UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the quarterly period ended ~~June 30, 2020~~March 31, 2021

☐	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the transition period from ________ to ________.

Commission file number 1-12711

~~DPW~~AULT GLOBAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware

94-1721931

(State or other jurisdiction of incorporation or

organization)

(I.R.S. Employer Identification Number)

~~201 Shipyard Way, Suite E~~11411 Southern Highlands Pkwy #240

~~Newport Beach, CA 92663~~Las Vegas, NV 89141

(Address of principal executive offices)

(949) 444-5464

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

~~Securities registered pursuant to Section 12(b) of the Act:~~

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.001 par value	DPW	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding year (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer þ	Smaller reporting company þ
Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

At ~~August 17, 2020~~May 20, 2021 the registrant had outstanding ~~11,059,617~~49,774,538 shares of common stock.

~~DPW~~

AULT GLOBAL HOLDINGS, INC.

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of ~~June 30,~~ March 31, 2021 and December 31, 2020 (Unaudited) ~~and~~ ~~December 31, 2019 (Audited)~~	F-1 – F-2

	Condensed Consolidated Statements of ~~Operations~~Income and Comprehensive ~~Loss~~ Income (Loss) for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ (Unaudited)	F-3

	Condensed Consolidated Statements of Changes in Stockholders' Equity for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ (Unaudited)	F-4 – ~~F-7~~F-5

	Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 30,~~ March 31, 2021 and 2020 ~~and 2019~~ (Unaudited)	~~F-8~~F-6 – ~~F-9~~F-7

	Notes to ~~Interim~~ Condensed Consolidated Financial Statements (Unaudited)	~~F-10~~F-8 – ~~F-41~~F-33

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	118

Item 4.	Controls and Procedures	118

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	1310
Item 1A.	Risk Factors	1612
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	1612
Item 3.	Defaults Upon Senior Securities	1612
Item 4.	Mine Safety Disclosures	1612
Item 5.	Other Information	1612
Item 6.	Exhibits	1713

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements that involve a number of risks and uncertainties. Words such as “anticipates,” “expects,” “intends,” “goals,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” “will,” “would,” “should,” “could,” and variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, uncertain events or assumptions, and other characterizations of future events or circumstances are forward-looking statements. Such statements are based on management's expectations as of the date of this filing and involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include those described throughout this report and our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, particularly the “Risk Factors” sections of such reports. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Readers are urged to carefully review and consider the various disclosures made in this Form 10-Q and in other documents we file from time to time with the Securities and Exchange Commission that disclose risks and uncertainties that may affect our business. The forward-looking statements in this Form 10-Q do not reflect the potential impact of any divestitures, mergers, acquisitions, or other business combinations that had not been completed as of ~~August 19, 2020.~~May 24, 2021. In addition, the forward-looking statements in this Form 10-Q are made as of the date of this filing, and we do not undertake, and expressly ~~disclaims~~disclaim any duty to update such statements, whether as a result of new information, new developments or otherwise, except to the extent that disclosure may be required by law.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

~~DPW~~AULT GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

June 30, December 31,
2020 2019
(Unaudited)
ASSETS

CURRENT ASSETS
Cash and cash equivalents $ 1,691,289 $ 483,383
Marketable equity securities 596,313 639,647
Accounts receivable 2,225,091 2,438,254
Accounts and other receivable, related party 1,196,379 1,196,379
Accrued revenue 2,185,895 2,226,570
Inventories, net 2,485,795 2,481,511
Prepaid expenses and other current assets 1,110,350 1,324,161
Current assets held for sale — 281,352
TOTAL CURRENT ASSETS 11,491,112 11,071,257
Intangible assets 3,034,445 3,206,988
Goodwill 8,086,723 8,100,947
Property and equipment, net 1,694,220 1,787,393
Right-of-use assets 3,930,609 4,177,590
Investments - related party 6,739,234 6,540,720
Investments in derivative liabilities and common stock - related party 1,604,349 2,128,224
Equity investments in private companies 261,767 261,767
Investment in limited partnership 1,969,000 1,969,000
Loans receivable 553,568 795,481
Other investments, related parties 817,500 832,500
Other assets 311,628 275,273
Noncurrent assets held for sale — 1,603,268
TOTAL ASSETS $ 40,494,155 $ 42,750,408
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 13,571,731 $ 14,284,563
Accounts payable and accrued expenses, related party 40,805 64,604
Operating lease liability, current 471,651 484,819
Advances on future receipts 2,276,898 2,210,392
Short term advances, related party 175,212 1,409,331
Revolving credit facility 290,045 221,705
Notes payable, net 9,014,567 5,505,015
Notes payable, related parties 193,222 169,153
Convertible notes payable 741,550 2,732,990
Convertible notes payable, related party 1,000,000 —
Other current liabilities 3,018,344 1,545,210
Current liabilities held for sale 1,515,972 1,593,550
TOTAL CURRENT LIABILITIES 32,309,997 30,221,332
LONG TERM LIABILITIES
Operating lease liability, non-current 3,505,559 3,726,493
Notes payable 369,185 482,624
Notes payable, related parties 90,285 115,164
Convertible notes payable 345,305 304,773
Noncurrent liabilities held for sale 843,020 951,072
TOTAL LIABILITIES 37,463,351 35,801,458

	March 31,		December 31,
	2021		2020
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	107,801,265	$	18,679,848
Marketable equity securities		18,153,863		2,562,983
Securities purchased under agreement to resell		33,647,059		—
Accounts receivable		3,506,451		3,852,033
Accounts and other receivable, related party		1,196,379		1,196,379
Accrued revenue		1,533,215		1,695,905
Inventories		3,476,512		3,373,851
Prepaid expenses and other current assets		2,918,284		2,988,080
TOTAL CURRENT ASSETS		172,233,028		34,349,079

Intangible assets, net		4,240,420		4,390,388
Goodwill		9,466,577		9,645,686
Property and equipment, net		6,288,714		2,122,730
Right-of-use assets		4,816,798		4,317,778
Investment in promissory notes, related parties		13,467,783		10,668,470
Investments in derivatives and common stock, related parties		14,822,439		6,139,391
Investments in debt and equity securities		2,320,539		261,767
Investment in limited partnership		1,869,000		1,869,000
Loans receivable		596,568		750,174
Other investments, related parties		3,465,000		802,500
Other assets		443,543		326,419
TOTAL ASSETS	$	234,030,409	$	75,643,382

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	9,020,134	$	10,579,501
Securities purchase consideration payable		33,310,589		—
Accounts payable and accrued expenses, related party		32,569		35,687
Operating lease liability, current		855,933		524,326
Revolving credit facility		117,215		125,188
Notes payable, net		2,154,676		4,048,009
Notes payable, related parties		149,489		187,818
Convertible notes payable, related party		400,000		400,000
Warrant liability		4,870,821		4,192,052
Other current liabilities		1,836,937		1,789,825
TOTAL CURRENT LIABILITIES		52,748,363		21,882,406

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~DPW~~

AULT GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

	March 31,			December 31,
	2021			2020
	(Unaudited)
LONG TERM LIABILITIES
Operating lease liability, non-current		4,020,877			3,854,573
Notes payable		319,047			336,500
Notes payable, related parties		66,083			51,537
Convertible notes payable		406,327			386,283

TOTAL LIABILITIES		57,560,697			26,511,299

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY
Series A Convertible Preferred Stock, $25.00 stated value per share,		7			7
$0.001 par value – 1,000,000 shares authorized; 7,040 shares
issued and outstanding at March 31, 2021 and December 31, 2020,
respectively (redemption amount and liquidation preference of $176,000
as of March 31, 2021 and December 31, 2020)
Series B Convertible Preferred Stock, $10 stated value per share,		125			125
share, $0.001 par value – 500,000 shares authorized; 125,000 shares issued
and outstanding at March 31, 2021 and December 31, 2020 (liquidation
preference of $1,250,000 at March 31, 2021 and December 31, 2020)
Class A Common Stock, $0.001 par value – 500,000,000 shares authorized;		49,499			27,754
49,498,676 and 27,753,562 shares issued and outstanding at March 31, 2021
and December 31, 2020, respectively
Class B Common Stock, $0.001 par value – 25,000,000 shares authorized;		-			-
nil shares issued and outstanding at March 31, 2021 and December 31, 2020
Additional paid-in capital		292,763,040			171,397,199
Accumulated deficit		(119,403,734	)		(121,396,715	)
Accumulated other comprehensive income (loss)		1,158,542			(1,717,934	)
TOTAL DPW HOLDINGS STOCKHOLDERS’ EQUITY		174,567,479			48,310,436

Non-controlling interest		1,902,233			821,647

TOTAL STOCKHOLDERS’ EQUITY		176,469,712			49,132,083

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	234,030,409		$	75,643,382

June 30, December 31,
2020 2019
(Unaudited)
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Series A Convertible Preferred Stock, $25.00 stated value per share, 7 7
$0.001 par value – 1,000,000 shares authorized; 7,040 shares
issued and outstanding at June 30, 2020 and December 31, 2019,
respectively (redemption amount and liquidation preference of $176,000
as of June 30, 2020 and December 31, 2019)
Series B Convertible Preferred Stock, $10 stated value per share, 125 125
share, $0.001 par value – 500,000 shares authorized; 125,000 shares issued
and outstanding at June 30, 2020 and December 31, 2019 (liquidation
preference of $1,250,000 at June 30, 2020 and December 31, 2019)
Class A Common Stock, $0.001 par value – 500,000,000 shares authorized; 6,112 3,318
6,112,117 and 3,318,390 shares issued and outstanding at June 30, 2020
and December 31, 2019, respectively
Class B Common Stock, $0.001 par value – 25,000,000 shares authorized; — —
nil shares issued and outstanding at June 30, 2020 and December 31, 2019
Additional paid-in capital 105,625,502 101,099,347
Accumulated deficit (96,564,940 ) (88,650,465 )
Accumulated other comprehensive loss (6,044,244 ) (5,511,624 )
TOTAL DPW HOLDINGS STOCKHOLDERS' EQUITY 3,022,562 6,940,708

Non-controlling interest 8,242 8,242

TOTAL STOCKHOLDERS' EQUITY 3,030,804 6,948,950

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 40,494,155 $ 42,750,408

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~DPW~~

AULT GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~INCOME AND COMPREHENSIVE ~~LOSS~~INCOME (LOSS) (Unaudited)

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,						For the Three Months Ended
	2020			2019			2020			2019			March 31,
													2021			2020
Revenue	$	5,434,736		$	4,541,198		$	11,004,018		$	10,092,849		$	7,904,511		$	5,569,282
Revenue, cryptocurrency mining		—			256,116			—			284,920			129,896			—
Revenue, lending activities		(33,756	)		189,621			2,396			374,710
Revenue, lending and trading activities														5,210,222			36,152
Total revenue		5,400,980			4,986,935			11,006,414			10,752,479			13,244,629			5,605,434
Cost of revenue		3,495,574			4,267,194			7,349,009			9,093,024			5,107,908			3,853,435
Gross profit		1,905,406			719,741			3,657,405			1,659,455			8,136,721			1,751,999

Operating expenses
Engineering and product development		462,159			471,268			902,785			926,946			601,918			440,626
Selling and marketing		294,974			382,184			633,137			799,806			1,241,542			338,163
General and administrative		2,917,999			3,510,839			5,820,901			8,013,157			5,092,268			2,902,994
Provision for credit losses		(1,000,000	)		—			—			—			—			1,000,000
Loss on digital currency		(106	)		(4,479	)		(14	)		(5,982	)
Total operating expenses		2,675,026			4,359,812			7,356,809			9,733,927			6,935,728			4,681,783
Loss from continuing operations		(769,620	)		(3,640,071	)		(3,699,404	)		(8,074,472	)
Income (loss) from continuing operations														1,200,993			(2,929,784	)
Other income (expenses)
Interest income		35,936			911,537			36,256			1,748,464			36,923			320
Interest expense		(962,714	)		(532,255	)		(2,048,877	)		(2,631,007	)		(313,934	)		(1,086,163	)
Change in fair value of marketable equity securities		336,781			272,689			(28,578	)		156,647			1,959,791			(365,359	)
Loss on extinguishment of debt		(11,620	)		—			(474,754	)		(807,784	)
Loss on issuance of warrants		—			(1,763,481	)		—			(1,763,481	)
Realized gain on marketable securities														397,331			—
Gain (loss) on extinguishment of debt														481,533			(463,134	)
Change in fair value of warrant liability		(10,184	)		946,825			(5,773	)		946,825			(678,769	)		4,411
Total other expenses, net		(611,801	)		(164,685	)		(2,521,726	)		(2,350,336	)
Loss from continuing operations before income taxes		(1,381,421	)		(3,804,756	)		(6,221,130	)		(10,424,808	)
Income tax benefit		5,888			73,976			11,793			88,144
Net loss from continuing operations		(1,375,533	)		(3,730,780	)		(6,209,337	)		(10,336,664	)
Total other income (expenses), net														1,882,875			(1,909,925	)

Income (loss) from continuing operations before income taxes														3,083,868			(4,839,709	)
Income tax (expense) benefit														(5,901	)		5,905
Net income (loss) from continuing operations														3,077,967			(4,833,804	)
Net loss from discontinued operations, net of taxes		—			(328,117	)		(1,697,744	)		(433,259	)		—			(1,697,744	)
Net loss		(1,375,533	)		(4,058,897	)		(7,907,081	)		(10,769,923	)
Less: Net loss attributable to non-controlling interest		—			—			—			32,416
Net loss attributable to DPW Holdings		(1,375,533	)		(4,058,897	)		(7,907,081	)		(10,737,507	)
Net income (loss)														3,077,967			(6,531,548	)
Less: Net income attributable to non-controlling interest														(1,080,586	)		—
Net income (loss) attributable to Ault Global Holdings														1,997,381			(6,531,548	)
Preferred dividends		(2,934	)		(5,284	)		(7,394	)		(7,153	)		(4,400	)		(4,460	)
Net loss available to common stockholders	$	(1,378,467	)	$	(4,064,181	)	$	(7,914,475	)	$	(10,744,660	)
Basic and diluted net loss per common share:
Net income (loss) available to common stockholders													$	1,992,981		$	(6,536,008	)

Basic net income (loss) per common share:
Continuing operations	$	(0.24	)	$	(4.60	)	$	(1.20	)	$	(21.52	)	$	0.05		$	(1.07	)
Discontinued operations		—			(0.40	)		(0.33	)		(0.90	)		—			(0.37	)
Net loss per common share	$	(0.24	)	$	(5.00	)	$	(1.52	)	$	(22.42	)
Weighted average common shares outstanding, basic and diluted		5,864,395			812,355			5,198,806			479,226
Comprehensive loss
Loss available to common stockholders	$	(1,378,467	)	$	(4,064,181	)	$	(7,914,475	)	$	(10,744,660	)
Net income (loss) per common share													$	0.05		$	(1.44	)

Diluted net income (loss) per common share:
Continuing operations													$	0.05		$	(1.07	)
Discontinued operations														—			(0.37	)
Net income (loss) per common share													$	0.05		$	(1.44	)

Weighted average basic common shares outstanding														39,256,336			4,533,217
Weighted average diluted common shares outstanding														40,202,443			4,533,217

Comprehensive income (loss)
Income (loss) available to common stockholders													$	1,992,981		$	(6,536,008	)
Other comprehensive income (loss)
Foreign currency translation adjustment		97,200			162,648			(51,407	)		192,505			(92,694	)		(148,607	)
Net unrealized gain (loss) on derivative securities of related party		760,881			375,499			(481,213	)		(361,181	)		2,969,170			(1,242,094	)
Other comprehensive loss		858,081			538,147			(532,620	)		(168,676	)
Total comprehensive loss	$	(520,386	)	$	(3,526,034	)	$	(8,447,095	)	$	(10,913,336	)
Other comprehensive income (loss)														2,876,476			(1,390,701	)
Total comprehensive income (loss)													$	4,869,457		$	(7,926,709	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~DPW~~AULT GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)

Three Months Ended ~~June 30, 2020~~March 31, 2021

															Accumulated
	Series A & B								Additional						Other					Total
	Preferred Stock				Common Stock				Paid-In			Accumulated			Comprehensive			Non-Controlling		Stockholders'
	Shares		Amount		Shares		Amount		Capital			Deficit			Income (Loss)			Interest		Equity

BALANCES, January 1, 2021		132,040	$	132		27,753,562	$	27,754	$	171,397,199		$	(121,396,715	)	$	(1,717,934	)	$	821,647	$	49,132,083
Stock based compensation:
Options		—		—		—		—		19,602			—			—			—		19,602
Issuance of common stock for cash		—		—		21,561,900		21,562		124,961,743			—			—			—		124,983,305
Issuance of common stock for conversion
of convertible notes payable		—		—		183,214		183		449,333			—			—			—		449,516
Financing cost in connection with sales of common stock		—		—		—		—		(4,064,837	)		—			—			—		(4,064,837	)
Net income		—				—		—		—			1,997,381			—			—		1,997,381
Preferred dividends		—		—		—		—		—			(4,400	)		—			—		(4,400	)
Net unrealized gain on derivatives
in related party		—		—		—		—		—			—			2,969,170			—		2,969,170
Foreign currency translation adjustments		—		—		—		—		—			—			(92,694	)		—		(92,694	)
Net income attributable to non-controlling interest																			1,080,586		1,080,586

BALANCES, March 31, 2021		132,040	$	132		49,498,676	$	49,499	$	292,763,040		$	(119,403,734	)	$	1,158,542		$	1,902,233	$	176,469,712

~~The above Condensed Consolidated Statement of Changes in Stockholders’ Equity reflects a 1-for-40 reverse stock split effective August 5, 2019. See Note 1 for further information.~~

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~DPW~~AULT GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)

Three Months Ended ~~June 30, 2019~~March 31, 2020

															Accumulated																					Accumulated
									Additional						Other					Total											Additional					Other					Total
	Preferred Stock				Common Stock				Paid-In			Accumulated			Comprehensive			Non-Controlling		Stockholders'			Preferred Stock				Common Stock				Paid-In		Accumulated			Comprehensive			Non-Controlling		Stockholders'
	Shares		Amount		Shares		Amount		Capital			Deficit			Loss			Interest		Equity			Shares		Amount		Shares		Amount		Capital		Deficit			Loss			Interest		Equity

BALANCES, April 1, 2019		126,504	$	126		231,478	$	231	$	84,903,648		$	(62,401,594	)	$	(4,478,216	)	$	8,242	$	18,032,437
BALANCES, January 1, 2020																								132,040	$	132		3,318,390	$	3,318	$	101,099,347	$	(88,650,465	)	$	(5,511,624	)	$	8,242	$	6,948,950
Stock based compensation:
Options		—		—		—		—		248,340			—			—			—		248,340			—		—		—		—		19,956		—			—			—		19,956
Issuance of common stock for cash		—		—		96,388		97		1,056,112			—			—			—		1,056,209
Common stock																								—		—		65,000		65		73,385		—			—			—		73,450
Issuance of common stock in payment of
short term advances, related party																								—		—		660,667		661		739,287		—			—			—		739,948
Issuance of common stock in payment of
accrued liabilities		—		—		9,375		9		108,514			—			—			—		108,523			—		—		12,500		13		73,141		—			—			—		73,154
Issuance of common stock upon exercise
of warrants		—		—		699,887		700		6,620,325			—			—			—		6,621,025
Issuance of Series A preferred stock for cash		5,536		6		—		—		138,394			—			—			—		138,400
Issuance of common stock for conversion
of debt																								—		—		1,345,164		1,345		2,118,617		—			—			—		2,119,962
Beneficial conversion feature in connection
with convertible notes		—		—		—		—		188,448			—			—			—		188,448			—		—		—		—		20,345		—			—			—		20,345
Fair value of warrants issued in connection
with convertible notes		—				—		—		58,448			—			—			—		58,448			—		—		—		—		414,895		—			—			—		414,895
Cash for exchange fees and other financing costs		—		—		—		—		(944,864	)		—			—			—		(944,864	)
Comprehensive loss:
Net loss		—				—		—		—			(4,058,897	)		—			—		(4,058,897	)		—				—		—		—		(6,531,548	)		—			—		(6,531,548	)
Preferred dividends		—		—		—		—		—			(5,284	)		—			—		(5,284	)		—		—		—		—		—		(4,460	)		—			—		(4,460	)
Net unrealized gain on derivatives
Net unrealized loss on derivatives
in related party		—		—		—		—		—			—			375,499			—		375,499			—		—		—		—		—		—			(1,242,094	)		—		(1,242,094	)
Foreign currency translation adjustments		—		—		—		—		—			—			31,518			—		31,518			—		—		—		—		—		—			(148,607	)		—		(148,607	)

BALANCES, June 30, 2019		132,040	$	132		1,037,128	$	1,037	$	92,377,365		$	(66,465,775	)	$	(4,071,199	)	$	8,242	$	21,849,802
BALANCES, March 31, 2020																								132,040	$	132		5,401,721	$	5,402	$	104,558,973	$	(95,186,473	)	$	(6,902,325	)	$	8,242	$	2,483,951

~~The above Condensed Consolidated Statement of Changes in Stockholders’ Equity reflects a 1-for-40 reverse stock split effective August 5, 2019. See Note 1 for further information.~~

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~DPW~~AULT GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF ~~CHANGES IN STOCKHOLDERS’ EQUITY~~CASH FLOWS (Unaudited)

~~Six Months Ended June 30, 2020~~

Accumulated
Additional Other Total
Preferred Stock Common Stock Paid-In Accumulated Comprehensive Non-Controlling Stockholders'
Shares Amount Shares Amount Capital Deficit Income (Loss) Interest Equity
BALANCES, January 1, 2020 132,040 $ 132 3,318,390 $ 3,318 $ 101,099,347 $ (88,650,465 ) $ (5,511,624 ) $ 8,242 $ 6,948,950
Stock based compensation:
Options — — — — 40,134 — — — 40,134
Common stock — — 65,000 65 73,385 — — — 73,450
Issuance of common stock in payment of
  short term advances, related party — — 660,667 661 739,287 — — — 739,948
Issuance of common stock in payment of
  accrued liabilities — — 153,124 153 228,548 — — — 228,701
Issuance of common stock for conversion
of debt — — 1,914,936 1,915 2,686,711 — — — 2,688,626
Beneficial conversion feature in connection
with convertible notes — — — — 66,582 — — — 66,582
Fair value of warrants issued in connection
with convertible notes — — — 691,508 — — — 691,508
Comprehensive loss:
Net loss — — — — (7,907,081 ) — — (7,907,081 )
Preferred dividends — — — — — (7,394 ) — — (7,394 )
Net unrealized loss on derivatives
  in related party — — — — — — (481,213 ) — (481,213 )
Foreign currency translation adjustments — — — — — — (51,407 ) — (51,407 )

BALANCES, June 30, 2020 132,040 $ 132 6,112,117 $ 6,112 $ 105,625,502 $ (96,564,940 ) $ (6,044,244 ) $ 8,242 $ 3,030,804

	For the Three Months Ended March 31,
	2021			2020

Cash flows from operating activities:
Net loss	$	3,077,967		$	(6,531,548	)
Less: Net loss from discontinued operations		—			(1,697,744	)
Net income (loss) from continuing operations		3,077,967			(4,833,804	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation		161,713			174,947
Amortization		104,130			83,285
Amortization of right-of-use assets		228,703			122,034
Amortization, related party		7,500			7,500
Interest expense – debt discount		20,044			677,022
Gain on extinguishment of debt		(481,533	)		—
Change in fair value of warrant liability		678,769			(4,411	)
Accretion of original issue discount on notes receivable – related party		(3,870	)		—
Accretion of original issue discount on notes receivable		(64,596	)		(3,738	)
Increase in accrued interest on notes receivable – related party		(745	)		—
Stock-based compensation		19,602			122,763
Realized losses on other investments		—			27,500
Realized gains on sale of marketable securities		(4,891,601	)		(14,442	)
Unrealized (gains) losses on marketable equity securities		(2,259,739	)		121,068
Unrealized (gains) losses on equity securities – related party		(153,576	)		181,990
Unrealized (gains) losses on equity securities		(57,560	)		92,930
Provision for loan losses		-			1,000,000
Changes in operating assets and liabilities:
Marketable equity securities		(8,869,664	)		—
Accounts receivable		300,848			(607,615	)
Accrued revenue		104,231			403,955
Inventories		(117,654	)		25,590
Prepaid expenses and other current assets		(90,656	)		103,636
Other assets		(85,525	)		(46,813	)
Accounts payable and accrued expenses		(1,709,982	)		894,001
Accounts payable, related parties		(3,118	)		(9,725	)
Other current liabilities		77,677			480,477
Lease liabilities		(229,812	)		(115,350	)
Net cash used in continuing operating activities		(14,238,447	)		(1,117,200	)
Net cash provided by discontinued operating activities		—			1,246
Net cash used in operating activities		(14,238,447	)		(1,115,954	)
Cash flows from investing activities:
Purchase of property and equipment		(4,348,871	)		(155,981	)
Investment in promissory notes, related parties		(3,594,698	)		(50,661	)
Investments in derivative liabilities and common stock, related parties		(4,756,302	)		(1,413	)
Investment in real property, related party		(2,670,000	)		—
Purchase of marketable equity securities		-			—
Sales of marketable equity securities		430,124			106,589
Investments in debt and equity securities		(1,787,010	)		(510	)
Net cash used in investing activities	$	(16,726,757	)	$	(101,976	)

~~The above Condensed Consolidated Statement of Changes in Stockholders’ Equity reflects a 1-for-40 reverse stock split effective August 5, 2019. See Note 1 for further information.~~

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~DPW~~

AULT GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~CHANGES IN STOCKHOLDERS’ EQUITY~~CASH FLOWS (Unaudited)

~~Six Months Ended June 30, 2019~~ (continued)

Accumulated
Additional Other Total
Preferred Stock Common Stock Paid-In Accumulated Comprehensive Non-Controlling Stockholders'
Shares Amount Shares Amount Capital Deficit Income (Loss) Interest Equity
BALANCES, January 1, 2019 126,434 $ 126 100,910 $ 101 $ 77,647,544 $ (55,721,115 ) $ (3,902,523 ) $ 40,658 $ 18,064,791
Stock based compensation:
Options — — — — 493,954 — — — 493,954
Common stock — — 9,375 9 253,010 — — — 253,019
Issuance of common stock for cash — — 191,179 192 5,453,552 — — — 5,453,744
Issuance of common stock in payment of
accrued liabilities — — 9,375 9 108,514 — — — 108,523
Issuance of common stock for conversion
of debt — — 26,402 26 2,608,431 — — — 2,608,457
Issuance of common stock upon exercise
of warrants — — 699,887 700 6,620,325 — — — 6,621,025
Issuance of Series A preferred stock for cash 5,606 6 — — 140,144 — — — 140,150
Beneficial conversion feature in connection
with convertible notes — — — — 188,448 — — — 188,448
Fair value of warrants issued in connection
with convertible notes — — — 58,448 — — — 58,448
Cash for exchange fees and other financing costs — — — — (1,195,005 ) — — — (1,195,005 )
Comprehensive loss:
Net loss — — — — (10,737,507 ) — — (10,737,507 )
Preferred dividends — — — — — (7,153 ) — — (7,153 )
Net unrealized loss on derivatives
in related party — — — — — — (361,181 ) — (361,181 )
Foreign currency translation adjustments — — — — — — 192,505 — 192,505
Net loss attributable to non-controlling interest — — — — — — — (32,416 ) (32,416 )

BALANCES, June 30, 2019 132,040 $ 132 1,037,128 $ 1,037 $ 92,377,365 $ (66,465,775 ) $ (4,071,199 ) $ 8,242 $ 21,849,802

	For the Three Months Ended March 31,
	2021			2020

Cash flows from financing activities:
Gross proceeds from sales of common stock and warrants	$	124,983,305		$	—
Financing cost in connection with sales of equity securities		(4,064,837	)		—
Proceeds from notes payable		—			600,000
Proceeds from short-term advances – related party		—			573,754
Payments on short-term advances – related party		—			(28,779	)
Payments on notes payable		(971,925	)		(80,782	)
Payments on advances on future receipts		—			(20,000	)
Payments of preferred dividends		(4,400	)		(4,460	)
Payments on revolving credit facilities, net		(7,973	)		231,957
Net cash provided by financing activities		119,934,170			1,271,690

Effect of exchange rate changes on cash and cash equivalents		152,451			89,194

Net increase (decrease) in cash and cash equivalents		89,121,417			142,954

Cash and cash equivalents at beginning of period		18,679,848			483,383

Cash and cash equivalents at end of period	$	107,801,265		$	626,337

Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	658,042		$	38,345

Non-cash investing and financing activities:
Cancellation of notes payable into shares of common stock	$	449,516		$	1,909,350
Payment of accounts payable with digital currency	$	118,627		$	—
Cancellation of short term advances, related party into shares
of common stock	$	—		$	739,948
Purchase of marketable equity securities for future payment	$	33,647,059		$	—

~~The above Condensed Consolidated Statement of Changes in Stockholders’ Equity reflects a 1-for-40 reverse stock split effective August 5, 2019. See Note 1 for further information.~~

