What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-19 compared with 2024-08-16 · 536 added, 439 removed, 211 unchanged (82% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In this quarterly report on

Form 10-Q (the “Quarterly Report”), the “Company,” “AAI,” “we,” “us” and “our”

refer to Ault Alliance, Inc., a Delaware corporation.

AAI is a diversified holding company pursuing growth by acquiring undervalued businesses

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

In this quarterly report on Form 10-Q (the “Quarterly Report”),

the “Company,” “Hyperscale Data,” “we,” “us” and “our” refer to Hyperscale

Data, Inc., a Delaware corporation.

Hyperscale Data is a diversified holding company pursuing growth by acquiring undervalued businesses

and disruptive technologies with a global impact.

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ecosystems and other industries, and provide mission-critical products that support a diverse range of industries, including metaverse

platform, oil exploration, crane services, defense/aerospace, industrial, automotive, medical/biopharma, hotel operations and textiles.

In addition, we own and operate hotels and extend credit to select entrepreneurial businesses through a licensed lending subsidiary.

platform, oil exploration, crane services, defense/aerospace, industrial, automotive, medical/biopharma and hotel operations.

we own and operate hotels and extend credit to select entrepreneurial businesses through a licensed lending subsidiary.

Recent Events and Developments

On December 14, 2023, we,

along with our wholly owned subsidiaries Sentinum, Third Avenue, ACS, BNI Montana, Ault Lending, Ault Aviation and AGREE (collectively

with our company, Sentinum, Third Avenue, ACS, BNI Montana, Ault Lending and Ault Aviation, the “Guarantors”) entered into

a Loan and Guaranty Agreement (the “2023 Loan Agreement”) with institutional lenders, pursuant to which Ault & Company,

(“Ault & Company”), a related party, borrowed $36 million and issued secured promissory notes to the lenders in the

aggregate amount of $38.9 million (collectively, the “Secured Notes”;

On December 14, 2023, we, along with our

wholly owned subsidiaries Sentinum, Third Avenue, ACS, BNI Montana, Ault Lending, Ault Aviation and AGREE (collectively with our company,

Sentinum, Third Avenue, ACS, BNI Montana, Ault Lending and Ault Aviation, the “Guarantors”) entered into a Loan and Guaranty

Agreement (the “2023 Loan Agreement”) with institutional lenders, pursuant to which Ault & Company, Inc.

& Company”), a related party, borrowed $36 million and issued secured promissory notes to the lenders in the aggregate amount

of $38.9 million (collectively, the “Secured Notes”;

and the transaction, the “Loan”).

Loan Agreement was amended as of April 15, 2024.

Pursuant to the 2023 Loan

Agreement, the Guarantors, as well as Milton C.

Ault, III, our Executive Chairman and the Chief Executive Officer of Ault & Company,

agreed to act as guarantors for repayment of the Secured Notes.

In addition, certain Guarantors entered into various agreements as collateral

in support of the guarantee of the Secured Notes, including (i) a security agreement by Sentinum, pursuant to which Sentinum granted to

the Lenders a security interest in (a) 19,226 Antminers (the “Miners”), (b) all of the digital currency mined or otherwise

generated from the Miners and (c) the membership interests of ACS, (ii) a security agreement by the Company, Ault Lending, BNI Montana

and AGREE, pursuant to which those entities granted to the lenders a security interest in substantially all of their assets, as well as

a pledge of equity interests in Ault Aviation, AGREE, Sentinum, Third Avenue, Ault Energy, LLC, our wholly owned subsidiary (“Ault

Energy”), ADTC, Eco Pack, and Circle 8 Holdco, (iii) a mortgage and security agreement by Third Avenue on the real estate property

owned by Third Avenue in St.

Petersburg, Florida (the “Florida Property”), (iv) a future advance mortgage by ACS on the real

estate property owned by ACS in Dowagiac, Michigan (the “Michigan Property”), (v) an aircraft mortgage and security agreement

by Ault Aviation on a private aircraft owned by Ault Aviation (the “Aircraft”), and (vi) deposit account control agreements

over certain bank accounts held by certain of our subsidiaries.

In addition, pursuant to the

2023 Loan Agreement, we agreed to establish a segregated deposit account (the “Segregated Account”), which would be used as

a further guarantee of repayment of the Secured Notes.

The 2023 Loan Agreement

was amended as of April 15, 2024.

Pursuant to the 2023 Loan Agreement, the

Guarantors, as well as Milton C.

Ault, III, our Executive Chairman and the Chief Executive Officer of Ault & Company, agreed to act

as guarantors for repayment of the Secured Notes.

In addition, certain Guarantors entered into various agreements as collateral in support

of the guarantee of the Secured Notes, including (i) a security agreement by Sentinum, pursuant to which Sentinum granted to the Lenders

a security interest in (a) 19,226 Antminers (the “Miners”), (b) all of the crypto currency mined or otherwise generated from

the Miners and (c) the membership interests of ACS, (ii) a security agreement by the Company, Ault Lending, BNI Montana and AGREE, pursuant

to which those entities granted to the lenders a security interest in substantially all of their assets, as well as a pledge of equity

interests in Ault Aviation, AGREE, Sentinum, Third Avenue, Ault Energy, LLC, our wholly owned subsidiary (“Ault Energy”),

ADTC, Eco Pack, and Circle 8 Holdco, (iii) a mortgage and security agreement by Third Avenue on the real estate property owned by Third

Avenue in St.

Petersburg, Florida (the “Florida Property”), (iv) a future advance mortgage by ACS on the real estate property

owned by ACS in Dowagiac, Michigan (the “Michigan Property”), (v) an aircraft mortgage and security agreement by Ault Aviation

on a private aircraft owned by Ault Aviation (the “Aircraft”), and (vi) deposit account control agreements over certain bank

accounts held by certain of our subsidiaries.

In addition, pursuant to the 2023 Loan Agreement,

we agreed to establish a segregated deposit account (the “Segregated Account”), which would be used as a further guarantee

of repayment of the Secured Notes.

$3.5 million of cash was paid into the Segregated Account on the closing date.

We are required to have the minimum balance in the Segregated Account be not less than $7 million, $15 million, $20 million and $27.5

million on the five-month, nine-month, one-year and two-year anniversaries of the closing date, respectively.

In addition, starting on

March 31, 2024, we were required to deposit $0.3 million monthly into the Segregated Account, which increases to $0.4 million monthly

starting March 31, 2025.

Further, we agreed to deposit into the Segregated Account, (i) up to the first $7 million of net proceeds, if

any, from the sale of the Hilton Garden Inn in Madison West, the Residence Inn in Madison West, the Courtyard in Madison West, and the

Hilton Garden Inn in Rockford;

(ii) 50% of cash dividends (on a per dividend basis) received from Circle 8 on or after June 30, 2024;

(iii) 30% of the net proceeds from any bond offerings we conduct, which shall not exceed $9 million in the aggregate;

and (iv) 25% of

the net proceeds from cash flows, collections and revenues from loans or other investments made by Ault Lending (including but not limited

to sales of loans or investments, dividends, interest payments and amortization payments), which shall not exceed $5 million in the aggregate.

In addition, if we decide to sell certain assets, we further agreed to deposit funds into the Segregated Account from the sale of those

assets, including, (i) $15 million from the sale of the Florida Property, (ii) $11 million from the sale of the Aircraft, (iii) $17 million

from the sale of the Michigan Property, (iv) $350 per Miner, subject to a de minimis threshold of $1 million, and (v) $10 million from

the sale of Circle 8.

On May 15, 2024, the 2023

Loan Agreement was amended to extend the date by which we were required to have a specified minimum balance in the Segregated Account

from May 15, 2024 to July 22, 2024 and the specified minimum balance to be in the account as of such date was increased from $7 million

to $7.4 million.

On July 25, 2024, the 2023 Loan Agreement was further amended to extend the date by which we were required to have a

specified minimum balance in the Segregated Account from July 22, 2024 to July 31, 2024 and to require that we deposit $600,000 in the Segregated account on July 25, 2024.

On August 16, 2024, we agreed

to deposit, by no later than September 1, 2024, an additional $1.5 million into the Segregated Account as well as make a modification

payment to the institutional lenders in the amount of $0.3 million by no later than September 15, 2024.

As a result of the foregoing amendments,

we are required to deposit additional incremental amounts such that at or prior to the nine-month anniversary, the one-year anniversary

and the two-year anniversary of December 14, 2023, we shall have deposited the required funds such that the balance in the Segregated

Account shall not be less than $15.0 million, $20.0 million and $27.5 million, respectively.

On January 12, 2024, pursuant

to the approval provided by our stockholders at the annual meeting of stockholders, we filed an Amendment to our Certificate of Incorporation

with the State of Delaware to effectuate a reverse stock split of our common stock affecting both the authorized and issued and outstanding

number of such shares by a ratio of one-for-twenty-five.

