Big Digital Energy, Inc.
For the period ended Jun 30, 2026. Filed Aug 14, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 14, 2026
BGDE$3.16+19.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-14.
0001213900-26-056680
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-14.
0001213900-26-089986
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 75 previous paragraphs and 124 current paragraphs.
40 unchanged; 31 reworded; 42 added; 4 removed; 0 previous and 11 current paragraphs rearranged.
Tables are not compared: 28 previous and 28 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (42)
Current report
Recent Developments
Current report
During the three months ended June 30, 2026, the Company established a revolving line of credit and issued Series D Preferred Stock and a related Warrant, which are discussed under “Liquidity and Capital Resources.”
Current report
GPU Pilot Program
Current report
Our graphics processing unit (“GPU”) pilot program that launched in October 2025 on a leading decentralized AI network continues to advance our strategy of expanding the Company’s AI infrastructure capabilities. The pilot remains operational and has performed in line with, and in several key operational areas above, our initial expectations.
Current report
Since its inception, the program has provided valuable operational and commercial insights across infrastructure performance, workload optimization, marketplace dynamics, and deployment methodologies. These results have strengthened our technical capabilities and validated key assumptions underlying the development of a scalable AI infrastructure platform. The pilot has also demonstrated consistent operational performance while allowing the Company to further refine its provisioning, pricing, and utilization strategies.
Current report
The Company continues to evaluate the pilot as part of its broader AI infrastructure initiative, with ongoing efforts focused on expanding certification coverage, optimizing deployment processes, and assessing additional opportunities for future GPU capacity. The operational data and experience gained through the program continue to support management’s confidence in the scalability of the platform and its potential to contribute to the Company’s long-term infrastructure strategy.
Current report
Joint Mining Agreement
Current report
Termination of Rights Plan
Current report
On June 5, 2026, Company and Computershare Trust Company, N.A., as Rights Agent, executed Amendment No. 1 (the “Amendment”) to the Rights Agreement dated as of February 2, 2026. The Amendment accelerated the expiration date of the Rights Agreement to the earlier of June 8, 2026, and the Redemption Date (as defined in the Rights Agreement). At the time of the termination of the Rights Agreement, all of the Rights expired that were previously distributed to holders of the Company’s issued and outstanding common stock pursuant to the Rights Agreement. In deciding to accelerate the expiration date to June 8, 2026, the Company’s Board of Directors determined that an active Rights Agreement is no longer needed to protect stockholder value at this time.
Current report
Nasdaq Listing Rules Compliance
Current report
On June 16, 2026, the Company received written notice from Nasdaq’s Listing Qualifications Hearings Department confirming that the Company had regained compliance with the Nasdaq Listing Rules. Nasdaq’s determination is subject to the Company maintaining stockholders’ equity of at least $5 million in each quarter for a twelve-month period, beginning with the quarter ending June 30, 2026, and promptly notifying Nasdaq of any significant events that could affect the Company’s compliance with that requirement. As previously disclosed, the Company was notified by Nasdaq that the Company was in violation of the minimum equity standard under Listing Rule 5550(b)(1), as of December 19, 2025, which requires $2.5 million in stockholders’ equity.
Current report
Hood County Site Acquisition
Current report
On July 14, 2026 and July 15, 2026, the Company entered into definitive agreements with 10NetZero, Inc. to form a 50/50 joint venture, and on July 15, 2026 the joint venture acquired 30 acres of a site in Hood County, Texas for approximately $10 million in cash, with an option to purchase the remainder of the site for an additional $600,000. In connection with the acquisition, the Company provided a $4.9 million loan to 10NetZero to fund a portion of its capital contribution required for the acquisition of the Hood County Site. The loan bears interest at the short-term applicable federal rate and matures on October 13, 2026; interest and principal are due at maturity. 10NetZero’s 50% ownership interest in the joint venture is transferable to the Company at a rate of 10% ownership interest per month, prorated daily, for each month past the maturity date that 10NZ fails to repay the entire loan, so that 10NetZero’s entire ownership interest shall have transferred in full to the Company if the loan is not paid in full within five months of the maturity date.
Current report
Digital colocation revenues for the three months ended June 30, 2026 and 2025, were $3.5 million and $3.7 million, respectively. This represented a 4% decrease or a decrease of $0.2 million, compared to the same period in 2025. Digital colocation revenues for the three months ended June 30, 2026 include profit share revenues earned from our new joint mining agreement with Six Thirty AI which partially offset decreases in revenue due to reductions in both the number of customers and the average contract size as compared to the 2025 period.
Current report
Digital assets mining revenues from self-mining of Bitcoin for the three months ended June 30, 2026 and 2025, were $0.03 million and $0.7 million, respectively. The decline was driven by the reallocation of our self-mining fleet capacity at our facilities in Midland and Bellefonte to customer fleets from our new joint mining agreement.
Current report
Selling, general and administrative expenses for the three months ended June 30, 2026 and 2025 were $6.0 million and $5.9 million, respectively, an increase of $0.1 million, or 2%, from period to period. The increase was primarily due to higher insurance expenses, partially offset by lower bonus-related expenses.