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~DPW HOLDINGS, INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)~~

For the Six Months Ended June 30,
2020 2019

Cash flows from operating activities:
Net loss $ (7,907,081 ) $ (10,769,923 )
Less: Net loss from discontinued operations (1,697,744 ) (433,259 )
Net loss from continuing operations (6,209,337 ) (10,336,664 )
Adjustments to reconcile net loss to net cash (used in) operating activities:
Depreciation 259,906 1,595,847
Amortization 166,697 299,462
Amortization of right-of-use assets 246,981 19,059
Interest expense – debt discount 907,480 1,676,609
Fair value in excess of proceeds upon issuance of warrants — 1,763,481
Change in fair value of warrant liability 10,184 (946,825 )
Accretion of original issue discount on notes receivable – related party 15,000 (1,262,422 )
Accretion of original issue discount on notes receivable (4,137 ) (58,023 )
Increase in accrued interest on notes receivable – related party — (464,114 )
Stock-based compensation 142,941 992,283
Realized losses on other investments 27,500 —
Realized (gains) losses on sale of digital currencies — (394 )
Realized (gains) losses on sale of marketable securities (14,708 ) (86,741 )
Unrealized (gains) losses on marketable equity securities (52,313 ) (231,608 )
Unrealized losses on equity securities – related party 64,639 (21,288 )
Unrealized losses on equity securities 73,077 (6,316 )
Changes in operating assets and liabilities:
Accounts receivable 198,620 (594,491 )
Accounts receivable, related party — 2,648,798
Accrued revenue 33,829 68,999
Digital currencies (14 ) (290,902 )
Inventories (34,907 ) 598,777
Prepaid expenses and other current assets 181,531 (53,576 )
Other assets (39,418 ) (271,679 )
Accounts payable and accrued expenses 1,365,505 405,708
Accounts payable, related parties (23,799 ) 2,271
Other current liabilities 659,795 (158,201 )
Lease liabilities (234,102 ) —

Net cash (used in) continuing operating activities (2,259,050 ) (4,711,950 )
Net cash provided by (used in) discontinued operating activities 1,246 42,230
Net cash used in operating activities (2,257,804 ) (4,669,720 )

Cash flows from investing activities:
Purchase of property and equipment (190,117 ) (86,048 )
Investments – related party (198,514 ) (1,027,847 )
Investments in warrants and common stock - related party (10,367 ) (681,164 )
Sales of marketable equity securities 110,355 571,741
Proceeds from loans receivable 139,933 —
Investments in debt and equity securities (3,060 ) (383,876 )

Net cash used in investing activities $ (151,770 ) $ (1,607,194 )

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

~~DPW HOLDINGS, INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (continued)~~

For the Six Months Ended June 30,
2020 2019

Cash flows from financing activities:
Gross proceeds from sales of common stock and warrants $ — $ 11,528,605
Proceeds from issuance of Series A Convertible Preferred Stock — 131,741
Financing cost in connection with sales of equity securities — (1,195,004 )
Proceeds from warrant exercises — 127,000
Proceeds from convertible notes payable 100,000 500,000
Proceeds from notes payable 3,147,434 4,102,918
Proceeds from short-term advances – related party 604,254 313,000
Payments on short-term advances – related party (98,425 ) —
Payments on notes payable (185,583 ) (1,386,935 )
Payments on convertible notes payable — (7,069,547 )
Proceeds from advances on future receipts — 319,729
Payments on advances on future receipts (20,000 ) (674,229 )
Payments of preferred dividends (7,394 ) (7,153 )
Payments on revolving credit facilities, net 68,340 (217,830 )

Net cash provided by financing activities 3,608,626 6,472,295

Effect of exchange rate changes on cash and cash equivalents 8,854 (114,036 )
Net increase in cash and cash equivalents 1,207,906 81,345
Cash and cash equivalents at beginning of period 483,383 769,619

Cash and cash equivalents at end of period $ 1,691,289 $ 850,964

Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 70,727 $ 1,644,524

Non-cash investing and financing activities:
Cancellation of convertible note payable into shares of common stock $ 2,688,626 $ 2,608,458
Payment of debt with digital currency $ — $ 273,517
Issuance of common stock in payment of liability $ 228,701 $ 108,523
Cancellation of short term advances, related party into shares
of common stock $ 739,948 $ —
Conversion of loans receivable for marketable equity securities $ — $ 485,000
Conversion of loans receivable for investments in warrants and
common stock - related party $ — $ 91,483
Issuance of notes payable and convertible notes payable in
payment of accrued expenses $ 420,000 $ —

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

~~DPW~~AULT GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited

~~JUNE 30, 2020~~March 31, 2021

1. DESCRIPTION OF BUSINESS

~~DPW~~Ault Global Holdings, Inc., a Delaware corporation (“~~DPW”~~Ault Global” or the “Company”), formerly known as ~~Digital Power Corporation,~~DPW Holdings, was incorporated in September 2017. The Company is a diversified holding company owning subsidiaries engaged in the following operating businesses: commercial and defense solutions, commercial lending and advanced textile technology. The Company’s wholly-owned operating subsidiaries are Gresham Worldwide, Inc. (“GWW”), Coolisys Technologies Corp. (“Coolisys”), Gresham Power Electronics Ltd. (f/k/a Digital Power Limited) (“Gresham Power”), ~~Enertec~~ ~~Systems 2001 Ltd~~Relec Electronics Ltd. (“~~Enertec~~”Relec”), Digital Power Lending, LLC (“DP Lending”), Ault Alliance, Inc. (“Ault Alliance”), Ault Disruptive Technologies Company, LLC and ~~Digital Farms, Inc.~~Tansocial LLC (“~~Digital Farms”~~Tansocial”). The Company also has a controlling interest in Enertec Systems 2001 Ltd (“Enertec”), Microphase Corporation (“Microphase”) and Alliance Cloud Services, LLC (“Alliance Cloud Services”). The Company has three reportable ~~segments – defense solutions through GWW with operations conducted by Microphase, Enertec and Gresham Power, commercial solutions through Coolisys and commercial lending through DP Lending.~~segments:

GWW – defense solutions with operations conducted by Microphase, Enertec, Gresham Power and Relec,

Coolisys – commercial electronics solutions, and

Ault Alliance – commercial lending and digital learning through DP Lending, Alliance Cloud Services and Tansocial.

During March 2020, the Company ceased restaurant operations at ~~Digital Farms, the Company’s blockchain mining subsidiary, and I. AM,~~I.AM, Inc. (“~~I. AM”~~I.AM”). Management determined that the permanent closing of the restaurant operations at ~~I. AM,~~I.AM, which owned and operated the Prep Kitchen brand restaurants located in the San Diego area, met the criteria for presentation as discontinued operations. Accordingly, the results of the restaurant operations segment are presented as discontinued operations in our condensed consolidated statements of operations and comprehensive loss and are excluded from continuing operations for all periods presented.

On ~~March 14, 2019,~~ ~~pursuant to~~November 2, 2020, I.AM filed a voluntary petition for bankruptcy under Chapter 7 in the ~~authorization provided by~~United States Bankruptcy Court in the ~~Company’s stockholders~~ ~~at a Special Meeting~~Central District of Stockholders, the Company’s Board of Directors (the “Board”) approved an amendment to the Certificate of Incorporation (the “COI Amendment”) to effectuate a reverse stock split of the Common Stock of the Company’s issued and outstandingCalifornia, Santa Ana Division, case number ~~of such shares by a ratio of one-for-twenty (the “First Stock Split”)~~. At the Company’s 2019 reconvened Annual Meeting of Stockholders, the Company’s stockholders approved a proposal permitting the Board to effectuate a second reverse stock split (the “Second Stock Split”) of the Company’s issued and outstanding Common Stock. Thereafter, on July 23, 2019, the Board approved the Second Stock Split with a ratio of one-for-forty. The Second Stock Split did not affect the number of authorized shares of Common Stock or their par value per share.8:20-bk-13076. As a result of I.AM’s bankruptcy filing on November 2, 2020, Ault Global ceded authority for managing the ~~Second Stock Split, each forty shares~~business to the Bankruptcy Court. For this reason, the Company concluded that Ault Global had lost control of I.AM, and no longer had significant influence over I.AM. Therefore, the Company deconsolidated I.AM effective with the filing of the Chapter 11 bankruptcy in November 2020.

In March 2021, the Company resumed cryptocurrency mining operations due to several factors, which had positively affected the number of active miners the Company operated, including the market prices of digital currencies, and favorable power costs available at the Michigan cloud data center purchased on January 29, 2021.

On January 19, 2021, the Company changed its corporate name from DPW Holdings, Inc., to Ault Global Holdings, Inc. The name change was effected through a parent/subsidiary short merger pursuant to an agreement and plan of merger dated January 7, 2021. The merger and resulting name change do not affect the rights of security holders of the Company. The Company’s common stock ~~issued and outstanding prior~~continues to be quoted on the ~~Second Stock Split were converted into one share of common stock. The Second Stock Split became effective in~~NYSE American under the ~~State of Delaware on August 5, 2019. All share amounts in these financial statements have been updated to reflect these reverse stock splits.~~symbol “DPW”.

2. LIQUIDITY ~~GOING CONCERN~~ AND ~~MANAGEMENT’S PLANS~~FINANCIAL CONDITION

~~The accompanying condensed consolidated financial statements have been prepared on the basis that the Company will continue as a going concern.~~ As of ~~June 30, 2020,~~March 31, 2021, the Company had cash and cash equivalents of ~~$1,691,289, an accumulated deficit of $96,564,940 and negative~~$107.8 million, working capital of ~~$20,818,885. The Company has incurred recurring losses~~$119.5 million and ~~reported losses for the six months ended June 30, 2020 and 2019, totaling $7,907,081 and $10,769,923, respectively.~~total stockholders’ equity of $176.5 million. In the past, the Company has financed its operations principally through issuances of convertible debt, promissory notes and equity securities. During ~~2020,~~the three months ended March 31, 2021, the Company continued to successfully obtain additional equity ~~and debt financing and restructured existing debt.~~financing.

The Company ~~expects to continue to incur losses for the foreseeable future and needs to raise additional capital to continue~~believes its business development initiatives and to support its working capital requirements. During February 2020, the Company entered into a Master Exchange Agreement with an entity that has agreed to purchase up to approximately $7.7 million in certain promissory notes previously issued by the Company. Management believes that the Company has access to capital resources through potential public or private issuances of debt or equity securities. However, if the Companycurrent cash on hand is unable to raise additional capital, which ability could be adversely affected by the outbreak of COVID-19, it may be required to curtail operations and take additional measures to reduce costs, including reducing its workforce and eliminating outside consultants to conserve its cash in amounts sufficient to ~~sustain operations and~~ meet its ~~obligations. These matters raise substantial doubt about~~operating and capital requirements for at least the ~~Company’s ability to continue as a going concern. The accompanying~~next twelve months from the date these financial statements ~~do not include any adjustments that might become necessary should the Company be unable to continue as a going concern.~~are issued.

~~DPW~~AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

~~JUNE 30, 2020~~March 31, 2021

~~Coronavirus disease 2019 and 2020 pandemic~~

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) as a pandemic which continues to spread throughout the United States and the world. The Company is monitoring the outbreak of COVID-19 and the related business and travel restrictions and changes to behavior intended to reduce its spread, and its impact on operations, financial position, cash flows, inventory, supply chains, customer purchasing trends, customer payments, and the industry in general, in addition to the impact on its employees. Due to the rapid development and fluidity of this situation, the magnitude and duration of the pandemic and its impact on the Company's operations and liquidity is uncertain as of the date of this report.

However, the Company’s business has been disrupted and materially adversely affected by the outbreak of COVID-19. The Company is still assessing its business operations and system supports and the impact COVID-19 may have on its results and financial condition, but there can be no assurance that this analysis will enable the Company to avoid part or all of any impact from the spread of COVID-19 or its consequences, including downturns in business sentiment generally or in its sectors in particular.

~~The Company’s operations are located in Alameda County, CA, Orange County, CA, Fairfield County, CT, the United Kingdom, Israel and members of senior management work in Seattle, WA and New York, NY.~~ The Company has been following the recommendations of local health authorities to minimize exposure risk for its employees, including the temporary closures of its offices and having employees work remotely to the extent possible~~, which has to an extent adversely affected their efficiency.~~

~~Updates by business unit are as follows:~~

DPW Holdings’ corporate headquarters, located in Newport Beach, CA, continues to work remotely, based on the occupancy and social distancing order from the Orange County Health Officer (http://www.ochealthinfo.com/phs/about/epidasmt/epi/dip/prevention/novel_coronavirus). The headquarters staff has tested the secure remote access systems and technology infrastructure to adjust working arrangements for its employees and believes it has adequate internal communications system and can remain operational with a remote staff. The Company is reviewing the reopening guidance by the Orange County Health Agency and the State of California along with COVID-19 General Checklist for Office Workspaces published by the California Department of Public Health. The corporate headquarters will reopen when the Company can provide a safe workspace for its employees.

Coolisys Technologies Corp., located in Fremont, CA, had temporarily suspended operations as a result of the Alameda County Public Health Department’s order to cease all activities at facilities located within the County. Currently, manufacturing and logistics personnel operate on site whereas administrative personnel work remotely.

Microphase Corporation, located in Shelton, CT, has developed an emergency plan to ensure that its mission critical manufacturing and logistical functions are up and running. Microphase has implemented additional steps to ensure a higher level of cleanliness in its facility. Employees at greater risk of major health issues from COVID-19, which include key members of its finance department, are not required to work on site. The crisis management team meets regularly to monitor the situation, and modifies and communicates the plan as the need arises. Once the COVID-19 crisis has passed, the team will work on transitioning Microphase back to normal operations.

Gresham Power Electronics Limited, located in Salisbury, UK, continues to follow UK Government and Public Health England COVID-19 safety guidelines, which includes a combination of working remotely and adhering to social distancing and health and safety procedures on site. Essential staff are on site for specific work as required.

Enertec Systems 2001 Ltd., located in Karmiel, Israel, has been granted a waiver by the Israeli government to remain open to complete key projects that impact national security. Approximately 50% of the Enertec workforce is working remotely.

~~DPW HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)~~

~~JUNE 30, 2020~~

3. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Regulation S-X and do not include all the information and disclosures required by generally accepted accounting principles in the United States of America (“GAAP”). The Company has made estimates and judgments affecting the amounts reported in our condensed consolidated financial statements and the accompanying notes. The actual results experienced by the Company may differ materially from our estimates. The condensed consolidated financial information is unaudited but reflects all normal adjustments that are, in the opinion of management, necessary to provide a fair statement of results for the interim periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form ~~10-K/A~~10-K for the year ended December 31, ~~2019,~~2020, filed with the Securities and Exchange Commission on ~~June 1, 2020.~~April 15, 2021. The condensed consolidated balance sheet as of December 31, ~~2019~~2020 was derived from the Company’s audited ~~2019~~2020 financial statements contained in the above referenced Form ~~10-K/A.~~10-K. Results of the three ~~and six~~ months ended ~~June 30, 2020,~~March 31, 2021, are not necessarily indicative of the results to be expected for the full year ending December 31, ~~2020.~~2021.

~~Principles of Consolidation~~Significant Accounting Policies

The consolidated financial statements include the accounts of DPW and its wholly-owned subsidiaries, GWW, Coolisys, Digital Power Corporation (a wholly owned subsidiary of Coolisys), Gresham Power, Enertec, DP Lending and Digital Farms and its majority-owned subsidiaries, Microphase and I.AM. All significant intercompany accounts and transactionsThere have been ~~eliminated~~no material changes in ~~consolidation.~~the Company’s significant accounting policies to those previously disclosed in the 2020 Annual Report other than disclosed below.

~~Accounting Estimates~~Fair value of Financial Instruments

In accordance with ASC No. 820, Fair Value Measurements and Disclosures, fair value is defined as the exit price, or the amount that would be received for the sale of an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date.

The ~~preparation~~guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of ~~financial statements in conformity with U.S. GAAP requires management to make estimates, judgments~~observable inputs and ~~assumptions. The Company's management believes~~minimizes the use of unobservable inputs by requiring that the ~~estimates, judgments~~most observable inputs be used when available. Observable inputs include those that market participants would use in valuing the asset or liability and ~~assumptions used~~ are ~~reasonable~~developed based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dateson market data obtained from sources independent of the ~~financial statements,~~Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or model-derived valuations. All significant inputs used in our valuations are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities. Level 2 inputs also include quoted prices that were adjusted for security-specific restrictions which are compared to output from internally developed models such as a discounted cash flow model.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the ~~reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Key estimates include acquisition accounting,~~ fair value of ~~certain financial instruments, reserve for trade receivables and inventories,~~the assets or liabilities.

The carrying amounts of financial instruments carried at cost, including cash and cash equivalents, accounts receivables and accounts and other receivable – related party, investments, ~~carrying amounts~~notes receivable, trade payables and trade payables – related party approximate their fair value due to the short-term maturities of digital currencies, accruals of certain liabilities including product warranties, useful lives and the recoverability of long-lived assets, impairment analysis of intangibles and goodwill, and deferred income taxes and related valuation allowance.such instruments.

~~Impairment of long-lived assets:~~

Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted expected future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by comparing the amount by which the carrying amount of the assets to their fair value. During the six months ended June 30, 2020, management determined that its operating right-of-use assets attributed to the discontinued operations of I.AM were impaired by $1,020,514.

~~DPW~~AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

~~JUNE 30, 2020~~March 31, 2021

~~Revenue Recognition~~Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company ~~recognizes revenue under ASC 606,~~ has completed its evaluation process and the January 1, 2021 adoption did not have a material impact to the Company’s consolidated financial statements for the three months ended March 31, 2021.

4. Revenue ~~from Contracts with Customers~~. Disaggregation

The ~~core principle~~following tables summarize disaggregated customer contract revenues and the source of the ~~new~~ revenue ~~standard is that a company should recognize revenue to depict~~for the ~~transfer of promised goods or services to customers~~three months ended March 31, 2021 and 2020. Revenues from lending and trading activities included in ~~an amount that reflects the consideration to~~consolidated revenues were primarily interest, dividend and other investment income, which ~~the company expects~~are not considered to be ~~entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:~~

~~Step 1: Identify the contract with the customer,~~

~~Step 2: Identify the performance obligations in the contract,~~

~~Step 3: Determine the transaction price,~~

~~Step 4: Allocate the transaction price to the performance obligations in the contract, and~~

~~Step 5: Recognize revenue when the company satisfies a performance obligation.~~

revenues from contracts with customers under GAAP.

The Company’s disaggregated revenues consist of the following for the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020:

	Six Months ended June 30, 2020
	GWW		Coolisys		DP Lending		Total		Three Months ended March 31, 2021
									GWW		Coolisys		Ault Alliance		Total
Primary Geographical Markets
North America	$	3,370,374	$	1,965,465	$	2,396	$	5,338,235	$	1,889,262	$	1,207,400	$	302,039	$	3,398,701
Europe		447,603		287,157		—		734,760		1,910,002		109,141		—		2,019,143
Middle East		4,605,482		—		—		4,605,482		2,389,063		—		—		2,389,063
Other		153,123		174,814		—		327,937		161,692		65,808		—		227,500
	$	8,576,582	$	2,427,436	$	2,396	$	11,006,414

Revenue from contracts with customers										6,350,019		1,382,349		302,039		8,034,407
Revenue, lending and trading activities														5,210,222		5,210,222
Total revenue									$	6,350,019	$	1,382,349	$	5,512,261	$	13,244,629
Major Goods
RF/Microwave Filters	$	2,545,967	$	—	$	—	$	2,545,967	$	1,214,901	$	—	$	—	$	1,214,901
Detector logarithmic video amplifiers		878,372		—		—		878,372		71,070		—		—		71,070
Power Supply Units		—		2,427,436		—		2,427,436		238,423		1,382,349		—		1,620,772
Power Supply Systems		546,761		—		—		546,761		2,233,287		—		—		2,233,287
Healthcare diagnostic systems		523,228		—		—		523,228		184,725		—		—		184,725
Defense systems		4,082,254		—		—		4,082,254		2,407,613		—		—		2,407,613
Lending activities		—		—		2,396		2,396
	$	8,576,582	$	2,427,436	$	2,396	$	11,006,414

Digital currency mining														129,896		129,896
Other										—		—		172,143		172,143
Revenue from contracts with customers										6,350,019		1,382,349		302,039		8,034,407
Revenue, lending and trading activities														5,210,222		5,210,222
Total revenue									$	6,350,019	$	1,382,349	$	5,512,261	$	13,244,629
Timing of Revenue Recognition
Goods transferred at a point in time	$	3,971,100	$	2,427,436	$	2,396	$	6,400,932	$	3,757,681	$	1,382,349	$	302,039	$	5,442,069
Services transferred over time		4,605,482		—		—		4,605,482		2,592,338		—		—		2,592,338
	$	8,576,582	$	2,427,436	$	2,396	$	11,006,414
Revenue from contracts with customers									$	6,350,019	$	1,382,349	$	302,039	$	8,034,407

~~DPW~~

AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

~~JUNE 30, 2020~~March 31, 2021

	Three Month ended March 31, 2020
	GWW		Coolisys		Ault Alliance		Total
Primary Geographical Markets
North America	$	1,672,726	$	866,928	$	-	$	2,539,654
Europe		310,569		227,328		—		537,897
Middle East		2,306,288		—		—		2,306,288
Other		97,864		87,579		—		185,443
Revenue from contracts with customers		4,387,447		1,181,835		-		5,569,282
Revenue, lending and trading activities						36,152		36,152
Total revenue	$	4,387,447	$	1,181,835	$	36,152	$	5,605,434
Major Goods
RF/Microwave filters	$	1,501,380	$	—	$	—	$	1,501,380
Detector logarithmic video amplifiers		288,846		—		—		288,846
Power supply units		—		1,181,835		—		1,181,835
Power supply systems		290,933		—		—		290,933
Healthcare diagnostic systems		214,303		—		—		214,303
Defense systems		2,091,985		—		—		2,091,985
Revenue from contracts with customers		4,387,447		1,181,835		-		5,569,282
Revenue, lending and trading activities						36,152		36,152
Total revenue	$	4,387,447	$	1,181,835	$	36,152	$	5,605,434
Timing of Revenue Recognition
Goods transferred at a point in time	$	2,081,159	$	1,181,835	$	-	$	3,262,994
Services transferred over time		2,306,288		—		—		2,306,288
Revenue from contracts with customers	$	4,387,447	$	1,181,835	$	-	$	5,569,282

Six Months ended June 30, 2019
GWW Coolisys DP Lending Total

Primary Geographical Markets
North America $ 1,569,939 $ 2,790,091 $ 374,710 $ 4,734,740
Europe 1,012,761 16,804 — 1,029,565
Middle East 4,488,553 — — 4,488,553
Other 327,799 171,822 — 499,621
$ 7,399,052 $ 2,978,717 $ 374,710 $ 10,752,479

Major Goods
RF/Microwave filters $ 989,114 $ — $ — $ 989,114
Detector logarithmic video amplifiers 473,150 — — 473,150
Power supply units 180,475 2,693,797 — 2,874,272
Power supply systems 1,082,442 — — 1,082,442
Healthcare diagnostic systems 1,260,700 — — 1,260,700
Defense systems 3,413,171 — — 3,413,171
Lending activities — — 374,710 374,710
Digital currency mining — 284,920 — 284,920
$ 7,399,052 $ 2,978,717 $ 374,710 $ 10,752,479

Timing of Revenue Recognition
Goods transferred at a point in time $ 2,588,280 $ 2,978,717 $ 374,710 $ 5,941,707
Services transferred over time 4,810,772 — — 4,810,772
$ 7,399,052 $ 2,978,717 $ 374,710 $ 10,752,479

Sales of Products

The Company generates revenues from the sale of its products through a direct and indirect sales force. The Company’s performance obligations to deliver products are satisfied at the point in time when products are received by the customer, which is when the customer obtains control over the goods. The Company provides standard assurance warranties, which are not separately priced, that the products function as intended. The Company primarily receives fixed consideration for sales of product. Some of the Company’s contracts with distributors include stock rotation rights after six months for slow moving inventory, which represents variable consideration. The Company uses an expected value method to estimate variable consideration and constrains revenue for estimated stock rotations until it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. To date, returns have been insignificant. The Company’s customers generally pay within 30 days from the receipt of an invoice.

Because the Company’s product sales agreements have an expected duration of one year or less, the Company has elected to adopt the practical expedient in ASC 606-10-50-14(a) of not disclosing information about its remaining performance obligations.

Manufacturing Services

The Company provides manufacturing services in exchange primarily for fixed fees; however, the initial two MLSE units are subject to variable pricing under the $50 million purchase order from MTIX. Under the terms of the MLSE purchase order, the Company is entitled to cost plus $100,000 for the manufacture of the first two MLSE units. The Company has determined that the costs of manufacturing the MLSE units will decline over time because of a learning curve which will result in a greater amount of revenue being recognized for these initial two MLSE units.

~~DPW~~AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

~~JUNE 30, 2020~~March 31, 2021

For manufacturing services, which include revenues generated by Enertec and in certain instances revenues generated by Gresham Power, the Company’s performance obligation for manufacturing services is satisfied over time as the Company creates or enhances an asset based on criteria that are unique to the customer and that the customer controls as the asset is created or enhanced. Generally, the Company recognizes revenue based upon proportional performance over time using a cost to cost method which measures progress based on the costs incurred to total expected costs in satisfying its performance obligation. This method provides a depiction of the progress in providing the manufacturing service because there is a direct relationship between the costs incurred by the Company and the transfer of the manufacturing service to the customer. Manufacturing services that are recognized based upon the proportional performance method are included in the above table as services transferred over time and to the extent the customer has not been invoiced for these revenues, as accrued revenue in the accompanying consolidated balance sheets. Revisions to the Company’s estimates may result in increases or decreases to revenues and income and are reflected in the consolidated financial statements in the periods in which they are first identified.

The Company has elected the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component to the extent that the period between when the Company transfers its promised good or service to the customer and when the customer pays in one year or less.

The aggregate amount of the transaction price allocated to the performance obligation that is partially unsatisfied as of ~~June 30, 2020,~~March 31, 2021, for the MLSE units was ~~approximately $48~~$48.0 million, representing 24 MLSE units. Based on our expectations regarding funding of the production process and our experience building the first machines, the Company expects to recognize the remaining revenue related to the partially unsatisfied performance obligation over an estimated three year period. The Company will be paid in installments for this performance obligation over the estimated period that the remaining revenue is recognized.

Lending Activities and Trading Activities

Ault Alliance, through DP Lending, generates revenue from lending activities primarily through interest, origination fees and late/other fees. Interest income on these products is calculated based on the contractual interest rate and recorded as interest income as earned. The origination fees or original issue discounts are recognized over the life of the loan using the effective interest method.

Financial instruments utilized in trading activities are carried at fair value. Fair value is generally based on quoted market prices for the same or similar assets and liabilities. If these market prices are not available, fair values are estimated based on dealer quotes, pricing models, discounted cash flow methodologies, or similar techniques where the determination of ~~Financial Instruments~~fair value may require significant management judgment or estimation. Realized gains and losses are recorded on a trade-date basis. Realized and unrealized gains and losses are recognized in revenue from lending activities.

~~In accordance with ASC No. 820,~~ ~~Fair Value Measurements and Disclosures~~Blockchain Mining, fair value is defined as the exit price, or the amount that would be received for the sale of an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date.

The ~~guidance also establishes~~Company has entered into digital asset mining pools by executing contracts with the mining pool operators to provide computing power to the mining pool. The contracts are terminable at any time by either party and the Company’s enforceable right to compensation only begins when the Company provides computing power to the mining pool operator. In exchange for providing computing power, the Company is entitled to a ~~hierarchy~~fractional share of the fixed digital currency award the mining pool operator receives (less digital asset transaction fees to the mining pool operator which are recorded as a component of cost of revenues), for ~~inputs used in measuring fair value that maximizes~~successfully adding a block to the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs include those that market participants would use in valuing the asset or liability and are developedblockchain. The Company’s factional share is based on ~~market data obtained from sources independent~~the proportion of computing power the ~~Company. Unobservable inputs are inputs that reflect~~Company contributed to the ~~Company’s assumptions about~~mining pool operator to the ~~factors that market~~total computing power contributed by all mining pool participants ~~would use~~ in ~~valuing~~solving the ~~asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value:~~current algorithm.

~~Level 1: Quoted market prices in active markets for identical assets or liabilities.~~

~~DPW~~AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

~~JUNE 30, 2020~~March 31, 2021

~~Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to~~Providing computing power in digital asset transaction verification services is an output of the Company’s ordinary activities. The provision of providing such computing power is the only performance obligation in the Company’s contracts with mining pool operators. The transaction consideration the Company receives, if any, is noncash consideration, which the Company measures at fair value on the date received, which is not materially different than the fair value at contract inception or the time the Company has earned the award from the pools. The consideration is all variable. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pool operator successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the ~~assets or liabilities.~~consideration it will receive, at which time revenue is recognized. There is no significant financing component in these transactions.