We are required to have

the minimum balance in the Segregated Account be not less than $7 million, $15 million, $20 million and $27.5 million on the five-month,

nine-month, one-year and two-year anniversaries of the closing date, respectively.

In addition, starting on March 31, 2024, we were required

to deposit $0.3 million monthly into the Segregated Account, which increases to $0.4 million monthly starting March 31, 2025.

we agreed to deposit into the Segregated Account, (i) up to the first $7 million of net proceeds, if any, from the sale of the Hilton

Garden Inn in Madison West, the Residence Inn in Madison West, the Courtyard in Madison West, and the Hilton Garden Inn in Rockford;

50% of cash dividends (on a per dividend basis) received from Circle 8 on or after June 30, 2024;

(iii) 30% of the net proceeds from any

bond offerings we conduct, which shall not exceed $9 million in the aggregate;

and (iv) 25% of the net proceeds from cash flows, collections

and revenues from loans or other investments made by Ault Lending (including but not limited to sales of loans or investments, dividends,

interest payments and amortization payments), which shall not exceed $5 million in the aggregate.

In addition, if we decide to sell certain

assets, we further agreed to deposit funds into the Segregated Account from the sale of those assets, including, (i) $15 million from

the sale of the Florida Property, (ii) $11 million from the sale of the Aircraft, (iii) $17 million from the sale of the Michigan Property,

(iv) $350 per Miner, subject to a de minimis threshold of $1 million, and (v) $10 million from the sale of Circle 8.

On May 15, 2024, the 2023 Loan Agreement

was amended to extend the date by which we were required to have a specified minimum balance in the Segregated Account from May 15, 2024

to July 22, 2024 and the specified minimum balance to be in the account as of such date was increased from $7 million to $7.4 million.

On July 25, 2024, the 2023 Loan Agreement was further amended to extend the date by which we were required to have a specified minimum

balance in the Segregated Account from July 22, 2024 to July 31, 2024 and to require that we deposit $600,000 in the Segregated account

on July 25, 2024.

On January 12, 2024, pursuant to the approval

provided by our stockholders at the annual meeting of stockholders, we filed an Amendment to our Certificate of Incorporation with the

State of Delaware to effectuate a reverse stock split of our common stock affecting both the authorized and issued and outstanding number

of such shares by a ratio of one-for-twenty-five.

The reverse stock split became effective on January 16, 2024.

All share amounts

in this report have been updated to reflect the reverse stock split.

On January 31, 2024, Ault

Lending entered into a securities purchase agreement (the “January 2024 SPA”) with Alzamend Neuro, Inc.

(“Alzamend”),

pursuant to which Alzamend agreed to sell, in one or more closings, to Ault Lending up to 6,000 shares of Series B convertible preferred

stock (the “ALZN Series B Preferred”) and warrants to purchase up to 6.0 million shares of Alzamend common stock (the “ALZN

All share amounts in this

report have been updated to reflect the reverse stock split.

On January 31, 2024, Ault Lending entered

into a securities purchase agreement (the “January 2024 SPA”) with Alzamend Neuro, Inc.

(“Alzamend”), pursuant

to which Alzamend agreed to sell, in one or more closings, to Ault Lending up to 6,000 shares of Series B convertible preferred stock

(the “ALZN Series B Preferred”) and warrants to purchase up to 6.0 million shares of Alzamend common stock (the “ALZN

Series B Warrants”) for a total purchase price of up to $6.0 million.

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than the conversion price, as well as upon customary stock splits, stock dividends, combinations or similar events.

On each of March 7, 2024,

March 8, 2024, March 18, 2024, March 19, 2024 and April 17, 2024 pursuant to the securities purchase agreement we entered into with Ault

& Company, dated as of November 6, 2023 (the “November 2023 SPA”), we sold to Ault & Company 500 shares of Series

C Convertible Preferred Stock and warrants to purchase 147,820 shares of common stock to the Purchaser,

for a purchase price of $0.5 million.

On August 2, 2024, pursuant to the November 2023 SPA, we sold to Ault & Company 300

shares of Series C Convertible Preferred Stock and warrants to purchase 88,692 shares of common stock to

the Purchaser, for a purchase price of $500,000.

As of the date of this report, Ault & Company has purchased an aggregate

of 44,300 shares of Series C Convertible Preferred Stock and warrants to purchase an aggregate of 13,096,823 shares of common stock,

for an aggregate purchase price of $44.3 million.

On March 11, 2024, we entered

into a note purchase agreement with two institutional investors (the “Buyers”) pursuant to which the Buyers purchased from

the Company, on March 12, 2024 in a registered direct offering to the Buyers an aggregate of $2.0 million principal face amount convertible

promissory notes (the “Notes”).

The Notes were sold to the Buyers for an aggregate purchase price of $1.8 million, which

reflects an original issue discount of $0.2 million.

The Notes accrue interest at the rate of 6% per annum, unless an event of default

(as defined in the Notes) occurs, at which time the Notes would accrue interest at 12% per annum.

The Notes were subsequently converted

in full into shares of common stock at a conversion price of $0.35 per share.

On March 26, 2024, pursuant

to the January 2024 SPA, Ault Lending purchased 780 shares of ALZN Series B Preferred Stock and ALZN Series B Warrants to

purchase 78,000 shares of Alzamend common, for a purchase price of $0.8 million.

As of the date of this report, Ault

Lending has purchased an aggregate of 2,000 shares of ALZN Series B Preferred and ALZN Series B Warrants to purchase an aggregate

of 0.2 million shares of Alzamend common stock, for an aggregate purchase price of $2.0 million.

On March 25, 2024 we entered

into an amendment to the (i) November 2023 SPA, (ii) the related Certificate of Designation of Preferences, Rights and Limitations

of the Series C Preferred Convertible Stock and (iii) the number of Series C Warrants, to provide for (A) an increase in the dollar amount

of the Series C Convertible Preferred Stock that Ault & Company may purchase from us from $50.0 million to $75.0 million and

(B) extended the date of on which the final closing may occur to June 30, 2024, subject to Ault & Company’s ability to further

extended such date for ninety days.

On April 15, 2024, we established

a record date for our final distribution of securities of TurnOnGreen.

On each of March 7, 2024, March 8, 2024,

March 18, 2024, March 19, 2024 and April 17, 2024 pursuant to the securities purchase agreement we entered into with Ault & Company,

dated as of November 6, 2023 (the “November 2023 SPA”), we sold to Ault & Company 500 shares of Series C Convertible

Preferred Stock and warrants to purchase 147,820 shares of common stock to the Purchaser, for a purchase price

of $0.5 million.

On August 2, 2024, pursuant to the November 2023 SPA, we sold to Ault & Company 300 shares of Series

C Convertible Preferred Stock and warrants to purchase 88,692 shares of common stock to the Purchaser, for

a purchase price of $500,000.

As of the date of this report, Ault & Company has purchased an aggregate of 44,300 shares

of Series C Convertible Preferred Stock and warrants to purchase an aggregate of 13,096,823 shares of common stock, for an aggregate

purchase price of $44.3 million.

On March 11, 2024, we entered into a note

purchase agreement with two institutional investors (the “Buyers”) pursuant to which the Buyers purchased from the Company,

on March 12, 2024 in a registered direct offering to the Buyers an aggregate of $2.0 million principal face amount convertible promissory

notes (the “Notes”).

The Notes were sold to the Buyers for an aggregate purchase price of $1.8 million, which reflects

an original issue discount of $0.2 million.

The Notes accrue interest at the rate of 6% per annum, unless an event of default (as

defined in the Notes) occurs, at which time the Notes would accrue interest at 12% per annum.

The Notes were subsequently converted in

full into shares of common stock at a conversion price of $0.35 per share.

On March 26, 2024, pursuant to the January

2024 SPA, Ault Lending purchased 780 shares of ALZN Series B Preferred Stock and ALZN Series B Warrants to purchase

78,000 shares of Alzamend common, for a purchase price of $0.8 million.

As of the date of this report, Ault Lending

has purchased an aggregate of 2,000 shares of ALZN Series B Preferred and ALZN Series B Warrants to purchase an aggregate of

0.2 million shares of Alzamend common stock, for an aggregate purchase price of $2.0 million.

On March 25, 2024 we entered into an amendment

to the (i) November 2023 SPA, (ii) the related Certificate of Designation of Preferences, Rights and Limitations of the Series C

Preferred Convertible Stock and (iii) the number of Series C Warrants, to provide for (A) an increase in the dollar amount of the Series

C Convertible Preferred Stock that Ault & Company may purchase from us from $50.0 million to $75.0 million and (B) extended the

date of on which the final closing may occur to June 30, 2024, subject to Ault & Company’s ability to further extended such

date for ninety days.

On April 15, 2024, we established a record

date for our final distribution of securities of TurnOnGreen.

Stockholders as of this date were entitled to 0.83 shares of TurnOnGreen

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TurnOnGreen Securities in the final distribution.

