10-Q

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 September 30, 2020

☐	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 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

Newport Beach, CA 92663

(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:

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 November 13, 2020 the registrant had outstanding 16,517,437 shares of common stock.

DPW HOLDINGS, INC.

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of September 30, 2020 (Unaudited) and December 31, 2019 (Audited)	F-1 – F-2
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2020 and 2019 (Unaudited)	F-3
	Condensed Consolidated Statements of Changes in Stockholders' Equity for the three and nine months ended September 30, 2020 and 2019 (Unaudited)	F-4 – F-7
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019 (Unaudited)	F-8 – F-9
	Notes to Condensed Consolidated Financial Statements (Unaudited)	F-10 – F-46
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	12
Item 4.	Controls and Procedures	12
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	13
Item 1A.	Risk Factors	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3.	Defaults Upon Senior Securities	16
Item 4.	Mine Safety Disclosures	16
Item 5.	Other Information	16
Item 6.	Exhibits	17

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, 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 November 16, 2020. 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 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 HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,		December 31,
	2020		2019
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,274,408	$	483,383
Marketable equity securities		386,476		639,647
Accounts receivable		3,028,754		2,438,254
Accounts and other receivable, related party		1,196,379		1,196,379
Accrued revenue		1,630,138		2,226,570
Inventories, net		2,672,873		2,481,511
Prepaid expenses and other current assets		2,044,605		1,324,161
Current assets held for sale		—		281,352
TOTAL CURRENT ASSETS		12,233,633		11,071,257
Intangible assets		2,959,056		3,206,988
Goodwill		8,122,437		8,100,947
Property and equipment, net		1,977,775		1,787,393
Right-of-use assets		4,130,760		4,177,590
Investments - related party		7,059,322		6,540,720
Investments in derivative liabilities and common stock - related party		3,338,266		2,128,224
Equity investments in private companies		261,767		261,767
Investment in limited partnership		1,869,000		1,969,000
Loans receivable		564,169		795,481
Other investments, related parties		810,000		832,500
Other assets		318,627		275,273
Noncurrent assets held for sale		—		1,603,268
TOTAL ASSETS	$	43,644,812	$	42,750,408
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	13,073,937	$	14,284,563
Accounts payable and accrued expenses, related party		38,569		64,604
Operating lease liability, current		514,910		484,819
Advances on future receipts		1,534,822		2,210,392
Short term advances		540,000		—
Short term advances, related party		92,141		1,409,331
Revolving credit facility		177,342		221,705
Notes payable, net		9,833,928		6,137,015
Notes payable, related parties		211,253		169,153
Convertible notes payable		392,044		2,100,990
Convertible notes payable, related party		400,000		—
Other current liabilities		5,502,023		1,545,210
Current liabilities held for sale		1,572,177		1,593,550
TOTAL CURRENT LIABILITIES		33,883,146		30,221,332

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

F-1

DPW HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

	September 30,			December 31,
	2020			2019
	(Unaudited)
LONG TERM LIABILITIES
Operating lease liability, non-current		3,683,355			3,726,493
Notes payable		352,032			482,624
Notes payable, related parties		51,916			115,164
Convertible notes payable		365,794			304,773
Noncurrent liabilities held for sale		786,815			951,072
TOTAL LIABILITIES		39,123,058			35,801,458
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 September 30, 2020 and December 31, 2019,
respectively (redemption amount and liquidation preference of $176,000
as of September 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 September 30, 2020 and December 31, 2019 (liquidation
preference of $1,250,000 at September 30, 2020 and December 31, 2019)
Class A Common Stock, $0.001 par value – 500,000,000 shares authorized;		11,473			3,318
11,473,410 and 3,318,390 shares issued and outstanding at September 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 September 30, 2020 and December 31, 2019
Additional paid-in capital		122,243,579			101,099,347
Accumulated deficit		(113,302,229	)		(88,650,465	)
Accumulated other comprehensive loss		(4,439,443	)		(5,511,624	)
TOTAL DPW HOLDINGS STOCKHOLDERS’ EQUITY		4,513,512			6,940,708
Non-controlling interest		8,242			8,242
TOTAL STOCKHOLDERS’ EQUITY		4,521,754			6,948,950
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	43,644,812		$	42,750,408

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

F-2

DPW HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
Revenue	$	5,705,100		$	4,968,440		$	16,709,118		$	15,061,289
Revenue, cryptocurrency mining		-			307,172			-			592,092
Revenue, lending activities		(29,536	)		69,217			(27,140	)		443,927
Total revenue		5,675,564			5,344,829			16,681,978			16,097,308
Cost of revenue		3,736,082			4,348,761			11,085,091			13,441,785
Gross profit		1,939,482			996,068			5,596,887			2,655,523
Operating expenses
Engineering and product development		468,838			481,902			1,371,623			1,408,848
Selling and marketing		259,649			331,107			892,786			1,130,913
General and administrative		2,835,940			3,554,043			8,656,841			11,567,180
Impairment of property and equipment		-			4,315,856			-			4,315,856
Gain on digital currency		(237	)		(951	)		(251	)		(6,933	)
Total operating expenses		3,564,190			8,681,957			10,920,999			18,415,864
Loss from continuing operations		(1,624,708	)		(7,685,889	)		(5,324,112	)		(15,760,341	)
Other income (expenses)
Interest income		102,397			898,646			138,653			2,647,110
Interest expense		(2,365,741	)		(2,954,843	)		(4,414,618	)		(5,585,850	)
Change in fair value of marketable equity securities		(29,318	)		(330,150	)		(57,896	)		(173,503	)
Loss on extinguishment of debt		(12,823,039	)		(155,448	)		(13,297,793	)		(963,232	)
Loss on issuance of warrants		-			-			-			(1,763,481	)
Change in fair value of warrant liability		-			165,840			(5,773	)		1,112,665
Total other expenses, net		(15,115,701	)		(2,375,955	)		(17,637,427	)		(4,726,291	)
Loss from continuing operations before income taxes		(16,740,409	)		(10,061,844	)		(22,961,539	)		(20,486,632	)
Income tax benefit		6,053			5,140			17,846			93,284
Net loss from continuing operations		(16,734,356	)		(10,056,704	)		(22,943,693	)		(20,393,348	)
Net loss from discontinued operations, net of taxes		0			(284,167	)		(1,697,744	)		(717,426	)
Net loss		(16,734,356	)		(10,340,871	)		(24,641,437	)		(21,110,774	)
Less: Net loss attributable to non-controlling interest		-			-			-			32,416
Net loss attributable to DPW Holdings		(16,734,356	)		(10,340,871	)		(24,641,437	)		(21,078,358	)
Preferred dividends		(2,933	)		(5,284	)		(10,327	)		(12,437	)
Net loss available to common stockholders	$	(16,737,289	)	$	(10,346,155	)	$	(24,651,764	)	$	(21,090,795	)
Basic and diluted net loss per common share:
Continuing operations	$	(1.69	)	$	(6.29	)	$	(3.40	)	$	(23.78	)
Discontinued operations		—			(0.18	)		(0.25	)		(0.84	)
Net loss per common share	$	(1.69	)	$	(6.47	)	$	(3.65	)	$	(24.62	)
Weighted average common shares outstanding, basic and diluted		9,878,980			1,599,306			6,758,864			856,689
Comprehensive loss
Loss available to common stockholders	$	(16,737,289	)	$	(10,346,155	)	$	(24,651,764	)	$	(21,090,795	)
Other comprehensive income (loss)
Foreign currency translation adjustment		43,554			67,166			(7,853	)		259,671
Net unrealized gain (loss) on derivative securities of related party		1,561,247			(1,152,480	)		1,080,034			(1,513,661	)
Other comprehensive income (loss)		1,604,801			(1,085,314	)		1,072,181			(1,253,990	)
Total comprehensive loss	$	(15,132,488	)	$	(11,431,469	)	$	(23,579,583	)	$	(22,344,785	)

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

F-3

DPW HOLDINGS, INC. AND SUBSIDIARIES

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

Three Months Ended September 30, 2020

															Accumulated
	Series A & B								Additional						Other					Total
	Preferred Stock				Common Stock				Paid-In			Accumulated			Comprehensive			Non-Controlling		Stockholders'
	Shares		Amount		Shares		Amount		Capital			Deficit			Loss			Interest		Equity
BALANCES, July 1, 2020		132,040	$	132		6,112,117	$	6,112	$	105,625,502		$	(96,564,940	)	$	(6,044,244	)	$	8,242	$	3,030,804
Stock based compensation:
Options		—		—		—		—		20,400			—			—			—		20,400
Common stock		—		—		37,500		37		109,088			—			—			—		109,125
Issuance of common stock for conversion
of debt		—		—		5,323,793		5,324		14,016,853			—			—			—		14,022,177
Beneficial conversion feature in connection
with convertible notes		—		—		—		—		15,039			—			—			—		15,039
Fair value of warrants issued in connection
with convertible notes		—				—		—		2,481,697			—			—			—		2,481,697
Cash for exchange fees and other financing costs		—		—		—		—		(25,000	)		—			—			—		(25,000	)
Comprehensive loss:
Net loss		—				—		—		—			(16,734,356	)		—			—		(16,734,356	)
Preferred dividends		—		—		—		—		—			(2,933	)		—			—		(2,933	)
Net unrealized gain on derivatives
in related party		—		—		—		—		—			—			1,561,247			—		1,561,247
Foreign currency translation adjustments		—		—		—		—		—			—			43,554			—		43,554
BALANCES, September 30, 2020		132,040	$	132		11,473,410	$	11,473	$	122,243,579		$	(113,302,229	)	$	(4,439,443	)	$	8,242	$	4,521,754

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

F-4

DPW HOLDINGS, INC. AND SUBSIDIARIES

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

Three Months Ended September 30, 2019

	Series A & B								Additional						Other					Total
	Preferred Stock				Common Stock				Paid-In			Accumulated			Comprehensive			Non-Controlling		Stockholders'
	Shares		Amount		Shares		Amount		Capital			Deficit			Loss			Interest		Equity
BALANCES, July 1, 2019		132,040	$	132		1,037,128	$	1,037	$	92,377,366		$	(66,465,775	)	$	(4,071,199	)	$	8,242	$	21,849,803
Stock based compensation:
Options		—		—		—		—		187,125			—			—			—		187,125
Common stock		—		—		20,000		20		51,980			—			—			—		52,000
Issuance of common stock for cash		—		—		1,140,330		1,141		4,415,624			—			—			—		4,416,765
Issuance of common stock for conversion
of debt		—		—		344,071		344		2,127,493			—			—			—		2,127,837
Beneficial conversion feature in connection
with convertible notes		—		—		—		—		633,004			—			—			—		633,004
Fair value of warrants issued in connection
with convertible notes		—		—		—		—		142,070			—			—			—		142,070
Cash for exchange fees and other financing costs		—		—		—		—		(206,759	)		—			—			—		(206,759	)
Loss on debt extinguishment		—		—		—		—		155,448			—			—			—		155,448
Comprehensive loss:
Net loss		—				—		—		—			(10,340,851	)		—			—		(10,340,851	)
Preferred dividends		—		—		—		—		—			(5,284	)		—			—		(5,284	)
Net unrealized gain on derivatives
in related party		—		—		—		—		—			—			(1,152,480	)		—		(1,152,480	)
Foreign currency translation adjustments		—		—		—		—		—			—			67,166			—		67,166
BALANCES, September 30, 2019		132,040	$	132		2,541,529	$	2,542	$	99,883,351		$	(76,811,910	)	$	(5,156,513	)	$	8,242	$	17,925,844

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

F-5

DPW HOLDINGS, INC. AND SUBSIDIARIES

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

Nine Months Ended September 30, 2020

															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, 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		—		—		—		—		60,534			—			—			—		60,534
Common stock		—		—		102,500		102		182,473			—			—			—		182,575
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		—		—		7,238,729		7,239		16,703,564			—			—			—		16,710,803
Beneficial conversion feature in connection
with convertible notes		—		—		—		—		81,621			—			—			—		81,621
Fair value of warrants issued in connection
with convertible notes		—		—		—		—		3,173,205			—			—			—		3,173,205
Cash for exchange fees and other financing costs		—		—		—		—		(25,000	)		—			—			—		(25,000	)
Comprehensive loss:
Net loss		—				—		—		—			(24,641,437	)		—			—		(24,641,437	)
Preferred dividends		—		—		—		—		—			(10,327	)		—			—		(10,327	)
Net unrealized loss on derivatives
in related party		—		—		—		—		—			—			1,080,034			—		1,080,034
Foreign currency translation adjustments		—		—		—		—		—			—			(7,853	)		—		(7,853	)
BALANCES, September 30, 2020		132,040	$	132		11,473,410	$	11,473	$	122,243,579		$	(113,302,229	)	$	(4,439,443	)	$	8,242	$	4,521,754

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

F-6

DPW HOLDINGS, INC. AND SUBSIDIARIES

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

Nine Months Ended September 30, 2019

															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, 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		—		—		—		—		681,079			—			—			—			681,079
Common stock		—		—		29,375		29		304,990			—			—			—			305,019
Issuance of common stock for cash		—		—		1,331,509		1,333		9,869,176			—			—			—			9,870,509
Issuance of common stock in payment of
accrued liabilities		—		—		9,375		9		108,514			—			—			—			108,523
Issuance of common stock for conversion
of debt		—		—		370,473		370		4,735,924			—			—			—			4,736,294
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		—		—		—		—		821,452			—			—			—			821,452
Fair value of warrants issued in connection
with convertible notes		—				—		—		200,518			—			—			—			200,518
Cash for exchange fees and other financing costs		—		—		—		—		(1,401,763	)		—			—			—			(1,401,763	)
Loss on debt extinguishment		—		—		—		—		155,448			—			—			—			155,448
Comprehensive loss:
Net loss		—				—		—		—			(21,078,358	)		—			—			(21,078,358	)
Preferred dividends		—		—		—		—		—			(12,437	)		—			—			(12,437	)
Net unrealized loss on derivatives
in related party		—		—		—		—		—			—			(1,513,661	)		—			(1,513,661	)
Foreign currency translation adjustments		—		—		—		—		—			—			259,671			—			259,671
Net loss attributable to non-controlling interest		—		—		—		—		—			—			—			(32,416	)		(32,416	)
BALANCES, September 30, 2019		132,040	$	132		2,541,529	$	2,542	$	99,883,351		$	(76,811,910	)	$	(5,156,513	)	$	8,242		$	17,925,844

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

F-7

DPW HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	For the Nine Months Ended September 30,
	2020			2019
Cash flows from operating activities:
Net loss	$	(24,641,437	)	$	(21,110,774	)
Less: Net loss from discontinued operations		(1,697,744	)		(717,426	)
Net loss from continuing operations		(22,943,693	)		(20,393,348	)
Adjustments to reconcile net loss to net cash (used in) operating activities:
Depreciation		357,083			2,392,937
Amortization		251,968			400,661
Amortization of right-of-use assets		46,830			10,563
Interest expense – debt discount		2,379,196			3,034,454
Fair value of warrants issued to extinguish debt		2,749,259			—
Fair value in excess of proceeds upon issuance of warrants		—			1,763,481
Change in fair value of warrant liability		—			(1,112,665	)
Accretion of original issue discount on notes receivable – related party		20,532			(1,869,778	)
Accretion of original issue discount on notes receivable		(4,538	)		(77,155	)
Increase in accrued interest on notes receivable – related party		—			(732,542	)
Stock-based compensation		272,466			1,354,062
Impairment of property and equipment		—			4,315,856
Realized losses on other investments		27,500			—
Realized (gains) losses on sale of digital currencies		—			(394	)
Realized (gains) losses on sale of marketable securities		(22,602	)		(86,741	)
Unrealized (gains) losses on marketable equity securities		132,106			(294,717	)
Unrealized losses on equity securities – related party		(25,176	)		371,970
Unrealized losses on equity securities		72,976			24,597
Changes in operating assets and liabilities:
Accounts receivable		(590,502	)		(398,222	)
Accounts receivable, related party		—			2,648,798
Accrued revenue		599,604			(41,760	)
Digital currencies		(14	)		(599,025	)
Inventories		(198,930	)		613,847
Prepaid expenses and other current assets		(750,069	)		(33,812	)
Other assets		(86,143	)		(433,013	)
Accounts payable and accrued expenses		11,988,091			1,155,024
Accounts payable, related parties		(26,035	)		4,526
Other current liabilities		407,910			(354,773	)
Lease liabilities		(13,047	)		16,216
Net cash (used in) continuing operating activities		(5,355,228	)		(8,320,953	)
Net cash provided by (used in) discontinued operating activities		1,246			62,205
Net cash used in operating activities		(5,353,982	)		(8,258,748	)
Cash flows from investing activities:
Purchase of property and equipment		(554,462	)		(137,263	)
Investments – related party		(516,634	)		(1,501,912	)
Investments in warrants and common stock - related party		(93,222	)		(1,102,619	)
Sales of marketable equity securities		143,667			571,741
Proceeds from loans receivable		139,933			—
Investments in debt and equity securities		(13,260	)		(504,393	)
Net cash used in investing activities	$	(893,978	)	$	(2,674,446	)

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

F-8

DPW HOLDINGS, INC. AND SUBSIDIARIES

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

	For the Nine Months Ended September 30,
	2020			2019
Cash flows from financing activities:
Gross proceeds from sales of common stock and warrants	$	—		$	15,945,371
Proceeds from issuance of Series A Convertible Preferred Stock		—			131,741
Financing cost in connection with sales of equity securities		(25,000	)		(1,401,764	)
Proceeds from warrant exercises		—			127,000
Proceeds from convertible notes payable		100,000			500,000
Proceeds from notes payable		7,122,434			4,752,918
Proceeds from short-term advances		570,000			—
Payments on short-term advances		(30,000	)		—
Proceeds from short-term advances – related party		653,124			625,500
Payments on short-term advances – related party		(230,366	)		—
Payments on notes payable		(289,012	)		(2,001,474	)
Payments on convertible notes payable		—			(7,079,547	)
Proceeds from advances on future receipts		—			941,804
Payments on advances on future receipts		(762,076	)		(1,365,435	)
Payments of preferred dividends		(10,327	)		(12,437	)
Payments on revolving credit facilities, net		(44,363	)		(80,445	)
Net cash provided by financing activities		7,054,414			11,083,232
Effect of exchange rate changes on cash and cash equivalents		(15,429	)		(165,125	)
Net increase in cash and cash equivalents		791,025			(15,087	)
Cash and cash equivalents at beginning of period		483,383			769,619
Cash and cash equivalents at end of period	$	1,274,408		$	754,532
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	100,939		$	1,850,946
Non-cash investing and financing activities:
Cancellation of convertible note payable into shares of common stock	$	16,710,803		$	4,736,295
Payment of accounts payable with digital currency	$	—		$	594,320
Issuance of common stock in payment of liability	$	228,701		$	108,521
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.

F-9

DPW HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited

SEPTEMBER 30, 2020

1. DESCRIPTION OF BUSINESS

DPW Holdings, Inc., a Delaware corporation (“DPW” or the “Company”), formerly known as Digital Power Corporation, 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 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 (“Enertec”), Digital Power Lending, LLC (“DP Lending”), Ault Alliance, Inc. (“Ault Alliance”), It’sLikeFasion.com, Inc. (“It’sLikeFashion”) and Digital Farms, Inc. (“Digital Farms”). The Company also has a controlling interest in Microphase Corporation (“Microphase”). 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 and digital learning through Ault Alliance.

During March 2020, the Company ceased operations at Digital Farms, the Company’s blockchain mining subsidiary, and I.AM, Inc. (“I.AM”). 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 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 the authorization provided by the Company’s stockholders at a Special Meeting 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 outstanding 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. As a result of the Second Stock Split, each forty shares of common stock issued and outstanding prior to the Second Stock Split were converted into one share of common stock. The Second Stock Split became effective in the State of Delaware on August 5, 2019. All share amounts in these financial statements have been updated to reflect these reverse stock splits.

2. LIQUIDITY, GOING CONCERN AND MANAGEMENT’S PLANS

The accompanying condensed consolidated financial statements have been prepared on the basis that the Company will continue as a going concern. As of September 30, 2020, the Company had cash and cash equivalents of $1,274,408, an accumulated deficit of $113,302,229 and negative working capital of $21,649,513. The Company has incurred recurring losses and reported net losses attributable to DPW Holdings for the nine months ended September 30, 2020 and 2019, totaling $24,641,437 and $21,078,358, respectively. In the past, the Company has financed its operations principally through issuances of convertible debt, promissory notes and equity securities. During 2020, the Company continued to successfully obtain additional equity and debt financing and restructured existing debt.

The Company expects to continue to incur losses for the foreseeable future and needs to raise additional capital to continue its business development initiatives and to support its working capital requirements. On February 10, 2020, the Company entered into a Master Exchange Agreement with Esousa Holdings, LLC, which 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 Company is unable to raise additional capital, which ability could be adversely affected by the outbreak of a novel coronavirus (“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 the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might become necessary should the Company be unable to continue as a going concern.

F-10

DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

Impact of Coronavirus on the Company’s Operations

On March 16, 2020, to try and mitigate the spread of the novel coronavirus, 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 officials and the deteriorating business conditions at both our cryptocurrency mining and restaurant businesses, management concluded that discontinuing these operations was ultimately in our best interest. Although we have 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. However, management determined that the permanent closing of the restaurant operations met the criteria for presentation as discontinued operations.

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic which continues to spread throughout the United States and the world. We are 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 our operations, financial position, cash flows, inventory, supply chains, customer purchasing trends, customer payments, and the industry in general, in addition to the impact on our employees. Due to the rapid development and fluidity of this situation, the magnitude and duration of the pandemic and its impact on our operations and liquidity is uncertain as of the date of this quarterly report.

Our business has been disrupted and materially adversely affected by the recent outbreak of COVID-19. We are still assessing our business operations and system supports and the impact COVID-19 may have on our results of operations and financial condition, but there can be no assurance that this analysis will enable us 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 our sectors in particular.

Our operations are located in Santa Clara County, CA, Orange County, CA, Fairfield County, CT, the United Kingdom and Israel, and members of our senior management work in Seattle, WA and New York, NY. We have been following the recommendations of local health authorities to minimize exposure risk for our employees, including the temporary closures of our 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’s corporate headquarters, located in Newport Beach, CA, remains closed to non-essential employees based on the occupancy and social distancing order from the Orange County Health Officer. Non-essential headquarters staff continues to work remotely utilizing secure remote access systems and technology infrastructure. The Company 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, located in Milpitas, CA, had largely returned to normal operations with adherence to guidelines published by the Santa Clara Public Health Department. Certain individuals deemed to be high risk may work remotely as required. Coolisys has experienced disruption in its supply chain as a result of the COVID-19 impact on its vendors.

F-11

DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

· Microphase, 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, England, continues to follow UK Government and Public Health England COVID-19 safety guidelines for businesses located in England, 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, located in Karmiel, Israel, has been granted a waiver by the Israeli government to remain open to complete key projects that impact national security. High risk employees of Enertec are permitted to work remotely.

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 for the year ended December 31, 2019, filed with the Securities and Exchange Commission on June 1, 2020. The condensed consolidated balance sheet as of December 31, 2019 was derived from the Company’s audited 2019 financial statements contained in the above referenced Form 10-K/A. Results of the three and nine months ended September 30, 2020, are not necessarily indicative of the results to be expected for the full year ending December 31, 2020.

Principles of Consolidation

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, Ault Alliance, It’sLikeFashion and Digital Farms and its majority-owned subsidiaries, Microphase and I.AM. All significant intercompany accounts and transactions have been eliminated in consolidation.

Accounting Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions. The Company's management believes that the estimates, judgments and assumptions used are reasonable 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 dates of the financial statements, and 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, carrying amounts of investments, carrying amounts 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.

F-12

DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

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 first quarter of 2020, based upon the deteriorating business conditions for restaurants in the San Diego County as result of the spread of COVID-19 and the decline in projected cash flows over the life of the restaurant long-lived assets, the Company performed an undiscounted cash flow test to determine if the restaurant equipment and right-of-use assets were impaired. The undiscounted cash flows were less than the carrying amount of the Company’s restaurant equipment and right-of-use assets and therefore, the carrying amount of the assets were compared to the fair value of the assets, and the Company determined that there were impairment charges to be recorded on the restaurant long-lived assets. Impairment charges for the nine months ended September 30, 2020 related to restaurant equipment were in an amount equal to the cost of the Company’s restaurant equipment, net of depreciation of $504,802 and the impairment related to the right-of-use assets attributed to the discontinued restaurant operations was the full carrying amount of $1,020,514. The restaurant-related impairment charges are included as a component of net loss from discontinued operations (see Note 4).

Revenue Recognition

The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects 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.

F-13

DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

The Company’s disaggregated revenues consist of the following for the nine months ended September 30, 2020 and 2019:

	Nine Months ended September 30, 2020
	GWW		Coolisys		Ault Alliance			Total
Primary Geographical Markets
North America	$	5,109,672	$	3,100,552	$	(27,140	)	$	8,183,084
Europe		694,478		288,282		-			982,760
Middle East		6,837,501		-		-			6,837,501
Other		264,226		414,407		-			678,633
	$	12,905,877	$	3,803,241	$	(27,140	)	$	16,681,978
Major Goods
RF/Microwave Filters	$	3,886,940	$	—	$	—		$	3,886,940
Detector logarithmic video amplifiers		1,318,547		—		—			1,318,547
Power Supply Units		—		3,803,241		—			3,803,241
Power Supply Systems		862,889		—		—			862,889
Healthcare diagnostic systems		784,689		—		—			784,689
Defense systems		6,052,812		—		—			6,052,812
Lending activities		—		—		(27,140	)		(27,140	)
	$	12,905,877	$	3,803,241	$	(27,140	)	$	16,681,978
Timing of Revenue Recognition
Goods transferred at a point in time	$	6,068,376	$	3,803,241	$	(27,140	)	$	9,844,477
Services transferred over time		6,837,501		—		—			6,837,501
	$	12,905,877	$	3,803,241	$	(27,140	)	$	16,681,978

	Nine Months ended September 30, 2019
	GWW		Coolisys		Ault Alliance		Total
Primary Geographical Markets
North America	$	2,703,803	$	4,590,840	$	443,927	$	7,738,570
Europe		6,341,396		16,804		—		6,358,200
Middle East		1,283,312		21,348		—		1,283,312
Other		447,786		269,440		—		717,226
	$	10,776,297	$	4,898,432	$	443,927	$	16,097,308
Major Goods
RF/Microwave filters	$	989,114	$	—	$	—	$	989,114
Detector logarithmic video amplifiers		473,150		—		—		473,150
Power supply units		3,194,843		4,306,340		—		7,501,183
Power supply systems		1,423,971		—		—		1,423,971
Healthcare diagnostic systems		1,260,700		—		—		1,260,700
Defense systems		3,413,171		—		—		3,413,171
Lending activities		—		—		443,927		443,927
Digital currency mining		—		592,092		—		592,092
	$	10,754,949	$	4,898,432	$	443,927	$	16,097,308
Timing of Revenue Recognition
Goods transferred at a point in time	$	5,944,177	$	4,898,432	$	443,927	$	11,286,536
Services transferred over time		4,810,772		—		—		4,810,772
	$	10,754,949	$	4,898,432	$	443,927	$	16,097,308

F-14

DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

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.

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 September 30, 2020, for the MLSE units was approximately $48 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

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.

F-15

DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

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 guidance also establishes a 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. 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 fair value of 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, 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 September 30, 2020
	Total		Level 1		Level 2		Level 3
Investments in convertible promissory note of AVLP – a related party	$	7,059,322	$	—	$	—	$	7,059,322
Investments in common stock and derivative instruments of AVLP – a related party		2,750,580		259,786	$	—		2,490,794
Investment in common stock and warrants of Alzamend – a related party		587,686		—		—		587,686
Investments in marketable equity securities		386,476		386,476		—		—
Investments in warrants of public companies		103		—		—		103
Total Investments	$	10,784,167	$	646,262	$	—	$	10,137,905

F-16

DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

	Fair Value Measurement at December 31, 2019
	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 common stock and derivative instruments of AVLP – a related party		1,569,286		238,602		—		1,330,684
Investment in common stock of Alzamend – a related party		558,938		—		—		558,938
Investments in marketable equity securities		639,647		639,647		—		—
Investments in warrants of public companies		9,174		—		—		9,174
Total Investments	$	9,317,765	$	878,249	$	—	$	8,439,516

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.

Net Loss per Share

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, 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 nine months ended September 30, 2020 and 2019. Anti-dilutive securities, which are convertible into or exercisable for the Company’s common stock, consist of the following at September 30, 2020 and 2019:

	September 30,
	2020		2019
Stock options		950		2,906
Warrants (1)		3,582,116		72,921
Convertible notes		1,396,419		349,486
Conversion of preferred stock		2,232		2,232
Total		4,981,717		427,545

⁽¹⁾ The Company has excluded 6,500 warrants issued in April 2019, which may be exercised by means of a cashless exercise into 6,500 shares of the Company’s common stock, in its anti-dilutive securities but included the warrants in its weighted average shares outstanding.

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 Adopted Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which will modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, including the removal of certain disclosure requirements. The amendments in ASU 2018-13 are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted the new disclosure requirements for the period ending March 31, 2020. The additional components of this release did not have a material impact on the Company’s consolidated financial statements.

F-17

DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 changes how entities will measure credit losses for most financial assets and other instruments that are not measured at fair value through net income. This update introduces the current expected credit loss (“CECL”) model, which will require an entity to measure credit losses for certain financial instruments and financial assets, including trade receivables. Under this update, on initial recognition and at each reporting period, an entity will be required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument. ASU 2016-13 is effective for public companies in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company has completed its evaluation process and the January 1, 2020 adoption did not have a material impact to the Company’s consolidated financial statements for the three and nine months ended September 30, 2020.

Recently Issued Accounting Standards

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. 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. Discontinued Operations

On March 16, 2020, to try and mitigate the spread of 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 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 condensed consolidated statements of operations and comprehensive loss and are excluded from continuing operations for all periods presented. In addition, the assets and liabilities of the restaurant operations are classified as held for sale in our condensed consolidated balance sheets for all periods presented.

F-18

DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

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

	September 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		322,125		229,574
Other current liabilities		461,738		482,375
Total current liabilities classified as held for sale		1,572,177		1,593,550
Long term liabilities
Operating lease liability, non-current		786,815		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 Nine Months Ended
	September 30,					September 30,
	2020		2019			2020			2019
Revenue	$	—	$	1,036,834		$	543,327		$	3,371,465
Cost of revenue		—		(293,765	)		(160,310	)		(908,256	)
Selling and marketing		—		(61,618	)		—			(162,268	)
General and administrative		—		(964,829	)		(555,445	)		(3,017,578	)
Impairment of property and equipment		—		—			(1,525,316	)		—
Interest expense		—		(789	)		—			(789	)
Loss from discontinued operations	$	—	$	(284,167	)	$	(1,697,744	)	$	(717,426	)

F-19

DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

5. Marketable Equity Securities

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

	Marketable equity securities at September 30, 2020
			Gross unrealized		Gross realized
	Cost		gains		gains (losses)		Fair value
Common shares	$	301,960	$	84,516	$	—	$	386,476

	Marketable equity securities at December 31, 2019
			Gross unrealized		Gross realized
	Cost		gains		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		(143,667	)
Realized gains on marketable equity securities		22,602
Unrealized losses on marketable equity securities		(132,106	)
Balance at September 30, 2020	$	386,476

At September 30, 2020 and December 31, 2019, the Company had invested in the marketable equity securities of certain publicly traded companies. During the three and nine months ended September 30, 2020, unrealized losses of $184,419 and $132,106, 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 September 30, 2020 and December 31, 2019 is a Level 1 measurement based on quoted prices in an active market.