~~The carrying amounts~~Fair value of the digital currency award received is determined using the market rate of the related digital currency at the time of receipt.

There is currently no specific definitive guidance under GAAP or alternative accounting framework for the accounting for digital currencies recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could have an effect on the Company’s consolidated financial position and results from operations.

Expenses associated with running the cryptocurrency mining business, such as equipment deprecation and electricity cost are recorded as a component of cost of revenues.

5. fair value of financial instruments carried at cost, including cash and cash equivalents, accounts receivables and accounts and other receivable – related party, investments, notes receivable, trade payables and trade payables – related party approximate their fair value due to the short-term maturities of such instruments.

The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following table sets forth the Company’s financial instruments ~~(see Note 5 and Note 9)~~ that were measured at fair value on a recurring basis by level within the fair value hierarchy:

	Fair Value Measurement at June 30, 2020								Fair Value Measurement at March 31, 2021
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Investments in convertible promissory note of AVLP – a related party	$	6,739,234	$	—	$	—	$	6,739,234
Investments in convertible and term promissory notes of AVLP and Ault & Company – related parties									$	13,467,783	$	—	$	—	$	13,467,783
Investments in common stock and derivative instruments of AVLP – a related party		1,028,424		169,860		—		858,564		10,335,348		819,324		—		9,516,024
Investment in common stock of Alzamend – a related party		575,925		—		—		575,925
Investment in common stock and warrants of Alzamend – a related party										4,487,091		—		—		4,487,091
Investments in marketable equity securities		596,313		596,313		—		—		18,153,863		18,153,863		—		—
Investments in warrants of public companies		2		—		—		2
Securities purchased under agreement to resell										33,647,059		33,647,059
Investments in debt and equity securities										2,320,539		—		506,574		1,813,965
Total Investments	$	8,939,898	$	766,173	$	—	$	8,173,725	$	82,411,683	$	52,620,246	$	506,574	$	29,284,863

AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

March 31, 2021

	Fair Value Measurement at December 31, 2019								Fair Value Measurement at December 31, 2020
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Investments in convertible promissory note of AVLP – a related party	$	6,540,720	$	—	$	—	$	6,540,720
Investments in convertible promissory notes and advances of AVLP and Alzamend – related parties									$	10,668,470	$	—	$	—	$	10,668,470
Investments in common stock and derivative instruments of AVLP – a related party		1,569,286		238,602		—		1,330,684		5,486,140		499,588		—		4,986,552
Investment in common stock of Alzamend – a related party		558,938		—		—		558,938
Investment in common stock and warrants of Alzamend – a related party										653,251		—		—		653,251
Investments in marketable equity securities		639,647		639,647		—		—		2,562,983		2,562,983		—		—
Investments in warrants of public companies		9,174		—		—		9,174
Investments in debt and equity securities										261,767		—		—		261,767
Total Investments	$	9,317,765	$	878,249	$	—	$	8,439,516	$	19,632,611	$	3,062,571	$	—	$	16,570,040

We assess the inputs used to measure fair value using the three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market.

~~F-16~~

We measure equity investments without readily determinable fair values on a nonrecurring basis. The fair values of these investments are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections. Our other current financial assets and current financial liabilities have fair values that approximate their carrying values.

~~DPW~~

We assess the inputs used to measure fair value using the three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market.

Investments

We consider all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents. The fair values of these investments approximate their carrying values. In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Investments with maturities beyond one year may be classified as short-term based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations.

Debt investments are classified as available-for-sale and realized gains and losses are recorded using the specific identification method. The Company made an irrevocable election to record available-for-sale debt investments at fair value utilizing the fair value option available under U.S. GAAP. The Company believed that carrying these investments at fair value better portrayed the economic substance of the investments. Under the fair value option, gains and losses on the debt investments are included in unrealized gains/(losses) on investments within net earnings each reporting period. Fair value is calculated based on publicly available market information or other estimates determined by management. If the cost of an investment exceeds its fair value, we evaluate, among other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than cost. To determine credit losses, we employ a systematic methodology that considers available quantitative and qualitative evidence. In addition, we consider specific adverse conditions related to the financial health of, and business outlook for, the investee. If we have plans to sell the security or it is more likely than not that we will be required to sell the security before recovery, then a decline in fair value below cost is recorded as an impairment charge in other income (expense), net and a new cost basis in the investment is established. If market, industry, and/or investee conditions deteriorate, we may incur future impairments .

AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

~~JUNE 30, 2020~~March 31, 2021

~~Net Loss per Share~~Equity investments

The following discusses our marketable equity securities, non-marketable equity securities, gains and losses on marketable and non-marketable equity securities.

Our marketable equity securities are publicly traded stocks or funds measured at fair value and classified within Level 1 and 2 in the fair value hierarchy because we use quoted prices for identical assets in active markets or inputs that are based upon quoted prices for similar instruments in active markets.

Our non-marketable equity securities are investments in privately held companies without readily determinable market values. The carrying value of our non-marketable equity securities is adjusted to fair value upon observable transactions for identical or similar investments of the same issuer or impairment (referred to as the measurement alternative). Non-marketable equity securities that have been remeasured during the period based on observable transactions are classified within Level 2 or Level 3 in the fair value hierarchy because we estimate the value based on valuation methods which may include a combination of the observable transaction price at the transaction date and other unobservable inputs including volatility, rights, and obligations of the securities we hold. The fair value of non-marketable equity securities that have been remeasured due to impairment are classified within Level 3.

We perform a qualitative assessment on a periodic basis and recognize an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value. Changes in value are recorded in other income (expense), net.

Derivatives

Derivative instruments are recognized as either assets or liabilities and measured at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation.

For derivative instruments that are not designated as hedges, gains and losses from changes in fair values are primarily recognized in other income (expense), net.

The following table summarizes the changes in investments in debt and equity securities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) for the three months ended March 31, 2021:

	Investments in
	debt and equity
	securities
Balance at January 1, 2021	$	261,767
Investment in convertible promissory notes		500,000
Investment in warrants		1,000,000
Change in fair value of warrants		57,560
Accretion of discount		52,198
Balance at March 31, 2021	$	2,320,539

See Note 12 for the changes in investments in AVLP, Alzamend and Ault & Company measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) during the three months ended March 31, 2021.

AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

March 31, 2021

6. Net Income (Loss) per Share

Basic and diluted net income per common share for the three months ended March 31, 2021 are calculated as follows:

	For the Three Months Ended March 31, 2021
	Income			Shares		Per-Share
	(Numerator)			(Denominator)		Amount
Net income (loss) attributable to Ault Global Holdings	$	1,997,381
Less: Preferred stock dividends		(4,400	)

Basic earnings per share
Net income available to common stockholders		1,992,981			39,256,336	$	0.05

Effect of dilutive securities
Stock options		-			505,245
8% convertible notes, related party		8,000			275,862
4% convertible notes		6,600			165,000

Diluted earnings per share
Income available to common stockholders plus assumed conversions	$	2,007,581			40,202,443	$	0.05

For the three months ended March 31, 2020, net loss per share is computed by dividing the net loss to common stockholders by the weighted average number of common shares outstanding. The calculation of the basic and diluted earnings per share is the same for ~~all periods presented,~~the three months ended March 31, 2020, as the effect of the potential common stock equivalents is anti-dilutive due to the Company’s net loss position for ~~all periods presented. The Company has included 6,500 warrants, which are exercisable for shares of~~ the ~~Company’s common stock on a one-for-one basis, in its earnings per share calculation for the six months ended June 30, 2020 and 2019.~~period. Anti-dilutive securities, which are convertible into or exercisable for the Company’s common stock, consist of the following at ~~June 30, 2020 and 2019:~~March 31, 2020:

June 30,
2020 2019
Stock options 950 9,006
Warrants ⁽¹⁾ 2,151,953 51,465
Convertible notes 551,104 75,000
Conversion of preferred stock 2,232 2,232
Total 2,706,239 137,703

	⁽¹⁾	~~The Company has excluded 6,500 warrants issued in April 2019, which may be exercised by means~~March 31, 2020
Stock options			950
Warrants			765,422
Convertible notes			561,158
Conversion of ~~a cashless exercise into 6,500 shares of the Company’s common~~preferred stock ~~in its anti-dilutive securities but included the warrants in its weighted average shares outstanding.~~			2,232
Total			1,329,762

~~Reclassifications~~

Certain prior year amounts have been reclassified for comparative purposes to conform to the current-year financial statement presentation. These reclassifications had no effect on previously reported results of operations. In addition, certain prior year amounts from the restated amounts have been reclassified for consistency with the current period presentation.

~~Recently Issued Accounting Standards~~

~~In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~ (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021. The Company has not early adopted ASU 2019-12 and is currently evaluating its impact on the Company’s financial position, results of operations, and cash flows.

4.7. Discontinued Operations

On March 16, 2020, to try and mitigate the spread of ~~the novel coronavirus (“COVID-19”),~~COVID-19, San Diego County health officials issued orders mandating that all restaurants must end dine-in services. As a result of these temporary closures and the deteriorating business conditions at ~~both~~ the Company’s ~~cryptocurrency mining and~~ restaurant businesses, the Company concluded that discontinuing the operations of ~~Digital Farms and I. AM~~I.AM was ultimately in its best interest.

~~Digital Farms was established to pursue a variety of digital currencies and mined the top three cryptocurrencies for its own account.~~ Although the Company has ceased operations at Digital Farms, since the assets and operations have not yet been abandoned, sold or distributed, these assets do not yet meet the requirement for presentation as discontinued operations. In the first quarter of 2020, management determined that the permanent closing of the restaurant operations met the criteria for presentation as discontinued operations. Accordingly, the results of the restaurant operations are presented as discontinued operations in ~~our~~the Company’s condensed consolidated statements of operations and comprehensive ~~loss~~income (loss) and are excluded from continuing operations for all periods presented. ~~In addition,~~On November 2, 2020, I.AM filed a voluntary petition for bankruptcy under Chapter 7 in the ~~assets~~United States Bankruptcy Court in the Central District of California, Santa Ana Division, case number 8:20-bk-13076. As a result of I.AM’s bankruptcy filing on November 2, 2020, Ault Global ceded authority for managing the business to the Bankruptcy Court. For this reason, the Company concluded that Ault Global had lost control of I.AM, and ~~liabilities~~no longer had significant influence over I.AM. Therefore, the Company deconsolidated I.AM effective with the filing of the ~~restaurant operations are classified as held for sale~~Chapter 11 bankruptcy in ~~our condensed consolidated balance sheets for all periods presented.~~November 2020.

~~DPW~~AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

~~JUNE 30, 2020~~March 31, 2021

~~The following tables summarize the major classes of assets and liabilities included as part of discontinued operations:~~

June 30, December 31,
2020 2019
(Unaudited)
Current assets
Cash and cash equivalents $ — $ 5,170
Accounts receivable — 83,885
Inventories, net — 60,341
Prepaid expenses and other current assets — 131,956
Total current assets classified as held for sale — 281,352
Property and equipment, net — 504,802
Right-of-use assets — 1,098,466
Total assets classified as held for sale $ — $ 1,884,620
Current liabilities
Accounts payable and accrued expenses $ 788,314 $ 881,601
Operating lease liability, current 265,920 229,574
Other current liabilities 461,738 482,375
Total current liabilities classified as held for sale 1,515,972 1,593,550
Long term liabilities
Operating lease liability, non-current 843,020 951,072
Total liabilities classified as held for sale $ 2,358,992 $ 2,544,622

The restaurant operations are included in our results as discontinued operations through March 16, 2020, the date of closing of the restaurants. The following tables summarize the major classes of line items included in loss from discontinued operations:

	For the Three Months Ended					For the Six Months Ended						For the Three
	June 30,					June 30,						Months Ended
	2020		2019			2020			2019			March 31, 2020
Revenue	$	—	$	1,161,132		$	543,327		$	2,334,631		$	543,327
Cost of revenue		—		(322,008	)		(160,310	)		(614,491	)		(160,310	)
Selling and marketing		—		(43,929	)		—			(100,650	)		—
General and administrative		—		(1,123,312	)		(555,445	)		(2,052,749	)		(555,445	)
Impairment of property and equipment		—		—			(1,525,316	)		—
Loss from discontinued operations	$	—	$	(328,117	)	$	(1,697,744	)	$	(433,259	)
Impairment of property and equipment and right-of-use assets													(1,525,316	)
Income (loss) from discontinued operations												$	(1,697,744	)

5.8. Marketable Equity Securities

Marketable securities in equity securities with readily determinable market prices consisted of the following as of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019:~~2020:

Marketable equity securities at June 30, 2020
Gross unrealized Gross realized
Cost gains (losses) gains (losses) Fair value
Common shares $ 327,378 $ 268,935 $ — $ 596,313

	Marketable equity securities at March 31, 2021
				Gross unrealized		Gross unrealized
		Cost		gains		losses			Fair value
Common shares	$	15,225,347	$	3,733,672	$	(805,156	)	$	18,153,863

~~DPW~~

	Marketable equity securities at December 31, 2020
				Gross unrealized		Gross unrealized
		Cost		gains		losses			Fair value
Common shares	$	1,505,686	$	1,083,532	$	(26,235	)	$	2,562,983

Marketable equity securities

The following table presents additional information about marketable equity securities:

	Marketable
	Equity Securities
Balance at January 1, 2021	$	2,562,983
Purchases of marketable equity securities in operations		62,994,562
Sales of marketable equity securities in operations		(54,124,898	)
Sales of marketable equity securities		(430,124	)
Realized gains on marketable equity securities		4,891,601
Unrealized gains on marketable equity securities		2,259,739
Balance at March 31, 2021	$	18,153,863

AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

~~JUNE 30, 2020~~March 31, 2021

Marketable equity securities at December 31, 2019
Gross unrealized Gross realized
Cost gains (losses) gains (losses) Fair value
Common shares $ 423,025 $ 216,622 $ — $ 639,647

~~The following table presents additional information about marketable equity securities:~~

Marketable
Equity Securities
Balance at January 1, 2020 $ 639,647
Sales of marketable equity securities (110,355 )
Realized gains on marketable equity securities 14,708
Unrealized losses on marketable equity securities 52,313
Balance at June 30, 2020 $ 596,313

At ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company had invested in the marketable equity securities of certain publicly traded companies. During the three and six months ended June 30, 2020, unrealized gains of $173,381 and $52,313, respectively, were included in net income as a component of change in fair value of equity securities. During the year ended December 31, 2019, the Company recognized unrealized gains of $258,905. The Company’s investment in marketable equity securities will be revalued on each balance sheet date. The fair value of the Company’s holdings in marketable equity securities at ~~June 30, 2020 and~~March 31, 2021and December 31, ~~2019~~2020 is a Level 1 measurement based on quoted prices in an active market.

At ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company also held ~~equity investments in private companies and~~ an investment in a limited partnership. ~~These investments do~~This investment does not have a readily determinable fair ~~values~~value and ~~have~~has been measured at cost less impairment, if any, and adjusted for observable price changes for identical or similar ~~investments~~investments.

Naked Brand Group stock purchase agreement

On March 29, 2021, DP Lending entered into a stock purchase agreement with an institutional investor (the “Seller”) to purchase 47,058,824 shares of Naked Brand Group Limited (the “NAKD shares”). Under the agreement, DP Lending agreed to sell the NAKD shares and pay the Seller 99% of the ~~issuer.~~net proceeds from the sale. As of March 31, 2021, the fair value of the NAKD shares was $33.6 million and is included in securities purchased under agreement to resell. The Company also recorded a $33.3 million stock purchase consideration payable and a $336,000 contract liability as of March 31, 2021.

6.9. PROPERTY AND EQUIPMENT, NET

At ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, property and equipment consist of:

	June 30,			December 31,
	2020			2019			March 31, 2021			December 31, 2020
Cryptocurrency machines and related equipment	$	567,216		$	567,216		$	593,226		$	567,216
Computer, software and related equipment		2,595,114			2,518,187			3,340,446			3,056,711
Office furniture and equipment		412,234			441,613			751,272			489,315
Land								2,566,621			—
Building								1,283,311
Leasehold improvements		1,186,796			1,230,407			1,343,162			1,352,124
		4,761,360			4,757,423			9,878,038			5,465,366
Accumulated depreciation and amortization		(3,067,140	)		(2,970,030	)		(3,589,324	)		(3,342,636	)
Property and equipment, net	$	1,694,220		$	1,787,393		$	6,288,714		$	2,122,730

~~Under~~For the ~~guidance~~three months ended March 31, 2021 and 2020, depreciation expense amounted to $162,000 and $175,000 respectively.

Acquisition of ~~ASC 360, Impairment or Disposal~~Michigan Cloud Data Center

On January 29, 2021, Alliance Cloud Services, LLC, a majority-owned subsidiary of ~~Long-lived Assets,~~its wholly-owned subsidiary, Ault Alliance, closed on the acquisition of a ~~long-lived asset or asset group (including intangibles) will be tested~~617,000 square foot energy-efficient facility located on a 34.5 acre site in southern Michigan for ~~recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. During~~a purchase price of $3.9 million. The facility is subject to a final corrective measures plan with the ~~first quarter of 2020, based upon~~Environment Protection Agency. The seller performed remedial activities at the ~~deteriorating business conditions for restaurants in the San Diego County as result of the spread of COVID-19~~Michigan facility relating to historical soil and the decline in projected cash flows over the life of the restaurant equipment, the Company performed an undiscounted cash flow test to determine if the restaurant equipment was impaired. The undiscounted cash flows were less than the carrying amount of the Company’s restaurant equipment and therefore, the carrying amount of the assets were compared to the fair value of the restaurant equipment,groundwater contamination and the Company ~~determined that there were impairment charges to be recorded on the restaurant equipment. Impairment charges~~is responsible for ~~the three~~ongoing monitoring and ~~six months ended June 30, 2020 were in an amount equal to the~~final remediation plans. The Company’s estimated cost of the environmental remediation obligation is approximately $300,000 and reflects its best estimate of probable future costs for remediation based on the current assessment data and regulatory obligations. Future costs will depend on many factors, including the extent of work necessary to implement monitoring and final remediation plans and the Company’s ~~restaurant equipment, net~~time frame for remediation. The Company may incur actual costs in the future that are materially different than this estimate and such costs could have a material impact on results of ~~depreciation of $504,802,~~operations, financial condition, and cash flows during the period in which they are ~~included as a component of net loss from discontinued operations (see Note 4).~~recorded.

~~DPW~~AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

~~JUNE 30, 2020~~March 31, 2021

For the three and six months ended June 30, 2020, depreciation expense amounted to $84,959 and $259,906, respectively. For the three and six months ended June 30, 2019, depreciation expense amounted to $1,027,698 and $1,826,721, respectively.

7.10. INTANGIBLE ASSETS, NET

At ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 intangible assets consist of:

	June 30,			December 31,
	2020			2019			March 31, 2021			December 31, 2020
Trade name and trademark	$	1,039,307		$	1,039,307		$	1,555,571		$	1,551,197
Customer list		2,402,054			2,406,434			3,391,272			3,441,654
Domain name and other intangible assets		639,957			641,809			665,295			689,920
		4,081,318			4,087,550			5,612,138			5,682,771
Accumulated depreciation and amortization		(1,046,873	)		(880,562	)		(1,371,718	)		(1,292,383	)
Intangible assets, net	$	3,034,445		$	3,206,988		$	4,240,420		$	4,390,388

The Company’s trade names and trademarks were determined to have an indefinite life. The remaining definite lived intangible assets are primarily being amortized on a straight-line basis over their estimated useful lives.

Amortization expense was ~~$83,412~~$104,000 and ~~$166,697,~~$83,000, respectively, for the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 and ~~$137,047 and $299,462, respectively, for the three and six months ended June 30, 2019.~~2020.

8.11. GOODWILL

~~The Company’s goodwill relates to the acquisition of a controlling interest in Microphase on June 2, 2017 and the acquisition of Enertec Systems 2001 Ltd. (“Enertec”) on May 22, 2018.~~ The following table summarizes the changes in our goodwill during the ~~six~~three months ended ~~June 30, 2020:~~March 31, 2021:

Goodwill
Balance as of January 1, 2020 $ 8,100,947
Effect of exchange rate changes (14,224 )
Balance as of June 30, 2020 $ 8,086,723

	Goodwill
Balance as of January 1, 2021	$	9,645,686
Effect of exchange rate changes		(179,109	)
Balance as of March 31, 2021	$	9,466,577

~~DPW~~12. INVESTMENTS – RELATED PARTIES

Investments in AVLP, Alzamend Neuro, Inc. (“Alzamend”) and Ault and Company, Inc. (“Ault & Company”) at March 31, 2021 and December 31, 2020, are comprised of the following:

	March 31,			December 31,
	2021			2020
Investment in convertible promissory note of AVLP	$	13,924,136		$	11,269,136
Short term advance in Alzamend		-			750,000
Investment in convertible promissory note of Alzamend		-			50,000
Investment in promissory note of Ault & Company		2,500,000			-
Accrued interest in promissory notes, related parties		2,027,557			2,026,812
Total investment in promissory notes, related parties – gross		18,451,693			14,095,948
Less: original issue discount		(1,560,302	)		(3,870	)
Less: provision for loan losses		(3,423,608	)		(3,423,608	)
Total investment in promissory notes, related parties		13,467,783			10,668,470

Investment in derivative instruments of AVLP		9,516,024			4,986,552
Investment in common stock of AVLP		819,324			499,588
Investment in common stock and warrants of Alzamend		4,487,091			653,251
Investments in derivatives and common stock, related parties		14,822,439			6,139,391
Total investments, related parties – net	$	28,290,222		$	16,807,861

Investments in derivatives and common stock, related parties	$	14,822,439		$	6,139,391
Investment in promissory notes, related parties		13,467,783			10,668,470
Total investment, related parties – net	$	28,290,222		$	16,807,861

AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

~~JUNE 30, 2020~~March 31, 2021

~~9. INVESTMENTS – RELATED PARTIES~~

~~Investments in AVLP and Alzamend Neuro, Inc. (“Alzamend”) at June 30, 2020 and December 31, 2019, are comprised of the following:~~

June 30, December 31,
2020 2019
Investment in convertible promissory note of AVLP $ 9,802,686 $ 9,595,079
Accrued interest in convertible promissory note of AVLP 2,025,475 2,025,475
Total investment in convertible promissory note of AVLP – Gross 11,828,161 11,620,554
Less: provision for loan losses (5,088,927 ) (5,079,834 )
Total investment in convertible promissory note of AVLP $ 6,739,234 $ 6,540,720

Investment in derivative instruments of AVLP 858,564 1,330,684
Investment in common stock of AVLP 169,860 238,602
Investment in common stock of Alzamend 575,925 558,938
Investment in derivative instruments and common stock of AVLP and
Alzamend $ 1,604,349 $ 2,128,224

Total investment in AVLP and Alzamend – Net $ 8,343,583 $ 8,668,944

Investment in warrants and common stock of AVLP and Alzamend $ 1,604,349 $ 2,128,224
Investment in convertible promissory note of AVLP 6,739,234 6,540,720
Total investment in AVLP and Alzamend – Net $ 8,343,583 $ 8,668,944

~~DPW HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)~~

~~JUNE 30, 2020~~

The following table summarizes the changes in our investments in AVLP, Alzamend and ~~Alzamend~~Ault & Company during the ~~six~~three months ended ~~June 30, 2020:~~March 31, 2021:

Investment in
warrants and Investment in Total
common stock convertible investment
of AVLP and promissory in AVLP and
Alzamend note of AVLP Alzamend – Net
Balance at January 1, 2020 $ 2,128,224 $ 6,540,720 $ 8,668,944
Investment in convertible promissory notes of AVLP — 198,514 198,514
Investment in common stock of AVLP and Alzamend 12,884 — 12,884
Fair value of derivative instruments issued by AVLP 9,093 — 9,093
Unrealized loss in derivative instruments of AVLP (481,213 ) — (481,213 )
Unrealized loss in common stock of AVLP and
Alzamend (64,639 ) — (64,639 )
Balance at June 30, 2020 $ 1,604,349 $ 6,739,234 $ 8,343,583

				Investment in
	Investment in			promissory notes			Total
	warrants and			and advances			investment
	common stock			of AVLP,			in AVLP,
	of AVLP and			Alzamend and			Alzamend and
	Alzamend			Ault & Company			Ault & Company, net
Balance at January 1, 2021	$	6,139,391		$	10,668,470		$	16,807,861
Investment in convertible promissory notes of AVLP		—			1,094,698			1,094,698
Investment in convertible promissory note of Alzamend		—			(50,000	)		(50,000	)
Investment in promissory note of Ault & Company		—			2,500,000			2,500,000
Investment in common stock of AVLP and Alzamend		3,046,016			—			3,046,016
Investment in warrants of Alzamend		953,984			—			953,984
Short term advance in Alzamend		—			(750,000	)		(750,000	)
Fair value of derivative instruments issued by AVLP		1,560,302			—			1,560,302
Unrealized gain in derivative instruments of AVLP		2,969,170			—			2,969,170
Unrealized loss in warrants of Alzamend		(13,086	)		—			(13,086	)
Unrealized gain in common stock of AVLP and Alzamend		166,662			—			166,662
Accretion of discount		—			3,870			3,870
Accrued Interest		—			745			745
Balance at March 31, 2021	$	14,822,439		$	13,467,783		$	28,290,222

Investments in AVLP

The Company’s investments in AVLP, a related party controlled by Philou Ventures, LLC ~~or Philou,~~(“Philou”), an affiliate of the Company, consist of convertible promissory notes, derivative instruments and shares of AVLP common stock. ~~At June 30, 2020, the Company has provided~~As of March 31, 2021, loans to AVLP ~~in the principal amount $9,802,686~~totaled $13.9 million and, in addition to the 12% convertible promissory notes, AVLP has issued to the Company warrants to purchase ~~19,605,372~~27.8 million shares of AVLP common stock at an exercise price of $0.50 per share for a period of five years. The warrants ~~were determined by the issuer to be~~are considered derivative financial instruments.

At ~~June 30, 2020 and December~~March 31, ~~2019,~~2021, the Company recorded a cumulative unrealized ~~loss~~gain on its investment in warrants of AVLP of ~~$4,845,469 and $4,364,256, respectively,~~$1.9 million compared to a cumulative unrealized loss of $1.1 million at December 31, 2020 representing the difference between the cost basis and the estimated fair value of the warrants in the Company’s accumulated other comprehensive income in the stockholder's equity section of the Company’s consolidated balance sheet. During the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2021, the Company recognized, in other comprehensive ~~loss,~~income (loss), net unrealized gain ~~(loss)~~ on derivative securities of related party of ~~$760,881 and ($1,242,094), respectively, which compares with~~$3.0 million compared to a net unrealized ~~gain (loss)~~loss on derivative securities of related party of ~~$375,499 and ($361,181), respectively~~$1.2 million during the three ~~and six~~ months ended ~~June 30, 2019.~~March 31, 2020. The Company’s investment in AVLP will be revalued on each balance sheet date.

The fair value of the Company’s holdings in the AVLP warrants was estimated using the Black-Scholes option-pricing ~~method. The risk-free rate, which ranged between 0.23%~~method and ~~2.60%, was derived from~~ the ~~U.S. Treasury yield curve, matching the term of our investment, in effect at the measurement date.~~ following assumptions:


Exercise price		$0.50
Remaining contractual term (in years)		1.68 — 5.0
Volatility		68.7% — $104.6%
Weighted average risk free interest rate		0.13% — 2.98%
Expected dividend yield		0%

AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

March 31, 2021

The volatility factor ~~which ranged between 68.7% and 89.4%~~ was determined based on historical stock prices for similar technology companies with market capitalizations under $100 million. The warrant valuation is a Level 3 measurement.

~~In accordance with ASC No. 310,~~ ~~Receivables~~ (“ASC 310”), the Company had accounted for its convertible promissory notes in AVLP at amortized cost, which represents the amount at which the convertible promissory notes were acquired, adjusted for accrued interest and accretion of original issue discount and discount attributed to the fair value of the warrants that the Company received in conjunction with its investment. Interest was accreted using the effective interest method. The Company recorded interest on an accrual basis and recognized it as earned in accordance with the contractual terms of the convertible promissory notes, to the extent that such amounts are expected to be collected. During the three ~~and six~~ months ended ~~June 30, 2019, the Company recorded $657,613~~March 31, 2021 and $1,277,422, respectively, of interest income for the discount accretion and $253,923 and $464,114, respectively, of interest income from the contractual 12% rate provided for by the convertible promissory notes. During the six months ended June 30, 2020, no interest income was recognized from the Company’s investment in AVLP.

~~DPW HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)~~

~~JUNE 30, 2020~~

The Company evaluated the collectability of both interest and principal for the convertible promissory notes in AVLP to determine whether there was an impairment. Based on current information and events, primarily the value of the underlying conversion feature and current economic events, the Company concluded that an impairment ~~existed at December~~existed. At March 31, ~~2019. At June 30, 2020,~~2021, the Company determined that the fair value of the convertible promissory notes in AVLP was ~~approximately $6,739,234.~~$12.5 million. The Company’s determination of fair value was based upon the estimated present value of a future liquidity event combined with the closing price of AVLP’s common stock at ~~June 30, 2020.~~March 31, 2021. Impairment assessments require significant judgments and are based on significant assumptions related to the borrower’s credit risk, financial performance, expected sales, and estimated fair value of the collateral.

