UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
| For the quarterly period ended June 30, 2026 |
| o | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
| For the transition period from ________ to ________. |
Commission file number 1-12711
HYPERSCALE DATA, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 94-1721931 |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
11411 Southern Highlands Parkway, Suite 190
Las Vegas, NV 89141
(Address of principal executive offices) (Zip code)
(949) 444-5464
(Registrant’s telephone number, including area code)
| Securities registered pursuant to Section 12(b) of the Act: | ||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Class A Common Stock, $0.001 par value | GPUS | NYSE American | ||
| American | ||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding year (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer o | Accelerated filer o |
| Non-accelerated filer x | Smaller reporting company x |
| Emerging growth company o |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
At August 17, 2026, the registrant had outstanding shares of Class A common stock and shares of Class B common stock.
HYPERSCALE DATA, INC.
TABLE OF CONTENTS
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements that involve a number of risks and uncertainties. Words such as “anticipates,” “expects,” “intends,” “goals,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” “will,” “would,” “should,” “could,” and variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, uncertain events or assumptions, and other characterizations of future events or circumstances are forward-looking statements. Such statements are based on management’s expectations as of the date of this filing and involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include those described throughout this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025, particularly the “Risk Factors” sections of such reports. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements in this Quarterly Report on Form 10-Q do not reflect the potential impact of any divestitures, mergers, acquisitions, or other business combinations that had not been completed as of the date of filing of this Quarterly Report on Form 10-Q. In addition, the forward-looking statements in this Quarterly Report on Form 10-Q are made as of the date of this filing, and we do not undertake, and expressly disclaim any duty, to update such statements, whether as a result of new information, new developments or otherwise, except to the extent that disclosure may be required by law.
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
HYPERSCALE DATA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-1 |
HYPERSCALE DATA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(Unaudited)
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock, $ par value - shares authorized; and shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively (liquidation preference of $90,875,000 as of June 30, 2026) | 2,000 | 2,000 | ||||||
| Class A Common Stock, $par value – shares authorized; and shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively | 581,000 | 323,000 | ||||||
| Class B Common Stock, $ par value – shares authorized; and shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively | 24,000 | 24,000 | ||||||
| Additional paid-in capital | 903,734,000 | 853,156,000 | ||||||
| Note receivable – related party | (5,000,000 | ) | ||||||
| Accumulated deficit | (790,495,000 | ) | (734,560,000 | ) | ||||
| Accumulated other comprehensive income | 1,365,000 | 812,000 | ||||||
| TOTAL HYPERSCALE DATA STOCKHOLDERS’ EQUITY | 110,211,000 | 119,757,000 | ||||||
| Non-controlling interest | 6,320,000 | 6,100,000 | ||||||
| TOTAL STOCKHOLDERS’ EQUITY | 116,531,000 | 125,857,000 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 360,038,000 | $ | 313,707,000 | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-2 |
HYPERSCALE DATA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue, crane operations | $ | 11,052,000 | $ | 11,582,000 | $ | 22,053,000 | $ | 25,351,000 | ||||||||
| Revenue, defense solutions | 11,916,000 | 1,692,000 | 23,834,000 | 3,284,000 | ||||||||||||
| Revenue, crypto assets mining | 4,923,000 | 4,684,000 | 10,000,000 | 9,882,000 | ||||||||||||
| Revenue, hotel and real estate operations | 5,869,000 | 5,622,000 | 9,725,000 | 9,287,000 | ||||||||||||
| Revenue, lending and trading activities | (2,279,000 | ) | 1,826,000 | 9,242,000 | 1,798,000 | |||||||||||
| Revenue, other | 3,360,000 | 450,000 | 4,066,000 | 1,275,000 | ||||||||||||
| Total revenue | 34,841,000 | 25,856,000 | 78,920,000 | 50,877,000 | ||||||||||||
| Cost of revenue, crane operations | 7,327,000 | 8,141,000 | 14,507,000 | 16,388,000 | ||||||||||||
| Cost of revenue, defense solutions | 7,761,000 | 1,012,000 | 15,720,000 | 1,873,000 | ||||||||||||
| Cost of revenue, crypto assets mining | 5,627,000 | 7,074,000 | 13,237,000 | 14,105,000 | ||||||||||||
| Cost of revenue, hotel and real estate operations | 3,303,000 | 3,285,000 | 6,293,000 | 6,129,000 | ||||||||||||
| Cost of revenue, lending and trading activities | 1,010,000 | 2,954,000 | ||||||||||||||
| Cost of revenue, other | 1,018,000 | 217,000 | 2,345,000 | 972,000 | ||||||||||||
| Total cost of revenue | 26,046,000 | 19,729,000 | 55,056,000 | 39,467,000 | ||||||||||||
| Gross profit | 8,795,000 | 6,127,000 | 23,864,000 | 11,410,000 | ||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative | 19,845,000 | 9,865,000 | 38,371,000 | 19,069,000 | ||||||||||||
| Selling and marketing | 8,139,000 | 6,277,000 | 13,751,000 | 8,611,000 | ||||||||||||
| Research and development | 4,281,000 | 112,000 | 9,081,000 | 241,000 | ||||||||||||
| Impairment of property and equipment | 2,300,000 | 2,300,000 | ||||||||||||||
| Change in fair value of crypto assets | (2,656,000 | ) | 4,749,000 | |||||||||||||
| Total operating expenses | 31,909,000 | 16,254,000 | 68,252,000 | 27,921,000 | ||||||||||||
| Loss from operations | (23,114,000 | ) | (10,127,000 | ) | (44,388,000 | ) | (16,511,000 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest and other income | 443,000 | 1,081,000 | 1,212,000 | 1,321,000 | ||||||||||||
| Interest expense | (3,942,000 | ) | (7,664,000 | ) | (10,488,000 | ) | (11,503,000 | ) | ||||||||
| Gain on extinguishment of settlement obligation | 16,060,000 | 16,060,000 | ||||||||||||||
| Change in fair value of crypto assets, restricted | (2,395,000 | ) | (7,077,000 | ) | ||||||||||||
| Impairment of crypto assets, restricted | (7,123,000 | ) | (7,123,000 | ) | ||||||||||||
| Gain (loss) on extinguishment of debt | 270,000 | 759,000 | (4,569,000 | ) | ||||||||||||
| Change in fair value of embedded derivative liabilities | 827,000 | 2,151,000 | ||||||||||||||
| (Loss) gain on deconsolidation of subsidiary | (359,000 | ) | 9,690,000 | |||||||||||||
| Loss on the sale of fixed assets | (398,000 | ) | (559,000 | ) | ||||||||||||
| Total other income (expense), net | 4,140,000 | (7,340,000 | ) | (4,506,000 | ) | (5,620,000 | ) | |||||||||
| Loss before income taxes | (18,974,000 | ) | (17,467,000 | ) | (48,894,000 | ) | (22,131,000 | ) | ||||||||
| Income tax (benefit) provision | (24,000 | ) | (129,000 | ) | 192,000 | (70,000 | ) | |||||||||
| Net loss | (18,950,000 | ) | (17,338,000 | ) | (49,086,000 | ) | (22,061,000 | ) | ||||||||
| Net income attributable to non-controlling interest | (406,000 | ) | (1,713,000 | ) | (220,000 | ) | (1,195,000 | ) | ||||||||
| Net loss attributable to Hyperscale Data | (19,356,000 | ) | (19,051,000 | ) | (49,306,000 | ) | (23,256,000 | ) | ||||||||
| Preferred dividends | (2,298,000 | ) | (2,215,000 | ) | (4,804,000 | ) | (4,181,000 | ) | ||||||||
| Net loss attributable to common stockholders | $ | (21,654,000 | ) | $ | (21,266,000 | ) | $ | (54,110,000 | ) | $ | (27,437,000 | ) | ||||
| Basic and diluted net loss per common share | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average basic and diluted common shares outstanding | ||||||||||||||||
| Comprehensive loss | ||||||||||||||||
| Net loss attributable to common stockholders | $ | (21,654,000 | ) | $ | (21,266,000 | ) | $ | (54,110,000 | ) | $ | (27,437,000 | ) | ||||
| Foreign currency translation adjustment | 1,359,000 | 553,000 | 6,000 | |||||||||||||
| Other comprehensive income | 1,359,000 | 553,000 | 6,000 | |||||||||||||
| Total comprehensive loss | $ | (20,295,000 | ) | $ | (21,266,000 | ) | $ | (53,557,000 | ) | $ | (27,431,000 | ) | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-3 |
HYPERSCALE DATA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
Three Months Ended June 30, 2026
| Preferred Stock | Note | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||||
| Series A | Series B | Series C | Series D | Series E | Series F | Series G | Series H | Class A Common Stock | Class B Common Stock | Additional | Receivable - | Other | Non- | Total | |||||||||||||||||||||||||||||||||||||
| Par | Par | Par | Par | Par | Par | Par | Par | Paid-In | Related | Accumulated | Comprehensive | Controlling | Stockholders’ | ||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Party | Deficit | Loss | Interest | Equity | ||||||||||||||||||||||||||
| BALANCES, April 1, 2026 | 7,040 | $ | 3,000 | $ | 50,000 | $ | 588,111 | $ | 649,998 | $ | 1,000 | 998,577 | $ | 1,000 | 960 | $ | 4,000 | $ | 370,193,806 | $ | 370,000 | 24,153,493 | $ | 24,000 | $ | 863,607,000 | $ | $ | (767,016,000 | ) | $ | 6,000 | $ | 5,914,000 | $ | 102,907,000 | |||||||||||||||
| Issuance of Series D preferred stock for cash | - | - | - | 31,486 | - | - | - | - | - | - | 513,000 | 513,000 | |||||||||||||||||||||||||||||||||||||||
| Class B common stock converted into Class A common stock | - | - | - | - | - | - | - | - | 258,736 | (258,736 | ) | ||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | - | 491,000 | 491,000 | |||||||||||||||||||||||||||||||||||||||
| Issuance of Class A common stock for cash | - | - | - | - | - | - | - | - | 217,230,065 | 217,000 | - | 39,312,000 | 39,529,000 | ||||||||||||||||||||||||||||||||||||||
| Financing cost in connection with sales of Class A common stock | - | - | - | - | - | - | - | - | - | - | (1,188,000 | ) | (1,188,000 | ) | |||||||||||||||||||||||||||||||||||||
| Conversion of convertible notes payable to common stock | - | - | - | - | - | - | - | - | 2,501,334 | 3,000 | - | 999,000 | 1,002,000 | ||||||||||||||||||||||||||||||||||||||
| Note receivable from related party stockholder | - | - | - | - | - | - | - | - | - | - | (5,000,000 | ) | (5,000,000 | ) | |||||||||||||||||||||||||||||||||||||
| Retirement of common stock repurchased in tender offer | - | - | - | - | - | - | - | - | (8,731,574 | ) | (9,000 | ) | - | (1,825,000 | ) | (1,834,000 | ) | ||||||||||||||||||||||||||||||||||
| Net loss attributable to Hyperscale Data | - | - | - | - | - | - | - | - | - | - | (19,356,000 | ) | (19,356,000 | ) | |||||||||||||||||||||||||||||||||||||
| Series A preferred dividends ($0.62 per share) | - | - | - | - | - | - | - | - | - | - | (5,000 | ) | (5,000 | ) | |||||||||||||||||||||||||||||||||||||
| Series B preferred dividends ($64.08 per share) | - | - | - | - | - | - | - | - | - | - | (114,000 | ) | (114,000 | ) | |||||||||||||||||||||||||||||||||||||
| Series C preferred dividends ($23.75 per share) | - | - | - | - | - | - | - | - | - | - | (1,192,000 | ) | (1,192,000 | ) | |||||||||||||||||||||||||||||||||||||
| Series D preferred dividends ($0.81 per share) | - | - | - | - | - | - | - | - | - | - | (464,000 | ) | (464,000 | ) | |||||||||||||||||||||||||||||||||||||
| Series E preferred dividends ($0.62 per share) | - | - | - | - | - | - | - | - | - | - | (406,000 | ) | (406,000 | ) | |||||||||||||||||||||||||||||||||||||
| Series G preferred dividends ($23.75 per share) | - | - | - | - | - | - | - | - | - | - | (22,000 | ) | (22,000 | ) | |||||||||||||||||||||||||||||||||||||
| Series H preferred dividends ($23.75 per share) | - | - | - | - | - | - | - | - | - | - | (95,000 | ) | (95,000 | ) | |||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | - | - | - | - | 1,359,000 | 1,359,000 | |||||||||||||||||||||||||||||||||||||||
| Net income attributable to non-controlling interest | - | - | - | - | - | - | - | - | - | - | 406,000 | 406,000 | |||||||||||||||||||||||||||||||||||||||
| BALANCES, June 30, 2026 | 7,040 | $ | .00 | $ | 50,000 | $ | 619,597 | $ | 649,998 | $ | 1,000 | 998,577 | $ | 1,000 | 960 | $ | 4,000 | $ | 581,452,367 | $ | 581,000 | 23,894,757 | $ | 24,000 | $ | 903,734,000 | $ | (5,000,000 | ) | $ | (790,495,000 | ) | $ | 1,365,000 | $ | 6,320,000 | $ | 116,531,000 | |||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-4 |
HYPERSCALE DATA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
Three Months Ended June 30, 2025
| Preferred Stock | Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||
| Series A | Series B | Series C | Series D | Series E | Series F | Series G | Class A Common Stock | Class B Common Stock | Additional | Other | Non- | Total | |||||||||||||||||||||||||||||||||||||
| Par | Par | Par | Par | Par | Par | Par | Paid-In | Accumulated | Comprehensive | Controlling | Treasury | Stockholders’ | |||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Loss | Interest | Stock | Equity | ||||||||||||||||||||||||||
| BALANCES, April 1, 2025 | 7,040 | $ | $ | 50,000 | $ | 453,792 | $ | 649,998 | $ | 1,000 | 998,577 | $ | 1,000 | 860 | $ | 1,429,995 | $ | 1,000 | 4,995,724 | $ | 5,000 | $ | 672,082,000 | $ | (665,692,000 | ) | $ | (88,000 | ) | $ | 480,000 | $ | $ | 6,790,000 | |||||||||||||||
| Issuance of Series G preferred stock, related party | - | - | - | - | - | - | 100 | - | - | 75,000 | 75,000 | ||||||||||||||||||||||||||||||||||||||
| Fair value of warrants issued in connection with Series G preferred stock, related party | - | - | - | - | - | - | - | - | - | 25,000 | 25,000 | ||||||||||||||||||||||||||||||||||||||
| Issuance of Series B preferred stock for cash | - | 7,899 | - | - | - | - | - | - | - | 7,899,000 | 7,899,000 | ||||||||||||||||||||||||||||||||||||||
| Issuance of Series D preferred stock for cash | - | - | - | 131,821 | - | - | - | - | - | 1,528,000 | 1,528,000 | ||||||||||||||||||||||||||||||||||||||
| Class B common stock converted into Class A common stock | - | - | - | - | - | - | - | 1,973 | (1,973 | ) | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | 68,000 | 68,000 | ||||||||||||||||||||||||||||||||||||||
| Issuance of Class A common stock for conversion of debt | - | - | - | - | - | - | - | 4,684,249 | 5,000 | - | 10,891,000 | 10,896,000 | |||||||||||||||||||||||||||||||||||||
| Net loss attributable to Hyperscale Data | - | - | - | - | - | - | - | - | - | (19,051,000 | ) | (19,051,000 | ) | ||||||||||||||||||||||||||||||||||||
| Series A preferred dividends ($1.25 per share) | - | - | - | - | - | - | - | - | - | (5,000 | ) | (5,000 | ) | ||||||||||||||||||||||||||||||||||||
| Series B preferred dividends ($13.13 per share) | - | 20 | - | - | - | - | - | - | - | 20,000 | (20,000 | ) | |||||||||||||||||||||||||||||||||||||
| Series C preferred dividends ($47.25 per share) | - | - | - | - | - | - | - | - | - | (1,184,000 | ) | (1,184,000 | ) | ||||||||||||||||||||||||||||||||||||
| Series D preferred dividends ($1.88 per share) | - | - | - | - | - | - | - | - | - | (457,000 | ) | (457,000 | ) | ||||||||||||||||||||||||||||||||||||
| Series E preferred dividends ($1.40 per share) | - | - | - | - | - | - | - | - | - | (542,000 | ) | (542,000 | ) | ||||||||||||||||||||||||||||||||||||
| Series G preferred dividends ($7.81 per share) | - | - | - | - | - | - | - | - | - | (7,000 | ) | (7,000 | ) | ||||||||||||||||||||||||||||||||||||
| Conversion of Series B preferred stock to common stock | - | (5,238 | ) | - | - | - | - | - | 2,549,838 | 3,000 | - | (3,000 | ) | ||||||||||||||||||||||||||||||||||||
| Net income attributable to non-controlling interest | - | - | - | - | - | - | - | - | - | 1,713,000 | 1,713,000 | ||||||||||||||||||||||||||||||||||||||
| Deconsolidation of subsidiary | - | - | - | - | - | - | - | - | - | (43,000 | ) | 191,000 | 148,000 | ||||||||||||||||||||||||||||||||||||
| Other | - | - | - | - | - | - | - | - | - | (1,000 | ) | 1,000 | |||||||||||||||||||||||||||||||||||||
| BALANCES, June 30, 2025 | 7,040 | $ | 2,681 | $ | 50,000 | $ | 585,613 | $ | 649,998 | $ | 1,000 | 998,577 | $ | 1,000 | 960 | $ | 8,666,055 | $ | 9,000 | 4,993,751 | $ | 5,000 | $ | 692,584,000 | $ | (686,958,000 | ) | $ | (131,000 | ) | $ | 2,385,000 | $ | $ | 7,896,000 | ||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-5 |
HYPERSCALE DATA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
Six Months Ended June 30, 2026
| Preferred Stock | Note | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||||
| Series A | Series B | Series C | Series D | Series E | Series F | Series G | Series H | Class A Common Stock | Class B Common Stock | Additional | Receivable - | Other | Non- | Total | |||||||||||||||||||||||||||||||||||||
| Par | Par | Par | Par | Par | Par | Par | Par | Paid-In | Related | Accumulated | Comprehensive | Controlling | Stockholders’ | ||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Party |
Deficit | Loss | Interest | Equity | ||||||||||||||||||||||||||
| BALANCES, January 1, 2026 | 7,040 | $ | 3,000 | $ | 50,000 | $ | 585,613 | $ | 649,998 | $ | 1,000 | 998,577 | $ | 1,000 | 960 | $ | 4,000 | $ | 323,405,790 | $ | 323,000 | 24,386,850 | $ | 24,000 | $ | 853,156,000 | $ | $ | (734,560,000 | ) | $ | 812,000 | $ | 6,100,000 | $ | 125,857,000 | |||||||||||||||
| Issuance of Series D preferred stock for cash | - | - | - | 33,984 | - | - | - | - | - | - | 566,000 | 566,000 | |||||||||||||||||||||||||||||||||||||||
| Class B common stock converted into Class A common stock | - | - | - | - | - | - | - | - | 492,093 | (492,093 | ) | ||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | - | 557,000 | 557,000 | |||||||||||||||||||||||||||||||||||||||
| Issuance of Class A common stock for cash | - | - | - | - | - | - | - | - | 263,784,724 | 264,000 | - | 49,910,000 | 50,174,000 | ||||||||||||||||||||||||||||||||||||||
| Financing cost in connection with sales of Class A common stock | - | - | - | - | - | - | - | - | - | - | (1,454,000 | ) | (1,454,000 | ) | |||||||||||||||||||||||||||||||||||||
| Conversion of convertible notes payable to common stock | - | - | - | - | - | - | - | - | 2,501,334 | 3,000 | - | 999,000 | 1,002,000 | ||||||||||||||||||||||||||||||||||||||
| Note receivable from related party stockholder | - | - | - | - | - | - | - | - | - | - | (5,000,000 | ) | (5,000,000 | ) | |||||||||||||||||||||||||||||||||||||
| Retirement of common stock repurchased in tender offer | - | - | - | - | - | - | - | - | (8,731,574 | ) | (9,000 | ) | - | (1,825,000 | ) | (1,834,000 | ) | ||||||||||||||||||||||||||||||||||
| Net loss attributable to Hyperscale Data | - | - | - | - | - | - | - | - | - | - | (49,306,000 | ) | (49,306,000 | ) | |||||||||||||||||||||||||||||||||||||
| Series A preferred dividends ($1.25 per share) | - | - | - | - | - | - | - | - | - | - | (9,000 | ) | (9,000 | ) | |||||||||||||||||||||||||||||||||||||
| Series B preferred dividends ($148.51 per share) | - | - | - | - | - | - | - | - | - | - | (367,000 | ) | (367,000 | ) | |||||||||||||||||||||||||||||||||||||
| Series C preferred dividends ($47.75 per share) | - | - | - | - | - | - | - | - | - | - | (2,390,000 | ) | (2,390,000 | ) | |||||||||||||||||||||||||||||||||||||
| Series D preferred dividends ($1.62 per share) | - | - | - | - | - | - | - | - | - | - | (968,000 | ) | (968,000 | ) | |||||||||||||||||||||||||||||||||||||
| Series E preferred dividends ($1.25 per share) | - | - | - | - | - | - | - | - | - | - | (812,000 | ) | (812,000 | ) | |||||||||||||||||||||||||||||||||||||
| Series G preferred dividends ($71.23 per share) | - | - | - | - | - | - | - | - | - | - | (68,000 | ) | (68,000 | ) | |||||||||||||||||||||||||||||||||||||
| Series H preferred dividends ($47.50 per share) | - | - | - | - | - | - | - | - | - | - | (190,000 | ) | (190,000 | ) | |||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | - | - | - | - | 553,000 | 553,000 | |||||||||||||||||||||||||||||||||||||||
| Net income attributable to non-controlling interest | - | - | - | - | - | - | - | - | - | - | 220,000 | 220,000 | |||||||||||||||||||||||||||||||||||||||
| BALANCES, June 30, 2026 | 7,040 | $ | 3,000 | $ | 50,000 | $ | 619,597 | $ | 649,998 | $ | 1,000 | 998,577 | $ | 1,000 | 960 | $ | 4,000 | $ | 581,452,367 | $ | 581,000 | 23,894,757 | $ | 24,000 | $ | 903,734,000 | $ | (5,000,000 | ) | $ | (790,495,000 | ) | $ | 1,365,000 | $ | 6,320,000 | $ | 116,531,000 | |||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-6 |
HYPERSCALE DATA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
Six Months Ended June 30, 2025
| Preferred Stock | Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||
| Series A | Series B | Series C | Series D | Series E | Series F | Series G | Class A Common Stock | Class B Common Stock | Additional | Other | Non- | Total | |||||||||||||||||||||||||||||||||||||
| Par | Par | Par | Par | Par | Par | Par | Paid-In | Accumulated | Comprehensive | Controlling | Treasury | Stockholders’ | |||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Loss | Interest | Stock | Equity | ||||||||||||||||||||||||||
| BALANCES, January 1, 2025 | 7,040 | $ | $ | 50,000 | $ | 323,835 | $ | 649,998 | $ | 1,000 | 998,577 | $ | 1,000 | $ | 1,259,893 | $ | 1,000 | 4,998,597 | $ | 5,000 | $ | 668,817,000 | $ | (628,950,000 | ) | $ | (668,000 | ) | $ | (6,546,000 | ) | $ | (30,571,000 | ) | $ | 2,090,000 | |||||||||||||
| Issuance of Series G preferred stock, related party | - | - | - | - | - | - | 960 | - | - | 619,000 | 619,000 | ||||||||||||||||||||||||||||||||||||||
| Fair value of warrants issued in connection with Series G preferred stock, related party | - | - | - | - | - | - | - | - | - | 341,000 | 341,000 | ||||||||||||||||||||||||||||||||||||||
| Issuance of Series B preferred stock for cash | - | 7,899 | - | - | - | - | - | - | - | 7,899,000 | 7,899,000 | ||||||||||||||||||||||||||||||||||||||
| Issuance of Series D preferred stock for cash | - | - | - | 261,778 | - | - | - | - | - | 3,450,000 | 3,450,000 | ||||||||||||||||||||||||||||||||||||||
| Class B common stock converted into Class A common stock | - | - | - | - | - | - | - | 4,846 | (4,846 | ) | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | 135,000 | 135,000 | |||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Class A common stock for conversion of debt | - | - | - | - | - | - | - | 4,851,478 | 5,000 | - | 11,308,000 | 11,313,000 | |||||||||||||||||||||||||||||||||||||
| Net loss attributable to Hyperscale Data | - | - | - | - | - | - | - | - | - | (23,256,000 | ) | (23,256,000 | ) | ||||||||||||||||||||||||||||||||||||
| Series A preferred dividends ($1.25 per share) | - | - | - | - | - | - | - | - | - | (9,000 | ) | (9,000 | ) | ||||||||||||||||||||||||||||||||||||
| Series B preferred dividends ($13.13 per share) | - | 20 | - | - | - | - | - | - | - | 20,000 | (20,000 | ) | |||||||||||||||||||||||||||||||||||||
| Series C preferred dividends ($47.25 per share) | - | - | - | - | - | - | - | - | - | (2,363,000 | ) | (2,363,000 | ) | ||||||||||||||||||||||||||||||||||||
| Series D preferred dividends ($1.88 per share) | - | - | - | - | - | - | - | - | - | (870,000 | ) | (870,000 | ) | ||||||||||||||||||||||||||||||||||||
| Series E preferred dividends ($1.40 per share) | - | - | - | - | - | - | - | - | - | (912,000 | ) | (912,000 | ) | ||||||||||||||||||||||||||||||||||||
| Series G preferred dividends ($7.81 per share) | - | - | - | - | - | - | - | - | - | (7,000 | ) | (7,000 | ) | ||||||||||||||||||||||||||||||||||||
| Conversion of Series B preferred stock to common stock | - | (5,238 | ) | - | - | - | - | - | 2,549,838 | 3,000 | - | (3,000 | ) | ||||||||||||||||||||||||||||||||||||
| Retirement of treasury stock | - | - | - | - | - | - | - | - | - | (30,571,000 | ) | 30,571,000 | |||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | - | - | - | 6,000 | 6,000 | ||||||||||||||||||||||||||||||||||||||
| Net income attributable to non-controlling interest | - | - | - | - | - | - | - | - | - | 1,195,000 | 1,195,000 | ||||||||||||||||||||||||||||||||||||||
| Deconsolidation of subsidiary | - | - | - | - | - | - | - | - | - | 531,000 | 7,736,000 | 8,267,000 | |||||||||||||||||||||||||||||||||||||
| Other | - | - | - | - | - | - | - | - | - | (2,000 | ) | (2,000 | ) | ||||||||||||||||||||||||||||||||||||
| BALANCES, June 30, 2025 | 7,040 | $ | 2,681 | $ | 50,000 | $ | 585,613 | $ | 649,998 | $ | 1,000 | 998,577 | $ | 1,000 | 960 | $ | 8,666,055 | $ | 9,000 | 4,993,751 | $ | 5,000 | $ | 692,584,000 | $ | (686,958,000 | ) | $ | (131,000 | ) | $ | 2,385,000 | $ | $ | 7,896,000 | ||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-7 |
HYPERSCALE DATA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (49,086,000 | ) | $ | (22,061,000 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 10,989,000 | 9,977,000 | ||||||
| Amortization of debt discount | 3,246,000 | 4,882,000 | ||||||
| Amortization of right-of-use assets | 705,000 | 741,000 | ||||||
| Stock-based compensation | 558,000 | 135,000 | ||||||
| Loss on the sale of fixed assets | 559,000 | |||||||
| Revenue, crypto assets mining | (10,000,000 | ) | (9,882,000 | ) | ||||
| Impairment of property and equipment | 2,300,000 | |||||||
| Proceeds from the sale of crypto assets | 9,940,000 | |||||||
| Change in fair value and impairment of crypto assets and crypto assets, restricted | 18,949,000 | 10,000 | ||||||
| Proceeds from the sale of investment in equity securities | 3,953,000 | |||||||
| Realized gains on non-marketable equity securities | (1,401,000 | ) | ||||||
| Change in fair value of embedded derivatives | (2,151,000 | ) | ||||||
| (Gain) loss on extinguishment of debt | (759,000 | ) | 4,569,000 | |||||
| Gain on deconsolidation of subsidiary | (9,690,000 | ) | ||||||
| Other operating activities | 2,291,000 | (636,000 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Marketable equity securities | 252,000 | (54,000 | ) | |||||
| Accounts receivable | (4,240,000 | ) | (1,196,000 | ) | ||||
| Inventories | (1,256,000 | ) | 293,000 | |||||
| Prepaid expenses and other current assets | (2,167,000 | ) | 591,000 | |||||
| Other assets | (1,728,000 | ) | 348,000 | |||||
| Accounts payable and accrued expenses | 22,959,000 | 2,613,000 | ||||||
| Lease liabilities | (747,000 | ) | (746,000 | ) | ||||
| Net cash used in operating activities | (9,885,000 | ) | (7,055,000 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | (17,315,000 | ) | (3,277,000 | ) | ||||
| Purchase of crypto assets | (8,914,000 | ) | ||||||
| Investments in loans receivable | (6,371,000 | ) | (1,350,000 | ) | ||||
| Collections on loans receivable | 5,293,000 | 236,000 | ||||||
| Investments in non-marketable equity securities | (12,693,000 | ) | ||||||
| Proceeds from the sale of property and equipment | 64,000 | 820,000 | ||||||
| Investment in notes receivable, related party | (5,000,000 | ) | (691,000 | ) | ||||
| Collections on notes receivable, related party | 1,945,000 | |||||||
| Other investing activities | (135,000 | ) | (14,000 | ) | ||||
| Net cash used in investing activities | (45,071,000 | ) | (2,331,000 | ) | ||||
| F-8 |
HYPERSCALE DATA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Unaudited)
| For the Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from financing activities: | ||||||||
| Gross proceeds from sales of Class A common stock | $ | 50,174,000 | $ | |||||
| Offering costs related to issuance of Class A common stock | (1,454,000 | ) | ||||||
| Proceeds from sales of Series B preferred stock | 7,899,000 | |||||||
| Proceeds from sales of Series D preferred stock | 566,000 | 3,450,000 | ||||||
| Proceeds from sales of Series C preferred stock and warrants, related party | 960,000 | |||||||
| Proceeds from notes payable | 60,100,000 | 29,127,000 | ||||||
| Payments on notes payable | (44,479,000 | ) | (30,289,000 | ) | ||||
| Repayments of related party notes payable | (2,398,000 | ) | (93,000 | ) | ||||
| Proceeds from related party notes payable | 874,000 | |||||||
| Payments of preferred dividends | (4,804,000 | ) | (4,161,000 | ) | ||||
| Proceeds from issuance of convertible notes | 16,001,000 | 5,020,000 | ||||||
| Payments on convertible notes | (1,981,000 | ) | (300,000 | ) | ||||
| Repurchase of common stock pursuant to tender offer | (1,834,000 | ) | ||||||
| Net cash provided by financing activities | 70,765,000 | 11,613,000 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 57,000 | 6,000 | ||||||
| Net increase in cash and cash equivalents and restricted cash | 15,866,000 | 2,233,000 | ||||||
| Cash, cash equivalents and restricted cash at beginning of period | 49,226,000 | 25,022,000 | ||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 65,092,000 | $ | 27,255,000 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid for interest | $ | 5,344,000 | $ | 5,336,000 | ||||
| Non-cash investing and financing activities: | ||||||||
| Transfers from crypto assets to crypto assets, restricted | $ | 55,871,000 | $ | |||||
| Settlement of accounts payable with crypto assets | $ | 110,000 | $ | 16,000 | ||||
| Conversion of convertible notes payable into shares of Class A common stock | $ | 1,000,000 | $ | 11,313,000 | ||||
| Conversion of Series B preferred stock into shares of Class A common stock | $ | $ | 3,000 | |||||
| Conversion of debt and equity securities to marketable securities | $ | 2,803,000 | $ | |||||
| Conversion of other equity securities to marketable securities | $ | 299,000 | $ | |||||
| Exchange of related party advances for investment in other equity securities, related party | $ | 1,800,000 | $ | |||||
| Note payable issued for equity securities | $ | 1,955,000 | $ | |||||
| Recognition of new operating lease right-of-use assets and lease liabilities | $ | 1,699,000 | $ | 1,552,000 | ||||
| Notes payable exchanged for convertible notes payable | $ | $ | 9,103,000 | |||||
| Paid-in-kind dividends settled through issuance of Series B preferred stock | $ | $ | 20,000 | |||||
| Property and equipment acquired through note payable financing | $ | 1,501,000 | $ | |||||
| F-9 |
1. DESCRIPTION OF BUSINESS
Hyperscale Data (“Hyperscale Data” or the “Company”), a Delaware corporation, through its wholly owned subsidiary Sentinum, Inc. (“Sentinum”), owns and operates a data center at which it mines digital assets and offers colocation and hosting services for the emerging AI ecosystems and other industries. Another of Hyperscale Data’s wholly owned subsidiaries, Ault Capital Group, Inc, (“ACG”), is a hybrid private equity firm and operating company that acquires, finances, builds and actively manages businesses across financial services, digital assets, industrial services, hospitality, defense technologies and other sectors. In addition, ACG is actively engaged in private credit and structured finance through Ault Lending, LLC (“Ault Lending”), a licensed lending subsidiary.