Effective April 29, 2024,

we issued to an accredited investor a term note with a principal face amount of $1.7 million.

The note bears interest at the rate of 15%

per annum and the note was issued with an original issuance discount.

Effective April 29, 2024, we issued to an

accredited investor a term note with a principal face amount of $1.7 million.

The note bears interest at the rate of 15% per annum and

the note was issued with an original issuance discount.

The maturity date of the note was May 17, 2024.

The note contained

a standard and customary event of default for failure to make payments when due under the note.

The note contained a standard

and customary event of default for failure to make payments when due under the note.

The purchase price for the note was $1.6 million.

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the maturity date to July 31, 2024.

On June 4, 2024, we entered

into a Loan Agreement (the “2024 Credit Agreement”) with OREE Lending Company, LLC and Helios Funds LLC, as lenders.

Credit Agreement provides for an unsecured, non-revolving credit facility in an aggregate draw limit of up to $20.0 million, provided,

however, that at no point will we be allowed to have outstanding loans under the 2024 Credit Agreement in a principal amount received

of more than $2.0 million.

On June 4, 2024, we entered into a Loan

Agreement (the “2024 Credit Agreement”) with OREE Lending Company, LLC and Helios Funds LLC, as lenders.

The 2024 Credit Agreement

provides for an unsecured, non-revolving credit facility in an aggregate draw limit of up to $20.0 million, provided, however, that at

no point will we be allowed to have outstanding loans under the 2024 Credit Agreement in a principal amount received of more than $2.0

The lenders made a loan to the Company of $1.5 million on June 4, 2024.

The loans under the 2024 Credit

Agreement are due December 4, 2024, provided, however, that if on such date, we have executed an equity line of credit agreement relating

to the sale of shares of the Series D Preferred Stock, which was executed on June 20, 2024, have an effective registration statement relating

thereto and are not currently in default under such agreement, then the maturity date shall be automatically extended until June 4, 2025.

The lenders are not obligated to make any further loans under the 2024 Credit Agreement after the maturity date described above.

under the 2024 Credit Agreement will be evidenced by promissory notes (the “Promissory Notes”) and will include the addition

of an original issuance discount of 20% to the amount of each loan and all loans will bear interest at the rate of 15.0% per annum and

may be repaid at any time without penalty or premium.

June 23, 2024, Ault Disruptive entered into an Agreement and Plan of Merger (as it may be amended, supplemented or otherwise modified

from time to time, the “Merger Agreement”) by and among Ault Disruptive, ADRT Merger Sub, Inc., a Delaware corporation and

a direct, wholly owned subsidiary of Ault Disruptive (“Merger Sub”), and Gresham Worldwide, Inc., a California corporation

The loans under the 2024 Credit Agreement are due

December 4, 2024, provided, however, that if on such date, we have executed an equity line of credit agreement relating to the sale of

shares of the Series D Preferred Stock, which was executed on June 20, 2024, have an effective registration statement relating thereto

and are not currently in default under such agreement, then the maturity date shall be automatically extended until June 4, 2025.

lenders are not obligated to make any further loans under the 2024 Credit Agreement after the maturity date described above.

the 2024 Credit Agreement will be evidenced by promissory notes (the “Promissory Notes”) and will include the addition of

an original issuance discount of 20% to the amount of each loan and all loans will bear interest at the rate of 15.0% per annum and may

be repaid at any time without penalty or premium.

On June 23, 2024,

Ault Disruptive entered into an Agreement and Plan of Merger (as it may be amended, supplemented or otherwise modified from time to time,

the “Merger Agreement”) by and among Ault Disruptive, ADRT Merger Sub, Inc., a Delaware corporation and a direct, wholly owned

subsidiary of Ault Disruptive (“Merger Sub”), and Gresham Worldwide, Inc., a California corporation (“GIGA”).

The transactions contemplated by the Merger Agreement are referred to herein as the “Business Combination.”

to the Merger Agreement and subject to the terms and conditions set forth therein, the Merger Sub was intended to merge with and into

GIGA (the “Merger”), with GIGA being the surviving corporation and thereby becoming a wholly owned subsidiary of Ault Disruptive.

Upon the Closing of the Business Combination (the “Effective Time”), it was expected that Ault Disruptive

be renamed Gresham Worldwide, Inc., and thereafter remain listed on the NYSE American under a new ticker symbol, “GWWI.”

on August 14, 2024, GIGA filed a petition for reorganization under Chapter XI of the bankruptcy laws.

Consequently, Ault Disruptive was

required to terminate the Merger Agreement, which it did on August 15, 2024.

Ault Disruptive does not presently intend to enter

into a new agreement and plan of merger with a third party.

On July 18, 2024, we entered

into a note purchase agreement with an institutional investor pursuant to which the institutional investor agreed to acquire, and we agreed

to issue and sell in a registered direct offering to the institutional investor, a $5.4 million 10% OID Convertible Promissory Note (the

The OID Note was sold to the institutional investor for a purchase price of $4.9 million, an original issue

discount of $0.5 million.

The OID Note will accrue interest at the rate of 15% per annum, unless an event of default occurs, at which

time the OID Note would accrue interest at 18% per annum.

Pursuant to the

Merger Agreement and subject to the terms and conditions set forth therein, the Merger Sub was intended to merge with and into GIGA (the

“Merger”), with GIGA being the surviving corporation and thereby becoming a wholly owned subsidiary of Ault Disruptive.

the Closing of the Business Combination (the “Effective Time”), it was expected that Ault Disruptive would be renamed Gresham

Worldwide, Inc., and thereafter remain listed on the NYSE American under a new ticker symbol, “GWWI.”

However, on August

14, 2024, GIGA filed a petition for reorganization under Chapter 11 of the bankruptcy laws.

Consequently, Ault Disruptive was required

to terminate the Merger Agreement, which it did on August 15, 2024.

Ault Disruptive does not presently intend to enter into a new

agreement and plan of merger with a third party.

On September 27, 2024, Ault Disruptive announced

that it will redeem all of its outstanding shares of common stock which occurred as of the close of business on October 11, 2024, because

Ault Disruptive would not consummate an initial business combination within the time period required by its Amended and Restated Certificate

of Incorporation, as amended.

During the nine months ended September 30, 2024, shares of Ault Disruptive common stock were redeemed for

an aggregate redemption amount of $1.5 million.

On October 11, 2024, all remaining shares

of Ault Disruptive common stock were redeemed for a redemption amount of $0.8 million.

On July 18, 2024, we entered into a note

purchase agreement with an institutional investor pursuant to which the institutional investor agreed to acquire, and we agreed to issue

and sell in a registered direct offering to the institutional investor, a $5.4 million 10% OID Convertible Promissory Note (the “OID

The OID Note was sold to the institutional investor for a purchase price of $4.9 million, an original issue discount

of $0.5 million.

The OID Note will accrue interest at the rate of 15% per annum, unless an event of default occurs, at which time the

OID Note would accrue interest at 18% per annum.

The OID Note will mature on October 19, 2024.

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York Stock Exchange (the “NYSE Limit”) unless we first obtain stockholder approval (“Stockholder Approval”).

If, on September 2, 2024 (the

“Adjustment Date”), the closing bid price of our common stock is lower than the OID Conversion Price, then the OID Conversion

Price will be reduced to 85% of the closing bid price of the common stock on September 2, 2024.

However, if after July 19, 2024, and prior

to the date on which Stockholder Approval is obtained, the holder of the OID Note has converted a portion of the outstanding amount under

the OID Note into shares of our common stock in an aggregate amount equal to the NYSE Limit, then the Adjustment Date will be extended

by such number of days between such date and the date on which we obtain Stockholder Approval.

If, on September 2, 2024 (the “Adjustment

Date”), the closing bid price of our common stock is lower than the OID Conversion Price, then the OID Conversion Price will be

reduced to 85% of the closing bid price of the common stock on September 2, 2024.

However, if after July 19, 2024, and prior to the date

on which Stockholder Approval is obtained, the holder of the OID Note has converted a portion of the outstanding amount under the OID

Note into shares of our common stock in an aggregate amount equal to the NYSE Limit, then the Adjustment Date will be extended by such

number of days between such date and the date on which we obtain Stockholder Approval.

On September 17,

2024, the loan and guarantee agreement, dated as of December 14, 2023, as amended, pursuant to which we have guaranteed financial obligations

of Ault & Company borrowings, was amended regarding our obligations to fund the restricted cash Segregated Account.

We agreed to deposit in the Segregated Account:

(i) $0.4 million monthly commencing on September 30, 2024 and ending on February 28, 2025;

and (ii) $0.5 million monthly commencing

on March 31, 2025 and ending on the earlier of the term loan maturity date, prepayment of the term loan in full or the date on which the

balance of the Segregated Account exceeds 110% of the outstanding balance of the term loan.

As of September 30, 2024 we had deposited

$6.5 million in the Segregated Account.