Current report
Depreciation consists primarily of depreciation of energy equipment, transformers and MDC equipment.
Current report
Interest expenses for the three months ended June 30, 2026 and 2025, were $1.0 million and $0.8 million, respectively. The higher amount of interest expense recognized in 2026 compared to 2025 is due to interest accreting to the total outstanding debt.
Current report
Income tax benefit (expense)
Current report
Results of Operations – Six months ended June 30, 2026 compared to the six months ended June 30, 2025
Current report
Revenues
Current report
Energy management revenues for the six months ended June 30, 2026 and 2025, were $3.8 million and $8.2 million, respectively. This represented a 54% decrease or a decrease of $4.4 million, compared to the same period in 2025. The decrease was primarily attributable to changes to miner specification requirements for curtailment program participation beginning in 2026, in which the Company’s mining fleet did not achieve the target life expectancy. The Company also realized lower curtailment earnings due to fewer customers and reductions in the average size of customer contracts. These decreases were partially offset by higher payments received for the sale of excess energy capacity.
Current report
Operating Expenses
Current report
Selling, general and administrative
Current report
Stock-based compensation
Current report
Depreciation and amortization
Current report
Depreciation and amortization for the six months ended June 30, 2026 and 2025, were $2.3 million and $3.0 million, respectively. The lower depreciation and amortization expense is due to an increase in the amount of fully depreciated equipment compared to prior periods.
Current report
Non-operating income (expense)
Current report
Interest expenses for the six months ended June 30, 2026 and 2025, were $2.0 million and $1.6 million, respectively. The higher amount of interest expense recognized in 2026 compared to 2025 is due to interest accreting to the total outstanding debt.
Current report
On May 28, 2026, the Company and Endeavor Blockchain, LLC, an Arkansas limited liability company (“Endeavor” and the “Noteholder”), entered into a promissory note providing for a revolving line of credit, with the aggregate principal sum of all revolving loans advanced from time to time by the Noteholder to the Company not to exceed forty million dollars ($40,000,000) (the “Revolver”). Endeavor is wholly owned by Josh Kilgore, the Company’s Executive Chairman.
Current report
Pursuant to the Revolver, each revolving loan bears interest at a fixed rate of 12% per annum, with principal and interest payable upon demand. The revolving line of credit is secured by assets of the Company listed in the Revolver.
Current report
The Revolver contains customary representations, warranties, covenants, events of default and security arrangements. The Company is also subject to restrictions on incurring additional indebtedness and additional liens on the collateral. The Revolver provides for customary events of default, including, among others, failure to pay principal or interest, breach of representations and warranties, violation of covenants, bankruptcy or insolvency events. As of June 30, 2026, the Company was in compliance with covenants under the Revolver.
Current report
The Company may at any time, and without penalty, prepay outstanding amounts under the revolving loans, or if there are no outstanding amounts, terminate the Revolver. The outstanding balance including interest is $2.5 million as of June 30, 2026, all of which is classified as a current liability.
Current report
Joint Mining Agreement
Current report
On April 27, 2026, the Company entered into the Six Thirty AI Colocation Agreement, which is described under “Recent Developments” of Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Current report
Series D Convertible Preferred Stock and Warrant
Current report
On June 30, 2026, the Company entered into a Securities Purchase Agreement, pursuant to which it issued and sold 16,700 shares of newly designated Series D Convertible Preferred Stock, par value $0.001 per share, with a stated value of $1,000 per share, at a purchase price of $900.00 per share, for net proceeds of $14.0 million, to Six Thirty AI, LLC. See Note 9, Stockholders’ Equity, for additional information on the terms of the Series D Convertible Preferred Stock and a related warrant.
Current report
While this financing strengthened our capital position, it includes covenants that, subject to customary exceptions, limit our ability to pay dividends or repurchase shares, take on new debt or create new liens, and enter into variable-rate financing. These restrictions may limit our flexibility to raise capital or refinance certain obligations in the near term. We plan to manage liquidity within the permitted baskets, seek consents if needed, and may prioritize equity or fixed-rate structures to remain compliant.
Current report
Hood County Site Acquisition
Current report
On July 14, 2026 and July 15, 2026, the Company entered into and closed on a series of definitive agreements with 10NetZero, Inc. (“10NZ”) as joint venture partners, including (i) the Operating Agreement of Texas Load House, LLC (the “Operating Agreement”), (ii) a Loan and Security Agreement between the joint venture partners (the “Loan and Security Agreement”), and (iii) a Side Agreement regarding the Interim Management of Texas Load House, LLC (the “Side Agreement,” and collectively with the other definitive agreements, the “Joint Venture Agreements”), to establish a joint venture for the acquisition, ownership, and development of certain real property located in Hood County, Texas (the “Hood County Site”). Subject to the terms of the Joint Venture Agreements, the Company initially owns a 50% membership interest in the joint venture and 10NZ initially owns the remaining 50% membership interest.
Showing the first 40 of 42 passages. Open the source sections for the rest.
Removed paragraphs (4)
Previous report
Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to, the risk factors set out in Item 1A. Risk Factors in this Quarterly Report on Form 10-Q, and in our 2025 Form 10-K.
