Hyperscale Data, Inc.

1. DESCRIPTION OF BUSINESS

Hyperscale Data, Inc. (“Hyperscale Data” or the “Company”) is a Delaware corporation that operates as an artificial intelligence (“AI”) data center company anchored by Bitcoin. Through its wholly owned subsidiary, Sentinum, Inc., the Company owns and operates a large-scale data center platform that integrates AI compute infrastructure with Bitcoin mining operations under a unified, parallel compute model. This hybrid architecture enables Hyperscale Data to generate compute power for enterprise AI workloads through NVIDIA graphic processing unit clusters, while also operating high-efficiency Bitcoin mining systems that contribute to the Bitcoin network and the Company’s growing digital asset treasury.

Through its other wholly owned subsidiary, Ault Capital Group, Inc. (“ACG”), the Company currently holds a portfolio of diversified businesses and strategic investments spanning commercial lending and trading, hotel operations, crane rental, AI-driven software and gaming platforms, and commercial electronics. The Company anticipates completing the planned divestiture of ACG in 2026, at which time Hyperscale Data expects to operate as a focused AI data center and Bitcoin infrastructure company.

The Company has the following reportable segments:

2. LIQUIDITY AND FINANCIAL CONDITION

As of September 30, 2025, the Company had cash and cash equivalents of $24.8 million (excluding restricted cash of $22.8 million) and negative working capital of $89.4 million. The Company has historically financed its operations through the issuance of convertible debt, promissory notes and equity securities.

The Company’s working capital position improved from negative $157.1 million at December 31, 2024 to negative $89.4 million at September 30, 2025, and was further strengthened subsequent to September 30, 2025, through the sale of 172.7 million shares of Class A common stock pursuant to the 2025 “At-the-Market” (“ATM”) offering for gross proceeds of $86.2 million and the sale of 8,500 shares of its Series B Convertible Preferred Stock for gross proceeds of approximately $8.5 million. These capital raises, together with the conversion of $2.3 million in aggregate principal and accrued interest of existing convertible debt into Class A common stock, have enhanced liquidity, reduced debt obligations and provided additional capital to support ongoing operations and planned growth initiatives.

In connection with the preparation of these financial statements, management performed an analysis of the Company’s financial position and working capital projections for at least the next twelve months following the issuance of these financial statements. Based on this analysis, and considering the proceeds received from recent financing activities, management believes that the Company’s available liquidity, including cash raised subsequent to September 30, 2025, will be sufficient to meet its obligations and fund its operations for at least one year from the date these condensed consolidated financial statements are issued. Accordingly, management has concluded that these financings alleviate the substantial doubt about the Company’s ability to continue as a going concern. Management will continue to monitor the Company’s liquidity position and market conditions and may seek additional financing as necessary to support operations and future growth initiatives.

3. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Regulation S-X and do not include all the information and disclosures required by generally accepted accounting principles in the United States of America (“GAAP”). The Company has made estimates and judgments affecting the amounts reported in the Company’s condensed consolidated financial statements and the accompanying notes. The actual results experienced by the Company may differ materially from the Company’s estimates. The condensed consolidated financial information is unaudited but reflects all normal adjustments that are, in the opinion of management, necessary to provide a fair statement of results for the interim periods presented.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Annual Report”), filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2025. The condensed consolidated balance sheet as of December 31, 2024 was derived from the Company’s audited 2024 financial statements contained in the above referenced 2024 Annual Report. Results of the three and nine months ended September 30, 2025, are not necessarily indicative of the results to be expected for the full year ending December 31, 2025.

Significant Accounting Policies

Other than as noted below, there have been no material changes to the Company’s significant accounting policies previously disclosed in the 2024 Annual Report.

Crypto Assets

Beginning during the three months ended September 30, 2025, the Company began holding Bitcoin for long-term investment purposes as a Bitcoin investment approach, retaining all Bitcoin mined in its operations, and making strategic open market purchases of Bitcoin. As a result, Bitcoin crypto assets are included in non-current assets on the condensed consolidated balance sheet due to the Company’s intent to retain and hold Bitcoin.

Reclassifications

Certain prior period amounts have been reclassified for comparative purposes to conform to the current-period financial statement presentation.

Recent Accounting Pronouncements

The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement may affect the Company’s financial reporting, the Company undertakes an analysis to determine whether any required changes should be made to its condensed consolidated financial statements.

On December 14, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires entities to disclose specific rate reconciliations, amount of income taxes separated by federal and individual jurisdiction, and the amount of income (loss) from continuing operations before income tax expense (benefit) disaggregated between federal, state, and foreign. The Company will adopt ASU 2023-09 as required for the year ending December 31, 2025. The Company is currently evaluating the impact of the new requirement for its income tax disclosure.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires additional disclosures of certain expenses in the notes of the financial statements, to provide enhanced transparency into the expense captions presented on the Consolidated Statements of Operations. Additionally, in January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), to clarify the effective date of ASU 2024-03. The new standard is effective for the Company for its annual periods beginning January 1, 2027 and for interim periods beginning January 1, 2028, with early adoption permitted. The Company is currently evaluating the impact of adopting the standard.