In October 2024, we deposited an additional $0.4 million in the Segregated Account.

On August 2, 2024, pursuant to the November

2023 SPA we entered into with Ault & Company, we sold 300 shares of Series C Convertible Preferred Stock and warrants to purchase

0.1 million shares of common stock to Ault & Company, for a purchase price of $0.3 million.

and November 2024, we sold to Ault & Company an aggregate of 2,230 shares of Series C Preferred Stock and Warrants to purchase 0.7

million shares of Class A common stock, for a total purchase price of $2.2 million.

11, 2024 we filed a Certificate of Designation, Rights and Preferences (the “Certificate of Designation”) with the Secretary

of State of the State of Delaware to establish the preferences, voting powers, limitations as to dividends or other distributions, qualifications,

terms and conditions of redemption and other terms and conditions of our Series E Preferred Stock.

The following is a summary description

of those terms and the general effect of the issuance of the shares of Series E Preferred Stock on our other classes of registered securities.

E Preferred Stock will, as to dividend rights and rights as to the distribution of assets upon our liquidation, dissolution or winding-up,

(1) senior to all classes or series of Common Stock and to all other equity securities issued by us other than equity securities

referred to in clauses (2) and (3);

(2) on parity with any future class or series of our equity securities expressly designated as ranking

on parity with the Series E Preferred Stock, (3) junior to our Series A Cumulative Redeemable Perpetual Preferred Stock and its Series

C Convertible Preferred Stock;

and all equity securities issued by us expressly designated as ranking senior to the Series E Preferred

and (4) junior to all our existing and future indebtedness.

To the extent

the shares of Series E Preferred Stock are issued, we will pay cumulative cash dividends on the Series E Preferred Stock when, as and

if declared by its board of directors (or a duly authorized committee of its board of directors), only out of funds legally available

for payment of dividends.

Dividends on the Series E Preferred Stock will accrue on the stated amount of $25.00 per share of the Series

E Preferred Stock at a rate per annum equal to 10.00% (equivalent to $3.00 per year), payable monthly in arrears.

E Preferred Stock is redeemable by us.

Holders of shares of the Series E Preferred Stock generally will have no voting rights, except

as required by law and as provided in the Certificate of Designation.

Voting rights for holders of the Series E Preferred Stock exist

primarily with respect to material and adverse changes in the terms of the Series E Preferred Stock and the creation of additional classes

or series of preferred stock that rank senior to the Series E Preferred Stock.

Further, unless

we have received the approval of two-thirds of the votes entitled to be cast by the holders of Series E Preferred Stock, we will not effect

any consummation of a binding share exchange or reclassification of the Series E Preferred Stock or a merger or consolidation of us with

another entity, unless (a) the shares of Series E Preferred Stock remain outstanding or, in the case of a merger or consolidation with

respect to which we are not the surviving entity, the shares of Series E Preferred Stock are converted into or exchanged for preference

securities, or (b) such shares remain outstanding or such preference securities are not materially less favorable than the Series E Preferred

Stock immediately prior to such consummation.

28, 2024 annual meeting of stockholders, voted upon and approved Proposal 5, an amendment to our Certificate of Incorporation to effect

a Reverse Split with a ratio of not less than one-for-two and not more than one-for-thirty-five at any time prior to June 27, 2025, with

the exact ratio to be set at a whole number within this range as determined by our board of directors in its sole discretion.

24, 2024, the board of directors authorized a special committee of the board to determine the ratio of the reverse split.

8, 2024, the special committee approved a one-for-thirty-five reverse split of the Class A common stock that will be effective in the

State of Delaware on Friday, November 22, 2024.

We anticipate that beginning with the opening of trading on Monday, November 25, 2024,

our Class A common stock will trade on the NYSE American on a split-adjusted basis.

15, 2024, we announced that we plan to issue a special one-time dividend (the “Distribution”) of 5.0 million shares of our

Class B Common Stock (the “Class B Common Stock”) to all holders of our Class A Common Stock (the “Class A Common Stock”)

and the Series C Convertible Preferred Stock on an as-converted basis.

date for the Distribution is November 29, 2024.

Stockholders who own our Class A Common Stock at the close of trading on that date will

be eligible to receive the shares of Class B Common Stock.

Further, we have set a payment date of December 16, 2024, subject to adjustment.

On the record date, we anticipate there will be approximately 1.1 million shares of Class A Common Stock and approximately 5.9 million

Class A Common Stock equivalents, based on the current conversion price of our Series C Convertible Preferred Stock, issued and outstanding

(collectively, the “Eligible Capital Stock”), for an aggregate of approximately 7.0 million shares of Eligible Capital Stock.

Consequently, the number of shares of Class B Common Stock issuable is approximately 0.71 for each share of Eligible Capital Stock.

foregoing figures reflect the implementation of the one-for-thirty-five reserve stock split that will be effectuated on November 25, 2024.

B Common Stock is identical to the currently outstanding Class A Common Stock, with the exception that each share thereof carries ten

times the voting power of a share of Class A Common Stock.

The Class B Common Stock is convertible at any time after the payment date

into Class A Common Stock on a one-for-one basis.

Presentation of GIGA as Discontinued Operations

August 14, 2024, our majority owned subsidiary, Gresham Worldwide, Inc.

(“ GIGA”), filed

a petition for reorganization under Chapter 11 of the bankruptcy laws.

The filing placed GIGA under the control of the bankruptcy court,

which oversees its reorganization and restructuring process.

We assessed the inherent uncertainties associated with the outcome of the

Chapter 11 reorganization process and the anticipated duration thereof, and concluded that it was appropriate to deconsolidate GIGA and

its subsidiaries effective on the petition date.

We recognized a gain on deconsolidation of GIGA of $2.0 million included in net gain

(loss) from discontinued operations.

In connection with the Chapter

11 reorganization process , we concluded that the operations of GIGA met the criteria for discontinued operations as this strategic

shift that will have a significant effect on our operations and financial results.

As a result, we have presented the results of operations,

cash flows and financial position of GIGA as discontinued operations in the accompanying consolidated financial statements and notes for

all periods presented.

Change in Plan of Sales of AGREE Hotel Properties

On April 30, 2024, we had

a change in plan of sale for our four hotels owned and operated by AGREE.

As a result, as of April 30, 2024, the assets no longer met

the held for sale criteria and were required to be reclassified as held and used at the lower of adjusted carrying value or the fair value

at the date of the not to sell.

For presentation purposes,

the assets and liabilities previously held for sale as of December 31, 2023, were reclassified in the December 31, 2023 balance sheet

in the accompanying financial statements back to their original asset and liability groups at their previous carrying values.

In connection

with this change in plan of sale, we recorded a loss on impairment of property and equipment related to the real estate assets of AGREE

of $8.0 million during the three months ended June 30, 2024.

As a holding company, our

business objective is to increase stockholder value through developing and growing our subsidiaries.

Under the strategy we have adopted,

we are focused on managing and financially supporting our existing subsidiaries and partner companies, with the goal of pursuing monetization

opportunities and maximizing the value returned to stockholders.

On April 30, 2024, we had a change in plan

of sale for our four hotels owned and operated by AGREE.

As a result, as of April 30, 2024, the assets no longer met the held for sale

criteria and were required to be reclassified as held and used at the lower of adjusted carrying value or the fair value at the date of

the not to sell.

For presentation purposes, the assets and

liabilities previously held for sale as of December 31, 2023, were reclassified in the December 31, 2023 balance sheet in the accompanying

financial statements back to their original asset and liability groups at their previous carrying values.

In connection with this change

in plan of sale, we recorded a loss on impairment of property and equipment related to the real estate assets of AGREE of $8.0 million

during the nine months ended September 30, 2024.

As a holding company, our business objective

is to increase stockholder value through developing and growing our subsidiaries.

Under the strategy we have adopted, we are focused on

managing and financially supporting our existing subsidiaries and partner companies, with the goal of pursuing monetization opportunities

and maximizing the value returned to stockholders.

We have, are and will consider initiatives including, among others:

offerings, the sale of individual partner companies, the sale of certain or all partner company interests in secondary market transactions,

or a combination thereof, as well as other opportunities to maximize stockholder value.

We anticipate returning value to stockholders

after satisfying our debt obligations and working capital needs.

From time to time, we engage

in discussions with other companies interested in our subsidiaries or partner companies, either in response to inquiries or as part of

a process we initiate.

To the extent we believe that a subsidiary or partner company’s further growth and development can best be

supported by a different ownership structure or if we otherwise believe it is in our stockholders’ best interests, we will seek

to sell all or a portion of our position in the subsidiary or partner company.

These sales may take the form of privately negotiated sales

of stock or assets, mergers and acquisitions, public offerings of the subsidiary or partner company’s securities and, in the case

of publicly traded partner companies, sales of their securities in the open market.

Our plans may include taking subsidiaries or partner

companies public through rights offerings and directed share subscription programs.