Previous report
In October 2025, we announced the launch of a graphics processing unit (“GPU”) pilot program on a major, leading decentralized AI network. Our GPU pilot’s overarching objective is to build a repeatable, scalable framework that proves a path for us to expand our role as an AI cloud or infrastructure provider across its U.S. sites. Since launch, the GPU pilot has outperformed competing marketplace offerings on GPU performance benchmarks for deep-learning tasks, while maintaining competitive bandwidth metrics at a limited scale. Analysis of runtime optimization, pricing dynamics and network placement has contributed to our growing internal technical expertise and stress-tested infrastructure assumptions for future GPU deployments. We continue to refine our listing strategy, expand certification coverage, and collect data in order to accelerate deployment speed and scale in subsequent GPU rollouts. Due to supply chain delays, the pilot program remains ongoing.
Previous report
Cost of revenues
Previous report
On April 27, 2026, the Company entered into a Joint Mining Agreement with Big Digital Energy, LLC (BDE”), (the “Colocation Agreement” or “Agreement”). Through the Agreement, Management desires to bring real revenue into the Company in the short term while pursuing its goal to move its operations away from Bitcoin mining towards selectively monetizing excess capacity where economically prudent and aligned with shareholder value creation. The Company’s core strategy is to optimize the utilization of each megawatt by deploying it toward the highest-value applications, with current priority given to future expansion into AI and high-performance computing (“HPC”) data center developments. BDE is deemed an affiliate of the Company because it is owned and/or controlled by Josh Kilgore, Phillip Stanley, and Cody Smith, who also serve as members of the Company’s Board of Directors. Entities affiliated with Mr. Kilgore, Mr. Smith, and Mr. Stanley hold 60%, 20%, and 20% ownership interests, respectively, in BDE.
Reworded paragraphs (31)
Previous wording
This report, and the 2025 Form 10-K identify important factors which could cause our actual results to differ materially from those indicated by the forward-looking statements, including those set forth under Item 1A. “Risk Factors” below.
Current wording
The 2025 Form 10-K and subsequent Quarterly Reports on Form 10-Q identify important factors which could cause our actual results to differ materially from those indicated by the forward-looking statements, including those set forth under Item 1A. “Risk Factors” below.
Previous wording
The risk factors included in this Quarterly Report on Form 10-Q, and in the 2025 Form 10-K are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Given these uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The following important factors, among others, could affect future results and events, causing those results and events to differ materially from those expressed or implied in our forward-looking statements:
Current wording
The risk factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Given these uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The following important factors, among others, could affect future results and events, causing those results and events to differ materially from those expressed or implied in our forward-looking statements:
Previous wording
Under the terms of the Colocation Agreement, BDE will purchase and deliver approximately 25,000 s19xp mining computers, and Big Digital will provide BDE with approximately 75MW of computing capacity at its facility in Midland, PA. Ownership of the miners will transfer to the Company after BDE reaches its stated return on investment as set forth in the Colocation Agreement. The Parties will operate under a 50%/50% profit-sharing structure, pursuant to which Big Digital will receive all cash net proceeds from the mining operations. The cash revenue will be used for general corporate purposes and asset purchases to ensure the Company’s use of all available power across its facility locations. As its share of the profit-sharing structure, BDE will receive monthly grants consisting of a combination of (i) shares of the Company’s common stock, where the number of shares will equal 20% of its share of the monthly cash net proceeds divided by 30-day volume weighted average price of the Company’s common stock (“VWAP”) on the grant date, and (ii) warrants to purchase the Company’s common stock, where the number of underlying shares will equal 80% of its share of the monthly cash net proceeds divided by $20. The warrants will allow BDE to purchase the Company’s common stock at an exercise price of $20 per share and will have a five-year term.
Current wording
On April 27, 2026, the Company entered into a Joint Mining Agreement (the “Six Thirty AI Colocation Agreement”) with Big Digital Energy, LLC (now Six Thirty AI, LLC), an affiliate of the Endeavor Group (“Six Thirty AI”). Under the terms of the Colocation Agreement, Six Thirty AI will purchase and deliver approximately 25,000 s19xp mining computers, and the Company will provide Six Thirty AI with approximately 75MW of computing capacity at its facility in Midland, PA. The Parties will operate under a 50%/50% profit-sharing structure, pursuant to which Big Digital will receive all cash net proceeds from the mining operations. The cash revenue will be used for general corporate purposes and asset purchases to ensure the Company’s use of all available power across its facility locations. As its share of the profit-sharing structure, Six Thirty AI will receive monthly grants consisting of a combination of (i) shares of Common Stock, where the number of shares will equal 20% of its share of the monthly cash net proceeds divided by 30-day volume weighted average price of the Common Stock on the grant date, and (ii) warrants to purchase Common Stock, where the number of underlying shares will equal 80% of its share of the monthly cash net proceeds divided by $20. The prefunded warrants will allow Six Thirty AI to purchase the Common Stock at an exercise price of $20 per share and will have a five-year term. Six Thirty AI is deemed an affiliate of the Company because it is owned and/or controlled by Joshua Kilgore, the Company’s Executive Chairman, Phillip Stanley, the Company’s CEO, and Cody Smith, the Company’s COO, who also serve as members of the Company’s Board of Directors.
