Hyperscale Data, Inc.

1. DESCRIPTION OF BUSINESS

Hyperscale Data, Inc. (“Hyperscale Data” or the “Company”) is a Delaware corporation whose principal operations consist of owning and operating data center infrastructure supporting digital asset mining operations. While the Company has completed initial deployments supporting high-density computing workloads for third-party customers, its current operations are primarily focused on Bitcoin mining and the accumulation of digital assets, primarily through its wholly owned subsidiary, Sentinum, Inc. (“Sentinum”), which operates facilities providing power and related infrastructure.

Through another of its wholly owned subsidiaries, Ault Capital Group, Inc. (“Ault Capital”), the Company holds a portfolio of diversified businesses and strategic investments spanning commercial lending and trading, hotel operations, crane rental, software platforms and commercial electronics. The Company anticipates completing the planned divestiture of Ault Capital in 2027, at which time it expects to operate as a more focused data center infrastructure-oriented business.

The Company has the following reportable segments:

2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

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

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”), filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2026. The condensed consolidated balance sheet as of December 31, 2025 was derived from the Company’s audited 2025 financial statements contained in the above referenced 2025 Annual Report. Results of operations for the three months ended March 31, 2026 are not necessarily indicative of results to be expected for future interim periods or the full year ending December 31, 2026.

Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies disclosed in the 2025 Annual Report.

Reclassifications

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

Recent Accounting Pronouncements

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

Recently Issued Standards

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

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). ASU 2025-05 provides a practical expedient to assume current economic conditions will not change for the remaining life of an asset when preparing forecasts as part of estimating credit losses. The new standard is effective for the Company for its annual periods beginning January 1, 2026 and interim period within those annual periods, with early adoption permitted and should be applied on a prospective basis. The Company adopted ASC 2025-05 during the three months ended March 31, 2026, which did not have a material impact on its consolidated financial position, results of operations, or cash flows.

In January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2025-01”), to clarify the effective date of ASU 2024-03. The new standard is effective for the Company for its annual periods beginning January 1, 2027 and for interim periods beginning January 1, 2028, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-01; however, because the standard primarily affects disclosure requirements, the Company does not expect adoption to have a material impact on its consolidated financial position, results of operations, or cash flows.

3. BUSINESS COMBINATION – GRESHAM

As disclosed in the 2025 Annual Report, the Company completed the acquisition and reconsolidation of Gresham on November 28, 2025. The preliminary allocation of purchase consideration to the acquired assets and assumed liabilities remains subject to finalization of certain valuation analyses, including inventory, property and equipment, intangible assets, income taxes, and other working capital items.

During the three months ended March 31, 2026, the Company recorded no material measurement period adjustments related to the acquisition. The Company does not currently expect material changes to the preliminary allocation; however, final amounts may differ from the preliminary estimates.

4. REVENUE DISAGGREGATION

The following tables summarize disaggregated customer contract revenues and the source of the revenue for the three months ended March 31, 2026 and 2025. Revenues from lending and trading activities included in consolidated revenues were primarily interest, dividend and other investment income, which are not considered to be revenues from contracts with customers under GAAP. Revenue is presented by reportable segment. The “Holding Co.” column includes revenue generated at the parent company level that is not allocated to a specific reportable segment. Although Holding Co. is not a separate reportable segment, it is presented below to reconcile segment revenues to total consolidated revenue.

The Company’s disaggregated revenues consisted of the following for the three months ended March 31, 2026:

The Company’s disaggregated revenues consisted of the following for the three months ended March 31, 2025:

5. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy at March 31, 2026 and December 31, 2025:

The Company assesses the inputs used to measure fair value using the three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market. For investments where little or no public market exists, management’s determination of fair value is based on the best available information, which may incorporate management’s own assumptions and involves a significant degree of judgment, taking into consideration various factors including earnings history, financial condition, recent sales prices of the Company’s securities and liquidity risks. There were no transfers into or out of Level 3 during the three months ended March 31, 2026 or during the year ended December 31, 2025.

The changes in Level 3 fair value hierarchy during the three months ended March 31, 2026 and 2025 were as follows:

6. CRYPTO ASSETS

The Company measures its crypto assets at fair value using quoted market prices in active markets for identical assets, which are classified within Level 1 of the fair value hierarchy.

The following table presents the Company’s significant digital asset holdings as of March 31, 2026 and December 31, 2025:

The following table presents the activities of the crypto assets for the three months ended March 31, 2026 and 2025:

The following table presents the activities of the crypto assets, restricted for the three months ended March 31, 2026:

7. PROPERTY AND EQUIPMENT, NET

At March 31, 2026 and December 31, 2025, property and equipment consisted of:

Summary of depreciation expense:

8. INTANGIBLE ASSETS, NET

At March 31, 2026 and December 31, 2025, 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 March 31, 2026, intangible assets subject to amortization have an average remaining useful life of 6.6 years. The following table presents estimated amortization expense for each of the succeeding five calendar years and thereafter.

9. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Other current liabilities at March 31, 2026 and December 31, 2025 consisted of:

10. NOTES PAYABLE

Notes payable at March 31, 2026 and December 31, 2025, were comprised of the following:

Second Amendment to AGREE Construction Loans

In January 2026, the Company’s subsidiary AGREE amended the terms of its construction loans related to the AGREE properties. The amendment extended the maturity dates of the loans to January 1, 2027, subject to a potential one-year extension to January 1, 2028 upon satisfaction of certain conditions. The agreement also modifies the interest rate to Term SOFR plus 5.75%, with required monthly interest payments based on Term SOFR plus 4.75%, with the difference accruing and payable at maturity or earlier repayment. On April 1, 2026, the borrowers were required to make a principal payment of $3.0 million followed by monthly principal payments of $1.0 million through maturity. As of the date of this filing, AGREE and its subsidiaries have not made the required principal payments. While such non-payment constitutes an event of default under the loan agreements, the lenders have not provided a notice of default. The modification also requires the borrowers to fund interest reserves totaling approximately $2.0 million and provides temporary waivers of certain financial covenants through the scheduled maturity date. The interest reserves have not been funded as of the date of this filing. In connection with the modification, the borrowers paid an extension fee of approximately $0.3 million.

Circle 8 Financing

In March 2026, Circle 8 entered into a secured promissory note in the principal amount of $1.5 million for the purchase of a crane. The secured promissory note accrues interest at 5.9% per annum and will mature in March 2031.

Term Notes

In January and February 2026, the Company issued two short-term term notes to an institutional investor for aggregate gross proceeds of $10.0 million. The notes were originally scheduled to mature in March and April 2026, respectively, and require periodic principal repayments prior to maturity. The Company amended the note that was scheduled to mature in March 2026 to extend its maturity date to April 7, 2026. In connection with the extension, the Company agreed to pay an extension fee of approximately $0.1 million, which was added to the outstanding principal balance. The notes have been repaid in full.

Notes Payable Maturities

Principal maturities of the Company’s notes payable, assuming the exercise of all extensions that are exercisable solely at the Company’s option, as of March 31, 2026 were:

Interest Expense

11. NOTES PAYABLE, RELATED PARTY

Notes payable, related party at March 31, 2026 and December 31, 2025, were comprised of the following:

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

12. CONVERTIBLE NOTES

Convertible notes payable at March 31, 2026 and December 31, 2025, were comprised of the following:

SJC Convertible Promissory Note Amendment

In January 2026, the Company entered into an amendment with SJC pursuant to which the maturity date of the convertible promissory note was extended to June 30, 2026.

Embedded Derivatives

The Company identified embedded derivative features within certain convertible promissory notes that required bifurcation and separate accounting as derivative liabilities under Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging. These features primarily relate to conversion options with variable pricing mechanisms.

The fair value of the embedded derivative liabilities was estimated using a Monte Carlo simulation model. The model incorporates key assumptions including the Company’s stock price, risk-free interest rate, expected volatility, credit-risk adjusted discount rate, and the specific terms of each conversion feature (including floor price, cap, and pricing based on the Volume-Weighted Average Price, or VWAP). Due to the significant use of unobservable inputs, these derivative liabilities are classified within Level 3 of the fair value hierarchy. See Note 5 for additional information, including the initial recognition and rollforward of embedded derivative liabilities.

The following table summarizes the key inputs used in the valuation of the embedded derivatives at inception and as of March 31, 2026:

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

Gain (Loss) on Extinguishment of Convertible Notes

During the three months ended March 31, 2026, the Company did not recognize any gains or losses on extinguishment of convertible notes.

During the three months ended March 31, 2025, the Company recognized a net loss on extinguishment of convertible notes of $4.6 million, consisting primarily of losses recognized on certain exchange or refinancing transactions where newly issued instruments were determined to be substantially different from the original debt instruments under applicable accounting guidance.

Contractual Maturities

Principal maturities of the Company’s convertible notes payable, assuming the exercise of all extensions that are exercisable solely at the Company’s option, as of March 31, 2026, were:

13. COMMITMENTS AND CONTINGENCIES

Contingencies

Litigation Matters

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

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

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

14. STOCKHOLDERS’ EQUITY

Class A Common Stock

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

On December 19, 2025, the Company entered into an at-the-market issuance sales agreement providing for the sale of up to $50.0 million of additional shares of Class A common stock under its effective shelf registration statement (the “ATM Offering”). During the period between January 1, 2026 through March 31, 2026, the Company sold an aggregate of 46.6 million shares of Class A common stock pursuant to the ATM Offering for gross proceeds of $10.6 million.

