QumulusAI, Inc.

Note 1. Organization and Nature of Operations

The Company

QumulusAI, Inc. (“QumulusAI” or the “Company”) is a Georgia corporation headquartered in Atlanta, Georgia. The Company is a cloud infrastructure provider specializing in the deployment of graphics processing unit (“GPU”)-powered computing solutions for artificial intelligence (“AI”) applications. The Company’s customers include small and mid-market participants, such as machine learning teams, AI infrastructure companies, and research institutions, as well as large enterprises that utilize the Company’s platform for long-term deployments or supplemental on-demand compute capacity.

WAHA Technologies, Inc. (“WAHA”) and WAHA, Inc. (subsequently renamed SPRE Commercial Group, Inc., or “SPRE”) were both incorporated in 2019. SPRE’s operations were focused on data center assets and operations, while WAHA’s operations were focused on blockchain managed services. In December 2022, WAHA and SPRE completed a corporate roll-up and became wholly owned subsidiaries of a newly formed holding company, Global Digital Holdings, Inc. (“GDH”). In October 2023, GDH made a minority investment in The Cloud Minders, Inc. (“TCM”), a company focused on GPU-as-a-Service (“GPUaaS”) assets and operations. In April 2025, GDH acquired the remaining outstanding interests in TCM, and TCM became a wholly owned subsidiary of GDH. In connection with this acquisition, GDH rebranded its combined operations under the QumulusAI name. On August 18, 2025, GDH changed its name to QumulusAI, Inc.

The Company's Registration Statement on Form S-1, as amended (File No. 333-292514), filed in connection with the Company's direct listing, was declared effective by the Securities and Exchange Commission (the “SEC”) on July 14, 2026. The Company's common stock began trading publicly on the Nasdaq Global Market under the symbol “QMLS” on July 16, 2026.

Reverse Stock Split

The Company effected a 1-for-3 reverse stock split (“Reverse Stock Split”) on September 30, 2025, pursuant to which every three shares of the Company’s issued and outstanding common stock were combined into one share of common stock. The Reverse Stock Split had no impact on the authorized number of shares of common stock, which continue to have no par value. Unless otherwise indicated, all share and per share information prior to the Reverse Stock Split date of September 30, 2025 in these condensed consolidated financial statements is retroactively adjusted to reflect the Reverse Stock Split, prior to the rounding of any fractional shares. Any fractional share resulting from the Reverse Stock Split was rounded up to the next whole number of shares.

Going Concern

Pursuant to Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40), management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date the financial statements are issued. Management’s evaluations are based on relevant conditions and events that are known and reasonably knowable as of the date the financial statements were issued.

The Company has incurred recurring operating losses since inception resulting in an accumulated deficit of $124,247,844 as of September 30, 2026. For the nine months ended September 30, 2026, the Company had an operating loss of $54,753,230. The Company’s operations have been funded partially through the issuance of debt and equity instruments. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these condensed consolidated financial statements.

In assessing the Company’s ability to continue as a going concern, the Company monitors and analyzes its cash and its ability to generate sufficient cash flow in the future to support its operating and capital expenditure commitments. At September 30, 2026, the Company had cash of $21,909,713 and restricted cash of $9,225,679, which is restricted for servicing debt. The Company’s plans to alleviate the substantial doubt include completing additional approved draws under the USD.AI protocol and utilizing new and existing lending partners. The Company also entered into a significant revenue contract in September 2026 for approximately $211,900,000 in future revenue, under which the Company received approximately $21,200,000 in cash prepayments in October 2026. The Company continues to see increased revenue and net cash inflows from operations as it has invested in additional HPC infrastructure. Accordingly, management concluded these plans will alleviate the substantial doubt about the Company’s ability to continue as a going concern for the one-year period extending from the date of issuance of these condensed consolidated financial statements.

Note 2. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company, its direct and indirect wholly owned subsidiaries, WAHA, SPRE, SPRE Watonga OK, LLC ("Watonga"), and TCM, TCM's wholly owned subsidiaries, HPC Capital Services Parent LLC, HPC Trinity B3-129 LLC, HPC USD B3-34 LLC and HPC USD H2-75 LLC, and TCM's partially owned consolidated entities, QAI Moon, LLC ("QAI Moon") and its subsidiaries, QAI Moon Parent LLC, QAI Moon USD B3-9 LLC, SPRE Brooklyn NY, LLC ("SPRE Brooklyn"), and SPRE NKC MO, LLC ("SPRE NKC"). The Company uses the equity method to account for investments in other companies if the investment provides management with the ability to exercise significant influence over the operating and financial policies of the investee. The condensed consolidated net loss includes the Company’s proportionate share of the net income or loss of these companies. Management's judgment regarding the level of influence over each equity method investee includes considering key factors, such as ownership interest, representation on the board of directors and participation in policy-making decisions. All significant intercompany transactions and balances have been eliminated in consolidation.

Basis of Presentation

The condensed consolidated financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") and pursuant to the rules and regulations of the SEC for interim financial information. Certain disclosures normally included in financial statements have been condensed or omitted from these condensed consolidated financial statements as they are not required for interim financial statements under U.S. GAAP and the rules of the SEC. Accordingly, these condensed consolidated financial statements do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation of the financial position, operating results and cash flows for the periods presented have been included. For financial and income tax reporting purposes, the Company has adopted a calendar year-end fiscal year. Operating results for the three and nine months ended September 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026 or any future period. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2025, and related notes thereto included in the Company’s Registration Statement on Form S-1, as amended (File No. 333-292514).