4. DECONSOLIDATION OF SUBSIDIARIES AND GRESHAM WORLDWIDE, INC. (“GIGA”) DISCONTINUED OPERATIONS

Deconsolidation of Avalanche International Corp. (“AVLP”)

On March 28, 2025, AVLP, formerly a majority-owned subsidiary of the Company, 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 the Company no longer maintained a controlling financial interest. Accordingly, the Company deconsolidated AVLP effective as of the petition date. In connection with the deconsolidation, the Company recognized a gain of $10.0 million, which is included in the condensed consolidated statement of operations for the nine months ended September 30, 2025. The Company 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, formerly a majority-owned subsidiary of the Company, filed a voluntary liquidation under the insolvency regulations in the UK. As a result of the filing, the Company no longer maintained a controlling financial interest. Accordingly, the Company deconsolidated Eco Pack effective as of the filing date. In connection with the deconsolidation, the Company recognized a loss of$0.4 million, which is included in the condensed consolidated statement of operations for the nine months ended September 30, 2025. The Company 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 ROI

During the three months ended September 30, 2025, the Company recognized a gain of $2.7 million in connection with the bankruptcy proceedings for a subsidiary of ROI. The Company deconsolidated the subsidiary as it determined that it no longer maintained a controlling financial interest in the subsidiary of ROI. The gain recognized reflects the derecognition of the subsidiary’s remaining assets, liabilities, and equity balances. The Company evaluated the criteria for discontinued operations and determined that the operations of the subsidiary did not meet the requirements for such classification.

**Presentation of GIGA as Discontinued Operations **

On August 14, 2024, 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. The Company 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.

In connection with the Chapter 11 reorganization process, the Company concluded that the operations of GIGA met the criteria for discontinued operations as this was a strategic shift that had and will continue to have a significant effect on the Company’s operations and financial results. As a result, the Company has 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.

The following table presents the results of GIGA operations:

The cash flow activity related to discontinued operations is presented separately on the statement of cash flows as summarized below:

5. REVENUE DISAGGREGATION

The following tables summarize disaggregated customer contract revenues and the source of the revenue for the three and nine months ended September 30, 2025 and 2024. Revenues from lending and trading activities included in consolidated revenues were primarily interest, dividend and other investment income, which are not considered to be revenues from contracts with customers under GAAP. Revenue is presented by reportable segment. The “Holding Co.” column includes revenue that is not allocated to a specific reportable segment but is generated within the holding company entity. While not a separate reportable segment, Holding Co. is included in the table below to reconcile the segments to total consolidated revenue.

The Company’s disaggregated revenues consisted of the following for the three months ended September 30, 2025:

The Company’s disaggregated revenues consisted of the following for the nine months ended September 30, 2025:

The Company’s disaggregated revenues consisted of the following for the three months ended September 30, 2024:

The Company’s disaggregated revenues consisted of the following for the nine months ended September 30, 2024:

6. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy at September 30, 2025 (no material financial instruments were measured at fair value on a recurring basis at December 31, 2024):

The Company assesses the inputs used to measure fair value using the three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market. For investments where little or no public market exists, management’s determination of fair value is based on the best available information which may incorporate management’s own assumptions and involves a significant degree of judgment, taking into consideration various factors including earnings history, financial condition, recent sales prices of the issuer’s securities and liquidity risks.

The changes in Level 3 fair value hierarchy during the three and nine months ended September 30, 2025 and 2024 were as follows:

7. CRYPTO ASSETS

The following table presents revenue from mined crypto assets for the three and nine months ended September 30, 2025 and 2024:

The following table presents the activities of the crypto assets for the nine months ended September 30, 2025 and 2024:

8. PROPERTY AND EQUIPMENT, NET

At September 30, 2025 and December 31, 2024, property and equipment consisted of:

Summary of depreciation expense:

9. INTANGIBLE ASSETS, NET

At September 30, 2025 and December 31, 2024, intangible assets consisted of:

Certain of the Company’s trade names and trademarks were determined to have an indefinite life. The remaining definite-lived intangible assets are primarily being amortized on a straight-line basis over their estimated useful lives.

Summary of amortization expense:

As of September 30, 2025, intangible assets subject to amortization have an average remaining useful life of 6.6 years. The following table presents estimated amortization expense for each of the succeeding five calendar years and thereafter.

