DESCRIPTION OF BUSINESS

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

DESCRIPTION OF BUSINESS

1. DESCRIPTION OF BUSINESS

Ault Alliance, Inc., a Delaware corporation which was then known as BitNile Holdings, Inc. ("BitNile" or the "Company"), which was formerly known as Ault Global Holdings, Inc., was incorporated in September 2017. BitNile is a diversified holding company pursuing growth by acquiring undervalued businesses and disruptive technologies with a global impact. Through its wholly- and majority-owned subsidiaries and strategic investments, the Company owns and operates a data center at which it mines Bitcoin, and provides mission-critical products that support a diverse range of industries, including defense/aerospace, industrial, automotive, telecommunications, medical/biopharma, and textiles. In addition, the Company extends credit to select entrepreneurial businesses through a licensed lending subsidiary. BitNile was founded by Milton "Todd" Ault, III, its Executive Chairman and is led by Mr. Ault, William B. Horne, its Chief Executive Officer and Vice Chairman and Henry Nisser, its President and General Counsel. Together, they constitute the Executive Committee, which manages the day-to-day operations of the Company. The Company's long-term objective is to maximize per share intrinsic value. All major investment and capital allocation decisions are made for the Company by Mr. Ault and the Executive Committee. The Company has six reportable segments:

● BitNile, Inc. – cryptocurrency mining operations,

● Ault Alliance, Inc. (“Ault Alliance”) – commercial lending, activist investing, media, and digital learning,

● Gresham Worldwide, Inc. (“GWW”) – defense solutions,

● TurnOnGreen, Inc. (“TurnOnGreen”) – commercial electronics solutions,

● Real Estate – hotel operations and other commercial real estate holdings, and

● Ault Disruptive Technologies Corporation (“Ault Disruptive”) – a special purpose acquisition company (“SPAC”).

On December 13, 2021, the Company changed its name from Ault Global Holdings, Inc. to BitNile Holdings, Inc. The name change did not affect the rights of security holders of the Company. The common stock continues to be listed on the NYSE American and trades under the symbol “NILE”.

1 A. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

This Amendment amends the Annual Report on Form 10-K of the Company for the year ended December 31, 2021, that was originally filed with the U.S. Securities and Exchange Commission on April 15, 2022. This Amendment only corrects an error in classification with respect to changes in fair value of financial instruments issued by a related party. The changes in fair value were erroneously recorded in other comprehensive income (loss) and have been reclassified to correct for the error within the statement of operations. The Company has restated its Consolidated Balance Sheets, Consolidated Statements of Operations and Comprehensive Loss, Consolidated Statements of Changes in Stockholders’ Equity and Condensed Consolidated Statements of Cash Flows to correct this misclassification. Finally, the Company has modified its disclosures in Item 9A of Part II to reflect the identification of an additional material weakness.

As a result, the reclassification resulted in an increase to “Accumulated deficit” and a corresponding decrease to “Accumulated other comprehensive loss” within stockholders’ equity, as reflected in the Company’s Consolidated Balance Sheets pursuant to the schedule below:

	For the Year Ended
	December 31, 2020
	As Reported			Adjustment			As Restated
STOCKHOLDERS’ EQUITY
Series A Convertible Preferred Stock, $25.00 stated value per share,	$	-		$	-		$	-
$0.001 par value – 1,000,000 shares authorized; 7,040 shares
issued and outstanding at December 31, 2021 and 2020
(redemption amount and liquidation preference of $176,000 as of
December 31, 2021 and 2020)
Series B Convertible Preferred Stock, $10 stated value per share,		-						-
share, $0.001 par value – 500,000 shares authorized; 125,000 shares issued
and outstanding at December 31, 2021 and 2020 (liquidation
preference of $1,250,000 at December 31, 2021 and 2020)
Class A Common Stock, $0.001 par value – 500,000,000 shares authorized;		28,000						28,000
84,344,607 and 27,753,562 shares issued and outstanding at December 31,
2021 and 2020, respectively
Class B Common Stock, $0.001 par value – 25,000,000 shares authorized;		-						-
nil shares issued and outstanding at December 31, 2021 and 2020
Additional paid-in capital		171,396,000						171,396,000
Accumulated deficit		(121,396,000	)		(933,000	)		(122,329,000	)
Accumulated other comprehensive loss		(1,718,000	)		933,000			(785,000	)
Treasury stock, at cost		-			-			-
TOTAL BITNILE HOLDINGS STOCKHOLDERS’ EQUITY		48,310,000			-			48,310,000
Non-controlling interest		822,000						822,000
TOTAL STOCKHOLDERS’ EQUITY	$	49,132,000		$	-		$	49,132,000

The Consolidated Statements of Operations and Comprehensive Loss amounts were adjusted pursuant to the schedules below:

	For the Year Ended
	December 31, 2020
	As Reported			Adjustment			As Restated
Revenue	$	23,629,000		$	-		$	23,629,000
Revenue, lending and trading activities		242,000						242,000
Total revenue		23,871,000			-			23,871,000
Cost of revenue		16,357,000						16,357,000
Gross profit		7,514,000			-			7,514,000
Operating expenses
Research and development		1,849,000						1,849,000
Selling and marketing		1,177,000						1,177,000
General and administrative		12,521,000						12,521,000
Benefit for credit losses		(2,000,000	)					(2,000,000	)
Total operating expenses		13,547,000			-			13,547,000
Loss from continuing operations		(6,033,000	)					(6,033,000	)
Other income (expenses)
Interest and other income		105,000						105,000
Change in fair value of equity securities, related party		-			3,312,000			3,312,000
Interest expense		(9,648,000	)					(9,648,000	)
Change in fair value of marketable equity securities		919,000						919,000
Gain (loss) on extinguishment of debt		(18,706,000	)					(18,706,000	)
Change in fair value of warrant liability		(49,000	)					(49,000	)
Total other income (expenses), net		(27,379,000	)		3,312,000			(24,067,000	)
Loss from continuing operations before income taxes		(33,412,000	)		3,312,000			(30,100,000	)
Income tax (provision) benefit		24,000						24,000
Net loss from continuing operations		(33,388,000	)		3,312,000			(30,076,000	)
Net income from discontinued operations, net of taxes		661,000						661,000
Net loss		(32,727,000	)		3,312,000			(29,415,000	)
Net loss attributable to non-controlling interest		-						-
Net loss attributable to Ault Alliance		(32,727,000	)		3,312,000			(29,415,000	)
Preferred dividends		(18,000	)					(18,000	)
Net loss available to common stockholders	$	(32,745,000	)	$	3,312,000		$	(29,433,000	)
Basic and diluted net loss per common share:
Continuing operations	$	(3.48	)				$	(3.13	)
Discontinued operations		0.07						0.07
Net loss per common share	$	(3.41	)				$	(3.06	)
Weighted average common shares outstanding, basic and diluted		9,606,000						9,606,000
Comprehensive loss
Net loss available to common stockholders	$	(32,745,000	)	$	3,312,000		$	(29,433,000	)
Other comprehensive income
Foreign currency translation adjustment		482,000			-			482,000
Net unrealized gain (loss) on derivative securities of related party		3,312,000			(3,312,000	)		-
Other comprehensive income		3,794,000			(3,312,000	)		482,000
Total comprehensive loss	$	(28,951,000	)	$	-		$	(28,951,000	)

	For the Year Ended
	December 31, 2021
	As Reported			Adjustment			As Restated
Revenue	$	32,096,000		$	-		$	32,096,000
Revenue, cryptocurrency mining, net		3,450,000						3,450,000
Revenue, lending and trading activities		16,854,000						16,854,000
Total revenue		52,400,000			-			52,400,000
Cost of revenue		23,858,000						23,858,000
Gross profit		28,542,000			-			28,542,000
Operating expenses
Research and development		2,041,000						2,041,000
Selling and marketing		7,773,000						7,773,000
General and administrative		36,686,000						36,686,000
Impairment of mined cryptocurrency		403,000						403,000
Total operating expenses		46,903,000			-			46,903,000
Loss from continuing operations		(18,361,000	)					(18,361,000	)
Other income (expenses)
Interest and other income		808,000						808,000
Change in fair value of equity securities, related party		-			(7,773,000	)		(7,773,000	)
Accretion of discount on note receivable, related party		-			4,210,000			4,210,000
Impairment of debt securities, net		(5,090,000	)		4,496,000			(594,000	)
Interest expense		(1,871,000	)					(1,871,000	)
Change in fair value of marketable equity securities		(1,327,000	)					(1,327,000	)
Realized gain on marketable securities		1,924,000						1,924,000
Loss from equity investment		(311,000	)					(311,000	)
Gain (loss) on extinguishment of debt		929,000						929,000
Change in fair value of warrant liability		(542,000	)					(542,000	)
Total other income (expenses), net		(5,480,000	)		933,000			(4,547,000	)
Loss from continuing operations before income taxes		(23,841,000	)		933,000			(22,908,000	)
Income tax (provision) benefit		(130,000	)					(130,000	)
Net loss from continuing operations		(23,971,000	)		933,000			(23,038,000	)
Net income from discontinued operations, net of taxes		-						-
Net loss		(23,971,000	)		933,000			(23,038,000	)
Net loss attributable to non-controlling interest		(213,000	)					(213,000	)
Net loss attributable to Ault Alliance		(24,184,000	)		933,000			(23,251,000	)
Preferred dividends		(18,000	)					(18,000	)
Net loss available to common stockholders	$	(24,202,000	)	$	933,000		$	(23,269,000	)
Basic and diluted net loss per common share:
Continuing operations	$	(0.44	)				$	(0.42	)
Discontinued operations		0.00						0.00
Net loss per common share	$	(0.44	)				$	(0.42	)
Weighted average common shares outstanding, basic and diluted		55,444,000						55,444,000
Comprehensive loss
Net loss available to common stockholders	$	(24,202,000	)	$	933,000		$	(23,269,000	)
Other comprehensive income
Foreign currency translation adjustment		85,000			-			85,000
Net unrealized gain (loss) on derivative securities of related party		(7,773,000	)		7,773,000			-
Impairment of debt securities		9,300,000			(8,706,000	)		594,000
Other comprehensive income		1,612,000			(933,000	)		679,000
Total comprehensive loss	$	(22,590,000	)	$	-		$	(22,590,000	)

The Condensed Consolidated Statements of Changes in Stockholders’ Equity amounts of “Accumulated deficit” and “Accumulated other comprehensive loss” were adjusted pursuant to the schedules below:

	January 1, 2020
	As Reported			Adjustment			As Restated
STOCKHOLDERS’ EQUITY
Common stock	$	3,000		$	-		$	3,000
Additional paid-in capital		101,099,000						101,099,000
Accumulated deficit		(88,650,000	)		(4,245,000	)		(92,895,000	)
Accumulated other comprehensive loss		(5,511,000	)		4,245,000			(1,266,000	)
TOTAL AULT ALLIANCE STOCKHOLDERS’ EQUITY		6,941,000			-			6,941,000
Non-controlling interest		8,000						8,000
TOTAL STOCKHOLDERS’ EQUITY	$	6,949,000		$	-		$	6,949,000

	December 31, 2020
	As Reported			Adjustment			As Restated
STOCKHOLDERS’ EQUITY
Common stock	$	28,000		$	-		$	28,000
Additional paid-in capital		171,396,000						171,396,000
Accumulated deficit		(121,396,000	)		(933,000	)		(122,329,000	)
Accumulated other comprehensive loss		(1,718,000	)		933,000			(785,000	)
TOTAL AULT ALLIANCE STOCKHOLDERS’ EQUITY		48,310,000			-			48,310,000
Non-controlling interest		822,000						822,000
TOTAL STOCKHOLDERS’ EQUITY	$	49,132,000		$	-		$	49,132,000

Further, the reclassification also resulted in adjustments within net cash used in operating activities, as reflected in the Company’s Consolidated Statements of Cash Flows, as follows:

	For the Year Ended
	December 31, 2020
	As Reported			Adjustment			As Restated
Cash flows from operating activities:
Net loss	$	(32,727,000	)	$	3,312,000		$	(29,415,000	)
Less: Net income from discontinued operations		661,000						661,000
Net loss from continuing operations		(33,388,000	)		3,312,000			(30,076,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		392,000						392,000
Amortization		336,000						336,000
Amortization of right-of-use assets		(140,000	)					(140,000	)
Interest expense – debt discount		7,251,000						7,251,000
Loss on extinguishment of debt		18,706,000						18,706,000
Change in fair value of warrant liability		49,000						49,000
Accretion of original issue discount on notes receivable – related party		22,000						22,000
Accretion of original issue discount on notes receivable		(62,000	)					(62,000	)
Increase in accrued interest on notes receivable – related party		(1,000	)					(1,000	)
Stock-based compensation		1,106,000						1,106,000
Impairment of cryptocurrencies		(5,000	)					(5,000	)
Realized losses on other investments		39,000						39,000
Realized gains on sale of marketable securities		(75,000	)					(75,000	)
Unrealized gains on marketable equity securities		(796,000	)					(796,000	)
Unrealized gains on equity securities – related party		(298,000	)		(3,312,000	)		(3,610,000	)
Unrealized losses on equity securities		73,000						73,000
Provision for loan losses		(2,000,000	)					(2,000,000	)
Changes in operating assets and liabilities:
Accounts receivable		(641,000	)					(641,000	)
Accrued revenue		645,000						645,000
Inventories		183,000						183,000
Prepaid expenses and other current assets		(1,613,000	)					(1,613,000	)
Other assets		(88,000	)					(88,000	)
Accounts payable and accrued expenses		(364,000	)					(364,000	)
Accounts payable, related parties		(28,000	)					(28,000	)
Other current liabilities		(650,000	)					(650,000	)
Lease liabilities		168,000						168,000
Net cash used in continuing operating activities		(11,179,000	)		-			(11,179,000	)
Net cash provided by discontinued operating activities		1,000			-			1,000
Net cash used in operating activities	$	(11,178,000	)	$	-		$	(11,178,000	)

	For the Year Ended
	December 31, 2021
	As Reported			Adjustment			As Restated
Cash flows from operating activities:
Net loss	$	(23,971,000	)	$	933,000		$	(23,038,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		2,103,000						2,103,000
Amortization		375,000						375,000
Amortization of right-of-use assets		950,000						950,000
Amortization, related party		30,000						30,000
Interest expense – debt discount		1,076,000						1,076,000
Gain on extinguishment of debt		(929,000	)					(929,000	)
Change in fair value of warrant liability		542,000						542,000
Accretion of original issue discount on notes receivable – related party		-			(4,210,000	)		(4,210,000	)
Impairment of debt securities		5,090,000			(4,496,000	)		594,000
Accretion of original issue discount on notes receivable		21,000						21,000
Increase in accrued interest on notes receivable – related party		(235,000	)					(235,000	)
Stock-based compensation		7,750,000						7,750,000
Impairment of cryptocurrencies		403,000						403,000
Realized gains on sale of marketable securities		(21,187,000	)					(21,187,000	)
Unrealized losses on marketable equity securities		14,127,000						14,127,000
Unrealized losses on equity securities – related party		5,754,000			7,773,000			13,527,000
Unrealized gains on equity securities		(10,734,000	)					(10,734,000	)
Loss from equity investment		311,000						311,000
Changes in operating assets and liabilities:
Marketable equity securities		(29,398,000	)					(29,398,000	)
Accounts receivable		(1,407,000	)					(1,407,000	)
Accrued revenue		(498,000	)					(498,000	)
Inventories		(2,031,000	)					(2,031,000	)
Prepaid expenses and other current assets		(5,548,000	)					(5,548,000	)
Digital currencies		(3,450,000	)					(3,450,000	)
Other assets		(1,526,000	)					(1,526,000	)
Accounts payable and accrued expenses		1,613,000						1,613,000
Accounts payable, related parties		17,000						17,000
Lease liabilities		(919,000	)					(919,000	)
Net cash used in operating activities	$	(61,671,000	)	$	-		$	(61,671,000	)