We will continue to consider these (or similar) initiatives

and the sale of certain subsidiary or partner company interests in secondary market transactions to maximize value for our stockholders.

In recent years, we have provided

capital and relevant expertise to fuel the growth of businesses in metaverse platform, oil exploration, crane services, defense/aerospace,

industrial, automotive, medical/biopharma, hotel operations and textiles.

We have provided capital to subsidiaries as well as partner

companies in which we have an equity interest or may be actively involved, influencing development through board representation and management

We are a Delaware corporation

with our corporate office located at 11411 Southern Highlands Pkwy, Suite 240, Las Vegas, NV 89141.

Our phone number is 949-444-5464 and

our website address is www.ault.com.

public offerings,

the sale of individual partner companies, the sale of certain or all partner company interests in secondary market transactions, or a

combination thereof, as well as other opportunities to maximize stockholder value.

We anticipate returning value to stockholders after

satisfying our debt obligations and working capital needs.

From time to time, we engage in discussions

with other companies interested in our subsidiaries or partner companies, either in response to inquiries or as part of a process we initiate.

To the extent we believe that a subsidiary or partner company’s further growth and development can best be supported by a different

ownership structure or if we otherwise believe it is in our stockholders’ best interests, we will seek to sell all or a portion

of our position in the subsidiary or partner company.

These sales may take the form of privately negotiated sales of stock or assets,

mergers and acquisitions, public offerings of the subsidiary or partner company’s securities and, in the case of publicly traded

partner companies, sales of their securities in the open market.

Our plans may include taking subsidiaries or partner companies public

through rights offerings and directed share subscription programs.

We will continue to consider these (or similar) initiatives and the

sale of certain subsidiary or partner company interests in secondary market transactions to maximize value for our stockholders.

In recent years, we have provided capital and relevant expertise to

fuel the growth of businesses in metaverse platform, oil exploration, crane services, defense/aerospace, industrial, automotive, medical/biopharma

and hotel operations.

We have provided capital to subsidiaries as well as partner companies in which we have an equity interest or may

be actively involved, influencing development through board representation and management support.

We are a Delaware corporation with our corporate

office located at 11411 Southern Highlands Pkwy, Suite 240, Las Vegas, NV 89141.

Our phone number is 949-444-5464 and our website address

is www.hyperscaledata.com.

Results of Operations

Results of Operations for the Three Months Ended June 30, 2024 and

The following table summarizes

the results of our operations for the three months ended June 30, 2024 and 2023.

For the Three Months Ended June 30,

Revenue, digital assets mining

Results of Operations for the Three Months Ended September 30, 2024 and 2023

The following table summarizes the results

of our operations for the three months ended September 30, 2024 and 2023.

For the Three Months Ended September 30,

Revenue, crypto assets mining

Revenue, hotel and real estate operations

3 unchanged sentences

Cost of revenue, products

Cost of revenue, digital assets mining

Cost of revenue, crypto assets mining

Cost of revenue, hotel and real estate operations

7 unchanged sentences

Impairment of property and equipment

Impairment of goodwill and intangible assets

Impairment of mined digital assets

Impairment of mined crypto assets

Total operating expenses

5 unchanged sentences

Interest expense

(15,927,000 )

Loss on extinguishment of debt

Loss from investment in unconsolidated entity

Impairment of equity securities

Change in fair value of warrant liability

Gain on the sale of fixed assets

Total other income (expense), net

Gain (loss) on the sale of fixed assets

Total other expense, net

Loss before income taxes

(31,803,000 )

(27,288,000 )

Loss before income taxes

Income tax provision (benefit)

Net loss from continuing operations

(31,855,000 )

(26,723,000 )

Income tax provision

Net gain (loss) from discontinued operations

(29,639,000 )

(28,082,000 )

Net (income) loss attributable to non-controlling interest

Net loss attributable to Ault Alliance, Inc.

Net loss attributable to non-controlling interest

Net loss attributable to Hyperscale Data, Inc.

(25,549,000 )

14 unchanged sentences

$ (22,465,000 )

Revenues by segment for the

three months ended June 30, 2024 and 2023 were as follows:

For the Three Months Ended June 30,

Revenue, digital assets mining

Revenues by segment for the three months

ended September 30, 2024 and 2023 were as follows:

For the Three Months Ended September 30,

Revenue, crypto assets mining

$ (2,294,000 )

Revenue, commercial real estate leases

2 unchanged sentences

(15,931,000 )

The Singing Machine Company, Inc.

Total revenue

$ (12,029,000 )

Revenues from Sentinum’s

digital assets mining operations increased $0.1 million due primarily to a $1.2 million increase in revenue from Sentinum digital mining

equipment hosted at third-party facilities and a 134% increase in the average Bitcoin price, partially offset by a 71% increase in the

average Bitcoin mining difficulty level and the estimated $4.4 million unfavorable impact of the April 19, 2024 Bitcoin halving event

occurred on the Bitcoin network.

Halving is a key part of the

Bitcoin protocol and serves to control the overall supply and reduce the risk of inflation in digital assets using a proof-of-work consensus

Revenues from Sentinum’s crypto assets

mining operations decreased by $2.2 million, primarily due to an estimated $5.3 million unfavorable impact from the April 19, 2024 Bitcoin

halving event on the Bitcoin network, coupled with a 76% increase in the average Bitcoin mining difficulty level for the three months

ended September 30, 2024, compared to the corresponding period in 2023.

This decrease was partially offset by a 128% increase in the average

Bitcoin price and a $0.3 million reduction in revenue from Sentinum’s crypto mining equipment hosted at third-party facilities for

the three months ended September 30, 2024, compared to the corresponding period in 2023.

Halving is a key part of the Bitcoin protocol

and serves to control the overall supply and reduce the risk of inflation in crypto assets using a proof-of-work consensus algorithm.

The Bitcoin halving event reduced the block subsidy by half from 6.25 to 3.125 Bitcoin.

Transaction fees were not directly

impacted by the halving.

Energy revenues from the Circle

8 crane operations decreased by $0.9 million, or 7%, for the three months ended June 30, 2024.

This decrease was primarily due to lower

utilization of the crane fleet, as five cranes were out of service during the three months ended June 30, 2024.

from our lending and trading activities were negative $9.8 million for the three months ended June 30, 2024, primarily due to a $9.4 million

unrealized loss on 2.5 million shares of White River Energy Corp.

(“White River”) common stock and a $0.5 million unrealized

loss from our investment in Alzamend included in revenue from lending and trading activities.

Revenues from our lending and trading activities

were $9.5 million for the three months ended June 30, 2023, due to an aggregate $6.6 million of net realized gains and $1.5 million of

net unrealized gains on our investments in marketable equity securities, and a $1.5 million unrealized gain from our investment in Alzamend.

from our trading activities for the three months ended June 30, 2024 included net gains on equity securities, including unrealized gains

and losses from market price changes.

Transaction fees were not directly impacted by

Energy revenues from Circle 8’s crane

operations decreased by $0.2 million, or 1%, for the three months ended September 30, 2024, remaining essentially flat compared to the

prior period.

Revenues from our

lending and trading activities were $5.6 million for the three months ended September 30, 2024, driven primarily by $2.6 million in realized

gains from trading activities, $2.6 million in fee income, and $0.6 million in unrealized gains on investment positions.

In comparison,

revenues from lending and trading activities for the same period in 2023 were negative $0.2 million, due to a $3.0 million unrealized

loss from our investment in Alzamend and $0.8 million in net unrealized losses on investments in marketable equity securities, partially

offset by $3.0 million in realized gains from trading activities and $0.5 million dividend income.

Revenues from our

trading activities for the three months ended September 30, 2024 included net gains on equity securities, including unrealized gains and

losses from market price changes.

These gains and losses have caused, and will continue to cause, significant volatility in our periodic

For the three-month period

ending June 30, 2024, GIGA revenues increased by $1.9 million.

This growth is driven by ongoing global conflicts and tensions, which have

spurred investments in force protection technologies in the United States, U.K., Europe, Asia and the Middle East.

to the significant change in our ownership and voting rights, we determined that we no longer met the criteria of the primary beneficiary

and, accordingly, we deconsolidated SMC as of November 20, 2023.

SMC revenues were $0 for the three months ended June 30, 2024,

SMC revenues were $0 for the three months ended September 30,

2024, a decrease of $15.9 million compared to the corresponding period in 2023.

TurnOnGreen's revenues increased

by $0.5 million for the three months ended June 30, 2024, compared to the corresponding period in 2023.

This rise was primarily due to

higher sales from a single, higher-margin customer in the defense industry during the three months ended June 30, 2024.

TurnOnGreen's revenues increased by $0.1

million for the three months ended September 30, 2024, compared to the corresponding period in 2023.

This rise was primarily due to higher

sales from a single, higher-margin customer in the defense industry during the three months ended September 30, 2024.

