Revenue and Profitability - Total revenue for the three months ended June 30, 2020, increased by $414,045, or 8.3%, to $5,400,980 compared to $4,986,935 for the same period in 2019[231]. - Gross profit for the three months ended June 30, 2020, was $1,905,406, up from $719,741 in the same period of 2019, resulting in a gross margin increase to 35.3% from 14.4%[230][233]. - Revenue for the six months ended June 30, 2020, increased by $253,935, or 2.4%, to $11,006,414 from $10,752,479 for the same period in 2019, driven by growth in military market solutions[251]. - Gross margins improved to 33.2% for the six months ended June 30, 2020, compared to 15.4% for the same period in 2019, indicating enhanced profitability[253]. Losses and Financial Performance - The company reported a net loss from continuing operations of $1,375,533 for the three months ended June 30, 2020, compared to a net loss of $3,730,780 for the same period in 2019[230]. - The company recorded a net loss of $1,375,533 for the three months ended June 30, 2020, compared to a net loss of $4,058,897 for the same period in 2019, reflecting a significant improvement[245]. - The company recorded a loss from continuing operations of $3,699,404 for the six months ended June 30, 2020, a decrease from a loss of $8,074,472 for the same period in 2019[258]. - The net loss for the six months ended June 30, 2020, was $7,907,081, an improvement from a net loss of $10,769,923 for the same period in 2019, representing a reduction of approximately 26%[264]. Expenses - Engineering and product development expenses decreased to $462,159 for the three months ended June 30, 2020, from $471,268 in the same period of 2019[234]. - Selling and marketing expenses decreased by $87,210 to $294,974 for the three months ended June 30, 2020, compared to $382,184 for the same period in 2019[235]. - General and administrative expenses decreased to $2,917,999 for the three months ended June 30, 2020, from $3,510,839 in the same period of 2019, primarily due to lower stock compensation expenses[236]. - General and administrative expenses decreased by $2,192,256 to $5,820,901 for the six months ended June 30, 2020, mainly due to lower stock compensation and travel-related costs[257]. Cash Flow and Financing - Cash and cash equivalents increased to $1,691,289 as of June 30, 2020, compared to $483,383 at December 31, 2019, reflecting a significant increase of approximately 250%[267]. - Net cash used in operating activities decreased to $2,257,804 for the six months ended June 30, 2020, from $4,669,720 in 2019, a reduction of about 51.6%[268]. - Net cash used in investing activities was $151,770 for the six months ended June 30, 2020, a decrease from $1,607,194 in 2019, indicating a reduction of approximately 90.6%[270]. - Net cash provided by financing activities was $3,608,626 for the six months ended June 30, 2020, compared to $6,472,295 in 2019, a decrease of about 44.5%[270]. Operational Changes - The company ceased operations at Digital Farms due to deteriorating business conditions in the cryptocurrency mining sector, resulting in no revenue from cryptocurrency operations during the three months ended June 30, 2020[232]. - The company ceased operations at Digital Farms, resulting in no revenue from cryptocurrency mining during the six months ended June 30, 2020[252]. Other Financial Metrics - Other comprehensive income was $858,081 for the three months ended June 30, 2020, primarily due to unrealized gains in warrant derivative securities[247]. - Other comprehensive loss was $532,620 for the six months ended June 30, 2020, compared to $168,676 in 2019, primarily due to unrealized losses in warrant derivative securities[266]. - The company recognized non-cash charges of $440,703 for the three months ended June 30, 2020, compared to $1,648,435 for the same period in 2019[245]. - Non-cash charges included in the net loss for the six months ended June 30, 2020, totaled $3,023,387, down from $4,060,412 in 2019, indicating a decrease of about 25.6%[265]. Future Outlook - The company anticipates continuing to incur losses and will need to raise additional capital to support working capital requirements, indicating ongoing financial challenges[273]. - The company has raised capital successfully over the last 12 months but may need to curtail operations if unable to secure additional funding[273]. - The company entered into a Master Exchange Agreement with Esousa, involving approximately $4.2 million in principal amount of promissory notes, with an additional potential $3.5 million expected to be acquired[272].
Ault Alliance(AULT) - 2020 Q2 - Quarterly Report