During the six months ended June 30, 2020 and year ended December 31, 2019, the Company also acquired in the open market 5,000 shares of AVLP common stock for $1,274 and 91,000 shares of AVLP common stock for $53,032, respectively. At June 30, 2020, the closing market price of AVLP’s common stock was $0.17, a decline from $0.24 at December 31, 2019. The Company has determined that its investment in AVLP marketable equity securities should be accounted for in accordance with ASC No. 820, ~~Fair Value Measurements and Disclosures~~ ~~and based upon the closing market price of AVLP common stock at June 30, 2020, the Company’s investment in AVLP common stock had an unrealized loss of $577,975.~~

In aggregate, the Company has 999,175 shares of AVLP common stock which represents 18.0% of AVLP’s outstanding shares of common stock. At March 31, 2021, the closing market price of AVLP’s common stock was $0.82, an increase from $0.50 at December 31, 2020. Based upon the closing market price of AVLP common stock at March 31, 2021, the Company’s investment in AVLP common stock had an unrealized gain of $71,000.

The Company has determined that AVLP is a variable interest entity (“VIE”) as it does not have sufficient equity at risk. The Company does not consolidate AVLP because the Company is not the primary beneficiary and does not have a controlling financial interest. To be a primary beneficiary, an entity must have the power to direct the activities of a VIE that most significantly impact the ~~VIE's~~VIE’s economic performance, among other factors. Although the Company has made a significant investment in AVLP, the Company has determined that Philou, which controls AVLP through the voting power conferred by its equity investment and which is deemed to be more closely associated with AVLP, is the primary beneficiary. As a result, AVLP’s financial position and results of operations are not consolidated in our financial position and results of operations.

~~10. INVESTMENTS IN LIMITED PARTNERSHIP~~Investments in Alzamend

On June 8, 2018, the Company entered into a limited partnership agreement, in which it agreed to become a limited partner in the partnership (the “NY Partnership”). The NY Partnership is a limited partner in the partnership that is responsible for the construction and related activities of a hotel in New York City. In connection with this transaction, the Company has agreed to finance a portion of the capital required by the NY Partnership. As of June 30,At December 31, 2020, the Company had provided Alzamend a short-term advance of $750,000 and invested $50,000 in an ~~aggregate~~8% convertible promissory note. In conjunction with the issuance of ~~$1,869,000 in~~ the ~~NY Partnership and $100,000 in another real estate investment. The Company has no obligation to make any capital contributions until the hotel is open for business~~8% convertible promissory note, Alzamend issued to the ~~public.~~

~~11. OTHER INVESTMENTS, RELATED PARTIES~~

~~The Company’s other related party investments primarily consist~~Company warrants to purchase 16,667 shares of ~~two investments.~~

~~MTIX, Ltd.~~Alzamend common stock at an exercise price of $3.00 per share for a period of five years.

On ~~December 5, 2017,~~March 9, 2021, DP Lending, entered into a securities purchase agreement with Alzamend to invest $10.0 million in Alzamend common stock and warrants, subject to the achievement of certain milestones. DP Lending funded $4.0 million upon execution of the securities purchase agreement, which included the conversion of the short term advance and convertible promissory note in the aggregate amount of $800,000. The remaining $6.0 million will be funded upon Alzamend achieving certain milestones related to the U.S. Food and Drug Administration approval of Alzamend’s Investigational New Drug application and Phase 1a human clinical trials for Alzamend’s lithium based ionic cocrystal therapy, known as AL001. Under the securities purchase agreement, in aggregate, Alzamend has agreed to sell up to 6,666,667 shares of its common stock to DP Lending for $10.0 million, or $1.50 per share, and issue to DP Lending warrants to acquire up to 3,333,334 shares of Alzamend common stock with an exercise price of $3.00 per share. The transaction was approved by the Company’s independent directors after receiving a third-party valuation report of Alzamend.

In addition to the Alzamend common shares purchase on March 9, 2021, the Company ~~entered into~~also held 427,888 shares of Alzamend common stock that it had acquired in during the years ended December 31, 2020 and 2019 for $252,000. At March 31, 2021, the estimated fair value of Alzamend’s common stock was $1.14. Based upon the estimated fair value of Alzamend common stock at March 31, 2021, the Company’s investment in Alzamend common stock had an ~~exchange agreement with WT Johnson pursuant to which the Company issued to WT Johnson two convertible promissory notes in the principal amounts~~unrealized gain of ~~$600,000 (“Note A”) and $1,667,766 (“Note B”), in exchange for cancellation of amounts due to WT Johnson by MTIX Ltd., a related party of the Company.~~$236,000.

~~DPW~~AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

~~JUNE 30, 2020~~March 31, 2021

Investment in Ault & Company, Inc.

~~During December 2017, the~~

On February 25, 2021, Ault & Company, a related party, sold and issued ~~750 shares of its common stock to WT Johnson & Sons upon the conversion of~~an 8% Secured Promissory Note A and WT Johnson subsequently sold the 750 shares. The proceeds from the sale of shares of common stock received upon the conversion of Note A were sufficient to satisfy the entire $2,267,766 obligation as well as an additional $400,500 of value added tax due to WT Johnson. Concurrent with entering into the exchange agreement, the Company received a promissory note in the principal amount of ~~$2,668,266 from MTIX and cancelled Note B. At June 30, 2020 and December 31, 2019,~~$2.5 million to the ~~Company has valued the note receivable at $600,000, the carrying~~Company. The principal amount of the Secured Promissory Note, ~~A. The Company will recognize the remainder~~plus any accrued and unpaid interest at a rate of ~~the amount~~8% per annum, is due ~~from MTIX upon payment of the promissory note by MTIX.~~and payable on February 25, 2022.

13. OTHER INVESTMENTS, RELATED PARTIES

~~Israeli Property~~Executive Chairman relocation benefit

~~During the year ended December 31, 2017,~~On February 23, 2021, as part of a relocation benefit for our ~~President, Amos Kohn, purchased certain real property that serves as a facility for the Company’s business operations in Israel. The Company made $300,000 in payments~~Executive Chairman, Milton C. Ault, III, related to the ~~seller~~Company moving its corporate headquarters from Newport Beach, CA to Las Vegas, NV, the Company agreed to purchase Mr. Ault’s California residence for $2.7 million. The transaction was structured such that upon the closing of the property and received a 28% undivided interest in the real property (the “Property”). The Company’s indirectly held wholly owned subsidiary, Coolisys Technologies, Inc. (“CTI”), entered into a Trust Agreement and Tenancy in Common Agreement with Roni Kohn, who owns a 72% interest in the Property, the daughter of Mr. Kohn and an Israeli citizen. The Property was purchased to serve as a residence/office facility for the Company in order to oversee its Israeli operations and to expand its business in the high-tech industry located in Israel. Pursuant to the Trust Agreement, Ms. Kohn will hold and manage CTI’s undivided 28% interest in the Property. The trust will be in effect until it is terminated by mutual agreementsubsequent sale of the parties. During the term of the trust, Ms. Kohn will not sell, lease, sublease, transfer, grant, encumber, change or effect any other disposition with respect to the Property or CTI’s interest without the Company’s approval.

Under the Tenancy in Common Agreement, CTI and its executive officers shall have the exclusive rights to use the Property for the Company and its affiliates’ business operations. The Property shall be managed by Ms. Kohn. Further, pursuant to the Tenancy in Common Agreement, for each completed calendar month of employment of Mr. Kohn by the Company, Ms. Kohn shall have the right to purchase a portion of the Company’s interest in the Property. Such right shall fully vest at the end of five years of continuous employment and the Trustee shall have the right to purchase the Company’s 28% interest in the Property for a nominal price. The Company will amortize its $300,000 investment over ten years, subject to a cliff vesting after five years. During the three and six months ended June 30, 2020 and 2019, the Company recognized $7,500 and $15,000, respectively, in amortization expense. At June 30, 2020 and December 31, 2019, the unamortized balance of the Israeli Property was $217,500 and $232,500, respectively. If Mr. Kohn is not employed by the Company,residence, the Company shall have not recognized a gain or a loss on the ~~right~~transaction. The Company and Mr. Ault agreed to ~~demand that Ms. Kohn~~escrow $254,000 of the purchase ~~the Company’s remaining interest~~price in the ~~Property that was not subject to vesting~~event of a loss on the subsequent sale of the residence. During April 2021, the Company entered into an agreement for the ~~fair market value~~subsequent sale of ~~such unvested Property interest.~~the residence, which closed on April 19, 2021.

~~12.~~14. STOCK-BASED COMPENSATION

Under the Company's 2018 Stock Incentive Plan (the “2018 Plan”), 2017 Stock Incentive Plan (the “2017 Plan”), 2016 Stock Incentive Plan (the “2016 Plan”) and the 2012 Stock Option Plan, as amended (the “2012 Plan”) (collectively, the “Plans”), options may be granted to employees, officers, consultants, service providers and directors of the Company. On July 19, 2019, the Company’s stockholders approved an amendment to the 2018 Plan which increased the number of shares of the Company’s common stock that may be issued thereunder to a total of 175,000 shares. The Plans, as amended, provide for the issuance of a maximum of 184,216 shares of the Company’s common stock.

Options granted under the Plans have an exercise price equal to or greater than the fair value of the underlying common stock at the date of grant and become exercisable based on a vesting schedule determined at the date of grant. Typically, options granted generally become fully vested after four years. Any options that are forfeited or cancelled before expiration become available for future grants. The options expire between 5 and 10 years from the date of grant. Restricted stock awards granted under the Plans are subject to a vesting period determined at the date of grant. As of June 30, 2020, an aggregate of 53,543 of the Company's options are still available for future grant.

~~DPW HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)~~

~~JUNE 30, 2020~~

During the six months ended June 30, 2020 and the year ended December 31, 2019, the Company did not grant any options under the Plans. Generally, options granted under the Plans become fully vested after four years. During the six months ended June 30, 2020 and 2019, the Company also issued 65,000 and 9,375, respectively, shares of common stock to its consultants and service providers. The grant date fair value of these shares amounted to $73,450 and $253,019 respectively, which was determined from the closing price of the Company’s common stock on the date of issuance.

The Company has valued the options at their date of grant utilizing the Black-Scholes option pricing model. This model is dependent upon several variables such as the options’ term, exercise price, current stock price, risk-free interest rate estimated over the expected term and estimated volatility of our stock over the expected term of the options. The risk-free interest rate used in the calculations is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options as calculated using the simplified method. The estimated volatility was determined based on the historical volatility of our common stock.

The options outstanding as of ~~June 30, 2020,~~March 31, 2021, have been classified by exercise price, as follows:

Outstanding					Exercisable
		Weighted
		Average	Weighted			Weighted
		Remaining	Average			Average
Exercise	Number	Contractual	Exercise		Number	Exercise
Price	Outstanding	Life (Years)	Price		Exercisable	Price
$480 - $560	894	4.70	$	537.34	695	$	530.84
$1,208 - $1,352	25	3.00	$	1,336.00	25	$	1,336.00
$480 - $1,352	919	4.65	$	559.07	720	$	558.82

Issuances outside of Plans
$1.79	850,000	9.47	$	1.79	0	$	0.00

Total Options
$480 - 1,856	850,919	9.47	$	2.39	720	$	558.82

Outstanding Exercisable

Weighted
Average Weighted Weighted
Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Price Outstanding Life (Years) Price Exercisable Price
$480 - $560 919 5.44 $537.96 525 $530.95
$1,208 - $1,352 31 3.13 $1,339.20 31 $1,339.20
$480 - $1,352 950 5.36 $564.32 556 $576.36

On ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, there was no aggregate intrinsic value of stock options that were outstanding and exercisable. The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the fair value of such awards as of the period-end ~~date~~date.

The total stock-based compensation expense related to stock options and stock awards issued pursuant to the Plans to the Company’s employees, consultants and directors, included in reported net loss for the three and six months ended June 30, 2020 and 2019, is comprised as follows:

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Stock-based compensation from Plans $ 20,178 $ 162,764 $ 110,691 $ 325,090
Stock-based compensation from issuances
outside of Plans — 208,231 32,250 667,193
Total Stock-based compensation $ 20,178 $ 370,995 $ 142,941 $ 992,283

~~DPW~~AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

~~JUNE 30, 2020~~March 31, 2021

A summary of option activity under the Company's stock option plans as of ~~June 30, 2020,~~March 31, 2021, and changes during the ~~six~~three months ended are as follows:

Outstanding Options
Weighted
Weighted Average
Shares Average Remaining Aggregate
Available Number Exercise Contractual Intrinsic
for Grant of Shares Price Life (years) Value
January 1, 2020 103,105 1,388 $ 636.47 6.33 $ 0
Restricted stock awards (50,000 ) —
Forfeited 438 (438 ) $ 793.14
June 30, 2020 53,543 950 $ 564.32 5.36 $ 0

			Outstanding Options
								Weighted
						Weighted		Average
	Shares					Average		Remaining		Aggregate
	Available		Number			Exercise		Contractual		Intrinsic
	for Grant		of Shares			Price		Life (years)		Value
January 1, 2021		6,693		925		$	564.43		4.87	$	—
Forfeited ¹		—		(6	)	$	1,352.00
March 31, 2021		6,693		919		$	559.07		4.65	$	—

~~As of June 30, 2020, there was $167,818 of unrecognized compensation cost related~~¹ Includes options that were issued pursuant to ~~non-vested stock-based compensation arrangements granted under~~ the ~~Plans. That cost is expected to be recognized over a weighted average period of 2.02 years.~~Company’s 2002 Plan and are not available for future issuance.

~~13.~~15. WARRANTS

During the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, the Company ~~issued a total of 2,079,435~~did not issue any warrants. The following table summarizes information about common stock warrants outstanding at ~~an average exercise price of $1.37 per share.~~March 31, 2021:

~~(i)~~

On February 20, 2020, pursuant to the Master Exchange Agreement, the Company issued warrants to purchase an aggregate of 270,198 shares of common stock at an average exercise price equal to $1.43 per share of common stock (see Note 17).

~~(ii)~~

During the six months ended June 30, 2020, the Company issued warrants to purchase an aggregate of 890,103 shares of common stock at an average exercise price equal to $1.08 per share of common stock in connection with the issuance of the Esousa 12% short-term promissory notes in the aggregate principal amount of $875,000 (see Note 17).

~~(iii)~~

~~On April 14, 2020, the Company issued warrants to purchase~~ ~~up to 157,143 shares of common stock~~ ~~at an exercise price equal to $1.17 per share of common stock in connection with the issuance of a convertible promissory note in the principal amount of $100,000 (see Note 19~~).

~~(iv)~~

On May 28, 2020, the Company issued warrants to purchase an aggregate of 400,000 shares of common stock at an exercise price equal to $1.07 per share of common stock in connection with the issuance of a convertible promissory note in the principal amount of $200,000 (see Note 19).

~~(v)~~

~~On June 26, 2020,~~ ~~the Company issued warrants to purchase an aggregate of 361,991 shares of common stock at an exercise price equal to $2.43 per share of common stock in connection with the issuance of~~ ~~promissory notes in the aggregate principal face amount of $800,000~~ ~~(see Note 17)~~.

Outstanding					Exercisable
		Weighted
		Average	Weighted			Weighted
		Remaining	Average			Average
Exercise	Number	Contractual	Exercise		Number	Exercise
Price	Outstanding	Life (Years)	Price		Exercisable	Price
$ —	6,500	3.00	$	—	6,500	$	—
$0.88 - $1.91	3,237,016	4.05	$	1.43	3,237,016		$0.88 - $1.91
$8.00 - $19.80	53,452	3.13	$	12.74	53,452		$8.00 - $19.80
$440 - $920	16,225	1.95	$	733.40	16,225		$440 - $920
$1,040 - $2,000	2,367	1.93	$	1,404.85	2,367		$1,040 - $2,000
$0.88 - $2,000	3,315,560	4.02	$	6.19	3,315,560	$	6.19

~~DPW~~Warrant issuances during 2020 requiring shareholder approval

Rule 713 of the NYSE American, the national securities exchange on which the Common Stock is listed, requires stockholder approval of a transaction, other than a public offering, involving the sale, issuance or potential issuance by an issuer of Common Stock (or securities convertible into or exercisable for Common Stock) at a price less than the greater of book or market value which together with sales by officers, directors or principal stockholders of the issuer equals 20% or more of presently outstanding Common Stock, or equal to 20% or more of presently outstanding stock for less than the greater of book or market value of the stock, or when the issuance or potential issuance of additional shares will result in a change of control of the issuer. Accordingly, absent shareholder approval, the holders of warrants issued between October 22, 2020 and November 19, 2020 to purchase an aggregate of 2,627,394 shares of Common Stock are prohibited from exercising the warrants and receiving shares of Common Stock unless stockholder approval is obtained for the warrants. The Company anticipates seeking stockholder approval for the exercise of all the warrants during July 2021.

AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

~~JUNE 30, 2020~~March 31, 2021

~~The following table summarizes information about common stock warrants outstanding at June 30, 2020:~~

Outstanding Exercisable
Weighted
Average Weighted Weighted
Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Price Outstanding Life (Years) Price Exercisable Price
$ — 6,500 3.75 $ — 6,500 $ —
$ 0.88 281,250 4.77 $ 0.88 — $ 0.88
$ 1.07 400,000 4.91 $ 1.07 400,000 $ 1.07
$ 1.14 144,928 4.69 $ 1.14 — $ 1.14
$ 1.16 95,238 4.91 $ 1.16 — $ 1.16
$ 1.17 157,143 4.79 $ 1.17 157,143 $ 1.17
$ 1.19 277,778 4.66 $ 1.19 — $ 1.19
$ 1.21 90,909 4.81 $ 1.21 — $ 1.21
$ 1.43 270,198 4.61 $ 1.43 — $ 1.43
$ 2.43 361,991 1.41 $ 2.43 361,991 $ 2.43
$ 8.00 397 1.34 $ 8.00 397 $ 8.00
$ 8.80 25,000 4.01 $ 8.80 25,000 $ 8.80
$ 12.00 12,500 3.86 $ 12.00 12,500 $ 12.00
$ 19.80 15,555 3.75 $ 19.80 15,555 $ 19.80
$ 440.00 355 2.36 $ 440.00 355 $ 440.00
$ 480.00 94 2.84 $ 480.00 94 $ 480.00
$ 528.00 186 2.34 $ 528.00 186 $ 528.00
$ 560.00 2,657 2.37 $ 560.00 2,657 $ 560.00
$ 600.00 170 1.87 $ 600.00 170 $ 600.00
$ 640.00 200 1.82 $ 640.00 200 $ 640.00
$ 752.00 9,614 2.88 $ 752.00 9,614 $ 752.00
$ 800.00 350 2.44 $ 800.00 350 $ 800.00
$ 880.00 947 1.17 $ 880.00 947 $ 880.00
$ 920.00 2,126 2.74 $ 920.00 2,126 $ 920.00
$ 1,040.00 1,243 2.79 $ 1,040.00 1,243 $ 1,040.00
$ 1,760.00 781 2.56 $ 1,760.00 781 $ 1,760.00
$ 1,800.00 140 2.57 $ 1,800.00 140 $ 1,800.00
$ 2,000.00 203 2.57 $ 2,000.00 203 $ 2,000.00
$ 0.88 - $ 2,000.00 2,158,453 4.16 $ 8.88 998,152 $ 17.85

The Company has valued the warrants at their date of grant utilizing the Black-Scholes option pricing model. This model is dependent upon several variables such as the warrants’ term, exercise price, current stock price, risk-free interest rate and estimated volatility of our stock over the contractual term of the warrants. The risk-free interest rate used in the calculations is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the contractual life of the warrants.

The Company utilized the Black-Scholes option pricing model and the assumptions used during the ~~six~~three months ended ~~June 30, 2020 and 2019:~~March 31, 2020:

Six Months Ended
June 30, 2020 June 30, 2019
Weighted average risk free interest rate 0.17% — 1.38% 2.18% — 2.28%
Weighted average life (in years) 1.42 — 5 5.0
Volatility 86.3% — 103.1% 87.5%
Expected dividend yield 0% 0%
Weighted average grant-date fair value per
share of warrants granted $ 0.78 $ 10.48

~~DPW HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)~~

~~JUNE 30, 2020~~

Exercise price	$0.88 - $1.91
Remaining contractual term (in years)	5.0
Volatility	86.3%
Weighted average risk free interest rate	0.46% — 1.38%
Expected dividend yield	0%

~~14.~~16. OTHER CURRENT LIABILITIES

Other current liabilities at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 consist of:

	June 30,		December 31,
	2020		2019		March 31, 2021		December 31, 2020
Accrued payroll and payroll taxes	$	1,818,109	$	1,237,054	$	1,497,374	$	1,411,728
Warrant liability		833,982		9,364
Warranty liability		86,070		80,412		91,043		90,640
Other accrued expenses		280,183		218,380		248,520		287,457
	$	3,018,344	$	1,545,210	$	1,836,937	$	1,789,825

~~15.~~17. LEASES

We have operating leases for office ~~space and restaurant locations.~~space. Our leases have remaining lease terms of 12 month to 11 years, some of which may include options to extend the leases perpetually, and some of which may include options to terminate the leases within 1 year.

The following table provides a summary of leases by balance sheet category as of ~~June 30, 2020:~~March 31, 2021:

	June 30, 2020		March 31, 2021
Operating right-of-use assets	$	3,930,609	$	4,816,798
Operating lease liability - current		471,651		855,933
Operating lease liability - non-current		3,505,559		4,020,877

The components of lease expenses for the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, were as follows:

	Six Months Ended		Three Months Ended
	June 30, 2020		March 31, 2021
Operating lease cost	$	452,725	$	345,755
Short-term lease cost		—		—
Variable lease cost		106,927		—

The following tables provides a summary of other information related to leases for the ~~six~~three months ended ~~June 30, 2020:~~March 31, 2021:

	June 30, 2020			March 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	540,561		$	346,864
Right-of-use assets obtained in exchange for new operating lease liabilities	$	-		$	—
Weighted-average remaining lease term - operating leases		7.8 years			6.4 years
Weighted-average discount rate - operating leases		10	%		9.0	%

AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

March 31, 2021

The Company determined that using a discount rate of ~~10%~~9% is reasonable, as this is consistent with the mortgage rates for commercial properties for the time period commensurate with the terms of the leases.

Maturity of lease liabilities under our non-cancellable operating leases as of ~~June 30, 2020,~~March 31, 2021, are as follows:

Payments due by period
2020 (remainder) $ 444,385
2021 787,506
2022 776,229
2023 786,645
2024 755,298
Thereafter 2,233,700
Total lease payments 5,783,763
Less interest (1,806,553 )
Present value of lease liabilities $ 3,977,210

~~DPW HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)~~

~~JUNE 30, 2020~~

Payments due by period
2021 (remainder)	$	1,033,945
2022		1,292,334
2023		992,390
2024		914,693
2025		697,692
Thereafter		1,793,975
Total lease payments		6,725,029
Less interest		(1,848,219	)
Present value of lease liabilities	$	4,876,810

~~16. ADVANCES ON FUTURE RECEIPTS~~

The Company has received funding as a result of entering into multiple Agreements for the Purchase and Sale of Future Receipts (the “Agreements on Future Receipts”). The Agreements on Future Receipts have been personally guaranteed by the Company’s Chief Executive Officer and in one instance has also been guaranteed by Philou. During the six months ended June 30, 2020, the Company made payments of $20,000 on the outstanding balance. The Company is in default on its payment obligations on these Agreements on Future Receipts.

~~17.~~18. NOTES PAYABLE

Notes Payable at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, are comprised of the following:

June 30, December 31,
2020 2019
Esousa Purchased promissory notes $ 2,828,323 $ 2,828,323
June '20 short-term promissory notes 800,000 —
12% short-term promissory note 585,919 —
Other short-term notes payable 1,537,760 1,050,339
12% May '20 promissory note 354,781 —
Esousa short-term promissory notes 875,000 —
Notes payable to Wells Fargo 197,362 290,560
Note payable to Dept. of Economic and Community Development 212,968 229,096
Paycheck Protection Program Loans 1,162,302 —
SBA Economic Injury Disaster Loan 150,000 —
Short term bank credit 1,484,193 1,622,337
Total notes payable 10,188,608 6,020,655
Less:
Unamortized debt discounts (804,856 ) (29,348 )
Unamortized financing cost — (3,668 )
Total notes payable, net of financing cost $ 9,383,752 $ 5,987,639
Less: current portion (9,014,567 ) (5,505,015 )
Notes payable – long-term portion $ 369,185 $ 482,624

	March 31, 2021			December 31, 2020
Esousa purchased notes	$	—		$	200,000
Short-term notes payable		1,087,491			1,088,899
Notes payable to Wells Fargo		174,290			182,615
Note payable to Dept. of Economic and Community Development		185,546			196,597
Paycheck Protection Program Loans		447,201			1,162,302
SBA Economic Injury Disaster Loan		150,000			150,000
Short term bank credit		429,195			1,404,096
Total notes payable	$	2,473,723		$	4,384,509
Less: current portion		(2,154,676	)		(4,048,009	)
Notes payable – long-term portion	$	319,047		$	336,500

Master Exchange Agreement

On February 10, 2020, the Company entered into a master exchange agreement (the “Master Exchange Agreement”) with Esousa Holdings, LLC (“Esousa” or the “Creditor”) which acquired ~~$4,163,481 in principal amount, plus accrued but unpaid interest, of~~ certain promissory notes that had been previously issued by ~~us to Dominion (the “Dominion Short-Term Promissory Note”) and~~ the Canadian Special Opportunity Fund, LP (the “CSOF Short-Term Promissory Note” and with the Dominion Short-Term Promissory Note, the “Esousa Purchased Notes”) in separate transactions. The Creditor also agreed to purchase additional notes up to an additional principal amount, plus accrued but unpaid interest, of $3.5 million (the “Additional Notes” and collectively, with the Esousa Purchased Notes, the “Notes”). Pursuant to the Master Exchange Agreement, the Creditor has the unilateral right to acquire shares of the Company’s common stock (the “Exchange Shares”) in exchange for the Notes.

The first exchange occurred on the date of the Master Exchange Agreement upon which the Creditor may exchange, in whole or in part, the Esousa Purchased Notes for the Exchange Shares (the “Initial Exchange”) and the second exchange (the “Second Exchange” and together with the Initial Exchange, the “Exchange”) shall occur if the Company receives stockholder approval at a special meeting thereof for the Exchange of the Additional Notes for the Company’s common stock, and subsequently, authorization from the NYSE American (together, the “Required Approvals”).

~~DPW HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)~~

~~JUNE 30, 2020~~

The Exchange Agreement provides for two pricing periods, the first of which shall commence after the date on which the Creditor receives the Exchange Shares pursuant to the Initial Exchange and ending on the date that is 90 days after receipt thereof, subject to extension as provided for in the Exchange Agreement, and the second of which shall commence on the date on which the Creditor receives the Exchange Shares pursuant to the Second Exchange and ending on the date that is 90 days after receipt thereof, in either case, unless earlier terminated by the Creditor by written notice.

The number of shares to be issued upon each Exchange will be equal to (x) the principal and accrued but unpaid interest due on the Notes being exchanged multiplied by 1.35, divided by (y) the closing bid price effective on each date of an exchange notice, provided, however, that the Company shall theretofore have obtained the Required Approvals (the “Exchange Price”). The total number of shares of the Company’s common stock to be issued to Creditor in connection with the applicable Exchange shall be adjusted on the Business Day immediately following the Pricing Period based upon the volume weighted average price (“VWAP”) of the Company’s common stock over the applicable Pricing Period (the “VWAP Shares”). VWAP Shares means the number of shares determined by dividing (x) the Exchange Amount of the applicable Exchange, multiplied by 1.1, by (y) the greater of (I) seventy-five percent (75.0%) of the VWAP of the Company’s common stock over the applicable Pricing Period, or (II) $0.30 per share.

Pursuant to the Master Exchange Agreement, the Company issued warrants to purchase an aggregate of 1,832,597 shares of common stock at an average exercise price equal to $1.43 per share of common stock. The warrants shall be exercisable commencing on the date upon which the Company receives the Required Approvals therefor. In connection therewith, the Company has agreed to file a registration statement to register the sale of the shares of common stock underlying the exercise of the warrants by the Creditor pursuant to the Master Exchange Agreement. In the event that the Creditor does not purchase all of the Additional Notes, the Company shall have the option to acquire a portion of the warrants from the Creditor for an aggregate price of $1.00. Consequently, at June 30, 2020, since the Creditor had not purchased all of the Additional Notes, the option represented the right to acquire 1,562,399 of the warrants from the Creditor. Therefore, only 270,198 options are deemed outstanding at June 30, 2020.