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

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DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

6. PROPERTY AND EQUIPMENT, NET

At September 30, 2020 and December 31, 2019, property and equipment consist of:

	September 30,			December 31,
	2020			2019
Cryptocurrency machines and related equipment	$	567,216		$	567,216
Computer, software and related equipment		2,941,870			2,518,187
Office furniture and equipment		441,104			441,613
Leasehold improvements		1,246,301			1,230,407
		5,196,491			4,757,423
Accumulated depreciation and amortization		(3,218,716	)		(2,970,030	)
Property and equipment, net	$	1,977,775		$	1,787,393

Under the guidance of ASC 360, Impairment or Disposal of Long-lived Assets, a long-lived asset or asset group (including intangibles) will be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. During the first quarter of 2020, based upon the deteriorating business conditions for restaurants in the San Diego County as result of the spread of COVID-19 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, and the Company determined that there were impairment charges to be recorded on the restaurant equipment. Impairment charges for the three and nine months ended September 30, 2020 were in an amount equal to the cost of the Company’s restaurant equipment, net of depreciation of $504,802, and are included as a component of net loss from discontinued operations (see Note 4).

For the three and nine months ended September 30, 2020, depreciation expense amounted to $97,177 and $357,083 respectively. For the three and nine months ended September 30, 2019, depreciation expense amounted to $846,631 and $2,673,352, respectively.

7. INTANGIBLE ASSETS, NET

At September 30, 2020 and December 31, 2019 intangible assets consist of:

	September 30,			December 31,
	2020			2019
Trade name and trademark	$	1,039,307		$	1,039,307
Customer list		2,413,054			2,406,434
Domain name and other intangible assets		644,607			641,809
		4,096,968			4,087,550
Accumulated depreciation and amortization		(1,137,912	)		(880,562	)
Intangible assets, net	$	2,959,056		$	3,206,988

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 $85,271 and $251,968, respectively, for the three and nine months ended September 30, 2020 and $101,199 and $400,661, respectively, for the three and nine months ended September 30, 2019.

F-21

DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

8. GOODWILL

The Company’s goodwill relates to the acquisition of a controlling interest in Microphase on June 2, 2017 and the acquisition of Enertec on May 22, 2018. The following table summarizes the changes in our goodwill during the nine months ended September 30, 2020:

	Goodwill
Balance as of January 1, 2020	$	8,100,947
Effect of exchange rate changes		21,490
Balance as of September 30, 2020	$	8,122,437

9. INVESTMENTS – RELATED PARTIES

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

	September 30,			December 31,
	2020			2019
Investment in convertible promissory note of AVLP	$	10,153,661		$	9,595,079
Investment in convertible promissory note of Alzamend		50,000			—
Accrued interest in convertible promissory note of AVLP		2,025,475			2,025,475
Total investment in convertible promissory note of AVLP – Gross		12,229,136			11,620,554
Less: original issue discount		(9,904	)		—
Less: provision for loan losses		(5,159,910	)		(5,079,834	)
Total investment in convertible promissory note of AVLP and Alzamend		7,059,322			6,540,720
Investment in derivative instruments of AVLP		2,490,794			1,330,684
Investment in common stock of AVLP		259,786			238,602
Investment in common stock and warrants of Alzamend		587,686			558,938
Investment in derivative instruments and common stock of AVLP and Alzamend		3,338,266			2,128,224
Total investment in AVLP and Alzamend – Net	$	10,397,588		$	8,668,944
Investment in warrants and common stock of AVLP and Alzamend	$	3,338,266		$	2,128,224
Investment in convertible promissory note of AVLP and Alzamend		7,059,322			6,540,720
Total investment in AVLP and Alzamend – Net	$	10,397,588		$	8,668,944

F-22

DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

The following table summarizes the changes in our investments in AVLP and Alzamend during the nine months ended September 30, 2020:

	Investment in		Investment in
	warrants and		convertible		Total
	common stock		promissory		investment
	of AVLP and		note of AVLP		in AVLP and
	Alzamend		and Alzamend		Alzamend – Net
Balance at January 1, 2020	$	2,128,224	$	6,540,720	$	8,668,944
Investment in convertible promissory notes of AVLP		—		478,506		478,506
Investment in convertible promissory note of Alzamend		—		38,128		38,128
Investment in common stock of AVLP and Alzamend		12,884		—		12,884
Investment in warrants of Alzamend		11,872		—		11,872
Fair value of derivative instruments issued by AVLP		80,076		—		80,076
Unrealized loss in derivative instruments of AVLP		1,080,034		—		1,080,034
Unrealized loss in common stock of AVLP and Alzamend		25,176		—		25,176
Accretion of discount				1,968		1,968
Balance at September 30, 2020	$	3,338,266	$	7,059,322	$	10,397,588

Investments in AVLP

The Company’s investments in AVLP, a related party controlled by Philou Ventures, LLC, or Philou, an affiliate of the Company, consist of convertible promissory notes, derivative instruments and shares of AVLP common stock. At September 30, 2020, the Company has provided loans to AVLP in the principal amount $10,153,661 and, in addition to the 12% convertible promissory notes, AVLP has issued to the Company warrants to purchase 20,306,921 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 derivative financial instruments. At September 30, 2020 and December 31, 2019, the Company recorded a cumulative unrealized loss on its investment in warrants of AVLP of $3,284,222 and $4,364,256, respectively, 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 nine months ended September 30, 2020, the Company recognized, in other comprehensive loss, net unrealized gain on derivative securities of related party of $1,561,247 and $1,080,034, respectively, which compares with a net unrealized loss on derivative securities of related party of $1,152,480 and $1,513,661, respectively during the three and nine months ended September 30, 2019. 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 0.13% and 2.98%, was derived from the U.S. Treasury yield curve, matching the term of our investment, in effect at the measurement date. The volatility factor which ranged between 68.7% and 104.6% 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 nine months ended September 30, 2019, the Company recorded $614,856 and $1,892,278, respectively, of interest income for the discount accretion and  $268,428 and $732,542, respectively, of interest income from the contractual 12% rate provided for by the convertible promissory notes. During the nine months ended September 30, 2020, no interest income was recognized from the Company’s investment in AVLP.

F-23

DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 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 31, 2019. At September 30, 2020, the Company determined that the fair value of the convertible promissory notes in AVLP was approximately $7,059,322. 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 September 30, 2020. 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 nine months ended September 30, 2020 and year ended December 31, 2019, the Company acquired 5,000 shares of AVLP common stock for $1,274 and 91,000 shares of AVLP common stock for $53,032, respectively, in each case in the open market. At September 30, 2020, the closing market price of AVLP’s common stock was $0.26, an increase 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 September 30, 2020, the Company’s investment in AVLP common stock had an unrealized loss of $488,049.

In aggregate, the Company has 999,175 shares of AVLP common stock which represents 18.0% of AVLP’s outstanding shares of common stock. 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 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.

Investments in Alzamend

The Company’s investments in Alzamend, a related party, consist of a convertible promissory note, derivative instruments and shares of Alzamend common stock. At September 30, 2020, the Company has provided a loan to Alzamend in the principal amount $50,000 and, in addition to the 8% convertible promissory notes, Alzamend has issued to the Company warrants to purchase 16,667 shares of Alzamend common stock at an exercise price of $3.00 per share for a period of five years. The warrants were determined by the issuer to be derivative financial instruments. At September 30, 2020, the Company recorded a cumulative unrealized loss on its investment in warrants of Alzamend of $111, 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. The Company’s investment in Alzamend will be revalued on each balance sheet date. The fair value of the Company’s holdings in the Alzamend warrants was estimated using the Black-Scholes option-pricing method. The risk-free rate of 0.28% was derived from the U.S. Treasury yield curve, matching the term of our investment, in effect at the measurement date. The volatility factor of 103.7% was determined based on historical stock prices for similar 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 Alzamend at amortized cost, which represents the amount at which the convertible promissory notes were acquired, adjusted for accrued interest and accretion of the 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 nine months ended September 30, 2019, the Company recorded $1,968 of interest income for the discount accretion and $329 of interest income from the contractual 8% rate provided for by the convertible promissory notes.

F-24

DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

The Company evaluated the collectability of both interest and principal for the convertible promissory notes in Alzamend 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 no impairment existed at September 30, 2020.

During the nine months ended September 30, 2020 and year ended December 31, 2019, the Company also acquired 11,325 shares of Alzamend common stock for $9,060 and 372,625 shares of Alzamend common stock for $208,100, respectively. At September 30, 2020, the estimated fair value of Alzamend’s common stock was $1.50. The Company has determined that its investment in Alzamend marketable equity securities should be accounted for in accordance with ASC No. 820, Fair Value Measurements and Disclosures and based upon the estimated fair value of Alzamend common stock at September 30, 2020, the Company’s investment in Alzamend common stock had an unrealized gain of $358,765.

10. INVESTMENTS IN LIMITED PARTNERSHIP

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 September 30, 2020, the Company had invested an aggregate of $1,869,000 in the NY Partnership. The Company has no obligation to make any capital contributions until the hotel is open for business to the public.

11. OTHER INVESTMENTS, RELATED PARTIES

The Company’s other related party investments primarily consist of two investments.

MTIX, Ltd.

On December 5, 2017, the Company entered into an exchange agreement with WT Johnson pursuant to which the Company issued to WT Johnson two convertible promissory notes in the principal amounts 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.

During December 2017, the Company issued 750 shares of its common stock to WT Johnson & Sons upon the conversion of 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 amount of $2,668,266 from MTIX and cancelled Note B. At September 30, 2020 and December 31, 2019, the Company has valued the note receivable at $600,000, the carrying amount of Note A. The Company will recognize the remainder of the amount due from MTIX upon payment of the promissory note by MTIX.

Israeli Property

During the year ended December 31, 2017, 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 to the seller 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 agreement 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.

F-25

DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

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 nine months ended September 30, 2020 and 2019, the Company recognized $7,500 and $22,500, respectively, in amortization expense. At September 30, 2020 and December 31, 2019, the unamortized balance of the Israeli Property was $210,000 and $232,500, respectively. If Mr. Kohn is not employed by the Company, the Company shall have the right to demand that Ms. Kohn purchase the Company’s remaining interest in the Property that was not subject to vesting for the fair market value of such unvested Property interest.

12. 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 September 30, 2020, an aggregate of 6,668 of the Company’s options are still available for future grant.

During the nine months ended September 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 nine months ended September 30, 2020 and 2019, the Company also issued 102,500 and 29,375, respectively, shares of common stock to its consultants and service providers. The grant date fair value of these shares amounted to $182,575 and $338,619 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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

The options outstanding as of September 30, 2020, 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	919	5.19	$537.96	566	$533.08
$1,208 - $1,352	31	2.88	$1,339.20	31	$1,339.20
$480 - $1,352	950	5.11	$564.32	597	$575.23
Issuances outside of Plans
$1.79	850,000	9.97	$1.79	0	$0.00
Total Options
$480 - 1,856	850,950	9.96	$2.42	597	$575.23

On September 30, 2020 and December 31, 2019, the aggregate intrinsic value of stock options that were outstanding was $187,000 and $0, respectively. and exercisable. On September 30, 2020 and December 31, 2019, there was no aggregate intrinsic value of stock options that were 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

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 nine months ended September 30, 2020 and 2019, is comprised as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Stock-based compensation from Plans	$	202,975	$	206,289	$	272,466	$	531,379
Stock-based compensation from issuances
outside of Plans		-		155,490		-		822,683
Total Stock-based compensation	$	202,975	$	361,779	$	272,466	$	1,354,062

A summary of option activity under the Company's stock option plans as of September 30, 2020, and changes during the nine 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, 2019		103,105			1,388		$	636.47		6.33	$	0
Restricted stock awards		(96,875	)		—
Forfeited		438			(438	)	$	793.14
September 30, 2020		6,668			950		$	564.32		5.11	$	0

As of September 30, 2020, there was $147,418 of unrecognized compensation cost related to non-vested stock-based compensation arrangements granted under the Plans. That cost is expected to be recognized over a weighted average period of 1.81 years.

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DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

During the nine months ended September 30, 2020, the Company estimated the fair value of stock options granted using the Black-Scholes option pricing model with the following weighted average assumptions:

	Nine Months Ended
	September 30, 2020
Weighted average risk-free interest rate	0.280%
Weighted average life (in years)	5.7
Volatility	100.3% — 100.5%
Expected dividend yield	0%
Weighted average grant-date fair value per share of options granted	$1.38

13. WARRANTS 

During the nine months ended September 30, 2020, the Company issued warrants to purchase an aggregate of 3,509,598 shares of common stock at an average exercise price of $1.39 per share.

(i) On February 20, 2020, pursuant to the Master Exchange Agreement, the Company issued warrants to purchase an aggregate of 1,700,361 shares of common stock at an average exercise price equal to $1.43 per share of common stock (see Note 17).

(ii) During the nine months ended September 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).

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DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

The following table summarizes information about common stock warrants outstanding at September 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	3.50	$	-		6,500	$	-
$	0.88		281,250	4.52	$	0.88		281,250	$	0.88
$	1.07		400,000	4.66	$	1.07		400,000	$	1.07
$	1.14		144,928	4.44	$	1.14		144,928	$	1.14
$	1.16		95,238	4.65	$	1.16		95,238	$	1.16
$	1.17		157,143	4.53	$	1.17		157,143	$	1.17
$	1.19		277,778	4.41	$	1.19		277,778	$	1.19
$	1.21		90,909	4.56	$	1.21		90,909	$	1.21
$	1.43		1,700,361	4.36	$	1.43		1,700,361	$	1.43
$	2.43		361,991	1.16	$	2.43		361,991	$	2.43
$	8.00		397	1.09	$	8.00		397	$	8.00
$	8.80		25,000	3.75	$	8.80		25,000	$	8.80
$	12.00		12,500	3.61	$	12.00		12,500	$	12.00
$	19.80		15,555	3.50	$	19.80		15,555	$	19.80
$	440.00		355	2.11	$	440.00		355	$	440.00
$	480.00		94	2.58	$	480.00		94	$	480.00
$	528.00		186	2.09	$	528.00		186	$	528.00
$	560.00		2,657	2.12	$	560.00		2,657	$	560.00
$	600.00		170	1.62	$	600.00		170	$	600.00
$	640.00		200	1.57	$	640.00		200	$	640.00
$	752.00		9,614	2.62	$	752.00		9,614	$	752.00
$	800.00		350	2.19	$	800.00		350	$	800.00
$	880.00		947	0.92	$	880.00		947	$	880.00
$	920.00		2,126	2.49	$	920.00		2,126	$	920.00
$	1,040.00		1,243	2.54	$	1,040.00		1,243	$	1,040.00
$	1,760.00		781	2.31	$	1,760.00		781	$	1,760.00
$	1,800.00		140	2.32	$	1,800.00		140	$	1,800.00
$	2,000.00		203	2.32	$	2,000.00		203	$	2,000.00
$	0.88 - $2,000.00		3,588,616	4.09	$	5.91		3,588,616	$	5.91

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.

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DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

The Company utilized the Black-Scholes option pricing model and the assumptions used during the nine months ended September 30, 2020 and 2019:

	Nine Months Ended
	September 30, 2020		September 30, 2019
Weighted average risk free interest rate		0.17% — 1.38%		1.75% — 2.28%
Weighted average life (in years)		1.42 — 5		5.0
Volatility		86.3% — 103.1%		85.5% —87.5%
Expected dividend yield		0%		0%
Weighted average grant-date fair value per share of warrants granted	$	1.39	$	10.34

14. OTHER CURRENT LIABILITIES

Other current liabilities at September 30, 2020 and December 31, 2019 consist of:

	September, 30		December 31,
	2020		2019
Accrued payroll and payroll taxes	$	1,594,038	$	1,237,054
Warrant liability		3,561,067		9,364
Warranty liability		86,070		80,412
Other accrued expenses		260,848		218,380
	$	5,502,023	$	1,545,210

15. LEASES

We have operating leases for office space. Our leases have remaining lease terms of 1 month to 10.8 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 September 30, 2020:

	September 30, 2020
Operating right-of-use assets	$	4,130,760
Operating lease liability - current		514,910
Operating lease liability - non-current		3,683,355

The components of lease expenses for the nine months ended September 30, 2020, were as follows:

	Nine Months Ended
	September 30, 2020
Operating lease cost	$	695,456
Short-term lease cost		-
Variable lease cost		106,927

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DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

The following tables provides a summary of other information related to leases for the nine months ended September 30, 2020:

	September 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	762,356
Right-of-use assets obtained in exchange for new operating lease liabilities	$	-
Weighted-average remaining lease term - operating leases		7.4 years
Weighted-average discount rate - operating leases		10%

The Company determined that using a discount rate of 10% 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 September 30, 2020, are as follows:

Payments due by period
2020 (remainder)	$	247,790
2021		880,914
2022		872,599
2023		895,200
2024		857,368
Thereafter		2,233,700
Total lease payments		5,987,571
Less interest		(1,789,306	)
Present value of lease liabilities	$	4,198,265

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 nine months ended September 30, 2020, the Company made payments of $762,076 on the outstanding balance. The Company is in default on its payment obligations on these Agreements on Future Receipts.

F-31

DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

17. NOTES PAYABLE

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

	September 30,			December 31,
	2020			2019
Esousa purchased notes	$	431,668		$	2,828,323
Esousa additional purchased notes		1,772,700			632,000
Esousa short-term promissory notes		4,850,000			—
June '20 short-term promissory notes		800,000			—
Other short-term notes payable		1,182,401			1,050,339
Notes payable to Wells Fargo		189,037			290,560
Note payable to Dept. of Economic and Community Development		204,813			229,096
Paycheck Protection Program Loans		1,162,302			—
SBA Economic Injury Disaster Loan		150,000			—
Short term bank credit		1,423,724			1,622,337
Total notes payable		12,166,645			6,652,655
Less:
Unamortized debt discounts		(1,980,685	)		(29,348	)
Unamortized financing cost		—			(3,668	)
Total notes payable, net of financing cost	$	10,185,960		$	6,619,639
Less: current portion		(9,833,928	)		(6,137,015	)
Notes payable – long-term portion	$	352,032		$	482,624

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 the Company to Dominion Capital LLC (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 and during the three months ended September 30, 2020, Esousa acquired $2,240,015 in principal amount, plus accrued but unpaid interest, of certain additional promissory notes that had been previously issued by us (the “Esousa Additional Purchased 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 when the Creditor exchanged a portion of 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”) began July 8, 2020 when the Company received stockholder approval at a special meeting thereof for the Exchange of the Esousa Additional Purchased Notes for the Company’s common stock, and subsequently, authorization from the NYSE American (together, the “Required Approvals”).

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DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

The Exchange Agreement provides for two pricing periods, the first of which commenced after the date on which the Creditor received the Exchange Shares pursuant to the Initial Exchange and ended on the date that was 90 days after receipt thereof, 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 became exercisable in July 2020. In connection therewith, the Company 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. Since the Creditor did not purchase all of the additional notes, the Company has the option to acquire a portion of the warrants from the Creditor for an aggregate price of $1.00. Consequently, at September 30, 2020, the option represented the right to acquire 132,236 of the warrants from the Creditor. Therefore, only 1,700,360 options are deemed outstanding at September 30, 2020.

The Company computed the fair value of the 1,700,360 warrants using the Black-Scholes option pricing model and, as a result of this calculation, recorded a loss on extinguishment in the amount of $2,713,874 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 0.23% to 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% to 100.82% was determined based on historical stock prices of similar technology companies.

During the nine months ended September 30, 2020, the Company issued to the investor an aggregate of 5,771,580 shares of the Company’s common stock upon the exchange of principal and interest in the amount of $2,396,655 and $1,536,064, respectively. A loss on extinguishment of $10,548,535 was recognized on the issuances of common stock based on the fair value of the Company’s common stock at the date of the exchanges.

Esousa short-term promissory notes

During the nine months ended September 30, 2020, the Company issued to Esousa 12% short-term promissory notes in the aggregate principal amount of $2,000,000 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.

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 on the estimated fair value of the warrants. During the nine months ended September 30, 2020, the entire amount of debt discount was amortized as non-cash interest expense. 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 and subsequently obtained approval by the NYSE American to issue such shares.

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DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

Between August 2020 and September 2020, the Company also received $2,850,000 in loans from Esousa pursuant to which the Company agreed to issue unsecured short-term promissory notes with interest rates of 13% and 14% and warrants with terms of approximately one and a half years to purchase an aggregate of 1,154,927 shares of the Company’s common stock at an average exercise price of $2.71 per share of common stock. Both the notes and warrants were executed subsequent to September 30, 2020 (see Note 25). The notes have a term of three months from the date the Company received the proceeds. The warrants are immediately exercisable if the Company receives stockholder approval at an annual meeting of stockholders to be held on December 30, 2020, and subsequently, authorization from the NYSE American. The warrants may be exercised via cashless exercise at the option of the Investor. These warrants to purchase common stock do not qualify to be treated as equity, and accordingly, were recorded as a liability. The Company is required to present these instruments at fair value at each reporting date and any changes in fair values shall be recorded as an adjustment to earnings.

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 $2,727,085 based on the estimated fair value of the warrants. During the nine months ended September 30, 2020, non-cash interest expense of $1,190,706 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 rate of 0.17% 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 104.56% was determined based on historical stock prices of similar technology companies.

June ‘20 short-term promissory notes

On June 26, 2020, the Company issued to several institutional investors unsecured 12% short-term promissory notes in the aggregate principal amount of $800,000 and seventeen month warrants to purchase an aggregate of 361,991 shares of the Company’s common stock at an exercise price of $2.43 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 of the Investor. These warrants to purchase common stock do not qualify to be treated as equity, and accordingly, were recorded as a liability. The Company is required to present these instruments at fair value at each reporting date and any changes in fair values shall be recorded as an adjustment to earnings.

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.

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DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 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 September 30, 2020 and December 31, 2019, are comprised of the following:

	September 30,			December 31,
	2020			2019
Notes payable, related parties	$	263,169		$	284,317
Less: current portion		(211,253	)		(169,153	)
Notes payable, related parties – long-term portion	$	51,916		$	115,164

Microphase is a party to several notes payable agreements with six of its past officers, employees and their family members. As of September 30, 2020, the aggregate outstanding balance pursuant to these notes payable agreements, inclusive of $38,569 of accrued interest, was $301,738, with annual interest rates ranging between 3.00% and 6.00%.

19. CONVERTIBLE NOTES

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

	September 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% November 2019 convertible promissory note		—			350,000
12% August 2020 convertible promissory note		330,000			—
April 2020 convertible promissory note		100,000			—
Total convertible notes payable		1,090,000			2,760,990
Less:
Unamortized debt discounts		(332,162	)		(355,227	)
Total convertible notes payable, net of financing cost	$	757,838		$	2,405,763
Less: current portion		(392,044	)		(2,100,990	)
Convertible notes payable, net of financing cost – long-term portion	$	365,794		$	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 nine months ended September 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.

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DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 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. These two notes were issued upon the exchange of the 12% Convertible Promissory 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. During the three months ended September 30, 2020, Esousa purchased the 12% promissory note in the principal amount of $585,919 from the institutional investor (See Note 17).

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 a 12% 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 became convertible into the Company’s common stock commencing June 30, 2020 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 exercise of the warrant is subject to approval of the NYSE American. During the three months ended September 30, 2020, Esousa purchased both the Exchanged Note and the Convertible Note from the institutional investor (See Note 17).

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.

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DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

At the time of issuance of the Ault & Company Convertible Note, the closing price of the Company’s common stock was in excess of the 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, Debt (“ASC 470”). At issuance, the intrinsic value of the BCF totaled $68,966, 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 resulting in a contingent BCF. The Company received stockholder approval on July 8, 2020. On August 20, 2020, the Company issued 413,793 shares of its common stock upon the conversion of $600,000 in principal.

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 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.

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DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

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.

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 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 to vigorously defend them.

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”). 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.

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”) 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.

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 to vigorously defend them.

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

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DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

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

The motion to dismiss was returnable before the Court on November 17, 2020. The Court is fully briefed and motion is 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 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.

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 $4.1 million of such debt obligations and entered into settlement agreements for the remaining amount of approximately $70,000 which is included within future receipts obligations in the accompanying consolidated balance sheet at September 30, 2020. The Company also recorded approximately $400,000 of trade liabilities for a judgment settled in favor of a trade creditor as of September 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 $200,000. 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 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. 

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DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

22. STOCKHOLDERS’ EQUITY

Preferred Stock

The Company is authorized to issue 25,000,000 shares of Preferred Stock $0.001 par value. The Board has designated 1,000,000 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 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 September 30, 2020, 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 the nine months ended September 30, 2020, the Company issued 102,500 shares of its common stock as payment for services to its consultants. The shares were valued at $182,575, an average of $1.78 per share.

Issuance of common stock in payment of short term advances, related party

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.

Issuance of common stock in payment of accrued liability

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 (see Note 17).

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.

Issuance of common stock for conversion of debt

During the nine months ended September 30, 2020, principal and accrued interest of $3,977,427 and $1,584,841, respectively, on the Company’s debt securities was satisfied through the issuance of 6,824,936 shares of the Company’s common stock. The Company recognized a loss on extinguishment of $10,548,535 as a result of these issuances.

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DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

On August 20, 2020, the Company issued 413,793 shares of its common stock upon the conversion of $600,000 in principal on the Ault & Company Convertible Note.

23. RELATED PARTY TRANSACTIONS

a. 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, 2021, subject to the terms and conditions stated in the Loan Agreement, including that the Company having available funds to grant such credit. At September 30, 2020, the Company has provided loans to AVLP in the principal amount $10,153,661 and, in addition to the 12% convertible promissory notes, AVLP has issued to the Company warrants to purchase 20,306,921 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 September 30, 2020, the Company recorded contractual interest receivable attributed to the AVLP Loan Agreement of $2,025,475 and a provision for loan losses of $5,159,910.

During the nine months ended September 30, 2020 and the 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 September 30, 2020, the Company’s investment in AVLP common stock had an unrealized loss of $488,049.

Philou is AVLP’s controlling shareholder. Mr. Ault is Chairman of AVLP’s Board of Directors and the Chairman of the Board. Mr. William B. Horne is the Chief Financial Officer and a director of AVLP and the Company.

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

b. At September 30, 2020, the Company has provided a loan to Alzamend in the principal amount $50,000 and, in addition to the 8% convertible promissory notes, Alzamend has issued to the Company warrants to purchase 16,667 shares of Alzamend common stock at an exercise price of $3.00 per share for a period of five years. The warrants were determined by the issuer to be derivative financial instruments. At September 30, 2020, the Company recorded a cumulative unrealized loss on its investment in warrants of Alzamend of $111, 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. 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 nine months ended September 30, 2019, the Company recorded $1,968 of interest income for the discount accretion and $329 of interest income from the contractual 8% rate provided for by the convertible promissory notes.

During the nine months ended September 30, 2020 and year ended December 31, 2019, the Company also acquired 11,325 shares of Alzamend common stock for $9,060 and 372,625 shares of Alzamend common stock for $208,100, respectively. At September 30, 2020, the estimated fair value of Alzamend ’s common stock was $1.50. The Company has determined that its investment in Alzamend marketable equity securities should be accounted for in accordance with ASC No. 820, Fair Value Measurements and Disclosures and based upon the estimated fair value of Alzamend common stock at September 30, 2020, the Company’s investment in AVLP common stock had an unrealized gain of $358,765.

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DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

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.

c. During the nine months ended September 30, 2020, Ault & Company, Inc. (“Ault & Company”) has provided $422,758 in short-term advances, net of repayments. 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.

d. On December 22, 2019, the Company entered into a securities purchase agreement with Ault & Company. Pursuant to the terms 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 purchase on January 15, 2020.

e. 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). On August 20, 2020, the Company issued 413,793 shares of its common stock upon the conversion of $600,000 in principal on the Ault & Company Convertible Note.

f. 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.

g. Milton C. Ault, III, the Company’s Chairman and Chief Executive Officer and MCKEA guaranteed the Company’s obligation to repay a 12% January 2020 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.

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DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 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 loss from operations of the Company’s reportable segments is less than the Company’s consolidated loss from operations due to DPW Holdings corporate expenses.

	Three Months ended September 30, 2020
	GWW			Coolisys		Ault Alliance			Total
Revenue	$	4,329,295		$	1,375,805	$	—		$	5,705,100
Revenue, lending activities		—			—		(29,536	)		(29,536	)
Total revenues	$	4,329,295		$	1,375,805	$	(29,536	)	$	5,675,564
Depreciation and
amortization expense	$	328,302		$	21,426	$	—		$	349,728
Loss from operations	$	(65,369	)	$	126,593	$	(40,561	)	$	20,663
Capital expenditures for
segment assets, as of
September 30, 2020	$	337,921		$	26,425	$	—		$	364,346
Identifiable assets as of
September 30, 2020	$	21,186,343		$	21,009,613	$	1,448,856		$	43,644,812

	Three Months ended September 30, 2019
	GWW			Coolisys			Ault Alliance			Total
Revenue	$	3,355,897		$	1,612,543		$	—		$	4,968,440
Revenue, cryptocurrency
mining		—			307,172			—			307,172
Revenue, lending activities		—			—			69,217			69,217
Total revenues	$	3,355,897		$	1,919,715		$	69,217		$	5,344,829
Depreciation and
amortization expense	$	151,257		$	747,034		$	—		$	898,291
Loss from operations	$	(133,909	)	$	(5,050,617	)	$	(70,953	)	$	(5,255,479	)
Capital expenditures for
segment assets, as of
September 30, 2019	$	25,135		$	30,582		$	—		$	55,717
Identifiable assets as of
September 30, 2019	$	19,440,320		$	28,079,982		$	2,983,046		$	50,503,348

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DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

	Nine Months ended September 30, 2020
	GWW		Coolisys			Ault Alliance			Total
Revenue	$	12,905,877	$	3,803,241		$	—		$	16,709,118
Revenue, lending activities		—		—		$	(27,140	)		(27,140	)
Total revenues	$	12,905,877	$	3,803,241		$	(27,140	)	$	16,681,978
Depreciation and
amortization expense	$	478,316	$	129,644		$	—		$	607,960
Loss from operations	$	118,642	$	(27,460	)	$	(121,977	)	$	(30,795	)
Capital expenditures for
segment assets, as of
September 30, 2020	$	528,038	$	26,425		$	—		$	554,463
Identifiable assets as of
September 30, 2020	$	21,170,343	$	21,297,286		$	1,448,856		$	43,916,485

	Nine Months ended September 30, 2019
	GWW			Coolisys			Ault Alliance			Total
Revenue	$	10,754,949		$	4,306,340		$	—		$	15,061,289
Revenue, cryptocurrency
mining		—			592,092			—			592,092
Revenue, lending activities		—			—			443,927			443,927
Total revenues	$	10,754,949		$	4,898,432		$	443,927		$	16,097,308
Depreciation and
amortization expense	$	553,642		$	2,239,958		$	—		$	2,793,600
Loss from operations	$	(651,993	)	$	(7,188,830	)	$	(29,663	)	$	(7,870,486	)
Capital expenditures for
segment assets, as of
June 30, 2019	$	102,364		$	46,959		$	—		$	149,323
Identifiable assets as of
June 30, 2019	$	19,138,562		$	23,200,317		$	3,184,296		$	45,523,175

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DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

Concentration Risk:

The following tables provide the percentage of total revenues for the three and nine months ended September 30, 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 Nine Months Ended
	September 30, 2020			September 30, 2020
	Total Revenues		Percentage of	Total Revenues		Percentage of
	by Major		Total Company	by Major		Total Company
	Customers		Revenues	Customers		Revenues
Customer A	$	1,862,667	33%	$	5,596,089	34%
Customer B		1,065,400	19%		2,660,800	16%

	For the Three Months Ended			For the Nine Months Ended
	September 30, 2019			September 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	27%	$	2,845,541	18%

Revenue from Customer A is attributable to Enertec. Revenue from Customer B is attributable to Microphase. Further, at September 30, 2020, MTIX represented all the Company’s accounts and other receivable, related party.

25. SUBSEQUENT EVENTS

In accordance with FASB ASC 855-10, the Company has analyzed its operations subsequent to September 30, 2020, and thru the date of this report being issued and has determined that it does not have any material subsequent events to disclose in these financial statements except for the following.