Non-Controlling Interests

The Company follows Accounting Standards Codification ("ASC") 810, Consolidation, which governs the accounting for and reporting of non-controlling interests (“NCIs”) in partially owned consolidated entities and the loss of control of those entities. NCI positions are reported as a separate component of consolidated shareholders’ equity from the equity attributable to QumulusAI’s shareholders for all periods presented. The net income (loss) attributable to the NCIs is separately presented in the accompanying condensed consolidated statements of operations resulting from the Company’s consolidation of QAI Moon, SPRE Brooklyn and SPRE NKC as VIEs for which the Company is the primary beneficiary.

Reclassifications

Certain reclassifications have been made to the prior period financial statements to conform to the current period financial statement presentation. Certain expenses that were previously classified as general and administrative were reclassified to sales and marketing on the condensed consolidated statements of operations. In addition, certain balances related to deposits on power equipment classified as non-current assets were reclassified to current assets on the condensed consolidated balance sheets. These reclassifications had no effect on total assets, net income (loss), or shareholders’ equity.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Management's estimates and assumptions include, but are not limited to, estimating the fair value of consideration of acquisitions, the accounting for business combinations and allocating purchase price, valuation and estimating the useful life of identifiable intangible assets, valuation of goodwill, estimates used for forecast in business combinations, allowance for credit losses, financial instruments recorded at a fair value on a recurring basis, revenue recognition, collectability of accounts receivable, valuation of convertible note payable, fair value of assets and liabilities assumed in acquisitions, valuation of stock-based awards, salvage values and estimated useful lives of property and equipment, valuation of deferred taxes and uncertain tax positions, valuation of common stock and warrant liabilities, and other assumptions used to measure stock-based compensation, determination of incremental borrowing rate, and estimates for transfers of investments and valuation of assets. Management's estimates and assumptions are derived from and are continually evaluated based upon available information, judgment, and experience.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable.

The Company maintains cash balances in various financial institutions. At times, such balances may be in excess of the Federal Deposit Insurance Corporation insurance limit. As of September 30, 2026 and December 31, 2025, interest-bearing accounts and non-interest bearing accounts were insured by the Federal Deposit Insurance Corporation up to $250,000 per financial institution. In lieu of insurance, the financial institution may collateralize the commercial paper with U.S. government securities, in which case they become repurchase agreements. The Company has not experienced any losses in such accounts and monitors the credit worthiness of the financial institutions with which they conduct business. Management believes that the Company is not exposed to significant credit risk with respect to its cash balances.

The Company is exposed to counterparty risk through the deposits it places with suppliers of equipment to secure orders and delivery dates. The risk of a supplier failing to meet its contractual obligations may result in late deliveries of equipment needed to fulfill customer orders. The Company attempts to mitigate this risk by procuring hardware from larger, more established suppliers and those whom the Company has existing relationships and knowledge of their reputation in the market.

The following table presents customers that individually accounted for 10% or more of total revenue or accounts receivable, net for the periods presented:

Cash and Restricted Cash

For purposes of the condensed consolidated balance sheets and condensed consolidated statements of cash flows, the Company considers cash in operating bank accounts and cash on hand as cash.

Cash that is restricted as to withdrawal or use under the terms of certain contractual agreements are recorded as restricted cash in current assets on the condensed consolidated balance sheets. At September 30, 2026, the Company had a restricted cash balance of $9,225,679.

The following table provides a reconciliation of cash and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows:

Digital Assets

Crypto Assets

The Company accounts for crypto assets in accordance with ASU 2023-08, Intangibles - Goodwill and Other - Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, which requires entities to measure certain crypto assets at fair value with changes recognized in the condensed consolidated statements of operations for each reporting period. The Company’s crypto assets consist of Bitcoin, which has not been determined to be a stablecoin or derivative and is within the scope of ASU 2023-08. The Company has deemed the price of crypto assets to be a Level 1 input under the ASC 820, Fair Value Measurement, hierarchy because it is based on observable quoted prices in the Company’s principal market for identical assets. The Company’s crypto assets are received in exchange for services transferred to a customer and are converted to cash daily. Cash proceeds from the sale of digital assets are classified within operating activities in the Company’s consolidated statements of cash flows.

The Company acquires crypto assets through its network operations and holds these crypto assets. Each crypto asset acquisition is considered its own “lot” with its own cost basis based on the crypto asset-to-U.S. dollar ("USD") conversion price from the Company’s principal market at time of acquisition. Any realized gain/loss on the disposition of crypto assets is calculated on a weighted-average basis.

Principal Market and Fair Value Determination

To determine which market is the Company’s principal market (or in the absence of a principal market, the most advantageous market) for purposes of determining fair value of individual digital assets, the Company follows ASC 820, which outlines the application of fair value accounting. ASC 820 determines fair value to be the price that would be received for digital assets in a current sale, which assumes an orderly transaction between market participants on the measurement date. ASC 820 requires the Company to assume that the digital asset is sold in its principal market to market participants or, in the absence of a principal market, the most advantageous market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact.

The Company transacts in a Brokered Market, a Dealer Market, Principal-to-Principal Markets and Exchange Markets, each as defined in the FASB Master Glossary (collectively, "Digital Asset Markets"). In determining which of the eligible Digital Asset Markets is the Company’s principal market, the Company reviews these criteria in the following order:

•First, the Company determines which Digital Asset Markets for the relevant digital asset are accessible to the Company.

•Second, the Company sorts the remaining Digital Asset Markets from high to low by market-based volume of the digital asset traded on each Digital Asset Markets in the trailing twelve months.

•Third, the Company then selects a Digital Asset Market as its principal market based on the highest market-based volume in comparison to the other Digital Asset Markets on the list.

