Hyperscale Data Inc (GPUS) 2020 Q4 法說會逐字稿

Hello, everybody. Thank you for joining the Ault Global Holdings conference call for the year-end 2020. We are waiting for a few people to join us. We'll be with you shortly. Thank you so much.

I hope everyone can hear me well. My name is Milton Todd Ault III. I go by Todd Ault. I'm the Executive Chairman of Ault Global Holdings, DPW, on the New York American. I see many of you we've seen before. We appreciate your support and joining us. On the call, I have the CEO of the company, Will Horne, He's also the Vice Chairman. Will, you here?

I am here.

Excellent. And I have Ken Cragun, the CFO. Ken, are you here?

I am. I must be on.

Nice. Great. I know our General Counsel will be listening in, but he will not be commenting today. We appreciate Henry being here. He is also the President of the company. We have the team here today. We don't have everybody, but I'm excited. Ken, good job getting this done. Will, we filed a 10-K after a lot of changes. Darren, if you could read the forward-looking statements, we'll get started. Darren, obviously, everyone can refer to the forward-looking statements. We're going to read a short version of it really quickly. Darren, let's go.

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements about Ault Global Holdings, Inc., sometimes referred to as AGH, expectations regarding the market demands, future financial performance, the implementation of strategic plans and future growth. These statements are made based upon current expectations that are subject to known and unknown risks and uncertainties. AGH does not undertake to update forward-looking statements in this presentation to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking information.

Assumptions and other information that could cause results to differ from those set forth in the forward-looking information can be found in this presentation and in the AGH filings with the Securities and Exchange Commission, including its most recent periodic reports, including the risk factors listed in the Form 10-K for the year-end December 31, 2020, the 2020 annual report, as amended, available on our website and on the Securities and Exchange Commission's website at www.sec.gov.

Now I'll turn it back over to you, Todd.

Well, Darren, thank you so much. Obviously, what I want -- can we go forward with the next slide. One of the things I want to talk about is a fairly dramatic change in the way the company looks, but I want to go backwards to go forward. We became a holding company, really converted to that when I became the CEO, I think, in late '17, early '18. And the holding company transition has been difficult. I would argue it was like building and laying the asphalt on a road as you drove the car to the road you were laying. It was very difficult to do. And we're talking about year-end results, but we're also going to be commenting about subsequent events. And one thing I want to draw your attention to is we ended the year with $18,679,000 in cash, and that's a dramatic change from the cash we had before, and that's because we raised $40 million in that quarter -- in that period of time, I think the last 4 months.

And then in the beginning of the year, we're already obviously done with the first quarter results. We raised an additional $125 million in cash. So clearly, the prospects for the company have dramatically changed. And Ken, if you could do me a favor and go through the revenue numbers here and any comments you may have on them, maybe walk us through the revenue and any comments you have on the revenue line, and then I'll comment in, too. Ken?

Yes, you bet. So we have set out a goal. One of our corporate goals was to grow the top line and improve the bottom line. So the fourth quarter, we saw a 14.8% growth in revenue and ended the quarter with $7.2 million in revenue. And the growth is coming -- the growth came in the fourth quarter from our defense business. We were able to fund the defense business, given them some working capital. They have great backlog, and they've been able to execute on that backlog with less friction because of the improvement in working capital. And so we have seen growth in revenue, largely driven from the Gresham Worldwide defense business.

So one of the things I want to comment about the gross profit is you see a dramatic improvement in gross profit, a 374% improvement, gross profit of $1.9 million. Will, I thought maybe you could comment on what -- I know that there were some discontinued operations, Will or Ken, why don't you take a comment on that improvement in gross profit for the fourth quarter.

Yes, of course. So If you look at what happened at the end of 2019 or even throughout 2019, there was really 2 negative factors that really hurt our gross margins. One, of course, was Digital Farms, which was our legacy entity that we'd established to mine cryptocurrencies for our own account. We have some more expensive data centers, where miners were stored, and it just -- it made it incredibly difficult to have any type of margins. One, because of the cost of the energy that we're acquiring, which is much more expensive; and two, because of the price of bitcoin at the time. So that really hurt our margins. And then we also had some credit losses, some provisions that we took unrelated to Digital Farms but to DP Lending at the end of 2019.

So the combination of not having to deal with either one of those negative impacts really increase gross margins this year on a comparative basis. Although, I would expect to see gross margins go up from what I've seen during the first quarter so far.

Yes. I want to say that one of the things we're focusing on now is we're not sacrificing everything for lack of profitability. We are trying to make sure that the -- there's 3 main subsidiaries, they were generating gross margin and we're doing it efficiently. We're seeing a lot of improvement here. I've been very pleased with the improvement what's happening in defense as we funded them, as Ken alluded to.

