10q10k10q10k.net

What changed in Hyperscale Data, Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Hyperscale Data, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+1206 added−1020 removedSource: 10-K (2024-04-16) vs 10-K (2023-04-17)

Top changes in Hyperscale Data, Inc.'s 2023 10-K

1206 paragraphs added · 1020 removed · 494 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

154 edited+386 added−205 removed114 unchanged
Biggest changeKey strengths of Circle 8 include: - Leading lifting solutions platform o Leading provider of comprehensive lifting solutions to diversified end markets, including oil & gas and with expanding operations in infrastructure, plant turn-around and commercial / industrial construction o Leading market position with five branches strategically located throughout Texas and Oklahoma - Industry leading safety record, commitment and policy o Safety is a core value and Circle 8 is a market leader in employee training and practices o Dedicated team focused on safety programs. - Proven strength of management, recently enhanced and augmented o Proven ability to navigate a secular downturn by maintaining strong customer relationships and scale operations to capture additional market share o Seasoned industry leaders who have positioned Circle 8 for future growth o Additional advisory team to supplement full time management with strategic industry knowledge, contacts and corporate transaction capability - High quality fleet with the opportunity to expand by 100% creates a barrier to entry o Current fleet of 54 cranes, comprised of 46 all-terrain cranes and 6 hydraulic truck cranes, with a combined average age of 6.2 years and capacity of up to 350 tons - Diversified blue-chip customers o Entrenched provider to leading, well-capitalized oil and gas industry operators in Texas and Oklahoma o Diverse customer base with minimal customer concentration risk o Longstanding relationships enable company to easily scale up operations with customers’ demands in the oilfield (upstream), commercial, construction, refining & marketing (downstream) and wind energy markets. - Compelling utilization and financial profile o Recently downsized underutilized cranes to return to pre-pandemic fleet utilization over 160% o Substantial upside remains as Circle 8 efficiently relocates and repurposes its fleet across geographies and end markets.
Biggest changeKey strengths of Circle 8 include: · Leading lifting solutions platform ○ Leading provider of comprehensive lifting solutions to diversified end markets, including oil & gas and with expanding operations in infrastructure, plant turn-around and commercial/industrial construction; and ○ Leading market position with five branches strategically located throughout Texas and Oklahoma. · Industry leading safety record, commitment and policy ○ Safety is a core value and Circle 8 is a market leader in employee training and practices; and ○ Dedicated team focused on safety programs. · Proven strength of management, recently enhanced and augmented ○ Proven ability to navigate a secular downturn by maintaining strong customer relationships and scale operations to capture additional market share; ○ Seasoned industry leaders who have positioned Circle 8 for future growth; and ○ Additional advisory team to supplement full time management with strategic industry knowledge, contacts and corporate transaction capability. 34 · High quality fleet with the opportunity to expand by 100% creates a barrier to entry.
To the extent we believe that a subsidiary 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 some or all of our position in the subsidiary or partner company.
To the extent we believe that a subsidiary 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 some or all 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, transactions in their securities in the open market.
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, transactions in their securities in the open market.
That activity may involve a broad range of approaches, from influencing the management of a target to take steps to improve stockholder value, to acquiring a controlling or sizable but non-controlling interest or outright ownership of the target company in order to implement changes that we believe are required to improve its business, and then operating and expanding that business.
That activity may involve a broad range of approaches, from influencing the management of a target to take steps to improve stockholder value, to acquiring a controlling or sizable but non-controlling interest or outright ownership of the target company in order to implement changes that we believe are required to improve its business, and then operating and expanding that business.
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, transactions in their securities in the open market.
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, transactions in their securities in the open market.
Ault Alliance actively oversees and supports the management teams of each of our businesses by, among other things: ● recruiting and retaining talented managers to operate our businesses using structured incentive compensation programs, including non-controlling equity ownership, tailored to each business; ● regularly monitoring financial and operational performance, instilling consistent financial discipline, and supporting management in the development and implementation of information systems to effectively achieve these goals; ● identifying and aligning with external policy and performance tailwinds such as those influenced by growing climate, health, and social justice concerns (and similar environmental, social and governance (“ESG”) drivers); ● assisting management in their analysis and pursuit of prudent organic growth strategies; ● identifying and working with management to execute attractive external growth and acquisition opportunities; ● assisting management in controlling and right-sizing overhead costs; ● nurturing an internal culture of transparency, alignment, accountability and governance, including regular reporting; ● professionalizing our subsidiaries at scale; and ● forming strong subsidiary level boards of directors to supplement management in their development and implementation of strategic goals and objectives. 29 Specifically, while our businesses have different growth opportunities and potential rates of growth, we expect Ault Alliance to work with the management teams of each of our businesses to increase the value of, and cash generated by, each business through various initiatives, including: ● making selective capital investments to expand geographic reach, increase capacity, or reduce manufacturing costs of our businesses; ● investing in product research and development for new products, processes or services for customers; ● improving and expanding existing sales and marketing programs; ● pursuing reductions in operating costs through improved operational efficiency or outsourcing of certain processes and products; and ● consolidating or improving management of certain overhead functions.
Ault Alliance actively oversees and supports the management teams of each of our businesses by, among other things: · recruiting and retaining talented managers to operate our businesses using structured incentive compensation programs, including non-controlling equity ownership, tailored to each business; · regularly monitoring financial and operational performance, instilling consistent financial discipline, and supporting management in the development and implementation of information systems to effectively achieve these goals; · identifying and aligning with external policy and performance tailwinds such as those influenced by growing climate, health, and social justice concerns (and similar environmental, social and governance (“ESG”) drivers); · assisting management in their analysis and pursuit of prudent organic growth strategies; · identifying and working with management to execute attractive external growth and acquisition opportunities; · assisting management in controlling and right-sizing overhead costs; · nurturing an internal culture of transparency, alignment, accountability and governance, including regular reporting; · professionalizing our subsidiaries at scale; and · forming strong subsidiary level boards of directors to supplement management in their development and implementation of strategic goals and objectives. 41 Specifically, while our businesses have different growth opportunities and potential rates of growth, we expect Ault Alliance to work with the management teams of each of our businesses to increase the value of, and cash generated by, each business through various initiatives, including: · making selective capital investments to expand geographic reach, increase capacity, or reduce manufacturing costs of our businesses; · investing in product research and development for new products, processes or services for customers; · improving and expanding existing sales and marketing programs; · pursuing reductions in operating costs through improved operational efficiency or outsourcing of certain processes and products; and · consolidating or improving management of certain overhead functions.
Cryptocurrency prices are quoted on various exchanges and fluctuate with extreme volatility. 13 We believe cryptocurrencies, particularly Bitcoin, the only cryptocurrency we receive for providing computing power to a mining pool operator, offer many advantages over traditional, fiat currencies, although many of these factors also present potential disadvantages and may introduce additional risks, including: ● Acting as a fraud deterrent, as cryptocurrencies are digital and cannot be counterfeited or reversed arbitrarily by a sender; ● Immediate settlement; ● Elimination of counterparty risk; ● No trusted intermediary required; ● Lower fees; ● Identity theft prevention; ● Accessible by everyone; ● Transactions are verified and protected through a confirmation process, which prevents the problem of double spending; ● Decentralized — no central authority (government or financial institution); and ● Not recognized universally and not bound by government imposed or market exchange rates.
Cryptocurrency prices are quoted on various exchanges and fluctuate with extreme volatility. 12 We believe cryptocurrencies, particularly Bitcoin, the only cryptocurrency we receive for providing computing power to a mining pool operator, offer many advantages over traditional, fiat currencies, although many of these factors also present potential disadvantages and may introduce additional risks, including: · Acting as a fraud deterrent, as cryptocurrencies are digital and cannot be counterfeited or reversed arbitrarily by a sender; · Immediate settlement; · Elimination of counterparty risk; · No trusted intermediary required; · Lower fees; · Identity theft prevention; · Accessible by everyone; · Transactions are verified and protected through a confirmation process, which prevents the problem of double spending; · Decentralized — no central authority (government or financial institution); and · Not recognized universally and not bound by government imposed or market exchange rates.
Investigation, remediation, and operation and maintenance costs associated with environmental compliance and management of sites are a normal, recurring part of TurnOnGreen’s operations. 32 Non-U.S. Sales . TurnOnGreen’s non-U.S. sales are subject to both U.S. and non-U.S. governmental regulations and procurement policies and practices, including regulations relating to import-export control, tariffs, investment, exchange controls, anti-corruption, and repatriation of earnings.
Investigation, remediation, and operation and maintenance costs associated with environmental compliance and management of sites are a normal, recurring part of TurnOnGreen’s operations. Non-U.S. Sales . TurnOnGreen’s non-U.S. sales are subject to both U.S. and non-U.S. governmental regulations and procurement policies and practices, including regulations relating to import-export control, tariffs, investment, exchange controls, anti-corruption, and repatriation of earnings.
In addition to our continued expansion investments at the Facility, we also seek out new locations to support our Bitcoin mining business. We consider sites with a variety of offerings, including purchasing the site (as we have done in Michigan), but also leasing buildings and facilities, hosting relationships and strategic partnerships.
In addition to our continued expansion investments at the Michigan Facility, we also seek out new locations to support our bitcoin mining business. We consider sites with a variety of offerings, including purchasing the site (as we have done in Michigan), but also leasing buildings and facilities (as we have done with the Montana Facilities), hosting relationships and strategic partnerships.
REACH (Registration, Evaluation, Authorization and Restriction of Chemicals Registration) is a European Union regulation dating from 18 December 2006. REACH addresses the production and use of chemical substances, and their potential impacts on both human health and the environment. These regulatory mandates apply to all of GIGA’s operating subsidiaries.
REACH (Registration, Evaluation, Authorization and Restriction of Chemicals Registration) is a European Union regulation dating from 18 December 2006. REACH addresses the production and use of chemical substances, and their potential impacts on both human health and the environment. 43 These regulatory mandates apply to all of GIGA’s operating subsidiaries.
The block reward payments and the aggregated transaction fees are what provide the incentive for miners to contribute hash rate to the network. 14 A “hash” is the actual cryptographic function run by the miners, and is a unique set of numbers and letters derived from the content of the block.
The block reward payments and the aggregated transaction fees are what provide the incentive for miners to contribute hash rate to the network. A “hash” is the actual cryptographic function run by the miners, and is a unique set of numbers and letters derived from the content of the block.
Compliance and Regulatory Management To navigate the complex and evolving regulatory landscape, BNC will prioritize compliance with relevant laws and regulations in all jurisdictions where it operates. This includes data privacy and protection regulations, gaming and sweepstakes regulations, and intellectual property rights.
To navigate the complex and evolving regulatory landscape, BNC will prioritize compliance with relevant laws and regulations in all jurisdictions where it operates. This includes data privacy and protection regulations, gaming and sweepstakes regulations, and intellectual property rights.
Customers With a focus on the oil services sub-segment of the lifting solutions business in the Eagle Ford, Haynesville, Permian and Anadarko basins, Circle 8 has a diversified base of blue-chip customers in TX and OK.
Customers With a focus on the oil services sub-segment of the lifting solutions business in the Eagle Ford, Haynesville, Permian, Delaware and Anadarko basins, Circle 8 has a diversified base of blue-chip customers in TX and OK.
Cryptocurrencies are generally decentralized currencies that enable near instantaneous transfers. Transactions occur via an open source, cryptographic protocol platform which uses peer-to-peer technology to operate with no central authority.
Cryptocurrencies are decentralized currencies that enable near instantaneous transfers. Transactions occur via an open-source, cryptographic protocol platform which uses peer-to-peer technology to operate with no central authority.
On June 10, 2022, we entered into an At-The-Market Issuance Sales Agreement (the “2022 Preferred Sales Agreement”) with Ascendiant to sell shares of our 13.00% Series D Cumulative Redeemable Preferred Stock (the “Preferred Shares”) having an aggregate offering price of up to $46.4 million from time to time, through an “at the market offering” program (the “2022 ATM Preferred Offering”).
On June 10, 2022, we entered into an At-The-Market Issuance Sales Agreement (the “2022 Preferred Sales Agreement”) with Ascendiant to sell shares of our 13.00% Series D Cumulative Redeemable Preferred Stock (the “Series D Preferred Shares”) having an aggregate offering price of up to $46.4 million from time to time, through an “at the market offering” program (the “2022 ATM Preferred Offering”).
Since transfers generally do not require involvement of intermediaries or third parties, there are only nominal transaction costs in direct peer-to-peer transactions.
Since transfers do not require involvement of intermediaries or third parties, there are only nominal transaction costs in direct peer-to-peer transactions.
Each share of Preferred Stock will also have an $11,000 liquidation preference in the event of a liquidation, change of control event, dissolution or winding up of BMI, and will rank senior to all other capital stock of BMI with respect thereto, except that the Series B Preferred and Series C Preferred shall rank pari passu.
Each share of Preferred Stock will also have an $11,000 liquidation preference in the event of a liquidation, change of control event, dissolution or winding up of ROI, and will rank senior to all other capital stock of ROI with respect thereto, except that the Series B Preferred and Series C Preferred shall rank pari passu.
In terms of the businesses in which we have a controlling interest as of December 31, 2022, we believe that these businesses have strong management teams, operate in strong markets with defensible market niches, and maintain long-standing customer relationships. Ault Lending provides funding to businesses through loans and investments.
In terms of the businesses in which we have a controlling interest as of December 31, 2023, we believe that these businesses have strong management teams, operate in strong markets with defensible market niches, and maintain long-standing customer relationships. Ault Lending provides funding to businesses through loans and investments.
The offer and sale of Preferred Shares from the 2022 ATM Preferred Offering was made pursuant to our effective “shelf” registration statement on Form S-3 and an accompanying base prospectus contained therein (Registration Statement No. 333-260618) which became effective on November 12, 2021.
The offer and sale of Series D Preferred Shares from the 2022 ATM Preferred Offering was made pursuant to our effective “shelf” registration statement on Form S-3 and an accompanying base prospectus contained therein (Registration Statement No. 333-260618) which became effective on November 12, 2021.
Compliance with Material Government (Including Environmental) Regulations ACS ACS is subject to various federal, state, local and non-U.S. laws and regulations relating to environmental protection and remediation of hazardous substances and wastes. ACS continually assesses compliance status and management of environmental matters to ensure our operations are in compliance with all applicable environmental laws and regulations.
Compliance with Material Government (Including Environmental) Regulations Sentinum Sentinum is subject to various federal, state, local and non-U.S. laws and regulations relating to environmental protection and remediation of hazardous substances and wastes. Sentinum continually assesses compliance status and management of environmental matters to ensure our operations are in compliance with all applicable environmental laws and regulations.
Our common stock is traded on the NYSE American under the symbol “AULT.” Existing stock certificates that reflect our prior corporate names continue to be valid. Certificates reflecting the new corporate name are issued as old stock certificates are tendered for exchange or transfer to our transfer agent.
Our common stock is traded on the NYSE American under the symbol “AULT.” Existing stock certificates that reflect a prior corporate name continue to be valid. Certificates reflecting the new corporate name are issued as old stock certificates are tendered for exchange or transfer to our transfer agent.
While ACS’s regulatory compliance costs are currently not considered material, it is reasonably possible that costs incurred to ensure continued environmental compliance could have a material impact on results of operations, financial condition or cash flows if new areas of soil, air and groundwater contamination are discovered and/or expansions of work scope are prompted by the results of ongoing monitoring.
While Sentinum’s regulatory compliance costs are currently not considered material, it is possible that costs incurred to ensure continued environmental compliance could have a material impact on results of operations, financial condition or cash flows if new areas of soil, air and groundwater contamination are discovered and/or expansions of work scope are prompted by the results of ongoing monitoring.
In consideration for receiving a percentage of the earned block rewards and transaction fees, Antpool.com administers the pool and ensures that the participants in the pool receive their share of the block reward and related transaction fees, generally pro-rata to their contributed hash rate. Mining pools offer miners more predictable and consistent revenue compared to mining individually.
In consideration for receiving a percentage of the earned block rewards and transaction fees, Luxor administers the pool and ensures that the participants in the pool receive their share of the block reward and related transaction fees, generally pro-rata to their contributed hash rate. Mining pools offer miners more predictable and consistent revenue compared to mining individually.
If BMI fails to make a dividend payment as required by the Preferred Stock Certificates, the dividend rate will be increased to 12% for as long as such default remains ongoing and uncured.
If ROI fails to make a dividend payment as required by the Preferred Stock Certificates, the dividend rate will be increased to 12% for as long as such default remains ongoing and uncured.
We participate in mining pools by providing what the industry refers to as “hashrate” to the pool. Hashrate is defined as the computing power that our mining equipment produces when helping to validate a block that the mining pool is trying to solve. We use the FPPS, or Full Pay-Per-Share, method when mining with Antpool.com.
We participate in mining pools by providing what the industry refers to as “hashrate” to the pool. Hashrate is defined as the computing power that our mining equipment produces when helping to validate a block that the mining pool is trying to solve. We use the FPPS, or Full Pay-Per-Share, method when mining with Luxor.
The combination of private and public cryptographic keys constitutes a secure digital identity in the form of a digital signature, providing strong control of ownership. In a cryptocurrency network, generally no single entity owns or operates the network. The infrastructure is typically collectively maintained by a decentralized public user base.
The combination of private and public cryptographic keys constitutes a secure digital identity in the form of a digital signature, providing strong control of ownership. No single entity owns or operates the network. The infrastructure is collectively maintained by a decentralized public user base.
Its modern fleet consists of 54 mobile all-terrain and hydraulic cranes, with lifting capacities of up to 350 tons that provides services across the Eagle Ford, Permian, Anadarko and Haynesville basins. Circle 8 is poised for organic growth through a strengthened financial profile following its recapitalization in December 2022.
Its modern fleet consists of 55 mobile all-terrain and hydraulic cranes, with lifting capacities of up to 350 tons that provides services across the Eagle Ford, Permian, Delaware and Haynesville basins. Circle 8 is poised for organic growth through a strengthened financial profile following its recapitalization in December 2022.
The Facility is subject to a final corrective measures plan with the Environment Protection Agency. The seller performed remedial activities at the Facility relating to historical soil and groundwater contamination and ACS is responsible for ongoing monitoring and final remediation plans.
The Michigan Facility is subject to a final corrective measures plan with the Environment Protection Agency. The seller performed remedial activities at the Michigan Facility relating to historical soil and groundwater contamination and Sentinum is responsible for ongoing monitoring and final remediation plans.
Under the SPA, we are obligated to repay, while the Note remains outstanding, (i) eighty percent (80%) of the proceeds we may receive from any financing conducted, other than at-the-market offerings and (ii) one hundred percent (100%) of the proceeds we may receive from the sale of marketable securities by Ault Lending.
Under the SPA, we were obligated to repay, while the December 2022 Note remains outstanding, (i) eighty percent (80%) of the proceeds we may receive from any financing conducted, other than at-the-market offerings and (ii) one hundred percent (100%) of the proceeds we may receive from the sale of marketable securities by Ault Lending.
Our miners provide computing power to a Bitcoin mining pool operator, in which all the participants’ machines mine Bitcoin as a collective group, and we get paid the expected value of both the block reward and transaction fees for doing so, rather than mine directly for our own account.
Some of our miners provide computing power to a Bitcoin mining pool operator, in which all the participants’ machines mine Bitcoin as a collective group, and we get paid the expected value of both the block reward and transaction fees for doing so; the other miners mine directly for our own account.
In this way the mining pool operator, rather than an individual miner, validates the block and receives the block reward and related transaction fees. The mining pool is organized by a third party, in our case Antpool.com.
In this way the mining pool operator, rather than an individual miner, validates the block and receives the block reward and related transaction fees. The mining pool is organized by a third party, in our case, Luxor.
On November 7, 2022, we and certain of our subsidiaries borrowed $18.9 million of principal amount of term loans (the “Loans”) from a group of institutional investors (the “Financing”).
