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TurnOnGreen (TOGI) Risk Analysis
Risk Overview Q4, 2023
Source: the company's latest filing for the period ended Dec 31, 2023, filed Apr 11, 2024
Risk Change Over Time
- Share Price & Shareholder Rights - Risk 1As long as Ault controls us, your ability to influence matters requiring shareholder approval will be limited.
As of December 31, 2023, Ault beneficially owns approximately 51 million shares of our common stock and approximately 1.3 billion through its ownership of shares of our Series A Preferred Stock, the Preferred Stock is subject to a 19.9% beneficial ownership limitation, representing approximately 40% of the combined voting power of our outstanding common stock. For so long as Ault beneficially owns shares of our common stock representing at least a majority of the votes entitled to be cast by the holders of outstanding common stock, and potentially even a number of beneficially owned shares that falls short of a majority, Ault will be able to elect all of the members of our board of directors. For so long as any of the shares of Series A Preferred Stock remains issued and outstanding, Ault will have the ability to appoint a majority of our board of directors. In addition, until such time as Ault beneficially owns shares of our common stock representing less than a majority of the votes entitled to be cast by the holders of outstanding common stock, Ault will have the ability to take shareholder action without the vote of any other shareholder and without having to call a shareholder meeting, and shareholders will not be able to affect the outcome of any shareholder vote during this period. As a result, Ault will have the ability to control all matters affecting us, including: - the composition of our Board and, through our Board, any determination with respect to our business plans and policies;- any determinations with respect to mergers, acquisitions and other business combinations;- our acquisition or disposition of assets;- our financing activities;- changes to our articles of incorporation and bylaws;- corporate opportunities that may be suitable for us and Ault;- determinations with respect to enforcement of rights we may have against third parties, including with respect to intellectual property rights;- the payment of dividends on our common stock;- the number of shares available for issuance under our stock plan for our prospective and existing employees; and - the strategy, direction and objectives of our business. It should be noted that Ault may not require beneficial ownership amounting to an outright majority to control or very strongly influence any of the above matters, in part because many shareholders would not attend, whether in person or not, any of our shareholder meetings(s). If Ault does not provide any requisite consent allowing us to conduct such activities when requested, we will not be able to conduct such activities and, as a result, our business and our operating results may be harmed. Ault's voting control and its additional rights described above may discourage transactions involving a change of control of us, including transactions in which you as a holder of our common stock might otherwise receive a premium for your shares over the then-current market price. Ault is not prohibited from selling a controlling interest in us to a third party and may do so without your or our approval and without providing for a purchase of your shares of common stock. Accordingly, your shares of common stock may be worth less than they would be if Ault did not maintain voting control over us or have the additional rights described above. Ault's interests and objectives as a shareholder may not align with, or may even directly conflict with, your interests and objectives as a shareholder. For example, Ault may be more or less interested in us entering into a transaction or conducting an activity due to the impact such transaction or activity may have on Ault as a company, independent of us. In such instances, Ault may exercise its control over us in a way that is beneficial to Ault, and you will not be able to affect the outcome so long as Ault continues to hold a majority of the outstanding shares entitled to vote. Even if Ault were to reduce its ownership below a majority of the aggregate voting power of the common stock, it could still retain effective control of our company provided that it maintained a significant number of our outstanding common stock. In the event Ault is acquired or otherwise undergoes a change of control, any acquirer or successor will be entitled to exercise the voting control and contractual rights of Ault and may do so in a manner that could vary significantly from what Ault would have done or not done.
- Debt & Financing - Risk 2We will need, but may be unable to obtain, funding on satisfactory terms, or at all; any financing we do obtain could dilute our shareholders and investors, or impose burdensome financial restrictions on our business.
We have relied upon cash from financing activities and in the future, we hope to rely on revenues generated from operations to fund all of the cash requirements of our activities. However, it is extremely unlikely that we will be able to generate any significant cash from our operating activities in the foreseeable future. Future financings may not be available on a timely basis, in sufficient amounts or on terms acceptable to us, if at all. Any debt financing or other financing of securities senior to our common stock will likely include financial and other covenants that will restrict our flexibility. Any failure to comply with these covenants may cause an event of default and acceleration of the obligation to pay the debt, which would have a material adverse effect on our business, prospects, financial condition and results of operations and we could lose our existing sources of funding and impair our ability to secure new sources of funding. You should not assume that Ault will support us financially in the future. There can be no assurance that we will be able to generate any further investor interest in our securities or other types of funding, in which case you would likely lose the entirety of the value of our shares that will be distributed to you.
Risk Highlights Q4, 2023
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 63
- Share Price & Shareholder Rights - Risk 1ChangedAs long as Ault controls us, your ability to influence matters requiring shareholder approval will be limited.
