QumulusAI, Inc.

Previous wording

This quarterly report on Form 10-Q contains not only historical information, but also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are subject to the safe harbor created by those sections. In addition, the Company or others on the Company’s behalf may make forward-looking statements from time to time in oral presentations, including telephone conferences and/or web casts open to the public, in press releases or reports, on the Company’s website, or otherwise. All statements other than statements of historical facts included in this report or expressed by the Company orally from time to time that address activities, events, or developments that the Company expects, believes, or anticipates will or may occur in the future are forward-looking statements, including, in particular, the statements about the Company’s plans, objectives, strategies, and prospects regarding, among other things, the Company’s financial condition, results of operations, business strategy, and short-term and long-term business operations and objectives. The Company has identified some of these forward-looking statements in this report with words like “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” or the negative of these words or other words and terms of similar meaning. The use of future dates is also an indication of a forward-looking statement. Forward-looking statements may be contained in the notes to the Company’s consolidated financial statements and elsewhere in this report, including under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Current wording

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Previous wording

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the Company’s unaudited condensed consolidated financial statements and the related notes thereto included under the heading “Part I. Financial Information–* Item 1. Unaudited Condensed Consolidated Financial Statements*.” References in this quarterly report on Form 10-Q (this “report”) to the “Company,”, “us” or “we” refer to QumulusAI, Inc. on a consolidated basis. References to our “management” or our “management team” refer to our officers and directors. This discussion and analysis provides material historical and prospective disclosures intended to enable investors and other users to assess the Company’s financial condition and results of operations. See “Cautionary Note Regarding Forward-Looking Statements.”

Current wording

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the Company’s condensed consolidated financial statements and the related notes thereto included under the heading “Part I. Financial Information– Item 1. Condensed Consolidated Financial Statements.” References in this quarterly report on Form 10-Q (this “report”) to the “Company,”, “us” or “we” refer to QumulusAI, Inc. on a consolidated basis. References to our “management” or our “management team” refer to our officers and directors. This discussion and analysis provides material historical and prospective disclosures intended to enable investors and other users to assess the Company’s financial condition and results of operations. See “Cautionary Note Regarding Forward-Looking Statements.”

Previous wording

Originally established as a crypto-focused data center and power infrastructure company, we have evolved into a full-stack platform purpose-built for high-throughput, enterprise-grade compute. Leveraging our operational heritage in constructing and managing over 100 megawatts (“MW”) of high-density data center capacity, we are repurposing infrastructure previously used for cryptocurrency mining to meet accelerating AI demand while continuing to operate managed services for crypto mining infrastructure and blockchain asset management as a complementary, revenue-generating load management capabilities during the transition toward high-performance computing (“HPC”) operations.

Current wording

Originally established as a crypto-focused data center and power infrastructure company, we have evolved into a full-stack platform purpose-built for high-throughput, enterprise-grade compute. Leveraging our operational heritage in constructing and managing over 100 megawatts (“MW”) of high-density data center capacity, we are repurposing infrastructure previously used for cryptocurrency mining to meet accelerating AI demand while continuing to operate managed services for crypto mining infrastructure and blockchain asset management as complementary, revenue-generating load management capabilities during the transition toward high-performance computing (“HPC”) operations.

Previous wording

While we expect blockchain mining income to continue during 2026, revenue generated from third-party hosting clients is expected to continue to decline as existing hosting customer contracts expire and are not renewed. As hosting capacity becomes available, we plan to transition that capacity to HPC compute operations. During the six months ended June 30, 2026, blockchain-related revenue accounted for approximately 24% of total revenue, while HPC compute revenue accounted for approximately 76% of total revenue. We expect this trend of HPC compute revenue becoming a higher percentage of total revenue to continue as we continue to deploy additional HPC infrastructure and allocate a greater portion of our active power capacity toward HPC compute workloads.

Current wording

While we expect blockchain mining income to continue during 2026, revenue generated from third-party hosting clients is expected to continue to decline as existing hosting customer contracts expire and are not renewed. As hosting capacity becomes available, we plan to transition that capacity to HPC compute operations. During the nine months ended September 30, 2026, blockchain-related revenue accounted for approximately 12% of total revenue, while HPC compute revenue accounted for approximately 88% of total revenue. We expect this trend of HPC compute revenue becoming a higher percentage of total revenue to continue as we continue to deploy additional HPC infrastructure and allocate a greater portion of our active power capacity toward HPC compute workloads.