On November 7, 2022, we and certain of our subsidiaries borrowed $18.9 million of principal amount of term loans (the “Term Loans”) from a group of institutional investors (the “Financing”).
The Conversion Price will be subject to certain adjustments, including potential downward adjustment if BMI closes a qualified financing resulting in at least $25 million in gross proceeds at a price per share that is lower than the Conversion Price then in effect.
The Conversion Price will be subject to certain adjustments, including potential downward adjustment if ROI closes a qualified financing resulting in at least $25,000,000 in gross proceeds at a price per share that is lower than the Conversion Price then in effect.
For example: ● In terms of conventional peer-to-peer transactions, there either are no fees or they are de minimis (Source: https://www.kraken.com/en-us); ● For purposes of traditional networks, there are nominal fees associated with any transaction (Source: https://bitinfocharts.com/bitcoin); and ● As of April 15, 2023, the average Bitcoin network fee is $1.20 per transaction, which is still very low compared to conventional transaction fees charged by banks and other more traditional financial institutions (https://bitinfocharts.com/bitcoin).
For example: · In terms of conventional peer-to-peer transactions, there either are no fees or they are de minimis (Source: https://www.kraken.com/en-us); · For purposes of traditional networks, there are nominal fees associated with any transaction (Source: https://bitinfocharts.com/bitcoin); and · As of April 1, 2024, the average Bitcoin network fee is $5.82 per transaction, which is still low compared to conventional transaction fees charged by banks and other more traditional financial institutions (https://bitinfocharts.com/bitcoin).
These regulations and laws may change over time. Unfavorable changes in existing and new laws and regulations could increase our cost of doing business and impede our growth. 34 Research and Development During the years ended December 31, 2022 and 2021, we spent approximately $2.8 million and $2.0 million, respectively, on research and development.
These regulations and laws may change over time. Unfavorable changes in existing and new laws and regulations could increase our cost of doing business and impede our growth. Research and Development During the years ended December 31, 2023 and 2022, we spent approximately $7.2 million and $2.8 million, respectively, on research and development.
On December 29, 2022, the Company and the accredited investor entered into an amended and restated amendment to the SPA, pursuant to which the total amount of the financing was increased to $17.5 million and the Company sold an additional note to a second accredited investor.
On December 29, 2022, the Company and the December 2022 Investor entered into an amended and restated amendment to the SPA, pursuant to which the total amount of the financing was increased to $17,456,245 and the Company sold an additional note to a second accredited investor.
Circle 8’s fleet consists of Grove, Xuzhou Construction Machinery Group (“XCMG”) and other leading original equipment manufacturers. Circle 8 provides experienced professionally certified operators to deliver customized solutions to lifting clients in oil field services, construction, commercial, refining / marketing and wind energy markets. Circle 8 maintains an industry leading safety record.
Circle 8’s fleet consists of Grove, Xuzhou Construction Machinery Group (“XCMG”) and other leading original equipment manufacturers. Circle 8 provides experienced professionally certified operators to deliver customized solutions to lifting clients in oil field services, construction, commercial, refining / marketing and wind energy markets. Circle 8 maintains an industry leading safety record. Safety personnel hold certifications and undergo in-house training.
Official Secrets Act and its implementing regulations. Enertec complies with all information security requirements included in their customer contracts as well as all the confidentiality laws that the State of Israel mandates for work related to defense of the country. Audits and Investigations As a government contractor, we are subject to audits and investigations by U.S.
Enertec complies with all information security requirements included in their customer contracts as well as all the confidentiality laws that the State of Israel mandates for work related to defense of the country. Audits and Investigations As a government contractor, we are subject to audits and investigations by U.S.
Regulators must ensure that platforms adhere to existing data protection regulations, such as the General Data Protection Regulation (“GDPR”) and the California Consumer Privacy Act (“CCPA”); · Intellectual Property Rights: The metaverse’s reliance on user-generated content and digital assets raises questions about intellectual property rights and the enforcement of copyright, trademark, and patent laws in virtual environments; · Taxation and Financial Regulations: The growth of virtual economies and the increasing popularity of cryptocurrencies and NFT’s have raised questions about taxation and financial regulations.
Regulators must ensure that platforms adhere to existing data protection regulations, such as the General Data Protection Regulation (“GDPR”) and the California Consumer Privacy Act (“CCPA”); · Intellectual Property Rights: The metaverse’s reliance on user-generated content and virtual goods and items raises questions about intellectual property rights and the enforcement of copyright, trademark, and patent laws in virtual environments; · Taxation and Financial Regulations: The growth of virtual economies and the increasing popularity of cryptocurrencies and non-fungible tokens have raised questions about taxation and financial regulations.
In addition, if Third Avenue Apartments, LLC (“Third Avenue”), our wholly owned subsidiary, sells the property it owns in St. Peterburg, Florida, then we will use the net proceeds from the sale of such property in excess of $10 million, to repay the Note.
In addition, if Third Avenue Apartments, LLC (“Third Avenue”), our wholly owned subsidiary, sold the property it owns in St. Peterburg, Florida, then we would use the net proceeds from the sale of such property in excess of $10 million, to repay the December 2022 Note.
When we opt to convert the digital assets we sell or exchange our Bitcoin through Gemini, the custodian of our digital wallet. When we elect to make a sale or exchange our Senior Vice President - Finance submits a request to Gemini’s execution department to exchange Bitcoin for U.S. dollars. Gemini sends an approval email to our CEO to approve.
When we opt to convert the digital assets we sell or exchange our Bitcoin through Gemini, the custodian of our digital wallet. When we elect to make a sale or exchange our Senior Vice President - Finance submits a request to Gemini’s execution department to exchange Bitcoin for U.S. dollars.
If the network is decentralized, it will not rely on either governmental authorities or financial institutions to create, transmit or determine the value of the currency units.
As the network is decentralized, it does not rely on either governmental authorities or financial institutions to create, transmit or determine the value of the currency units.
We recognize revenue, net of certain transaction fees from the mining pool operator, which are not considered material. To date, we have only used one mining pool operator. Our current mining pool agreement is cancelable at any time by either party without penalty.
We recognize revenue, net of certain transaction fees from the mining pool operator, which are not considered material. Our current mining pool agreement is cancelable at any time by either party without penalty.
Management of the company has considered the issues surrounding the environmental impact of our Bitcoin mining operations. Based on this review, we have concluded that the environmental impact of our mining operations is not material given that approximately 85% of the energy we use is “green,” meaning it is sourced from nuclear, wind or solar power.
Based on this review, we have concluded that the environmental impact of our mining operations is not material given that approximately 85% of the energy we use is “green,” meaning it is sourced from nuclear, wind or solar power.
Starting in January 2023, the lenders have the right to require us to make monthly payments of $0.6 million, which will increase to $1.1 million in November 2023. The Loans were issued with an original issue discount of $1.89 million.
Starting in January 2023, the lenders had the right to require us to make monthly payments of $0.6 million, which increased to $1.1 million in November 2023. The Term Loans were issued with an original issue discount of $1.89 million.
Circle 8 plans to continue the extensive training program which involves OEM training sessions on operations and maintenance to ensure the entire sales force knows the fleet inside and out.
Circle 8 plans to continue the extensive training program which involves original equipment manufacturer (“OEM”) training sessions on operations and maintenance to ensure the entire sales force knows the fleet inside and out.
On February 25, 2022, we entered into an At-The-Market Issuance Sales Agreement (the “2022 Sales Agreement”) with Ascendiant to sell shares of common stock having an aggregate offering price of up to $200 million from time to time, through an “at the market offering” program (the “2022 ATM Offering”).
Recent Events and Developments On February 25, 2022, we entered into an At-The-Market Issuance Sales Agreement (the “2022 Sales Agreement”) with Ascendiant Capital Markets, LLC (“Ascendiant”) to sell shares of common stock having an aggregate offering price of up to $200 million from time to time, through an “at the market offering” program (the “2022 ATM Offering”).
We believe this smart growth strategy, including our commitment to mining efficiency and return on investment in miners, will enable us to build value over the long term. Own and Operate Our Mining Facilities We have made significant investments in purchasing, building and operating our mining facilities.
We believe this smart growth strategy, including our commitment to mining efficiency and return on investment in miners, will enable us to build value over the long term. Own and Operate Our Mining Facilities We are investing heavily in purchasing, building and operating our mining facilities.
An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value.
An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired.
We account for our mining-related gains or losses in accordance with the first-in, first-out method of accounting. 19 Ault Lending Ault Lending acquires controlling or non-controlling interests in and actively manages businesses that we generally believe (i) are undervalued and have disruptive technologies with a global impact, (ii) operate in industries with long-term macroeconomic growth opportunities, (iii) have positive and stable cash flows, (iv) face minimal threats of technological or competitive obsolescence, and (v) have strong management teams largely in place.
Ault Lending acquires controlling or non-controlling interests in and actively manages businesses that we generally believe (i) are undervalued and have disruptive technologies with a global impact, (ii) operate in industries with long-term macroeconomic growth opportunities, (iii) have the potential for positive and stable cash flows, (iv) face minimal threats of technological or competitive obsolescence, and (v) have strong management teams largely in place.
Overview BNC, an entity in the embryonic stage of development, represents a groundbreaking development in the online metaverse landscape, offering immersive, interconnected digital experiences that are inclusive, engaging, and dynamic. By integrating various elements such as virtual markets, real world goods marketplaces, gaming, social activities, sweepstakes, gambling, and more, BNC aims to revolutionize the way people interact online.
The Metaverse represents a significant development in the online metaverse landscape, offering immersive, interconnected digital experiences that are inclusive, engaging, and dynamic. By integrating various elements such as virtual markets, real world goods marketplaces and VIP experiences, gaming, social activities, sweepstakes, gambling, and more, ROI aims to revolutionize the way people interact online.
Each share of Series B Preferred was originally entitled to vote with the BMI Common Stock at a rate of 10 votes per share of Common Stock into which the Series B Preferred is convertible, but that provision was subsequently eliminated.
Each share of Series B Preferred was originally entitled to vote with the ROI common stock at a rate of 10 votes per share of common stock into which the Series B Preferred is convertible, but that provision was subsequently eliminated, as were the conventional voting rights of the Series C Preferred.
We provide computing power to the mining pool, which is run by the mining pool operator with whom we contract, who in turn provides transaction verification services. Based on the terms of the agreement, in our judgment, the mining pool operator is considered the principal in providing mining pool services.
Luxor currently charges us a 0.68% mining fee. 14 We provide computing power to the mining pool, which is run by the mining pool operator with whom we contract, who in turn provides transaction verification services. Based on the terms of the agreement, in our judgment, the mining pool operator is considered the principal in providing mining pool services.
It increases the mining pool participants’ earnings by sharing transaction fees. Standard transaction fees are calculated using a certain period which are then distributed to miners according to their hash power contributions in the pool. Antpool.com currently charges us a 0.3% mining fee.
It increases the mining pool participants’ earnings by sharing transaction fees. Standard transaction fees are calculated using a certain period which are then distributed to miners according to their hash power contributions in the pool.
It is possible that changes in environmental and worker health and safety laws or liabilities from newly discovered non-compliance or contamination could have a material adverse effect on Circle 8’s business, financial condition and results of operations. BitNile, Inc. BNI conducts data center operations and Bitcoin mining through ACS.
It is possible that changes in environmental and worker health and safety laws or liabilities from newly discovered non-compliance or contamination could have a material adverse effect on Circle 8’s business, financial condition and results of operations.
Overview BNI is a blockchain technology company focused on mining of Bitcoin. We mine using purpose-built computers (or “miners”) to solve complex cryptographic algorithms (or “verify” or “solve” blocks) in the blockchain in exchange for rewards and fees denominated in the native token of that blockchain network.
We also mine Bitcoin using purpose-built computers (or “miners”) to solve complex cryptographic algorithms (or “verify” or “solve” blocks) in the blockchain in exchange for rewards and fees denominated in the native token of that blockchain network.
The Agreement provides that BMI will seek shareholder approval (the “Shareholder Approval”) following the closing. 6 Pursuant to the Certificates of Designations of the Rights, Preferences and Limitations of the Series B Preferred and the Series C Preferred (collectively, the “Preferred Stock Certificates”), each share of Preferred Stock will be convertible into a number of shares of BMI Common Stock determined by dividing the Stated Value by $0.25 (the “Conversion Price”), or 40,000 shares of BMI Common Stock.
Pursuant to the Certificates of Designations of the Rights, Preferences and Limitations of the Series B Preferred and the Series C Preferred (collectively, the “Preferred Stock Certificates”), each share of Preferred Stock will be convertible into a number of shares of ROI common stock determined by dividing the Stated Value by $0.25 (the “Conversion Price”), or 40,000 shares of ROI common stock.
We believe that our average tenure of 7.7 years as of the end of the fiscal year 2022 reflects the engagement of our employees in this core talent system tenet. The Company believes it materially complies with all applicable state, local and international laws governing nondiscrimination in employment in every location in which the Company operates.
We believe that our average tenure of 6.4 years as of the end of the fiscal year 2023 reflects the engagement of our employees in this core talent system tenet. 45 We believe we materially comply with all applicable state, local and international laws governing nondiscrimination in employment in every location in which we operate.
Once approved by our CEO, Gemini executes the sale/exchange on its trading platform at current market prices, less commissions, and deposits the U.S. dollars into our bank account.
Gemini sends an approval email to both our CEO and CFO to approve. Once approved by either our CEO or CFO, Gemini executes the sale/exchange on its trading platform at current market prices, less commissions, and deposits the U.S. dollars into our bank account.
Employee Profile As of December 31, 2022, we had 615 employees located in the U.S., the U.K. and Israel, of whom 83 were engaged in engineering and product development, 46 in sales and marketing, 386 in general operations and 100 in general administration and finance. All but 17 of these employees are employed on a full-time basis.
Employee Profile As of December 31, 2023, we had 643 employees located in the U.S., the U.K. and Israel, of whom 71 were engaged in engineering and product development, 62 in sales and marketing, 369 in general operations and 141 in general administration and finance. All but 56 of these employees are employed on a full-time basis.
(“IMHC” or “TurnOnGreen”), which wholly owns TOG Technologies, Inc. (“TOG Technologies”) and Digital Power Corporation (“Digital Power”), (ii) Giga-tronics Incorporated (“GIGA”), which wholly owns Gresham Worldwide, Inc. (“GWW”), which in turn wholly owns Gresham Power Electronics Ltd. (“Gresham Power”), Enertec Systems 2001 Ltd. (“Enertec”), Relec Electronics Ltd.
(“TOG Technologies”) and Digital Power Corporation (“Digital Power”), (iii) Gresham Worldwide, Inc., formerly known as Giga-tronics Incorporated (“GIGA”), which wholly owns Gresham Holdings, Inc., formerly Gresham Worldwide, Inc. (“GWW”), which in turn wholly owns Gresham Power Electronics Ltd. (“Gresham Power”), Enertec Systems 2001 Ltd. (“Enertec”), Relec Electronics Ltd.
Key competitors include: · Established metaverse platforms, such as Decentraland, The Sandbox, and Second Life, as well as companies that focus on development of metaverse tools and platforms such as META; · Gaming-focused platforms, like Fortnite and Roblox; and · Social media platforms that integrate metaverse elements, such as Facebook’s Horizon Workrooms.
Competition BNC faces competition from existing metaverse platforms and new entrants. Key competitors include: · Established metaverse platforms, such as Decentraland, The Sandbox, and Second Life, as well as companies that develop metaverse tools and platforms such as META; · Gaming-focused platforms, like Fortnite and Roblox; and · Social media platforms that integrate metaverse elements, such as Facebook’s Horizon Workrooms.
The Loans mature in 18 months, which may be extended to 24 months, accrue interest at the rate of 8.5% per annum and are secured by certain of our and certain of our subsidiaries’ assets.
The Term Loans matured in 18 months, which may have been extended to 24 months, accrued interest at the rate of 8.5% per annum and were secured by certain of our and certain of our subsidiaries’ assets.
None of our employees is currently represented by a trade union. We consider our relations with our employees to be good. As of December 31, 2021, approximately 33% of our current workforce is female, 67% male, and our average tenure is 7.7 years, an increase of 24% from an average tenure of 6.2 years as of December 31, 2020.
None of our employees is currently represented by a trade union. We consider our relations with our employees to be good. As of December 31, 2023, approximately 28% of our current workforce is female, 72% male, and our average tenure is 6.4 years, a decrease of 17% from an average tenure of 7.7 years as of December 31, 2022.
Examples of equipment dealers include Finning and Toromont. Circle 8 operates substantially in a segment of the rental business whereby Circle 8 provides all labor and consumables to complete a project or an assignment.
Examples of equipment dealers include Finning and Toromont. Circle 8 operates substantially in a segment of the rental business whereby Circle 8 provides all labor and consumables to complete a project or an assignment. Like Circle 8, many other pure equipment rental companies may also provide parts and service support to customers.
The underwriting process determines the loan amount to approve, how loans will be priced, and whether to include a blanket lien is based on the above analysis, as well as additional factors (including length of loan, estimated default rates by type and grade, and general economic environment). 20 Our Executive Committee, which is comprised of our Executive Chairman, Chief Executive Officer and President, acts as the underwriting committee for Ault Lending and approves all lending transactions.
The underwriting process determines the loan amount to approve, how loans will be priced, and whether to include a blanket lien is based on the above analysis, as well as additional factors (including length of loan, estimated default rates by type and grade, and general economic environment).
Through our wholly- and majority-owned subsidiaries and strategic investments, we own and operate a data center at which we mine Bitcoin, and provide mission-critical products that support a diverse range of industries, including crane services, oil exploration, defense/aerospace, industrial, automotive, medical/biopharma, consumer electronics, hotel operations and textiles.
Through our wholly and majority-owned subsidiaries and strategic investments, we own and/or operate data centers at which we mine Bitcoin and offer colocation and hosting services for the emerging artificial intelligence (“AI”) ecosystems and other industries, and provide mission-critical products that support a diverse range of industries, including a metaverse platform, oil exploration, crane services, defense/aerospace, industrial, automotive, medical/biopharma, consumer electronics and textiles.
Health and Safety The success of our business is fundamentally connected to the well-being of our people. Accordingly, we are committed to the health, safety and wellness of our employees.
We established a Company matched 401(k) plan during 2021. Health and Safety The success of our business is fundamentally connected to the well-being of our people. Accordingly, we are committed to the health, safety and wellness of our employees.
The lenders received warrants to purchase approximately 4.5 million shares of our common stock, exercisable for four years at $0.45 per share and warrants to purchase another approximately 4.5 million shares of our common stock, exercisable for four years at $0.75 per share, subject to adjustment.
The lenders received warrants to purchase 604 shares of our common stock, exercisable for four years at $3,375 per share and warrants to purchase another 604 shares of our common stock, exercisable for four years at $5,625 per share, subject to adjustment.
Other than certain rights granted to the Company relating to amendments or waiver of various negative covenants, the terms, rights, preferences and limitations of the Preferred Stock Certificates are essentially identical. The Agreement closed on March 6, 2023. Corporate Information We are a Delaware corporation, initially formed in California in 1969 and reincorporated in Delaware in 2017.
Other than certain rights granted to the Company relating to amendments or waiver of various negative covenants, the terms, rights, preferences and limitations of the Preferred Stock Certificates are essentially identical. The February 2023 Agreement closed on March 6, 2023.
We are located at 11411 Southern Highlands Parkway, Suite 240, Las Vegas, NV 89141. Our phone number is (949) 444-5464 and our website address is www.ault.com.
Corporate Information We are a Delaware corporation, initially formed in California in 1969 and reincorporated in Delaware in 2017. We are located at 11411 Southern Highlands Parkway, Suite 240, Las Vegas, NV 89141. Our phone number is (949) 444-5464 and our website address is www.ault.com.
After a predetermined number of blocks are added to the blockchain, the mining reward is cut in half, hence the term “halving.” The last halving for Bitcoin occurred on May 11, 2020.
