Form 4: Ault Alliance Executive Chairman Milton Ault III Reports Acquisition of Series C Convertible Preferred Stock and Warrants

Milton Ault III, Executive Chairman of Ault Alliance, reports the acquisition of Series C Convertible Preferred Stock and Warrants, convertible into common stock, through Ault & Company, Inc.

Summary

• Milton C. Ault III, Executive Chairman of Ault Alliance, filed a Form 4 detailing changes in beneficial ownership.
• The report indicates the acquisition of Series C Convertible Preferred Stock and Series C Warrants through Ault & Company, Inc.
• Each share of Series C Convertible Preferred Stock has a stated value of $1,000 and is convertible into common stock at a conversion price, with an initial conversion price of $0.35 per share as of April 17, 2024.
• The issuer faces restrictions on issuing common stock upon conversion or exercise if it exceeds 19.99% of the total shares outstanding as of November 6, 2023, without stockholder approval.
• Ault & Company, Inc. holds 44,000 shares of common stock and 13,008,140 warrants.
• Milton C. Ault, III, as CEO of Ault & Company, Inc., is deemed to beneficially own the shares held by Ault & Co.

Sentiment

Score: 6

Explanation: The document is a standard regulatory filing, so the sentiment is neutral. The acquisition of convertible securities could be seen as a positive sign of investment, but the restrictions on conversion introduce some uncertainty.

Negatives

• The issuer is restricted from issuing shares of Common Stock upon conversion of the Series C Convertible Preferred Stock and /or exercise of the Series C Warrants to the extent such issuances would result in an aggregate number of shares of Common Stock exceeding 452,214, which represents 19.99% of the total shares of Common Stock issued and outstanding as of November 6, 2023, the execution date of the purchase agreement pursuant to which the shares of Series C Convertible Preferred Stock and Series C Warrants are issued, in accordance with the rules and regulations of the NYSE American unless the Issuer first obtains stockholder approval, which has not yet been obtained.

Risks

• The restriction on issuing common stock upon conversion or exercise without stockholder approval could limit the company's flexibility.
• The conversion price of the Series C Convertible Preferred Stock is subject to adjustment, which could impact the number of shares issued upon conversion.

Future Outlook

The document does not contain specific forward-looking statements beyond the terms of the convertible securities and warrants.

Management Comments

• Milton C. Ault, III, is the Chief Executive Officer of Ault & Company, Inc. and is deemed to beneficially own the shares held by Ault & Co.

Industry Context

Form 4 filings are standard practice for reporting changes in beneficial ownership by company insiders, providing transparency to investors.

Comparison to Industry Standards

• The terms of the Series C Convertible Preferred Stock, including the conversion price and restrictions on issuance, are typical for private placements and convertible securities.
• Similar structures can be seen in companies like DigitalBridge Group, Inc. and Colony Capital, Inc., which utilize convertible preferred stock to raise capital.

Stakeholder Impact

• Shareholders may be impacted by the potential dilution from the conversion of the Series C Convertible Preferred Stock and exercise of warrants.
• The restrictions on issuing common stock without stockholder approval could affect the company's ability to raise capital in the future.

Key Dates

Keywords

Ault Alliance, Milton Ault III, Series C Convertible Preferred Stock, Series C Warrants, Beneficial Ownership, Form 4, Ault & Company, Conversion Price, Common Stock