Michael Roussel | Page 1

SHORT
SHORT, target: < $0.50 Crypto Pump & Dump; Management Fraud History
Digital
DigitalPower
PowerHoldings,
Holdings,LLC
LLC
NYSE: DPW Akin to the newly listed companies touting “.com” in their name in the late 1990’s,
NYSE: DPW “crypto” companies are given extraordinary valuations, even where little value exists.
P: $2.30 Avg Volume: 9.6m In the last few months, several companies in entirely unrelated industries (beverages,
Price: $2.85 textiles, advertising) have announced “pivots” and seen their valuations appreciate
MC: $46.1m XXXXXXXXXXXXX
Market Cap: $85.8m enormously (RIOT 6x, LBCC 4x, CNET 9x, DPW 11x). There is a current thematic decline
Average Volume: 9.08m in these valuations which underlay this short thesis on Digital Power. The only sell-side
research is optimistici
Figures as of 5 Jan 2018

By Michael Rousselss
Digital Power Holdings LLC, incorporated in 1969, is a
historically marginal/failing power supplies-turned-holding
company, with core revenues in terminal decline amid a
lack of technological improvements, which underwent a
management shakeup in late 2016. Philou Ventures
purchased a $1.5m, 40.06%, stake from Telkoor Telecom
Ltd. in late 2016. Philou Ventures is effectively owned and
managed by Kristine Ault (she retains beneficial ownership
over the Philou shares), wife of the new CEO and Executive
Chairman Milton “Todd” Ault, a VP of Philou Ventures.
Digital Power is in dire financial duress and engages in
frequent equity dilution as they struggle to meet NYSE
listing minimum requirements. Digital Power exists in a
web-like nexus of other companies owned and/or run by
Mr. and Mrs. Ault and their associates; these tiny companies appear to do business almost exclusively among themselves or
with other virtually non-existent companies and are often run by the same management. At least two of Mr. Ault’s prior
companies highly suggest pump-and-dump schemes (Angel Acquisitions [AGEL] - delisted by the SEC after a pump and dump
scheme1 and Cross Click Media [XCLK] – covered in Appendix V). Mr. Ault was banned by FINRA in 2012 for breach of fiduciary
duty2, sued by a group of hedge funds he allegedly defrauded after using funds for a pornography venture3, and sued in 2014
for breach of fiduciary duty and fraud4. Former Philou manager Guillermo Jalil sells Wyoming shell companies5,6 - includes
Philou7.

Cryptomanic Valuation from Exaggerated Claims

Digital Power has ridden crypto-mania to an outrageous valuation; However, (1) DPW has near zero actual exposure to anything
‘crypto’ related. (1a) Digital Power got its purported start through partnership with PoW mining – a quick look at the website8
suggests the near-zero value add: the company evidently only exists in conjunction with the DPW partnership and is only staffed
by the 60-year old equities writer who produces and disseminates Digital Power’s press releases, Steve Kanaval. Mr. Kanaval
has also been accused of several scams, even as recently as 2015,9,10 and was closely connected a major 2002 fraud11. He
neglects to mention the PoW position on his Linked-in 12 . Digital Power later announced, in conjunction with the PoW
partnership, they had launched a line of ‘mining power systems’ and were filling orders for the 1,000 pre-ordered units from
Digital Power subsidiary Coolisys-owned supercryptopower.com. Upon inspection, ‘supercryptopower’ sells equivalent power
supplies at a massive premium to market and has nearly no internet traffic13,14. The domain, retained only for two years, is also
registered through Domains by Proxy - concealing the identity of the registrar15. Even acknowledging the likely bubble in mining
equipment preceding an inevitable consolidation of the mining base, it immediately appears unlikely that 1,000 units were pre-
ordered by outsiders in a few days. 200% premium to market, a virtually fraudulent warranty, and months between the order
and shipping – a vague date of “Q118”; how many unreasonable people would even find this “opportunity” given the recent
creation and near-non-existence of site traffic and linked sites? (1b) Digital Power also announced they have created a
 Michael Roussel | Page 2

Cryptocurrency Mining Division and “secured an agreement”

with IMG Networks, a subsidiary of Imagine Media Group 16
(legacy business only does poorly designed advertising, mostly for
eXtreme autofest17,18 a once-a-year venture by an employee [also
says he started working at the company 3 years before founding19)
to create a “network of 10,000 mining machines”. To be clear,
this management team has no experience which would suggest a Chula Vista, CA
reasonable likelihood of success. These entities are sparingly
operated by their degreeless (excepting a VP’s DeVry “Electronic
Engineering Technology” degree) co-involved management20 and,
as with PoW Mining, appear to nearly not exist outside of its dealings with the Aults – including baseless hyping of former
venture Cross Click (Appendix V), excepting three 2010 contracts – one of which was for an employee company21,22. My call to
management was met with surprise and repeated inquiries into who I was – contrary to DPW statements, IMG management
stated that though they would support the network, their functional role in actually producing the network of 10,000 mining
machines was nonexistent. There is no available information on this deal or the proposed “network”, that includes on their own
site supercryptomining.com23. (1c) Despite no formal DPW release concerning actual mining operations, the company released
several videos on their Facebook purporting to show their mining rigs at work – the videos were shortly after removed along
with the Facebook page, which had been recently delegated to release material information. Why would such operations only
be disclosed on the Facebook page and then quickly and quietly removed, not to be mentioned again? (1d) Digital Power lacks
any advantage in mining cryptocurrency. They may produce their own outdated power supply equipment, though this is only a
small portion of total costs of such an operation. Digital Power has as much an edge as any other heavily indebted and unrelated
company; they lack the financial resources and the technical expertise to effectively scale and compete.