10. INVESTMENTS – RELATED PARTIES

Investments in Alzamend Neuro, Inc. (“Alzamend”), Ault & Company, Inc. (“Ault & Company”) and GIGA at September 30, 2025 and December 31, 2024, were comprised of the following:

Investment in Promissory Notes, Related Parties – Ault & Company and GIGA

GIGA Exit Financing Convertible Note

On September 26, 2025, the Company, through Ault Lending, entered into a loan and security agreement (the “Loan Agreement”) with GIGA, pursuant to which Ault Lending agreed to loan GIGA up to $10.0 million (the “Loan”), subject to the terms and conditions of the Loan Agreement. The Loan, which is evidenced by the issuance by GIGA of a15% Senior Secured Original Issue Discount Convertible Promissory Note (the “GIGA Note”) in the original principal amount of $11.0 million, was to be funded in three tranches. The first tranche, in an amount of $6.5 million, was funded on September 30, 2025, and the remaining tranches, totaling $3.5 million, are expected to be funded pursuant to the terms of the Loan Agreement. The GIGA Note, which matures on November 15, 2028, was issued as part of GIGA’s confirmed Chapter 11 plan of reorganization and is secured by substantially all of GIGA’s assets. The GIGA Note is convertible into shares of GIGA common stock at a conversion price equal to the greater of (i) $0.10 per share (the “GIGA Floor Price”), which GIGA Floor Price shall not be adjusted for stock dividends, stock splits, stock combinations and other similar transactions and (ii) the lesser of a 5% premium to the volume weighted average price during the five trading days immediately prior to the trading day immediately preceding the date of conversion into shares of common stock or $1.00.

Summary of interest income, related party, recorded within interest and other income on the condensed consolidated statement of operations:

At each reporting date, the Company applies its judgment to evaluate the collectability of the note receivable and makes a provision based on the assessed amount of expected credit loss. This judgment is based on parameters such as interest rates, market conditions and creditworthiness of the creditor.

The Company determined that the collectability of certain notes receivables is doubtful based on information available.

Investment in Alzamend Series B Convertible Preferred Stock, Warrants and Common Stock, Related Parties – Alzamend

The following tables summarize the changes in the Company’s investments in Alzamend common stock during the three months ended September 30, 2025 and 2024:

The following tables summarize the changes in the Company’s investments in Alzamend common stock during the nine months ended September 30, 2025 and 2024:

Ault Lending, LLC (“Ault Lending”) Investment in Alzamend Series B Convertible Preferred Stock and Warrants

In connection with a securities purchase agreement entered into with Alzamend in January 2024, Ault Lending purchased 2,100 shares of Alzamend Series B convertible preferred stock and warrants to purchase 0.2 million shares of Alzamend common stock with a five-year term and an exercise price of $12.00 per share for a total purchase price of $2.1 million.

During the nine months ended September 30, 2025, Ault Lending converted a portion of its Alzamend Series B convertible preferred stock into Alzamend common stock, which resulted in the reduction of the carrying amount of the investment from $2.1 million at December 31, 2024 to $0.8 million at September 30, 2025.

The Company has elected to account for investment in other investments securities, related party, using a measurement alternative under which they are measured at cost and adjusted for observable price changes and impairments.

Messrs. Horne and Nisser are each paid $50,000 annually by Alzamend. Mr. Ault is paid $25,000 annually by Alzamend.

11. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Other current liabilities at September 30, 2025 and December 31, 2024 consisted of:

12. DIVIDEND PAYABLE IN TURNONGREEN COMMON STOCK

In March 2024, the Company, in connection with a planned distribution of its common stock holdings of TurnOnGreen, announced the distribution to its stockholders of 25.0 million shares of TurnOnGreen common stock and warrants to purchase 25.0 million shares of TurnOnGreen common stock, which resulted in an adjustment to additional paid in capital and increase to non-controlling interest of $4.9 million based on the recorded value of the Company’s holdings in TurnOnGreen at the record date of the distribution.

13. ROI Transfers of White River Common Stock

In January 2024, ROI announced that it had concluded that, for regulatory reasons, ROI would be unable to effect the distribution of its shares of common stock of White River as contemplated by a registration statement previously filed by White River.

During the nine months ended September 30, 2024, ROI transferred 12.0 million shares of White River common stock with a fair value of $19.2 million at the date of transfer to certain of its accredited investors to resolve the matters discussed above.

In conjunction with the transfers to non-controlling interests, ROI converted a portion of its White River Series A convertible preferred stock into common stock and recorded a non-cash $17.9 million gain on conversion.

14. NOTES PAYABLE

Notes payable at September 30, 2025 and December 31, 2024, were comprised of the following:

Amendment to AGREE Secured Construction Loans

The AGREE secured construction loans with an original due date of January 1, 2025, were amended on February 2, 2025, whereby AGREE agreed to pay monthly installments of interest only based on an annualized interest rate of Term SOFR plus 4.75%. In addition, AGREE agreed to make principal payments of $1.0 million in June 2025 and $2.0 million in September 2025 and December 2025 with the balance due March 1, 2026. AGREE has failed to make timely interest payments per the amended payment terms.

