XML 16 R7.htm IDEA: XBRL DOCUMENT
v3.23.1

DESCRIPTION OF BUSINESS | 6 Months Ended
--- | ---
Jun. 30, 2022
Accounting Policies [Abstract] |
DESCRIPTION OF BUSINESS | 1. DESCRIPTION OF BUSINESS Ault Alliance, Inc., a Delaware corporation which was then known as BitNile Holdings, Inc. (“BitNile” or the “Company”) was incorporated in September 2017. BitNile is a diversified holding company pursuing growth by acquiring undervalued businesses and disruptive technologies with a global impact. Through its wholly- and majority-owned subsidiaries and strategic investments, the Company owns and operates a data center at which it mines Bitcoin, and provides mission-critical products that support a diverse range of industries, including defense/aerospace, industrial, automotive, medical/biopharma, karaoke audio equipment, hotel operations and textiles. In addition, the Company extends credit to select entrepreneurial businesses through a licensed lending subsidiary. BitNile was founded by Milton “Todd” Ault, III, its Executive Chairman and is led by Mr. Ault, William B. Horne, its Chief Executive Officer and Vice Chairman and Henry Nisser, its President and General Counsel. Together, they constitute the Executive Committee, which manages the day-to-day operations of the Company. All major investment and capital allocation decisions are made for the Company by Mr. Ault and the other members of the Executive Committee. The Company has eight reportable segments:
| · | BitNile, Inc. (“BNI”) – cryptocurrency mining operations;
| · | Ault Alliance, Inc. (“Ault Alliance”) – commercial lending, activist investing, media, and digital learning;
| · | Gresham Worldwide, Inc. (“GWW”) – defense solutions;
| · | TurnOnGreen, Inc. (“TurnOnGreen”) – commercial electronics solutions;
| · | The Singing Machine Company, Inc. (“SMC”) – karaoke audio equipment;
| · | Avalanche International Corp. (“Avalanche” or “AVLP”) – advanced textiles processing technology;
| · | Ault Global Real Estate Equities, Inc. (“AGREE”) – hotel operations and other commercial real estate holdings; and
| · | Ault Disruptive Technologies Corporation (“Ault Disruptive”) – a special purpose acquisition company (“SPAC”).
1 A. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS This Amendment amends the Quarterly Report on Form 10-Q of the Company for the six months ended June 30, 2022, that was originally filed with the U.S. Securities and Exchange Commission on August 22, 2022. This Amendment only corrects an error in classification with respect to changes in fair value of financial instruments issued by a related party. The changes in fair value were erroneously recorded in other comprehensive income (loss) and have been reclassified to correct for the error within the statement of operations. The Company has restated its Condensed Consolidated Statements of Operations and Comprehensive Loss, Condensed Consolidated Statements of Changes in Stockholders’ Equity and Condensed Consolidated Statements of Cash Flows to correct this misclassification. Further, this Amendment also includes certain limited modifications to reflect the correct classification in disclosures in the Company’s Note 20 Net (Loss) Income per Share footnote in the Company’s Notes to Condensed Consolidated Financial Statements. Finally, the Company has modified its disclosures in Item 4 of Part I to reflect the identification of an additional material weakness. As a result, the Condensed Consolidated Statements of Operations and Comprehensive Loss amounts of “Change in fair value of equity securities, related party” and “Net unrealized gain on derivative securities of related party” were adjusted pursuant to the schedules below:
Schedule of condensed consolidated statements of operations and comprehensive loss |  |  |  |  |  |  |  |  |  |  |  |
|  | For the Three Months Ended |
|  | June 30, 2021 |
|  | As Reported |  |  | Adjustment |  |  | As Restated |
Revenue |  | $ | 8,564,000 |  |  | $ | - |  |  | $ | 8,564,000 |
Revenue, cryptocurrency mining, net |  |  | 291,000 |  |  |  |  |  |  |  | 291,000 |
Revenue, lending and trading activities |  |  | 53,274,000 |  |  |  |  |  |  |  | 53,274,000 |
Total revenue |  |  | 62,129,000 |  |  |  | - |  |  |  | 62,129,000 |
Cost of revenue |  |  | 6,278,000 |  |  |  |  |  |  |  | 6,278,000 |
Gross profit |  |  | 55,851,000 |  |  |  | - |  |  |  | 55,851,000 |
Operating expenses |  |  |  |  |  |  |  |  |  |  |  |
Research and development |  |  | 531,000 |  |  |  |  |  |  |  | 531,000 |
Selling and marketing |  |  | 1,505,000 |  |  |  |  |  |  |  | 1,505,000 |
General and administrative |  |  | 7,992,000 |  |  |  |  |  |  |  | 7,992,000 |
Total operating expenses |  |  | 10,028,000 |  |  |  | - |  |  |  | 10,028,000 |
Income from operations |  |  | 45,823,000 |  |  |  |  |  |  |  | 45,823,000 |
Other income (expenses) |  |  |  |  |  |  |  |  |  |  |  |
Interest and other income |  |  | 14,000 |  |  |  |  |  |  |  | 14,000 |
Change in fair value of equity securities, related party |  |  | - |  |  |  | (5,893,000 | ) |  |  | (5,893,000 | )
Interest expense |  |  | (22,000 | ) |  |  |  |  |  |  | (22,000 | )
Change in fair value of marketable equity securities |  |  | (1,915,000 | ) |  |  |  |  |  |  | (1,915,000 | )
Gain on extinguishment of debt |  |  | 447,000 |  |  |  |  |  |  |  | 447,000 |
Change in fair value of warrant liability |  |  | 290,000 |  |  |  |  |  |  |  | 290,000 |
Total other expenses, net |  |  | (1,186,000 | ) |  |  | (5,893,000 | ) |  |  | (7,079,000 | )
Income (loss) before income taxes |  |  | 44,637,000 |  |  |  | (5,893,000 | ) |  |  | 38,744,000 |
Income tax provision |  |  | (3,504,000 | ) |  |  |  |  |  |  | (3,504,000 | )
Net income (loss) |  |  | 41,133,000 |  |  |  | (5,893,000 | ) |  |  | 35,240,000 |
Net income attributable to non-controlling interest |  |  | 1,083,000 |  |  |  |  |  |  |  | 1,083,000 |
Net income (loss) attributable to Ault Alliance, Inc. |  |  | 42,216,000 |  |  |  | (5,893,000 | ) |  |  | 36,323,000 |
Preferred dividends |  |  | (4,000 | ) |  |  |  |  |  |  | (4,000 | )
Net income (loss) available to common stockholders |  | $ | 42,212,000 |  |  | $ | (5,893,000 | ) |  | $ | 36,319,000 |
Basic net income (loss) per common share |  | $ | 0.83 |  |  |  |  |  |  | $ | 0.72 |
Diluted net income (loss) per common share |  | $ | 0.81 |  |  |  |  |  |  | $ | 0.69 |
Weighted average basic common shares outstanding |  |  | 50,783,000 |  |  |  |  |  |  |  | 50,783,000 |
Weighted average diluted common shares outstanding |  |  | 52,780,000 |  |  |  |  |  |  |  | 52,780,000 |
Comprehensive income |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) available to common stockholders |  | $ | 42,212,000 |  |  | $ | (5,893,000 | ) |  | $ | 36,319,000 |