Hyperscale Data currently expects the divestiture of ACG (the “Divestiture”) to occur in 2027. Upon the occurrence of the Divestiture, the Company would be an owner and operator of data centers to support high-performance computing services, as well as a holder of the digital assets. Until the Divestiture occurs, the Company will continue to provide, through ACG and its wholly and majority-owned subsidiaries and strategic investments, mission-critical products and services that support a diverse range of industries, including an AI software platform, equipment rental services, defense/aerospace, industrial, automotive and hotel operations.
The Company has the following reportable segments:
| · | Sentinum – crypto asset mining operations, colocation and hosting services for emerging artificial intelligence (“AI”) ecosystems and other industries, and the Company’s digital asset treasury activities; |
| · | Energy and Infrastructure (“Energy”) – crane operations; |
| · | Defense – the operations of Gresham Worldwide, Inc. (“Gresham”) and TurnOnGreen, Inc. (“TurnOnGreen”), which manufacture and distribute electronic components, power solutions and other mission-critical products serving defense and commercial markets; |
| · | Ault Global Real Estate Equities, Inc. (“AGREE”) – hotel operations and other commercial real estate holdings; |
| · | Technology and Finance (“Fintech”) – commercial lending, activist investing, and stock trading; and |
| · | Holding Company – the Company’s corporate operations, including strategic initiatives, AI software platform, blockchain and digital technology initiatives, portfolio company management, and other corporate assets and activities not otherwise included within the Company’s operating segments. |
2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Regulation S-X and do not include all the information and disclosures required by generally accepted accounting principles in the United States of America (“GAAP”). The Company has made estimates and judgments affecting the amounts reported in the Company’s condensed consolidated financial statements and the accompanying notes. The actual results experienced by the Company may differ materially from the Company’s estimates. The condensed consolidated financial information is unaudited but reflects all normal adjustments that are, in the opinion of management, necessary to provide a fair statement of results for the interim periods presented.
These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”), as filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2026. The condensed consolidated balance sheet as of December 31, 2025 was derived from the Company’s audited 2025 financial statements contained in the 2025 Annual Report. Results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of results to be expected for future interim periods or the full year ending December 31, 2026.
| F-10 |
Liquidity and Going Concern
The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. As of June 30, 2026, the Company had cash and cash equivalents of approximately $36.8 million and restricted cash of approximately $28.3 million. The Company also had approximately $201.7 million of current liabilities as of June 30, 2026, including approximately $99.3 million of current notes payable, related party notes payable and convertible notes payable. The Company incurred a net loss of approximately $49.1 million and used approximately $9.9 million in cash to support operating activities during the six months ended June 30, 2026.
The Company expects to require substantial additional capital to fund its operations, satisfy existing obligations and execute its planned development of its Michigan data center. In connection with the phased deployment of approximately 20 MW of critical power capacity under the Company’s master services agreement with an AI infrastructure customer, the Company currently expects to make investments in excess of $100 million over time to construct, equip and commission the applicable service areas, power modules and related infrastructure. The amount and timing of these expenditures will depend on, among other factors, construction progress, equipment procurement, customer deployment schedules and the availability of financing.
The Company’s existing cash and other presently available sources of liquidity are not expected to be sufficient to fund its anticipated operating requirements, existing obligations and planned capital expenditures, including those associated with the Michigan data center, through the twelve-month period following the issuance of these condensed consolidated financial statements. Accordingly, these conditions and events raise substantial doubt about the Company’s ability to continue as a going concern.
Management intends to address the Company’s liquidity requirements through a combination of capital-raising activities, including sales of equity securities, debt or other financing arrangements, cash generated from operations, potential sales or monetization of investments or other assets, and other strategic financing transactions. The Company has an effective registration statement and an at-the-market offering program under which it may sell shares of its Class A common stock from time to time. Management is also evaluating additional financing alternatives to fund the development of the Michigan data center.
The Company’s ability to obtain additional capital is subject to numerous factors, including market conditions, the trading price of its Class A common stock, operating performance, the value and liquidity of its assets and investments, and investor and lender demand. There can be no assurance that additional financing will be available when needed or, if available, that it will be available on terms acceptable to the Company or in amounts sufficient to meet the Company’s liquidity requirements. Because the Company’s plans are dependent on obtaining additional financing and other actions that are not entirely within the Company’s control, management cannot conclude that such plans are probable of being effectively implemented and sufficient to alleviate the substantial doubt. Accordingly, substantial doubt about the Company’s ability to continue as a going concern has not been alleviated. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Significant Accounting Policies
There have been no material changes to the Company’s significant accounting policies disclosed in the 2025 Annual Report, except as follows:
Related Party Receivables
The Company evaluates receivables from related parties based on the facts and circumstances of the arrangement, including the nature of the relationship between the parties and the substance of the transaction. Receivables from related parties that are determined to be substantively similar to unpaid capital contributions are presented as a deduction from stockholders’ equity rather than as assets.
Digital assets associated with decentralized finance protocols
The Company participates in decentralized finance protocols in connection with certain of its financing activities. In connection with its Bitcoin-backed borrowings through the Morpho decentralized finance lending protocol, the Company exchanges Bitcoin for Coinbase Wrapped Bitcoin (“cbBTC”) and pledges the cbBTC as collateral for its borrowings.
| F-11 |
The Company accounts for the exchange of Bitcoin for cbBTC as a disposal of Bitcoin and recognizes any resulting gain or loss in earnings. The cbBTC received is recognized at fair value on the exchange date, which establishes its initial carrying amount. Because cbBTC does not meet the scope requirements of ASC 350-60, Crypto Assets, the Company accounts for cbBTC as an intangible asset under ASC 350, Intangibles—Goodwill and Other, and subsequently measures it at cost less impairment.
The Company continues to recognize cbBTC pledged as collateral while the related borrowings remain outstanding and presents such cbBTC as crypto assets, restricted on the condensed consolidated balance sheets. Upon repayment of the borrowings, the collateral is released and exchanged for Bitcoin.
Reclassifications
Certain prior period amounts have been reclassified for comparative purposes to conform to the current-period financial statement presentation.
Recent Accounting Pronouncements
The Company continually assesses any new accounting pronouncements to determine their applicability. When management determines that a new accounting pronouncement may affect the Company’s financial reporting, the Company undertakes an analysis to determine whether any required changes should be made to its condensed consolidated financial statements.
Recently Adopted Accounting Standards
In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). ASU 2025-05 provides a practical expedient to assume current economic conditions will not change for the remaining life of an asset when preparing forecasts as part of estimating credit losses. The new standard is effective for the Company for its annual periods beginning January 1, 2026 and interim period within those annual periods, with early adoption permitted and should be applied on a prospective basis. The Company adopted ASC 2025-05 during the three months ended March 31, 2026, which did not have a material impact on its consolidated financial position, results of operations, or cash flows.
Accounting Standards Not Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires additional disclosures of certain expenses in the notes of the financial statements, to provide enhanced transparency into the expense captions presented on the consolidated statements of operations. The new standard is effective for the Company for its annual periods beginning January 1, 2027 and for interim periods beginning January 1, 2028, with early adoption permitted. The Company is currently evaluating the impact of adopting the standard.
In January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2025-01”), to clarify the effective date of ASU 2024-03. The new standard is effective for the Company for its annual periods beginning January 1, 2027 and for interim periods beginning January 1, 2028, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-01; however, because the standard primarily affects disclosure requirements, the Company does not expect adoption to have a material impact on its consolidated financial position, results of operations, or cash flows.
In May 2026, the FASB issued ASU 2026-01, Compensation - Stock Compensation (Topic 718) and Equity (Topic 505): Accounting for Paid-in-Kind Dividends (“ASU 2026-01”). ASU 2026-01 clarifies the accounting for certain paid-in-kind (“PIK”) dividends, including the recognition and measurement of PIK dividends that are settled through the issuance of additional equity instruments. The amendments are intended to improve consistency in the accounting for these arrangements. ASU 2026-01 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2026-01. The Company does not currently expect adoption of ASU 2026-01 to have a material impact on its consolidated financial position, results of operations, or cash flows.
| F-12 |
3. BUSINESS COMBINATION – GRESHAM
As disclosed in the 2025 Annual Report, the Company completed the acquisition and reconsolidation of Gresham on November 28, 2025. The preliminary allocation of purchase consideration to the acquired assets and assumed liabilities remains subject to finalization of certain valuation analyses, including inventory, property and equipment, intangible assets, income taxes, and other working capital items.
During the six months ended June 30, 2026, the Company recorded no material measurement period adjustments related to the acquisition. The Company does not currently expect material changes to the preliminary allocation; however, final amounts may differ from the preliminary estimates.
4. REVENUE DISAGGREGATION
The following tables summarize disaggregated customer contract revenues and the source of the revenue for the three and six months ended June 30, 2026 and 2025. Revenues from lending and trading activities included in consolidated revenues were primarily interest, dividend and other investment income, which are not considered to be revenues from contracts with customers under GAAP. Revenue is presented by reportable segment. The “Holding Co.” column includes revenue generated at the parent company level that is not allocated to a specific reportable segment. Although Holding Co. is not a separate reportable segment, it is presented below to reconcile segment revenues to total consolidated revenue.
The Company’s disaggregated revenues consisted of the following for the three months ended June 30, 2026:
| Defense | Fintech | Sentinum | AGREE | Energy | Holding Co. | Total | ||||||||||||||||||||||
| Primary Geographical Markets | ||||||||||||||||||||||||||||
| North America | $ | 2,698,000 | $ | $ | 5,138,000 | $ | 5,654,000 | $ | 11,052,000 | $ | 3,360,000 | $ | 27,902,000 | |||||||||||||||
| Europe | 1,564,000 | 1,564,000 | ||||||||||||||||||||||||||
| Middle East and other | 7,654,000 | 7,654,000 | ||||||||||||||||||||||||||
| Revenue from contracts with customers | 11,916,000 | 5,138,000 | 5,654,000 | 11,052,000 | 3,360,000 | 37,120,000 | ||||||||||||||||||||||
| Revenue, lending and trading activities (North America) | (2,279,000 | ) | (2,279,000 | ) | ||||||||||||||||||||||||
| Total revenue | $ | 11,916,000 | $ | (2,279,000 | ) | $ | 5,138,000 | $ | 5,654,000 | $ | 11,052,000 | $ | 3,360,000 | $ | 34,841,000 | |||||||||||||
| Major Goods or Services | ||||||||||||||||||||||||||||
| Crane rental | $ | $ | $ | $ | $ | 11,052,000 | $ | $ | 11,052,000 | |||||||||||||||||||
| Revenue from mined crypto assets at Sentinum owned and operated facilities | 4,923,000 | 4,923,000 | ||||||||||||||||||||||||||
| Hotel and real estate operations | 215,000 | 5,654,000 | 5,869,000 | |||||||||||||||||||||||||
| Power supply units and systems | 4,829,000 | 4,829,000 | ||||||||||||||||||||||||||
| Defense systems | 6,513,000 | 6,513,000 | ||||||||||||||||||||||||||
| Other | 574,000 | 3,360,000 | 3,934,000 | |||||||||||||||||||||||||
| Revenue from contracts with customers | 11,916,000 | 5,138,000 | 5,654,000 | 11,052,000 | 3,360,000 | 37,120,000 | ||||||||||||||||||||||
| Revenue, lending and trading activities | (2,279,000 | ) | (2,279,000 | ) | ||||||||||||||||||||||||
| Total revenue | $ | 11,916,000 | $ | (2,279,000 | ) | $ | 5,138,000 | $ | 5,654,000 | $ | 11,052,000 | $ | 3,360,000 | $ | 34,841,000 | |||||||||||||
| Timing of Revenue Recognition | ||||||||||||||||||||||||||||
| Goods and services transferred at a point in time | $ | 5,040,000 | $ | $ | 5,138,000 | $ | 5,654,000 | $ | $ | 3,360,000 | $ | 19,192,000 | ||||||||||||||||
| Services transferred over time | 6,876,000 | 11,052,000 | 17,928,000 | |||||||||||||||||||||||||
| Revenue from contracts with customers | $ | 11,916,000 | $ | $ | 5,138,000 | $ | 5,654,000 | $ | 11,052,000 | $ | 3,360,000 | $ | 37,120,000 | |||||||||||||||
| F-13 |
The Company’s disaggregated revenues consisted of the following for the six months ended June 30, 2026:
| Defense | Fintech | Sentinum | AGREE | Energy | Holding Co. | Total | ||||||||||||||||||||||
| Primary Geographical Markets | ||||||||||||||||||||||||||||
| North America | $ | 5,974,000 | $ | $ | 10,468,000 | $ | 9,257,000 | $ | 22,053,000 | $ | 4,066,000 | $ | 51,818,000 | |||||||||||||||
| Europe | 3,194,000 | 3,194,000 | ||||||||||||||||||||||||||
| Middle East and other | 14,666,000 | 14,666,000 | ||||||||||||||||||||||||||
| Revenue from contracts with customers | 23,834,000 | 10,468,000 | 9,257,000 | 22,053,000 | 4,066,000 | 69,678,000 | ||||||||||||||||||||||
| Revenue, lending and trading activities (North America) | 9,242,000 | 9,242,000 | ||||||||||||||||||||||||||
| Total revenue | $ | 23,834,000 | $ | 9,242,000 | $ | 10,468,000 | $ | 9,257,000 | $ | 22,053,000 | $ | 4,066,000 | $ | 78,920,000 | ||||||||||||||
| Major Goods or Services | ||||||||||||||||||||||||||||
| Crane rental | $ | $ | $ | $ | $ | 22,053,000 | $ | $ | 22,053,000 | |||||||||||||||||||
| Revenue from mined crypto assets at Sentinum owned and operated facilities | 10,000,000 | 10,000,000 | ||||||||||||||||||||||||||
| Hotel and real estate operations | 468,000 | 9,257,000 | 9,725,000 | |||||||||||||||||||||||||
| Power supply units and systems | 9,907,000 | 9,907,000 | ||||||||||||||||||||||||||
| Defense systems | 12,578,000 | 12,578,000 | ||||||||||||||||||||||||||
| Other | 1,349,000 | 4,066,000 | 5,415,000 | |||||||||||||||||||||||||
| Revenue from contracts with customers | 23,834,000 | 10,468,000 | 9,257,000 | 22,053,000 | 4,066,000 | 69,678,000 | ||||||||||||||||||||||
| Revenue, lending and trading activities | 9,242,000 | 9,242,000 | ||||||||||||||||||||||||||
| Total revenue | $ | 23,834,000 | $ | 9,242,000 | $ | 10,468,000 | $ | 9,257,000 | $ | 22,053,000 | $ | 4,066,000 | $ | 78,920,000 | ||||||||||||||
| Timing of Revenue Recognition | ||||||||||||||||||||||||||||
| Goods and services transferred at a point in time | $ | 10,318,000 | $ | $ | 10,468,000 | $ | 9,257,000 | $ | $ | 4,066,000 | $ | 34,109,000 | ||||||||||||||||
| Services transferred over time | 13,516,000 | 22,053,000 | 35,569,000 | |||||||||||||||||||||||||
| Revenue from contracts with customers | $ | 23,834,000 | $ | $ | 10,468,000 | $ | 9,257,000 | $ | 22,053,000 | $ | 4,066,000 | $ | 69,678,000 | |||||||||||||||
The Company’s disaggregated revenues consisted of the following for the three months ended June 30, 2025:
| Defense | Fintech | Sentinum | AGREE | Energy | Holding Co. | Total | ||||||||||||||||||||||
| Primary Geographical Markets | ||||||||||||||||||||||||||||
| North America | $ | 1,593,000 | $ | $ | 4,929,000 | $ | 5,377,000 | $ | 11,582,000 | $ | 450,000 | $ | 23,931,000 | |||||||||||||||
| Europe | (6,000 | ) | (6,000 | ) | ||||||||||||||||||||||||
| Middle East and other | 105,000 | 105,000 | ||||||||||||||||||||||||||
| Revenue from contracts with customers | 1,692,000 | 4,929,000 | 5,377,000 | 11,582,000 | 450,000 | 24,030,000 | ||||||||||||||||||||||
| Revenue, lending and trading activities (North America) | 1,826,000 | 1,826,000 | ||||||||||||||||||||||||||
| Total revenue | $ | 1,692,000 | $ | 1,826,000 | $ | 4,929,000 | $ | 5,377,000 | $ | 11,582,000 | $ | 450,000 | $ | 25,856,000 | ||||||||||||||
| Major Goods or Services | ||||||||||||||||||||||||||||
| Power supply units and systems | $ | 1,692,000 | $ | $ | $ | $ | $ | $ | 1,692,000 | |||||||||||||||||||
| Revenue from mined crypto assets at Sentinum owned and operated facilities | 4,684,000 | 4,684,000 | ||||||||||||||||||||||||||
| Hotel and real estate operations | 245,000 | 5,377,000 | 5,622,000 | |||||||||||||||||||||||||
| Crane rental | 11,582,000 | 11,582,000 | ||||||||||||||||||||||||||
| Other | 450,000 | 450,000 | ||||||||||||||||||||||||||
| Revenue from contracts with customers | 1,692,000 | 4,929,000 | 5,377,000 | 11,582,000 | 450,000 | 24,030,000 | ||||||||||||||||||||||
| Revenue, lending and trading activities | 1,826,000 | 1,826,000 | ||||||||||||||||||||||||||
| Total revenue | $ | 1,692,000 | $ | 1,826,000 | $ | 4,929,000 | $ | 5,377,000 | $ | 11,582,000 | $ | 450,000 | $ | 25,856,000 | ||||||||||||||
| Timing of Revenue Recognition | ||||||||||||||||||||||||||||
| Goods and services transferred at a point in time | $ | 1,656,000 | $ | $ | 4,929,000 | $ | 5,377,000 | $ | $ | 450,000 | $ | 12,412,000 | ||||||||||||||||
| Services transferred over time | 36,000 | 11,582,000 | 11,618,000 | |||||||||||||||||||||||||
| Revenue from contracts with customers | $ | 1,692,000 | $ | $ | 4,929,000 | $ | 5,377,000 | $ | 11,582,000 | $ | 450,000 | $ | 24,030,000 | |||||||||||||||
| F-14 |
The Company’s disaggregated revenues consisted of the following for the six months ended June 30, 2025:
| Defense | Fintech | Sentinum | AGREE | Energy | Holding Co. | Total | ||||||||||||||||||||||
| Primary Geographical Markets | ||||||||||||||||||||||||||||
| North America | $ | 3,121,000 | $ | $ | 10,643,000 | $ | 8,526,000 | $ | 25,351,000 | $ | 1,246,000 | $ | 48,887,000 | |||||||||||||||
| Europe | 29,000 | 29,000 | ||||||||||||||||||||||||||
| Middle East and other | 163,000 | 163,000 | ||||||||||||||||||||||||||
| Revenue from contracts with customers | 3,284,000 | 10,643,000 | 8,526,000 | 25,380,000 | 1,246,000 | 49,079,000 | ||||||||||||||||||||||
| Revenue, lending and trading activities (North America) | 1,798,000 | 1,798,000 | ||||||||||||||||||||||||||
| Total revenue | $ | 3,284,000 | $ | 1,798,000 | $ | 10,643,000 | $ | 8,526,000 | $ | 25,380,000 | $ | 1,246,000 | $ | 50,877,000 | ||||||||||||||
| Major Goods or Services | ||||||||||||||||||||||||||||
| Power supply units and systems | $ | 3,284,000 | $ | $ | $ | $ | $ | $ | 3,284,000 | |||||||||||||||||||
| Revenue from mined crypto assets at Sentinum owned and operated facilities | 9,882,000 | 9,882,000 | ||||||||||||||||||||||||||
| Hotel and real estate operations | 761,000 | 8,526,000 | 9,287,000 | |||||||||||||||||||||||||
| Crane rental | 25,351,000 | 25,351,000 | ||||||||||||||||||||||||||
| Other | 29,000 | 1,246,000 | 1,275,000 | |||||||||||||||||||||||||
| Revenue from contracts with customers | 3,284,000 | 10,643,000 | 8,526,000 | 25,380,000 | 1,246,000 | 49,079,000 | ||||||||||||||||||||||
| Revenue, lending and trading activities | 1,798,000 | 1,798,000 | ||||||||||||||||||||||||||
| Total revenue | $ | 3,284,000 | $ | 1,798,000 | $ | 10,643,000 | $ | 8,526,000 | $ | 25,380,000 | $ | 1,246,000 | $ | 50,877,000 | ||||||||||||||
| Timing of Revenue Recognition | ||||||||||||||||||||||||||||
| Goods and services transferred at a point in time | $ | 3,248,000 | $ | $ | 10,643,000 | $ | 8,526,000 | $ | 29,000 | $ | 1,246,000 | $ | 23,692,000 | |||||||||||||||
| Services transferred over time | 36,000 | 25,351,000 | 25,387,000 | |||||||||||||||||||||||||
| Revenue from contracts with customers | $ | 3,284,000 | $ | $ | 10,643,000 | $ | 8,526,000 | $ | 25,380,000 | $ | 1,246,000 | $ | 49,079,000 | |||||||||||||||
5. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy at June 30, 2026 and December 31, 2025:
| Fair Value Measurement at June 30, 2026 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Embedded conversion feature liabilities | $ | 5,425,000 | $ | $ | $ | 5,425,000 | ||||||||||
| Fair Value Measurement at December 31, 2025 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Embedded conversion feature liabilities | $ | 1,576,000 | $ | $ | $ | 1,576,000 | ||||||||||
The Company assesses the inputs used to measure fair value using the three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market. For investments where little or no public market exists, management’s determination of fair value is based on the best available information, which may incorporate management’s own assumptions and involves a significant degree of judgment, taking into consideration various factors including earnings history, financial condition, recent sales prices of the Company’s securities and liquidity risks. The Company estimates the fair value of its embedded conversion feature liabilities using a Monte Carlo simulation model. See Note 13 for additional information regarding the valuation methodology and significant assumptions used in the valuation of the embedded conversion features. There were no transfers into or out of Level 3 during the six months ended June 30, 2026 or during the year ended December 31, 2025.