Gross Margins

Gross margins decreased to

(2%) for the three months ended June 30, 2024, compared to 38% for the three months ended June 30, 2023.

Our gross margins recognized during

the three months ended June 30, 2024 and 2023 were impacted by margins from our lending and trading activities, with a negative impact

during the three months ended June 30, 2024 and a positive impact during the three months ended June 30, 2023.

Excluding the effects of

margin from our lending and trading activities, our adjusted gross margins for the three months ended June 30, 2024 and 2023 would have

been 24% and 22%, respectively.

Our gross margins (excluding the effects of margin from our lending and trading activities) improved,

in part, due to high margin revenue from Sentinum digital mining equipment hosted at third-party facilities.

Gross margins rose to 28% for the three

months ended September 30, 2024, compared to 20% for the same period in 2023.

This increase was influenced by our lending and trading

activities, which contributed favorably in 2024 but had a negative impact in 2023.

In both periods, gross margins were adversely affected

by negative margins from our crypto assets mining operations.

Excluding the impacts of both our lending and trading activities and our

crypto assets mining operations, adjusted gross margins for the three months ended September 30, 2024, and 2023 would have been 38% and

33%, respectively.

Gross margins improved due to the deconsolidation of the lower margin of SMC business.

Research and Development

Research and development expenses

decreased by $1.0 million for the three months ended June 30, 2024, due to lower expenditures related to development work on ROI’s

BitNile metaverse platform.

Research and development expenses increased

by $3.5 million for the three months ended September 30, 2024, due to increased expenditures related to development work on ROI’s

BitNile gaming platform.

Selling and Marketing

Selling and marketing expenses

were $4.0 million for the three months ended June 30, 2024, compared to $9.6 million for the three months ended June 30, 2023, a decrease

Selling and marketing expenses were $4.8

million for the three months ended September 30, 2024, compared to $7.6 million for the three months ended September 30, 2023, a decrease

of $2.9 million, or 38%.

3 unchanged sentences

General and Administrative

General and administrative

expenses were $13.5 million for the three months ended June 30, 2024, compared to $21.3 million for the three months ended June 30,

General and administrative expenses were

$12.0 million for the three months ended September 30, 2024, compared to $16.3 million for the three months ended September 30, 2023,

a decrease of $4.3 million, or 27%.

General and administrative expenses decreased from the comparative prior period, mainly due

to the following:

· $3.0 million lower professional fees;

General and administrative expenses decreased from the comparative prior period, mainly due to the

· $2.8 million decrease in general and administrative expenses from SMC due to the deconsolidation

of SMC as of November 20, 2023;

· $1.4 million lower professional fees;

· $1.4 million lower salaries and benefits.

· $0.6 million lower operating expenses at ROI primarily related to ceased operations at Agora Digital Holdings,

(“Agora Digital”), ROI’s wholly owned subsidiary;

· $0.4 million lower stock compensation.

Other Income (Expense), Net

Other expense, net was $12.8

million for the three months ended June 30, 2024, compared to other expense, net of $12.4 million for the three months ended June 30,

Interest and other income

was $0.8 million for the three months ended June 30, 2024, compared to $2.2 million for the three months ended June 30, 2023.

in interest and other income is primarily due to the decline in Ault Disruptive’s interest income as a result of the decline in

cash and marketable securities held in the trust account as a result of redemptions of Ault Disruptive common stock subject to possible

Interest expense was $5.4

million for the three months ended June 30, 2024, compared to $15.9 million for the three months ended June 30, 2023.

Interest expense

for the three months ended June 30, 2024 included contractual interest of $3.3 million, amortization of debt discount of $1.3 million

and forbearance and extension fees of $0.8 million.

Interest expense for the three months ended June 30, 2023 included amortization of

debt discount of $7.2 million, forbearance and extension fees of $6.2 million and contractual interest of $2.5 million.

Partially offset by:

· $1.0 million higher operating expenses at AGREE;

· $0.9 million higher operating expenses at Circle 8.

Impairment of Property and Equipment

During the three months ended

June 30, 2024, holders of our convertible notes converted $2.0 million of convertible notes that had a fair value of $2.7 million at the

time of conversion and recognized a $0.7 million loss on extinguishment of debt.

Loss from investment in unconsolidated

entity was $1.3 million for the three months ended June 30, 2024, representing our share of losses from our equity method investment in

Cumulative downward adjustments

for impairments for our equity securities without readily determinable fair values held at were $6.3 million for the three months ended

June 30, 2024.

Income Tax Provision

The income tax provision was

$24,000 and $1.4 million during the three months ended June 30, 2024 and 2023, respectively.

The effective income tax provision rate was

0.1% and 2.2% for the three months ended June 30, 2024 and 2023, respectively.

The lower income tax provision during the three months

ended June 30, 2024 related primarily to lower dividend income compared to the prior year period as a result of the decline in cash and

marketable securities held in the trust account as a result of redemptions of Ault Disruptive common stock subject to possible redemption.

Results of Operations for the Six Months Ended June 30, 2024 and

The following table summarizes

the results of our operations for the six months ended June 30, 2024 and 2023.

For the Six Months Ended June 30,

Revenue, digital assets mining

September 30, 2024, due to increases in the Bitcoin mining difficulty level, which compounded the continued impact of the Bitcoin halving

event, we concluded that indicated that an impairment triggering event had occurred.

Testing performed indicated the estimated fair value

of our miners to be less than their net carrying value as of September 30, 2024, and an impairment charge of $10.5 million was recognized,

decreasing the net carrying value of our crypto assets mining equipment to their estimated fair value.

In addition, we recorded $1.2

million in impairment charges related to real estate assets of AGREE during the three months ended September 30, 2024.

Other Income (Expense), Net

Other expense, net was $7.2 million for

the three months ended September 30, 2024, compared to other expense, net of $6.9 million for the three months ended September 30,

Interest and other income was $0.8 million

for the three months ended September 30, 2024, compared to $0.3 million for the three months ended September 30, 2023.

Interest expense was $7.8 million for the

three months ended September 30, 2024, compared to $6.1 million for the three months ended September 30, 2023.

Interest expense for the

three months ended September 30, 2024 included contractual interest of $5.4 million, amortization of debt discount of $1.4 million and

forbearance and extension fees of $1.1 million.

Interest expense for the three months ended September 30, 2023 included contractual interest

of $5.0 million, amortization of debt discount of $0.6 million and forbearance and extension fees of $0.5 million.

During the three months ended September

30, 2024, an investor converted $0.7 million of a convertible note into 3.0 million shares of Class A common stock that had a fair value

of $0.9 million at the time of conversion and we recognized a $0.2 million loss on extinguishment of debt.

Income Tax Provision (Benefit)

The income tax provision (benefit) was $52,000

and ($0.6) million during the three months ended September 30, 2024 and 2023, respectively.

The effective income tax provision (benefit)

rate was 0.2% and (2.1%) for the three months ended September 30, 2024 and 2023, respectively.

The lower income tax provision during the

three months ended September 30, 2024 related primarily to lower dividend income compared to the prior year period as a result of the

decline in cash and marketable securities held in the trust account as a result of redemptions of Ault Disruptive common stock subject

to possible redemption.

Results of Operations for the Nine Months Ended September 30, 2024 and 2023

The following table summarizes the results

of our operations for the nine months ended September 30, 2024 and 2023.

For the Nine Months Ended September 30,

Revenue, crypto assets mining

Revenue, hotel and real estate operations

3 unchanged sentences

Cost of revenue, products

Cost of revenue, digital assets mining

Cost of revenue, crypto assets mining

Cost of revenue, hotel and real estate operations

8 unchanged sentences

Impairment of goodwill and intangible assets

Impairment of mined digital assets

Impairment of mined crypto assets

Total operating expenses

14 unchanged sentences

Gain on the sale of fixed assets

Total other income (expense), net

Total other expense, net

(37,440,000 )

2 unchanged sentences

(134,595,000 )

Income tax provision (benefit)

Income tax provision

Net loss from continuing operations

(57,449,000 )

(135,146,000 )

Net (income) loss attributable to non-controlling interest

Net loss attributable to Ault Alliance, Inc.

Net loss from discontinued operations

(58,228,000 )

(139,804,000 )

Net loss attributable to non-controlling interest

Net loss attributable to Hyperscale Data, Inc.

(55,759,000 )

(131,100,000 )

Preferred dividends

12 unchanged sentences

$ (132,765,000 )

Revenues by segment for the

six months ended June 30, 2024 and 2023 were as follows:

For the Six Months Ended June 30,

Revenue, digital assets mining

Revenues by segment for the nine months

ended September 30, 2024 and 2023 were as follows:

For the Nine Months Ended September 30,

Revenue, crypto assets mining

Revenue, commercial real estate leases

1 unchanged sentence

Revenue, lending and trading activities

(21,939,000 )

Total revenue

$ 104,238,000

Revenues from Sentinum’s

digital assets mining operations increased $4.2 million due primarily to a $3.7 million increase in revenue from Sentinum digital mining

equipment hosted at third-party facilities and a 134% increase in the average Bitcoin price, partially offset by an 84% increase in the

average Bitcoin mining difficulty level and the impact of the April 19, 2024 Bitcoin halving event occurred on the Bitcoin network.

