Business Operations - Ault Alliance, Inc. owns and operates a data center for Bitcoin mining and offers colocation and hosting services for AI ecosystems, supporting various industries including metaverse, oil exploration, and medical/biopharma [140]. - The company has provided capital and expertise to support growth in various sectors, including defense/aerospace and consumer electronics [145]. Financial Transactions - The company entered into a Share Exchange Agreement with BMI, acquiring approximately 92.4% of BMI's outstanding common stock through the issuance of Series B and Series C Preferred Stock valued at $100 million [141]. - A private placement raised $10 million through the issuance of 100,000 shares of preferred stock, including 83,000 shares of Series E Convertible Preferred Stock, with a conversion price set at 85% of the common stock's closing price [142]. - Ault Alliance has entered into a loan agreement with Ault & Company for an unsecured credit facility of up to $10 million, with $4.7 million advanced as of the report date [142]. - The company has sold 3.8 million shares of common stock for gross proceeds of $16.1 million through an At-the-Market Issuance Sales Agreement [142]. - The company established a record date for distributing TurnOnGreen securities, distributing 56.4 million shares in the second distribution [144]. - Ault Alliance's Series B and Series C Preferred Stock will yield dividends at a rate of 5% per annum, increasing to 12% if dividend payments are missed [141]. Revenue and Profitability - Total revenue for the three months ended June 30, 2023, was $47,408,000, a 173% increase from $17,366,000 in the same period of 2022 [148]. - Revenue from cryptocurrency mining increased by 110% to $8,368,000, up from $3,976,000 year-over-year [148]. - Revenue from lending and trading activities surged 910% to $9,525,000, compared to $943,000 in the prior year [148]. - Gross profit for the period was $17,885,000, with gross margins increasing to 38% from 29% year-over-year [154]. - Total revenue for the six months ended June 30, 2023, was $78,594,000, a 57% increase from $50,192,000 in the same period of 2022 [167]. - Revenue from cryptocurrency mining increased by $8,191,000, or 109%, reaching $15,715,000 compared to $7,524,000 in the prior year [167]. - Energy segment revenue rose by $25,782,000 due to the acquisition of Circle 8 crane operations in December 2022 [173]. - Gross profit decreased to $19,925,000, with gross margins dropping to 25% from 54% in the prior year [173]. Expenses - Research and development expenses rose by $1.1 million due to development work on the BMI metaverse platform [155]. - Selling and marketing expenses increased by 37% to $9.6 million, driven by higher advertising costs related to the BMI metaverse platform [156]. - General and administrative expenses were $21.3 million, a 12% increase attributed to costs from new acquisitions [157]. - Total operating expenses increased to $101,848,000, up from $50,018,000, reflecting a 103% rise [173]. - Research and development expenses increased by $2.2 million, primarily due to development work on the BMI metaverse platform [174]. - Selling and marketing expenses rose by $4.9 million, or 36%, totaling $18.4 million for the six months ended June 30, 2023 [174]. - General and administrative expenses increased by $11.3 million, or 34%, reaching $44.0 million, driven by costs from new acquisitions [174]. Impairments and Losses - The company recognized a non-cash impairment charge of $18.6 million for AVLP's goodwill due to indicators of impairment [161]. - Impairment charges recognized for AVLP goodwill and intangible assets totaled $35.6 million during the six months ended June 30, 2023 [176][177]. - The net loss for the three months ended June 30, 2023, was $64,252,000, compared to a net loss of $26,085,000 in the same period of 2022 [148]. - Net loss for the six months ended June 30, 2023, was $113,081,000, compared to a net loss of $54,872,000 in the same period of 2022 [166]. Interest and Cash Flow - Interest expense for the period was $15.9 million, significantly up from $2.0 million in the prior year, primarily due to amortization of debt discount and fees [165]. - Interest and other income increased to $3.6 million for the six months ended June 30, 2023, from $0.5 million in the same period of 2022, primarily due to higher interest rates [179]. - Interest expense decreased to $29.7 million for the six months ended June 30, 2023, from $31.9 million in the same period of 2022, with $16.2 million attributed to amortization of debt discount [179]. - Net cash provided by operating activities totaled $12.9 million for the six months ended June 30, 2023, compared to $19.4 million for the same period in 2022 [181]. - Net cash used in investing activities was $21.8 million for the six months ended June 30, 2023, significantly lower than $87.1 million in the same period of 2022 [181]. - Net cash provided by financing activities was $12.8 million for the six months ended June 30, 2023, down from $75.5 million in the same period of 2022 [183]. - Cash and cash equivalents increased to $19.7 million as of June 30, 2023, from $10.5 million at December 31, 2022 [181]. Stock Transactions - The company sold an aggregate of 0.1 million shares of common stock for gross proceeds of $4.2 million during the 2022 Common ATM Offering [183]. - Subsequent to June 30, 2023, the company sold 3.9 million shares of common stock for gross proceeds of $15.6 million under the 2023 Common ATM Offering [183].
Ault Alliance(AULT) - 2023 Q2 - Quarterly Report