| F-15 |
The changes in Level 3 fair value hierarchy during the three and six months ended June 30, 2026 and 2025 were as follows:
| Level 3 Balance at Beginning of Period | Fair Value Adjustments | Sales and Settlement | Grants | Level 3 Balance at End of Period | ||||||||||||||||
| Six months ended June 30, 2026 | ||||||||||||||||||||
| Investments in other equity securities - embedded conversion feature | $ | $ | (1,613,000 | ) | $ | $ | 1,613,000 | $ | ||||||||||||
| Investments in other equity securities - warrants | $ | $ | $ | (1,085,000 | ) | $ | 1,085,000 | $ | ||||||||||||
| Embedded conversion feature liabilities | $ | 1,576,000 | $ | (2,151,000 | ) | $ | $ | 6,000,000 | $ | 5,425,000 | ||||||||||
| Level 3 Balance at Beginning of Period | Fair
Value Adjustments | Sales and Settlement | Grants | Level 3 Balance at End of Period | ||||||||||||||||
| Six months ended June 30, 2025 | ||||||||||||||||||||
| Embedded conversion feature liabilities | $ | $ | 662,000 | $ | (1,274,000 | ) | $ | 4,143,000 | $ | 3,531,000 | ||||||||||
Level 3 Balance at Beginning of Period | Fair Value Adjustments | Sales and Settlement | Grants | Level 3 Balance at End of Period | ||||||||||||||||
| Three months ended June 30, 2026 | ||||||||||||||||||||
| Investments in other equity securities - embedded conversion feature | $ | 2,913,000 | $ | (2,913,000 | ) | $ | $ | $ | ||||||||||||
| Investments in other equity securities - warrants | $ | 285,000 | $ | $ | (285,000 | ) | $ | $ | ||||||||||||
| Embedded conversion feature liabilities | $ | 252,000 | $ | (827,000 | ) | $ | $ | 6,000,000 | $ | 5,425,000 | ||||||||||
| Level 3 Balance at Beginning of Period | Fair Value Adjustments | Sales and Settlement | Grants | Level 3 Balance at End of Period | ||||||||||||||||
| Three months ended June 30, 2025 | ||||||||||||||||||||
| Embedded conversion feature liabilities | $ | 2,269,000 | $ | 662,000 | $ | (1,274,000 | ) | $ | 1,874,000 | $ | 3,531,000 | |||||||||
6. CRYPTO ASSETS
The following table presents the Company’s significant crypto asset holdings as of June 30, 2026 and December 31, 2025:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Bitcoin | $ | 4,409,000 | $ | 46,197,000 | ||||
| Bitcoin, restricted(1) | 16,201,000 | |||||||
| cbBTC, restricted(2) | 25,441,000 | |||||||
| Total crypto assets holdings | $ | 46,051,000 | $ | 46,197,000 | ||||
| (1) | The Company’s Bitcoin, restricted, includes Bitcoin pledged as collateral for the convertible promissory notes issued to JGB entities. See Note 13. |
| (2) | The Company’s cbBTC, restricted, includes wrapped Bitcoin pledged as collateral for the Morpho borrowings. See Note 13. |
The Company measures Bitcoin and Bitcoin, restricted, at fair value using quoted market prices in active markets for identical assets, which are classified within Level 1 of the fair value hierarchy.
cbBTC is a wrapped digital asset designed to represent Bitcoin for use on compatible blockchain networks and decentralized finance protocols. During the second quarter of 2026, the Company exchanged certain of its Bitcoin for cbBTC and pledged the cbBTC as collateral for borrowings through the Morpho decentralized finance lending protocol. The cbBTC is accounted for as an intangible asset under ASC 350 and is carried at cost less impairment. See Note 2 for additional information regarding the Company’s accounting policy for digital assets associated with decentralized finance protocols and Note 11 for additional information regarding the Morpho borrowings.
| F-16 |
The following table presents the activities of the crypto assets for the six months ended June 30, 2026 and 2025:
The following table presents the activities of Bitcoin, restricted for the six months ended June 30, 2026:
| 2026 | ||||
| Balance at January 1 | $ | |||
| Transferred to Bitcoin, restricted | 23,307,000 | |||
| Unrealized loss on crypto assets | (7,077,000 | ) | ||
| Other | (29,000 | ) | ||
| Balance at June 30 | $ | 16,201,000 | ||
The following table presents the activities of cbBTC, restricted for the six months ended June 30, 2026:
| 2026 | ||||
| Balance at January 1 | $ | |||
| Transferred to cbBTC, restricted | 32,564,000 | |||
| Impairment | (7,123,000 | ) | ||
| Balance at June 30 | $ | 25,441,000 | ||
During the three and six months ended June 30, 2026, the Company recognized an impairment charge of approximately $7.1 million related to cbBTC, restricted, which is included in impairment of crypto assets, restricted in the condensed consolidated statements of operations.
7. PROPERTY AND EQUIPMENT, NET
At June 30, 2026 and December 31, 2025, property and equipment consisted of:
| June 30, 2026 | December 31, 2025 | |||||||
| Building, land and improvements | $ | 93,327,000 | $ | 85,355,000 | ||||
| Crypto assets mining equipment | 10,964,000 | 27,245,000 | ||||||
| Crane rental equipment | 35,808,000 | 33,368,000 | ||||||
| Computer, software and related equipment | 15,063,000 | 13,807,000 | ||||||
| Aircraft | 15,983,000 | 15,983,000 | ||||||
| Other property and equipment | 15,876,000 | 8,563,000 | ||||||
| Total gross property and equipment | 187,021,000 | 184,321,000 | ||||||
| Accumulated depreciation and amortization | (38,742,000 | ) | (42,333,000 | ) | ||||
| Property and equipment, net | $ | 148,279,000 | $ | 141,988,000 | ||||
Summary of depreciation expense:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Depreciation expense | $ | 4,239,000 | $ | 4,711,000 | $ | 10,240,000 | $ | 9,786,000 | ||||||||
| F-17 |
Impairment of Bitcoin Mining Equipment
During the three and six months ended June 30, 2026, the Company recognized an impairment charge of $2.3 million related to certain Bitcoin mining equipment located at its Michigan data center. The impairment assessment was triggered by the execution of the Company’s master services agreement with a third-party customer for AI compute and neocloud hosting services. As a result of the anticipated allocation of electrical capacity at the Michigan data center to support the customer’s deployments, the Company expects to substantially wind down its Bitcoin mining operations at that location. The impairment reflects the Company’s strategic reallocation of power capacity from Bitcoin mining to AI compute, neocloud and colocation services at the Michigan data center, rather than a deterioration in the physical condition of the equipment.
At the time of the assessment, management had not finalized its plans regarding the future deployment, relocation or disposition of the affected mining equipment. Given the anticipated reduction in use of the equipment at the Michigan data center and the uncertainty surrounding its future utilization, management concluded that the carrying amount of the asset group was not recoverable and recorded an impairment charge to reduce the carrying value of the equipment to its estimated fair value. Estimated fair value was determined primarily using observable market data for comparable Bitcoin mining equipment, consistent with an orderly liquidation value approach.
8. INTANGIBLE ASSETS, NET
At June 30, 2026 and December 31, 2025, intangible assets consisted of:
| Useful Life | June 30, 2026 | December 31, 2025 | ||||||||
| Definite lived intangible assets: | ||||||||||
| Developed technology | 5-10 years | $ | 6,036,000 | $ | 5,684,000 | |||||
| Customer list | 8-12 years | 6,607,000 | 6,358,000 | |||||||
| Trade names | 10-15 years | 2,626,000 | 2,529,000 | |||||||
| 15,269,000 | 14,571,000 | |||||||||
| Accumulated amortization | (1,662,000 | ) | (898,000 | ) | ||||||
| Total definite-lived intangible assets | $ | 13,607,000 | $ | 13,673,000 | ||||||
Certain of the Company’s trade names and trademarks were determined to have an indefinite life. The remaining definite-lived intangible assets are primarily being amortized on a straight-line basis over their estimated useful lives.
Summary of amortization expense:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Amortization expense | $ | 375,000 | $ | 66,000 | $ | 749,000 | $ | 192,000 | ||||||||
As of June 30, 2026, intangible assets subject to amortization have an average remaining useful life of 6.6 years. The following table presents estimated amortization expense for each of the succeeding five calendar years and thereafter.
| 2026 (remainder) | $ | 755,000 | ||
| 2027 | 1,517,000 | |||
| 2028 | 1,517,000 | |||
| 2029 | 1,517,000 | |||
| 2030 | 1,500,000 | |||
| Thereafter | 6,801,000 | |||
| $ | 13,607,000 |
| F-18 |
9. RELATED PARTY NOTE RECEIVABLE
On June 12, 2026, ACG entered into a Loan Agreement with Ault & Company, Inc. (“Ault & Company”), a related party, pursuant to which ACG agreed to provide Ault & Company a term loan in a principal amount of up to $5.0 million. On June 12, 2026, the full $5.0 million principal amount was advanced. The Loan Agreement and related transaction were reviewed and approved by a special committee of independent directors of the Company’s Board of Directors.
The loan bears interest at a fixed rate of 8.5% per annum, payable monthly in arrears, and matures on June 11, 2029, at which time all outstanding principal and accrued interest become due. Upon an event of default, the interest rate increases to 18.0% per annum. The loan may be prepaid by the borrower without penalty upon prior notice. The proceeds of the loan are restricted to the repayment of existing indebtedness and working capital purposes.
The loan is supported by the personal guaranty of the Company’s Executive Chairman, Milton C. Ault, III, in his capacity as the Chief Executive Officer of Ault & Company, but is otherwise unsecured.
At June 30, 2026, the outstanding principal balance was $5.0 million. Due to the related-party relationship between the Company and Ault & Company, including Ault & Company’s significant ownership interest in the Company and overlapping ownership and management relationships, the Company evaluated the appropriate balance sheet presentation of the note under applicable accounting guidance. Based on this evaluation, the Company presents the $5.0 million principal balance as a deduction from stockholders’ equity rather than as an asset in the accompanying condensed consolidated balance sheet.
Accrued interest receivable of approximately $21,000 is included in other assets. During the three months ended June 30, 2026, the Company recognized approximately $21,000 of interest income related to the note.
10. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Other current liabilities at June 30, 2026 and December 31, 2025 consisted of:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Accounts payable | $ | 28,645,000 | $ | 19,076,000 | ||||
| Tenant security deposits | 5,701,000 | |||||||
| Contract liabilities | 5,421,000 | 984,000 | ||||||
| Accrued payroll and payroll taxes | 4,325,000 | 4,520,000 | ||||||
| Interest payable | 2,877,000 | 2,752,000 | ||||||
| Accrued participation profits payable to investors | 2,021,000 | |||||||
| Accrued legal | 1,066,000 | 1,139,000 | ||||||
| Other accrued expenses | 11,362,000 | 10,736,000 | ||||||
| Total | $ | 61,418,000 | $ | 39,207,000 | ||||
11. NOTES PAYABLE
Notes payable at June 30, 2026 and December 31, 2025, were comprised of the following:
| Collateral | Interest rate | Effective rate(1) |
Due date | June 30, 2026 | December 31, 2025 | ||||||||||||
| AGREE secured construction loans, in default | AGREE hotels | 10% | 6% | January 1, 2027 | $ | 68,750,000 | $ | 68,750,000 | |||||||||
| Morpho | $25.4 million of cbBTC | 5% | 5% | On demand / No stated maturity | 15,997,000 | ||||||||||||
| Circle 8 financing agreement | Circle 8 cranes with a book value of $26.6 million | 6% | 6% | March 9, 2031 | 9,583,000 | ||||||||||||
| Circle 8 revolving credit facility | - | 9% | - | - | - | 7,205,000 | |||||||||||
| Circle 8 equipment financing notes | Circle 8 equipment with a book value of $2.5 million | 6% | 6% | Various dates through July 20, 2029 | 3,609,000 | 2,171,000 | |||||||||||
| Other | - | 6% | - | Various | 7,995,000 | 4,995,000 | |||||||||||
| Total notes payable | $ | 105,934,000 | $ | 83,121,000 | |||||||||||||
| Less: current portion | (95,236,000 | ) | (82,055,000 | ) | |||||||||||||
| Notes payable – long-term portion | $ | 10,698,000 | $ | 1,066,000 | |||||||||||||
| (1) | Includes forbearance and extension fees and original issue discount (“OID”) costs that are amortized to interest expense over the life of the notes. |
| F-19 |
Second Amendment to AGREE Construction Loans
In January 2026, the Company’s indirect, wholly owned subsidiary AGREE amended the terms of its construction loans related to the AGREE properties. The amendment extended the maturity dates of the loans to January 1, 2027, subject to a potential one-year extension to January 1, 2028 upon satisfaction of certain conditions. The agreement also modifies the interest rate to Term SOFR plus 5.75%, with required monthly interest payments based on Term SOFR plus 4.75%, with the difference accruing and payable at maturity or earlier repayment. On April 1, 2026, the borrowers were required to make a principal payment of $3.0 million followed by monthly principal payments of $1.0 million through maturity. As of the date of this filing, AGREE and its subsidiaries have not made the required principal payments. While such non-payment constitutes an event of default under the loan agreements, the lenders have not provided a notice of default. The modification also requires the borrowers to fund interest reserves totaling approximately $2.0 million and provides temporary waivers of certain financial covenants through the scheduled maturity date. The interest reserves have not been funded as of the date of this filing. In connection with the modification, the borrowers paid an extension fee of approximately $0.3 million.
Morpho Bitcoin-Backed Borrowings
During the second quarter of 2026, the Company entered into borrowing arrangements through Morpho, a decentralized finance lending protocol, under which the Company may borrow against cbBTC pledged as collateral. As of June 30, 2026, the Company had outstanding borrowings of approximately $16.0 million, collateralized by cbBTC with a carrying amount of approximately $25.4 million. The borrowings bear interest at a variable rate, which approximated 5% per annum as of June 30, 2026, and do not have a stated contractual maturity date. The borrowings remain outstanding until repaid or otherwise settled, provided that the required collateralization levels are maintained. The borrowings may be repaid at any time without prepayment penalty. If the fair value of the pledged cbBTC declines below specified collateralization thresholds, the Company may be required to pledge additional cbBTC as collateral or a portion of the pledged cbBTC may be liquidated to satisfy the outstanding borrowings. The pledged cbBTC continues to be recognized as crypto assets, restricted, on the Company’s consolidated balance sheet while serving as collateral for the outstanding borrowings.
Circle 8 Equipment Financing Notes
In March 2026, Circle 8 entered into a secured promissory note in the principal amount of $1.5 million for the purchase of a crane. The secured promissory note accrues interest at 5.9% per annum and will mature in March 2031.
Circle 8 Financing Agreement
In April 2026, Circle 8 finalized a financing arrangement and received $10.0 million in equipment financing. In connection with the financing, Circle 8 issued a promissory note with a five-year term requiring monthly payments of approximately $0.2 million. The note bears interest at a variable rate based on the five-year U.S. Treasury rate plus 2%, with an initial rate of approximately 5.7%.
Term Notes
In January and February 2026, the Company issued two short-term term notes to an institutional investor for aggregate gross proceeds of $10.0 million. Repayment obligations under the note were guaranteed by Ault & Company and Milton C. Ault, III, the Company’s Executive Chairman. During the three months ended June 30, 2026, the notes were repaid in full.
In April 2026, the Company entered into a short-term term note with an institutional investor for gross proceeds of $10.0 million. The note was issued with an OID of $0.8 million and had a principal face amount of $10.8 million. The note bore interest at 12% per annum and matured on June 29, 2026. Beginning May 8, 2026, the Company was required to make weekly principal payments of $0.7 million through June 26, 2026, with the remaining outstanding principal balance and accrued interest due at maturity. The note was prepaid and fully satisfied during the three months ended June 30, 2026. Accordingly, no amounts were outstanding under the term note as of June 30, 2026. Repayment obligations under the note were guaranteed by Ault & Company and Milton C. Ault, III, the Company’s Executive Chairman.
| F-20 |
Notes Payable Maturities
Principal maturities of the Company’s notes payable, assuming the exercise of all extensions that are exercisable solely at the Company’s option, as of June 30, 2026 were:
| Year | ||||
| 2026 (remainder) | $ | 94,381,000 | ||
| 2027 | 2,845,000 | |||
| 2028 | 2,750,000 | |||
| 2029 | 2,610,000 | |||
| 2030 | 2,420,000 | |||
| Thereafter | 928,000 | |||
| $ | 105,934,000 | |||
Interest Expense
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Contractual interest expense | $ | 2,291,000 | $ | 3,400,000 | $ | 7,168,000 | $ | 7,175,000 | ||||||||
| Forbearance fees | 365,000 | 74,000 | 377,000 | |||||||||||||
| Amortization of debt discount | 1,651,000 | 3,899,000 | 3,246,000 | 3,951,000 | ||||||||||||
| Total interest expense | $ | 3,942,000 | $ | 7,664,000 | $ | 10,488,000 | $ | 11,503,000 | ||||||||
12. NOTES PAYABLE, RELATED PARTY
Notes payable, related party at June 30, 2026 and December 31, 2025, were comprised of the following:
| Interest rate | Effective rate | Due date | June 30, 2026 | December 31, 2025 | ||||||||||||
| Ault & Company demand promissory note | 10% | 9.5% | Upon demand | $ | 137,000 | $ | 1,635,000 | |||||||||
| Notes from officers - TurnOnGreen, in default | 14% | 14.0% | Past due | 25,000 | 51,000 | |||||||||||
| Total notes payable | $ | 162,000 | $ | 1,686,000 | ||||||||||||
Summary of interest expense, related party, recorded within interest expense on the condensed consolidated statement of operations:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Interest expense, related party | $ | 17,000 | $ | 3,000 | $ | 44,000 | $ | 19,000 | ||||||||
| F-21 |
13. CONVERTIBLE NOTES
Convertible notes payable at June 30, 2026 and December 31, 2025, were comprised of the following:
| Conversion price per share | Interest rate | Effective rate(1) | Due date | June 30, 2026 | December 31, 2025 | |||||||||||
| YA II PN, Ltd. (“Yorkville”) prepaid advance | Lower of (i) $0.2153 or (ii) 90% of the lowest daily VWAP during the applicable 5-trading-day pricing period, subject to a $0.10 Floor Price | 4% | 8% | December 11, 2027 | $ | 15,958,000 | $ | |||||||||
| Convertible promissory notes issued to JGB entities | 85% of 3-day VWAP | 13% | 34% | December 30, 2027 | 12,768,000 | 12,768,000 | ||||||||||
| SJC Lending, LLC (“SJC”) convertible promissory note | 75% of 5-day VWAP | 15% | 8% | June 30, 2026 | 1,958,000 | 2,786,000 | ||||||||||
| RiskOn International, Inc. (“ROI”) senior secured convertible note, in default | $0.11 (ROI stock) | OID Only | 15% | April 27, 2024 | 1,981,000 | |||||||||||
| TurnOnGreen convertible promissory note | 80% of 10-day VWAP (TurnOnGreen stock) | 12% | 21% | Various dates through March 27, 2027 | 1,540,000 | 440,000 | ||||||||||
| Fair value of embedded conversion options | 5,425,000 | 1,576,000 | ||||||||||||||
| Total convertible notes payable | 37,649,000 | 19,551,000 | ||||||||||||||
| Less: unamortized debt discounts | (10,663,000 | ) | (4,958,000 | ) | ||||||||||||
| Total convertible notes payable, net of financing cost, long-term | $ | 26,986,000 | $ | 14,593,000 | ||||||||||||
| Less: current portion | (3,940,000 | ) | (6,750,000 | ) | ||||||||||||
| Convertible notes payable, net of financing cost – long-term portion | $ | 23,046,000 | $ | 7,843,000 | ||||||||||||
| (1) | Includes forbearance and extension fees and OID costs that are amortized to interest expense over the life of the notes. |
SJC Convertible Promissory Note Amendment
In January 2026, the Company entered into an amendment with SJC pursuant to which the maturity date of the convertible promissory note was extended to June 30, 2026.
Yorkville Prepaid Advance
On June 11, 2026, the Company entered into a prepaid advance agreement with Yorkville, pursuant to which the Company issued a prepaid advance having an aggregate principal amount of $16.0 million in exchange for net cash proceeds of $15.0 million, reflecting a 6% OID. The prepaid advance bears interest at 4% per annum and matures on December 11, 2027.
While amounts remain outstanding under the agreement, Yorkville may periodically deliver purchase notices requiring the Company to issue shares of its Class A common stock in partial or full satisfaction of amounts outstanding under the prepaid advance. The purchase price per share is equal to the lower of (i) $0.2153 or (ii) 90% of the lowest daily VWAP of the Company’s Class A common stock during the applicable five-trading-day pricing period, subject to a minimum purchase price of $0.10 per share.
The Company concluded that the variable-priced conversion and settlement provisions embedded within the prepaid advance require bifurcation as an embedded derivative liability under Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging (“ASC 815”). Accordingly, the embedded derivative was initially recognized at fair value upon issuance, with a corresponding debt discount recorded against the debt host. The embedded derivative is subsequently remeasured at fair value each reporting period, with changes in fair value recognized in other income (expense), net.
Embedded Derivatives
The Company identified embedded derivative features within certain convertible promissory notes that required bifurcation and separate accounting as derivative liabilities under ASC 815. These features primarily relate to conversion options with variable pricing mechanisms.
The fair value of the embedded derivative liabilities was estimated using a Monte Carlo simulation model. The model incorporates key assumptions including the Company’s stock price, risk-free interest rate, expected volatility, credit-risk adjusted discount rate, and the specific terms of each conversion feature (including floor price, cap, and pricing based on the Volume-Weighted Average Price, or VWAP). Due to the significant use of unobservable inputs, these derivative liabilities are classified within Level 3 of the fair value hierarchy. See Note 5 for additional information, including the initial recognition and rollforward of embedded derivative liabilities.
| F-22 |
The following table summarizes the key inputs used in the valuation of the embedded derivatives at inception and as of June 30, 2026:
The Monte Carlo simulation utilized 100,000 iterations and incorporated conversion mechanics, including the floor price and the VWAP-based conversion price as defined in each agreement. The incremental value attributable to the conversion feature was isolated to determine its impact on the overall fair value of the embedded option.
Loss on Extinguishment of Convertible Notes
During the six months ended June 30, 2026, the Company did not recognize any gains or losses on extinguishment of convertible notes.
During the six months ended June 30, 2025, the Company recognized a net loss on extinguishment of convertible notes of $4.6 million, consisting primarily of losses recognized on certain exchange or refinancing transactions where newly issued instruments were determined to be substantially different from the original debt instruments under applicable accounting guidance.
Contractual Maturities
Principal maturities of the Company’s convertible notes payable, assuming the exercise of all extensions that are exercisable solely at the Company’s option, as of June 30, 2026, were:
| Year | Principal | |||
| 2026 (remainder) | $ | 19,456,000 | ||
| 2027 | 12,768,000 | |||
| $ | 32,224,000 | |||
14. COMMITMENTS AND CONTINGENCIES
Contingencies
Litigation Matters
The Company is involved in litigation arising from matters in the ordinary course of business. The Company is regularly subject to claims, suits, regulatory and government investigations, and other proceedings involving labor and employment, commercial disputes, and other matters. Such claims, suits, regulatory and government investigations, and other proceedings could result in fines, civil penalties or other adverse consequences.
| F-23 |
Certain of these outstanding matters include speculative, substantial or indeterminate monetary amounts. The Company records a liability when it believes that it is probable that a loss has been incurred and the amount can be reasonably estimated. If the Company determines that a loss is reasonably possible and the loss or range of loss can be estimated, the Company discloses the reasonably possible loss. The Company evaluates developments in its legal matters that could affect the amount of liability that has been previously accrued, and the matters and related reasonably possible losses disclosed, and makes adjustments as appropriate. Significant judgment is required to determine both likelihood of there being a loss and the estimated amount of a loss related to such matters.
Dowagiac Data Center Litigation
On May 26, 2026, a purported class action complaint was filed against Alliance Cloud Services, LLC (“Alliance Cloud Services”), an indirect, wholly owned subsidiary of the Company, in the United States District Court for the Western District of Michigan. The complaint alleges that operations at the Company’s Michigan data center have generated excessive noise, asserting claims for private nuisance, public nuisance and negligence, and seeks unspecified monetary damages and other relief on behalf of a proposed class of nearby residents.
On July 24, 2026, Alliance Cloud Services filed a partial motion to dismiss the public nuisance and negligence claims. On July 28, 2026, the Court entered an order permitting the plaintiffs to file an amended complaint in response to the motion. If an amended complaint is filed, the pending motion will be denied without prejudice as moot; otherwise, the Court will consider the motion after briefing is complete.