As of December 31, 2023, Ault beneficially owns approximately 51 million shares of our common stock and approximately 1.3 billion through its ownership of shares of our Series A Preferred Stock, the Preferred Stock is subject to a 19.9% beneficial ownership limitation, representing approximately 40% of the combined voting power of our outstanding common stock. For so long as Ault beneficially owns shares of our common stock representing at least a majority of the votes entitled to be cast by the holders of outstanding common stock, and potentially even a number of beneficially owned shares that falls short of a majority, Ault will be able to elect all of the members of our board of directors. For so long as any of the shares of Series A Preferred Stock remains issued and outstanding, Ault will have the ability to appoint a majority of our board of directors. In addition, until such time as Ault beneficially owns shares of our common stock representing less than a majority of the votes entitled to be cast by the holders of outstanding common stock, Ault will have the ability to take shareholder action without the vote of any other shareholder and without having to call a shareholder meeting, and shareholders will not be able to affect the outcome of any shareholder vote during this period. As a result, Ault will have the ability to control all matters affecting us, including: - the composition of our Board and, through our Board, any determination with respect to our business plans and policies;- any determinations with respect to mergers, acquisitions and other business combinations;- our acquisition or disposition of assets;- our financing activities;- changes to our articles of incorporation and bylaws;- corporate opportunities that may be suitable for us and Ault;- determinations with respect to enforcement of rights we may have against third parties, including with respect to intellectual property rights;- the payment of dividends on our common stock;- the number of shares available for issuance under our stock plan for our prospective and existing employees; and - the strategy, direction and objectives of our business. It should be noted that Ault may not require beneficial ownership amounting to an outright majority to control or very strongly influence any of the above matters, in part because many shareholders would not attend, whether in person or not, any of our shareholder meetings(s). If Ault does not provide any requisite consent allowing us to conduct such activities when requested, we will not be able to conduct such activities and, as a result, our business and our operating results may be harmed. Ault's voting control and its additional rights described above may discourage transactions involving a change of control of us, including transactions in which you as a holder of our common stock might otherwise receive a premium for your shares over the then-current market price. Ault is not prohibited from selling a controlling interest in us to a third party and may do so without your or our approval and without providing for a purchase of your shares of common stock. Accordingly, your shares of common stock may be worth less than they would be if Ault did not maintain voting control over us or have the additional rights described above. Ault's interests and objectives as a shareholder may not align with, or may even directly conflict with, your interests and objectives as a shareholder. For example, Ault may be more or less interested in us entering into a transaction or conducting an activity due to the impact such transaction or activity may have on Ault as a company, independent of us. In such instances, Ault may exercise its control over us in a way that is beneficial to Ault, and you will not be able to affect the outcome so long as Ault continues to hold a majority of the outstanding shares entitled to vote. Even if Ault were to reduce its ownership below a majority of the aggregate voting power of the common stock, it could still retain effective control of our company provided that it maintained a significant number of our outstanding common stock. In the event Ault is acquired or otherwise undergoes a change of control, any acquirer or successor will be entitled to exercise the voting control and contractual rights of Ault and may do so in a manner that could vary significantly from what Ault would have done or not done.
- Share Price & Shareholder Rights - Risk 2There is a limited public market for our common stock, and there may be a large number of sales after the Distribution.
Although our common stock has been publicly traded since 2007, due to the relatively few number of shares held in the "public float," the relatively few number of shareholders and the infrequency of trading, there is currently only a limited trading market for our common stock and there can be no assurance as to the extent of the trading market that will develop following the Distribution. Immediately after the Distribution, it is possible that there may be a larger number of sellers than purchasers of our common stock, as new shareholders may not be interested in owning an interest in our company attempt to sell their shares of our common stock. If such a situation exists, the price of our common stock would likely be adversely affected.
- Share Price & Shareholder Rights - Risk 3An active, liquid trading market for our common stock does not currently exist and may not develop after this report, and as a result, you may not be able to sell your common stock at or above the public offering price, or at all.
A relatively inactive trading market exists for our common stock on the Pink Open Market (Current Information). No assurance can be given as to the following: - that we will be successful in causing our common stock to become listed on the OTCQB Market or, in the future, any national securities exchange such as The Nasdaq Capital Market or NYSE American;- the likelihood that a more active trading market for shares of our common stock will develop or be sustained;- the liquidity of any such market;- the ability of our shareholders to sell their shares of common stock; or - the price that our shareholders may obtain for their shares of common stock. If an active market does not develop for our common stock or is not maintained, the market price of our common stock may decline and you may not be able to sell your shares. The market price of our common stock may be highly volatile and subject to wide fluctuations. Our financial performance, government regulatory action, tax laws, interest rates and market conditions in general could have a significant impact on the future market price of our common stock.