$50m DPW Growth Narrative Cannot be Trusted - Massive Ownership Overlap

The crypto investments and $50m contract are by far the most exciting news on the company; these events are frequently
covered by DPW hypeman Mr. Kanaval24. (2a). After taking control of DPW in 2016, the Aults quickly acquired Microphase
Corporation (which had been used as a pass-through company in a pump-and-dump run by an Ault affiliate25), a military sub-
contractor for radar and communication systems and announced a 3-year $50m contract with MTIX Ltd. to manufacture, install,
and service six textile machines. MTIX, a subsidiary of Avalanche (OTC: AVLP), is controlled by the Aults through DPW and Philou
Ventures.

CEO / Chairman of the Board

Kristine Ault Milton Ault
Chairman of
the Board

Owner/Manager
William Horne
VP
MCKEA
CFO / Head of Audit
Committee
Director /
Sole member
CFO-to-be
Financing
Philou Ventures Avalanche Owns 74%
80+% voting power Holdings

Owns 100%

$50m order
MTIX
Digital Power
Owns 16% Holdings
Director
 Michael Roussel | Page 3

(2b). Oversight Impossible with Overwhelming Ault Control; $50m MTIX Deal Likely Impossible. In 2014 Philou Ventures
purchased 1.9m shares of Avalanche International (OTC: AVLP), a glass tile distributor, for 150k, owning 74% of the company26.
That same day the company created its single subsidiary - an e-vapor liquid company Smith & Ramsay. MCKEA Holdings’
subsidiary Vape Nation, an online e-juice and vape retailer, accounted for 70 and 88% of AVLP’s Smith and Ramsay 2014 and
2015 revenue 27 , yet does not appear to have done any major non-Ault business dealings. Cross Click Media, consistently
provided non-interest bearing financing (much of which was forgiven) and received 59% of 2014 revenue from Smith & Ramsay.
In July 2015 a $200,000 Vape Nation order was announced by Avalanche. 3 days before the deal was announced, Vape Nation
made a posting inquiring how to become unbanned by Amazon28. The order never occurred and the company went dark. Further
information on Cross Click and management history is available in the appendix.

Avalanche International then re-emerged in

Ault Ventures are Mainly Related-Party Transactions: 2014 Snapshot
Q117 (after Digital Power had purchased 250k
shares at 85k) announcing acquisition of MTIX, Sole member
Ltd, a textile machine manufacturer. The MCKEA Philou Ventures
acquisition was made possible through a DPW 50% owner
non-revolving credit facility of up to $5m. 80+% voting
Related documents and late Q116 filings were 88% of 2014 rev.
Vape Nation
the only company postings in FY201729. Avalanache
54% owner Freq. financing Holdings
Management then issued Philou Ventures Cross Click
Shared Sole subsidiary
warrants to purchase 5,000,000 “as Media 64% of 2014 A/R
owners
compensation for services that it provides to the 59% of 2014 rev. Smith and
32% of 2014 A/R
Company” 30 . Two days later, AVLP then issued Ramsay

2014 rev
23% of
Philou all 50,000 authorized Class A Shares Foundation for a
(convertible at $0.50/share) in exchange for the Greater America
surrender of 2,000,000 Common Shares. Philou
controls 80% of shareholder votes despite only owning 214,000 shares of common stock.