Gain on Extinguishment of ROI Note Payable

During the three months ended September 30, 2025, the Company recognized a gain on extinguishment of debt of $1.1 million related to the pay-off of an ROI note payable.

Notes Payable Maturities

Principal maturities of the Company’s notes payable, assuming the exercise of all extensions that are exercisable solely at the Company’s option, as of September 30, 2025 were:

Interest Expense

15. NOTES PAYABLE, RELATED PARTY

Notes payable, related party at September 30, 2025 and December 31, 2024, were comprised of the following:

Summary of interest expense, related party, recorded within interest expense on the condensed consolidated statement of operations:

Ault & Company Demand Note

On September 9, 2025, the Company executed a Demand Promissory Note (the “Note”) in favor of Ault & Company to formalize prior advances and loans previously provided by Ault & Company. The Note has an original principal balance of $4.0 million, bears interest at 9.5% per annum, and is payable upon demand. The Note is unsecured.

16. CONVERTIBLE NOTES

Convertible notes payable at September 30, 2025 and December 31, 2024, were comprised of the following:

Orchid Convertible Promissory Notes

On February 5, 2025, the Company entered into an exchange agreement with an institutional investor (“Orchid”), pursuant to which the Company issued to the investor a convertible promissory note in the principal face amount of $1.9 million (the “February 2025 Convertible Note”), in exchange for the cancellation of an outstanding term note the Company issued to the investor in April 2024. That note had an outstanding principal amount and accrued but unpaid interest of $1.9 million. The February 2025 Convertible Note accrued interest at the rate of 15% per annum. The February 2025 Convertible Note was to mature on May 5, 2025. The February 2025 Convertible Note was convertible into shares of Class A common stock at a fixed conversion price of $4.00 per share.

On March 14, 2025, the Company entered into an exchange agreement with an institutional investor pursuant to which we issued to the investor a convertible promissory note in the principal face amount of $4.2 million in exchange for the cancellation of (i) a term note issued by the Company on May 16, 2024, with outstanding principal and accrued but unpaid interest of $0.7 million, (ii) a term note issued by the Company on May 20, 2024, with outstanding principal and accrued but unpaid interest of $1.5 million, and (iii) the February 2025 Convertible Note issued by the Company on February 5, 2025, with outstanding principal and accrued but unpaid interest of $2.0 million. 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 matured on June 30, 2025. The note is convertible into shares of Class A common stock at a conversion price equal to the greater of (i) $0.40 per share (the “Floor Price”) and (ii) the lesser of 75% of the VWAP (as defined in the note) of the Class A common stock during the five trading days immediately prior to (A) the date of issuance of the note or (B) the date of conversion into shares of Class A common stock.

On April 1, 2025, the Company issued a convertible promissory note to an institutional investor in the principal amount of $1.65 million in consideration for $1.5 million in cash previously advanced to the Company. The note bears interest at 15% per annum, increasing to 18% per annum upon an event of default, as defined in the note. The note matures on September 30, 2025. The note is convertible into shares of the Company’s Class A common stock at any time at a conversion price equal to the greater of (i) the Floor Price and (ii) the lesser of (A) 75% of the VWAP (as defined in the note) of the Class A common stock during the five trading days immediately prior to the April 1, 2025 issuance date, or (B) 75% of the VWAP during the five trading days immediately prior to the date of conversion. The conversion price is not subject to adjustment for stock splits, combinations, or dividends. The note was issued with an OID of 10%.

During the three months ended September 30, 2025, the outstanding principal and accrued interest under the Orchid convertible promissory notes were fully converted into shares of the Company’s Class A common stock, and no balance remained outstanding as of September 30, 2025.

Forbearance Convertible Promissory Note

In February 2025, the Company and an institutional investor entered into an amended and restated forbearance agreement pursuant to which the investor agreed to forebear through the close of business on May 15, 2025, from exercising the rights and remedies it is entitled in consideration for the Company’s agreement to issue to the investor an amended and restated convertible promissory note in the amount of $3.5 million (the “A&R Forbearance Note”), consisting of (i) the amount then due under the original forbearance agreement of $0.9 million, (ii) a forbearance extension fee of $0.3 million and (iii) a true-up amount of $2.3 million. Subject to the approval by the NYSE and the Company’s stockholders, the A&R Forbearance Note is convertible into shares of Class A common stock at a conversion price equal to $2.00, subject to adjustment. The A&R Forbearance Note accrues interest at the rate of 18% per annum with a maturity date of May 15, 2025. On June 3, 2025, the Company and the investor entered into an amendment to the A&R Forbearance Note, pursuant to which the maturity date of the A&R Forbearance Note was extended until June 30, 2025.