At-The-Market Equity Offering

On October 2, 2020 the Company established an “at-the-market” equity offering program under which it may sell, from time to time, shares of its common stock for aggregate gross proceeds of up to $8,975,000. The shares of common stock will be offered through Ascendiant Capital Markets, LLC, which will act in its capacity as sales agent (the “Agent”).

Pursuant to a sales agreement with the Agent, sales of shares of the Company's common stock may be made in transactions that are deemed to be “at-the-market” offerings, including sales made by means of ordinary brokers’ transactions on the NYSE American or otherwise at market prices prevailing at the time of sale or as agreed to with the Agent.

The Company intends to use the net proceeds from the “at-the-market” equity offering, if any, for the financing of possible acquisitions of companies and technologies, business expansions and investments and for working capital and general corporate purposes, which may include the repayment, refinancing, redemption or repurchase of future indebtedness or capital stock. The Company does not have agreements or commitments for any specific acquisitions at this time.

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DPW HOLDINGS AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – Unaudited (Continued)

SEPTEMBER 30, 2020

The shares of common stock described above are being offered pursuant to a shelf registration statement (File No. 333-222132) which became effective on January 11, 2018. Such shares of common stock may be offered only by means of a prospectus, including a prospectus supplement, forming a part of the effective registration statement.

During October and through November 13, 2020 the Company received gross proceeds of $5,375,055 through the sale of 2,935,875 shares of the Company’s common stock through the ATM Offering.

Issuance of common stock for conversion of debt

During October 2020, principal and accrued interest of $2,277,194 on the Company’s debt securities was satisfied through the issuance of 2,108,152 shares of the Company’s common stock.

I.AM Bankruptcy Filing

On November 2, 2020, I.AM, Inc. 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.

13% Unsecured Promissory Note

On August 5, 2020, the Company received $2,000,000 from Esousa and on October 22, 2020, the Company issued to Esousa a promissory note in the principal face amount of $2,000,000, with an interest rate of 13%. The outstanding principal face amount, plus any accrued and unpaid interest, is due by November 3, 2020, or as otherwise provided in accordance with the terms set forth therein. In connection therewith, the Company delivered to the institutional investor a warrant to purchase 729,927 shares of the Company’s common stock at an exercise price of $3.01. The exercise of the warrant is subject to approval of the NYSE American.

14% Unsecured Promissory Notes

The Company issued to Esousa two unsecured promissory notes in the aggregate principal face amount of $1,200,000, of which $850,000 was received prior to September 30, 2020. The principal amount of $850,000 of the first Note dated October 27, 2020, together with all accrued unpaid interest at an annual rate of 14%, is due and payable on December 28, 2020. The principal amount of $350,000 of the second Note dated October 27, 2020, together with all accrued unpaid interest at an annual rate of 14%, is due and payable on January 7, 2021.

In connection with the two Promissory Notes, the Company delivered to the institutional investor (i) a warrant dated October 27, 2020, to purchase 425,000 shares of the Company’s common stock at an exercise price of $2.20 (the “First Warrant”), and (ii) a warrant dated October 27, 2020, to purchase 148,936 shares of the Company’s common stock at an exercise price of $2.59. The exercise of the warrants is subject to approval of the NYSE American.

Pending Acquisiton of Relec Electronics Ltd.

On November 9, 2020, GWW entered into a Stock Purchase Agreement (the “Agreement”) with Tabard Holdings Inc., a Delaware corporation and wholly owned subsidiary of GWW (“Tabard”), the legal and beneficial owners (the “Sellers”) of 100% of the issued shares in the capital of Relec Electronics Ltd., a corporation organized under the laws of England and Wales (“Relec”), and Peter Lappin, in his capacity as the representative of the Sellers (the “Sellers’ Representative”).  Upon the terms and subject to the conditions set forth in the Agreement, Tabard shall acquire Relec pursuant to the Agreement whereby the Sellers shall sell to Tabard (i) 100% of the issued shares of Relec. The purchase price is approximately £3,000,000 plus an amount equal to Relec’s cash balance immediately prior to closing of the acquisiton. Tabard has paid the sum of $500,000 to an escrow as a deposit toward payment of the purchase price.

F-46

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 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

On January 7, 2020, we formed Coolisys Technologies Corp. (“CTC”), a wholly-owned subsidiary, in order to hold Digital Power Corporation which designs, develops, manufactures and sells high-grade customized and flexible power system solutions. Coolisys Technologies, Inc. (“CTI”) is presently owned by Gresham Worldwide, Inc. (“GWW”) and owns Microphase Corporation, Gresham Power Electronics and Enertec Systems. We may merge CTI out of existence in the future, leaving GWW as the direct owner of the three foregoing subsidiaries.

On February 10, 2020, we entered into a Master Exchange Agreement (the “Master Exchange Agreement”) with Esousa Holdings, LLC (“Esousa” or the “Creditor”) 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 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. 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) (as amended on March 11, 2019, the “Amended Complaint”) against the Company and certain of its officers and directors pending in the United States District Court for the Central District of California (the “Court”). As previously disclosed, the Amended Complaint alleges violations including breaches of fiduciary duties and unjust enrichment claims based on the previously pled transactions.

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 at an earlier stage.

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 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.

1

In connection with the Settlement Agreement, the parties 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 continues to believe that it did not engage in any wrongdoing or otherwise commit any violation of federal or state securities laws or other laws.

Other Matters

During the first quarter of 2020, we decided to discontinue the operations of Digital Farms and I.AM. On March 16, 2020, to try and mitigate the spread of the novel coronavirus, 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 officials and the deteriorating business conditions at both our cryptocurrency mining and restaurant businesses, management concluded that discontinuing these operations was ultimately in our best interest. Although we have 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. However, management determined that the permanent closing of the restaurant operations met the criteria for presentation as discontinued operations.

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic which continues to spread throughout the United States and the world. We are 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 our operations, financial position, cash flows, inventory, supply chains, customer purchasing trends, customer payments, and the industry in general, in addition to the impact on our employees. Due to the rapid development and fluidity of this situation, the magnitude and duration of the pandemic and its impact on our operations and liquidity is uncertain as of the date of this quarterly report.

However, our business has been disrupted and materially adversely affected by the recent outbreak of COVID-19. We are still assessing our business operations and system supports and the impact COVID-19 may have on our results and financial condition, but there can be no assurance that this analysis will enable us 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 our sectors in particular.

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

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.

2

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. Our phone number is 949-444-5464 and our website address is www.dpwholdings.com.

Results of Operations

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

The following table summarizes the results of our operations for the three months ended September 30, 2020 and 2019.

	For the Three Months Ended
	September,
	2020			2019
Revenue	$	5,705,100		$	4,968,440
Revenue, cryptocurrency mining		-			307,172
Revenue, lending activities		(29,536	)		69,217
Total revenue		5,675,564			5,344,829
Cost of revenue		3,736,082			4,348,761
Gross profit		1,939,482			996,068
Total operating expenses		3,564,190			8,681,957
Loss from continuing operations		(1,624,708	)		(7,685,889	)
Interest income		102,397			898,646
Interest expense		(2,365,741	)		(2,954,843	)
Change in fair value of marketable equity securities		(29,318	)		(330,150	)
Loss on extinguishment of debt		(12,823,039	)		(155,448	)
Loss on issuance of warrants		-			-
Change in fair value of warrant liability		-			165,840
Loss from continuing operations before income taxes		(16,740,409	)		(10,061,844	)
Income tax benefit		6,053			5,140
Net loss from continuing operations		(16,734,356	)		(10,056,704	)
Net loss from discontinued operations, net of taxes		0			(284,167	)
Net loss		(16,734,356	)		(10,340,871	)
Less: Net loss attributable to non-controlling interest		-			-
Net loss attributable to DPW Holdings		(16,734,356	)		(10,340,871	)
Preferred dividends		(2,933	)		(5,284	)
Net loss available to common stockholders	$	(16,737,289	)	$	(10,346,155	)
Comprehensive loss
Loss available to common stockholders	$	(16,737,289	)	$	(10,346,155	)
Other comprehensive income (loss)
Foreign currency translation adjustment		43,554			67,166
Net unrealized loss on derivative securities of related party		1,561,247			(1,152,480	)
Other comprehensive income (loss)		1,604,801			(1,085,314	)
Total comprehensive loss	$	(15,132,488	)	$	(11,431,469	)

3

Revenues

Our revenues increased by $330,735, or 6.2%, to $5,675,564 for the three months ended September 30, 2020, from $5,344,829 for the three months ended September 30, 2019. The increase from the three months ended September 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 a decrease in revenue due to our decision to cease operations at our cryptocurrency mining operations.

Revenues, 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 the first quarter of 2020, due to deteriorating business conditions in the cryptocurrency mining sector, we ceased operations at Digital Farms. The market prices of digital currencies have declined since the formation of Digital Farms which, due to power cost considerations, negatively affected the number of active miners we operated. These factors, coupled with a significant increase in the difficulty of mining blocks of cryptocurrency, led to our decision to cease cryptocurrency mining operations. As a result, we did not generate any revenues from our cryptocurrency operations during the three months ended September 30, 2020.

Gross Margins

Gross margins increased to 34.2% for the three months ended September 30, 2020 compared to 18.6% for the three months ended September 30, 2019. The Company’s gross margins have typically ranged between 33% and 37%, with slight variations depending on the overall composition of our revenue.

Our gross margins of 18.6% recognized during the three months ended September 30, 2019, were impacted by the negative margins at Digital Farms. Excluding the effects of Digital Farms, our adjusted gross margins for the three months ended September 30, 2019, would have been 33.2%, consistent with our historical average.

Engineering and Product Development

Engineering and product development expenses decreased by $13,064 to $468,838 for the three months ended September 30, 2020, from $481,902 for the three months ended September 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 $259,649 for the three months ended September 30, 2020, compared to $331,107 for the three months ended September 30, 2019, a decrease of $71,458. This decrease was the result of decreases in personnel costs directly attributed to a reduction in sales and marketing personnel primarily at Coolisys, which designs, develops, manufactures and sells customized and flexible power system solutions for the commercial markets.

General and Administrative

General and administrative expenses were $2,835,940 for the three months ended September 30, 2020, compared to $3,554,043 for the three months ended September 30, 2019, a decrease of $718,103. General and administrative expenses decreased from the comparative prior period, mainly due to lower stock compensation expense, as well as cost reductions at Coolisys and corporate headquarters.

4

Loss from Continuing Operations

The Company recorded a loss from continuing operations of $1,624,708 for the three months ended September 30, 2020, compared to an operating loss of $7,685,889 for the three months ended September 30, 2019. The prior year period included a $4,315,856 impairment charge related to cryptocurrency mining equipment. In addition, the decrease in operating loss is attributable to an increase in our gross margins and the decrease in general and administrative expenses.

Interest Income

Interest income was $102,397 for the three months ended September 30, 2020 compared to $898,646 for the three months ended September 30, 2019. The decrease in interest income for the three months ended September 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 September 30, 2020.

Interest Expense

Interest expense was $2,365,741 for the three months ended September 30, 2020 compared to $2,954,843 for the three months ended September 30, 2019. The decrease in interest expense for the three months ended September 30, 2020 is primarily related to lower financing costs, including default penalties, partially offset by a 6% increase in our level of borrowings.

Change in fair value of warrant liability

During the three months ended September 30, 2019, the fair value of the warrants that were issued in our Offering decreased by $165,840. 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.

Loss on extinguishment of debt

Loss on extinguishment of debt was $12,823,039 for the three months ended September 30, 2020 compared to $155,448 for the three months ended September 30, 2019. During the three months ended September 30, 2020, principal and accrued interest of $2,396,655 and $699,219, respectively, on the Company’s debt securities was satisfied through the issuance of 4,910,000 shares of the Company’s common stock. The Company recognized a loss on extinguishment of $10,326,303 as a result of these issuances of common stock based on the fair value of the Company’s common stock at the date of the exchanges. The remaining loss on extinguishment is primarily due to the estimated fair value of warrants to purchase an aggregate of 1,430,163 shares of common stock that were issued to Esousa pursuant to the Master Exchange Agreement.

Net Loss from Discontinued Operations

During the first quarter of 2020, 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. As a result of the permanent closing of the restaurants, we did not incur any additional costs during the three months ended September 30, 2020.

5

Net Loss

For the foregoing reasons, our net loss for the three months ended September 30, 2020, was $16,734,356 compared to a net loss of $10,340,871 for the three months ended September 30, 2019. After taking into consideration preferred dividends of $2,933 and $5,284, respectively, the net loss available to common shareholders during the three months ended September 30, 2020 and 2019, was $16,737,289 and $10,346,155, respectively.

During the three months ended September 30, 2020 and 2019, our reported net loss included non-cash charges of $14,601,675 and $6,296,889, respectively. A summary of these non-cash charges is as follows:

	For the Three Months Ended
	September 30,
	2020			2019
Loss on extinguishment of debt	$	12,823,039		$	155,448
Interest expense – debt discount		1,471,716			1,357,845
Stock-based compensation		129,525			361,779
Depreciation and amortization		182,448			898,289
Impairment of property and equipment		-			4,315,856
Accretion of original issue discount on notes receivable – related party		5,532			(607,356	)
Accretion of original issue discount on notes receivable		(401	)		(19,132	)
Fair value in excess of proceeds upon issuance of warrants		-			-
Change in fair value of warrant liability		(10,184	)		(165,840	)
Non-cash items included in net loss	$	14,601,675		$	6,296,889

Other comprehensive income (loss)

Other comprehensive income was $1,604,801 for the three months ended September 30, 2020, compared to other comprehensive loss of $1,085,314 for the three months ended September 30, 2019. Other comprehensive income for the three months ended September 30, 2020, 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. During the three months ended September 30, 2019, unrealized losses in the warrant derivative securities of AVLP was the primary component of other comprehensive loss.

6

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

The following table summarizes the results of our operations for the nine months ended September 30, 2020 and 2019.

	For the Nine Months Ended
	September,
	2020			2019
Revenue	$	16,709,118		$	15,061,289
Revenue, cryptocurrency mining		-			592,092
Revenue, lending activities		(27,140	)		443,927
Total revenue		16,681,978			16,097,308
Cost of revenue		11,085,091			13,441,785
Gross profit		5,596,887			2,655,523
Total operating expenses		10,920,999			18,415,864
Loss from continuing operations		(5,324,112	)		(15,760,341	)
Interest income		138,653			2,647,110
Interest expense		(4,414,618	)		(5,585,850	)
Change in fair value of marketable equity securities		(57,896	)		(173,503	)
Loss on extinguishment of debt		(13,297,793	)		(963,232	)
Loss on issuance of warrants		-			(1,763,481	)
Change in fair value of warrant liability		(5,773	)		1,112,665
Loss from continuing operations before income taxes		(22,961,539	)		(20,486,632	)
Income tax benefit		17,846			93,284
Net loss from continuing operations		(22,943,693	)		(20,393,348	)
Net loss from discontinued operations, net of taxes		(1,697,744	)		(717,426	)
Net loss		(24,641,437	)		(21,110,774	)
Less: Net loss attributable to non-controlling interest		-			32,416
Net loss attributable to DPW Holdings		(24,641,437	)		(21,078,358	)
Preferred dividends		(10,327	)		(12,437	)
Net loss available to common stockholders	$	(24,651,764	)	$	(21,090,795	)
Comprehensive loss
Loss available to common stockholders	$	(24,651,764	)	$	(21,090,795	)
Other comprehensive income (loss)
Foreign currency translation adjustment		(7,853	)		259,671
Net unrealized loss on derivative securities of related party		1,080,034			(1,513,661	)
Other comprehensive income (loss)		1,072,181			(1,253,990	)
Total comprehensive loss	$	(23,579,583	)	$	(22,344,785	)

7

Revenues

Our revenues increased by $584,670, or 3.6%, to $16,681,978 for the nine months ended September 30, 2020, from $16,097,308 for the nine months ended September 30, 2019. The increase from the nine months ended September 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 nine months ended September 30, 2020, we ceased operations at Digital Farms. As a result, we did not generate any revenues from our cryptocurrency operations during the nine months ended September 30, 2020.

Gross Margins

Gross margins increased to 33.6% for the nine months ended September 30, 2020 compared to 16.5% for the nine months ended September 30, 2019. The Company’s gross margins have typically ranged between 33% and 37%, with slight variations depending on the overall composition of our revenue.

Our gross margins of 16.5% recognized during the nine months ended September 30, 2019, were 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 30.3%, slightly less than our historical average as a result of lower revenues in our defense business relative to manufacturing overhead during the nine months ended September 30, 2019

Engineering and Product Development

Engineering and product development expenses decreased by $37,225 to $1,371,623 for the nine months ended September 30, 2020, from $1,408,848 for the nine months ended September 30, 2019. The decrease in engineering and product development expenses is due to various costs, none of which is significant individually.

Selling and Marketing

Selling and marketing expenses were $892,786 for the nine months ended September 30, 2020, compared to $1,130,913 for the nine months ended September 30, 2019, a decrease of $238,127. This decrease was the result of decreases in personnel costs directly attributed to a reduction in sales and marketing personnel primarily at Coolisys.

8

General and Administrative

General and administrative expenses were $8,656,841 for the nine months ended September 30, 2020, compared to $11,567,180 for the nine months ended September 30, 2019, a decrease of $2,910,339. 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 nine months ended September 30, 2020 because of travel restrictions from COVID-19.

Loss from Continuing Operations

The Company recorded a loss from continuing operations of $5,324,111 for the nine months ended September 30, 2020, compared to an operating loss of $15,760,341 for the nine months ended September 30, 2019. The prior year period included a $4,315,856 impairment charge related to cryptocurrency mining equipment. In addition, the decrease in operating loss is attributable to an increase in our gross margins and the decrease in general and administrative expenses.

Interest Income

Interest income was $138,653 for the nine months ended September 30, 2020 compared to $2,647,110 for the nine months ended September 30, 2019. The decrease in interest income for the nine months ended September 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 nine months ended September 30, 2020.

Interest Expense

Interest expense was $4,414,618 for the nine months ended September 30, 2020 compared to $5,585,850 for the nine months ended September 30, 2019. The decrease in interest expense for the nine months ended September 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 nine months ended September 30, 2020 and 2019, as a result of these issuances, non-cash interest expense of $2,379,196 and $3,034,454, 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 nine months ended September 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 nine months ended September 30, 2019, the fair value of the warrants that were issued in our Offering decreased by $1,112,665. 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.

Loss on extinguishment of debt

Loss on extinguishment of debt was $13,297,793 for the nine months ended September 30, 2020 compared to $963,232 for the nine months ended September 30, 2019. During the nine months ended September 30, 2020, principal and accrued interest of $3,977,427 and $1,584,841, respectively, on the Company’s debt securities was satisfied through the issuance of 6,824,936 shares of the Company’s common stock. The Company recognized a loss on extinguishment of $10,548,535 as a result of these issuances. The remaining loss on extinguishment is primarily due to the estimated fair value of warrants to purchase an aggregate of 1,700,361 shares of common stock that were issued to Esousa pursuant to the Master Exchange Agreement.

9

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 nine months ended September 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 nine months ended September 30, 2020, was $24,641,437 compared to a net loss of $21,110,774 for the nine months ended September 30, 2019. After taking into consideration the loss attributable to the non-controlling interest of the minority shareholders of Microphase during the nine months ended September 30, 2020 and 2019, of nil and $32,416, respectively, and preferred dividends of $10,327 and $12,437, respectively, the net loss available to common shareholders during the nine months ended September 30, 2020 and 2019, was $24,651,764 and $21,090,795, respectively.

During the nine months ended September 30, 2020 and 2019, our reported net loss included non-cash charges of $18,099,816 and $11,165,085, respectively. A summary of these non-cash charges is as follows:

	For the Nine Months Ended
	September 30,
	2020			2019
Loss on extinguishment of debt	$	13,297,793		$	963,232
Interest expense – debt discount		2,379,196			3,034,454
Stock-based compensation		272,466			1,354,062
Depreciation and amortization		609,051			2,793,598
Impairment of property and equipment		1,525,316			4,315,856
Accretion of original issue discount on notes receivable – related party		20,532			(1,869,778	)
Accretion of original issue discount on notes receivable		(4,538	)		(77,155	)
Fair value in excess of proceeds upon issuance of warrants		-			1,763,481
Change in fair value of warrant liability		-			(1,112,665	)
Non-cash items included in net loss	$	18,099,816		$	11,165,085

Other comprehensive income (loss)

Other comprehensive income was $1,072,181 for the nine months ended September 30, 2020, compared to other comprehensive loss of $1,253,990 for the nine months ended September 30, 2019. Other comprehensive income for the nine months ended September 30, 2020, 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. During the nine months ended September 30, 2019, unrealized losses in the warrant derivative securities of AVLP was the primary component of other comprehensive loss.

LIQUIDITY AND CAPITAL RESOURCES

On September 30, 2020, we had cash and cash equivalents of $1,274,408. This compares with cash and cash equivalents of $483,383 at December 31, 2019. The increase in cash and cash equivalents was primarily due to cash provided by financing activities with the remaining variance attributed to fluctuations in exchange rates between the U.S. dollar and the Israeli Shekel.

10

Net cash used in continuing operating activities totaled $5,355,228 for the nine months ended September 30, 2020, compared to $8,320,953 for the nine months ended September 30, 2019. During the nine months ended September 30, 2020, the decrease in net cash used in operating activities compared to the nine months ended September 30, 2019, was mainly due to improved operating results compared to the prior year period, including improved gross margins from ceasing the negative margin cryptocurrency mining operations and lower general and administrative expenses from lower third party fees and travel related costs. Additionally, we experienced significant variations in changes in operating assets and 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 such payments were received during the nine months ended September 30, 2020.

Net cash used in investing activities was $893,978 for the nine months ended September 30, 2020, compared to $2,674,446 for the nine months ended September 30, 2019. The decrease of the net usage of cash from investing activities was primarily attributed to a decrease in related party investments.

Net cash provided by financing activities was $7,054,414 and $11,083,232 for the nine months ended September 30, 2020 and 2019, respectively. Financing activities during the nine months ended September 30, 2020, primarily related to proceeds from notes payable and short-term advances, related party. During the nine months ended September 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.

Historically, we have financed our operations principally through issuances of convertible debt, promissory notes and equity securities. During 2020, as reflected below, we continued to successfully obtain additional equity and debt financing and in restructuring existing debt.

· 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 us. Esousa also agreed to purchase additional notes and during the three months ended September 30, 2020, Esousa acquired $2,240,015 in principal amount, plus accrued but unpaid interest, of certain additional promissory notes that had been previously issued by us (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.

· In October 2020, subsequent to the end of the most recent quarter, the Company established an “at-the-market” equity offering program under which it may sell, from time to time, shares of its common stock for aggregate gross proceeds of up to $8,975,000.

· Between August 2020 and September 2020, the Company received $2,850,000 in loans from Esousa pursuant to which the Company agreed to issue unsecured short-term promissory notes with interest rates of 13% and 14%. Pursuant to these loans, and an additional loan of $350,000 received during October 2020, we issued two unsecured promissory notes in the aggregate principal face amount of $1,200,000 with an interest rate of 14%, and issued a promissory note in the principal face amount of $2,000,000 with an interest rate of 13%.

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 curtail our current operations 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 the associated legal fees, in order to conserve cash in order to sustain operations and meet our obligations.

Based on the above, these matters raise substantial doubt about our ability to continue as a going concern and amounts reported in our 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.

11

CRITICAL ACCOUNTING POLICIES

In our Annual Report on Form 10-K for the year ended December 31, 2019, we identified the critical accounting policies which affect our more significant estimates and assumptions used in preparing our consolidated financial statements. The basis for developing the estimates and assumptions within our critical accounting policies is based on historical information 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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable for a smaller reporting company.

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, 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 to ensure that information necessary to properly record transactions is adequately communicated and we did 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.

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.

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 May 2019, we hired an Executive Vice President and General Counsel. In August 2020, we announced changes to our existing leadership team as our Chief Financial Officer, was appointed as President and our Chief Accounting Officer, was appointed as Chief Financial Officer. We have 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 comprised of our Chief Executive Officer, President and Executive Vice President and General Counsel. The Executive Committee meets on a daily basis to address the Company’s critical needs and provides a forum to approve transactions. Further, as we continue to expand our internal accounting department, the Chairman of the Audit Committee shall perform the following:

12

· assist with documentation and implementation of policies and procedures and monitoring of controls, and

· 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 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 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 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”).

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 us.

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.

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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 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.

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.

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 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 to vigorously defend them.

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”). 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.

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.

14

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.

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 to vigorously defend them.

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 motion to dismiss was returnable before the Court on November 17, 2020. The Court is fully briefed and motion is 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 believe that the Company has operated our 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

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 $4.1 million of such debt obligations and entered into settlement agreements for the remaining amount of approximately $70,000 which is included within future receipts obligations in the accompanying consolidated balance sheet at September 30, 2020. The Company also recorded approximately $400,000 of trade liabilities for a judgment settled in favor of a trade creditor as of September 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 $200,000. 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.

15

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

The risks described in Part I, Item 1A, “Risk Factors,” in our 2019 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 Annual Report on Form 10-K remains current in all material respects.

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

During the nine months ended September 30, 2020, we issued 102,500 shares of our common stock as payment for services to its consultants. The shares were valued at $182,575, an average of $1.78 per share.

On December 23, 2019, we 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 our 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 our common stock.

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

During the nine months ended September 30, 2020, we issued 140,624 shares of our common stock in satisfaction of accrued liabilities of $155,547.

During the nine months ended September 30, 2020, principal and accrued interest of $3,977,427 and $1,584,841, respectively, on our debt securities was satisfied through the issuance of 6,824,936 shares of our common stock. We recognized a loss on extinguishment of $10,548,535 as a result of these issuances.

On August 20, 2020, we issued 413,793 shares of our common stock upon the conversion of $600,000 in principal on the Ault & Company Convertible Note.

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

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None

ITEM 5. OTHER INFORMATION

None

16

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	Bylaws dated August 13, 2020. Incorporated herein by reference to the Current report on Form 8-K filed on August 14, 2020 as Exhibit 3.1 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.

** Furnished herewith.

17

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:  November 18, 2020

DPW HOLDINGS, INC.
By:	/s/ Milton C. Ault, III
	Milton C. Ault, III
	Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ Kenneth S. Cragun
	Kenneth S. Cragun
	Chief Financial Officer
	(Principal Accounting Officer)

18

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Milton C. Ault, III, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of DPW Holdings, Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.  The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated:  November 18, 2020

/s/	Milton C. Ault, III
	Name: Milton C. Ault, III
	Title: Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Kenneth S. Cragun, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of DPW Holdings, Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.  The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated:  November 18, 2020

/s/	Kenneth S. Cragun
	Name: Kenneth S. Cragun
	Title: Chief Financial Officer
	(Principal Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of DPW Holdings, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: November 18, 2020
	By: /s/ Milton C. Ault, III
	Name: Milton C. Ault III
	Title: Chief Executive Officer and
	(Principal Executive Officer)

Date: November 18, 2020
	By: /s/ Kenneth S. Cragun
	Name: Kenneth S. Cragun
	Title: Chief Financial Officer and
	(Principal Financial Officer)

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	Sep. 30, 2020	Nov. 13, 2020
Cover [Abstract]
Entity Registrant Name	DPW Holdings, Inc.
Entity Central Index Key	0000896493
Document Type	10-Q
Document Period End Date	Sep. 30, 2020
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity File Number	1-12711
Entity Incorporation, State or Country Code	DE
Title of 12(b) Security	Class A Common Stock, $0.001 par value
Trading Symbol	DPW
Security Exchange Name	NYSEAMER
Entity Reporting Status Current	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		16,517,437
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2020

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
CURRENT ASSETS
Cash and cash equivalents	$ 1,274,408	$ 483,383
Marketable equity securities	386,476	639,647
Accounts receivable	3,028,754	2,438,254
Accounts and other receivable, related party	1,196,379	1,196,379
Accrued revenue	1,630,138	2,226,570
Inventories, net	2,672,873	2,481,511
Prepaid expenses and other current assets	2,044,605	1,324,161
Current assets held for sale		281,352
TOTAL CURRENT ASSETS	12,233,633	11,071,257
Intangible assets	2,959,056	3,206,988
Goodwill	8,122,437	8,100,947
Property and equipment, net	1,977,775	1,787,393
Right-of-use assets	4,130,760	4,177,590
Investments - related party	7,059,322	6,540,720
Investments in derivative liabilities and common stock - related party	3,338,266	2,128,224
Equity investments in private companies	261,767	261,767
Investment in limited partnership	1,869,000	1,969,000
Loans receivable	564,169	795,481
Other investments, related parties	810,000	832,500
Other assets	318,627	275,273
Noncurrent assets held for sale		1,603,268
TOTAL ASSETS	43,644,812	42,750,408
CURRENT LIABILITIES
Accounts payable and accrued expenses	13,073,937	14,284,563
Accounts payable and accrued expenses, related party	38,569	64,604
Operating lease liability, current	514,910	484,819
Advances on future receipts	1,534,822	2,210,392
Short term advances	540,000
Short term advances, related party	92,141	1,409,331
Revolving credit facility	177,342	221,705
Notes payable, net	9,833,928	6,137,015
Notes payable, related parties	211,253	169,153
Convertible notes payable	392,044	2,100,990
Convertible notes payable, related party	400,000
Other current liabilities	5,502,023	1,545,210
Current liabilities held for sale	1,572,177	1,593,550
TOTAL CURRENT LIABILITIES	33,883,146	30,221,332
LONG TERM LIABILITIES
Operating lease liability, non-current	3,683,355	3,726,493
Notes payable	352,032	482,624
Notes payable, related parties	51,916	115,164
Convertible notes payable	365,794	304,773
Noncurrent liabilities held for sale	786,815	951,072
TOTAL LIABILITIES	39,123,058	35,801,458
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Additional paid-in capital	122,243,579	101,099,347
Accumulated deficit	(113,302,229)	(88,650,465)
Accumulated other comprehensive loss	(4,439,443)	(5,511,624)
TOTAL DPW HOLDINGS STOCKHOLDERS' EQUITY	4,513,512	6,940,708
Non-controlling interest	8,242	8,242
TOTAL STOCKHOLDERS' EQUITY	4,521,754	6,948,950
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	43,644,812	42,750,408
Series A Convertible Preferred Stock [Member]
STOCKHOLDERS' EQUITY
Convertible Preferred Stock	7	7
Series B Convertible Preferred Stock [Member]
STOCKHOLDERS' EQUITY
Convertible Preferred Stock	125	125
Class A Common Stock [Member]
STOCKHOLDERS' EQUITY
Common Stock	11,473	3,318
Class B Common Stock [Member]
STOCKHOLDERS' EQUITY
Common Stock

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Convertible preferred stock, par value (in dollars per share)	$ 0.001
Convertible preferred stock, authorized	25,000,000
Convertible preferred stock, outstanding	23,497,500
Series A Convertible Preferred Stock [Member]
Convertible preferred stock, stated value (in dollars per share)	$ 25	$ 25
Convertible preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Convertible preferred stock, authorized	1,000,000	1,000,000
Convertible preferred stock, issued	7,040	7,040
Convertible preferred stock, outstanding	7,040	7,040
Convertible preferred stock, redemption amount	$ 176,000	$ 176,000
Convertible preferred stock, liquidation preference	$ 176,000	$ 176,000
Series B Convertible Preferred Stock [Member]
Convertible preferred stock, stated value (in dollars per share)	$ 10	$ 10
Convertible preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Convertible preferred stock, authorized	500,000	500,000
Convertible preferred stock, issued	125,000	125,000
Convertible preferred stock, outstanding	125,000	125,000
Convertible preferred stock, liquidation preference	$ 1,250,000	$ 1,250,000
Class A Common Stock [Member]
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized	500,000,000	500,000,000
Common stock, issued	11,473,410	3,318,390
Common stock, outstanding	11,473,410	3,318,390
Class B Common Stock [Member]
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized	25,000,000	25,000,000
Common stock, issued
Common stock, outstanding