Previous wording
Energy management revenues for the three months ended March 31, 2026 and 2025, were $1.2 million and $3.1 million, respectively. This represented a 61% decrease or a decrease of $1.9 million, compared to the same period in 2025. The decrease was primarily attributable to changes to miner specification requirements for curtailment program participation beginning in 2026, in which the Company’s mining fleet did not achieve the target life expectancy.
Current wording
Energy management revenues for the three months ended June 30, 2026 and 2025, were $2.6 million and $5.1 million, respectively. This represented a 49% decrease or a decrease of $2.5 million, compared to the same period in 2025. The decrease was primarily attributable to changes to miner specification requirements for curtailment program participation beginning in 2026, in which the Company’s mining fleet did not achieve the target life expectancy. The Company also realized lower curtailment earnings due to fewer customers and reductions in the average size of customer contracts. These decreases were partially offset by higher payments received for the sale of excess energy capacity.
Previous wording
Cost of revenues for the three months ended March 31, 2026 and 2025, were $3.8 million and $7.9 million, respectively. This decrease of $4.1 million, or 52%, in cost of revenues compared to the same period in 2025 was attributable to lower energy consumption from reduced digital colocation services and digital asset mining from self-mining, partially offset by higher average energy prices during the 2026 period.
Current wording
Cost of revenues for the three months ended June 30, 2026 and 2025, were $4.5 million and $5.6 million, respectively. This decrease of $1.1 million, or 19%, in cost of revenues compared to the same period in 2025 was attributable to lower energy consumption from reduced digital colocation services and digital asset mining from self-mining, partially offset by higher average energy prices during the 2026 period.
Previous wording
Stock-based compensation expenses for the three months ended March 31, 2026 and 2025 were $0.4 million and $2.1 million, respectively. The decrease was primarily due to a reduction in new award issuances and the completion of service-based vesting conditions from awards issued over the prior two years.
Current wording
Stock-based compensation expenses for the three months ended June 30, 2026 and 2025 were $0.7 million and $1.0 million, respectively. The decrease was primarily due to a reduction in new award issuances and the completion of service-based vesting conditions from awards issued over the prior two years. Stock-based compensation expense for the three months ended June 30, 2026 includes the acceleration of expense from outstanding service-based awards due to the April 6, 2026 change in the Company’s Board of Directors.
Previous wording
Depreciation and amortization for the three months ended March 31, 2026 and 2025, were $1.2 million and $1.5 million, respectively. The lower depreciation and amortization expense is the result of an increased number of the Company’s digital asset mining hardware being fully depreciated compared to prior periods.
Current wording
Depreciation and amortization for the three months ended June 30, 2026 and 2025, were $1.1 million and $1.5 million, respectively. The lower depreciation and amortization expense is due to an increase in the amount of fully depreciated equipment compared to prior periods.
Previous wording
During the three months ended March 31, 2026 and 2025, there was a gain on the fair value of the derivative asset of $0.1 million and $4.1 million, respectively. The change in fair value is primarily due to decreasing volatility in fair value due to the shorter remaining term of the power supply agreements.
Current wording
During the three months ended June 30, 2026 and 2025, there was a loss on the fair value of the derivative asset of $0.1 million and $2.1 million, respectively. The change in fair value is primarily due to decreasing volatility in fair value due to the shorter remaining term of the power supply agreement.
Previous wording
During the three months ended March 31, 2026, loss on foreign currency transactions was $0.4 million. During the three months ended March 31, 2025, loss on foreign currency transactions was $0.1 million. The difference is due to the impact of changes in the US Dollar and Australian Dollar exchange rate on intercompany transactions.
Current wording
During the three months ended June 30, 2026, loss on foreign currency transactions was $0.04 million. During the three months ended June 30, 2025, loss on foreign currency transactions was $0.7 million. The difference is due to the impact of changes in the US Dollar and Australian Dollar exchange rate on intercompany transactions.
Previous wording
The Company recorded income tax expense of approximately 17.8% of income before income taxes and (54.8)% of loss before income taxes for the three months ended March 31, 2026 and 2025, respectively. The difference in the income tax expense for the three months ended March 31, 2026 versus the three months ended March 31, 2025 relates mainly to differences in estimated interest and penalty accruals included in the current payable for each of those periods, as well as changes in estimates regarding the realizability of deferred tax balances that impact the Company’s deferred tax expense.
Current wording
The Company recorded income tax expense of $30,000 and an income tax benefit of $18,000 for the three months ended June 30, 2026 and 2025, respectively. The income tax expense for the three months ended June 30, 2026 versus the income tax benefit for the three months ended June 30, 2025 relates mainly to differences in estimated interest and penalty accruals included in the current income tax payable for each of those periods, as well as changes in estimates regarding the realizability of deferred tax balances that impact the Company’s deferred tax expense.
Previous wording
Digital colocation revenues for the three months ended March 31, 2026 and 2025, were $3.5 million and $10.4 million, respectively. This represented a 66% decrease or a decrease of $6.9 million, compared to the same period in 2025. The decrease in revenue was primarily attributable to a reduction in both the number of customers and the average contract size as compared to the 2025 period. One customer, Consensus Technology Group LLC, accounted for $7.0 million of the decrease.
