Q2 2021 Revenue of $62.1 Million, up 1050% From the Prior
Year’s Quarter
Q2 2021 Net Income of $42.2 Million Compared to a $1.4
Million Loss in the Prior Year’s Quarter
Total Assets of More Than a Quarter of a Billion Dollars
($259.1 Million)
Ault Global Holdings, Inc. (NYSE American: DPW) a diversified
holding company (the “Company”), today announced its
financial results for the second quarter ended June 30, 2021.
Q2-2021 highlights
- Revenue of $62.1 million, an increase of 1050% from $5.4
million in the prior second fiscal quarter;
- Revenue from lending and trading activities of $53.3 million
due to the allocation of capital to the Company’s wholly owned
subsidiary, Digital Power Lending, LLC (“DP Lending”);
- Revenue from lending and trading activities includes an
approximate $40 million unrealized gain from the Company’s
investment in Alzamend Neuro, Inc. (Nasdaq: ALZN)
(“Alzamend”), early clinical-stage biopharmaceutical company
focused on developing novel products for the treatment of
neurodegenerative diseases and psychiatric disorders;
- Revenue from cryptocurrency mining of $291,000 as the Company
resumed cryptocurrency mining operations with approximately 1,000
miners during March 2021;
- Net income of $42.2 million for the quarter, which represents
the largest quarterly profit in Company history;
- Positive working capital of $127.9 million;
- Total assets of more than a quarter-of-a-billion dollars
($259.1 million); and
- Cash of $105.4 million, marketable securities of $30.2 million
and other investments of $81.5 million as of June 30, 2021.
Six months ended June 30, 2021 highlights
- Revenue of $75.4 million, an increase of 585% from $11.0
million in the prior six-month period;
- Revenue from lending and trading activities of $58.5 million
due to the allocation of capital to DP Lending;
- Revenue from cryptocurrency mining of $421,000 as the Company
resumed cryptocurrency mining operations with approximately 1,000
miners during March 2021; and
- Net income of $44.2 million compared to a net loss of $7.9
million in the prior six-month period.
Revenues
Revenues by segment for the three months ended June 30, 2021 and
2020 were as follows:
For the Three Months Ended
June 30,
2021
2020
Increase
%
Gresham Worldwide (“GWW”)
$
6,475,000
$
4,189,000
$
2,286,000
55%
Coolisys Technologies Corp.
(“Coolisys”)
1,831,000
1,246,000
585,000
47%
Ault Alliance:
Revenue, cryptocurrency mining
291,000
—
291,000
—
Revenue, lending and trading
activities
53,274,000
(34,000)
53,308,000
156788%
Other
$
258,000
—
258,000
—
Total revenue
$
62,129,000
$
5,401,000
$
56,728,000
1050%
GWW
GWW’s revenues increased by $2.3 million, or 55%, to $6.5
million for the three months ended June 30, 2021, from $4.2 million
for the three months ended June 30, 2020. GWW revenue in 2021
includes $1.7 million from Relec, which was acquired on November
30, 2020. In addition, the increase in revenue from our GWW segment
for customized solutions for the military markets reflected the
benefit of capital that was allocated to our defense business based
on the overall improved capital structure of the Company.
Coolisys
Coolisys’ revenues increased by $586,000 or 47%, to $1.8 million
for the three months ended June 30, 2021, from $1.2 million for
three months ended June 30, 2020. The increase is due, in part, to
the lack of disruptions to Coolisys’ business operations, which
Coolisys experienced in the prior year period related to the
temporary suspension of operations related to the outbreak of
COVID-19.
Ault Alliance
Revenues from our cryptocurrency mining operations were $291,000
for the three months ended June 30, 2021, compared to nil for the
three months ended June 30, 2020, as we resumed our cryptocurrency
mining operations during the first quarter of 2021. Our decision to
resume cryptocurrency mining operations in 2021 was based on
several factors, including the market prices of digital currencies,
and favorable power costs available at our Michigan Data Center,
operated by our majority owned subsidiary Alliance Cloud Services,
LLC (“Alliance”).
Revenues from our lending and trading activities increased to
$53.3 million for the three months ended June 30, 2021, from
negative revenues of $34,000 for the three months ended June 30,
2020, which is attributable to a significant allocation of capital
from our recent equity financing transactions to our loan and
investment portfolio. During the three months ended June 30, 2021,
DP Lending generated significant income from appreciation of
investments in marketable securities as well as shares of common
stock underlying convertible notes and warrants issued to DP
Lending in certain financing transactions. Under its business
model, DP Lending also generates revenue through origination fees
charged to borrowers and interest generated from each loan.
