Hyperscale Data, Inc 10-Q for FY2026 Q1
Hyperscale Data, Inc. (GPUS)
About this 10-Q
Hyperscale Data, Inc filed this 10-Q on May 18, 2026, covering the quarter ended March 31, 2026 (FY2026 Q1).
Headline figures
Quarter ended March 31, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $44.08M
- up 76.2% from $25.02M a year earlier
- Net loss
- $29.95M
- compared with a net loss of $4.21M a year earlier
- Diluted EPS
- -$0.09
- compared with -$0.98 a year earlier
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
| For the quarterly period ended |
| 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
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
(Address of principal executive offices) (Zip code)
(
(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 | ||
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.
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).
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 ¨ | Accelerated filer ¨ |
| Smaller reporting company | |
| Emerging growth company |
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. ¨
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨
At May 15, 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)
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Loans receivable, current | ||||||||
| Crypto assets | ||||||||
| Prepaid expenses and other current assets | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| Crypto assets, restricted | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Property and equipment, net | ||||||||
| Right-of-use assets | ||||||||
| Investments in common stock and equity securities, related party | ||||||||
| Investments in other equity securities | ||||||||
| Other assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Operating lease liability, current | ||||||||
| Notes payable, current | ||||||||
| Notes payable, related party, current | ||||||||
| Convertible notes payable | ||||||||
| Guarantee liability | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| LONG-TERM LIABILITIES | ||||||||
| Operating lease liability, non-current | ||||||||
| Notes payable, non-current | ||||||||
| Convertible notes payable, non-current | ||||||||
| Other long-term liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
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)
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock, $ par value - shares authorized; and shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively (liquidation preference of $ | ||||||||
| Class A Common Stock, $ par value – shares authorized; and shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively | ||||||||
| Class B Common Stock, $ par value – shares authorized; and shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| TOTAL HYPERSCALE DATA STOCKHOLDERS’ EQUITY | ||||||||
| Non-controlling interest | ||||||||
| TOTAL STOCKHOLDERS’ EQUITY | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
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)
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenue, crane operations | $ | $ | ||||||
| Revenue, defense solutions | ||||||||
| Revenue, crypto assets mining | ||||||||
| Revenue, hotel and real estate operations | ||||||||
| Revenue, lending and trading activities | ( | ) | ||||||
| Revenue, other | ||||||||
| Total revenue | ||||||||
| Cost of revenue, crane operations | ||||||||
| Cost of revenue, defense solutions | ||||||||
| Cost of revenue, crypto assets mining | ||||||||
| Cost of revenue, hotel and real estate operations | ||||||||
| Cost of revenue, lending and trading activities | ||||||||
| Cost of revenue, other | ||||||||
| Total cost of revenue | ||||||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| General and administrative | ||||||||
| Selling and marketing | ||||||||
| Research and development | ||||||||
| Change in fair value of crypto assets | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other (expense) income: | ||||||||
| Interest and other income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Change in fair value of crypto assets, restricted | ( | ) | ||||||
| Gain (loss) on extinguishment of debt | ( | ) | ||||||
| Change in fair value of embedded derivative liabilities | ||||||||
| Gain on deconsolidation of subsidiary | ||||||||
| Loss on the sale of fixed assets | ( | ) | ||||||
| Total other (expense) income, net | ( | ) | ||||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Income tax provision | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Net income attributable to non-controlling interest | ||||||||
| Net loss attributable to Hyperscale Data | ( | ) | ( | ) | ||||
| Preferred dividends | ( | ) | ( | ) | ||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted net loss per common share | $ | ) | $ | ) | ||||
| Weighted average basic and diluted common shares outstanding | ||||||||
| Comprehensive (loss) income | ||||||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Foreign currency translation adjustment | ( | ) | ||||||
| Other comprehensive (loss) income | ( | ) | ||||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | ||
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 March 31, 2026
| Preferred Stock | Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series A | Series B | Series C | Series D | Series E | Series F | Series G | Series H | Class A | Class B | Additional | Other | Non- | Total | ||||||||||||||||||||||||||||||||||||||||||||||
| Par | Par | Par | Par | Par | Par | Par | Par | Common Stock | Common Stock | Paid-In | 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 | Deficit | Loss | Interest | Equity | |||||||||||||||||||||||||||||||||||
| BALANCES, January 1, 2026 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of Series D preferred stock for cash |
- | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Class B common stock converted into Class A common stock | - | - | - | - | - | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Class A common stock for cash | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Financing cost in connection with sales of Class A common stock | - | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to Hyperscale Data | - | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||
| Series A preferred dividends ($0.62 per share) | - | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||
| Series B preferred dividends ($84.42 per share) | - | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||
| Series C preferred dividends ($24.00 per share) | - | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||
| Series D preferred dividends ($0.81 per share) | - | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||
| Series E preferred dividends ($0.62 per share) | - | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||
| Series G preferred dividends ($47.48 per share) | - | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||
| Series H preferred dividends ($23.75 per share) | - | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to non-controlling interest | - | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||
| BALANCES, March 31, 2026 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
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 March 31, 2025
| Preferred Stock | Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Series A | Series C | Series D | Series E | Series F | Series G | Class A | Class B | Additional | Other | Non- | Total | ||||||||||||||||||||||||||||||||||||||||
| Par | Par | Par | Par | Par | Par | Common Stock | Common Stock | Paid-In | Accumulated | Comprehensive | Controlling | Treasury | Stockholders’ | ||||||||||||||||||||||||||||||||||||||
| 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 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Issuance of Series G preferred stock, related party |
- | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
| Fair value of warrants issued in connection with Series G preferred stock, related party | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
| Issuance of Series D preferred stock for cash |
- | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
| Class B common stock dividend | - | - | - | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Class A common stock for conversion of debt | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to Hyperscale Data | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Series A preferred dividends ($0.62 per share) | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Series C preferred dividends ($23.57 per share) | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Series D preferred dividends ($1.06 per share) | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Series E preferred dividends ($0.57 per share) | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Retirement of treasury stock | - | - | - | - | - | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to non-controlling interest | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Deconsolidation of subsidiary | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||
| BALANCES, March 31, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||||||||||
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 CASH FLOWS
(Unaudited)
| For the Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of debt discount | ||||||||
| Amortization of right-of-use assets | ||||||||
| Stock-based compensation | ||||||||
| Loss on the sale of fixed assets | ||||||||
| Revenue, crypto assets mining | ( | ) | ( | ) | ||||
| Proceeds from the sale of crypto assets | ||||||||
| Change in fair value of crypto assets and crypto assets, restricted | ||||||||
| Realized gains on non-marketable equity securities | ( | ) | ||||||
| Change in fair value of embedded derivatives | ( | ) | ||||||
| (Gain) loss on extinguishment of debt | ( | ) | ||||||
| Gain on deconsolidation of subsidiary | ( | ) | ||||||
| Other operating activities | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Marketable equity securities | ( | ) | ||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventories | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Other assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Lease liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Purchase of crypto assets | ( | ) | ||||||
| Investments in loans receivable | ( | ) | ||||||
| Collections on loans receivable | ||||||||
| Investments in non-marketable equity securities | ( | ) | ||||||
| Proceeds from the sale of property and equipment | ||||||||
| Investment in notes receivable, related party | ( | ) | ||||||
| Collections on notes receivable, related party | ||||||||
| Other investing activities | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| F-6 |
HYPERSCALE DATA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Unaudited)
| For the Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from financing activities: | ||||||||
| Gross proceeds from sales of Class A common stock | $ | $ | ||||||
| Offering costs related to issuance of Class A common stock | ( | ) | ||||||
| Proceeds from sales of Series D preferred stock | ||||||||
| Proceeds from sales of Series G preferred stock and warrants, related party | ||||||||
| Proceeds from notes payable | ||||||||
| Payments on notes payable | ( | ) | ( | ) | ||||
| Repayments of related party notes payable | ( | ) | ||||||
| Proceeds from related party notes payable | ||||||||
| Payments of preferred dividends | ( | ) | ( | ) | ||||
| Proceeds from issuance of convertible notes | ||||||||
| Payments on convertible notes | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ||||||
| Net decrease in cash and cash equivalents and restricted cash | ( | ) | ( | ) | ||||
| Cash, cash equivalents and restricted cash at beginning of period | ||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid for interest | $ | 3,446,000 | $ | 2,699,000 | ||||
| Non-cash investing and financing activities: | ||||||||
| Settlement of accounts payable with crypto assets | $ | $ | ||||||
| Conversion of convertible notes payable into shares of Class A common stock | $ | $ | ||||||
| Conversion of debt and equity securities to marketable securities | $ | $ | ||||||
| Exchange of related party advances for investment in other equity securities, related party | $ | $ | ||||||
| Recognition of new operating lease right-of-use assets and lease liabilities | $ | $ | ||||||
| Notes payable exchanged for convertible notes payable | $ | $ | ||||||
| Property and equipment acquired through note payable financing | $ | 1,500,000 | $ | - | ||||
| F-7 |
1. DESCRIPTION OF BUSINESS
Hyperscale Data, Inc. (“Hyperscale Data” or the “Company”) is a Delaware corporation whose principal operations consist of owning and operating data center infrastructure supporting digital asset mining operations. While the Company has completed initial deployments supporting high-density computing workloads for third-party customers, its current operations are primarily focused on Bitcoin mining and the accumulation of digital assets, primarily through its wholly owned subsidiary, Sentinum, Inc. (“Sentinum”), which operates facilities providing power and related infrastructure.
Through another of its wholly owned subsidiaries, Ault Capital Group, Inc. (“Ault Capital”), the Company holds a portfolio of diversified businesses and strategic investments spanning commercial lending and trading, hotel operations, crane rental, software platforms and commercial electronics. The Company anticipates completing the planned divestiture of Ault Capital in 2027, at which time it expects to operate as a more focused data center infrastructure-oriented business.
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; |
| · | Gresham Worldwide, Inc. (“Gresham”) – defense solutions; |
| · | Ault Global Real Estate Equities, Inc. (“AGREE”) – hotel operations and other commercial real estate holdings: |
| · | TurnOnGreen, Inc. (“TurnOnGreen”) – commercial electronics; |
| · | Technology and Finance (“Fintech”) – commercial lending, activist investing, and stock trading; and |
| · | askROI, Inc. and RiskOn International, Inc. (“ROI”) – AI software platform. |
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”), 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 above referenced 2025 Annual Report. Results of operations for the three months ended March 31, 2026 are not necessarily indicative of results to be expected for future interim periods or the full year ending December 31, 2026.
Significant Accounting Policies
There have been no material changes to the Company’s significant accounting policies disclosed in the 2025 Annual Report.
Reclassifications
Certain prior period amounts have been reclassified for comparative purposes to conform to the current-period financial statement presentation.
| F-8 |
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 Issued Standards
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 July 2025, the FASB issued 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.
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.
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 three months ended March 31, 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 months ended March 31, 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.
| F-9 |
The Company’s disaggregated revenues consisted of the following for the three months ended March 31, 2026:
| Schedule of disaggregated revenues | ||||||||||||||||||||||||||||||||||||
| Gresham | TurnOnGreen | Fintech | Sentinum | AGREE | Energy | ROI | Holding Co. | Total | ||||||||||||||||||||||||||||
| Primary Geographical Markets | ||||||||||||||||||||||||||||||||||||
| North America | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Europe | ||||||||||||||||||||||||||||||||||||
| Middle East and other | ||||||||||||||||||||||||||||||||||||
| Revenue from contracts with customers | ||||||||||||||||||||||||||||||||||||
| Revenue, lending and trading activities (North America) | ||||||||||||||||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Major Goods or Services | ||||||||||||||||||||||||||||||||||||
| Crane rental | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Revenue from mined crypto assets at Sentinum owned and operated facilities | ||||||||||||||||||||||||||||||||||||
| Hotel and real estate operations | ||||||||||||||||||||||||||||||||||||
| Power supply units and systems | ||||||||||||||||||||||||||||||||||||
| Defense systems | ||||||||||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||||||
| Revenue from contracts with customers | ||||||||||||||||||||||||||||||||||||
| Revenue, lending and trading activities | ||||||||||||||||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Timing of Revenue Recognition | ||||||||||||||||||||||||||||||||||||
| Goods and services transferred at a point in time | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Services transferred over time | ||||||||||||||||||||||||||||||||||||
| Revenue from contracts with customers | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
The Company’s disaggregated revenues consisted of the following for the three months ended March 31, 2025:
| TurnOnGreen | Fintech | Sentinum | AGREE | Energy | ROI | Holding Co. | Total | |||||||||||||||||||||||||
| Primary Geographical Markets | ||||||||||||||||||||||||||||||||
| North America | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||
| Europe | ||||||||||||||||||||||||||||||||
| Middle East and other | ||||||||||||||||||||||||||||||||
| Revenue from contracts with customers | ( | ) | ||||||||||||||||||||||||||||||
| Revenue, lending and trading activities (North America) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Total revenue | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||
| Major Goods or Services | ||||||||||||||||||||||||||||||||
| Power supply units and systems | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Revenue from mined crypto assets at Sentinum owned and operated facilities | ||||||||||||||||||||||||||||||||
| Hotel and real estate operations | ||||||||||||||||||||||||||||||||
| Crane rental | ||||||||||||||||||||||||||||||||
| Other | ( | ) | ||||||||||||||||||||||||||||||
| Revenue from contracts with customers | ( | ) | ||||||||||||||||||||||||||||||
| Revenue, lending and trading activities | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Total revenue | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||
| Timing of Revenue Recognition | ||||||||||||||||||||||||||||||||
| Goods and services transferred at a point in time | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||
| Services transferred over time | ||||||||||||||||||||||||||||||||
| Revenue from contracts with customers | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||
| F-10 |
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 March 31, 2026 and December 31, 2025:
| Fair value, assets measured on recurring basis | ||||||||||||||||
| Fair Value Measurement at March 31, 2026 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Investments in other equity securities - embedded conversion feature | $ | $ | $ | $ | ||||||||||||
| Investments in other equity securities - warrants | $ | $ | $ | $ | ||||||||||||
| Embedded conversion feature liabilities | $ | $ | $ | $ | ||||||||||||
| Fair Value Measurement at December 31, 2025 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Embedded conversion feature liabilities | $ | $ | $ | $ | ||||||||||||
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. There were no transfers into or out of Level 3 during the three months ended March 31, 2026 or during the year ended December 31, 2025.
The changes in Level 3 fair value hierarchy during the three months ended March 31, 2026 and 2025 were as follows:
| Schedule of changes in fair value hierarchy | ||||||||||||||||
| Level 3 Balance at Beginning of Period | Fair Value Adjustments | Grants | Level 3 Balance at End of Period | |||||||||||||
| Three months ended March 31, 2026 | ||||||||||||||||
| Investments in other equity securities - embedded conversion feature | $ | $ | $ | $ | ||||||||||||
| Investments in other equity securities - warrants | $ | $ | ( | ) | $ | $ | ||||||||||
| Embedded conversion feature liabilities | $ | $ | ( | ) | $ | $ | ||||||||||
| Level 3 Balance at Beginning of Period | Fair Value Adjustments | Grants | Level 3 Balance at End of Period | |||||||||||||
| Three months ended March 31, 2025 | ||||||||||||||||
| Embedded conversion feature liabilities | $ | $ | $ | $ | ||||||||||||
6. CRYPTO ASSETS
The Company measures its crypto assets at fair value using quoted market prices in active markets for identical assets, which are classified within Level 1 of the fair value hierarchy.
The following table presents the Company’s significant digital asset holdings as of March 31, 2026 and December 31, 2025:
| Schedule of digital asset holdings | March 31, | December 31, | ||||||
| 2026 | 2025 | |||||||
| Crypto assets | $ | $ | ||||||
| Crypto assets, restricted(1) | ||||||||
| Total crypto assets holdings | $ | $ | ||||||
| (1) |
| F-11 |
The following table presents the activities of the crypto assets for the three months ended March 31, 2026 and 2025:
| Schedule of activities of the crypto assets | ||||||||
| For the Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Balance at January 1 | $ | $ | ||||||
| Additions of mined crypto assets | ||||||||
| Purchases of crypto assets | ||||||||
| Sale of crypto assets | ( | ) | ||||||
| Transferred to crypto assets, restricted | ( | ) | ||||||
| Unrealized loss on crypto assets | ( | ) | ( | ) | ||||
| Other | ( | ) | ( | ) | ||||
| Balance at March 31 | $ | $ | ||||||
The following table presents the activities of the crypto assets, restricted for the three months ended March 31, 2026:
| 2026 | ||||
| Balance at January 1 | $ | |||
| Transferred to crypto assets, restricted | ||||
| Unrealized loss on crypto assets, restricted | ( | ) | ||
| Other | ( | ) | ||
| Balance at March 31 | $ | |||
7. PROPERTY AND EQUIPMENT, NET
At March 31, 2026 and December 31, 2025, property and equipment consisted of:
| Schedule of property and equipment | ||||||||
| March 31, 2026 | December 31, 2025 | |||||||
| Building, land and improvements | $ | $ | ||||||
| Crypto assets mining equipment | ||||||||
| Crane rental equipment | ||||||||
| Computer, software and related equipment | ||||||||
| Aircraft | ||||||||
| Other property and equipment | ||||||||
| Accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Summary of depreciation expense:
| Schedule of depreciation | ||||||||
| For the Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Depreciation expense | $ | $ | ||||||
8. INTANGIBLE ASSETS, NET
At March 31, 2026 and December 31, 2025, intangible assets consisted of:
| Schedule of intangible asset | ||||||||||
| Useful Life | March 31, 2026 | December 31, 2025 | ||||||||
| Definite lived intangible assets: | ||||||||||
| Developed technology | $ | $ | ||||||||
| Customer list | ||||||||||
| Trade names | ||||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||||
| Total definite-lived intangible assets | $ | $ | ||||||||
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:
| Schedule of amortization expense | ||||||||
| For the Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Amortization expense | $ | $ | ||||||
| F-12 |
As
of March 31, 2026,
| Schedule of estimated amortization expense | ||||
| 2026 (remainder) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| $ |
9. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Other current liabilities at March 31, 2026 and December 31, 2025 consisted of:
| Schedule of other current liabilities | ||||||||
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Accounts payable | $ | $ | ||||||
| Accrued participation profits payable to investors | ||||||||
| Accrued payroll and payroll taxes | ||||||||
| Interest payable | ||||||||
| Accrued legal | ||||||||
| Other accrued expenses | ||||||||
| Total | $ | $ | ||||||
10. NOTES PAYABLE
Notes payable at March 31, 2026 and December 31, 2025, were comprised of the following:
| Schedule of notes payable | ||||||||||||||||||||||
| Collateral | Guarantors | Interest rate | Effective rate(1) | Due date | March 31, 2026 | December 31, 2025 | ||||||||||||||||
| AGREE secured construction loans, in default | - | % | % | $ | $ | |||||||||||||||||
| Circle 8 revolving credit facility | - | % | % | |||||||||||||||||||
| Circle 8 equipment financing notes | - | % | % | Various dates through | ||||||||||||||||||
| Term note | - | Ault & Company, Inc. (“Ault & Company”) and Milton C. Ault, III | % | % | ||||||||||||||||||
| Other | - | - | % | Various | ||||||||||||||||||
| Total notes payable | $ | $ | ||||||||||||||||||||
| Less: | ||||||||||||||||||||||
| Unamortized debt discounts | ( | ) | ||||||||||||||||||||
| Total notes payable, net | $ | $ | ||||||||||||||||||||
| Less: current portion | ( | ) | ( | ) | ||||||||||||||||||
| Notes payable – long-term portion | $ | $ | ||||||||||||||||||||
| (1) |
| F-13 |
Second Amendment to AGREE Construction Loans
In January 2026, the
Company’s 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
Circle 8 Financing
In March 2026, Circle 8 entered
into a secured promissory note in the principal amount of $
Term Notes
In January and February 2026,
the Company issued two short-term term notes to an institutional investor for aggregate gross proceeds of $
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 March 31, 2026 were:
| Schedule of maturities | ||||
| Year | ||||
| 2026 (remainder) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| $ | ||||
Interest Expense
| Schedule of interest expense | ||||||||
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Contractual interest expense | $ | $ | ||||||
| Forbearance fees | ||||||||
| Amortization of debt discount | ||||||||
| Total interest expense | $ | $ | ||||||
11. NOTES PAYABLE, RELATED PARTY
Notes payable, related party at March 31, 2026 and December 31, 2025, were comprised of the following:
| Schedule of notes payable, related party | ||||||||||||||
| Interest rate | Effective rate | Due date | March 31, 2026 | December 31, 2025 | ||||||||||
| Ault & Company demand promissory note | Upon demand | $ | $ | |||||||||||
| Notes from officers - TurnOnGreen, in default | Past due | |||||||||||||
| Total notes payable | $ | $ | ||||||||||||
| F-14 |
Summary of interest expense, related party, recorded within interest expense on the condensed consolidated statement of operations:
| Schedule of interest expense, related party | ||||||||
| For the Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Interest expense, related party | $ | $ | ||||||
12. CONVERTIBLE NOTES
Convertible notes payable at March 31, 2026 and December 31, 2025, were comprised of the following:
| Schedule of convertible notes payable | ||||||||||||||||
| Conversion price per share | Interest rate | Effective rate(1) | Due date | March 31, 2026 | December 31, 2025 | |||||||||||
| Convertible promissory notes issued to JGB entities | 85% of 3-day VWAP | $ | $ | |||||||||||||
| SJC Lending, LLC (“SJC”) convertible promissory note | 75% of 5-day VWAP | |||||||||||||||
| ROI senior secured convertible note, in default | $0.11 (ROI stock) | OID Only | ||||||||||||||
| TurnOnGreen convertible promissory note | 80% of 10-day VWAP (TurnOnGreen stock) | Various dates through | ||||||||||||||
| Fair value of embedded conversion options | ||||||||||||||||
| Total convertible notes payable | ||||||||||||||||
| Less: unamortized debt discounts | ( | ) | ( | ) | ||||||||||||
| Total convertible notes payable, net of financing cost, long-term | $ | $ | ||||||||||||||
| Less: current portion | ( | ) | ( | ) | ||||||||||||
| Convertible notes payable, net of financing cost – long-term portion | $ | $ | ||||||||||||||
| (1) |
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.
Embedded Derivatives
The Company identified embedded derivative features within certain convertible promissory notes that required bifurcation and separate accounting as derivative liabilities under Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging. 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.
The following table summarizes the key inputs used in the valuation of the embedded derivatives at inception and as of March 31, 2026:
| Schedule of valuation of the embedded derivatives | ||||
| Assumption | Weighted Average at Inception | Weighted Average at March 31, 2026 | ||
| Valuation technique | Monte Carlo Simulation | Monte Carlo Simulation | ||
| Risk-free interest rate | ||||
| Expected volatility | ||||
| Credit-risk adjusted rate | ||||
| Time to maturity (years) | ||||
| Stock price at valuation date | $ | $ | ||
| Dividend yield |
| F-15 |
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.
Gain (Loss) on Extinguishment of Convertible Notes
During the three months ended March 31, 2026, the Company did not recognize any gains or losses on extinguishment of convertible notes.
During
the three months ended March 31, 2025, the Company recognized a net loss on extinguishment of convertible notes of $
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 March 31, 2026, were:
| Schedule of contractual maturities | ||||
| Year | Principal | |||
| 2026 (remainder) | $ | |||
| 2027 | ||||
| $ | ||||
13. 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.
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.
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.
14. 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 liquidation of the Company.
| F-16 |
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 (the “ATM Offering”). During
the period between January 1, 2026 through March 31, 2026, the Company sold an aggregate of
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 $
Preferred Stock
Preferred stock as of March 31, 2026 consisted of the following:
| Stockholders’ equity | ||||||||||||||||||||
| Par Value Per Share | Stated Value Per Share | Shares Authorized | Liquidation Preference | Shares Issued and Outstanding at March 31, 2026 | ||||||||||||||||
| Series A Convertible Preferred Stock | $ | $ | $ | |||||||||||||||||
| Series B Convertible Preferred Stock | $ | $ | ||||||||||||||||||
| Series C Convertible Preferred Stock | $ | $ | ||||||||||||||||||
| Series D Cumulative Redeemable Perpetual Preferred Stock | $ | $ | ||||||||||||||||||
| Series E Cumulative Redeemable Perpetual Preferred Stock | $ | $ | ||||||||||||||||||
| Series F Exchangeable Preferred Stock | $ | $ | ||||||||||||||||||
| Series G Convertible Preferred Stock | $ | $ | ||||||||||||||||||
| Series H Convertible Preferred Stock | $ | $ | ||||||||||||||||||
| Unallocated | ||||||||||||||||||||
| Total | $ | |||||||||||||||||||
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 | $ | $ | $ | |||||||||||||||||
| Series B Convertible Preferred Stock | $ | $ | ||||||||||||||||||
| Series C Convertible Preferred Stock | $ | $ | ||||||||||||||||||
| Series D Cumulative Redeemable Perpetual Preferred Stock | $ | $ | ||||||||||||||||||
| Series E Cumulative Redeemable Perpetual Preferred Stock | $ | $ | ||||||||||||||||||
| Series F Exchangeable Preferred Stock | $ | $ | ||||||||||||||||||
| Series G Convertible Preferred Stock | $ | $ | ||||||||||||||||||
| Series H Convertible Preferred Stock | $ | $ | ||||||||||||||||||
| Unallocated | ||||||||||||||||||||
| Total | $ | |||||||||||||||||||
| F-17 |
The Company is authorized to issue million shares of preferred stock, $ par value. As of March 31, 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.
15. INCOME TAXES
The Company calculates its
interim income tax provision in accordance with ASC Topic 270, Interim Reporting, and Topic 740, Income Taxes. The difference between
the effective tax rate and the federal statutory rate of
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 March 31, 2026 and 2025:
| Schedule of net loss per share | ||||||||
| March 31, 2026 | March 31, 2025 | |||||||
| Convertible preferred stock | ||||||||
| Convertible notes | ||||||||
| Stock options | ||||||||
| Warrants | ||||||||
| Total | ||||||||
| F-18 |
17. SEGMENT AND CUSTOMERS INFORMATION
The Company had the following reportable segments as of March 31, 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 three months ended March 31, 2026:
| Schedule of operating segments | ||||||||||||||||||||||||||||||||||||
| Gresham | TurnOnGreen | Fintech | Sentinum | AGREE | Energy | ROI | Holding Co. | Total | ||||||||||||||||||||||||||||
| Revenue, crane operations | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Revenue, defense solutions | ||||||||||||||||||||||||||||||||||||
| Revenue, crypto assets mining | ||||||||||||||||||||||||||||||||||||
| Revenue, hotel and real estate operations | ||||||||||||||||||||||||||||||||||||
| Revenue, lending and trading activities | ||||||||||||||||||||||||||||||||||||
| Revenue, other | ||||||||||||||||||||||||||||||||||||
| Total revenue | ||||||||||||||||||||||||||||||||||||
| Cost of revenue | ||||||||||||||||||||||||||||||||||||
| Gross profit (loss) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||||||||||||||
| Selling and marketing | ||||||||||||||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||||||||||||||
| Change in fair value of crypto assets | ||||||||||||||||||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||||||||||||||||||
| (Loss) income from operations | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ( | ) | ||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||||||||||||
| Interest and other income | ||||||||||||||||||||||||||||||||||||
| Interest expense | ( | ) | ||||||||||||||||||||||||||||||||||
| Gain on extinguishment of debt | ||||||||||||||||||||||||||||||||||||
| Change in fair value of embedded derivative liabilities | ||||||||||||||||||||||||||||||||||||
| Total other expense, net | ( | ) | ||||||||||||||||||||||||||||||||||
| Loss before income taxes | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Depreciation and amortization expense | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Interest expense | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||
| Capital expenditures for the three months ended March 31, 2026 | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Segment identifiable assets as of March 31, 2026 | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| F-19 |
The following data presents the revenues, expenditures and other operating data of the Company and its operating segments for the three months ended March 31, 2025:
| TurnOnGreen | Fintech | Sentinum | AGREE | Energy | ROI | Holding Co. | Total | |||||||||||||||||||||||||
| Revenue, crane operations | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Revenue, crypto assets mining | ||||||||||||||||||||||||||||||||
| Revenue, hotel and real estate operations | ||||||||||||||||||||||||||||||||
| Revenue, lending and trading activities | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Revenue, other | ( | ) | ||||||||||||||||||||||||||||||
| Total revenue | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Cost of revenue | ||||||||||||||||||||||||||||||||
| Gross profit (loss) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||||||||||
| Selling and marketing | ||||||||||||||||||||||||||||||||
| General and administrative | ( | ) | ||||||||||||||||||||||||||||||
| Total operating expenses | ( | ) | ||||||||||||||||||||||||||||||
| (Loss) income from operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ( | ) | |||||||||||
| Other income (expense): | ||||||||||||||||||||||||||||||||
| Interest and other income | ||||||||||||||||||||||||||||||||
| Interest expense | ( | ) | ||||||||||||||||||||||||||||||
| Loss on extinguishment of debt | ( | ) | ||||||||||||||||||||||||||||||
| Gain on deconsolidation of subsidiary | ||||||||||||||||||||||||||||||||
| Loss on the sale of fixed assets | ( | ) | ||||||||||||||||||||||||||||||
| Total other expense, net | ||||||||||||||||||||||||||||||||
| Loss before income taxes | $ | ( | ) | |||||||||||||||||||||||||||||
| Depreciation and amortization expense | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Interest expense | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||
| Capital expenditures for the year ended March 31, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Segment identifiable assets as of March 31, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| F-20 |
18. 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:
| Schedule of concentrations of credit and revenue risk | ||||||||||||||||
| Accounts Receivable | Revenue | |||||||||||||||
| March 31, | December 31, | For the Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Customer A | * | * | % | % | ||||||||||||
| Customer B | % | % | * | * | ||||||||||||
| Customer C | * | * | % | * | ||||||||||||
| Customer D | % | % | % | * | ||||||||||||
| * | less than 10% |
19. SUBSEQUENT EVENTS
Class A Common Stock ATM Offering Activity
During
the period between April 1, 2026 through May 15, 2026,
the Company sold an aggregate of million shares of Class A common
stock pursuant to the ATM Offering for gross proceeds of $
Series D Preferred ATM Offering Activity
During the period between
April 1, 2026 through May 15,
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 $
Term Note
In April 2026, the Company
entered into a short-term term note with an institutional investor for gross proceeds of $
Receipt of Litigation-Related Proceeds
On April 1, 2026, the Company
received cash proceeds of approximately $
| F-21 |
Circle 8 Financing Agreement
In April 2026, Circle 8 finalized
a financing arrangement and received $
The financing is secured by first-priority liens on certain cranes and related equipment owned by Circle 8. Proceeds from the financing were used to fully repay amounts outstanding under the Circle 8 revolving credit facility and for general operating purposes.
Authorized Shares Increase
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 shares to shares.
| F-22 |
| 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 the second quarter of 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 “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 as an additional sales agent.
As of May 15, 2026, we have sold 137.6 million shares of our Class A common stock under the ATM Offering for gross proceeds of approximately $24.7 million.
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.
As of May 15, 2026, we have sold 22,743 shares of our Series D Preferred under the Series D Preferred ATM Offering for gross proceeds of approximately $0.5 million.
In April 2026, we entered into a short-term term note with an institutional investor for gross proceeds of $10.0 million. The note was issued with an original issue discount of $0.8 million and has a principal face amount of $10.8 million. The note bears interest at 12% per annum and matures on June 29, 2026. Beginning May 8, 2026, we are 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 may be prepaid at any time without penalty. Repayment obligations under the note are guaranteed by Ault & Company and Milton C. Ault, III, our Executive Chairman.
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.
| 1 |
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 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/.
| 2 |
Results of Operations
Results of Operations for the Three Months Ended March 31, 2026 and 2025
The following table summarizes the results of our operations for the three months ended March 31, 2026 and 2025.
| For the Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenue, crane operations | $ | 11,001,000 | $ | 13,769,000 | ||||
| Revenue, defense solutions | 10,182,000 | - | ||||||
| Revenue, crypto assets mining | 5,077,000 | 5,198,000 | ||||||
| Revenue, hotel and real estate operations | 3,856,000 | 3,665,000 | ||||||
| Revenue, lending and trading activities | 11,521,000 | (28,000 | ) | |||||
| Revenue, other | 2,442,000 | 2,417,000 | ||||||
| Total revenue | 44,079,000 | 25,021,000 | ||||||
| Cost of revenue, crane operations | 7,180,000 | 8,247,000 | ||||||
| Cost of revenue, defense solutions | 7,036,000 | - | ||||||
| Cost of revenue, crypto assets mining | 7,610,000 | 7,031,000 | ||||||
| Cost of revenue, hotel and real estate operations | 2,990,000 | 2,844,000 | ||||||
| Cost of revenue, lending and trading activities | 1,944,000 | - | ||||||
| Cost of revenue, other | 2,250,000 | 1,616,000 | ||||||
| Total cost of revenue | 29,010,000 | 19,738,000 | ||||||
| Gross profit | 15,069,000 | 5,283,000 | ||||||
| Operating expenses | ||||||||
| General and administrative | 18,526,000 | 9,195,000 | ||||||
| Selling and marketing | 5,612,000 | 2,334,000 | ||||||
| Research and development | 4,800,000 | 129,000 | ||||||
| Change in fair value of crypto assets | 7,405,000 | 9,000 | ||||||
| Total operating expenses | 36,343,000 | 11,667,000 | ||||||
| Loss from operations | (21,274,000 | ) | (6,384,000 | ) | ||||
| Other (expense) income: | ||||||||
| Interest and other income | 769,000 | 240,000 | ||||||
| Interest expense | (6,546,000 | ) | (3,839,000 | ) | ||||
| Change in fair value of crypto assets, restricted | (4,682,000 | ) | - | |||||
| Gain (loss) on extinguishment of debt | 489,000 | (4,569,000 | ) | |||||
| Change in fair value of embedded derivative liabilities | 1,324,000 | - | ||||||
| Gain on deconsolidation of subsidiary | - | 10,049,000 | ||||||
| Loss on the sale of fixed assets | - | (161,000 | ) | |||||
| Total other expense, net | (8,646,000 | ) | 1,720,000 | |||||
| Loss before income taxes | (29,920,000 | ) | (4,664,000 | ) | ||||
| Income tax provision | 216,000 | 59,000 | ||||||
| Net loss | (30,136,000 | ) | (4,723,000 | ) | ||||
| Net income attributable to non-controlling interest | 186,000 | 518,000 | ||||||
| Net loss attributable to Hyperscale Data | (29,950,000 | ) | (4,205,000 | ) | ||||
| Preferred dividends | (2,506,000 | ) | (1,966,000 | ) | ||||
| Net loss attributable to common stockholders | $ | (32,456,000 | ) | $ | (6,171,000 | ) | ||
| Comprehensive loss | ||||||||
| Net loss attributable to common stockholders | $ | (32,456,000 | ) | $ | (6,171,000 | ) | ||
| Other comprehensive (loss) income | ||||||||
| Foreign currency translation adjustment | (806,000 | ) | 6,000 | |||||
| Other comprehensive (loss) income | (806,000 | ) | 6,000 | |||||
| Total comprehensive loss | $ | (33,262,000 | ) | $ | (6,165,000 | ) | ||
| 3 |
Revenues
Revenues by business category for the three months ended March 31, 2026 and 2025 were as follows:
| For the Three Months Ended March 31, | Increase | |||||||||||||||
| 2026 | 2025 | (Decrease) | % | |||||||||||||
| Sentinum | ||||||||||||||||
| Revenue, crypto assets mining | $ | 5,077,000 | $ | 5,198,000 | $ | (121,000 | ) | -2 | % | |||||||
| Revenue, commercial real estate leases | 253,000 | 516,000 | (263,000 | ) | -51 | % | ||||||||||
| Energy | ||||||||||||||||
| Revenue, crane operations | 11,001,000 | 13,769,000 | (2,768,000 | ) | -20 | % | ||||||||||
| Other | - | 29,000 | (29,000 | ) | -100 | % | ||||||||||
| Fintech | 11,521,000 | (28,000 | ) | 11,549,000 | n/m | |||||||||||
| Gresham | 10,182,000 | - | 10,182,000 | n/m | ||||||||||||
| AGREE | 3,603,000 | 3,149,000 | 454,000 | 14 | % | |||||||||||
| TurnOnGreen | 1,736,000 | 1,592,000 | 144,000 | 9 | % | |||||||||||
| Other | 706,000 | 796,000 | (90,000 | ) | -11 | % | ||||||||||
| Total revenue | $ | 44,079,000 | $ | 25,021,000 | $ | 19,058,000 | 76 | % | ||||||||
n/m - not meaningful
Sentinum
Revenues from Sentinum’s crypto asset mining operations decreased by $0.1 million to $5.1 million for the three months ended March 31, 2026, compared to $5.2 million for the same period in 2025. The decrease in mining revenue was driven by an 18% decrease in the average Bitcoin price and a 27% increase in the average Bitcoin network difficulty level during the three months ended March 31, 2026, compared to the same period in 2025.
Energy
Energy revenues from Circle 8’s crane operations declined by $2.8 million, or 20%, for the three months ended March 31, 2026, compared to the same period in 2025. The decrease reflects a slowdown in demand from oil and gas customers, as many exploration projects were delayed or scaled back amid continued market uncertainty. Key contributing factors included fluctuations in crude oil prices, softer global demand and trade-related concerns, all of which impacted the pace of new project starts and the need for crane services.
Fintech
Revenues from our lending and trading activities increased by $11.5 million to $11.5 million for the three months ended March 31, 2026, compared to ($28,000) for the same period in 2025. The increase was driven primarily by litigation-related proceeds associated with legacy ownership interests held by Ault Lending and unrealized gains on investments in other equity securities.
Revenues from our trading activities for the three months ended March 31, 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.
Gresham
Revenues from Gresham were $10.2 million for the three months ended March 31, 2026. No revenues from Gresham were included in the comparable prior-year period because we did not reconsolidate Gresham until its emergence from Chapter 11 bankruptcy proceedings in late 2025.
| 4 |
AGREE
Revenues from AGREE’s hotel operations increased by $0.5 million, or 14%, for the three months ended March 31, 2026, compared to the same period in 2025. The increase reflects incremental improvements in both occupancy and average daily rates, indicating continued progress in hotel performance year-over-year.
TurnOnGreen
TurnOnGreen’s revenues increased by $0.1 million, to $1.7 million for the three months ended March 31, 2026, compared to $1.6 million in the corresponding period in 2025. The increase was primarily attributable to increased sales to a new electric vehicle charging customer.
Other
Other revenues decreased by $0.1 million, or 11%, for the three months ended March 31, 2026, compared to the same period in 2025. The decrease was primarily driven by reduced corporate aircraft charter revenue from third parties during the period.
Gross Margins
Gross margins increased to 34% for the three months ended March 31, 2026, compared to 21% for the three months ended March 31, 2025. The improvement was primarily driven by favorable contributions from lending and trading activities, which generated approximately $9.6 million of gross profit, as well as the inclusion of Gresham revenue following its emergence from bankruptcy. These improvements were partially offset by unfavorable margins from crypto asset mining activities and lower margins from crane operations.
Excluding the effects of crypto asset mining and lending and trading activities, adjusted gross margins decreased to 29% for the three months ended March 31, 2026, compared to 36% for the three months ended March 31, 2025, primarily reflecting a shift in revenue mix, including the inclusion of Gresham operations and lower crane operations margins.
Research and Development
Research and development expenses increased by approximately $4.7 million for the three months ended March 31, 2026, reflecting increased investment in the development of our AI and blockchain initiatives as these efforts continue to scale.
Selling and Marketing
Selling and marketing expenses were $5.6 million for the three months ended March 31, 2026, compared to $2.3 million for the three months ended March 31, 2025, an increase of $3.3 million, or 140%, reflecting increased investment in brand-building initiatives and expanded marketing campaigns to support our growth strategy.
General and Administrative
General and administrative expenses were $18.5 million for the three months ended March 31, 2026, compared to $9.2 million for the same period in 2025, representing an increase of $9.3 million, or 101%. The increase was primarily driven by the inclusion of Gresham following its emergence from bankruptcy, higher corporate-level expenses at the holding company level, and increased professional fees, including consulting and legal costs, as well as higher travel-related expenses.
Change in Fair Value of Crypto Assets
We recorded a $7.4 million loss related to the change in fair value of crypto assets for the three months ended March 31, 2026, reflecting a decline in Bitcoin market prices during the period. We held approximately $26.3 million of Bitcoin as of March 31, 2026, compared to $46.2 million as of December 31, 2025, and the decrease in market prices resulted in an overall unfavorable fair value adjustment recognized in earnings.
| 5 |
Other Income (Expense), Net
Other expense, net was $8.6 million for the three months ended March 31, 2026, compared to other income, net of $1.7 million for the three months ended March 31, 2025. The change was primarily driven by the absence of the prior year gain on deconsolidation of a subsidiary, as well as higher interest expense and losses on the change in fair value of crypto assets, restricted, partially offset by gains recognized in the current period.
Interest and other income totaled $0.8 million for the three months ended March 31, 2026, compared to $0.2 million for the same period in 2025, primarily reflecting higher income from various non-operating sources.
Interest expense increased to $6.5 million for the three months ended March 31, 2026, compared to $3.8 million for the same period in 2025, primarily due to higher average outstanding debt balances and financing costs during the period.
We recorded a $4.7 million loss related to the change in fair value of restricted crypto assets, restricted for the three months ended March 31, 2026, reflecting a decline in Bitcoin market prices during the period. We held approximately $16.7 million of crypto assets, restricted as of March 31, 2026, whereas no crypto assets, restricted were held as of December 31, 2025, and the decrease in market prices resulted in an overall unfavorable fair value adjustment recognized in earnings.
We recorded a $4.7 million loss related to the change in fair value of crypto assets, restricted for the three months ended March 31, 2026, reflecting a decline in Bitcoin market prices during the period. We held approximately $16.7 million of Bitcoin as of March 31, 2026, compared to $0 as of December 31, 2025, and the decrease in market prices resulted in an overall unfavorable fair value adjustment recognized in earnings.
During the three months ended March 31, 2026, we recognized a gain on extinguishment of debt of approximately $0.5 million, compared to a loss of $4.6 million in the prior year period, reflecting the settlement of certain debt obligations on favorable terms.
Additionally, we recognized a $1.3 million gain related to the change in fair value of embedded derivative liabilities during the three months ended March 31, 2026, primarily driven by changes in our stock price and other key valuation inputs, including volatility and discount rates, associated with certain convertible financing instruments.
For the three months ended March 31, 2025, we recognized a $10.0 million gain on deconsolidation of a subsidiary (Avalanche International Corp.) following its filing for Chapter 7 liquidation, which resulted in us no longer maintaining a controlling financial interest. This gain did not recur in the current period.
Income Tax Provision
We recorded an income tax provision of approximately $0.2 million for the three months ended March 31, 2026, compared to $0.1 million for the same period in 2025. The effective tax rate for the three months ended March 31, 2026 was approximately 0.8%, compared to 1.3% 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 March 31, 2026, we had $10.5 million in cash and cash equivalents and $25.7 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.
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, mining operations and other operating businesses. As of March 31, 2026, our short-term obligations primarily consisted of approximately $94.6 million of current notes payable and convertible notes payable, approximately $2.0 million of current operating lease liabilities, and approximately $60.6 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 March 31, 2026, we also held approximately $26.3 million of crypto assets, excluding the $16.7 million of crypto assets, restricted.
| 6 |
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.
We believe our existing liquidity sources, anticipated cash generated from operations and access to external financing sources will provide us with the flexibility necessary to support our operations and address our anticipated obligations over at least the next 12 months. However, our ability to maintain adequate liquidity will depend on, among other factors, operating performance, capital market conditions, the availability of additional financing, and the market value of our assets and investments.
Total cash, cash equivalents and restricted cash decreased by approximately $12.9 million during the three months ended March 31, 2026, primarily reflecting cash used in investing activities, partially offset by cash provided by financing activities.
Net cash used in operating activities was approximately $0.2 million for the three months ended March 31, 2026, compared to $4.0 million for the same period in 2025.
Net cash used in investing activities was approximately $22.8 million for the three months ended March 31, 2026, compared to $1.2 million for the same period in 2025. Cash used in investing activities during the three months ended March 31, 2026 was primarily attributable to:
| · | $10.6 million of capital expenditures related to property and equipment; |
| · | $7.7 million of investments in non-marketable equity securities; |
| · | $3.8 million of purchases of crypto assets; and |
| · | $2.9 million of investments in loans receivable. |
These uses were partially offset by $1.1 million collections on loans receivable and $1.0 million of proceeds from the sale of property and equipment.
Net cash provided by financing activities was approximately $10.6 million for the three months ended March 31, 2026, compared to $4.7 million for the same period in 2025.
Cash provided by financing activities during the 2026 period primarily consisted of:
| · | $18.3 million of proceeds from notes payable; |
| · | $10.6 million of gross proceeds from the sale of Class A common stock, net of $0.3 million in offering costs; |
| · | $0.9 million of proceeds from related party notes payable; and |
| · | $0.8 million of proceeds from convertible notes. |
These inflows were partially offset by:
| · | $14.3 million of payments on notes payable; |
| · | $2.5 million of preferred dividend payments; |
| · | $1.7 million of repayments of related party notes payable; and |
| · | $1.4 million of repayments on convertible notes. |
| 7 |
Financing Transactions Subsequent to March 31, 2026
Class A Common Stock ATM Offering Activity
During the period between April 1, 2026 through May 15, 2026, we sold an aggregate of 91.1 million shares of Class A common stock pursuant to the ATM Offering for gross proceeds of $14.0 million.
Series D Preferred ATM Offering Activity
During the period between April 1, 2026 through May 15, 2026, we sold an aggregate of 20,245 shares of Series D Preferred Stock pursuant to our Series Preferred D ATM Offering for gross proceeds of $0.4 million.
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%.
The financing is secured by first-priority liens on certain cranes and related equipment owned by Circle 8. Proceeds from the financing were used to repay amounts outstanding under the Circle 8 revolving credit facility and for general operating purposes.
Term Note
In April 2026, we 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 has a principal face amount of $10.8 million. The note bears interest at 12% per annum and matures on June 29, 2026. Beginning May 8, 2026, we are 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 may be prepaid at any time without penalty. Repayment obligations under the note are guaranteed by Ault & Company and Milton C. Ault, III, our Executive Chairman.
Critical Accounting Estimates
There have been no material changes to our critical accounting estimates previously disclosed in the 2025 Annual Report.
| 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 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.
| 8 |
Management has identified the following material weaknesses:
| 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. |
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. |
| 9 |
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 March 31, 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.
| 10 |
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.
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.
| ITEM 4. | MINE SAFETY DISCLOSURES |
Not applicable.
| ITEM 5. | OTHER INFORMATION |
None of the
Company’s directors and officers
| 11 |
| ITEM 6. | EXHIBITS |
| 12 |
| * | Filed herewith. |
| ** | Furnished herewith. |
| 13 |
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: May 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) | |||
14
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: May 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: May 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 March 31, 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: May 18, 2026 | By: /s/ William B. Horne | |
| Name: William B. Horne | ||
| Title: Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: May 18, 2026 | By: /s/ Kenneth S. Cragun | |
| Name: Kenneth S. Cragun | ||
| Title: Chief Financial Officer | ||
| (Principal Accounting Officer) |