Class B Common Stock

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

Series D Preferred ATM Offering Activity

On February 13, 2026, the Company entered into an at-the-market issuance sales agreement to sell shares of the Company’s 13.00% Series D Cumulative Redeemable Perpetual Preferred Stock, par value $0.001 per share (the “Series D Preferred”), having an aggregate offering price of up to $35.4 million from time to time, through an “at the market offering” (the “Series Preferred D ATM Offering”). During the period between January 1, 2026 through March 31, 2026, the Company sold an aggregate of 2,498 shares of Series D Preferred Stock pursuant to its Series Preferred D ATM offering for net proceeds of $53,000.

Preferred Stock

Preferred stock as of March 31, 2026 consisted of the following:

Preferred stock as of December 31, 2025 consisted of the following:

The Company is authorized to issue 25.0 million shares of preferred stock, $0.001 par value. As of March 31, 2026, the rights, preferences, privileges and restrictions on the remaining authorized 18.2 million shares of preferred stock had not been determined. The Board is authorized to designate a new series of preferred shares and determine the number of shares, as well as the rights, preferences, privileges and restrictions granted to or imposed upon any series of preferred shares.

15. INCOME TAXES

The Company calculates its interim income tax provision in accordance with ASC Topic 270, Interim Reporting, and Topic 740, Income Taxes. The difference between the effective tax rate and the federal statutory rate of 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.

16. NET LOSS PER SHARE

Net loss per share is computed by dividing the net loss to common stockholders by the weighted average number of shares of Class A and Class B common stock outstanding. The calculation of the basic and diluted earnings per share is the same for all periods presented as the effect of the potential common stock equivalents is anti-dilutive due to the Company’s net loss position for all periods presented. Anti-dilutive securities, which are convertible into or exercisable for the Company’s Class A common stock, consisted of the following at March 31, 2026 and 2025:

17. SEGMENT AND CUSTOMERS INFORMATION

The Company had the following reportable segments as of March 31, 2026 and 2025; see Note 1 for a brief description of the Company’s business.

The following data presents the revenues, expenditures and other operating data of the Company and its operating segments for the three months ended March 31, 2026:

The following data presents the revenues, expenditures and other operating data of the Company and its operating segments for the three months ended March 31, 2025:

18. CONCENTRATIONS OF CREDIT AND REVENUE RISK

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

19. SUBSEQUENT EVENTS

Class A Common Stock ATM Offering Activity

During the period between April 1, 2026 through May 15, 2026, the Company sold an aggregate of 91.1 million shares of Class A common stock pursuant to the ATM Offering for gross proceeds of $14.0 million.

Series D Preferred ATM Offering Activity

During the period between April 1, 2026 through May 15, 2026, the Company issued an aggregate of 20,245 shares of Series D Preferred Stock pursuant to its Series Preferred D ATM Offering for gross proceeds of $0.4 million.

Term Note

In April 2026, the Company entered into a short-term term note with an institutional investor for gross proceeds of $10.0 million. The note was issued with an OID of $0.8 million and has a principal face amount of $10.8 million. The note bears interest at 12% per annum and matures on June 29, 2026. Beginning May 8, 2026, the Company is required to make weekly principal payments of $0.7 million through June 26, 2026, with the remaining outstanding principal balance and accrued interest due at maturity. The note may be prepaid at any time without penalty. Repayment obligations under the note are guaranteed by Ault & Company and Milton C. Ault, III, the Company’s Executive Chairman.

Receipt of Litigation-Related Proceeds

On April 1, 2026, the Company received cash proceeds of approximately $16.6 million in connection with the resolution of litigation involving a former subsidiary. The Company is currently evaluating the appropriate accounting and treatment of these proceeds, including the extent to which amounts may be retained, distributed, or otherwise allocated.

Circle 8 Financing Agreement

In April 2026, Circle 8 finalized a financing arrangement and received $10.0 million in equipment financing. In connection with the financing, Circle 8 issued a promissory note with a five-year term requiring monthly payments of approximately $0.2 million. The note bears interest at a variable rate based on the five-year U.S. Treasury rate plus 2%, with an initial rate of approximately 5.7%.

The financing is secured by first-priority liens on certain cranes and related equipment owned by Circle 8. Proceeds from the financing were used to fully repay amounts outstanding under the Circle 8 revolving credit facility and for general operating purposes.

Authorized Shares Increase

On April 16, 2026, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware to increase the number of authorized shares of its Class A common stock from 500,000,000 shares to 2,500,000,000 shares.