During the nine months ended September 30, 2025, the outstanding principal and accrued interest under the A&R Forbearance Note were fully converted into shares of the Company’s Class A common stock, and no balance remained outstanding as of September 30, 2025.

SJC Convertible Promissory Note

On March 21, 2025, the Company entered into an exchange agreement with an institutional investor, pursuant to which the Company issued to the investor a convertible promissory note in the principal face amount of $4.9 million (the “Exchange Note”) in exchange for the cancellation of (i) a term note issued by the Company on January 14, 2025, with outstanding principal and accrued but unpaid interest of $2.6 million, (ii) a promissory note issued by the Company on March 7, 2025, with outstanding principal and accrued but unpaid interest of $0.5 million, (iii) a promissory note issued by the Company on March 12, 2025, with outstanding principal and accrued but unpaid interest of $1.5 million, and (iv) a promissory note issued by the Company on March 13, 2025, with outstanding principal and accrued but unpaid interest of $0.3 million. The Exchange Note accrues interest at the rate of 15% per annum. The Exchange Note will mature on December 31, 2025. The Exchange Note is convertible into shares of Class A common stock at a conversion price equal to the greater of (i) the Floor Price and (ii) the lesser of 75% of the VWAP (as defined in the Exchange Note) of the Class A common stock during the five trading days immediately prior to (A) the date of issuance of the Exchange Note or (B) the date of conversion into shares of Class A common stock, but not greater than $10.00 per share.

20% OID Convertible Promissory Notes

On April 15, 2025, the Company issued convertible promissory notes in aggregate principal amount of $5.0 million to Target Capital 14 LLC and Secure Net Capital LLC in exchange for $4.0 million in cash proceeds. The Company incurred placement agent fees and expenses of approximately $0.5 million in connection with the transaction. The notes do not bear interest unless an event of default occurs, in which case the interest rate increases to 20% per annum.

The notes were convertible into Class A common stock at any time at a conversion price equal to the greater of (i) the Floor Price and (ii) 80% of the lowest closing price of the Class A common stock during the five trading days immediately prior to the date of conversion. The conversion price is not subject to adjustment for stock dividends, splits, or similar corporate actions. The notes were issued with an OID of 20%.

During the nine months ended September 30, 2025, approximately $3.4 million of the outstanding balance under the notes was converted into shares of the Company’s Class A common stock, and the remaining $1.6 million was repaid in cash. As a result, no balance remained outstanding under the notes as of September 30, 2025.

Embedded Derivatives

The Company identified embedded derivative features within certain convertible promissory notes issued during the nine months ended September 30, 2025, that required bifurcation and separate accounting as derivative liabilities under Accounting Standards Codification (“ASC”) 815,Derivatives and Hedging Activities. Specifically, the embedded conversion options associated with the Orchid convertible promissory notes, the SJC convertible promissory note and the April 2025 convertible notes were determined to meet the criteria for derivative classification.

The fair value of the embedded derivative liabilities was estimated using a Monte Carlo simulation model. The model incorporates key assumptions including the Company’s stock price, risk-free interest rate, expected volatility, credit-risk adjusted discount rate, and the specific terms of each conversion feature (including floor price, cap, and VWAP-based pricing). Due to the significant use of unobservable inputs, these derivative liabilities are classified within Level 3 of the fair value hierarchy.

The following table summarizes the key inputs used in the valuation of the embedded derivatives at inception:

The Monte Carlo simulation utilized 100,000 iterations and incorporated conversion mechanics, including the floor price and the VWAP-based conversion price as defined in each agreement. The incremental value attributable to the conversion feature was isolated to determine its impact on the overall fair value of the embedded option.

During the nine months ended September 30, 2025, principal, accrued and unpaid interest of $19.3 million was converted into 10.0 million shares of Class A common stock of the Company.

Gain (Loss) on Extinguishment of Convertible Notes

During the nine months ended September 30, 2025, the Company recognized a total net loss on extinguishment of convertible notes of $4.6 million. This amount includes:

17. COMMITMENTS AND CONTINGENCIES

Related Party Commitments

During the three months ended June 30, 2025, the Company’s subsidiaries, BitNile.com, Inc. and askROI, Inc., entered into marketing and promotional commitments with a subsidiary of Ault & Company. The commitments, which total approximately $9.2 million, relate to the coordination and execution of media placements, promotional events, and related marketing services in connection with various contracted events. These services are billed on a pass-through basis, at cost, without any mark-up or commission. Of the total commitments, approximately $8.8 million was expensed during the nine months ended September 30, 2025.

Contingencies

Litigation Matters

The Company is involved in litigation arising from other matters in the ordinary course of business. The Company is regularly subject to claims, suits, regulatory and government investigations, and other proceedings involving labor and employment, commercial disputes, and other matters. Such claims, suits, regulatory and government investigations, and other proceedings could result in fines, civil penalties, or other adverse consequences.

