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Ault Alliance(AULT) - 2024 Q3 - Quarterly Report
AULTAult Alliance(AULT)2024-11-19 22:14

Financing Activities - Hyperscale Data entered into a Loan and Guaranty Agreement on December 14, 2023, with a borrowing amount of 36millionandsecuredpromissorynotestotaling36 million and secured promissory notes totaling 38.9 million[104]. - The company is required to maintain a minimum balance in a segregated deposit account, starting at 7millionandincreasingto7 million and increasing to 27.5 million over two years[104]. - Ault Lending purchased 1,220 shares of Series B convertible preferred stock for 1.22milliononJanuary31,2024,aspartofalargeragreementwithAlzamendNeuro,Inc.[105].−Thecompanysoldanaggregateof1.22 million on January 31, 2024, as part of a larger agreement with Alzamend Neuro, Inc.[105]. - The company sold an aggregate of 2.0 million principal face amount convertible promissory notes for 1.8million,reflectinganoriginalissuediscountof1.8 million, reflecting an original issue discount of 0.2 million[105]. - Ault & Company has purchased a total of 44,300 shares of Series C Convertible Preferred Stock for an aggregate purchase price of 44.3million[105].−Atermnotewithaprincipalamountof44.3 million[105]. - A term note with a principal amount of 1.7 million was issued on April 29, 2024, with an interest rate of 15% per annum[105]. - The 2023 Loan Agreement was amended multiple times, including extending the minimum balance requirement and adjusting deposit amounts[104]. - Ault Lending has purchased a total of 2,000 shares of ALZN Series B Preferred and warrants for an aggregate purchase price of 2.0million[105].−ThecompanyenteredintoaLoanAgreementprovidingforanunsecured,non−revolvingcreditfacilitywithadrawlimitofupto2.0 million[105]. - The company entered into a Loan Agreement providing for an unsecured, non-revolving credit facility with a draw limit of up to 20.0 million, with an initial loan of 1.5millionmadeonJune4,2024[106].−AultDisruptiveannouncedtheredemptionofalloutstandingsharesofcommonstock,withanaggregateredemptionamountof1.5 million made on June 4, 2024[106]. - Ault Disruptive announced the redemption of all outstanding shares of common stock, with an aggregate redemption amount of 1.5 million during the nine months ended September 30, 2024, and an additional 0.8millionredeemedonOctober11,2024[106].−Anotepurchaseagreementwasenteredintofora0.8 million redeemed on October 11, 2024[106]. - A note purchase agreement was entered into for a 5.4 million 10% OID Convertible Promissory Note, sold for a purchase price of 4.9million,withamaturitydateofOctober19,2024[106].−Thecompanyplanstoissueaspecialone−timedividendof5.0millionsharesofClassBCommonStocktoholdersofClassACommonStock,witharecorddateofNovember29,2024[108].−AsofSeptember30,2024,thecompanyhaddeposited4.9 million, with a maturity date of October 19, 2024[106]. - The company plans to issue a special one-time dividend of 5.0 million shares of Class B Common Stock to holders of Class A Common Stock, with a record date of November 29, 2024[108]. - As of September 30, 2024, the company had deposited 6.5 million in a Segregated Account, with an additional 0.4milliondepositedinOctober2024[108].−Areversestocksplitofone−for−thirty−fivewasapproved,effectiveNovember22,2024,withtradingonasplit−adjustedbasisstartingNovember25,2024[108].FinancialPerformance−TotalrevenueforthethreemonthsendedSeptember30,2024,was0.4 million deposited in October 2024[108]. - A reverse stock split of one-for-thirty-five was approved, effective November 22, 2024, with trading on a split-adjusted basis starting November 25, 2024[108]. Financial Performance - Total revenue for the three months ended September 30, 2024, was 31,061,000, a decrease of 28% compared to 43,090,000forthesameperiodin2023[114].−Revenuefromcryptoassetsminingdecreasedby43,090,000 for the same period in 2023[114]. - Revenue from crypto assets mining decreased by 2,294,000, or 30%, to 5,264,000,primarilyduetoa5,264,000, primarily due to a 5.3 million unfavorable impact from the Bitcoin halving event and a 76% increase in mining difficulty[114][115]. - Revenues from lending and trading activities were 5,575,000,asignificantincreasefromnegative5,575,000, a significant increase from negative 249,000 in the same period last year, driven by 2.6millioninrealizedgainsand2.6 million in realized gains and 2.6 million in fee income[117]. - Gross profit for the three months ended September 30, 2024, was 8,545,000,comparedto8,545,000, compared to 8,732,000 in the prior year, with gross margins improving to 28% from 20%[114][119]. - Total revenue for the nine months ended September 30, 2024, was 87,219,000,adecreaseof1687,219,000, a decrease of 16% compared to 104,238,000 for the same period in 2023[128]. - Revenue from crypto assets mining increased by 1,928,000,or81,928,000, or 8%, to 25,201,000 for the nine months ended September 30, 2024, compared to 23,273,000in2023[128].