With new Philou control, in September 2017, DPW issued a $3.5m Avalanche BS Q415 Q116
Convertible Promissory Note (convertible at $0.50/share) to AVLP and Cash 405 58
received warrants to purchase 6,948,800 shares at $0.50/share. In addition A/R 17,222 17,222
to 314,231 shares acquired on the open market, Digital Power owns 14m Notes/R 123,975
shares, or 74% of the company31. Other current 705 15,615
Total Assets 18,332 156,870
It is very unlikely that Avalanche is capable of financing such a relatively
massive transaction. Avalanche is a holdings company, though immediately A/P 177,004 260,207
prior to the MTIX acquisition in 2017, Avalanche controlled a single A/P, related 63,699 197,159
operational subsidiary with a single investment. Restaurant Capital Group Derivative liability 1,313,012 1,084,408
LLC32 (Milton Ault listed as manager) financed Giuliu, a restaurant in DTLA, Convertible N/P 416,975 498,352
possible only through a 100k loan from MCKEA Holdings. Opened April 8, N/P 135,031 246,260
2017, Giuliu appeared to be a significant focus of CEO Mr. & Mrs. Ault through Total Current 2,105,721 2,286,386
2017, per their social media accounts. LT Convertible N/P 844
Total Liabilities 2,105,721 2,287,230
On announcement of the MTIX/DPW contract, AVLP’s market capitalization
of $1.4m rose to $2.4m - could anyone reasonably believe the struggling Common stock 6,310 6,842
company (not even an office – call to AVLP leads to 3rd party call reception
Add. Paid-in Cap 1,119,118 1,383,871
center) to have $50m for installment of machines nobody is purchasing?
Accum. Deficit -3,212,817 -3,521,073
Could such a consistently non-profitable and distressed company even
Total SD -2,087,389 -2,130,360
receive a $50m loan? Even assuming an ability to finance the move, why
would AVLP pay 50m for manufacturing, installation, and servicing of six machines whose “total cost of a fully installed solution,
including training, shipping, etc, … will be in the region of $2.5m euro”33?
 Michael Roussel | Page 4

Digital Power’s financial health is enormously overstated. Facing DPW Common-sized BS Q316 Q416 Q117 Q217 Q317
pressure to meet $6m in shareholder equity to remain listed, C/CE 29% 18% 20% 3% 2%
management copes by inflating assets. As of Q317, goodwill from A/R 25% 26% 18% 9% 16%
the Microphase acquisition (mostly equity-financed, also note
Inventories 27% 21% 16% 12% 10%
Microphase CEO Amos Kohn temporarily became DPW CEO)
5% 5% 5% 5% 3%
accounted for 34% of total assets. According to DPW, ~2m DPW Prepaids and other
common shares at $0.50/share = Microphase operations + $6m, Restricted 0% 0% 0% 1% 0%
where $6m is equal to the value of Microphase’s brand and Intangibles 0% 0% 0% 1% 2%
relationships. While goodwill is a somewhat subjective Goodwill 0% 0% 0% 43% 36%
measurement, management’s near-delusional assessment may PP&E 14% 10% 10% 4% 3%
even be considered fraudulent. Meanwhile, investments in Related party Invest 0% 19% 29% 18% 21%
related parties composed 21% (almost entirely a promissory note Other investments 0% 0% 0% 3% 4%
for Avalanche, with a doubtful ability to repay) and unverifiable OI - related 0% 0% 0% 0% 2%
accounts receivable (mostly related to MTIX deal) made up 17%. Deposits and loans 0% 0% 2% 2% 1%
Together, these account for 70% of total assets. Less the Total Assets 100%
laughably bloated goodwill as well as investments in and accounts
receivable from related parties under severe financial duress, liabilities would exceed assets by a significant margin. These
remaining 30% of assets, worth 5.4m, represent all DPW Holdings subsidiaries: Digital Power, DP Limited, Microphase, Coolisys,
Power-Plus, and DP Lending. Additionally, there is no disclosure regarding DPW’s massively expanded accounts payable, which
amounts to ½ total liabilities.

With shared ownership and management, the relationship between Digital Power and Avalanche is difficult to analyze and
fraught with incentive conflicts. Indeed, William Horne is both the CFO and Audit Committee Chairman of Avalanche Holdings
as well as a director and CFO-to-be of Digital Power. The Aults effectively control Avalanche International through indirect
holdings. This is a ripe situation for fraudulent activity and the impossibility of the announced deal certainly suggests some
degree of purposeful misrepresentation. Notably, Cross Click’s (former Ault venture) auditor was charged by the SEC in 2016
related to violating accounting standards while performing audits of microcaps34 and the Aults changed auditors from an EY
global partner as soon as they assumed ownership of DPW (the new auditor was 30+% more expensive, cost couldn’t have been
the factor) – management’s prior history of fraudulent activity further covered in Appendix IV. In the past, The Ault cabal
acquires companies in dire financial duress, aggressively inspires hype from announced deals with other Ault-owned
businesses, issues themselves options and/or warrants at an attractive price, and then engages in massive equity dilution –
often funneling the funds into their other businesses while likely something far smaller, if anything, is ever delivered.

Even Ignoring Fraudulent Misrepresentation, Inevitable Continuation of Short-term Pain

(3) Further dilution is an inevitable fact of the current financial situation – As a company with five consecutive years of losses,
Digital Power must meet $6m in shareholders’ equity to remain NYSE listed. This is a race between the negative cash flows,
adding to the accumulated deficit, and equity dilution. It appears Digital Power acquires portfolio companies which allows them
to raise revenue guidance and then raise more capital at a more attractive valuation – however, these portfolio companies are
often heavily leveraged and create even more negative cash flows, thus forcing Digital Power to dilute further. It is an endless
cycle of losses and dilution; after the Microphase and Enertec acquisitions the company must certainly dilute further or de-list.

In this case, we have seen massive dilution across the last few months as Digital Power is hyped on announcements of the bogus
$50m contract and crypto “involvement”. Furthermore, after reaching their authorized share cap of 32m in late December, the
company reorganized as a Delaware entity and now has an authorized capital stock of 250m35.