Certain of these outstanding matters include speculative, substantial or indeterminate monetary amounts. The Company records a liability when it believes that it is probable that a loss has been incurred and the amount can be reasonably estimated. If the Company determines that a loss is reasonably possible and the loss or range of loss can be estimated, the Company discloses the reasonably possible loss. The Company evaluates developments in its legal matters that could affect the amount of liability that has been previously accrued, and the matters and related reasonably possible losses disclosed, and makes adjustments as appropriate. Significant judgment is required to determine both likelihood of there being a loss and the estimated amount of a loss related to such matters.

Arena Investors, LP (ROI Litigation)

On May 30, 2024, Arena Investors LP (“Arena”), in its capacity as collateral agent for five noteholders, filed a filed a Complaint (the “Complaint”) in the Supreme Court of the State of New York, County of New York against the Company and ROI, in an action captionedArena Investors LP v. Ault Alliance, Inc. and RiskOn International, Inc., Index No. 652792/2024.

The Complaint asserts a cause of action for breach of contract against the Company based on a Guaranty, dated April 27, 2023, and entered into, amongst others, the Company and Arena, and seeks damages in an amount in excess of $3,750,000, plus interest, attorneys’ fees, costs, expenses, and disbursements.

The Complaint also asserts a cause of action for breach of contract against ROI based on an alleged breach of that certain Security Agreement, dated April 27, 2023, and entered into among ROI and Arena. In connection with this cause of action, Arena seeks, among other things, costs and expenses from the Company and ROI.

On July 31, 2024, the Company and ROI filed a motion to dismiss (the “Motion”) seeking to partially dismiss the Complaint, as against the Company, and to dismiss the Compliant, in its entirety, as against ROI.

On or about January 21, 2025, the Court entered an Order denying the part of the Motion which sought partial dismissal of the Complaint, as against Company, and granting the part of the Motion which sought dismissal of the Complaint, in its entirety, as against ROI.

On February 18, 2025, the Company filed an Answer to the Complaint and asserted numerous affirmative defenses.

On or about July 29, 2025, the Court entered an Order (the “Consolidation and Dismissal Order”) consolidating this action with that certain action captionedArena Investors, LP v. Milton C. Ault III and Kristine Ault, Index No. 655857/2024, pending in the Supreme Court of the State of New York, County of New York (the “Second Filed Action”). In the Consolidation and Dismissal Order, the Court also dismissed Arena’s claims in the Second Filed Action, which arise from an alleged failure to pay a redemption premium as set forth in that certain Event of Default Redemption Notice, dated November 5, 2024, that Arena transmitted to, among others, the Company.

On or about September 11, 2025, Arena filed a notice of appeal in connection with the Consolidation and Dismissal Order.

On or about September 17, 2025, Arena formally commenced such appeal (the “Appeal”).

On or about October 3, 2025, the Company and Arena executed various settlement documents.

All deadlines in the action are currently stayed through March 16, 2026, by which date the Company anticipates that a withdrawal of the Appeal and a stipulation of discontinuance, with prejudice, of the action, will both be filed.

Other Litigation Matters

With respect to the Company’s other outstanding matters, based on the Company’s current knowledge, the Company believes that the amount or range of reasonably possible loss will not, either individually or in aggregate, have a material adverse effect on the Company’s business, consolidated financial position, results of operations, or cash flows. However, the outcome of such matters is inherently unpredictable and subject to significant uncertainties.

The Company had accrued loss contingencies related to litigation matters of $1.3 million and $2.3 million as of September 30, 2025 and December 31, 2024, respectively.

18. STOCKHOLDERS’ EQUITY

Class A Common Stock

Class A common stock confers upon the holders the rights to receive notice to participate and vote at any meeting of stockholders of the Company, to receive dividends, if and when declared, and to participate in a distribution of surplus of assets upon liquidation of the Company.

Class B Common Stock

The Class B common stock is identical to the Class A common stock, with the exception that each share thereof carries 10 times the voting power of a share of Class A common stock. The Class B common stock is convertible at any time into Class A common stock on a one-for-one basis at the option of the holder of the Class B common stock.

Preferred Stock

Preferred stock as of September 30, 2025 consisted of the following:

Preferred stock as of December 31, 2024 consisted of the following:

The Company is authorized to issue 25.0 million shares of preferred stock, $0.001 par value. As of September 30, 2025, the rights, preferences, privileges and restrictions on the remaining authorized 18.2 million shares of preferred stock have not been determined. The Board is authorized to designate a new series of preferred shares and determine the number of shares, as well as the rights, preferences, privileges and restrictions granted to or imposed upon any series of preferred shares.

Issuance of Class A Common Stock pursuant to the At-the-Market Offering

On August 29, 2025, the Company entered into a sales agreement with Wilson-Davis & Co., Inc. to sell shares of the Company’s class A common stock, having an aggregate offering price of up to $125 million from time to time, through an ATM offering program. Between August 29, 2025 and September 30, 2025, the Company received gross proceeds of $38.8 million through the sale of 82.7 million shares of the Company’s class A common stock through the ATM offering.

$50.0 Million Securities Purchase Agreement for Sale of Series B Convertible Preferred Stock

On March 31, 2025, the Company entered into a securities purchase agreement with an institutional investor pursuant to which the Company 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; however, the investor may, at its sole discretion, purchase additional shares of Series B Preferred Stock prior to the scheduled closings.

During the nine months ended September 30, 2025, the Company issued an aggregate of 23,914 shares of Series B Preferred Stock for gross proceeds of approximately $23.9 million. In addition, approximately 92 shares of Series B Preferred Stock were issued as paid-in-kind (“PIK”) dividends pursuant to the terms of the Series B Preferred Stock. In the same period, the investor converted approximately 24,006 shares of Series B Preferred Stock, including PIK shares, into shares of Class A common stock.

Each share of Series B Preferred Stock has a stated value of $1,000 and is convertible into shares of Class A common stock at a conversion price equal to the greater of (i) the Floor Price and (ii) 75% of the Company’s lowest VWAP during the five trading days immediately prior to the date of conversion, subject to a maximum of $10.00 per share. The holders are entitled to cumulative dividends at a 15% annual rate, payable monthly in arrears, and for the first two years, the Company may elect to pay such dividends in additional shares of Series B Preferred Stock in lieu of cash.

On April 23, 2025, the Company filed a Certificate of Amendment to the Certificate of Designation of Preferences, Rights and Limitations of the Series B Convertible Preferred Stock. This amendment, approved by the Board of Directors on April 22, 2025, revised the definition of “Conversion Price” to the greater of (i) the Floor Price and (ii) 75% of the Company’s lowest VWAP during the five trading days immediately preceding conversion, subject to a maximum of $10.00 per share.

Termination of Equity Purchase Agreement

On May 28, 2025, the Company and Orion Equity Partners, LLC (“Orion”) mutually agreed to terminate the Purchase Agreement originally entered into on June 24, 2024, as subsequently amended (the “Purchase Agreement”). The Purchase Agreement provided the Company with the right, subject to certain terms and conditions, to sell up to $25.0 million of its 13.00% Series D Cumulative Redeemable Perpetual Preferred Stock (the “Series D Preferred Stock”) to Orion over a 36-month period. Prior to termination, the Company issued an aggregate of 0.3 million shares of Series D Preferred Stock pursuant to the Purchase Agreement, generating net proceeds of approximately $3.5 million. No further shares will be issued under the Purchase Agreement following its termination.

Sales of Series G Preferred Stock and Warrants

During the nine months ended September 30, 2025, the Company sold to Ault & Company an aggregate of 960 shares of Series G Convertible Preferred Stock and warrants to purchase an aggregate of 0.2 million shares of Class A common stock, for an aggregate purchase price of $1.0 million.

Series H Convertible Preferred Stock Securities Purchase Agreement with Ault & Company

On July 31, 2025, the Company entered into a securities purchase agreement (the “July 2025 SPA”) with Ault & Company, pursuant to which it agreed to sell, in one or more closings, to Ault & Company up to 100,000 shares of Series H convertible preferred stock (“Series H Preferred Stock”) for a total purchase price of up to $100.0 million. The July 2025 SPA provides that the financing may be conducted through one or more closings. During the three months ended September 30, 2025, the Company sold to Ault & Company 4,000 shares of Series H Preferred Stock for an aggregate purchase price of $4.0 million.

Each share of Series H 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) $0.79645 or (B) 105% of the volume weighted average price of the Class A common stock during the five trading days immediately prior to the date of conversion. The conversion price is subject to adjustment in the event of an issuance of Class A common stock at a price per share lower than the conversion price then in effect, as well as upon customary stock splits, stock dividends, combinations or similar events. The holders of Series H 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 H Preferred Stock and are payable monthly in arrears. For the first two years, the Company may elect to pay the dividend amount in shares of Class A common stock rather than cash. The holders of the Series H Preferred Stock are entitled to vote with the Class A common stock as a single class on an as-converted basis.

During the nine months ended September 30, 2025, the Company issued 10.0 million shares of Class A common stock upon conversion of convertible promissory notes payable (see Note 16).

2025 Stock Incentive Plan and Option Grants

On July 31, 2025, the Board of Directors approved grants of 7.25 million non-qualified stock options to purchase shares of Class A common stock for the Company’s directors and executive officers. The grants were issued on August 12, 2025, at an exercise price of $0.72 per share. These grants are made outside of the 2025 Stock Incentive Plan and are subject to stockholder and exchange approval.