After a predetermined number of blocks are added to the blockchain, the mining reward is cut in half, hence the term “halving.” The last halving for Bitcoin occurred on May 11, 2020 but the next halving is expected to occur in April 2024. Transaction fees are variable and depend on the level of activity on the network.
For example, on the Bitcoin blockchain the protocol is coded such that a new block is solved and verified approximately every ten minutes, while on Ethereum blocks are designed to be solved approximately every twelve to fifteen seconds.
For example, on the Bitcoin blockchain the protocol is coded such that a new block is solved and verified approximately every ten minutes.
At this time, we have not entered into any new mining agreements at locations other than the Facility. We currently mine Bitcoin only. Coins that are mined are held in a custodial account as digital assets.
At this time, we have not entered into any new mining agreements at locations other than the Michigan Facility and the Montana Facilities. We currently mine Bitcoin only. Coins that are mined are held in a custodial account as digital assets. We securely store our digital assets at Gemini Trust Company, LLC (“Gemini”), a regulated, audited and insured cryptocurrency custodian.
The final interest rate offered to the borrower will be determined by Ault Lending’s interpretation of the marketplace. In order to borrow from Ault Lending, borrowers must display characteristics indicative of durable business and financial situations. These include factors such as revenue, time in business, number of employees, and financial and credit variables.
If the business meets Ault Lending’s criteria, Ault Lending sets the initial interest rate according to its credit and financial models. The final interest rate offered to the borrower will be determined by Ault Lending’s interpretation of the marketplace. In order to borrow from Ault Lending, borrowers must display characteristics indicative of durable business and financial situations.
Mabee was the Partner in Charge / Administration at R.S. Phillips Steel LLC, a fourth-generation family-owned Steel Service Center that serves the Tri-State Area of New York, New Jersey and Pennsylvania. During his time there, Mr. Babee pioneered several new innovative ideas to enhance safety, compliance and productivity. Mr.
Mabee is responsible for one of the larger mobile crane companies in the US. Prior to joining Sterling Crane, Mr. Mabee was the Partner in Charge / Administration at R.S. Phillips Steel LLC, a fourth-generation family-owned Steel Service Center that serves the Tri-State Area of New York, New Jersey and Pennsylvania. During his time there, Mr.
Ault Lending may also generate income from appreciation of investments in marketable securities as well as any shares of common stock underlying convertible notes or warrants issued to Ault Lending in any particular financing.
Under its business model, Ault Lending generates revenue through origination fees charged to borrowers and interest generated from each loan. Ault Lending may also generate income from appreciation of investments in marketable securities as well as any shares of common stock underlying convertible notes or warrants issued to Ault Lending in any particular financing.
Ault Lending may also generate income from appreciation of investments in marketable securities as well as any shares of common stock underlying convertible notes or warrants issued to Ault Lending in any particular financing.
Under its business model, Ault Lending generates revenue through origination fees charged to borrowers and interest generated from each loan. Ault Lending may also generate income from appreciation of investments in marketable securities as well as any shares of common stock underlying convertible notes or warrants issued to Ault Lending in any particular financing.
Government would pay only for the work that has been accepted and could require TurnOnGreen to pay the difference between the original contract price and the cost to re-procure the contract items, net of the work accepted from the original contract. The U.S. Government can also hold TurnOnGreen liable for damages resulting from the default. Medical device power supplies .
If any of TurnOnGreen’s government contracts were to be terminated for default, generally the U.S. Government would pay only for the work that has been accepted and could require TurnOnGreen to pay the difference between the original contract price and the cost to re-procure the contract items, net of the work accepted from the original contract. The U.S.
On December 16, 2022 we entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor (the “Investor”) providing for the issuance of a secured promissory note (the “Note”) with an aggregate principal face amount of $14.7 million (the “Financing”).
The Term Loans were repaid in December 2023. 2 On December 16, 2022 we entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor (the “December 2022 Investor”) providing for the issuance of a secured promissory note (the “December 2022 Note”) with an aggregate principal face amount of $14,700,000.

… 665 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

249 edited+197 added−193 removed649 unchanged
Biggest changeU.S. companies that (i) are, or hold themselves out as being, engaged primarily in the business of investing, reinvesting or trading in securities (Section 3(a)(1)(A)), (ii) are engaged or propose to engage in the business of issuing face-amount certificates of the installment type (or have been engaged in such business and have any such certificate outstanding) (Section 3(a)(1)(B)) or (iii) are engaged or propose to engage in the business of investing, reinvesting, owning, holding or trading securities, and own or propose to acquire investment securities having a value exceeding 40 percent of the value of the company’s total assets (exclusive of Government securities and cash items) on an unconsolidated basis (Section 3(a)(1)(C)) are subject to regulation under the Investment Company Act, unless the company is able to satisfy an exemption from the definition of “investment company” in either Section 3(b) or 3(c) of the Investment Company Act (or the rules adopted thereunder) or is otherwise not required to register as an “investment company” under the Investment Company Act.
Biggest changeOur inability to exchange Bitcoin for fiat or other digital assets (and vice versa) to administer our treasury management objectives may decrease our earnings potential and have an adverse impact on our business and financial condition. 66 Under the Investment Company Act, a company may fall within the definition of an investment company under section 3(c)(1)(A) thereof if it is or holds itself out as being engaged primarily, or proposes to engage primarily in the business of investing, reinvesting or trading in securities, or under section 3(a)(1)(C) thereof if it is engaged or proposes to engage in business of investing, reinvesting, owning, holding, or trading in securities, and owns or proposes to acquire “investment securities” (as defined therein) having a value exceeding 40% of its total assets (exclusive of government securities and cash items) on an unconsolidated basis.
If such retrofits or replacements cannot be achieved in a timely manner, or at all, Circle 8’s sales, financial results and financial position would be materially adversely impacted. These increases could materially impact Circle 8 financial condition or results of operations in future periods if Circle 8 is not able to pass such cost increases through to its customers.
If such retrofits or replacements cannot be achieved in a timely manner, or at all, Circle 8’s sales, financial results and financial position would be materially adversely impacted. These increases could materially impact Circle 8’s financial condition or results of operations in future periods if Circle 8 is not able to pass such cost increases through to its customers.
Because a significant portion of Microphase’s revenue is dependent on its performance and payment under its U.S. Government contracts, the loss of one or more large contracts could have a material adverse impact on its business, financial condition, results of operations and cash flows. Microphase’s government business also is subject to specific procurement regulations and other requirements.
Because a significant portion of Microphase’s revenue is dependent on its performance and payment under its U.S. Government contracts, the loss of one or more large contracts could have a material adverse impact on its business, financial condition, results of operations and cash flows. Microphase’s government business is also subject to specific procurement regulations and other requirements.
We may sell shares or other securities in any other offering at a price per share that is less than the price per share paid by investors in this offering, and investors purchasing shares or other securities in the future could have rights superior to existing stockholders.
We may sell shares or other securities in any other offering at a price per share that is less than the price per share paid by investors in this offering, and investors purchasing shares or other securities in the future could have rights superior to existing stockholders.
We do not anticipate paying dividends on our common stock and, accordingly, stockholders must rely on stock appreciation for any return on their investment. We have never declared or paid cash dividends on our common stock and do not expect to do so in the foreseeable future.
We do not anticipate paying cash dividends on our common stock and, accordingly, stockholders must rely on stock appreciation for any return on their investment. We have never declared or paid cash dividends on our common stock and do not expect to do so in the foreseeable future.
These fluctuations, among others, could impact the efficiency and profitability of Circle 8’s lifting solutions business and can be impacted by a variety of factors, including the following: • possible geopolitical unrest and conflict may impact ability to receive new parts or new cranes in a timely manner, if at all, to optimize utilization and ultimately, profitability; • reliance on foreign suppliers for cranes and exposure to trade embargoes could impede its ability to procure necessary parts and equipment to execute its growth strategies and maintain its fleet; • inflationary pressures resulting from supply chain disruptions and labor shortages could make it difficult for Circle 8 to repair and replace its crane equipment at regular costs; • fuel price escalation could have a material impact on gross profit since it is typically approximately 7% of the operating cost structure in recent history; • oil market sanctions and political pressure on domestic production reduction may adversely impact Circle 8’s core clients and its revenues and profitability; or • steel market sanctions, trade embargoes and other supply chain shocks may adversely impact public and private infrastructure and renewables new construction and maintenance projects, ultimately slowing Circle 8’s strategic transition to diversify its end markets and client base.
These fluctuations, among others, could impact the efficiency and profitability of Circle 8’s lifting solutions business and can be impacted by a variety of factors, including the following: · possible geopolitical unrest and conflict may impact ability to receive new parts or new cranes in a timely manner, if at all, to optimize utilization and ultimately, profitability; 51 · reliance on foreign suppliers for cranes and exposure to trade embargoes could impede its ability to procure necessary parts and equipment to execute its growth strategies and maintain its fleet; · inflationary pressures resulting from supply chain disruptions and labor shortages could make it difficult for Circle 8 to repair and replace its crane equipment at regular costs; · fuel price escalation could have a material impact on gross profit since it is typically approximately 7% of the operating cost structure in recent history; · oil market sanctions and political pressure on domestic production reduction may adversely impact Circle 8’s core clients and its revenues and profitability; or · steel market sanctions, trade embargoes and other supply chain shocks may adversely impact public and private infrastructure and renewables new construction and maintenance projects, ultimately slowing Circle 8’s strategic transition to diversify its end markets and client base.
In addition to the risks described above, acquisitions are accompanied by a number of inherent risks, including, without limitation, the following: ● If senior management and/or management of future acquired companies terminate their employment prior to our completion of integration; ● difficulty of integrating acquired products, services or operations; ● integration of new employees and management into our culture while maintaining focus on operating efficiently and providing consistent, high-quality goods and services; 63 ● potential disruption of the ongoing businesses and distraction of our management and the management of acquired companies; ● unanticipated issues with transferring customer relationships; ● complexity associated with managing our combined company; ● difficulty of incorporating acquired rights or products into our existing business; ● difficulties in disposing of the excess or idle facilities of an acquired company or business and expenses in maintaining such facilities; ● difficulties in maintaining uniform standards, controls, procedures and policies; ● potential impairment of relationships with employees and customers as a result of any integration of new management personnel; ● potential inability or failure to achieve additional sales and enhance our customer base through cross-marketing of the products to new and existing customers; ● effect of any government regulations which relate to the business acquired; and ● potential unknown liabilities associated with acquired businesses or product lines, or the need to spend significant amounts to retool, reposition or modify the marketing and sales of acquired products or the defense of any litigation, whether or not successful, resulting from actions of the acquired company prior to our acquisition.
In addition to the risks described above, acquisitions are accompanied by a number of inherent risks, including, without limitation, the following: · If senior management and/or management of future acquired companies terminate their employment prior to our completion of integration; · difficulty of integrating acquired products, services or operations; · integration of new employees and management into our culture while maintaining focus on operating efficiently and providing consistent, high-quality goods and services; · potential disruption of the ongoing businesses and distraction of our management and the management of acquired companies; · unanticipated issues with transferring customer relationships; · complexity associated with managing our combined company; · difficulty of incorporating acquired rights or products into our existing business; · difficulties in disposing of the excess or idle facilities of an acquired company or business and expenses in maintaining such facilities; · difficulties in maintaining uniform standards, controls, procedures and policies; · potential impairment of relationships with employees and customers as a result of any integration of new management personnel; · potential inability or failure to achieve additional sales and enhance our customer base through cross-marketing of the products to new and existing customers; · effect of any government regulations which relate to the business acquired; and · potential unknown liabilities associated with acquired businesses or product lines, or the need to spend significant amounts to retool, reposition or modify the marketing and sales of acquired products or the defense of any litigation, whether or not successful, resulting from actions of the acquired company prior to our acquisition.
A security breach or other significant disruption involving these types of information and information technology networks and related systems could: ● disrupt the proper functioning of these networks and systems and therefore its operations and/or those of certain of its customers; ● result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information of Microphase or its customers, including trade secrets, which others could use to compete against Microphase or for disruptive, destructive or otherwise harmful purposes and outcomes; ● compromise national security and other sensitive government functions; ● require significant management attention and resources to remedy the damages that result; ● subject Microphase to claims for breach of contract, damages, credits, penalties or termination; and ● damage Microphase’s reputation with its customers (particularly agencies of the U.S.
A security breach or other significant disruption involving these types of information and information technology networks and related systems could: · disrupt the proper functioning of these networks and systems and therefore its operations and/or those of certain of its customers; 102 · result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information of Microphase or its customers, including trade secrets, which others could use to compete against Microphase or for disruptive, destructive or otherwise harmful purposes and outcomes; · compromise national security and other sensitive government functions; · require significant management attention and resources to remedy the damages that result; · subject Microphase to claims for breach of contract, damages, credits, penalties or termination; and · damage Microphase’s reputation with its customers (particularly agencies of the U.S.
Additionally, its business may face temporary or long-term negative impacts due to: • a reduction in extraction levels by customers due to increased costs and break-even oil price and lower levels of reserves due to depletion of existing reserves and resources; • exploration and drilling are capital intensive and results are uncertain, which may limit Circle 8’s current clients’ demand for Circle 8’s services and adversely affect its ability to generate new clients; • until it executes on its expansion program, dependence on a limited number of clients in a niche oil services market could make Circle 8 vulnerable compared to larger industry incumbents with greater client diversity; • unfavorable credit and equity markets affecting end-user access to capital or cost of capital, also potentially increasing the all-in cash costs and break-even oil prices may make operations of its current and future clients no longer economically viable; • adverse changes in federal, state, tribal and local government infrastructure spending; • an increase in the cost of consumables and construction materials related to oil extraction and infrastructure construction; • adverse weather conditions or natural disasters which may affect a particular region; • a decrease in the level of exploration, development, production activity and capital spending by oil and natural gas companies; • an increase in inflationary pressure on materials and labor; • labor issues such as strikes or worker shortages; • a prolonged shutdown of the U.S. government; • an increase in interest rates; • supply chain disruptions; • changes in federal and state regulations related to climate change and greenhouse gas emissions may materially adversely impact Circle 8’s and/or its clients’ revenues, operating results and profitability; • public health crises and epidemics, such as COVID-19; or • terrorism or hostilities involving the United States and/or its allies.
Additionally, its business may face temporary or long-term negative impacts due to: · a reduction in extraction levels by customers due to increased costs and break-even oil price and lower levels of reserves due to depletion of existing reserves and resources; · exploration and drilling are capital intensive and results are uncertain, which may limit Circle 8’s current clients’ demand for Circle 8’s services and adversely affect its ability to generate new clients; · until it executes on its expansion program, dependence on a limited number of clients in a niche oil services market could make Circle 8 vulnerable compared to larger industry incumbents with greater client diversity; · unfavorable credit and equity markets affecting end-user access to capital or cost of capital, also potentially increasing the all-in cash costs and break-even oil prices may make operations of its current and future clients no longer economically viable; · adverse changes in federal, state, tribal and local government infrastructure spending; 50 · an increase in the cost of consumables and construction materials related to oil extraction and infrastructure construction; · adverse weather conditions or natural disasters which may affect a particular region; · a decrease in the level of exploration, development, production activity and capital spending by oil and natural gas companies; · an increase in inflationary pressure on materials and labor; · labor issues such as strikes or worker shortages; · a prolonged shutdown of the U.S. government; · an increase in interest rates; · supply chain disruptions; · changes in federal and state regulations related to climate change and greenhouse gas emissions may materially adversely impact Circle 8’s and/or its clients’ revenues, operating results and profitability; · public health crises and epidemics; or · terrorism or hostilities involving the United States and/or its allies.
Any significant decline in the selling prices for used equipment could have a material adverse effect on Circle 8’s business, financial condition, results of operations or cash flows. 45 As Circle 8’s rental fleet ages, its operating costs may increase, it may be unable to pass along such costs to customers, and earnings may decrease.
Any significant decline in the selling prices for used equipment could have a material adverse effect on Circle 8’s business, financial condition, results of operations or cash flows. As Circle 8’s rental fleet ages, its operating costs may increase, it may be unable to pass along such costs to customers, and earnings may decrease.
If we are unable to prevent such security breaches in the future, these events or circumstances could materially and adversely affect our operations, financial condition and operating results and impair our ability to execute our business strategy. We face significant competition, including changes in pricing. The markets for our products are both competitive and price sensitive.
If we are unable to prevent such security breaches in the future, these events or circumstances could materially and adversely affect our operations, financial condition and operating results and impair our ability to execute our business strategy. 109 We face significant competition, including changes in pricing. The markets for our products are both competitive and price sensitive.
In addition, the termination of, or failure to commit additional funds to, a program for which Microphase is a subcontractor could result in lost revenue and increase its overall costs of doing business. 88 Generally, U.S. Government contracts are subject to oversight audits by U.S. Government representatives. Such audits could result in adjustments to Microphase’s contract costs.
In addition, the termination of, or failure to commit additional funds to, a program for which Microphase is a subcontractor could result in lost revenue and increase its overall costs of doing business. Generally, U.S. Government contracts are subject to oversight audits by U.S. Government representatives. Such audits could result in adjustments to Microphase’s contract costs.
As a result of these or other factors, BNC’s metaverse strategy and investments may not be successful in the foreseeable future, or at all, which could adversely affect BNC’s business, reputation, or financial results. BNC may not be able to successfully grow usage of and engagement with applications that integrate with BNC’s products.
As a result of these or other factors, BNC’s metaverse strategy and investments may not be successful in the foreseeable future, or at all, which could adversely affect BNC’s business, reputation, or financial results. 81 BNC may not be able to successfully grow usage of and engagement with applications that integrate with BNC’s products.
If we fail to maintain effective internal control over financial reporting or our management does not timely assess the adequacy of such internal control, we may be subject to regulatory sanctions, and our reputation may decline. 95 Our internal computer systems may fail or suffer security breaches, which could result in a material disruption of our operations .
If we fail to maintain effective internal control over financial reporting or our management does not timely assess the adequacy of such internal control, we may be subject to regulatory sanctions, and our reputation may decline. Our internal computer systems may fail or suffer security breaches, which could result in a material disruption of our operations .
Conversely, a significant portion of Bitcoin demand is generated by investors seeking a long-term store of value or speculators seeking to profit from the short- or long-term holding of the asset. Price volatility undermines any Bitcoin’s role as a medium of exchange, as retailers are much less likely to accept it as a form of payment.
Conversely, a significant portion of Bitcoin demand is generated by investors seeking a long-term store of value or speculators seeking to profit from the short- or long-term holding of the asset. Price volatility undermines Bitcoin’s role as a medium of exchange, as retailers are much less likely to accept it as a form of payment.
Any of these events could have an adverse effect on BNC’s business and financial results. BNC expects to be party to patent lawsuits and other intellectual property rights claims that are expensive and time consuming and, if resolved adversely, could have a significant impact on BNC’s business, financial condition, or results of operations.
Any of these events could have an adverse effect on BNC’s business and financial results. 87 BNC expects to be party to patent lawsuits and other intellectual property rights claims that are expensive and time consuming and, if resolved adversely, could have a significant impact on BNC’s business, financial condition, or results of operations.
If such increases resulted from our status as a U.S. company, those changes could place us at a disadvantage to our non-U.S. competitors if those competitors remain subject to lower local tax rates. Our sales and profitability may be affected by changes in economic, business and industry conditions .
If such increases resulted from our status as a U.S. company, those changes could place us at a disadvantage to our non-U.S. competitors if those competitors remain subject to lower local tax rates. 110 Our sales and profitability may be affected by changes in economic, business and industry conditions .
BNC intends to regularly review BNC’s processes for calculating these metrics, and from time to time BNC expects to discover inaccuracies in these metrics or make adjustments to improve their accuracy. The lack of comprehensive encryption for communications on the Platform may increase the impact of a data security incident.