Date 3/24/2017 Q217 7/31/2017 Q317 11/17/2017 12/1/2017 12/13/2017 1/2/2018

Common
8,855,941 10,467,658 13,205,910 13,745,540 15,817,393 17,107,784 23,276,813 30,397,299
Shares
 Michael Roussel | Page 5

(3a) Microphase has not turned a profitable quarter since 2014. The company’s income statement is available in appendix II.
Though Mr. Kanaval’s reports celebrate revenue accretions, the acquisition will produce even more deeply negative cash flow
and ensure further dilution. Zacks Research also takes a favorable perspective36. (3b) Enertec Additionally, in early 2018 Digital
Power began initiating purchase of Areospace and Defense subsidiary Enertec Systems 2001 Ltd. from Micronet Enertec
Technologies, a tiny Israeli microcap. The deal consists of a cash payment of $5.25m and assumption of $4m of Enertec liabilities.
The subsidiary, an Areospace and Defense contractor, has also had negative cash flows over the last two years.

Microphase, thousands Q116 Q216 Q316 Q416 Q117 Q217 Q317

Revenues 1,953 2,118 1,373 1,144 1,066
Late on filings
Operating Income -505 -110 -553 -926 -1,038

Enertec, thousands Q116 Q216 Q316 Q416 Q117 Q217 Q317

Revenues 2,531 2,322 1,703 2,908 2,558 2,157 1,458
Operating Income 159 -135 -729 -278 -417 -413 -446

As Digital Power Holdings acquires yet another portfolio company in which management has no experience, this case presents
a distressed, capex heavy, international company. The only other business dealings by DPW in Israeli appear to be when CEO
Amos Kohn used $300k of shareholder funds, classified under “other investments”37, to finance a property purchase for his
daughter38(Mr. Kohn’s daughter will be vested with the optionality to purchase DPW’s 28% stake for $120.00 over the next few
months39).

Conclusion:
In summation, we have a unique equity play which offers an opportunity to short crypto-mania as well as a phony cartel of shell
companies run by sketchy and dishonest management. We therefore have a $70m company with smoke and mirrors of related,
virtually non-existent parties for business prospects and near-certainty of further dilution as DPW continues to acquire deeply
unprofitable companies. Given management dishonesty and the extreme uncertainty surrounding this company, I cannot
reasonably assign an approximate value. There is not $70m of value here and over a near-term timeline there will be no value
at all as the Aults and their associates move onto another venture.
Catalysts: Release of next major filing
End of ‘crypto-mania’
Continued dilution
Management charged with market manipulation or misrepresentation
Risks: Continuation of the ‘crypto-premium’
Other hype-based announcements rile up retail
 Michael Roussel | Page 6

Appendix I. December 2, 2017 Share Dump

Shareholder Prior to offering After offering % of total

Cantone Asset Management, LLC 1,481,211 0 8.9%
Firstfire Global Opportunities Fund, LLC 1,490,583 0 9.0%
DiamondRock, LLC 635,250 0 3.8%
IntraCoastal Capital, LLC 1,090,723 337,613 6.6%
Iroquois capital Investment Group LLC 253,417 0 1.5%
Iroguois Master Fund Ltd. 920,701 167,591 5.6%
JLA Realty 83,333 0 0.5%
Oppenheim/Slagle Family Trust 160,000 0 1.0%
Daniel Eng 125,000 0 0.8%
Sichenzia Ross Ference Kesner LLP 100,000 0 0.6%
Spartan Capital Securities, LLC 200,000 0 1.2%

Total Listed 6,540,218 39.5%

Total Shares Out (12/4/2017) 16,568,356

Appendix II. Digital Power Holdings, LLC Selected Financials

Balance Sheet Ault ->
Assets Q116 Q216 Q316 Q416 Q117 Q217 Q317
C/CE 1,158 1,212 1,292 996 1,138 443 314
Accounts recievable 1,261 1,205 1,110 1,439 1,030 1,253 2,8921
Accounts recievable, RP 68 52
Inventories 1,428 1,203 1,186 1,122 937 1,609 1,858
Prepaids and other current 180 127 239 285 272 659 603
Current Assets 4,095 3,799 3,827 3,842 3,377 3,964 5,667
Restricted 100
Intangibles 93 420
Goodwill 6,0022 6,490
PP&E 729 662 615 570 543 623 603
Investment in Telkoor 90 90
Long-term Deposits 13 13
Investments, RP 1,036 1,653 2,582 3,7823
Other investments 20 3984 679
Other investments, RP 354
Deposits and loans 13 24 112 219 265
Total Assets 4,927 4,564 4,455 5,472 5,705 13,981 18,260

1
Over ½ related to MTIX acquisition
2
Goodwill related to Microphase acquisition
3
Avalanche promissory note
4
75% financing of an Israeli house for Romi Kohn, daughter of former CEO and current President Amos Kohn
 Michael Roussel | Page 7