Ken, we go to the next line, the loss from operations, I want to highlight, we lost $709,000 from operations. Now I know there's some accounting charges in there, but this is on a GAAP basis. Ken, I thought maybe you could cover -- I want to go back to a few years ago, we had always hoped pre-COVID to fast forward that we would be profitable by the end of the year. We did not achieve that because of various reasons, lots of reasons, including financing and other problems we had. But we have a dramatic improvement and continued operational improvement. I know that in the first quarter, we're seeing a lot of improvement there, too. Ken, can you talk about the loss from operations and what we're seeing that's happening there?

Yes. In the fourth quarter on a GAAP basis, we had a $709,000 loss from continuing ops. So it's -- considering our history that's actually fairly close to a breakeven run rate on a GAAP basis exiting 2020. Now with the working capital improvements came late in the year and a little bit too late for us to hit our goal of becoming profitable on an operating basis by the end of the year, but we were close. And when you look at it compared to last year, Q4 had almost $9 million loss. So it's greatly improved and it's headed in the right direction. So with fully loaded with the working capital we need going into 2020, it bodes well for us to flip that into the black.

Yes. I would say -- and I don't -- Will, if you want to comment, but the continual operations, while you can never predict the future yet, we're not there in terms of being profitable long enough. We see a dramatic improvement in profitability. Do you want to couch that in terms of what you're feeling like with our continued operations and what we're seeing across Coolisys, Gresham and Ault Alliance. I'm really happy with this number. I know that that's important in terms of our burn rate and that there is a very dramatic improvement from $8.9 million of losses to only $709 (sic) [$709,361] and effectively a couple of tweaks here with working capital. What are your thoughts, Will?

Really a couple of things. We talked about overall profitability and loss from operations or gains from operations depending upon what periods we're looking at. But the reality is we've been able to inject capital into all of our subsidiaries. And we saw this in Microphase when we go back and look at 2019 compared to 2020. Once we were able to get adequate funding into these subsidiaries like Microphase, get current with the vendors and our suppliers, it really allowed us to be a lot more efficient on the manufacturing side and produce at levels that was more in line with what our backlog was. So we're experiencing that not just at Microphase, but also at Enertec. And those are 2 key drivers of our revenues. But of course, if you're looking at profitability and overall profitability, what's really hindered this company historically, there's been the need to go to -- go to the markets for debt financings. And we've really taken the bulk of our charges and the bulk of our losses as a result of historical debt levels.

We've, at the end of 2020, exited almost every one of the onerous debt arrangements. And you can see that by looking at our balance sheet. If you compare our balance sheet at the end of 2020 to even the balance sheet at September 30, our current liabilities were almost $34 million at September 30, and we reduced those down to just under $22 million at year-end. It's a sizable decrease, and it really reflects the ability to get out of existing debt agreements and by paying them off or issuing securities, which we did during 2020, and that was a big part of our loss. But going forward, because we're not leveraged and because we're not in a position where we have to take such draconian terms from anybody on lending, I expect a huge -- a markedly improved operating income or results of operations in 2021.

Is it fair to say, Will, with the fact that we have so much cash currently on our balance sheet, everyone knows with subsequent events, we raised $165 million total in the fourth quarter and the first quarter with that $100-plus million of cash way more than that on the balance sheet. We just don't really have any net debt, net of cash and really don't need to deal with any kind of lenders that were draconian in the past. We will effectively, for the most part, we just do not need capital, correct?

Yes. We -- well, it all depends on how we operate the business. And obviously, we could get by without bringing in any additional capital. But as we start to look at some of these subsidiaries or some of these investments that we have that are not a direct subsidiary, such as Avalanche, we may determine that it's in our best interest to invest more heavily than we would otherwise. And of course, there's a couple of those, right? You've got the EV business, which we're pursuing, which is -- there's been a lot of progress made in the last 6 months. And we've got Avalanche, which both of those could require a significant amount of capital. Now again, we're in a fantastic position because we can determine how that capital is deployed and the timing of it.

Right. So obviously, we had a net loss of $10.4 million for the quarter, including noncash charges of $11.2 million. So obviously, Will, any comment on the noncash charges are kind of obvious, right? They were noncash. They were finance and debt extinguishment related.

Yes. So realistically, it boils down to the debt agreements that we had entered into. And it's because when we entered into the debt agreements, we had contractual obligations to issue securities based upon what approximated, I'll say, the market price of our stock when we entered into these agreements. By the time we actually issued the securities though, 6 months later, 7 months later or whatever, the value of our securities increased significantly. So when you had to compare with the amount of debt that was being retired with the value of the securities, we ended up with a massive, massive loss on extinguishment. That loss was $18 million, of which a big portion of it was recognized in the fourth quarter.

And that covers the fourth quarter. I think that for the year as we move on to the year-end, $23.9 million of revenue, an increase of 6.7%, I think this is a miracle. Ken, I don't know how you feel, I see this is as a miracle. We started off the first quarter being told to shut down in Israel, in England, in Italy, where we manufacture the MTIX International, MTIX Ltd., Avalanche/products for MTIX Ltd. We started off that year shutting down everywhere. COVID ravaged us, I would say, pretty hard because in every jurisdiction where we manufactured, we were ordered to shut down. We were lucky to be a single-source supplier for a very critical important jet for the U.S. military and, therefore, we were ordered to reopen in Connecticut, and that probably had a dramatic influence on helping us a 6.9% increase year-over-year. I could not tell you how disappointing the number is, $23.9 million, and how wonderful the number is because I would have never expected us to have the recovery we did. Gross profits of $7.5 million, a dramatic increase on gross profitability of 145%.