BNC intends to regularly review BNC’s processes for calculating these metrics, and from time to time BNC expects to discover inaccuracies in these metrics or make adjustments to improve their accuracy. 82 The lack of comprehensive encryption for communications on the Platform may increase the impact of a data security incident.
International sales are also subject to the export laws and regulations of the U.S. and other countries. Because a significant portion of our revenues and expenses is denominated in foreign currencies, fluctuations in exchange rates could have a material adverse effect on our operating results.
International sales are also subject to the export laws and regulations of the U.S. and other countries. 98 Because a significant portion of our revenues and expenses is denominated in foreign currencies, fluctuations in exchange rates could have a material adverse effect on our operating results.
Our ability to manage the anticipated future growth, should it occur, will depend upon a significant expansion of our accounting and other internal management systems and the implementation and subsequent improvement of a variety of systems, procedures and controls. We cannot assure that significant problems in these areas will not occur.
Our ability to manage the anticipated future growth, should it occur, will depend upon a significant expansion of our accounting and other internal management systems and the implementation and subsequent improvement of a variety of systems, procedures and controls. We cannot assure you that significant problems in these areas will not occur.
For example, the economic uncertainty caused by COVID-19, and its impact on Circle 8’s future operational and financial performance was highly dependent on the depth and duration of the pandemic, as well as the government-mandated restrictions on economic activity and government economic stimulus packages passed in response to the economic downturn.
For example, the economic uncertainty caused by COVID-19, and its impact on Circle 8’s operational and financial performance was highly dependent on the depth and duration of the pandemic, as well as the government-mandated restrictions on economic activity and government economic stimulus packages passed in response to the economic downturn.
We are dependent on the electronic equipment industry, and accordingly will be affected by the impact on that industry of current economic conditions. 82 Substantially all of our existing customers are in the electronic equipment industry, and they manufacture products that are subject to rapid technological change, obsolescence, and large fluctuations in demand.
We are dependent on the electronic equipment industry, and accordingly will be affected by the impact on that industry of current economic conditions. Substantially all of our existing customers are in the electronic equipment industry, and they manufacture products that are subject to rapid technological change, obsolescence, and large fluctuations in demand.
The price per share at which we sell additional shares of our common stock, or securities convertible or exchangeable into common stock, in future transactions may be higher or lower than the price per share paid by investors in this offering. Our common stock price is volatile. Our common stock is listed on the NYSE American.
The price per share at which we sell additional shares of our common stock, or securities convertible or exchangeable into common stock, in future transactions may be higher or lower than the price per share paid by investors in this offering. 105 Our common stock price is volatile. Our common stock is listed on the NYSE American.
Risks Related to Our Bitcoin Operations Risks Related to Our Bitcoin Operations – General To remain competitive in our industry, we seek to grow our hash rate to match the growing network hash rate and increasing network difficulty of the Bitcoin blockchain, and if we are unable to grow our hash rate at pace with the network hash rate, our chance of earning Bitcoin from our Mining operations would decline.
Risks Related to Our Bitcoin Operations Risks Related to Our Bitcoin Operations – General To remain competitive in our industry, we would need to seek to grow our hash rate to match the growing network hash rate and increasing network difficulty of the Bitcoin blockchain, and if we are unable to grow our hash rate at pace with the network hash rate, our chance of earning Bitcoin from our Mining operations would decline.
Our operating results from this sector will depend in large part upon the value of Bitcoin because it is the sole digital asset we currently mine. Specifically, our revenues from our Bitcoin mining operations are principally based upon two factors: the number of Bitcoin rewards we successfully mine and the value of Bitcoin.
Our operating results from this sector will depend in part upon the value of Bitcoin because it is the sole digital asset we currently mine. Specifically, our revenues from our Bitcoin mining operations are principally based upon two factors: the number of Bitcoin rewards we successfully mine and the value of Bitcoin.
Such demands may adversely affect our ability to successfully compete in certain markets or our ability to sustain our gross margins. Our reliance on subcontract manufacturers to manufacture certain aspects of our products involves risks, including delays in product shipments and reduced control over product quality.
Such demands may adversely affect our ability to successfully compete in certain markets or our ability to sustain our gross margins. 96 Our reliance on subcontract manufacturers to manufacture certain aspects of our products involves risks, including delays in product shipments and reduced control over product quality.
These circumstances could cause our earnings to be lower than they otherwise might be. 91 Risks Related to Ownership of Our Common Stock and Future Offerings If we do not continue to satisfy the NYSE American continued listing requirements, our common stock could be delisted from NYSE American.
These circumstances could cause our earnings to be lower than they otherwise might be. Risks Related to Ownership of Our Common Stock and Future Offerings If we do not continue to satisfy the NYSE American continued listing requirements, our common stock could be delisted from NYSE American.
The factors include, but are not limited to: ● the progress of worldwide growth in the adoption and use of Bitcoin and other cryptocurrencies as a medium of exchange; ● the experience of businesses in using Bitcoin; 47 ● the impact from prominent business leaders in criticizing Bitcoin’s potential harm to the environment and the effect of announcements critical of Bitcoin, such as those that occurred with Elon Musk of Tesla; ● governmental and organizational regulation of Bitcoin and other cryptocurrencies and their use, or restrictions on or regulation of access to and operation of the network or similar cryptocurrency systems (such as the recent ban in China); ● changes in consumer demographics and public tastes and preferences, including as may result from coverage of Bitcoin or other cryptocurrencies by journalists and other sources of information and media; ● the maintenance and development of the open-source software protocol of the network; ● the increased consolidation of contributors to the Bitcoin blockchain through mining pools and scaling of mining equipment by well-capitalized market participants; ● the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies; ● the use of the networks supporting Bitcoin or other cryptocurrencies for developing smart contracts and distributed applications; ● general economic conditions and the regulatory environment relating to Bitcoin and other cryptocurrencies; ● the impact of regulators focusing on cryptocurrencies and the costs, financial and otherwise, associated with such regulatory oversight; and ● a decline in the popularity or acceptance of Bitcoin could adversely affect an investment in us.
The factors include, but are not limited to: · the progress of worldwide growth in the adoption and use of Bitcoin and other cryptocurrencies as a medium of exchange; · the experience of businesses in using Bitcoin; · the impact from prominent business leaders in criticizing Bitcoin’s potential harm to the environment and the effect of announcements critical of Bitcoin, such as those that occurred with Elon Musk of Tesla; · governmental and organizational regulation of Bitcoin and other cryptocurrencies and their use, or restrictions on or regulation of access to and operation of the network or similar cryptocurrency systems (such as the 2021 ban in China); 56 · changes in consumer demographics and public tastes and preferences, including as may result from coverage of Bitcoin or other cryptocurrencies by journalists and other sources of information and media; · the maintenance and development of the open-source software protocol of the network; · the increased consolidation of contributors to the Bitcoin blockchain through mining pools and scaling of mining equipment by well-capitalized market participants; · the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies; · the use of the networks supporting Bitcoin or other cryptocurrencies for developing smart contracts and distributed applications; · general economic conditions and the regulatory environment relating to Bitcoin and other cryptocurrencies; · the impact of regulators focusing on cryptocurrencies and the costs, financial and otherwise, associated with such regulatory oversight; and · a decline in the popularity or acceptance of Bitcoin could adversely affect an investment in us.
Bitcoin and other cryptocurrency market prices, which have historically been volatile and are impacted by a variety of factors are determined primarily using data from various exchanges, over-the-counter markets and derivative platforms.
Bitcoin and other cryptocurrency market prices have historically been volatile, are impacted by a variety of factors, and are determined primarily using data from various exchanges, over-the-counter markets and derivative platforms.
There is some doubt as to whether Avalanche will ever have the ability to repay its debt to us, as well as our ability to sell the shares we beneficially own since at present there is no market for these shares.
There is doubt as to whether Avalanche will ever have the ability to repay its debt to us, as well as our ability to sell the shares we beneficially own since at present there is no market for these shares.
The success of your investment will likely depend entirely upon any future appreciation of the market price of our common stock, which is uncertain and unpredictable. There is no guarantee that our common stock will appreciate in value.
The success of your investment will likely depend entirely upon any future appreciation of the market price of our common stock, which is uncertain and unpredictable. There is no guarantee that our common stock will appreciate in value. 113
However, there is no guarantee that any of the mechanisms in place or being explored for increasing the scale of settlement of Bitcoin transactions will be effective, or how long they will take to become effective, which could adversely affect an investment in our securities. 60 There is a possibility of Bitcoin mining algorithms transitioning to proof of stake validation and other mining related risks, which could make us less competitive and ultimately adversely affect our business and the value of our shares.
However, there is no guarantee that any of the mechanisms in place or being explored for increasing the scale of settlement of Bitcoin transactions will be effective, or how long they will take to become effective, which could adversely affect an investment in our securities. 69 There is a possibility of Bitcoin mining algorithms transitioning to proof of stake validation and other mining related risks, which could make us less competitive and ultimately adversely affect our business and the value of our shares.
Any number of factors can negatively affect user retention, growth, and engagement, including if: • users increasingly engage with other competitive products or services; • BNC fails to introduce new features, products, or services that users find engaging or if BNC introduces new products or services, or makes changes to existing products and services, that are not favorably received; • users feel that their experience is diminished as a result of the decisions BNC makes with respect to the frequency, prominence, format, size, and quality of ads that BNC displays; • users have difficulty installing, updating, or otherwise accessing BNC’s products on mobile devices as a result of actions by BNC or third parties that BNC relies on to distribute BNC’s products and deliver BNC’s services; • BNC is unable to develop products for mobile devices that users find engaging, that work with a variety of mobile operating systems and networks, and that achieve a high level of market acceptance; • there are decreases in user sentiment due to questions about the quality or usefulness of BNC’s products or BNC’s user data practices, concerns about the nature of content made available on BNC’s products, or concerns related to privacy, safety, security, well-being, or other factors; • BNC is unable to manage and prioritize information to ensure users are presented with content that is appropriate, interesting, useful, and relevant to them; • BNC is unable to obtain or attract engaging third-party content; • BNC is unable to successfully maintain or grow usage of and engagement with applications that integrate with BNC’s products; 70 • users adopt new technologies where BNC’s products may be displaced in favor of other products or services, or may not be featured or otherwise available; • there are changes mandated by legislation, government and regulatory authorities, or litigation that adversely affect BNC’s products or users; • BNC is unable to offer a number of BNC’s products and services in Europe, or are otherwise limited in BNC’s business operations, as a result of European regulators, courts, or legislative bodies determining that BNC’s reliance on Standard Contractual Clauses or other legal bases BNC may rely upon to transfer user data from the European Union to the United States is invalid; • there is decreased engagement with BNC’s products, or failure to accept BNC’s terms of service, as part of privacy-focused changes that BNC has implemented or may implement in the future, whether voluntarily, in connection with the General Data Protection Regulation (“GDPR”), the European Union’s ePrivacy Directive, the California Privacy Rights Act (“CPRA”), or other laws, regulations, or regulatory actions, or otherwise; • technical or other problems prevent BNC from delivering its products in a rapid and reliable manner or otherwise affect the user experience, such as security breaches or failure to prevent or limit spam or similar content, or users feel their experience is diminished as a result of BNC’s efforts to protect the security and integrity of the Platform; • BNC adopts terms, policies, or procedures related to areas such as sharing, content, user data, or advertising, or BNC takes, or fails to take, actions to enforce BNC’s policies, that are perceived negatively by BNC’s users or the general public; • BNC elects to focus its product decisions on longer-term initiatives that do not prioritize near-term user growth and engagement; • BNC makes changes in its user account login or registration processes or changes in how BNC promotes different products and services across its family of products; • initiatives designed to attract and retain users and engagement, including the use of new technologies such as artificial intelligence, are unsuccessful, whether as a result of actions by BNC, its competitors, or other third parties, or otherwise; • there is decreased engagement with BNC’s products as a result of taxes imposed on the use of social media or other mobile applications in certain countries, internet shutdowns, or other actions by governments that affect the accessibility of BNC’s products in their countries; • BNC fails to provide adequate customer service to users, marketers, developers, or other partners; or • BNC, developers whose products are integrated with BNC’s products, or other partners and companies in BNC’s industry are the subject of adverse media reports or other negative publicity, including as a result of BNC’s or its user data practices.
Any number of factors can negatively affect user retention, growth, and engagement, including if: · users increasingly engage with other competitive products or services; · BNC fails to introduce new features, products, or services that users find engaging or if BNC introduces new products or services, or makes changes to existing products and services, that are not favorably received; · users feel that their experience is diminished as a result of the decisions BNC makes with respect to the frequency, prominence, format, size, and quality of ads that BNC displays; · users have difficulty installing, updating, or otherwise accessing BNC’s products on mobile devices as a result of actions by BNC or third parties that BNC relies on to distribute BNC’s products and deliver BNC’s services; · BNC is unable to develop products for mobile devices that users find engaging, that work with a variety of mobile operating systems and networks, and that achieve a high level of market acceptance; · there are decreases in user sentiment due to questions about the quality or usefulness of BNC’s products or BNC’s user data practices, concerns about the nature of content made available on BNC’s products, or concerns related to privacy, safety, security, well-being, or other factors; 79 · BNC is unable to manage and prioritize information to ensure users are presented with content that is appropriate, interesting, useful, and relevant to them; · BNC is unable to obtain or attract engaging third-party content; · BNC is unable to successfully maintain or grow usage of and engagement with applications that integrate with BNC’s products; · users adopt new technologies where BNC’s products may be displaced in favor of other products or services, or may not be featured or otherwise available; · there are changes mandated by legislation, government and regulatory authorities, or litigation that adversely affect BNC’s products or users; · BNC is unable to offer a number of BNC’s products and services in Europe, or are otherwise limited in BNC’s business operations, as a result of European regulators, courts, or legislative bodies determining that BNC’s reliance on Standard Contractual Clauses or other legal basis BNC may rely upon to transfer user data from the European Union to the United States is invalid; · there is decreased engagement with BNC’s products, or failure to accept BNC’s terms of service, as part of privacy-focused changes that BNC has implemented or may implement in the future, whether voluntarily, in connection with the General Data Protection Regulation (“GDPR”), the European Union’s ePrivacy Directive, the California Privacy Rights Act (“CPRA”), or other laws, regulations, or regulatory actions, or otherwise; · technical or other problems prevent BNC from delivering its products in a rapid and reliable manner or otherwise affect the user experience, such as security breaches or failure to prevent or limit spam or similar content, or users feel their experience is diminished as a result of BNC’s efforts to protect the security and integrity of the Platform; · BNC adopts terms, policies, or procedures related to areas such as sharing, content, user data, or advertising, or BNC takes, or fails to take, actions to enforce BNC’s policies, that are perceived negatively by BNC’s users or the general public; · BNC elects to focus its product decisions on longer-term initiatives that do not prioritize near-term user growth and engagement; · BNC makes changes in its user account login or registration processes or changes in how BNC promotes different products and services across its family of products; · initiatives designed to attract and retain users and engagement, including the use of new technologies such as artificial intelligence, are unsuccessful, whether as a result of actions by BNC, its competitors, or other third parties, or otherwise; · there is decreased engagement with BNC’s products as a result of taxes imposed on the use of social media or other mobile applications in certain countries, internet shutdowns, or other actions by governments that affect the accessibility of BNC’s products in their countries; · BNC fails to provide adequate customer service to users, marketers, developers, or other partners; or · BNC, developers whose products are integrated with BNC’s products, or other partners and companies in BNC’s industry are the subject of adverse media reports or other negative publicity, including as a result of BNC’s or its user data practices. 80 From time to time, certain of these factors have negatively affected user retention, growth, and engagement to varying degrees.
The foregoing description is not the only means by which the entirety of blockchains or cryptocurrencies may be compromised but is only an example. 55 Although we are unaware of any reports of malicious activity or control of blockchains achieved through controlling over 50% of the processing power on the network, it is believed that certain mining pools may have exceeded the 50% threshold in Bitcoin.
The foregoing description is not the only means by which the entirety of blockchains or cryptocurrencies may be compromised but is only an example. 63 Although we are unaware of any reports of malicious activity or control of blockchains achieved through controlling over 50% of the processing power on the network, it is believed that certain mining pools may have exceeded the 50% threshold in Bitcoin.
To the extent that we are unable to recover our losses from such action, error or theft, such events could have a material adverse effect on our business. 62 Because many of our digital assets may in the future be held by digital asset exchanges, we could face heightened risks from cybersecurity attacks and financial stability of digital asset exchanges .
To the extent that we are unable to recover our losses from such action, error or theft, such events could have a material adverse effect on our business. 71 Because many of our digital assets may in the future be held by digital asset exchanges, we could face heightened risks from cybersecurity attacks and financial stability of digital asset exchanges .
Based on our assessment, as of December 31, 2021, we concluded that our internal control over financial reporting contained material weaknesses. The weakness will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and our management has concluded, through testing, that these controls are operating effectively.
Based on our assessment, as of December 31, 2023, we concluded that our internal control over financial reporting contained material weaknesses. The weakness will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and our management has concluded, through testing, that these controls are operating effectively.
Our loss of access to our private keys or our experience of a data loss relating to our digital wallets could adversely affect our business. 54 Cryptocurrencies are controllable only by the possessor of both the unique public and private keys relating to the local or online digital wallet in which they are held, which wallet’s public key or address is reflected in the network’s public blockchain.
Our loss of access to our private keys or our experience of a data loss relating to our digital wallets could adversely affect our business. 62 Cryptocurrencies are controllable only by the possessor of both the unique public and private keys relating to the local or online digital wallet in which they are held, which wallet’s public key or address is reflected in the network’s public blockchain.
As a Bitcoin mining company, we do not believe we are an issuer of any “securities” as defined under U.S. federal securities laws. Our internal process for determining whether the digital assets we hold or plan to hold is based upon the public statements of the SEC and existing case law.
As a Bitcoin mining company, we do not believe we are an issuer of any “securities” as defined under the federal securities laws. Our internal process for determining whether the digital assets we hold or plan to hold is based upon the public statements of the SEC and existing case law.
This metrics can be fundamentally impacted by the functionality of the global supply chain, which plays several roles in the lifting solutions business. For example, supply chain disruptions could delay the delivery of critical parts and components needed for maintenance and repair of lifting assets, leading to longer downtime periods and reduced utilization rates.
These metrics can be fundamentally impacted by the functionality of the global supply chain, which plays several roles in the lifting solutions business. For example, supply chain disruptions could delay the delivery of critical parts and components needed for maintenance and repair of lifting assets, leading to longer downtime periods and reduced utilization rates.
In consideration therefor, AVLP issued Ault Alpha a term note in the principal amount of $3.6 million, which term note had a maturity date of June 30, 2022. 68 On June 27, 2022, AVLP exchanged the term note it had issued to Ault Alpha for a 10% senior secured convertible note in the principal face amount of $3.8 million due June 15, 2024 (the “Ault Alpha Note”).
In consideration therefor, AVLP issued Ault Alpha a term note in the principal amount of $3.6 million, which term note had a maturity date of June 30, 2022. 77 On June 27, 2022, AVLP exchanged the term note it had issued to Ault Alpha for a 10% senior secured convertible note in the principal face amount of $3.8 million due June 15, 2024 (the “Ault Alpha Note”).
For the years ended December 31, 2022 and 2021, approximately 16.9% and 35.9% of our revenue, respectively, was denominated in currencies other than U.S. dollars. Our results of operations could also be negatively impacted by a strengthening of the U.S. dollar as a large portion of our costs are U.S. dollar denominated.
For the years ended December 31, 2023 and 2022, approximately 16.9% and 35.9% of our revenue, respectively, was denominated in currencies other than U.S. dollars. Our results of operations could also be negatively impacted by a strengthening of the U.S. dollar as a large portion of our costs are U.S. dollar denominated.