Previous wording

QumulusAI is headquartered in Atlanta, Georgia. We operate in multiple colocation data centers in Marietta, Georgia, Kansas City, Missouri, Denver, Colorado, and Philadelphia, Pennsylvania, with combined deployed and contracted capacity of approximately 8 MW of power. We have secured rights of first refusal for 15 MW of information technology (“IT”) load capacity space for our GPU equipment and we are actively planning for expansion exceeding 120 MW of total IT load across our platform with potential to support over 90,000 NVIDIA B200/B300 GPUs (among the latest generation GPUs purpose-built for foundation model training), or as many as 1,500,000 GPUs optimized for AI inference at scale.

Current wording

QumulusAI is headquartered in Atlanta, Georgia. We operate in multiple colocation data centers in Atlanta, Georgia, Kansas City, Missouri, Denver, Colorado, and Philadelphia, Pennsylvania, with combined active and contracted capacity of up to approximately 11.75 MW of power. We have secured letters of intent and rights of first refusal for 7 MW of information technology (“IT”) load capacity space for our GPU equipment.

Previous wording

Additionally, in the aggregate, we operate approximately 10 MW of grid power with immediate access to 39 MW of additional grid power in Watonga, Oklahoma and Denton, Texas where we manage blockchain assets. These sites serve as foundational assets for power-intensive compute deployments and provide strategic flexibility for future infrastructure repurposing.

Current wording

Additionally, in the aggregate, we operate approximately 10 MW of grid power with immediate access to 7 MW of additional grid power in Watonga, Oklahoma where we manage blockchain assets. These sites serve as foundational assets for power-intensive compute deployments and provide strategic flexibility for future infrastructure repurposing. In November 2026, we entered into an agreement to sell our Denton, Texas facility. See Note 26 “Subsequent Events” in the notes to our condensed consolidated financial statements.

Previous wording

As we continue transitioning toward HPC compute operations, we expect the relationship between costs and revenues to evolve. HPC operations generally involve higher upfront capital expenditures and infrastructure-related costs, including GPU servers, networking equipment, colocation costs, power infrastructure, and data center buildout expenditures. We also expect depreciation expense and operating costs associated with HPC infrastructure to increase as additional HPC assets are deployed and future data center capacity is developed. However, we believe HPC compute operations will generate higher revenue and gross profit per megawatt of deployed power capacity as compared to traditional blockchain hosting operations.

Current wording

As we continue transitioning toward HPC compute operations, we expect the relationship between costs and revenues to evolve. HPC operations generally involve higher upfront capital expenditures and infrastructure-related costs, including GPU servers, networking equipment, colocation costs, power infrastructure, and data center buildout expenditures. We also expect depreciation expense and operating costs associated with HPC infrastructure to increase as additional HPC assets are deployed and future data center capacity is developed. However, we believe HPC compute operations will generate higher revenue as compared to traditional blockchain hosting operations.

Previous wording

Revenues are derived primarily from the provision of compute power, together with mining hosting services and bitcoin self-mining. The Company provides compute power directly to end users, including under multi-year direct contracts, as well as to a marketplace. The Company deploys and maintains its compute infrastructure primarily in colocation data center facilities, which provide the megawatt capacity supporting its high-performance computing operations, and makes that infrastructure available to customers for large-scale cloud processing.

Current wording

Revenues are derived primarily from the provision of compute power, together with mining hosting services and bitcoin self-mining. The Company's compute power revenue is reported in its HPC segment, and its mining hosting and bitcoin self-mining revenue is reported in its Bitcoin segment. The Company provides compute power directly to end users, including under multi-year direct contracts, as well as to a marketplace. Marketplace revenue reflects the Company's contractual share of the marketplace's net revenue from its customers, 80% under the Company's agreement with RunPod, and direct contracts are priced on a fixed per-hour basis for each unit of compute power. The Company deploys and maintains its compute infrastructure primarily in colocation data center facilities, which provide the megawatt capacity supporting its high-performance computing operations, and makes that infrastructure available to customers for large-scale cloud processing. Compute power revenue is recognized over time as capacity is delivered, and payments received in advance are recorded as deferred revenue until the related services are provided.