Total loss on operations for the full year, including COVID, of $6 million, down from $24.7 million, a dramatic improvement. Ken, any comments on any of these numbers, anything you'd like to say -- and before, Ken, you make a comment, I want to be clear to everybody on the call, the auditor has removed our going concern qualification, Will and Ken -- Ken, can you comment on the numbers? And then Will, can you comment on the going concern removal and what a big deal that is for us?

Yes. Yes. We have some recurring themes of what we talked about on fourth quarter results here, where the defense business grew, big uptick in margin from higher revenue plus margins weren't burdened by the cryptocurrency mining operations, which in 2019, as Will mentioned, had a negative impact on margins. But we ended the year in a much better working capital situation. We had $12.5 million of positive working capital, where we ended last year -- or last year, meaning 2019, we had a working capital deficit of $19 million. So as you mentioned, Todd, it was tough coming into 2020, a negative working capital of $19 million coming into the year, strained vendor relationships kind of hampered in executing on backlog. But exit the year with a positive working capital of $12.5 million, a big change in the cap structure. And then subsequent to year-end, we're tacking on another $125 million from the equity raise.

And I can't emphasize what a dramatic change from having a negative working capital of $19 million to a positive working capital of $12 million, a huge change in the operational structure of the company. Will, what about the going concern? I know this was important to you What are your thoughts here?

Well, look, the reality is, whenever you evaluate a company from a going -- on a going concern basis, you look to see if they have enough capital to get through the next year from when you filed. Obviously, with raising $125 million in the fourth -- or in the first quarter, it kind of alleviates any of those concerns. Even when you go through and look at what we could invest in our existing businesses, it would still not be enough to use the entire $125 million. And of course, if you look at our operating losses, our uses of cash, historically, they've been less -- they've been around the $10 million to $12 million range per year in years where we were in a loss position. So I think this is a very, very easy judgment call for both management and our auditors.

Right now and commenting on fourth -- what's going forward, I will -- I'll clarify this. I know we're worried about these words we're using. But obviously, you're going to see a very big improvement -- a dramatic improvement in revenue in the first quarter, quarter-over-quarter from the fourth quarter to the first quarter. Obviously, we already ended it. We're working on the numbers, but we expect a dramatic increase in the revenue line. I wonder, Will, do you want to comment on what you're thinking about the total revenue for 2021? I know we're not giving guidance, but what about any thoughts on just the wording you would say about revenue improvement given the fact that we are able now to execute on our backlog, what are you thinking?

Of course, we're somewhat guarded. I think you can look at our historical results. We were under $24 million in total revenue for 2020. And we know that we recognized about $7.2 million in the fourth quarter, which -- that's above the average of just under $6 million a quarter. So we're seeing a positive trend. I expect that trend to continue. And then, of course, because of the infusion of capital, the $125 million as well as the capital that was received in 2020, we're now able to actually put a significant amount of investment into Ault Alliance and, of course, DP Lending, which is our California lender as well as the platform that we use, the entity that we use to do investing activities. As you've seen in our subsequent events footnote as well as our 13D filings, we've been quite active in the public markets, too. So those are going to drive significant revenues. And they have in Q1. To the extent, I don't want to go into that yet, but there has been some 8-Ks filed on this, I believe.

Yes. There's been some press releases, too. We obviously see the lending platform and the operations there improving. There is obviously a difference in funding capabilities here.

One thing to -- for the audience or investors to keep in mind that we acquired Relec in the end of November. So Gresham added a new subsidiary, Relec Electronics in the U.K., they contributed over $600,000 to revenue in the month of December. And so we'll have the contribution of that new subsidiary fully weighted for 2020. So that bumps up the run rate as well. So just keep that in mind.

Yes. With the Relec acquisition and the funding of the subsidiaries and working backlog and the funding of the lender, obviously, crypto mining turned on in March. You're going to see a what we expect to be a fairly dramatic increase in revenue. And we'll stay tuned for that. I think we have to report within about 30 days or so.

I'm going to kind of skip over this next section. You can see this slide. It kind of speaks for itself. It's backward-looking. We covered a lot of this already. Obviously, Gresham Worldwide is improving because it's funded. Coolisys has shifted its focus from just power electronics to working on the EV products it has. Here's the thing about EV that I'll comment on about electric vehicles. It's -- just like in bitcoin mining, Coolisys is a power electronics business that makes power supplies. There are power supplies and EV units, and it was a logical step for almost kind of leave that company to move it into EV, had been working on for a few years. And there's a big tailwind for infrastructure, the electrification of the businesses. We expect Coolisys to change dramatically over time because of its EV exposure, and we have been investing in that business. So Will, I don't know if you want to comment on EV. We did hire a Chief Technology Officer, Douglas Gintz, to join us. And welcome to Douglas. And Joe, Crypto Joe moved over to the CIO role, Chief Information Officer. And so Will, do you want to comment on the hire of Douglas Gintz and what we're doing in EV there? I know that you're very involved in overseeing some of what's happening there?