Uncertainty about economic conditions may increase foreign currency volatility in markets in which it transacts business, which could have an adverse effect on Circle 8 operating results. The inability to forecast trends accurately may have an adverse impact on Circle 8’s business and financial condition. An economic downturn or economic uncertainty makes it difficult to forecast trends.
Uncertainty about economic conditions may increase foreign currency volatility in markets in which it transacts business, which could have an adverse effect on Circle 8’s operating results. 52 The inability to forecast trends accurately may have an adverse impact on Circle 8’s business and financial condition. An economic downturn or economic uncertainty makes it difficult to forecast trends.
Circle 8. employee’s union organizing efforts or collective bargaining negotiations could potentially lead to work stoppages and/or slowdowns or strikes by certain of Circle 8 employees, which could adversely affect its ability to serve its customers. Climate change, climate change regulations and greenhouse effects may materially adversely impact Circle 8 operations and markets.
Any Circle 8 employee’s union organizing efforts or collective bargaining negotiations could potentially lead to work stoppages and/or slowdowns or strikes by certain Circle 8 employees, which could adversely affect its ability to serve its customers. Climate change, climate change regulations and greenhouse effects may materially adversely impact Circle 8 operations and markets.
A fork in the network of a particular cryptocurrency could adversely affect an investment in our securities or our ability to operate. 61 Since August 1, 2017, Bitcoin’s blockchain was forked multiple times creating alternative versions of the cryptocurrency such as Bitcoin Cash, Bitcoin Gold and Bitcoin SV.
A fork in the network of a particular cryptocurrency could adversely affect an investment in our securities or our ability to operate. 70 Since August 1, 2017, Bitcoin’s blockchain was forked multiple times creating alternative versions of the cryptocurrency such as Bitcoin Cash, Bitcoin Gold and Bitcoin SV.
However, if BNC does not successfully develop its business within the foreseeable future, it could be required to seek additional capital, which could result in a decrease in the value of our shares of Series B Preferred, whether due to dilution or the terms of such financing.
However, if BNC does not successfully develop its business within the foreseeable future, ROI could be required to seek additional capital, which could result in a decrease in the value of our shares of Series B Preferred, whether due to dilution or the terms of such financing.
Our operating results have in the past been subject to quarter-to-quarter fluctuations, and we expect that these fluctuations will continue, and may increase in magnitude, in future periods. Demand for our products is driven by many factors, including the availability of funding for our products in our customers’ capital budgets.
Our operating results may vary from quarter to quarter. Our operating results have in the past been subject to quarter-to-quarter fluctuations, and we expect that these fluctuations will continue, and may increase in magnitude, in future periods. Demand for our products is driven by many factors, including the availability of funding for our products in our customers’ capital budgets.
This inherent competitive limitation gives others an advantage in pursuing acquisition and investment opportunities. 65 Furthermore, our subsidiaries also face competition from both traditional and new market entrants that may adversely affect them as well, as discussed elsewhere in these risk factors.
This inherent competitive limitation gives others an advantage in pursuing acquisition and investment opportunities. 74 Furthermore, our subsidiaries also face competition from both traditional and new market entrants that may adversely affect them as well, as discussed elsewhere in these risk factors.
We are required to comply with certain provisions of Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”). Section 404 requires that we document and test our internal control over financial reporting and issue management’s assessment of our internal control over financial reporting. Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021.
We are required to comply with certain provisions of Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”). Section 404 requires that we document and test our internal control over financial reporting and issue management’s assessment of our internal control over financial reporting. Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023.
In addition, climate change may also reduce the availability or increase the cost of insurance for weather-related events as well as may impact the global economy, including as a result of disruptions to supply chains. Circle 8 anticipates that climate change-related risks will increase over time.
In addition, climate change may also reduce the availability or increase the cost of insurance for weather-related events and may impact the global economy, including as a result of disruptions to supply chains. Circle 8 anticipates that climate change-related risks will increase over time.
The following factors, many of which are beyond our control, may influence our stock price: · the status of our growth strategy including the development of new products with any proceeds we may be able to raise in the future; · announcements of technological or competitive developments; · announcements or expectations of additional financing efforts; · our ability to market new and enhanced products on a timely basis; · changes in laws and regulations affecting our business; · commencement of, or involvement in, litigation involving us; · regulatory developments affecting us, our customers or our competitors; · announcements regarding patent or other intellectual property litigation or the issuance of patents to us or our competitors or updates with respect to the enforceability of patents or other intellectual property rights generally in the US or internationally; · actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us; 92 · changes in the market’s expectations about our operating results; · our operating results failing to meet the expectations of securities analysts or investors in a particular period; · changes in the economic performance or market valuations of our competitors; · additions or departures of our executive officers; · sales or perceived sales of our common stock by us, our insiders or our other stockholders; · share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; and · general economic, industry, political and market conditions and overall fluctuations in the financial markets in the United States and abroad, including as a result of ongoing COVID-19 pandemic.
The following factors, many of which are beyond our control, may influence our stock price: · the status of our growth strategy including the development of new products with any proceeds we may be able to raise in the future; · announcements of technological or competitive developments; · announcements or expectations of additional financing efforts; · our ability to market new and enhanced products on a timely basis; · changes in laws and regulations affecting our business; · commencement of, or involvement in, litigation involving us; · regulatory developments affecting us, our customers or our competitors; · announcements regarding patent or other intellectual property litigation or the issuance of patents to us or our competitors or updates with respect to the enforceability of patents or other intellectual property rights generally in the US or internationally; · actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us; · changes in the market’s expectations about our operating results; · our operating results failing to meet the expectations of securities analysts or investors in a particular period; · changes in the economic performance or market valuations of our competitors; · additions or departures of our executive officers; · sales or perceived sales of our common stock by us, our insiders or our other stockholders; · share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; and · general economic, industry, political and market conditions and overall fluctuations in the financial markets in the United States and abroad.
If this occurs, you may lose some or all of your investment. 52 Our future success will depend in large part upon the value of Bitcoin. The value of Bitcoin may be subject to pricing risk and has historically been subject to wide swings.
If this occurs, you may lose some or all of your investment. Our future success will depend in part upon the value of Bitcoin. The value of Bitcoin may be subject to pricing risk and has historically been subject to wide swings.
We evaluate our disclosure controls and procedures as of the end of each fiscal quarter, and annually review and evaluate our internal control over financial reporting in order to comply with the Commission’s rules relating to internal control over financial reporting adopted pursuant to the Sarbanes-Oxley Act of 2002.
We evaluate our disclosure controls and procedures as of the end of each fiscal quarter, and annually review and evaluate our internal control over financial reporting in order to comply with the SEC’s rules relating to internal control over financial reporting adopted pursuant to the Sarbanes-Oxley Act of 2002.
If we fail to maintain compliance under Section 404, or if our internal control over financial reporting continues to not be effective as defined under Section 404, we could be subject to sanctions or investigations by the NYSE American, the Commission, or other regulatory authorities.
If we fail to maintain compliance under Section 404, or if our internal control over financial reporting continues to not be effective as defined under Section 404, we could be subject to sanctions or investigations by the NYSE American, the SEC, or other regulatory authorities.
Circle 8 has the ability to increase the CITN loan by $10 million. Circle 8 may further increase its debt balance where permitted by incumbent lenders for growth and expansionary purposes. Circle 8’s substantial indebtedness could have important consequences.
Circle 8 has the ability to increase the FCB loan by $10 million. Circle 8 may further increase its debt balance where permitted by incumbent lenders for growth and expansionary purposes. Circle 8’s substantial indebtedness could have important consequences.
If Circle 8 has insufficient capital to cover its debt obligations, it may be forced to reduce or delay ongoing or growth activities and capital expenditures, sell assets, obtain additional debt or dilutive equity capital or restructure or refinance all or a portion of its debt, including the incumbent CITN and DLL loans, and any other incremental loans, on or before maturity.
If Circle 8 has insufficient capital to cover its debt obligations, it may be forced to reduce or delay ongoing or growth activities and capital expenditures, sell assets, obtain additional debt or dilutive equity capital or restructure or refinance all or a portion of its debt, including the incumbent FCB, DLL and MidCap loans, and any other incremental loans, on or before maturity.
We sold BNC to BMI under the assumption that BNC is worth $100 million, of which we would receive shares of Series B Preferred valued at $86 million, assuming BMI obtains Shareholder Approval, as discussed above.
We sold BNC to ROI under the assumption that BNC is worth $100 million, of which we would receive shares of Series B Preferred valued at $86 million, assuming ROI obtains Shareholder Approval, as discussed above.
Management has identified the following material weakness which has caused management to conclude that as of December 31, 2022, our internal control over financial reporting (“ICFR”) was not effective at the reasonable assurance level.
Management has identified the following material weakness which has caused management to conclude that as of December 31, 2023, our internal control over financial reporting (“ICFR”) was not effective at the reasonable assurance level.
For example, a digital asset that is a security may generally only be offered or sold pursuant to a registration statement filed with the SEC or in an offering that qualifies for an exemption from registration.
For example, a digital asset that is a security in the United States may generally only be offered or sold in the United States pursuant to a registration statement filed with the SEC or in an offering that qualifies for an exemption from registration.
There can be no assurance that BMI would be able to raise the requisite financing to maintain or develop its business on reasonably favorable terms, whether to it or to us, if at all.
There can be no assurance that ROI would be able to raise the requisite financing to maintain or develop its business on reasonably favorable terms, whether to it or to us, if at all.
However, as demand has increased and scarcity in the supply of new miners has resulted, the price of new miners has increased sharply, and we expect this process to continue in the future as demand for Bitcoin increases.
Further, as demand has increased and scarcity in the supply of new miners has resulted, the price of new miners has increased sharply, and we expect this process to continue in the future as demand for Bitcoin increases.
In recent months, members of Congress have made inquiries into the regulation of crypto assets, and Gary Gensler, Chair of the Commission, has made public statements regarding increased regulatory oversight of crypto assets.
In recent months, members of Congress have made inquiries into the regulation of crypto assets, and Gary Gensler, Chair of the SEC, has made public statements regarding increased regulatory oversight of crypto assets.
No assurance of successful expansion of operations. Our significant increase in the scope and the scale of our operations, including the hiring of additional personnel, has resulted in significantly higher operating expenses. We anticipate that our operating expenses will continue to increase. Expansion of our operations may also make significant demands on our management, finances and other resources.
Our significant increase in the scope and the scale of our operations, including the hiring of additional personnel, has resulted in significantly higher operating expenses. We anticipate that our operating expenses will continue to increase. Expansion of our operations may also make significant demands on our management, finances and other resources.
Pursuant to a security agreement entered into by Avalanche and Ault Alpha, as amended by an intercreditor agreement entered into by and among the foregoing parties, our company and certain other persons, Ault Alpha has a second priority interest in AVLP’s assets securing the repayment of the Ault Alpha Note.
Pursuant to a security agreement entered into by Avalanche and Ault Alpha, as amended by an intercreditor agreement entered into by and among the foregoing parties, our company and certain other persons, Ault Alpha was granted a second priority interest in AVLP’s assets securing the repayment of the Ault Alpha Note.
Currently, there are approximately 19 million Bitcoin in circulation representing about 90% of the total supply of Bitcoin under the current source code. For the foregoing reasons, the halving feature exposes us to inherent uncertainty and reliance upon the historically volatile price of Bitcoin, rendering an investment in us particularly speculative, especially in the long-term.
Currently, there are approximately 19.7 million Bitcoin in circulation representing about 93.6% of the total supply of Bitcoin under the current source code. For the foregoing reasons, the halving feature exposes us to inherent uncertainty and reliance upon the historically volatile price of Bitcoin, rendering an investment in us particularly speculative, especially in the long-term.
As a result, new laws and regulations may be proposed and adopted in the United States and internationally, or existing laws and regulations may be interpreted in new ways, that harm the crypto economy or crypto asset platforms, which could adversely impact our business. Pending regulation related to electricity consumption by mining companies may impact our result of operation.
As a result, new laws and regulations may be proposed and adopted in the United States and internationally, or existing laws and regulations may be interpreted in new ways, that harm the crypto economy or crypto asset platforms, which could adversely impact our business. 65 Pending regulation related to electricity consumption by mining companies may impact our results of operations.
In the event that BNC ever develops a significant intellectual property portfolio, it would face similar challenges that established companies do. In addition, various "non-practicing entities" that own patents and other intellectual property rights often attempt to aggressively assert their rights in order to extract value from technology companies.
In the event that BNC ever develops a significant intellectual property portfolio, it would face similar challenges that established companies do. In addition, various “non-practicing entities” that own patents and other intellectual property rights often attempt to aggressively assert their rights in order to extract value from technology companies.
These activities are subject to the uncertainties associated with international business operations, including trade barriers and other restrictions, changes in trade policies, governmental regulations, currency exchange fluctuations, reduced protection for intellectual property, war and other military activities, terrorism, changes in social, political, or economic conditions, and other disruptions or delays in production or shipments, any of which could have a materially adverse effect on our business, financial condition, and/or operating results. 84 We depend on international sales for a portion of our revenues.
These activities are subject to the uncertainties associated with international business operations, including trade barriers and other restrictions, changes in trade policies, governmental regulations, currency exchange fluctuations, reduced protection for intellectual property, war and other military activities, terrorism, changes in social, political, or economic conditions, and other disruptions or delays in production or shipments, any of which could have a materially adverse effect on our business, financial condition, and/or operating results.
It can be expected that Circle 8’s quarterly results will continue to fluctuate in the future due to a number of factors, including the following: • general economic conditions in the markets in which the company operates; 44 • the cyclical nature of Circle 8’s customers’ business, particularly Circle 8’s oil services customer and prospective customers in the construction industry; • sales patterns in general in the construction industry, with sales activity tending to be lower in the winter months, which causes significant volatility in utilization; • changes in the size of Circle 8’s fleet due to rapid growth followed by a slow-down and Circle 8’s ability to service and maintain its fleet in a timely manner; • an overcapacity of fleet in the crane services industry; • severe weather and seismic conditions temporarily affecting the regions in which Circle 8 operates; • supply chain or other disruptions that impact its ability to obtain equipment and other supplies from key suppliers on acceptable terms or at all; • changes in corporate spending for plants and facilities or changes in government spending for infrastructure projects; • changes in interest rates and related changes in Circle 8’s interest expense and debt service obligations; or • the possible need, from time to time, to record impairment charges or other write-offs or charges due to a variety of occurrences, such as the impairment of assets, existing location divestitures, dislocation in the equity and/or credit markets, consolidations or closings, restructurings, or the refinancing of existing indebtedness.
It can be expected that Circle 8’s quarterly results will continue to fluctuate in the future due to a number of factors, including the following: · general economic conditions in the markets in which the company operates; · the cyclical nature of Circle 8’s customers’ business, particularly Circle 8’s oil services customer and prospective customers in the construction industry; · sales patterns in general in the construction industry, with sales activity tending to be lower in the winter months, which causes significant volatility in utilization; · changes in the size of Circle 8’s fleet due to rapid growth followed by a slow-down and Circle 8’s ability to service and maintain its fleet in a timely manner; · an overcapacity of fleet in the crane services industry; · severe weather and seismic conditions temporarily affecting the regions in which Circle 8 operates; · supply chain or other disruptions that impact its ability to obtain equipment and other supplies from key suppliers on acceptable terms or at all; · changes in corporate spending for plants and facilities or changes in government spending for infrastructure projects; · changes in interest rates and related changes in Circle 8’s interest expense and debt service obligations; or · the possible need, from time to time, to record impairment charges or other write-offs or charges due to a variety of occurrences, such as the impairment of assets, existing location divestitures, dislocation in the equity and/or credit markets, consolidations or closings, restructurings, or the refinancing of existing indebtedness. 53 Circle 8 is subject to competition, which may have a material adverse effect on its business by reducing its ability to increase or maintain revenues or profitability.
On June 1, 2022, we converted the entire principal and accrued interest on the Prior AVLP Note into an aggregate of 51.9 million shares of common stock of Avalanche, representing approximately 90.2% of Avalanche’s issued and outstanding shares of common stock. There is currently no liquid market for the Avalanche common stock.
On June 1, 2022, we converted the entire principal and accrued interest on the AVLP Loan Agreement into an aggregate of 51.9 million shares of common stock of Avalanche, representing approximately 90.2% of Avalanche’s issued and outstanding shares of common stock. There is currently no liquid market for the Avalanche common stock.
If BNC does not successfully develop its business, the shares that we own as well as those we are entitled to may have very little value, if any.
Risks Related to RiskOn Risks Related to BNC If BNC does not successfully develop its business, the shares that we own as well as those we are entitled to may have very little value, if any.
Sales to customers outside of North America accounted for 19% and 37% of net revenues for the years ended December 31, 2022 and 2021, respectively, and we expect that international sales will continue to represent a material portion of our total revenues.
We depend on international sales for a portion of our revenues. Sales to customers outside of North America accounted for 19% and 37% of net revenues for the years ended December 31, 2023 and 2022, respectively, and we expect that international sales will continue to represent a material portion of our total revenues.
If we are unable to remedy these failures or defects or if we cannot effect such required product modifications, we could experience lost revenues, increased costs, including inventory write-offs, warranty expense and costs associated with customer support, delays in, or cancellations or rescheduling of, orders or shipments and product returns or discounts, any of which would harm our business. 85 Some of our business is subject to U.S.
If we are unable to remedy these failures or defects or if we cannot effect such required product modifications, we could experience lost revenues, increased costs, including inventory write-offs, warranty expense and costs associated with customer support, delays in, or cancellations or rescheduling of, orders or shipments and product returns or discounts, any of which would harm our business.
Ongoing concerns about the systemic impact of potential long-term and widespread recession and potentially prolonged economic recovery, volatile energy costs, fluctuating commodity prices and interest rates, volatile exchange rates, geopolitical issues, including the recent outbreak of armed conflict in Ukraine, natural disasters and pandemic illness, instability in credit markets, cost and terms of credit, consumer and business confidence and demand, a changing financial, regulatory and political environment, and substantially increased unemployment rates have all contributed to increased market volatility and diminished expectations for many established and emerging economies, including those in which we operate.
Ongoing concerns about the systemic impact of potential long-term and widespread recession and potentially prolonged economic recovery, volatile energy costs, fluctuating commodity prices and interest rates, volatile exchange rates, geopolitical issues, including the conflicts between Russia and Ukraine and between Israel and Hamas, natural disasters and pandemic illness, instability in credit markets, cost and terms of credit, consumer and business confidence and demand, a changing financial, regulatory and political environment, and substantially increased unemployment rates have all contributed to increased market volatility and diminished expectations for many established and emerging economies, including those in which we operate.
Therefore, if the price of Bitcoin is not sufficiently high to allow us to fund our hash rate growth through new miner acquisitions and if we are otherwise unable to access additional capital to acquire these miners, our hash rate may stagnate and we may fall behind our competitors.
Therefore, if and when we do look to purchase additional miners, if the price of Bitcoin is not sufficiently high to allow us to fund our hash rate growth through new miner acquisitions and if we are otherwise unable to access additional capital to acquire these miners, our hash rate may further stagnate and we may fall behind our competitors.
We would far prefer to rely on these entities’ assistance compared to other sources of financing as the terms they provide us are in general more favorable to us than we could obtain elsewhere. However, Messrs.
We would far prefer to rely on Ault & Company’s assistance compared to other sources of financing as the terms they provide us are in general more favorable to us than we could obtain elsewhere. However, Messrs.
For the years ended December 31, 2022 and 2021, the effects of exchange rates on our cash, cash equivalents, and restricted cash totaled $0.9 million and $0.3 million, respectively, due to fluctuations in exchange rates and the strengthening of the U.S. dollar.
For the years ended December 31, 2023 and 2022, the effects of exchange rates on our cash, cash equivalents, and restricted cash totaled ($0.8) million and $0.9 million, respectively, due to fluctuations in exchange rates and the strengthening of the U.S. dollar.