Revenues from our trading activities in 2021 included
significant net gains on equity securities, including unrealized
gains and losses from market price changes. These gains and losses
have caused, and will continue to cause, significant volatility in
our periodic earnings.
Gross margins
Gross margins increased to 89.9% for the three months ended June
30, 2021 compared to 37.1% for the three months ended June 30,
2020. Our gross margins have typically ranged between 33% and 37%,
with slight variations depending on the overall composition of our
revenue.
Our gross margins of 89.9% recognized during the three months
ended June 30, 2021 resulted from the favorable margins from our
lending and trading activities. Excluding the effects of margin
from our lending and trading activities, our adjusted gross margins
for the three months ended June 30, 2021, would have been 29%,
slightly lower than our historical range.
Operating expenses
Operating expenses increased to $10.0 million for the three
months ended June 30, 2021, representing an increase of $7.3
million compared to $2.7 million for the three months ended June
30, 2020.
The increase in operating expenses from the three months ended
June 30, 2020 was due to the following:
- Research and development expenses increased by $69,000 to
$531,000 for the three months ended June 30, 2021, from $462,000
for the three months ended June 30, 2020. The increase in research
and development expenses is due to costs incurred by Coolisys
related to the development of our electric vehicle charger
products;
- Selling and marketing expenses were $1.5 million for the three
months ended June 30, 2021, compared to $295,000 for the three
months ended June 30, 2020, an increase of $1.2 million, or 410%.
The increase was in part the result of increases in personnel costs
directly attributable to the increase in sales and marketing
personnel and consultants, primarily at Ault Alliance related to
digital marketing and digital learning. The increase is also
attributable to costs incurred at Coolisys to grow our selling and
marketing infrastructure related to our electric vehicle charger
products;
- General and administrative expenses were $8.0 million for the
three months ended June 30, 2021, compared to $2.9 million for the
three months ended June 30, 2020, an increase of $5.1 million.
General and administrative expenses increased from the comparative
prior period due mainly to:
- the accrual of a $2.9 million performance bonus related to
trading activities during the period;
- non-cash stock compensation costs of $545,000 related to GWW
options and shares issued to GWW’s Chief Executive Officer and
Chief Operating Officer;
- general and administrative costs of $363,000 related to Relec,
which was acquired on November 30, 2020;
- increased costs related to our Michigan Data Center; and
- higher consulting, audit, legal and insurance costs; and
- The three months ended June 30, 2020 included a $1.0 million
reversal of a provision for credit losses.
The Company’s Chief Financial Officer, Kenneth S. Cragun, said,
“The financial results for the second quarter of 2021 demonstrate
that we are continuing to achieve our objectives to grow revenue
and improve operating results, with revenue growth of 1050% over
the prior second fiscal quarter and net income of $42.2 million. We
saw tremendous growth from our lending and trading activities with
the infusion of capital and growth in all of our business segments.
Our balance sheet remains strong, ending the second quarter of 2021
with positive working capital of $127.9 million.”
The Company’s Founder and Executive Chairman, Milton “Todd”
Ault, III said, “Our results for the second quarter of 2021 reflect
the strength of our lending and trading activities at DP Lending,
our financial services subsidiary. We believe our current lending
and investing pipeline is strong and if the market conditions for
investing in small cap stocks remains strong, the future prospects
for the Company are extremely promising. Quite simply, we are in
the strongest position of our Company’s 52-year history. We have
grown assets to more than a quarter of a billion and are announcing
a goal to grow assets to more than one billion dollars. Over the
longer term, we envision allocating $250 million to DP Lending,
$250 million to real estate investments, and $500 million to
completing acquisitions of profitable companies, or distressed
companies that we believe we can make profitable. As discussed in
the previous quarter, our near-term key initiatives include:
- Exploring a potential IPO or other transaction to access
capital markets for our GWW defense business;
- Exploring a potential IPO for our power electronics and
electric vehicle charger business;
- Completing the initial 30,000 square foot buildout of our
Michigan Data Center;
- Ramping up cryptocurrency mining operations at our Michigan
Data Center;
- Ramping up fulfillment of the $50 million MTIX purchase order
for MLSE plasma-laser systems;
- Expanding our loan and investment portfolio at DP Lending;
and
- Considering further acquisitions.