Sure. So I think, Douglas, has been with us for about 2 months now. And the primary reason that we brought him on and the timing of when we brought him on, was because as we started expanding the offerings on the EV side, specifically the commercial side of the EV business, the network infrastructure, the mobile apps, all of that needs to be integrated, and it was the perfect time to bring somebody that's got, I'd say, nearly 30 years of experience doing these sorts of things. So that was a huge success that we were able to convince Douglas to come onboard and devote his time to this. As far as the EV business goes, it's -- that's a business that's going to require a significant amount of capital, but it's where society is going. So I think the long-term prospects are great there.

Right. Yes, I'm excited about the new products they have. Obviously, iNet, the distributor of our home EV charger, I guess, was a very large order. I think it was in the magnitude of around over $10 million. Am I right about that? Will, do you remember the size of that iNet order?

Yes. So in aggregate, it's 35,000 units. And those are at 3 50. So it's -- with accessories, I think it could approach between $12 million and $15 million.

So when you look at EV and you look at Gresham, we've talked about in the past that both those subsidiaries are kind of being groomed to ultimately be, hopefully, a public offering or something. We reserve all the rights of what we're looking at doing there. We talked about this in various disclosures. But those 2 subsidiaries are being funded in a way, where we're trying to make them autonomous. They do report to Will as the CEO of the parent company, but Will is setting them up and properly setting them up, so that they can be incubated and built up to be their own stand-alone companies. So I think that's moving in the right direction.

And again, Todd, if you look at the EV business and the capital needs that are going to go into this long term, You're talking commercial installations, you're talking expensive commercial charging units. This is something that really does need to be a stand-alone company long term because you could be talking about infrastructure costs of hundreds of millions of dollars over the next several years.

Yes. I mean obviously, we do not intend to fund that from the parent company. So it would be logical, one can conclude that as the EV space grows, that would be something we'd want to do to benefit shareholders. And as I'm channeling our General Counsel, who is obviously on mute, he would say to me, all rights reserved to what we're going to do there. We have told the public that ultimately we expect these things to be stand-alone entities. We don't know the timing yet, but we are working on both of them getting funded. And obviously, the logical conclusion as demand for EV picks up dramatically around the globe in the U.S. and with Biden's infrastructure bills, we think pending the tailwinds there, it would be natural for Coolisys to ultimately be an independent stand-alone company and as one of the largest shareholders of Ault Global, we'll make sure that we do everything we can to make sure that benefits shareholders, that's the plan. The same with Gresham Worldwide. As we talk about -- Ken, any more comments from either you or Will on Gresham Worldwide or Coolisys on what we're doing there before we move on to Ault Alliance?

No, I think we've covered it. We have some -- I think we have some of our most exciting prospects coming up in Ault Alliance with data center and lending and investing activities. So I think it's a good time to transition.

Great. So as I move to Ault Alliance, a business run by Darren Magot, and I'm the Chairman of that business, which is a wholly owned subsidiary of Ault Global. We have resumed crypto mining. We got, I don't know the best word to pick -- we got our heads cut off the first time we crypto mined. We decided to do it a lot differently this year in buying a data center. I noticed that Riot bought a data center that has -- is capable of 300 megawatts. We have a data center that's capable of that, obviously. We're very excited about the purchase price we paid for that. Will was really intimately involved in the details. So I'm going to ask Will to comment on the data center and what that means. We put out forecast long term of what we think could happen there. This is a mega facility, 34.5 acres with very -- with much improved energy costs for us, a big footprint directly connected to a nuclear power plant, 14 acres under roof, already cash flow positive. Well, I think personally, it's one of the best acquisitions we've ever made. I don't know, I can't speak for you, but maybe you could talk us through data center and your thoughts on what is Ault Alliance cloud services and what we're doing in the data center space. This is really exciting for me, Will, as you get the comment about the long-term viability of free cash flow from this project and the ability for us to cash flow and pay the bills of the parent company and make sure that we're cash flow positive as a business. Will, I know we're both excited about this. Maybe you could comment.

No, you're absolutely correct. We are both excited. The thing I like about the data center is that this eliminates the problem that we had when we first moved into mining crypto several years ago, and that was the ability to control our costs and to control how we were going to mine. This to me, this gives us the tools so that we can mine if it's profitable, which right now with bitcoin, it's 63,000 or whatever it is, and the cost of power that we have here is clearly profitable. But also, it gives us the ability to leverage that data center for other customers. So they were not entirely dependent on just mining. So this is the best of both worlds. We've got a facility at 617,000 square feet. And because it's on 34.5 acres, we could expand that. We've got a facility that we can put up to 300 megawatts of relatively low-cost power. That speaks volumes to what we can put there. 300 megawatts is an enormous amount of power. I don't think we can use it in the entire 617,000-square foot facility. And then, of course, it's going to take us time to build that out. Our initial build-out is only 5% of that facility space, 30,000 square feet, and that's going well.