Current wording
Digital colocation revenues for the six months ended June 30, 2026 and 2025, were $7.0 million and $14.1 million, respectively. This represented a 50% decrease or a decrease of $7.1 million, compared to the same period in 2025. The decrease in revenue was primarily attributable to a reduction in both the number of customers and the average contract size as compared to the 2025 period. One customer, Consensus Technology Group LLC, accounted for $7.0 million of the decrease. Digital colocation revenues for the six months ended June 30, 2026 include profit share revenues from our new joint mining agreement with Six Thirty AI.
Previous wording
Digital assets mining revenues from self-mining of Bitcoin for the three months ended March 31, 2026 and 2025, were $0.1 million and $0.3 million, respectively. This represented a decrease of $0.2 million compared to the same period in 2025. The decline was primarily driven by industry-wide conditions, including higher overall energy costs and an increase in global network difficulty, both of which contributed to lower Bitcoin production from self-mining activities.
Current wording
Digital assets mining revenues from self-mining of Bitcoin for the six months ended June 30, 2026 and 2025, were $0.2 million and $1.1 million, respectively. This represented an 86% decrease or a decrease of $0.9 million compared to the same period in 2025. The decline was primarily driven by industry-wide conditions, including higher overall energy costs and an increase in global network difficulty, both of which contributed to lower Bitcoin production from self-mining activities. The decline was also driven by the reallocation of our self-mining fleet capacity at our facilities in Midland and Bellefonte to customer fleets from our new joint mining agreement.
Previous wording
Selling, general and administrative expenses for the three months ended March 31, 2026 and 2025 were $7.6 million and $5.8 million, respectively, an increase of $1.8 million, or 32%, from period to period. The increase was primarily due to higher legal and professional fees, offset by lower payroll tax expenses caused by lower share-based payment vesting activities in March 31, 2026 as compared to 2025.
Current wording
Selling, general and administrative expenses for the six months ended June 30, 2026 and 2025 were $13.6 million and $11.7 million, respectively, an increase of $1.9 million, or 17%, from period to period. The increase was primarily due to higher insurance, legal and professional fees, partially offset by lower bonus-related expenses.
Previous wording
Depreciation consists primarily of depreciation of digital asset mining hardware and modular data center (“MDC”) equipment.
Current wording
Depreciation consists primarily of depreciation of energy equipment, transformers and modular data center (“MDC”) equipment.
Previous wording
During the three months ended March 31, 2026, we reached a confidential settlement with Ionic Digital Mining LLC (“Ionic”) to resolve all claims Ionic brought against us and two of our subsidiaries related to the Celsius Colocation Agreement, all settlement amounts have already been paid. In addition, the Company entered a separate, unrelated settlement to resolve a customer dispute over a hosting arrangement. These two settlements resulted in the Company recognizing gains on legal settlements of $10.2 million.
Current wording
During the six months ended June 30, 2026, we reached a confidential settlement with Ionic Digital Mining LLC (“Ionic”) to resolve all claims Ionic brought against us and two of our subsidiaries related to the Celsius Colocation Agreement. In addition, the Company entered a separate, unrelated settlement to resolve a customer dispute over a hosting arrangement. These two settlements resulted in the Company recognizing gains on legal settlements of $10.2 million.
Previous wording
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. For the three months ended March 31, 2026, we financed our operations primarily through cash from operations, proceeds from our ATM Program and other cash reserves.
Current wording
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. For the six months ended June 30, 2026, we financed our operations primarily through cash from operations, proceeds from our ATM Program, the Revolver, as defined below, and other cash reserves.
Previous wording
During the three months ended March 31, 2026, the Company has sold 1,586,774 shares of Common Stock under the Sales Agreement at an average price of approximately $4.18 per share, which has resulted in cash proceeds to the Company of $6.4 million, net of issuance costs.
Current wording
During the six months ended June 30, 2026, the Company has sold 1,693,968 shares of Common Stock under the Sales Agreement at an average price of approximately $4.43 per share, which has resulted in cash proceeds to the Company of $7.3 million, net of issuance costs.
Previous wording
The total amount of cash the Company will receive from the Colocation Agreement will be largely dependent on the economics of mining during the term of the Agreement. The Agreement has a twelve-month term and may be terminated upon 30 days’ notice, subject to its conditional terms. Cash or other consideration equal to the monthly cash net proceeds will be paid in lieu of the securities, to the extent that (i) stockholder approval would otherwise be required for their issuance or the substitution is otherwise necessary to comply with Nasdaq listing standards or (ii) the substitution is approved by a majority of the independent members of the Company’s Board of Directors.
Current wording
The total amount of cash the Company will receive from the Six Thirty AI Colocation Agreement will be largely dependent on the economics of mining during the term of the Agreement. The Agreement has a twelve-month term and may be terminated upon 30 days’ notice, subject to its conditional terms.