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Total revenue	$ 5,675,564	$ 5,344,829	$ 16,681,978	$ 16,097,308
Cost of revenue	3,736,082	4,348,761	11,085,091	13,441,785
Gross profit	1,939,482	996,068	5,596,887	2,655,523
Operating expenses
Engineering and product development	468,838	481,902	1,371,623	1,408,848
Selling and marketing	259,649	331,107	892,786	1,130,913
General and administrative	2,835,940	3,554,043	8,656,841	11,567,180
Impairment of property and equipment		4,315,856		4,315,856
Gain on digital currency	(237)	(951)	(251)	(6,933)
Total operating expenses	3,564,190	8,681,957	10,920,999	18,415,864
Loss from continuing operations	(1,624,708)	(7,685,889)	(5,324,112)	(15,760,341)
Other income (expenses)
Interest income	102,397	898,646	138,653	2,647,110
Interest expense	(2,365,741)	(2,954,843)	(4,414,618)	(5,585,850)
Change in fair value of marketable equity securities	(29,318)	(330,150)	(57,896)	(173,503)
Loss on extinguishment of debt	(12,823,039)	(155,448)	(13,297,793)	(963,232)
Loss on issuance of warrants				(1,763,481)
Change in fair value of warrant liability		165,840	(5,773)	1,112,665
Total other expenses, net	(15,115,701)	(2,375,955)	(17,637,427)	(4,726,291)
Loss from continuing operations before income taxes	(16,740,409)	(10,061,844)	(22,961,539)	(20,486,632)
Income tax benefit	6,053	5,140	17,846	93,284
Net loss from continuing operations	(16,734,356)	(10,056,704)	(22,943,693)	(20,393,348)
Net loss from discontinued operations, net of taxes	0	(284,167)	(1,697,744)	(717,426)
Net loss	(16,734,356)	(10,340,871)	(24,641,437)	(21,110,774)
Less: Net loss attributable to non-controlling interest				32,416
Net loss attributable to DPW Holdings	(16,734,356)	(10,340,871)	(24,641,437)	(21,078,358)
Preferred dividends	(2,933)	(5,284)	(10,327)	(12,437)
Net loss available to common stockholders	$ (16,737,289)	$ (10,346,155)	$ (24,651,764)	$ (21,090,795)
Basic and diluted net loss per common share:
Continuing operations	$ (1.69)	$ (6.29)	$ (3.40)	$ (23.78)
Discontinued operations		(0.18)	(0.25)	(0.84)
Net loss per common share (in dollars per share)	$ (1.69)	$ (6.47)	$ (3.65)	$ (24.62)
Weighted average common shares outstanding, basic and diluted (in shares)	9,878,980	1,599,306	6,758,864	856,689
Comprehensive loss
Loss available to common stockholders	$ (16,737,289)	$ (10,346,155)	$ (24,651,764)	$ (21,090,795)
Other comprehensive income (loss)
Foreign currency translation adjustment	43,554	67,166	(7,853)	259,671
Net unrealized gain (loss) on derivative securities of related party	1,561,247	(1,152,480)	1,080,034	(1,513,661)
Other comprehensive income (loss)	1,604,801	(1,085,314)	1,072,181	(1,253,990)
Total comprehensive loss	(15,132,488)	(11,431,469)	(23,579,583)	(22,344,785)
Revenue [Member]
Total revenue	5,705,100	4,968,440	16,709,118	15,061,289
Cryptocurrency Mining [Member]
Total revenue		307,172		592,092
Lending Activities [Member]
Total revenue	$ (29,536)	$ 69,217	$ (27,140)	$ 443,927

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($)	Series A & B Preferred Stock [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Loss [Member]	Non-Controlling Interest [Member]	Total
Balance at beginning at Dec. 31, 2018	$ 126	$ 101	$ 77,647,544	$ (55,721,115)	$ (3,902,523)	$ 40,658	$ 18,064,791
Balance at beginning (in shares) at Dec. 31, 2018	126,434	100,910
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock based compensation: Options			681,079				681,079
Stock based compensation: Common stock		$ 29	304,990				305,019
Stock based compensation: Common Stock (Shares)		29,375
Issuance of common stock for cash		$ 1,333	9,869,176				9,870,509
Issuance of common stock for cash (in shares)		1,331,509
Issuance of common stock in payment of accrued liabilities		$ 9	108,514				108,523
Issuance of common stock in payment of accrued liabilities (in shares)		9,375
Issuance of common stockupon exercise of warrants		$ 700	6,620,325				6,621,025
Issuance of common stock upon exercise of warrants (in shares)		699,887
Issuance of Series A preferred stock for cash	$ 6		140,144				140,150
Issuance of Series A preferred stock for cash (in shares)	5,606
Issuance of common stock for conversion of debt		$ 370	4,735,924				4,736,294
Issuance of common stock for conversion of debt (in shares)		370,473
Beneficial conversion feature in connection with convertible notes			821,452				821,452
Fair value warrants issued in connection with convertible notes			200,518				200,518
Cash for exchange fees and other financing costs			(1,401,763)				(1,401,763)
Loss on debt extinguishment			155,448				(963,232)
Comprehensive loss:
Net loss				(21,078,358)			(21,078,358)
Preferred dividends				(12,437)			(12,437)
Net unrealized loss on derivatives in related party					(1,513,661)		(1,513,661)
Foreign currency translation adjustments					259,671		259,671
Net loss attributable to non-controlling interest						(32,416)	(32,416)
Balance at ending at Sep. 30, 2019	$ 132	$ 2,542	99,883,351	(76,811,910)	(5,156,513)	8,242	17,925,844
Balance at ending (in shares) at Sep. 30, 2019	132,040	2,541,529
Balance at beginning at Jun. 30, 2019	$ 132	$ 1,037	92,377,366	(66,465,775)	(4,071,199)	8,242	21,849,803
Balance at beginning (in shares) at Jun. 30, 2019	132,040	1,037,128
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock based compensation: Options			187,125				187,125
Stock based compensation: Common stock		$ 20	51,980				52,000
Stock based compensation: Common Stock (Shares)		20,000
Issuance of common stock for cash		$ 1,141	4,415,624				4,416,765
Issuance of common stock for cash (in shares)		1,140,330
Issuance of common stock for conversion of debt		$ 344	2,127,493				2,127,837
Issuance of common stock for conversion of debt (in shares)		344,071
Beneficial conversion feature in connection with convertible notes			633,004				633,004
Fair value warrants issued in connection with convertible notes			142,070				142,070
Cash for exchange fees and other financing costs			(206,759)				(206,759)
Loss on debt extinguishment			155,448				(155,448)
Comprehensive loss:
Net loss				(10,340,851)			(10,340,871)
Preferred dividends				(5,284)			(5,284)
Net unrealized loss on derivatives in related party					(1,152,480)		(1,152,480)
Foreign currency translation adjustments					67,166		67,166
Balance at ending at Sep. 30, 2019	$ 132	$ 2,542	99,883,351	(76,811,910)	(5,156,513)	8,242	17,925,844
Balance at ending (in shares) at Sep. 30, 2019	132,040	2,541,529
Balance at beginning at Dec. 31, 2019	$ 132	$ 3,318	101,099,347	(88,650,465)	(5,511,624)	8,242	6,948,950
Balance at beginning (in shares) at Dec. 31, 2019	132,040	3,318,390
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock based compensation: Options			60,534				60,534
Stock based compensation: Common stock		$ 102	182,473				182,575
Stock based compensation: Common Stock (Shares)		102,500
Issuance of common stock in payment of short term advances, related party		$ 661	739,287				739,948
Issuance of common stock in payment of short term advances, related party (in shares)		660,667
Issuance of common stock in payment of accrued liabilities		$ 153	228,548				228,701
Issuance of common stock in payment of accrued liabilities (in shares)		153,124
Issuance of common stock for conversion of debt		$ 7,239	16,703,564				16,710,803
Issuance of common stock for conversion of debt (in shares)		7,238,729
Beneficial conversion feature in connection with convertible notes			81,621				81,621
Fair value warrants issued in connection with convertible notes			3,173,205				3,173,205
Cash for exchange fees and other financing costs			(25,000)				(25,000)
Loss on debt extinguishment							(13,297,793)
Comprehensive loss:
Net loss				(24,641,437)			(24,641,437)
Preferred dividends				(10,327)			(10,327)
Net unrealized loss on derivatives in related party					1,080,034		1,080,034
Foreign currency translation adjustments					(7,853)		(7,853)
Balance at ending at Sep. 30, 2020	$ 132	$ 11,473	122,243,579	(113,302,229)	(4,439,443)	8,242	4,521,754
Balance at ending (in shares) at Sep. 30, 2020	132,040	11,473,410
Balance at beginning at Jun. 30, 2020	$ 132	$ 6,112	105,625,502	(96,564,940)	(6,044,244)	8,242	3,030,804
Balance at beginning (in shares) at Jun. 30, 2020	132,040	6,112,117
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock based compensation: Options			20,400				20,400
Stock based compensation: Common stock		$ 37	109,088				109,125
Stock based compensation: Common Stock (Shares)		37,500
Issuance of common stock for conversion of debt		$ 5,324	14,016,853				14,022,177
Issuance of common stock for conversion of debt (in shares)		5,323,793
Beneficial conversion feature in connection with convertible notes			15,039				15,039
Fair value warrants issued in connection with convertible notes			2,481,697				2,481,697
Cash for exchange fees and other financing costs			(25,000)				(25,000)
Loss on debt extinguishment							(12,823,039)
Comprehensive loss:
Net loss				(16,734,356)			(16,734,356)
Preferred dividends				(2,933)			(2,933)
Net unrealized loss on derivatives in related party					1,561,247		1,561,247
Foreign currency translation adjustments					43,554		43,554
Balance at ending at Sep. 30, 2020	$ 132	$ 11,473	$ 122,243,579	$ (113,302,229)	$ (4,439,443)	$ 8,242	$ 4,521,754
Balance at ending (in shares) at Sep. 30, 2020	132,040	11,473,410

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Cash flows from operating activities:
Net loss	$ (24,641,437)	$ (21,110,774)
Less: Net loss from discontinued operations	(1,697,744)	(717,426)
Net loss from continuing operations	(22,943,693)	(20,393,348)
Adjustments to reconcile net loss to net cash (used in) operating activities:
Depreciation	357,083	2,392,937
Amortization	251,968	400,661
Amortization of right-of-use assets	46,830	10,563
Interest expense - debt discount	2,379,196	3,034,454
Fair value of warrants issued to extinguish debt	2,749,259
Fair value in excess of proceeds upon issuance of warrants		1,763,481
Change in fair value of warrant liability		(1,112,665)
Accretion of original issue discount on notes receivable - related party	20,532	(1,869,778)
Accretion of original issue discount on notes receivable	(4,538)	(77,155)
Increase in accrued interest on notes receivable - related party		(732,542)
Stock-based compensation	272,466	1,354,062
Impairment of property and equipment		4,315,856
Realized losses on other investments	27,500
Realized (gains) losses on sale of digital currencies		(394)
Realized (gains) losses on sale of marketable securities	(22,602)	(86,741)
Unrealized (gains) losses on marketable equity securities	132,106	(294,717)
Unrealized losses on equity securities - related party	(25,176)	371,970
Unrealized losses on equity securities	72,976	24,597
Changes in operating assets and liabilities:
Accounts receivable	(590,502)	(398,222)
Accounts receivable, related party		2,648,798
Accrued revenue	599,604	(41,760)
Digital currencies	(14)	(599,025)
Inventories	(198,930)	613,847
Prepaid expenses and other current assets	(750,069)	(33,812)
Other assets	(86,143)	(433,013)
Accounts payable and accrued expenses	11,988,091	1,155,024
Accounts payable, related parties	(26,035)	4,526
Other current liabilities	407,910	(354,773)
Lease liabilities	(13,047)	16,216
Net cash (used in) continuing operating activities	(5,355,228)	(8,320,953)
Net cash provided by (used in) discontinued operating activities	1,246	62,205
Net cash used in operating activities	(5,353,982)	(8,258,748)
Cash flows from investing activities:
Purchase of property and equipment	(554,462)	(137,263)
Investments - related party	(516,634)	(1,501,912)
Investments in warrants and common stock - related party	(93,222)	(1,102,619)
Sales of marketable equity securities	143,667	571,741
Proceeds from loans receivable	139,933
Investments in debt and equity securities	(13,260)	(504,393)
Net cash used in investing activities	(893,978)	(2,674,446)
Cash flows from financing activities:
Gross proceeds from sales of common stock and warrants		15,945,371
Proceeds from issuance of Series A Convertible Preferred Stock		131,741
Financing cost in connection with sales of equity securities	(25,000)	(1,401,764)
Proceeds from warrant exercises		127,000
Proceeds from convertible notes payable	100,000	500,000
Proceeds from notes payable	7,122,434	4,752,918
Proceeds from short-term advances	570,000
Payments on short-term advances	(30,000)
Proceeds from short-term advances - related party	653,124	625,500
Payments on short-term advances - related party	(230,366)
Payments on notes payable	(289,012)	(2,001,474)
Payments on convertible notes payable		(7,079,547)
Proceeds from advances on future receipts		941,804
Payments on advances on future receipts	(762,076)	(1,365,435)
Payments of preferred dividends	(10,327)	(12,437)
Payments on revolving credit facilities, net	(44,363)	(80,445)
Net cash provided by financing activities	7,054,414	11,083,232
Effect of exchange rate changes on cash and cash equivalents	(15,429)	(165,125)
Net increase in cash and cash equivalents	791,025	(15,087)
Cash and cash equivalents at beginning of period	483,383	769,619
Cash and cash equivalents at end of period	1,274,408	754,532
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	100,939	1,850,946
Non-cash investing and financing activities:
Cancellation of convertible note payable into shares of common stock	16,710,803	4,736,295
Payment of accounts payable with digital currency		594,320
Issuance of common stock in payment of liability	228,701	108,521
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

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DESCRIPTION OF BUSINESS

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

DESCRIPTION OF BUSINESS

1. DESCRIPTION OF BUSINESS

DPW Holdings, Inc., a Delaware corporation (“DPW” or the “Company”), formerly known as Digital Power Corporation, 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 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 (“Enertec”), Digital Power Lending, LLC (“DP Lending”), Ault Alliance, Inc. (“Ault Alliance”), It’sLikeFasion.com, Inc. (“It’sLikeFashion”) and Digital Farms, Inc. (“Digital Farms”). The Company also has a controlling interest in Microphase Corporation (“Microphase”). 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 and digital learning through Ault Alliance.

During March 2020, the Company ceased operations at Digital Farms, the Company’s blockchain mining subsidiary, and I.AM, Inc. (“I.AM”). 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 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 the authorization provided by the Company’s stockholders at a Special Meeting 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 outstanding 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. As a result of the Second Stock Split, each forty shares of common stock issued and outstanding prior to the Second Stock Split were converted into one share of common stock. The Second Stock Split became effective in the State of Delaware on August 5, 2019. All share amounts in these financial statements have been updated to reflect these reverse stock splits.

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LIQUIDITY, GOING CONCERN AND MANAGEMENT'S PLANS

9 Months Ended

Sep. 30, 2020

Liquidity Going Concern And Managements Plans [Abstract]

LIQUIDITY, GOING CONCERN AND MANAGEMENT'S PLANS

2. LIQUIDITY, GOING CONCERN AND MANAGEMENT’S PLANS

The accompanying condensed consolidated financial statements have been prepared on the basis that the Company will continue as a going concern. As of September 30, 2020, the Company had cash and cash equivalents of $1,274,408, an accumulated deficit of $113,302,229 and negative working capital of $21,649,513. The Company has incurred recurring losses and reported net losses attributable to DPW Holdings for the nine months ended September 30, 2020 and 2019, totaling $24,641,437 and $21,078,358, respectively. In the past, the Company has financed its operations principally through issuances of convertible debt, promissory notes and equity securities. During 2020, the Company continued to successfully obtain additional equity and debt financing and restructured existing debt.

The Company expects to continue to incur losses for the foreseeable future and needs to raise additional capital to continue its business development initiatives and to support its working capital requirements. On February 10, 2020, the Company entered into a Master Exchange Agreement with Esousa Holdings, LLC, which 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 Company is unable to raise additional capital, which ability could be adversely affected by the outbreak of a novel coronavirus (“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 the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might become necessary should the Company be unable to continue as a going concern.

Impact of Coronavirus on the Company’s Operations

On March 16, 2020, to try and mitigate the spread of the novel coronavirus, 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 officials and the deteriorating business conditions at both our cryptocurrency mining and restaurant businesses, management concluded that discontinuing these operations was ultimately in our best interest. Although we have 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. However, management determined that the permanent closing of the restaurant operations met the criteria for presentation as discontinued operations.

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic which continues to spread throughout the United States and the world. We are 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 our operations, financial position, cash flows, inventory, supply chains, customer purchasing trends, customer payments, and the industry in general, in addition to the impact on our employees. Due to the rapid development and fluidity of this situation, the magnitude and duration of the pandemic and its impact on our operations and liquidity is uncertain as of the date of this quarterly report.

Our business has been disrupted and materially adversely affected by the recent outbreak of COVID-19. We are still assessing our business operations and system supports and the impact COVID-19 may have on our results of operations and financial condition, but there can be no assurance that this analysis will enable us 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 our sectors in particular.

Our operations are located in Santa Clara County, CA, Orange County, CA, Fairfield County, CT, the United Kingdom and Israel, and members of our senior management work in Seattle, WA and New York, NY. We have been following the recommendations of local health authorities to minimize exposure risk for our employees, including the temporary closures of our 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’s corporate headquarters, located in Newport Beach, CA, remains closed to non-essential employees based on the occupancy and social distancing order from the Orange County Health Officer. Non-essential headquarters staff continues to work remotely utilizing secure remote access systems and technology infrastructure. The Company 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, located in Milpitas, CA, had largely returned to normal operations with adherence to guidelines published by the Santa Clara Public Health Department. Certain individuals deemed to be high risk may work remotely as required. Coolisys has experienced disruption in its supply chain as a result of the COVID-19 impact on its vendors.

• Microphase, 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, England, continues to follow UK Government and Public Health England COVID-19 safety guidelines for businesses located in England, 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, located in Karmiel, Israel, has been granted a waiver by the Israeli government to remain open to complete key projects that impact national security. High risk employees of Enertec are permitted to work remotely.

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

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 for the year ended December 31, 2019, filed with the Securities and Exchange Commission on June 1, 2020. The condensed consolidated balance sheet as of December 31, 2019 was derived from the Company’s audited 2019 financial statements contained in the above referenced Form 10-K/A. Results of the three and nine months ended September 30, 2020, are not necessarily indicative of the results to be expected for the full year ending December 31, 2020.

Principles of Consolidation

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, Ault Alliance, It’sLikeFashion and Digital Farms and its majority-owned subsidiaries, Microphase and I.AM. All significant intercompany accounts and transactions have been eliminated in consolidation.

Accounting Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions. The Company's management believes that the estimates, judgments and assumptions used are reasonable 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 dates of the financial statements, and 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, carrying amounts of investments, carrying amounts 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.

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 first quarter of 2020, based upon the deteriorating business conditions for restaurants in the San Diego County as result of the spread of COVID-19 and the decline in projected cash flows over the life of the restaurant long-lived assets, the Company performed an undiscounted cash flow test to determine if the restaurant equipment and right-of-use assets were impaired. The undiscounted cash flows were less than the carrying amount of the Company’s restaurant equipment and right-of-use assets and therefore, the carrying amount of the assets were compared to the fair value of the assets, and the Company determined that there were impairment charges to be recorded on the restaurant long-lived assets. Impairment charges for the nine months ended September 30, 2020 related to restaurant equipment were in an amount equal to the cost of the Company’s restaurant equipment, net of depreciation of $504,802 and the impairment related to the right-of-use assets attributed to the discontinued restaurant operations was the full carrying amount of $1,020,514. The restaurant-related impairment charges are included as a component of net loss from discontinued operations (see Note 4).

Revenue Recognition

The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects 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.

The Company’s disaggregated revenues consist of the following for the nine months ended September 30, 2020 and 2019:

	Nine Months ended September 30, 2020
	GWW		Coolisys		Ault Alliance			Total
Primary Geographical Markets
North America	$	5,109,672	$	3,100,552	$	(27,140	)	$	8,183,084
Europe		694,478		288,282		-			982,760
Middle East		6,837,501		-		-			6,837,501
Other		264,226		414,407		-			678,633
	$	12,905,877	$	3,803,241	$	(27,140	)	$	16,681,978
Major Goods
RF/Microwave Filters	$	3,886,940	$	—	$	—		$	3,886,940
Detector logarithmic video amplifiers		1,318,547		—		—			1,318,547
Power Supply Units		—		3,803,241		—			3,803,241
Power Supply Systems		862,889		—		—			862,889
Healthcare diagnostic systems		784,689		—		—			784,689
Defense systems		6,052,812		—		—			6,052,812
Lending activities		—		—		(27,140	)		(27,140	)
	$	12,905,877	$	3,803,241	$	(27,140	)	$	16,681,978
Timing of Revenue Recognition
Goods transferred at a point in time	$	6,068,376	$	3,803,241	$	(27,140	)	$	9,844,477
Services transferred over time		6,837,501		—		—			6,837,501
	$	12,905,877	$	3,803,241	$	(27,140	)	$	16,681,978

	Nine Months ended September 30, 2019
	GWW		Coolisys		Ault Alliance		Total
Primary Geographical Markets
North America	$	2,703,803	$	4,590,840	$	443,927	$	7,738,570
Europe		6,341,396		16,804		—		6,358,200
Middle East		1,283,312		21,348		—		1,283,312
Other		447,786		269,440		—		717,226
	$	10,776,297	$	4,898,432	$	443,927	$	16,097,308
Major Goods
RF/Microwave filters	$	989,114	$	—	$	—	$	989,114
Detector logarithmic video amplifiers		473,150		—		—		473,150
Power supply units		3,194,843		4,306,340		—		7,501,183
Power supply systems		1,423,971		—		—		1,423,971
Healthcare diagnostic systems		1,260,700		—		—		1,260,700
Defense systems		3,413,171		—		—		3,413,171
Lending activities		—		—		443,927		443,927
Digital currency mining		—		592,092		—		592,092
	$	10,754,949	$	4,898,432	$	443,927	$	16,097,308
Timing of Revenue Recognition
Goods transferred at a point in time	$	5,944,177	$	4,898,432	$	443,927	$	11,286,536
Services transferred over time		4,810,772		—		—		4,810,772
	$	10,754,949	$	4,898,432	$	443,927	$	16,097,308

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.

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 September 30, 2020, for the MLSE units was approximately $48 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

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.

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 guidance also establishes a 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. 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 fair value of 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, 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 September 30, 2020
	Total		Level 1		Level 2		Level 3
Investments in convertible promissory note of AVLP – a related party	$	7,059,322	$	—	$	—	$	7,059,322
Investments in common stock and derivative instruments of AVLP – a related party		2,750,580		259,786	$	—		2,490,794
Investment in common stock and warrants of Alzamend – a related party		587,686		—		—		587,686
Investments in marketable equity securities		386,476		386,476		—		—
Investments in warrants of public companies		103		—		—		103
Total Investments	$	10,784,167	$	646,262	$	—	$	10,137,905

	Fair Value Measurement at December 31, 2019
	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 common stock and derivative instruments of AVLP – a related party		1,569,286		238,602		—		1,330,684
Investment in common stock of Alzamend – a related party		558,938		—		—		558,938
Investments in marketable equity securities		639,647		639,647		—		—
Investments in warrants of public companies		9,174		—		—		9,174
Total Investments	$	9,317,765	$	878,249	$	—	$	8,439,516

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.

Net Loss per Share

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, 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 nine months ended September 30, 2020 and 2019. Anti-dilutive securities, which are convertible into or exercisable for the Company’s common stock, consist of the following at September 30, 2020 and 2019:

	September 30,
	2020		2019
Stock options		950		2,906
Warrants (1)		3,582,116		72,921
Convertible notes		1,396,419		349,486
Conversion of preferred stock		2,232		2,232
Total		4,981,717		427,545

⁽¹⁾ The Company has excluded 6,500 warrants issued in April 2019, which may be exercised by means of a cashless exercise into 6,500 shares of the Company’s common stock, in its anti-dilutive securities but included the warrants in its weighted average shares outstanding.

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 Adopted Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which will modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, including the removal of certain disclosure requirements. The amendments in ASU 2018-13 are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted the new disclosure requirements for the period ending March 31, 2020. The additional components of this release did not have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 changes how entities will measure credit losses for most financial assets and other instruments that are not measured at fair value through net income. This update introduces the current expected credit loss (“CECL”) model, which will require an entity to measure credit losses for certain financial instruments and financial assets, including trade receivables. Under this update, on initial recognition and at each reporting period, an entity will be required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument. ASU 2016-13 is effective for public companies in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company has completed its evaluation process and the January 1, 2020 adoption did not have a material impact to the Company’s consolidated financial statements for the three and nine months ended September 30, 2020.

Recently Issued Accounting Standards

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. 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.

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Discontinued Operations

9 Months Ended

Sep. 30, 2020

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

4. Discontinued Operations

On March 16, 2020, to try and mitigate the spread of 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 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 condensed consolidated statements of operations and comprehensive loss and are excluded from continuing operations for all periods presented. In addition, the assets and liabilities of the restaurant operations are classified as held for sale in our condensed consolidated balance sheets for all periods presented.

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

	September 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		322,125		229,574
Other current liabilities		461,738		482,375
Total current liabilities classified as held for sale		1,572,177		1,593,550
Long term liabilities
Operating lease liability, non-current		786,815		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 Nine Months Ended
	September 30,					September 30,
	2020		2019			2020			2019
Revenue	$	—	$	1,036,834		$	543,327		$	3,371,465
Cost of revenue		—		(293,765	)		(160,310	)		(908,256	)
Selling and marketing		—		(61,618	)		—			(162,268	)
General and administrative		—		(964,829	)		(555,445	)		(3,017,578	)
Impairment of property and equipment		—		—			(1,525,316	)		—
Interest expense		—		(789	)		—			(789	)
Loss from discontinued operations	$	—	$	(284,167	)	$	(1,697,744	)	$	(717,426	)

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Marketable Equity Securities

9 Months Ended

Sep. 30, 2020

Marketable Securities [Abstract]

Marketable Equity Securities

5. Marketable Equity Securities

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

	Marketable equity securities at September 30, 2020
			Gross unrealized		Gross realized
	Cost		gains		gains (losses)		Fair value
Common shares	$	301,960	$	84,516	$	—	$	386,476

	Marketable equity securities at December 31, 2019
			Gross unrealized		Gross realized
	Cost		gains		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		(143,667	)
Realized gains on marketable equity securities		22,602
Unrealized losses on marketable equity securities		(132,106	)
Balance at September 30, 2020	$	386,476

At September 30, 2020 and December 31, 2019, the Company had invested in the marketable equity securities of certain publicly traded companies. During the three and nine months ended September 30, 2020, unrealized losses of $184,419 and $132,106, 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 September 30, 2020 and December 31, 2019 is a Level 1 measurement based on quoted prices in an active market.

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

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PROPERTY AND EQUIPMENT, NET

9 Months Ended

Sep. 30, 2020

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT, NET

6. PROPERTY AND EQUIPMENT, NET

At September 30, 2020 and December 31, 2019, property and equipment consist of:

	September 30,			December 31,
	2020			2019
Cryptocurrency machines and related equipment	$	567,216		$	567,216
Computer, software and related equipment		2,941,870			2,518,187
Office furniture and equipment		441,104			441,613
Leasehold improvements		1,246,301			1,230,407
		5,196,491			4,757,423
Accumulated depreciation and amortization		(3,218,716	)		(2,970,030	)
Property and equipment, net	$	1,977,775		$	1,787,393

Under the guidance of ASC 360, Impairment or Disposal of Long-lived Assets, a long-lived asset or asset group (including intangibles) will be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. During the first quarter of 2020, based upon the deteriorating business conditions for restaurants in the San Diego County as result of the spread of COVID-19 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, and the Company determined that there were impairment charges to be recorded on the restaurant equipment. Impairment charges for the three and nine months ended September 30, 2020 were in an amount equal to the cost of the Company’s restaurant equipment, net of depreciation of $504,802, and are included as a component of net loss from discontinued operations (see Note 4).

For the three and nine months ended September 30, 2020, depreciation expense amounted to $97,177 and $357,083 respectively. For the three and nine months ended September 30, 2019, depreciation expense amounted to $846,631 and $2,673,352, respectively.

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INTANGIBLE ASSETS, NET

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS, NET

7. INTANGIBLE ASSETS, NET

At September 30, 2020 and December 31, 2019 intangible assets consist of:

	September 30,			December 31,
	2020			2019
Trade name and trademark	$	1,039,307		$	1,039,307
Customer list		2,413,054			2,406,434
Domain name and other intangible assets		644,607			641,809
		4,096,968			4,087,550
Accumulated depreciation and amortization		(1,137,912	)		(880,562	)
Intangible assets, net	$	2,959,056		$	3,206,988

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 $85,271 and $251,968, respectively, for the three and nine months ended September 30, 2020 and $101,199 and $400,661, respectively, for the three and nine months ended September 30, 2019.

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GOODWILL

9 Months Ended

Sep. 30, 2020

Intangible Assets, Net (Including Goodwill) [Abstract]

GOODWILL

8. GOODWILL

The Company’s goodwill relates to the acquisition of a controlling interest in Microphase on June 2, 2017 and the acquisition of Enertec on May 22, 2018. The following table summarizes the changes in our goodwill during the nine months ended September 30, 2020:

	Goodwill
Balance as of January 1, 2020	$	8,100,947
Effect of exchange rate changes		21,490
Balance as of September 30, 2020	$	8,122,437

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INVESTMENTS - RELATED PARTIES

9 Months Ended

Sep. 30, 2020

Investments, Debt and Equity Securities [Abstract]

INVESTMENTS - RELATED PARTIES

9. INVESTMENTS – RELATED PARTIES

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

	September 30,			December 31,
	2020			2019
Investment in convertible promissory note of AVLP	$	10,153,661		$	9,595,079
Investment in convertible promissory note of Alzamend		50,000			—
Accrued interest in convertible promissory note of AVLP		2,025,475			2,025,475
Total investment in convertible promissory note of AVLP – Gross		12,229,136			11,620,554
Less: original issue discount		(9,904	)		—
Less: provision for loan losses		(5,159,910	)		(5,079,834	)
Total investment in convertible promissory note of AVLP and Alzamend		7,059,322			6,540,720
Investment in derivative instruments of AVLP		2,490,794			1,330,684
Investment in common stock of AVLP		259,786			238,602
Investment in common stock and warrants of Alzamend		587,686			558,938
Investment in derivative instruments and common stock of AVLP and Alzamend		3,338,266			2,128,224
Total investment in AVLP and Alzamend – Net	$	10,397,588		$	8,668,944
Investment in warrants and common stock of AVLP and Alzamend	$	3,338,266		$	2,128,224
Investment in convertible promissory note of AVLP and Alzamend		7,059,322			6,540,720
Total investment in AVLP and Alzamend – Net	$	10,397,588		$	8,668,944

The following table summarizes the changes in our investments in AVLP and Alzamend during the nine months ended September 30, 2020:

	Investment in		Investment in
	warrants and		convertible		Total
	common stock		promissory		investment
	of AVLP and		note of AVLP		in AVLP and
	Alzamend		and Alzamend		Alzamend – Net
Balance at January 1, 2020	$	2,128,224	$	6,540,720	$	8,668,944
Investment in convertible promissory notes of AVLP		—		478,506		478,506
Investment in convertible promissory note of Alzamend		—		38,128		38,128
Investment in common stock of AVLP and Alzamend		12,884		—		12,884
Investment in warrants of Alzamend		11,872		—		11,872
Fair value of derivative instruments issued by AVLP		80,076		—		80,076
Unrealized loss in derivative instruments of AVLP		1,080,034		—		1,080,034
Unrealized loss in common stock of AVLP and Alzamend		25,176		—		25,176
Accretion of discount				1,968		1,968
Balance at September 30, 2020	$	3,338,266	$	7,059,322	$	10,397,588

Investments in AVLP

The Company’s investments in AVLP, a related party controlled by Philou Ventures, LLC, or Philou, an affiliate of the Company, consist of convertible promissory notes, derivative instruments and shares of AVLP common stock. At September 30, 2020, the Company has provided loans to AVLP in the principal amount $10,153,661 and, in addition to the 12% convertible promissory notes, AVLP has issued to the Company warrants to purchase 20,306,921 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 derivative financial instruments. At September 30, 2020 and December 31, 2019, the Company recorded a cumulative unrealized loss on its investment in warrants of AVLP of $3,284,222 and $4,364,256, respectively, 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 nine months ended September 30, 2020, the Company recognized, in other comprehensive loss, net unrealized gain on derivative securities of related party of $1,561,247 and $1,080,034, respectively, which compares with a net unrealized loss on derivative securities of related party of $1,152,480 and $1,513,661, respectively during the three and nine months ended September 30, 2019. 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 0.13% and 2.98%, was derived from the U.S. Treasury yield curve, matching the term of our investment, in effect at the measurement date. The volatility factor which ranged between 68.7% and 104.6% 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 nine months ended September 30, 2019, the Company recorded $614,856 and $1,892,278, respectively, of interest income for the discount accretion and  $268,428 and $732,542, respectively, of interest income from the contractual 12% rate provided for by the convertible promissory notes. During the nine months ended September 30, 2020, no interest income was recognized from the Company’s investment in AVLP.