I know it's confusing for people to see that we ceased crypto mining operations last year. In March, we turned back on Indiana. Indiana, which is our old facility, is burning off bitcoin to pay down bills for the Indiana facility. But the Michigan facility that is mining bitcoin right now, we're retaining all the bitcoin. We are not selling any of the Michigan bitcoin. We are keeping that bitcoin, obviously, smaller amounts as we just get started. But we're excited. We're very careful how we're doing this. I know we're trying not to have history repeat itself. So we may be a little slower than everybody else, but we're being methodical by buying our own facility, controlling our own power and making sure that we're careful with what we're paying for miners. But I'm pretty thrilled about this. I'm excited to see bitcoin on our balance sheet, a small amount, obviously. I know we'll clarify this small, but that we're retaining it. I know Crypto Joe in the second quarter, we'll be talking about as the mining operations build out what we're doing there. Clearly, in Ault Alliance, there's other things in there like investments. We have a fintech lender called Digital Power Lending that will be going through a name change later this month or next month. That lender is building a platform to deploy capital to public capital, the public companies and also has an activist land. As many of you know, I've been in the business for 32 years. I'm an activist investor. And we've created a holding company, very similar to we hope like Icahn Enterprises, where we do have activist investments there. And we think that will contribute dramatically to what we do in terms of capital markets and how we improve our free cash flow for the business. Ken, do you want to make any comments about Ault Alliance? I know you are intimately involved in seeing what's happening there. I wonder if you had any comments.

We do feel fortunate to have a license lender, California licensed finance lender. And now we have the opportunity to fund that and build up our loan portfolio. We saw decreased revenue from 2019 to 2020. But the first quarter of 2021, we've seen excellent returns on the capital we've deployed at DP Lending. And so it bodes well for us to improve our overall corporate profitability in 2021.

This next slide talks about debt extinguishment. Will kind of covered that. Obviously, it's pretty clear here. It breaks it down what happened in terms of total debt extinguishment. I don't think, Will, you need to comment on this next slide or can we move on?

No. It just goes to show the significance that these, I would say, highly expensive debt instruments, how badly they impacted our operating results when you look at it year-over-year. You take out the debt expense and you take out all these noncash charges and it's a much, much different picture.

Next slide. I appreciate that, Will. Obviously, I have a quote here -- we talked about the $165 million. We have this simply the strongest cash position, the strongest balance sheet, I believe, in the 52-year history of the company. We literally are funded for years to come, especially with our plans. Obviously, what Will is talking about with Coolisys and the EV business, we'd be counting on a long term, hopefully making that a public company or a stand-alone business. But we are in an excellent position right now with the cash we have. And of course, the operations because we've been investing in things like Gresham for many years. I mean we started with the Microphase acquisition, JR and the team there, Tim Long. JR, the CEO of Gresham Worldwide; and Tim Long, the Chief Operating Officer, obviously, have improved the operations of Microphase. Enertec is doing a great job. They're improving dramatically as they have capital to deploy and work on their backlog. I know that Gresham Limited in England is working on restoring some of their backlog. The 2 women that run that company over there are working very hard. And then, of course, welcoming Relec to the organization, that is a long-standing business that we are proud to be able to acquire. We're really building out the defense business. I wonder, Will, if you could talk about what we've done in the defense business at all in terms of building it out that acquisition. What are your thoughts are going forward?

To me, the defense business is a difficult one to discuss in some respects. At proper scale, it's a great business. It's relatively predictable. With the right R&D -- with the right financing of R&D, you can see consistent growth in those businesses. The question is how it fits in our overall portfolio long term, and that's a difficult one because we are looking at really transitioning to technology play, if you start looking at the textile machines with Avalanche, if you start looking at the data center, if you start looking at the EV component of Coolisys, whereas the defense business is much more of a manufacturing business. So long term, I don't know that one still up in the air. And we've had discussions about that, Todd, internally, significant ones.

We told the public ultimately as that business improves, we would be looking to bring it public. We've made this clear. I think that's the same with EV. I think with EV, I think we want to see a little more traction, a few more orders, and then that's kind of a different conversation. But when you look at the overall scale of the business, when you look at the MTIX machines, and we took in that $50 million purchase order many years ago, we had some trouble financing. There's no question. I'm not going to get into the details there. But we're still very optimistic about the future of the MTIX machines and what they're doing in textiles is really disruptive technology, amazing disruptive technology. Will, I'll be careful because I know you analyze this, why don't you comment a little bit on how that's going with customers to the extent you can comment, I would -- I mean I know we want to keep this limited. But I guess what I want to say about that is Gresham Worldwide, we're a true holding company. And from time to time, as we evolve, we want to reward shareholders. We noticed, obviously, that the price of the stock is down to below $3. I think we might even be nearing cash levels. I know we're below book value. So it's important for us to look at our plans and say, how do we unlock value for shareholders with the IPO aggression or some sort of transaction or Gresham with a potential transaction for EV. Everything is on the table. We're looking at all avenues to make sure we can benefit shareholders. Will, is that a fair statement? Is that what you're referring to in terms of how hard it is to talk about them right now?