As of December 31, 2022, we had federal and state net operating loss carry forwards (“NOLs”) for income tax purposes of approximately $23.7 million and $104.2 million, respectively, after application of the limitations set forth in Section 382 of the Internal Revenue Code.
As of December 31, 2023, we had federal and state net operating loss carryforwards (“NOLs”) for income tax purposes of approximately $23.7 million and $104.2 million, respectively, after application of the limitations set forth in Section 382 of the Internal Revenue Code.
We are subject to the examination of our income tax returns by the Internal Revenue Service and foreign tax authorities in the jurisdictions in which we operate, and we may be subject to assessments or audits in the future in any such jurisdictions.
We are subject to the examination of our income tax returns by the IRS and foreign tax authorities in the jurisdictions in which we operate, and we may be subject to assessments or audits in the future in any such jurisdictions.
Ault & Company Our relationship with Ault & Company may enhance the difficulty inherent in obtaining financing for us as well as expose us to certain conflicts of interest. As of April 17, 2023, Ault & Company, of which Milton C.
Ault & Company Our relationship with Ault & Company may enhance the difficulty inherent in obtaining financing for us as well as expose us to certain conflicts of interest. As of April 15, 2024, Ault & Company, of which Milton C.
Changes, bugs, or technical issues in such systems, or changes in BNC’s relationships with mobile operating system partners, handset manufacturers, browser developers, or mobile carriers, or in the content or application of their terms of service or policies that degrade BNC’s products’ functionality, reduce or eliminate BNC’s ability to update or distribute BNC’s products, give preferential treatment to competitive products, limit BNC’s ability to deliver, target, or measure the effectiveness of ads, or charge fees related to the distribution of BNC’s products or BNC’s delivery of ads have in the past adversely affected, and could in the future adversely affect, the usage of BNC’s products and monetization on mobile devices. 71 BNC’s products and changes to such products could fail to attract or retain users or generate revenue and profits, or otherwise adversely affect BNC’s business.
Changes, bugs, or technical issues in such systems, or changes in BNC’s relationships with mobile operating system partners, handset manufacturers, browser developers, or mobile carriers, or in the content or application of their terms of service or policies that degrade BNC’s products’ functionality, reduce or eliminate BNC’s ability to update or distribute BNC’s products, give preferential treatment to competitive products, limit BNC’s ability to deliver, target, or measure the effectiveness of ads, or charge fees related to the distribution of BNC’s products or BNC’s delivery of ads have in the past adversely affected, and could in the future adversely affect, the usage of BNC’s products and monetization on mobile devices.

… 559 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

8 edited+0 added−1 removed0 unchanged
Biggest changeOur leases expire between August 2023 and May 2026. The annual base rent under the leases, payable on a monthly basis, was approximately $0.5 million during 2022. Our GIGA segment also leases 65,390 square feet of office and manufacturing space internationally in Salisbury, United Kingdom, Dorset, United Kingdom, and Karmeil, Israel.
Biggest changeOur GIGA segment also leases 65,390 square feet of office and manufacturing space internationally in Salisbury, United Kingdom, Dorset, United Kingdom, and Karmeil, Israel. The annual base rent, payable on a monthly basis, was approximately $0.5 million in 2023. The leases expire between September 2024 and May 2031.
We currently anticipate that the current leased space will be sufficient to support our current and foreseeable future needs.
We currently anticipate that the current leased space will be sufficient to support our current and foreseeable future needs. 115
The annual base rent, payable on a monthly basis, was approximately $0.5 million in 2022. The leases expire between September 2024 and May 2031. 100 Our TurnOnGreen segment leases 39,965 square feet of office, engineering, laboratory and warehouse space in two locations in Milpitas, California. Our leases expire between November 2024 and January 2026.
Our TurnOnGreen segment leases 39,965 square feet of office, engineering, laboratory and warehouse space in two locations in Milpitas, California. Our leases expire between November 2024 and January 2026. The annual base rent under the leases, payable on a monthly basis, was approximately $0.5 million during 2023.
Our Energy segment crane rental business leases 27,909 of commercial buildings and 10 acres of land in Carthage, Texas,Clinton, Oklahoma, Houston, Texas, and Robstown, Texas. Our leases expire between March 2024 and April 20227. The annual base rent under the leases, payable on a monthly basis, was approximately $23,000 in 2022.
Our Energy segment crane rental business leases 27,909 of commercial buildings and 10 acres of land in Carthage, Texas, Clinton, Oklahoma, Houston, Texas, and Robstown, Texas. Our leases expire between March 2024 and April 2027. The annual base rent under the leases, payable on a monthly basis, was approximately $0.5 million in 2023.
ITEM 2. PROPERTIES Our corporate headquarters office utilizes 9,560 square feet of leased office space in Las Vegas, Nevada. One of our Las Vegas leases commenced in January 2021, expired in December 2022, and is currently leased on a month-to-month basis. Our other Las Vegas lease commenced in August 2021 and expires in August 2024.
ITEM 2. PROPERTIES Our corporate headquarters office utilizes 17,376 square feet of leased office space in Las Vegas, Nevada. One of our Las Vegas leases is currently leased on a month-to-month basis. Our other Las Vegas lease commenced in August 2021 and expires in August 2024.
The annual base rent under the leases, payable on a monthly basis, was approximately $0.3 million during 2022. We also lease additional corporate offices in Costa Mesa, California and New York, New York. Our leases expire between April 2023 and December 2024. The annual base rent under the leases, payable on a monthly basis, was approximately $0.3 million during 2022.
The annual base rent under the leases, payable on a monthly basis, was approximately $0.3 million during 2023. We also lease additional corporate offices in Costa Mesa, California and New York, New York. Some leases previously expired and are now on a month-to-month basis, while remaining leases expire between December 2024 and July 2026.
The annual base rent under the leases, payable on a monthly basis, was approximately $0.5 million during 2022. Our SMC segment leases 92,500 square feet of office and warehouse space in Ft. Lauderdale, Florida and Ontario, California. Our leases expire between August 2023 and March 2024.
Our GIGA segment leases 47,771 square feet of office, engineering, laboratory and warehouse space in Scottsdale, Arizona, Shelton, Connecticut and Dublin, California. Our leases expire between August 2023 and May 2026. The annual base rent under the leases, payable on a monthly basis, was approximately $0.5 million during 2023.
We own a 617,000 square foot data center in Dowagiac, Michigan, in which we operate our cryptocurrency mining operations for our BNI segment, in addition to renting commercial office and warehouse space. Our GIGA segment leases 47,771 square feet of office, engineering, laboratory and warehouse space in Scottsdale, Arizona, Shelton, Connecticut and Dublin, California.
The annual base rent under the leases, payable on a monthly basis, was approximately $0.2 million during 2023. We own a 617,000 square foot data center in Dowagiac, Michigan, in which we operate our cryptocurrency mining operations for Sentinum, in addition to renting commercial office and warehouse space.
Removed
The annual base rent under the leases, payable on a monthly basis, was approximately $93,000 during 2022. Our AGREE segment owns and operates three hotels in Middleton, Wisconsin, a hotel and undeveloped land in Rockford, Illinois, all of which are subject to a mortgage, and a parcel of land in St. Peterburg, Florida.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−13 removed5 unchanged
Biggest changeHowever, the outcome of such matters is inherently unpredictable and subject to significant uncertainties. Blockchain Mining Supply and Services, Ltd. On November 28, 2018, Blockchain Mining Supply and Services, Ltd.
Biggest changeHowever, the outcome of such matters is inherently unpredictable and subject to significant uncertainties.
Removed
(“Blockchain Mining”) a vendor who sold computers to our subsidiary, filed a Complaint (the “Complaint”) in the United States District Court for the Southern District of New York against us and our subsidiary, Digital Farms, Inc. (f/k/a Super Crypto Mining, Inc.), in an action captioned Blockchain Mining Supply and Services, Ltd. v.
Removed
Super Crypto Mining, Inc. and DPW Holdings, Inc. , Case No. 18-cv-11099. The Complaint asserts claims for breach of contract and promissory estoppel against us and our subsidiary arising from the subsidiary’s alleged failure to honor its obligations under the purchase agreement. The Complaint seeks monetary damages in excess of $1.4 million, plus attorneys’ fees and costs.
Removed
Based on our assessment of the facts underlying the claims, the uncertainty of litigation, and the preliminary stage of the case, we cannot reasonably estimate the potential loss or range of loss that may result from this action.
Removed
Notwithstanding, we have established a $1.3 million reserve, the amount of the unpaid portion of the purchase agreement, which is included in accounts payable and accrued expenses.
Removed
An unfavorable outcome may have a material adverse effect on our business, financial condition and results of operations. 101 Ding Gu (a/k/a Frank Gu) and Xiaodan Wang Litigation On January 17, 2020, Ding Gu (a/k/a Frank Gu) (“Gu”) and Xiaodan Wang (“Wang” and with “Gu” collectively, “Plaintiffs”), filed a Complaint (the “Complaint”) in the Supreme Court of the State of New York, County of New York against us and our Chief Executive Officer, Milton C.
Removed
Ault, III, in an action captioned Ding Gu (a/k/a Frank Gu) and Xiaodan Wang v. DPW Holdings, Inc. and Milton C. Ault III (a/k/a Milton Todd Ault III a/k/a Todd Ault) , Index No. 650438/2020.
Removed
The Complaint asserts causes of action for declaratory judgment, specific performance, breach of contract, conversion, attorneys’ fees, permanent injunction, enforcement of Guaranty, unjust enrichment, money had and received, and fraud arising from: (i) a series of transactions entered into between Gu and us, as well as Gu and Ault, in or about May 2019; and (ii) a term sheet entered into between Plaintiffs and DPW, in or about July 2019.
Removed
The Complaint seeks, among other things, monetary damages in excess of $1.1 million, plus a decree of specific performance directing DPW to deliver unrestricted shares of DPW’s common stock to Gu, plus attorneys’ fees and costs.
Removed
On or about November 28, 2022, we and Plaintiffs entered into a stipulation of settlement (the “Stipulation of Settlement”), which Stipulation of Settlement was further amended by us and Plaintiffs, by amendments dated, January 12, 2023, February 2, 2023, and February 23, 2023. On or about December 12, 2022, Plaintiffs and Mr.
Removed
Ault entered into a stipulation of discontinuance, pursuant to which, among other things, Plaintiffs dismissed all claims asserted against Mr. Ault in the action, with prejudice. SEC Subpoena The Company and certain affiliates and related parties have received several subpoenas from the SEC for the production of documents and testimony.
Removed
The Company is fully cooperating with this non-public, fact-finding inquiry and management believes that the Company has operated its business in compliance with all applicable laws.
Removed
The subpoenas expressly provide that the inquiry is not to be construed as an indication by the Commission or its staff that any violations of the federal securities laws have occurred, nor should they be considered a reflection upon any person, entity or security. However, there can be no assurance as to the outcome of this matter.
Removed
The Company recorded a $1.0 million loss contingency related to this matter.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed3 unchanged
Biggest changeCommon Stock Purchased Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under Plans or Programs October 1, 2022 – October 31, 2022 1,034,776 $ 0.18 November 1, 2022 – November 30, 2022 415,353 $ 0.16 December 1, 2022 – December 31, 2022 3,500,000 $ 0.11 Total 4,950,129 $ 0.13 - - 103 Series D Preferred Stock Purchased Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under Plans or Programs October 1, 2022 – October 31, 2022 151 $ 13.5 November 1, 2022 – November 30, 2022 - $ - December 1, 2022 – December 31, 2022 - $ - Total 151 $ 13.5 - - ITEM 6.
Biggest changeCommon Stock Purchased Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under Plans or Programs October 1, 2023 – October 31, 2023 - $ - November 1, 2023 – November 30, 2023 13,866 $ 2.22 December 1, 2023 – December 31, 2023 - $ - Total 13,866 $ 2.22 - - 117 Series D Preferred Stock Purchased Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under Plans or Programs October 1, 2023 – October 31, 2023 - $ - November 1, 2023 – November 30, 2023 178 $ 21.96 December 1, 2023 – December 31, 2023 - $ - Total 178 $ 21.96 - - ITEM 6.
Recent Sales of Unregistered Securities Not applicable. Purchases of Equity Securities by the Issuer and Affiliated Purchasers From October 1, 2022 through December 31, 2022, Ault Alpha LP purchased 4,950,129 shares of common stock and 151 shares of Series D Preferred Stock.
Recent Sales of Unregistered Securities Not applicable. Purchases of Equity Securities by the Issuer and Affiliated Purchasers From October 1, 2023 through December 31, 2023, Ault Alpha LP purchased 13,866 shares of common stock and 178 shares of Series D Preferred Stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed on the NYSE American under the symbol AULT. Record Holders As of April 17, 2023, 415,746,694 shares of our common stock were issued and outstanding and were owned by 39 holders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed on the NYSE American under the symbol AULT. Record Holders As of April 15, 2024, 30,065,339 shares of our common stock were issued and outstanding and were owned by 5 holders of record.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

3 edited+0 added−0 removed0 unchanged
Biggest changeItem 6. Reserved 104 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 104 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 119 Item 8. Financial Statements and Supplementary Data F-1 – F-58 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 119 Item 9A. Controls and Procedures 120 Item 9B.
Biggest changeItem 6. Reserved 118 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 118 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 134 Item 8. Financial Statements and Supplementary Data F-1 – F-53 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 134 Item 9A. Controls and Procedures 135 Item 9B.
Other Information 121 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 121 PART III Item 10. Directors, Executive Officers and Corporate Governance 122 Item 11. Executive Compensation 128 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 132 Item 13. Certain Relationships and Related Transactions, and Director Independence 134 Item 14.
Other Information 137 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 137 PART III Item 10. Directors, Executive Officers and Corporate Governance 138 Item 11. Executive Compensation 144 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 151 Item 13. Certain Relationships and Related Transactions, and Director Independence 153 Item 14.
Principal Accountant Fees and Services 135 PART IV Item 15. Exhibits and Financial Statement Schedules 137
Principal Accountant Fees and Services 161 PART IV Item 15. Exhibits and Financial Statement Schedules 162

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

76 edited+129 added−114 removed21 unchanged
Biggest changeFor the Year Ended December 31, 2022 2021 Revenue $ 61,561,000 $ 32,096,000 Revenue, cryptocurrency mining 16,693,000 3,450,000 Revenue, hotel operations 16,697,000 - Revenue, crane operations 2,739,000 - Revenue, lending and trading activities 36,644,000 16,854,000 Total revenue 134,334,000 52,400,000 Cost of revenue, products 44,508,000 22,733,000 Cost of revenue, cryptocurrency mining 21,508,000 1,125,000 Cost of revenue, hotel operations 11,406,000 - Cost of revenue, crane operations 940,000 - Total cost of revenue 78,362,000 23,858,000 Gross profit 55,972,000 28,542,000 Total operating expenses 196,140,000 46,903,000 Loss from operations (140,168,000 ) (18,361,000 ) Other income (expense): Interest and other income 2,594,000 808,000 Interest expense (42,546,000 ) (1,871,000 ) Change in fair value of equity securities, related party - (7,773,000 ) Accretion of discount on note receivable, related party - 4,210,000 Impairment of debt securities, net - (594,000 ) Change in fair value of marketable equity securities (2,144,000 ) (1,327,000 ) Gain on extinguishment of debt - 929,000 Realized (loss) gain on marketable securities (419,000 ) 1,924,000 Loss from investment in unconsolidated entity (924,000 ) (311,000 ) Impairment of equity securities (11,500,000 ) - Gain from bargain purchase of business 806,000 - Change in fair value of warrant liability (17,000 ) (542,000 ) Loss before income taxes (194,318,000 ) (22,908,000 ) Income tax (benefit) provision (4,485,000 ) 130,000 Net loss (189,833,000 ) (23,038,000 ) Net loss (income) attributable to non-controlling interest 8,017,000 (213,000 ) Net loss attributable to Ault Alliance, Inc.
Biggest changeFor the Year Ended December 31, 2023 2022 Revenue $ 76,137,000 $ 61,561,000 Revenue, digital currencies mining 33,107,000 16,693,000 Revenue, crane operations 49,198,000 2,739,000 Revenue, lending and trading activities (1,998,000 ) 36,644,000 Total revenue 156,444,000 117,637,000 Cost of revenue, products 57,788,000 44,508,000 Cost of revenue, digital currencies mining 36,446,000 21,508,000 Cost of revenue, crane operations 29,971,000 940,000 Cost of revenue, lending and trading activities 1,180,000 - Total cost of revenue 125,385,000 66,956,000 Gross profit 31,059,000 50,681,000 Total operating expenses 184,780,000 190,158,000 Loss from operations (153,721,000 ) (139,477,000 ) Other income (expense): Interest and other income 5,294,000 2,594,000 Interest expense (36,595,000 ) (37,342,000 ) Interest expense (664,000 ) - Other expense, guarantee (35,400,000 ) - Loss on extinguishment of debt (8,719,000 ) - Loss on extinguishment of debt, related party (4,164,000 ) - Loss from investment in unconsolidated entity (302,000 ) (924,000 ) Loss on deconsolidation of subsidiary (3,040,000 ) - Impairment of equity securities (9,555,000 ) (11,500,000 ) Gain from bargain purchase of business - 806,000 Gain on the sale of fixed assets 2,069,000 - Change in fair value of warrant and derivative liabilities 4,544,000 (2,280,000 ) Total other expense, net (86,532,000 ) (48,946,000 ) Loss before income taxes (240,253,000 ) (188,423,000 ) Income tax (benefit) provision 337,000 (4,485,000 ) Net loss from continuing operations (240,590,000 ) (183,938,000 ) Net loss from discontinued operations (15,704,000 ) (5,895,000 ) Net loss (256,294,000 ) (189,833,000 ) Net loss attributable to non-controlling interest 25,268,000 8,017,000 Net loss attributable to Ault Alliance, Inc.
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. 110 We are a Delaware corporation with our corporate office located at 11411 Southern Highlands Pkwy, Suite 240, Las Vegas, NV 89141.
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 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) programs and the sale of certain subsidiary or partner company interests in secondary market transactions to maximize value for our stockholders.
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.
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 some or all of our position in the subsidiary or partner company.
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 or dispose of some or all of our position in the subsidiary or partner company.
See the section entitled “ Risk Factors ” for a more detailed discussion of risks and uncertainties that may have an impact on our future results. 104 In this Annual Report, the “Company,” “ AAI ,” “we,” “us” and “our” refer to Ault Alliance, Inc., a Delaware corporation formerly known as BitNile Holdings, which was incorporated in September 2017.
See the section entitled “ Risk Factors ” for a more detailed discussion of risks and uncertainties that may have an impact on our future results. 118 In this Annual Report, the “Company,” “ AAI ,” “we,” “us” and “our” refer to Ault Alliance, Inc., a Delaware corporation formerly known as BitNile Holdings, which was incorporated in September 2017.
On June 10, 2022, we entered into an At-The-Market Issuance Sales Agreement (the “2022 Preferred Sales Agreement”) with Ascendiant to sell shares of our 13.00% Series D Cumulative Redeemable Preferred Stock (the “Preferred Shares”) having an aggregate offering price of up to $46.4 million from time to time, through an “at the market offering” program (the “2022 ATM Preferred Offering”).
On June 10, 2022, we entered into an At-The-Market Issuance Sales Agreement (the “2022 Preferred Sales Agreement”) with Ascendiant to sell shares of our 13.00% Series D Cumulative Redeemable Preferred Stock (the “Series D Preferred Shares”) having an aggregate offering price of up to $46.4 million from time to time, through an “at the market offering” program (the “2022 ATM Preferred Offering”).
Each share of Preferred Stock will also have an $11,000 liquidation preference in the event of a liquidation, change of control event, dissolution or winding up of BMI, and will rank senior to all other capital stock of BMI with respect thereto, except that the Series B Preferred and Series C Preferred shall rank pari passu.