Liabilities
Accounts payable 1,013 876 757 1,231 896 2,835 5,460
Accounts payable, RP 28 100 104
Advances on receipts 1,475
Revolving credit facility 612 310
Notes payable 250 250 1,247 1,609
Notes payable, RP 220 278 274
Convertible notes payable 250 4655
Other current 650 467 528 398 448 427 144
Total Current 1,663 1,343 1,285 1,879 1,842 5,749 9,841
Notes payable 569 659
N/P - related 128 132
Convertible Notes 34 78 122 166
Total Liabilities 1,663 1,343 1,285 1,913 1,920 6,568 10,798

Paid-in Cap 15,009 15,052 15,094 16,537 17,736 22,519 24,667

- - - - -
Accumulated deficit -11,229 -11,163
11,201 12,158 13,152 15,218 17,212
Accumulated other comprehensive loss -516 -668 -723 -820 -799 -721 -722
Total SE 3,264 3,221 3,170 3,559 3,785 6,580 6,733

Income Statement Ault ->

Q116 Q216 Q316 Q416 Q117 Q217 Q317
Revenue 1,713 2,064 1,826 2,078 1,628 1,822 3,220
COGS 1093 1,310 1,123 1,537 920 1,092 2,124
Gross Profit 620 754 703 541 708 730 1,096
R&D 194 170 147 165 227 265 306
S&M 255 233 235 153 295 327 423
G&A 371 340 404 583 973 1,582 1,685
Operating Income -200 11 -83 -360 -787 -1,444 -1,318
Interest income 7 55 23 206 -207 -407 -753
Pretax -193 66 -60 -154 -994 -1,851 -2,071
Tax 22 -2
Net Income -193 66 -38 -196 -994 -1,851 -2,071

GM 43% 37% 38% 26% 43% 40% 34%

OM -48% 1% -5% -17% -48% -79% -41%
NM -61% 3% -2% -9% -61% -102% -64%

5
Microphase Acquisition, 12% annual interest
 Michael Roussel | Page 8

Appendix III. Microphase Selected Financials

Microphase Selected Financials
Q415 Q116 Q216 Q316 Q416 Q117
Revenue 2,598,219 1,952,817 2,118,416 1,373,064 1,143,733 1,065,661
COGS 1,347,348 1,374,194 1,157,292 979,882 848,287 800,989
Gross Profit 1,250,871 578,623 961,124 393,182 295,446 264,672
SG&A 1,067,780 825,650 817,303 738,850 1,030,319 1,129,174
R&D 261,150 258,410 253,587 207,660 191,321 173,399
Op. Income -78,059 -505,437 -109,766 -553,328 -926,194 -1,037,901
Other income -6,018 -106,857 -115,445 -450,000 2,687
Interest income -59,287 -98,832 -30,050 -111,895 -117,474 -122,654
Pretax Income -143,364 -711,126 -255,261 -665223 -1,493,668 -1,157,868
Taxes -39,317 -5,750
Net Income -182,681 -716,876 -255,261 -665223 -1,493,668 -1,157,868

Shares Out 1,898,680 1,898,680 6,130,789 6201858 2,282,128 2,428,152

Assets 5,534,385 4868447 3,556,391 3,275,723

Liabilities 6,136,592 5,808,760 4,405,788 5,067,137
SH Deficit -602,207 -940313 -849,397 -1,791,414

Appendix IV. Mr. Ault’s Professional History

Company Position From Until Public? Ault’s
LinkedIn40
Ault & Co Chairman 2015 Present Y Y

Alzamend Neuro, Inc Executive Chairman 25-Feb-16 Present Y

DPW Holdings, Inc Executive Chairman, CEO 3/16/2017 Present Y Y

Avalanche International corp Chairman of the Board 2014 Present Y Y

MCKEA Holdings VP of Business Development 2011 Present

CoreStream Energy, Inc Chairman, President 2011 2011

Clear-lite Holdings, Inc 2011 2011 Y

BioGeron, Inc Chairman 2010 2011 Y

Zealous , Inc CEO 2007 2011 Y

Zealous Capital Markets, LLC CEO 2007 2010 Y Y

Tytan Holdings, Inc CEO 2008 Y

Atlantic Syndication Network CEO, President 2007 2008

Ault Glazer Investment Chairman, CEO 1998 2007 Y
Management & Co, LLC
Franklin Capital Corp CEO 2004 2007