It is. And obviously, I think there's a lot of positives that are going in the way of progressing that business forward with MTIX and Avalanche. The customer relationships are good. We've -- we're in advanced discussions with several customers right now, contract discussions. And then we've had really, really good relationship with all of the key vendors. And that was the biggest -- well, 1 of the 2 biggest issues that we experienced in 2019 and 2020. Certainly, in 2020, the second obstacle that we experienced was, of course, COVID. And the restrictions that it placed on trying to do any significant business, especially when you're talking about travel restrictions, going from here to the U.K. or to Italy, it really made it difficult. Because you're talking about significant components with long lead times and then, of course, getting those all in 1 location for assembly. And it's difficult enough if you have the capital, but you throw on the travel restrictions, it's virtually a standstill.

Right. If you look at the prospects for the future with EV and the defense business, I think JR would argue, he really much wants to acquire businesses in that defense space. And I think he would be -- he's been brought on to help prepare the company to or something like that. We ultimately think the defense business could roll up a lot of other smaller defense businesses. And as part of our mission is to fund these companies and eventually help them with potential acquisitions and increase shareholder value. So it would make sense and it's logical sense for us, for Gresham and Coolisys to eventually have an opportunity to be on their own. I know in the EV space, a lot of EV companies have great valuations. And of course, our valuation for our company is nearly at cash or somewhere close to it. So clearly, the market isn't valuing Gresham or the Coolisys business yet. And if you look at the data center business, there's tremendous potential for cash flow from the data center and that real estate play, and it would make a lot of sense for us to deploy capital into the data center. So we have an opportunity with those 2 to move them out. Ken, do you have any comments on Gresham or Coolisys at all in terms of future transactions?

Yes. I think, Gresham, like we talked about before, they've been driving the growth of the business. They've been driving a lot of the improved margin and bottom line. And if you look at Relec, we've shown that we can identify accretive transactions, even though it's a relatively small transaction. It's a model of something that we can replicate. There are defense businesses out there that are looking to merge and to scale or maybe there's older owners that are looking to exit. And so it's -- JR has identified a lot of interesting opportunities there. And so I think that's definitely a positive. It's helping our overall trends. But I think the huge growth trends, we see massive opportunities in the other areas we've discussed in electric vehicle chargers, data center, investing, lending. So I think we have a chance to start firing on all cylinders, but we definitely support JR, support EV business in controlling their own destinies, being able to raise their own capital and execute on those plans.

I think one of the things we haven't talked about with Will, bringing in Douglas Gintz is that with our Chief Technology Officer, specifically helping in EV, we are building out a team there to help almost grow that EV business. They have a lot of opportunities for test with the fast-food program, with what's happening with Tim Hortons' franchises -- franchisee in Canada. There's a lot on their plate there that they have to deal with.

Let's go to the next slide. It's a little bit of backwards, but when we look at the addressable market for fintech, it's about $130 billion. When you look at the defense is about $930 billion addressable market, we believe we're in, and power supplies is about a $25 billion business, truly doesn't overlap for EV. That's a really -- we didn't really include the EV space and what the addressable market is. Clearly, we're a holding company. You can see on the chart, Douglas Gintz is added. This is the people that are at the parent company. We put up an org chart here for you to see Coolisys, Digital Power, which is a 50-year-old business, the original listing of the company before it became Ault Global. Gresham and all of its subsidiaries, Relec, Microphase, Enertec and Gresham Power in England, Ault Alliance, Digital Power Lending, Ault Alliance Cloud Services. I'm not going to talk about Tansocial side of it. We listed it as a subsidiary, but effectively very small. I think that subsidiary is under $0.5 million a year. You guys want to comment on the org chart at all. Anything here that you think is important for us to talk about, Will, before we wind it down.

No. I think the org chart is fairly self-explanatory. The only thing that really is not on here and rightly so at this point because it doesn't quite meet that standard is, of course, the significant investment we have in Avalanche and by default, Avalanche's wholly-owned subsidiary, MTIX Ltd. I look this as this -- I think this technology is disruptive. I think it could change the entire structure of this company over the next several years as we continue to look to either invest in it directly or to potentially partner with other entities as we start proving out the model.

So as we thank you, we're going to answer some questions real quickly. And I will -- we have several questions. I will read them And then I will comment and ask Will and Ken to comment if they'd like to. Ken, I get an update on the Tim Hortons' EV program you are exploring.