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 31, 2019. At September 30, 2020, the Company determined that the fair value of the convertible promissory notes in AVLP was approximately $7,059,322. 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 September 30, 2020. 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 nine months ended September 30, 2020 and year ended December 31, 2019, the Company acquired 5,000 shares of AVLP common stock for $1,274 and 91,000 shares of AVLP common stock for $53,032, respectively, in each case in the open market. At September 30, 2020, the closing market price of AVLP’s common stock was $0.26, an increase 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 September 30, 2020, the Company’s investment in AVLP common stock had an unrealized loss of $488,049.

In aggregate, the Company has 999,175 shares of AVLP common stock which represents 18.0% of AVLP’s outstanding shares of common stock. 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 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.

Investments in Alzamend

The Company’s investments in Alzamend, a related party, consist of a convertible promissory note, derivative instruments and shares of Alzamend common stock. At September 30, 2020, the Company has provided a loan to Alzamend in the principal amount $50,000 and, in addition to the 8% convertible promissory notes, Alzamend has issued to the Company warrants to purchase 16,667 shares of Alzamend common stock at an exercise price of $3.00 per share for a period of five years. The warrants were determined by the issuer to be derivative financial instruments. At September 30, 2020, the Company recorded a cumulative unrealized loss on its investment in warrants of Alzamend of $111, 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. The Company’s investment in Alzamend will be revalued on each balance sheet date. The fair value of the Company’s holdings in the Alzamend warrants was estimated using the Black-Scholes option-pricing method. The risk-free rate of 0.28% was derived from the U.S. Treasury yield curve, matching the term of our investment, in effect at the measurement date. The volatility factor of 103.7% was determined based on historical stock prices for similar 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 Alzamend at amortized cost, which represents the amount at which the convertible promissory notes were acquired, adjusted for accrued interest and accretion of the 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 nine months ended September 30, 2019, the Company recorded $1,968 of interest income for the discount accretion and $329 of interest income from the contractual 8% rate provided for by the convertible promissory notes.

The Company evaluated the collectability of both interest and principal for the convertible promissory notes in Alzamend 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 no impairment existed at September 30, 2020.

During the nine months ended September 30, 2020 and year ended December 31, 2019, the Company also acquired 11,325 shares of Alzamend common stock for $9,060 and 372,625 shares of Alzamend common stock for $208,100, respectively. At September 30, 2020, the estimated fair value of Alzamend’s common stock was $1.50. The Company has determined that its investment in Alzamend marketable equity securities should be accounted for in accordance with ASC No. 820, Fair Value Measurements and Disclosures and based upon the estimated fair value of Alzamend common stock at September 30, 2020, the Company’s investment in Alzamend common stock had an unrealized gain of $358,765.

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INVESTMENTS IN LIMITED PARTNERSHIP

9 Months Ended

Sep. 30, 2020

Investments, Debt and Equity Securities [Abstract]

INVESTMENTS IN LIMITED PARTNERSHIP

10. INVESTMENTS IN LIMITED PARTNERSHIP

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 September 30, 2020, the Company had invested an aggregate of $1,869,000 in the NY Partnership. The Company has no obligation to make any capital contributions until the hotel is open for business to the public.

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OTHER INVESTMENTS, RELATED PARTIES

9 Months Ended

Sep. 30, 2020

Other Investments Related Parties

OTHER INVESTMENTS, RELATED PARTIES

11. OTHER INVESTMENTS, RELATED PARTIES

The Company’s other related party investments primarily consist of two investments.

MTIX, Ltd.

On December 5, 2017, the Company entered into an exchange agreement with WT Johnson pursuant to which the Company issued to WT Johnson two convertible promissory notes in the principal amounts 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.

During December 2017, the Company issued 750 shares of its common stock to WT Johnson & Sons upon the conversion of 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 amount of $2,668,266 from MTIX and cancelled Note B. At September 30, 2020 and December 31, 2019, the Company has valued the note receivable at $600,000, the carrying amount of Note A. The Company will recognize the remainder of the amount due from MTIX upon payment of the promissory note by MTIX.

Israeli Property

During the year ended December 31, 2017, 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 to the seller 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 agreement 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 nine months ended September 30, 2020 and 2019, the Company recognized $7,500 and $22,500, respectively, in amortization expense. At September 30, 2020 and December 31, 2019, the unamortized balance of the Israeli Property was $210,000 and $232,500, respectively. If Mr. Kohn is not employed by the Company, the Company shall have the right to demand that Ms. Kohn purchase the Company’s remaining interest in the Property that was not subject to vesting for the fair market value of such unvested Property interest.

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STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

12. 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 September 30, 2020, an aggregate of 6,668 of the Company’s options are still available for future grant.

During the nine months ended September 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 nine months ended September 30, 2020 and 2019, the Company also issued 102,500 and 29,375, respectively, shares of common stock to its consultants and service providers. The grant date fair value of these shares amounted to $182,575 and $338,619 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 September 30, 2020, 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	919	5.19	$537.96	566	$533.08
$1,208 - $1,352	31	2.88	$1,339.20	31	$1,339.20
$480 - $1,352	950	5.11	$564.32	597	$575.23
Issuances outside of Plans
$1.79	850,000	9.97	$1.79	0	$0.00
Total Options
$480 - 1,856	850,950	9.96	$2.42	597	$575.23

On September 30, 2020 and December 31, 2019, the aggregate intrinsic value of stock options that were outstanding was $187,000 and $0, respectively. and exercisable. On September 30, 2020 and December 31, 2019, there was no aggregate intrinsic value of stock options that were 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

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 nine months ended September 30, 2020 and 2019, is comprised as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Stock-based compensation from Plans	$	202,975	$	206,289	$	272,466	$	531,379
Stock-based compensation from issuances
outside of Plans		-		155,490		-		822,683
Total Stock-based compensation	$	202,975	$	361,779	$	272,466	$	1,354,062

A summary of option activity under the Company's stock option plans as of September 30, 2020, and changes during the nine 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, 2019		103,105			1,388		$	636.47		6.33	$	0
Restricted stock awards		(96,875	)		—
Forfeited		438			(438	)	$	793.14
September 30, 2020		6,668			950		$	564.32		5.11	$	0

As of September 30, 2020, there was $147,418 of unrecognized compensation cost related to non-vested stock-based compensation arrangements granted under the Plans. That cost is expected to be recognized over a weighted average period of 1.81 years.

During the nine months ended September 30, 2020, the Company estimated the fair value of stock options granted using the Black-Scholes option pricing model with the following weighted average assumptions:

	Nine Months Ended
	September 30, 2020
Weighted average risk-free interest rate	0.280%
Weighted average life (in years)	5.7
Volatility	100.3% — 100.5%
Expected dividend yield	0%
Weighted average grant-date fair value per share of options granted	$1.38

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WARRANTS

9 Months Ended

Sep. 30, 2020

Warrants

WARRANTS

13. WARRANTS 

During the nine months ended September 30, 2020, the Company issued warrants to purchase an aggregate of 3,509,598 shares of common stock at an average exercise price of $1.39 per share.

(i) On February 20, 2020, pursuant to the Master Exchange Agreement, the Company issued warrants to purchase an aggregate of 1,700,361 shares of common stock at an average exercise price equal to $1.43 per share of common stock (see Note 17).

(ii) During the nine months ended September 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).

The following table summarizes information about common stock warrants outstanding at September 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	3.50	$	-		6,500	$	-
$	0.88		281,250	4.52	$	0.88		281,250	$	0.88
$	1.07		400,000	4.66	$	1.07		400,000	$	1.07
$	1.14		144,928	4.44	$	1.14		144,928	$	1.14
$	1.16		95,238	4.65	$	1.16		95,238	$	1.16
$	1.17		157,143	4.53	$	1.17		157,143	$	1.17
$	1.19		277,778	4.41	$	1.19		277,778	$	1.19
$	1.21		90,909	4.56	$	1.21		90,909	$	1.21
$	1.43		1,700,361	4.36	$	1.43		1,700,361	$	1.43
$	2.43		361,991	1.16	$	2.43		361,991	$	2.43
$	8.00		397	1.09	$	8.00		397	$	8.00
$	8.80		25,000	3.75	$	8.80		25,000	$	8.80
$	12.00		12,500	3.61	$	12.00		12,500	$	12.00
$	19.80		15,555	3.50	$	19.80		15,555	$	19.80
$	440.00		355	2.11	$	440.00		355	$	440.00
$	480.00		94	2.58	$	480.00		94	$	480.00
$	528.00		186	2.09	$	528.00		186	$	528.00
$	560.00		2,657	2.12	$	560.00		2,657	$	560.00
$	600.00		170	1.62	$	600.00		170	$	600.00
$	640.00		200	1.57	$	640.00		200	$	640.00
$	752.00		9,614	2.62	$	752.00		9,614	$	752.00
$	800.00		350	2.19	$	800.00		350	$	800.00
$	880.00		947	0.92	$	880.00		947	$	880.00
$	920.00		2,126	2.49	$	920.00		2,126	$	920.00
$	1,040.00		1,243	2.54	$	1,040.00		1,243	$	1,040.00
$	1,760.00		781	2.31	$	1,760.00		781	$	1,760.00
$	1,800.00		140	2.32	$	1,800.00		140	$	1,800.00
$	2,000.00		203	2.32	$	2,000.00		203	$	2,000.00
$	0.88 - $2,000.00		3,588,616	4.09	$	5.91		3,588,616	$	5.91

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 nine months ended September 30, 2020 and 2019:

	Nine Months Ended
	September 30, 2020		September 30, 2019
Weighted average risk free interest rate		0.17% — 1.38%		1.75% — 2.28%
Weighted average life (in years)		1.42 — 5		5.0
Volatility		86.3% — 103.1%		85.5% —87.5%
Expected dividend yield		0%		0%
Weighted average grant-date fair value per share of warrants granted	$	1.39	$	10.34

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OTHER CURRENT LIABILITIES

9 Months Ended

Sep. 30, 2020

Other Current Liabilities

OTHER CURRENT LIABILITIES

14. OTHER CURRENT LIABILITIES

Other current liabilities at September 30, 2020 and December 31, 2019 consist of:

	September, 30		December 31,
	2020		2019
Accrued payroll and payroll taxes	$	1,594,038	$	1,237,054
Warrant liability		3,561,067		9,364
Warranty liability		86,070		80,412
Other accrued expenses		260,848		218,380
	$	5,502,023	$	1,545,210

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LEASES

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

LEASES

15. LEASES

We have operating leases for office space. Our leases have remaining lease terms of 1 month to 10.8 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 September 30, 2020:

	September 30, 2020
Operating right-of-use assets	$	4,130,760
Operating lease liability - current		514,910
Operating lease liability - non-current		3,683,355

The components of lease expenses for the nine months ended September 30, 2020, were as follows:

	Nine Months Ended
	September 30, 2020
Operating lease cost	$	695,456
Short-term lease cost		-
Variable lease cost		106,927

The following tables provides a summary of other information related to leases for the nine months ended September 30, 2020:

	September 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	762,356
Right-of-use assets obtained in exchange for new operating lease liabilities	$	-
Weighted-average remaining lease term - operating leases		7.4 years
Weighted-average discount rate - operating leases		10%

The Company determined that using a discount rate of 10% 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 September 30, 2020, are as follows:

Payments due by period
2020 (remainder)	$	247,790
2021		880,914
2022		872,599
2023		895,200
2024		857,368
Thereafter		2,233,700
Total lease payments		5,987,571
Less interest		(1,789,306	)
Present value of lease liabilities	$	4,198,265

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ADVANCES ON FUTURE RECEIPTS

9 Months Ended

Sep. 30, 2020

Advances On Future Receipts

ADVANCES ON FUTURE RECEIPTS

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 nine months ended September 30, 2020, the Company made payments of $762,076 on the outstanding balance. The Company is in default on its payment obligations on these Agreements on Future Receipts.

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NOTES PAYABLE

9 Months Ended

Sep. 30, 2020

Notes Payable [Abstract]

NOTES PAYABLE

17. NOTES PAYABLE

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

	September 30,			December 31,
	2020			2019
Esousa purchased notes	$	431,668		$	2,828,323
Esousa additional purchased notes		1,772,700			632,000
Esousa short-term promissory notes		4,850,000			—
June '20 short-term promissory notes		800,000			—
Other short-term notes payable		1,182,401			1,050,339
Notes payable to Wells Fargo		189,037			290,560
Note payable to Dept. of Economic and Community Development		204,813			229,096
Paycheck Protection Program Loans		1,162,302			—
SBA Economic Injury Disaster Loan		150,000			—
Short term bank credit		1,423,724			1,622,337
Total notes payable		12,166,645			6,652,655
Less:
Unamortized debt discounts		(1,980,685	)		(29,348	)
Unamortized financing cost		—			(3,668	)
Total notes payable, net of financing cost	$	10,185,960		$	6,619,639
Less: current portion		(9,833,928	)		(6,137,015	)
Notes payable – long-term portion	$	352,032		$	482,624

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 the Company to Dominion Capital LLC (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 and during the three months ended September 30, 2020, Esousa acquired $2,240,015 in principal amount, plus accrued but unpaid interest, of certain additional promissory notes that had been previously issued by us (the “Esousa Additional Purchased 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 when the Creditor exchanged a portion of 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”) began July 8, 2020 when the Company received stockholder approval at a special meeting thereof for the Exchange of the Esousa Additional Purchased Notes for the Company’s common stock, and subsequently, authorization from the NYSE American (together, the “Required Approvals”).

The Exchange Agreement provides for two pricing periods, the first of which commenced after the date on which the Creditor received the Exchange Shares pursuant to the Initial Exchange and ended on the date that was 90 days after receipt thereof, 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 became exercisable in July 2020. In connection therewith, the Company 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. Since the Creditor did not purchase all of the additional notes, the Company has the option to acquire a portion of the warrants from the Creditor for an aggregate price of $1.00. Consequently, at September 30, 2020, the option represented the right to acquire 132,236 of the warrants from the Creditor. Therefore, only 1,700,360 options are deemed outstanding at September 30, 2020.

The Company computed the fair value of the 1,700,360 warrants using the Black-Scholes option pricing model and, as a result of this calculation, recorded a loss on extinguishment in the amount of $2,713,874 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 0.23% to 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% to 100.82% was determined based on historical stock prices of similar technology companies.

During the nine months ended September 30, 2020, the Company issued to the investor an aggregate of 5,771,580 shares of the Company’s common stock upon the exchange of principal and interest in the amount of $2,396,655 and $1,536,064, respectively. A loss on extinguishment of $10,548,535 was recognized on the issuances of common stock based on the fair value of the Company’s common stock at the date of the exchanges.

Esousa short-term promissory notes

During the nine months ended September 30, 2020, the Company issued to Esousa 12% short-term promissory notes in the aggregate principal amount of $2,000,000 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.

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 on the estimated fair value of the warrants. During the nine months ended September 30, 2020, the entire amount of debt discount was amortized as non-cash interest expense. 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 and subsequently obtained approval by the NYSE American to issue such shares.

Between August 2020 and September 2020, the Company also received $2,850,000 in loans from Esousa pursuant to which the Company agreed to issue unsecured short-term promissory notes with interest rates of 13% and 14% and warrants with terms of approximately one and a half years to purchase an aggregate of 1,154,927 shares of the Company’s common stock at an average exercise price of $2.71 per share of common stock. Both the notes and warrants were executed subsequent to September 30, 2020 (see Note 25). The notes have a term of three months from the date the Company received the proceeds. The warrants are immediately exercisable if the Company receives stockholder approval at an annual meeting of stockholders to be held on December 30, 2020, and subsequently, authorization from the NYSE American. The warrants may be exercised via cashless exercise at the option of the Investor. These warrants to purchase common stock do not qualify to be treated as equity, and accordingly, were recorded as a liability. The Company is required to present these instruments at fair value at each reporting date and any changes in fair values shall be recorded as an adjustment to earnings.

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 $2,727,085 based on the estimated fair value of the warrants. During the nine months ended September 30, 2020, non-cash interest expense of $1,190,706 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 rate of 0.17% 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 104.56% was determined based on historical stock prices of similar technology companies.

June ‘20 short-term promissory notes

On June 26, 2020, the Company issued to several institutional investors unsecured 12% short-term promissory notes in the aggregate principal amount of $800,000 and seventeen month warrants to purchase an aggregate of 361,991 shares of the Company’s common stock at an exercise price of $2.43 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 of the Investor. These warrants to purchase common stock do not qualify to be treated as equity, and accordingly, were recorded as a liability. The Company is required to present these instruments at fair value at each reporting date and any changes in fair values shall be recorded as an adjustment to earnings.

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.

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.

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NOTES PAYABLE - RELATED PARTIES

9 Months Ended

Sep. 30, 2020

Notes Payable [Abstract]

NOTES PAYABLE - RELATED PARTIES

18. NOTES PAYABLE – RELATED PARTIES

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

	September 30,			December 31,
	2020			2019
Notes payable, related parties	$	263,169		$	284,317
Less: current portion		(211,253	)		(169,153	)
Notes payable, related parties – long-term portion	$	51,916		$	115,164

Microphase is a party to several notes payable agreements with six of its past officers, employees and their family members. As of September 30, 2020, the aggregate outstanding balance pursuant to these notes payable agreements, inclusive of $38,569 of accrued interest, was $301,738, with annual interest rates ranging between 3.00% and 6.00%.

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CONVERTIBLE NOTES

9 Months Ended

Sep. 30, 2020

Long-term Debt, Unclassified [Abstract]

CONVERTIBLE NOTES

19. CONVERTIBLE NOTES

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

	September 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% November 2019 convertible promissory note		—			350,000
12% August 2020 convertible promissory note		330,000			—
April 2020 convertible promissory note		100,000			—
Total convertible notes payable		1,090,000			2,760,990
Less:
Unamortized debt discounts		(332,162	)		(355,227	)
Total convertible notes payable, net of financing cost	$	757,838		$	2,405,763
Less: current portion		(392,044	)		(2,100,990	)
Convertible notes payable, net of financing cost – long-term portion	$	365,794		$	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 nine months ended September 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.

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. These two notes were issued upon the exchange of the 12% Convertible Promissory 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. During the three months ended September 30, 2020, Esousa purchased the 12% promissory note in the principal amount of $585,919 from the institutional investor (See Note 17).

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 a 12% 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 became convertible into the Company’s common stock commencing June 30, 2020 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 exercise of the warrant is subject to approval of the NYSE American. During the three months ended September 30, 2020, Esousa purchased both the Exchanged Note and the Convertible Note from the institutional investor (See Note 17).

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CONVERTIBLE NOTE PAYABLE - RELATED PARTY

9 Months Ended

Sep. 30, 2020

Investment in warrants and common stock of AVLP and Alzamend

CONVERTIBLE NOTE PAYABLE - RELATED PARTY

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.

At the time of issuance of the Ault & Company Convertible Note, the closing price of the Company’s common stock was in excess of the 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, Debt (“ASC 470”). At issuance, the intrinsic value of the BCF totaled $68,966, 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 resulting in a contingent BCF. The Company received stockholder approval on July 8, 2020. On August 20, 2020, the Company issued 413,793 shares of its common stock upon the conversion of $600,000 in principal.

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

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 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.

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.

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 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 to vigorously defend them.

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”). 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.

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”) 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.

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 to vigorously defend them.

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 motion to dismiss was returnable before the Court on November 17, 2020. The Court is fully briefed and motion is 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 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.

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 $4.1 million of such debt obligations and entered into settlement agreements for the remaining amount of approximately $70,000 which is included within future receipts obligations in the accompanying consolidated balance sheet at September 30, 2020. The Company also recorded approximately $400,000 of trade liabilities for a judgment settled in favor of a trade creditor as of September 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 $200,000. 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 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.

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STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2020

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

22. STOCKHOLDERS’ EQUITY

Preferred Stock

The Company is authorized to issue 25,000,000 shares of Preferred Stock $0.001 par value. The Board has designated 1,000,000 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 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 September 30, 2020, 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 the nine months ended September 30, 2020, the Company issued 102,500 shares of its common stock as payment for services to its consultants. The shares were valued at $182,575, an average of $1.78 per share.

Issuance of common stock in payment of short term advances, related party

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.

Issuance of common stock in payment of accrued liability

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 (see Note 17).

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.

Issuance of common stock for conversion of debt

During the nine months ended September 30, 2020, principal and accrued interest of $3,977,427 and $1,584,841, respectively, on the Company’s debt securities was satisfied through the issuance of 6,824,936 shares of the Company’s common stock. The Company recognized a loss on extinguishment of $10,548,535 as a result of these issuances.

On August 20, 2020, the Company issued 413,793 shares of its common stock upon the conversion of $600,000 in principal on the Ault & Company Convertible Note.

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2020

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

23. RELATED PARTY TRANSACTIONS

a. 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, 2021, subject to the terms and conditions stated in the Loan Agreement, including that the Company having available funds to grant such credit. At September 30, 2020, the Company has provided loans to AVLP in the principal amount $10,153,661 and, in addition to the 12% convertible promissory notes, AVLP has issued to the Company warrants to purchase 20,306,921 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 September 30, 2020, the Company recorded contractual interest receivable attributed to the AVLP Loan Agreement of $2,025,475 and a provision for loan losses of $5,159,910.

During the nine months ended September 30, 2020 and the 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 September 30, 2020, the Company’s investment in AVLP common stock had an unrealized loss of $488,049.

Philou is AVLP’s controlling shareholder. Mr. Ault is Chairman of AVLP’s Board of Directors and the Chairman of the Board. Mr. William B. Horne is the Chief Financial Officer and a director of AVLP and the Company.

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

b. At September 30, 2020, the Company has provided a loan to Alzamend in the principal amount $50,000 and, in addition to the 8% convertible promissory notes, Alzamend has issued to the Company warrants to purchase 16,667 shares of Alzamend common stock at an exercise price of $3.00 per share for a period of five years. The warrants were determined by the issuer to be derivative financial instruments. At September 30, 2020, the Company recorded a cumulative unrealized loss on its investment in warrants of Alzamend of $111, 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. 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 nine months ended September 30, 2019, the Company recorded $1,968 of interest income for the discount accretion and $329 of interest income from the contractual 8% rate provided for by the convertible promissory notes.

During the nine months ended September 30, 2020 and year ended December 31, 2019, the Company also acquired 11,325 shares of Alzamend common stock for $9,060 and 372,625 shares of Alzamend common stock for $208,100, respectively. At September 30, 2020, the estimated fair value of Alzamend’s common stock was $1.50. The Company has determined that its investment in Alzamend marketable equity securities should be accounted for in accordance with ASC No. 820, Fair Value Measurements and Disclosures and based upon the estimated fair value of Alzamend common stock at September 30, 2020, the Company’s investment in AVLP common stock had an unrealized gain of $358,765.

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.

c. During the nine months ended September 30, 2020, Ault & Company, Inc. (“Ault & Company”) has provided $422,758 in short-term advances, net of repayments. 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.

d. On December 22, 2019, the Company entered into a securities purchase agreement with Ault & Company. Pursuant to the terms 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 purchase on January 15, 2020.

e. 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). On August 20, 2020, the Company issued 413,793 shares of its common stock upon the conversion of $600,000 in principal on the Ault & Company Convertible Note.

f. 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.

g. Milton C. Ault, III, the Company’s Chairman and Chief Executive Officer and MCKEA guaranteed the Company’s obligation to repay a 12% January 2020 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.

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SEGMENT, CUSTOMERS AND GEOGRAPHICAL INFORMATION

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

SEGMENT, CUSTOMERS AND GEOGRAPHICAL INFORMATION

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 loss from operations of the Company’s reportable segments is less than the Company’s consolidated loss from operations due to DPW Holdings corporate expenses.

	Three Months ended September 30, 2020
	GWW			Coolisys		Ault Alliance			Total
Revenue	$	4,329,295		$	1,375,805	$	—		$	5,705,100
Revenue, lending activities		—			—		(29,536	)		(29,536	)
Total revenues	$	4,329,295		$	1,375,805	$	(29,536	)	$	5,675,564
Depreciation and
amortization expense	$	328,302		$	21,426	$	—		$	349,728
Loss from operations	$	(65,369	)	$	126,593	$	(40,561	)	$	20,663
Capital expenditures for
segment assets, as of
September 30, 2020	$	337,921		$	26,425	$	—		$	364,346
Identifiable assets as of
September 30, 2020	$	21,186,343		$	21,009,613	$	1,448,856		$	43,644,812

	Three Months ended September 30, 2019
	GWW			Coolisys			Ault Alliance			Total
Revenue	$	3,355,897		$	1,612,543		$	—		$	4,968,440
Revenue, cryptocurrency
mining		—			307,172			—			307,172
Revenue, lending activities		—			—			69,217			69,217
Total revenues	$	3,355,897		$	1,919,715		$	69,217		$	5,344,829
Depreciation and
amortization expense	$	151,257		$	747,034		$	—		$	898,291
Loss from operations	$	(133,909	)	$	(5,050,617	)	$	(70,953	)	$	(5,255,479	)
Capital expenditures for
segment assets, as of
September 30, 2019	$	25,135		$	30,582		$	—		$	55,717
Identifiable assets as of
September 30, 2019	$	19,440,320		$	28,079,982		$	2,983,046		$	50,503,348

	Nine Months ended September 30, 2020
	GWW		Coolisys			Ault Alliance			Total
Revenue	$	12,905,877	$	3,803,241		$	—		$	16,709,118
Revenue, lending activities		—		—		$	(27,140	)		(27,140	)
Total revenues	$	12,905,877	$	3,803,241		$	(27,140	)	$	16,681,978
Depreciation and
amortization expense	$	478,316	$	129,644		$	—		$	607,960
Loss from operations	$	118,642	$	(27,460	)	$	(121,977	)	$	(30,795	)
Capital expenditures for
segment assets, as of
September 30, 2020	$	528,038	$	26,425		$	—		$	554,463
Identifiable assets as of
September 30, 2020	$	21,170,343	$	21,297,286		$	1,448,856		$	43,916,485

	Nine Months ended September 30, 2019
	GWW			Coolisys			Ault Alliance			Total
Revenue	$	10,754,949		$	4,306,340		$	—		$	15,061,289
Revenue, cryptocurrency
mining		—			592,092			—			592,092
Revenue, lending activities		—			—			443,927			443,927
Total revenues	$	10,754,949		$	4,898,432		$	443,927		$	16,097,308
Depreciation and
amortization expense	$	553,642		$	2,239,958		$	—		$	2,793,600
Loss from operations	$	(651,993	)	$	(7,188,830	)	$	(29,663	)	$	(7,870,486	)
Capital expenditures for
segment assets, as of
June 30, 2019	$	102,364		$	46,959		$	—		$	149,323
Identifiable assets as of
June 30, 2019	$	19,138,562		$	23,200,317		$	3,184,296		$	45,523,175

Concentration Risk:

The following tables provide the percentage of total revenues for the three and nine months ended September 30, 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 Nine Months Ended
	September 30, 2020			September 30, 2020
	Total Revenues		Percentage of	Total Revenues		Percentage of
	by Major		Total Company	by Major		Total Company
	Customers		Revenues	Customers		Revenues
Customer A	$	1,862,667	33%	$	5,596,089	34%
Customer B		1,065,400	19%		2,660,800	16%

	For the Three Months Ended			For the Nine Months Ended
	September 30, 2019			September 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	27%	$	2,845,541	18%

Revenue from Customer A is attributable to Enertec. Revenue from Customer B is attributable to Microphase. Further, at September 30, 2020, MTIX represented all the Company’s accounts and other receivable, related party.

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2020

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

25. SUBSEQUENT EVENTS

In accordance with FASB ASC 855-10, the Company has analyzed its operations subsequent to September 30, 2020, and thru the date of this report being issued and has determined that it does not have any material subsequent events to disclose in these financial statements except for the following.

At-The-Market Equity Offering

On October 2, 2020 the Company established an “at-the-market” equity offering program under which it may sell, from time to time, shares of its common stock for aggregate gross proceeds of up to $8,975,000. The shares of common stock will be offered through Ascendiant Capital Markets, LLC, which will act in its capacity as sales agent (the “Agent”).

Pursuant to a sales agreement with the Agent, sales of shares of the Company's common stock may be made in transactions that are deemed to be “at-the-market” offerings, including sales made by means of ordinary brokers’ transactions on the NYSE American or otherwise at market prices prevailing at the time of sale or as agreed to with the Agent.

The Company intends to use the net proceeds from the “at-the-market” equity offering, if any, for the financing of possible acquisitions of companies and technologies, business expansions and investments and for working capital and general corporate purposes, which may include the repayment, refinancing, redemption or repurchase of future indebtedness or capital stock. The Company does not have agreements or commitments for any specific acquisitions at this time.

The shares of common stock described above are being offered pursuant to a shelf registration statement (File No. 333-222132) which became effective on January 11, 2018. Such shares of common stock may be offered only by means of a prospectus, including a prospectus supplement, forming a part of the effective registration statement.

During October and through November 13, 2020 the Company received gross proceeds of $5,375,055 through the sale of 2,935,875 shares of the Company’s common stock through the ATM Offering.

Issuance of common stock for conversion of debt

During October 2020, principal and accrued interest of $2,277,194 on the Company’s debt securities was satisfied through the issuance of 2,108,152 shares of the Company’s common stock.

I.AM Bankruptcy Filing

On November 2, 2020, I.AM, Inc. 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.

13% Unsecured Promissory Note

 On August 5, 2020, the Company received $2,000,000 from Esousa and on October 22, 2020, the Company issued to Esousa a promissory note in the principal face amount of $2,000,000, with an interest rate of 13%. The outstanding principal face amount, plus any accrued and unpaid interest, is due by November 3, 2020, or as otherwise provided in accordance with the terms set forth therein. In connection therewith, the Company delivered to the institutional investor a warrant to purchase 729,927 shares of the Company’s common stock at an exercise price of $3.01. The exercise of the warrant is subject to approval of the NYSE American.

14% Unsecured Promissory Notes

The Company issued to Esousa two unsecured promissory notes in the aggregate principal face amount of $1,200,000, of which $850,000 was received prior to September 30, 2020. The principal amount of $850,000 of the first Note dated October 27, 2020, together with all accrued unpaid interest at an annual rate of 14%, is due and payable on December 28, 2020. The principal amount of $350,000 of the second Note dated October 27, 2020, together with all accrued unpaid interest at an annual rate of 14%, is due and payable on January 7, 2021.