Previous wording

The Company has also entered into hosting contracts where it operates mining equipment owned by third parties within its facilities in exchange for a fee or reimbursement of electricity cost including a markup.

Current wording

The Company also hosts mining equipment owned by third parties across its operational sites, which generates recurring income by leveraging existing infrastructure in exchange for a fee or reimbursement of electricity costs at a markup.

Previous wording

Cost of revenues reflect direct costs associated with the delivery of the Company’s products and services to its customers. These costs include electricity and infrastructure expenses associated with operating the Company’s mining facilities. Cost of revenues also includes colocation and hosting costs related to GPU-based high-performance computing data centers, as well as fees paid to certain consultants.

Current wording

Cost of revenues, exclusive of depreciation and amortization, reflect direct costs associated with the delivery of the Company’s products and services to its customers. These costs include electricity and infrastructure expenses associated with operating the Company’s mining facilities. Cost of revenues, exclusive of depreciation and amortization, also includes colocation and hosting costs related to GPU-based high-performance computing data centers, as well as fees paid to certain consultants. These costs exclude depreciation and amortization, which is presented as a separate line item and includes depreciation of servers, miners, and other equipment and amortization of finance lease right-of-use assets used to generate revenue.

Previous wording

General and administrative expenses include salaries, benefits and other costs of departments serving administrative functions, such as executives, finance and accounting, and human resources. In addition, general and administrative expense includes non-personnel costs, such as professional fees, legal fees, accounting and finance advisory fees and other supporting corporate expenses not allocated to cost of revenues or sales and marketing.

Current wording

General and administrative expenses include salaries, benefits, and stock-based compensation expense, and other costs of departments serving administrative functions, such as executives, finance and accounting, and human resources. In addition, general and administrative expense includes non-personnel costs, such as professional fees, legal fees, accounting and finance advisory fees and other supporting corporate expenses not allocated to cost of revenues or sales and marketing. General and administrative expenses also include acquisition-related costs when incurred and costs associated with preparing to become and operating as a public company, such as audit, legal, and consulting fees, listing and exchange fees, directors' and officers' insurance, and investor relations. Costs incurred in connection with the Company's direct listing were expensed as incurred and are included in general and administrative expenses.

Previous wording

Sales and marketing expenses include social media, advertising and marketing costs, marketing consultant costs, website costs and costs related to conferences and seminars. It also includes all expenses related to salespeople salaries, commissions, benefits, and other costs related to the sales function such as productivity tools, and customer relationship management tools.

Current wording

Sales and marketing expenses include social media, advertising and marketing costs, marketing consultant costs, website costs and costs related to conferences and seminars. It also includes all expenses related to employee salaries, commissions, benefits, and other costs related to the sales and marketing functions such as productivity tools, and customer relationship management tools.

Previous wording

Depreciation and amortization relates to long-lived assets and intangible assets used in the Company’s business. Depreciation expense relates primarily to buildings and improvements, server equipment, miners, and mining related equipment. Amortization expense relates primarily to right-of-use assets, vendor relationships and trade name.

Current wording

Depreciation and amortization relates to long-lived assets and intangible assets used in the Company’s business and is presented separately from cost of revenues. Depreciation expense relates primarily to buildings and improvements, server equipment, miners, and mining related equipment. Amortization expense relates primarily to finance lease right-of-use assets, vendor relationships and trade name. Operating lease cost is recognized on a straight-line basis and is not included in depreciation and amortization.

Previous wording

Change in Fair Value of Warrant Liability

Current wording

Change in fair value of warrant liability represents periodic non-cash gains or losses resulting from the remeasurement of outstanding warrant instruments classified as liabilities. Only the Company's penny warrants are classified as liabilities, because they are not considered indexed to the Company's own stock under ASC 815-40. The Company's other warrants are classified as equity and are not remeasured. The liability is measured at intrinsic value, which is the fair value of the Company's common stock less the exercise price, so changes in the liability primarily reflect changes in the fair value of the Company's common stock. When the value of the common stock increases, the liability increases and the Company records a loss, and when it decreases, the Company records a gain. Following the Company's direct listing on July 16, 2026, the fair value of the Company's common stock is based on its quoted market price. Adjustments are recorded in the condensed consolidated statements of operations and do not impact cash flow.