No, you cannot get an update. We will update that at the end of the first quarter's call. We expect to report the first quarter in the next 30 days, and I want the team at Coolisys to be able to update you directly. We will be inviting them on the call to talk about EV and the exciting programs they have in the next quarter.

What was the purpose of taking an investment stake in NAKD? What are your plans on holding -- are you holding on to it?

No, I have no comment on Naked. That is a 13G position, and we are a passive investor there. I have no comment.

I'm noticing uncomfortable pattern on what I consider to be speculative penny stocks. This is very risky, and I want to have a savings money only need the upcoming downturn and not have -- I think there's a comment about the ATM. We have a $75 million ATM that we have not used. Will, do you want to comment on that at all? We have not used that ATM. We have not drawn anything down on that $75 million. Do you have anything to add there, Will?

No, I think that's clear in our 10-K that we filed today. We have raised $125 million, just under $125 million of the $200 million that's available. So I think that's speaks for itself.

Will, this is maybe a question for you. What part of the Coolisys play, if all, is in the presidential infrastructure plans for 500,000 charging stations installed? Do you have any comment on the presidential infrastructure plan? And how does that affect you think long term the business of Coolisys with their EV project?

Well, I think as you pointed out, there's a lot of tailwind on the EV business right now. And we're relatively new to the game. I know that Amos has been working on, creating the chargers for the last couple of years with this manufacturing partners. But it's -- the EV play or the EV division is so much more than just the chargers. And it's going to take us a little bit of time to make sure that we've chosen the right partners and built out our network.

Will, how many EV charges do you expect to sell in the next quarters? I will comment and say that we did receive an order, but we're not giving guidance on total EV charger sales yet. Will, do you have any comments on that? Or do you concur with what I said?

No, I concur. We wouldn't comment on how many units we're going to sell.

Yes. Can you provide an update on annual deliveries of Coolisys textile treatment systems and utilizing the MTIX' proprietary Multiplexed Laser Surface Enhancement, wow. Someone wrote that whole thing out.

My comment is that we feel stronger than ever that the technology is incredibly disruptive. I would say that it was a lot more difficult to understand the customer lead time and what it was going to take. Will, I don't know if you have any comments about it. You kind of did make some comments in the call so far. Do you have any comments on that question?

Look, we've taken a long look at the forecast -- our 5-year forecast. And obviously, I'm not going to disclose that. But I will say is we have -- we've made significant payments to our third-party vendors that Ault Global Holdings is obligated to pay for in order to complete the manufacturing of the first, I'll call it, 3 machines because we are working on 3 different machines right now. So there was a lot of prepayments. And before the vendors would really start doing any significant amount of work, they wanted to get current, and they wanted to make sure they had a down payment. So we've worked through that. We're working through scheduling them, and we're going to finish the first 2 machines, and we're working on a third machine. And when we have agreements, we'll announce them.

Will, thank you for that. Ken, I was asking about the comment of the Alzamend Neuro IPO, it's been obviously reported that we're going to invest up to $10 million in that IPO. I would simply say it's clear today to everybody, Alzamend Neuro, I am the Chairman of the company, that Alzamend Neuro did file confidentially. We put that out in the press release. Ken, do you have any comments? I know this is a quiet period, so we got to be very careful what we say about the IPO of Alzamend Neuro.

Yes. I would just refer people to the press release as we issued discussing the confidential filing and the registration statement. We really can't comment beyond that right now.

Are you planning on expanding your Bitcoin mining capabilities? If yes, how many miners you plan on buying and when?

I'll refer back to my comments earlier. We are mining now. We're not giving guidance on miners. We did say we plan on putting in 1,000 new ones. We -- I would say to you what we are is the company is in a position to generate cash now. With the money we have, we want to generate cash. I see questions about a stock buyback. Obviously, it would make sense if we didn't think we could generate a lot of free cash to use cash to buy something that is at depressed levels. And I -- Will, I know that you're very good at describing this. So why don't you comment on a potential buyback? I know that we've been talking about it. I know there's a lot of questions on it. What are your thoughts on whether we'd ever consider it or not?

I think there's a couple of factors when you start looking at a stock buyback. One, of course, is our immediate needs. When we file the shelf for $200 million, the most recent shelf that we filed, I think it went effective at the beginning of January, if I recall. We were really looking at all of our prospects. And again, you have to keep in mind that this isn't just our existing legacy businesses like the defense business, but also it's the new businesses that we're expanding into. You've got a data center that's 617,000-square feet that's going to require significant upgrades over the next 3 or 4 years. Obviously, we plan on doing those upgrades at a rate where we can lease it out, so that we don't get ahead of ourselves. It doesn't make sense to have an asset just sit there, not being used effectively. We've got significant costs that we could invest just to support the MTIX MLSE machines. And then, of course, we've got significant amount of cost for the EV business. So it's difficult to advocate to do a stock buyback right now. Although, I do believe the stock is low. When it's uncertain what the total capital investment is going to be for these various initiatives. Now obviously, if we were -- if we had operating income and we were both GAAP and on a cash basis, profitable, I think it would be a different discussion. And I think that's something that we'll look at later this year, and we'll evaluate it.

