Ault Alliance, Inc. (NYSE American: AULT), a diversified holding
company (“Ault Alliance,” or the “Company”), today
announced the closing of a $41.5 million financing (the
“Financing”) with Ault & Company, Inc.
(“A&C”), an affiliate of the Company, pursuant to the
Securities Purchase Agreement (the “Agreement”) entered into
between the Company and A&C on November 6, 2023.
The Financing had three separate closings, all of which occurred
on December 14, 2023. The Company utilized proceeds from the
closings to pay off the $20.4 million owed to the Company’s senior
lenders (the “Lenders”) as well as repay the $17.5 million
owed to A&C under the senior secured convertible promissory
note issued on October 13, 2023. The Company issued 41,500 shares
of Series C convertible preferred stock (the “Preferred
Stock”) to A&C which, while subject to adjustment in the
future, are as of the date of the Agreement convertible into
approximately 198 million shares of the Company’s common stock
(“Common Stock”) at a conversion price (the “Conversion
Price”) of $0.2098 per share and warrants (the
“Warrants”) to purchase approximately 307 million shares of
Common Stock at $0.1353 per share (the “Exercise
Price”).
On December 14, 2023, the Common Stock closed at $0.088 per
share (the “Closing Price”). Consequently, the Conversion
Price constitutes approximately 238% of the Closing Price, while
the Exercise Price represents approximately 154% of the Closing
Price.
The issuance of Common Stock, upon either the conversion of the
Preferred Stock or the exercise of the Warrants, is subject to
approval of the NYSE American and the Company’s stockholders.
The Company, along with its wholly owned subsidiaries Sentinum,
Inc. (“Sentinum”), Third Avenue Apartments LLC (“Third
Avenue”), Alliance Cloud Services, LLC (“Alliance
Cloud”), BNI Montana, LLC (“BNI Montana”), Ault Lending,
LLC (“Ault Lending”), Ault Global Real Estate Equities, Inc.
(“AGREE”) and Ault Aviation, LLC (“Ault Aviation” and
collectively with the Company, Sentinum, Third Avenue, Alliance
Cloud, BNI Montana, Ault Lending and AGREE, the
“Guarantors”) entered into a Loan and Guaranty Agreement
with the Lenders, pursuant to which the Guarantors guaranteed the
repayment of secured promissory notes issued by the Lenders in the
aggregate amount of $38,918,919 to A&C.
The Company believes that it is important for investors to
understand that the net effect of this transaction is, in essence,
to replace a third party lender with A&C, a lender that is
affiliated with the Company. For one, a related party must meet
certain criteria governing the terms of the transaction that AAI’s
principal regulator, the NYSE American, would not require of an
arm’s length third party. Further, and of equal if not greater
value to the Company’s stockholders, by virtue of the principals of
A&C being very similar to those of the Company, these
individuals have an inherent vested interest in seeing the Company
succeed, which cannot, as a general rule, be said for unaffiliated
parties. A&C has assumed what was previously a debt owed by the
Company to a third party lender and used the funds lent to it to
not only bolster the Company’s financial position but free it from
arduous obligations contained in the loan documents with the third
party lender. While the Company and certain of its subsidiaries and
affiliates have guaranteed the debt owed by A&C to the third
party, it is no longer the actual debtor, having issued equity to
eliminate its own debt to the lender.
Milton ‘Todd” Ault, III, the Company’s Executive Chairman and
the Chief Executive Officer of Ault & Company, stated, “The
Company and its management entered into the foregoing transactions
based on their collective belief in the Company’s future and the
path laid out over the previous few years. As stewards of both Ault
& Company and Ault Alliance, which are led by essentially the
same individuals, our leadership team has a unique, dual
perspective that reinforces our commitment to this course of
action. By securing a majority beneficial ownership of Ault
Alliance through this process, subject to approval of the Company’s
stockholders at the Company’s forthcoming annual meeting, we are
not only demonstrating our confidence in the Company’s future but
also actively shaping it. I strongly believe that this financing
will fortify the Company’s capital structure and its balance sheet.
As a result of closing of this financing, the Company is poised to
improve its profitability and cash flow as well as position itself
for strong future growth.”
Mr. Ault added that, “As an activist investor focused on
identifying value, particularly the equity of undervalued
companies, I have consistently communicated to the market the value
I perceive in Ault Alliance. I remain convinced that Ault
Alliance's assets are significantly undervalued, and my
macro-outlook for the Company is more robust than ever. Through
this financing, the Company has secured $41.5 million in new
equity, enabling us to further strengthen our existing assets and
keep growing its operations, as we have since current management
assumed control of the Company.”
The material terms of the Agreement, the Preferred Stock and
Warrants were described in the Form 8-K filed by the Company with
the Securities and Exchange Commission on November 7, 2023.
For more information on Ault Alliance and its subsidiaries, Ault
Alliance recommends that stockholders, investors, and any other
interested parties read Ault Alliance’s public filings and press
releases available under the Investor Relations section at
www.Ault.com or at www.sec.gov.
About Ault Alliance, Inc.
Ault Alliance, Inc. 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, Ault
Alliance owns and operates a data center at which it mines Bitcoin
and offers colocation and hosting services for the emerging
artificial intelligence ecosystems and other industries, and
provides mission-critical products that support a diverse range of
industries, including metaverse platform, oil exploration, crane
services, defense/aerospace, industrial, automotive,
medical/biopharma, consumer electronics, hotel operations and
textiles. In addition, Ault Alliance extends credit to select
entrepreneurial businesses through a licensed lending subsidiary.
Ault Alliance’s headquarters are located at 11411 Southern
Highlands Parkway, Suite 240, Las Vegas, NV 89141;
www.Ault.com.
Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements generally include
statements that are predictive in nature and depend upon or refer
to future events or conditions, and include words such as
“believes,” “plans,” “anticipates,” “projects,” “estimates,”
“expects,” “intends,” “strategy,” “future,” “opportunity,” “may,”
“will,” “should,” “could,” “potential,” or similar expressions.
Statements that are not historical facts are forward-looking
statements. Forward-looking statements are based on current beliefs
and assumptions that are subject to risks and uncertainties.
Forward-looking statements speak only as of the date they are
made, and the Company undertakes no obligation to update any of
them publicly in light of new information or future events. Actual
results could differ materially from those contained in any
forward-looking statement as a result of various factors. More
information, including potential risk factors, that could affect
the Company’s business and financial results are included in the
Company’s filings with the U.S. Securities and Exchange Commission,
including, but not limited to, the Company’s Forms 10-K, 10-Q and
8- K. All filings are available at www.sec.gov and on the Company’s
website at www.Ault.com.
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Ault Alliance Investor Contact: IR@Ault.com or
1-888-753-2235
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