Previous wording
We believe our near-term working capital requirements will continue to be funded through a combination of the cash we expect to generate from future operations, our existing funds, external debt facilities that may be available to use, future issuances of shares, and other potential sources of capital, monetization, or funds. We believe a combination of these opportunities is expected to be adequate to fund our operations over the next twelve months. For our business growth, it is expected we may continue to invest in expanding and/or upgrading our infrastructure and/or other equipment and will require additional working capital in the short-term and long-term. As of March 31, 2026, we had an aggregate of $26.5 million of debt, all of which is overdue for repayment unless we refinance, renegotiate the terms, or prevail in our disputes and/or related claims and/or counterclaims.
Current wording
We believe our near-term working capital requirements will continue to be funded through a combination of the cash we expect to generate from future operations, our existing funds, external debt facilities that may be available to use, future issuances of shares, and other potential sources of capital, monetization, or funds. We believe a combination of these opportunities is expected to be adequate to fund our operations over the next twelve months. For our business growth, it is expected we may continue to invest in expanding and/or upgrading our infrastructure and/or other equipment and will require additional working capital in the short-term and long-term. As of June 30, 2026, we had an aggregate of $30.1 million of debt, $27.5 million of which is overdue for repayment unless we refinance, renegotiate the terms, or prevail in our disputes and/or related claims and/or counterclaims.
Previous wording
As of March 31, 2026 and December 31, 2025, we had a cash and cash equivalent balance of $2.4 million and $13.3 million, respectively. As of March 31, 2026 and December 31, 2025, the trade receivables balance was $10.5 million and $9.6 million, respectively. As of March 31, 2026, we had $26.5 million of outstanding short-term loans, and as of December 31, 2025, we had $25.2 million of short-term loans. The short-term loans as of March 31, 2026, relate to the Celsius Promissory Note, W Capital Loan, Secured Convertible Promissory Notes and Marshall Loan (each of which is currently in default). Refer to “Material Cash Requirements” below for more information. As of March 31, 2026 and December 31, 2025, we had negative working capital of $22.8 million and $31.3 million, respectively.
Current wording
As of June 30, 2026 and December 31, 2025, we had a cash and cash equivalent balance of $16.3 million and $13.3 million, respectively. As of June 30, 2026 and December 31, 2025, the trade receivables balance was $9.4 million and $9.6 million, respectively. As of June 30, 2026, we had $30.1 million of outstanding short-term loans, and as of December 31, 2025, we had $25.2 million of short-term loans. The short-term loans as of June 30, 2026, relate to the Celsius Promissory Note, W Capital Loan, Secured Convertible Promissory Notes and Marshall Loan (each of which is currently in default) and the revolving line of credit extended by Endeavor. Refer to “Material Cash Requirements” below for more information. As of June 30, 2026 and December 31, 2025, we had negative working capital of $13.7 million and $31.3 million, respectively.
Previous wording
The following table presents the major components of net cash flows (used in) provided by operating, investing and financing activities for the three months ended March 31, 2026 and 2025:
Current wording
The following table presents the major components of net cash flows (used in) provided by operating, investing and financing activities for the six months ended June 30, 2026 and 2025:
Previous wording
For the three months ended March 31, 2026, net cash used in operating activities was $17.1 million. We had a net gain of $0.6 million for the three months ended March 31, 2026, which included $10.2 million of gain on legal settlements, $0.1 million gain on other income, $0.4 million non-cash stock-based compensation, $1.2 million of depreciation and amortization expense and $0.9 million of interest expense. For the three months ended March 31, 2025, net cash used in operating activities was $0.5 million. We had a net loss of $0.3 million for the three months ended March 31, 2025, which included $1.5 million of depreciation and amortization expense, $2.1 million of stock-based compensation expense, and $4.1 million of gain on derivative asset.
Current wording
For the six months ended June 30, 2026, net cash used in operating activities was $20.5 million. We had a net loss of $6.8 million for the six months ended June 30, 2026, which included $10.2 million of gain on legal settlements, $0.1 million gain on other income, $1.1 million non-cash stock-based compensation, $2.3 million of depreciation and amortization expense and $2.0 million of interest expense. Net cash used in operating activities was also impacted by cash payments to settle outstanding income tax liabilities, totaling $0.7 million. For the six months ended June 30, 2025, net cash used in operating activities was $2.6 million. We had a net loss of $8.3 million for the six months ended June 30, 2025, which included $1.9 million of gain on derivative asset, $3.1 million of stock based compensation, $3.0 million of depreciation and amortization expense, $1.0 million of provision for doubtful accounts and $1.6 million of non-cash interest expense.
Previous wording
For the three months ended March 31, 2026, net cash used in investing activities was $0.04 million. The net cash used in investing activities during the three months ended March 31, 2026, was primarily attributable to capital expenditures partially offset by proceeds from sale of certain non-utilized equipment.
Current wording
For the six months ended June 30, 2026 and June 30, 2025, net cash used in investing activities was $0.05 million. The net cash used in investing activities during the six months ended June 30, 2026 and June 30,2025, was primarily attributable to capital expenditures and the purchase of equipment.
Previous wording
For the three months ended March 31, 2026, net cash provided by financing activities was $6.3 million and for the three months ended March 31, 2025, net cash used was $0.1 million. The cash provided by financing activities during the three months ended March 31, 2026, was primarily attributable to cash proceeds of $6.4 million from the issuance of our Common Stock under the ATM Program.