Yes. I would comment that as we announced the first quarter coming up and we assess our cash needs, it will be important the company is in a position to grow and grow cash flow. And I'm more concerned about the cash flow side of it and not -- and burning a minimal amount of cash as I am, whether we're GAAP profitable because, obviously, some of these opportunities to bring EV public or do a deal in EV and grow EV will bring a lot of value. We think that there's a lot of prospects for us to add. This is a global build-out of EV. Electrification is not going away, we think we've got a great asset. It just needs a lot of work. And we think the market's under -- clearly, I believe that the market is undervaluing where the company is. And I think over time, as people see the first quarter, they start to see what we're doing. They see progress with MTIX Ltd. They see progress with Gresham, and they start to see us generating cash and opportunity for sales that the market will reward us with a higher stock price. Obviously, we're in a lot different position than we were before. With the cash we have in the bank, we have years of capital. We would only need to go to market if we wanted to, to expand our lending and investment operations or if we wanted to speed up some of the machine delivery. We just really in a different position that we've ever been in. And as I reiterate, I think the company -- I mean, Will, is that a fair assessment to say, I know you always want to limit these comments. But is it fair to say, we're in the best position we've ever been in, in the company's history, and with what we have, we're really in a position to sort of maximize what we're doing. I mean I don't know there could be any better, in my opinion, other than if we had delivered hundreds of machines. I don't know what else could be better for us. What's your thoughts?

So I would agree with that statement, and I would even actually add to it. It's not just the fact that we have a strong balance sheet now. And it's the fact that we have eliminated debt and our operating results are improving and our financial results are obviously improving as a result of all of those reasons. But it's the fact that we've been able to start expanding our management team, and that was something that was very, very thin for several years, really going back to 2016. So as we start bringing on more talented people and distributing the workload, it's -- yes, our prospects are 10 times better because we can look at opportunities and we're not rushed to make decisions. In the past, I think if you ever look at why businesses fail, sometimes it's because they react too quickly and they don't properly evaluate what their business prospects are. And we certainly fall into that trap before.

Yes. I think that over the next 30 days or so, as we start to report the first quarter, we look at our cash flow that we're doing, obviously, we'll assess -- I know this question about buybacks are pretty -- it's a pretty prevalent question. We'll assess what we can do there. I suspect we're not going to be very happy with the price being down here, but you can't affect that. Hopefully, the market will see what we think has value. I mean keep in mind, at this point, we have a subsidiary worldwide. We have a subsidiary which is Coolisys in EV power electronics. We have a data center and fintech subsidiary with Ault Alliance. And then we have a large ownership in MTIX International, Avalanche and the growth of those machines that we still believe in. And we're fully funded at this point. We have the capability of growing the business. And so I'm pretty excited. We appreciate everyone's questions. Ken, do you have any comments on our way out here?

No, I just agree with your position -- your statement about our positioning. And I think there's no friction, right? We can -- it's just down to execution. And so that, I think, puts us in the best position we've been in.

Right. So obviously, I'm the largest shareholder through Ault & Company. You can see that we're filing a lot of 13Ds. We're actively pursuing an activist strategy. We hope that is accretive to the company. Obviously, those people who've known me for 32 years, I have had some success in activism. Hopefully, that contributes to the fintech side of our business. We are a true holding company. We've got a lot of assets, and we're going to work on growing them.

Will, appreciate you being on the call, Ken. Thanks to all the shareholders. Special thanks to a lot of people that stood by us during very difficult times. It is a much different company. Thanks to Henry Nisser, the President of the company for sticking by us. A special thanks to one of our lenders last year, [Sooza], that helped us through some difficult times. It's a different world for us now. And I want to point out a couple of other things before we hang up and that is we ended with $49 million of equity, which is about 8x the required equity at the end of the year for the New York Stock Exchange. We had -- we raised an additional $125 million. So if you just do the math and put that onto the assets we have, that could take it to substantially big numbers. If you just add the $77 million in assets and $125 million in cash that we raised in the second quarter, it's wonderful. I expect us to be and hope to be in compliance and hopefully, we are definitely above the equity standards. We're in good shape, we think, and we'll look to talk to you again. Right after we report the first quarter, we should be coming up at about less than 30 days or so. It's unusual when a company as small as ours reports this late because you're already past the first quarter. We really can't comment about it. But we thank everybody for being on the call. Special thanks to the team, JR; [Vikka] in Israel, the team; welcome to the people at Relec; what's going on with Gresham, U.K.; Amos and the team; Jodi, who's working on an EV. Everybody. Welcome to Douglas Gintz for joining us, the Board, everyone. It's an exciting time for us. I'm the most excited I have to be here. Will, obviously became the CEO in the first quarter. I've been working very closely with Will for many years. I think Will and I are good team. We put together a good team. We have a great Executive Committee now. And we will see you when we report the next quarter. Take care, everybody.