Other comprehensive income (loss) |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustment |  |  | 134,000 |  |  |  |  |  |  |  | 134,000 |
Net unrealized gain on derivative securities of related party |  |  | (5,893,000 | ) |  |  | 5,893,000 |  |  |  | - |
Other comprehensive (loss) income |  |  | (5,759,000 | ) |  |  | 5,893,000 |  |  |  | 134,000 |
Total comprehensive income |  | $ | 36,453,000 |  |  | $ | - |  |  | $ | 36,453,000 |
|  | For the Six Months Ended |
|  | June 30, 2021 |
|  | As Reported |  |  | Adjustment |  |  | As Restated |
Revenue |  | $ | 16,469,000 |  |  | $ | - |  |  | $ | 16,469,000 |
Revenue, cryptocurrency mining, net |  |  | 421,000 |  |  |  |  |  |  |  | 421,000 |
Revenue, lending and trading activities |  |  | 58,485,000 |  |  |  |  |  |  |  | 58,485,000 |
Total revenue |  |  | 75,375,000 |  |  |  | - |  |  |  | 75,375,000 |
Cost of revenue |  |  | 11,386,000 |  |  |  |  |  |  |  | 11,386,000 |
Gross profit |  |  | 63,989,000 |  |  |  | - |  |  |  | 63,989,000 |
Operating expenses |  |  |  |  |  |  |  |  |  |  |  |
Research and development |  |  | 1,133,000 |  |  |  |  |  |  |  | 1,133,000 |
Selling and marketing |  |  | 2,747,000 |  |  |  |  |  |  |  | 2,747,000 |
General and administrative |  |  | 13,084,000 |  |  |  |  |  |  |  | 13,084,000 |
Total operating expenses |  |  | 16,964,000 |  |  |  | - |  |  |  | 16,964,000 |
Income from operations |  |  | 47,025,000 |  |  |  |  |  |  |  | 47,025,000 |
Other income (expenses) |  |  |  |  |  |  |  |  |  |  |  |
Interest and other income |  |  | 51,000 |  |  |  |  |  |  |  | 51,000 |
Change in fair value of equity securities, related party |  |  | - |  |  |  | (2,924,000 | ) |  |  | (2,924,000 | )
Interest expense |  |  | (337,000 | ) |  |  |  |  |  |  | (337,000 | )
Change in fair value of marketable equity securities |  |  | 45,000 |  |  |  |  |  |  |  | 45,000 |
Realized gain on marketable securities |  |  | 397,000 |  |  |  |  |  |  |  | 397,000 |
Gain on extinguishment of debt |  |  | 929,000 |  |  |  |  |  |  |  | 929,000 |
Change in fair value of warrant liability |  |  | (388,000 | ) |  |  |  |  |  |  | (388,000 | )
Total other (expenses) income, net |  |  | 697,000 |  |  |  | (2,924,000 | ) |  |  | (2,227,000 | )
Income (loss) before income taxes |  |  | 47,722,000 |  |  |  | (2,924,000 | ) |  |  | 44,798,000 |
Income tax provision |  |  | (3,510,000 | ) |  |  |  |  |  |  | (3,510,000 | )
Net income (loss) |  |  | 44,212,000 |  |  |  | (2,924,000 | ) |  |  | 41,288,000 |
Net income attributable to non-controlling interest |  |  | 3,000 |  |  |  |  |  |  |  | 3,000 |
Net income (loss) attributable to Ault Alliance, Inc. |  |  | 44,215,000 |  |  |  | (2,924,000 | ) |  |  | 41,291,000 |
Preferred dividends |  |  | (9,000 | ) |  |  |  |  |  |  | (9,000 | )
Net income (loss) available to common stockholders |  | $ | 44,206,000 |  |  | $ | (2,924,000 | ) |  | $ | 41,282,000 |
Basic net income (loss) per common share |  | $ | 0.98 |  |  |  |  |  |  | $ | 0.92 |
Diluted net income (loss) per common share |  | $ | 0.92 |  |  |  |  |  |  | $ | 0.86 |
Weighted average basic common shares outstanding |  |  | 45,052,000 |  |  |  |  |  |  |  | 45,052,000 |
Weighted average diluted common shares outstanding |  |  | 47,574,000 |  |  |  |  |  |  |  | 47,574,000 |
Comprehensive income |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) available to common stockholders |  | $ | 44,206,000 |  |  | $ | (2,924,000 | ) |  | $ | 41,282,000 |