The Company computed the fair value of the 270,198 warrants using the Black-Scholes option pricing model and, as a result of this calculation, recorded a loss on extinguishment in the amount of $232,177 based on the estimated fair value of the warrants. The fair value of the warrants was estimated using the Black-Scholes option-pricing method. The risk-free rate of 1.38% was derived from the U.S. Treasury yield curve, matching the term of the warrants, in effect at the measurement dates. The volatility factor of 86.31% was determined based on historical stock prices of similar technology companies. The Company, however, is prohibited from issuing the shares of common stock issuable upon exercise of the warrants unless stockholder approval of such issuance of securities is obtained as required by applicable NYSE American listing rules. On July 8, 2020, the Company received stockholder approval of such share issuances.

Company. During ~~the six months ended June 30, 2020,~~January 2021, the Company issued to the investor an aggregate of ~~861,580~~183,214 shares of the Company’s common stock upon the exchange of principal and interest in the amount of ~~$836,845.~~$200,000 and $15,948, respectively. A loss on extinguishment of ~~$222,232~~$234,000 was recognized on the ~~issuances~~issuance of common stock based on the fair value of the Company’s common stock at the date of the exchanges.

~~June '20 short-term promissory notes~~Paycheck Protection Program

~~On June 26,~~During April 2020, the Company ~~issued to several institutional investors unsecured 12% short-term promissory notes~~ received loans under the Paycheck Protection Program (“PPP”)in the ~~aggregate~~ principal amount of ~~$800,000~~$715,000 and ~~seventeen month warrants to purchase an aggregate~~the Company’s majority owned subsidiary, Microphase, received loans in the principal amount of ~~361,991 shares~~$467,000. The principal of the ~~Company’s common stock at an exercise price~~loan may be forgiven up to the total cost of ~~$2.43 per share of common stock. These notes have a term of three months. The Warrants are immediately exercisable once~~payroll, mortgage interest payments, rent and utility payments made during the eight-week period after origination. On January 11, 2021, the Company ~~obtains approval thereof by~~received forgiveness in the ~~NYSE American. The Warrants may be exercised via cashless exercise at the option~~principal amount of ~~the Investor. These warrants to purchase common stock do not qualify to be treated as equity, and accordingly, shall be recorded as a liability.~~ $715,000. The Company ~~is required to present these instruments at fair value at each reporting date and any changes in fair values~~expects the remaining amount received under the PPP shall also be ~~recorded as an adjustment to earnings.~~forgiven.

~~DPW~~AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

~~JUNE 30, 2020~~March 31, 2021

19. NOTES PAYABLE – RELATED PARTIES

Notes Payable – Related parties at March 31, 2021 and December 31, 2020, are comprised of the following:

	March 31, 2021			December 31, 2020
Notes payable, related parties	$	215,572		$	239,355
Less: current portion		(149,489	)		(187,818	)
Notes payable, related parties – long-term portion	$	66,083		$	51,537

Microphase is a party to several notes payable agreements with six of its past officers, employees and their family members. As of March 31, 2021, the aggregate outstanding balance pursuant to these notes payable agreements, inclusive of $33,000 of accrued interest, was $248,000, with annual interest rates ranging between 3.00% and 6.00%.

20. CONVERTIBLE NOTES

Convertible Notes Payable at March 31, 2021 and December 31, 2020, are comprised of the following:

	March 31, 2021			December 31, 2020
4% Convertible promissory note	$	660,000		$	660,000
Less: Unamortized debt discounts		(253,673	)		(273,717	)
Total convertible notes payable, net of financing cost	$	406,327		$	386,283

~~12% short-term promissory note~~4% Convertible Promissory Note

On ~~February 5, 2020,~~May 20, 2019, the Company ~~issued~~entered into a ~~12%~~securities purchase agreement with an investor to sell, for a purchase price of $500,000, a 4% original issue discount (“OID”) convertible promissory note ~~in the~~with an aggregate principal face amount of ~~$585,919.~~$660,000 and a five-year warrant to purchase an aggregate of 12,500 shares of the Company’s common stock. The ~~12% short-term promissory note was issued pursuant~~Company is required to ~~the February 2020 Exchange Agreement (see Note 19)~~make quarterly interest payments and ~~was due upon issuance.~~

~~12% January '20 short-term promissory note~~

~~On January 29, 2020, the Company issued a 12% promissory note in~~ the principal amount of ~~$235,796 to an accredited investor.~~the note is due on May 20, 2024. The ~~maturity date~~note is convertible into shares of Common Stock at $4.00 per share. The exercise price of the ~~promissory note was February 28, 2020 and included an OID of $28,296 and debt issuance costs of $7,500, resulting in net proceeds of $200,000.~~ ~~The Company received cash of $150,000 and cancelled $50,000 of accrued liabilities due the investor.~~warrant is $12.00 per share. In addition, ~~Mr. Ault~~the Executive Chairman of the Company agreed to guarantee and ~~MCKEA Holdings, LLC (“MCKEA”) guaranteed~~act as surety for the Company’s obligation to repay ~~this~~the note pursuant to a ~~Guaranty.~~

~~Esousa short-term promissory notes~~

During the six months ended June 30, 2020, the Company issued to Esousa 12% short-term promissory notes in the aggregate principal amount of $875,000 and five-year warrants to purchase an aggregate of 890,103 shares of common stock at an average exercise price equal to $1.08 per share of common stock. The Esousa 12% short-term promissory notes have a term of three months.personal guarantee.

The Company computed the fair value of the warrants using the Black-Scholes option pricing model and, as a result of this calculation, recorded debt discount in the amount of ~~$354,426 based~~$58,000based on the estimated fair value of the warrants. During the six months ended June 30, 2020, non-cash interest expense of $310,957 was recorded from the amortization of debt discounts. The fair value of the warrants was estimated using the Black-Scholes option-pricing method. The risk-free rates ranged from 0.34% and 1.11% and were derived from the U.S. Treasury yield curve, matching the term of the warrants, in effect at the measurement dates. The volatility factor was between 86.31% and 94.51% and was determined based on historical stock prices of similar technology companies. The Company was prohibited from issuing the shares of common stock issuable upon exercise of the warrants until stockholder approval of such issuance of securities was obtained as required by applicable NYSE American listing rules. The Company received stockholder approval of such share issuances on July 8, 2020.

~~Paycheck Protection Program~~

~~In March 2020, U.S.~~ ~~lawmakers agreed on the passage of a $2 trillion stimulus bill called the~~ ~~CARES (Coronavirus Aid, Relief, and Economic Security) Act~~ to blunt the impact of an economic downturn set in motion by the global coronavirus pandemic. On March 27, 2020, President Trump signed the bill into law. The main driver of small business stimulus in the ~~CARES Act~~ ~~is contained in the Paycheck Protection Program (PPP). PPP~~ ~~Loans may be used to cover payroll, benefits, and salaries, as well as interest payments, rent, and utilities. Fees are waived, and collateral and personal guarantees are not required. Payments are deferred for a minimum of six months, up to one year, and there are no prepayment penalties.~~

During April 2020, the Company received loans under the PPP in the principal amount of $715,101 and the Company’s majority owned subsidiary, Microphase, received loans in the principal amount of $467,333. The principal of the loan may be forgiven up to the total cost of payroll, mortgage interest payments, rent and utility payments made during the eight-week period after origination. In addition to meeting the size requirement (500 or fewer employees for most companies), the Company was required to demonstrate that its business had been negatively impacted by COVID-19. The Company expects that the entire amount received under the PPP is eligible for loan forgiveness.

~~DPW HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)~~

~~JUNE 30, 2020~~

~~Economic Injury Disaster Loan~~

~~On May 27, 2020, the Company received an Economic Injury Disaster Loan in the principal amount of $150,000 with an annual interest rate of 3.75%. The Company shall begin making principal and interest payments of $731 every month beginning on May 27, 2021. All remaining principal and interest is due and payable thirty years from the date of the note.~~

~~18. NOTES PAYABLE – RELATED PARTIES~~

~~Notes Payable – Related parties at June 30, 2020 and December 31, 2019, are comprised of the following:~~

June 30, December 31,
2020 2019
Notes payable, related parties $ 283,507 $ 284,317
Less: current portion (193,222 ) (169,153 )
Notes payable, related parties – long-term portion $ 90,285 $ 115,164

Microphase is a party to several notes payable agreements with seven of its past officers, employees and their family members. As of June 30, 2020, the aggregate outstanding balance pursuant to these notes payable agreements, inclusive of $39,982 of accrued interest, was $323,489, with annual interest rates ranging between 3.00% and 6.00%.

~~19. CONVERTIBLE NOTES~~

~~Convertible Notes Payable at June 30, 2020 and December 31, 2019, are comprised of the following:~~

June 30, December 31,
2020 2019
8% Convertible promissory note $ — $ 935,772
12% Convertible promissory note — 815,218
4% Convertible promissory note 660,000 660,000
12% July 2019 convertible promissory note 632,000 632,000
12% November 2019 convertible promissory note — 350,000
May 2020 convertible promissory note 200,000 —
April 2020 convertible promissory note 100,000 —
Total convertible notes payable 1,592,000 3,392,990
Less:
Unamortized debt discounts (505,145 ) (355,227 )
Total convertible notes payable, net of financing cost $ 1,086,855 $ 3,037,763
Less: current portion (741,550 ) (2,732,990 )
Convertible notes payable, net of financing cost – long-term portion $ 345,305 $ 304,773

~~8% Convertible Promissory Note~~

On November 15, 2019, the Company entered into an exchange agreement with a lender pursuant to which the Company issued to the lender a convertible promissory note in the principal amount of $935,772 with an interest rate of 8% per annum. The 8% convertible promissory note is convertible into shares of the Company’s common stock at conversion price of $1.80. During the six months ended June 30, 2020, the Company issued 529,425 shares of common stock upon the conversion of principal and interest of $952,965. Since the proceeds received by the investor from the sales of common stock were less than the amount of principal and accrued interest, the investor was due a true up payment in the amount of $210,049, which was recognized as additional interest expense.

~~DPW HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)~~

~~JUNE 30, 2020~~

~~12% Convertible Promissory Note~~

On February 5, 2020 the Company entered into an exchange agreement (the “February 2020 Exchange Agreement”) with an institutional investor pursuant to which the Company issued to the investor a 12% convertible promissory note in the principal amount of $295,000 with a conversion price of $1.45 per share of common stock and a 12% promissory note in the principal amount of $585,919 (see Note 17). These two notes were issued upon the exchange of the 12% Convertible Note, in the principal amount of $815,218, issued on September 26, 2019. On February 25, 2020, the Company issued to the investor 203,448 shares of the Company’s common stock upon the conversion of principal of $295,000. Since the exchange provided the institutional investor with a substantive conversion feature, the debt instruments were determined to be substantially different and a loss on extinguishment of $20,345 was recognized.

~~April 2020 Convertible Promissory Note~~

On April 13, 2020, the Company issued a convertible promissory note in the principal amount of $100,000 with an interest rate of 10% per annum and a five-year warrant to purchase shares of the Company’s common stock equal to 50% of the number of shares of common stock issuable pursuant to the convertible promissory note, at an exercise price equal to $1.17 per share of common stock. The number of shares to be issued upon conversion of the note shall be equal to (x) the principal and accrued but unpaid interest due on the note being exchanged multiplied by 1.35, divided by (y) the closing bid price effective on date of conversion, provided, however, that the Company shall theretofore have obtained the approval of the issuance of the shares of common stock by the NYSE American. The total number of shares of the Company’s common stock to be issued to creditor in connection with the conversion of the note shall be adjusted based upon the VWAP of the Company’s common stock over the applicable pricing period. The amount of the adjustment shall be determined by dividing (x) the aggregate amount of principal and interest converted multiplied by 1.1, by (y) the greater of (I) seventy-five percent (75.0%) of the VWAP of the Company’s common stock over the applicable pricing period, or (II) $0.35 per share.

~~May 2020 Convertible Promissory Note~~

On May 28, 2020, the Company entered into a securities purchase and exchange agreement with an institutional investor. Pursuant to the agreement, the Company exchanged the 12% January ’20 short-term promissory note in the principal amount of $235,796 for a new note due and payable on June 30, 2020 (the “Exchanged Note”) that would become convertible into common stock of the Company should the Company be in default under the terms of the Exchanged Note. In addition, pursuant to the agreement, the Company issued to the investor a note due and payable on November 28, 2020 in the principal amount of $200,000 that becomes convertible into the Company’s common stock commencing June 30, 2020 (the “Convertible Note” and with the Exchanged Note, the “Notes”) with an original issue discount of twenty percent (20%). In conjunction with the issuance of the Convertible Note, the Company also issued to the investor a warrant to purchase an aggregate of 400,000 shares of Common Stock at an exercise price of $1.07. The conversion of the Notes and the exercise of the warrant is subject to approval of the NYSE American.

~~20. CONVERTIBLE NOTE PAYABLE – RELATED PARTY~~

~~On February 5, 2020, the~~ ~~Company~~ issued an 8% convertible promissory note in the principal amount of $1,000,000 to Ault & Company (the “Ault & Company Convertible Note”). The principal amount of this note, plus any accrued and unpaid interest at a rate of 8% per annum, shall be due and payable on August 5, 2020. The Ault & Company Convertible Note shall be convertible into shares of the Company’s common stock at a conversion price of $1.45 per share, subject to the approval of the Company’s stockholders at a special meeting thereof, and subsequently, authorization from the NYSE American.

~~DPW HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)~~

~~JUNE 30, 2020~~

At the time of issuance of the ~~Ault & Company Convertible Note,~~note, the closing price of the ~~Company’s common stock~~Common Stock was in excess of the effective conversion price, resulting in a beneficial conversion feature (“BCF”)~~. The BCF embedded in the Ault & Company Convertible Note is accounted for under ASC No.~~ ~~470, De~~~~bt (“ASC 470”). At issuance, the intrinsic value~~ of ~~the BCF totaled $68,966,~~$188,000, based on the difference between the effective conversion price and the fair value of the Company’s common stock at the commitment date of the transaction. The Company was prohibited from issuing the shares of common stock issuable pursuant to the Ault & Company Convertible Note unless stockholder approval of such issuance of securities was obtained as required by applicable NYSE American listing rules. The Company received stockholder approval subsequent to June 30, 2020. This provision resulted in a contingent BCF that shall be recognized during the quarter ended September 30, 2020.

~~21. COMMITMENTS AND CONTINGENCIES~~

~~Derivative Action~~

On July 31, 2018, Ethan Young and Greg Young (collectively, “Plaintiffs”) filed a stockholder derivative complaint (the “Complaint”) in the United States District Court for the Central District of California (the “Court”) against the Company as the nominal defendant, as well as its current directors and a former director, in action captioned, Ethan Young and Greg Young, Derivatively on Behalf of Nominal Defendant, DPW Holdings, Inc. v. Milton C. Ault, III, Amos Kohn, William B. Horne, Jeff Bentz, Mordechai Rosenberg, Robert O. Smith, and Kristine Ault and DPW Holdings, Inc.~~, as the nominal defendant, (collectively, “Defendants”) Case No. 18-cv-6587 (the “Derivative Action”).~~

The Complaint alleged violations of state law and breaches of fiduciary duty, unjust enrichment and gross mismanagement by the individual defendants, in connection with various transactions entered into by the Company.

The Defendants moved to dismiss the Complaint, and on February 25, 2019, the Court granted Defendants motion to dismiss, in its entirety, without prejudice, and also granted Plaintiffs leave to amend their Complaint.

On March 11, 2019, Plaintiffs filed an amended complaint asserting violations of breaches of fiduciary duties and unjust enrichment claims based on the previously pled transactions (the “Amended Complaint”).

On March 25, 2019, Defendants filed a motion to dismiss (the “Motion”) the Amended Complaint. On May 21, 2019, the Court granted in part, and denied in part, the Defendants’ Motion. On February 24, 2020, the Company entered into a definitive settlement agreement (the “Settlement Agreement”) with Plaintiffs to settle the claims asserted in the Amended Complaint.

On April 15, 2020, the Court issued an Order (the “Order”) approving a Motion for Preliminary Approval of Settlement in the Derivative Action. On July 16, 2020, the Court issued an Order (the “Final Order”) approving a Motion for Final Approval of Settlement in the Derivative Action filed against DPW as a Nominal Defendant and its directors who served on its board of directors on July 31, 2018 who were not dismissed from the action as a result of the Court’s partial grant of the Motion.

~~On July 16, 2020, the Court entered a Judgment based upon the Final Order~~

Under the terms of the Final Order, the Board shall adopt and/or maintain certain resolutions and amendments to the Company’s committee charters and/or bylaws, to ensure adherence to certain corporate governance policies (collectively, the “Reforms”). The Final Order further provides that such Reforms shall remain in effect for a period of no less than five (5) years and shall be subject to any of the following: (a) a determination by a majority of the independent directors that the Reforms are no longer in the best interest of the Company, including, but not limited to, due to circumstances making the Reforms no longer applicable, feasible, or available on commercially reasonable terms, or (b) modifications which the Company reasonably believes are required by applicable law or regulation.

In ~~connection with~~aggregate, the ~~Settlement Agreement, the parties have agreed upon~~Company recorded a ~~payment of attorneys’ fees~~debt discount in the amount of ~~$600,000, which sum shall be payable by our Director & Officer liability insurance.~~$406,896 based on the relative fair values of the warrants, BCF and OID. During the three months ended March 31, 2021 and 2020, non-cash interest expense of $20,000 and $20,000, respectively, was recorded from the amortization of debt discounts. The ~~Settlement Agreement contains no admission~~fair value of ~~wrongdoing.~~the warrants was estimated using the Black-Scholes option-pricing method. The risk-free rate of 2.18% was derived from the U.S. Treasury yield curve, matching the term of the warrant, in effect at the measurement date. The volatility factor of 87.51% was determined based on historical stock prices of similar technology companies.

~~DPW~~AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

~~JUNE 30, 2020~~March 31, 2021

We have always maintained and continue to believe that neither we nor our current or former directors engaged in any wrongdoing or otherwise committed any violation of federal or state securities laws or any other laws or regulations.21. COMMITMENTS AND CONTINGENCIES

Blockchain Mining Supply and Services, Ltd.

On November 28, 2018, Blockchain Mining Supply and Services, Ltd. (“Blockchain Mining”) a vendor who sold computers to our subsidiary, filed a Complaint (the “Complaint”) in the United States District Court for the Southern District of New York against us and our subsidiary, Digital Farms, Inc. (f/k/a Super Crypto Mining, Inc.), in an action captioned Blockchain Mining Supply and Services, Ltd. v. Super Crypto Mining, Inc. and DPW Holdings, Inc., Case No. 18-cv-11099.

The Complaint asserts claims for breach of contract and promissory estoppel against the usCompany and ~~our~~its subsidiary arising from the subsidiary’s alleged failure to honor its obligations under the purchase agreement. The Complaint seeks monetary damages in excess of $1,388,495, plus attorneys’ fees and costs.

~~We believe that these claims are without merit and intend~~The Company intends to vigorously defend ~~them.~~against the claims asserted against it in this action.

On April 13, 2020, wethe Company and ~~our~~its subsidiary, jointly filed a motion to dismiss the Complaint in its entirety as against us, and the promissory estoppel claim as against ~~our~~its subsidiary. On the same day, ~~our~~the Company’s subsidiary also filed a partial Answer to the Complaint in connection with the breach of contract claim.

On April 29, 2020, Blockchain Mining filed an amended complaint (the “Amended Complaint”). The Amended Complaint asserts the same causes of action and seeks the same damages as the initial Complaint.

On May 13, 2020, wethe Company and ~~our~~its subsidiary, jointly filed a motion to dismiss the Amended Complaint in its entirety as against ~~us,~~the Company, and the promissory estoppel claim as against of ~~our~~its subsidiary. On the same day, ~~our~~the Company’s subsidiary also filed a partial Answer to the Amended Complaint in connection with the breach of contract claim.

In its partial Answer, the Company’s subsidiary admitted to the validity of the contract at issue and also asserted numerous affirmative defenses concerning the proper calculation of damages.

On December 4, 2020, the Court issued an Order directing the Parties to engage in limited discovery (the “Limited Discovery”) to be completed by March 4, 2021. In connection therewith, the Court also denied the defendants’ Motion to Dismiss without prejudice.

The Company and its subsidiary have informed the Court that they intend to file a revised motion to dismiss the Amended Complaint and anticipate filing such motion to dismiss when the Court issues a briefing schedule.

Based on ~~our~~the Company’s assessment of the facts underlying the claims, the uncertainty of litigation, and the preliminary stage of the case, wethe Company cannot reasonably estimate the potential loss or range of loss that may result from this action. Notwithstanding, ~~we have~~the Company has established a reserve in the amount of the unpaid portion of the purchase agreement. An unfavorable outcome may have a material adverse effect on our business, financial condition and results of operations.

Ding Gu (a/k/a Frank Gu) and Xiaodan Wang Litigation

On January 17, 2020, Ding Gu (a/k/a Frank Gu) (“Gu”) and Xiaodan Wang (“Wang” and with “Gu” collectively, “Plaintiffs”), filed a Complaint (the “Complaint”) in the Supreme Court of the State of New York, County of New York against us and our Chief Executive Officer, Milton C. Ault, III, in an action captioned Ding Gu (a/k/a Frank Gu) and Xiaodan Wang v. DPW Holdings, Inc. and Milton C. Ault III (a/k/a Milton Todd Ault III a/k/a Todd Ault), Index No. 650438/2020.

AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

March 31, 2021

The Complaint asserts causes of action for declaratory judgment, specific performance, breach of contract, conversion, attorneys’ fees, permanent injunction, enforcement of Guaranty, unjust enrichment, money had and received, and fraud arising from: (i) a series of transactions entered into between Gu and us, as well as Gu and Ault, in or about May 2019; and (ii) a term sheet entered into between Plaintiffs and DPW, in or about July 2019. The Complaint seeks, among other things, monetary damages in excess of ~~$1,100,000,~~$1.1 million, plus a decree of specific performance directing ~~DPW~~the Company to deliver unrestricted shares of ~~DPW’s~~ common stock to Gu, plus attorneys’ fees and costs.

~~We believe that these claims are without merit and intend~~The Company intends to vigorously defend ~~them.~~against the claims asserted against it in this action.

On May 4, 2020, wethe Company and Ault jointly filed a motion to dismiss the Complaint in its entirety, with prejudice.

~~DPW HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)~~

~~JUNE 30, 2020~~

On July 24, 2020, Plaintiffs filed their opposition papers to ~~our~~the Company’s joint motion to dismiss.

The ~~return date for the~~ motion to dismiss has been fully briefed and is ~~presently set for August 25, 2020.~~currently pending before the court.

Based on ~~our~~the Company’s assessment of the facts underlying the above claims, the uncertainty of litigation, and the preliminary stage of the case, wethe Company cannot reasonably estimate the potential loss or range of loss that may result from this action. An unfavorable outcome may have a material adverse effect on our business, financial condition and results of operations.

Subpoena

The Company received a subpoena from the SEC for the voluntary production of documents. The Company is fully cooperating with this non-public, fact-finding inquiry and Management believe that the Company has operated its business in compliance with all applicable laws. The subpoena expressly provides that the inquiry is not to be construed as an indication by the Commission or its staff that any violations of the federal securities laws have occurred, nor should it be considered a reflection upon any person, entity or security. However, there can be no assurance as to the outcome of this matter.

AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

March 31, 2021

Other Litigation Matters

Several non-trade creditors of the Company commenced litigation against the Company for payment of approximately $4.2 million of debt obligations not paid according to contractual terms. The Company has since repaid approximately $3.6 million of such debt obligations and entered into settlement agreements for the remaining amount of approximately $600,000 which are included within future receipts obligations in the accompanying consolidated balance sheet at June 30, 2020. The Company also recorded approximately $400,000 of trade liabilities for a judgment settled in favor of a trade creditor as of June 30, 2020 and is currently a defendant in several other claims made by trade creditors in which the maximum loss exposure is currently estimated to be approximately $800,000. The outcome of any matters relating to unresolved trade credit obligations cannot be predicted at this time.

The Company is involved in litigation arising from other matters in the ordinary course of business. We are regularly subject to claims, suits, regulatory and government investigations, and other proceedings involving labor and employment, commercial disputes, and other matters. Such claims, suits, regulatory and government investigations, and other proceedings could result in fines, civil penalties, or other adverse consequences.

Certain of these outstanding matters include speculative, substantial or indeterminate monetary amounts. ~~We record~~The Company records a liability when ~~we believe~~it believes that it is probable that a loss has been incurred and the amount can be reasonably estimated. If ~~we determine~~the Company determines that a loss is reasonably possible and the loss or range of loss can be estimated, ~~we disclose~~the Company discloses the reasonably possible loss. ~~We evaluate~~The Company evaluates developments in ~~our~~its legal matters that could affect the amount of liability that has been previously accrued, and the matters and related reasonably possible losses disclosed, and ~~make~~makes adjustments as appropriate. Significant judgment is required to determine both likelihood of there being and the estimated amount of a loss related to such matters.

With respect to ~~our~~the Company’s other outstanding matters, based on ~~our~~the Company’s current knowledge, ~~we believe~~the Company believes that the amount or range of reasonably possible loss will not, either individually or in aggregate, have a material adverse effect on ~~our~~the Company’s business, consolidated financial position, results of operations, or cash flows. However, the outcome of such matters is inherently unpredictable and subject to significant uncertainties.

~~DPW HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)~~

~~JUNE 30, 2020~~

22. STOCKHOLDERS’ EQUITY

Preferred Stock

The Company is authorized to issue ~~25,000,000~~25.0 million shares of Preferred Stock $0.001 par value. The Board has designated ~~1,000,000~~1.0 million shares as Series A Convertible Preferred Stock (the “Series A Preferred Stock”), 500,000 shares as Series B Convertible Preferred Stock (the “Series B Preferred Stock”) and 2,500 shares as Series C Convertible Redeemable Preferred Stock (the “Series C Preferred Stock”). The rights, preferences, privileges and restrictions on the remaining authorized ~~23,497,500~~23.5 million shares of Preferred Stock have not been determined. The Board is authorized to designate a new series of preferred shares and determine the number of shares, as well as the rights, preferences, privileges and restrictions granted to or imposed upon any series of preferred shares. As of ~~June 30, 2020,~~March 31, 2021, there were 7,040 shares of Series A Preferred Stock, 125,000 shares of Series B Preferred Stock and no other shares of Preferred Stock issued or outstanding.

Common Stock

Common stock confers upon the holders the rights to receive notice to participate and vote at any meeting of stockholders of the Company, to receive dividends, if and when declared, and to participate in a distribution of surplus of assets upon liquidation of the Company. The Class B common stock carries the voting power of 10 shares of Class A common stock.

~~2020 Issuances~~

~~Issuances of Common Stock for Services~~

~~During March 2020, the Company issued 65,000 shares of its common stock as payment for services to its consultants. The shares were valued at $73,450, an average of $1.13 per share.~~

~~Issuance of common stock in payment of short term advances, related party~~2021 ATM Offering

On ~~December 23, 2019,~~January 22, 2021, the Company entered into ~~a securities purchase agreement~~an At-The-Market Issuance Sales Agreement, as amended on February 17, 2021 and thereafter on March 5, 2021 (the “2021 Sales Agreement”) with ~~Ault & Company. Pursuant~~Ascendiant Capital Markets, LLC, or the sales agent, relating to the ~~terms~~sale of this agreement, Ault & Company agreed to purchase an aggregate of 660,667 shares of the Company’s common stock for a total purchase price of $739,948 at a purchase price per share of $1.12, subject to the approval of the NYSE American. The sale was authorized by the NYSE American on January 15, 2020. As a result, at the closing on January 15, 2020, Ault & Company became the beneficial owner of 666,945 shares of Common ~~Stock.~~

~~Issuance of common stock in payment of accrued liability~~

OnStock offered by a prospectus supplement and the accompanying prospectus, as amended by the amendments to the sales agreement dated February 16, 2021 and March ~~4, 2020, pursuant to~~5, 2021. In accordance with the terms of the ~~securities purchase~~2021 Sales Agreement, the Company may offer and sell shares of Common Stock having an aggregate offering price of up to $200.0 million from time to time through the sales agent. As of March 5, 2021, the Company had sold an aggregate of 21.6 million shares of Common Stock pursuant to the sales agreement for ~~the sale~~gross proceeds of ~~the Dominion short-term promissory note, the Company issued to Dominion 12,500 shares of its common stock (see Note 17).~~$125.0 million.

~~During the quarter ended June 30, 2020, the Company issued 140,624 shares of its common stock in satisfaction of accrued liabilities of $155,547.~~AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

March 31, 2021

Issuance of common stock for conversion of debt

During January 2021, the ~~six months ended June 30, 2020, principal and accrued interest~~Company issued to Esousa an aggregate of ~~$1,580,772 and $885,622, respectively, on the Company’s debt securities was satisfied through the issuance of 1,914,936~~183,214 shares of the Company’s common ~~stock. The Company recognized a~~stock upon the exchange of principal and interest in the amount of $200,000 and $16,000, respectively. A loss on extinguishment of ~~$222,232 as a result~~$234,000 was recognized on the issuance of ~~these issuances.~~

~~DPW HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)~~

~~JUNE 30, 2020~~

common stock based on the fair value of the Company’s common stock at the date of the exchanges.