Previous wording

Revenue for the three months ended June 30, 2026 was $6,712,805, representing an increase of $3,627,366, or 118%, as compared to $3,085,439 for the three months ended June 30, 2025. The increase was driven primarily by revenue from compute power, which grew to $5,608,946, or approximately 84% of revenue, from $1,311,700, or approximately 43% of revenue, in the prior-year period, reflecting the Company’s continued scaling of its high-performance computing footprint, including additional megawatts of data center capacity, expanded server deployments, and the closing of multi-year direct contracts with compute customers. High-performance computing is the Company’s primary strategic focus and principal source of revenue. Mining hosting services revenue declined to $693,778, or approximately 10% of revenue, from $1,625,701, or approximately 53% of revenue, in the prior-year period, reflecting both the Company’s strategic reallocation of capacity towards compute power services and the curtailment of operations by certain hosting clients amid lower bitcoin prices. Curtailed hosting capacity was redeployed to self-mining activities on an interim basis, increasing self-mining revenue to $410,081 for the three months ended June 30, 2026 from $148,038 for the three months ended June 30, 2025.

Current wording

Revenue for the three months ended September 30, 2026 was $14,755,114, representing an increase of $11,654,329, or 376%, as compared to $3,100,785 for the three months ended September 30, 2025. The increase was driven primarily by revenue from compute power, which grew to $14,126,265, or approximately 96% of revenue, from $1,443,351, or approximately 47% of revenue, in the prior-year period, due to the Company’s continued scaling of its HPC capacity, including additional megawatts of data center capacity, expanded server deployments, and the closing of multi-year direct contracts with compute customers. HPC is the Company’s primary strategic focus and principal source of revenue. Mining hosting services revenue declined to $365,854, or approximately 2% of revenue, from $1,445,669, or approximately 47% of revenue, in the prior-year period, reflecting both the Company’s strategic reallocation of capacity toward compute power services and the curtailment of operations by certain hosting clients amid lower bitcoin prices. Curtailed hosting capacity was redeployed to self-mining activities on an interim basis, increasing self-mining revenue to $262,995 for the three months ended September 30, 2026 from $211,765 for the three months ended September 30, 2025.

Previous wording

During the three months ended June 30, 2026, the Company’s bitcoin mining operations were influenced by changes in network difficulty, fleet utilization, and overall market pricing compared to the three months ended June 30, 2025. Average bitcoin mined per day increased from 0.02 bitcoin to 0.06 bitcoin, average terahash per miner (“TH/s”) increased from 72.96 TH/s to 87.63 TH/s, average daily workers increased from 445 to 967, and total bitcoin mined increased from 1.55 BTC to 5.72 BTC, while average bitcoin price decreased from $98,373 to $72,698 and network difficulty declined slightly from 122.6 trillion to 121.9 trillion during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.

Current wording

During the three months ended September 30, 2026, the Company’s bitcoin mining operations were influenced by changes in network difficulty, fleet utilization, and overall market pricing compared to the three months ended September 30, 2025. Average bitcoin mined per day increased from 0.02 bitcoin to 0.04 bitcoin, average terahash per miner (“TH/s”) increased from 71.01 TH/s to 80.16 TH/s, average daily miners increased from 580 to 913, and total bitcoin mined increased from 1.83 BTC to 3.85 BTC, while average bitcoin price decreased from $114,382 to $71,003 and network difficulty declined from 130.0 trillion to 128.4 trillion during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025.

Previous wording

Cost of revenue for the three months ended June 30, 2026 was $2,242,402, representing an increase of $856,028, or 62%, as compared to $1,386,374 for the three months ended June 30, 2025. For the three months ended June 30, 2026, the increase in colocation costs was driven by the continued growth and investment that the Company has made into the HPC business and the decrease in hosting expenses was due to the shift in operations from hosting to compute power.

Current wording

Cost of revenue, exclusive of depreciation and amortization, for the three months ended September 30, 2026 was $4,161,145, representing an increase of $2,517,165, or 153%, as compared to $1,643,980 for the three months ended September 30, 2025. For the three months ended September 30, 2026, the increase in colocation costs was driven by the continued growth and investment that the Company has made into the HPC business. This increase was partially offset by a decrease in hosting expenses due to the shift in operations from hosting to compute power and a decrease in electricity due to lower power usage and a lower average power rate at the Company's Oklahoma mining site.

