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

Milton C. Ault, III, Executive Chairman of Ault Alliance, reports transactions involving Series C Convertible Preferred Stock and Warrants, indirectly held 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 covers transactions in Series C Convertible Preferred Stock and related warrants.
• The transactions occurred on December 14, 2023, March 7, 2024, and March 8, 2024.
• The securities are indirectly held through Ault & Company, Inc., where Milton C. Ault, III, serves as CEO.
• Each share of Series C Convertible Preferred Stock has a stated value of $1,000 and is convertible into common stock.
• The conversion price is the greater of $0.10 per share or the lesser of $5.245 or 105% of the volume-weighted average price of the common stock during the ten trading days before conversion.
• As of March 11, 2024, the conversion price is approximately $0.61 per share, making each preferred share convertible into about 1,639 common shares.
• The issuer is restricted from issuing shares of common stock upon conversion or exercise of warrants if it exceeds 19.99% of the total shares outstanding as of November 6, 2023, without stockholder approval.

Sentiment

Score: 5

Explanation: The document is a routine regulatory filing, so the sentiment is neutral. It reports transactions but doesn't inherently indicate positive or negative performance.

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 warrant exercise could limit the company's flexibility in raising capital or executing strategic initiatives.
• Failure to obtain stockholder approval for exceeding the 19.99% issuance limit could further constrain the company's options.

Future Outlook

The company's ability to issue common stock upon conversion of preferred stock and exercise of warrants is contingent upon obtaining stockholder approval to exceed the 19.99% issuance limit.

Management Comments

• Milton C. Ault, III, as CEO of Ault & Company, Inc., 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 regarding management's stake in the company.

Comparison to Industry Standards

• Form 4 filings are a standard regulatory requirement for publicly traded companies in the United States, ensuring transparency regarding insider transactions.
• The conversion features of the Series C Convertible Preferred Stock are relatively common, with conversion prices often tied to the company's stock performance.
• The 19.99% issuance limit without stockholder approval is a common provision to comply with NYSE American rules and regulations, similar to other listed companies.

Stakeholder Impact

• Shareholders should be aware of the potential dilution from the conversion of preferred stock and exercise of warrants.
• The restrictions on issuing common stock without stockholder approval could impact the company's ability to raise capital and execute its business plan.

Next Steps

• The company may need to seek stockholder approval to issue additional shares of common stock upon conversion of the Series C Convertible Preferred Stock and exercise of the Series C Warrants if it exceeds the 19.99% limit.
• Monitor future filings for further transactions by Mr. Ault or Ault & Company, Inc.

Key Dates

Keywords

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