The Company believes the claims are without merit and intends to vigorously defend the action. At this stage of the proceedings, the Company is unable to reasonably estimate the possible loss or range of loss, if any, associated with this matter.
Other Litigation Matters
With respect to the Company’s other outstanding matters, based on the Company’s current knowledge, the Company believes that the amount or range of reasonably possible loss will not, either individually or in aggregate, have a material adverse effect on the Company’s business, consolidated financial position, results of operations, or cash flows. However, the outcome of such matters is inherently unpredictable and subject to significant uncertainties.
15. STOCKHOLDERS’ EQUITY
Class A Common Stock
Class A common stock confers upon the holders the rights to receive notice to participate and vote at any meeting of stockholders of the Company, to receive dividends, if and when declared, and to participate in a distribution of surplus of assets upon any liquidation of the Company.
On December 19, 2025, the Company entered into an at-the-market issuance sales agreement providing for the sale of up to $50.0 million of additional shares of Class A common stock under its effective shelf registration statement. On January 16, 2026, the Company entered into an amended and restated At-the-Market Issuance Sales Agreement (the “Prior ATM Agreement”) with Spartan Capital Securities, LLC (“Spartan Capital”), as lead sales agent, and Wilson-Davis & Co., Inc., as an additional sales agent, pursuant to which the Company was permitted to sell shares of its Class A common stock from time to time through at-the-market offerings.
On May 27, 2026, the Company provided notice of its election to terminate the Prior ATM Agreement, with such termination becoming effective on June 8, 2026. Prior to its termination, the Company had sold approximately 137.6 million shares of its Class A common stock under the Prior ATM Agreement for aggregate gross proceeds of approximately $24.6 million.
On June 18, 2026, the Company entered into a new At-the-Market Issuance Sales Agreement (the “2026 ATM Agreement”) with Spartan Capital, pursuant to which the Company may offer and sell shares of its Class A common stock having an aggregate offering price of up to $300.0 million from time to time through an at-the-market offering.
During the three and six months ended June 30, 2026, the Company sold approximately 126.2 million shares under the 2026 ATM Agreement for aggregate gross proceeds of approximately $25.5 million, before deducting commissions and offering expenses.
| F-24 |
On April 16, 2026, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware to increase the number of authorized shares of its Class A common stock from 500 million shares to shares.
Tender Offer
On June 8, 2026, the Company completed a cash tender offer to repurchase shares of its Class A common stock. Pursuant to the tender offer, the Company repurchased shares of its Class A common stock from stockholders who validly tendered their shares at a purchase price of $ per share, for an aggregate purchase price of approximately $1.8 million.
The repurchased shares were retired during the quarter ended June 30, 2026 and are reflected as a reduction of stockholders’ equity in the accompanying condensed consolidated financial statements.
Class B Common Stock
The Class B common stock is identical to the Class A common stock, with the exception that each share thereof carries 10 times the voting power of a share of Class A common stock. The Class B common stock is convertible at any time into Class A common stock on a one-for-one basis at the option of the holder of the Class B common stock.
Series D Preferred ATM Offering Activity
On February 13, 2026, the Company entered into an at-the-market issuance sales agreement to sell shares of the Company’s 13.00% Series D Cumulative Redeemable Perpetual Preferred Stock, par value $ per share (the “Series D Preferred”), having an aggregate offering price of up to $35.4 million from time to time, through an “at the market offering” (the “Series Preferred D ATM Offering”). During the period between January 1, 2026 through June 30, 2026, the Company sold an aggregate of 33,984 shares of Series D Preferred Stock pursuant to its Series Preferred D ATM offering for net proceeds of $0.6 million.
Preferred Stock
Preferred stock as of June 30, 2026 consisted of the following:
| Par Value Per Share | Stated Value Per Share | Shares Authorized | Liquidation Preference | Shares Issued and Outstanding at June 30, 2026 | ||||||||||||||||
| Series A Convertible Preferred Stock | $ | $ | $ | 176,000 | ||||||||||||||||
| Series B Convertible Preferred Stock | $ | $ | 3,000,000 | |||||||||||||||||
| Series C Convertible Preferred Stock | $ | $ | 50,000,000 | |||||||||||||||||
| Series D Cumulative Redeemable Perpetual Preferred Stock | $ | $ | 15,490,000 | |||||||||||||||||
| Series E Cumulative Redeemable Perpetual Preferred Stock | $ | $ | 16,250,000 | |||||||||||||||||
| Series F Exchangeable Preferred Stock | $ | $ | 999,000 | |||||||||||||||||
| Series G Convertible Preferred Stock | $ | $ | 960,000 | |||||||||||||||||
| Series H Convertible Preferred Stock | $ | $ | 4,000,000 | |||||||||||||||||
| Unallocated | ||||||||||||||||||||
| Total | $ | 90,875,000 | ||||||||||||||||||
| F-25 |
Preferred stock as of December 31, 2025 consisted of the following:
| Par Value Per Share | Stated Value Per Share | Shares Authorized | Liquidation Preference | Shares Issued and Outstanding at December 31, 2025 | ||||||||||||||||
| Series A Convertible Preferred Stock | $ | $ | $ | 176,000 | ||||||||||||||||
| Series B Convertible Preferred Stock | $ | $ | 3,000,000 | |||||||||||||||||
| Series C Convertible Preferred Stock | $ | $ | 50,000,000 | |||||||||||||||||
| Series D Cumulative Redeemable Perpetual Preferred Stock | $ | $ | 14,640,000 | |||||||||||||||||
| Series E Cumulative Redeemable Perpetual Preferred Stock | $ | $ | 16,250,000 | |||||||||||||||||
| Series F Exchangeable Preferred Stock | $ | $ | 999,000 | |||||||||||||||||
| Series G Convertible Preferred Stock | $ | $ | 960,000 | |||||||||||||||||
| Series H Convertible Preferred Stock | $ | $ | 4,000,000 | |||||||||||||||||
| Unallocated | ||||||||||||||||||||
| Total | $ | 90,025,000 | ||||||||||||||||||
The Company is authorized to issue million shares of preferred stock, $ par value. As of June 30, 2026, the rights, preferences, privileges and restrictions on the remaining authorized 18.2 million shares of preferred stock had not been determined. The Board is authorized to designate a new series of preferred shares and determine the number of shares, as well as the rights, preferences, privileges and restrictions granted to or imposed upon any series of preferred shares.
Related Party Note Receivable
At June 30, 2026, the Company presented the $5.0 million principal balance of its note receivable from Ault & Company as a deduction from stockholders’ equity. See Note 9 for additional information.
16. INCOME TAXES
The Company calculates its interim income tax provision in accordance with ASC Topic 270, Interim Reporting, and ASC Topic 740, Income Taxes. The difference between the effective tax rate and the federal statutory rate of 21% is primarily due to items recognized for financial reporting purposes that are permanently disallowed for U.S. federal income tax purposes, as well as changes in the valuation allowance.
Net loss per share is computed by dividing the net loss to common stockholders by the weighted average number of shares of Class A and Class B common stock outstanding. The calculation of the basic and diluted earnings per share is the same for all periods presented as the effect of the potential common stock equivalents is anti-dilutive due to the Company’s net loss position for all periods presented. Anti-dilutive securities, which are convertible into or exercisable for the Company’s Class A common stock, consisted of the following at June 30, 2026 and 2025:
| June 30, | June 30, | |||||||
| 2026 | 2025 | |||||||
| Convertible preferred stock | ||||||||
| Convertible notes | ||||||||
| Stock options | ||||||||
| Warrants | ||||||||
| Total | ||||||||
| F-26 |
18. SEGMENT AND CUSTOMERS INFORMATION
The Company had the following reportable segments as of June 30, 2026 and 2025; see Note 1 for a brief description of the Company’s business.
The following data presents the revenues, expenditures and other operating data of the Company and its operating segments for the six months ended June 30, 2026:
| Defense | Fintech | Sentinum | AGREE | Energy | Holding Co. | Total | ||||||||||||||||||||||
| Revenue, crane operations | $ | $ | $ | $ | $ | 22,053,000 | $ | $ | 22,053,000 | |||||||||||||||||||
| Revenue, defense solutions | 23,834,000 | 23,834,000 | ||||||||||||||||||||||||||
| Revenue, crypto assets mining | 10,000,000 | 10,000,000 | ||||||||||||||||||||||||||
| Revenue, hotel and real estate operations | 468,000 | 9,257,000 | 9,725,000 | |||||||||||||||||||||||||
| Revenue, lending and trading activities | 9,242,000 | 9,242,000 | ||||||||||||||||||||||||||
| Revenue, other | 4,066,000 | 4,066,000 | ||||||||||||||||||||||||||
| Total revenue | 23,834,000 | 9,242,000 | 10,468,000 | 9,257,000 | 22,053,000 | 4,066,000 | 78,920,000 | |||||||||||||||||||||
| Cost of revenue | 15,720,000 | 2,954,000 | 13,237,000 | 6,293,000 | 14,507,000 | 2,345,000 | 55,056,000 | |||||||||||||||||||||
| Gross profit (loss) | 8,114,000 | 6,288,000 | (2,769,000 | ) | 2,964,000 | 7,546,000 | 1,721,000 | 23,864,000 | ||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||||
| General and administrative | 6,556,000 | 263,000 | 2,114,000 | 2,520,000 | 4,444,000 | 22,474,000 | 38,371,000 | |||||||||||||||||||||
| Selling and marketing | 1,453,000 | 12,298,000 | 13,751,000 | |||||||||||||||||||||||||
| Research and development | 1,281,000 | 7,800,000 | 9,081,000 | |||||||||||||||||||||||||
| Change in fair value of crypto assets | 3,788,000 | 961,000 | 4,749,000 | |||||||||||||||||||||||||
| Impairment of property and equipment | 2,300,000 | 2,300,000 | ||||||||||||||||||||||||||
| Total operating expenses | 9,290,000 | 263,000 | 8,202,000 | 2,520,000 | 4,444,000 | 43,533,000 | 68,252,000 | |||||||||||||||||||||
| (Loss) income from operations | $ | (1,176,000 | ) | $ | 6,025,000 | $ | (10,971,000 | ) | $ | 444,000 | $ | 3,102,000 | $ | (41,812,000 | ) | (44,388,000 | ) | |||||||||||
| Other income (expense): | ||||||||||||||||||||||||||||
| Interest and other income | 1,212,000 | |||||||||||||||||||||||||||
| Interest expense | (10,488,000 | ) | ||||||||||||||||||||||||||
| Gain on extinguishment of settlement obligation | 16,060,000 | |||||||||||||||||||||||||||
| Change in fair value of crypto assets, restricted | (7,077,000 | ) | ||||||||||||||||||||||||||
| Impairment of crypto assets, restricted | (7,123,000 | ) | ||||||||||||||||||||||||||
| Gain on extinguishment of debt | 759,000 | |||||||||||||||||||||||||||
| Change in fair value of embedded derivative liabilities | 2,151,000 | |||||||||||||||||||||||||||
| Total other expense, net | (4,506,000 | ) | ||||||||||||||||||||||||||
| Loss before income taxes | $ | (48,894,000 | ) | |||||||||||||||||||||||||
| Depreciation and amortization expense | $ | 950,000 | $ | $ | 5,362,000 | $ | 1,429,000 | $ | 2,072,000 | $ | 1,176,000 | $ | 10,989,000 | |||||||||||||||
| Interest expense | $ | (1,320,000 | ) | $ | $ | (1,000 | ) | $ | (4,314,000 | ) | $ | (465,000 | ) | $ | (3,988,000 | ) | $ | (10,088,000 | ) | |||||||||
| Capital expenditures for the six months ended June 30, 2026 | $ | 48,000 | $ | $ | 8,727,000 | $ | 353,000 | $ | 1,513,000 | $ | 6,649,000 | $ | 17,290,000 | |||||||||||||||
| Segment identifiable assets as of June 30, 2026 | $ | 45,528,000 | $ | 22,137,000 | $ | 65,882,000 | $ | 65,597,000 | $ | 45,815,000 | $ | 104,674,000 | $ | 349,633,000 | ||||||||||||||
| F-27 |
The following data presents the revenues, expenditures and other operating data of the Company and its operating segments for the three months ended June 30, 2026:
| Defense | Fintech | Sentinum | AGREE | Energy | Holding Co. | Total | ||||||||||||||||||||||
| Revenue, crane operations | $ | $ | $ | $ | $ | 11,052,000 | $ | $ | 11,052,000 | |||||||||||||||||||
| Revenue, defense solutions | 11,916,000 | 11,916,000 | ||||||||||||||||||||||||||
| Revenue, crypto assets mining | 4,923,000 | 4,923,000 | ||||||||||||||||||||||||||
| Revenue, hotel and real estate operations | 215,000 | 5,654,000 | 5,869,000 | |||||||||||||||||||||||||
| Revenue, lending and trading activities | (2,279,000 | ) | (2,279,000 | ) | ||||||||||||||||||||||||
| Revenue, other | 3,360,000 | 3,360,000 | ||||||||||||||||||||||||||
| Total revenue | 11,916,000 | (2,279,000 | ) | 5,138,000 | 5,654,000 | 11,052,000 | 3,360,000 | 34,841,000 | ||||||||||||||||||||
| Cost of revenue | 7,761,000 | 1,010,000 | 5,627,000 | 3,303,000 | 7,327,000 | 1,018,000 | 26,046,000 | |||||||||||||||||||||
| Gross profit (loss) | 4,155,000 | (3,289,000 | ) | (489,000 | ) | 2,351,000 | 3,725,000 | 2,342,000 | 8,795,000 | |||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||||
| General and administrative | 3,000,000 | 254,000 | 1,157,000 | 1,163,000 | 2,252,000 | 12,019,000 | 19,845,000 | |||||||||||||||||||||
| Selling and marketing | 691,000 | 7,448,000 | 8,139,000 | |||||||||||||||||||||||||
| Research and development | 748,000 | 3,533,000 | 4,281,000 | |||||||||||||||||||||||||
| Change in fair value of crypto assets | (2,967,000 | ) | 311,000 | (2,656,000 | ) | |||||||||||||||||||||||
| Impairment of property and equipment | 2,300,000 | 2,300,000 | ||||||||||||||||||||||||||
| Total operating expenses | 4,439,000 | 254,000 | 490,000 | 1,163,000 | 2,252,000 | 23,311,000 | 31,909,000 | |||||||||||||||||||||
| (Loss) income from operations | $ | (284,000 | ) | $ | (3,543,000 | ) | $ | (979,000 | ) | $ | 1,188,000 | $ | 1,473,000 | $ | (20,969,000 | ) | (23,114,000 | ) | ||||||||||
| Other income (expense): | ||||||||||||||||||||||||||||
| Interest and other income | 443,000 | |||||||||||||||||||||||||||
| Interest expense | (3,942,000 | ) | ||||||||||||||||||||||||||
| Gain on extinguishment of settlement obligation | 16,060,000 | |||||||||||||||||||||||||||
| Change in fair value of crypto assets, restricted | (2,395,000 | ) | ||||||||||||||||||||||||||
| Impairment of crypto assets, restricted | (7,123,000 | ) | ||||||||||||||||||||||||||
| Gain on extinguishment of debt | 270,000 | |||||||||||||||||||||||||||
| Change in fair value of embedded derivative liabilities | 827,000 | |||||||||||||||||||||||||||
| Total other expense, net | 4,140,000 | |||||||||||||||||||||||||||
| Loss before income taxes | $ | (18,974,000 | ) | |||||||||||||||||||||||||
| Depreciation and amortization expense | $ | 405,000 | $ | $ | 1,820,000 | $ | 721,000 | $ | 1,051,000 | $ | 617,000 | $ | 4,614,000 | |||||||||||||||
| Interest expense | $ | (718,000 | ) | $ | $ | $ | (904,000 | ) | $ | (194,000 | ) | $ | (1,726,000 | ) | $ | (3,542,000 | ) | |||||||||||
| Capital expenditures for the three months ended June 30, 2026 | $ | $ | $ | 2,204,000 | $ | 233,000 | $ | 31,000 | $ | 4,256,000 | $ | 6,724,000 | ||||||||||||||||
| F-28 |
The following data presents the revenues, expenditures and other operating data of the Company and its operating segments for the six months ended June 30, 2025:
| Defense | Fintech | Sentinum | AGREE | Energy | Holding Co. | Total | ||||||||||||||||||||||
| Revenue, crane operations | $ | $ | $ | $ | $ | 25,351,000 | $ | $ | 25,351,000 | |||||||||||||||||||
| Revenue, crypto assets mining | 9,882,000 | 9,882,000 | ||||||||||||||||||||||||||
| Revenue, hotel and real estate operations | 761,000 | 8,526,000 | 9,287,000 | |||||||||||||||||||||||||
| Revenue, lending and trading activities | 1,798,000 | 1,798,000 | ||||||||||||||||||||||||||
| Revenue, other | 3,284,000 | 29,000 | 1,246,000 | 4,559,000 | ||||||||||||||||||||||||
| Total revenue | 3,284,000 | 1,798,000 | 10,643,000 | 8,526,000 | 25,380,000 | 1,246,000 | 50,877,000 | |||||||||||||||||||||
| Cost of revenue | 1,873,000 | 14,105,000 | 6,129,000 | 16,505,000 | 855,000 | 39,467,000 | ||||||||||||||||||||||
| Gross profit (loss) | 1,411,000 | 1,798,000 | (3,462,000 | ) | 2,397,000 | 8,875,000 | 391,000 | 11,410,000 | ||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||||
| Research and development | 231,000 | 10,000 | 241,000 | |||||||||||||||||||||||||
| Selling and marketing | 494,000 | 8,117,000 | 8,611,000 | |||||||||||||||||||||||||
| General and administrative | 1,969,000 | 353,000 | (337,000 | ) | 2,877,000 | 4,346,000 | 9,861,000 | 19,069,000 | ||||||||||||||||||||
| Total operating expenses | 2,694,000 | 353,000 | (337,000 | ) | 2,877,000 | 4,346,000 | 17,988,000 | 27,921,000 | ||||||||||||||||||||
| (Loss) income from operations | $ | (1,283,000 | ) | $ | 1,445,000 | $ | (3,125,000 | ) | $ | (480,000 | ) | $ | 4,529,000 | $ | (17,597,000 | ) | (16,511,000 | ) | ||||||||||
| Other income (expense): | ||||||||||||||||||||||||||||
| Interest and other income | 1,321,000 | |||||||||||||||||||||||||||
| Interest expense | (11,503,000 | ) | ||||||||||||||||||||||||||
| Loss on extinguishment of debt | (4,569,000 | ) | ||||||||||||||||||||||||||
| Gain on deconsolidation of subsidiary | 9,690,000 | |||||||||||||||||||||||||||
| Loss on the sale of fixed assets | (559,000 | ) | ||||||||||||||||||||||||||
| Total other expense, net | (5,620,000 | ) | ||||||||||||||||||||||||||
| Loss before income taxes | $ | (22,131,000 | ) | |||||||||||||||||||||||||
| Depreciation and amortization expense | $ | 39,000 | $ | $ | 5,078,000 | $ | 1,663,000 | $ | 2,201,000 | $ | 996,000 | $ | 9,977,000 | |||||||||||||||
| Interest expense | $ | (15,000 | ) | $ | $ | (1,000 | ) | $ | (3,974,000 | ) | $ | (1,283,000 | ) | $ | (6,230,000 | ) | $ | (11,503,000 | ) | |||||||||
| Capital expenditures for the six months ended June 30, 2025 | $ | $ | $ | 1,674,000 | $ | 163,000 | $ | 1,398,000 | $ | 42,000 | $ | 3,277,000 | ||||||||||||||||
| Segment identifiable assets as of June 30, 2025 | $ | 2,581,000 | $ | 19,863,000 | $ | 31,525,000 | $ | 68,543,000 | $ | 42,576,000 | $ | 48,118,000 | $ | 213,206,000 | ||||||||||||||
| F-29 |
The following data presents the revenues, expenditures and other operating data of the Company and its operating segments for the three months ended June 30, 2025:
| Defense | Fintech | Sentinum | AGREE | Energy | Holding Co. | Total | ||||||||||||||||||||||
| Revenue, crane operations | $ | $ | $ | $ | $ | 11,582,000 | $ | $ | 11,582,000 | |||||||||||||||||||
| Revenue, crypto assets mining | 4,684,000 | 4,684,000 | ||||||||||||||||||||||||||
| Revenue, hotel and real estate operations | 245,000 | 5,377,000 | 5,622,000 | |||||||||||||||||||||||||
| Revenue, lending and trading activities | 1,826,000 | 1,826,000 | ||||||||||||||||||||||||||
| Revenue, other | 1,692,000 | 450,000 | 2,142,000 | |||||||||||||||||||||||||
| Total revenue | 1,692,000 | 1,826,000 | 4,929,000 | 5,377,000 | 11,582,000 | 450,000 | 25,856,000 | |||||||||||||||||||||
| Cost of revenue | 1,012,000 | 7,074,000 | 3,285,000 | 8,141,000 | 217,000 | 19,729,000 | ||||||||||||||||||||||
| Gross profit (loss) | 680,000 | 1,826,000 | (2,145,000 | ) | 2,092,000 | 3,441,000 | 233,000 | 6,127,000 | ||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||||
| Research and development | 106,000 | 6,000 | 112,000 | |||||||||||||||||||||||||
| Selling and marketing | 248,000 | 6,029,000 | 6,277,000 | |||||||||||||||||||||||||
| General and administrative | 831,000 | 233,000 | (286,000 | ) | 1,514,000 | 2,009,000 | 5,564,000 | 9,865,000 | ||||||||||||||||||||
| Total operating expenses | 1,185,000 | 233,000 | (286,000 | ) | 1,514,000 | 2,009,000 | 11,599,000 | 16,254,000 | ||||||||||||||||||||
| (Loss) income from operations | $ | (505,000 | ) | $ | 1,593,000 | $ | (1,859,000 | ) | $ | 578,000 | $ | 1,432,000 | $ | (11,366,000 | ) | (10,127,000 | ) | |||||||||||
| Other income (expense): | ||||||||||||||||||||||||||||
| Interest and other income | 1,081,000 | |||||||||||||||||||||||||||
| Interest expense | (7,664,000 | ) | ||||||||||||||||||||||||||
| Gain on deconsolidation of subsidiary | (359,000 | ) | ||||||||||||||||||||||||||
| Loss on the sale of fixed assets | (398,000 | ) | ||||||||||||||||||||||||||
| Total other expense, net | (7,340,000 | ) | ||||||||||||||||||||||||||
| Loss before income taxes | $ | (17,467,000 | ) | |||||||||||||||||||||||||
| Depreciation and amortization expense | $ | 20,000 | $ | $ | 2,494,000 | $ | 691,000 | $ | 1,073,000 | $ | 498,000 | $ | 4,776,000 | |||||||||||||||
| Interest expense | $ | (8,000 | ) | $ | $ | $ | (2,135,000 | ) | $ | (380,000 | ) | $ | (5,141,000 | ) | $ | (7,664,000 | ) | |||||||||||
| Capital expenditures for the three months ended June 30, 2025 | $ | $ | $ | 53,000 | $ | 68,000 | $ | 260,000 | $ | 16,000 | $ | 397,000 | ||||||||||||||||
19. CONCENTRATIONS OF CREDIT AND REVENUE RISK
Significant customers are those that represent more than 10% of the Company’s total revenue or accounts receivable balances for the periods and as of each balance sheet date presented. For each significant customer, revenue as a percentage of total revenue and gross accounts receivable as a percentage of total gross accounts receivable as of the periods presented were as follows:
| * | less than 10% |
20. SUBSEQUENT EVENTS
Class A Common Stock ATM Offering Activity
During the period between July 1, 2026 through August 13, 2026, the Company sold an aggregate of million shares of Class A common stock pursuant to the ATM Offering for gross proceeds of $9.2 million.
Series D Preferred ATM Offering Activity
During the period between July 1, 2026 through August 13, 2026, the Company issued an aggregate of shares of Series D Preferred Stock pursuant to its Series Preferred D ATM Offering for gross proceeds of $0.2 million.
| F-30 |
Morpho Bitcoin-Backed Borrowings
Subsequent to June 30, 2026, the Company received aggregate net proceeds of approximately $31.6 million from additional Bitcoin-backed borrowings through the Morpho decentralized finance lending protocol. The additional borrowings were entered into under terms consistent with the Company’s existing Morpho borrowing arrangements, including the pledge of Bitcoin as collateral.
In August 2026, the Company sold approximately Bitcoin for aggregate proceeds of approximately $43.4 million and used a portion of the proceeds to repay in full all amounts outstanding under its Morpho Bitcoin-backed borrowing arrangements. Following the repayment, the Bitcoin pledged as collateral for the Morpho borrowings was released and the Company had no outstanding borrowings under the Morpho protocol.
Yorkville Prepaid Advance
Subsequent to June 30, 2026, Yorkville delivered purchase notices pursuant to the prepaid advance agreement requiring the Company to issue shares of its Class A common stock in partial satisfaction of amounts outstanding under the prepaid advance. Between July 1, 2026 and August 6, 2026, the Company issued an aggregate of approximately million shares of its Class A common stock in satisfaction of approximately $3.1 million of amounts outstanding under the prepaid advance, consisting of approximately $3.0 million of principal and $0.1 million of accrued interest. Following such issuances, approximately $13.0 million of principal remained outstanding under the prepaid advance.
Ault & Company Related Party Lending Arrangement
On August 18, 2026, ACG entered into a Loan Agreement (the “Loan Agreement”) with Ault & Company pursuant to which ACG agreed to provide Ault & Company with a non-revolving line of credit of up to $15.0 million. Advances under the Loan Agreement are subject to ACG’s availability of capital, as determined by ACG in its sole discretion, and amounts repaid may not be reborrowed. ACG is not obligated to make additional advances after six months from the effective date of the Loan Agreement.
Each advance under the Loan Agreement will be evidenced by a promissory note that bears interest at a fixed rate of 8.5% per annum and matures three years from its date of issuance, at which time all outstanding principal and accrued interest under such note become due and payable. Upon the occurrence and during the continuance of an event of default, outstanding amounts bear interest at the applicable default rate. Ault & Company may prepay advances without penalty or premium upon notice. The form of promissory note provides for customary enforcement and collection provisions.
The $5.0 million term loan previously advanced by ACG to Ault & Company on June 12, 2026 was incorporated into the new lending arrangement. Upon execution of the Loan Agreement, the prior note was cancelled and replaced by a note issued pursuant to the Loan Agreement, and the outstanding principal and accrued interest under the prior note became an advance under the Loan Agreement. On August 18, 2026, ACG made an additional advance of $2.0 million to Ault & Company under the Loan Agreement, evidenced by a promissory note issued pursuant to the Loan Agreement. As a result, as of August 18, 2026, aggregate principal advances outstanding under the Loan Agreement were $7.0 million.