Energy revenues from the Circle

8 crane operations increased by $0.6 million, or 2%, for the six months ended June 30, 2024.

This increase reflects higher crane service

utilization from Circle 8’s largest customer during the six months ended June 30, 2024.

from our lending and trading activities were negative $0.7 million for the six months ended June 30, 2024, primarily due to a $0.4 million

unrealized loss from our investment in Alzamend included in revenue from lending and trading activities.

Revenues from our lending and

trading activities were $4.6 million for the six months ended June 30, 2023, due to an aggregate $6.8 million of net realized and unrealized

gains on our investments in marketable equity securities, a $0.6 million unrealized loss from our investment in Alzamend, and a $2.0 million

impairment related to investments in equity securities.

from our trading activities for the six months ended June 30, 2024 included net gains on equity securities, including unrealized gains

and losses from market price changes.

$ (17,019,000 )

Revenues from Sentinum’s crypto assets

mining operations increased $4.2 million due primarily to a $3.5 million increase in revenue from Sentinum crypto mining equipment hosted

at third-party facilities and a 128% increase in the average Bitcoin price, partially offset by an 76% increase in the average Bitcoin

mining difficulty level for the nine months ended September 30, 2024, compared to the corresponding period in 2023, and an $9.7 million

unfavorable impact from the April 19, 2024 Bitcoin halving event occurred on the Bitcoin network.

Energy revenues from Circle 8’s crane

operations decreased by $0.8 million, or 2%, for the nine months ended September 30, 2024, remaining essentially flat compared to the

prior period.

This decrease was primarily due to lower utilization of the crane fleet, as five cranes were out of service during the three

months ended June 30, 2024.

Revenues from our

lending and trading activities were $4.9 million for the nine months ended September 30, 2024, driven primarily by $2.5 million in realized

gains from trading activities and $2.7 million in fee income, partially offset by a $0.6 million unrealized loss from our investment in

In comparison, revenues from lending and trading activities for the same period in 2023 were $4.3 million, driven primarily

by $8.5 million in net realized and unrealized gains on investments in marketable equity securities and $1.6 million in dividend income,

partially offset by a $3.6 million unrealized loss from our investment in Alzamend and a $2.0 million impairment for equity securities

that do not have readily determinable fair values related to Fintech lending operations.

Revenues from our

trading activities for the nine months ended September 30, 2024 included net gains on equity securities, including unrealized gains and

losses from market price changes.

These gains and losses have caused, and will continue to cause, significant volatility in our periodic

For the six-month period ending

June 30, 2024, GIGA revenues increased by $2.7 million.

This growth is driven by ongoing global conflicts and tensions, which have spurred

investments in force protection technologies in the United States, U.K., Europe, Asia and the Middle East.

to the significant change in our ownership and voting rights, we determined that we no longer met the criteria of the primary beneficiary

and, accordingly, we deconsolidated SMC as of November 20, 2023.

SMC revenues were $0 for the six months ended June 30, 2024, a

decrease of $6.0 million compared to the corresponding period in 2023.

TurnOnGreen's revenues increased

by $0.9 million for the six months ended June 30, 2024, compared to the corresponding period in 2023.

SMC revenues were $0 for the nine months ended September 30, 2024,

a decrease of $21.9 million compared to the corresponding period in 2023.

TurnOnGreen's revenues increased by $1.0

million for the nine months ended September 30, 2024, compared to the corresponding period in 2023.

This rise was primarily due to higher

sales from a single, higher-margin customer in the defense industry during the six months ended June 30, 2024.

sales from a single, higher-margin customer in the defense industry during the nine months ended September 30, 2024.

Gross Margins

Gross margins were 25% for

the six months ended June 30, 2024, compared to 25% for the six months ended June 30, 2023.

Our gross margins during the six months ended

June 30, 2024 and 2023 were unfavorably impacted by margins from our lending and trading activities.

Excluding the effects of margin from

our lending and trading activities, our adjusted gross margins for the six months ended June 30, 2024 and 2023 would have been 26% and

22%, respectively.

Our gross margins improved, in part, due to high margin revenue from Sentinum digital mining equipment hosted at third-party

Gross margins rose to 26% for the nine months

ended September 30, 2024, compared to 23% for the same period in 2023.

This increase was influenced by our lending and trading activities,

which contributed favorably to our gross margins for the nine months ended September 30, 2024 and 2023.

In both periods, gross margins

were adversely affected by negative margins from our crypto assets mining operations.

Excluding the impacts of both our lending and trading

activities and our crypto assets mining operations, adjusted gross margins for the nine months ended September 30, 2024, and 2023 would

have been 36% and 33%, respectively.

Gross margins improved due to the deconsolidation of the lower margin of SMC business.

Research and Development

Research and development expenses

decreased by $1.7 million for the six months ended June 30, 2024, due to lower expenditures related to development work on ROI’s

BitNile metaverse platform.

Research and development expenses increased

by $1.5 million for the nine months ended September 30, 2024, due to increased expenditures primarily related to development work on ROI’s

BitNile gaming platform.

Selling and Marketing

Selling and marketing expenses

were $8.7 million for the six months ended June 30, 2024, compared to $18.4 million for the six months ended June 30, 2023, a decrease

Selling and marketing expenses were $12.5

million for the nine months ended September 30, 2024, compared to $25.0 million for the nine months ended September 30, 2023, a decrease

of $12.5 million, or 48%.

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General and Administrative

General and administrative

expenses were $26.8 million for the six months ended June 30, 2024, compared to $44.0 million for the six months ended June 30, 2023,

General and administrative expenses were

$33.7 million for the nine months ended September 30, 2024, compared to $53.1 million for the nine months ended September 30, 2023,

a decrease of $19.3 million, or 36%.

3 unchanged sentences

· $4.6 million lower stock compensation expense;

5 million lower professional fees;

· $4.0 million lower salaries and benefits;

· $1.2 million lower professional fees;

· $1.2 million lower performance bonus related to realized gains on trading activities.

· $0.6 million lower filings fees;

· $0.6 million lower operating expenses at ROI primarily related to ceased operations at Agora Digital.

Other Income (Expense), Net

Other expense, net was $3.5

million for the six months ended June 30, 2024, compared to other expense, net of $30.1 million for the six months ended June 30, 2023.

Interest and other income

was $1.4 million for the six months ended June 30, 2024, compared to $3.3 million for the six months ended June 30, 2023.

in interest and other income is primarily due to the decline in Ault Disruptive’s interest income as a result of the decline in

cash and marketable securities held in the trust account as a result of redemptions of Ault Disruptive common stock subject to possible

Interest expense was $12.3

million for the six months ended June 30, 2024, compared to $29.7 million for the six months ended June 30, 2023.

Interest expense for

the six months ended June 30, 2024 included contractual interest of $6.6 million, amortization of debt discount of $3.4 million, and forbearance

and extension fees of $2.3 million.

Interest expense for the six months ended June 30, 2023 included amortization of debt discount of

$16.2 million, forbearance and extension fees of $7.5 million, and contractual interest of $5.9 million.

Gain on conversion of investment

in equity securities to marketable equity securities of $17.9 million relates to ROI conversion of White River common stock.

six months ended June 30, 2024, ROI transferred 14.5 million shares of White River common stock with a fair value of $19.2 million at

the date of transfer.

In conjunction with the transfers, ROI converted a portion of their White River’s Series A Convertible Preferred

Stock into common stock and recorded a noncash $17.9 million gain on conversion.

Impairment of Property and Equipment

During the three months ended

March 31, 2024, ROI converted $2.3 million of ROI senior secured convertible notes that had a fair value of $0.9 million at the time of

conversion and recognized a $1.4 million gain on extinguishment of debt.

During the three months ended June 30, 2024, holders of our convertible

September 30, 2024, due to increases in the Bitcoin mining difficulty level, which compounded the continued impact of the Bitcoin halving

event, we concluded that indicated that an impairment triggering event had occurred.

Testing performed indicated the estimated fair value

of our miners to be less than their net carrying value as of September 30, 2024, and an impairment charge of $10.5 million was recognized,

decreasing the net carrying value of our crypto assets mining equipment to their estimated fair value.

In addition, we recorded $9.2

million in impairment charges related to real estate assets of AGREE during the nine months ended September 30, 2024.

Other Income (Expense), Net

Other expense, net was $9.5 million for

the nine months ended September 30, 2024, compared to other expense, net of $37.4 million for the nine months ended September 30,

Interest and other income was $2.1 million

for the nine months ended September 30, 2024, compared to $3.6 million for the nine months ended September 30, 2023.

