Financing Activities - Hyperscale Data entered into a Loan and Guaranty Agreement on December 14, 2023, with a borrowing amount of $36 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 $7 million and increasing to $27.5 million over two years[104]. - Ault Lending purchased 1,220 shares of Series B convertible preferred stock for $1.22 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 $1.8 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 $44.3 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 $2.0 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 $1.5 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 $0.8 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 $4.9 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 $0.4 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 $43,090,000 for the same period in 2023[114]. - Revenue from crypto assets mining decreased by $2,294,000, or 30%, to $5,264,000, 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, a significant increase from negative $249,000 in the same period last year, driven by $2.6 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, 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, 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, or 8%, to $25,201,000 for the nine months ended September 30, 2024, compared to $23,273,000 in 2023[128]. - Revenue from lending and trading activities rose by $574,000, or 13%, to $4,911,000 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, 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, 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, compared to $29,082,000 in the prior year, leading to a loss from operations of $24,595,000[114]. - Interest expense increased to $7,766,000 from $6,137,000, 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 $22,183,000 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 $10.5 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 $135,146,000 in 2023[136]. - Impairment charges included $10.5 million related to crypto assets mining equipment and $9.2 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 $6.1 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 $2.2 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 $23.8 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].
Ault Alliance(AULT) - 2024 Q3 - Quarterly Report