In connection with the Loan Agreement, Milton C. Ault III, the Chief Executive Officer and controlling stockholder of Ault & Company and Executive Chairman of the Company, provided an absolute and unconditional personal guaranty of Ault & Company’s payment obligations under the lending arrangement.
The proceeds of advances under the Loan Agreement are restricted to the repayment of Ault & Company’s existing indebtedness, the redemption of certain outstanding preferred equity of Ault & Company and working capital purposes. The Loan Agreement prohibits Ault & Company from using any portion of the proceeds to extend credit, directly or indirectly, to any director, executive officer or equivalent person of Ault & Company or any of its affiliates in a manner that would constitute a personal loan prohibited by Section 13(k) of the Exchange Act.
Investment in Alzamend, Related Party
On July 31, 2026, Ault Lending entered into a securities purchase agreement with Alzamend Neuro, Inc. (“Alzamend”), a related party, pursuant to which Ault Lending agreed to purchase up to $25.0 million of Alzamend’s newly designated Series D Convertible Preferred Stock in one or more closings. At the initial closing on July 31, 2026, Ault Lending purchased $7.5 million of Alzamend Series D Convertible Preferred Stock. Subject to the terms and conditions of the securities purchase agreement, Ault Lending has committed to purchase an additional (i) $2.5 million in a second closing within ten (10) days after a resale registration statement has been declared effective and (ii) $1.0 million on each monthly anniversary thereafter until the entire $25.0 million has been purchased. Ault Lending may, at its option, purchase any shares of Series D Convertible Preferred Stock prior to a scheduled closing date.
| F-31 |
The Series D Convertible Preferred Stock is convertible into shares of Alzamend common stock at a variable conversion price, subject to a stated floor price and maximum price and other terms and conditions set forth in the securities purchase agreement and certificate of designation.
Reverse Stock Split
On August 6, 2026, the Company’s Board of Directors authorized the formation of a special committee and delegated to the committee the authority to determine the ratio and effective date of a reverse stock split of the Company’s Class A common stock and Class B common stock. Subsequently, the committee approved a one-for-five reverse stock split, which is expected to become effective on August 24, 2026. The Company expects its Class A common stock to begin trading on the NYSE American on a split-adjusted basis on August 25, 2026.
The reverse stock split, when effective, will reduce the number of issued and outstanding shares of Class A common stock and Class B common stock in the same one-for-five proportion, as well as the number of shares available for issuance under the Company’s equity incentive plans and the number of shares issuable upon exercise of outstanding stock options and warrants. The par value of the Class A common stock and Class B common stock will remain unchanged at $0.001 per share. No fractional shares will be issued in connection with the reverse stock split; stockholders otherwise entitled to fractional shares will receive cash in lieu thereof.
Because the reverse stock split had not become effective as of the date these condensed consolidated financial statements were issued, the share and per-share amounts presented herein have not been adjusted to reflect the reverse stock split.
| F-32 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In this quarterly report on Form 10-Q (the “Quarterly Report”), the “Company,” “Hyperscale Data,” “we,” “us” and “our company” refer to Hyperscale Data, Inc., a Delaware corporation. Hyperscale Data operates as an artificial intelligence (“AI”) data center company anchored by Bitcoin. Through its wholly owned subsidiary, Sentinum, Inc., the Company owns and operates a large-scale data center platform that integrates AI compute infrastructure with Bitcoin mining operations under a unified, parallel compute model. This hybrid architecture enables Hyperscale Data to generate compute power for enterprise AI workloads through NVIDIA graphic processing unit clusters, while also operating high-efficiency Bitcoin mining systems that contribute to the Bitcoin network and the Company’s growing digital asset treasury.
Through another of its wholly owned subsidiaries, Ault Capital Group, Inc. (“ACG”), the Company currently holds a portfolio of diversified businesses and strategic investments spanning commercial lending and trading, an AI software platform, equipment rental services, defense/aerospace, industrial, automotive, medical and hotel operations. In addition, ACG is actively engaged in extending private credit and structured finance through a licensed lending subsidiary. Hyperscale Data currently expects the divestiture of ACG (the “Divestiture”) to occur in 2027, though there can be no assurance that the Divestiture will be completed during such quarter. Upon the occurrence of the Divestiture, the Company would operate as a focused AI data center and Bitcoin infrastructure company.
Recent Events and Developments
On December 19, 2025, we entered into an At-the-Market Issuance Sales Agreement with Spartan Capital Securities, LLC (“Spartan”), as sales agent to sell shares of our Class A common stock, having an aggregate offering price of up to $50 million from time to time, through an “at the market offering” (the “Prior ATM Offering”) as defined in Rule 415 under the Securities Act. On December 19, 2025, we filed a prospectus supplement with the SEC relating to the offer and sale of up to $50 million of Class A common stock in the ATM Offering. On January 16, 2026, we amended the At-the-Market Issuance Sales Agreement and filed a prospectus supplement to indicate that Spartan will serve as the lead sales agent and to add Wilson-Davis & Co., Inc. (“Wilson-Davis”) as an additional sales agent.
On February 13, 2026, we entered into an At-the-Market Issuance Sales Agreement with Wilson Davis, as sales agent to sell shares of our 13.00% Series D Cumulative Redeemable Perpetual Preferred Stock, par value $0.001 per share (the “Series D Preferred”), having an aggregate offering price of up to $35.4 million from time to time, through an “at the market offering” (the “Series Preferred D ATM Offering”) as defined in Rule 415 under the Securities Act. On February 13, 2026, we filed a prospectus supplement with the SEC relating to the offer and sale of up to $35.4 million of Series D Preferred in the Series D Preferred ATM Offering.
In January and February 2026, we issued two short-term term notes to an institutional investor for aggregate gross proceeds of $10.0 million. Repayment obligations under the note were guaranteed by Ault & Company and Milton C. Ault, III, our Executive Chairman. Both notes have since been repaid in full.
In April 2026, we entered into an additional short-term term note with the same institutional investor for gross proceeds of $10.0 million. The note was issued with an original issue discount of $0.8 million and had a principal face amount of $10.8 million. The note bore interest at 12% per annum and matured on June 29, 2026. Beginning May 8, 2026, we were required to make weekly principal payments of $0.7 million through June 26, 2026, with the remaining outstanding principal balance and accrued interest due at maturity. The note was prepaid and fully satisfied during the three months ended June 30, 2026. Accordingly, no amounts were outstanding under the term note as of June 30, 2026. Repayment obligations under the note were guaranteed by Ault & Company and Milton C. Ault, III, our Executive Chairman.
On May 27, 2026, we provided notice of our election to terminate our Prior ATM Offering, with such termination becoming effective on June 8, 2026. Prior to its termination, we had sold approximately 137.6 million shares of our Class A common stock under the program for aggregate gross proceeds of approximately $24.6 million.
On June 18, 2026, we entered into a new At-the-Market Issuance Sales Agreement with Spartan as sales agent, pursuant to which we may offer and sell shares of our Class A common stock having an aggregate offering price of up to $300.0 million from time to time. Sales under the new ATM program are made pursuant to our effective shelf registration statement on Form S-3.
| 1 |
On June 11, 2026, we entered into a Prepaid Advance Agreement with YA II PN, Ltd. (“Yorkville”), pursuant to which we received net proceeds of approximately $15.0 million in exchange for a prepaid advance with an initial principal balance of approximately $16.0 million. The prepaid advance bears interest at 4% per annum and matures on December 11, 2027. The advance will be repaid through periodic cash payments or, subject to the terms of the agreement, through the issuance of shares of our Class A common stock based on a formula tied to the market price of our common stock. We may also prepay all or a portion of the outstanding balance under certain circumstances. The financing provides us with additional capital to support our strategic initiatives and general corporate purposes.
On June 23, 2026, our indirect wholly owned subsidiary, Alliance Cloud Services, LLC (the “Provider”) entered into a Master Services Agreement (the “Agreement”) with a customer (the “Customer”) to deploy a total of approximately 20 megawatts (“MW”), to be delivered by Provider in phases as described herein, for AI computing at the Provider’s AI data center campus in Dowagiac, Michigan (the “Facility”). Pursuant to the Agreement, the Provider agrees to provide to Customer, certain colocation and related data center services that are set forth in the Agreement (each, a “Service” and collectively, the “Services”) at the recurring service charges for each Contract Year (as defined below).
Further, the Agreement provides for the Provider granting the Customer an exclusive license (the “License”) to use a certain area of the Facility (the “Service Area”), for an initial term of 10 years and two five-year extension options (the “Term”) to commence on the “Service Commencement Date,” which means, with respect each Phase, the date of delivery of the applicable Service Area and electrical capacity to the Customer and to end on the date which shall be the last day of the calendar month in which the end of the tenth Contract Year occurs (the “Fixed Expiration Date”) where “Contract Year” means (i) with respect to the first Contract Year, the period commencing on the Service Commencement Date and ending on the day before the first anniversary of the later to occur of (x) the Service Commencement Date of Phase 1 and (y) the date that is six months after the Execution Date, and (y) each successive 12 month period after the First Year Expiration Date until the Fixed Expiration Date. If available, the Agreement also provides the Customer with a right of first offer to an additional 32 MW of critical AI compute capacity.
The License applies to the following Phases (each, a “Phase” and collectively the “Phases”):
(a) ”Phase 1”, consisting of power modules for 10 MW of critical information technology (“IT”) power capacity to a portion of the Service Area, with a targeted delivery date of 90 days after the Execution Date; and
(b) ”Phase 2”, consisting of power modules for an additional 10 MW of critical IT power capacity to a different portion of the Service Area, with a targeted delivery date of 180 days after the Execution Date.
Pursuant to the Agreement, assuming the Customer elects to exercise the two five-year extension options, the total contract value to the Provider is approximately $1.2 billion during the Term, subject to the Provider meeting its obligations under the Agreement. If the Customer exercises its right of first offer within the first two years from the Execution Date for the additional 32 MW of critical AI compute capacity, then the total contract value to the Provider would increase to approximately $3.0 billion. The Agreement provides for certain one-time payments by the Customer in connection with Phase 1 and Phase 2 fit out work, as well as a monthly colocation fee to paid by the Customer for Phase 1 and Phase 2 (a portion of which is to be prepaid), based upon the number of kilowatts delivered.
The Agreement requires the Provider to construct, equip, and commission two Phases of the Service Area at the Facility, with Phase 1 (10 MW) ready-for-service date targeted at September 21, 2026 and with full deployment in Phase 2 (10 MW) targeted by the end of 2026.
As of June 30, 2026, we had sold an aggregate of approximately 126.2 million shares of our Class A common stock under the new ATM program for gross proceeds of approximately $25.5 million.
As of June 30, 2026, we had sold 33,984 shares of our Series D Preferred under the Series D Preferred ATM Offering for gross proceeds of approximately $0.8 million.
General
As a holding company, our business objective is to increase stockholder value through developing and growing our subsidiaries. Under the strategy we have adopted, we are focused on managing and financially supporting our existing subsidiaries and partner companies, with the goal of pursuing monetization opportunities and maximizing the value returned to stockholders. We have, are and will consider initiatives including, among others: public offerings, the sale of individual partner companies, the sale of certain or all partner company interests in secondary market transactions, or a combination thereof, as well as other opportunities to maximize stockholder value. We anticipate returning value to stockholders after satisfying our debt obligations, working capital needs and other senior capital commitments.
| 2 |
From time to time, we engage in discussions with other companies interested in our subsidiaries or partner companies, either in response to inquiries or as part of a process we initiate. To the extent we believe that a subsidiary or partner company’s further growth and development can best be supported by a different ownership structure or if we otherwise believe it is in our stockholders’ best interests, we will seek to sell all or a portion of our position in the subsidiary or partner company. These sales may take the form of privately negotiated sales of stock or assets, mergers and acquisitions, public offerings of the subsidiary or partner company’s securities and, in the case of publicly traded partner companies, sales of their securities in the open market. Our plans may include taking subsidiaries or partner companies public through rights offerings and directed share subscription programs. We will continue to consider these (or similar) initiatives and the sale of certain subsidiary or partner company interests in secondary market transactions to maximize value for our stockholders.
In recent years, we have provided capital and relevant expertise to fuel the growth of businesses in our AI software platform, equipment rental services, defense, industrial and hotel operations. We have provided capital to subsidiaries as well as partner companies in which we have an equity interest or may be actively involved, influencing development through board representation and management support.
Hyperscale Data is a Delaware corporation with its corporate office located at 11411 Southern Highlands Pkwy, Suite 190, Las Vegas, NV 89141. Our phone number is 949-444-5464 and our website address is https://hyperscaledata.com/.
| 3 |
Results of Operations
Results of Operations for the Three Months Ended June 30, 2026 and 2025
The following table summarizes the results of our operations for the three months ended June 30, 2026 and 2025.
| For the Three Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Revenue, crane operations | $ | 11,052,000 | $ | 11,582,000 | ||||
| Revenue, defense solutions | 11,916,000 | 1,692,000 | ||||||
| Revenue, crypto assets mining | 4,923,000 | 4,684,000 | ||||||
| Revenue, hotel and real estate operations | 5,869,000 | 5,622,000 | ||||||
| Revenue, lending and trading activities | (2,279,000 | ) | 1,826,000 | |||||
| Revenue, other | 3,360,000 | 450,000 | ||||||
| Total revenue | 34,841,000 | 25,856,000 | ||||||
| Cost of revenue, crane operations | 7,327,000 | 8,141,000 | ||||||
| Cost of revenue, defense solutions | 7,761,000 | 1,012,000 | ||||||
| Cost of revenue, crypto assets mining | 5,627,000 | 7,074,000 | ||||||
| Cost of revenue, hotel and real estate operations | 3,303,000 | 3,285,000 | ||||||
| Cost of revenue, lending and trading activities | 1,010,000 | - | ||||||
| Cost of revenue, other | 1,018,000 | 217,000 | ||||||
| Total cost of revenue | 26,046,000 | 19,729,000 | ||||||
| Gross profit | 8,795,000 | 6,127,000 | ||||||
| Operating expenses | ||||||||
| General and administrative | 19,845,000 | 9,865,000 | ||||||
| Selling and marketing | 8,139,000 | 6,277,000 | ||||||
| Research and development | 4,281,000 | 112,000 | ||||||
| Impairment of property and equipment | 2,300,000 | - | ||||||
| Change in fair value of crypto assets | (2,656,000 | ) | - | |||||
| Total operating expenses | 31,909,000 | 16,254,000 | ||||||
| Loss from operations | (23,114,000 | ) | (10,127,000 | ) | ||||
| Other income (expense): | ||||||||
| Interest and other income | 443,000 | 1,081,000 | ||||||
| Interest expense | (3,942,000 | ) | (7,664,000 | ) | ||||
| Gain on extinguishment of settlement obligation | 16,060,000 | - | ||||||
| Change in fair value of crypto assets, restricted | (2,395,000 | ) | - | |||||
| Impairment of crypto assets, restricted | (7,123,000 | ) | - | |||||
| Gain on extinguishment of debt | 270,000 | - | ||||||
| Change in fair value of embedded derivative liabilities | 827,000 | - | ||||||
| Loss on deconsolidation of subsidiary | - | (359,000 | ) | |||||
| Loss on the sale of fixed assets | - | (398,000 | ) | |||||
| Total other income (expense), net | 4,140,000 | (7,340,000 | ) | |||||
| Loss before income taxes | (18,974,000 | ) | (17,467,000 | ) | ||||
| Income tax benefit | (24,000 | ) | (129,000 | ) | ||||
| Net loss | (18,950,000 | ) | (17,338,000 | ) | ||||
| Net income attributable to non-controlling interest | (406,000 | ) | (1,713,000 | ) | ||||
| Net loss attributable to Hyperscale Data, Inc. | (19,356,000 | ) | (19,051,000 | ) | ||||
| Preferred dividends | (2,298,000 | ) | (2,215,000 | ) | ||||
| Net loss attributable to common stockholders | $ | (21,654,000 | ) | $ | (21,266,000 | ) | ||
| Comprehensive loss | ||||||||
| Net loss attributable to common stockholders | $ | (21,654,000 | ) | $ | (21,266,000 | ) | ||
| Other comprehensive income | ||||||||
| Foreign currency translation adjustment | 1,359,000 | - | ||||||
| Other comprehensive income | 1,359,000 | - | ||||||
| Total comprehensive loss | $ | (20,295,000 | ) | $ | (21,266,000 | ) | ||
| 4 |
Revenues
Revenues by business category for the three months ended June 30, 2026 and 2025 were as follows:
| For the Three Months Ended June 30, | Increase | |||||||||||||||
| 2026 | 2025 | (Decrease) | % | |||||||||||||
| Sentinum | ||||||||||||||||
| Revenue, crypto assets mining | $ | 4,923,000 | $ | 4,684,000 | $ | 239,000 | 5 | % | ||||||||
| Revenue, commercial real estate leases | 215,000 | 245,000 | (30,000 | ) | -12 | % | ||||||||||
| Energy | 11,052,000 | 11,582,000 | (530,000 | ) | -5 | % | ||||||||||
| AGREE | 5,654,000 | 5,377,000 | 277,000 | 5 | % | |||||||||||
| Defense | 11,916,000 | 1,692,000 | 10,224,000 | 604 | % | |||||||||||
| Fintech | (2,279,000 | ) | 1,826,000 | (4,105,000 | ) | -225 | % | |||||||||
| Other | 3,360,000 | 450,000 | 2,910,000 | 647 | % | |||||||||||
| Total revenue | $ | 34,841,000 | $ | 25,856,000 | $ | 8,985,000 | 35 | % | ||||||||
Sentinum
Revenues from Sentinum’s crypto asset mining operations increased by $0.2 million to $4.9 million for the three months ended June 30, 2026, compared to $4.7 million for the same period in 2025. The increase in mining revenue was driven by the deployment of 4,092 Bitmain S21+ and S21 Pro Antminers in November 2025, partially offset by a 10% increase in the average Bitcoin network difficulty level and a 27% decrease in the average Bitcoin price and during the three months ended June 30, 2026, compared to the same period in 2025.
Energy
Energy revenues from Circle 8’s crane operations decreased by approximately $0.5 million, or 5%, for the three months ended June 30, 2026, compared to the same period in 2025. The decrease was primarily attributable to lower activity from certain oil and gas customers, reflecting industry consolidation and a reduction in drilling locations requiring crane services.
Fintech
Revenues from our lending and trading activities decreased by approximately $4.1 million to negative $2.3 million for the three months ended June 30, 2026, compared to revenue of $1.8 million for the same period in 2025. The decrease was primarily attributable to non-cash unrealized losses on equity securities and changes in the fair value of warrant-related derivative instruments, which was partially offset by increased interest and fee income. Interest income increased primarily due to the accretion of discounts on our loans receivable, while fee income increased due to fees earned in connection with that lending activity.
Revenues from our trading activities for the three months ended June 30, 2026 also included net gains on equity securities, including unrealized gains and losses from market price changes. These gains and losses have caused, and will continue to cause, significant volatility in our periodic earnings.
Defense
Defense segment revenues increased by approximately $10.2 million, or 604%, to $11.9 million for the three months ended June 30, 2026, compared to $1.7 million for the same period in 2025. The increase was primarily attributable to the inclusion of revenues from our Gresham Worldwide, Inc. (“Gresham”) defense subsidiary that reemerged from Chapter 11 bankruptcy proceedings and was reconsolidated in late 2025. As a result, no revenues from that subsidiary were included in the comparable prior-year period.
AGREE
Revenues from AGREE’s hotel operations increased by approximately $0.3 million, or 5%, for the three months ended June 30, 2026, compared to the same period in 2025. The increase was primarily driven by higher occupancy resulting from increased guest demand, while average daily rates remained relatively consistent with the prior-year period. The combination of higher occupancy and stable room rates contributed to improved revenue per available room and overall hotel operating performance.
| 5 |
Other
Other revenues increased by approximately $2.9 million, or 647%, for the three months ended June 30, 2026, compared to the same period in 2025. The increase was primarily attributable to revenues generated from our blockchain initiatives.
Gross Profits and Margins
Gross profit increased by approximately $2.7 million, or 44%, to $8.8 million for the three months ended June 30, 2026, compared to $6.1 million for the same period in 2025. Gross margin increased to 25% from 24% in the prior-year period. The improvement was primarily attributable to growth of our Defense operations following the reconsolidation of a subsidiary in late 2025, higher-margin blockchain-related revenues, and improved margins within our crane and hotel operations. These favorable factors were partially offset by negative gross margins from our lending and trading activities, driven primarily by non-cash fair value adjustments, and continued negative gross margins from crypto asset mining activities.
Research and Development
Research and development expenses were $4.3 million for the three months ended June 30, 2026, compared to $0.1 million for the three months ended June 30, 2025, an increase of approximately $4.2 million. The increase reflects increased investment in the development of our AI and blockchain initiatives as these development efforts continue to scale.
Selling and Marketing
Selling and marketing expenses were $8.1 million for the three months ended June 30, 2026, compared to $6.2 million for the three months ended June 30, 2025, an increase of $1.9 million, or 30%, reflecting increased investment in brand-building initiatives and expanded marketing campaigns to support our growth strategy.
General and Administrative
General and administrative expenses were $19.8 million for the three months ended June 30, 2026, compared to $9.9 million for the same period in 2025, an increase of $10.0 million, or 101%. The increase primarily reflected approximately $2.6 million of expenses associated with the reconsolidation of Gresham, $2.0 million of higher employee compensation and benefits as we expanded our operations, $1.5 million of higher legal and professional fees supporting strategic and corporate initiatives, $1.5 million of higher travel-related expenses and approximately $2.4 million of other net increases in corporate operating costs.
Impairment of Property and Equipment
During the three months ended June 30, 2026, we recorded a $2.3 million impairment charge related to certain Bitcoin mining equipment located at our Michigan data center. The impairment was triggered by our execution of a master services agreement with a third-party customer for AI compute, neocloud and colocation services. As we prepare to allocate a significant portion of the facility’s available electrical capacity to support that customer’s deployments, we expect to substantially wind down our Bitcoin mining operations at the Michigan data center. The impairment reflects our strategic transition of the facility from Bitcoin mining to AI infrastructure services, rather than any deterioration in the physical condition of the equipment.
At the time of our impairment analysis, we had not yet determined whether the affected mining equipment would be relocated to another facility, sold or otherwise disposed of. Because we expect the equipment to no longer be used at the Michigan data center and its future use remained uncertain, we concluded that the carrying amount of the related asset group was not recoverable. Accordingly, we recorded an impairment charge to reduce the carrying value of the equipment to its estimated fair value, which was determined primarily using observable market data for comparable Bitcoin mining equipment under an orderly liquidation value approach.
Change in Fair Value of Crypto Assets
We recorded a $2.7 million gain related to the change in fair value of crypto assets for the three months ended June 30, 2026. The gain primarily reflects increases in the market price of Bitcoin during periods in which we held higher balances of unrestricted crypto assets prior to transferring a significant portion of our Bitcoin holdings to restricted crypto assets during the quarter.
| 6 |
Other Income (Expense), Net
Other income, net was $4.1 million for the three months ended June 30, 2026, compared to other expense, net of $7.3 million for the same period in 2025. The favorable change was primarily attributable to the gain on extinguishment of a settlement obligation and lower interest expense, partially offset by losses related to the change in fair value of restricted crypto assets, including changes in fair value and impairment charges.
Interest and other income totaled $0.4 million for the three months ended June 30, 2026, compared to $1.1 million for the same period in 2025, primarily reflecting lower income from various non-operating sources.
Interest expense decreased by approximately $3.7 million, or 49%, to $3.9 million for the three months ended June 30, 2026, compared to $7.7 million for the same period in 2025. The decrease was primarily attributable to lower non-cash amortization of debt discounts and reduced contractual interest expense, reflecting changes in our financing mix and lower average borrowing costs during the current period. The decrease also reflects the absence of forbearance fees recognized in the prior-year period.
During the three months ended June 30, 2026, we recognized a gain of approximately $16.0 million related to the extinguishment of a settlement obligation. The gain resulted from management’s determination that it had substantially satisfied its obligations under a settlement agreement to identify and distribute proceeds to eligible stockholders of a former subsidiary and that substantially all of the remaining obligation had been extinguished.
We recorded a loss of approximately $2.4 million related to the change in fair value of crypto assets, restricted for the three months ended June 30, 2026, reflecting declines in the market price of restricted Bitcoin during the period. In addition, we recognized an impairment charge of approximately $7.1 million related to cbBTC pledged as collateral for our Bitcoin-backed borrowings.
During the three months ended June 30, 2026, we recognized a gain on extinguishment of debt of approximately $0.3 million, reflecting the settlement of certain debt obligations on favorable terms. No comparable gains were recognized during the prior-year period.
We recognized a non-cash gain of $0.8 million during the three months ended June 30, 2026, primarily related to the remeasurement of the embedded derivative associated with our Yorkville prepaid advance financing. The embedded derivative is measured at fair value each reporting period, and changes in fair value are recognized in earnings. No comparable gain or loss was recognized during the three months ended June 30, 2025.
