What changed in this filing

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Item 1. Legal Proceedings

2024-11-19 compared with 2024-08-16 · 79 added, 80 removed, 17 unchanged (90% of the section changed)

1 unchanged sentence

Litigation Matters

The Company is involved in

litigation arising from other matters in the ordinary course of business.

We are regularly subject to claims, suits, regulatory and government

investigations, and other proceedings involving labor and employment, commercial disputes, and other matters.

Such claims, suits, regulatory

and government investigations, and other proceedings could result in fines, civil penalties, or other adverse consequences.

Certain of these outstanding

matters include speculative, substantial or indeterminate monetary amounts.

We record a liability when we believe that it is probable

that a loss has been incurred and the amount can be reasonably estimated.

If we determine that a loss is reasonably possible and the loss

or range of loss can be estimated, we disclose the reasonably possible loss.

We evaluate developments in our legal matters that could

affect the amount of liability that has been previously accrued, and the matters and related reasonably possible losses disclosed, and

make adjustments as appropriate.

Significant judgment is required to determine both likelihood of there being and the estimated amount

of a loss related to such matters.

The Company is involved in litigation arising

from other matters in the ordinary course of business.

We are regularly subject to claims, suits, regulatory and government investigations,

and other proceedings involving labor and employment, commercial disputes, and other matters.

Such claims, suits, regulatory and government

investigations, and other proceedings could result in fines, civil penalties, or other adverse consequences.

Certain of these outstanding matters include

speculative, substantial or indeterminate monetary amounts.

We record a liability when we believe that it is probable that a loss has

been incurred and the amount can be reasonably estimated.

If we determine that a loss is reasonably possible and the loss or range of

loss can be estimated, we disclose the reasonably possible loss.

We evaluate developments in our legal matters that could affect the amount

of liability that has been previously accrued, and the matters and related reasonably possible losses disclosed, and make adjustments

as appropriate.

Significant judgment is required to determine both likelihood of there being and the estimated amount of a loss related

to such matters.

Arena Litigation

Arena Investors, LP (ROI Litigation)

On May 30, 2024, Arena Investors,

LP (“Arena”), in its capacity as collateral agent for five noteholders, filed a filed a Complaint (the “ROI Complaint”)

in the Supreme Court of the State of New York, County of New York against the Company and ROI, in action captioned Arena Investors,

Ault Alliance, Inc.

On May 30, 2024, Arena Investors, LP (“Arena”),

in its capacity as collateral agent for five noteholders, filed a filed a Complaint (the “ROI Complaint”) in the Supreme Court

of the State of New York, County of New York against the Company and ROI, in action captioned Arena Investors, LP v.

Ault Alliance,

and RiskOn International, Inc.

The ROI Complaint asserts

a cause of action for breach of contract against the Company based on a Guaranty, dated April 27, 2023, and entered into, amongst others,

the Company and Arena, and seeks damages in the amount of in excess of $3.75 million, plus interest, attorneys’ fees, costs, expenses,

and disbursements.

The ROI Complaint also asserts

a cause of action for breach of contract against ROI based on an alleged breach of that certain Security Agreement, dated April 27, 2023,

and entered into among ROI and Arena.

In connection with this cause of action, Arena seeks, among other things, costs and expenses from

the Company and ROI.

On July 31, 2024, the Company

and ROI filed a motion to dismiss seeking to partially dismiss the ROI Complaint, as against the Company, and to dismiss the Compliant,

in its entirety, as against ROI.

The deadline for Arena to

file its opposition to the motion to dismiss is September 27, 2024.

Based on the Company’s

assessment of the facts underlying the claims, the uncertainty of litigation, and the preliminary stage of the case, the Company cannot

reasonably estimate the potential loss or range of loss that may result from this action.

Notwithstanding, the Company has recorded the

unpaid portion of the notes.

An unfavorable outcome may have a material adverse effect on the Company’s business, financial condition

and results of operations.

The ROI Complaint asserts a cause of action

for breach of contract against the Company based on a Guaranty, dated April 27, 2023, and entered into, amongst others, the Company and

Arena, and seeks damages in the amount of in excess of $3.75 million, plus interest, attorneys’ fees, costs, expenses, and disbursements.

The ROI Complaint also asserts a cause of

action for breach of contract against ROI based on an alleged breach of that certain Security Agreement, dated April 27, 2023, and entered

into among ROI and Arena.

In connection with this cause of action, Arena seeks, among other things, costs and expenses from the Company

On July 31, 2024, the Company and ROI filed

a motion to dismiss seeking to partially dismiss the ROI Complaint, as against the Company, and to dismiss the Compliant, in its entirety,

as against ROI.

The Motion has been fully briefed and is

currently pending before the Court.

Based on the Company’s assessment

of the facts underlying the claims, the uncertainty of litigation, and the preliminary stage of the case, the Company cannot reasonably

estimate the potential loss or range of loss that may result from this action.

Notwithstanding, the Company has recorded the unpaid portion

of the notes.

An unfavorable outcome may have a material adverse effect on the Company’s business, financial condition and results

of operations.

Arena Investors, LP (Gresham Litigation)

On June 6, 2024, Arena, in

its capacity as collateral agent for Arena and Walleye Opportunities Master Fund Ltd.