Considering our subsidiaries operating in the sectors of
defense, electric vehicle chargers, power electronic businesses,
data center, crypto mining, lending and investment platform, the
road ahead is bright.”
For more information on Ault Global Holdings and its
subsidiaries, the Company recommends that stockholders, investors
and any other interested parties read the Company’s public filings
and press releases available under the Investor Relations section
at www.AultGlobal.com or available at www.sec.gov.
About Ault Global Holdings, Inc.
Ault Global Holdings, 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, the Company
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. Ault Global Holding’s
headquarters are located at 11411 Southern Highlands Parkway, Suite
240, Las Vegas, NV 89141; www.AultGlobal.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.AultGlobal.com.
AULT GLOBAL HOLDINGS, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30,
December 31,
2021
2020
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
105,391,000
$
18,680,000
Marketable equity securities
30,172,000
2,563,000
Accounts receivable
4,730,000
3,852,000
Accounts and other receivable, related
party
1,196,000
1,196,000
Accrued revenue
1,594,000
1,696,000
Inventories
2,900,000
3,374,000
Prepaid expenses and other current
assets
5,373,000
2,988,000
TOTAL CURRENT ASSETS
151,356,000
34,349,000
Intangible assets, net
4,175,000
4,390,000
Goodwill
9,589,000
9,646,000
Property and equipment, net
7,262,000
2,123,000
Right-of-use assets
4,605,000
4,318,000
Investment in promissory notes, related
parties
13,913,000
10,668,000
Investments in common stock and warrants,
related parties
60,355,000
6,139,000
Investments in debt and equity
securities
4,013,000
262,000
Investment in limited partnership
1,869,000
1,869,000
Loans receivable
572,000
750,000
Other investments, related parties
788,000
803,000
Other assets
604,000
326,000
TOTAL ASSETS
$
259,101,000
$
75,643,000
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses
$
7,784,000
$
10,579,000
Accounts payable and accrued expenses,
related party
—
36,000
Operating lease liability, current
876,000
524,000
Revolving credit facility
103,000
125,000
Notes payable, net
1,808,000
4,048,000
Notes payable, related parties
—
188,000
Convertible notes payable, related
party
—
400,000
Warrant liability
4,580,000
4,192,000
Income taxes payable
2,770,000
—
Other current liabilities
5,572,000
1,790,000
TOTAL CURRENT LIABILITIES
$
23,493,000
$
21,882,000
AULT GLOBAL HOLDINGS, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(Unaudited)
June 30,
December 31,
2021
2020
LONG TERM LIABILITIES
Operating lease liability, non-current
3,792,000
3,855,000
Notes payable
—
336,000
Notes payable, related parties
—
52,000
Convertible notes payable
427,000
386,000
TOTAL LIABILITIES
27,712,000
26,511,000
COMMITMENTS AND CONTINGENCIES
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 June 30, 2021
and December 31, 2020
(redemption amount and liquidation
preference of $176,000
as of June 30, 2021 and December 31,
2020)
Series B Convertible Preferred Stock, $10
stated value per share,
—
—
$0.001 par value – 500,000 shares
authorized; 125,000 shares issued
and outstanding at June 30, 2021 and
December 31, 2020 (liquidation
preference of $1,250,000 at June 30, 2021
and December 31, 2020)
Class A Common Stock, $0.001 par value –
500,000,000 shares authorized;
56,000
28,000
56,159,963 and 27,753,562 shares issued
and outstanding at June 30,
2021 and December 31, 2020,
respectively
Class B Common Stock, $0.001 par value –
25,000,000 shares authorized;
—
—
nil shares issued and outstanding at June
30, 2021 and December 31,
2020
Additional paid-in capital
311,760,000
171,397,000
Accumulated deficit
(77,190,000)
(121,397,000)
Accumulated other comprehensive gain
(loss)
(4,601,000)
(1,718,000)
TOTAL AULT GLOBAL HOLDINGS
STOCKHOLDERS’ EQUITY
230,025,000
48,310,000
Non-controlling interest
1,364,000
822,000
TOTAL STOCKHOLDERS’ EQUITY
231,389,000