The decrease in interest

and other income is primarily due to the decline in Ault Disruptive’s interest income as a result of the decline in cash and marketable

securities held in the trust account as a result of redemptions of Ault Disruptive common stock subject to possible redemption.

Interest expense was $18.8 million for the

nine months ended September 30, 2024, compared to $35.2 million for the nine months ended September 30, 2023.

Interest expense for the

nine months ended September 30, 2024 included contractual interest of $10.7 million, amortization of debt discount of $4.8 million, and

forbearance and extension fees of $3.3 million.

Interest expense for the nine months ended September 30, 2023 included amortization of

debt discount of $18.2 million, contractual interest of $9.6 million and forbearance and extension fees of $7.3 million.

Gain on conversion of investment in equity

securities to marketable equity securities of $17.9 million relates to ROI conversion of White River common stock.

During the nine months

ended September 30, 2024, ROI transferred 14.5 million shares of White River common stock with a fair value of $19.2 million at the date

In conjunction with the transfers, ROI converted a portion of their White River’s Series A Convertible Preferred Stock

into common stock and recorded a noncash $17.9 million gain on conversion.

During the three months ended March 31,

2024, ROI converted $2.3 million of ROI senior secured convertible notes that had a fair value of $0.9 million at the time of conversion

and recognized a $1.4 million gain on extinguishment of debt.

During the three months ended September 30, 2024, holders of our convertible

notes converted $2.0 million of convertible notes that had a fair value of $2.7 million at the time of conversion and recognized a $0.7

million loss on extinguishment of debt.

Loss from investment in unconsolidated

entity was $2.0 million for the six months ended June 30, 2024, representing our share of losses from our equity method investment in

For the six months ended June

During the three months ended September

30, 2024, an investor converted $0.7 million of a convertible note into 3.0 million shares of Class A common stock that had a fair value

of $0.9 million at the time of conversion and we recognized a $0.2 million loss on extinguishment of debt.

Loss from investment in unconsolidated entity

was $2.0 million for the nine months ended September 30, 2024, representing our share of losses from our equity method investment in SMC.

For the nine months ended September 30,

2024, the provision for loan losses on the related party note receivable from Ault & Company was $3.1 million, due to uncertainties

1 unchanged sentence

This compares to no provision for the same period in 2023.

Cumulative downward adjustments

for impairments for our equity securities without readily determinable fair values held at were $6.3 million for the six months ended

June 30, 2024.

Income Tax Provision (Benefit)

The income tax provision (benefit)

was ($20,000) and $1.1 million during the six months ended June 30, 2024 and 2023, respectively.

The effective income tax (benefit) provision

rate was (0.1%) and 1.0% for the six months ended June 30, 2024 and 2023, respectively.

The lower income tax provision during the six

months ended June 30, 2024 related primarily to lower dividend income compared to the prior year period as a result of the decline in

cash and marketable securities held in the trust account as a result of redemptions of Ault Disruptive common stock subject to possible

Cumulative downward adjustments for impairments

for our equity securities without readily determinable fair values held at were $6.3 million for the nine months ended September 30, 2024.

Income Tax Provision

The income tax provision was $47,000 and

$0.5 million during the nine months ended September 30, 2024 and 2023, respectively.

The effective income tax provision rate was 0.1%

and 0.4% for the nine months ended September 30, 2024 and 2023, respectively.

The lower income tax provision during the nine months ended

September 30, 2024 related primarily to lower dividend income compared to the prior year period as a result of the decline in cash and

marketable securities held in the trust account as a result of redemptions of Ault Disruptive common stock subject to possible redemption.

Liquidity and Capital Resources

On June 30, 2024, we had cash

and cash equivalents of $9.6 million (excluding restricted cash of $7.3 million), compared to cash and cash equivalents of $9.7 million

(excluding restricted cash of $5.7 million) at December 31, 2023.

The decrease in cash and cash equivalents was primarily due to the payment

of debt, purchases of property and equipment and cash used in operating activities, partially offset by cash provided by financing activities

related to the sale of common and preferred stock, as well as proceeds from notes payable and convertible notes.

Net cash used in operating

activities totaled $13.9 million for the six months ended June 30, 2024, compared to net cash provided by operating activities of $12.9 million

for the six months ended June 30, 2023.

Cash used in operating activities for the six months ended June 30, 2024 included $15.5 million

proceeds from the sale of digital assets from our Sentinum Bitcoin mining operations, offset by operating losses and changes in working

On September 30, 2024, we had cash and cash

equivalents of $7.2 million (excluding restricted cash of $8.3 million), compared to cash and cash equivalents of $6.1 million (excluding

restricted cash of $5.0 million) at December 31, 2023.

The increase in cash and cash equivalents was primarily due to cash provided by

financing activities related to the sale of common and preferred stock, as well as proceeds from notes payable and convertible notes,

partially offset by the payment of debt, purchases of property and equipment and cash used in operating activities.

Net cash used in operating activities totaled

$10.2 million for the nine months ended September 30, 2024, compared to $2.2 million for the nine months ended September 30, 2023.

Cash used in operating activities for the nine months ended September 30, 2024 included $20.0 million proceeds from the sale of crypto

assets from our Sentinum crypto assets mining operations, offset by operating losses and changes in working capital.

Net cash used in

operating activities for the nine months ended September 30, 2024 included $6.4 million cash used in operating activities from discontinued

Net cash used in investing

activities was $3.8 million for the six months ended June 30, 2024, compared to $18.9 million for the six months ended June 30, 2023.

Net cash used in investing activities for the six months ended June 30, 2024 was primarily related to $3.9 million capital expenditures.

Net cash provided by financing

activities was $18.8 million for the six months ended June 30, 2024, compared to $12.8 million for the six months ended June 30,

activities was $11.8 million for the nine months ended September 30, 2024, compared to $22.9 million for the nine months ended September

Net cash used in investing activities for the nine months ended September 30, 2024 was primarily related to $4.8 million

capital expenditures.

Net cash used in investing activities for the nine months ended September 30, 2024 included $3.8 million cash used

in investing activities from discontinued operations.

Net cash provided by financing activities

was $22.6 million for the nine months ended September 30, 2024, compared to $23.8 million for the nine months ended September 30,

2023, and primarily reflects the following transactions:

4 unchanged sentences

· $49.3 million proceeds from notes payable, partially offset by $47.0 million payments on notes payable;

· $6.7 million proceeds from convertible notes payable, partially offset by $1.3 million payments on notes

· $2.8 million proceeds from sales of Series C preferred stock, related

1 unchanged sentence

non-controlling interests;

· $1.8 million proceeds from convertible notes payable, partially offset by $1.2 million payments on notes

· $3.9 million payments of preferred dividends;

· $1.9 million payments on notes payable, related party.

Financing Transactions Subsequent to June

2024, we entered into a term note agreement with institutional investors of up to $2.6 million, of which the principal amount of $1.8

million was immediately funded.

The term note was issued at a discount, with net proceeds to us of $1.5 million.

The term note does not

accrue any interest.

The term note was scheduled to mature on August 2, 2024.

The term note is guaranteed by Mr.

The term note is

in default and a default fee of $0.2 million accrues monthly until the term note is paid in full.

On July 18, 2024, we entered

into a note purchase agreement with an institutional investor pursuant to which the institutional investor agreed to acquire, and we agreed

to issue and sell in a registered direct offering to the institutional investor, the OID Note.

The OID Note was sold to the institutional

investor for a purchase price of $4.9 million, an original issue discount of $0.5 million.

The OID Note will accrue interest at the

rate of 15% per annum, unless an event of default occurs, at which time the OID Note would accrue interest at 18% per annum.

will mature on October 19, 2024.

In addition, the OID Note is convertible at any time after NYSE American approval of a Supplemental Listing

Application into shares of our common stock at the OID Conversion Price, subject to adjustment.

However, we may not issue shares of common

stock upon conversion of the OID Note to the extent such issuance would result in an aggregate number of shares of common stock exceeding

the NYSE Limit unless we first obtain Stockholder Approval.

2, 2024, we sold to Ault & Company 300 shares of Series C Preferred Stock and Warrants to purchase 0.1 million shares of Class A common

stock, for a total purchase price of $0.3 million.

Net cash provided by financing

activities for the nine months ended September 30, 2024 included $2.6 million cash provided by financing activities from discontinued

Financing Transactions Subsequent to September 30, 2024

In October 2024, we sold

to Ault & Company an aggregate of 1,400 shares of Series C Preferred Stock and Warrants to purchase 0.4 million shares of Class A

common stock, for a total purchase price of $1.4 million.

Critical Accounting Estimates

have been no material changes to our critical accounting estimates previously disclosed in the 2023 Annual Report.

There have been

no material changes to our critical accounting estimates previously disclosed in the 2023 Annual Report.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

applicable for a smaller reporting company.

Not applicable

for a smaller reporting company.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis