GPUS 10-K & 10-Q changes, risk factors and insider trading
Hyperscale Data, Inc. (also GPUS-PD) · NYSE · Oil & Gas Field Machinery & Equipment · CIK 896493 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Our Bitcoin strategy exposes us to various risks, including risks associated with Bitcoin.”
New heading “Our Bitcoin strategy subjects us to enhanced regulatory oversight.”
New heading “The concentration of our Bitcoin holdings enhances the risks inherent in our Bitcoin strategy.”
New heading “The emergence or growth of other digital assets, including those with significant private or public sector backing, could have a negative impact on the price of Bitcoin and adversely affect our business.”
New heading “Risks Related to Omnipresent”
New heading “Omnipresent intends to operate in an emerging market, which makes it difficult to evaluate its business and prospects. If markets for service robotics develop more slowly than expected, or long-term end-customer adoption rates and demand are slower than expected, Omnipresent’s operating results and growth prospects could be harmed.”
New heading “Omnipresent intends to operate in an emerging industry that is subject to rapid technological change and will experience increasing competition.”
New heading “Omnipresent’s business plans require a significant amount of capital. Future capital needs may require us to sell additional equity or debt securities that may dilute our stockholders.”
New heading “Omnipresent has no experience in operating robots. Unforeseen safety issues with its future products could result in injuries to people which would in turn result in adverse effects on Hyperscale Data’s business and reputation.”
New heading “Omnipresent intends to target customers, suppliers and production counterparties that are large corporations with substantial negotiating power, exacting product, quality and warranty standards and potentially competitive internal solutions. If Omnipresent proves unable to sell its future products to these customers or is unable to enter into agreements with customers, suppliers and production counterparties on satisfactory terms, its prospects and results of operations will be adversely affected.”
New heading “Omnipresent must successfully manage product introductions and transitions in order to become competitive.”
New heading “Omnipresent expects to rely on third party manufacturers/suppliers for the foreseeable future. This reliance on third parties increases the risk that Omnipresent will not, assuming its business develops, have sufficient quantities of its products or such quantities at an acceptable cost, which could delay, prevent or impair its anticipated development or commercialization efforts.”
New heading “Components used in Omnipresent’s future products sensors may fail as a result of manufacturing, design or other defects over which it has no control and render its anticipated devices permanently inoperable.”
New heading “Risks Related to Our Ault Blockchain Operations”
New heading “All capital that we have invested through Ault Capital in the Ault Blockchain could be lost entirely.”
New heading “We have never built or operated a public blockchain network, and we may be unable to successfully execute a venture of this technical and operational complexity.”
New heading “We may lack the internal organizational capacity and management bandwidth required to build and operate a public blockchain network while simultaneously operating our existing businesses.”
New heading “A new blockchain network has no established value without participants, and participants may not join a network that does not yet have demonstrated value, a challenge that may prove impossible to overcome.”
New heading “No secondary market for AULT Tokens may ever develop, which would make the tokens economically worthless and undermine the economic rationale for purchasing a Node License.”
New heading “The Ault Blockchain Mainnet launched in March 2026 and we have no meaningful track record from which investors can evaluate the performance or long-term prospects of this business.”
New heading “The node license program is a novel commercial structure with no established market precedent, and the market may not accept it.”
New heading “A significant failure in the Ault Blockchain business could harm the reputation and operations of our other business segments, and adverse developments in other segments could in turn harm the Ault Blockchain.”
New heading “Ongoing development of the Ault Blockchain requires continued capital investment that may not be available on acceptable terms or at all.”
New heading “The Ault Blockchain depends on a small number of individuals with specialized knowledge who are not easily replaced, and the loss of any of them could significantly harm our operations.”
New heading “The Ault Blockchain competes against established blockchain networks with substantially greater resources, participation, and proven track records, and may be unable to compete effectively.”
New heading “Broad declines or periods of negative sentiment in digital asset markets generally could reduce demand for Node Licenses and adversely affect the Ault Blockchain business regardless of the network’s own performance.”
New heading “The long-term strategy for the Ault Blockchain depends on applications that have not been built, and these applications may not be successfully developed or may fail to attract users.”
New heading “The strategy of building a blockchain network oriented toward tokenized real-world assets depends on legal, custodial, and market infrastructure that does not yet fully exist, and the execution of this strategy may prove more complex and costly than we currently anticipate.”
New heading “Operational and Financial Risks”
New heading “The core software underlying the Ault Blockchain is developed primarily by an outside firm rather than an internal team, creating dependency, lack of knowledge continuity, and transition risks that could materially disrupt the network.”
New heading “There is currently no available insurance product that would cover losses resulting from a smart contract vulnerability, governance attack, or loss of digital asset private keys, meaning any such loss would be unrecoverable.”
New heading “Blockchain businesses frequently face difficulty maintaining banking relationships, and the loss of banking access would impair our ability to conduct the fiat currency operations necessary to run the Ault Blockchain business.”
New heading “Affiliated entities that operate as validators or stake AULT Tokens are subject to a protocol-enforced penalties that can permanently reduce their token holdings, and any such event could result in a material financial loss.”
New heading “Affiliated entities hold or may hold a majority of all outstanding Node Licenses, concentrating economic interests and potential governance influence within our corporate group.”
New heading “The Ault DAO governance process may produce decisions that are harmful to our interests or to the long-term health of the network, and we have limited ability to prevent such outcomes.”
New heading “The on-chain treasury funded by network transaction fees is controlled by governance votes that we cannot override, and those funds may be allocated in ways that do not benefit the network.”
New heading “The economic arrangements between the Ault Blockchain and our affiliates create potential conflicts of interest that may not be fully aligned with the interests of unaffiliated Node License purchasers.”
New heading “Our ability to screen Node License purchasers and governance participants depends on third-party identity verification and sanctions screening services, and any failure of those services could impair our compliance operations.”
New heading “We rely on external vendors and partners for critical functions we cannot fully perform in-house, and the loss of any key relationship could severely disrupt operations.”
New heading “Legal and Regulatory Risks”
New heading “If either the AULT Token or the Node Licenses we are selling are determined to be a security under applicable law, we could be required to register token distributions as well as node sales, restructure the network’s economics, or cease operations in their current form.”
New heading “The SEC, CFTC, FinCEN, OFAC, or other regulators may take enforcement action against us or the Ault Blockchain in connection with its digital asset activities, and any such action could be materially disruptive.”
New heading “The regulatory posture toward digital assets in the United States has shifted materially between presidential administrations and could shift again, creating significant uncertainty for a business built on long-term regulatory assumptions.”
New heading “We may be subject to obligations under federal anti-money laundering laws that impose significant compliance costs and operational requirements, and failure to comply could result in material penalties.”
New heading “We apply identity verification and sanctions screening at our controlled access points, but the Ault Blockchain is a public network and we cannot prevent all protocol-level interaction by sanctioned persons, which may expose us to regulatory risk.”
New heading “The Wyoming decentralized autonomous organization limited liability company statute is a new and largely untested area of law, and courts or regulators in other jurisdictions may not recognize or enforce the protections it provides.”
New heading “Before the network reaches a defined stage of operation, Ault DAO LLC retains the unilateral authority to amend the governing Constitution, which means the terms that Node License purchasers agreed to could change after purchase.”
New heading “The Ault Blockchain operates across multiple regulatory jurisdictions, and adverse regulatory developments in any major jurisdiction could restrict participant access and impair the network’s global growth.”
New heading “Planned applications involving tokenized financial assets may require exchange, alternative trading system, or broker-dealer registration that we do not currently hold, and the absence of such registration could prevent these applications from launching.”
New heading “The Ault Blockchain is a public network on which any developer may deploy applications without approval, and harmful or non-compliant applications could expose the network and our company to regulatory scrutiny and reputational harm.”
New heading “The accounting and tax treatment of AULT Token distributions received by affiliated entities is uncertain, and adverse determinations could result in unexpected financial and tax liabilities.”
New heading “We may be subject to regulatory enforcement proceedings, class action litigation from Node License purchasers, or other legal proceedings that could result in material costs, penalties, and operational disruption.”
New heading “Participants who lose access to their Node Licenses or earned tokens due to the loss of their private keys may bring claims against us despite the fact that we have no custody of or access to those assets.”
New heading “The governing Constitution limits member claims against us and requires binding arbitration, but these provisions may not be enforceable in all jurisdictions and may not fully protect us from litigation.”
New heading “Technology Risks”
New heading “Protocol and smart contract vulnerabilities; the software underlying the Ault Blockchain, may contain bugs or security flaws that could be exploited to cause permanent, unrecoverable harm to the network and its participants.”
New heading “Theft or compromise of the private keys controlling affiliated entities’ AULT Token holdings could result in the permanent loss of significant digital assets, with no ability to recover them.”
New heading “Block production on the Ault Blockchain is concentrated among the top 100 validators, and the compromise or coordination of a significant portion of that group could disrupt or manipulate the network.”
New heading “The verifiable random function system that node operators depend on for their participation in the network could produce compromised outputs if a sufficient number of nodes are coordinated or manipulated, undermining network functions that rely on randomness.”
New heading “Governance-approved changes to the network’s software may introduce unforeseen technical problems, and disagreements over upgrades could result in the network splitting into additional, incompatible versions.”
New heading “The Ault Blockchain is built on open-source components that we do not own or fully control, and vulnerabilities or changes introduced by third-party maintainers could affect the security and stability of the network.”
New heading “The Ault Blockchain’s planned cross-chain connectivity relies on LayerZero, an external cross-chain messaging protocol that we do not own or control, and any failure, vulnerability, or adverse change affecting LayerZero could disrupt the network’s cross-chain functionality.”
New heading “The Ault Blockchain may not perform as designed under real-world conditions, and performance failures could drive participants and developers to competing networks.”
New heading “The blockchain technology underlying the Ault Blockchain is evolving rapidly, and the network’s current architecture could become technically outdated relative to newer networks, reducing its competitiveness.”
New heading “BNC has no operating history in the predictions market industry, and its prior sweepstakes gaming operations are not indicative of future performance in its new business.”
New heading “The Platform is currently in alpha testing and is not yet commercially available, and BNC may face significant delays or obstacles in completing development and launching to a broader user base.”
New heading “The Platform’s availability is restricted to permitted jurisdictions, which significantly limits BNC’s addressable market and may constrain revenue growth.”
New heading “Predictions markets require sufficient two-sided market liquidity to function effectively, and BNC may be unable to attract and maintain the user base necessary to support a viable marketplace.”
New heading “BNC faces competition from well-capitalized and, in certain cases, already-regulated predictions market platforms, and the competitive landscape is expanding rapidly.”
New heading “BNC’s Platform depends on third-party data providers to supply verified real-world event outcomes for settlement purposes, and disruptions in those services could impair the Platform’s ability to settle markets accurately and on time.”
New heading “BNC’s products and internal systems rely on software and hardware that is highly technical, and any errors, bugs, or vulnerabilities in these systems could adversely affect BNC’s business.”
New heading “BNC’s ability to grow its user base and generate revenue depends on its ability to attract and retain users in a market where user switching costs are low and competing platforms are readily accessible.”
New heading “BNC’s ability to access payment processing services and maintain banking relationships may be constrained by the regulatory uncertainty surrounding the predictions market industry.”
New heading “The predictions market industry is subject to complex and evolving federal and state regulation, and BNC may be required to obtain regulatory authorizations it has not yet obtained before it can operate commercially in certain jurisdictions.”
New heading “The CFTC has broad authority over event contracts, and regulatory action by the CFTC could require BNC to restructure or discontinue certain aspects of its business.”
New heading “The question of whether federal regulation of predictions market platforms preempts state gambling and gaming laws is actively contested in courts across multiple jurisdictions, and an adverse outcome could materially restrict BNC’s operations.”
New heading “Certain U.S. states may characterize predictions markets as gambling or gaming activities subject to state licensing requirements, and certain states have pursued civil and criminal enforcement actions against predictions market platforms.”
New heading “Event contracts relating to sports outcomes are subject to heightened regulatory and legal scrutiny and may be subject to state sports betting licensing requirements in addition to federal commodity regulation.”
New heading “BNC is subject to know-your-customer and anti-money laundering compliance obligations that could increase its operating costs and restrict its ability to onboard users.”
New heading “BNC may be subject to consumer protection claims and problem gambling liability as regulators and courts increasingly characterize predictions market activity as a form of gambling with associated public health consequences.”
New heading “Congressional legislation addressing the regulatory framework for predictions markets could alter the conditions under which BNC operates, with outcomes that may be favorable or adverse to BNC’s business.”
New heading “Numerous foreign jurisdictions have already classified predictions market platforms as illegal gambling and banned their operation, which may significantly restrict BNC’s ability to serve international users.”
New heading “The regulatory framework for predictions markets in certain foreign jurisdictions is actively evolving, and changes in those frameworks could affect BNC’s ability to operate in markets that are currently accessible.”
New heading “BNC’s geographic access controls may be insufficient to prevent users in prohibited jurisdictions from accessing the Platform, which could expose BNC to regulatory enforcement in those jurisdictions.”
New heading “Changes in law or regulatory policy applicable to predictions markets could require BNC to make significant changes to its business model or cease operations in certain jurisdictions.”
New heading “The collection and handling of user personal data, including information gathered through the user verification process, exposes BNC to data privacy compliance obligations and the risk of regulatory enforcement.”
New heading “BNC’s products and internal systems rely on software and hardware developed in part by third parties, and BNC has limited visibility into and control over the security and reliability practices of those providers.”
New heading “BNC may be unable to adequately protect its intellectual property, and third parties may assert that BNC’s Platform or technology infringes their intellectual property rights.”
New heading “Risks Related to the OnlyBulls Platform”
New heading “The OnlyBulls platform depends on third-party market data providers, and any disruption to or termination of those relationships could impair our ability to deliver core platform functionality.”
New heading “askROI’s integration with third-party charting providers exposes askROI to risks associated with those providers’ continued availability, pricing, and terms of service.”
New heading “The DeFi self-custody wallet functionality on the OnlyBulls platform relies on Privy as its wallet infrastructure provider, and any disruption to that relationship could impair or disable askROI’s wallet offering.”
New heading “Users of the OnlyBulls DeFi self-custody wallet bear sole responsibility for maintaining access to their authentication credentials, and the permanent loss of those credentials may result in the irreversible loss of all digital assets held in the wallet.”
New heading “Digital asset swap functionality within OnlyBulls depends on decentralized exchange aggregators that askROI does not control, and users may experience losses or service failures associated with those protocols.”
New heading “askROI relies on multiple third-party providers for on-ramp and off-ramp services enabling users to convert between traditional currency and digital assets, and disruptions to any of these providers could impair this functionality.”
New heading “The DeFi self-custody wallet and related transaction features of OnlyBulls may be subject to money transmission licensing requirements, anti-money laundering obligations or other financial services regulations that could constrain askROI’s operations or require significant compliance investment.”
New heading “AI-generated research outputs on the OnlyBulls platform could be incorrect, misleading, or misinterpreted as personalized investment advice, exposing askROI to regulatory scrutiny and legal claims.”
New heading “Periods of volatility or sustained declines in digital asset markets could reduce user engagement with the OnlyBulls platform and adversely affect askROI’s business.”
New heading “The DeFi self-custody wallet functionality of OnlyBulls presents heightened cybersecurity risks, and any breach or theft of digital assets could result in significant losses and reputational harm.”
New heading “User misunderstanding of the scope of OnlyBulls’ functionality could result in reputational harm and regulatory scrutiny if users believe the platform offers securities trading capabilities, which it does not provide.”
New heading “Risks Related to the Purchase, Ownership and Custody of Precious Metals”
New heading “We currently have no experience as a company in purchasing, owning, holding or liquidating precious metals.”
New heading “The price of precious metals is volatile.”
New heading “Crises may motivate large-scale sales of precious metals which could decrease the price of precious metals and adversely affect an investment in our company.”
New heading “The price of precious metals may be affected by the sale of precious metals by ETFs or other exchange traded vehicles tracking such markets.”
New heading “Substantial sales of precious metals by the official sector could adversely affect our investment in precious metals.”
New heading “Our precious metals may be subject to loss, damage, theft or restriction on access.”
New heading “Risks Related to Gresham”
New heading “Gresham has historically incurred net losses and negative cash flow and Gresham’s operating results may significantly vary from quarter to quarter, so it may not be able to achieve or sustain profitability.”
New heading “A large percentage of Gresham’s current revenue is derived from prime defense contractors to the United States government and its allies, and the loss of these relationships, a reduction in government funding or a change in government spending priorities or bidding processes could have an adverse impact on Gresham’s business, financial condition, results of operations and cash flow.”
New heading “If Gresham’s reputation or relationships with the governments of the United States, the United Kingdom, Israel or the limited number of defense contractors with which Gresham works were harmed, Gresham’s future revenues and cash flows would be adversely affected.”
New heading “Because Gresham engages in fixed fee contracts with Gresham’s customers, it faces pressure on Gresham’s gross profit margins and operating costs from inflation.”
New heading “The effects of Russia’s invasion of Ukraine, the conflict in the Middle East involving Iran, the Houthis, Hamas, Hezbollah’s rocket attacks in Northern Israel and tensions elsewhere in the world on the capital markets and the economy is uncertain, and Gresham may be faced with a recessionary economy and economic uncertainty including possible adverse effects upon the capital markets.”
New heading “Gresham’s subsidiary, Enertec, operates a production facility in Karmiel, Israel, and Gresham’s business, financial condition and results of operations may be adversely affected by geopolitical risks and military activity in the region.”
New heading “If the inflationary pressures in the United States and elsewhere where Gresham operates continue at current levels or increase, Gresham could experience reduced margins and lose future business.”
New heading “If Gresham loses key personnel, it could have a material adverse effect on Gresham’s financial condition, results of operations and growth prospects.”
New heading “Gresham’s sales and profitability may be affected by changes in economic, business and industry conditions.”
New heading “Gresham’s sales cycles can be long and unpredictable, and Gresham’s sales efforts require considerable time and expense. As a result, Gresham’s sales and revenue are difficult to predict and may vary substantially from period to period, which may cause Gresham’s operating results to fluctuate significantly.”
New heading “Gresham’s sales are significantly dependent on the defense industry and a limited number of customers.”
New heading “Gresham faces intense industry competition and product obsolescence, which, in turn, could increase Gresham’s losses.”
New heading “Because Gresham’s competitors have greater resources, Gresham may not be able to compete effectively.”
New heading “The sale of Gresham’s products is dependent upon its ability to satisfy the proprietary requirements of its customers.”
New heading “If Gresham is unable to identify, attract, train and retain qualified personnel, especially its design and technical personnel, Gresham’s business and results of operations would be materially and adversely affected and it may not be able to effectively execute its business strategy.”
New heading “Gresham’s strategic focus on purpose-built electronics solutions and concurrent cost reduction plans may be ineffective or may limit its ability to compete.”
New heading “A significant portion of Gresham’s contracts are fixed-price contracts that could subject it to losses in the event of cost overruns or a material increase in inflation.”
New heading “Gresham’s subsidiaries purchase a significant amount of their components and products outside of the countries in which they operate.”
New heading “As a result of the Chapter 11 Case, Gresham’s financial results may be volatile and may not reflect historical trends.”
New heading “Gresham has experienced, and may continue to experience, increased levels of employee attrition as a result of the Chapter 11 Case.”
New heading “Risks Related to the Planned Divestiture of Ault Capital”
New heading “Completion of the Divestiture could result in a decline in the price of our Class A common stock.”
New heading “The Divestiture might not be completed or not be completed within the envisaged time frame.”
New heading “Certain of our executive officers and directors may have actual or potential conflicts of interest after the Divestiture.”
Removed heading “Our relationship with Alzamend may expose us to certain conflicts of interest.”
Removed heading “Our growth and profitability depend on continued interest in social gaming and sweepstakes within the U.S., and shifts in consumer preferences could harm our business”
Removed heading “BNC’s products and changes to such products could fail to attract or retain users or generate revenue and profits, or otherwise adversely affect BNC’s business.”
Removed heading “Our reliance on third-party certified game providers creates operational, compliance, and reputational vulnerabilities that could adversely impact our business.”
Removed heading “The lack of comprehensive encryption for communications on the Platform may increase the impact of a data security incident.”
Removed heading “Challenges in advertising and promoting our sweepstakes could hinder our user acquisition and revenue growth.”
Removed heading “A perceived lack of fairness in outcomes or prize distribution could severely damage brand trust.”
Removed heading “Our sweepstakes model could be reclassified as gambling or otherwise face tighter restrictions in certain U.S. states, which would materially affect our operations.”
Removed heading “We are subject to complex and evolving U.S. federal and state sweepstakes and consumer protection laws, which may impose substantial compliance burdens and operational constraints.”
Removed heading “Regulatory inquiries or legal proceedings related to AML, consumer fraud, or other compliance areas could disrupt our business and harm our reputation.”
Removed heading “We anticipate that BNC’s efforts related to privacy, safety, security, and content review will identify additional instances of misuse of user data or other undesirable activity by third parties on the Platform.”
Removed heading “BNC’s products and internal systems rely on software and hardware that is highly technical, and any errors, bugs, or vulnerabilities in these systems, or failures to address or mitigate technical limitations in BNC’s systems, could adversely affect BNC’s business.”
Removed heading “If we do not continue to satisfy the NYSE American continued listing requirements, our Class A common stock could be delisted from NYSE American.”
Largest changes
“The effects of Russia’s invasion of Ukraine, the conflict in the Middle East involving Iran, the Houthis, Hamas, Hezbollah’s rocket attacks in Northern Israel and tensions elsewhere in the world on the capital markets and the economy is uncertain, and Gresham may be faced with a recessionary economy and economic uncertainty including possible adverse effects upon the capital markets.”see in full comparison
“We may be subject to regulatory enforcement proceedings, class action litigation from Node License purchasers, or other legal proceedings that could result in material costs, penalties, and operational disruption.”see in full comparison
“In addition to BNC’s efforts to mitigate cybersecurity risks, BNC intends to make investments in privacy, safety, security, and content review efforts to combat misuse of BNC’s services and user data by third parties, including investigations and audits of platform applications, as well as other enforcement efforts. As a result of these efforts BNC anticipates that BNC will discover and announce additional incidents of misuse of user data or other undesirable activity by third parties. …”see in full comparison
“BNC’s predictions market platform involves the collection, storage, and transmission of user data, including personal identification information gathered through the user verification process, account balances, and records of user positions and settlement history. Unauthorized access to this data, or to the systems that determine market settlement outcomes, could result in the theft or misuse of sensitive information, manipulation of market results, and significant harm to users who rely on the Platform’s integrity. …”see in full comparison
“Any high-profile investigation or lawsuit ,whether or not it leads to a formal penalty, may also attract unwanted media attention, casting doubt on our security measures and the integrity of our games. Damage to our brand’s reputation could undermine user confidence, leading to reduced engagement, fewer new sign-ups, and diminished revenue streams. We might also face lawsuits from users or other parties alleging deceptive practices, demanding refunds, or claiming injuries from fraudulent or unauthorized activities. …”see in full comparison
“In connection with BNC’s user verification and account management processes, BNC collects and retains personal information about its users, including identification documents, financial account information, and transaction records. The collection, storage, transmission, and use of this information is subject to a range of federal and state data privacy laws, including the California Consumer Privacy Act (the “CCPA”) and other applicable state privacy statutes, as well as any federal privacy or data security requirements applicable to BNC’s business. …”see in full comparison
Full comparison: every changed paragraph (378)
Until
we are profitable, we will need to quickly
raise additional capital in order to fund our operations in furtherance of our business plan.
The proposed financing may include shares
of common stock, shares of preferred stock, warrants to purchase shares of common stock or preferred
stock, debt securities, units consisting
of the foregoing securities, equity investments from strategic development partners or some combination
of each. Any additional equity
financings may be financially dilutive to, and will be dilutive from an ownership perspective to, our stockholders,
and such dilution
may be significant based upon the size of such financing. Additionally, we cannot assure that such funding will be available
on a timely
basis, in needed quantities, or on terms favorable to us, if at all.
As
previously announced, on
December 14, 2023, we, along with our wholly owned subsidiaries Sentinum, ACS, BNI Montana, Ault Lending, Ault
Aviation and AGREE, entered
into the Loan Agreement with institutional lenders, pursuant to which Ault & Company borrowed $36 million
and issued Secured Notes
to the lenders in the aggregate amount of $38.9 million. Pursuant to the Loan Agreement, we, and the other Guarantors,
agreed to act as
guarantors for repayment of the Secured Notes. In addition, certain Guarantors entered into various agreements as collateral
in support
of the guarantee of the Secured Notes, including (i) a security agreement by Sentinum, pursuant to which Sentinum granted to
the Lenders
a security interest in (a) the Miners, (b) all of the digital currency mined or otherwise generated from the Miners and (c)
the membership
interests of ACS, (ii) a security agreement by the Company, Ault Lending, BNI Montana and AGREE, pursuant to which those
entities granted
to the lenders a security interest in substantially all of their assets, as well as a pledge of equity interests in Ault
Aviation, AGREE,
Sentinum, Ault Energy, Eco Pack,Pack Technologies Limited, and Circle 8 Holdco, (iii) a future advance mortgage by ACS on the Michigan Property,
(iv) an aircraft mortgage and security agreement by Ault Aviation on the Aircraft, and (v) deposit account control agreements over certain
bank accounts held by certain of our subsidiaries. The Loan Agreement has customary representations, warranties and covenants including
restrictions on indebtedness, liens, restricted payments and dividends, investments, asset sales and similar covenants and contains customary
events of default.
Further, on December 2, 2025 we, along with its direct and indirect wholly owned subsidiaries Sentinum and ACS (with Sentinum, the “Guarantors”), entered into a Note Purchase Agreement (the “Agreement” and with the Loan Agreement, the Agreements”) with JGB Capital, LP, JGB Partners, LP and JGB Capital Offshore Ltd. (the “Lenders”) as well as JGB Collateral, LLC (the “Agent”). Pursuant to the Agreement, we borrowed $12.8 million from the Investors and issued secured convertible promissory notes to the Investors in such aggregate amount, which includes an original issue discount of $0.8 million (collectively, the “Convertible Notes”).
In connection with the Agreement, we, the Agent and a custodian entered into an Account Control Agreement which governs the terms of a crypto asset account established by the foregoing parties. We have deposited Bitcoin having a U.S. dollar value of $16.0 million therein as collateral for the loans made to the Company under the Agreement and evidenced by the Convertible Notes.
The
covenants and other restrictions
contained in the Loan AgreementAgreements and other current or future debt agreements could, among other things,
restrict our ability to dispose of
assets, incur additional indebtedness, pay dividends or make other restricted payments, create liens
on assets, make investments, loans
or advances, make acquisitions, engage in mergers or consolidations and engage in certain transactions
with affiliates. These restrictions
could limit our ability to plan for or react to market conditions or meet extraordinary capital needs
or otherwise restrict corporate
activities. In addition, substantially all of our borrowed money obligations are secured by certain of
our assets.
