Hyperscale Data, Inc.

ITEM 1. LEGAL PROCEEDINGS

Litigation Matters

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

Certain of these outstanding matters include speculative, substantial or indeterminate monetary amounts. We record a liability when we believe that it is probable that a loss has been incurred and the amount can be reasonably estimated. If we determine that a loss is reasonably possible and the loss or range of loss can be estimated, we disclose the reasonably possible loss. We evaluate developments in our legal matters that could affect the amount of liability that has been previously accrued, and the matters and related reasonably possible losses disclosed, and make adjustments as appropriate. Significant judgment is required to determine both likelihood of there being a loss and the estimated amount of a loss related to such matters.

Dowagiac Data Center Litigation

On May 26, 2026, a purported class action complaint was filed against Alliance Cloud Services, LLC (“Alliance Cloud Services”), a wholly owned subsidiary ours, in the United States District Court for the Western District of Michigan. The complaint alleges that operations at our Dowagiac, Michigan data center have generated excessive noise, asserting claims for private nuisance, public nuisance and negligence, and seeks unspecified monetary damages and other relief on behalf of a proposed class of nearby residents.

On July 24, 2026, Alliance Cloud Services filed a partial motion to dismiss the public nuisance and negligence claims. On July 28, 2026, the Court entered an order permitting the plaintiffs to file an amended complaint in response to the motion. If an amended complaint is filed, the pending motion will be denied without prejudice as moot; otherwise, the Court will consider the motion after briefing is complete.

We believe the claims are without merit and intend to vigorously defend the action. At this stage of the proceedings, we are unable to reasonably estimate the possible loss or range of loss, if any, associated with this matter.

Other Litigation Matters*

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