Current wording
For the six months ended June 30, 2026, net cash provided by financing activities was $23.5 million and for the six months ended June 30, 2025, net cash used was $0.2 million. The cash provided by financing activities during the six months ended June 30, 2026, was primarily attributable to cash proceeds of $7.2 million from the issuance of our Common Stock under the ATM Program, $14.0 million from the issuance of our Series D Convertible Stock and $2.5 million from the revolving line of credit.
Previous wording
The Company is included as a guarantor of the Marshall Loan. The loan matured in February 2024 and bears interest at a rate of 12% per annum (with an overdue rate provision of an additional 500bps), payable monthly with interest payments that commenced in December 2021. This loan facility is secured by direct assets of MIG No.1 and a general security agreement given by the Company. Principal repayments began during November 2022. There has been no principal and interest payments made since May 2023. The outstanding balance including interest is $13.5 million as of March 31, 2026, all of which is currently classified as a current liability.
Current wording
The Company is included as a guarantor of the Marshall Loan. The loan matured in February 2024 and bears interest at a rate of 12% per annum (with an overdue rate provision of an additional 500bps), payable monthly with interest payments that commenced in December 2021. This loan facility is secured by direct assets of MIG No.1 and a general security agreement given by the Company. Principal repayments began during November 2022. There has been no principal and interest payments made since May 2023. The outstanding balance including interest is $14.1 million as of June 30, 2026, all of which is currently classified as a current liability.
Previous wording
The Company is included as a guarantor of the W Capital Loan. As of March 31, 2026, the balance was AUD $2.6 million (USD $1.8 million) representing outstanding interest, all of which is currently classified as a current liability. The W Capital Loan accrues interest daily at a rate of 12% per annum (with an overdue rate provision of an additional 800bps). The W Capital Loan expired in March 2023.
Current wording
The Company is included as a guarantor of the W Capital Loan. As of June 30, 2026, the balance was AUD $2.8 million (USD $1.9 million) representing outstanding interest, all of which is currently classified as a current liability. The W Capital Loan accrues interest daily at a rate of 12% per annum (with an overdue rate provision of an additional 800bps). The W Capital Loan expired in March 2023.
Previous wording
On February 23, 2022, Luna Squares entered into the Digital Colocation Agreement with Celsius Mining LLC. In connection with this agreement, Celsius Mining LLC loaned Luna Squares a principal amount of $20.0 million, for the purpose of funding the infrastructure required to meet the obligations of the Digital Colocation Agreement, for which Luna Squares issued the Celsius Promissory Note for repayment of such amount. The Celsius Promissory Note accrues interest daily at a rate of 12% per annum (with an overdue rate provision of an additional 200bps). Luna Squares is required to amortize the loan at a rate of 15% per quarter, principal repayments began at the end of September 2022. The Celsius Promissory Note had a maturity date of August 23, 2023. The outstanding balance including interest is $11.1 million as of March 31, 2026, all of which is currently classified as a current liability.
Current wording
On February 23, 2022, Luna Squares entered into the Digital Colocation Agreement with Celsius Mining LLC. In connection with this agreement, Celsius Mining LLC loaned Luna Squares a principal amount of $20.0 million, for the purpose of funding the infrastructure required to meet the obligations of the Digital Colocation Agreement, for which Luna Squares issued the Celsius Promissory Note for repayment of such amount. The Celsius Promissory Note accrues interest daily at a rate of 12% per annum (with an overdue rate provision of an additional 200bps). Luna Squares is required to amortize the loan at a rate of 15% per quarter, principal repayments began at the end of September 2022. The Celsius Promissory Note had a maturity date of August 23, 2023. The outstanding balance including interest is $11.3 million as of June 30, 2026, all of which is currently classified as a current liability.
Previous wording
On July 8, 2022, the Company issued the Secured Convertible Promissory Notes in exchange for an aggregate of $3.6 million in cash. On September 29, 2022, the Company entered into a letter variation relating to some of the Secured Convertible Promissory Notes, with an aggregate principal amount of $3.1 million, which gave those holders the option to elect for pre-payment (including accrued interest to maturity) subject to certain conditions. All of the investors included in this letter variation elected for the pre-payment option and therefore there were $3.1 million principal repayments made during November 2022. The final convertible noteholder who was not a party to this variation opted to enter into an arrangement whereby it received pre-payment of interest but agreed that repayment of the principal was not required therefore the remaining $0.50 million had been classified as a current liability. The convertible note matured in July 2023. Interest has been accrued from July 2023 onwards and therefore the outstanding balance is $0.2 million as of March 31, 2026, all of which is classified as a current liability. During 2024 the principal amount outstanding of $0.50 million was repaid to the investor.