23. RELATED PARTY TRANSACTIONS

The Company and AVLP entered into a Loan and Security Agreement (“AVLP Loan Agreement”) with an effective date of August 21, ~~2017, pursuant to which the Company will provide AVLP a non-revolving credit facility of up to $10,000,000 for a period ending on August 21,~~2017. At March 31, 2021, ~~subject to the terms and conditions stated in the Loan Agreement, including that the Company having available funds to grant such credit. At June 30, 2020,~~ the Company has provided loans to AVLP in the principal amount ~~$9,802,686~~$13.9 million and, in addition to the 12% convertible promissory notes, AVLP has issued to the Company warrants to purchase ~~19,605,372~~27.8 million shares of AVLP common stock. Under the terms of the AVLP Loan Agreement, any notes issued by AVLP are secured by the assets of AVLP. As of ~~June 30, 2020,~~March 31, 2021, the Company recorded contractual interest receivable attributed to the AVLP Loan Agreement of ~~$2,025,475~~$2.0 million, and a provision for loan ~~losses~~loss of ~~$5,088,927.~~$3.4 million.

~~During the six months ended June 30, 2020 and the year ended December 31, 2019, the~~The Company ~~also acquired in the open market 5,000~~owns 999,175 shares of AVLP common stock ~~for $1,274 and 91,000 shares of AVLP common stock for $53,032, respectively.~~that it acquired in the open market. At ~~June 30, 2020,~~March 31, 2021, the Company’s investment in AVLP common stock had an unrealized ~~loss~~gain of ~~$577,975.~~$71,000.

Philou is AVLP’s controlling shareholder. Mr. Ault is Chairman of AVLP’s Board of Directors and the Executive Chairman of the ~~Board.~~Board of the Company. Mr. ~~William B.~~ Horne is the Chief Financial Officer and a director of AVLP and Chief Executive Officer, Vice Chairman and Director of the Company. Mr. Nisser is General Counsel of AVLP and President, General Counsel and Director of the Company.

In March 2017, the Company was awarded a ~~$50~~$50.0 million purchase order by MTIX to manufacture, install and service the Multiplex Laser Surface Enhancement (“MLSE”) plasma-laser ~~systems.~~system. On April 12, 2019, the Company received payment of ~~$2,676,219~~$2.7 million for manufacturing services performed ~~during the year ended December 31, 2018~~ on the first MLSE system. At ~~June 30,~~December 31, 2020, the Company had recorded a receivable from MTIX of ~~$1,238,856.~~$1.2 million.

~~During the six months ended June 30, 2020, the Company recognized an unrealized gain of $5,377 resulting from its investment~~On March 12, 2021, DP Lending, entered into a securities purchase agreement with Alzamend to invest $10.0 million in Alzamend common ~~stock.~~stock and warrants, subject to the achievement of certain milestones. DP Lending funded $4.0 million upon execution of the securities purchase agreement, which included the conversion of a short-term advance of $750,000 and a convertible promissory note of $50,000. The remaining $6.0 million will be funded upon Alzamend achieving certain milestones related to the U.S. Food and Drug Administration approval of Alzamend’s Investigational New Drug application and Phase 1a human clinical trials for Alzamend’s lithium based ionic cocrystal therapy, known as AL001. Under the securities purchase agreement, in aggregate, Alzamend has agreed to sell up to 6,666,667 shares of its common stock to DP Lending for $10.0 million, or $1.50 per share, and issue to DP Lending warrants to acquire up to 3,333,334 shares of Alzamend common stock with an exercise price of $3.00 per share. The transaction was approved by the Company’s independent directors after receiving a third-party valuation report of Alzamend.

In addition to the Alzamend common shares purchased on March 9, 2021, the Company also held 427,888 shares of Alzamend common stock that it had acquired during the years ended December 31, 2020 and 2019 for $252,000. At March 31, 2021, the estimated fair value of Alzamend’s common stock was $1.50. Based upon the estimated fair value of Alzamend common stock at March 31, 2021, the Company’s investment in Alzamend common stock had an unrealized gain of $236,000.

AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

March 31, 2021

Mr. Ault is Executive Chairman of Alzamend’s Board of Directors and the Chairman of the Board. Mr. William B. Horne and Mr. Henry Nisser are directors of Alzamend and the Company. Mr. Kenneth S. Cragun is Chief Financial Officer of Alzamend and the Company.

~~During the six months ended June 30, 2020,~~On February 25, 2021, Ault & Company, ~~Inc. (“Ault & Company”) has provided $505,829~~a related party, sold and issued an 8% Secured Promissory Note in ~~short-term advances, net~~the principal amount of ~~repayments.~~$2.5 million to the Company. The principal amount of the Secured Promissory Note, plus any accrued and unpaid interest at a rate of 8% per annum, is due and payable on February 25, 2022, Ault and Company is the Manager of Philou which presently owns 125,000 shares of the Company’s Series B Preferred Stock. Mr. Ault and Mr. Horne serve as the Chief Executive Officer and Chief Financial Officer, respectively, of Ault & Company.

On ~~December 22, 2019,~~February 23, 2021, as part of a relocation benefit for our Executive Chairman, Milton C. Ault, III, related to the Company moving its corporate headquarters from Newport Beach, CA to Las Vegas, NV, the Company agreed to purchase Mr. Ault’s California residence for $2.7 million. The transaction was structured such that upon the closing of the subsequent sale of the residence, the Company shall have not recognized a gain or a loss on the transaction. During April 2021, the Company entered into ~~a securities purchase~~an agreement ~~with Ault & Company. Pursuant to~~for the ~~terms~~subsequent sale of the agreement, Ault & Company purchased an aggregate of 660,667 shares of the Company’s common stock for a total purchase price of $739,948, at a purchase price per share of $1.12, subject to the approval of the NYSE American. The NYSE American approved the purchaseresidence, which closed on ~~January 15, 2020.~~April 19, 2021.

~~On February 5, 2020, the~~ ~~Company~~ ~~issued an 8% convertible promissory note in the principal amount of $1,000,000 and a maturity date of August 5, 2020 to Ault & Company (see Note 20).~~

~~Ault & Company guaranteed the prompt and complete payment and performance of the Dominion Short-Term Promissory Note, which was purchased by Esousa, with a principal face amount of $2,900,000.~~

Milton C. Ault, III, the Company’s Chairman and Chief Executive Officer and MCKEA guaranteed the Company’s obligation to repay the 12% January ’20 short-term promissory note in the principal amount of $235,796. MCKEA is the majority member of Philou and Kristine L. Ault, a former director and the wife of Mr. Ault III, is the manager and owner of MCKEA.

~~DPW HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)~~

~~JUNE 30, 2020~~

24. SEGMENT, CUSTOMERS AND GEOGRAPHICAL INFORMATION

The Company has three reportable segments; see Note 1 for a brief description of the Company’s business.

The following data presents the revenues, expenditures and other operating data of the Company’s operating segments and presented in accordance with ASC No. 280. The total income (loss) from operations of the Company’s reportable segments is different than the Company’s consolidated income (loss) from operations due to Ault Global Holdings corporate expenses.

	Three Months ended June 30, 2020										Three Months ended March 31, 2021
	GWW		Coolisys		DP Lending			Total			GWW		Coolisys			Ault Alliance		Total
Revenue	$	4,189,135	$	1,245,601	$	—		$	5,434,736		$	6,350,019	$	1,382,349		$	172,143	$	7,904,511
Revenue, lending activities		—		—	($	33,756	)		(33,756	)
Revenue, lending and trading activities												—		—			5,210,222		5,210,222
Revenue, cryptocurrency mining												—		—			129,896		129,896
Total revenues	$	4,189,135	$	1,245,601	$	(33,756	)	$	5,400,980		$	6,350,019	$	1,382,349		$	5,512,261	$	13,244,629

Depreciation and
amortization expense	$	157,742	$	10,629	$	—		$	168,371		$	213,217	$	6,810		$	45,816	$	265,843

Loss from operations	$	88,255	$	64,491	$	(45,703	)	$	108,994		$	211,658	$	(200,332	)	$	4,033,013	$	4,044,339

Capital expenditures for
segment assets, as of
June 30, 2020	$	25,611	$	887	$	7 638		$	34,136
March 31, 2021											$	92,268	$	-		$	4,256,603	$	4,348,871

Identifiable assets as of
June 30, 2020	$	21,386,419	$	17,543,671	$	1,564,065		$	40,494,155
March 31, 2021											$	29,838,776	$	1,720,894		$	202,470,739	$	234,030,409

Three Months ended June 30, 2019
GWW Coolisys DP Lending Total
Revenue $ 3,256,394 $ 1,284,804 $ — $ 4,541,198
Revenue, cryptocurrency
mining — 256,116 — 256,116
Revenue, lending activities — — 189,621 189,621
Total revenues $ 3,256,394 $ 1,540,920 $ 189,621 $ 4,986,935
Depreciation and
amortization expense $ 187,604 $ 746,267 $ — $ 933,871
Loss from operations $ (235,178 ) $ (1,035,212 ) $ (34,005 ) $ (1,304,395 )
Capital expenditures for
segment assets, as of
June 30, 2019 $ 77,229 $ 6,771 $ — $ 84,000
Identifiable assets as of
June 30, 2019 $ 19,440,320 $ 28,079,982 $ 2,983,046 $ 50,503,348

Six Months ended June 30, 2020
GWW Coolisys DP Lending Total
Revenue $ 8,576,582 $ 2,427,436 $ — $ 11,004,018
Revenue, lending activities — — $ 2,396 2,396
Total revenues $ 8,576,582 $ 2,427,436 $ 2,396 $ 11,006,414
Depreciation and
amortization expense $ 307,756 $ 118,847 $ — $ 426,603
Loss from operations $ 184,011 $ (154,053 ) $ (81,416 ) $ (51,458 )
Capital expenditures for
segment assets, as of
June 30, 2020 $ 164,283 $ 1,556 $ 24,278 $ 190,117
Identifiable assets as of
June 30, 2020 $ 21,386,419 $ 17,543,671 $ 1,564,065 $ 40,494,155

~~DPW~~AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

~~JUNE 30, 2020~~March 31, 2021

	Six Months ended June 30, 2019											Three Months ended March 31, 2020
	GWW			Coolisys			DP Lending		Total			GWW		Coolisys			Ault Alliance			Total
Revenue	$	7,399,052		$	2,693,797		$	—	$	10,092,849		$	4,387,447	$	1,181,835		$	—		$	5,569,282
Revenue, cryptocurrency
mining		—			284,920			—		284,920
Revenue, lending activities		—			—			374,710		374,710
Revenue, lending and trading activities													—		—			36,152			36,152
Total revenues	$	7,399,052		$	2,978,717		$	374,710	$	10,752,479		$	4,387,447	$	1,181,835		$	36,152		$	5,605,434

Depreciation and
amortization expense	$	402,385		$	1,492,924		$	—	$	1,895,309		$	150,014	$	108,218		$	—		$	258,232

Loss from operations	$	(518,084	)	$	(2,138,213	)	$	41,290	$	(2,615,007	)	$	95,756	$	(218,544	)	$	(35,713	)	$	(158,501	)

Capital expenditures for
segment assets, as of
June 30, 2019	$	77,229		$	16,377		$	—	$	93,606
March 31, 2020												$	138,672	$	669		$	16,640		$	155,981

Identifiable assets as of
June 30, 2019	$	19,440,320		$	28,079,982		$	2,983,046	$	50,503,348
March 31, 2020												$	20,827,301	$	15,352,192		$	1,586,215		$	37,765,708

Concentration Risk:

The following tables provide the percentage of total revenues for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ attributable to a single customer from which 10% or more of total revenues are derived.

For the Three Months Ended For the Six Months Ended
June 30, 2020 June 30, 2020

Total Revenues Percentage of Total Revenues Percentage of
by Major Total Company by Major Total Company
Customers Revenues Customers Revenues
Customer A $ 1,427,134 26% $ 3,281,429 30%

	For the Three Months Ended
	March 31, 2021

		Total Revenues	Percentage of
		by Major	Total Company
		Customers	Revenues
Customer A	$	2,107,072	16	%

For the Three Months Ended For the Six Months Ended
June 30, 2019 June 30, 2019

Total Revenues Percentage of Total Revenues Percentage of
by Major Total Company by Major Total Company
Customers Revenues Customers Revenues
Customer A $ 1,429,455 29% $ 2,845,541 26%

	For the Three Months Ended
	March 31, 2020

		Total Revenues	Percentage of
		by Major	Total Company
		Customers	Revenues
Customer A	$	1,854,295	33	%

Revenue from Customer A is attributable to Enertec. Further, at ~~June 30, 2020,~~March 31, 2021, MTIX represented all the Company’s accounts and other receivable, related party.

25. SUBSEQUENT EVENTS

~~In accordance with FASB ASC 855-10,~~Extension of AVLP Loan Agreement

On April 13, 2021, the AVLP Loan Agreement was increased to up to $15,000,000 and extended to December 31, 2023. As of April 14, 2021, the Company has ~~analyzed its operations subsequent~~provided loans to ~~June 30, 2020,~~AVLP in the principal amount $13,924,136 and, ~~thru~~in addition to the ~~date~~12% convertible promissory notes, AVLP has issued to the Company warrants to purchase 27,848,272 shares of ~~this report being issued and has determined that it does not have any material subsequent events to disclose in these financial statements except~~AVLP common stock at an exercise price of $0.50 per share for ~~the following.~~a period of five years.

~~Esousa short-term promissory notes~~Issuance of Common Stock for Convertible Promissory Note

~~DPW~~On May 12, 2021, the Company issued 275,862 shares of Common Stock to Ault & Company, Inc. upon the conversion of $400,000 of principal on an 8% Convertible Promissory Note dated February 5, 2020.

AULT GLOBAL HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

~~JUNE 30, 2020~~March 31, 2021

~~On July 24, 2020, the Company issued to Esousa a 12% short-term promissory note in the aggregate principal amount~~Sale of ~~$1,125,000. The note has a term of two weeks.~~Naked Brand Group Stock

~~August '20 short-term promissory notes~~

~~On August 5, 2020, the Company issued to Esousa a secured 13% short-term promissory note in the aggregate principal amount of $2,000,000 and eighteen month warrants to purchase an aggregate of 729,927~~In April 22, 2021, DP Lending sold 47,058,824 shares of ~~the Company’s common stock at an exercise price~~Naked Brand Group Limited for gross proceeds of $3.01 per share of common stock. These notes have a term of three months. The Warrants are immediately exercisable once the Company obtains approval thereof by the NYSE American. The Warrants may be exercised via cashless exercise at the option$29.3 million. DP Lending remitted 99% of the ~~Investor. These warrants~~proceeds to ~~purchase common stock do not qualify to be treated as equity,~~the institutional investor and ~~accordingly, shall~~retained 1% or $293,000, which will be recorded as ~~a liability. The Company is required to present these instruments at fair value at each reporting date and any changes~~revenue in ~~fair values shall be recorded as an adjustment to earnings.~~April 2021.

~~Issuances of Common Stock for exchange of Debt~~

~~Between July 2020 and August 5, 2020 the Company issued to Esousa 4,910,000 shares of the Company’s common stock pursuant to the terms of the Master Exchange Agreement.~~

~~Issuances of Common Stock for Services~~

~~During August 2020, the Company issued 37,500 shares of its common stock as payment for services to its consultants. The shares were valued at $100,965, an average of $2.69 per share.~~

~~Failure to Satisfy a Continued Listing Rule~~

~~On July 24, 2020, the Company was notified by the NYSE American (the “~~~~Exchange~~~~”) that the Company has failed to comply with Section 1003(a)(ii) and (iii) of the Exchange’s Company Guide (the “~~~~Listing Standards~~”), which require that the Company maintain stockholders’ equity of no less than $6,000,000 because the Company has reported losses from continuing operations and/or net losses in five of its most recent fiscal years ended December 31, 2019. The Company had disclosed in its Form 10-Q filed for the fiscal period ended March 31, 2020 that its stockholders’ equity was approximately $2.5 million. Under the applicable NYSE American listing rules, the Company must by August 23, 2020 submit a compliance plan that demonstrates how it intends to regain compliance with the Listing Standards within 18 months of the receipt of the notice, or January 24, 2022.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In this quarterly report, the “Company,” “DPW Holdings,” “we,” “us” and “our” refer to ~~DPW~~Ault Global Holdings, Inc., a Delaware corporation, our wholly-owned subsidiaries, Gresham Worldwide, Inc., Coolisys Technologies, Corp, Ault Alliance, Inc., Digital Power Lending, LLC, Digital Farms, Inc., Gresham Power Electronics, Enertec Systems 2001 Ltd. and our majority owned subsidiary, Microphase Corporation.

Recent Developments

2021 ATM Offering

On January ~~7, 2020,~~22, 2021, we ~~formed Coolisys Technologies Corp. (“~~~~CTC~~”entered into an At-The-Market Issuance Sales Agreement, as amended on February 17, 2021 and thereafter on March 5, 2021 (the “2021 Sales Agreement”), with Ascendiant Capital Markets, LLC, or the sales agent, relating to the sale of shares of Common Stock offered by a prospectus supplement and the accompanying prospectus, as amended by the amendments to the sales agreement dated February 16, 2021 and March 5, 2021. In accordance with the terms of the 2021 Sales Agreement, we may offer and sell shares of Common Stock having an aggregate offering price of up to $200 million from time to time through the sales agent. As of March 5, 2021, we sold an aggregate of 21.6 million shares of Common Stock pursuant to the sales agreement for gross proceeds of $125 million.

Issuance of common stock for conversion of debt

During January 2021, principal and accrued interest of $200,000 and $16,000, respectively, on our debt securities was satisfied through the issuance of 183,214 shares of Common Stock. We recognized a loss on extinguishment of $234,000 as a result of this issuance.

Acquisition of Michigan Cloud Data Center

On January 29, 2021, Alliance Cloud Services, LLC, a majority-owned subsidiary of its wholly-owned subsidiary, Ault Alliance, closed on the acquisition of a 617,000 square foot energy-efficient facility located on a 34.5 acre site in ~~order~~southern Michigan for a purchase price of $3.9 million. The purchase price was paid by the Company’s own working capital.

Investment in Alzamend Neuro, Inc.

On March 12, 2021, we announced that its wholly owned subsidiary, DP Lending, entered into a securities purchase agreement with Alzamend, a related party, to ~~hold Digital Power Corporation which designs, develops, manufactures~~invest $10 million in Alzamend common stock and ~~sells high-grade customized~~warrants, subject to the achievement of certain milestones. We agreed to fund $4 million upon execution of the securities purchase agreement and ~~flexible power system solutions. Coolisys Technologies,~~to fund the balance upon Alzamend achieving certain milestones related to the U.S. Food and Drug Administration approval of Alzamend’s Investigational New Drug application and Phase 1a human clinical trials for Alzamend’s lithium based ionic cocrystal therapy, known as AL001. Under the securities purchase agreement, Alzamend has agreed to sell up to 6,666,667 shares of its common stock to DPL for $10 million, or $1.50 per share, and issue to DPL warrants to acquire up to 3,333,334 shares of Alzamend common stock with an exercise price of $3.00 per share. The transaction was approved by our independent directors after receiving a third-party valuation report of Alzamend.

Investment in Ault & Company, Inc. (“~~CTI~~~~”) is presently owned by Gresham Worldwide, Inc. (“~~~~GWW~~”)

$2.5 million 8% one year On February 25, 2021, Ault & Company, a related party, sold and ~~owns Microphase Corporation, Gresham Power Electronics and Enertec Systems. We may dispose of CTI~~issued an 8% Secured Promissory Note in the ~~future, leaving GWW as the direct owner~~principal amount of $2.5 million to us. The principal amount of the ~~three foregoing subsidiaries.~~Secured Promissory Note, plus any accrued and unpaid interest at a rate of 8% per annum, is due and payable on February 25, 2022.

Executive Chairman relocation benefit

On February ~~10, 2020, we entered into~~23, 2021, as part of a ~~Master Exchange Agreement (the “~~~~Master Exchange Agreement~~~~”) with Esousa Holdings, LLC (“~~~~Esousa~~~~” or the “~~~~Credito~~r”) that acquired approximately $4.2 million dollars in principal amount, plus accrued but unpaid interest, of certain promissory notes that had been previously issued by us to Dominion Capital, LLC, a Connecticut limited liability company (the “~~Dominion Note~~~~”) and the Canadian Special Opportunity Fund, LP (the “~~~~CSOF Note~~~~” and with the Dominion Note, the “~~~~Esousa Purchased Notes~~~~”) in separate transactions. The Creditor also agreed to purchase additional notes up to an additional principal amount, plus accrued but unpaid interest, of $3.5 million (the “~~~~Additional Notes~~~~” and collectively, with the Esousa Purchased Notes, the “~~~~Notes~~~~”). Pursuant to the Exchange Agreement, the Creditor has the unilateral right to acquire shares of the Company’s common stock (the “~~~~Exchange Shares~~~~”) in exchange~~relocation benefit for ~~the Notes, which Notes evidence an aggregate of up to approximately $7.7 million of indebtedness of the Company. In aggregate, we have issued to Esousa a total of 5,771,580 Exchange Shares.~~

~~Settlement of Derivative Litigation~~

~~On February 24, 2020, we entered into a definitive settlement agreement (the “~~~~Settlement Agreement~~~~”) that is intended to settle the previously disclosed derivative litigation captioned~~ ~~Ethan Young and Greg Young, Derivatively on Behalf of Nominal Defendant, DPW Holdings, Inc. v.~~our Executive Chairman, Milton C. Ault, III, ~~Amos Kohn, William B. Horne, Jeff Bentz, Mordechai Rosenberg, Robert O. Smith, and Kristine Ault and DPW Holdings, Inc., as~~related to our moving its corporate headquarters from Newport Beach, CA to Las Vegas, NV, we agreed to purchase Mr. Ault’s California residence for the ~~nominal defendant~~ ~~(Case No. 18-cv-6587) (as amended on March 11, 2019,~~appraised market value of the “~~Amended Complaint~~~~”) against~~property of $2.7 million. The transaction was structured such that upon the closing of the subsequent sale of the residence, the Company ~~and certain of its officers and directors pending in~~shall have not recognized a gain or a loss on the ~~United States District Court~~transaction. During April 2021, the Company entered into an agreement for the ~~Central District~~subsequent sale of ~~California (the “~~~~Court~~~~”). As previously disclosed,~~ the ~~Amended Complaint alleges violations including breaches~~residence, which closed on April 19, 2021.

Forgiveness of ~~fiduciary duties and unjust enrichment claims based on the previously pled transactions.~~Debt

On ~~April 15, 2020,~~January 11, 2021we received forgiveness of a loan under the ~~Court issued an Order (the “~~~~Order~~~~”) approving a Motion for Preliminary Approval of Settlement~~PPP in the ~~Derivative Action. On July 16, 2020, the Court issued an Order (the “~~~~Final Order~~~~”) approving a Motion for Final Approval~~principal amount of Settlement in the Derivative Action filed against DPW as a Nominal Defendant and its directors who served on its board of directors on July 31, 2018 who were not dismissed from the action at an earlier stage.$715,000.

~~On July 16, 2020, the Court entered a Judgment based upon the Final Order.~~Impact of Coronavirus on Our Operations

Under the terms of the Final Order, the Board shall adopt and/or maintain resolutions and amendments to committee charters and/or the Company’s bylaws to ensure adherence to certain corporate governance policies (collectively, the “~~Reforms~~”), which shall remain in effect for no less than five (5) years, subject to any of the following: (a) a determination by a majority of the independent directors that the Reforms are no longer in the best interest of the Company, including, but not limited to, due to circumstances making the Reform no longer applicable, feasible, or available on commercially reasonable terms, or (b) modifications which the Company reasonably believes are required by applicable law or regulation.

~~In connection with the Settlement Agreement, the parties have agreed upon a payment of attorneys’ fees in the amount of $600,000 payable by the Company’s Director & Officer liability insurance.~~ The ~~Settlement Agreement contains no admission of wrongdoing. The Company has always maintained and~~COVID-19 pandemic continues to ~~believe that it did not engage~~present significant business challenges in ~~any wrongdoing or otherwise commit any violation of federal or state securities laws or other laws.~~

~~Other Matters~~

2021. During the first quarter of ~~2020,~~2021, we ~~made the decision~~continued to ~~discontinue the operations~~experience impacts in each of ~~Digital Farms~~our business areas related to COVID-19, primarily in continued increased coronavirus-related costs, delays in supplier deliveries, impacts of travel restrictions, site access and I. AM. On March 16, 2020, to try and mitigate the spread of the novel coronavirus (“COVID-19”), San Diego County health officials issued orders mandating that all restaurants must end dine-in services. As a result of these temporary closures by the San Diego County health officialsquarantine restrictions, and the ~~deteriorating business conditions at both~~impacts of remote work and adjusted work schedules. During the first quarter, we continued to take measures to protect the health and safety of our ~~cryptocurrency mining~~employees, including measures to facilitate the provision of vaccines to our employees in line with state and ~~restaurant businesses, management concluded that discontinuing these operations was ultimately in~~local guidelines. We also continued to work with our ~~best interest. Although the Company has ceased operations at Digital Farms, since the assets~~customers and operations have not yet been abandoned, sold or distributed, these assets do not yet meet the requirement for presentation as discontinued operations. However, management determined that the permanent closing of the restaurant operations met the criteria for presentation as discontinued operations.suppliers to minimize disruptions.

~~In March 2020,~~Although the ~~World Health Organization declared~~COVID-19 pandemic did not have a significant impact on our financial results in the ~~outbreak~~first quarter of 2021, the ultimate impact of COVID-19 ~~as a~~on our operations and financial performance in future periods, including our ability to execute our programs in the expected timeframe, remains uncertain and will depend on future pandemic ~~which continues to spread throughout~~related developments, including the United States and the World. The Company is monitoring the outbreak of COVID-19 and the related business and travel restrictions and changes to behavior intended to reduce its spread, and its impact on operations, financial position, cash flows, inventory, supply chains, customer purchasing trends, customer payments, and the industry in general, in addition to the impact on its employees. Due to the rapid development and fluidity of this situation, the magnitude and duration of the pandemic, any potential subsequent waves of COVID-19 infection, the effectiveness, distribution and ~~its impact~~acceptance of COVID-19 vaccines, and related government actions to prevent and manage disease spread, all of which are uncertain and cannot be predicted. The long-term impacts of COVID-19 on ~~the Company's operations~~demand for our products and ~~liquidity is uncertain as of the date of this report.~~

~~However, the Company’s business has been disrupted and materially adversely affected by the recent outbreak of COVID-19. We~~services are ~~still assessing~~also difficult to predict but could negatively affect our ~~business operations and system supports and the impact COVID-19 may have on our~~future results and ~~financial condition, but there can be no assurance that this analysis will enable us~~business operations. For additional risks to ~~avoid part or all of any impact from~~ the ~~spread of~~corporation related to the COVID-19 ~~or its consequences, including downturns in business sentiment generally or in our sectors in particular.~~

~~Our operations are located in Alameda County, CA, Orange County, CA, Fairfield County, CT, the United Kingdom, Israel and members~~pandemic, see Item 1A, Risk Factors of our ~~senior management work in Seattle, WA and New York, NY.~~ ~~The Company has been following~~Annual Report on Form 10-K for the ~~recommendations of local health authorities to minimize exposure risk for its employees, including the temporary closures of its offices and having employees work remotely to the extent possible, which has to an extent adversely affected their efficiency.~~year ended December 31, 2020.

GENERAL

As a holding company, our business strategy is designed to increase shareholder value. Under this strategy, we are focused on managing and financially supporting our existing subsidiaries and partner companies, with the goal of pursuing monetization opportunities and maximizing the value returned to shareholders. We have, are and will consider initiatives including, among others: public offerings, the sale of individual partner companies, the sale of certain or all partner company interests in secondary market transactions, or a combination thereof, as well as other opportunities to maximize shareholder value. We anticipate returning value to shareholders after satisfying our debt obligations and working capital needs.

From time to time, we engage in discussions with other companies interested in our subsidiaries or partner companies, either in response to inquiries or as part of a process we initiate. To the extent we believe that a subsidiary partner company’s further growth and development can best be supported by a different ownership structure or if we otherwise believe it is in our shareholders’ best interests, we will seek to sell some or all of our position in the subsidiary or partner company. These sales may take the form of privately negotiated sales of stock or assets, mergers and acquisitions, public offerings of the subsidiary or partner company’s securities and, in the case of publicly traded partner companies, sales of their securities in the open market. Our plans may include taking subsidiaries or partner companies public through rights offerings and directed share subscription programs. We will continue to consider these (or similar) programs and the sale of certain subsidiary or partner company interests in secondary market transactions to maximize value for our shareholders.