Income Tax Benefit
We recorded an income tax benefit of approximately $24,000 for the three months ended June 30, 2026, compared to $0.1 million for the same period in 2025. The effective tax rate for the three months ended June 30, 2026 was approximately 0.1%, compared to 0.7% for the same period in 2025. The effective tax rate differs from the statutory rate primarily due to the impact of valuation allowances and the mix of income and losses across jurisdictions.
| 7 |
Results of Operations for the Six Months Ended June 30, 2026 and 2025
The following table summarizes the results of our operations for the six months ended June 30, 2026 and 2025.
| For the Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Revenue, crane operations | $ | 22,053,000 | $ | 25,351,000 | ||||
| Revenue, defense solutions | 23,834,000 | 3,284,000 | ||||||
| Revenue, crypto assets mining | 10,000,000 | 9,882,000 | ||||||
| Revenue, hotel and real estate operations | 9,725,000 | 9,287,000 | ||||||
| Revenue, lending and trading activities | 9,242,000 | 1,798,000 | ||||||
| Revenue, other | 4,066,000 | 1,275,000 | ||||||
| Total revenue | 78,920,000 | 50,877,000 | ||||||
| Cost of revenue, crane operations | 14,507,000 | 16,388,000 | ||||||
| Cost of revenue, defense solutions | 15,720,000 | 1,873,000 | ||||||
| Cost of revenue, crypto assets mining | 13,237,000 | 14,105,000 | ||||||
| Cost of revenue, hotel and real estate operations | 6,293,000 | 6,129,000 | ||||||
| Cost of revenue, lending and trading activities | 2,954,000 | - | ||||||
| Cost of revenue, other | 2,345,000 | 972,000 | ||||||
| Total cost of revenue | 55,056,000 | 39,467,000 | ||||||
| Gross profit | 23,864,000 | 11,410,000 | ||||||
| Operating expenses | ||||||||
| General and administrative | 38,371,000 | 19,069,000 | ||||||
| Selling and marketing | 13,751,000 | 8,611,000 | ||||||
| Research and development | 9,081,000 | 241,000 | ||||||
| Impairment of property and equipment | 2,300,000 | - | ||||||
| Change in fair value of crypto assets | 4,749,000 | - | ||||||
| Total operating expenses | 68,252,000 | 27,921,000 | ||||||
| Loss from operations | (44,388,000 | ) | (16,511,000 | ) | ||||
| Other (expense) income: | ||||||||
| Interest and other income | 1,212,000 | 1,321,000 | ||||||
| Interest expense | (10,488,000 | ) | (11,503,000 | ) | ||||
| Gain on extinguishment of settlement obligation | 16,060,000 | - | ||||||
| Change in fair value of crypto assets, restricted | (7,077,000 | ) | - | |||||
| Impairment of crypto assets, restricted | (7,123,000 | ) | - | |||||
| Gain (loss) on extinguishment of debt | 759,000 | (4,569,000 | ) | |||||
| Change in fair value of embedded derivative liabilities | 2,151,000 | - | ||||||
| Gain on deconsolidation of subsidiary | - | 9,690,000 | ||||||
| Loss on the sale of fixed assets | - | (559,000 | ) | |||||
| Total other expense, net | (4,506,000 | ) | (5,620,000 | ) | ||||
| Loss before income taxes | (48,894,000 | ) | (22,131,000 | ) | ||||
| Income tax provision (benefit) | 192,000 | (70,000 | ) | |||||
| Net loss | (49,086,000 | ) | (22,061,000 | ) | ||||
| Net income attributable to non-controlling interest | (220,000 | ) | (1,195,000 | ) | ||||
| Net loss attributable to Hyperscale Data, Inc. | (49,306,000 | ) | (23,256,000 | ) | ||||
| Preferred dividends | (4,804,000 | ) | (4,181,000 | ) | ||||
| Net loss attributable to common stockholders | $ | (54,110,000 | ) | $ | (27,437,000 | ) | ||
| Comprehensive loss | ||||||||
| Net loss attributable to common stockholders | $ | (54,110,000 | ) | $ | (27,437,000 | ) | ||
| Other comprehensive income | ||||||||
| Foreign currency translation adjustment | 553,000 | 6,000 | ||||||
| Other comprehensive income | 553,000 | 6,000 | ||||||
| Total comprehensive loss | $ | (53,557,000 | ) | $ | (27,431,000 | ) | ||
| 8 |
Revenues
Revenues by business category for the six months ended June 30, 2026 and 2025 were as follows:
| For the Six Months Ended June 30, | Increase | |||||||||||||||
| 2026 | 2025 | (Decrease) | % | |||||||||||||
| Sentinum | ||||||||||||||||
| Revenue, crypto assets mining | $ | 10,000,000 | $ | 9,882,000 | $ | 118,000 | 1 | % | ||||||||
| Revenue, commercial real estate leases | 468,000 | 761,000 | (293,000 | ) | -39 | % | ||||||||||
| Energy | ||||||||||||||||
| Revenue, crane operations | 22,053,000 | 25,351,000 | (3,298,000 | ) | -13 | % | ||||||||||
| Other | - | 29,000 | (29,000 | ) | -100 | % | ||||||||||
| Fintech | 9,242,000 | 1,798,000 | 7,444,000 | 414 | % | |||||||||||
| Defense | 23,834,000 | 3,284,000 | 20,550,000 | 626 | % | |||||||||||
| AGREE | 9,257,000 | 8,526,000 | 731,000 | 9 | % | |||||||||||
| Other | 4,066,000 | 1,246,000 | 2,820,000 | 226 | % | |||||||||||
| Total revenue | $ | 78,920,000 | $ | 50,877,000 | $ | 28,043,000 | 55 | % | ||||||||
Sentinum
Revenues from Sentinum’s crypto asset mining operations increased by $0.1 million to $10.0 million for the six months ended June 30, 2026, compared to $9.9 million for the same period in 2025. The increase in mining revenue was driven by the deployment of 4,092 Bitmain S21+ and S21 Pro Antminers in November 2025, partially offset by an 18% increase in the average Bitcoin network difficulty level and a 23% decrease in the average Bitcoin price and during the six months ended June 30, 2026, compared to the same period in 2025.
Energy
Energy revenues from Circle 8’s crane operations decreased by approximately $3.3 million, or 13%, for the six months ended June 30, 2026, compared to the same period in 2025. The decrease was primarily attributable to lower activity from certain oil and gas customers as a result of industry consolidation, which reduced the number of active drilling locations requiring crane services.
Fintech
Revenues from our lending and trading activities increased by approximately $7.4 million to $9.2 million for the six months ended June 30, 2026, compared to $1.8 million for the same period in 2025. The increase was primarily attributable to litigation-related proceeds associated with legacy ownership interests held by Ault Lending, partially offset by non-cash unrealized losses on equity securities and changes in the fair value of warrant-related derivative instruments.
Revenues from our trading activities for the six months ended June 30, 2026 included net gains on equity securities, including unrealized gains and losses from market price changes. These gains and losses have caused, and will continue to cause, significant volatility in our periodic earnings.
Defense
Defense segment revenues increased by approximately $20.6 million, or 626%, to $23.8 million for the six months ended June 30, 2026, compared to $3.3 million for the same period in 2025. The increase was primarily attributable to the inclusion of revenues from our Gresham defense subsidiary that reemerged from Chapter 11 bankruptcy proceedings and was reconsolidated in late 2025. As a result, no revenues from that subsidiary were included in the comparable prior-year period.
| 9 |
AGREE
Revenues from AGREE’s hotel operations increased by approximately $0.7 million, or 9%, for the six months ended June 30, 2026, compared to the same period in 2025. The increase was primarily driven by stronger guest demand, resulting in higher occupancy across AGREE’s hotel portfolio, together with modest improvements in average daily room rates. The combination of higher occupancy and improved room rates contributed to increased revenue per available room and overall hotel operating performance.
Other
Other revenues increased by approximately $2.8 million, or 226%, for the six months ended June 30, 2026, compared to the same period in 2025. The increase was primarily attributable to revenues generated from our blockchain initiatives.
Gross Profit and Margins
Gross profit increased by approximately $12.5 million, or 109%, to $23.9 million for the six months ended June 30, 2026, compared to $11.4 million for the same period in 2025. Gross margin increased to 30% from 22% in the prior-year period. The improvement was primarily attributable to our Defense operations following the reconsolidation of a subsidiary in late 2025 and favorable contributions from our lending and trading activities. These favorable factors were partially offset by continued negative gross margins from crypto asset mining activities.
Research and Development
Research and development expenses were $9.1 million for the six months ended June 30, 2026, compared to $0.2 million for the six months ended June 30, 2025, an increase of approximately $8.8 million. The increase reflects increased investment in the development of our AI and blockchain initiatives as these development efforts continue to scale.
Selling and Marketing
Selling and marketing expenses were $13.8 million for the six months ended June 30, 2026, compared to $8.6 million for the six months ended June 30, 2025, an increase of $5.1 million, or 60%, reflecting increased investment in brand-building initiatives and expanded marketing campaigns to support our growth strategy.
General and Administrative
General and administrative expenses were $38.4 million for the six months ended June 30, 2026, compared to $19.1 million for the same period in 2025, an increase of $19.3 million, or 101%. The increase primarily reflected approximately $4.9 million of general and administrative expenses associated with the reconsolidation of Gresham following its acquisition in late 2025, $3.7 million of higher salaries and benefits, $3.5 million of higher legal and professional fees, $2.7 million of higher travel-related expenses, $0.7 million of higher consulting expenses and approximately $3.8 million of other net increases across our operations.
Impairment of Property and Equipment
During the six months ended June 30, 2026, we recorded a $2.3 million impairment charge related to certain Bitcoin mining equipment located at our Michigan data center. The impairment was triggered by our execution of a master services agreement with a third-party customer for AI compute, neocloud and colocation services. As we prepare to allocate a significant portion of the facility’s available electrical capacity to support that customer’s deployments, we expect to substantially wind down our Bitcoin mining operations at the Michigan data center. The impairment reflects our strategic transition of the facility from Bitcoin mining to AI infrastructure services, rather than any deterioration in the physical condition of the equipment.
At the time of our impairment analysis, we had not yet determined whether the affected mining equipment would be relocated to another facility, sold or otherwise disposed of. Because we expect the equipment to no longer be used at the Michigan data center and its future use remained uncertain, we concluded that the carrying amount of the related asset group was not recoverable. Accordingly, we recorded an impairment charge to reduce the carrying value of the equipment to its estimated fair value, which was determined primarily using observable market data for comparable Bitcoin mining equipment under an orderly liquidation value approach.
| 10 |
Change in Fair Value of Crypto Assets
We recorded a loss of approximately $4.7 million related to the change in fair value of crypto assets for the six months ended June 30, 2026. The loss primarily reflects the overall decline in the market price of Bitcoin during the period, resulting in an unfavorable fair value adjustment recognized in earnings.
Other Income (Expense), Net
Other expense, net was $4.5 million for the six months ended June 30, 2026, compared to $5.6 million for the same period in 2025. The year-over-year improvement was primarily attributable to the gain on extinguishment of a settlement obligation, lower interest expense and gains recognized on the extinguishment of debt and changes in the fair value of embedded derivative liabilities. These favorable items were partially offset by losses related to restricted crypto assets, including changes in fair value and impairment charges.
Interest and other income totaled $1.2 million for the six months ended June 30, 2026, compared to $1.3 million for the same period in 2025.
Interest expense decreased by approximately $1.0 million, or 9%, to $10.5 million for the six months ended June 30, 2026, compared to $11.5 million for the same period in 2025. The decrease was primarily attributable to lower non-cash amortization of debt discounts and reduced forbearance-related charges. Contractual interest expense remained substantially consistent with the prior-year period.
During the three months ended June 30, 2026, we recognized a gain of approximately $16.0 million related to the extinguishment of a settlement obligation. The gain resulted from management’s determination that we had substantially satisfied our obligations under a settlement agreement to identify and distribute proceeds to eligible stockholders of a former subsidiary and that substantially all of the remaining obligation had been extinguished.
We recorded a loss of approximately $7.1 million related to the change in fair value of crypto assets, restricted for the six months ended June 30, 2026, reflecting declines in the market price of restricted Bitcoin during the period. In addition, we recognized an impairment charge of approximately $7.1 million related to cbBTC pledged as collateral for our Bitcoin-backed borrowings.
During the six months ended June 30, 2026, we recognized a gain on extinguishment of debt of approximately $0.8 million, reflecting the settlement of certain debt obligations on favorable terms. During the comparable prior-year period, we recognized a net loss on extinguishment of debt of approximately $4.6 million, primarily related to debt exchange and refinancing transactions.
During the six months ended June 30, 2026, we also recognized a gain of approximately $2.2 million related to changes in the fair value of embedded derivative liabilities, primarily reflecting changes in the valuation of certain conversion features associated with convertible financing instruments.
Income Tax Provision (Benefit)
We recorded an income tax provision of approximately $0.2 million for the six months ended June 30, 2026, compared to a tax benefit of $0.1 million for the same period in 2025. The effective tax rate for the six months ended June 30, 2026 was approximately 0.4%, compared to -0.3% for the same period in 2025. The effective tax rate differs from the statutory rate primarily due to the impact of valuation allowances and the mix of income and losses across jurisdictions.
Liquidity and Capital Resources
As of June 30, 2026, we had $36.8 million in cash and cash equivalents and $28.3 million in restricted cash, compared to $13.1 million in cash and cash equivalents and $36.1 million in restricted cash as of December 31, 2025.
| 11 |
In the next 12 months, in addition to funding our operations, we expect to satisfy obligations related to scheduled debt maturities, interest payments, operating lease obligations, accrued preferred dividend obligations, and planned capital expenditures associated with our data center infrastructure and other operating businesses. These planned capital expenditures include investments necessary to construct, equip and commission the service areas, power modules and related infrastructure supporting the phased deployment of approximately 20 MW of critical power capacity at our Michigan data center pursuant to the Agreement. Management currently expects these investments to exceed $100 million over time, although the timing and amount of such expenditures will depend on construction progress, equipment procurement, customer deployment schedules and financing availability. As of June 30, 2026, our short-term obligations primarily consisted of approximately $99.2 million of current notes payable and convertible notes payable, approximately $2.0 million of current operating lease liabilities, and approximately $61.4 million of accounts payable and accrued expenses.
To fund our short-term liquidity requirements, management expects to utilize a combination of existing cash and restricted cash balances, cash generated from operations, proceeds from financings, capital raising activities, sales of investments or other assets, and other available liquidity sources. As of June 30, 2026, we also held approximately $4.4 million of crypto assets, excluding the $41.6 million of crypto assets, restricted.
Our longer-term liquidity requirements beyond the next 12 months primarily relate to long-term debt obligations, lease commitments, strategic capital expenditures, investments in infrastructure expansion and strategic growth initiatives, and other long-term operating commitments. Management continually evaluates opportunities to refinance existing indebtedness, extend maturities, raise additional capital, monetize investments or assets, and pursue other strategic transactions to support our long-term liquidity objectives.
Based on our current operating plans, existing obligations and anticipated capital expenditures, including the substantial capital required for the development of our Michigan data center, our existing cash and presently available sources of liquidity are not expected to be sufficient to meet our anticipated liquidity requirements through at least the next 12 months. We therefore expect to require significant additional financing. We intend to seek such financing through a combination of equity offerings, debt or other financing arrangements, asset monetizations and other strategic transactions. There can be no assurance that we will be able to obtain sufficient additional capital when needed or on acceptable terms. These conditions raise substantial doubt about our ability to continue as a going concern. See Note 2 to our condensed consolidated financial statements for additional information.
Total cash, cash equivalents and restricted cash increased by approximately $15.9 million during the six months ended June 30, 2026, primarily reflecting cash provided by financing activities, partially offset by cash used in investing activities.
Net cash used in operating activities was approximately $9.9 million for the six months ended June 30, 2026, compared to $7.0 million for the same period in 2025.
Net cash used in investing activities was approximately $45.1 million for the six months ended June 30, 2026, compared to $2.3 million for the same period in 2025. Cash used in investing activities during the six months ended June 30, 2026 consisted primarily of:
| · | $17.3 million of capital expenditures related to property and equipment; |
| · | $12.7 million of investments in non-marketable equity securities; |
| · | $8.9 million of purchases of crypto assets; |
| · | $6.4 million of investments in loans receivable; and |
| · | $5.0 million of investments in a note receivable, related party. |
These uses were partially offset by $5.3 million in collections on loans receivable.
Net cash provided by financing activities was approximately $70.8 million for the six months ended June 30, 2026, compared to $11.6 million for the same period in 2025.
| 12 |
Cash provided by financing activities during the 2026 period primarily consisted of:
| · | $60.1 million of proceeds from the issuance of notes payable; |
| · | $50.2 million of gross proceeds from the sale of Class A common stock, net of $1.5 million in offering costs; |
| · | $16.1 million of proceeds from the issuance convertible notes payable; |
| · | $0.9 million of proceeds from the issuance of related party notes payable; and |
| · | $0.6 million of proceeds from the sale of Series D preferred stock. |
These inflows were partially offset by:
| · | $44.5 million of payments on notes payable; |
| · | $4.8 million of preferred dividend payments; |
| · | $2.4 million of repayments of related party notes payable; |
| · | $2.0 million of repayments on convertible notes; and |
| · | $1.8 million repurchase of common stock pursuant to a tender offer. |
During the three months ended June 30, 2026, we completed a tender offer to repurchase shares of our Class A common stock. Upon expiration of the tender offer on June 8, 2026, we accepted for purchase 8,731,574 shares of our Class A common stock at a purchase price of $0.21 per share, for an aggregate purchase price of approximately $1.8 million.
Financing Transactions Subsequent to June 30, 2026
Class A Common Stock ATM Offering Activity
During the period between July 1, 2026 through August 13, 2026, we sold an aggregate of 70.8 million shares of Class A common stock pursuant to the ATM Offering for gross proceeds of $9.2 million.
Series D Preferred ATM Offering Activity
During the period between July 1, 2026 through August 13, 2026, we sold an aggregate of 11,369 shares of Series D Preferred Stock pursuant to our Series Preferred D ATM Offering for gross proceeds of $0.2 million.
Bitcoin-Backed Borrowings
Subsequent to June 30, 2026, we received net proceeds of approximately $31.6 million from additional Bitcoin-backed borrowings utilizing the Morpho decentralized finance lending protocol. The additional borrowings were collateralized by Bitcoin and bore interest at variable market rates.
In August 2026, we sold approximately 686 Bitcoin for aggregate proceeds of approximately $43.4 million and used a portion of the proceeds to repay in full all amounts outstanding under our Morpho Bitcoin-backed borrowing arrangements. Following the repayment, the Bitcoin pledged as collateral for the Morpho borrowings was released, and we had no outstanding borrowings under the Morpho protocol.
Critical Accounting Estimates
There have been no material changes to our critical accounting estimates previously disclosed in the 2025 Annual Report.
| 13 |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Because we are a smaller reporting company, we are not required to provide the information otherwise required under this Item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to management, including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.
Our principal executive officer and principal financial officer, with the assistance of other members of the Company’s management, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report. Based upon our evaluation, each of our principal executive officer and principal financial officer has concluded that the Company’s disclosure controls and procedures were not effective as of the end of the period covered by this Quarterly Report because the Company has not yet fully completed its remediation of the material weaknesses in internal control over financial reporting previously identified and disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, the end of its most recent fiscal year.
The previously identified material weaknesses are described below:
| 1. | We do not have sufficient resources in our accounting department, which restricts our ability to gather, analyze and properly review information related to financial reporting, including applying complex accounting principles relating to consolidation accounting, related party transactions, fair value estimates, accounting contingencies and analysis of financial instruments for proper classification in the consolidated financial statements, in a timely manner; |
| 2. | Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties during our assessment of our disclosure controls and procedures and concluded that the control deficiency that resulted represented a material weakness; |
| 3. | Our primary user access controls (i.e., provisioning, de-provisioning, privileged access and user access reviews) to ensure appropriate authorization and segregation of duties that would adequately restrict user and privileged access to the financially relevant systems and data to appropriate personnel were not designed and/or implemented effectively. We did not design and/or implement sufficient controls for program change management to certain financially relevant systems affecting our processes; and |
| 4. | The Company did not design and/or implement user access controls to ensure appropriate segregation of duties or program change management controls for certain financially relevant systems impacting the Company’s processes around revenue recognition and crypto assets to ensure that IT program and data changes affecting the Company’s (i) financial IT applications, (ii) crypto assets mining equipment, and (iii) underlying accounting records, are identified, tested, authorized and implemented appropriately to validate that data produced by its relevant IT system(s) were complete and accurate. Automated process-level controls and manual controls that are dependent upon the information derived from such financially relevant systems were also determined to be ineffective as a result of such deficiency. In addition, the Company has not effectively designed a manual key control to detect material misstatements in revenue. |
| 14 |
Planned Remediation
Management continues to work to improve its controls related to our material weaknesses, specifically relating to user access and change management surrounding our IT systems and applications. Management will continue to implement measures to remediate material weaknesses, such that these controls are designed, implemented, and operating effectively. The remediation actions include: (i) enhancing design and documentation related to both user access and change management processes and control activities; and (ii) developing and communicating additional policies and procedures to govern the area of IT change management. In order to achieve the timely implementation of the above, management has commenced the following actions and will continue to assess additional opportunities for remediation on an ongoing basis:
| · | Engaging a third-party specialist to assist management with improving the Company’s overall control environment, focusing on change management and access controls; |
| · | Implementing new applications and systems that are aligned with management’s focus on creating strong internal controls; and |
| · | Continuing to increase headcount across the Company, with a particular focus on hiring individuals with strong Sarbanes Oxley and internal control backgrounds. |
We are currently working to improve and simplify our internal processes and implement enhanced controls, as discussed above, to address the material weaknesses in our internal control over financial reporting and to remedy the ineffectiveness of our disclosure controls and procedures. These material weaknesses will not be considered to be remediated until the applicable remediated controls are operating for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
Despite the existence of these material weaknesses, we believe that the condensed consolidated financial statements included in the period covered by this Quarterly Report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles.
Changes in Internal Controls over Financial Reporting.
During the fiscal quarter ended June 30, 2026, management continued to execute its remediation plan addressing the previously identified material weaknesses, including ongoing enhancement of policies, procedures and control documentation. However, the remediation efforts have not yet operated for a sufficient period of time to conclude the material weaknesses have been remediated. Other than such continuing remediation activities, there were no significant changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
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PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Litigation Matters
The Company is involved in litigation arising from other matters in the ordinary course of business. We are regularly subject to claims, suits, regulatory and government investigations, and other proceedings involving labor and employment, commercial disputes, and other matters. Such claims, suits, regulatory and government investigations, and other proceedings could result in fines, civil penalties, or other adverse consequences.
Certain of these outstanding matters include speculative, substantial or indeterminate monetary amounts. We record a liability when we believe that it is probable that a loss has been incurred and the amount can be reasonably estimated. If we determine that a loss is reasonably possible and the loss or range of loss can be estimated, we disclose the reasonably possible loss. We evaluate developments in our legal matters that could affect the amount of liability that has been previously accrued, and the matters and related reasonably possible losses disclosed, and make adjustments as appropriate. Significant judgment is required to determine both likelihood of there being a loss and the estimated amount of a loss related to such matters.
Dowagiac Data Center Litigation
On May 26, 2026, a purported class action complaint was filed against Alliance Cloud Services, LLC (“Alliance Cloud Services”), a wholly owned subsidiary ours, in the United States District Court for the Western District of Michigan. The complaint alleges that operations at our Dowagiac, Michigan data center have generated excessive noise, asserting claims for private nuisance, public nuisance and negligence, and seeks unspecified monetary damages and other relief on behalf of a proposed class of nearby residents.
On July 24, 2026, Alliance Cloud Services filed a partial motion to dismiss the public nuisance and negligence claims. On July 28, 2026, the Court entered an order permitting the plaintiffs to file an amended complaint in response to the motion. If an amended complaint is filed, the pending motion will be denied without prejudice as moot; otherwise, the Court will consider the motion after briefing is complete.
We believe the claims are without merit and intend to vigorously defend the action. At this stage of the proceedings, we are unable to reasonably estimate the possible loss or range of loss, if any, associated with this matter.
Other Litigation Matters
With respect to our other outstanding matters, based on our current knowledge, we believe that the amount or range of reasonably possible loss will not, either individually or in aggregate, have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows. However, the outcome of such matters is inherently unpredictable and subject to significant uncertainties.
ITEM 1A. RISK FACTORS
There are no updates or changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2025.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
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ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None of the Company’s directors and officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s fiscal quarter ended June 30, 2026 (each as defined in Item 408 of Regulation S-K under the Securities Exchange Act of 1934, as amended).
ITEM 6. EXHIBITS
| 17 |
| 18 |
+ Certain confidential information – identified by a bracketed asterisk “[*]” - has been omitted from this exhibit pursuant to Item 601(b)(10) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of an unredacted copy to the SEC upon request.
# The annexes, schedules, and certain exhibits to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Registrant hereby agrees to furnish supplementally a copy of any omitted annex, schedule or exhibit to the SEC upon request.
| * | Filed herewith. |
| ** | Furnished herewith. |
| 19 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: August 18, 2026
| HYPERSCALE DATA, INC. | ||||
| By: | /s/ William B. Horne | |||
| William B. Horne | ||||
| Chief Executive Officer | ||||
| (Principal Executive Officer) | ||||
| By: | /s/ Kenneth S. Cragun | |||
| Kenneth S. Cragun | ||||
| Chief Financial Officer | ||||
| (Principal Accounting Officer) | ||||
20
Exhibit 10.6
LOAN AGREEMENT
This Loan Agreement (as it may be amended, this “Agreement”) is entered into on June 12, 2026 by and between Ault & Company, Inc., a Delaware corporation (the “Borrower”) and Ault Capital Group, Inc., a Nevada corporation, or its assigns (the “Lender”).
1. LOANS.
1.1 Amount. Subject to the terms and conditions contained in this Agreement, Lender will provide funds of up to Five Million Dollars ($5,000,000) from time to time upon the written request of Borrower to Lender. Each Loan request shall be accompanied by a reasonably detailed description of the amounts and purposes for the use of funds. Borrower represents that funds shall only be used as set forth in Section 3(f) below, and such representation shall be included by reference in all documents related hereto. All loan requests shall provide advance notice of at least three (3) business days. All amount loaned hereunder shall be referred to as “Term Loans.”
1.2 Repayment. Accrued interest on all Term Loans shall be payable monthly, with the principal and one month’s interest being payable at the maturity of the Term Loan, which will be on or before June 11, 2029 (the “Maturity Date”). The Term Loans shall be evidence by the form of promissory note (the “Term Note”) attached hereto as Exhibit A.
1.3 Interest. All Term Loans shall bear interest at eight and one half percent (8.5%) based on the actual number of days elapsed in a year of 365 days (the “Interest Rate”); provided, that after the occurrence of an Event of Default (as defined in the Term Note), all Term Loans and other monetary obligations shall, at Lender’s option, bear interest at a rate per annum equal to nine and one half percent (9.5%) in excess of the rate otherwise applicable thereto, for an aggregate rate of eighteen percent (18%) (the “Default Rate”) until paid in full or the Note is no longer in default (notwithstanding the entry of any judgment against any Borrower or the exercise of any other right or remedy by Lender), and all such interest shall be payable on demand. Notwithstanding anything to the contrary contained in this Agreement, the aggregate of all amounts deemed to be interest hereunder and charged or collected by Lender is not intended to exceed the highest rate permissible under any applicable law, but if it should, such interest shall automatically be reduced to the extent necessary to comply with applicable law and any such excess payments received by Lender shall be credited as a reduction of the outstanding principal balance.
2. PERSONAL GUARANTY.
An affiliate of the Borrower hereby agrees to enter into a personal guaranty dated of even date herewith (the “Personal Guaranty”), which with this Agreement and the Term Note are collectively referred to herein as the “Loan Documents.” Such Personal Guaranty is attached hereto as Exhibit B.
3. REPRESENTATION, WARRANTIES & COVENANTS.
To induce Lender to enter into this Agreement, the Borrower represents, warrants and covenants as follows (it being understood that (i) each such representation and warranty will be deemed remade as of the date on which each Term Loan is made and shall not be affected by any knowledge of, or any investigation by, Lender, and (ii) the accuracy of each such representation, warranty and covenant will be a condition to each Term Loan).