A
failure to comply with any
restrictions or covenants in the Loan Agreement,Agreements, or to make payments into the Segregated Account when due or
make other payments we are obligated
to make under Loan Agreement, could have serious consequences to our financial condition or result
in a default under the Loan AgreementAgreements and
under other agreements containing cross-default provisions. A default would permit lenders to
accelerate the maturity of the debt under
these debt agreements and to foreclose upon collateral securing the debt, among other remedies.
Furthermore, an event of default or an
acceleration under one of our debt agreements could also cause a cross-default or cross-acceleration
of another debt instrument or contractual
obligation, which would adversely impact our liquidity. Under these circumstances, we might
not have sufficient funds or other resources
to satisfy all of our obligations. We may not be granted waivers or other amendments to these
debt agreements if for any reason we are
unable to comply with these debt agreements, and we may not be able to restructure or refinance
our debt on terms acceptable to us, or
at all. Whether or not those kinds of actions are successful, we might seek protections of applicable
bankruptcy laws. Additionally, all
of our indebtedness is senior to the existing common stock in our capital structure. If we were to
seek certain restructuring transactions,
our creditors would experience better returns as compared to our equity holders. Any of these
actions could have a material adverse effect
on the value of our equity and on our business, financial performance, and liquidity.
While Circle 8 currently has areduced
the substantial
amount of outstanding debt.debt Asfrom 2024 to 2025, as of December 31, 2024,2025, it still had total outstanding indebtedness of approximately $16.6
$9.4 million, of which $13.1
$7.2 million was borrowed from First Citizens Bank (“FCB”) in a senior secured asset-based revolving
line of credit, $1.9$1.2 million consists of outstanding equipment notes with Flagstar Financial & Leasing (“FFL”), $0.4 million
consists of outstanding equipment notes with Manitowoc Finance (“MANF”) and SQN$0.6 Capital Management, LLC (“SQN), $.9
million of outstanding vehicle notes with
Ford Motor Credit (“FMC”). andIn a $.6 million short term unsecured note with Meridian
Finance LLC.addition, Circle 8 has the ability to increase the FCB loanloan, bywhich $7.4availability was $12.8 million
as of December 31, 2024.2025. Circle 8 may further increase
its debt balance where permitted by incumbent lenders for growth and expansionary
purposes. Circle 8’s substantial indebtedness
could have important consequences. For example, it may:
Circle 8 expects to use cash
flow from operations and borrowings under the FCB commitment to meet current and future financial obligations, including funding operations,
debt service and capital expenditures. Circle 8’s ability to make these payments depends on future operational performance, which
will be affected by financial, business, economic and other factors, many of which Circle 8 cannot control. Circle 8’s business
may not generate sufficient cash flow from operations in the future or be able to appropriately adjust operations to suit organic industry
developments, which could result in Circle 8’s inability to service its debt obligations, or to fund other liquidity needs. If Circle
8 has insufficient capital to cover its debt obligations, it may be forced to reduce or delay ongoing or growth activities and capital
expenditures, sell assets, obtain additional debt or dilutive equity capital or restructure or refinance all or a portion of its debt,
including the incumbent FCB, MANF,SQNMANF, FFL and FMC loans, and any other incremental loans, on or before maturity. There can be no assurance
that Circle 8 will be able to accomplish any of these alternatives on terms acceptable to it or to us, if at all. In addition, the terms
of existing or future indebtedness, including the agreements governing the incumbent loans, may limit Circle 8’s ability to pursue
any other alternatives.
In addition, fluctuations
in commodity prices could impact the cost of raw materials needed to manufacture lifting assets, potentially affecting theCircle company’s8’s
profitability. These fluctuations, among others, could impact the efficiency and profitability of Circle 8’s lifting solutions business
and can be impacted by a variety of factors, including the following:
Furthermore, as Circle 8 expands
its operations, it may need to rely on suppliers and logistics partners in new geographic regions, which could expose theCircle company8 to additional
supply chain risks.
Circle 8’s reliance on a limited number
of equipment manufacturers exposes theCircle company8 to significant risks, as the termination or disruption of relationships with any of these
manufacturers could adversely impact Circle 8’s ability to obtain equipment in a timely or adequate manner, potentially leading
to operational disruptions and financial losses.
Circle 8 purchases most of
its equipment from a leading, nationally
recognized OEM.OEMs. For the year ended December 31, 2024,2025, theCircle company8 acquired two newManitowoc/Grove cranes
and pursuantone toLiebherr leasescrane, witha antop-tier optionheavy toequipment purchase.
Priormanufacturer thereto,based itin purchasedGermany. 100%Historically, Circle 8 has sourced the majority of its equipment
fleet from Manitowoc/Grove, one of thea leading worldwide heavycrane equipment manufacturers.manufacturer. Utilizing
one a primary OEM reduceshas reduced the number of parts and inventory
items itemsrequired to be kept on handhand, resulting in savings,operational whileefficiencies stilland allowing for efficienttimely maintenance and timelyrepairs. Going forward,
repairs and maintenance of Circle 8’s cranes. Circle 8 mayintends diversifyto continue utilizing Manitowoc/Grove for crane models that align with its equipmentcore supplieroperating optionsneeds, goingwhile forwardselectively toexpanding
its diversifyfleet itswith higher-capacity Liebherr cranes, particularly in classes exceeding 350 tons. While introducing an additional OEM enhances
fleet somewhat.capability Utilizingand acapacity, newit OEMmay equipmentrequire manufacturerincremental creates risk from requiring an increaseinvestment in parts inventory and technician training and could havecreate ansupply
adversechain effectdependencies onthat may adversely affect the business, financial condition or results of operations if thesuch newmanufacturers OEM wereare unable
to supply Circleequipment 8or components in an adequate
ora timely manner.
Circle 8’s financial
results, operations and forecasts depend significantly on worldwide economic and geopolitical conditions, the demand for Circle 8’s
products, and the financial condition of its customers and suppliers. Economic weakness and geopolitical uncertainty have in the past
resulted, and may result in the future, in reduced demand for lifting solutions resulting in decreased sales, margins and earnings. InThe
2022U.S. and 2023, the U.S.has experienced significantly heightened inflationary pressures whichover havethe continuedlast intoseveral 2025.years. It is difficult to
fully mitigate the
impact of inflation through price increases passed through to customers that are operating in commodity sector with
global end market
pricing mechanisms, productivity initiatives and cost savings, which could have an adverse effect on Circle 8’s
financial results
and position. In addition, if the U.S. economy enters a recession, Circle 8’s sales may decline, which could have
an adverse effect
on its overall business, operating results and financial condition. Similarly, disruptions in financial and/or credit
markets may impact
Circle 8’s ability to manage normal commercial relationships with its customers, suppliers and creditors. Further,
in the event
of a recession or threat of a recession, Circle 8’s customers and suppliers may suffer their own financial and economic challenges
challenges and as a result they may demand pricing accommodations, delay payment, or become insolvent, which could harm Circle 8’s ability
ability to meet its customer demands or collect revenue or otherwise could harm the business and its ability to service incumbent loans, ultimately
ultimately leading to possible insolvency. An economic or credit crisis could occur and impair credit availability and Circle 8’s
ability to
raise capital as required for ongoing working capital, maintenance capital and expansion capex. A disruption in the financial markets
markets could impair Circle 8’s banking or other business partners, on whom it relies for access to capital. In addition, changes
in tax
or interest rates in the U.S. or other nations, whether due to recession, economic disruptions or other reasons, could have an adverse
adverse effect on Circle 8’s operating results. Economic weakness and geopolitical uncertainty may also lead to asset impairment, restructuring
restructuring actions or adjust Circle 8’s operating strategy and reduce expenses in response to decreased sales or margins. Circle
8 may not
be able to adequately adjust its cost structure in a timely fashion, which could have an adverse effect on its operating results
and financial
condition. Uncertainty about economic conditions may increase foreign currency volatility in markets in which it transacts
business, which
could have an adverse effect on Circle 8’s operating results.
An economic downturn or economic
uncertainty makes it difficult to forecast trends. For example, the economic uncertainty caused by COVID-19, and its impact on Circle
8’s operational and financial performance was highly dependent on the depth and duration of the pandemic, as well as the government-mandated
restrictions on economic activity and government economic stimulus packages passed in response to the economic downturn. More recently,
rising interest rates,rates in recent years, higher than expected inflation,
and several bank failures also underscore the potential impact of ongoing economic
risks to Circle 8’s operations and financial performance.
These factors can lead to increased borrowing costs, reduced consumer
spending, and reduced access to credit, among other potential challenges.
Circle 8 typically includes
in operating income the difference between the sales price and the depreciated value of an item of equipment sold. In the year ended December
31, 2023, Circle 8 sold used equipment from its rental fleet, reducing the total number of cranes from 75 to 55, with the average selling
price exceeding the net orderly liquidation value. However,Then, in 2024, Circle 8 slightly increased its fleet size by adding two additional
cranes, bringing the total to 57 cranes. However, in 2025, Circle 8 disposed of approximately 10 underutilized and maintenance-intensive
cranes. As a result of the condition of the cranes, the aggregate sale price was less than the carrying book value of the cranes, resulting
in a loss. While recent equipment sales have generally remained favorable, there can be no assurance that used equipment
selling prices
will not decline in the future. Any significant downturn in the market for used equipment could have a material adverse
effect on Circle
8’s business, financial condition, results of operations, or cash flows.
Circle 8’s operating performance depends on maintaining a reliable, safe and competitive crane fleet. As equipment ages, maintenance costs may increase and downtime risks may rise, potentially affecting equipment utilization and operating margins. As of the date of this Annual Report, Circle 8’s fleet has an average age of approximately 10 years, which is an increase from approximately nine years as of the date of our prior annual report. If Circle 8’s rental equipment ages, the costs of maintaining such equipment, if not replaced within a certain period of time, will likely increase. When properly maintained, mobile hydraulic and all-terrain cranes can typically remain in productive service for at least 20 years.
If Circle 8’s rental
equipment ages, theThe costs of maintaining such equipment, if not replaced within a certain period of time, will likely increase. The costs
of maintenance may
materially increase in the future and could lead to material adverse effects on Circle 8’s results of operations.
The cost of new
equipment for use in Circle 8’s rental fleet could also increase due to increased material costs for its suppliers
(including tariffs
on raw materials) or other factors beyond Circle 8’s control. SuchFor increasesexample, couldthe materiallycost adverselyof impactacquiring new cranes has increased in recent
Circleyears 8’sdue financialto conditioninflation, higher steel prices, supply chain disruptions, tariffs on imported equipment and resultsfluctuations in foreign exchange
markets. Many mobile cranes used in the United States are manufactured in Europe, particularly in Germany, and tariffs and the strength
of the Euro relative to the U.S. dollar may increase the cost of operations in future periods. Furthermore, changes in customer demand could cause
certain of Circle 8’s existing equipment to become obsolete and require Circle 8 to purchaseacquiring new equipment atand increasedreplacement costs.components.
Such increases could materially adversely impact Circle 8’s financial condition and results of operations in future periods. Furthermore, changes in customer demand could cause certain of Circle 8’s existing equipment to become obsolete and require Circle 8 to purchase new equipment at increased costs.
Risks Related to Our Bitcoin Strategy and Holdings
Our Bitcoin strategy exposes us to various risks, including risks associated with Bitcoin.
Our Bitcoin digital asset treasury strategy, or DAT, exposes us to various risks, including the following:
Bitcoin is a highly volatile asset. Bitcoin is a highly volatile asset that has traded below $61,000 per Bitcoin and above $126,000 per Bitcoin in the 12 months preceding the date of this Annual Report. The trading price of Bitcoin significantly decreased during prior periods, and such declines may occur again in the future.
Bitcoin does not pay interest or dividends. Bitcoin does not pay interest or other returns and we can only generate cash from our Bitcoin holdings if we sell our Bitcoin or implement strategies to create income streams or otherwise generate cash by using our Bitcoin holdings. Even if we pursue any such strategies, we may be unable to create income streams or otherwise generate cash from our Bitcoin holdings, and any such strategies may subject us to additional risks.
Our Bitcoin holdings could significantly impact our financial results and the market price of our Class A common stock. Our Bitcoin holdings could significantly affect our financial results and as we continue to increase our overall holdings of Bitcoin in the future, they will have a greater impact on our financial results and the market price of our Class A common stock.
Our assets are increasingly concentrated in Bitcoin. As of December 31, 2025, approximately 15% of our total assets consisted of our Bitcoin holdings. We have disclosed that we intend to substantially increase our Bitcoin holdings, which would likely result in the vast majority of our assets being concentrated in Bitcoin holdings. The concentration of our assets in Bitcoin limits our ability to mitigate risk that could otherwise be achieved by holding a more diversified portfolio of treasury assets.
We purchase Bitcoin primarily using proceeds from equity financings. While we mine Bitcoin and hold those Bitcoin on our balance sheet, our ability to achieve the objectives of our DAT depends in significant part on our ability to obtain equity financing. If we are unable to obtain equity financing on favorable terms, or at all, we may not be able to successfully implement our DAT.
Our DAT has not been tested over an extended period of time or under different market conditions. We only recently announced our strategy to acquire and hold Bitcoin as a digital asset treasury. This DAT has not been tested over an extended period of time or under different market conditions. For example, although we believe Bitcoin, due to its limited supply, has the potential to serve as a hedge against inflation in the long term, the short-term price of Bitcoin declined in recent periods during which the inflation rate increased. If Bitcoin prices were to decrease or our DAT otherwise proves unsuccessful, our financial condition, results of operations, and the market price of our Class A common stock would be materially adversely impacted.
We are subject to counterparty risks, including in particular, risks relating to our custodians. Although we have implemented various measures that are designed to mitigate our counterparty risks, including by storing substantially all of the Bitcoin we own in a custody account at U.S.-based, institutional-grade custodian, applicable insolvency law is not fully developed with respect to the holding of digital assets in custodial accounts. If our custodially-held Bitcoin was considered to be the property of our custodian’s estate in the event that any such custodian was to enter bankruptcy, receivership or similar insolvency proceedings, we could be treated as a general unsecured creditor of such custodian, inhibiting our ability to exercise ownership rights with respect to such Bitcoin, or delaying or hindering our access to our Bitcoin holdings, which could ultimately result in the loss of the value related to some or all of such Bitcoin, which in turn would have a material adverse effect on our financial condition as well as the market price of our Class A common stock.
The broader digital assets industry is subject to counterparty risks, which could adversely impact the adoption rate, price, and use of Bitcoin. A series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to companies operating in the digital asset industry have highlighted the counterparty risks applicable to owning and transacting in digital assets. Although these bankruptcies, closures, liquidations and other events have not resulted in any loss or misappropriation of our Bitcoin, nor have such events adversely impacted our access to our Bitcoin, they have, in the short-term, likely negatively impacted the adoption rate and use of Bitcoin. Additional bankruptcies, closures, liquidations, regulatory enforcement actions or other events involving participants in the digital assets industry in the future may further negatively impact the adoption rate, price, and use of Bitcoin, limit the availability to us of financing collateralized by Bitcoin, or create or expose additional counterparty risks.
Changes in the accounting treatment of our Bitcoin holdings could have significant accounting impacts, including increasing the volatility of our results. We adopted ASU 2023-08 as of January 1, 2025, which requires us to measure our Bitcoin holdings at fair value in our statement of financial position, and to recognize gains and losses from changes in the fair value of our Bitcoin in net income each reporting period beginning January 1, 2025. ASU 2023-08 also requires us to provide certain interim and annual disclosures with respect to our Bitcoin holdings. Due in particular to the volatility in the price of Bitcoin, we expect the adoption of ASU 2023-08 to have a material impact on our financial results in future periods, increase the volatility of our financial results, and affect the carrying value of our Bitcoin on our balance sheet. ASU 2023-08 could also have adverse tax consequences. These impacts could in turn have a material adverse effect on our financial results and the market price of our Class A common stock.
The broader digital assets industry, including the technology associated with digital assets, the rate of adoption and development of, and use cases for, digital assets, market perception of digital assets, and the legal, regulatory, and accounting treatment of digital assets are constantly developing and changing, and there may be additional risks in the future that are not possible to predict.
Our Bitcoin strategy subjects us to enhanced regulatory oversight.
In January 2024, the SEC approved the listing and trading of spot Bitcoin exchange traded products (“ETPs”), the shares of which can be sold in public offerings, are traded on U.S. national securities exchanges and have continuous share creation and redemption at net asset value. Even though we are not, and do not function in the manner of, a spot Bitcoin ETP, it is possible that we nevertheless could face regulatory scrutiny from the SEC or other federal or state agencies due to our Bitcoin holdings.
In addition, there has been increasing focus on the extent to which digital assets can be used to launder the proceeds of illegal activities, fund criminal or terrorist activities, or circumvent sanctions regimes, including those sanctions imposed in response to the ongoing conflicts between Russia and Ukraine as well as the one between the United States and Israel against Iran. While we have implemented and maintain policies and procedures reasonably designed to promote compliance with applicable anti-money laundering and sanctions laws and regulations and take care to only acquire our Bitcoin through entities subject to anti-money laundering regulation and related compliance rules in the United States, if we are found to have purchased any of our Bitcoin from bad actors that have used Bitcoin to launder money or persons subject to sanctions, we may be subject to regulatory proceedings and any further transactions or dealings in Bitcoin by us may be restricted or prohibited.
A portion of our Bitcoin holdings currently serves as collateral securing any of our outstanding indebtedness. Further, we may in the future incur indebtedness or enter into other financial instruments in the future that may be collateralized by our Bitcoin holdings. We may also consider pursuing strategies to create income streams or otherwise generate funds using our Bitcoin holdings. These types of Bitcoin-related transactions are the subject of enhanced regulatory oversight. These and any other Bitcoin-related transactions we may enter into, beyond simply acquiring and holding Bitcoin, may subject us to additional regulatory compliance requirements and scrutiny, including under federal and state money services regulations, money transmitter licensing requirements and various commodity and securities laws and regulations.
Additional laws, guidance and policies may be issued by domestic and foreign regulators following the filing for Chapter 11 bankruptcy protection by FTX, one of the world’s largest cryptocurrency exchanges, in November 2022. While the financial and regulatory fallout from FTX’s collapse did not directly impact our business, financial condition or corporate assets, the FTX collapse may have increased regulatory focus on the digital assets industry. Increased enforcement activity and changes in the regulatory environment, including changing interpretations and the implementation of new or varying regulatory requirements by the government or any new legislation affecting Bitcoin, as well as enforcement actions involving or impacting our trading venues, counterparties and custodians, may impose significant costs or significantly limit our ability to hold and transact in Bitcoin.
The concentration of our Bitcoin holdings enhances the risks inherent in our Bitcoin strategy.
As of December 31, 2025, we held approximately 525 Bitcoins, of which 83 Bitcoins were generated from our mining operations and 442 Bitcoins were acquired at an aggregate purchase price of $45.4 million, and we intend to purchase additional Bitcoin and increase our overall holdings of Bitcoin in the future. The concentration of our Bitcoin holdings limits the risk mitigation that we could achieve if we were to purchase a more diversified portfolio of treasury assets, and the absence of diversification enhances the risks inherent in our Bitcoin strategy. The price of Bitcoin has in the past experienced significant declines and any future significant declines in the price of Bitcoin would potentially have a more pronounced impact on our financial condition than if we used our cash to purchase a more diverse portfolio of assets.
The emergence or growth of other digital assets, including those with significant private or public sector backing, could have a negative impact on the price of Bitcoin and adversely affect our business.
As a result of our Bitcoin strategy, our assets are concentrated in our Bitcoin holdings. Accordingly, the emergence or growth of digital assets other than Bitcoin may have a material adverse effect on our financial condition. As of December 31, 2025, Bitcoin was the largest digital asset by market capitalization. However, there are numerous alternative digital assets and many entities, including consortia and financial institutions, are researching and investing resources into private or permissioned blockchain platforms or digital assets that do not use proof-of-work mining like the Bitcoin network. For example, in late 2022, the Ethereum network transitioned to a “proof-of-stake” mechanism for validating transactions that requires significantly less computing power than proof-of-work mining. The Ethereum network has completed another major upgrade since then and may undertake additional upgrades in the future. If the mechanisms for validating transactions in Ethereum and other alternative digital assets are perceived as superior to proof-of-work mining, those digital assets could gain market share relative to Bitcoin.
Other alternative digital assets that compete with Bitcoin in certain ways include “stablecoins,” which are designed to maintain a constant price because of, for instance, their issuers’ promise to hold high-quality liquid assets (such as U.S. dollar deposits and short-term U.S. treasury securities) equal to the total value of stablecoins in circulation. Stablecoins have grown rapidly as an alternative to Bitcoin and other digital assets as a medium of exchange and store of value, particularly on digital asset trading platforms. As of December 31, 2025, two of the eight largest digital assets by market capitalization were U.S. dollar-pegged stablecoins.
Additionally, central banks in some countries have started to introduce digital forms of legal tender. For example, China’s Central Bank Digital Currency (“CBDC”) project was made available to consumers in January 2022, and governments including the United States, the United Kingdom, the European Union, and Israel have been discussing the potential creation of new CBDCs. Whether or not they incorporate blockchain or similar technology, CBDCs, as legal tender in the issuing jurisdiction, could also compete with, or replace, Bitcoin and other digital assets as a medium of exchange or store of value. As a result, the emergence or growth of these or other digital assets could cause the market price of Bitcoin to decrease, which could have a material adverse effect on our business, prospects, financial condition, and operating results.
Geopolitical crises, in particular
major ones such as Russia’s invasion of Ukraine and the conflict between Israel and Hamas as well as itsthe supporters,one between the United States and Israel against Iran, may motivate
large-scale purchases of Bitcoin and other cryptocurrencies, which could increase the price of Bitcoin and other cryptocurrencies rapidly.
This may increase the likelihood of a subsequent price decrease as crisis-driven purchasing behavior dissipates, adversely affecting the
value of our Bitcoin following such downward adjustment. Such risks are similar to the risks of purchasing commodities in general uncertain
times, such as the risk of purchasing, holding or selling gold. Alternatively, as an emerging asset class with limited acceptance as a
payment system or commodity, global crises and general economic downturn may discourage investment in cryptocurrencies as investors focus
their investment on less volatile asset classes as a means of hedging their investment risk.
We have operated and expect
to continue
to operate at a loss as we continue to establish our business model and as Bitcoin prices continue to experience significant volatility.
volatility. In addition, we expect to need to raise additional capital to fund our working capital requirements, expand our operations,
pursue our growth strategy and to respond to competitive pressures or working capital requirements.
pressures. Specifically, the expansion of our
Michigan Property to potentially 340 MWs of power will require significant capital. We may
not be able to obtain additional debt or equity
financing on favorable terms, if at all, which could impair our growth and adversely affect
our existing operations. The global economy,
including credit and financial markets, has recently experienced extreme volatility and disruptions,
including diminished credit availability,
rising interest and inflation rates, declines in consumer confidence, declines in economic growth,
increases in unemployment rates and
uncertainty about economic stability. Such macroeconomic conditions could also make it more difficult
for us to incur additional debt
or obtain equity financing. If we raise additional equity financing, our stockholders may experience significant
dilution of their ownership
interests, and the per share value of our Class A common stock could decline. Further, if we engage in additional
debt financing, the
holders of debt likely would have priority over the holders of our Class A common stock on order of payment preference.
We may be required
to accept terms that restrict our ability to incur additional indebtedness, take other actions including accepting
terms that require
us to maintain specified liquidity or other ratios that could otherwise not be in the interests of our stockholders.
Increased credit
pressures on the cryptocurrency industry, such as banks, investors and other companies reducing or eliminating their
exposure to the cryptocurrency
industry through lending, have had and may continue to have a material impact on our business. In light
of conditions impacting our industry,
it may be more difficult for us to obtain equity or debt financing in the future.
Current interpretations require the regulation
of Bitcoin under the Commodity Exchange ActCEA by the Commodity Futures Trading Commission,CFTC, and we may be required to register and comply
with such regulations. Any disruption of our operations
in response to the changed regulatory circumstances may be at a time that is disadvantageous
to our investors.
Current and future legislation,
regulation by the Commodity Futures Trading Commission (the “CFTC”) and other regulatory developments, including interpretations
released by a regulatory authority, may impact the
manner in which Bitcoin and other cryptocurrencies are treated for classification and
clearing purposes. In particular, derivatives on
these assets are not excluded from the definition of “commodity future” by
the CFTC. We cannot be certain as to how future
regulatory developments will impact the treatment of Bitcoin and other cryptocurrencies
under the law.
Bitcoin has been deemed to
fall within the definition of a commodity,
and we may be required to register and comply with additional regulation under the Commodity Exchange Act,CEA, including
additional periodic
report and disclosure standards and requirements. Moreover, we may be required to register as a commodity pool operator
and to register
as a commodity pool with the CFTC through the National Futures Association. Such additional registrations may result in
extraordinary, extraordinary,
non-recurring expenses, thereby materially and adversely impacting an investment in us. If we determine not to comply
with such additional
regulatory and registration requirements, we may seek to cease certain of our operations. Any such action may adversely
affect an investment
in us.
The Office of Financial Assets Control of the U.S. Department of Treasury
(“OFAC”) requires us to comply
with its sanction program and not conduct business with persons named on its list of specially
designated nationals (“SDN”).
However, because of the pseudonymous nature of blockchain transactions, we may inadvertently
and without our knowledge engage in transactions
with persons named on OFAC’s SDN list. Our internal policies prohibit any transactions
with such SDN individuals, but we may not
be adequately capable of determining the ultimate identity of the individual with whom we transact
with respect to selling digital assets.
In addition, in the future OFAC or another regulator may require us to screen transactions for
OFAC addresses or other bad actors before
including such transactions in a block, which may increase our compliance costs, decrease our
anticipated transaction fees and lead to
decreased traffic on our network. Any of these factors, consequently, could have a material adverse
effect on our business, prospects,
financial condition, and operating results.
Risks Related to Omnipresent
Omnipresent intends to operate in an emerging market, which makes it difficult to evaluate its business and prospects. If markets for service robotics develop more slowly than expected, or long-term end-customer adoption rates and demand are slower than expected, Omnipresent’s operating results and growth prospects could be harmed.
While robots have been applied to applications like industrial manufacturing and domestic in-home cleaning, the concept of commercial service robots is relatively new and rapidly evolving, making the business and prospects of Omnipresent difficult to evaluate. The growth and profitability of the service robotics market depends on the increasing level of demand and acceptance of collaborative robots that operate alongside employees, as to which there can be no assurance. If there is pushback against the adoption of robotics in everyday commercial applications, then this market may develop more slowly than Omnipresent expects, which could adversely impact its operating results and ability to grow the business.
Omnipresent intends to operate in an emerging industry that is subject to rapid technological change and will experience increasing competition.
Omnipresent’s future product offerings will compete in a broad competitive landscape that includes incumbent actors, and emerging players in the service robotics space, particularly in the cleaning and indoor delivery automation. Omnipresent’s future competitors may develop new technologies or products that provide superior features or are less expensive than Omnipresent’s anticipated products. Omnipresent’s competitors may respond more quickly to new or emerging technologies, undertake more extensive marketing campaigns, have greater financial, marketing, manufacturing and other resources than it does, or may be more successful in attracting potential customers, employees and strategic partners. If Omnipresent is unable to compete effectively, its business, prospects, financial condition, and operating results will be negatively impacted.
Omnipresent’s business plans require a significant amount of capital. Future capital needs may require us to sell additional equity or debt securities that may dilute our stockholders.
Omnipresent is an embryonic-stage business. While we intend to have Omnipresent initiate operations and to invest in the research and development of its products, we anticipate that we will continue to incur expenses for the foreseeable future as we continue to advance Omnipresent’s products and services, develop its corporate infrastructure, and further its research and development initiatives. Omnipresent is subject to all of the risks typically related to the development of robotics, and it may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect its business. Until Omnipresent can generate a sufficient amount of revenue from the commercialization of its products and services, if ever, we expect to finance Omnipresent’s future cash needs through public or private equity or debt financings, third-party (including government) funding and marketing and distribution arrangements, as well as other collaborations, strategic alliances and licensing arrangements, or any combination of these approaches.
Omnipresent has no experience in operating robots. Unforeseen safety issues with its future products could result in injuries to people which would in turn result in adverse effects on Hyperscale Data’s business and reputation.
Omnipresent’s future robots are expected to operate autonomously in environments, such as restaurants, hotels, casinos, and healthcare facilities, that are surrounded by various moving and stationary physical obstacles and by human and vehicles. Such environments are prone to collisions, unintended interactions and various other incidents. Therefore, there is a possibility that Omnipresent’s robots may be involved in a collision with any number of such obstacles or even a human being. Omnipresent’s future robots are expected to be equipped with advanced sensors that are designed to effectively prevent any such incidents and are intended to stop any motion at the detection of intervening objects. Nevertheless, real-life environments, especially those in crowded areas, are unpredictable and situations may arise in which Omnipresent’s robots may not perform as intended. A highly publicized incident of Omnipresent’s autonomous robots causing injuries to people could lead to negative publicity and subject Omnipresent and thereby our company to litigation. Such litigation or adverse publicity would negatively affect Omnipresent’s brand and harm its business, prospects, financial condition and operating results.
Omnipresent intends to target customers, suppliers and production counterparties that are large corporations with substantial negotiating power, exacting product, quality and warranty standards and potentially competitive internal solutions. If Omnipresent proves unable to sell its future products to these customers or is unable to enter into agreements with customers, suppliers and production counterparties on satisfactory terms, its prospects and results of operations will be adversely affected.
Omnipresent currently has no customers. Several of Omnipresent’s potential customers are large, multinational corporations with substantial negotiating power relative to Omnipresent as well as to our company. These large, multinational corporations are also aware of competitor products and are actively engaging with competitors to determine which products they like better. Meeting the requirements and securing contracts with any of these companies will require a substantial investment of Omnipresent’s time and resource. Omnipresent cannot assure you that any products it may develop and manufacture, if any, will be the one these companies will choose, or that Omnipresent will generate any revenue from the sales of its potential products to these key potential customers. If Omnipresent’s future products, if any, are not selected by these large corporations, its business and future prospects will be materially and adversely affected.
Omnipresent must successfully manage product introductions and transitions in order to become competitive.
Management's Discussion & Analysis (MD&A)
New heading “Deconsolidation of Avalanche International Corp. (“AVLP”)”
New heading “Deconsolidation of Eco Pack Technologies Limited (“Eco Pack”)”
New heading “Deconsolidation of a Subsidiary of RiskOn International, Inc. (“ROI”)”
New heading “Issuance of Class A Common Stock pursuant to the ATM Offering”
New heading “Issuance of Series D Preferred Stock Pursuant to the ATM Offering”
New heading “Circle 8 Financing”
New heading “Fair Value of Bitcoin and Digital Assets”
New heading “Impairment of Long-Lived Assets (including Mining Equipment and Data Center Infrastructure)”
New heading “Fair Value of Convertible Instruments and Embedded Derivatives”
New heading “Accounting for Business Combinations and Reorganization Transactions”
Removed heading “Impairment of Mined Digital Currencies”
Removed heading “Sales of Series G Preferred Stock and Warrants”
Removed heading “Issuances of Series D Preferred Stock”
Removed heading “OID Only Term Note”
Removed heading “15% Promissory Note”
Removed heading “Convertible Promissory Note”
Removed heading “Series B Convertible Preferred Stock Securities Purchase Agreement”
Removed heading “Short-Term OID Promissory Notes”
Removed heading “April 2025 Convertible Promissory Note”
Removed heading “April 2025 Convertible Note”
Removed heading “Deficiency Letter from the NYSE American”
Largest changes
“On April 1, 2025, we issued to an institutional investor, a convertible promissory note in the principal face amount of $1.7 million (the “April 2025 Note”) in consideration for an advance of $1.5 million previously made by the investor to us (the “Transaction”). The April 2025 Note has a principal face amount of $1.7 million and was issued with an OID of 10%. The April 2025 Note accrues interest at the rate of 15% per annum, unless an event of default (as defined in the April 2025 Note) occurs, at which time the April 2025 Note would accrue interest at 18% per annum. …”see in full comparison
“The Note accrues interest at the rate of 15% per annum, unless an event of default (as defined in the Note) occurs, at which time the Note would accrue interest at 18% per annum. The Note will mature on December 31, 2025. …”see in full comparison
“On April 8, 2025, we issued to an accredited investor a convertible promissory note in the principal face amount of $110,000 in consideration for $100,000. The note accrues interest at the rate of 15% per annum, unless an event of default (as defined in the note) occurs, at which time the note would accrue interest at 18% per annum. The note will mature on September 30, 2025. …”see in full comparison
“On August 14, 2024, our majority owned subsidiary, Gresham Worldwide, Inc. (“GIGA”), filed a petition for reorganization under Chapter 11 of the bankruptcy laws. The filing placed GIGA under the control of the bankruptcy court, which oversees its reorganization and restructuring process. We assessed the inherent uncertainties associated with the outcome of the Chapter 11 reorganization process and the anticipated duration thereof, and concluded that it was appropriate to deconsolidate GIGA and its subsidiaries effective on the petition date. …”see in full comparison
“Impairment of Long-Lived Assets (including Mining Equipment and Data Center Infrastructure)”see in full comparison
Full comparison: every changed paragraph (144)
In this Annual Report, the “Company,” “we,” “us” and “our” refer to Hyperscale Data, Inc., a Delaware corporation, which was incorporated in September 2017. We are an artificial intelligence (“AI”) data center company anchored by Bitcoin. Through our wholly owned subsidiary, Sentinum, Inc. (“Sentinum”), we own and operate 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 us 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 our growing digital asset treasury.
Through our other wholly owned subsidiary, Ault Capital Group, Inc. (“Ault Capital”), we currently hold a portfolio of diversified businesses and strategic investments spanning commercial lending and trading, hotel operations, crane rental, AI-driven software platforms and commercial electronics. We anticipate completing the planned divestiture of Ault Capital in 2027, at which time we expect to operate as a focused AI data center and Bitcoin infrastructure company.
Our direct and indirect wholly owned subsidiaries include:
In this Annual Report, the
“Company,” “we,” “us” and “our” refer to Hyperscale Data, Inc., a Delaware corporation
formerly known as Ault Alliance, which was incorporated in September 2017. Hyperscale Data is a diversified holding company pursuing growth
by acquiring undervalued businesses and disruptive technologies with a global impact.
Through our wholly- and majority-owned subsidiaries and strategic investments, we own and operate a data center
at which we mine Bitcoin, and provide mission-critical products that support a diverse range of industries, including a metaverse platform,
crane services, defense, industrial and automotive. In addition, we extend credit to select entrepreneurial businesses through a licensed
lending subsidiary.
We own Ault Capital Group, Inc. (“Ault Capital”), which
in turn either wholly owns or has a direct controlling interest in, among other entities, (i) Ault Lending, LLC (“Ault Lending”),
(ii) RiskOn International, Inc., formerly known as BitNile Metaverse, Inc. (“ROI”), which wholly owns BitNile.com, Inc. (“BNC”),
(iii) askROI, Inc. (“askROI”), (iv) Ault Global Real Estate Equities, Inc. (“AGREE”), (v) Eco Pack Technologies,
Inc. (“Eco Pack”), (vi) Ault Aviation, LLC (“Ault Aviation”), (vii) Circle 8 Holdco LLC (“Circle 8 Holdco”),
which wholly owns Circle 8 Crane Services, LLC (“Circle 8”), and (viii) TurnOnGreen, Inc. (“TurnOnGreen”), which
wholly owns TOG Technologies, Inc. and Digital Power Corporation. We consolidate ROI as a variable interest entity.
On December 2, 2025, we issued to JGB Capital, LP, JGB Partners, LP and JGB Capital Offshore Ltd. the Convertible Notes in the aggregate principal face amount of $12.8 million in consideration for an aggregate of $12.0 million paid to us. The Convertible Notes bear interest at 12.5% per annum, mature on December 2, 2027, and are convertible into Conversion Shares at a conversion price equal to the lower of (i) $0.3235 per share and (ii) 85% of the lowest daily volume-weighted average price during the three trading days immediately preceding and including the applicable conversion date, but not less than $0.40.
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 “Second 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 Second 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 April 12, 2026, we have sold 91.6 million shares of our Class A common stock under the Second ATM Offering for gross proceeds of approximately $18.1 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 April 12, 2026, we have sold 2,909 shares of our Series D Preferred under the Series D Preferred ATM Offering for gross proceeds of approximately $65,000.
On November 15, 2024, we announced
the distribution of 5.0 million shares of our Class B Common Stock (the “Class B Common Stock”) to all holders of our Class
A common stock and Series C Convertible Preferred Stock on an as-converted basis. The record date for this dividend was November 29, 2024,
and the payment date is December 16, 2024. There is currently no public trading market for the Class B Common Stock. While we presently
intend to seek to have the Class B Common Stock listed for trading on the NYSE American within the foreseeable future, there can be no
assurance when, or if, such a listing will occur. The Class B Common Stock is identical to the currently outstanding 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 after the payment date into Class A common stock on a one-for-one basis.
On November 20, 2024, pursuant
to the approval provided by our stockholders at the annual meeting of stockholders held on June 28, 2024, we filed an Amendment to our
Certificate of Incorporation with the State of Delaware to effectuate a reverse stock split of our Class A common stock affecting the
issued and outstanding number of such shares by a ratio of one-for-thirty-five. The reverse stock split became effective on November 22,
2024. All share amounts in this Annual Report have been updated to reflect the reverse stock split.
On November 26, 2024, we announced
the distribution of 1.0 million shares of our Series F Exchangeable Preferred Stock (“Series F Preferred Stock”) to holders
of Class A common stock and Series C Convertible Preferred Stock on an as-converted basis. The record date for this dividend was December
13, 2024, and the payment date was December 23, 2024. The Series F Preferred Stock has a $1.00 liquidation preference and will not pay
a dividend. Each share of Series F Preferred Stock will be exchangeable, at the option of its holder, for (i) 10 shares of Class A Common
Stock of Ault Capital and (ii) five shares of Class B Common Stock of Ault Capital, at any time beginning on the later of (i) one year
after issuance of the Series F Preferred Stock and (ii) the date of the registration under the Securities Act of 1933, as amended, of
all of the foregoing shares of Ault Capital Class A Common Stock and Ault Capital Class B Common Stock. Once the Series F Preferred Stock
has been exchanged into shares of Ault Capital Class A Common Stock and Class B Common Stock, our sole business will be our ownership
of Sentinum, Inc. through which we operate our Bitcoin mining business as well as its HPC and AI operations.
On December 13, 2024 (the
“Closing Date”), Third Avenue Apartments LLC (“Third Avenue”), which was a subsidiary of AGREE, completed the
sale of its real property located at the southeast corner of 5th Street North and 3rd Avenue North in St. Petersburg, Florida (the “Property”).
The Property was sold on the Closing Date to Cats Mirror Lake, LLC (the “Buyer”) pursuant to a contract of sale, as amended
entered into by Third Avenue and the Buyer. The sale price for the property was $13.0 million. In February 2025, Third Avenue filed a
certificate of cancellation with the Delaware Secretary of State.
On December 21, 2024, we entered
into a securities purchase agreement (the “December 2024 SPA”) with Ault & Company, pursuant to which we agreed to sell,
in one or more closings, to Ault & Company up to 25,000 shares of Series G convertible preferred stock (“Series G Preferred
Stock”) and warrants to purchase up to 4.2 million shares of Class A common stock (the “Series G Warrants”) for a total
purchase price of up to $25.0 million. The December 2024 SPA provides that the financing may be conducted through one or more closings.
Through April 14, 2025, pursuant to the December 2024 SPA, we have sold to Ault & Company 960 shares of Series G Preferred Stock and
Series G Warrants to purchase 162,217 shares of Class A common stock, for a purchase price of $1.0 million.
Each share of Series G Preferred
Stock has a stated value of $1,000.00 and is convertible into shares of Class A common stock at a conversion price equal to the greater
of (i) $0.10 per share, and (ii) the lesser of (A) $6.74 or (B) 105% of the volume weighted average price of the Class A common stock
during the 10 trading days immediately prior to the date of conversion. The holders of Series G Preferred Stock are entitled to cumulative
cash dividends at an annual rate of 9.5%, or $95.00 per share, based on the stated value per share. Dividends shall accrue for 10 years
from the date of issuance of such shares of Series G Preferred Stock and are payable monthly in arrears. For the first two years, we may
elect to pay the dividend amount in shares of Class A common stock rather than cash. The holders of the Series G Preferred Stock are entitled
to vote with the Class A common stock as a single class on an as-converted basis.
On March 28, 2025, our
majority owned subsidiary, Avalanche International Corp. (“AVLP”), filed a petition
for liquidation under Chapter 7 of the bankruptcy laws. The filing placed AVLP under the control of the bankruptcy court, which will oversee
its liquidation. As a result, we no longer consider AVLP as a subsidiary of ours.
On March 31, 2025, we entered
into a securities purchase agreement with an institutional investor pursuant to which we agreed to sell up to 50,000 shares of Series
B Convertible Preferred Stock (“Series B Preferred Stock”) for a total purchase price of up to $50.0 million. The securities
purchase agreement provides that the transaction shall be conducted through 49 separate tranche closings, provided, however, that the
investor has the ability, exercisable in its sole discretion, to purchase any number of shares of Series B Preferred Stock prior to the
dates of the tranche closings provided for in the securities purchase agreement. The initial tranche closing, which will close promptly
after the investor has converted out of the Exchange Note, will consist of the sale and issuance to the investor of 2,000 shares of Series
B Preferred Stock for an aggregate of $2.0 million. Pursuant to the securities purchase agreement, provided certain closing conditions
have been met, the investor shall purchase up to 4,800 shares of Series B Preferred Stock on a monthly basis, with the investor being
required to purchase 1,000 shares per month.
Each share of Series B Preferred
Stock has a stated value of $1,000.00 and is convertible into shares of Class A common stock at a at a conversion price equal the lesser
of a 25% discount to our volume weighted average price during the five trading days immediately prior to (A) the date of execution of
the securities purchase agreement or (B) the date of conversion into shares of Class A common stock, but not greater than $10.00 per share.
Notwithstanding the foregoing, in no event shall the Series B Preferred Stock be convertible at less than the Floor Price. The holders
of Series B Preferred Stock are entitled to cumulative cash dividends at an annual rate of 15%, or $150.00 per share, based on the stated
value per share. Dividends shall accrue for as long as any shares of Series B Preferred Stock remain issued and outstanding and are payable
monthly in arrears. For the first two years, we may elect to pay the dividend amount in additional shares of Series B Preferred Stock
rather than cash. The holders of the Series B Preferred Stock are entitled to vote with the Class A common stock as a single class on
an as-converted basis.
Presentation of GIGA as Discontinued OperationsGresham
On August 14, 2024, Gresham filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code. Upon the filing, Gresham became subject to the jurisdiction and oversight of the bankruptcy court. As a result of the loss of control over Gresham’s significant operating and financial decisions, we determined that we no longer maintained a controlling financial interest in Gresham and deconsolidated Gresham and its subsidiaries effective as of the petition date.
Upon deconsolidation, we recognized a gain on deconsolidation of approximately $2.0 million, which is included in net gain (loss) from discontinued operations in the consolidated statement of operations for the year ended December 31, 2024.
On June 6, 2025, we entered into a settlement agreement with Gresham and Gresham’s senior secured lenders. On August 29, 2025, the United States Bankruptcy Court for the District of Arizona confirmed Gresham’s Plan of Reorganization (the “Plan”). Pursuant to the confirmed Plan, certain senior lender claims were resolved in exchange for settlement payments, which were funded prior to emergence.
The Plan became effective on November 28, 2025 (the “Effective Date”), at which time Gresham emerged from Chapter 11 bankruptcy.
On November 28, 2025, upon the Effective Date of the Plan, we regained control of Gresham and obtained 100% of the voting equity of the reorganized entity. Because we had previously deconsolidated Gresham during the bankruptcy proceedings and regained control upon emergence, the transaction was accounted for as a business combination under Accounting Standards Codification (“ASC”) 805, Business Combinations. Gresham has been reconsolidated beginning on November 28, 2025.
Gresham’s primary operations are in the defense and aerospace markets and consist principally of the Enertec, Microphase and Relec businesses. Management believes the reconsolidation strengthens our position in mission-critical electronic components and power systems and enhances our long-term growth profile.
On
August 14, 2024, our majority owned subsidiary, Gresham Worldwide, Inc. (“GIGA”), filed
a petition for reorganization under Chapter 11 of the bankruptcy laws. The filing placed GIGA under the control of the bankruptcy court,
which oversees its reorganization and restructuring process. We assessed the inherent uncertainties associated with the outcome of the
Chapter 11 reorganization process and the anticipated duration thereof, and concluded that it was appropriate to deconsolidate GIGA and
its subsidiaries effective on the petition date. We recognized a gain on deconsolidation of GIGA of $2.0 million during the year ended
December 31, 2024, which is included in net gain (loss) from discontinued operations.
In connection with the Chapter
11 reorganization process, we concluded that the operations of GIGA met the criteria for discontinued operations as this strategic
shift will have a significant effect on our operations and financial results. As a result, we have presented the results of operations,
cash flows and financial position of GIGA as discontinued operations in the accompanying consolidated financial statements and notes for
all periods presented.
On April 30, 2024, we had
a change in plan of sale for our four hotels owned and operated by AGREE.Ault Global Real Estate Equities, Inc. (“AGREE”). As a
result, as of April 30, 2024, the assets no longer met
the held for sale criteria and were required to be reclassified as held and used
at the lower of adjusted carrying value or the fair value
at the date of the determination not to sell. In connection with this change
in plan of sale, we recorded a loss on impairment of property and equipment related to the real estate assets of AGREE of $8.0 million
during the year ended December 31, 2024.
Deconsolidation of Avalanche International Corp. (“AVLP”)
On March 28, 2025, AVLP, a majority-owned subsidiary of ours, filed a voluntary petition for liquidation under Chapter 7 of the U.S. Bankruptcy Code. As a result of the filing, AVLP became subject to the control of the bankruptcy court, and we no longer maintained a controlling financial interest. Accordingly, we deconsolidated AVLP effective as of the petition date. In connection with the deconsolidation, we recognized a gain of $10.0 million, which is included in the consolidated statement of operations for the year ended December 31, 2025. We evaluated the criteria for discontinued operations and determined that the operations of AVLP did not meet the requirements for such classification.
Deconsolidation of Eco Pack Technologies Limited (“Eco Pack”)
On April 16, 2025, Eco Pack, a majority-owned subsidiary of ours, filed a voluntary liquidation under the insolvency regulations in the UK. As a result of the filing, we no longer maintained a controlling financial interest. Accordingly, we deconsolidated Eco Pack effective as of the filing date. In connection with the deconsolidation, we recognized a loss of $0.4 million, which is included in the consolidated statement of operations for the year ended December 31, 2025. We evaluated the criteria for discontinued operations and determined that the operations of Eco Pack did not meet the requirements for such classification.
Deconsolidation of a Subsidiary of RiskOn International, Inc. (“ROI”)
During the year ended December 31, 2025, we recognized a gain of $2.7 million in connection with the bankruptcy proceedings for a subsidiary of ROI. We deconsolidated the subsidiary as we determined that we no longer maintained a controlling financial interest in the subsidiary. The gain recognized reflects the derecognition of the subsidiary’s remaining assets, liabilities, and equity balances. We evaluated the criteria for discontinued operations and determined that the operations of the subsidiary did not meet the requirements for such classification.
For presentation purposes,
the assets and liabilities previously held for sale as of December 31, 2023, were reclassified in the December 31, 2023 balance sheet
in the accompanying financial statements back to their original asset and liability groups at their previous carrying values. In connection
with this change in plan of sale, we recorded a loss on impairment of property and equipment related to the real estate assets of AGREE
of $8.0 million during the year ended December 31, 2024.
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 andobligations, working capital needs.needs and other senior capital commitments.
In recent years, we have provided
capital and relevant expertise to fuel the growth of businesses in AI software platform, social gaming 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.
We are a Delaware corporation
with our 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/.www.hyperscaledata.com.
Revenues from Sentinum’s
crypto assets mining operations decreased $2.5$9.3 million to $30.6$21.3 million for the year ended December 31, 2024,2025, compared to $33.1$30.6 million
for the year ended December 31, 2023.2024. The decrease was due primarily to a $4.1$3.7 million decline in revenue from mined crypto assets
at at
Sentinum owned and operated facilities,facilities partiallycoupled offset bywith a $1.6$5.6 million increasedecline in revenue from Sentinum crypto mining equipment hosted
at third-party facilities. The $4.1$3.7 million decrease in revenue from mined crypto assets at Sentinum owned and operated facilities was
due in part to the April 2024 Bitcoin halving eventevent, thatwhich occurredreduced the block reward on the Bitcoin networknetwork, andas well as a 70%47% increase
in the average Bitcoin mining difficulty
level, partially offset by a 129%54% increase in the average Bitcoin price for the year ended December
31, 2024,2025, compared to the corresponding
period in 2023.2024. No revenue was generated from third-party hosted mining operations in 2025.
Energy revenues from Circle 8’s crane operations declined by $2.0 million, or 4%, to $45.5 million for the year ended December 31, 2025, compared to $47.5 million for the same period in 2024. 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.
AGREE
Revenues from AGREE’s hotel operations increased by $0.9 million, or 5%, to $19.0 million for the year ended December 31, 2025, compared to $18.0 million for the same period in 2024. The increase reflects incremental improvements in both occupancy and average daily rates, indicating continued progress in hotel performance year-over-year.
TurnOnGreen’s revenues increased by $2.3 million, to $7.2 million for the year ended December 31, 2025, compared to $4.9 million in the corresponding period in 2024. This increase was primarily due to a new defense customer that contributed $1.1 million in new revenue, increased revenue of $0.7 million from one of our existing defense industry customers and $0.7 million increased revenue from two of our commercial and telecom customers, partially offset by decreased sales of $0.2 million from one of medical customers during the year ended December 31, 2025.
Gresham
Revenue attributable to Gresham was $3.4 million for the year ended December 31, 2025, compared to no revenue in the prior year. The increase reflects our acquisition of Gresham upon its emergence from bankruptcy on November 28, 2025. As a result, Gresham’s operating results were consolidated only for the period subsequent to emergence in 2025, representing approximately one month of activity during the year, whereas no comparable revenue was included in 2024.
Energy revenues from Circle 8’s crane operations decreased by
$1.7 million, or 4%, for the year ended December 31, 2024, remaining essentially flat compared to the prior period. This decrease was
primarily due to competitive pricing pressures and lower utilization of the crane fleet, as five cranes were out of service during the
year ended December 31, 2024.
Revenues from our lending and trading activities decreased by approximately $0.2 million to $1.7 million for the year ended December 31, 2025, compared to revenues of approximately $1.9 million for the year ended December 31, 2024. The decrease was primarily attributable to realized losses on related-party investments, lower fee income and reduced realized trading gains.
Fee income declined to approximately $0.3 million for the year ended December 31, 2025, compared to approximately $2.3 million for the year ended December 31, 2024. Realized trading gains decreased to approximately $1.8 million from approximately $3.2 million in the prior year. In addition, during the year ended December 31, 2025, we recognized approximately $0.4 million of realized losses on related-party investments, primarily related to equity investments in Alzamend. In addition, interest income improved to approximately $0.6 million for the year ended December 31, 2025, compared to negative $0.2 million for the year ended December 31, 2024. The prior year also included a $2.4 million impairment of equity securities that did not recur during the year ended December 31, 2025.
Revenues
from our lending and trading activities were $1.9 million for the year ended December 31, 2024, driven primarily by $2.4 million in realized
gains from trading activities and $2.7 million in fee income, partially offset by a $0.6 million unrealized loss from our investment in
Alzamend and a $2.4 million impairment for equity securities that did not have readily determinable fair values related to Fintech lending
operations. In comparison, revenues from lending and trading activities for the same period in 2023 were negative $2.0 million, driven
primarily by a $5.6 million unrealized loss from our investment in Alzamend and a $6.2 million impairment for equity securities that did
not have readily determinable fair values related to Fintech lending operations, partially offset by $11.0 million in net realized and
unrealized gains on investments in marketable equity securities.
Revenues
from our trading
activities for the yearyears ended December 31, 2025 and 2024 included net gains on equity securities, including unrealized gains and losses
losses from market price changes. These gains and losses have caused, and will continue to cause, significant volatility in our periodic earnings
earnings.relating to our Fintech segment.
SMC
Due
to the significant change in our ownership and voting rights, we determined that we no longer met the criteria of the primary beneficiary
and, accordingly, we deconsolidated SMC as of November 20, 2023. SMC revenues were $0 for the year ended December 31, 2024, a decrease
of $31.6 million compared to the corresponding period in 2023.
TurnOnGreen’s revenues
increased by $0.7 million, to $4.9 million for the year ended December 31, 2024, compared to $4.2 million in the corresponding period
in 2023. This rise was primarily due to higher sales from a single, higher-margin customer in the defense industry during the year ended
December 31, 2024.
Other revenues increaseddecreased by
$1.8$0.1 million, to $2.5$2.7 million for the year ended December 31, 2024,2025, compared to $0.8$2.8 million in the corresponding period in 2023.2024.
This This
risedecrease was primarily due to higherlower corporate aircraft charter revenue from third parties.
Gross margins decreased to 21% for the year ended December 31, 2025, compared to 23% for the same period in 2024. The decrease was primarily attributable to margin fluctuations within our crypto asset mining and lending activities. Excluding the impact of lending and trading activities and crypto asset mining, adjusted gross margin increased to 36% for the year ended December 31, 2025, compared to 34% for the year ended December 31, 2024, reflecting improved gross margins at AGREE and higher product segment margins driven by growth in higher margin TurnOnGreen revenue.
General and administrative expenses were $50.0 million for the year ended December 31, 2025, compared to $35.2 million for the year ended December 31, 2024, an increase of $14.8 million. The increase was primarily driven by higher salaries and benefits, higher performance-based bonuses at Ault Lending, partially offset by the deconsolidation of AVLP and Eco Pack, the completion and wind-down of Ault Disruptive Technologies Corporation following the full redemption of its public shares and a reduction in stock-based compensation expense.
Selling and marketing expenses were $18.3 million for the year ended December 31, 2025, compared to $14.0 million for the year ended December 31, 2024, an increase of $4.3 million, or 31%. The increase was primarily the result of increased sales and marketing expenses at ROI, including higher levels of advertising and promotional activity.
Gross margins rose to 23%
for the year ended December 31, 2024, compared to 18% for the same period in 2023. This increase was influenced by our lending and trading
activities, which contributed favorably to our gross margins for the year ended December 31, 2024 and unfavorably to our gross margins
for the year ended December 31, 2023. In both periods, gross margins were adversely affected by negative margins from our crypto assets
mining operations. Excluding the impacts of both our lending and trading activities and our crypto assets mining operations, adjusted
gross margins for the year ended December 31, 2024, and 2023 would have been 34% and 30%, respectively. Gross margins improved due to
the deconsolidation of the lower margin of SMC’s business.
What changed in the latest 10-Q
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.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Impairment of Property and Equipment”
New heading “Results of Operations for the Six Months Ended June 30, 2026 and 2025”
New heading “Gross Profit and Margins”
New heading “Research and Development”
New heading “Selling and Marketing”
New heading “General and Administrative”
New heading “Impairment of Property and Equipment”
New heading “Change in Fair Value of Crypto Assets”
New heading “Other Income (Expense), Net”
New heading “Income Tax Provision (Benefit)”
New heading “Bitcoin-Backed Borrowings”
Removed heading “Circle 8 Financing Agreement”
Largest changes
“Based on our current operating plans, existing obligations and anticipated capital expenditures, including the substantial capital required for the development of our Michigan data center, our existing cash and presently available sources of liquidity are not expected to be sufficient to meet our anticipated liquidity requirements through at least the next 12 months. We therefore expect to require significant additional financing. …”see in full comparison
“During the three months ended June 30, 2026, we recorded a $2.3 million impairment charge related to certain Bitcoin mining equipment located at our Michigan data center. The impairment was triggered by our execution of a master services agreement with a third-party customer for AI compute, neocloud and colocation services. As we prepare to allocate a significant portion of the facility’s available electrical capacity to support that customer’s deployments, we expect to substantially wind down our Bitcoin mining operations at the Michigan data center. …”see in full comparison
“During the six months ended June 30, 2026, we recorded a $2.3 million impairment charge related to certain Bitcoin mining equipment located at our Michigan data center. The impairment was triggered by our execution of a master services agreement with a third-party customer for AI compute, neocloud and colocation services. As we prepare to allocate a significant portion of the facility’s available electrical capacity to support that customer’s deployments, we expect to substantially wind down our Bitcoin mining operations at the Michigan data center. …”see in full comparison
“On June 23, 2026, our indirect wholly owned subsidiary, Alliance Cloud Services, LLC (the “Provider”) entered into a Master Services Agreement (the “Agreement”) with a customer (the “Customer”) to deploy a total of approximately 20 megawatts (“MW”), to be delivered by Provider in phases as described herein, for AI computing at the Provider’s AI data center campus in Dowagiac, Michigan (the “Facility”). …”see in full comparison
Full comparison: every changed paragraph (121)
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.
On December 19, 2025, we entered into an At-the-Market Issuance Sales Agreement with Spartan Capital Securities, LLC (“Spartan”), as sales agent to sell shares of our Class A common stock, having an aggregate offering price of up to $50 million from time to time, through an “at the market offering” (the “Prior ATM Offering”) as defined in Rule 415 under the Securities Act. On December 19, 2025, we filed a prospectus supplement with the SEC relating to the offer and sale of up to $50 million of Class A common stock in the ATM Offering. On January 16, 2026, we amended the At-the-Market Issuance Sales Agreement and filed a prospectus supplement to indicate that Spartan will serve as the lead sales agent and to add Wilson-Davis & Co., Inc. (“Wilson-Davis”) as an additional sales agent.
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.
In January and February 2026, we issued two short-term term notes to an institutional investor for aggregate gross proceeds of $10.0 million. Repayment obligations under the note were guaranteed by Ault & Company and Milton C. Ault, III, our Executive Chairman. Both notes have since been repaid in full.
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 aan additional short-term term note with anthe same institutional investor for gross proceeds of $10.0 million. The note was issued
with an original
issue discount of $0.8 million and hashad a principal face amount of $10.8 million. The note bearsbore interest at 12% per annum
and matures
matured on June 29, 2026. Beginning May 8, 2026, we arewere 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 bewas prepaid atand anyfully timesatisfied
during withoutthe penalty.three months ended June 30, 2026. Accordingly, no amounts were outstanding under the term note as of June 30, 2026. Repayment
Repayment obligations under the note arewere guaranteed by Ault & Company and Milton C. Ault, III, our Executive Chairman.
On May 27, 2026, we provided notice of our election to terminate our Prior ATM Offering, with such termination becoming effective on June 8, 2026. Prior to its termination, we had sold approximately 137.6 million shares of our Class A common stock under the program for aggregate gross proceeds of approximately $24.6 million.
On June 18, 2026, we entered into a new At-the-Market Issuance Sales Agreement with Spartan as sales agent, pursuant to which we may offer and sell shares of our Class A common stock having an aggregate offering price of up to $300.0 million from time to time. Sales under the new ATM program are made pursuant to our effective shelf registration statement on Form S-3.
On June 11, 2026, we entered into a Prepaid Advance Agreement with YA II PN, Ltd. (“Yorkville”), pursuant to which we received net proceeds of approximately $15.0 million in exchange for a prepaid advance with an initial principal balance of approximately $16.0 million. The prepaid advance bears interest at 4% per annum and matures on December 11, 2027. The advance will be repaid through periodic cash payments or, subject to the terms of the agreement, through the issuance of shares of our Class A common stock based on a formula tied to the market price of our common stock. We may also prepay all or a portion of the outstanding balance under certain circumstances. The financing provides us with additional capital to support our strategic initiatives and general corporate purposes.
On June 23, 2026, our indirect wholly owned subsidiary, Alliance Cloud Services, LLC (the “Provider”) entered into a Master Services Agreement (the “Agreement”) with a customer (the “Customer”) to deploy a total of approximately 20 megawatts (“MW”), to be delivered by Provider in phases as described herein, for AI computing at the Provider’s AI data center campus in Dowagiac, Michigan (the “Facility”). Pursuant to the Agreement, the Provider agrees to provide to Customer, certain colocation and related data center services that are set forth in the Agreement (each, a “Service” and collectively, the “Services”) at the recurring service charges for each Contract Year (as defined below).
Further, the Agreement provides for the Provider granting the Customer an exclusive license (the “License”) to use a certain area of the Facility (the “Service Area”), for an initial term of 10 years and two five-year extension options (the “Term”) to commence on the “Service Commencement Date,” which means, with respect each Phase, the date of delivery of the applicable Service Area and electrical capacity to the Customer and to end on the date which shall be the last day of the calendar month in which the end of the tenth Contract Year occurs (the “Fixed Expiration Date”) where “Contract Year” means (i) with respect to the first Contract Year, the period commencing on the Service Commencement Date and ending on the day before the first anniversary of the later to occur of (x) the Service Commencement Date of Phase 1 and (y) the date that is six months after the Execution Date, and (y) each successive 12 month period after the First Year Expiration Date until the Fixed Expiration Date. If available, the Agreement also provides the Customer with a right of first offer to an additional 32 MW of critical AI compute capacity.
The License applies to the following Phases (each, a “Phase” and collectively the “Phases”):
(a) ”Phase 1”, consisting of power modules for 10 MW of critical information technology (“IT”) power capacity to a portion of the Service Area, with a targeted delivery date of 90 days after the Execution Date; and (b) ”Phase 2”, consisting of power modules for an additional 10 MW of critical IT power capacity to a different portion of the Service Area, with a targeted delivery date of 180 days after the Execution Date.
Pursuant to the Agreement, assuming the Customer elects to exercise the two five-year extension options, the total contract value to the Provider is approximately $1.2 billion during the Term, subject to the Provider meeting its obligations under the Agreement. If the Customer exercises its right of first offer within the first two years from the Execution Date for the additional 32 MW of critical AI compute capacity, then the total contract value to the Provider would increase to approximately $3.0 billion. The Agreement provides for certain one-time payments by the Customer in connection with Phase 1 and Phase 2 fit out work, as well as a monthly colocation fee to paid by the Customer for Phase 1 and Phase 2 (a portion of which is to be prepaid), based upon the number of kilowatts delivered.
The Agreement requires the Provider to construct, equip, and commission two Phases of the Service Area at the Facility, with Phase 1 (10 MW) ready-for-service date targeted at September 21, 2026 and with full deployment in Phase 2 (10 MW) targeted by the end of 2026.
As of June 30, 2026, we had sold an aggregate of approximately 126.2 million shares of our Class A common stock under the new ATM program for gross proceeds of approximately $25.5 million.
As of June 30, 2026, we had sold 33,984 shares of our Series D Preferred under the Series D Preferred ATM Offering for gross proceeds of approximately $0.8 million.
In recent years, we have provided capital and relevant expertise to fuel the growth of businesses in our AI software platform, equipment rental services, defense, industrial and hotel operations. We have provided capital to subsidiaries as well as partner companies in which we have an equity interest or may be actively involved, influencing development through board representation and management support.
Results of Operations for the Three Months Ended MarchJune 31,30, 2026 and
and 2025
The following table summarizes
the results of our operations for the three months ended MarchJune 31,30, 2026 and 2025.
Revenues by business category
for the three months ended MarchJune 31,30, 2026 and 2025 were as follows:
n/m - not meaningful
Sentinum
Revenues from Sentinum’s
crypto asset mining operations decreasedincreased by $0.1$0.2 million to $5.1$4.9 million for the three months ended MarchJune 31,30, 2026, compared to $5.2$4.7 million
for the same period in 2025. The decreaseincrease in mining revenue was driven by an 18% decrease in the averagedeployment Bitcoinof price4,092 Bitmain S21+ and S21 Pro Antminers in
November 2025, partially offset by a 27%10% increase
in the average Bitcoin network difficulty level and a 27% decrease in the average Bitcoin
price and during the three months ended MarchJune 31,30, 2026, compared to the same period in 2025.
Energy revenues from Circle
8’s crane operations declineddecreased by $2.8approximately $0.5 million, or 20%,5%, for the three months ended MarchJune 31,30, 2026, compared to the same
period in
2025. The decrease reflectswas aprimarily slowdownattributable into demandlower activity from certain oil and gas customers, asreflecting manyindustry explorationconsolidation
and projectsa were delayed or scaled back
amid continued market uncertainty. Key contributing factors included fluctuationsreduction in crudedrilling oillocations prices, softer global demand and trade-related
concerns, all of which impacted the pace of new project starts and the need forrequiring crane services.
Revenues from our lending and trading activities decreased by approximately $4.1 million to negative $2.3 million for the three months ended June 30, 2026, compared to revenue of $1.8 million for the same period in 2025. The decrease was primarily attributable to non-cash unrealized losses on equity securities and changes in the fair value of warrant-related derivative instruments, which was partially offset by increased interest and fee income. Interest income increased primarily due to the accretion of discounts on our loans receivable, while fee income increased due to fees earned in connection with that lending activity.
Revenues
from our 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 MarchJune 31,30, 2026 also included net gains on equity securities, including unrealized
gains and losses from market price changes. These gains and losses have caused, and will continue to cause, significant volatility in
our periodic earnings.
Defense
Defense segment revenues increased by approximately $10.2 million, or 604%, to $11.9 million for the three months ended June 30, 2026, compared to $1.7 million for the same period in 2025. The increase was primarily attributable to the inclusion of revenues from our Gresham Worldwide, Inc. (“Gresham”) defense subsidiary that reemerged from Chapter 11 bankruptcy proceedings and was reconsolidated in late 2025. As a result, no revenues from that subsidiary were included in the comparable prior-year period.
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.
Revenues from AGREE’s
hotel operations increased by $0.5approximately $0.3 million, or 14%,5%, for the three months ended MarchJune 31,30, 2026, compared to the same period
in 2025. The
increase reflectswas incrementalprimarily improvementsdriven inby bothhigher occupancy resulting from increased guest demand, while average daily rates remained
relatively consistent with the prior-year period. The combination of higher occupancy and averagestable dailyroom rates,rates indicatingcontributed continuedto progressimproved inrevenue
per available room and overall hotel performance
year-over-year.operating performance.
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 revenues decreasedincreased by
$0.1approximately $2.9 million, or 11%,647%, for the three months ended MarchJune 31,30, 2026, compared to the same period in 2025. The decreaseincrease was primarily
attributable driven
byto reducedrevenues corporate aircraft charter revenuegenerated from thirdour partiesblockchain during the period.initiatives.
Gross Profits and Margins
Gross profit increased by approximately $2.7 million, or 44%, to $8.8 million for the three months ended June 30, 2026, compared to $6.1 million for the same period in 2025. Gross margin increased to 25% from 24% in the prior-year period. The improvement was primarily attributable to growth of our Defense operations following the reconsolidation of a subsidiary in late 2025, higher-margin blockchain-related revenues, and improved margins within our crane and hotel operations. These favorable factors were partially offset by negative gross margins from our lending and trading activities, driven primarily by non-cash fair value adjustments, and continued negative gross margins from crypto asset mining activities.