The Company determines its principal market (or in the absence of a principal market, the most advantageous market) annually to determine (i) if there have been recent changes to each Digital Asset Market’s trading volume in the trailing twelve months, (ii) if any Digital Asset Markets to which the Company has access have developed, ceased to operate, or become inaccessible, or (iii) if recent changes to each Digital Asset Market’s price stability have occurred that would materially impact the selection of the principal market and necessitate a change in the Company’s determination of its principal market.

The Company’s holdings of Bitcoin are recorded at fair value, as determined using the period-end closing price at 16:00:00 coordinated universal time ("UTC") for Bitcoin on the Company’s principal markets, New York Digital Investment Group and Coinbase (the “Principal Markets”), and changes in fair value are recognized as a change in fair value of digital assets on the condensed consolidated statements of operations.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value should be based on assumptions market participants would use when pricing an asset or liability. U.S. GAAP provides a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Assets and liabilities that are required to be recorded at fair value on the balance sheet are categorized based on the inputs to valuation techniques as follows:

•Level 1. These are assets and liabilities where values are based on unadjusted quoted prices for identical assets in an active market the Company has the ability to access.

•Level 2. These are assets and liabilities where values are based on similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active, and model derived prices whose inputs are observable or whose significant value drivers are observable.

•Level 3. Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company's warrant liability, convertible notes payable, and additional convertible notes option liability are measured at fair value on a recurring basis. See Note 5 - Fair Value of Financial Instruments, for further information regarding the valuation techniques and classification of these instruments within the fair value hierarchy.

The fair values of financial instruments including cash, accounts receivable, accounts payable, accrued expenses, and other current assets and liabilities approximate their respective carrying values due to the short maturities of those instruments. The fair value of notes payable approximates the carrying value, principally because of the maturity dates and the current terms applicable to the notes payable.

Financial Instruments — Credit Losses

Under the current expected credit loss ("CECL") impairment model, the Company estimates its allowance for credit losses on its accounts receivables. The allowance is determined using the peer-based loss rate method, which applies a loss rate derived from the credit loss experience of comparable peer companies to the gross accounts receivable balance as of the balance sheet date. Accounts receivable are written off against the allowance when they are deemed uncollectible, and recoveries are credited to the allowance when collected.

The Company develops and documents its allowance for credit losses on its loans receivable based on debtor type, while also taking into account factors that may influence credit risk, such as macroeconomic conditions and liquidity risks. The allowance for loans receivable is determined using the Probability of Default and Loss Given Default methods.

The Company considers current conditions and reasonable and supportable forecasts when evaluating whether the peer-based loss rate requires adjustment.

Accounts Receivable, Net

Accounts receivable are stated at the amount management expects to collect from balances outstanding as of each reporting date. Accounts receivable are generally due 15 days after the invoice is issued and considered delinquent if not paid by that date. Amounts determined to be uncollectible are written off against the allowance for credit losses in the period in which that determination is made. See Financial Instruments — Credit Losses above for further discussion of the Company's allowance for credit losses methodology under ASC 326, Financial Instruments – Credit Losses. Under ASC 326, the Company determines its allowance by applying a peer-based loss rate method to the Company’s trade receivables.

The following table represents the impact of the CECL allowance on accounts receivable:

Property and Equipment, Net

Property and equipment are recorded at cost, less accumulated depreciation. Expenditures for additions, improvements, betterments, if material, and individual purchases are generally capitalized. Minor replacements, maintenance, and repairs that do not improve or extend the lives of the assets are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period.

The useful life of the Company’s high performance compute equipment, consisting of servers and networking equipment, range from 3 to 7 years. The useful life of the Company's mining related equipment, consisting of pods and transformers, is 5 years. Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In the event that facts and circumstances indicate that the cost of any long-lived assets may be impaired, an evaluation of recoverability would be performed.

Management reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of property and equipment may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of property and equipment. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property and equipment are used, and the effects of obsolescence, demand, competition, and other economic factors. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods, generally, Modified Accelerated Cost Recovery System, for income tax purposes. These differences in depreciation methods result in related deferred taxes.

Digital Asset Machines

Management assesses and adjusts the estimated useful lives of its digital asset machines (miners) when there are indicators that productivity of the mining assets is higher or lower than the assigned estimated useful life. The rate at which the Company generates digital assets and, therefore, consumes the economic benefits of its transaction verification servers, is influenced by a number of factors including the following:

•The complexity of the transaction verification process which is driven by the algorithms contained within the Bitcoin open source software;

•The general availability of appropriate computer processing capacity on a global basis (commonly referred to in the industry as hashing capacity which is measured in petahash units); and

•Technological obsolescence reflecting rapid development in the transaction verification server industry such that more recently developed hardware is more economically efficient to run in terms of digital assets generated as a function of operating costs, primarily power costs, i.e., the speed of hardware evolution in the industry is such that later hardware models generally have faster processing capacity combined with lower operating costs and a lower cost of purchase. The Company operates in an emerging industry for which limited data is available to make estimates of the useful economic lives of specialized equipment. To the extent that any of the assumptions underlying management’s estimate of useful life of its transaction verification servers are subject to revision in a future reporting period, either as a result of changes in circumstances or through the availability of greater quantities of data, then the estimated useful life could change and have a prospective impact on depreciation expense and the carrying amounts of these assets.

Deposits on Equipment

The Company makes deposits, representing prepayments to suppliers and manufacturers, to secure pricing and delivery of compute power and related power infrastructure equipment. These deposits are recorded at cost and are classified as current or noncurrent assets on the Company's condensed consolidated balance sheets based on the timing of expected receipt from vendor. Upon receipt of the related equipment, the deposit is applied against the purchase price and the equipment is capitalized as property and equipment.