Over the recent past we have provided capital and relevant expertise to fuel the growth of businesses in defense/aerospace, industrial, telecommunications, medical and textiles. We have provided capital to subsidiaries as well as partner companies in which we have an equity interest or may be actively involved, influencing development through board representation and management support.

We are a Delaware corporation with our corporate office located at ~~201 Shipyard Way, Suite E, Newport Beach, California 92663.~~11411 Southern Highlands Pkwy #240, Las Vegas, Nevada 89141. Our phone number is 949-444-5464 and our website address is ~~www.dpwholdings.com.~~www.aultglobal.com.

Results of Operations

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED ~~JUNE 30,~~MARCH 31, 2021 AND 2020 ~~AND 2019~~

The following table summarizes the results of our operations for the three months ended ~~June 30, 2020~~March 31, 2021 and ~~2019.~~2020.

	For the Three Months Ended						For the Three Months Ended
	June 30,						March 31,
	2020			2019			2021			2020

Revenue	$	5,434,736		$	4,541,198		$	7,904,511		$	5,569,282
Revenue, cryptocurrency mining		—			256,116			129,896			—
Revenue, lending activities		(33,756	)		189,621
Revenue, lending and trading activities								5,210,222			36,152
Total revenue		5,400,980			4,986,935			13,244,629			5,605,434
Cost of revenue		3,495,574			4,267,194			5,107,908			3,853,435
Gross profit		1,905,406			719,741			8,136,721			1,751,999
Total operating expenses		2,675,026			4,359,812			6,935,728			4,681,783
Loss from continuing operations		(769,620	)		(3,640,071	)
Income (loss) from continuing operations								1,200,993			(2,929,784	)
Interest income		35,936			911,537			36,923			320
Interest expense		(962,714	)		(532,255	)		(313,934	)		(1,086,163	)
Change in fair value of marketable equity securities		336,781			272,689			1,959,791			(365,359	)
Loss on extinguishment of debt		(11,620	)		—
Loss on issuance of warrants		—			(1,763,481	)
Realized gain on marketable securities								397,331			—
Gain (loss) on extinguishment of debt								481,533			(463,134	)
Change in fair value of warrant liability		(10,184	)		946,825			(678,769	)		4,411
Loss from continuing operations before income taxes		(1,381,421	)		(3,804,756	)
Income tax benefit		5,888			73,976
Net loss from continuing operations		(1,375,533	)		(3,730,780	)

Income (loss) from continuing operations before income taxes								3,083,868			(4,839,709	)
Income tax (expense) benefit								(5,901	)		5,905
Net income (loss) from continuing operations								3,077,967			(4,833,804	)
Net loss from discontinued operations, net of taxes		—			(328,117	)		—			(1,697,744	)
Net loss attributable to DPW Holdings		(1,375,533	)		(4,058,897	)
Net income (loss)								3,077,967			(6,531,548	)
Less: Net gain attributable to non-controlling interest								(1,080,586	)		—
Net income (loss) attributable to Ault Global Holdings								1,997,381			(6,531,548	)
Preferred dividends		(2,934	)		(5,284	)		(4,400	)		(4,460	)
Net loss available to common stockholders	$	(1,378,467	)	$	(4,064,181	)
Comprehensive loss
Loss available to common stockholders	$	(1,378,467	)	$	(4,064,181	)
Net income (loss) available to common stockholders							$	1,992,981		$	(6,536,008	)

Comprehensive income (loss)
Income (loss) available to common stockholders							$	1,992,981		$	(6,536,008	)
Other comprehensive income (loss)
Foreign currency translation adjustment		97,200			162,648			(92,694	)		(148,607	)
Net unrealized loss on derivative securities of related party		760,881			375,499
Other comprehensive loss		858,081			538,147
Total comprehensive loss	$	(520,386	)	$	(3,526,034	)
Net unrealized gain (loss) on derivative securities of related party								2,969,170			(1,242,094	)
Other comprehensive income (loss)								2,876,476			(1,390,701	)
Total comprehensive income (loss)							$	4,869,457		$	(7,926,709	)

Revenues

Revenues by segment for the three months ended March 31, 2021 and 2020 are as follows:

	For the Three Months Ended March 31,				Increase
	2021		2020		(Decrease)		%

GWW	$	6,350,019	$	4,387,447	$	1,962,572		45	%
Coolisys		1,382,349		1,181,835		200,514		17	%
Ault Alliance:
Revenue, cryptocurrency mining		129,896		—		129,896		-
Revenue, lending and trading activities		5,210,222		36,152		5,174,070		14312	%
Other		172,143		—		172,143		—
Total revenue	$	13,244,629	$	5,605,434	$	7,639,195		136	%

Our revenues increased by ~~$414,045,~~$7,639,195, or ~~8.3%~~136%, to ~~$5,400,980~~$13,244,629 for the three months ended ~~June 30, 2020,~~March 31, 2021, from ~~$4,986,935~~$5,605,434 for the three months ended ~~June 30, 2019. The increase from~~March 31, 2020.

GWW

GWW revenues increased by $2.0 million, or 45%, to $6.4 million for the three months ended ~~June 30, 2019, was caused by an~~March 31, 2021, from $4.4 million for the three months ended March 31, 2020. The increase in revenue from our Gresham Worldwide segment for customized solutions for the military markets ~~as we continue to experience~~reflected the benefit of capital that was allocated to our defense business ~~during~~based on the ~~second half~~overall improved capital structure of ~~2019. The increase~~the Company. GWW revenue in 2021 includes $1.8 million from Relec, which was acquired on November 30, 2020. Revenue from Enertec, which largely consists of revenue recognized over time, for the three months ended March 31, 2021 increased $133,000 or 5.8% from the ~~military markets was partially offset~~prior-year period.

Coolisys

Coolisys revenues increased by ~~a decrease in revenue~~$201,000, or 16%, to $1.4 million for the three months ended March 31, 2021, from ~~our commercial lending segment, attributed to a reduction in our loan portfolio and our decision to cease operations at~~$1.2 million for three months ended March 31, 2020.

Ault Alliance

Revenues from our cryptocurrency mining ~~operations.~~

~~Revenues,~~operations revenues increased by $130,000, or 100% from the three months ended March 31, 2020, as we resumed our cryptocurrency mining

In January 2018, we formed Digital Farms, Inc. (“Digital Farms”), then known as Super Crypto Mining, Inc. Digital Farms was established to operate our cryptocurrency business, which was pursuing a variety of digital currencies. During operations during the first quarter of ~~2020,~~2021, due to ~~deteriorating~~improved business ~~conditions in the~~conditions. Our decision to resume cryptocurrency mining ~~sector, we ceased~~ operations ~~at Digital Farms. The market prices of digital currencies have declined since the formation of Digital Farms~~in 2021 was based on several factors, which ~~due to power cost considerations, negatively~~had positively affected the number of active miners we ~~operated. These factors, coupled with a significant increase in~~operated, including the ~~difficulty~~market prices of ~~mining blocks of cryptocurrency, led to~~digital currencies, and favorable power costs available at our ~~decision to cease cryptocurrency mining operations. As a result, we did not generate any revenues~~Michigan data center.

Revenues from our ~~cryptocurrency operations during~~lending and trading activities increased to $5.2 million, for the three months ended ~~June 30, 2020.~~March 31, 2021, from $36,000 for the three months ended March 31, 2020 attributed to a significant allocation of capital from our recent equity financing transactions to our loan and investment portfolio. Under its business model, DP Lending generates revenue through origination fees charged to borrowers and interest generated from each loan. DP Lending may also generate income from appreciation of investments in marketable securities as well as any shares of common stock underlying convertible notes or warrants issued to DP Lending in any particular financing.

Gross ~~Margins~~margins

Gross margins increased to ~~35.3%~~61.2% for the three months ended ~~June 30, 2020~~March 31, 2021 compared to ~~14.4%~~31.3% for the three months ended ~~June 30, 2019. The Company’s~~March 31, 2020. Our gross margins have typically ranged between 33% and 37%, with slight variations depending on the overall composition of our revenue.

Our gross margins of ~~14.4%~~61.2% recognized during the three months ended ~~June 30, 2019,~~March 31, 2021, were impacted by the ~~negative~~favorable margins ~~at Digital Farms.~~from our lending and trading activities. Excluding the effects of ~~Digital Farms,~~margin from our lending and trading activities, our adjusted gross margins for the three months ended ~~June 30, 2019,~~March 31, 2021, would have been ~~28.9%~~36.1%, ~~slightly less than~~consistent with our historical ~~average as a result of lower revenues in our defense business to allocate manufacturing overhead during the quarter ended June 30, 2019~~average.

Engineering and ~~Product Development~~product development

Engineering and product development expenses ~~decreased~~increased by ~~$9,109~~$161,000 to ~~$462,159~~$602,000 for the three months ended ~~June 30, 2020,~~March 31, 2021, from ~~$471,268~~$441,000 for the three months ended ~~June 30, 2019.~~March 31, 2020. The ~~decrease~~increase in engineering and product development expenses is due to ~~various costs, none~~cost incurred at Coolisys related to the development of ~~which are significant individually.~~our electric vehicle charger products.

Selling and ~~Marketing~~marketing

Selling and marketing expenses were ~~$294,974~~$1.2 million for the three months ended ~~June 30, 2020,~~March 31, 2021, compared to ~~$382,184~~$338,000 for the three months ended ~~June 30, 2019, a decrease~~March 31, 2020, an increase of ~~$87,210. This decrease~~$903,000 or 267.1%. The increase was the result of ~~decreases~~increases in personnel costs directly attributed to ~~a reduction~~an increase in sales and marketing personnel and consultants primarily at ~~Coolisys, which designs, develops, manufactures~~Ault Alliance related to digital marketing through Tansocial and ~~sells customized and flexible power system solutions for the commercial markets.~~digital learning.

General and ~~Administrative~~administrative

General and administrative expenses were ~~$2,917,999~~$5.1 million for the three months ended ~~June 30, 2020,~~March 31, 2021, compared to ~~$3,510,839~~$2.9 million for the three months ended ~~June 30, 2019, a decrease~~March 31, 2020, an increase of ~~$592,840.~~$2.2 million. General and administrative expenses ~~decreased~~increased from the comparative prior period, mainly due to ~~lower stock compensation expense~~higher consulting, audit, legal and ~~cost reductions at Coolisys.~~insurance costs. In addition, we have increased our general and administrative costs related to our Michigan Data Center, operated by Alliance Cloud Services. General and administrative expenses in 2021 include $341,000 of costs from Relec, which was acquired on November 30, 2020.

Income (loss) from continuing operations

We recorded income from continuing operations of $1.2 million for the three months ended March 31, 2021, compared to an operating loss of $2.9 million for the three months ended March 31, 2020. The prior year period included a $1.0 million provision for credit losses. In addition, the improve in operating results is attributable to an increase in revenue and gross margins partially offset by the increase in general and administrative expenses.

Provision for ~~Credit Losses~~credit losses

Loans are generally carried at the amount of unpaid principal, adjusted for unearned loan fees and original issue discount,, which are amortized over the term of the loan using the effective interest rate method. Interest on loans is accrued based on the principal amounts outstanding. During the ~~year ended December 31, 2019~~ ~~we determined that our investment in the convertible promissory notes of AVLP were impaired. During the~~ three months ended ~~June 30,~~March 31, 2021 and 2020, we ~~determined that~~evaluated the ~~fair value~~collectability of both interest and principal for the convertible promissory notes in AVLP to determine whether there was ~~approximately $6,739,234, resulting in~~an impairment. As of March 31, 2020, based on information and events available at that time, primarily the value of the underlying conversion feature and recent economic events, we concluded that an impairment existed and, accordingly, we recorded a ~~decrease in our~~$1.0 million provision for credit ~~loss of $1,000,000.~~losses.

~~Loss from Continuing Operations~~Interest income

~~The Company recorded a loss from continuing operations of $769,620~~Interest income was $37,000 for the three months ended ~~June 30, 2020,~~March 31, 2021 compared to ~~an operating loss of $3,640,071~~$320 for the three months ended ~~June 30, 2019. The decrease in operating loss is mostly attributable to an increase in our gross margins and the decrease in general and administrative expenses.~~March 31, 2020.

Interest ~~Income~~expense

Interest ~~income~~expense was ~~$35,936~~$314,000 for the three months ended ~~June 30, 2020~~March 31, 2021 compared to ~~$911,537~~$1.1 million for the three months ended ~~June 30, 2019.~~March 31, 2020. The decrease in interest income for the three months ended June 30, 2020 is related to a decrease in interest income pursuant to the Loan and Security Agreement entered into on September 6, 2017, with AVLP, a related party. Due to the impaired status of the loan, no interest was recognized during the three months ended June 30, 2020.

~~Interest Expense~~

~~Interest expense was $962,714 for the three months ended June 30, 2020 compared to $532,255 for the three months ended June 30, 2019. The increase~~ in interest expense for the three months ended ~~June 30, 2020~~March 31, 2021 is primarily related to ~~an overall increase~~the decrease in our level of borrowings.

~~Loss on issuance of warrants~~

On March 29, 2019, we entered into an underwriting agreement (the “Offering”) pursuant to which on April 2, 2019, we sold 71,388 shares of our common stock, warrants to purchase 388,888 shares of our common stock and pre-funded warrants to purchase 317,500 shares of our common stock. We received net proceeds from the Offering of $6,204,717, after deducting underwriting discounts and commissions and offering expenses. We recognized a loss on issuance of warrants of $1,763,481 for the three months ended June 30, 2019, based upon the fair value of the warrants issued in our Offering in excess of the proceeds received from the Offering.

Change in fair value of warrant liability

During the three months ended ~~June 30, 2019,~~March 31, 2020, the fair value of the warrants that were issued during 2020 in ~~our Offering decreased~~a series of debt financings increased by ~~$946,825.~~$679,000. The fair value of these warrants is re-measured at each financial reporting period and immediately before exercise, with any changes in fair value recorded as change in fair value of warrant liability in the ~~Condensed~~ Consolidated Statements of Operations and Comprehensive ~~Loss.~~Income (Loss).

Change in fair value of marketable equity securities

Change in fair value of marketable equity securities was a gain of $2.0 million for the three months ended March 31, 2021 compared to a loss of $365,000 for the three months ended March 31, 2020.

Realized gain on marketable securities

Realized gain on marketable securities was $397,000 for the three months ended March 31, 2021.

Gain (loss) on extinguishment of debt

Gain on extinguishment of debt was $482,000 for the three months ended March 31, 2021 compared to a loss of $463,000 for the three months ended March 31, 2020. During the three months ended March 31, 2021, principal and accrued interest of $200,000 and $16,000, respectively, on our debt securities was satisfied through the issuance of 183,214 shares of our common stock. We recognized a loss on extinguishment of $234,000 as a result of this issuance of common stock based on the fair value of our common stock at the date of the exchange. The loss on extinguishment from the issuance of the 183,214 shares of our common stock was offset by the forgiveness of our Paycheck Protection Program loan in the principal amount of $715,000.

Net Loss from Discontinued Operations

~~During~~As a result of temporary closures of restaurants in San Diego County and the deteriorating business conditions at the Company’s restaurant businesses, during the first quarter of 2020, the Company concluded that discontinuing the operations of I.AM was ultimately in its best interest. Management determined that the permanent closing of the restaurant operations ~~at I. AM, which owned and operated the Prep Kitchen brand restaurants located in the San Diego area,~~ met the criteria for presentation as discontinued operations. Accordingly, the results of the restaurant operations are presented as discontinued operations in our consolidated statements of operations and comprehensive loss and are excluded from continuing operations for all periods presented. Additionally, on November 2, 2020, I.AM filed a voluntary petition for bankruptcy under Chapter 7 in the United States Bankruptcy Court in the Central District of California, Santa Ana Division, case number 8:20-bk-13076. As a result of I.AM’s bankruptcy filing on November 2, 2020, Ault Global ceded authority for managing the ~~permanent closing~~business to the Bankruptcy Court. For this reason, we concluded that Ault Global had lost control of I.AM, and no longer had significant influence over I.AM. Therefore, we deconsolidated I.AM effective with the filing of the ~~restaurants, we did not incur any additional costs during the three months ended June 30,~~Chapter 11 bankruptcy in November 2020.

Net ~~Loss~~income (loss)

For the foregoing reasons, our net ~~loss~~income for the three months ended ~~June 30, 2020,~~March 31, 2021, was ~~$1,375,533~~$3.1 million compared to a net loss of ~~$4,058,897~~$6.5 million for the three months ended ~~June 30, 2019.~~March 31, 2020. After taking into consideration preferred dividends of ~~$2,934~~$4,400 and ~~$5,284,~~$4,460, respectively, and a net gain attributable to non-controlling interest of $1.1 million for the three months ended March 31, 2021, the net ~~loss~~income available to common shareholders during the three months ended ~~June 30, 2020 and 2019,~~March 31, 2021 was ~~$1,378,467 and $4,064,181, respectively.~~

~~During~~$2.0 million compared to a net loss available to common shareholders of $6.5 million during the three months ended ~~June 30, 2020 and 2019, our reported net loss included non-cash charges of $440,703 and $1648,435, respectively. A summary of these non-cash charges is as follows:~~March 31, 2020.

For the Three Months Ended
June 30,
2020 2019
Interest expense – debt discount $ 230,458 $ 185,544
Stock-based compensation 20,178 370,995
Depreciation and amortization 168,371 933,871
Accretion of original issue discount on notes receivable – related party 7,500 (650,113 )
Accretion of original issue discount on notes receivable (399 ) (8,518 )
Fair value in excess of proceeds upon issuance of warrants — 1,763,481
Change in fair value of warrant liability 14,595 (946,825 )
Non-cash items included in net loss $ 440,703 $ 1,648,435

Other comprehensive income (loss)

Other comprehensive income was ~~$858,081 and $538,147, respectively,~~$4.9 million for the three months ended ~~June 30, 2020 and 2019.~~March 31, 2021, compared to other comprehensive loss of $7.9 million for the three months ended March 31, 2020. Other comprehensive income for the three months ended ~~June 30, 2020,~~March 31, 2021, which increased our equity, was primarily due to unrealized gains in the warrant derivative securities that we received as a result of our investment in Avalanche International, Corp., or AVLP, a related ~~party, and from fluctuations in exchange rates between the U.S. dollar and the Israeli Shekel.~~party. During the three months ended ~~June~~March 30, ~~2019, unrealized losses in the warrant derivative securities of AVLP was the primary component of other comprehensive income.~~

~~RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30,~~ 2020, ~~AND 2019~~

~~The following table summarizes the results of our operations for the six months ended June 30, 2020 and 2019.~~

For the Six Months Ended
June 30,
2020 2019

Revenue $ 11,004,018 $ 10,092,849
Revenue, cryptocurrency mining — 284,920
Revenue, lending activities 2,396 374,710
Total revenue 11,006,414 10,752,479
Cost of revenue 7,349,009 9,093,024
Gross profit 3,657,405 1,659,455
Total operating expenses 7,356,809 9,733,927
Loss from continuing operations (3,699,404 ) (8,074,472 )
Interest income 36,256 1,748,464
Interest expense (2,048,877 ) (2,631,007 )
Change in fair value of marketable equity securities (28,578 ) 156,647
Loss on extinguishment of debt (474,754 ) (807,784 )
Loss on issuance of warrants — (1,763,481 )
Change in fair value of warrant liability (5,773 ) 946,825
Loss from continuing operations before income taxes (6,221,130 ) (10,424,808 )
Income tax benefit 11,793 88,144
Net loss from continuing operations (6,209,337 ) (10,336,664 )
Net loss from discontinued operations, net of taxes (1,697,744 ) (433,259 )
Net loss (7,907,081 ) (10,769,923 )
Less: Net loss attributable to non-controlling interest — 32,416
Net loss attributable to DPW Holdings (7,907,081 ) (10,737,507 )
Preferred dividends (7,394 ) (7,153 )
Net loss available to common stockholders $ (7,914,475 ) $ (10,744,660 )
Comprehensive loss
Loss available to common stockholders $ (7,914,475 ) $ (10,744,660 )
Other comprehensive income (loss)
Foreign currency translation adjustment (51,407 )
192,505

Net unrealized loss on derivative securities of related party (481,213 ) (361,181 )
Other comprehensive income (loss) (532,620 )
(168,676
)
Total comprehensive loss $ (8,447,095 ) $
(10,913,336
)

~~Revenues~~

Our revenues increased by $253,935, or 2.4%, to $11,006,414 for the six months ended June 30, 2020, from $10,752,479 for the six months ended June 30, 2019. The increase from the six months ended June 30, 2019, was caused by an increase in revenue from customized solutions for the military markets as we continue to experience the benefit of capital that was allocated to our defense business during the second half of 2019. The increase in revenue from the military markets was partially offset by a decrease in revenue from our commercial lending segment, attributed to a reduction in our loan portfolio and our decision to cease operations at our cryptocurrency mining operations.

~~Revenues, cryptocurrency mining~~

During the six months ended June 30, 2020, we ceased operations at Digital Farms. As a result, we did not generate any revenues from our cryptocurrency operations during the six months ended June 30, 2020.

~~Gross Margins~~

Gross margins increased to 33.2% for the six months ended June 30, 2020 compared to 15.4% for the six months ended June 30, 2019. Our gross margins during the six months ended June 30, 2020 were affected by the negative margins on no revenues at Digital Farms. Excluding the effects of Digital Farms, then our adjusted gross margins for the three months ended June 30, 2020 would have been 34.1%, within our historical range of 33% and 37%.

Our gross margins of 15.4% recognized during the six months ended June 30, 2019, was also impacted by the negative margins at Digital Farms. Excluding the effects of Digital Farms, our adjusted gross margins for the three months ended June 30, 2019, would have been 28.9%, slightly less than our historical average as a result of lower revenues in our defense business to allocate manufacturing overhead during the six months ended June 30, 2019.

~~Engineering and Product Development~~

Engineering and product development expenses decreased by $24,161 to $902,785 for the six months ended June 30, 2020, from $926,649 for the six months ended June 30, 2019. The decrease in engineering and product development expenses is due to various costs, none of which are significant individually.

~~Selling and Marketing~~

Selling and marketing expenses were $633,137 for the six months ended June 30, 2020, compared to $799,806 for the six months ended June 30, 2019, a decrease of $166,669. This decrease was the result of decreases in personnel costs directly attributed to a reduction in sales and marketing personnel primarily at Coolisys.

~~General and Administrative~~

General and administrative expenses were $5,820,901 for the six months ended June 30, 2020, compared to $8,013,157 for the six months ended June 30, 2019, a decrease of $2,192,256. General and administrative expenses decreased from the comparative prior period, mainly due to lower stock compensation expense, other third party fees and travel related costs, which represented a significant decrease during the six months ended June 30, 2020 because of travel restrictions from COVID-19.

~~Loss from Continuing Operations~~

The Company recorded a loss from continuing operations of $3,699,404 for the six months ended June 30, 2020, compared to an operating loss of $8,074,472 for the six months ended June 30, 2019. The decrease in operating loss is mostly attributable to an increase in our gross margins and the decrease in general and administrative expenses.

~~Interest Income~~

Interest income was $36,256 for the six months ended June 30, 2020 compared to $1,748,464 for the six months ended June 30, 2019. The decrease in interest income for the six months ended June 30, 2020 is related to a decrease in interest income pursuant to the Loan and Security Agreement entered into on September 6, 2017, with AVLP, a related party. Due to the impaired status of the loan, no interest was recognized during the six months ended June 30, 2020.

~~Interest Expense~~

Interest expense was $2,048,877 for the six months ended June 30, 2020 compared to $2,631,007 for the six months ended June 30, 2019. The decrease in interest expense for the six months ended June 30, 2020 is primarily related to a reduction of amortization of debt discount resulting from original issue discount from the issuance of warrants in conjunction with the sale of debt instruments. During the six months ended June 30, 2020 and 2019, as a result of these issuances, non-cash interest expense of $1,129,711 and $1,676,609, respectively, was recorded from the amortization of debt discount and debt financing costs.

~~Loss on issuance of warrants~~

We recognized a loss on issuance of warrants of $1,763,481 for the six months ended June 30, 2019, based upon the fair value of the warrants issued in our Offering in excess of the proceeds received from the Offering.

~~Change in fair value of warrant liability~~

During the six months ended June 30, 2019, the fair value of the warrants that were issued in our Offering decreased by $946,825. The fair value of these warrants is re-measured at each financial reporting period and immediately before exercise, with any changes in fair value recorded as change in fair value of warrant liability in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

~~Net Loss from Discontinued Operations~~

During the first quarter of 2020, the permanent closing of the restaurant operations at I. AM met the criteria for presentation as discontinued operations. We determined that the assets of I. AM, primarily consisting of restaurant equipment and right-of-use assets related to I. AM’s operating leases, were impaired in the amount of $1,525,316. These impairment charges represented the majority of our net loss from discontinued operations of $1,697,744 during the six months ended June 30, 2020. The remaining increase in our net loss from discontinued operations is attributed to an overall decline in revenues at the restaurants and general inefficiencies during the final months of operations.

~~Net Loss~~

For the foregoing reasons, our net loss for the six months ended June 30, 2020, was $7,907,081 compared to a net loss of $10,769,923 for the six months ended June 30, 2019. After taking into consideration the loss attributable to the non-controlling interest of the minority shareholders of Microphase during the six months ended June 30, 2020 and 2019, of nil and $32,416, respectively, and preferred dividends of $7,394 and $7,153, respectively, the net loss available to common shareholders during the six months ended June 30, 2020 and 2019, was $7,914,475 and $10,744,660, respectively.

~~During the six months ended June 30, 2020 and 2019, our reported net loss included non-cash charges of $3,023,387 and $4,060,412, respectively. A summary of these non-cash charges is as follows:~~

For the Six Months Ended
June 30,
2020 2019
Interest expense – debt discount $ 907,480 $ 1,676,609
Stock-based compensation 142,941 992,283
Depreciation and amortization 426,603 1,895,309
Impairment of property and equipment 1,525,316 —
Accretion of original issue discount on notes receivable – related party 15,000 (1,262,422 )
Accretion of original issue discount on notes receivable (4,137 ) (58,023 )
Fair value in excess of proceeds upon issuance of warrants — 1,763,481
Change in fair value of warrant liability 10,184 (946,825 )
Non-cash items included in net loss $ 3,023,387 $ 4,060,412

~~Other comprehensive income (loss)~~

Other comprehensive loss was $532,620 and $168,676, respectively, for the six months ended June 30, 2020 and 2019. Other comprehensive loss for the six months ended June 30, 2020, which decreased our equity, was primarily due to unrealized losses in the warrant derivative securities that we received as a result of our investment in Avalanche International, Corp., or AVLP, a related party, and from fluctuations in exchange rates between the U.S. dollar and the Israeli Shekel. During the six months ended June 30, 2019, unrealized losses in the warrant derivative securities of AVLP was the primary component of other comprehensive loss.

LIQUIDITY AND CAPITAL RESOURCES

On ~~June 30, 2020,~~March 31, 2021, we had cash and cash equivalents of ~~$1,691,289.~~$107.8 million. This compares with cash and cash equivalents of ~~$483,383~~$18.7 million at December 31, ~~2019.~~2020. The increase in cash and cash equivalents was primarily due to cash provided by financing activities ~~with the remaining variance attributed~~related to ~~fluctuations in exchange rates between the U.S. dollar and the Israeli Shekel.~~our 2021 ATM offering.

Net cash used in continuing operating activities totaled ~~$2,257,804~~$14.2 million for the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, compared to ~~$4,669,720~~$1.1 million for the ~~six~~three months ended ~~June 30, 2019. During the six months ended June 30, 2020, the decrease in~~March 31, 2020. Cash used for operating activities included $8.9 million net cash used ~~in operating~~for marketable securities related to trading activities ~~compared~~related to the ~~six months ended June 30, 2019, was mainly due~~operations of DP Lending and $1.7 million cash used to ~~several non-cash charges, a decrease in amortization of debt discount of $769,129, stock-based compensation of $849,342,~~reduce accounts payable and ~~depreciation and amortization of $1,468,706. Additionally, we experienced significant variations in changes in operating assets and~~accrued liabilities. The most significant change was a decrease in cash provided from payments on accounts receivable, related party. During April 2019, we received a payment $2,676,219 and no payments were received during the six months ended June 30, 2020.

Net cash used in investing activities was ~~$151,770~~$16.7 million for the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, compared to ~~$1,607,194~~$102,000 for the ~~six~~three months ended ~~June 30, 2019. The decrease of~~March 31, 2020 and reflects the ~~net usage of cash from investing activities was primarily attributed to a decrease in related party investments.~~following transactions:

Acquisition of Michigan Cloud Data Center - On January 29, 2021, Alliance Cloud Services, LLC, a majority-owned subsidiary of its wholly-owned subsidiary, Ault Alliance, closed on the acquisition of a 617,000 square foot energy-efficient facility located on a 34.5 acre site in southern Michigan for a purchase price of $3.9 million.

Net cash provided by financing activities was $3,608,626 and $6,472,295 for the six months ended June 30, 2020 and 2019, respectively. Financing activities during the six months ended June 30, 2020, primarily related to proceeds from notes payable and short-term advances, related party. During the six months ended June 30, 2019, the financing activities primarily related to the sale of shares of common stock through our at-the-market offering, net proceeds from our debt financings and from advances on future receipts.