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 expenses
increasedwere by approximately $4.7$4.3 million for the three months ended MarchJune 31,30, 2026, reflectingcompared to $0.1 million for the three months ended June 30, 2025, an increase
of approximately $4.2 million. The increase reflects increased investment in the development
of our AI and blockchain initiatives as these
development efforts continue to scale.
Selling and marketing expenses
were $5.6$8.1 million for the three months ended MarchJune 31,30, 2026, compared to $2.3$6.2 million for the three months ended MarchJune 31,30, 2025, an increase
of $3.3$1.9 million, or 140%,30%, reflecting increased investment in brand-building initiatives and expanded marketing campaigns to support our
growth strategy.
General and administrative
expenses were $18.5$19.8 million for the three months ended MarchJune 31,30, 2026, compared to $9.2$9.9 million for the same period in 2025, representing
an increase
of $9.3$10.0 million, or 101%. The increase was primarily drivenreflected byapproximately $2.6 million of expenses associated with the inclusionreconsolidation
of Gresham, $2.0 million of Gresham following its emergence from bankruptcy,
higher corporate-levelemployee expenses at the holding company level,compensation and increasedbenefits as we expanded our operations, $1.5 million of higher legal and
professional fees,fees includingsupporting consultingstrategic and legalcorporate costs,initiatives, as
well$1.5 asmillion of higher travel-related expenses.expenses and approximately $2.4
million of other net increases in corporate operating costs.
Impairment of Property and Equipment
During the three months ended June 30, 2026, we recorded a $2.3 million impairment charge related to certain Bitcoin mining equipment located at our Michigan data center. The impairment was triggered by our execution of a master services agreement with a third-party customer for AI compute, neocloud and colocation services. As we prepare to allocate a significant portion of the facility’s available electrical capacity to support that customer’s deployments, we expect to substantially wind down our Bitcoin mining operations at the Michigan data center. The impairment reflects our strategic transition of the facility from Bitcoin mining to AI infrastructure services, rather than any deterioration in the physical condition of the equipment.
At the time of our impairment analysis, we had not yet determined whether the affected mining equipment would be relocated to another facility, sold or otherwise disposed of. Because we expect the equipment to no longer be used at the Michigan data center and its future use remained uncertain, we concluded that the carrying amount of the related asset group was not recoverable. Accordingly, we recorded an impairment charge to reduce the carrying value of the equipment to its estimated fair value, which was determined primarily using observable market data for comparable Bitcoin mining equipment under an orderly liquidation value approach.
We recorded a $2.7 million gain related to the change in fair value of crypto assets for the three months ended June 30, 2026. The gain primarily reflects increases in the market price of Bitcoin during periods in which we held higher balances of unrestricted crypto assets prior to transferring a significant portion of our Bitcoin holdings to restricted crypto assets during the quarter.
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.
Other expense,income, net was $8.6$4.1 million for the three months ended MarchJune
31,30, 2026, compared to other income,expense, net of $1.7$7.3 million for the threesame monthsperiod ended March 31,in 2025. The favorable change was primarily driven byattributable
the absence ofto the prior year gain on deconsolidationextinguishment of a subsidiary,settlement asobligation welland as higherlower interest expense and losses on the change in
fair value of crypto assets, restricted,expense, partially offset by gainslosses recognizedrelated to the change
in fair value of restricted crypto assets, including changes in thefair currentvalue period.and impairment charges.
Interest and other income
totaled $0.8$0.4 million for the three months
ended MarchJune 31,30, 2026, compared to $0.2$1.1 million for the same period in 2025, primarily reflecting higher
lower income from various non-operating
sources.
Interest expense increaseddecreased
by approximately $3.7 million, or 49%, to $6.5$3.9 million for the three months ended MarchJune 31,30, 2026, compared to $3.8$7.7 million for the same
period in 2025,2025. The decrease was primarily dueattributable to higher
averagelower outstandingnon-cash amortization of debt balancesdiscounts and reduced contractual interest
expense, reflecting changes in our financing mix and lower average borrowing costs during the current period. The decrease also reflects
the absence of forbearance fees recognized in the prior-year period.
During the three months ended June 30, 2026, we recognized a gain of approximately $16.0 million related to the extinguishment of a settlement obligation. The gain resulted from management’s determination that it had substantially satisfied its obligations under a settlement agreement to identify and distribute proceeds to eligible stockholders of a former subsidiary and that substantially all of the remaining obligation had been extinguished.
We recorded a $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 $4.7loss of approximately $2.4 million
loss related to the change
in fair value of crypto assets, restricted for the three months ended MarchJune 31,30, 2026, reflecting adeclines decline
in Bitcointhe market pricesprice of restricted
Bitcoin during the period. WeIn heldaddition, we recognized an impairment charge of approximately $16.7$7.1 million ofrelated Bitcointo cbBTC pledged as ofcollateral
for Marchour 31,Bitcoin-backed 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.borrowings.
During the three months ended
MarchJune 31,30, 2026, we recognized a gain on extinguishment of debt of approximately $0.5$0.3 million, compared to a loss of $4.6 million in the
prior year period, reflecting the settlement of certain debt
obligations on favorable terms. No comparable gains were recognized during the prior-year period.
We recognized a non-cash gain of $0.8 million during the three months ended June 30, 2026, primarily related to the remeasurement of the embedded derivative associated with our Yorkville prepaid advance financing. The embedded derivative is measured at fair value each reporting period, and changes in fair value are recognized in earnings. No comparable gain or loss was recognized during the three months ended June 30, 2025.
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 ProvisionBenefit
We recorded an income tax provisionbenefit
of approximately $0.2 million$24,000 for the three months ended MarchJune 31,30, 2026, compared to $0.1 million for the same period in 2025. The effective
tax rate for the three months ended MarchJune 31,30, 2026 was approximately 0.8%,0.1%, compared to 1.3%0.7% for the same period in 2025. The effective
tax rate differs from the statutory rate primarily due to the impact of valuation allowances and the mix of income and losses across jurisdictions.
GPUS insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 28 Form 4 filings (5 insiders, 31 trade dates, 18,258,896 shares, about $6.7M) and open-market sales in 1 filing (1 insider, 1 trade date, 1,000 shares, about $290). Net open-market shares: 18,257,896 (purchases minus sales); net value about $6.7M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-30 | Ault Milton C Iii |
Open-market purchase | 311,874 | $0.16 | $51.1K |
| 2026-09-30 | Ault Milton C Iii |
Open-market purchase | 10,000,000 | $0.50 | $5.0M |
| 2026-09-30 | Horne William B. |
Open-market purchase | 100,000 | $0.16 | $16.0K |
| 2026-09-29 | Ault Milton C Iii |
Open-market purchase | 1,600 | $0.17 | $266 |
| 2026-09-29 | Horne William B. |
Open-market purchase | 100,000 | $0.17 | $17.0K |
| 2026-09-25 | Ault Milton C Iii |
Open-market purchase | 56,600 | $0.16 | $9.1K |
| 2026-09-25 | Ault Milton C Iii |
Open-market purchase | 500,000 | $0.17 | $85.0K |
| 2026-09-24 | Ault Milton C Iii |
Open-market purchase | 100,000 | $0.18 | $18.0K |
| 2026-09-24 | Ault Milton C Iii |
Open-market purchase | 33,000 | $0.17 | $5.6K |
| 2026-09-23 | Ault Milton C Iii |
Open-market purchase | 2,000 | $0.17 | $340 |
| 2026-09-23 | Ault Milton C Iii |
Open-market purchase | 100,000 | $0.18 | $18.0K |
| 2026-09-22 | Ault Milton C Iii |
Open-market purchase | 2,200 | $0.20 | $440 |
| 2026-09-21 | Ault Milton C Iii |
Open-market purchase | 500 | $0.18 | $90 |
| 2026-09-18 | Ault Milton C Iii |
Open-market purchase | 20,000 | $0.18 | $3.6K |
| 2026-09-17 | Ault & Company, Inc. |
Open-market purchase | 25,000 | $0.19 | $4.8K |
| 2026-09-17 | Ault & Company, Inc. |
Open-market purchase | 12,500 | $0.18 | $2.2K |
| 2026-09-16 | Horne William B. |
Open-market purchase | 1,000 | $18.00 | $18.0K |
| 2026-09-16 | Ault & Company, Inc. |
Open-market purchase | 125,000 | $0.18 | $22.5K |
| 2026-09-16 | Ault & Company, Inc. |
Open-market purchase | 19,500 | $0.18 | $3.5K |
| 2026-09-15 | Ault & Company, Inc. |
Open-market purchase | 20,000 | $0.19 | $3.8K |
| 2026-09-14 | Ault Milton C Iii |
Open-market purchase | 4,500 | $0.18 | $810 |
| 2026-09-11 | Ault Milton C Iii |
Open-market purchase | 2,100 | $0.18 | $378 |
| 2026-09-11 | Ault & Company, Inc. |
Open-market purchase | 150,000 | $0.19 | $28.5K |
| 2026-09-11 | Ault & Company, Inc. |
Open-market purchase | 150,000 | $0.19 | $28.5K |
| 2026-09-10 | Ault & Company, Inc. |
Open-market purchase | 22,800 | $0.19 | $4.3K |
| 2026-09-10 | Ault & Company, Inc. |
Open-market purchase | 22,800 | $0.19 | $4.3K |
| 2026-09-09 | Ault & Company, Inc. |
Open-market purchase | 5,500 | $0.19 | $1.0K |
| 2026-09-09 | Ault & Company, Inc. |
Open-market purchase | 5,500 | $0.19 | $1.0K |
| 2026-09-08 | Ault & Company, Inc. |
Open-market purchase | 80,200 | $0.19 | $15.2K |
| 2026-09-08 | Horne William B. |
Open-market purchase | 60,000 | $0.19 | $11.4K |
| 2026-09-04 | Ault Milton C Iii |
Open-market purchase | 1,913,691 | $0.19 | $363.6K |
| 2026-09-04 | Ault Milton C Iii |
Open-market purchase | 196,800 | $0.19 | $37.4K |
| 2026-09-04 | Cragun Kenneth S |
Open-market purchase | 100,000 | $0.19 | $19.0K |
| 2026-09-04 | Nisser Henry Carl |
Open-market purchase | 250,000 | $0.19 | $47.5K |
| 2026-09-04 | Horne William B. |
Open-market purchase | 100,000 | $0.20 | $20.0K |
| 2026-09-04 | Ault Milton C Iii |
Open-market purchase | 1,913,691 | $0.19 | $363.6K |
| 2026-09-04 | Ault Milton C Iii |
Open-market purchase | 196,800 | $0.19 | $37.4K |
| 2026-09-03 | Ault Milton C Iii |
Open-market purchase | 38,200 | $0.19 | $7.3K |
| 2026-09-03 | Ault Milton C Iii |
Open-market purchase | 38,200 | $0.19 | $7.3K |
| 2026-09-02 | Horne William B. |
Open-market purchase | 100,000 | $0.20 | $20.0K |
| 2026-09-02 | Ault Milton C Iii |
Open-market purchase | 42,000 | $0.23 | $9.7K |
| 2026-09-01 | Ault Milton C Iii |
Open-market purchase | 107,999 | $0.25 | $27.0K |
| 2026-08-31 | Ault & Company, Inc. |
Open-market purchase | 89,000 | $0.27 | $24.0K |
| 2026-08-28 | Ault & Company, Inc. |
Open-market purchase | 150,000 | $0.30 | $45.0K |
| 2026-08-28 | Ault & Company, Inc. |
Open-market sale | 1,000 | $0.29 | $290 |
| 2026-08-28 | Ault & Company, Inc. |
Open-market purchase | 47,641 | $0.31 | $14.8K |
| 2026-08-27 | Ault & Company, Inc. |
Open-market purchase | 10,000 | $0.34 | $3.4K |
| 2026-06-30 | Ault & Company, Inc. |
Open-market purchase | 100 | $19.53 | $2.0K |
| 2026-06-29 | Horne William B. |
Open-market purchase | 5,000 | $19.00 | $95.0K |
| 2026-06-18 | Ault Milton C Iii |
Open-market purchase | 18,000 | $0.27 | $4.9K |
| 2026-06-16 | Ault & Company, Inc. |
Open-market purchase | 50,000 | $0.24 | $12.0K |
| 2026-06-16 | Ault & Company, Inc. |
Open-market purchase | 5,000 | $0.24 | $1.2K |
| 2026-06-11 | Horne William B. |
Open-market purchase | 200,000 | $0.17 | $34.0K |
| 2026-06-11 | Ault & Company, Inc. |
Open-market purchase | 15,000 | $0.16 | $2.4K |
| 2026-06-11 | Ault & Company, Inc. |
Open-market purchase | 100,000 | $0.16 | $16.0K |
| 2026-06-10 | Ault & Company, Inc. |
Open-market purchase | 40,000 | $0.17 | $6.8K |
| 2026-05-28 | Ault Milton C Iii |
Open-market purchase | 100 | $21.19 | $2.1K |
| 2026-05-19 | Ault Milton C Iii |
Open-market purchase | 100,000 | $0.13 | $13.0K |
| 2026-05-19 | Ault Milton C Iii |
Open-market purchase | 397,500 | $0.13 | $51.7K |
Well-known investors holding GPUS (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Renaissance Technologies | 2026-06-30 | 109,669 | $15.4K | 0.0% | New position |