Previous wording

Sales and marketing expenses for the three months ended June 30, 2026 were $916,220, an increase of $550,127, as compared to $366,093 for the three months ended June 30, 2025. The increase is due primarily to the hiring of sales and marketing personnel in the second half of 2025 to help promote the Company’s shift in strategic focus to the HPC business as well as commissions paid to salespeople beginning in 2026 as we began selling directly to customers.

Current wording

Sales and marketing expenses for the three months ended September 30, 2026 were $1,605,602, an increase of $1,458,131, or 989%, as compared to $147,471 for the three months ended September 30, 2025. The increase is due primarily to the hiring of additional sales and marketing personnel to help promote the Company’s shift in strategic focus to the HPC business as well as commissions paid to salespeople beginning in 2026 as the Company began selling directly to customers.

Previous wording

Depreciation and amortization expense for the three months ended June 30, 2026 was $6,882,154, an increase of $5,822,254, or 549%, as compared to $1,059,900 for the three months ended June 30, 2025. The increase was primarily due to an increase in depreciation expense due to purchase of additional property and equipment and the amortization of finance right-of-use leased assets acquired during 2026.

Current wording

Depreciation and amortization expense for the three months ended September 30, 2026 was $14,872,738, an increase of $13,447,003, or 943%, as compared to $1,425,735 for the three months ended September 30, 2025. The increase was primarily due to an increase in depreciation expense due to purchase of additional property and equipment to support the growth of the Company's HPC business and the amortization of finance right-of-use leased assets acquired during 2026.

Previous wording

Change in fair value of additional convertible notes option for the six months ended June 30, 2026 was a gain of $3,850,850, compared to a $0 change in fair value of additional convertible notes option for the six months ended June 30, 2025. The change was driven by the issuance of additional convertible notes options during the six months ended June 30, 2026.

Current wording

Change in fair value of additional convertible notes option for the three months ended September 30, 2026 was a gain of $16,537,550, compared to $0 for the three months ended September 30, 2025, when the Company had no such option. The gain reflects a decrease in the fair value of the option as the price of the Company’s common stock declined during the three months ended September 30, 2026, which reduced the value of the additional convertible notes underlying the option and the estimated probability that they will be issued.

Previous wording

Loss on extinguishment of debt for the three months ended June 30, 2026 was $0, as compared to a loss of $71,094 for the three months ended June 30, 2025. The expense was primarily driven by the issuance of preferred stock for the partial conversion of a TCM convertible note in May 2025.

Current wording

Loss on extinguishment of debt for the three months ended September 30, 2026 was $0, as compared to a loss of $883,667 for the three months ended September 30, 2025. The expense was primarily driven by the issuance of preferred stock for the partial conversion of a TCM convertible note in September 2025.

Previous wording

Interest expense, net for the three months ended June 30, 2026 was $2,045,748, an increase of $1,444,488 as compared to $601,260 for the three months ended June 30, 2025. The increase is driven by an increase in finance leases for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025.

Current wording

Interest expense, net for the three months ended September 30, 2026 was $5,369,084, an increase of $4,859,218 as compared to $509,866 for the three months ended September 30, 2025. The increase is driven by an increase in finance leases for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025.

Previous wording

We operate our business as two operating and reportable segments: Bitcoin and HPC. For additional information about our segments, see Note 23 “Segment Reporting” in the notes to our unaudited condensed consolidated financial statements.

Current wording

We operate our business as two operating and reportable segments: Bitcoin and HPC. For additional information about our segments, see Note 23 “Segment Reporting” in the notes to our condensed consolidated financial statements.

Previous wording

HPC revenue for the three months ended June 30, 2026 was $5,608,946, an increase of $4,297,246 as compared to $1,311,700 for the three months ended June 30, 2025. The increase is driven by the pivot to focus on the HPC business and investment in additional infrastructure.

Current wording

HPC revenue for the three months ended September 30, 2026 was $14,126,265, an increase of $12,682,914 as compared to $1,443,351 for the three months ended September 30, 2025. The increase is driven by the pivot to focus on the HPC business and investment in additional infrastructure.