Each share of Preferred Stock will also have an $11,000 liquidation preference in the event of a liquidation, change of control event, dissolution or winding up of ROI, and will rank senior to all other capital stock of ROI with respect thereto, except that the Series B Preferred and Series C Preferred shall rank pari passu.
Pursuant to the Certificates of Designations of the Rights, Preferences and Limitations of the Series B Preferred and the Series C Preferred (collectively, the “Preferred Stock Certificates”), each share of Preferred Stock will be convertible into a number of shares of BMI Common Stock determined by dividing the Stated Value by $0.25 (the “Conversion Price”), or 40,000 shares of BMI Common Stock.
Pursuant to the Certificates of Designations of the Rights, Preferences and Limitations of the Series B Preferred and the Series C Preferred (collectively, the “Preferred Stock Certificates”), each share of Preferred Stock will be convertible into a number of shares of ROI common stock determined by dividing the Stated Value by $0.25 (the “Conversion Price”), or 40,000 shares of ROI common stock.
The offer and sale of Preferred Shares from the 2022 ATM Preferred Offering was made pursuant to our effective “shelf” registration statement on Form S-3 and an accompanying base prospectus contained therein (Registration Statement No. 333-260618) which became effective on November 12, 2021.
The offer and sale of Series D Preferred Shares from the 2022 ATM Preferred Offering was made pursuant to our effective “shelf” registration statement on Form S-3 and an accompanying base prospectus contained therein (Registration Statement No. 333-260618) which became effective on November 12, 2021.
On January 23, 2023, we filed a Certificate of Elimination with the Secretary of State of the State of Delaware with respect to our Series C convertible redeemable preferred stock (“Series C Preferred Stock”) which, effective upon filing, eliminated the Series C Preferred Stock.
On January 23, 2023, we filed a Certificate of Elimination with the Secretary of State of the State of Delaware with respect to our Series C convertible redeemable preferred stock which, effective upon filing, eliminated the Series C convertible redeemable preferred stock.
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.
These sales or dispositions 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, dividends and, in the case of publicly traded partner companies, sales of their securities in the open market.
If BMI fails to make a dividend payment as required by the Preferred Stock Certificates, the dividend rate will be increased to 12% for as long as such default remains ongoing and uncured.
If ROI fails to make a dividend payment as required by the Preferred Stock Certificates, the dividend rate will be increased to 12% for as long as such default remains ongoing and uncured.
The Conversion Price will be subject to certain adjustments, including potential downward adjustment if BMI closes a qualified financing resulting in at least $25 million in gross proceeds at a price per share that is lower than the Conversion Price then in effect.
The Conversion Price will be subject to certain adjustments, including potential downward adjustment if ROI closes a qualified financing resulting in at least $25.0 million in gross proceeds at a price per share that is lower than the Conversion Price then in effect.
Revenues from our trading activities during the year ended December 31, 2022 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 earnings.
Revenues from our trading activities for the year ended December 31, 2023 included net losses 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 earnings.
Our phone number is 949-444-5464 and our website address is www.ault.com. Results of Operations Results of Operations for the Years ended December 31, 2022 and 2021 The following table summarizes the results of our operations for the years ended December 31, 2022 and 2021.
Our phone number is 949-444-5464 and our website address is www.ault.com. 126 Results of Operations Results of Operations for the Years ended December 31, 2023 and 2022 The following table summarizes the results of our operations for the years ended December 31, 2023 and 2022.
On November 7, 2022, we and certain of our subsidiaries borrowed $18.9 million of principal amount of term loans (the “Loans”) from a group of institutional investors (the “Financing”).
On November 7, 2022, we and certain of our subsidiaries borrowed $18.9 million of principal amount of term loans (the “Term Loans”) from a group of institutional investors (the “Financing”).
Through March 13, 2023, we received gross proceeds of approximately $177 million through the sale of approximately 317.9 million shares of common stock from the 2022 ATM Offering. The 2022 Sales Agreement has been terminated.
Through March 13, 2023, we received gross proceeds of approximately $177 million through the sale of approximately 42,382 shares of common stock from the 2022 ATM Offering. The 2022 Sales Agreement has been terminated.
In addition, if Third Avenue Apartments, LLC (“Third Avenue”), our wholly owned subsidiary, sells the property it owns in St. Peterburg, Florida, then we will use the net proceeds from the sale of such property in excess of $10 million, to repay the Note.
In addition, if Third Avenue Apartments, LLC (“Third Avenue”), our wholly owned subsidiary, sold the property it owns in St. Peterburg, Florida, then we would use the net proceeds from the sale of such property in excess of $10 million, to repay the December 2022 Note.
On December 16, 2022 we entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor (the “Investor”) providing for the issuance of a secured promissory note (the “Note”) with an aggregate principal face amount of $14.7 million (the “Financing”).
On December 16, 2022 we entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor (the “December 2022 Investor”) providing for the issuance of a secured promissory note (the “December 2022 Note”) with an aggregate principal face amount of $14.7 million.
On February 25, 2022, we entered into an At-The-Market Issuance Sales Agreement (the “2022 Sales Agreement”) with Ascendiant to sell shares of common stock having an aggregate offering price of up to $200 million from time to time, through an “at the market offering” program (the “2022 ATM Offering”).
Recent Events and Developments On February 25, 2022, we entered into an At-The-Market Issuance Sales Agreement (the “2022 Sales Agreement”) with Ascendiant Capital Markets, LLC (“Ascendiant”) to sell shares of common stock having an aggregate offering price of up to $200 million from time to time, through an “at the market offering” program (the “2022 ATM Offering”).
Net cash provided by operating activities totaled $26.5 million for the year ended December 31, 2022, compared to net cash used in operating activities of $61.7 million for the year ended December 31, 2021.
Net cash used in operating activities totaled $5.4 million for the year ended December 31, 2023, compared to net cash provided by operating activities of $26.5 million for the year ended December 31, 2022.
Other than certain rights granted to the Company relating to amendments or waiver of various negative covenants, the terms, rights, preferences and limitations of the Preferred Stock Certificates are essentially identical. The Agreement closed on March 6, 2023.
Other than certain rights granted to the Company relating to amendments or waiver of various negative covenants, the terms, rights, preferences and limitations of the Preferred Stock Certificates are essentially identical.
The decrease in cash and cash equivalents was primarily due the payment of debt and purchases of property and equipment 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 cash provided by operating activities.
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 and convertible notes partially offset by cash used in operating activities, the payment of debt, purchases of property and equipment and investments in equity securities.
The valuation of the GIGA reporting units was determined using an income approach methodology of valuation. The income approach is based on the projected cash flows discounted to their present value using discount rates that in our judgment consider the timing and risk of the forecasted cash flows using internally developed forecasts and assumptions.
The income approach was based on the projected cash flows discounted to their present value using discount rates, that in our judgment, consider the timing and risk of the forecasted cash flows using internally developed forecasts and assumptions.
Each share of Series B Preferred was originally entitled to vote with the BMI Common Stock at a rate of 10 votes per share of Common Stock into which the Series B Preferred is convertible, but that provision was subsequently eliminated.
Each share of Series B Preferred was originally entitled to vote with the ROI common stock at a rate of 10 votes per share of common stock into which the Series B Preferred is convertible, but that provision was subsequently eliminated, as were the conventional voting rights of the Series C Preferred.
The results of the quantitative test indicated the fair value of the SMC reporting unit did not exceed its carrying amounts, including goodwill, in excess of the carrying value of the goodwill. As a result, the entire $3.2 million carrying amount of SMC’s goodwill was recognized as a non-cash impairment charge during the year ended December 31, 2022.
The results of the quantitative test indicated the fair value of the AVLP reporting unit did not exceed its carrying amounts, including goodwill, in excess of the carrying value of the goodwill. As a result, the entire $18.6 million carrying amount of AVLP’s goodwill was recognized as a non-cash impairment charge during the year ended December 31, 2023.
We had a deposit of approximately $2.0 million with Compute North for services yet to be performed by Compute North. The ultimate outcome of the bankruptcy process, and its impact on our deposit remains to be determined. We assessed this financial exposure and recorded an impairment of the deposit totaling $2.0 million during the year ended December 31, 2022.
We had a deposit of approximately $2.0 million with Compute North for services yet to be performed by Compute North. We assessed this financial exposure and recorded an impairment of the deposit totaling $2.0 million during the year ended December 31, 2022.
In addition, we agreed to issue 11.6 million shares of our common stock to the Investor in exchange for the cancellation of all outstanding warrants previously issued to the Investor, which warrants were exercisable for 11.6 million shares of our common stock.
In addition, we agreed to issue 1,547 shares of our common stock to the December 2022 Investor in exchange for the cancellation of all outstanding warrants previously issued to the December 2022 Investor, which warrants were exercisable for 1,547 shares of our common stock.
Through our wholly- and majority-owned subsidiaries and strategic investments, we own and operate a data center at which we mine Bitcoin, and provide mission-critical products that support a diverse range of industries, including crane services, oil exploration, defense/aerospace, industrial, automotive, medical/biopharma, consumer electronics, hotel operations and textiles.
Through our wholly- and majority-owned subsidiaries and strategic investments, we own and operate a data center at which we mine Bitcoin, and provide mission-critical products that support a diverse range of industries, including crane services, oil exploration, defense/aerospace, industrial, automotive, medical/biopharma, consumer electronics and textiles. In addition, we extend credit to select entrepreneurial businesses through a licensed lending subsidiary. .
(“IMHC” or “TurnOnGreen”), which wholly owns TOG Technologies, Inc. (“TOG Technologies”) and Digital Power Corporation (“Digital Power”), (ii) Giga-tronics Incorporated (“GIGA”), which wholly owns Gresham Worldwide, Inc. (“GWW”), which in turn wholly owns Gresham Power Electronics Ltd. (“Gresham Power”), Enertec Systems 2001 Ltd. (“Enertec”), Relec Electronics Ltd.
(“TOG Technologies”) and Digital Power Corporation (“Digital Power”), (iii) Gresham Worldwide, Inc., formerly known as Giga-tronics Incorporated (“GIGA”), which wholly owns Gresham Holdings, Inc., formerly Gresham Worldwide, Inc. (“GWW”), which in turn wholly owns Gresham Power Electronics Ltd. (“Gresham Power”), Enertec Systems 2001 Ltd. (“Enertec”), Relec Electronics Ltd.
The Loans mature in 18 months, which may be extended to 24 months, accrue interest at the rate of 8.5% per annum and are secured by certain of our and certain of our subsidiaries’ assets.
The Term Loans matured in 18 months, which may have been extended to 24 months, accrued interest at the rate of 8.5% per annum and were secured by certain of our and certain of our subsidiaries’ assets.
In recent years, we have provided capital and relevant expertise to fuel the growth of businesses in oil exploration, defense/aerospace, industrial, automotive, medical/biopharma, karaoke audio equipment, hotel operations and textiles.
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, consumer electronics and textiles.
However, pending approval of the transaction by BMI’s shareholders, the Preferred Stock is subject to a 19.9% beneficial ownership limitation, including the Series A Convertible Preferred Stock that we acquired from BMI in June of 2022. The Agreement provides that BMI will seek shareholder approval (the “Shareholder Approval”) following the closing.
However, pending approval of the transaction by ROI’s shareholders, the Preferred Stock is subject to a 19.9% beneficial ownership limitation, including the Series A Convertible Preferred Stock that we acquired from ROI in June of 2022.
Loss From Investment in Unconsolidated Entity Loss from investment in unconsolidated entity was $0.9 million for the year ended December 31, 2022, compared to $0.3 million for the year ended December 31, 2021, representing our share of losses from our equity method investment in AVLP prior to the June 1, 2022 acquisition.
Loss from investment in unconsolidated entity was $0.3 million for the year ended December 31, 2023, representing our share of losses from our equity method investment in SMC, subsequent to the November 2023 deconsolidation.
Cash provided by operating activities for the year ended December 31, 2022 included $79.0 million net cash provided by marketable securities from trading activities related to the operations of Ault Lending, partially offset by operating losses and changes in working capital.
Cash used in operating activities for the year ended December 31, 2023 included $71.2 million net cash provided by marketable equity securities from trading activities related to the operations of Ault Lending and $29.1 million proceeds from the sale of digital currencies from our Sentinum Bitcoin mining operations, offset by operating losses and changes in working capital.
During the year ended December 31, 2022, Ault Lending generated significant income from appreciation of investments in marketable securities as well as shares of common stock underlying convertible notes and warrants issued to Ault Lending in certain financing transactions.
During the year ended December 31, 2022, Ault Lending generated income from realized gains from investments in marketable securities as well as shares of common stock underlying equity securities issued to Ault Lending in certain financing transactions. Ault Lending also generates revenue through origination fees charged to borrowers and interest generated from each loan.
We have removed the Bitcoin miners that were installed at the hosting facility in Texas. 114 Impairment of Bitcoin Mining Equipment During the year ended December 31, 2022, adverse changes in business climate, including decreases in the price of Bitcoin and resulting decrease in the market price of miners, indicated that an impairment triggering event had occurred.
During the year ended December 31, 2023, we recognized an impairment charge of $3.9 million related to property and equipment at ROI. During the year ended December 31, 2022, adverse changes in business climate, including a decrease in the price of Bitcoin and resulting decrease in the market price of miners, indicated that an impairment triggering event had occurred.
On December 29, 2022, the Company and the accredited investor entered into an amended and restated amendment to the SPA, pursuant to which the total amount of the financing was increased to $17.5 million and the Company sold an additional note to a second accredited investor. 107 Under the SPA, we are obligated to repay, while the Note remains outstanding, (i) eighty percent (80%) of the proceeds we may receive from any financing conducted, other than at-the-market offerings and (ii) one hundred percent (100%) of the proceeds we may receive from the sale of marketable securities by Ault Lending.
Under the SPA, we were obligated to repay, while the December 2022 Note remains outstanding, (i) eighty percent (80%) of the proceeds we may receive from any financing conducted, other than at-the-market offerings and (ii) one hundred percent (100%) of the proceeds we may receive from the sale of marketable securities by Ault Lending.
The valuation of the SMC reporting units was determined using a market approach with observable inputs, primarily based on the trading price of SMC’s common stock plus an estimated control premium of approximately 20%.
Due to these factors, we determined that a triggering event had occurred, and therefore, performed a goodwill impairment assessment as of December 31, 2022. The valuation of the SMC reporting units was determined using a market approach with observable inputs, primarily based on the trading price of SMC’s common stock plus an estimated control premium of approximately 20%.
The Series B Preferred and the Series C Preferred each have a stated value of $10,000 per share (the “Stated Value”), for a combined stated value of the Preferred Stock to be issued by BMI of $100 million, and subject to adjustment, are convertible into an aggregate of 400 million shares of common stock of BMI (the “BMI Common Stock”), which represent and pursuant to the Agreement will represent approximately 92.4% of BMI’s outstanding BMI Common Stock on a fully-diluted basis as of the date of the Agreement.
The Series B Preferred and the Series C Preferred each have a stated value of $10,000 per share (the “Stated Value”), for a combined stated value of the Preferred Stock to be issued by ROI, of $100 million, and subject to adjustment, are convertible into shares of common stock of ROI.
Our gross margins of 42% recognized during the year ended December 31, 2022 were impacted by the favorable margins from our lending and trading activities and negative margins from our BNI cryptocurrency mining segment due to the decline in the price of Bitcoin coupled with an increase in Bitcoin mining difficulty level.
Our gross margins of 20% recognized during the year ended December 31, 2023 were impacted by negative margins from our Sentinum digital currencies mining segment due to the increase in Bitcoin mining difficulty level, in addition to negative margins from our lending and trading activities as compared to other segments.
Starting in January 2023, the lenders have the right to require us to make monthly payments of $0.6 million, which will increase to $1.1 million in November 2023. The Loans were issued with an original issue discount of $1.89 million.
Starting in January 2023, the lenders had the right to require us to make monthly payments of $0.6 million, which increased to $1.1 million in November 2023.
General and Administrative General and administrative expenses were $67.3 million for the year ended December 31, 2022, compared to $36.7 million for the year ended December 31, 2021, an increase of $30.6 million, or 84%.
General and Administrative General and administrative expenses were $77.8 million for the year ended December 31, 2023, compared to $60.3 million for the year ended December 31, 2022, an increase of $17.5 million, or 29%.
Excluding the effects of margin from our lending and trading activities and cryptocurrency mining operations, our adjusted gross margins for the year ended December 31, 2022 and 2021 would have been 29% and 33%, respectively, with gross margins for the year ended December 31, 2022, slightly lower than our historical averages due to gross margins from SMC, which were 22%.
Excluding the effects of margin from our lending and trading activities and digital currencies mining operations, our adjusted gross margins for the year ended December 31, 2023 and 2022 would have been 30% and 29%, respectively.
(“BitNile.com”), of which we owned approximately 86%, and the remaining 14% was owned by minority shareholders (the “Minority Shareholders”), as well as Ault Iconic, (formerly Ault Media Group) and the securities of Earnity beneficially owned by BitNile.com (which represented approximately 19.9% of the outstanding equity securities of Earnity as of the date of the Agreement), in exchange for the following: (i) 8,637.5 shares of newly designated Series B Convertible Preferred Stock of BMI to be issued to our company (the “Series B Preferred”), and (ii) 1,362.5 shares of newly designated Series C Convertible Preferred Stock of BMI to be issued to the to the Minority Shareholders (the “Series C Preferred,” and together with the Series B Preferred, the “Preferred Stock”).
The February 2023 Agreement provided that, subject to the terms and conditions set forth therein, ROI would acquire all of the outstanding shares of capital stock of our then subsidiary, BNC, of which we owned approximately 86%, and the remaining 14% was owned by minority shareholders (the “Minority Shareholders”), as well as RiskOn 360, in exchange for the following: (i) 8,637.5 shares of newly designated Series B Convertible Preferred Stock of ROI that were issued to our company (the “Series B Preferred”), and (ii) 1,362.5 shares of newly designated Series C Convertible Preferred Stock of ROI that were issued to the to the Minority Shareholders (the “Series C Preferred,” and together with the Series B Preferred, the “Preferred Stock”).
Dollar, and the British Pound and Israeli Shekel. 116 Liquidity and Capital Resources On December 31, 2022, we had cash and cash equivalents of $10.5 million (excluding restricted cash of $3.6 million), compared to cash and cash equivalents of $15.9 million (excluding restricted cash of $5.3 million) at December 31, 2021.
Liquidity and Capital Resources On December 31, 2023, excluding cash and cash equivalents from discontinued operations, we had cash and cash equivalents of $8.6 million (excluding restricted cash of $5.0 million), compared to cash and cash equivalents of $7.9 million (excluding restricted cash of $0.7 million) at December 31, 2022.
Net cash used in investing activities for the year ended December 31, 2022 included $108.4 million of capital expenditures primarily related to Bitcoin mining equipment, $26.6 million for investments in equity securities, $11.1 million for the purchase of Circle 8, $8.2 million for the purchase of SMC and $3.7 million for the purchase of GIGA, net of cash received, partially offset by $11.7 million proceeds from the sale of marketable equity securities and $11.1 million principal payments received on loans receivable.
Net cash used in investing activities for the year ended December 31, 2023 was primarily related to $8.7 million purchase of property and equipment, the $11.0 million purchase of equity securities, and the $6.3 million decrease in cash from the deconsolidation of SMC, partially offset by proceeds from the sale of fixed assets of $4.5 million.
The lenders received warrants to purchase approximately 4.5 million shares of our common stock, exercisable for four years at $0.45 per share and warrants to purchase another approximately 4.5 million shares of our common stock, exercisable for four years at $0.75 per share, subject to adjustment.
The Term Loans were issued with an original issue discount of $1.9 million. 119 The lenders received warrants to purchase 604 shares of our common stock, exercisable for four years at $3,375 per share and warrants to purchase another 604 shares of our common stock, exercisable for four years at $5,625 per share, subject to adjustment.