Investment in Alzamend Neuro, Inc. - On March 12, 2021, we announced that its wholly owned subsidiary, DP Lending, entered into a securities purchase agreement with Alzamend, a related party, to invest $10 million in Alzamend common stock and warrants, subject to the achievement of certain milestones. We agreed to fund $4 million upon execution of the securities purchase agreement and to fund the balance upon Alzamend achieving certain milestones related to the U.S. Food and Drug Administration approval of Alzamend’s Investigational New Drug application and Phase 1a human clinical trials for Alzamend’s lithium based ionic cocrystal therapy, known as AL001. Under the securities purchase agreement, Alzamend has agreed to sell up to 6,666,667 shares of its common stock to DPL for $10,000,000, or $1.50 per share, and issue to DPL warrants to acquire up to 3,333,334 shares of Alzamend common stock with an exercise price of $3.00 per share. The transaction was approved by our independent directors after receiving a third-party valuation report of Alzamend.

Investment in Ault & Company, Inc. - On February 25, 2021, Ault & Company, a related party, sold and issued an 8% Secured Promissory Note in the principal amount of $2.5 million to us. The principal amount of the Secured Promissory Note, plus any accrued and unpaid interest at a rate of 8% per annum, is due and payable on February 25, 2022.

Executive Chairman relocation benefit - On February 23, 2021, as part of a relocation benefit for our Executive Chairman, Milton C. Ault, III, related to the moving of our corporate headquarters from Newport Beach, CA to Las Vegas, NV, we agreed to purchase Mr. Ault’s California residence for the appraised market value of the property of $2.7 million. The house was subsequently sold during April 2021 and no gain or loss was recognized from sale of the property.

Historically, we have financed our operations principally through issuances of convertible debt, promissory notes and equity securities. During ~~2020, as reflected below,~~2021, we continued to successfully obtain additional equity financing. Net cash provided by financing activities was $119.9 million and ~~debt financing~~$1.3 million for the three months ended March 31, 2021 and ~~in restructuring existing debt.~~2020, respectively. Financing activities during the three months ended March 31, 2021, primarily related to proceeds from the 2021 ATM offering. On January 22, 2021, we entered into an At-The-Market Issuance Sales Agreement, as amended on February 17, 2021 and thereafter on March 5, 2021 (the “2021 Sales Agreement”) with Ascendiant Capital Markets, LLC, or the sales agent, relating to the sale of shares of Common Stock offered by a prospectus supplement and the accompanying prospectus, as amended by the amendments to the sales agreement dated February 16, 2021 and March 5, 2021. In accordance with the terms of the 2021 Sales Agreement, we may offer and sell shares of Common Stock having an aggregate offering price of up to $200 million from time to time through the sales agent. As of March 5, 2021, we sold an aggregate of 21.6 million shares of Common Stock pursuant to the sales agreement for gross proceeds of $125 million.

On February 10, 2020, we entered into a Master Exchange Agreement with Esousa, which acquired approximately $4.2 million dollars in principal amount, plus accrued but unpaid interest, of certain promissory notes that had been previously issued by the Company. Esousa also agreed to purchase additional notes up to an additional principal amount, plus accrued but unpaid interest, of $3.5 million (collectively, the “~~Notes~~”). Pursuant to the Master Exchange Agreement, Esousa has the unilateral right to acquire shares of the Company’s common stock in exchange for the Notes. We anticipate that Esousa will in the second exchange acquire an additional $3.5 million of certain promissory notes and that this will be completed during the quarter ended September 30, 2020.

We expect to continue incurring losses for the foreseeable future and will be required to raise additional capital to continue to support our working capital requirements. We have been successful over the last 12 months in raising capital to support our working capital requirements. We anticipate that we will continue to raise capital through public and private equity offerings, debt financings, or other means. If we are unable to secure additional capital, we may be required to curtailbelieve our current ~~operations~~cash on hand is sufficient to meet its operating and ~~take additional measures to reduce costs expenses, including reducing our workforce, eliminating outside consultants, ceasing or reducing our due diligence of potential future acquisitions, including~~capital requirements for at least the ~~associated legal fees, in order to conserve cash in order to sustain operations and meet our obligations.~~

~~Based on~~next twelve months from the ~~above, these matters raise substantial doubt about our ability to continue as a going concern and amounts reported in our~~date the financial statements ~~do not reflect the effects of any adjustments to the carrying amounts of our assets and liabilities should we be unable to continue as a going concern.~~for its fiscal quarter ended March 31, 2021 are issued.

CRITICAL ACCOUNTING POLICIES

Fair value of Financial Instruments

In ~~our Annual Report on Form 10-K~~accordance with ASC No. 820, Fair Value Measurements and Disclosures, fair value is defined as the exit price, or the amount that would be received for the ~~year ended~~sale of an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date.

The guidance also establishes a three-tier hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs include those that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability.

We assess the inputs used to measure fair value using the three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market.

The Company’s investments in AVLP, a related party controlled by Philou, an affiliate of the Company, consist of convertible promissory notes, derivative instruments and shares of AVLP common stock. As of December 31, ~~2019, we identified~~2020, the ~~critical accounting policies~~Company has provided loans to AVLP in the principal amount $13,924,136 and, in addition to the 12% convertible promissory notes, AVLP has issued to the Company warrants to purchase 27,858,272 shares of AVLP common stock at an exercise price of $0.50 per share for a period of five years. Management used both a market and income approach to quantify the carrying amount of the convertible notes, including credit risk. The market approach considered the fair value of AVLP’s common stock adjusted for a lack of marketability discount and the time value of money based on expectation as to the timing of a potential liquidity event which could affect ~~our more significant estimates~~the timing of a settlement of the convertible notes. The income approach was primarily based on a discounted cash flow analysis with assumptions regarding forecasted revenues, operating margins and a risk-adjusted discount rate to compute the net present value of such cash flows.

In determining the revenue and expense assumptions that were used in ~~preparing our consolidated financial statements. The basis~~the discounted cash flow analysis, the Company considered the disruptive nature of AVLP’s Multiplex Laser Surface Enhancement (“MLSE”) plasma-laser system, the size of the market for ~~developing~~ the ~~estimates~~treatment of textiles, customer demand, existing treatment methods, the performance capabilities of the MLSE system and ~~assumptions within our critical accounting policies is based on historical information~~the risk of business execution and known current trends and factors. The estimates and assumptions are evaluated on an ongoing basis and actual results have been within our expectations. We have not changed these policies from those previously disclosed in our Annual Report.the adoption of AVLP’s disruptive technology.

~~ITEM 3.~~

~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable for a smaller reporting company.

~~ITEM 4.~~

~~CONTROLS AND PROCEDURES~~

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to management, including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

Our principal executive officer and principal financial officer, with the assistance of other members of the Company's management, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Based upon our evaluation, our principal executive officer and principal financial officer has concluded that the Company’s internal control over financial reporting was not effective as of the end of the period covered by this Quarterly Report on Form 10-Q because the Company has not yet completed its remediation of the material weakness previously identified and disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, the end of its most recent fiscal year.

Specifically, management has determined that we do not have sufficient resources ~~to ensure an appropriate level of segregation of duties~~ in our accounting function, ~~we have inadequate controls~~which restricts our ability to ~~ensure that~~gather, analyze and properly review information ~~necessary~~related to ~~properly record transactions is adequately communicated~~financial reporting, including applying complex accounting principles relating to consolidation accounting and ~~we did~~fair value estimates, in a timely manner. In addition, due to our size and nature, segregation of all conflicting duties may not ~~design or maintain effective general information technology controls over certain information systems that are relevant to the mitigation of the risk pertaining to the misappropriation of assets.~~always be possible and may not be economically feasible.

A material weakness is a control deficiency or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

Planned Remediation

Management, in coordination with the input, oversight and support of our Audit Committee, has identified the measures below to strengthen our control environment and internal control over financial reporting.

On August 19, 2020, Mr. Horne resigned as our Chief Financial Officer and was appointed our President, and later became our Chief Executive Officer. Mr. Cragun, who had served as the Company’s Chief Accounting Officer since October 1, 2018, succeeded Mr. Horne as the Chief Financial Officer of the Company. In January 2018, we ~~hired a new Chief Financial Officer and~~ engaged the services of a financial accounting advisory firm. In ~~September 2018, we hired a Chief Accounting Officer and in~~ January 2019, we hired a Senior Vice President of Finance. ~~Finally, in~~In May 2019, we hired an Executive Vice President and General Counsel, who later became our President and General Counsel. ~~We have~~Finally, in January 2021, we hired a Director of Reporting. These individuals were tasked ~~these individuals~~ with expanding and monitoring the Company’s internal controls, to provide an additional level of review of complex financial issues and to assist with financial reporting. On October 7, 2019, we created an Executive Committee which is currently comprised of our Executive Chairman, Chief Executive Officer ~~Chief Financial Officer~~ and ~~Executive Vice President and General Counsel.~~President. The Executive Committee meets on a daily basis to address the Company’s critical needs and provides a forum to approve ~~transactions.~~transactions which are communicated to the Company’s Chief Financial Officer and Senior Vice President of Finance on a bi-weekly basis by our Chief Executive Officer, who also reviews all of the Company’s material transactions and reviews the financial performance of each of our subsidiaries. On December 16, 2020, in consultation with the Chairman of the Audit Committee, we engaged a professional services firm to review management’s assessment of compliance with Section 404 of the Sarbanes-Oxley Act of 2002 and to identify internal control process improvement opportunities. These changes have improved and simplified our internal processes and resulted in enhanced controls. While these changes have improved and simplified our internal processes and resulted in enhanced controls, these enhancements have not been operating for a sufficient period of time for management to conclude, through testing, that these controls are operating effectively. Further, as we continue to expand our internal accounting department, the Chairman of the Audit Committee shall perform the following:

~~assists~~assist with documentation and implementation of policies and procedures and monitoring of controls, and

~~reviews~~review all anticipated transactions that are not considered in the ordinary course of business to assist in the early identification of accounting issues and ensure that appropriate disclosures are made in the Company’s financial statements

We are currently working to improve and simplify our internal processes and implement enhanced controls, as discussed above, to address the material weaknesses in our internal control over financial reporting and to remedy the ineffectiveness of our disclosure controls and procedures. These material weaknesses will not be considered to be remediated until the applicable remediated controls are operating for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Despite the existence of these material weaknesses, ~~the Company believes~~we believe that the consolidated financial statements included in the period covered by this Quarterly Report on Form 10-Q fairly present, in all material respects, ~~the Company's~~our financial condition, results of operations and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles.

Changes in Internal Controls over Financial Reporting.

Except as detailed above, during the most recent fiscal quarter ~~2020~~2021 there were no significant changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II — OTHER INFORMATION

~~ITEM 1.~~

~~LEGAL PROCEEDINGS~~

~~Derivative Action~~

~~On July 31, 2018, Ethan Young and Greg Young (collectively, “~~~~Plaintiffs~~~~”) filed a stockholder derivative complaint (the “~~~~Complaint~~~~”) in the United States District Court for the Central District of California (the “~~~~Court~~~~”) against the Company as the nominal defendant, as well as its current directors and a former director, in action captioned,~~ Ethan Young and Greg Young, Derivatively on Behalf of Nominal Defendant, DPW Holdings, Inc. v. Milton C. Ault, III, Amos Kohn, William B. Horne, Jeff Bentz, Mordechai Rosenberg, Robert O. Smith, and Kristine Ault and DPW Holdings, Inc.~~, as the nominal defendant, Case No. 18-cv-6587 (the “~~~~Derivative Action~~~~”).~~

~~We moved to dismiss the Complaint, and on February 25, 2019, the Court granted our motion to dismiss, in its entirety, without prejudice, and also granted Plaintiffs leave to amend their Complaint.~~

~~On March 11, 2019, plaintiffs filed an amended complaint asserting violations of breaches of fiduciary duties and unjust enrichment claims based on the previously pled transactions (the “~~~~Amended Complaint~~~~”).~~

On March 25, 2019, we filed a motion to dismiss (the “Motion”) the Amended Complaint. On May 21, 2019, the Court granted in part, and denied in part, our Motion. On February 24, 2020, the Company entered into a definitive settlement agreement (the “~~Settlement Agreement~~~~”) with Plaintiffs to settle the claims asserted in the Amended Complaint.~~

~~On April 15, 2020, the Court issued an Order (the “~~~~Order~~~~”) approving a Motion for Preliminary Approval of Settlement in the Derivative Action. On July 16, 2020, the Court issued an Order (the~~ ~~“Final Order”~~) approving a Motion for Final Approval of Settlement in the Derivative Action filed against DPW as a Nominal Defendant and its directors who served on its board of directors on July 31, 2018 who were not dismissed from the action as a result of the Court’s partial grant of the Motion.

~~On July 16, 2020, the Court entered a Judgment based upon the Final Order.~~

In connection with the Settlement Agreement, the parties have agreed upon a payment of attorneys’ fees in the amount of $600,000, which sum shall be payable by our Director & Officer liability insurance. The Settlement Agreement contains no admission of wrongdoing.

Blockchain Mining Supply and Services, Ltd.

On November 28, 2018, Blockchain Mining Supply and Services, Ltd. (“Blockchain ~~Mining~~”Mining”) a vendor who sold computers to our subsidiary, filed a Complaint (the “~~Complaint~~”“Complaint”) in the United States District Court for the Southern District of New York against us and our subsidiary, Digital Farms, Inc. (f/k/a Super Crypto Mining, Inc.), in an action captioned Blockchain Mining Supply and Services, Ltd. v. Super Crypto Mining, Inc. and DPW Holdings, Inc., Case No. 18-cv-11099.

The Complaint asserts claims for breach of contract and promissory estoppel against ~~the~~ us and our subsidiary arising from the subsidiary’s alleged failure to honor its obligations under the purchase agreement. The Complaint seeks monetary damages in excess of $1,388,495, plus attorneys’ fees and costs.

~~We believe that these claims are without merit and intend~~The Company intends to vigorously defend ~~them.~~against the claims asserted against it in this action.

On April 13, 2020, we and our subsidiary, jointly filed a motion to dismiss the Complaint in its entirety as against us, and the promissory estoppel claim as against our subsidiary. On the same day, our subsidiary also filed a partial Answer to the Complaint in connection with the breach of contract claim.

On April 29, 2020, Blockchain Mining filed an amended complaint (the “~~Amended Complaint~~”“Amended Complaint”). The Amended Complaint asserts the same causes of action and seeks the same damages as the initial Complaint.

On May 13, 2020, we and our subsidiary, jointly filed a motion to dismiss the Amended Complaint in its entirety as against us, and the promissory estoppel claim as against of our subsidiary. On the same day, our subsidiary also filed a partial Answer to the Amended Complaint in connection with the breach of contract claim.

In its partial Answer, the Company’s subsidiary admitted to the validity of the contract at issue and also asserted numerous affirmative defenses concerning the proper calculation of damages.

On December 4, 2020, the Court issued an Order directing the Parties to engage in limited discovery (the “Limited Discovery”) which was completed on March 4, 2021. In connection therewith, the Court also denied Defendants’ Motion to Dismiss without prejudice.

Based on our assessment of the facts underlying the claims, the uncertainty of litigation, and the preliminary stage of the case, we cannot reasonably estimate the potential loss or range of loss that may result from this action. Notwithstanding, we have established a reserve in the amount of the unpaid portion of the purchase agreement. An unfavorable outcome may have a material adverse effect on our business, financial condition and results of operations.

Ding Gu (a/k/a Frank Gu) and Xiaodan Wang Litigation

On January 17, 2020, Ding Gu (a/k/a Frank Gu) (“Gu”Gu”) and Xiaodan Wang (“~~Wang~~”Wang” and with “Gu”“Gu” collectively, “~~Plaintiffs~~”“Plaintiffs”), filed a Complaint (the “~~Complaint~~”“Complaint”) in the Supreme Court of the State of New York, County of New York against us and our Chief Executive Officer, Milton C. Ault, III, in an action captioned Ding Gu (a/k/a Frank Gu) and Xiaodan Wang v. DPW Holdings, Inc. and Milton C. Ault III (a/k/a Milton Todd Ault III a/k/a Todd Ault), Index No. 650438/2020.

The Complaint asserts causes of action for declaratory judgment, specific performance, breach of contract, conversion, attorneys’ fees, permanent injunction, enforcement of Guaranty, unjust enrichment, money had and received, and fraud arising from: (i) a series of transactions entered into between Gu and us, as well as Gu and Ault, in or about May 2019; and (ii) a term sheet entered into between Plaintiffs and DPW, in or about July 2019. The Complaint seeks, among other things, monetary damages in excess of $1,100,000, plus a decree of specific performance directing DPW to deliver unrestricted shares of DPW’s common stock to Gu, plus attorneys’ fees and costs.

~~We believe that these claims are without merit and intend~~The Company intends to vigorously defend ~~them.~~against the claims asserted against it in this action.

On May 4, 2020, we and Ault jointly filed a motion to dismiss the Complaint in its entirety, with prejudice.

On July 24, 2020, Plaintiffs filed their opposition papers to our joint motion to dismiss.

The ~~return date for the~~ motion to dismiss has been fully briefed and is ~~presently set for August 25, 2020.~~currently pending before the court.

Based on our assessment of the facts underlying the above claims, the uncertainty of litigation, and the preliminary stage of the case, we cannot reasonably estimate the potential loss or range of loss that may result from this action. An unfavorable outcome may have a material adverse effect on our business, financial condition and results of operations.

Subpoena

The Company received a subpoena from the SEC for the voluntary production of documents. The Company is fully cooperating with this non-public, fact-finding inquiry and ~~Management~~managements believe that the Company has operated ~~our~~its business in compliance with all applicable laws. The subpoena expressly provides that the inquiry is not to be construed as an indication by the Commission or its staff that any violations of the federal securities laws have occurred, nor should it be considered a reflection upon any person, entity or security. However, there can be no assurance as to the outcome of this matter.

Other Litigation Matters

Certain of these outstanding matters include speculative, substantial or indeterminate monetary amounts. We record a liability when we believe that it is probable that a loss has been incurred and the amount can be reasonably estimated. If we determine that a loss is reasonably possible and the loss or range of loss can be estimated, we disclose the reasonably possible loss. We evaluate developments in our legal matters that could affect the amount of liability that has been previously accrued, and the matters and related reasonably possible losses disclosed, and make adjustments as appropriate. Significant judgment is required to determine both likelihood of there being and the estimated amount of a loss related to such matters.

With respect to our other outstanding matters, based on our current knowledge, we believe that the amount or range of reasonably possible loss will not, either individually or in aggregate, have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows. However, the outcome of such matters is inherently unpredictable and subject to significant uncertainties.

~~ITEM 1A.~~

~~RISK FACTORS~~

ITEM 1A. RISK FACTORS

The risks described in Part I, Item 1A, “Risk Factors,” in our ~~2019~~2020 Annual Report on Form 10-K, could materially and adversely affect our business, financial condition and results of operations, and the trading price of our common stock could decline. These risk factors do not identify all risks that we face - our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations. Due to risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. The Risk Factors section of our ~~2019~~2020 Annual Report on Form 10-K remains current in all material respects.

~~ITEM 2.~~

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~During March 2020, the Company issued 65,000 shares of its common stock as payment for services to its consultants. The shares were valued at $73,450, an average of $1.13 per share.~~

On December 23, 2019, the Company entered into a securities purchase agreement with Ault & Company. Pursuant to the terms of this agreement, Ault & Company agreed to purchase an aggregate of 660,667 shares of the Company’s common stock for a total purchase price of $739,948 at a purchase price per share of $1.12, subject to the approval of the NYSE American. The sale was authorized by the NYSE American on January 15, 2020. As a result, at the closing on January 15, 2020, Ault & Company became the beneficial owner of 666,945 shares of Common Stock.None

~~On March 4, 2020, pursuant to the terms of the securities purchase agreement for the sale of the Dominion short-term promissory note, the Company issued to Dominion 12,500 shares of its common stock.~~

~~During the quarter ended June 30, 2020, the Company issued 140,624 shares of its common stock in satisfaction of accrued liabilities of $155,547.~~

During the six months ended June 30, 2020, principal and accrued interest of $1,580,772 and $885,622, respectively, on the Company’s debt securities was satisfied through the issuance of 1,914,936 shares of the Company’s common stock. The Company recognized a loss on extinguishment of $222,232 as a result of these issuances.

~~The foregoing issuances were exempt from registration upon reliance of Section 4(a)(2).~~

~~ITEM 3.~~

~~DEFAULTS UPON SENIOR SECURITIES~~

~~None.~~ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

~~ITEM 4.~~

~~MINE SAFETY DISCLOSURES~~

ITEM 4. MINE SAFETY DISCLOSURES

None

~~ITEM 5.~~

~~OTHER INFORMATION~~

ITEM 5. OTHER INFORMATION

None

~~ITEM 6.~~

~~EXHIBITS~~

ITEM 6. EXHIBITS

Exhibit Number		Description
3.1		Certification of Incorporation, dated September 22, 2017. Incorporated herein by reference to the Current Report on Form 8-K filed on December 29, 2017 as Exhibit 3.1 thereto.
3.2		Bylaws, dated September 25, 2017. Incorporated herein by reference to the Current Report on Form 8-K filed on December 29, 2017 as Exhibit 3.2 thereto.
3.3		Certificate of Amendment to Certificate of Incorporation, dated January 2, 2019. Incorporated by reference to the Current Report on Form 8-K filed on January 3, 2019 as Exhibit 3.1 thereto.
3.4		Certificate of Amendment to Certificate of Incorporation (1-for-20 Reverse Stock Split of Common Stock), dated March 14, 2019. Incorporated herein by reference to the Current Report on Form 8-K filed on March 14, 2019 as Exhibit 3.1 thereto.
3.5		Certificate of Designations of Rights and Preferences of 10% Series A Cumulative Redeemable Perpetual Preferred Stock, dated September 13, 2018. Incorporated herein by reference to the Current Report on Form 8-K filed on September 14, 2018 as Exhibit 3.1 thereto.
3.6		Form of Certificate of Determination of Preferences, Rights and Limitations of Series B Convertible Preferred Stock, dated March 3, 2017. Incorporated by reference to the Current Report on Form 8-K filed on March 9, 2017 as Exhibit 3.1 thereto.
3.7		Certificate of Designations of Rights and Preferences of Series C Convertible Redeemable Preferred Stock, dated February 27, 2019. Incorporated herein by reference to the Current report on Form 8-K filed on February 28, 2019 as Exhibit 3.1 thereto.
3.8		~~Amended~~ Bylaws dated ~~October 4, 2019.~~August 13, 2020. Incorporated herein by reference to the Current report on Form 8-K filed on ~~October 7, 2019~~August 14, 2020 as Exhibit 3.1 thereto.
3.9		Agreement and Plan of Merger dated January 7, 2021 (changing the Company name to Ault Global Holdings, Inc.). Incorporated herein by reference to the Current Report on Form 8-K filed on January 19, 2021 as Exhibit 2.1 thereto.
10.1		At-The-Market Issuance Sales Agreement, dated January 22, 2021, with Ascendiant Capital Markets, LLC. Incorporated herein by reference to the Current Report on Form 8-K filed on January 25, 2021 as Exhibit 10.1 thereto.
10.2		Amendment No. 1 dated February 17, 2021 to At-The-Market Issuance Sales Agreement, dated January 22, 2021, with Ascendiant Capital Markets, LLC. Incorporated herein by reference to the Current Report on Form 8-K filed on February 17, 2021 as Exhibit 10.1 thereto.
10.3		Amendment No. 2 dated March 5, 2021 to At-The-Market Issuance Sales Agreement, dated January 22, 2021, with Ascendiant Capital Markets, LLC. Incorporated herein by reference to the Current Report on Form 8-K filed on March 5, 2021 as Exhibit 10.1 thereto.
31.1*		Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a)
31.2*		Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a)
32.1**		Certification of Chief Executive and Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

~~Filed herewith.~~

~~Furnished herewith.~~

** Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: ~~August 19, 2020~~May 24, 2021

		~~DPW~~AULT GLOBAL HOLDINGS, INC.

		By:	/s/ ~~Milton C. Ault, III~~William B. Horne
			~~Milton C. Ault, III~~William B. Horne
			Chief Executive Officer
			(Principal Executive Officer)


		By:	/s/ ~~William B. Horne~~Kenneth S. Cragun
			~~William B. Horne~~Kenneth S. Cragun
			Chief Financial Officer
			(Principal Accounting Officer)

1814

	For the Six Months Ended June 30,
	2020			2019

Cash flows from operating activities:
Net loss	$	(7,907,081	)	$	(10,769,923	)
Less: Net loss from discontinued operations		(1,697,744	)		(433,259	)
Net loss from continuing operations		(6,209,337	)		(10,336,664	)
Adjustments to reconcile net loss to net cash (used in) operating activities:
Depreciation		259,906			1,595,847
Amortization		166,697			299,462
Amortization of right-of-use assets		246,981			19,059
Interest expense – debt discount		907,480			1,676,609
Fair value in excess of proceeds upon issuance of warrants		—			1,763,481
Change in fair value of warrant liability		10,184			(946,825	)
Accretion of original issue discount on notes receivable – related party		15,000			(1,262,422	)
Accretion of original issue discount on notes receivable		(4,137	)		(58,023	)
Increase in accrued interest on notes receivable – related party		—			(464,114	)
Stock-based compensation		142,941			992,283
Realized losses on other investments		27,500			—
Realized (gains) losses on sale of digital currencies		—			(394	)
Realized (gains) losses on sale of marketable securities		(14,708	)		(86,741	)
Unrealized (gains) losses on marketable equity securities		(52,313	)		(231,608	)
Unrealized losses on equity securities – related party		64,639			(21,288	)
Unrealized losses on equity securities		73,077			(6,316	)
Changes in operating assets and liabilities:
Accounts receivable		198,620			(594,491	)
Accounts receivable, related party		—			2,648,798
Accrued revenue		33,829			68,999
Digital currencies		(14	)		(290,902	)
Inventories		(34,907	)		598,777
Prepaid expenses and other current assets		181,531			(53,576	)
Other assets		(39,418	)		(271,679	)
Accounts payable and accrued expenses		1,365,505			405,708
Accounts payable, related parties		(23,799	)		2,271
Other current liabilities		659,795			(158,201	)
Lease liabilities		(234,102	)		—

Net cash (used in) continuing operating activities		(2,259,050	)		(4,711,950	)
Net cash provided by (used in) discontinued operating activities		1,246			42,230
Net cash used in operating activities		(2,257,804	)		(4,669,720	)

Cash flows from investing activities:
Purchase of property and equipment		(190,117	)		(86,048	)
Investments – related party		(198,514	)		(1,027,847	)
Investments in warrants and common stock - related party		(10,367	)		(681,164	)
Sales of marketable equity securities		110,355			571,741
Proceeds from loans receivable		139,933			—
Investments in debt and equity securities		(3,060	)		(383,876	)

Net cash used in investing activities	$	(151,770	)	$	(1,607,194	)

	Marketable equity securities at June 30, 2020
				Gross unrealized		Gross realized
		Cost		gains (losses)		gains (losses)		Fair value
Common shares	$	327,378	$	268,935	$	—	$	596,313

	Marketable
	Equity Securities
Balance at January 1, 2020	$	639,647
Sales of marketable equity securities		(110,355	)
Realized gains on marketable equity securities		14,708
Unrealized losses on marketable equity securities		52,313
Balance at June 30, 2020	$	596,313

	Goodwill
Balance as of January 1, 2020	$	8,100,947
Effect of exchange rate changes		(14,224	)
Balance as of June 30, 2020	$	8,086,723

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Stock-based compensation from Plans	$	20,178	$	162,764	$	110,691	$	325,090
Stock-based compensation from issuances
outside of Plans		—		208,231		32,250		667,193
Total Stock-based compensation	$	20,178	$	370,995	$	142,941	$	992,283

Payments due by period
	2020 (remainder)	$	444,385
	2021		787,506
	2022		776,229
	2023		786,645
	2024		755,298
	Thereafter		2,233,700
	Total lease payments		5,783,763
	Less interest		(1,806,553	)
	Present value of lease liabilities	$	3,977,210

	Three Months ended June 30, 2019
	GWW			Coolisys			DP Lending			Total
Revenue	$	3,256,394		$	1,284,804		$	—		$	4,541,198
Revenue, cryptocurrency
mining		—			256,116			—			256,116
Revenue, lending activities		—			—			189,621			189,621
Total revenues	$	3,256,394		$	1,540,920		$	189,621		$	4,986,935
Depreciation and
amortization expense	$	187,604		$	746,267		$	—		$	933,871
Loss from operations	$	(235,178	)	$	(1,035,212	)	$	(34,005	)	$	(1,304,395	)
Capital expenditures for
segment assets, as of
June 30, 2019	$	77,229		$	6,771		$	—		$	84,000
Identifiable assets as of
June 30, 2019	$	19,440,320		$	28,079,982		$	2,983,046		$	50,503,348