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Item 1. Legal Proceedings

2025-08-15 compared with 2025-05-20 · 60 added, 49 removed, 11 unchanged (91% 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 a loss 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 a loss 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 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.

On May 30, 2024, Arena Investors,

LP (“Arena”), in its capacity as collateral agent for five noteholders, 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.

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

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 ROI Compliant, in its entirety,

as against ROI.

On or about January 21, 2025, the Court

entered an order denying the part of the motion which sought partial dismissal of the ROI Complaint, as against Company, and granting

the part of the motion which sought dismissal of the ROI Complaint, in its entirety, as against ROI.

On February 18, 2025, the Company filed

an Answer to the ROI Complaint and asserted numerous affirmative defenses.

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 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 ROI Compliant,

in its entirety, as against ROI.

On or about January 21, 2025,

the Court entered an order denying the part of the motion which sought partial dismissal of the ROI Complaint, as against Company, and

granting the part of the motion which sought dismissal of the ROI Complaint, in its entirety, as against ROI.

On February 18, 2025, the

Company filed an Answer to the ROI Complaint and asserted numerous affirmative defenses.

On or about July 29, 2025,

the Court entered an Order (the “Consolidation and Dismissal Order”) consolidating this action with that certain action captioned

Arena Investors, LP v.

Ault III and Kristine Ault, Index No.

655857/2024, pending in the Supreme Court of the State of New York,

County of New York (the “Second Filed Action”).

In the Consolidation and Dismissal Order, the Court also dismissed so much

of the complaint from the Second Filed Action that asserts claims arising from an alleged failure to pay a redemption premium as set forth

in that certain Event of Default Redemption Notice, dated November 5, 2024, that Arena transmitted to, among others, the Company.

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, 2024.

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, 2024.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

3 unchanged sentences

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