49,132,000
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
259,101,000
$
75,643,000
AULT GLOBAL HOLDINGS, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME (LOSS) (Unaudited)
For the Three Months
Ended
For the Six Months
Ended
June 30,
June 30,
2021
2020
2021
2020
Revenue
$
8,564,000
$
5,435,000
$
16,469,000
$
11,004,000
Revenue, cryptocurrency mining
291,000
—
421,000
—
Revenue, lending and trading
activities
53,274,000
(34,000)
58,485,000
2,000
Total revenue
62,129,000
5,401,000
75,375,000
11,006,000
Cost of revenue
6,278,000
3,496,000
11,386,000
7,349,000
Gross profit
55,851,000
1,905,000
63,989,000
3,657,000
Operating expenses
Research and development
531,000
462,000
1,133,000
903,000
Selling and marketing
1,505,000
295,000
2,747,000
633,000
General and administrative
7,992,000
2,918,000
13,084,000
5,821,000
Provision for credit losses
—
(1,000,000)
—
—
Total operating expenses
10,028,000
2,675,000
16,964,000
7,357,000
Income (loss) from continuing
operations
45,823,000
(770,000)
47,025,000
(3,700,000)
Other income (expenses)
Interest income
14,000
36,000
51,000
36,000
Interest expense
(22,000)
(963,000)
(337,000)
(2,049,000)
Change in fair value of marketable equity
securities
(1,915,000)
337,000
45,000
(29,000)
Realized gain on marketable securities
—
—
397,000
—
Gain (loss) on extinguishment of debt
447,000
(12,000)
929,000
(475,000)
Change in fair value of warrant
liability
290,000
(10,000)
(388,000)
(6,000)
Total other income (expenses), net
(1,186,000)
(612,000)
697,000
(2,523,000)
Income (loss) from continuing operations
before income taxes
44,637,000
(1,382,000)
47,722,000
(6,223,000)
Income tax (expense) benefit
(3,504,000)
6,000
(3,510,000)
12,000
Net income (loss) from continuing
operations
41,133,000
(1,376,000)
44,212,000
(6,211,000)
Net loss from discontinued operations, net
of taxes
—
—
—
(1,698,000)
Net income (loss)
41,133,000
(1,376,000)
44,212,000
(7,909,000)
Net loss attributable to non-controlling
interest
1,083,000
—
3,000
—
Net income (loss) attributable to Ault
Global Holdings
42,216,000
(1,376,000)
44,215,000
(7,909,000)
Preferred dividends
(4,000)
(3,000)
(9,000)
(7,000)
Net income (loss) available to common
stockholders
$
42,212,000
$
(1,379,000)
$
44,206,000
$
(7,916,000)
Basic net income (loss) per common
share:
Continuing operations
$
0.82
$
(0.24)
$
0.97
$
(1.20)
Discontinued operations
—
—
—
(0.33)
Net income (loss) per common share
$
0.82
$
(0.24)
$
0.97
$
(1.52)
Diluted net income (loss) per common
share:
Continuing operations
$
0.79
$
(0.24)
$
0.91
$
(1.20)
Discontinued operations
—
—
—
(0.33)
Net income (loss) per common share
$
0.79
$
(0.24)
$
0.91
$
(1.52)
Weighted average basic common shares
outstanding
50,783,000
5,864,000
45,052,000
5,199,000
Weighted average diluted common shares
outstanding
52,780,000
5,864,000
47,574,000
5,199,000
Comprehensive income (loss)
Net income (loss) available to common
stockholders
$
42,212,000
$
(1,379,000)
$
44,206,000
$
(7,916,000)
Other comprehensive income (loss)
Foreign currency translation
adjustment
134,000
97,000
41,000
(51,000)
Net unrealized gain (loss) on derivative
securities of related party
(5,893,000)
761,000
(2,924,000)
(481,000)
Other comprehensive income (loss)
(5,759,000)
858,000
(2,883,000)
(532,000)
Total comprehensive income (loss)
$
36,453,000
$
(521,000)
$
41,323,000
$
(8,448,000)
AULT GLOBAL HOLDINGS, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended June
30,
2021
2020
Cash flows from operating activities:
Net income (loss)
$
44,212,000
$
(7,909,000)
Less: Net loss from discontinued
operations
—
(1,698,000)
Net income (loss) from continuing
operations
44,212,000
(6,211,000)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation
446,000
260,000
Amortization
191,000
167,000
Amortization of right-of-use assets
441,000
247,000
Amortization, related party
15,000
—
Interest expense – debt discount
40,000
908,000
Gain on extinguishment of debt
(929,000)
—
Change in fair value of warrant
liability
(290,000)
10,000