Patient Safety Technologies CEO 2004 2006 Y

Ipex, Inc Interim CEO 2005 2005

DigiCorp Interim CEO 2005 2005 Y

China Youth Media CEO 2005 2005

ASNI-II Inc. Chairman, CEO, President 2008

 Michael Roussel | Page 9

Appendix V. Management History Example

Cross Click Media ft. Super PAC Pump-and-Dump our same
management pivoted a MCKEA-funded beer pong table
company, Cross Click Media, as it accepted a contract
running call centers for Foundations for a Greater America,
a HRC super PAC which shares the same address as
MCKEA41. Cross Click Media’s auditor has been charged by
the SEC for improper audits of microcaps42. The super PAC
was registered by close Ault-associate Arash Shirdel
(apparently tells clients he’ll prevent cases from happening,
obstruction of justice? 43 ) and headed by Milton Ault,
husband of manager of ‘family office’ MCKEA Holdings;
company announcements neglected to mention this 44 .
MCKEA and FFAGA even share the same address 45 . This
super PAC never donated any money to the candidate. The
hype drummed up from the deal by other Ault counter-parties on various pennystock investor forums, Cross Click stock
exploded x12 and the company then engaged in massive equity dilution: 170m to 2,600m shares in less than 12mo46. Yet FFAGA
only paid Cross Click the same amount Cross Click had loaned – in fact, the fee structuring was soon after redacted from the
filed agreement47. Meanwhile, FFAGA instead paid over 220k to Bandb Ltd. for “telephone fundraising services”. There is no
record Bandb ever conducted calls – Bandb head is closely associated with Aults and banned for life by FINRA. FFAGA lists
Bandb, Ltd. as in “Ridgefield”, yet Bandb is registered in Nevada, where no Ridgefield exists. Bandb only existed between
November 2014 and November 201548. Evidently the only filings on the web are incorporation details – the President is “Don
Hunter”. In 2012 FINRA permanently banned Donald Horton Hunter for life from selling securities or working at any firm that
sells securities49 after he purposefully misrepresented the dismal financial condition of his company as he sold high-interest
debt to unsophisticated investors 50. Nonetheless, Donald Hunter, as CEO of YouFunding Inc (another entity with no other
business dealings), entered into agreement to list Cross Click’s massively dilutive private placement offering51, or the dumping
of the shares. The crowdfunding platform also listed Avalanche International Corp52. YouFunding.com and Bandb, Ltd. actually
share the same address53. Finally, the super PAC made $242k in loans to Finiks Capital, a fund which evidently only exists to fund
Ault ventures, to “invest in small-cap equities”. James Hodgins, listed as FFAGA Treasurer, also worked at Finiks Capital and Ault
& Glazer Co.

Interestingly, the Republican wife of a broker who had been charged by the SEC for involvement in a pump-and-dump scheme
which used Microphase Corporation as an exit outlet54, loaned 200k and paid $150k by FFAGA. The largest donator/lender,
Judson Church, is also a registered republican. The Super PAC also made several 1,000+% interest rate loans to Cross Click Media.

My hypothesis: Finiks Capital financed an Ault venture, likely Cross Click, with the loaned money from the super PAC. Cross Click
was hyped on exaggerations about operating a call center on behalf of FFAGA and the share price rose. Cross Click issued massive
amounts of shares for “services” in the months prior55. Management/Finiks Capital was able to dump at an attractive price while
FFAGA instead retained a shell company for the call centers – thus funneling the money into a proverbial black hole. It appears
to be both a leveraged pump-and-dump and bait-and-switch.

In the meantime, related Ault ventures provided the appearance of legitimacy: 81% of Cross Click 2014 revenue and 96% of
accounts receivable were from either Avalanche or FFAGA.

Additionally, Cross Click Media, formerly co-signer.com, had engaged in minimum retainer contracts with IMG Networks parent
Imagine Media Group LLC – the very same company with which Digital Power is purportedly creating its network of 10,000
mining machines – since 201356. As hype ramped up, the company announced a 3-year $1,000,000 contract57. The company
engaged in massive equity dilution, settled a default suit by major creditor and shareholder KBM Worldwide58, and then went
dark, filing for the last time only months later.
 Michael Roussel | Page 10

Appendix VI. - March 2018 Updates; Money Exit

On February 27th 2018, Digital Power Holdings announced an At Market Issuance Sales Agreement with H.C. Wainwright &
Co., LLC. The arrangement allows for DPW to sell up to $50mn worth of new shares at-will on the open market (note DPW’s
mkt cap is about ~55mn).

Following this agreement Digital Power Holdings subsidiary Super Crypto Mining announced an asset purchase agreement
regarding 1,100 Bitmain Antminer S9 miners at $3.2mn ($2,909/per) from Blockchain Mining Supply & Services Ltd (BMSS)59.
Bitmain, the miner manufacturer, sells the same miners at $2,320/per60. Online searches for BMSS are not forthcoming;
searches only yield miner purchase agreements with DPW and RIOT Blockchain – RIOT is currently under formal SEC
investigation (also note that H.C. Wainwright also provides investment banking services to RIOT – HCW is dubious in their own
right and their glassdoor reviews are amusing61) 62. The BMSS-DPW agreement lists the “Toronto Warehouse” as 7347 Kimbal
St. Mississauga, Ontario - this address has belonged to International Warehousing & Distribution Inc and Stonegate Logistics
since at least 200763. BMSS does not appear to be listed in the Canadian Business Registry64. Both purchase agreements, which
list different BMSS presidents and are evidently for used miners (“Assets in good operating condition … ordinary wear and tear
excepted”) include aggressive confidentiality clauses barring BMSS from discussing the transactions without prior written
consent.