The Borrower warrants and represents to the Lender the following:
(a) Due Organization; Valid Existence. Borrower is a corporation duly incorporated and validly existing under the laws of the State of Nevada.
(b) Authority. The execution, delivery and performance of this Agreement, agreements and documents contemplated by this Agreement are valid, legal and binding obligations of the Borrower, are within Borrower’s corporate power, have been duly authorized by all necessary corporate action, and will not result in any event of default under the terms of Borrower’s articles of incorporation or bylaws, or of any agreement, or undertaking to which the Borrower is or may be a party or by which it is or may be bound.
(c) Compliance with Laws. The Borrower will comply, in all material respects with all applicable laws, rules, regulations and orders, except to the extent that noncompliance would not have a material adverse effect upon the business, operations or financial condition of the Borrower taken as a whole.
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(d) Preservation of Existence. The Borrower will maintain and preserve, and cause each subsidiary, if any, to maintain and preserve, its existence, and become or remain duly qualified and in good standing in each jurisdiction in which the failure to be so qualified would have a material adverse effect on the business, operations or financial condition of the Borrower, taken as a whole.
(e) Maintenance of Properties. The Borrower will maintain and preserve, all of its properties which are necessary in the proper conduct of its business in good working order and condition, ordinary wear and tear excepted, and comply, at all times with the provisions of all leases to which it is a party as lessee or under which it occupies property, so as to prevent any forfeiture or material loss thereof or thereunder.
(f) Use of Proceeds. The proceeds from the Term Loans shall be used solely to repay Borrower’s issued and outstanding indebtedness as well as working capital, and shall under no circumstances be used by the Borrower to make payments for the personal benefit of any officer or director of the Borrower.
4. TERM.
4.1. Obligations of the Parties. This Agreement and the Loan Documents, and all representations, warranties and covenants of Borrower contained herein and therein shall remain in full force and effect until the occurrence of the earlier of (i) the Maturity Date, or (ii) the date that all of the monetary obligations hereunder are indefeasibly paid in full.
4.2. Early Termination. This Agreement may be terminated prior to the Maturity Date as follows: (i) by Borrower, upon ten (10) days’ notice of termination and repayment of all outstanding obligations due to Lender hereunder; or (ii) by Lender at any time after the occurrence of an Event of Default, without notice, effective immediately.
4.3. Payment of Obligations. On the Maturity Date or on any earlier effective date of termination, Borrower shall pay in full all obligations due to the Lender hereunder, whether or not all or any part of such obligations are otherwise then due and payable.
4.4. Effect of Termination. No termination shall affect or impair any right or remedy of Lender or relieve Borrower of any of the obligations until all of the monetary obligations have been indefeasibly paid in full. Upon indefeasible payment and performance in full of all of the monetary obligations and termination of this Agreement, the Personal Guaranty shall be deemed null and void.
5. GENERAL PROVISIONS.
5.1. Notices. All notices to be given under this Agreement shall be in writing and shall be given either personally, by reputable private delivery service, by regular first-class mail or certified mail return receipt requested, addressed to Lender or Borrower at the address shown below, or by facsimile to the facsimile number shown below or at any other address (or to any other facsimile number) designated in writing by one party to the other party in the manner prescribed in this Section 5.1. All notices shall be deemed to have been given when received or when delivery is refused by the recipient.
| (a) | Lender: Ault Capital Group, Inc. |
11411 Southern Highlands Parkway, Suite 190
Las Vegas, Nevada 89141
Attn. William B. Horne, Chief Executive Officer
Tel: (949) 444-5464
Email: Will@ault.com
| (b) | Borrower: Ault & Company, Inc. |
11411 Southern Highlands Parkway, Suite 190
Las Vegas, Nevada 89141
Attn. Milton C. Ault, III, Chief Executive Officer
Tel: (949) 444-5464
5.2. Severability. If any provision of this Agreement, or the application thereof to any party or circumstance, is held to be void or unenforceable by any court of competent jurisdiction, such defect shall not affect the remainder of this Agreement, which shall continue in full force and effect.
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5.3. Integration. This Agreement and the other Loan Documents represent the final, entire and complete agreement between the Borrower and the Lender and supersede all prior and contemporaneous negotiations, oral representations and agreements, all of which are merged and integrated into this Agreement. THERE ARE NO ORAL UNDERSTANDINGS, REPRESENTATIONS OR AGREEMENTS BETWEEN THE PARTIES THAT ARE NOT SET FORTH IN THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.
5.4. Waivers. The failure of Lender at any time or times to require Borrower to strictly comply with any of the provisions of this Agreement or any other Loan Documents shall not waive or diminish any right of Lender later to demand and receive strict compliance therewith. Any waiver of any default shall not waive or affect any other default, whether prior or subsequent, and whether or not similar. None of the provisions of this Agreement or any other loan document shall be deemed to have been waived by any act or knowledge of Lender or its agents or employees, but only by a specific written waiver signed by an authorized officer of Lender and delivered to Borrower.
5.5. Amendment. This Agreement may not be amended or modified except in a writing executed by Borrower and a duly authorized officer of Lender.
5.6. Time of Essence. Time is of the essence in the performance by Borrower of each and every obligation under this Agreement and the other Loan Documents.
5.7. Benefit of Agreement; Assignability. The provisions of this Agreement shall be binding upon and inure to the benefit of the respective successors, assigns, heirs, beneficiaries and representatives of Borrower and Lender; provided, that Borrower may not assign or transfer any of its rights under this Agreement without the prior written consent of Lender, and any prohibited assignment shall be void. No consent by Lender to any assignment shall release Borrower from its liability for any of the obligations. Lender shall have the right to assign all or any of its rights and obligations under this Agreement and any related document or agreement, to one or more other Persons, and Borrower agrees to execute all agreements, instruments and documents requested by Lender in connection with each such assignment and participation.
5.8. Headings; Construction. Section and subsection headings are used in this Agreement only for convenience and do not affect the meanings of the provisions that they precede.
5.9. Governing law. THIS AGREEMENT HAS BEEN NEGOTIATED, EXECUTED AND DELIVERED, AND SHALL BE DEEMED TO HAVE BEEN MADE, IN NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
6. WIRE TRANSFER INSTRUCTIONS
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IN WITNESS WHEREOF, Borrower and Lender have signed this Agreement as of the date first set forth above.
BORROWER:
| AULT & COMPANY, INC. | ||
| /s/ Milton C. Ault | ||
| By: | Milton C. Ault, III | |
| Its: | Chief Executive Officer | |
LENDER:
|
AULT CAPITAL GROUP, INC. |
||
| /s/ William B. Horne | ||
| By: | William B. Horne | |
| Its: | Chief Executive Officer | |
| Page 4 |
Exhibit A
FORM OF Term NoTE
Exhibit 10.7
Term NoTE
| $5,000,000 | June 12, 2026 (the “Issuance Date”) |
FOR VALUE RECEIVED, the undersigned Ault & Company, Inc. (hereinafter sometimes called the “Borrower”) promises to pay, on or before June 11, 2029 (the “Maturity Date”), to Ault Capital Group, Inc., or its assigns (hereinafter called the “Lender”), at 11411 Southern Highlands Parkway, Suite 190, Las Vegas, Nevada 89141 or such other address as is designated by the Lender, up to the sum of Five Million Dollars ($5,000,000), including accrued but unpaid interest thereon on the Maturity Date.
The interest rate payable on this Promissory Note (the “Note”) shall be eight and a half percent (8.5%) per annum, payable monthly, with the principal and one month’s interest being payable on or before the Maturity Date, subject to a cure period of five (5) business days. In the event that principal and interest hereunder shall not have been paid by the Maturity Date (an “Event of Default”), interest shall accrue and be payable at the rate of eighteen percent (18%) per annum. Notwithstanding anything to the contrary contained in this Note, the aggregate of all amounts deemed to be interest hereunder and charged or collected by Lender is not intended to exceed the highest rate permissible under any applicable law, but if it should, such interest shall automatically be reduced to the extent necessary to comply with applicable law and any such excess payments received by Lender shall be credited as a reduction of the outstanding principal balance.
Except as expressly provided herein, the Borrower waives presentment, demand, notice, protest, and all other demands or notices in connection with the delivery, acceptance, endorsement, performance, default or enforcement of this Note, generally waives all suretyship defenses and defenses in the nature thereof, and agrees to be bound by all the terms and conditions contained in this Note executed in connection herewith.
The undersigned will pay all costs and expenses of collection, including reasonable attorneys' fees actually incurred or paid by the Lender in enforcing this Note or the obligations hereby evidenced, to the extent permitted by law.
No delay or omission of the holder in exercising any right or remedy hereunder shall constitute a waiver of any such right or remedy. Acceptance by the Lender of any payment after acceleration shall not be deemed a waiver of such acceleration. A waiver on one occasion shall not operate as a bar to or waiver of any such right or remedy on any future occasion.
The Lender need not enter payments of principal or interest upon this Note but may maintain a record thereof on a separate ledger maintained by the Lender.
Time is of the essence of this Note.
The word “holder” as used in this Note, shall mean the payee or endorsee of the Note who is in possession of it or the bearer if this Note is at the time payable to bearer.
If any provision of this Note is held to be invalid or unenforceable by a court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to be enforceable, or if such modification is not practicable, such provision shall be deemed deleted from this Note, and the other provisions of this Note shall remain in full force and effect, and shall be construed in favor of holder. Subject to the foregoing provisions of this paragraph, it is the express intention of Borrower and holder to conform strictly to any applicable usury laws. Accordingly, all agreements between Borrower and holder, whether now existing or hereafter arising, and whether written or oral, are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of the maturity of this Note or otherwise, shall the amount paid or agreed to be paid to Lender or the holder of this Note for the use, forbearance or detention of the money loaned pursuant hereto or otherwise, or for the payment or performance of any covenant or obligation contained herein or in any other document executed in connection herewith, exceed the maximum amount permissible under applicable law. If, from any circumstance or contingency whatsoever, fulfillment of any provision hereof or of any other document executed in connection herewith, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, then, ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity, and if from any such circumstance or contingency holder shall ever receive as interest or otherwise an amount which would exceed the maximum rate of interest permitted by applicable law, the amount of such excess shall be applied to a reduction of the indebtedness evidenced by this Note, and not to the payment of interest, and if such excessive interest exceeds such indebtedness, the amount of such excessive interest shall be refunded to Borrower. If at any time this Note prescribes a rate of interest in excess of the maximum rate permitted by law, all sums paid or agreed to be paid to holder for the use, forbearance or detention of the money loaned pursuant to this Note shall be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full, so that the actual rate of interest on account of such indebtedness is uniform throughout the term hereof.
This Note shall be governed by and construed solely and exclusively in accordance with the internal laws of the State of New York without regard to the conflicts of laws principles thereof. The parties hereto hereby expressly and irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Note shall be brought solely in a federal or state court located in the City, County and State of New York. By its execution hereof, in the case of Borrower, or acceptance, in the case of Lender, the parties hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the City, County and State of New York and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in New York City. The parties hereto expressly and irrevocably waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto. In the event of any such action or proceeding, the party prevailing therein shall be entitled to payment from the other party hereto of all of its reasonable counsel fees and disbursements.
IN WITNESS WHEREOF, the Borrower has duly executed this Note as a sealed instrument as of the date and year first above written.
| AULT & COMPANY, INC. | |||
| By: | /s/ Milton C. Ault | ||
| Name: | Milton C. Ault III | ||
| Title: | Chief Executive Officer |
Exhibit 10.8
PERSONAL GUARANTY
This PERSONAL GUARANTY (this “Guaranty”) is made as of the 12th day of June, 2026, by the undersigned (the “Guarantor”) for the benefit of Ault Capital Group, Inc., a Nevada corporation, and its successors and assigns (the “Lender”).
W I T N E S S E T H
WHEREAS, the Guarantor serves as the Chief Executive Officer of Ault & Company, Inc., a Delaware corporation (the “Borrower”).
WHEREAS, the Lender has extended credit to the Borrower through the making of a loan in the principal amount of $5,000,000 pursuant to that certain Loan Agreement (the “Agreement”) pursuant to which it was issued that certain Term Note (the “Note”), in each case dated of even date herewith.
WHEREAS, as used herein, the term “Loan Documents” means, collectively, this Guaranty, the Agreement and the Note.
NOW THEREFORE, to induce the Lender to extend credit to the Borrower pursuant to the Agreement and the Note and for other good and valuable consideration, including, but not limited to, the consideration described in the recitals above, receipt of which is hereby acknowledged, the Guarantor hereby agrees as follows:
1. Upon the terms and subject to conditions hereinafter set forth, the Guarantor hereby guarantees the payment by the Borrower, when due, to the Lender under the Note (the obligations under the Guaranty and the other Loan Documents, together with such reasonable and documented costs and expenses, collectively being herein called the “Obligations”). The foregoing guaranty shall be a continuing guaranty and shall remain in full force and effect until all of the Obligations of the Borrower hereby guaranteed are indefeasibly paid in full. The Guarantor’s obligations under this paragraph shall be reinstated and continued in full force and effect if at any time any payment received by the Lender in satisfaction of the Obligations referred to above is invalidated, declared to be fraudulent or preferentially set aside and/or required to be repaid by the Lender. Additional guarantors to this Guaranty may only be added with the consent of the Lender.
2. This Guaranty is an absolute, unconditional, continuing guaranty of payment and not merely of collection; this Guaranty may be proceeded upon immediately upon non-payment (when due) of any of the Obligations without any prior action or proceeding against the Borrower. The obligations of the Guarantor hereunder shall not be released, discharged or otherwise affected by any amendment, change or modification to or of any of the Loan Documents. Upon any breach of this Guaranty, the Guarantor shall notify the Lender of such breach.
3. The Guarantor hereby expressly waives, disclaims and relinquishes all setoffs and counterclaims and all presentments, demands for payment or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor, notices of acceptance of this Guaranty, notices of sale, any requirement that the Lender exhaust any right, power or remedy or take any action against the Borrower, and other formalities of similar kind, and any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge, release or defense of a guarantor or surety, or that might otherwise limit recourse against the Guarantor. The obligations of the Guarantor hereunder are absolute and unconditional irrespective of the genuineness, legality, regularity or enforceability of any of the Loan Documents, or any other agreement, instrument or document contemplated therein or thereby.
4. The Guarantor shall not assign his obligations hereunder to any other person without the written consent of the Lender, and any purported assignment in violation of this provision shall be void.
5. This Guaranty shall be governed by, and construed in accordance with, the law of the State of New York without regard to the conflict of laws rules thereof. This Guaranty may not be modified, altered, or amended except by a writing signed by the Guarantor and consented to by the Lender.
6. This Guaranty is intended to be, and is for the benefit of the Lender and may be relied on by the Lender, its successors and assigns. This Guaranty is a legal and binding obligation of the Guarantor and is enforceable by the Lender in accordance with its terms, except as limited by applicable law.
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the day and year first above written.
| GUARANTOR: | |
| /s/ Milton C. Ault | |
| Milton C. Ault III |
| AGREED AND ACCEPTED: | |
| Ault Capital Group, Inc. | |
| By: | /s/ William B. Horne |
| Name: | William B. Horne |
| Title: | Chief Executive Officer |
Exhibit 10.9
LOAN AGREEMENT
by and between
AULT CAPITAL GROUP, INC., AS THE LENDER
&
AULT & COMPANY, INC., AS THE BORROWER
This LOAN AGREEMENT is entered into with an effective date as of August 18, 2026, by and between Ault Capital Group, Inc., a Nevada corporation (the “Lender”) and Ault & Company, Inc., a Delaware corporation (the “Borrower”).
RECITALS
WHEREAS, Borrower wishes to seek, and Lender wishes to grant, a line of credit up to an aggregate amount of Fifteen Million Dollars ($15,000,000);
WHEREAS, in consideration of the extension of a maximum line of credit of up to $15,000,000, Lender and the Borrower wish to enter into this Agreement; and
WHEREAS, Lender and Borrower have agreed to enter into this Agreement to memorialize their understanding regarding their respective rights and obligations with respect to this Agreement and the Loan as such term is defined herein.
AGREEMENT
NOW, THEREFORE, in consideration of the making of the Loan and the covenants, agreements, representations and warranties set forth in this Agreement and the other Loan Documents as defined herein, the receipt and legal sufficiency of which hereby are acknowledged, the parties hereby covenant, agree, represent and warrant as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms shall have the following definitions:
“Lender Expenses” means all reasonable costs or expenses (including reasonable attorneys’ fees and expenses, whether generated in-house or by outside counsel) incurred in connection with the preparation, negotiation, administration, and enforcement of the Loan Documents; and Lender’s reasonable attorneys’ fees and expenses (whether generated in-house or by outside counsel) incurred in amending, enforcing or defending the Loan Documents (including fees and expenses of appeal), incurred before, during and after an Insolvency Proceeding, whether or not suit is brought.
“Advance” or “Advances” means a cash advance or cash advances under the Non-Revolving Line.
“Affiliate” means, with respect to any Person, any Person that owns or controls directly or indirectly such Person, any Person that controls or is controlled by or is under common control with such Person, and each of such Person’s senior executive officers, directors, and partners.
“Business Day” means any day that is not a Saturday, Sunday, or other day on which national and state banks located in the State of New York are authorized or required to close.
“Cash” means cash and cash equivalents.
“Change in Control” shall mean a transaction in which any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of Borrower ordinarily entitled to vote in the election of directors, empowering such “person” or “group” to elect a majority of the Board of Directors of Borrower, who did not have such power before such transaction.
“Closing Date” means the date of this Agreement.
“Credit Extension” means each Advance or any other extension of credit by Lender to or for the benefit of Borrower hereunder.
“Event of Default” has the meaning assigned in Article 8.
“GAAP” means generally accepted accounting principles in the United States, consistently applied, as in effect from time to time.
“Insolvency Proceeding” means any proceeding commenced by or against any Person or entity under any provision of the United States Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law, including assignments for the benefit of creditors, formal or informal moratoria, compositions, extension generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.
“Interest Rate” means 8.5% interest, per annum.
“IRC” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder.
“Loan” means, collectively, the Credit Extensions available to Borrower under the Loan Documents.
“Loan Documents” means, collectively, this Agreement, the Note, and any other document, instrument or agreement entered into in connection with this Agreement, all as amended or extended from time to time.
“Material Adverse Effect” means a material adverse effect on (i) the business operations, or financial condition of Borrower and its Subsidiaries taken as a whole or (ii) the ability of Borrower to repay the Obligations or otherwise perform its obligations under the Loan Documents.
“Maturity Date” shall mean that date that the Note becomes due and payable.
“Non-Revolving Line” means a Credit Extension of up to Fifteen Million Dollars ($15,000,000) granted by Lender to Borrower.
“Note” means the promissory note, in the form attached hereto as Exhibit A, which will be issued each time an Advance or any other extension of credit by Lender is made to the Borrower.
“Obligations” means all debt, principal, interest, Lender Expenses and other amounts owed to Lender by Borrower pursuant to this Agreement or any other agreement, whether absolute or contingent, due or to become due, now existing or hereafter arising, including any interest that accrues after the commencement of an Insolvency Proceeding and including any debt, liability, or obligation owing from Borrower to others that Lender may have obtained by assignment or otherwise.
“Periodic Payments” means all installments or similar recurring payments that Borrower may now or hereafter become obligated to pay to Lender pursuant to the terms and provisions of any instrument, or agreement, including this Agreement, now or hereafter in existence between Borrower and Lender.
“Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.
“Prior Note” means that certain Term Note in the principal amount of $5,000,000 dated June 12, 2026 issued Borrower to Lender.
“Responsible Officer” means each of the Chief Executive Officer, the Chief Financial Officer and the President of the Borrower.
“Schedule” means the schedule of exceptions attached hereto and approved by Lender, if any.
“Subsidiary” means any corporation, partnership or limited liability company or joint venture in which (i) any general partnership interest or (ii) more than fifty percent (50%) of the stock, limited liability company interest or joint venture of which by the terms thereof has the ordinary voting power to elect the Board of Directors, managers or trustees of the entity, at the time as of which any determination is being made, is owned by a Borrower, either directly or through an Affiliate.
“Trademarks” means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of a Borrower connected with and symbolized by such trademarks.
1.2 Accounting Terms. Any accounting term not specifically defined herein shall be construed in accordance with GAAP and all calculations shall be made in accordance with GAAP. The term “financial statements” shall include the accompanying notes and schedules.
2. LOAN AND TERMS OF PAYMENT.
2.1 Credit Extensions.
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(a) Promise to Pay. Borrower promises to pay to Lender, in lawful money of the United States of America, the aggregate unpaid principal amount of all Credit Extensions made by Lender to Borrower, together with interest on the unpaid principal amount of such Credit Extensions at the Interest Rate in accordance with the terms hereof.
(b) Advances Under Non-Revolving Line.
(i) Amount. Subject to and upon the terms and conditions of this Agreement and Lender’s availability of capital, as determined by Lender in its sole and absolute discretion, Borrower may request Advances in an aggregate outstanding amount not to exceed the Non-Revolving Line. Amounts borrowed pursuant to this Section 2.1(b) which have been repaid may not be reborrowed at any time. All Advances under this Section 2.1(b) shall be immediately due and payable on the Maturity Date. Borrower may prepay any Advances without penalty or premium upon notice.
(ii) Form of Request. Whenever a Borrower desires an Advance, such Borrower will notify Lender by email or telephone no later than ten (10) Business Day prior to the date the Advance is to be made. Each such notification shall be promptly confirmed by a Payment/Advance Form in substantially the form of Exhibit B hereto. Lender is authorized to make Advances under this Agreement, based upon instructions received from a Responsible Officer or a designee of a Responsible Officer, or without instructions if in Lender’s discretion such Advances are necessary to meet Obligations which have become due and remain unpaid. Lender shall be entitled to rely on any telephonic notice given by a person who Lender reasonably believes to be a Responsible Officer or a designee thereof, and Borrower shall indemnify and hold Lender harmless for any damages or loss suffered by Lender as a result of such reliance. Lender will evidence the amount of Advances made under this Section 2.1(b) by a Note.
2.2 Overadvances. If the aggregate amount of the outstanding Advances exceeds the Non-Revolving Line at any time, then within fifteen (15) days (or such longer period as Lender may grant in its sole discretion) of notice of such excess advanced, Borrower shall pay to Lender, in cash, the amount of such excess, together with all accrued but unpaid interest on such excess.
2.3 Interest Rates, Payments, and Calculations.
(a) Interest Rates. Except as set forth in Section 2.3(b), the Advances shall bear interest at the rate equal to the Interest Rate.
(b) Default Rate. If any payment is not made within ten (10) days after the date such payment is due, Borrower shall pay Lender a late fee equal to the lesser of (i) five percent (5%) of the amount of such unpaid amount or (ii) the maximum amount permitted to be charged under applicable law. All Obligations shall bear interest, from and after the occurrence and during the continuance of an Event of Default, at a rate equal to five (5) percentage points above the Interest Rate applicable immediately prior to the occurrence of the Event of Default.
(c) Payments. Interest and principal hereunder shall be due and payable on the Maturity Date. Borrower authorizes Lender, at its option, to charge such interest, all Lender Expenses, and all Periodic Payments against the Non-Revolving Line, in which case those amounts shall thereafter accrue interest at the rate then applicable hereunder.
(d) Computation. All interest chargeable under the Loan Documents shall be computed on the basis of a three hundred sixty-five (365) day year for the actual number of days elapsed.
2.4 Crediting Payments. If no Event of Default exists, Lender shall credit a wire transfer of funds, check or other item of payment to such deposit account or Obligation as Borrower specifies. During the existence of an Event of Default, Lender shall have the right, in its sole discretion, to immediately apply any wire transfer of funds, check, or other item of payment Lender may receive to conditionally reduce Obligations, but such applications of funds shall not be considered a payment on account unless such payment is of immediately available federal funds or unless and until such check or other item of payment is honored when presented for payment. Notwithstanding anything to the contrary contained herein, any wire transfer or payment received by Lender or for its benefit at its financial institution after 12:00 noon Pacific time shall be deemed to have been received by Lender as of the opening of business on the immediately following Business Day. Whenever any payment to Lender under the Loan Documents would otherwise be due (except by reason of acceleration) on a date that is not a Business Day, such payment shall instead be due on the next Business Day, and additional fees or interest, as the case may be, shall accrue and be payable for the period of such extension.
2.5 Prior Note. Upon execution of this Agreement, the Prior Note shall be cancelled and be of no further force or effect, and its principal amount and accrued interest shall be deemed to have been issued under this Agreement and, as a result, become part of the Advances made under this Agreement.
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2.6 Term. This Agreement shall become effective on the Closing Date and, subject to Section 12.7, shall continue in full force and effect for so long as any Obligations remain outstanding or Lender has any obligation to make Credit Extensions under this Agreement. Notwithstanding the foregoing, Lender shall have the right to terminate its obligation to make Credit Extensions under this Agreement immediately and without notice upon the occurrence and during the continuance of an Event of Default. After six months from the effective date of this Agreement, Lender will not be obligated to make any further Advances.
3. CONDITIONS OF LOANS.
3.1 Conditions Precedent to Initial Credit Extension. The obligation of Lender to make the initial Credit Extension is subject to the condition precedent that Lender shall have received, in form and substance satisfactory to Lender, the following:
(a) this Agreement duly executed by the Borrower; and
(b) an officer’s certificate of each Borrower with respect to incumbency and resolutions authorizing the execution and delivery of this Agreement.
3.2 Conditions Precedent to all Credit Extensions. The obligation of Lender to make each Credit Extension, including the initial Credit Extension, is further subject to the following conditions:
(a) timely receipt by Lender of the Payment/Advance Form as provided in Section 2.1; and
(b) the representations and warranties contained in Section 4 shall be true and correct in all material respects on and as of the date of such Payment/Advance Form and on the effective date of each Credit Extension as though made at and as of each such date, and no Event of Default shall have occurred and be continuing, or would exist after giving effect to such Credit Extension (provided, however, that those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of such date). The making of each Credit Extension shall be deemed to be a representation and warranty by each Borrower on the date of such Credit Extension as to the accuracy of the facts referred to in this Section 3.2.
4. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants as follows:
4.1 Due Organization and Qualification. Borrower and each Subsidiary is duly existing under the laws of the state in which it is organized and qualified and licensed to do business in any state in which the conduct of its business or its ownership of property requires that it be so qualified, except where the failure to do so could not reasonably be expected to cause a Material Adverse Effect.
4.2 Due Authorization; No Conflict. The execution, delivery, and performance of the Loan Documents are within Borrower’s powers, have been duly authorized, and are not in conflict with nor constitute a breach of any provision contained in Borrower’s Certificate/Articles of Incorporation or Bylaws, nor will they constitute an event of default under any material agreement by which Borrower is bound. Borrower is not in default under any agreement by which it is bound, except to the extent such default could not reasonably be expected to cause a Material Adverse Effect.