Accretion of original issue discount on
notes receivable – related party
(4,000)
15,000
Accretion of original issue discount on
notes receivable
(955,000)
(4,000)
Increase in accrued interest on notes
receivable – related party
(1,000)
—
Stock-based compensation
584,000
143,000
Realized losses on other investments
—
28,000
Realized gains on sale of marketable
securities
(12,283,000)
(15,000)
Unrealized gains on marketable equity
securities
(3,483,000)
(52,000)
Unrealized (gains) losses on equity
securities – related party
(39,852,000)
65,000
Unrealized (gains) losses on equity
securities
(1,224,000)
73,000
Changes in operating assets and
liabilities:
Marketable equity securities
(9,616,000)
—
Accounts receivable
(887,000)
199,000
Accrued revenue
78,000
34,000
Inventories
485,000
(35,000)
Prepaid expenses and other current
assets
(2,537,000)
181,000
Other assets
(246,000)
(39,000)
Accounts payable and accrued expenses
(2,651,000)
1,365,000
Accounts payable, related parties
(36,000)
(24,000)
Income taxes payable
2,770,000
Other current liabilities
4,472,000
660,000
Lease liabilities
(439,000)
(234,000)
Net cash used in continuing operating
activities
(21,699,000)
(2,259,000)
Net cash provided by discontinued
operating activities
—
1,000
Net cash used in operating activities
(21,699,000)
(2,258,000)
Cash flows from investing activities:
Purchase of property and equipment
(5,590,000)
(190,000)
Investment in promissory notes, related
parties
(4,040,000)
(199,000)
Investments in common stock and warrants,
related parties
(16,483,000)
(10,000)
Investment in real property, related
party
(2,670,000)
—
Proceeds from sale of investment in real
property, related party
2,670,000
—
Purchase of marketable equity
securities
—
—
Sales of marketable equity securities
430,000
110,000
Proceeds from loans receivable
—
140,000
Investments in debt and equity
securities
(4,054,000)
(3,000)
Net cash used in investing activities
$
(29,737,000)
$
(152,000)
AULT GLOBAL HOLDINGS, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (continued)
For the Six Months Ended June
30,
2021
2020
Cash flows from financing activities:
Gross proceeds from sales of common
stock
$
144,044,000
$
—
Financing cost in connection with sales of
equity securities
(4,541,000)
—
Proceeds from convertible notes
payable
—
100,000
Proceeds from notes payable
500,000
3,148,000
Proceeds from short-term advances –
related party
—
604,000
Payments on short-term advances – related
party
—
(98,000)
Payments on notes payable
(1,917,000)
(186,000)
Payments on advances on future
receipts
-
(20,000)
Payments of preferred dividends
(9,000)
(7,000)
Payments on revolving credit facilities,
net
(23,000)
68,000
Net cash provided by financing
activities
138,054,000
3,609,000
Effect of exchange rate changes on cash
and cash equivalents
93,000
9,000
Net increase in cash and cash
equivalents
86,711,000
1,208,000
Cash and cash equivalents at beginning of
period
18,680,000
483,000
Cash and cash equivalents at end of
period
$
105,391,000
$
1,691,000
Supplemental disclosures of cash flow
information:
Cash paid during the period for
interest
$
658,000
$
71,000
Non-cash investing and financing
activities:
Cancellation of convertible notes payable
into shares of common stock
$
—
$
2,689,000
Cancellation of notes payable into shares
of common stock
$
449,000
$
—
Payment of accounts payable with digital
currency
$
119,000
$
—
Issuance of common stock in payment of
liability
$
—
$
229,000
Cancellation of short-term advances,
related party into shares of common stock
$
—
$
740,000
Issuance of notes payable and convertible
notes payable in payment of accrued expenses
$
—
$
420,000
Conversion of debt and equity securities
to marketable securities
$
2,656,000
$
—
Conversion of loans to debt and equity
securities
$
150,000
$
—
Conversion of convertible notes payable,
related party into shares
of common stock
$
400,000
$
—
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210816005229/en/
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