In connection with the two Promissory Notes, the Company delivered to the institutional investor (i) a warrant dated October 27, 2020, to purchase 425,000 shares of the Company’s common stock at an exercise price of $2.20 (the “First Warrant”), and (ii) a warrant dated October 27, 2020, to purchase 148,936 shares of the Company’s common stock at an exercise price of $2.59. The exercise of the warrants is subject to approval of the NYSE American.

Pending Acquisiton of Relec Electronics Ltd.

On November 9, 2020, GWW entered into a Stock Purchase Agreement (the “Agreement”) with Tabard Holdings Inc., a Delaware corporation and wholly owned subsidiary of GWW (“Tabard”), the legal and beneficial owners (the “Sellers”) of 100% of the issued shares in the capital of Relec Electronics Ltd., a corporation organized under the laws of England and Wales (“Relec”), and Peter Lappin, in his capacity as the representative of the Sellers (the “Sellers’ Representative”).  Upon the terms and subject to the conditions set forth in the Agreement, Tabard shall acquire Relec pursuant to the Agreement whereby the Sellers shall sell to Tabard (i) 100% of the issued shares of Relec. The purchase price is approximately £3,000,000 plus an amount equal to Relec’s cash balance immediately prior to closing of the acquisiton. Tabard has paid the sum of $500,000 to an escrow as a deposit toward payment of the purchase price.

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

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, Ault Alliance, It’sLikeFashion and Digital Farms and its majority-owned subsidiaries, Microphase and I.AM. All significant intercompany accounts and transactions have been eliminated in consolidation.

Accounting Estimates

Accounting Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions. The Company's management believes that the estimates, judgments and assumptions used are reasonable 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 dates of the financial statements, and 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, carrying amounts of investments, carrying amounts 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.

Impairment of long-lived assets:

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 first quarter of 2020, based upon the deteriorating business conditions for restaurants in the San Diego County as result of the spread of COVID-19 and the decline in projected cash flows over the life of the restaurant long-lived assets, the Company performed an undiscounted cash flow test to determine if the restaurant equipment and right-of-use assets were impaired. The undiscounted cash flows were less than the carrying amount of the Company’s restaurant equipment and right-of-use assets and therefore, the carrying amount of the assets were compared to the fair value of the assets, and the Company determined that there were impairment charges to be recorded on the restaurant long-lived assets. Impairment charges for the nine months ended September 30, 2020 related to restaurant equipment were in an amount equal to the cost of the Company’s restaurant equipment, net of depreciation of $504,802 and the impairment related to the right-of-use assets attributed to the discontinued restaurant operations was the full carrying amount of $1,020,514. The restaurant-related impairment charges are included as a component of net loss from discontinued operations (see Note 4).

Revenue Recognition

Revenue Recognition

The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects 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.

The Company’s disaggregated revenues consist of the following for the nine months ended September 30, 2020 and 2019:

	Nine Months ended September 30, 2020
	GWW		Coolisys		Ault Alliance			Total
Primary Geographical Markets
North America	$	5,109,672	$	3,100,552	$	(27,140	)	$	8,183,084
Europe		694,478		288,282		-			982,760
Middle East		6,837,501		-		-			6,837,501
Other		264,226		414,407		-			678,633
	$	12,905,877	$	3,803,241	$	(27,140	)	$	16,681,978
Major Goods
RF/Microwave Filters	$	3,886,940	$	—	$	—		$	3,886,940
Detector logarithmic video amplifiers		1,318,547		—		—			1,318,547
Power Supply Units		—		3,803,241		—			3,803,241
Power Supply Systems		862,889		—		—			862,889
Healthcare diagnostic systems		784,689		—		—			784,689
Defense systems		6,052,812		—		—			6,052,812
Lending activities		—		—		(27,140	)		(27,140	)
	$	12,905,877	$	3,803,241	$	(27,140	)	$	16,681,978
Timing of Revenue Recognition
Goods transferred at a point in time	$	6,068,376	$	3,803,241	$	(27,140	)	$	9,844,477
Services transferred over time		6,837,501		—		—			6,837,501
	$	12,905,877	$	3,803,241	$	(27,140	)	$	16,681,978

	Nine Months ended September 30, 2019
	GWW		Coolisys		Ault Alliance		Total
Primary Geographical Markets
North America	$	2,703,803	$	4,590,840	$	443,927	$	7,738,570
Europe		6,341,396		16,804		—		6,358,200
Middle East		1,283,312		21,348		—		1,283,312
Other		447,786		269,440		—		717,226
	$	10,776,297	$	4,898,432	$	443,927	$	16,097,308
Major Goods
RF/Microwave filters	$	989,114	$	—	$	—	$	989,114
Detector logarithmic video amplifiers		473,150		—		—		473,150
Power supply units		3,194,843		4,306,340		—		7,501,183
Power supply systems		1,423,971		—		—		1,423,971
Healthcare diagnostic systems		1,260,700		—		—		1,260,700
Defense systems		3,413,171		—		—		3,413,171
Lending activities		—		—		443,927		443,927
Digital currency mining		—		592,092		—		592,092
	$	10,754,949	$	4,898,432	$	443,927	$	16,097,308
Timing of Revenue Recognition
Goods transferred at a point in time	$	5,944,177	$	4,898,432	$	443,927	$	11,286,536
Services transferred over time		4,810,772		—		—		4,810,772
	$	10,754,949	$	4,898,432	$	443,927	$	16,097,308

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.

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 September 30, 2020, for the MLSE units was approximately $48 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

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.

Fair value of Financial Instruments

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 guidance also establishes a 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. 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 fair value of 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, 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 September 30, 2020
	Total		Level 1		Level 2		Level 3
Investments in convertible promissory note of AVLP – a related party	$	7,059,322	$	—	$	—	$	7,059,322
Investments in common stock and derivative instruments of AVLP – a related party		2,750,580		259,786	$	—		2,490,794
Investment in common stock and warrants of Alzamend – a related party		587,686		—		—		587,686
Investments in marketable equity securities		386,476		386,476		—		—
Investments in warrants of public companies		103		—		—		103
Total Investments	$	10,784,167	$	646,262	$	—	$	10,137,905

	Fair Value Measurement at December 31, 2019
	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 common stock and derivative instruments of AVLP – a related party		1,569,286		238,602		—		1,330,684
Investment in common stock of Alzamend – a related party		558,938		—		—		558,938
Investments in marketable equity securities		639,647		639,647		—		—
Investments in warrants of public companies		9,174		—		—		9,174
Total Investments	$	9,317,765	$	878,249	$	—	$	8,439,516

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.

Net Loss per Share

Net Loss per Share

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, 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 nine months ended September 30, 2020 and 2019. Anti-dilutive securities, which are convertible into or exercisable for the Company’s common stock, consist of the following at September 30, 2020 and 2019:

	September 30,
	2020		2019
Stock options		950		2,906
Warrants (1)		3,582,116		72,921
Convertible notes		1,396,419		349,486
Conversion of preferred stock		2,232		2,232
Total		4,981,717		427,545

⁽¹⁾ The Company has excluded 6,500 warrants issued in April 2019, which may be exercised by means of a cashless exercise into 6,500 shares of the Company’s common stock, in its anti-dilutive securities but included the warrants in its weighted average shares outstanding.

Reclassifications

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 Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which will modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, including the removal of certain disclosure requirements. The amendments in ASU 2018-13 are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted the new disclosure requirements for the period ending March 31, 2020. The additional components of this release did not have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 changes how entities will measure credit losses for most financial assets and other instruments that are not measured at fair value through net income. This update introduces the current expected credit loss (“CECL”) model, which will require an entity to measure credit losses for certain financial instruments and financial assets, including trade receivables. Under this update, on initial recognition and at each reporting period, an entity will be required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument. ASU 2016-13 is effective for public companies in fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company has completed its evaluation process and the January 1, 2020 adoption did not have a material impact to the Company’s consolidated financial statements for the three and nine months ended September 30, 2020.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

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. 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’ss financial position, results of operations, and cash flows.

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Schedule of revenue recognition

The Company’s disaggregated revenues consist of the following for the nine months ended September 30, 2020 and 2019:

	Nine Months ended September 30, 2020
	GWW		Coolisys		Ault Alliance			Total
Primary Geographical Markets
North America	$	5,109,672	$	3,100,552	$	(27,140	)	$	8,183,084
Europe		694,478		288,282		-			982,760
Middle East		6,837,501		-		-			6,837,501
Other		264,226		414,407		-			678,633
	$	12,905,877	$	3,803,241	$	(27,140	)	$	16,681,978
Major Goods
RF/Microwave Filters	$	3,886,940	$	—	$	—		$	3,886,940
Detector logarithmic video amplifiers		1,318,547		—		—			1,318,547
Power Supply Units		—		3,803,241		—			3,803,241
Power Supply Systems		862,889		—		—			862,889
Healthcare diagnostic systems		784,689		—		—			784,689
Defense systems		6,052,812		—		—			6,052,812
Lending activities		—		—		(27,140	)		(27,140	)
	$	12,905,877	$	3,803,241	$	(27,140	)	$	16,681,978
Timing of Revenue Recognition
Goods transferred at a point in time	$	6,068,376	$	3,803,241	$	(27,140	)	$	9,844,477
Services transferred over time		6,837,501		—		—			6,837,501
	$	12,905,877	$	3,803,241	$	(27,140	)	$	16,681,978

	Nine Months ended September 30, 2019
	GWW		Coolisys		Ault Alliance		Total
Primary Geographical Markets
North America	$	2,703,803	$	4,590,840	$	443,927	$	7,738,570
Europe		6,341,396		16,804		—		6,358,200
Middle East		1,283,312		21,348		—		1,283,312
Other		447,786		269,440		—		717,226
	$	10,776,297	$	4,898,432	$	443,927	$	16,097,308
Major Goods
RF/Microwave filters	$	989,114	$	—	$	—	$	989,114
Detector logarithmic video amplifiers		473,150		—		—		473,150
Power supply units		3,194,843		4,306,340		—		7,501,183
Power supply systems		1,423,971		—		—		1,423,971
Healthcare diagnostic systems		1,260,700		—		—		1,260,700
Defense systems		3,413,171		—		—		3,413,171
Lending activities		—		—		443,927		443,927
Digital currency mining		—		592,092		—		592,092
	$	10,754,949	$	4,898,432	$	443,927	$	16,097,308
Timing of Revenue Recognition
Goods transferred at a point in time	$	5,944,177	$	4,898,432	$	443,927	$	11,286,536
Services transferred over time		4,810,772		—		—		4,810,772
	$	10,754,949	$	4,898,432	$	443,927	$	16,097,308

Schedule of 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 September 30, 2020
	Total		Level 1		Level 2		Level 3
Investments in convertible promissory note of AVLP – a related party	$	7,059,322	$	—	$	—	$	7,059,322
Investments in common stock and derivative instruments of AVLP – a related party		2,750,580		259,786	$	—		2,490,794
Investment in common stock and warrants of Alzamend – a related party		587,686		—		—		587,686
Investments in marketable equity securities		386,476		386,476		—		—
Investments in warrants of public companies		103		—		—		103
Total Investments	$	10,784,167	$	646,262	$	—	$	10,137,905

	Fair Value Measurement at December 31, 2019
	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 common stock and derivative instruments of AVLP – a related party		1,569,286		238,602		—		1,330,684
Investment in common stock of Alzamend – a related party		558,938		—		—		558,938
Investments in marketable equity securities		639,647		639,647		—		—
Investments in warrants of public companies		9,174		—		—		9,174
Total Investments	$	9,317,765	$	878,249	$	—	$	8,439,516

Schedule of anti-dilutive securities

Anti-dilutive securities, which are convertible into or exercisable for the Company’s common stock, consist of the following at September 30, 2020 and 2019:

	September 30,
	2020		2019
Stock options		950		2,906
Warrants (1)		3,582,116		72,921
Convertible notes		1,396,419		349,486
Conversion of preferred stock		2,232		2,232
Total		4,981,717		427,545

⁽¹⁾ The Company has excluded 6,500 warrants issued in April 2019, which may be exercised by means of a cashless exercise into 6,500 shares of the Company’s common stock, in its anti-dilutive securities but included the warrants in its weighted average shares outstanding.

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Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2020

Discontinued Operations and Disposal Groups [Abstract]

Schedule of major classes of assets and liabilities

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

	September 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		322,125		229,574
Other current liabilities		461,738		482,375
Total current liabilities classified as held for sale		1,572,177		1,593,550
Long term liabilities
Operating lease liability, non-current		786,815		951,072
Total liabilities classified as held for sale	$	2,358,992	$	2,544,622

Schedule of major classes of loss from discontinued operations

The following tables summarize the major classes of line items included in loss from discontinued operations:

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2020		2019			2020			2019
Revenue	$	—	$	1,036,834		$	543,327		$	3,371,465
Cost of revenue		—		(293,765	)		(160,310	)		(908,256	)
Selling and marketing		—		(61,618	)		—			(162,268	)
General and administrative		—		(964,829	)		(555,445	)		(3,017,578	)
Impairment of property and equipment		—		—			(1,525,316	)		—
Interest expense		—		(789	)		—			(789	)
Loss from discontinued operations	$	—	$	(284,167	)	$	(1,697,744	)	$	(717,426	)

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Marketable Equity Securities (Tables)

9 Months Ended

Sep. 30, 2020

Marketable Securities [Abstract]

Schedule of marketable securities

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

	Marketable equity securities at September 30, 2020
			Gross unrealized		Gross realized
	Cost		gains		gains (losses)		Fair value
Common shares	$	301,960	$	84,516	$	—	$	386,476

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

Schedule of additional information about marketable securities

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		(143,667	)
Realized gains on marketable equity securities		22,602
Unrealized losses on marketable equity securities		(132,106	)
Balance at September 30, 2020	$	386,476

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PROPERTY AND EQUIPMENT, NET (Tables)

9 Months Ended

Sep. 30, 2020

Property, Plant and Equipment [Abstract]

Schedule of property and equipment

At September 30, 2020 and December 31, 2019, property and equipment consist of:

	September 30,			December 31,
	2020			2019
Cryptocurrency machines and related equipment	$	567,216		$	567,216
Computer, software and related equipment		2,941,870			2,518,187
Office furniture and equipment		441,104			441,613
Leasehold improvements		1,246,301			1,230,407
		5,196,491			4,757,423
Accumulated depreciation and amortization		(3,218,716	)		(2,970,030	)
Property and equipment, net	$	1,977,775		$	1,787,393

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INTANGIBLE ASSETS, NET (Tables)

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of intangible assets

At September 30, 2020 and December 31, 2019 intangible assets consist of:

	September 30,			December 31,
	2020			2019
Trade name and trademark	$	1,039,307		$	1,039,307
Customer list		2,413,054			2,406,434
Domain name and other intangible assets		644,607			641,809
		4,096,968			4,087,550
Accumulated depreciation and amortization		(1,137,912	)		(880,562	)
Intangible assets, net	$	2,959,056		$	3,206,988

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GOODWILL (Tables)

9 Months Ended

Sep. 30, 2020

Intangible Assets, Net (Including Goodwill) [Abstract]

Schedule of goodwill

The following table summarizes the changes in our goodwill during the nine months ended September 30, 2020:

	Goodwill
Balance as of January 1, 2020	$	8,100,947
Effect of exchange rate changes		21,490
Balance as of September 30, 2020	$	8,122,437

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INVESTMENTS - RELATED PARTIES (Tables)

9 Months Ended

Sep. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Schedule of investments

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

	September 30,			December 31,
	2020			2019
Investment in convertible promissory note of AVLP	$	10,153,661		$	9,595,079
Investment in convertible promissory note of Alzamend		50,000			—
Accrued interest in convertible promissory note of AVLP		2,025,475			2,025,475
Total investment in convertible promissory note of AVLP – Gross		12,229,136			11,620,554
Less: original issue discount		(9,904	)		—
Less: provision for loan losses		(5,159,910	)		(5,079,834	)
Total investment in convertible promissory note of AVLP and Alzamend		7,059,322			6,540,720
Investment in derivative instruments of AVLP		2,490,794			1,330,684
Investment in common stock of AVLP		259,786			238,602
Investment in common stock and warrants of Alzamend		587,686			558,938
Investment in derivative instruments and common stock of AVLP and Alzamend		3,338,266			2,128,224
Total investment in AVLP and Alzamend – Net	$	10,397,588		$	8,668,944
Investment in warrants and common stock of AVLP and Alzamend	$	3,338,266		$	2,128,224
Investment in convertible promissory note of AVLP and Alzamend		7,059,322			6,540,720
Total investment in AVLP and Alzamend – Net	$	10,397,588		$	8,668,944

Schedule of summarizes the changes in our investments

The following table summarizes the changes in our investments in AVLP and Alzamend during the nine months ended September 30, 2020:

	Investment in		Investment in
	warrants and		convertible		Total
	common stock		promissory		investment
	of AVLP and		note of AVLP		in AVLP and
	Alzamend		and Alzamend		Alzamend – Net
Balance at January 1, 2020	$	2,128,224	$	6,540,720	$	8,668,944
Investment in convertible promissory notes of AVLP		—		478,506		478,506
Investment in convertible promissory note of Alzamend		—		38,128		38,128
Investment in common stock of AVLP and Alzamend		12,884		—		12,884
Investment in warrants of Alzamend		11,872		—		11,872
Fair value of derivative instruments issued by AVLP		80,076		—		80,076
Unrealized loss in derivative instruments of AVLP		1,080,034		—		1,080,034
Unrealized loss in common stock of AVLP and Alzamend		25,176		—		25,176
Accretion of discount				1,968		1,968
Balance at September 30, 2020	$	3,338,266	$	7,059,322	$	10,397,588

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STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Schedule of exercise price

The options outstanding as of September 30, 2020, 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	919	5.19	$537.96	566	$533.08
$1,208 - $1,352	31	2.88	$1,339.20	31	$1,339.20
$480 - $1,352	950	5.11	$564.32	597	$575.23
Issuances outside of Plans
$1.79	850,000	9.97	$1.79	0	$0.00
Total Options
$480 - 1,856	850,950	9.96	$2.42	597	$575.23

Schedule of stock-based compensation expense

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 nine months ended September 30, 2020 and 2019, is comprised as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Stock-based compensation from Plans	$	202,975	$	206,289	$	272,466	$	531,379
Stock-based compensation from issuances
outside of Plans		-		155,490		-		822,683
Total Stock-based compensation	$	202,975	$	361,779	$	272,466	$	1,354,062

Schedule of option activity under the company's stock option plans

A summary of option activity under the Company's stock option plans as of September 30, 2020, and changes during the nine 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, 2019		103,105			1,388		$	636.47		6.33	$	0
Restricted stock awards		(96,875	)		—
Forfeited		438			(438	)	$	793.14
September 30, 2020		6,668			950		$	564.32		5.11	$	0

Schedule of weighted average assumptions

During the nine months ended September 30, 2020, the Company estimated the fair value of stock options granted using the Black-Scholes option pricing model with the following weighted average assumptions:

	Nine Months Ended
	September 30, 2020
Weighted average risk-free interest rate	0.280%
Weighted average life (in years)	5.7
Volatility	100.3% — 100.5%
Expected dividend yield	0%
Weighted average grant-date fair value per share of options granted	$1.38

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WARRANTS (Tables)

9 Months Ended

Sep. 30, 2020

Warrants

Schedule of common stock warrants outstanding

The following table summarizes information about common stock warrants outstanding at September 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	3.50	$	-		6,500	$	-
$	0.88		281,250	4.52	$	0.88		281,250	$	0.88
$	1.07		400,000	4.66	$	1.07		400,000	$	1.07
$	1.14		144,928	4.44	$	1.14		144,928	$	1.14
$	1.16		95,238	4.65	$	1.16		95,238	$	1.16
$	1.17		157,143	4.53	$	1.17		157,143	$	1.17
$	1.19		277,778	4.41	$	1.19		277,778	$	1.19
$	1.21		90,909	4.56	$	1.21		90,909	$	1.21
$	1.43		1,700,361	4.36	$	1.43		1,700,361	$	1.43
$	2.43		361,991	1.16	$	2.43		361,991	$	2.43
$	8.00		397	1.09	$	8.00		397	$	8.00
$	8.80		25,000	3.75	$	8.80		25,000	$	8.80
$	12.00		12,500	3.61	$	12.00		12,500	$	12.00
$	19.80		15,555	3.50	$	19.80		15,555	$	19.80
$	440.00		355	2.11	$	440.00		355	$	440.00
$	480.00		94	2.58	$	480.00		94	$	480.00
$	528.00		186	2.09	$	528.00		186	$	528.00
$	560.00		2,657	2.12	$	560.00		2,657	$	560.00
$	600.00		170	1.62	$	600.00		170	$	600.00
$	640.00		200	1.57	$	640.00		200	$	640.00
$	752.00		9,614	2.62	$	752.00		9,614	$	752.00
$	800.00		350	2.19	$	800.00		350	$	800.00
$	880.00		947	0.92	$	880.00		947	$	880.00
$	920.00		2,126	2.49	$	920.00		2,126	$	920.00
$	1,040.00		1,243	2.54	$	1,040.00		1,243	$	1,040.00
$	1,760.00		781	2.31	$	1,760.00		781	$	1,760.00
$	1,800.00		140	2.32	$	1,800.00		140	$	1,800.00
$	2,000.00		203	2.32	$	2,000.00		203	$	2,000.00
$	0.88 - $2,000.00		3,588,616	4.09	$	5.91		3,588,616	$	5.91

Schedule of option pricing

The Company utilized the Black-Scholes option pricing model and the assumptions used during the nine months ended September 30, 2020 and 2019:

	Nine Months Ended
	September 30, 2020		September 30, 2019
Weighted average risk free interest rate		0.17% — 1.38%		1.75% — 2.28%
Weighted average life (in years)		1.42 — 5		5.0
Volatility		86.3% — 103.1%		85.5% —87.5%
Expected dividend yield		0%		0%
Weighted average grant-date fair value per share of warrants granted	$	1.39	$	10.34

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OTHER CURRENT LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2020

Other Current Liabilities

Schedule of other current liabilities

Other current liabilities at September 30, 2020 and December 31, 2019 consist of:

	September, 30		December 31,
	2020		2019
Accrued payroll and payroll taxes	$	1,594,038	$	1,237,054
Warrant liability		3,561,067		9,364
Warranty liability		86,070		80,412
Other accrued expenses		260,848		218,380
	$	5,502,023	$	1,545,210

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LEASES (Tables)

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Schedule of supplemental balance sheet information related to leases

The following table provides a summary of leases by balance sheet category as of September 30, 2020:

	September 30, 2020
Operating right-of-use assets	$	4,130,760
Operating lease liability - current		514,910
Operating lease liability - non-current		3,683,355

Schedule of lease expenses

The components of lease expenses for the nine months ended September 30, 2020, were as follows:

	Nine Months Ended
	September 30, 2020
Operating lease cost	$	695,456
Short-term lease cost		-
Variable lease cost		106,927

Schedule of supplemental cash flow information related to leases

The following tables provides a summary of other information related to leases for the nine months ended September 30, 2020:

	September 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	762,356
Right-of-use assets obtained in exchange for new operating lease liabilities	$	-
Weighted-average remaining lease term - operating leases		7.4 years
Weighted-average discount rate - operating leases		10%

Schedule of maturities of operating lease liabilities

Maturity of lease liabilities under our non-cancellable operating leases as of September 30, 2020, are as follows:

Payments due by period
2020 (remainder)	$	247,790
2021		880,914
2022		872,599
2023		895,200
2024		857,368
Thereafter		2,233,700
Total lease payments		5,987,571
Less interest		(1,789,306	)
Present value of lease liabilities	$	4,198,265

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NOTES PAYABLE (Tables)

9 Months Ended

Sep. 30, 2020

Notes Payable [Abstract]

Schedule of notes payable

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

	September 30,			December 31,
	2020			2019
Esousa purchased notes	$	431,668		$	2,828,323
Esousa additional purchased notes		1,772,700			632,000
Esousa short-term promissory notes		4,850,000			—
June '20 short-term promissory notes		800,000			—
Other short-term notes payable		1,182,401			1,050,339
Notes payable to Wells Fargo		189,037			290,560
Note payable to Dept. of Economic and Community Development		204,813			229,096
Paycheck Protection Program Loans		1,162,302			—
SBA Economic Injury Disaster Loan		150,000			—
Short term bank credit		1,423,724			1,622,337
Total notes payable		12,166,645			6,652,655
Less:
Unamortized debt discounts		(1,980,685	)		(29,348	)
Unamortized financing cost		—			(3,668	)
Total notes payable, net of financing cost	$	10,185,960		$	6,619,639
Less: current portion		(9,833,928	)		(6,137,015	)
Notes payable – long-term portion	$	352,032		$	482,624

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NOTES PAYABLE - RELATED PARTIES (Tables)

9 Months Ended

Sep. 30, 2020

Notes Payable [Abstract]

Schedule of notes payable - related parties

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

	September 30,			December 31,
	2020			2019
Notes payable, related parties	$	263,169		$	284,317
Less: current portion		(211,253	)		(169,153	)
Notes payable, related parties – long-term portion	$	51,916		$	115,164	s

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CONVERTIBLE NOTES (Tables)

9 Months Ended

Sep. 30, 2020

Long-term Debt, Unclassified [Abstract]

Schedule of convertible notes

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

	September 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% November 2019 convertible promissory note		—			350,000
12% August 2020 convertible promissory note		330,000			—
April 2020 convertible promissory note		100,000			—
Total convertible notes payable		1,090,000			2,760,990
Less:
Unamortized debt discounts		(332,162	)		(355,227	)
Total convertible notes payable, net of financing cost	$	757,838		$	2,405,763
Less: current portion		(392,044	)		(2,100,990	)
Convertible notes payable, net of financing cost – long-term portion	$	365,794		$	304,773

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SEGMENT, CUSTOMERS AND GEOGRAPHICAL INFORMATION (Tables)

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Schedule of geographic operating segments

The total loss from operations of the Company’s reportable segments is less than the Company’s consolidated loss from operations due to DPW Holdings corporate expenses.

	Three Months ended September 30, 2020
	GWW			Coolisys		Ault Alliance			Total
Revenue	$	4,329,295		$	1,375,805	$	—		$	5,705,100
Revenue, lending activities		—			—		(29,536	)		(29,536	)
Total revenues	$	4,329,295		$	1,375,805	$	(29,536	)	$	5,675,564
Depreciation and
amortization expense	$	328,302		$	21,426	$	—		$	349,728
Loss from operations	$	(65,369	)	$	126,593	$	(40,561	)	$	20,663
Capital expenditures for
segment assets, as of
September 30, 2020	$	337,921		$	26,425	$	—		$	364,346
Identifiable assets as of
September 30, 2020	$	21,186,343		$	21,009,613	$	1,448,856		$	43,644,812

	Three Months ended September 30, 2019
	GWW			Coolisys			Ault Alliance			Total
Revenue	$	3,355,897		$	1,612,543		$	—		$	4,968,440
Revenue, cryptocurrency
mining		—			307,172			—			307,172
Revenue, lending activities		—			—			69,217			69,217
Total revenues	$	3,355,897		$	1,919,715		$	69,217		$	5,344,829
Depreciation and
amortization expense	$	151,257		$	747,034		$	—		$	898,291
Loss from operations	$	(133,909	)	$	(5,050,617	)	$	(70,953	)	$	(5,255,479	)
Capital expenditures for
segment assets, as of
September 30, 2019	$	25,135		$	30,582		$	—		$	55,717
Identifiable assets as of
September 30, 2019	$	19,440,320		$	28,079,982		$	2,983,046		$	50,503,348

	Nine Months ended September 30, 2020
	GWW		Coolisys			Ault Alliance			Total
Revenue	$	12,905,877	$	3,803,241		$	—		$	16,709,118
Revenue, lending activities		—		—		$	(27,140	)		(27,140	)
Total revenues	$	12,905,877	$	3,803,241		$	(27,140	)	$	16,681,978
Depreciation and
amortization expense	$	478,316	$	129,644		$	—		$	607,960
Loss from operations	$	118,642	$	(27,460	)	$	(121,977	)	$	(30,795	)
Capital expenditures for
segment assets, as of
September 30, 2020	$	528,038	$	26,425		$	—		$	554,463
Identifiable assets as of
September 30, 2020	$	21,170,343	$	21,297,286		$	1,448,856		$	43,916,485

	Nine Months ended September 30, 2019
	GWW			Coolisys			Ault Alliance			Total
Revenue	$	10,754,949		$	4,306,340		$	—		$	15,061,289
Revenue, cryptocurrency
mining		—			592,092			—			592,092
Revenue, lending activities		—			—			443,927			443,927
Total revenues	$	10,754,949		$	4,898,432		$	443,927		$	16,097,308
Depreciation and
amortization expense	$	553,642		$	2,239,958		$	—		$	2,793,600
Loss from operations	$	(651,993	)	$	(7,188,830	)	$	(29,663	)	$	(7,870,486	)
Capital expenditures for
segment assets, as of
June 30, 2019	$	102,364		$	46,959		$	—		$	149,323
Identifiable assets as of
June 30, 2019	$	19,138,562		$	23,200,317		$	3,184,296		$	45,523,175

Schedule of total revenues

The following tables provide the percentage of total revenues for the three and nine months ended September 30, 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 Nine Months Ended
	September 30, 2020			September 30, 2020
	Total Revenues		Percentage of	Total Revenues		Percentage of
	by Major		Total Company	by Major		Total Company
	Customers		Revenues	Customers		Revenues
Customer A	$	1,862,667	33%	$	5,596,089	34%
Customer B		1,065,400	19%		2,660,800	16%

	For the Three Months Ended			For the Nine Months Ended
	September 30, 2019			September 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	27%	$	2,845,541	18%

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DESCRIPTION OF BUSINESS (Details Narrative) - Number			9 Months Ended
	Jul. 23, 2019	Mar. 14, 2019	Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of reportable segments			3
Description of reverse stock split	one-for-forty	one-for-twenty

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LIQUIDITY, GOING CONCERN AND MANAGEMENT'S PLANS (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	Dec. 31, 2018
Liquidity Going Concern And Managements Plans [Abstract]
Cash and cash equivalent	$ 1,274,408	$ 754,532	$ 1,274,408	$ 754,532	$ 483,383	$ 769,619
Accumulated deficit	(113,302,229)		(113,302,229)		$ (88,650,465)
Working capital	(21,649,513)		(21,649,513)
Net income (loss) attributable to parent	$ (16,734,356)	$ (10,340,871)	(24,641,437)	$ (21,110,774)
Promissory notes			$ 7,700,000