Impairment of GIGA Goodwill During the fourth quarter of 2022, GIGA experienced a significant decline in sales and a drop in the trading price of its common stock. Due to these factors, we determined that a triggering event had occurred, and therefore, performed a goodwill impairment assessment as of December 31, 2022.
Due to these factors, we determined that a triggering event had occurred, and therefore, performed a goodwill impairment assessment as of December 31, 2022. The valuation of the GIGA reporting units was determined using an income approach methodology of valuation.
Petersburg, Florida, (vii) a future advance mortgage by ACS on the real estate property owned by ACS in Dowagiac, Michigan, and (viii) an aircraft mortgage and security agreement by Ault Aviation on the private aircraft purchased by Ault Aviation on November 7, 2022.
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.
Interest and Other Income Interest and other income was $2.6 million for the year ended December 31, 2022, compared to $0.8 million for the year ended December 31, 2021. The increase in interest and other income is primarily due to income from Ault Disruptive from cash and marketable securities held in the trust account.
The increase in interest and other income is primarily due to higher interest rates resulting in higher income from ADRT’s cash and marketable securities held in the trust account, partially offset by lower cash and marketable securities held in the trust account as a result of redemptions that occurred in June 2023. 131 Interest expense was $36.6 million for the year ended December 31, 2023, compared to $37.3 million for the year ended December 31, 2022.
Net cash used in investing activities was $158.6 million for the year ended December 31, 2022, compared to $333.5 million for the year ended December 31, 2021.
Net cash used in investing activities for the year ended December 31, 2023 included $6.3 million cash used in investing activities from discontinued operations.
Goodwill impairment Impairment of SMC Goodwill During the fourth quarter of 2022, SMC experienced adverse changes in business climate, a significant decline in sales and a drop in the trading price of its common stock. Due to these factors, we determined that a triggering event had occurred, and therefore, performed a goodwill impairment assessment as of December 31, 2022.
As a result, the entire $3.2 million carrying amount of Microphase’s goodwill was recognized as a non-cash impairment charge during the year ended December 31, 2023. Impairment of SMC Goodwill During the fourth quarter of 2022, SMC experienced adverse changes in business climate, a significant decline in sales and a drop in the trading price of its common stock.
Net cash provided by financing activities was $124.1 million for the year ended December 31, 2022, compared to $397.9 million for the year ended December 31, 2021, and reflects the following transactions: · 2022 Common ATM Offering – On February 25, 2022, we entered into an At-The-Market issuance sales agreement with Ascendiant Capital to sell shares of common stock having an aggregate offering price of up to $200 million from time to time, through the 2022 Common ATM Offering.
Net cash provided by financing activities was $37.0 million for the year ended December 31, 2023, compared to net cash provided by financing activities of $124.1 million for the year ended December 31, 2022, and primarily reflects the following transactions: · 2022 Common ATM Offering – During the year ended December 31, 2023, we sold an aggregate of 4,268 shares of common stock pursuant to the 2022 Common ATM Offering for gross proceeds of $4.2 million and effective March 17, 2023, the 2022 Common ATM Offering was terminated; · 2022 Preferred ATM Offering – During the year ended December 31, 2023, we sold an aggregate of 252,359 shares of Series D Preferred Stock pursuant to the 2022 Preferred ATM Offering for gross proceeds of $3.0 million and effective June 16, 2023, the 2022 Preferred ATM Offering was terminated; · 2023 Common ATM Offering –On June 9, 2023, we entered into the 2023 Common ATM Offering with Ascendiant Capital.
GIGA research and development expense in 2022 includes $0.3 million from GIGA, which was acquired on September 8, 2022. Selling and Marketing Selling and marketing expenses were $29.4 million for the year ended December 31, 2022, compared to $7.8 million for the year ended December 31, 2021, an increase of $21.6 million, or 278%.
Selling and Marketing Selling and marketing expenses were $33.5 million for the year ended December 31, 2023, compared to $29.4 million for the year ended December 31, 2022, an increase of $4.2 million, or 14%.
Impairment of Equity Securities Cumulative downward adjustments for impairments for our equity securities without readily determinable fair values held at December 31, 2022 were $11.5 million.
Loss from investment in unconsolidated entity was $0.9 million for the year ended December 31, 2022, representing our share of losses from our equity method investment in AVLP prior to the June 2022 acquisition. Cumulative downward adjustments for impairments for our equity securities without readily determinable fair values held at December 31, 2023 were $9.6 million.
Realized (Loss) Gain on Marketable Securities Realized loss on marketable securities was $0.4 million for the year ended December 31, 2022, compared to a gain of $1.9 million for the year ended December 31, 2021.
Income Tax Provision Provision for income taxes was $0.3 million during the year ended December 31, 2023 compared to a benefit of $4.4 million during the year ended December 31, 2022. The effective income tax provision rate was 0.1% for the year ended December 31, 2023 as compared to a benefit of 2.4% for the year ended December 31, 2022.
(181,816,000 ) (23,251,000 ) Preferred dividends (393,000 ) (18,000 ) Net loss available to common stockholders $ (182,209,000 ) $ (23,269,000 ) Comprehensive (loss) income Net loss income available to common stockholders $ (182,209,000 ) $ (23,269,000 ) Other comprehensive (loss) income Foreign currency translation adjustment (995,000 ) 85,000 Impairment of debt securities - 594,000 Other comprehensive (loss) income (995,000 ) 679,000 Total comprehensive loss $ (183,204,000 ) $ (22,590,000 ) 111 Revenues Revenues by segment for the years ended December 31, 2022 and 2021 were as follows: For the Year Ended December 31, Increase 2022 2021 (Decrease) % GIGA $ 30,255,000 $ 25,581,000 $ 4,674,000 18 % TurnOnGreen 5,522,000 5,346,000 176,000 3 % SMC 24,224,000 - 24,224,000 — BNI Revenue, cryptocurrency mining 16,693,000 3,450,000 13,243,000 384 % Revenue, commercial real estate leases 1,105,000 788,000 317,000 40 % AGREE 16,697,000 189,000 16,508,000 8734 % Fintech: Revenue, lending and trading activities 36,644,000 16,854,000 19,790,000 117 % Other 239,000 192,000 47,000 24 % Energy 2,955,000 - 2,955,000 — Total revenue $ 134,334,000 $ 52,400,000 $ 81,934,000 156 % Our revenues increased by $81.9 million, or 156%, to $134.3 million for the year ended December 31, 2022, from $52.4 million for the year ended December 31, 2021.
(231,026,000 ) (181,816,000 ) Preferred dividends (1,375,000 ) (393,000 ) Net loss available to common stockholders $ (232,401,000 ) $ (182,209,000 ) Comprehensive loss Net loss available to common stockholders $ (232,401,000 ) $ (182,209,000 ) Other comprehensive loss Foreign currency translation adjustment (997,000 ) (995,000 ) Other comprehensive loss (997,000 ) (995,000 ) Total comprehensive loss $ (233,398,000 ) $ (183,204,000 ) 127 Revenues Revenues by segment for the years ended December 31, 2023 and 2022 were as follows: For the Year Ended December 31, Increase 2023 2022 (Decrease) % Sentinum Revenue, digital currencies mining $ 33,107,000 $ 16,693,000 $ 16,414,000 98 % Revenue, commercial real estate leases 1,416,000 1,105,000 311,000 28 % Energy Revenue, crane operations 49,198,000 2,739,000 46,459,000 1696 % Other 899,000 216,000 683,000 316 % Fintech: Revenue, lending and trading activities (1,998,000 ) 36,644,000 (38,642,000 ) -105 % Other - 239,000 (239,000 ) -100 % GIGA 37,759,000 30,255,000 7,504,000 25 % SMC 32,357,000 24,224,000 7,333,000 30 % TurnOnGreen 4,201,000 5,522,000 (1,321,000 ) -24 % ROI 305,000 - - Total revenue $ 156,444,000 $ 117,637,000 $ 38,502,000 33 % Our revenues increased by $38.5 million, or 33%, to $156.4 million for the year ended December 31, 2023, from $117.6 million for the year ended December 31, 2022.
Impairment of Mined Cryptocurrency Impairment of mined cryptocurrency for the years ended December 31, 2022 and 2021 was $3.1 million and $0.4 million, respectively, attributable to the decline in Bitcoin values and increase in Bitcoin mined in 2022 as compared to 2021.
Impairment of Mined Digital Currencies Impairment of mined digital currencies for the years ended December 31, 2023 and 2022 was $0.5 million and $3.1 million, respectively. Impairment losses are attributable to the volatility of the Bitcoin market when market price of Bitcoin drops below our carrying value within the respective periods.
Each Preferred Share is convertible into shares of our common stock at a conversion price equal to 85% of the closing sale price of our common stock on the trading day prior to the date of conversion, subject to a floor price of $0.10.
The Convertible Note is convertible into shares of common stock at a conversion price equal to 90% of the lowest volume weighted average price of the common stock during the five consecutive trading days prior to the date of conversion.
General and administrative expenses increased from the comparative prior period, mainly due to: · general and administrative costs of $5.8 million from our hotel operations, which were acquired in December 2021; · general and administrative costs of $5.1 million from SMC, which was acquired in June 2022; 113 · general and administrative costs of $1.2 million from AVLP, which was acquired in June 2022; · general and administrative costs of $1.0 million from Circle 8, which was acquired in December 2022; · increased general and administrative costs of $1.4 million from Ault Disruptive, a SPAC which completed its IPO in December 2021; · increased general and administrative costs of $1.7 million from TurnOnGreen from higher rent expense and legal fees; · $2.9 million increase in the accrual of a performance bonus related to realized gains on trading activities during the period; · higher salaries of $1.8 million; · higher audit fees of $2.0 million; · increased costs of $2.8 million related to the Michigan data center and Bitcoin mining operations; and · increased corporate and Ault Lending legal fees of $2.5 million, including $0.7 million related to the efforts to acquire EYP, Inc.
General and administrative expenses increased from the comparative prior period, mainly due to increases from new acquisitions and higher cost from our use of the corporate aircraft: · general and administrative costs of $10.4 million from Circle 8, which was acquired in December 2022; · general and administrative costs of $7.5 million from ROI, which was acquired in March 2023; · general and administrative costs of $6.1 million from SMC, which was acquired in June 2022; · general and administrative costs of $4.4 million from GIGA, which was acquired in September 2022; · general and administrative costs of $1.2 million from AVLP, which was acquired in June 2022; and · $4.4 million costs, including $1.9 million depreciation expense, related to our use of the corporate aircraft.
Energy Energy revenues increased by $3.0 million primarily due to the acquisition of Circle 8 in December 2022 and our participation in drilling oil wells in 2022. Gross Margins Gross margins decreased to 41.7% for the year ended December 31, 2022, compared to 54.5% for the year ended December 31, 2021.
Energy Energy revenues increased by $47.1 million primarily due to the acquisition of Circle 8 in December 2022.
(“BNI”), which wholly owns Alliance Cloud Services, LLC (“ACS”) and BNI Montana, LLC (“BNI Montana”), (v) Circle 8 Holdco LLC, a Delaware limited liability company (“Circle 8 Holdco”), (vi) Ault Energy, LLC (“Ault Energy”), and (vii) Ault Aviation, LLC (“Ault Aviation”). We also have a direct controlling interest in (i) Imperalis Holding Corp.
We also have a direct controlling interest in (i) Circle 8 Holdco LLC (“Circle 8 Holdco”), which wholly owns Circle 8 Crane Services, LLC (“Circle 8”), (ii) TurnOnGreen, Inc., formerly known as Imperalis Holding Corp. (“TurnOnGreen”), which wholly owns TOG Technologies, Inc.
During the year ended December 31, 2022, we sold an aggregate of 285.4 million shares of common stock pursuant to the 2022 Common ATM Offering for gross proceeds of $172 million.
During the year ended December 31, 2023, we sold an aggregate of 4.3 million shares of common stock pursuant to the 2023 Common ATM Offering for gross proceeds of $35.3 million; · $65.0 million payments on notes payable, partially offset by $38.8 million proceeds from notes payable; · $7.3 million proceeds from subsidiaries’ sale of stock to non-controlling interests; · $5.2 million proceeds from convertible notes payable, partially offset by $1.0 million payments on convertible notes payable; · $4.6 million proceeds from convertible notes payable, related party, partially offset by $0.2 million payments on convertible notes payable, related party; and · $3.8 million net proceeds from sales of Series C preferred stock, related party.
Horne was appointed as our Chief Executive Officer and remains as Vice Chairman of our Board, and Henry Nisser was appointed as our President and remains as our General Counsel. 109 Our corporate structure is currently as follows: General As a holding company, our business objective is designed to increase stockholder value.
Our Corporate Structure Our common stock is traded on the NYSE American under the symbol “AULT.” Our corporate structure is currently as follows: 125 General As a holding company, our business objective is designed to increase stockholder value.
On February 8, 2023, we entered into a Share Exchange Agreement (the “Agreement”) with BMI and the other signatories thereto. The Agreement provides that, subject to the terms and conditions set forth therein, BMI will acquire all of the outstanding shares of capital stock of our then subsidiary, BitNile.com, Inc.
On February 8, 2023, we entered into a Share Exchange Agreement (the “February 2023 Agreement”) with ROI and the other signatories thereto.
Realized Gain on Sale of Cryptocurrency Realized gain on sale of cryptocurrency was $1.0 million for the year ended December 31, 2022, compared to $0 for the year ended December 31, 2021. Realized gain for the year ended December 31, 2022 related primarily to gains on the sale of Bitcoin by BNI.
Interest expense for the year ended December 31, 2022 related primarily to amortization of debt discount of $29.1 million, contractual interest of $6.8 million, and forbearance and extension fees of $1.5 million. Interest expense, related party was $0.7 million for the year ended December 31, 2023, compared to $0 for the year ended December 31, 2022.
Each Preferred Share is convertible into shares of our common stock at a conversion price equal to 85% of the closing sale price of the common stock on the trading day prior to the date of conversion, subject to a floor price of $0.10.
The convertible promissory notes are convertible into shares of common stock at a conversion price of $0.35 per share.
Fintech Revenues from our lending and trading activities increased to $36.6 million due to significant realized and unrealized gains in the current year period and unrealized losses in the prior year period from our investment portfolio.
Fintech Revenues from our lending and trading activities were negative for the year ended December 31, 2023, due to a $6.2 million impairment related to investments in equity securities, a $5.6 million unrealized loss from our investment in Alzamend and a $1.2 million negative adjustment to dividend income, partially offset by $11.0 million of realized and unrealized losses from our investment portfolio.
In addition, the Company and certain of its subsidiaries entered into various agreements as collateral for the repayment of the Loans, including (i) a security interest in certain Bitcoin mining equipment, (ii) a pledge of the membership interests of Third Avenue Apartments, (iii) a pledge of the membership interests of ACS, (iv) a pledge of the membership interests of Ault Aviation, (v) a pledge in a segregated deposit account of $1.5 million of cash, (vi) a mortgage and security agreement by Third Avenue Apartments on the real estate property owned by Third Avenue Apartments in St.
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, 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.
The increase was the result of $18.9 million higher advertising and promotion costs at Ault Alliance, including $13.1 million related to an advertising sponsorship agreement as well as a $2.0 million increase in sales and marketing personnel and a $0.9 million increase in travel expense.
The increase was the result of $5.7 million higher advertising and promotion costs related to ROI’s BitNile metaverse platform and $0.7 million higher travel expenditures, partially offset by a $2.2 million decline in employee related costs and consulting expenses.
The Loans are guaranteed by Ault Lending, LLC, Ault & Company, Inc., an affiliate of the Company, as well as Milton C. Ault, III, our Executive Chairman and the Chief Executive Officer of Ault & Company, Inc.
The Loan Agreement was amended on April 15, 2024. Pursuant to the 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.
Financing Transactions Subsequent to December 31, 2022 Financing transactions subsequent to December 31, 2022 include the following: 2022 Common ATM Offering During the period between January 1, 2023 through April 15, 2023, we sold an aggregate of 32.0 million shares of common stock pursuant to the 2022 Common ATM Offering for gross proceeds of $4.2 million. 2022 Preferred ATM Offering During the period between January 1, 2023 through April 15, 2023, we sold an aggregate of 89,748 shares of Series D Preferred Stock pursuant to the 2022 Preferred ATM Offering for gross proceeds of $1.2 million. 118 We believe our current cash on hand is not sufficient to fund our planned operations through one year after the date the consolidated financial statements are issued.
Financing Transactions Subsequent to December 31, 2023 Financing transactions subsequent to December 31, 2023 include the following: 2023 Common ATM Offering During the period between January 1, 2024 through March 13, 2024, we sold an aggregate of 25.6 million shares of common stock pursuant to the 2023 Common ATM Offering for gross proceeds of $14.6 million and effective March 14, 2024, the 2023 Common ATM Offering was terminated. 6% Convertible Promissory Notes On March 11, 2024, we entered into a note purchase agreement with two institutional investors pursuant to which we sold in a registered direct offering to the investors an aggregate of $2.0 million convertible promissory notes, bearing interest of 6%.
Research and Development Research and development expenses increased by $0.7 million to $2.8 million for the year ended December 31, 2022, from $2.0 million for the year ended December 31, 2021. The increase in research and development expenses was due to product development efforts at TurnOnGreen and GIGA.
Research and Development Research and development expenses increased by $4.5 million for the year ended December 31, 2023, primarily due to expenditures related to development work on ROI’s BitNile metaverse platform.
The holders of the secured promissory notes have a security interest in marketable securities, investments and certain Bitcoin mining equipment. The secured promissory notes are further secured by a guaranty provided by us, as well as by Milton C. Ault, our Executive Chairman. The maturity date of the secured promissory notes is August 10, 2023.
The maturity date of the Short-Term Note was September 25, 2023. The purchase price for the Short-Term Note was $2 million. Repayment of the Short-Term Note was secured by a guaranty provided by Ault & Company as well as by Milton C. Ault, our Executive Chairman of the Company and the Chief Executive Officer of Ault & Company.
Change in Fair Value of Marketable Equity Securities Change in fair value of marketable equity securities was a loss of $2.1 million for the year ended December 31, 2022, compared to a loss of $1.3 million for the year ended December 31, 2021.
Other Expense, Net Other expense, net was $86.5 million for the year ended December 31, 2023, compared to $48.9 million for the year ended December 31, 2022. Interest and other income was $5.3 million for the year ended December 31, 2023, compared to $2.6 million for the year ended December 31, 2022.
Removed
In addition, we extend credit to select entrepreneurial businesses through a licensed lending subsidiary. Our direct and indirect wholly owned subsidiaries include (i) Ault Lending, LLC (“Ault Lending,” formerly known as Digital Power Lending, LLC), (ii) Ault Global Real Estate Equities, Inc.
Added
Our direct and indirect wholly owned subsidiaries include (i) Sentinum, Inc. (“Sentinum”), (ii) Alliance Cloud Services, LLC (“ACS”), (iii) BNI Montana, LLC (“BNI Montana”), (iv) Ault Capital Group, Inc. (“Ault Capital”), (v) Ault Lending, LLC (“Ault Lending”), (vii) Ault Global Real Estate Equities, Inc.
Removed
(“AGREE”), which wholly owns AGREE Madison, LLC (“AGREE Madison”) and Third Avenue Apartments LLC (“Third Avenue Apartments”), (iii) Ault Disruptive Technologies Company, LLC (“ADTC”), (iv) BitNile, Inc.
Added
(“AGREE”), (viii) Ault Disruptive Technologies Company, LLC (“ADTC”), which is the sponsor, Manager and the majority owner of Ault Disruptive Technologies Corporation (“Ault Disruptive”), (ix) Eco Pack Technologies, Inc. (“Eco Pack”), which has a controlling interest in Eco Pack Technologies Limited, (x) Ault Aviation, LLC (“Ault Aviation”) and (xi) Third Avenue Apartments, LLC (“Third Avenue”).

… 239 more changes not shown on this page.

Other GPUS 10-K year-over-year comparisons