Other comprehensive income (loss) |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustment |  |  | 41,000 |  |  |  |  |  |  |  | 41,000 |
Net unrealized gain on derivative securities of related party |  |  | (2,924,000 | ) |  |  | 2,924,000 |  |  |  | - |
Other comprehensive (loss) income |  |  | (2,883,000 | ) |  |  | 2,924,000 |  |  |  | 41,000 |
Total comprehensive income |  | $ | 41,323,000 |  |  | $ | - |  |  | $ | 41,323,000 |
The Condensed Consolidated Statements of Changes in Stockholders’ Equity amounts of “Accumulated deficit” and “Accumulated other comprehensive loss” were adjusted pursuant to the schedules below:
Schedule of condensed consolidated statements of changes in stockholders’ equity |  |  |  |  |  |  |  |  |  |  |  |
|  | January 1, 2021 |
|  | As Reported |  |  | Adjustment |  |  | As Restated |
STOCKHOLDERS’ EQUITY |  |  |  |  |  |  |  |  |  |  |  |
Common stock |  | $ | 28,000 |  |  | $ | - |  |  | $ | 28,000 |
Additional paid-in capital |  |  | 171,396,000 |  |  |  |  |  |  |  | 171,396,000 |
Accumulated deficit |  |  | (121,396,000 | ) |  |  | (933,000 | ) |  |  | (122,329,000 | )
Accumulated other comprehensive loss |  |  | (1,718,000 | ) |  |  | 933,000 |  |  |  | (785,000 | )
TOTAL AULT ALLIANCE STOCKHOLDERS’ EQUITY |  |  | 48,310,000 |  |  |  | - |  |  |  | 48,310,000 |
Non-controlling interest |  |  | 822,000 |  |  |  |  |  |  |  | 822,000 |
TOTAL STOCKHOLDERS’ EQUITY |  | $ | 49,132,000 |  |  | $ | - |  |  | $ | 49,132,000 |
|  | April 1, 2021 |
|  |  | As Reported |  |  |  | Adjustment |  |  |  | As Restated |
STOCKHOLDERS’ EQUITY |  |  |  |  |  |  |  |  |  |  |  |
Common stock |  | $ | 49,000 |  |  | $ | - |  |  | $ | 49,000 |
Additional paid-in capital |  |  | 292,763,000 |  |  |  |  |  |  |  | 292,763,000 |
Accumulated deficit |  |  | (119,402,000 | ) |  |  | 2,036,000 |  |  |  | (117,366,000 | )
Accumulated other comprehensive loss |  |  | 1,158,000 |  |  |  | (2,036,000 | ) |  |  | (878,000 | )
TOTAL AULT ALLIANCE STOCKHOLDERS’ EQUITY |  |  | 174,568,000 |  |  |  | - |  |  |  | 174,568,000 |
Non-controlling interest |  |  | 1,902,000 |  |  |  |  |  |  |  | 1,902,000 |
TOTAL STOCKHOLDERS’ EQUITY |  | $ | 176,470,000 |  |  | $ | - |  |  | $ | 176,470,000 |
|  | June 30, 2021 |
|  |  | As Reported |  |  |  | Adjustment |  |  |  | As Restated |
STOCKHOLDERS’ EQUITY |  |  |  |  |  |  |  |  |  |  |  |
Common stock |  | $ | 56,000 |  |  | $ | - |  |  | $ | 56,000 |
Additional paid-in capital |  |  | 311,760,000 |  |  |  |  |  |  |  | 311,760,000 |
Accumulated deficit |  |  | (77,190,000 | ) |  |  | (3,857,000 | ) |  |  | (81,047,000 | )
Accumulated other comprehensive loss |  |  | (4,601,000 | ) |  |  | 3,857,000 |  |  |  | (744,000 | )
TOTAL AULT ALLIANCE STOCKHOLDERS’ EQUITY |  |  | 230,025,000 |  |  |  | - |  |  |  | 230,025,000 |
Non-controlling interest |  |  | 1,364,000 |  |  |  |  |  |  |  | 1,364,000 |
TOTAL STOCKHOLDERS’ EQUITY |  | $ | 231,389,000 |  |  | $ | - |  |  | $ | 231,389,000 |
Further, the reclassification also resulted in a corresponding decrease in net income and a decrease in unrealized gains on equity securities, related party within net cash used in operating activities, as reflected in the Company’s Condensed Consolidated Statements of Cash Flows, as follows:
Schedule of condensed consolidated statements of cash flows |  |  |  |  |  |  |  |  |  |  |  |