Previous wording

Bitcoin gross profit for the three months ended June 30, 2026 was $452,135, a decrease of $231,205 as compared to $683,340 for the three months ended June 30, 2025. The decrease is due to significant decline in Bitcoin activities as we shift our focus towards HPC activities.

Current wording

Bitcoin gross profit for the three months ended September 30, 2026 was $298,300, a decrease of $168,914 as compared to $467,214 for the three months ended September 30, 2025. The decrease is due to significant decline in Bitcoin activities as we shift our focus towards HPC activities.

Previous wording

Bitcoin net loss for the three months ended June 30, 2026 was $784,897, a decrease of $1,139,456 as compared to income of $354,559 for the three months ended June 30, 2025. The change is driven by the pivot to focus on the HPC business and increased costs associated with it.

Current wording

Bitcoin net loss before income taxes for the three months ended September 30, 2026 was $635,713, a decrease of $454,952 as compared to $180,761 for the three months ended September 30, 2025. The change is driven by the pivot to focus on the HPC business and increased costs associated with it.

Previous wording

HPC net loss for the three months ended June 30, 2026 was $4,341,152, a decrease of $17,932,849 as compared to net income of $13,591,697 for the three months ended June 30, 2025. The decrease is primarily due to the gain on remeasurement of investment in TCM of $14,549,536 that was recognized in April 2025.

Current wording

HPC net loss before income taxes for the three months ended September 30, 2026 was $15,294,571, a decrease of $12,986,055 as compared to $2,308,516 for the three months ended September 30, 2025. The decrease is primarily due to the gain on remeasurement of investment in TCM of $14,549,536 that was recognized in April 2025.

Previous wording

Revenue for the six months ended June 30, 2026 was $10,132,723, representing an increase of $5,176,032, or 104%, as compared to $4,956,691 for the six months ended June 30, 2025. The increase was driven primarily by revenue from compute power, which grew to $7,711,458, or approximately 76% of revenue, from $1,311,700, or approximately 27% of revenue, in the prior-year period, reflecting the Company’s continued scaling of its high-performance computing footprint, including additional megawatts of data center capacity, expanded server deployments, and the closing of multi-year direct contracts with compute customers. High-performance computing is the Company’s primary strategic focus and principal source of revenue. Mining hosting services revenue declined to $1,642,205, or approximately 16% of revenue, from $3,349,152, or approximately 68% of revenue, in the prior-year period, reflecting both the Company’s strategic reallocation of capacity towards compute power services and the curtailment of operations by certain hosting clients amid lower bitcoin prices. The Company redeployed curtailed hosting capacity to self-mining activities on an interim basis, and self-mining revenue increased to $779,060 for the six months ended June 30, 2026 from $295,839 for the six months ended June 30, 2025.

Current wording

Revenue for the nine months ended September 30, 2026 was $24,887,837, representing an increase of $16,830,361, or 209%, as compared to $8,057,476 for the nine months ended September 30, 2025. The increase was driven primarily by revenue from compute power, which grew to $21,837,723, or approximately 88% of revenue, from $2,755,051, or approximately 34% of revenue, in the prior-year period, due to the Company’s continued scaling of its HPC capacity, including additional megawatts of data center capacity, expanded server deployments, and the closing of multi-year direct contracts with compute customers. HPC is the Company’s primary strategic focus and principal source of revenue. Mining hosting services revenue declined to $2,008,059, or approximately 8% of revenue, from $4,794,821, or approximately 60% of revenue, in the prior-year period, reflecting both the Company’s strategic reallocation of capacity toward compute power services and the curtailment of operations by certain hosting clients amid lower bitcoin prices. The Company redeployed curtailed hosting capacity to self-mining activities on an interim basis, and self-mining revenue increased to $1,042,055 for the nine months ended September 30, 2026 from $507,604 for the nine months ended September 30, 2025.

Previous wording

During the six months ended June 30, 2026, the Company’s bitcoin mining operations were influenced by changes in network difficulty, fleet utilization, and overall market pricing compared to the six months ended June 30, 2025. Average bitcoin mined per day increased from 0.02 bitcoin to 0.06 bitcoin, average terahash per miner increased from 71.39 TH/s to 83.13 TH/s, average daily miners increased from 441 to 901, and total bitcoin mined increased from 3.10 BTC to 10.80 BTC, while average bitcoin price decreased from $95,981 to $74,587 and network difficulty rose from 116.9 trillion to 131.3 trillion during the six months ended June 30, 2026 compared to the six months ended June 30, 2025.

Current wording

During the nine months ended September 30, 2026, the Company’s bitcoin mining operations were influenced by changes in network difficulty, fleet utilization, and overall market pricing compared to the nine months ended September 30, 2025. Average bitcoin mined per day increased from 0.02 bitcoin to 0.05 bitcoin, average terahash per miner increased from 71.26 TH/s to 81.38 TH/s, average daily miners increased from 487 to 1,024, and total bitcoin mined increased from 4.93 BTC to 14.64 BTC, while average bitcoin price decreased from $102,115 to $73,054 and network difficulty rose from 121.3 trillion to 134.6 trillion during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.

Previous wording

Cost of revenue for the six months ended June 30, 2026 was $4,378,199, representing an increase of $1,776,731, or 68.3%, as compared to $2,601,468 for the six months ended June 30, 2025. For the six months ended June 30, 2026, the increase in colocation costs was driven by the continued growth and investment that the Company has made in the HPC business.

Current wording

Cost of revenue, exclusive of depreciation and amortization, for the nine months ended September 30, 2026 was $8,539,344, representing an increase of $4,293,896, or 101%, as compared to $4,245,448 for the nine months ended September 30, 2025. For the nine months ended September 30, 2026, the increase in colocation costs was driven by the continued growth and investment that the Company has made in the HPC business. This increase was partially offset by a decrease in hosting expenses due to the shift in operations from hosting to compute power and a decrease in electricity due to lower power usage and a lower average power rate at the Company's Oklahoma mining site.

Previous wording

Sales and marketing expenses for the six months ended June 30, 2026 were $1,152,572, an increase of $488,279, as compared to $664,293 for the six months ended June 30, 2025. The increase is due primarily to the hiring of sales and marketing personnel in the second half of 2025 to help promote the Company’s shift in strategic focus to the HPC business as well as commissions paid to salespeople beginning in 2026 as we began selling directly to customers.

Current wording

Sales and marketing expenses for the nine months ended September 30, 2026 were $2,758,174, an increase of $2,520,119, or 1059%, as compared to $238,055 for the nine months ended September 30, 2025. The increase is due primarily to the hiring of additional sales and marketing personnel to help promote the Company’s shift in strategic focus to the HPC business as well as commissions paid to salespeople beginning in 2026 as we began selling directly to customers.

Previous wording

Depreciation and amortization expense for the six months ended June 30, 2026 was $9,548,999, an increase of $8,011,051, or 520.9%, as compared to $1,537,948 for the six months ended June 30, 2025. The increase was primarily due to an increase in depreciation expense due to purchase of additional property and equipment and the amortization of finance right-of-use leased assets acquired during 2026.

Current wording

Depreciation and amortization expense for the nine months ended September 30, 2026 was $24,421,737, an increase of $21,063,658, or 627%, as compared to $3,358,079 for the nine months ended September 30, 2025. The increase was primarily due to an increase in depreciation expense due to purchase of additional property and equipment to support the growth of the Company's HPC business and the amortization of finance right-of-use leased assets acquired during 2026.

Previous wording

Loss on issuance of convertible note for the six months ended June 30, 2026 was $73,881,850, as compared to $0 for the six months ended June 30, 2025. The loss is because the aggregate fair value of the convertible notes issued in March and June 2026 is in excess of the proceeds received.

Current wording

Loss on issuance of convertible note for the nine months ended September 30, 2026 was $73,881,850, as compared to $0 for the nine months ended September 30, 2025. The loss for the nine months ended September 30, 2026 is due to the initial fair value of the notes issued in March and June 2026, and the related option to issue additional notes, exceeding the net proceeds received. The Company did not issue convertible notes in 2025.

Previous wording

Loss on extinguishment of debt for the six months ended June 30, 2026 was $0, as compared to a loss of $153,834 for the six months ended June 30, 2025. The expense was primarily driven by the retirement of a convertible note immediately prior to the TCM acquisition and the issuance of preferred stock for the partial conversion of a TCM convertible note in May 2025.

Current wording

Loss on extinguishment of debt for the nine months ended September 30, 2026 was $0, as compared to a loss of $1,037,501 for the nine months ended September 30, 2025. The expense was primarily driven by the retirement of a convertible note immediately prior to the TCM acquisition and the issuance of preferred stock for the partial conversion of a TCM convertible note in May and September 2025.

Previous wording

Interest expense, net for the six months ended June 30, 2026 was $2,584,024, an increase of $1,643,078 as compared to $940,946 for the six months ended June 30, 2025. The increase is driven by an increase in finance leases for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025.

Current wording

Interest expense, net for the nine months ended September 30, 2026 was $7,953,108, an increase of $6,502,296 as compared to $1,450,812 for the nine months ended September 30, 2025. The increase is driven by an increase in finance leases for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025.

Previous wording

We operate our business as two operating and reportable segments: Bitcoin and HPC. For additional information about our segments, see Note 23 “Segment Reporting” in the notes to our unaudited condensed consolidated financial statements.

Current wording

We operate our business as two operating and reportable segments: Bitcoin and HPC. For additional information about our segments, see Note 23 “Segment Reporting” in the notes to our condensed consolidated financial statements.

Previous wording

The following tables summarize our segment results of operations for the six months ended June 30, 2026 and 2025:

Current wording

The following tables summarize our segment results of operations for the nine months ended September 30, 2026 and 2025:

Previous wording

HPC net loss for the six months ended June 30, 2026 was $6,480,687, a decrease of $20,072,384 as compared to net income of $13,591,697 for the six months ended June 30, 2025. The decrease is driven by the gain on remeasurement of investment in TCM of $14,549,536 that was recognized in April 2025.

Current wording

HPC net loss before income taxes for the nine months ended September 30, 2026 was $21,775,258, a decrease of $33,058,439 as compared to net income before income taxes of $11,283,181 for the nine months ended September 30, 2025. The decrease is driven by the gain on remeasurement of investment in TCM of $14,549,536 that was recognized in April 2025.

Previous wording

In this quarterly report on Form 10-Q, we have provided a non-GAAP measure, which we define as financial information that has not been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The non-GAAP financial measure provided herein is earnings before interest, taxes, non-cash and other items (“Adjusted EBITDA”). Adjusted EBITDA should be viewed as supplemental to, and not as an alternative for, net income or loss calculated in accordance with U.S. GAAP (referred to below as “Net loss”).

Current wording

In this quarterly report on Form 10-Q, we have provided a non-GAAP measure, which we define as financial information that has not been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The non-GAAP financial measure provided herein is Adjusted EBITDA, which we define as net income (loss) adjusted to exclude depreciation and amortization (including amortization of finance lease right-of-use assets), interest expense, net, income tax expense (benefit), stock-based compensation, common stock issued for professional services in connection with the direct listing, changes in the fair value of the warrant liability, digital assets, convertible notes, and the option to issue additional convertible notes, gains and losses on sales of equity method investments and on the sale or disposal of property and equipment, loss on settlement of lease liability, the loss on issuance of convertible notes, losses on extinguishment of debt, and the gain on remeasurement of our investment in TCM (“Adjusted EBITDA”). Net income (loss) margin represents net income (loss) as a percentage of revenue and Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of revenue. Adjusted EBITDA should be viewed as supplemental to, and not as an alternative for, net income or loss calculated in accordance with U.S. GAAP.

Previous wording

We believe that the presentation of Adjusted EBITDA is useful to investors in their analysis of our results because it helps facilitate investor understanding of decisions made by management in light of the performance metrics used in making those decisions. In addition, as more fully described below, we believe that providing Adjusted EBITDA, together with a reconciliation of net loss to Adjusted EBITDA, helps investors make comparisons between our Company and other companies that may have different capital structures, different effective income tax rates and tax attributes, different capitalized asset values, and/or different forms of employee compensation. However, Adjusted EBITDA is not intended as a substitute for comparisons based on net loss. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measures and the corresponding U.S. GAAP measures provided by each company under applicable SEC rules.

Current wording

We believe Adjusted EBITDA helps investors compare our operating performance across periods by excluding items we believe are not indicative of ongoing operations, such as changes in fair value and gains and losses on financing, acquisition, and disposition transactions. However, Adjusted EBITDA is not intended as a substitute for comparisons based on net loss. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measures and the corresponding U.S. GAAP measures provided by each company under applicable SEC rules.