Current wording
On July 8, 2022, the Company issued the Secured Convertible Promissory Notes in exchange for an aggregate of $3.6 million in cash. On September 29, 2022, the Company entered into a letter variation relating to some of the Secured Convertible Promissory Notes, with an aggregate principal amount of $3.1 million, which gave those holders the option to elect for pre-payment (including accrued interest to maturity) subject to certain conditions. All of the investors included in this letter variation elected for the pre-payment option and therefore there were $3.1 million principal repayments made during November 2022. The final convertible noteholder who was not a party to this variation opted to enter into an arrangement whereby it received pre-payment of interest but agreed that repayment of the principal was not required therefore the remaining $0.50 million had been classified as a current liability. The Secured Convertible Promissory Notes matured in July 2023. Interest has been accrued from July 2023 onwards and therefore the outstanding balance is $0.2 million as of June 30, 2026, all of which is classified as a current liability. During 2024 the principal amount outstanding of $0.50 million was repaid to the investor.
Previous wording
As of March 31, 2026, and December 31, 2025, we had current liabilities of $42.7 million and $58.8 million, respectively. As of March 31, 2026, and December 31, 2025, we had net assets of $4.3 million and negative net assets $3.1 million, respectively. As of March 31, 2026, we had an accumulated deficit of $251.8 million compared to $252.5 million as of December 31, 2025. Our cash position of March 31, 2026, was $2.4 million in comparison to $13.3 million as of December 31, 2025.
Current wording
As of June 30, 2026, and December 31, 2025, we had current liabilities of $46.5 million and $58.8 million, respectively. As of June 30, 2026, and December 31, 2025, we had net assets of $12.4 million and negative net assets $3.1 million, respectively. As of June 30, 2026, we had an accumulated deficit of $259.2 million compared to $252.5 million as of December 31, 2025. Our cash position as of June 30, 2026, was $16.3 million in comparison to $13.3 million as of December 31, 2025.
Previous wording
For the three- month period ended March 31, 2026 and 2025, the Company generated net income of $0.6 million and net loss of $0.3 million, respectively.
Current wording
For the six months ended June 30, 2026 and 2025, the Company generated net loss of $6.8 million and $8.3 million, respectively.
Previous wording
Our primary requirements for liquidity and capital are working capital, capital expenditures, public company costs and general corporate needs. In particular, we have large power usage costs, and other significant costs include our legal, lease, operational, and employee costs. We expect these capital and liquidity needs to continue as we further develop and grow our business. Our principal sources of liquidity have been and are expected to be our cash and cash equivalents, and further issuances of shares.
Current wording
Our primary requirements for liquidity and capital are working capital, capital expenditures, public company costs and general corporate needs. In particular, we have large power usage costs, and other significant costs include our legal, lease, operational, and employee costs. We expect these capital and liquidity needs to continue as we further develop and grow our business.
Rearranged current paragraphs (11)
Current report — wording carried from elsewhere
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Current report — wording carried from elsewhere
Our cost of revenues consists primarily of direct power costs related to colocation services.
Current report — wording carried from elsewhere
Non-operating income (expense) consists primarily of interest expenses, gain (loss) on foreign currency transactions, and other income and expenses.
Current report — wording carried from elsewhere
Cost of revenues for the six months ended June 30, 2026 and 2025, were $8.4 million and $13.5 million, respectively. This decrease of $5.1 million, or 38%, in cost of revenues compared to the same period in 2025 was attributable to lower energy consumption from reduced digital colocation services and digital asset mining from self-mining, partially offset by higher average energy prices during the 2026 period.
Current report — wording carried from elsewhere
Our operating expenses include: selling, general and administrative expenses; stock-based compensation; depreciation and amortization; and change in fair value of derivative asset.
Current report — wording carried from elsewhere
Our selling, general and administrative expenses consist primarily of audit, legal, and other professional fees, employee compensation, director fees, equipment repairs, marketing, freight, insurance, consultant fees, lease amortization and general expenses.
Current report — wording carried from elsewhere
Stock-based compensation expenses for the six months ended June 30, 2026 and 2025 were $1.1 million and $3.1 million, respectively. The decrease was primarily due to a reduction in new award issuances and the completion of service-based vesting conditions from awards issued over the prior two years. Stock-based compensation expense for the six months ended June 30, 2026 includes the acceleration of expense from outstanding service-based awards due to the April 6, 2026 change in the Company’s Board of Directors.
Current report — wording carried from elsewhere
Change in fair value of derivative asset
Current report — wording carried from elsewhere
During the six months ended June 30, 2026, and 2025, there was a loss on the fair value of the derivative asset of $0.02 million and a gain on the fair value of the derivative asset of $1.9 million, respectively. The change in fair value is primarily due to decreasing volatility in fair value due to the shorter remaining term of the power supply agreements.
Current report — wording carried from elsewhere
During the six months ended June 30, 2026, loss on foreign currency transactions was $0.4 million. During the six months ended June 30, 2025, loss on foreign currency transactions was $0.8 million. The difference is due to the impact of changes in the US Dollar and Australian Dollar exchange rate on intercompany transactions.
Current report — wording carried from elsewhere
The Company recorded income tax expense of $162 thousand and $92 thousand for the six months ended June 30, 2026 and 2025, respectively. The difference in the income tax expense for the six months ended June 30, 2026 versus the six months ended June 30, 2025 relates mainly to differences in estimated interest and penalty accruals included in the current payable for each of those periods, as well as changes in estimates regarding the realizability of deferred tax balances that impact the Company’s deferred tax expense.