- Share Price & Shareholder Rights - Risk 4The price of our common stock may have little or no relationship to the historical bid prices of our common stock on the Pink Open Market (Current Information).
There has been no public market for our capital stock other than on the Pink Open Market (Current Information). Given the limited history of sales and the lack of publicly available information about our business, financing and financial results available, among other factors, this information may have little or no relation to broader market demand for our common stock and thus the price of our common stock. As a result, you should not rely on these historical sales prices as they may differ materially from subsequent prices of our common stock following the Distribution.
- Share Price & Shareholder Rights - Risk 5Future sales, or the perception of future sales, of a substantial amount of our shares of common stock could depress the trading price of our common stock.
If we or our shareholders sell substantial amounts of our shares of common stock in the public market following the Distribution or if the market perceives that these sales could occur, the market price of shares of our common stock could decline. These sales may make it more difficult for us to sell equity or equity-linked securities in the future at a time and price that we deem appropriate, or to use equity as consideration for future acquisitions. As of the date of this filing, we have 2,000,000,000 shares of common stock and 50,000,000 shares of "blank check" preferred stock authorized. As of April 10, 2024, we had 183,943,622 shares of common stock outstanding. Of these shares, 145,824,904 shares of common stock are currently held by unaffiliated shareholders. However, these figures do not take into account issuances of common stock that we may make between now and the Distribution Date, including those subject to conversion of Ault's preferred stock, nor does it account for any other shares that may be issued, including but not limited to such shares awarded under a management incentive plan that we intend to establish before the Distribution.
- Share Price & Shareholder Rights - Risk 6The rights of the holders of common stock may be impaired by the potential issuance of preferred stock.
Our articles of incorporation give our board of directors the right to create new series of preferred stock. As a result, the board of directors may, without shareholder approval, issue preferred stock with voting, dividend, conversion, liquidation, or other rights which could adversely affect the voting power and equity interest of the holders of common stock. Preferred stock, which could be issued with the right to more than one vote per share, could be utilized as a method of discouraging, delaying, or preventing a change of control. The possible impact on takeover attempts could adversely affect the price of our common stock. Although we have no present intention to issue any shares of preferred stock in addition to those issued to Ault in the Acquisition, we may issue such shares in the future.
- Share Price & Shareholder Rights - Risk 7Anti-takeover provisions in our charter documents could discourage, delay or prevent a change in control of our company and may affect the trading price of our common stock.
Our corporate documents and Nevada law contain provisions that may enable our board of directors to resist a change in control of our company even if a change in control were to be considered favorable by you and other shareholders. These provisions authorize the issuance of "blank check" preferred stock that could be issued by our board of directors to help defend against a takeover attempt. Further, Nevada law prohibits large shareholders, in particular those owning 10% or more of our outstanding voting stock, from merging or consolidating with us except under certain circumstances. These provisions and other provisions under Nevada law could discourage, delay or prevent a transaction involving a change in control of our company. These provisions could also discourage proxy contests and make it more difficult for you and other shareholders to elect directors of your choosing and cause us to take other corporate actions you desire.
- Share Price & Shareholder Rights - Risk 8If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our stock, the price of our common stock could decline.
The trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish about us or our business. We do not currently have and may never obtain research coverage by industry or financial analysts. If no or few analysts commence coverage of us, the trading price of our common stock could decrease. Even if we do obtain analyst coverage, if one or more of the analysts covering our business downgrade their evaluations of our stock, the price of our common stock could decline. If one or more of these analysts cease to cover our stock, we could lose visibility in the market for our common stock, which in turn could cause our stock price to decline.
- Share Price & Shareholder Rights - Risk 9Our charter provides for limitations of director liability and indemnification of directors, officers and employees.
Our articles of incorporation limit the liability of directors to the maximum extent permitted by Nevada law. Nevada law provides that directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except for liability for any: - breach of their duty of loyalty to us or our shareholders;- act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;- unlawful payments of dividends or unlawful stock repurchases, or redemptions as provided in the Nevada Revised Statutes; or - transaction from which the directors derived an improper personal benefit. These limitations of liability do not apply to liabilities arising under the federal or state securities laws and do not affect the availability of equitable remedies such as injunctive relief or rescission. Our bylaws provide that we will indemnify our directors, officers and employees to the fullest extent permitted by law. Our bylaws also provide that we are obligated to advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding. We believe that these provisions are necessary to attract and retain qualified persons as directors and officers. The limitation of liability in our articles of incorporation and bylaws may discourage shareholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might provide a benefit to us and our shareholders. Our results of operations and financial condition may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
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