The BMSS-RIOT agreement lists Joe (Yonah) Kalfa as BMSS President. Mr. Kalfa graduated from New England Rabbinical
College and his only listed experience on LinkedIn65 (excludes failed debate website Deeyoon66 and his real estate realtor
experience67) is the company he founded - North American Dental Wholesalers Inc (NADW). NADW was successfully sued by
supplier Sybron Dental Specialties Inc after selling counterfeited Syrbon products. NADW seems to have gone dark after
Sybron notified 30 of NADW’s customers (which amounted to 80% of sales). Currently, Linkedin employee searches yield a
single current member - new NADW CEO Naftali Kalfa (presumably related), who summarizes his position as “making things
happen!”68. Interestingly, RIOT purchased their used miners at market value - 3,000 Bitmain Antminer S9 miners at $7mn
(2,333/per)69.

The BMSS-DPW agreement lists William Tencer as BMSS President. Information about Mr. Tencer is limited; Tencer, a
Canadian, was linked to the Panama Papers through his connection with a company called Jutland Investments Limited70. He
was duped in a Ponzi scheme, which he legally pursued71. This agreement includes an immediate $163,625 deposit, a $1.49mn
payment for 500 miners on March 23rd, and a $1.62mn payment for 600 miners on April 15th. The deposit is non-refundable
without full payment by April 15th – as of May 17th DPW has only paid $1.68mn72.

Finally, DPW announced the deal would be paid in all-cash, financed by continual ATM (at-the-market) offerings. Digital
Power historically finances all expenses through debt or equity – this is the only all-cash transaction I’ve seen in my time
analyzing this company.

Why did DPW purchase used miners at a 25% premium to market in an all-cash transaction from an apparent
shell company with dubious management and concurrent business dealings with companies under formal SEC
investigation?
Through this investigative journey, I’ve always tried to “follow the money”. Personally, I believe this may be the exit point for
the entire operation. DPW is able to dilute, on the spot, and transfer the money to BMSS. While BMSS may indeed deliver on
the miners, DPW substantially overpays and may receive a kickback. This appears to be a blatant transfer of wealth from
shareholders to DPW insiders – namely, Milton Ault.
 Michael Roussel | Page 11