4.3 Intellectual Property. To the best of Borrower’s knowledge, each of the copyrights, Trademarks and patents is valid and enforceable, and no part of such intellectual property has been judged invalid or unenforceable, in whole or in part, and no claim has been made to Borrower that any part of such intellectual property violates the rights of any third party except to the extent such claim could not reasonably be expected to cause a Material Adverse Effect.
4.4 Legal Name. Borrower’s exact legal name is as set forth in the first paragraph of this Agreement.
4.5 No Material Adverse Change in Financial Statements. All consolidated and consolidating financial statements related to Borrower and any Subsidiary that are delivered by Borrower to Lender fairly present in all material respects Borrower’s consolidated and consolidating financial condition as of the date thereof and Borrower’s consolidated and consolidating results of operations for the period then ended. There has not been a material adverse change in the consolidated or in the consolidating financial condition of Borrower since the date of the most recent of such financial statements submitted to Lender.
4.6 Solvency, Payment of Debts. Borrower is able to pay its debts as they mature; the fair saleable value of Borrower’s assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; and Borrower is not left with unreasonably small capital after the transactions contemplated by this Agreement.
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4.7 Compliance with Laws and Regulations. Borrower and each Subsidiary have met the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA. No event has occurred resulting from Borrower’s failure to comply with ERISA that is reasonably likely to result in Borrower’s incurring any liability that could have a Material Adverse Effect. Borrower is not an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940. Borrower is not engaged principally, or as one of the important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T and U of the Board of Governors of the Federal Reserve System). Borrower has complied in all material respects with all the provisions of the Federal Fair Labor Standards Act. Borrower is in compliance with all environmental laws, regulations and ordinances except where the failure to comply is not reasonably likely to have a Material Adverse Effect. Borrower has not violated any statutes, laws, ordinances or rules applicable to it, the violation of which could reasonably be expected to have a Material Adverse Effect. Borrower and each Subsidiary have filed or caused to be filed all tax returns required to be filed, and have paid, or have made adequate provision for the payment of, all taxes reflected therein except those being contested in good faith with adequate reserves under GAAP or where the failure to file such returns or pay such taxes could not reasonably be expected to have a Material Adverse Effect. Borrower is in compliance with, and the intended use of the proceeds as described in this Agreement does not and will not violate Section 13(k) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Neither the Borrower nor any of its affiliates has, in connection with this Agreement or the transactions contemplated hereby, extended, arranged, or renewed any personal loan to or for any director or executive officer of the Borrower or any of its affiliates in violation of Section 13(k) of the Exchange Act.
4.8 Government Consents. Borrower and each Subsidiary have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all governmental authorities that are necessary for the continued operation of Borrower’s business as currently conducted, except where the failure to do so could not reasonably be expected to cause a Material Adverse Effect.
4.9 Full Disclosure. No representation, warranty or other statement made by Borrower in any certificate or written statement furnished to Lender taken together with all such certificates and written statements furnished to Lender contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained in such certificates or statements not misleading, it being recognized by Lender that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not to be viewed as facts and that actual results during the period or periods covered by any such projections and forecasts may differ from the projected or forecasted results.
5. BORROWER AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, until payment in full of all outstanding Obligations (other than inchoate indemnity obligations), and for so long as Lender may have any commitment to make a Credit Extension hereunder, such Borrower shall do all of the following:
5.1 Good Standing and Government Compliance. Borrower shall maintain its and each of its Subsidiaries’ corporate existence and good standing in the jurisdiction of formation, shall maintain qualification and good standing in each other jurisdiction in which the failure to so qualify could have a Material Adverse Effect, and shall furnish to Lender the organizational identification number issued to Borrower by the authorities of the state in which Borrower is organized, if applicable. Borrower shall meet, and shall cause each Subsidiary to meet, the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA. Borrower shall comply in all material respects with all applicable Environmental Laws, and maintain all material permits, licenses and approvals required thereunder where the failure to do so could reasonably be expected to have a Material Adverse Effect. Borrower shall comply, and shall cause each Subsidiary to comply, with all statutes, laws, ordinances and government rules and regulations to which it is subject, and shall maintain, and shall cause each of its Subsidiaries to maintain, in force all licenses, approvals and agreements, the loss of which or failure to comply with which could reasonably be expected to have a Material Adverse Effect.
5.2 Taxes. Borrower shall make, and cause each Subsidiary to make, due and timely payment or deposit of all material federal, state, and local taxes, assessments, or contributions required of it by law, including, but not limited to, those laws concerning income taxes, F.I.C.A., F.U.T.A. and state disability, and will execute and deliver to Lender, on demand, proof satisfactory to Lender indicating that Borrower or a Subsidiary has made such payments or deposits and any appropriate certificates attesting to the payment or deposit thereof; provided that each Borrower or a Subsidiary need not make any payment if the amount or validity of such payment is contested in good faith by appropriate proceedings and is reserved against (to the extent required by GAAP) by Borrower.
5.3 Insurance.
(a) Borrower, at its expense, shall maintain liability and other insurance in an amount not less than One Million Dollars ($1,000,000) and of a type that are customary to businesses similar to Borrower’s.
(b) All such policies of insurance shall be in such form, with such companies, and in such amounts as reasonably satisfactory to Lender. All policies of property insurance shall contain a Lender’s loss payable endorsement, in a form satisfactory to Lender, showing Lender as an additional loss payee, and all liability insurance policies shall show Lender as an additional insured and specify that the insurer must give at least 30 days’ notice to Lender before canceling its policy for any reason. Upon Lender’s request, each Borrower shall deliver to Lender certified copies of the policies of insurance and evidence of all premium payments. If an Event of Default has occurred and is continuing, proceeds payable under any casualty policy shall, at Lender’s option, be payable to Lender to be applied on account of the Obligations.
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5.4 Use of Proceeds. The proceeds from the Loans shall be used solely to repay Borrower’s issued and outstanding indebtedness, to redeem certain outstanding preferred equity, as well as working capital purposes. The Borrower shall not use any portion of the proceeds of the Loan to extend credit, directly or indirectly, to any director, executive officer, or equivalent person of the Borrower or any of its affiliates in any manner that would constitute a personal loan prohibited by Section 13(k) of the Exchange Act, or any rule or regulation promulgated thereunder. In addition, the Borrower shall promptly notify the Lender in writing upon becoming aware of any actual or potential violation of Section 13(k) of the Exchange Act in connection with the use of the proceeds of the Loan as set forth in this Agreement and take all corrective action necessary to cure any such violation as promptly as practicable following the occurrence thereof.
6. NEGATIVE COVENANTS.
Borrower covenants and agrees that, until the outstanding Obligations (other than inchoate indemnity obligations) are paid in full, Borrower will not do any of the following without Lender’s prior written consent, which shall not be unreasonably withheld:
6.1 Dispositions. Convey, sell, lease, license, transfer or otherwise dispose of (collectively, to “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, other than in the ordinary course of business. Borrower will not engage in any bulk sale of all or substantially all of its assets.
6.2 Change in Name, Location, Executive Office, or Executive Management; Change in Business; Change in Fiscal Year. Change its name or its jurisdiction of formation or relocate its chief executive office without prior written notification to Lender; hire or fire any executive officer; engage in any business, or permit any of its Subsidiaries to engage in any business, other than or reasonably related or incidental to the businesses currently engaged in by each Borrower; change its fiscal year end.
6.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with or into any other business organization (other than mergers or consolidations of a Subsidiary into another Subsidiary or into a Borrower), or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person except where (i) no Event of Default has occurred, is continuing or would exist after giving effect to such transactions and (ii) such transactions do not result in a Change in Control.
6.4 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower except for (i) transactions that are in the ordinary course of a Borrower’s business, upon fair and reasonable terms that are no less favorable to a Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person and (ii) transactions that are otherwise permitted pursuant to Section 7.
6.5 No Investment Company; Margin Regulation. Become or be controlled by an “investment company,” within the meaning of the Investment Company Act of 1940, or become principally engaged in, or undertake as one of its important activities, the business of extending credit for the purpose of purchasing or carrying margin stock, or use the proceeds of any Credit Extension for such purpose.
7. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an Event of Default by Borrower under this Agreement:
7.1 Payment Default. If Borrower fails to pay any of the Obligations when due.
7.2 Covenant Default.
(a) If Borrower breaches any representation under Article 4, fails to perform any obligation under Article 5 or 6 or violates any of the covenants contained in Article 7 of this Agreement; or
(b) If Borrower fails or neglects to perform or observe any other material term, provision, condition, covenant contained in this Agreement, in any of the Loan Documents, or in any other present or future agreement between Borrower and Lender and as to any default under such other term, provision, condition or covenant that can be cured, has failed to cure such default within ten (10) Business Days after Borrower receives notice thereof; provided, however, that if the default cannot by its nature be cured within such ten (10) Business Day period or cannot after diligent attempts by Borrower be cured within such ten (10) Business Day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to have cured such default shall not be deemed an Event of Default but no Credit Extensions will be made.
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7.3 Material Adverse Effect. If there occurs any Material Adverse Effect.
7.4 Attachment. If any material portion of Borrower’s assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within ten (10) days, or if a Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any material portion of a Borrower’s assets, or if a notice of lien, levy, or assessment is filed of record with respect to any of Borrower’s assets by the United States Government, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within ten (10) days after a Borrower receives notice thereof, provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contest by a Borrower (provided that no Credit Extensions will be made during such cure period).
7.5 Insolvency. If Borrower becomes insolvent, or if an Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced against a Borrower and is not dismissed or stayed within thirty (30) days (provided that no Credit Extensions will be made prior to the dismissal of such Insolvency Proceeding).
7.6 Change in Control. If a Change in Control occurs.
7.7 Misrepresentations. If any material misrepresentation or material misstatement exists now or hereafter in any warranty or representation set forth herein or in any certificate delivered to Lender by any Responsible Officer pursuant to this Agreement or to induce Lender to enter into this Agreement or any other Loan Document.
8. Lender’S RIGHTS AND REMEDIES.
8.1 Rights and Remedies. Upon the occurrence and during the continuance of an Event of Default, Lender may, at its election, without notice of its election and without demand, do any one or more of the following, all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable (provided that upon the occurrence of an Event of Default described in Section 8.5, all Obligations shall become immediately due and payable without any action by Lender);
(b) Cease advancing money or extending credit to or for the benefit of Borrower under this Agreement or under any other agreement between Borrower and Lender; and
(c) Set off and apply to the Obligations any and all (i) balances and deposits of Borrower held by Lender, and (ii) indebtedness at any time owing to or for the credit or the account of Borrower held by Lender.
8.2 No Obligation to Pursue Others. Lender has no obligation to attempt to satisfy the Obligations by collecting them from any other Person liable for them and Lender may release, modify or waive any collateral provided by any other Person to secure any of the Obligations, all without affecting Lender’s rights against Borrower. Borrower waives any rights they may have to require Lender to pursue any other Person for any of the Obligations.
8.3 Remedies Cumulative. Lender’s rights and remedies under this Agreement, the Loan Documents, and all other agreements shall be cumulative. Lender shall have all other rights and remedies not inconsistent herewith as provided by law or in equity. No exercise by Lender of one right or remedy shall be deemed an election, and no waiver by Lender of any Event of Default on Borrower’s part shall be deemed a continuing waiver. No delay by Lender shall constitute a waiver, election, or acquiescence by it. No waiver by Lender shall be effective unless made in a written document signed on behalf of Lender and then shall be effective only in the specific instance and for the specific purpose for which it was given. Borrower expressly agrees that this Section may not be waived or modified by Lender by course of performance, conduct, estoppel or otherwise.
8.4 Demand; Protest. Except as otherwise provided in this Agreement, Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment and any other notices relating to the Obligations.
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9. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by a recognized overnight delivery service, certified mail, postage prepaid, return receipt requested, or by email to Borrower or to Lender, as the case may be, at its addresses set forth below:
| If to Borrower: | Ault & Company, Inc. |
| 11411 Southern Highlands Parkway, Suite 190 | |
| Las Vegas, NV 89141 | |
| Attn: Milton C. Ault, III, Chief Executive Officer | |
| Email: Todd@aultandcompany.com |
| If to Lender: | Ault Capital Group, Inc. |
| 11411 Southern Highlands Parkway, Suite 190 | |
| Las Vegas, NV 89141 | |
| Attn: William B. Horne, Chief Executive Officer | |
| Email: Will@ault.com |
The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other.
10. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York, without regard to principles of conflicts of law. Borrower and Lender hereby submits to the exclusive jurisdiction of the state and Federal courts located in the County of New York, State of New York. THE UNDERSIGNED ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT OR AGREEMENT BETWEEN THE UNDERSIGNED PARTIES.
11. GENERAL PROVISIONS.
11.1 Successors and Assigns. This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties and shall bind all Persons who become bound as a debtor to this Agreement; provided, however, that neither this Agreement nor any rights hereunder may be assigned by Borrower without Lender’s prior written consent, which consent may be granted or withheld in Lender’s sole discretion. Lender shall have the right without the consent of or notice to Borrower to sell, transfer, negotiate, or grant participation in all or any part of, or any interest in, Lender’s obligations, rights and benefits hereunder.
11.2 Indemnification. Borrower shall defend, indemnify and hold harmless Lender and its officers, employees, and agents against: (a) all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this Agreement; and (b) all losses or Lender Expenses in any way suffered, incurred, or paid by Lender, its officers, employees and agents as a result of or in any way arising out of, following, or consequential to transactions between Lender and Borrower whether under this Agreement, or otherwise (including without limitation reasonable attorneys’ fees and expenses), except for obligations, demands, claims, liabilities and losses caused by Lender’s gross negligence or willful misconduct.
11.3 Time of Essence. Time is of the essence for the performance of all obligations set forth in this Agreement.
11.4 Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.
11.5 Amendments in Writing, Integration. All amendments to or terminations of this Agreement or the other Loan Documents must be in writing. All prior agreements, understandings, representations, warranties, and negotiations between the parties hereto with respect to the subject matter of this Agreement and the other Loan Documents, if any, are merged into this Agreement and the Loan Documents.
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11.6 Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement.
11.7 Survival. All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any Obligations (other than inchoate indemnity obligations) remain outstanding or Lender has any obligation to make any Credit Extension to Borrower. The obligations of Borrower to indemnify Lender with respect to the expenses, damages, losses, costs and liabilities described in Section 12.2 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Lender have run.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above.
| LENDER: | |||
| AULT CAPITAL GROUP, INC. | |||
| By: | |||
| Name: | William B. Horne | ||
| Title: | Chief Executive Officer | ||
| BORROWER: | |||
| AULT & COMPANY, INC. | |||
| By: | |||
| Name: | Milton C. Ault, III | ||
| Title: | Chief Executive Officer | ||
[Signature Page to Loan Agreement]
EXHIBIT A
[Form of Promissory Note attached hereto]
EXHIBIT B
PAYMENT/ADVANCE FORM
| TO: | ||
| Tel: (___) __________ | Fax: (___) __________ |
Date: ____________________________________________
From: Ault & Company, Inc.
(Contact Person): Milton C. Ault, III
Tel: (714) 795-0246
[ ] LOAN DISBURSEMENT: Amount US $ _____________________
| Intended Use of Proceeds: | ||
| [Working capital and general corporate purposes] $[●] | ||
| [Capital expenditures] $[●] | ||
| [Repayment of existing indebtedness] $[●] | ||
| [Other — specify] $[●] | ||
| Total Prior Loan Disbursements $____________ | ||
| Plus: Current Loan Disbursement Request $____________ | ||
| Total Loan Disbursements to Date $____________ | ||
| [ ] LOAN PAYMENT: Amount US$ | ||
| Loan Number: _________________ | ||
| [ ] Partial Principal Only | Deadline 3:00 PM | |
| [ ] Interest Only | Deadline 3:00 PM | |
| [ ] Pay off (Total Principal and Interest): | Deadline 3:00 PM |
By executing below, Borrower hereby represents, warrants, and confirms to the Lender that, as of the date hereof (the "Reaffirmation Date"): (i) each of the representations and warranties made by such party in the Loan Agreement, is true, correct, and complete in all material respects on and as of the Reaffirmation Date, as if made on and as of the Reaffirmation Date (except to the extent that any such representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty is reaffirmed as true, correct, and complete in all material respects as of such earlier date); and (ii) no event has occurred and is continuing, that constitutes or would constitute an Event of Default or that, with the giving of notice, the passage of time, or both, would constitute an Event of Default.
| Authorized Signature | ||
| Print Name | ||
| Date |
| v | All deadlines are pacific time |
Exhibit 10.10
Term NoTE
$__________ |
_____________ (the “Issuance Date”) |
FOR VALUE RECEIVED, the undersigned Ault & Company, Inc. (hereinafter sometimes called the “Borrower”) promises to pay, on or before August 17, 2029 (the “Maturity Date”), to Ault Capital Group, Inc., or its assigns (hereinafter called the “Lender”), at 11411 Southern Highlands Parkway, Suite 190, Las Vegas, Nevada 89141 or such other address as is designated by the Lender, up to the sum of __________ Dollars ($_________), including accrued but unpaid interest thereon on the Maturity Date. This Note is one of several Notes referred to in the Loan Agreement, dated as of August 18, 2026 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Loan Agreement”) among Borrower and Lender, and evidences Loans made by Lender thereunder. Borrower and Lender recognize that Lender may from time to time make advances and loans to Borrower on the dates and in the principal amounts provided in the Loan Agreement. Terms used but not defined in this Note have the respective meanings assigned to them in the Loan Agreement.
The date and the amount of each Loan made by Lender to Borrower, and each payment made on account of the principal thereof, shall be recorded by Lender on its books; provided, that the failure of Lender to make any such recordation shall not affect the obligations of Borrower to make a payment when due of any amount owing under the Loan Agreement or hereunder in respect of the Loans made by Lender.
The interest rate payable on this Promissory Note (the “Note”) shall be eight and a half percent (8.5%) per annum, payable monthly, with the principal and one month’s interest being payable on or before the Maturity Date, subject to a cure period of five (5) business days. Interest shall be computed by dividing the applicable yearly rate of interest by 365 and applying the resulting rate to the applicable outstanding principal amount for the actual number of days such principal amount is outstanding. Commencing on the occurrence of any Event of Default (as defined in the Loan Agreement) and for as long an Event of Default is not cured, interest shall accrue and be payable at the rate of eighteen percent (18%) per annum. Notwithstanding anything to the contrary contained in this Note, the aggregate of all amounts deemed to be interest hereunder and charged or collected by Lender is not intended to exceed the highest rate permissible under any applicable law, but if it should, such interest shall automatically be reduced to the extent necessary to comply with applicable law and any such excess payments received by Lender shall be credited as a reduction of the outstanding principal balance.
Except as expressly provided herein, the Borrower waives presentment, demand, notice, protest, and all other demands or notices in connection with the delivery, acceptance, endorsement, performance, default or enforcement of this Note, generally waives all suretyship defenses and defenses in the nature thereof, and agrees to be bound by all the terms and conditions contained in this Note executed in connection herewith.
The undersigned will pay all costs and expenses of collection, including reasonable attorneys' fees actually incurred or paid by the Lender in enforcing this Note or the obligations hereby evidenced, to the extent permitted by law.
No delay or omission of the holder in exercising any right or remedy hereunder shall constitute a waiver of any such right or remedy. Acceptance by the Lender of any payment after acceleration shall not be deemed a waiver of such acceleration. A waiver on one occasion shall not operate as a bar to or waiver of any such right or remedy on any future occasion.
The Lender need not enter payments of principal or interest upon this Note but may maintain a record thereof on a separate ledger maintained by the Lender.
Time is of the essence of this Note.
The word “holder” as used in this Note, shall mean the payee or endorsee of the Note who is in possession of it or the bearer if this Note is at the time payable to bearer.
| -1- |
If any provision of this Note is held to be invalid or unenforceable by a court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to be enforceable, or if such modification is not practicable, such provision shall be deemed deleted from this Note, and the other provisions of this Note shall remain in full force and effect, and shall be construed in favor of holder. Subject to the foregoing provisions of this paragraph, it is the express intention of Borrower and holder to conform strictly to any applicable usury laws. Accordingly, all agreements between Borrower and holder, whether now existing or hereafter arising, and whether written or oral, are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of the maturity of this Note or otherwise, shall the amount paid or agreed to be paid to Lender or the holder of this Note for the use, forbearance or detention of the money loaned pursuant hereto or otherwise, or for the payment or performance of any covenant or obligation contained herein or in any other document executed in connection herewith, exceed the maximum amount permissible under applicable law. If, from any circumstance or contingency whatsoever, fulfillment of any provision hereof or of any other document executed in connection herewith, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, then, ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity, and if from any such circumstance or contingency holder shall ever receive as interest or otherwise an amount which would exceed the maximum rate of interest permitted by applicable law, the amount of such excess shall be applied to a reduction of the indebtedness evidenced by this Note, and not to the payment of interest, and if such excessive interest exceeds such indebtedness, the amount of such excessive interest shall be refunded to Borrower. If at any time this Note prescribes a rate of interest in excess of the maximum rate permitted by law, all sums paid or agreed to be paid to holder for the use, forbearance or detention of the money loaned pursuant to this Note shall be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full, so that the actual rate of interest on account of such indebtedness is uniform throughout the term hereof.
This Note shall be governed by and construed solely and exclusively in accordance with the internal laws of the State of New York without regard to the conflicts of laws principles thereof. The parties hereto hereby expressly and irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Note shall be brought solely in a federal or state court located in the City, County and State of New York. By its execution hereof, in the case of Borrower, or acceptance, in the case of Lender, the parties hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the City, County and State of New York and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in New York City. The parties hereto expressly and irrevocably waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto. In the event of any such action or proceeding, the party prevailing therein shall be entitled to payment from the other party hereto of all of its reasonable counsel fees and disbursements.
| -2- |
IN WITNESS WHEREOF, the Borrower has duly executed this Note as a sealed instrument as of the date and year first above written.
| AULT & COMPANY, INC. | |||
| By: | |||
| Name: | Milton C. Ault III | ||
| Title: | Chief Executive Officer |
-3-
Exhibit 10.11
PERSONAL GUARANTY
This PERSONAL GUARANTY (this “Guaranty”) is made as of the 18th day of August, 2026, by the undersigned (the “Guarantor”) for the benefit of Ault Capital Group, Inc., a Nevada corporation, and its successors and assigns (the “Lender”).
W I T N E S S E T H
WHEREAS, the Guarantor serves as the Chief Executive Officer of Ault & Company, Inc., a Delaware corporation (the “Borrower”).
WHEREAS, the Lender has agreed to extend credit to the Borrower through the making of loans in the principal amount of up to $15,000,000 pursuant to that certain Loan Agreement (the “Agreement”) pursuant to which Lender will, from time to time, be issued certain promissory notes (collectively, the “Notes”).
WHEREAS, as used herein, the term “Loan Documents” means, collectively, this Guaranty, the Agreement and the Notes.
NOW THEREFORE, to induce the Lender to extend credit to the Borrower pursuant to the Agreement and the Notes and for other good and valuable consideration, including, but not limited to, the consideration described in the recitals above, receipt of which is hereby acknowledged, the Guarantor hereby agrees as follows:
1. Upon the terms and subject to conditions hereinafter set forth, the Guarantor hereby guarantees the payment by the Borrower, when due, to the Lender under the Notes (the obligations under the Guaranty and the other Loan Documents, together with such reasonable and documented costs and expenses, collectively being herein called the “Obligations”). The foregoing guaranty shall be a continuing guaranty and shall remain in full force and effect until all of the Obligations of the Borrower hereby guaranteed are indefeasibly paid in full. The Guarantor’s obligations under this paragraph shall be reinstated and continued in full force and effect if at any time any payment received by the Lender in satisfaction of the Obligations referred to above is invalidated, declared to be fraudulent or preferentially set aside and/or required to be repaid by the Lender. Additional guarantors to this Guaranty may only be added with the consent of the Lender.
2. This Guaranty is an absolute, unconditional, continuing guaranty of payment and not merely of collection; this Guaranty may be proceeded upon immediately upon non-payment (when due) of any of the Obligations without any prior action or proceeding against the Borrower. The obligations of the Guarantor hereunder shall not be released, discharged or otherwise affected by any amendment, change or modification to or of any of the Loan Documents. Upon any breach of this Guaranty, the Guarantor shall notify the Lender of such breach.
3. The Guarantor hereby expressly waives, disclaims and relinquishes all setoffs and counterclaims and all presentments, demands for payment or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor, notices of acceptance of this Guaranty, notices of sale, any requirement that the Lender exhaust any right, power or remedy or take any action against the Borrower, and other formalities of similar kind, and any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge, release or defense of a guarantor or surety, or that might otherwise limit recourse against the Guarantor. The obligations of the Guarantor hereunder are absolute and unconditional irrespective of the genuineness, legality, regularity or enforceability of any of the Loan Documents, or any other agreement, instrument or document contemplated therein or thereby.
4. The Guarantor shall not assign his obligations hereunder to any other person without the written consent of the Lender, and any purported assignment in violation of this provision shall be void.
5. This Guaranty shall be governed by, and construed in accordance with, the law of the State of New York without regard to the conflict of laws rules thereof. This Guaranty may not be modified, altered, or amended except by a writing signed by the Guarantor and consented to by the Lender.
6. This Guaranty is intended to be, and is for the benefit of the Lender and may be relied on by the Lender, its successors and assigns. This Guaranty is a legal and binding obligation of the Guarantor and is enforceable by the Lender in accordance with its terms, except as limited by applicable law.
| 1 |
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the day and year first above written.
| GUARANTOR: | ||
| Milton C. Ault III |
| AGREED AND ACCEPTED: | ||
| Ault Capital Group, Inc. | ||
| By: | ||
| Name: | William B. Horne | |
| Title: | Chief Executive Officer |
2
EXHIBIT 31.1
CERTIFICATION
I, William B. Horne, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Hyperscale Data, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: August 18, 2026
| /s/ William B. Horne | |
| Name: William B. Horne | |
| Title: Chief Executive Officer | |
| (Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION
I, Kenneth S. Cragun, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Hyperscale Data, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: August 18, 2026
| /s/ Kenneth S. Cragun | |
| Name: Kenneth S. Cragun | |
| Title: Chief Financial Officer | |
| (Principal Accounting Officer) |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Hyperscale Data, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
| Date: August 18, 2026 | By: /s/ William B. Horne | |
| Name: William B. Horne | ||
| Title: Chief Executive Officer | ||
| (Principal Executive Officer) |
| Date: August 18, 2026 | By: /s/ Kenneth S. Cragun | |
| Name: Kenneth S. Cragun | ||
| Title: Chief Financial Officer | ||
| (Principal Accounting Officer) |