On July 31, 2025, the Board also approved the Company’s 2025 Stock Incentive Plan, which authorizes the issuance of up to 8.0 million shares, and approved grants of options under the plan covering an aggregate of 6.2 million shares to employees at an exercise price of $0.72 per share.

Vesting for all 13.45 million grants is 50% upon stockholder and exchange approval and 50% in equal monthly installments over 24 months beginning January 1, 2026.

Because the grants are contingent upon stockholder and exchange approval, the options are not considered granted for accounting purposes as of September 30, 2025. Accordingly, no stock-based compensation expense has been recognized, and such expense will commence only once the required approvals are obtained and the grants are deemed effective under U.S. GAAP.

Distribution of Class B Common Stock

On September 22, 2025, the Company announced a planned dividend of 20 million shares of its Class B Common Stock to all holders of its Class A Common Stock and its Class B Common Stock, as well as its Series B Convertible Preferred Stock, Series C Convertible Preferred Stock, Series G Convertible Preferred Stock and Series H Preferred Stock on an as-converted basis. The record date for this dividend was October 6, 2025, and the payment date was October 31, 2025.

19. INCOME TAXES

The Company calculates its interim income tax provision in accordance with ASC Topic 270,Interim Reporting, and Topic 740, Income Taxes. The difference between the effective tax rate and the federal statutory rate of 21% is primarily due to items recognized for financial reporting purposes that are permanently disallowed for U.S. federal income tax purposes, as well as changes in the valuation allowance.

The One Big Beautiful Bill Act (“OBBB”) was enacted into law on July 4, 2025. The OBBB introduced significant tax law changes affecting various corporate tax provisions, including limitations on business interest expense deductions, immediate expensing of domestic research and experimentation expenditures under Section 174, updates to executive compensation aggregation rules under Section 162(m), modifications to certain tax credits, and changes to international tax items such as GILTI, FDII, and BEAT.

Management has assessed the implications for the Company’s tax reporting obligations. The bill introduces a range of tax and economic policy changes, however the overall impact on the Company’s tax reporting is minimal and there will be no material impact on the Company’s income tax obligations.

20. NET LOSS PER SHARE

Net loss per share is computed by dividing the net loss to common stockholders by the weighted average number of Class A and Class B common shares outstanding. The calculation of the basic and diluted earnings per share is the same for all periods presented as the effect of the potential common stock equivalents is anti-dilutive due to the Company’s net loss position for all periods presented. Anti-dilutive securities, which are convertible into or exercisable for the Company’s Class A common stock, consisted of the following at September 30, 2025 and 2024:

21. SEGMENT AND CUSTOMERS INFORMATION

The Company had the following reportable segments as of September 30, 2025 and 2024; see Note 1 for a brief description of the Company’s business.

The following data presents the revenues, expenditures and other operating data of the Company and its operating segments for the nine months ended September 30, 2025:

The following data presents the revenues, expenditures and other operating data of the Company and its operating segments for the three months ended September 30, 2025:

The following data presents the revenues, expenditures and other operating data of the Company and its operating segments for the nine months ended September 30, 2024:

The following data presents the revenues, expenditures and other operating data of the Company and its operating segments for the three months ended September 30, 2024:

22. CONCENTRATIONS OF CREDIT AND REVENUE RISK

Significant customers are those that represent more than 10% of the Company’s total revenue or accounts receivable balances for the periods and as of each balance sheet date presented. For each significant customer, revenue as a percentage of total revenue and gross accounts receivable as a percentage of total gross accounts receivable as of the periods presented were as follows:

*less than 10%

23. SUBSEQUENT EVENTS

2025 ATM Offering

During the period between October 1, 2025 through November 4, 2025, the Company sold an aggregate of 172.7 million shares of Class A common stock pursuant to the 2025 ATM Offering for gross proceeds of $86.2 million.

Between October 1, 2025 through November 17, 2025, the Company issued approximately 5.8 million shares of its Class A common stock upon the conversion of approximately $2.3 million in aggregate principal and accrued interest under its outstanding convertible notes payable.

Series B Preferred Stock

Between October 1, 2025 through November 17, 2025, the Company sold an aggregate of 8,500 shares of its Series B Convertible Preferred Stock for gross proceeds of approximately $8.5 million. In addition, during that same period, an aggregate of $5.5 million in stated value of Series B Convertible Preferred Stock was converted into approximately 13.8 million shares of the Company’s Class A common stock.

Extension of Series H Preferred Stock Purchase Agreement

On November 7, 2025, the Company and Ault & Company entered into an amendment to the Series H Convertible Preferred Stock Purchase Agreement (the “Series H SPA”) to extend its termination date. Under the amendment, the termination date will be extended to the later of (i) one year after the Company has a sufficient number of authorized shares of Class A common stock to satisfy all conversion and share-reserve requirements under the Series H SPA or (ii) December 31, 2027.