The Company periodically evaluates its deposits for recoverability, considering factors such as the financial condition of the supplier, the supplier's performance history, and any indicators that the supplier may be unable or unwilling to fulfill its contractual obligations. If the Company determines that a deposit is not recoverable, an impairment loss is recorded in the period such determination is made. See Concentration of Credit Risk above for further discussion of the counterparty risk associated with these deposits, and Note 11 - Deposits on Power Equipment, for the Company's outstanding deposit balances.

Equity Method Investments

Prior to February 13, 2026, the Company held certain investments accounted for under the equity method. Under the equity method, investments are carried at cost and increased or decreased by the Company’s pro rata share of the investee earnings or losses. The carrying cost of this investment is also increased or decreased to reflect additional contributions or distributions of capital. Any difference in book equity and the Company’s pro rata share of the net assets of the investment will be reported as gain or loss at the time of the sale, deconsolidation, or other disposition of the investment. It is the Company’s policy to record losses in excess of the investment if the Company is committed to provide financial support to the investee.

At acquisition, any excess of the acquisition cost over the total fair value of the net assets acquired constitutes equity method goodwill. Equity method goodwill is included in the balance of equity method investments and is not reported separately as goodwill on the Company’s condensed consolidated balance sheet. Equity method goodwill is not reviewed for impairment; however, the equity method investment is reviewed for impairment. There wereno impairment losses recognized during the nine months ended September 30, 2026 prior to the disposition of the Company's equity method investment on February 13, 2026, or during the three and nine months ended September 30, 2025.

Investments in Equity Securities

Investments in which the Company does not have the ability to exercise significant influence over operating and financial matters are accounted for in accordance with ASC 321, Investments - Equity Securities. Investments without readily determinable fair values are accounted for using the measurement alternative which is at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The Company qualitatively assesses its equity investments for impairment indicators as of each reporting date. If this assessment indicates it is more likely than not that an investment is impaired, the Company estimates the investment's fair value and records an impairment loss in the accompanying condensed consolidated statements of operations for any excess of carrying value over the estimated fair value.

On May 1, 2026, the Company invested $1,000,000 in a Simple Agreement for Future Equity (“SAFE”) that converts into equity securities upon specified events, including an equity financing, at a 20% discount to the price paid by new investors. On July 16, 2026, the Company received a second SAFE from a customer, with a deemed value of $82,500 as payment for compute power services. The second SAFE converts into preferred stock upon the customer’s next qualified equity financing at the lower of the price paid by new investors and a price based on a $50 million pre-money valuation cap. The SAFEs do not accrue interest, have no maturity date, and terminate upon conversion or settlement. The carrying amount of the SAFEs as of September 30, 2026 was $1,082,500. The Company didnot recognize impairment during the three and nine months ended September 30, 2026.

Business Combinations

The Company accounts for business acquisitions using the acquisition method of accounting, in accordance with ASC 805, Business Combinations, under which assets acquired and liabilities assumed are recorded at their respective fair values at the acquisition date. Goodwill represents the excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed. Acquisition-related costs are expensed as incurred.

The Company’s management exercises significant judgments in determining the fair value of assets acquired and liabilities assumed, as well as intangibles and their estimated useful lives. Fair value and useful life determinations are based on, among other factors, estimates of future expected cash flows and appropriate discount rates used in computing present values. These judgments may materially impact the estimates used in allocating acquisition date fair values to assets acquired and liabilities assumed, as well as the Company’s current and future operating results. Actual results may vary from these estimates. The Company may record adjustments to provisional amounts recognized at the acquisition date, with a corresponding adjustment to goodwill, during the measurement period, which shall not exceed one year from the acquisition date. Adjustments to the fair value of assets and liabilities made after the end of the measurement period are recorded within the Company’s operating results.

Long-Lived Assets, Including Definite-Lived Intangible Assets

Definite-lived intangible assets, which primarily consist of customer relationships and trade names, are recorded at cost, less accumulated amortization and any impairment losses, and are amortized on a straight-line basis over their estimated useful lives.

The Company reviews for the impairment of long-lived assets annually and whenever events and or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Such indicators include, among others, the nature of the asset, the projected future economic benefit of the asset, historical and future cash flows and profitability measurements. An impairment loss would be recognized when the value of the undiscounted estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than the carrying value. If this recoverability test indicates impairment, the Company measures the impairment loss based on the difference between the carrying amount and the estimated fair value. When an impairment exists, the related assets are written down to fair value. There wereno impairment losses recognized for the three and nine months ended September 30, 2026 and 2025.

Goodwill

Goodwill, which represents the excess of purchase price over the fair value of net assets acquired in business combinations, is carried at cost. Goodwill is not amortized; rather, it is tested for impairment annually as of the last day of the Company's fiscal year, or more frequently if a triggering event indicates that impairment may exist. The test for goodwill impairment involves a qualitative assessment of impairment indicators. If indicators are present, a quantitative test is performed by comparing the fair value of each reporting unit to which goodwill has been allocated to its carrying value. An impairment loss is recognized in an amount equal to the excess of the reporting unit’s carrying value over its fair value, up to the amount of goodwill allocated to the reporting unit. There wasno impairment of goodwill for the three and nine months ended September 30, 2026 and 2025.

Revenue and Cost Recognition

Overview

The Company generates revenue from the following sources: (1) cryptocurrency mining, (2) mining hosting services and (3) compute power.

In accordance with ASC 606, Revenue Recognition, the Company recognizes revenue from contracts with customers using a five-step model, which is described as follows:

•identify the customer contract;

•identify performance obligations that are distinct;

•determine the transaction price;

•allocate the transaction price to the distinct performance obligations; and

•recognize revenue as the performance obligations are satisfied.

Revenue from Cryptocurrency Mining

The Company participates in a third-party operated mining pool. As of April 2025, the pool operator is Luxor Technology Corporation ("Luxor"). Prior to April 2025, the pool operator was Foundry (now Foundry Digital) ("Foundry"). As a result of the change in pool operator, the Company's contract period end changed from 16:00:00 UTC to 23:59:59 UTC. As a participant in the third-party operated mining pool, the Company provides computing power to the third-party operated mining pool. The Company’s enforceable right to compensation begins when, and lasts as long as, the Company provides computing power to the mining pool operator.

Step 1: The Company has identified the third-party mining pool operator as its customer. The Company enters into a contract with the customer to provide its computing power to the customer's mining pool. The contracts are terminable without penalty at any time by either party, and thus the contract term is shorter than a 24-hour period and the contracts are continuously renewed.

Applying the criteria per ASC 606-10-25-1, the contract arises at the point that the Company provides computing power to the customer's mining pool, which is considered contract inception, because customer consumption is in tandem with delivery of the computing power.

Step 2: In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met:

•The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct); and

•The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).

Based on these criteria, the Company has identified a single performance obligation of providing computing power to the mining pool operator. The continuous renewal options do not represent material rights because they do not provide the customer with the right to purchase additional goods or services at a discount. Specifically, the contract is renewed at the same terms, conditions, and rate as the current contract which is consistent with market rates, and there are no upfront or incremental fees in the initial contract.

Step 3: The Company receives non-cash consideration in the form of bitcoin, the fair value of which the Company measures at 23:59:59 UTC and 16:00:00 UTC on the date of contract inception using the Company's principal market for bitcoin, Bitcoin Reference Rate, when the pool operator is Luxor and Foundry, respectively. The contract renews continuously throughout the day, and thus the value of the consideration should be assessed continuously throughout the day, and the Company has concluded to use the 23:59:59 UTC and 16:00:00 UTC bitcoin price each day when the pool operator is Luxor and Foundry, respectively. Revenue is recognized on the same day that control of the services transfers to the customer, which is the same day as contract inception. According to the customer contract, daily settlements are made to the Company by the customer based on the computing power provided over the contract periods occurring over a 24-hour period and the payout is made the following day. There are no other forms of variable considerations, such as discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties, or other similar items.

The Company earns non-cash consideration based on the Full-Pay-Per-Share (“FPPS”) payout method set forth by the customer in the form of bitcoin. The amount of bitcoin the Company is entitled to for providing hash calculations to the customer's mining pool under the FPPS payout method is made up of block rewards and transaction fees less mining pool fees determined as follows:

•The non-cash consideration calculated as a block reward over the continuously renewed contract periods is based on the total blocks expected to be generated on the Bitcoin Network for the daily 24-hour period beginning 0:00:00 UTC and 16:00:01 UTC and ending 23:59:59 UTC and 16:00:00 UTC when the pool operator is Luxor and Foundry, respectively, in accordance with the following formula: the computing power that the Company provides to the customer as a percent of the Bitcoin Network’s total computing power, multiplied by the total Bitcoin Network block rewards expected to be generated for the same period.

•The non-cash consideration calculated as transaction fees paid by transaction requestors is based on the share of total actual fees paid over the continuously renewed contract periods beginning 0:00:00 UTC and 16:00:01 UTC and ending 23:59:59 UTC and 16:00:00 UTC when the pool operator is Luxor and Foundry, respectively, in accordance with the following formula: total actual transaction fees generated on the Bitcoin Network during the contract period as a percent of total block rewards the Bitcoin Network actually generated during the same period, multiplied by the block rewards the Company earned for the same period noted above.

•The sum of the block reward and transaction fees earned by the Company is reduced by mining pool fees charged by the customer for operating the mining pool based on a rate schedule per the mining pool contract. The Company was not charged mining pool fees during the nine months ended September 30, 2026 as Luxor does not charge any fees as a pool operator. The fee charged by Foundry during the three and nine months ended September 30, 2025 was 0.05% and 2.50%, respectively. The mining pool fee is only incurred to the extent the Company provides computing power and generates revenue in accordance with the customer’s payout formula during the continuously renewed contract periods beginning 0:00:00 UTC and 16:00:01 UTC and ending 23:59:59 UTC and 16:00:00 UTC daily, when the pool operator is Luxor and Foundry, respectively.

Step 4: There is a single performance obligation (i.e., to provide computing power to the customer) for the contract; therefore, all consideration from the customer is allocated to this single performance obligation.

Step 5: The Company’s performance is completed over time as the customer obtains control of the computing power. The performance obligation of computing power is fulfilled over time, as opposed to a point in time, because the Company provides the computing power throughout the contract period and the customer simultaneously obtains control of the service and uses it to produce bitcoin.

Revenue from Mining Hosting Services

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 at a markup.

Step 1: The Company has identified the third-party mining equipment owners as its customer. The Company enters into a contract with the customer to host its miners on the Company’s network. The contracts are terminable without penalty at any time if the termination is agreed upon by both parties, and thus the contract term is the stated term.

Step 2: In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met:

•The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct); and

•The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).

Based on these criteria, the Company has identified one performance obligation of hosting the mining equipment. The service the Company provides also includes monitoring, active troubleshooting, and various maintenance levels for the mining equipment.

Step 3: The Company receives non-cash consideration in the form of USD Coin (“USDC”). The Company uses a spot rate on the date of payment from the customer to convert USDC to USD.

The Company’s hosting contracts can contain service level agreement clauses, which guarantee a certain percentage of time the power will be available to its customer. In the rare case that the Company may incur penalties under these clauses, the Company recognizes the payment as variable consideration and a reduction of the transaction price and, therefore, of revenue, when not in exchange for a good or service from the customer.

Customer contracts can include advance payment terms in the form of monthly cash prepayments and/or upfront cash payments at contract inception. Advance payments are recorded as deferred revenue and recognized over time

(generally, the month of hosting service to which they relate) as the customer simultaneously receives and consumes the benefits of the Company’s performance. There is no significant financing component in these transactions due to the short-term nature of the payments.

Step 4: No allocation of transaction price is required as there is only one performance obligation in each contract.

Step 5: The Company recognizes variable hosting revenue each month as the uncertainty related to the consideration is resolved, hosting services are provided to its customer, and its customer utilizes the hosting service (the customer simultaneously receives and consumes the benefits of the Company's performance). The Company's performance obligation related to these services is satisfied over time.

Revenue from Compute Power

The Company generates revenue from providing compute power both to marketplace customers, such as RunPod, Inc. ("RunPod"), and directly to customers. For marketplace customers, the compute power is maintained by the Company and made available to RunPod’s customers for large-scale cloud processing. For direct customers, the compute power is provided directly to the customer for their use.

Step 1: For marketplace sales, the Company has entered into a Services Agreement with RunPod, which acts as the customer. The agreement is structured around ongoing service delivery, with compute power provided on a usage basis. The contract is enforceable and includes defined terms for service levels, pricing, and revenue sharing. The contract is continuously active and renewed, with no penalties for termination, and services are delivered daily based on actual usage. Applying the criteria per ASC 606-10-25-1, the contract between the Company and RunPod arises at the point the Company begins providing compute power through its bare metal servers. This marks contract inception, as the customer’s consumption of compute power is simultaneous with the Company’s delivery of the service. The contract supports continuous usage-based billing, and the Company’s enforceable right to compensation begins and continues as long as compute power hours are delivered and consumed by RunPod’s customers.

For direct sales, the Company enters into contracts directly with customers. The agreement is structured around ongoing service delivery, with compute power provided over the term of the contract. The contract is enforceable and includes defined terms for service levels and pricing. The contract is continuously active and renewed, with no penalties for termination, and services are delivered daily. Applying the criteria per ASC 606-10-25-1, the contract between the Company and its customers arises at the point the Company begins providing compute power through its bare metal servers. This marks contract inception, as the customer’s consumption of compute power is simultaneous with the Company’s delivery of the service. The contract supports monthly billing, and the Company’s enforceable right to compensation begins and continues as long as compute power is delivered to the customer.

Step 2: In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met:

•The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct); and

•The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).

Based on these criteria, the Company has identified a single performance obligation to provide compute power for both its marketplace and direct customers. The continuous renewal options do not represent material rights because they do not provide the customer with the right to purchase additional goods or services at a discount. Specifically, the contract is renewed at the same terms, conditions, and rate as the current contract which is consistent with market rates, and there are no upfront or incremental fees in the initial contract.

Step 3: For marketplace sales, the transaction price is based on Net Revenue received by RunPod from its customers for compute power. The Company receives 80% of Net Revenue as its revenue share. There is no non-cash consideration involved, and all payments are made in U.S. dollars. The contract does not include other forms of variable consideration such as rebates, penalties, or bonuses, except for service credits tied to uptime performance, which are treated as variable consideration and reduce the transaction price when applicable.

For direct sales, the transaction price is based on a fixed price per hour of compute power provided per unit. There is no non-cash consideration involved, and all payments are made in U.S. dollars. The contract does not include other forms of variable consideration such as rebates, penalties, or bonuses, except for service credits tied to uptime performance, which are treated as variable consideration and reduce the transaction price when applicable.

Step 4: For both marketplace and direct sales, there is a single performance obligation (i.e., to provide compute power) for the contract; therefore, all consideration from the customer is allocated to this single performance obligation.

Step 5: For both marketplace and direct sales, the Company’s performance is completed over time as compute power is delivered and consumed. The performance obligation of computing power is fulfilled over time, as opposed to a point in time, because the Company provides the compute power throughout the contract period and the customer simultaneously obtains control of the service and integrates it into its platform offerings.

For any deposits the Company receives in advance of providing services, those payments are initially recognized as deferred revenue and recognized as revenue when the related performance obligation has been met. The Company reassesses variable consideration (e.g., service credits) and pricing adjustments at each reporting period to ensure accurate revenue recognition.

Cost of revenues, exclusive of depreciation and amortization, reflect direct costs associated with the delivery of the Company’s 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 including payments to contractors who help prepare the Company's data center locations, and subscriptions to technology products that the Company uses to manage and monitor GPU servers.

Income Taxes

The Company accounts for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and income tax basis of assets and liabilities, and for operating losses and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the years in which those items are expected to be realized. Tax law and rate changes are recorded in the period such changes are enacted. The Company establishes a valuation allowance when it is more likely than not that certain deferred tax assets will not be realized. See Note 18 - Income Taxes for discussion of the Company's methodology for estimating its interim tax provision and effective tax rate.

The Company recognizes a tax benefit from any uncertain tax positions only if they are more likely than not to be sustained upon examination based on the technical merits of the position. The amount of the accrual for which an exposure exists is measured as the largest amount of benefit determined on a cumulative probability basis that the Company believes is more likely than not to be realized upon ultimate settlement of the position. Interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense.

The “One Big Beautiful Bill Act” (“OBBBA”) was signed into law in the United States on July 4, 2025. Key tax provisions under OBBBA include the restoration of 100% bonus depreciation, immediate expensing for domestic research and experimental expenditures, changes to the interest limitations in Section 163(j) of the U.S. Internal Revenue Code (the “Code”), updates to the international tax rules governing Net CFC Tested Income ("NCTI", formerly Global Intangible Low-Taxed Income) and Foreign-Derived Deduction Eligible Income ("FDDEI", formerly Foreign-Derived Intangible Income), and expanded aggregation requirements under Section 162(m) of the Code. The application of the OBBBA to the Company did not have a material impact on its condensed consolidated financial statements.

Leases

The Company accounts for leases in accordance with ASC 842, Leases. The Company determines if an arrangement is a lease at inception and classifies its leases at commencement. Operating and finance leases are presented as right-of-use (“ROU”) assets and the corresponding lease liabilities are included in operating or finance lease liabilities, current and operating or finance lease liabilities on the Company’s condensed consolidated balance sheets. ROU assets represent the Company's right to use an underlying asset, and lease liabilities represent the Company's obligation for lease payments in exchange for the ability to use the asset for the duration of the lease term.

ROU assets and lease liabilities are recognized at commencement date and determined using the present value of the future minimum lease payments over the lease term. For leases in which the rate is not implicit in the lease, the Company uses a discount rate based on a benchmark approach to derive an appropriate incremental borrowing rate to discount remaining lease payments. The Company benchmarked itself against other companies of similar credit ratings and comparable quality and derived imputed rates for a lease term length of 10 years. Some leases include multiple year renewal options. The Company’s decision to exercise these renewal options is based on an assessment of its current business needs and market factors at the time of the renewal. Currently, the Company has certain leases for which the option to renew is reasonably certain, and therefore, options to renew were factored into the calculation of its right-of-use asset and lease liability as of September 30, 2026 and December 31, 2025. In addition, the Company does not recognize short-term leases that have a term of twelve months or less as ROU assets or lease liabilities for all asset classes. The Company recognizes operating lease expense on a straight-line basis over the lease term. For finance leases, the Company recognizes amortization expense on the ROU asset on a straight-line basis over the lease term, and interest expense on the lease liability using the effective interest method.

The Company has lease agreements which contain both lease and non-lease components, which it has elected to account for as a single lease component for all asset classes when the payments are fixed. As such, variable lease payments, including those not dependent on an index or rate, such as real estate taxes, common area maintenance, and other costs that are subject to fluctuation from period to period are not included in lease measurement. ROU assets are reviewed for impairment consistent with the Company's policy for long-lived assets. See Long-Lived Assets, Including Definite-Lived Intangible Assets above.

Segment Reporting

The Company accounts for segment reporting in accordance with ASC 280, Segment Reporting, as amended by ASU 2023-07, Improvements to Reportable Segment Disclosures. The Company determines its operating segments based on the components of the business for which discrete financial information is regularly reviewed by the chief operating decision maker ("CODM") in assessing performance and deciding how to allocate resources. The Company's CODM is its Chief Executive Officer.

The Company has determined it operates astwo operating and reportable segments: Bitcoin, which encompasses the Company's cryptocurrency mining and mining hosting operations, and HPC, which encompasses the Company's compute power operations. The CODM uses segment operating income (loss), segment gross profit, and segment net income (loss) before income tax to assess segment performance and allocate resources. See Note 23 - Segment Reporting, for further discussion of the Company's segments, including a reconciliation of segment results to the Company's condensed consolidated net loss before income taxes.

Net Income (Loss) per Share

Basic net income (loss) per share attributable to common shareholders is computed by dividing net income (loss) attributable to common shareholders of QumulusAI by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share attributable to common shareholders reflects the potential dilution that would occur if dilutive common stock equivalents were exercised or converted into common stock, unless their effect would be antidilutive. Convertible notes, employee stock options, unvested restricted stock units ("RSUs"), and warrants are treated as potential common shares in computing diluted earnings per share. Diluted shares outstanding are calculated using the if-converted method for convertible notes and the treasury stock method for other potentially dilutive securities. Under the if-converted method, the dilutive impact of securities is calculated as if conversion occurred at the beginning of the reporting period. Under the treasury stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future service that the Company has not yet recognized and the amount of benefits that would be recorded in common shares when the award becomes deductible for tax purposes are assumed to be used to repurchase shares. For periods in which the Company reports a net loss, all potentially dilutive securities are excluded from the calculation of diluted net loss per share because their effect would be antidilutive; accordingly, basic and diluted net loss per share are the same for such periods.

Loan Origination Costs

Costs incurred in connection with securing loans payable have been capitalized and are being amortized as a component of interest expense over the term of the respective debt using the effective interest method. The unamortized balance of loan origination costs is reflected on the condensed consolidated balance sheets as a direct deduction of the outstanding balance owed on the long-term debt.

Stock Issuance Costs

Stock issuance costs represent incremental costs incurred that are directly attributable to the sale of securities. The costs are charged against the gross proceeds of the respective sale and recorded as a reduction to equity.

Convertible Notes

The Company elected to account for its convertible notes payable at fair value at inception and at each subsequent reporting date. Subsequent changes in fair value are recorded as a component of non-operating (loss) income in the condensed consolidated statements of operations. As a result of electing the fair value option, direct costs and fees related to the convertible notes are expensed as incurred.

The Company’s option to issue additional convertible notes is a freestanding financial instrument that is recorded as a liability at fair value, with changes in fair value recorded as a component of non-operating (loss) income. When a note is issued, the amount by which the initial fair value of the note and the related option exceeds the net cash proceeds is recognized as a loss on issuance of convertible note.