−Revenuefromlendingandtradingactivitiesroseby23,273,000 in 2023[128]. - Revenue from lending and trading activities rose by 574,000, or 13%, to 4,911,000fortheninemonthsendedSeptember30,2024,comparedto4,911,000 for the nine months ended September 30, 2024, compared to 4,337,000 in 2023[128]. - Gross margins improved to 26% for the nine months ended September 30, 2024, up from 23% in the same period in 2023, influenced by lending and trading activities[135]. Expenses and Losses - Research and development expenses increased by 3,501,000,or3193,501,000, or 319%, to 4,598,000, primarily due to development work on the BitNile gaming platform[119]. - General and administrative expenses decreased by 4,343,000,or274,343,000, or 27%, to 12,000,000, mainly due to the deconsolidation of SMC and lower professional fees[121]. - Total operating expenses rose to 33,140,000,comparedto33,140,000, compared to 29,082,000 in the prior year, leading to a loss from operations of 24,595,000[114].−Interestexpenseincreasedto24,595,000[114]. - Interest expense increased to 7,766,000 from 6,137,000,reflectinghighercontractualinterestandfees[124].−Netlossattributabletocommonstockholderswas6,137,000, reflecting higher contractual interest and fees[124]. - Net loss attributable to common stockholders was 26,875,000 for the three months ended September 30, 2024, compared to 22,183,000inthesameperiodlastyear[114].−ThecompanyrecordedalossonimpairmentofpropertyandequipmentrelatedtoAGREE′srealestateassetsamountingto22,183,000 in the same period last year[114]. - The company recorded a loss on impairment of property and equipment related to AGREE's real estate assets amounting to 8.0 million during the nine months ended September 30, 2024[111]. - The company recognized an impairment charge of 10.5millionrelatedtocryptoassetsminingequipmentduetoincreasedminingdifficultyandtheBitcoinhalvingevent[122].−Netlossfromcontinuingoperationswas10.5 million related to crypto assets mining equipment due to increased mining difficulty and the Bitcoin halving event[122]. - Net loss from continuing operations was 57,449,000 for the nine months ended September 30, 2024, compared to a net loss of 135,146,000in2023[136].−Impairmentchargesincluded135,146,000 in 2023[136]. - Impairment charges included 10.5 million related to crypto assets mining equipment and 9.2millionrelatedtorealestateassetsfortheninemonthsendedSeptember30,2024[136].CashFlowandFinancialPosition−Cashandcashequivalentsincreasedto9.2 million related to real estate assets for the nine months ended September 30, 2024[136]. Cash Flow and Financial Position - Cash and cash equivalents increased to 7.2 million as of September 30, 2024, up from 6.1millionatDecember31,2023[140].−Netcashusedinoperatingactivitiestotaled6.1 million at December 31, 2023[140]. - Net cash used in operating activities totaled 10.2 million for the nine months ended September 30, 2024, compared to 2.2millionforthesameperiodin2023[140].−Netcashprovidedbyfinancingactivitieswas2.2 million for the same period in 2023[140]. - Net cash provided by financing activities was 22.6 million for the nine months ended September 30, 2024, compared to 23.8millionforthesameperiodin2023[142].−Thecompanyrecognizeda23.8 million for the same period in 2023[142]. - The company recognized a 1.4 million gain on extinguishment of debt during the three months ended March 31, 2024[138]. - Cumulative downward adjustments for impairments for equity securities without readily determinable fair values were $6.3 million for the nine months ended September 30, 2024[138]. Tax and Internal Controls - The effective income tax provision rate was 0.1% for the nine months ended September 30, 2024, down from 0.4% in the same period of 2023[139]. - Management identified material weaknesses in internal controls over financial reporting, including insufficient resources in the accounting department[144].