Citations
1
https://www.sec.gov/litigation/admin/2014/34-72875.pdf
2
https://www.securitieslawyer.com/milton-ault-fined-and-suspended-by-finra/
3
https://www.courthousenews.com/the-old-switcheroo-2/
4
https://www.leagle.com/decision/incaco20140812014
5
http://www.wyomingvirtualoffice.com/
6
https://www.assetprofile.com/index1.htm
7
https://www.bizapedia.com/wy/philou-ventures-llc.html
8
http://powdigitalmining.com/
9
https://www.ripoffreport.com/reports/kanaval-mark-and-steve/las-vegas-nevada-89139/kanaval-mark-and-steve-voiceamerica-finance-conman-and-pervert-las-vegas-nevada-433668
10
https://www.ripoffreport.com/reports/tomahawk-internet-cafe-steve-kanaval/tomahawk-wisconsin-54487/tomahawk-internet-cafe-steve-kanaval-steve-kanaval-steve-kanaval-from-the-
tomahawk-inter-1202035
11
https://www.institutionalinvestor.com/article/b151369qn20wlx/redemption
12
https://www.linkedin.com/in/steve-kanaval-14877212/, https://www.equities.com/user/steve-kanaval/profile?id=8760&limitstart=0
13
https://supercryptopower.com/
14
https://www.similarweb.com/website/supercryptopower.com#display
15
https://wa-com.com/supercryptopower.com
16
http://imaginemediagroup.com/
17
https://www.instagram.com/imaginemediagroup/
18
http://dnamotoring.com/web/event/extreme-autofest-2015/
19
https://www.linkedin.com/in/ale-santos-18758617/
20
https://www.linkedin.com/search/results/people/?facetCurrentCompany=%5B%221098139%22%5D
21
https://www.usaopps.com/government_contractors/contractor-5076660-IMAGINE-MEDIA-GROUP-.htm
22
http://government-contracts.insidegov.com/d/d/Imagine-Media-Group%2C-L.L.C-..-
23
http://supercryptomining.com/
24
https://www.equities.com/user/steve-kanaval
25
https://www.sec.gov/litigation/litreleases/lr19465.htm
26
Avalanche International Corp 8-k, filed May 14 2017
27
https://ir.avalancheinternationalcorp.com/annual-reports/xbrl_doc_only/2732
28
https://sellercentral.amazon.com/forums/thread.jspa?messageID=3264936&tstart=0
29
https://www.marketwatch.com/investing/stock/avlp/secfilings
30
https://www.bamsec.com/filing/121465917004811/1?cik=1537169&hl=71036:71154&hl_id=ekn4xsvnv
31
13D filed September 6 2017
32
http://www.restaurantcapitalgroup.net/
33
https://www.switchmed.eu/en/documents/big-business-corner/29-solutions/mlse.pdf
34
https://www.sec.gov/litigation/admin/2016/34-77997-s.pdf
35
Agreement and Plan of Merger of DPW Holdings Inc and Digital Power Corporation
36
http://s1.q4cdn.com/460208960/files/News/2018/January-3-2018_DPW_Thompson.pdf
37
DPW November 7 20178-K
38
https://www.sec.gov/Archives/edgar/data/896493/000143774917019763/dpw20171118_8k.htm
39
https://www.sec.gov/Archives/edgar/data/896493/000143774917019763/ex_100792.htm
40
https://www.linkedin.com/in/miltontoddault/
41
https://www.bamsec.com/filing/125529414001270/2
42
https://www.sec.gov/litigation/admin/2016/34-77997-s.pdf
43
https://www.complaintslist.com/2015/arash-shirdel-lawyer-maybe-not-really-go-law-school/
44
http://www.marketwired.com/press-release/crossclick-media-to-lead-national-call-center-effort-for-voters-for-hillary-otc-pink-xclk-1973220.htm
45
https://www.google.com/search?rlz=1C1GCEB_enUS780US780&ei=J0RmWs-
kGdGI_Qam6qbQBA&q=P.O.+BOX+3587+TUSTIN+CA+92781&oq=P.O.+BOX+3587+TUSTIN+CA+92781&gs_l=psy-ab.3...2717.3561.0.3806.6.6.0.0.0.0.76.314.6.6.0....0...1c.1.64.psy-
ab..0.0.0....0.yIKKApGA8Nc
46
https://www.propublica.org/article/how-a-dubious-super-pac-boosted-a-questionable-penny-stock
47
Ex-10.1, Cross Click Media Inc. December 2 2014 8-K
48
http://nvsos.gov/SOSEntitySearch/CorpDetails.aspx?lx8nvq=Qj%252fg22DWMkVI4RSBiL5J2Q%253d%253d&nt7=0
49
https://brokercheck.finra.org/individual/summary/1849030
50
https://www.hrw.org/sites/default/files/brule/37.FINRADonald_HortonHunter_August162012.pdf
51
Ex-10.1, Cross Click May 20 2014 10-Q
52
https://web.archive.org/web/20140808204405/http://you-funding.com/investments/
53
2 April 2014 Form of Posting Agreement between YouFunding Inc and Co-Signer Inc
54
https://www.google.com/search?ei=bj9iWuzRFMuj_QbW0bzIBQ&q=microphase+packetport&oq=microphase+packetport&gs_l=psy-
ab.3...58197.59018.0.59098.10.6.0.0.0.0.0.0..0.0....0...1c.1.64.psy-ab..10.0.0....0.pN3nH9Hd5LA
55
https://www.sec.gov/cgi-bin/viewer?action=view&cik=1487659&accession_number=0001262463-15-000678&xbrl_type=v#
56
Ex-10.3 of August 12, 2013 Co-Signer, Inc 8-K
57
Ex-10.1 of June 1, 2015 Cross Click Media 8-K
58
https://www.pacermonitor.com/public/case/8308014/KBM_Worldwide,_Inc_v_Cross_Click_Media,_Inc_et_al
59
3/9/2018 DPW 8-K
60
https://web.archive.org/web/20180224055446/https://shop.bitmain.com/
61
https://www.glassdoor.com/Reviews/HC-Wainwright-Reviews-E771873.htm
62
https://www.cnbc.com/2018/05/18/riot-blockchains-sec-subpoena-part-of-formal-investigation.html
63
https://www.google.com/maps/place/7347+Kimbel+St,+Mississauga,+ON+L4T+3M6,+Canada/@43.702842,-79.6605266,3a,75y,305.88h,71.29t/data=!3m7!1e1!3m5!1sO4GI-
lmI7OK8QQltPunRaA!2e0!5s20090401T000000!7i13312!8i6656!4m5!3m4!1s0x882b3c02a1e5e51f:0xcdebe83ee7535818!8m2!3d43.7037909!4d-79.6605329
64
https://www.ic.gc.ca/app/scr/cc/CorporationsCanada/fdrlCrpSrch.html?locale=en_CA
65
https://www.linkedin.com/in/joekalfa/
66
https://techcrunch.com/2012/10/02/deeyoon-launch/
67
http://www.crosscanadarealestate.ca/index.php?page=canada_real_estate_brokers&realtor_id=126547&realtor_name=Joseph+Kalfa
68
https://www.linkedin.com/in/naftali-nick-kalfa-b671234b/
69
2/23/2018 RIOT 8-K
70
https://offshoreleaks.icij.org/nodes/11010727
71
https://www.theglobeandmail.com/news/toronto/mensch-next-door-charged-with-ponzi-scheming/article4348187/
72
5/17/18 DPW Prospectus Supplement

i Zack’s Coverage: http://s1.q4cdn.com/460208960/files/News/2018/January-3-2018_DPW_Thompson.pdf