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Total revenue	$ 5,675,564	$ 5,344,829	$ 16,681,978	$ 16,097,308
RF/Microwave Filters [Member]
Total revenue			3,886,940	989,114
Detector Logarithmic Video Amplifiers [Member]
Total revenue			1,318,547	473,150
Power Supply Units [Member]
Total revenue			3,803,241	7,501,183
Power Supply Systems [Member]
Total revenue			862,889	1,423,971
Healthcare Diagnostic Systems [Member]
Total revenue			784,689	1,260,700
Defense Systems [Member]
Total revenue			6,052,812	3,413,171
Lending Activities [Member]
Total revenue			(27,140)	443,927
Goods Transferred At A Point In Time [Member]
Total revenue			9,844,477	11,286,536
Services Transferred Over Time [Member]
Total revenue			6,837,501	4,810,772
Digital Currency Mining [Member]
Total revenue				592,092
North America [Member]
Total revenue			8,183,084	7,738,570
Europe [Member]
Total revenue			982,760	6,358,200
Middle East [Member]
Total revenue			6,837,501	1,283,312
Other [Member]
Total revenue			678,633	717,226
GWW [Member]
Total revenue			12,905,877	10,754,949
GWW [Member] | RF/Microwave Filters [Member]
Total revenue			3,886,940	989,114
GWW [Member] | Detector Logarithmic Video Amplifiers [Member]
Total revenue			1,318,547	473,150
GWW [Member] | Power Supply Units [Member]
Total revenue				3,194,843
GWW [Member] | Power Supply Systems [Member]
Total revenue			862,889	1,423,971
GWW [Member] | Healthcare Diagnostic Systems [Member]
Total revenue			784,689	1,260,700
GWW [Member] | Defense Systems [Member]
Total revenue			6,052,812	3,413,171
GWW [Member] | Lending Activities [Member]
Total revenue
GWW [Member] | Goods Transferred At A Point In Time [Member]
Total revenue			6,068,376	5,944,177
GWW [Member] | Services Transferred Over Time [Member]
Total revenue			6,837,501	4,810,772
GWW [Member] | Digital Currency Mining [Member]
Total revenue
GWW [Member] | North America [Member]
Total revenue			5,109,672	2,703,803
GWW [Member] | Europe [Member]
Total revenue			694,478	6,341,396
GWW [Member] | Middle East [Member]
Total revenue			6,837,501	1,283,312
GWW [Member] | Other [Member]
Total revenue			264,226	447,786
Coolisys [Member]
Total revenue			3,803,241	4,898,432
Coolisys [Member] | RF/Microwave Filters [Member]
Total revenue
Coolisys [Member] | Detector Logarithmic Video Amplifiers [Member]
Total revenue
Coolisys [Member] | Power Supply Units [Member]
Total revenue			3,803,241	4,306,340
Coolisys [Member] | Power Supply Systems [Member]
Total revenue
Coolisys [Member] | Healthcare Diagnostic Systems [Member]
Total revenue
Coolisys [Member] | Defense Systems [Member]
Total revenue
Coolisys [Member] | Lending Activities [Member]
Total revenue
Coolisys [Member] | Goods Transferred At A Point In Time [Member]
Total revenue			3,803,241	4,898,432
Coolisys [Member] | Services Transferred Over Time [Member]
Total revenue
Coolisys [Member] | Digital Currency Mining [Member]
Total revenue				592,092
Coolisys [Member] | North America [Member]
Total revenue			3,100,552	4,590,840
Coolisys [Member] | Europe [Member]
Total revenue			288,282	16,804
Coolisys [Member] | Middle East [Member]
Total revenue				21,348
Coolisys [Member] | Other [Member]
Total revenue			414,407	269,440
Ault Alliance [Member]
Total revenue			(27,140)	443,927
Ault Alliance [Member] | RF/Microwave Filters [Member]
Total revenue
Ault Alliance [Member] | Power Supply Systems [Member]
Total revenue
Ault Alliance [Member] | Healthcare Diagnostic Systems [Member]
Total revenue
Ault Alliance [Member] | Defense Systems [Member]
Total revenue
Ault Alliance [Member] | Lending Activities [Member]
Total revenue			(27,140)	443,927
Ault Alliance [Member] | Goods Transferred At A Point In Time [Member]
Total revenue			(27,140)	443,927
Ault Alliance [Member] | Services Transferred Over Time [Member]
Total revenue
Ault Alliance [Member] | Digital Currency Mining [Member]
Total revenue
Ault Alliance [Member] | North America [Member]
Total revenue			(27,140)	443,927
Ault Alliance [Member] | Europe [Member]
Total revenue
Ault Alliance [Member] | Middle East [Member]
Total revenue
Ault Alliance [Member] | Other [Member]
Total revenue
Ault Alliance [Member] | Detector Logarithmic Video Amplifiers [Member]
Total revenue
Ault Alliance [Member] | Power Supply Units [Member]
Total revenue

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Available-for-sale securities	$ 7,059,322	$ 6,540,720
Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	10,784,167	9,317,765
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available-for-sale securities	646,262	878,249
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available-for-sale securities
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available-for-sale securities	10,137,905	8,439,516
Avalanche International Corp. [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	2,750,580	1,569,286
Avalanche International Corp. [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available-for-sale securities	259,786	238,602
Avalanche International Corp. [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available-for-sale securities
Avalanche International Corp. [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available-for-sale securities	2,490,794	1,330,684
Avalanche International Corp. [Member] | 8% Convertible Promissory Note [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	7,059,322	6,540,720
Avalanche International Corp. [Member] | 8% Convertible Promissory Note [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available-for-sale securities
Avalanche International Corp. [Member] | 8% Convertible Promissory Note [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available-for-sale securities
Avalanche International Corp. [Member] | 8% Convertible Promissory Note [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available-for-sale securities	7,059,322	6,540,720
Alzamend - A Related Party [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	587,686	558,938
Alzamend - A Related Party [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available-for-sale securities
Alzamend - A Related Party [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available-for-sale securities
Alzamend - A Related Party [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available-for-sale securities	587,686	558,938
Marketable Securities [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	386,476	639,647
Marketable Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available-for-sale securities	386,476	639,647
Marketable Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available-for-sale securities
Marketable Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available-for-sale securities
Investment In Warrants Of Public Companies [Member] | Fair Value, Measurements, Recurring [Member]
Available-for-sale securities	103	9,174
Investment In Warrants Of Public Companies [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available-for-sale securities
Investment In Warrants Of Public Companies [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available-for-sale securities	103	9,174
Investments in Warrants of Public Companies [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available-for-sale securities

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 2) - shares		9 Months Ended
		Sep. 30, 2020	Sep. 30, 2019
Anti-dilutive securities		4,981,717	427,545
Series A & B Preferred Stock [Member]
Anti-dilutive securities		2,232	2,232
Stock Option [Member]
Anti-dilutive securities		950	2,906
Warrant [Member]
Anti-dilutive securities	[1]	3,582,116	72,921
Convertible Notes [Member]
Anti-dilutive securities		1,396,419	349,486

[1] The Company has excluded 6,500 warrants issued in April 2019, which may be exercised by means of a cashless exercise into 6,500 shares of the Companys common stock, in its anti-dilutive securities but included the warrants in its weighted average shares outstanding.

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2020	Dec. 31, 2019	Apr. 30, 2019
Warrant outstanding	6,500
Revenue performance obligation	$ 48,000,000
Property and equipment, net	1,977,775	$ 1,787,393
Discontinued Operations [Member]
Property and equipment, net		$ 504,802
Discontinued Operations [Member] | Restaurant Equipment [Member]
Property and equipment, net	504,802
MTIX Ltd [Member] | Two MLSE Units [Member]
Unit purchase price	50,000,000
Manufacturing costs	$ 100,000
Warrant [Member]
Warrant outstanding			6,500
Cashless exercise of shares			6,500

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Discontinued Operations (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019	Sep. 30, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 1,274,408	$ 483,383	$ 754,532	$ 769,619
Accounts receivable	3,028,754	2,438,254
Inventories, net	2,672,873	2,481,511
Prepaid expenses and other current assets	2,044,605	1,324,161
Total current assets classified as held for sale	12,233,633	11,071,257
Property and equipment, net	1,977,775	1,787,393
Right-of-use assets	4,130,760	4,177,590
Total assets classified as held for sale	43,644,812	42,750,408	$ 50,503,348
Current liabilities
Accounts payable and accrued expenses	13,073,937	14,284,563
Operating lease liability, current	514,910	484,819
Other current liabilities	5,502,023	1,545,210
Total current liabilities classified as held for sale	33,883,146	30,221,332
Long term liabilities
Operating lease liability, non-current	3,683,355	3,726,493
Total liabilities classified as held for sale	39,123,058	35,801,458
Discontinued Operations [Member]
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	322,125	229,574
Other current liabilities	461,738	482,375
Total current liabilities classified as held for sale	1,572,177	1,593,550
Long term liabilities
Operating lease liability, non-current	786,815	951,072
Total liabilities classified as held for sale	$ 2,358,992	$ 2,544,622

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Discontinued Operations (Details 1) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenue	$ 5,675,564	$ 5,344,829	$ 16,681,978	$ 16,097,308
Cost of revenue	(3,736,082)	(4,348,761)	(11,085,091)	(13,441,785)
Selling and marketing	(259,649)	(331,107)	(892,786)	(1,130,913)
General and administrative	(2,835,940)	(3,554,043)	(8,656,841)	(11,567,180)
Impairment of property and equipment				(4,315,856)
Interest expense	(2,365,741)	(2,954,843)	(4,414,618)	(5,585,850)
Discontinued Operations [Member]
Revenue		1,036,834	543,327	3,371,465
Cost of revenue		(293,765)	(160,310)	(908,256)
Selling and marketing		(61,618)		(162,268)
General and administrative		(964,829)	(555,445)	(3,017,578)
Impairment of property and equipment			(1,525,316)
Interest expense		(789)		(789)
Loss from discontinued operations		$ (284,167)	$ (1,697,744)	$ (717,426)

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Marketable Equity Securities (Details) - USD ($)	9 Months Ended		12 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Cost	$ 516,634	$ 1,501,912
Common Stock [Member]
Cost	301,960		$ 423,025
Gross unrealized gains (losses)	84,516		216,622
Gross realized gains (losses)
Fair value	$ 386,476		$ 639,647

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Marketable Equity Securities (Details 1) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Sales of marketable equity securities			$ (143,667)	$ (571,741)
Realized gains on marketable equity securities			22,602	86,741
Unrealized losses on marketable equity securities	$ (29,318)	$ (330,150)	(57,896)	$ (173,503)
Common Stock [Member]
Balance at beginning			639,647
Sales of marketable equity securities			(143,667)
Realized gains on marketable equity securities			22,602
Unrealized losses on marketable equity securities			(132,106)
Balance at end	$ 386,476		$ 386,476

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Marketable Equity Securities (Details Narrative) - USD ($)	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Sep. 30, 2020	Dec. 31, 2019
Common Stock [Member]
Gross unrealized gains (losses)	$ 184,419	$ 132,106	$ 258,905

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PROPERTY AND EQUIPMENT, NET (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Property, plant and equipment, gross	$ 5,196,491	$ 4,757,423
Accumulated depreciation and amortization	(3,218,716)	(2,970,030)
Property and equipment, net	1,977,775	1,787,393
Cryptocurrency Machines and Related Equipment [Member]
Property, plant and equipment, gross	567,216	567,216
Computer Software and Related Equipment [Member]
Property, plant and equipment, gross	2,941,870	2,518,187
Office Furniture and Equipment [Member]
Property, plant and equipment, gross	441,104	441,613
Leasehold Improvements [Member]
Property, plant and equipment, gross	$ 1,246,301	$ 1,230,407

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PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Depreciation expense	$ 97,177	$ 846,631	$ 357,083	$ 2,673,352
Restaurant Equipment [Member]
Impairment charges			$ 504,802

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INTANGIBLE ASSETS, NET (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Intangible assets gross	$ 4,096,968	$ 4,087,550
Accumulated depreciation and amortization	(1,137,912)	(880,562)
Intangible assets, net	2,959,056	3,206,988
Customer List [Member]
Intangible assets gross	2,413,054	2,406,434
Domain Name and Other Intangible Assets [Member]
Intangible assets gross	644,607	641,809
Trade Name and Trademark [Member]
Intangible assets gross	$ 1,039,307	$ 1,039,307

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INTANGIBLE ASSETS, NET (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of intangible assets	$ 85,271	$ 101,199	$ 251,968	$ 400,661

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GOODWILL (Details)	9 Months Ended
	Sep. 30, 2020 USD ($)
Intangible Assets, Net (Including Goodwill) [Abstract]
Balance as of January 1, 2020	$ 8,100,947
Effect of exchange rate changes	(21,490)
Balance as of September 30, 2020	$ 8,122,437

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INVESTMENTS - RELATED PARTIES (Details) - Avalanche International Corp. ("AVLP") and Alzamend Neuro, Inc. ("Alzamend") [Member] - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Investment in convertible promissory note of AVLP	$ 10,153,661	$ 9,595,079
Investment in convertible promissory note of Alzamend	50,000
Accrued interest in convertible promissory note of AVLP	2,025,475	2,025,475
Total investment in convertible promissory note of AVLP - Gross	12,229,136	11,620,554
Less: original issue discount	(9,904)
Less: provision for loan losses	(5,159,910)	(5,079,834)
Total investment in convertible promissory note of AVLP and Alzamend	7,059,322	6,540,720
Investment in derivative instruments of AVLP	2,490,794	1,330,684
Investment in common stock of AVLP	259,786	238,602
Investment in common stock and warrants of Alzamend	587,686	558,938
Investment in derivative instruments and common stock of AVLP and Alzamend	3,338,266	2,128,224
Total investment in AVLP and Alzamend - Net	10,397,588	8,668,944
Investment in warrants and common stock of AVLP and Alzamend	3,338,266	2,128,224
Investment in convertible promissory note of AVLP and Alzamend	7,059,322	6,540,720
Total investment in AVLP and Alzamend - Net	$ 10,397,588	$ 8,668,944

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INVESTMENTS - RELATED PARTIES (Details 1) - USD ($)	3 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Fair value of derivative instruments issued by AVLP	$ (165,840)	$ 5,773	$ (1,112,665)
Avalanche International Corp. ("AVLP") and Alzamend Neuro, Inc. ("Alzamend") [Member]
Investment in convertible promissory note of Alzamend		50,000
Investment in common stock of AVLP and Alzamend		587,686		558,938
Avalanche International Corp. ("AVLP") and Alzamend Neuro, Inc. ("Alzamend") [Member] | 8% Convertible Promissory Note [Member]
Balance at beginning		6,540,720
Investment in convertible promissory notes of AVLP		478,506
Investment in convertible promissory note of Alzamend		38,128
Investment in common stock of AVLP and Alzamend
Investment in warrants of Alzamend
Fair value of derivative instruments issued by AVLP
Unrealized loss in derivative instruments of AVLP
Unrealized loss in common stock of AVLP and Alzamend
Accretion of discount		1,968
Balance at end		7,059,322		6,540,720
Avalanche International Corp. ("AVLP") and Alzamend Neuro, Inc. ("Alzamend") [Member] | Warrants and Common Stock [Member]
Balance at beginning		2,128,224
Investment in convertible promissory notes of AVLP
Investment in convertible promissory note of Alzamend
Investment in common stock of AVLP and Alzamend		12,884
Investment in warrants of Alzamend		11,872
Fair value of derivative instruments issued by AVLP		80,076
Unrealized loss in derivative instruments of AVLP		1,080,034
Unrealized loss in common stock of AVLP and Alzamend		25,176
Accretion of discount
Balance at end		3,338,266		2,128,224
Avalanche International Corp. ("AVLP") and Alzamend Neuro, Inc. ("Alzamend") [Member]
Balance at beginning		8,668,944
Investment in convertible promissory notes of AVLP		478,506
Investment in convertible promissory note of Alzamend		38,128
Investment in common stock of AVLP and Alzamend		12,884
Investment in warrants of Alzamend		11,872
Fair value of derivative instruments issued by AVLP		80,076
Unrealized loss in derivative instruments of AVLP		1,080,034
Unrealized loss in common stock of AVLP and Alzamend		25,176
Accretion of discount		1,968
Balance at end		$ 10,397,588		$ 8,668,944

XML

INVESTMENTS - RELATED PARTIES (Details Narrative)		3 Months Ended		6 Months Ended	9 Months Ended		12 Months Ended
	Aug. 20, 2020 shares	Sep. 30, 2020 USD ($) Number $ / shares shares	Sep. 30, 2019 USD ($)	Jun. 30, 2020 shares	Sep. 30, 2020 USD ($) Number $ / shares shares	Sep. 30, 2019 USD ($)	Dec. 31, 2019 USD ($) $ / shares shares
Number of shares issued (in shares) | shares				140,624
Net unrealized gain (loss) on derivative securities, related party		$ 1,561,247	$ (1,152,480)		$ 1,080,034	$ (1,513,661)
Common Stock [Member]
Number of shares issued (in shares) | shares	413,793				182,575
Avalanche International Corp. [Member] | Common Stock [Member]
Number of shares repurchased (in shares) | shares					5,000		91,000
Number of share repurchased, value					$ 1,274		$ 53,032
Closing price of stock | $ / shares		$ 0.26			$ 0.26		$ 0.24
Number of shares owned | shares					999,175
Avalanche International Corp. [Member] | 12% New Convertible Promissory Note [Member]
Interest income for the discount accretion			614,856			1,892,278
Interest income from related party			268,428		$ 0	732,542
Recognized unrealized gain					488,049
Avalanche International Corp. [Member] | Convertible Promissory Note [Member]
Convertible promissory note aggregate principal amount		$ 7,059,322			7,059,322
Avalanche International Corp. [Member] | Loan And Security Agreement [Member] | 12% New Convertible Promissory Note [Member]
Unrealized gain (loss) on its investment					3,284,222		$ 4,364,256
Net unrealized gain (loss) on derivative securities, related party		$ 1,561,247	1,152,480		$ 1,080,034	1,513,661
Description of market capitalizations					Based on historical stock prices for similar technology companies with market capitalizations under $100 million.
Avalanche International Corp. [Member] | Loan And Security Agreement [Member] | 12% New Convertible Promissory Note [Member] | Risk Free Interest Rate [Member] | Minimum [Member]
Measurement input | Number		0.13			0.13
Avalanche International Corp. [Member] | Loan And Security Agreement [Member] | 12% New Convertible Promissory Note [Member] | Risk Free Interest Rate [Member] | Maximum [Member]
Measurement input | Number		2.98			2.98
Avalanche International Corp. [Member] | Loan And Security Agreement [Member] | 12% New Convertible Promissory Note [Member] | Price Volatility [Member] | Minimum [Member]
Measurement input | Number		68.7			68.7
Avalanche International Corp. [Member] | Loan And Security Agreement [Member] | 12% New Convertible Promissory Note [Member] | Price Volatility [Member] | Maximum [Member]
Measurement input | Number		104.6			104.6
Alzamend [Member] | Common Stock [Member]
Number of shares repurchased (in shares) | shares					11,325		372,625
Number of share repurchased, value					$ 9,060		$ 208,100
Closing price of stock | $ / shares		$ 1.50			$ 1.50
Alzamend [Member] | 12% New Convertible Promissory Note [Member]
Interest income for the discount accretion			1,968			1,968
Interest income from related party			$ 329			$ 329
Interest rate			8.00%			8.00%
Alzamend [Member] | 12% New Convertible Promissory Note [Member]
Recognized unrealized gain					$ 358,765
Alzamend [Member] | Loan And Security Agreement [Member] | 12% New Convertible Promissory Note [Member]
Unrealized gain (loss) on its investment					$ 111
Description of market capitalizations					Based on historical stock prices for similar companies with market capitalizations under $100 million.
Alzamend [Member] | Loan And Security Agreement [Member] | 12% New Convertible Promissory Note [Member] | Risk Free Interest Rate [Member]
Measurement input | Number		0.28			0.28
Alzamend [Member] | Loan And Security Agreement [Member] | 12% New Convertible Promissory Note [Member] | Price Volatility [Member]
Measurement input | Number		103.7			103.7
Alzamend [Member]
Debt instrument maturity terms					5 years
Alzamend [Member] | DPW Holdings [Member]
Convertible promissory note aggregate principal amount		$ 50,000			$ 50,000
Conversion price (in dollars per share) | $ / shares		$ 3.00			$ 3.00
Interest rate		8.00%			8.00%
Number of warrants purchased | shares		16,667			16,667
Avalanche International Corp. [Member]
Debt instrument maturity terms					5 years
Number of warrants purchased | shares		20,306,921			20,306,921
Avalanche International Corp. [Member] | DPW Holdings [Member]
Convertible promissory note aggregate principal amount		$ 10,153,661			$ 10,153,661
Conversion price (in dollars per share) | $ / shares		$ 0.50			$ 0.50
Interest rate		12.00%			12.00%
Number of warrants purchased | shares		20,306,921			20,306,921
Ownership percentage		18.00%			18.00%

XML

INVESTMENTS IN LIMITED PARTNERSHIP (Details Narrative)	Sep. 30, 2020 USD ($)
Investments, Debt and Equity Securities [Abstract]
Real estate investment	$ 1,869,000

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OTHER INVESTMENTS, RELATED PARTIES (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Dec. 31, 2017	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2017	Dec. 31, 2019	Dec. 05, 2017
Payments to acquire property		$ 364,346	$ 55,717	$ 554,462	$ 137,263
Amortization expense				2,379,196	3,034,454
Unamortized balance		210,000		210,000			$ 232,500
Tenancy In Common Agreement [Member]
Amortization of property						$ 300,000
Amortization expense		7,500	$ 7,500	22,500	$ 22,500
WT Johnson & Sons [Member] | Convertible Promissory Note A [Member]
Number of shares issued upon conversion	750
Number of shares sold	750
Proceeds from promissory note	$ 2,267,766
Value added tax payable	400,500					400,500
WT Johnson & Sons [Member] | Convertible Promissory Note A [Member] | Exchange Agreement [Member]
Principal amount								$ 600,000
Value added tax payable	$ 2,668,266					2,668,266
Debt carrying amount		$ 600,000		$ 600,000			$ 600,000
WT Johnson & Sons [Member] | 10% Convertible Secured Notes [Member] | Exchange Agreement [Member]
Principal amount								$ 1,667,766
Amos Kohn [Member]
Payments to acquire property						$ 300,000
Amos Kohn [Member] | Undivided Interest [Member]
Percentage of real property	28.00%					28.00%
Roni Kohn [Member]
Percentage of real property	72.00%					72.00%

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STOCK-BASED COMPENSATION (Details)	9 Months Ended
	Sep. 30, 2020 $ / shares shares
Issuances Outside Of Plans [Member]
Exercise Price, lower limit	$ 1.79
Options Outstanding | shares	850,000
Weighted Average Remaining Contractual Life (Years)	9 years 11 months 19 days
Weighted Average Exercise Price, Outstanding	$ 1.79
Options, Exercisable | shares	0
Weighted Average Exercise Price, Exercisable	$ 0.00
Total Options [Memberer]
Exercise Price, lower limit	480
Exercise Price, upper limit	$ 1,856
Options Outstanding | shares	850,950
Weighted Average Remaining Contractual Life (Years)	9 years 11 months 16 days
Weighted Average Exercise Price, Outstanding	$ 2.42
Options, Exercisable | shares	597
Weighted Average Exercise Price, Exercisable	$ 575.23
Exercise Price Range $480 - $560 [Member]
Exercise Price, lower limit	480
Exercise Price, upper limit	$ 560
Options Outstanding | shares	919
Weighted Average Remaining Contractual Life (Years)	5 years 2 months 8 days
Weighted Average Exercise Price, Outstanding	$ 537.96
Options, Exercisable | shares	566
Weighted Average Exercise Price, Exercisable	$ 533.08
Exercise Price Range $1,208 - $1,352 [Member]
Exercise Price, lower limit	1,208
Exercise Price, upper limit	$ 1,352
Options Outstanding | shares	31
Weighted Average Remaining Contractual Life (Years)	2 years 10 months 17 days
Weighted Average Exercise Price, Outstanding	$ 1,339.20
Options, Exercisable | shares	31
Weighted Average Exercise Price, Exercisable	$ 1,339.20
Exercise Price Range $480 - $1,352 [Member]
Exercise Price, lower limit	480
Exercise Price, upper limit	$ 1,352
Options Outstanding | shares	950
Weighted Average Remaining Contractual Life (Years)	5 years 1 month 10 days
Weighted Average Exercise Price, Outstanding	$ 564.32
Options, Exercisable | shares	597
Weighted Average Exercise Price, Exercisable	$ 575.23

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STOCK-BASED COMPENSATION (Details 1) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Total stock-based compensation	$ 202,975	$ 361,779	$ 272,466	$ 1,354,062
Stock Based Compensation From Issuances Outside Plans [Member]
Total stock-based compensation		155,490		822,683
Stock Based Compensation From Plans [Member]
Total stock-based compensation	$ 202,975	$ 206,289	$ 272,466	$ 531,379

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STOCK-BASED COMPENSATION (Details 2)	9 Months Ended
	Sep. 30, 2020 USD ($) $ / shares shares
Shares Available for Grant
Beginning balance	103,105
Restricted stock awards	(96,875)
Forfeited	438
Ending balance	6,668
Number of Shares
Beginning balance	1,388
Restricted stock awards
Forfeited	(438)
Ending balance	950
Weighted Average Exercise Price
Beginning balance | $ / shares	$ 636.47
Forfeited | $ / shares	793.14
Ending balance | $ / shares	$ 564.32
Weighted Average Remaining Contractual Life
Beginning balance	6 years 3 months 29 days
Ending balance	5 years 1 month 10 days
Aggregate Intrinsic Value
Beginning balance | $	$ 0
Ending balance | $	$ 0

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STOCK-BASED COMPENSATION (Details 3)	9 Months Ended
	Sep. 30, 2020 $ / shares
Share-based Payment Arrangement
Weighted average risk-free interest rate	0.28%
Weighted average life (in years)	5 years 8 months 12 days
Volatility, minimum	100.30%
Volatility, maximum	100.50%
Expected dividend yield	0.00%
Weighted average grant-date fair value per share of options granted	$ 1.38

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STOCK-BASED COMPENSATION (Details Narrative) - USD ($)		3 Months Ended		9 Months Ended
	Jul. 19, 2019	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	Jun. 30, 2019
Aggregate intrinsic value		$ 187,000		$ 187,000		$ 0
Share-based compensation expense		202,975	$ 361,779	272,466	$ 1,354,062
Compensation cost not yet recognized		$ 147,418		$ 147,418
Weighted average period for recognition				1 year 9 months 22 days
Common Stock [Member]
Share price (in dollars per share)		$ 1.78		$ 1.78			$ 1.07
Employee [Member]
Vesting period				4 years
2012 Stock Option Plan [Member]
Number of shares authorized		184,216		184,216
Number of shares available for grant		6,668		6,668
2018 Amendment Stock Option Plan [Member]
Number of shares issued	175,000
2017 Stock Incentive Plan [Member] | Minimum [Member]
Expiration period				5 years
2017 Stock Incentive Plan [Member] | Maximum [Member]
Expiration period				10 years
2017 Stock Incentive Plan [Member] | Consultants and Service Providers [Member] | Common Stock [Member]
Weighted average grant date fair value				$ 182,575	$ 338,619
Number of shares issued				102,500	29,375

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WARRANTS (Details)	9 Months Ended
	Sep. 30, 2020 $ / shares shares
Exercse Price	$ 1.39
Number outstanding | shares	6,500
Exercise Price $0.00 [Member]
Exercse Price
Number outstanding | shares	6,500
Weighted average remaining contractual life (years)	3 years 6 months
Weighted Average Exercise Price
Number Exercisable | shares	6,500
Weighted Average Exercise Price
Exercise Price $ 0.88 [Member]
Exercse Price	$ 0.88
Number outstanding | shares	281,250
Weighted average remaining contractual life (years)	4 years 6 months 7 days
Weighted Average Exercise Price	$ 0.88
Number Exercisable | shares	281,250
Weighted Average Exercise Price	$ 0.88
Exercise Price $1.07 [Member]
Exercse Price	$ 1.07
Number outstanding | shares	400,000
Weighted average remaining contractual life (years)	4 years 7 months 28 days
Weighted Average Exercise Price	$ 1.07
Number Exercisable | shares	400,000
Weighted Average Exercise Price	$ 1.07
Exercise Price $1.14 [Member]
Exercse Price	$ 1.14
Number outstanding | shares	144,928
Weighted average remaining contractual life (years)	4 years 5 months 8 days
Weighted Average Exercise Price	$ 1.14
Number Exercisable | shares	144,928
Weighted Average Exercise Price	$ 1.14
Exercise Price $1.16 [Member]
Exercse Price	$ 1.16
Number outstanding | shares	95,238
Weighted average remaining contractual life (years)	4 years 7 months 24 days
Weighted Average Exercise Price	$ 1.16
Number Exercisable | shares	95,238
Weighted Average Exercise Price	$ 1.16
Exercise Price $1.17 [Member]
Exercse Price	$ 1.17
Number outstanding | shares	157,143
Weighted average remaining contractual life (years)	4 years 6 months 11 days
Weighted Average Exercise Price	$ 1.17
Number Exercisable | shares	157,143
Weighted Average Exercise Price	$ 1.17
Exercise Price $1.19 [Member]
Exercse Price	$ 1.19
Number outstanding | shares	277,778
Weighted average remaining contractual life (years)	4 years 4 months 28 days
Weighted Average Exercise Price	$ 1.19
Number Exercisable | shares	277,778
Weighted Average Exercise Price	$ 1.19
Exercise Price $1.21 [Member]
Exercse Price	$ 1.21
Number outstanding | shares	90,909
Weighted average remaining contractual life (years)	4 years 6 months 22 days
Weighted Average Exercise Price	$ 1.21
Number Exercisable | shares	90,909
Weighted Average Exercise Price	$ 1.21
Exercise Price $1.43 [Member]
Exercse Price	$ 1.43
Number outstanding | shares	1,700,361
Weighted average remaining contractual life (years)	4 years 4 months 10 days
Weighted Average Exercise Price	$ 1.43
Number Exercisable | shares	1,700,361
Weighted Average Exercise Price	$ 1.43
Exercise Price $2.43 [Member]
Exercse Price	$ 2.43
Number outstanding | shares	361,991
Weighted average remaining contractual life (years)	1 year 1 month 28 days
Weighted Average Exercise Price	$ 2.43
Number Exercisable | shares	361,991
Weighted Average Exercise Price	$ 2.43
Exercise Price $8.00 [Member]
Exercse Price	$ 8.00
Number outstanding | shares	397
Weighted average remaining contractual life (years)	1 year 1 month 2 days
Weighted Average Exercise Price	$ 8.00
Number Exercisable | shares	397
Weighted Average Exercise Price	$ 8.00
Exercise Price $8.80 [Member]
Exercse Price	$ 8.80
Number outstanding | shares	25,000
Weighted average remaining contractual life (years)	3 years 9 months
Weighted Average Exercise Price	$ 8.80
Number Exercisable | shares	25,000
Weighted Average Exercise Price	$ 8.80
Exercise Price $12.00 [Member]
Exercse Price	$ 12.00
Number outstanding | shares	12,500
Weighted average remaining contractual life (years)	3 years 7 months 10 days
Weighted Average Exercise Price	$ 12.00
Number Exercisable | shares	12,500
Weighted Average Exercise Price	$ 12.00
Exercise Price $19.80 [Member]
Exercse Price	$ 19.80
Number outstanding | shares	15,555
Weighted average remaining contractual life (years)	3 years 6 months
Weighted Average Exercise Price	$ 19.80
Number Exercisable | shares	15,555
Weighted Average Exercise Price	$ 19.80
Exercise Price $440.00 [Member]
Exercse Price	$ 440.00
Number outstanding | shares	355
Weighted average remaining contractual life (years)	2 years 1 month 10 days
Weighted Average Exercise Price	$ 440.00
Number Exercisable | shares	355
Weighted Average Exercise Price	$ 440.00
Exercise Price $480.00 [Member]
Exercse Price	$ 480.00
Number outstanding | shares	94
Weighted average remaining contractual life (years)	2 years 6 months 29 days
Weighted Average Exercise Price	$ 480.00
Number Exercisable | shares	94
Weighted Average Exercise Price	$ 480.00
Exercise Price $528.00 [Member]
Exercse Price	$ 528.00
Number outstanding | shares	186
Weighted average remaining contractual life (years)	2 years 1 month 2 days
Weighted Average Exercise Price	$ 528.00
Number Exercisable | shares	186
Weighted Average Exercise Price	$ 528.00
Exercise Price $560.00 [Member]
Exercse Price	$ 560.00
Number outstanding | shares	2,657
Weighted average remaining contractual life (years)	2 years 1 month 13 days
Weighted Average Exercise Price	$ 560.00
Number Exercisable | shares	2,657
Weighted Average Exercise Price	$ 560.00
Exercise Price $600 [Member]
Exercse Price	$ 600.00
Number outstanding | shares	170
Weighted average remaining contractual life (years)	1 year 7 months 13 days
Weighted Average Exercise Price	$ 600.00
Number Exercisable | shares	170
Weighted Average Exercise Price	$ 600.00
Exercise Price $640.00 [Member]
Exercse Price	$ 640.00
Number outstanding | shares	200
Weighted average remaining contractual life (years)	1 year 7 months 25 days
Weighted Average Exercise Price	$ 640.00
Number Exercisable | shares	200
Weighted Average Exercise Price	$ 640.00
Exercise Price $752.00 [Member]
Exercse Price	$ 752.00
Number outstanding | shares	9,614
Weighted average remaining contractual life (years)	2 years 7 months 13 days
Weighted Average Exercise Price	$ 752.00
Number Exercisable | shares	9,614
Weighted Average Exercise Price	$ 752.00
Exercise Price $800.00 [Member]
Exercse Price	$ 800.00
Number outstanding | shares	350
Weighted average remaining contractual life (years)	2 years 2 months 8 days
Weighted Average Exercise Price	$ 800.00
Number Exercisable | shares	350
Weighted Average Exercise Price	$ 800.00
Exercise Price $880.00 [Member]
Exercse Price	$ 880.00
Number outstanding | shares	947
Weighted average remaining contractual life (years)	11 months 1 day
Weighted Average Exercise Price	$ 880.00
Number Exercisable | shares	947
Weighted Average Exercise Price	$ 880.00
Exercise Price $920.00 [Member]
Exercse Price	$ 920.00
Number outstanding | shares	2,126
Weighted average remaining contractual life (years)	2 years 5 months 26 days
Weighted Average Exercise Price	$ 920.00
Number Exercisable | shares	2,126
Weighted Average Exercise Price	$ 920.00
Exercise Price $1,040.00 [Member]
Exercse Price	$ 1,040.00
Number outstanding | shares	1,243
Weighted average remaining contractual life (years)	2 years 6 months 14 days
Weighted Average Exercise Price	$ 1,040.00
Number Exercisable | shares	1,243
Weighted Average Exercise Price	$ 1,040.00
Exercise Price $1,760.00 [Member]
Exercse Price	$ 1,760.00
Number outstanding | shares	781
Weighted average remaining contractual life (years)	2 years 3 months 22 days
Weighted Average Exercise Price	$ 1,760.00
Number Exercisable | shares	781
Weighted Average Exercise Price	$ 1,760.00
Exercise Price $1,800.00 [Member]
Exercse Price	$ 1,800.00
Number outstanding | shares	140
Weighted average remaining contractual life (years)	2 years 3 months 25 days
Weighted Average Exercise Price	$ 1,800.00
Number Exercisable | shares	140
Weighted Average Exercise Price	$ 1,800.00
Exercise Price $2,000.00 [Member]
Exercse Price	$ 2,000.00
Number outstanding | shares	203
Weighted average remaining contractual life (years)	2 years 3 months 25 days
Weighted Average Exercise Price	$ 2,000.00
Number Exercisable | shares	203
Weighted Average Exercise Price	$ 2,000.00
Exercise Price $0.88 - $2,000.00 [Member]
Number outstanding | shares	3,588,616
Weighted average remaining contractual life (years)	4 years 1 month 2 days
Weighted Average Exercise Price	$ 5.91
Number Exercisable | shares	3,588,616
Weighted Average Exercise Price	$ 5.91
Exercise Price $0.88 - $2,000.00 [Member] | Maximum [Member]
Exercse Price	2,000
Exercise Price $0.88 - $2,000.00 [Member] | Minimum [Member]
Exercse Price	$ 0.88

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WARRANTS (Details 1) - $ / shares	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Weighted average risk-free interest rate	0.28%
Weighted average life (in years)	5 years 8 months 12 days
Expected dividend yield	0.00%
Warrant [Member]
Weighted average life (in years)		5 years
Expected dividend yield	0.00%	0.00%
Weighted average grant-date fair value per share of warrants granted (in dollars per share)	$ 1.39	$ 10.34
Warrant [Member] | Minimum [Member]
Weighted average risk-free interest rate	0.17%	1.75%
Weighted average life (in years)	1 year 5 months 1 day
Volatility	86.30%	85.50%
Warrant [Member] | Maximum [Member]
Weighted average risk-free interest rate	1.38%	2.28%
Weighted average life (in years)	5 years
Volatility	103.10%	87.50%

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WARRANTS (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2020	Jun. 26, 2020	May 28, 2020	Apr. 14, 2020	Feb. 20, 2020
Number of warrants issued	3,509,598
Warrant exercise price (in dollars per share)	$ 1.39
Warrant [Member] | Convertible Promissory Note [Member]
Warrant exercise price (in dollars per share)	$ 1.08	$ 2.43	$ 1.07	$ 1.17	$ 1.43
Number of common stock issued	890,103	361,991	400,000	157,143	1,700,361
Principal amount	$ 875,000	$ 800,000	$ 200,000	$ 10,000
Original issue discount percentage	12.00%

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OTHER CURRENT LIABILITIES (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Other Current Liabilities
Accrued payroll and payroll taxes	$ 1,594,038	$ 1,237,054
Warrant liability	3,561,067	9,364
Warranty liability	86,070	80,412
Other accrued expenses	260,848	218,380
Total	$ 5,502,023	$ 1,545,210

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LEASES (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Leases [Abstract]
Operating right-of-use assets	$ 4,130,760
Operating lease liability - current	514,910	$ 484,819
Operating lease liability - non-current	$ 3,683,355	$ 3,726,493

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LEASES (Details 1)	9 Months Ended
	Sep. 30, 2020 USD ($)
Leases [Abstract]
Operating lease cost	$ 695,456
Short-term lease cost
Variable lease cost	$ 106,927

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LEASES (Details 2)	9 Months Ended
	Sep. 30, 2020 USD ($)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 762,356
Right-of-use assets obtained in exchange for new operating lease liabilities
Weighted-average remaining lease term - operating leases	7 years 4 months 24 days
Weighted-average discount rate - operating leases	10.00%

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LEASES (Details 3)	Sep. 30, 2020 USD ($)
Payments due by period
2020 (remainder)	$ 247,790
2021	880,914
2022	872,599
2023	895,200
2024	857,368
Thereafter	2,233,700
Total lease payments	5,987,571
Less interest	(1,789,306)
Present value of lease liabilities	$ 4,198,265

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LEASES (Details Narrative)	9 Months Ended
	Sep. 30, 2020
Office Space And Restaurant [Member]
Lease options to terminate	Within 1 year.
Office Space And Restaurant [Member] | Minimum [Member]
Lease terms	1 month
Office Space And Restaurant [Member] | Maximum [Member]
Lease terms	10 years 9 months 18 days
Commercial Properties [Member]
Discount rate	10.00%

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ADVANCES ON FUTURE RECEIPTS (Details Narrative)	9 Months Ended
	Sep. 30, 2020 USD ($)
Purchase and Sale Agreement [Member] | Philou Ventures, LLC [Member] | Chief Executive Officer [Member]
Repayment of future receipts	$ 762,076

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NOTES PAYABLE (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Total notes payable	$ 12,166,645	$ 6,652,655
Less: Unamortized debt discounts	(1,980,685)	(29,348)
Less: Unamortized financing cost		(3,668)
Total notes payable, net of financing cost	10,185,960	6,619,639
Less: current portion	(9,833,928)	(6,137,015)
Notes payable - long-term portion	352,032	482,624
Other Short Term Notes Payable [Member]
Total notes payable	1,182,401	1,050,339
Esousa Purchased Notes [Member]
Total notes payable	431,668	2,828,323
June '20 Short-Term Promissory Note [Member]
Total notes payable	800,000
Note Payable To Dept. Of Economic And Community Development [Member]
Total notes payable	204,813	229,096
Short Term Bank Credit [Member]
Total notes payable	1,423,724	1,622,337
Paycheck Protection Program Loans [Member]
Total notes payable	1,162,302
SBA Economic Injury Disaster Loan [Member]
Total notes payable	150,000
Esousa Additional Purchased Notes [Member]
Total notes payable	1,772,700	632,000
Esousa Short-Term Promissory Notes [Member]
Total notes payable	4,850,000
Notes Payable To Wells Fargo [Member]
Total notes payable	$ 189,037	$ 290,560

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NOTES PAYABLE (Details Narrative)				1 Months Ended		3 Months Ended		6 Months Ended	9 Months Ended		12 Months Ended
	Aug. 20, 2020 USD ($) shares	May 27, 2020 USD ($)	Feb. 10, 2020 USD ($) $ / shares shares	Jun. 26, 2020 USD ($) $ / shares shares	Mar. 31, 2020 USD ($)	Sep. 30, 2020 USD ($) Number $ / shares shares	Sep. 30, 2019 USD ($)	Jun. 30, 2020 shares	Sep. 30, 2020 USD ($) Number $ / shares shares	Sep. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)	May 28, 2020 USD ($)	Apr. 30, 2020 USD ($)	Jun. 30, 2019 USD ($) $ / shares
Number of shares issued (in shares) | shares								140,624
Warrant exercise price (in dollars per share) | $ / shares						$ 1.39			$ 1.39
Loss on extinguishment						$ (12,823,039)	$ (155,448)		$ (13,297,793)	$ (963,232)
Coronavirus Aid Relief And Economic Security Act [Member]
Relief fund amount					$ 2,000,000,000,000
Warrant [Member]
Loss on extinguishment									$ 2,713,874
Warrant [Member] | Risk Free Interest Rate [Member]
Measurement input | Number						0.17			0.17
Warrant [Member] | Risk Free Interest Rate [Member] | Minimum [Member]
Measurement input | Number						0.23			0.23
Warrant [Member] | Risk Free Interest Rate [Member] | Maximum [Member]
Measurement input | Number						1.38			1.38
Warrant [Member] | Volatility Rate [Member]
Measurement input | Number						104.56			104.56
Warrant [Member] | Volatility Rate [Member] | Minimum [Member]
Measurement input | Number						86.31			86.31
Warrant [Member] | Volatility Rate [Member] | Maximum [Member]
Measurement input | Number						100.82			100.82
Stock Option [Member]
Warrant issued | shares						1,700,360			1,700,360
Common Stock [Member]
Principal amount	$ 600,000					$ 3,977,427			$ 3,977,427					$ 400,000
Number of shares issued (in shares) | shares	413,793								182,575
Share price (in dollars per share) | $ / shares						$ 1.78			$ 1.78					$ 1.07
Master Exchange Agreement [Member] | Common Stock [Member]
Description of volume weighted average price			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.
Number of shares issued (in shares) | shares			1,832,597
Excercise price (in dollar per shares) | $ / shares			$ 1.43
Warrant exercise price (in dollars per share) | $ / shares			$ 1.00
Dominion Short Term Promissory Note [Member] | Master Exchange Agreement [Member]
Warrant issued | shares						132,236			132,236
Number of option deemed									$ 1,700,360
12% Short-Term Promissory Notes [Member]
Principal amount												$ 235,796
12% Short-Term Promissory Notes [Member] | Warrant [Member]
Warrant issued | shares						354,426			354,426
Principal And Interest Payments [Member]
Principal amount		$ 150,000
Interest rate		3.75%
Principal and interest payments		$ 731
Esousa Holdings LLC [Member] | Unsecured Short Term Promissory Notes [Member]
Principal amount						$ 2,850,000			$ 2,850,000
Excercise price (in dollar per shares) | $ / shares						$ 2.71			$ 2.71
Warrant issued | shares						1,154,927			1,154,927
Warrant tem						1 year 6 months			1 year 6 months
Description of interest rate						Unsecured short-term promissory notes with interest rates of 13% and 14%.
Maturity date						Sep. 30, 2020
Debt original issuance discount						$ 2,727,085
Non-cash interest expense						1,190,706
Esousa Holdings LLC [Member] | Dominion Short Term Promissory Note [Member] | Master Exchange Agreement [Member]
Principal amount			$ 4,163,481
Additional principal amount			$ 2,240,015			2,240,015			$ 2,240,015
Description of agreement			The Exchange Agreement provides for two pricing periods, the first of which commenced after the date on which the Creditor received the Exchange Shares pursuant to the Initial Exchange and ended on the date that was 90 days after receipt thereof, 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.
Esousa Holdings LLC [Member] | 12% Short-Term Promissory Notes [Member]
Principal amount						$ 2,000,000			$ 2,000,000
Excercise price (in dollar per shares) | $ / shares						$ 1.08			$ 1.08
Warrant tem						5 years			5 years
Interest rate						12.00%			12.00%
Esousa Holdings LLC [Member] | 12% Short-Term Promissory Notes [Member] | Common Stock [Member]
Number of shares issued (in shares) | shares									890,103
Short term note term									The Esousa 12% short-term promissory notes have a term of three months.
Investor [Member] | Common Stock [Member]
Number of shares issued (in shares) | shares									5,771,580
Value of shares issued									$ 2,396,655		$ 1,536,064
Loss on extinguishment									$ 10,548,535
June '20 Short-Term Promissory Note [Member]
Principal amount				$ 800,000
Excercise price (in dollar per shares) | $ / shares				$ 2.43
Warrant issued | shares				361,991
Warrant tem				17 months
Interest rate				12.00%
Short term note term				P0Y3M
12% Short-Term Promissory Notes [Member] | Esousa Holdings LLC [Member] | Risk Free Interest Rate [Member] | Minimum [Member]
Measurement input | Number						0.34			0.34
12% Short-Term Promissory Notes [Member] | Esousa Holdings LLC [Member] | Risk Free Interest Rate [Member] | Maximum [Member]
Measurement input | Number						1.11			1.11
12% Short-Term Promissory Notes [Member] | Esousa Holdings LLC [Member] | Volatility Rate [Member] | Minimum [Member]
Measurement input | Number						86.31			86.31
12% Short-Term Promissory Notes [Member] | Esousa Holdings LLC [Member] | Volatility Rate [Member] | Maximum [Member]
Measurement input | Number						94.51			94.51
Paycheck Protection Program Loan [Member]
Principal amount													$ 715,101
Paycheck Protection Program Loan [Member] | Microphase Corporation [Member]
Principal amount													$ 467,333

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NOTES PAYABLE - RELATED PARTIES (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Notes Payable - Related Parties [Abstract]
Notes payable, related parties	$ 263,169	$ 284,317
Less: current portion	(211,253)	(169,153)
Notes payable, related parties - long-term portion	$ 51,916	$ 115,164

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NOTES PAYABLE - RELATED PARTIES (Details Narrative) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Notes payable from related parties	$ 211,253	$ 169,153
Microphase Corporation [Member]
Notes payable from related parties	38,569
Notes payable outstanding	$ 301,738
Former Officer And Employee [Member] | Notes Payable, Other Payables [Member] | Minimum [Member] | Microphase Corporation [Member]
Interest rate on debt	3.00%
Former Officer And Employee [Member] | Notes Payable, Other Payables [Member] | Maximum [Member] | Microphase Corporation [Member]
Interest rate on debt	6.00%

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CONVERTIBLE NOTES (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Total convertible notes payable	$ 1,090,000	$ 2,760,990
Unamortized debt discounts	(332,162)	(355,227)
Total convertible notes payable, net of financing cost	757,838	2,405,763
Less: current portion	(392,044)	(2,100,990)
Convertible notes payable, net of financing cost - long-term portion	365,794	304,773
8% Convertible Promissory Notes [Member]
Total convertible notes payable		935,772
12% Convertible Promissory Notes [Member]
Total convertible notes payable		815,218
4% Convertible Promissory Notes [Member]
Total convertible notes payable	660,000	660,000
12% November 2019 Convertible Promissory Note [Member]
Total convertible notes payable		350,000
April 2020 Convertible Promissory Note [Member]
Total convertible notes payable	100,000
12% August 2020 Convertible Promissory Note [Member]
Total convertible notes payable	$ 330,000

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CONVERTIBLE NOTES (Details Narrative) - USD ($)			1 Months Ended	3 Months Ended		9 Months Ended
	Apr. 13, 2020	Feb. 05, 2020	Nov. 13, 2020	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Nov. 28, 2020	Aug. 20, 2020	May 28, 2020	Apr. 20, 2020	Feb. 25, 2020	Nov. 15, 2019	Sep. 26, 2019	Jun. 30, 2019
Loss on extinguishment				$ (12,823,039)	$ (155,448)	$ (13,297,793)	$ (963,232)
Remaining outstanding principal and interest						16,710,803	$ 4,736,295
Subsequent Event [Member]
Principal amount								$ 200,000
Proceeds from issuance of common stock			$ 5,375,055
Percentage of original issue discount								20.00%
12% Short-Term Promissory Notes [Member]
Principal amount										$ 235,796
Common Stock [Member]
Principal amount				$ 3,977,427		$ 3,977,427			$ 600,000						$ 400,000
Number of convertible share issued				5,323,793	344,071	7,238,729	370,473
Proceeds from issuance of common stock						$ 6,824,936
Additional interest expense						$ 210,049
Common stock, issued (in shares)				529,425		529,425
Share price (in dollars per share)				$ 1.78		$ 1.78									$ 1.07
January 2018 10% Convertible Promissory Note [Member] | Common Stock [Member]
Remaining outstanding principal and interest						$ 952,965
10% Convertible Promissory Note [Member]
Principal amount	$ 100,000
Interest rate on debt	50.00%
Warrant tem	5 years
Description of volume weighted average price	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.
10% Convertible Promissory Note [Member] | Exchange Dividend Rate [Member]
Share price (in dollars per share)	$ 1.17
Dividend unpaid	$ 1.35
Securities Purchase Agreement [Member] | 12% Convertible Promissory Notes [Member]
Principal amount														$ 815,218
Interest rate on debt														12.00%
Institutional Investor [Member] | Common Stock [Member]
Loss on extinguishment						20,345
Institutional Investor [Member] | Convertible Promissory Note [Member] | Common Stock [Member]
Principal amount												$ 295,000
Common stock, issued (in shares)												203,448
Institutional Investor [Member] | Securities Purchase Agreement [Member] | Common Stock [Member]
Principal amount		$ 585,919
Amount of converted debt		$ 295,000
Conversion price (in dollars per share)		$ 1.45
Percentage of net proceeds		12.00%
Lender [Member] | Securities Purchase Agreement [Member] | 8% Convertible Promissory Notes [Member]
Principal amount													$ 935,772
Interest rate on debt													8.00%
Conversion price (in dollars per share)													$ 1.80
Volume Weighted Average Price [Member]
Interest rate on debt											75.00%
Share price (in dollars per share)											$ 0.35
Esousa Holdings LLC [Member] | 12% Promissory Note [Member] | Institutional Investor [Member]
Principal amount				$ 585,919		$ 585,919

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CONVERTIBLE NOTE PAYABLE - RELATED PARTY (Details Narrative) - USD ($)			6 Months Ended	9 Months Ended
	Aug. 20, 2020	Feb. 05, 2020	Jun. 30, 2020	Sep. 30, 2020	Jun. 30, 2019
Issued of shares			140,624
Common Stock [Member]
Principal amount	$ 600,000			$ 3,977,427	$ 400,000
Issued of shares	413,793			182,575
8% Convertible Promissory Note [Member]
Principal amount		$ 1,000,000
Interest rate		8.00%
Maturity date		Aug. 05, 2020
8% Convertible Promissory Note [Member] | Common Stock [Member]
Conversion price (in dollars per share)		$ 1.45
Intrinsic value		$ 68,966

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COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)		9 Months Ended	12 Months Ended
	Nov. 28, 2018	Sep. 30, 2020	Dec. 31, 2019
Ding Gu [Member]
Damages amount		$ 1,100,000
Blockchain Mining Supply And Services, Ltd [Member]
Damages amount	$ 1,388,495
Settlement Agreement [Member]
Attorneys' fees		600,000
Non-Trade Creditors [Member]
Damages amount			$ 4,100,000
Damages sought value			4,200,000
Non-Trade Creditors [Member] | Settlement Agreement [Member]
Settlement amount			$ 70,000
Two Trade Creditors [Member] | Trade Liabilities [Member]
Settlement amount		400,000
Maximum loss exposure		$ 200,000

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STOCKHOLDERS' EQUITY (Details Narrative) - USD ($)					1 Months Ended	6 Months Ended	9 Months Ended
	Aug. 20, 2020	Mar. 04, 2020	Jan. 15, 2020	Dec. 22, 2019	Dec. 23, 2019	Jun. 30, 2020	Sep. 30, 2020	Feb. 05, 2020	Dec. 31, 2019	Jun. 30, 2019
Preferred stock, authorized							25,000,000
Preferred stock, par value (in dollars per sahre)							$ 0.001
Preferred stock outstanding							23,497,500
Number of shares issued (in shares)						140,624
Shares of its common stock in satisfaction of accrued liabilities						$ 155,547
Ault & Company [Member] | Convertible Promissory Note [Member]
Principal amount								$ 1,000,000
Number of shares issued upon debt conversion	413,793
Value of shares issued upon debt conversion	$ 600,000
Securities Purchase Agreement [Member] | Ault & Company [Member]
Number of shares issued (in shares)				660,667
Common Stock [Member]
Number of shares issued for services							$ 102,500
Number of shares issued (in shares)	413,793						182,575
Share price (in dollars per share)							$ 1.78			$ 1.07
Principal amount	$ 600,000						$ 3,977,427			$ 400,000
Accrued interest							1,584,841
Gross proceeds from common stock							6,824,936
Loss on extinguishment							$ 10,548,535
Common Stock [Member] | Securities Purchase Agreement [Member] | Dominion Short Term Promissory Note [Member]
Number of shares issued (in shares)		12,500
Common Stock [Member] | Securities Purchase Agreement [Member] | Ault & Company [Member]
Number of shares issued (in shares)			666,945		660,667
Share price (in dollars per share)					$ 1.12
Purchase price					$ 739,948
Series A Convertible Preferred Stock [Member]
Preferred stock, authorized							1,000,000		1,000,000
Preferred stock, par value (in dollars per sahre)							$ 0.001		$ 0.001
Preferred stock issued							7,040		7,040
Preferred stock outstanding							7,040		7,040
Series B Convertible Preferred Stock [Member]
Preferred stock, authorized							500,000		500,000
Preferred stock, par value (in dollars per sahre)							$ 0.001		$ 0.001
Preferred stock issued							125,000		125,000
Preferred stock outstanding							125,000		125,000
Series C Preferred Stock [Member]
Convertible preferred stock, authorized							2,500

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RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)							1 Months Ended	3 Months Ended	6 Months Ended	9 Months Ended		12 Months Ended
	Aug. 20, 2020	Jan. 15, 2020	Dec. 22, 2019	Apr. 12, 2019	Mar. 31, 2017	Mar. 09, 2017	Dec. 23, 2019	Sep. 30, 2019	Jun. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	Feb. 05, 2020	Jun. 30, 2019	Aug. 21, 2017
Number of shares issued (in shares)									140,624
Short-term loans										$ 570,000
Common Stock [Member]
Principal amount	$ 600,000									$ 3,977,427				$ 400,000
Number of shares issued (in shares)	413,793									182,575
Fair value of common stock										$ 1.78				$ 1.07
Multiplex Laser Surface Enhancement [Member]
Proceeds from sale of shares				$ 2,676,219
AVLP [Member]
Number of shares issued (in shares)										5,000		91,000
Number of shares acquired												372,625
Value of shares acquired												$ 208,100
Fair value of common stock										$ 1.50
Amount of shares issued										$ 1,274		$ 53,032
Unrealized gain										488,049
AVLP [Member] | Common Stock [Member]
Unrealized gain										$ 358,765
Avalanche International Corp. [Member]
Number of warrants purchased										20,306,921
MTIX Limited [Member]
Proceeds from sale of shares										$ 1,238,856
MTIX Limited [Member] | Multiplex Laser Surface Enhancement [Member]
Purchase order					$ 50,000,000
Alzamend Neuro, Inc. [Member]
Number of shares acquired										11,325
Value of shares acquired										$ 9,060
Alzamend Neuro, Inc. [Member] | 8% Convertible Promissory Note [Member]
Interest income for discount accretion								$ 1,968			$ 329
Alzamend Neuro, Inc. [Member] | 8% Convertible Promissory Note [Member] | Warrant [Member]
Unrealized gain										$ 111
Number of warrants purchased										16,667
Exercise price										$ 3.00
Warrant tem										5 years
Ault & Company [Member]
Short-term loans										$ 422,758
Ault & Company [Member] | Convertible Promissory Note [Member]
Principal amount													$ 1,000,000
Interest rate on debt													8.00%
Number of shares issued upon debt conversion	413,793
Value of shares issued upon debt conversion	$ 600,000
Ault & Company [Member] | Short-Term Promissory Note [Member]
Principal amount										2,900,000
Ault & Company [Member] | 12% Short-Term Promissory Note Due on January 2020 [Member] | Milton C. [Member]
Principal amount										$ 235,796
Philou [Member] | Manager [Member] | Series B Convertible Preferred Stock [Member]
Number of shares issued (in shares)										125,000
Loan And Security Agreement [Member] | AVLP [Member]
Maximum amount of non-revolving credit facility															$ 10,000,000
Contractual interest receivable										$ 2,025,475
Provision for losses										5,159,910
Loan And Security Agreement [Member] | AVLP [Member] | Convertible Promissory Note [Member]
Principal amount										$ 10,153,661
Interest rate on debt										12.00%
Securities Purchase Agreement [Member] | Ault & Company [Member]
Number of shares issued (in shares)			660,667
Amount of shares issued			$ 739,948
Market price of common stock (in dollars per share)			$ 1.12
Securities Purchase Agreement [Member] | Ault & Company [Member] | Common Stock [Member]
Number of shares issued (in shares)		666,945					660,667
Fair value of common stock							$ 1.12
Preferred Stock Purchase Agreement [Member] | Philou [Member] | Series B Convertible Preferred Stock [Member]
Description of stock purchase agreement term						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.

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SEGMENT, CUSTOMERS AND GEOGRAPHICAL INFORMATION (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Revenue	$ 5,705,100	$ 4,968,440	$ 16,709,118	$ 15,061,289
Revenue, cryptocurrency mining		307,172		592,092
Revenue, lending activities	(29,536)	69,217	(27,140)	443,927
Total revenues	5,675,564	5,344,829	16,681,978	16,097,308
Depreciation and amortization expense	349,728	898,291	607,960	2,793,600
Loss from operations	(1,624,708)	(7,685,889)	(5,324,112)	(15,760,341)
Capital expenditures for segment assets	364,346	55,717	554,462	137,263
Identifiable assets	43,644,812	50,503,348	43,644,812	50,503,348	$ 42,750,408
Operating Segments [Member] | GWW [Member]
Revenue	4,329,295	3,355,897	12,905,877	10,754,949
Revenue, cryptocurrency mining
Revenue, lending activities
Total revenues	4,329,295	3,355,897	12,905,877	10,754,949
Depreciation and amortization expense	328,302	151,257	478,316	553,642
Loss from operations	(65,369)	(133,909)	118,642	(651,993)
Capital expenditures for segment assets	337,921	25,135	528,038	102,364
Identifiable assets	21,186,343	19,440,320	21,186,343	19,440,320
Operating Segments [Member] | Coolisys [Member]
Revenue	1,375,805	1,612,543	3,803,241	4,306,340
Revenue, cryptocurrency mining		307,172		592,092
Revenue, lending activities
Total revenues	1,375,805	1,919,715	3,803,241	4,898,432
Depreciation and amortization expense	21,426	747,034	129,644	2,239,958
Loss from operations	126,593	(5,050,617)	(27,460)	(7,188,830)
Capital expenditures for segment assets	26,425	30,582	26,425	46,959
Identifiable assets	21,009,613	28,079,982	21,009,613	28,079,982
Operating Segments [Member] | Ault Alliance [Member]
Revenue
Revenue, cryptocurrency mining
Revenue, lending activities	(29,536)	69,217	(27,140)	443,927
Total revenues	(29,536)	69,217	(27,140)	443,927
Depreciation and amortization expense
Loss from operations	(40,561)	(70,953)	(121,977)	(29,663)
Capital expenditures for segment assets
Identifiable assets	$ 1,448,856	$ 2,983,046	$ 1,448,856	$ 2,983,046

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SEGMENT, CUSTOMERS AND GEOGRAPHICAL INFORMATION (Details 1) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Total Revenues by Major Customer	$ 5,675,564	$ 5,344,829	$ 16,681,978	$ 16,097,308
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | Customer A [Member]
Total Revenues by Major Customer	$ 1,862,667	$ 1,429,455	$ 5,596,089	$ 2,845,541
Percentage of Total Company Revenues	33.00%	27.00%	34.00%	18.00%
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | Customer B [Member]
Total Revenues by Major Customer	$ 1,065,400		$ 2,660,800
Percentage of Total Company Revenues	19.00%		16.00%

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SEGMENT, CUSTOMERS AND GEOGRAPHICAL INFORMATION (Details Narrative)	9 Months Ended
	Sep. 30, 2020 Number
Segment Reporting [Abstract]
Number of reportable segments	3

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SUBSEQUENT EVENTS (Details Narrative) - USD ($)					1 Months Ended		6 Months Ended	9 Months Ended
	Nov. 09, 2020	Oct. 27, 2020	Oct. 02, 2020	Aug. 05, 2020	Nov. 13, 2020	Oct. 31, 2020	Jun. 30, 2020	Sep. 30, 2020	Nov. 28, 2020	Dec. 31, 2019
Subsequent Event [Line Items]
Number of common stock issued through ATM offering							140,624
Stockholders' equity								$ 4,513,512		$ 6,940,708
Esousa Holdings LLC [Member] | 13% Unsecured Promissory Notes [Member]
Subsequent Event [Line Items]
Proceeds from issuance of debt				$ 2,000,000
Principal amount				$ 2,000,000
Due date				Nov. 03, 2020
Esousa Holdings LLC [Member] | 14% Unsecured Promissory Notes [Member]
Subsequent Event [Line Items]
Proceeds from issuance of debt								850,000
Principal amount								$ 1,200,000
Institutional Investor [Member] | Warrant [Member]
Subsequent Event [Line Items]
Exercise price				$ 3.01
Number of shares issued (in shares)				729,927
Subsequent Event [Member]
Subsequent Event [Line Items]
Gross proceeds from issuance common stock					$ 5,375,055
Number of common stock issued through ATM offering					2,935,875
Principal amount									$ 200,000
Subsequent Event [Member] | Stock Purchase Agreement [Member] | Relec Electronics Ltd [Member]
Subsequent Event [Line Items]
percentage of ownership	100.00%
Descciption of acquisition	Tabard shall acquire Relec pursuant to the Agreement whereby the Sellers shall sell to Tabard (i) 100% of the issued shares of Relec. The purchase price is approximately £3,000,000 plus an amount equal to Relec’s cash balance immediately prior to closing of the acquisiton
Escrow deposit	$ 500,000
Subsequent Event [Member] | Ascendiant Capital Markets, LLC [Member]
Subsequent Event [Line Items]
Gross proceeds from issuance common stock			$ 8,975,000
Subsequent Event [Member] | Esousa Holdings LLC [Member] | 14% Unsecured First Promissory Notes [Member]
Subsequent Event [Line Items]
Principal amount		$ 850,000
Due date		Dec. 28, 2020
Subsequent Event [Member] | Esousa Holdings LLC [Member] | 14% Unsecured Second Promissory Notes [Member]
Subsequent Event [Line Items]
Principal amount		$ 350,000
Due date		Jan. 07, 2021
Accrued unpaid interest		14.00%
Subsequent Event [Member] | Institutional Investor [Member] | Warrant [Member]
Subsequent Event [Line Items]
Exercise price		$ 2.20
Number of shares issued (in shares)		425,000
Subsequent Event [Member] | Institutional Investor [Member] | Warrant [Member]
Subsequent Event [Line Items]
Exercise price		$ 2.59
Number of shares issued (in shares)		148,936
Subsequent Event [Member] | Convertible Note [Member]
Subsequent Event [Line Items]
Principal amount						$ 2,277,194
Accrued interest						$ 2,277,194
Issuance of common stock for conversion of debt (in shares)						2,108,152