(“Walleye”), filed a Complaint (the

“Complaint”) in the Supreme Court of the State of New York, County of New York against the Company and GIGA, in action captioned

Arena Investors, LP v.

On June 6, 2024, Arena, in its capacity

as collateral agent for Arena and Walleye Opportunities Master Fund Ltd.

(“Walleye”), filed a Complaint (the “Complaint”)

in the Supreme Court of the State of New York, County of New York against the Company and GIGA, in action captioned Arena Investors,

Gresham Worldwide, Inc.

f/k/a Giga-Tronics Incorporated and Ault Alliance, Inc.

On July 8, 2024, Arena filed

an Amended Complaint (the “Amended Complaint”) in the above-referenced action.

The Amended Complaint asserts a cause

of action against the Company for declaratory and injunctive relief seeking an injunction enjoining the Company, and its agent, affiliates,

servants, and employees from taking actions in breach of that certain Subordination Agreement, dated January 9, 2023, and entered into

among Walleye, Arena, and the Company.

The Amended Complaint also

asserts causes of action for breach of contract against GIGA based on two discrete convertible promissory notes (the “Notes”)

that GIGA entered into with each of Arena and Walleye, as well as a claim for breach duty of good faith and fair dealing, against GIGA,

and seeks, among other things, monetary damages in excess of $4.2 million, with interest thereon, attorneys’ fees, costs, and disbursements.

On July 8, 2024, Arena filed an Amended

Complaint (the “Amended Complaint”) in the above-referenced action.

The Amended Complaint asserts a cause of action

against the Company for declaratory and injunctive relief seeking an injunction enjoining the Company, and its agent, affiliates, servants,

and employees from taking actions in breach of that certain Subordination Agreement, dated January 9, 2023, and entered into among Walleye,

Arena, and the Company.

The Amended Complaint also asserts causes

of action for breach of contract against GIGA based on two discrete convertible promissory notes (the “Notes”) that GIGA entered

into with each of Arena and Walleye, as well as a claim for breach duty of good faith and fair dealing, against GIGA, and seeks, among

other things, monetary damages in excess of $4.2 million, with interest thereon, attorneys’ fees, costs, and disbursements.

The Amended Complaint further asserts another cause of action against GIGA for breach of contract seeking declaratory and injunctive relief

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plus the costs and out-of-pocket expenses associated with the enforcement of same.

On July 12, 2024, the Court

granted injunctive relief to Arena and ordered GIGA to comply with the inspection rights provision of the Security Agreement by July 17,

On July 19, 2024, Arena voluntarily

discontinued its cause of action for breach duty of good faith and fair dealing claim against GIGA.

On July 29, 2024, the Company

and GIGA filed a motion to dismiss, strike, and for sanctions (the “Motion”), in response to the Amended Complaint, on the

grounds that, amongst other things, the underlying Notes are criminally usurious under New York.

The deadline for Arena to

file its opposition to the Motion is September 19, 2024.

Based on the Company’s

assessment of the facts underlying the claims, the uncertainty of litigation, and the preliminary stage of the case, the Company cannot

reasonably estimate the potential loss or range of loss that may result from this action.

Notwithstanding, the Company has recorded the

unpaid portion of the Notes.

An unfavorable outcome may have a material adverse effect on the Company’s business, financial condition

and results of operations.

On July 12, 2024, the Court granted injunctive

relief to Arena and ordered GIGA to comply with the inspection rights provision of the Security Agreement by July 17, 2024.

On July 19, 2024, Arena voluntarily discontinued

its cause of action for breach duty of good faith and fair dealing claim against GIGA.

On July 29, 2024, the Company and GIGA filed

a motion to dismiss, strike, and for sanctions (the “Motion”), in response to the Amended Complaint, on the grounds that,

amongst other things, the underlying Notes are criminally usurious under New York.

On August 14, 2024, GIGA filed a petition

for reorganization under Chapter 11 of the bankruptcy laws

On November 12, 2024, GIGA removed the state

court action to the United States District Court for the Southern District of New York.

Based on the Company’s assessment

of the facts underlying the claims, the uncertainty of litigation, and the preliminary stage of the case, the Company cannot reasonably

estimate the potential loss or range of loss that may result from this action.

Notwithstanding, the Company has recorded the unpaid portion

of the Notes.

An unfavorable outcome may have a material adverse effect on the Company’s business, financial condition and results

of operations.

Other Litigation Matters

With respect to our other

outstanding matters, based on our current knowledge, we believe that the amount or range of reasonably possible loss will not, either

individually or in aggregate, have a material adverse effect on our business, consolidated financial position, results of operations,

or cash flows.

However, the outcome of such matters is inherently unpredictable and subject to significant uncertainties.

There are no updates

or changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2023.

With respect to our other outstanding matters,

based on our current knowledge, we believe that the amount or range of reasonably possible loss will not, either individually or in aggregate,

have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows.

However, the outcome

of such matters is inherently unpredictable and subject to significant uncertainties.

There are no updates or changes

to the risk factors set forth in our Annual Report on Form 10-K/A for the year ended December 31, 2023.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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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 1. Legal Proceedings