Financial Performance - Total revenue for Q1 2023 was $31,186,000, a decrease from $32,826,000 in Q1 2022, representing a decline of approximately 5%[101] - The company reported a net loss of $48,829,000 for Q1 2023, compared to a net loss of $28,787,000 in Q1 2022, indicating an increase in losses of approximately 69%[101] - Total operating expenses rose to $33,458,000 in Q1 2023, up from $21,302,000 in Q1 2022, reflecting an increase of approximately 57%[101] - Revenues from lending and trading activities were negative $4.9 million, attributed to significant unrealized losses from the investment portfolio[108] - Gross margins decreased to 7% for the three months ended March 31, 2023, down from 68% in the prior year, impacted by negative margins from lending and trading activities[109] Cryptocurrency Mining - Cryptocurrency mining revenue increased to $7,347,000 in Q1 2023 from $3,548,000 in Q1 2022, marking a growth of approximately 107%[101] - The cost of revenue for cryptocurrency mining was $8,103,000 in Q1 2023, compared to $2,497,000 in Q1 2022, an increase of approximately 225%[101] - Revenue from cryptocurrency mining operations increased by $3.8 million, despite lower Bitcoin prices and increased mining difficulty[106] Shareholder Initiatives - The company completed a share exchange agreement with BMI, which will result in the issuance of Series B and Series C Preferred Stock with a combined stated value of $100 million[94] - A reverse stock split was approved at a ratio of one-for-three hundred, effective May 17, 2023, aimed at increasing stockholder value[97] - The company sold 100,000 shares of preferred stock in a private placement, with a total stated value of $10 million, to institutional investors[95] - The company is focused on maximizing stockholder value through various initiatives, including potential public offerings and sales of partner companies[98] Expenses and Investments - Research and development expenses increased by $1.1 million due to expenditures related to the development of the BMI metaverse platform[109] - Selling and marketing expenses rose by $2.3 million, or 36%, to $8.8 million, driven by higher advertising costs related to the BMI metaverse platform[110] - General and administrative expenses increased by $9.0 million, or 66%, to $22.7 million, primarily due to costs from recent acquisitions and higher stock-based compensation[111] - The impairment of equity securities amounted to $9,555,000 in Q1 2023, indicating significant losses in investments[101] Revenue Sources - GIGA segment revenue increased by $1.5 million, including $0.4 million from the acquisition of Giga-tronics Incorporated, driven by increased military spending and improved economic conditions[104] - Energy revenues rose by $13.1 million, primarily due to the acquisition of Circle 8 crane operations in December 2022[109] Cash Flow - Cash and cash equivalents decreased to $9.2 million as of March 31, 2023, from $10.5 million at December 31, 2022, mainly due to debt payments and capital expenditures[113] Business Combinations - The purchase price of an acquired business is allocated to tangible and intangible assets based on estimated fair values, with any excess recorded as goodwill[118] - Direct transaction costs associated with business combinations are expensed as incurred, and the results of operations of acquired businesses are included in consolidated results from the acquisition date[118] - If a business combination is achieved in stages, the previously held equity interest is re-measured to fair value at the acquisition date, with any gains or losses recognized in profit or loss[120] - The company assesses whether it is the primary beneficiary of Variable Interest Entities (VIEs) based on its ability to direct activities that significantly impact the VIE's performance and its obligation to absorb losses[117]
Ault Alliance(AULT) - 2023 Q1 - Quarterly Report