|  | For the Six Months Ended |
|  | June 30, 2021 |
|  | As Reported |  |  | Adjustment |  |  | As Restated |
Cash flows from operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Net income |  | $ | 44,212,000 |  |  | $ | (2,924,000 | ) |  | $ | 41,288,000 |
Adjustments to reconcile net income to net cash used in operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 1,093,000 |  |  |  |  |  |  |  | 1,093,000 |
Interest expense – debt discount |  |  | 40,000 |  |  |  |  |  |  |  | 40,000 |
Gain on extinguishment of debt |  |  | (929,000 | ) |  |  |  |  |  |  | (929,000 | )
Change in fair value of warrant liability |  |  | (290,000 | ) |  |  |  |  |  |  | (290,000 | )
Accretion of original issue discount on notes receivable – related party |  |  | (4,000 | ) |  |  |  |  |  |  | (4,000 | )
Accretion of original issue discount on notes receivable |  |  | (955,000 | ) |  |  |  |  |  |  | (955,000 | )
Increase in accrued interest on notes receivable – related party |  |  | (1,000 | ) |  |  |  |  |  |  | (1,000 | )
Stock-based compensation |  |  | 584,000 |  |  |  |  |  |  |  | 584,000 |
Realized gains on sale of marketable securities |  |  | (12,283,000 | ) |  |  |  |  |  |  | (12,283,000 | )
Unrealized losses (gains) on marketable securities |  |  | (3,483,000 | ) |  |  |  |  |  |  | (3,483,000 | )
Unrealized losses (gains) on equity securities, related parties |  |  | (39,852,000 | ) |  |  | 2,924,000 |  |  |  | (36,928,000 | )
Unrealized gains on equity securities |  |  | (1,224,000 | ) |  |  |  |  |  |  | (1,224,000 | )
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Marketable equity securities |  |  | (9,616,000 | ) |  |  |  |  |  |  | (9,616,000 | )
Accounts receivable |  |  | (887,000 | ) |  |  |  |  |  |  | (887,000 | )
Accrued revenue |  |  | 78,000 |  |  |  |  |  |  |  | 78,000 |
Inventories |  |  | 485,000 |  |  |  |  |  |  |  | 485,000 |
Prepaid expenses and other current assets |  |  | (2,537,000 | ) |  |  |  |  |  |  | (2,537,000 | )
Other assets |  |  | (246,000 | ) |  |  |  |  |  |  | (246,000 | )
Accounts payable and accrued expenses |  |  | 83,000 |  |  |  |  |  |  |  | 83,000 |
Other current liabilities |  |  | 4,472,000 |  |  |  |  |  |  |  | 4,472,000 |
Lease liabilities |  |  | (439,000 | ) |  |  |  |  |  |  | (439,000 | )
Net cash used in operating activities |  | $ | (21,699,000 | ) |  | $ | - |  |  | $ | (21,699,000 | )

X
- References No definition available. + Details
Name: | us-gaap_AccountingPoliciesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the business description and basis of presentation concepts. Business description describes the nature and type of organization including but not limited to organizational structure as may be applicable to holding companies, parent and subsidiary relationships, business divisions, business units, business segments, affiliates and information about significant ownership of the reporting entity. Basis of presentation describes the underlying basis used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI https://asc.fasb.org/topic&trid=2122369 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -URI https://asc.fasb.org/topic&trid=2122149 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -URI https://asc.fasb.org/topic&trid=2134479 + Details
Name: | us-gaap_BusinessDescriptionAndBasisOfPresentationTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration