Ault Alliance, Inc. (NYSE American: AULT), a diversified holding
company (“AAI,” or the “Company”), today announced
that it has entered into a note purchase agreement (the
“Agreement”) with Ault & Company, Inc., a related party
(“A&C”). Pursuant to the Agreement, which closed upon
execution on October 13, 2023, AAI issued to A&C a senior
secured convertible promissory note (the “Note”) and
warrants (the “Warrants”) to purchase shares of AAI’s common
stock (“Common Stock”).
The Note and Warrants were paid by A&C through (i)
approximately $11.6 million of secured promissory notes previously
issued by the Company, which have been assumed by A&C, for
which the Company has issued term notes to A&C in the same
amount, which A&C canceled on closing, (ii) $4.6 million of
loans made by A&C to the Company pursuant to a credit agreement
entered into between the parties in June 2023, which A&C
canceled on closing, and (iii) $1.3 million stated value of 125,000
outstanding shares of the Company’s Series B convertible preferred
stock that A&C has surrendered to the Company for
retirement.
The Note accrues interest at the rate of 10% per annum, is due
five years after issuance, and is secured by a first priority
security interest in all the assets of the Company and its
subsidiaries, though certain collateral comprising the security
interest is subordinated to a security interest previously granted
by the Company and certain of its subsidiaries to an existing
lender.
The Note is convertible, at the option of A&C, into shares
of Common Stock at a conversion price equal to the greater of (i)
$0.10 per share (the “Floor Price”), which Floor Price shall
not, except for voting rights purposes, be adjusted for stock
dividends, stock splits, stock combinations and other similar
transactions and (ii) the lesser of (A) $0.2952, or (B) a 5%
premium to the closing sale price of the Common stock on the day
immediately prior to the date of conversion (the “Conversion
Price”). The Conversion Price is subject to standard
anti-dilution provisions in connection with any stock split, stock
dividend, subdivision or similar reclassification of the Common
Stock. The Note also has “full ratchet” price protection in the
event the Company should issue securities at a lower price than the
Conversion Price.
A&C received Warrants to purchase up to 47.7 million shares
of Common Stock, exercisable for five years at $0.1837 per share,
subject to adjustment.
Milton “Todd” Ault, III, Executive Chairman of AAI and Chief
Executive Officer of A&C, commented, “A&C’s and its
affiliates’ commitment to the Company dates back to late 2016.
Despite various evolutions, name shifts, and acquisitions
effectuated by AAI, AAI’s primary objective to foster a resilient
holding company remains unchanged. This debt restructuring reflects
A&C’s ongoing dedication to enable AAI to meet its financial
commitments and expand its business. Upon conversion of the Note,
should A&C elect to pursue such conversion, A&C looks
forward to demonstrating its confidence in AAI through becoming the
largest stockholder of AAI.”
The Note and Warrants will not be convertible and/or exercisable
unless and until approval is obtained for conversion and exercise
from the NYSE American, and thereafter, not into more than an
aggregate of 19.99% of the total shares of Common Stock outstanding
as of the date of the Agreement, unless the Company obtains
stockholder approval.
Additional information regarding the securities described above
and the terms of the Agreement, the Note and the Warrants will be
included in a Current Report on Form 8-K to be filed with the
Securities and Exchange Commission (“SEC”).
The Note and Warrants were issued in reliance upon the exemption
from the securities registration afforded by Section 4(a)(2) of the
Securities Act of 1933, as amended (the “Securities Act”) as
promulgated by SEC under the Securities Act.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy the securities, nor will there be
any sale of the securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of such jurisdiction.
For more information on AAI and its subsidiaries, AAI recommends
that stockholders, investors, and any other interested parties read
AAI’s public filings and press releases available under the
Investor Relations section at www.Ault.com or at www.sec.gov/.
About Ault Alliance, Inc.
Ault Alliance, Inc. is a diversified holding company pursuing
growth by acquiring undervalued businesses and disruptive
technologies with a global impact. Through its wholly and
majority-owned subsidiaries and strategic investments, AAI owns and
operates a data center at which it mines Bitcoin and offers
colocation and hosting services for the emerging artificial
intelligence ecosystems and other industries, and provides
mission-critical products that support a diverse range of
industries, including metaverse platform, oil exploration, crane
services, defense/aerospace, industrial, automotive,
medical/biopharma, consumer electronics, hotel operations and
textiles. In addition, AAI extends credit to select entrepreneurial
businesses through a licensed lending subsidiary. AAI’s
headquarters are located at 11411 Southern Highlands Parkway, Suite
240, Las Vegas, NV 89141; www.ault.com/.
Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements generally include
statements that are predictive in nature and depend upon or refer
to future events or conditions, and include words such as
“believes,” “plans,” “anticipates,” “projects,” “estimates,”
“expects,” “intends,” “strategy,” “future,” “opportunity,” “may,”
“will,” “should,” “could,” “potential,” or similar expressions.
Statements that are not historical facts are forward-looking
statements. Forward-looking statements are based on current beliefs
and assumptions that are subject to risks and uncertainties.
Forward-looking statements speak only as of the date they are
made, and the Company undertakes no obligation to update any of
them publicly in light of new information or future events. Actual
results could differ materially from those contained in any
forward-looking statement as a result of various factors. More
information, including potential risk factors, that could affect
the Company’s business and financial results are included in the
Company’s filings with the U.S. Securities and Exchange Commission,
including, but not limited to, the Company’s Forms 10-K, 10-Q and
8- K. All filings are available at www.sec.gov and on the Company’s
website at www.ault.com/.
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Ault Alliance Investor Contact: IR@Ault.com or
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