Distinguishing Liabilities from Equity

The Company relies on the guidance provided by ASC 480, Distinguishing Liabilities from Equity, and ASC 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity, to classify certain redeemable and/or convertible instruments. The Company first determines whether a financial instrument should be classified as a liability. The Company will determine the liability classification if the financial instrument is mandatorily redeemable, if the financial instrument embodies an obligation to repurchase the Company's own equity shares by transferring assets, or if the financial instrument, other than outstanding shares, embodies a conditional obligation that the Company must or may settle by issuing a variable number of its equity shares.

For freestanding equity-linked instruments such as warrants, the Company also evaluates whether the instrument is indexed to the Company's own stock and otherwise meets the criteria for equity classification under ASC 815-40. An instrument is not considered indexed to the Company's own stock if its exercise or settlement is contingent on variables unrelated to the fair value of the Company's equity shares, which precludes application of the fixed-for-fixed option pricing model. An instrument that fails this test is classified as a liability, initially and subsequently measured at fair value, with changes in fair value recognized in earnings each reporting period.

Once the Company determines that a financial instrument should not be classified as a liability, the Company determines whether the financial instrument should be presented between the liability section and the equity section of the balance sheet (“mezzanine equity”). The Company will determine mezzanine equity classification if the redemption of the financial instrument is outside the control of the Company (i.e., at the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity.

Stock-Based Compensation

The Company measures the cost of employee and non-employee services in exchange for awards of equity instruments based on the grant-date fair value of the award. The fair value is determined using an option pricing model. The fair value of restricted stock units ("RSUs") is determined based on the closing price of the Company's common stock on the date prior to grant. The cost of awards of equity instruments is recognized on a straight-line basis over the vesting period, which is the requisite service period, and is recorded as stock-based compensation expense together with a corresponding increase in paid-in capital. The Company has elected to account for forfeitures of awards as they occur.

Variable Interest Entities ("VIEs")

The Company evaluates its interests in VIEs and will consolidate any VIE in which the Company has a controlling financial interest and is deemed to be the primary beneficiary. A controlling financial interest has both of the following characteristics: (1) the power to direct the activities of the VIE that most significantly impact its economic performance; and (2) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could be significant to the VIE. If both of the characteristics are met, the Company is considered to be the primary beneficiary and therefore will consolidate that VIE into its condensed consolidated financial statements. See Note 9 - Equity Method Investments and Note 10 - Joint Ventures for additional disclosures.

Recently Issued Accounting Pronouncements - Adopted

In November 2024, the FASB issued ASU 2024-04, Debt - Debt with Conversion and Other Options (Topic 470). This guidance clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The Company adopted this standard effective January 1, 2026. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

In May 2025, the FASB issued ASU 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606). This guidance clarifies the requirements for share-based consideration payable to a customer. This ASU is effective for annual periods beginning after December 15, 2026, and interim periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. The Company early adopted this standard effective April 1, 2026. The adoption of this standard is reflected in the Company's condensed consolidated financial statements.

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, which provides a practical expedient for estimating expected credit losses on current accounts receivable and current contract assets. The Company adopted this standard effective January 1, 2026. See Financial Instruments — Credit Losses above for further discussion of the Company's application of this standard.

Recently Issued Accounting Pronouncements - Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Topic 220): Disaggregation of Income Statement Expenses. This guidance requires additional disclosure of certain amounts included in the expense captions presented on the statement of operations as well as disclosures about selling expenses. The ASU is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted for annual financial statements that have not yet been issued. The Company is currently evaluating the impact of ASU 2024-03 on its condensed consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40). This guidance updates the capitalization guidance for internal-use software development costs by removing all references to software project development stages and provides further guidance on when an entity is required to start capitalizing eligible costs. This ASU is effective for annual periods beginning after December 15, 2027, and interim periods within those annual reporting periods. The Company is currently evaluating the impact of ASU 2025-06 on its condensed consolidated financial statements and related disclosures.

Other recent accounting pronouncements did not or are not believed by management to have a material impact on the Company’s present or future condensed consolidated financial statements.

Note 3. Business Combination

On April 1, 2025 (the “Effective Date”), the Company entered into Contribution and Exchange Agreements, as amended (together, the “Acquisition Agreement”), with shareholders of TCM, pursuant to which each TCM shareholder contributed all outstanding equity securities in TCM to the Company in exchange for equity securities of the Company. As a result, TCM became a wholly owned subsidiary of the Company, with 75% of the Company’s capital stock held by Company shareholders and 25% of the Company’s capital stock held by former TCM shareholders (the “Acquisition”). The Acquisition formally closed on the Effective Date. TCM’s operations diversified the Company’s revenue base through the addition of GPU-based infrastructure, which has generated more stable, recurring revenue streams aligned with demand for high-performance computing ("HPC") resources across AI, machine learning, and data analytics sectors.

Prior to the Acquisition, the Company held a noncontrolling equity interest in TCM, acquired in October 2023. In connection with the Acquisition, the Company remeasured its previously-held equity interest to its acquisition-date fair value of $17,216,604, resulting in a gain of $14,549,536, which is presented as Gain on remeasurement of investment in TCM in the condensed consolidated statement of operations for the nine months ended September 30, 2025.

The following table summarizes the fair value of the consideration and the fair value of assets acquired and liabilities assumed associated with the Acquisition:

The Company has applied the acquisition method of accounting in accordance with ASC 805 and recognized assets acquired and liabilities assumed of TCM at their fair value as of the date of acquisition, with the excess purchase consideration recorded to goodwill. The Company recorded $23,542 of acquisition related costs within general and administrative expenses.

Pro Forma Financial Information

The following table represents the revenue, net loss and net loss per share effect of the acquired company, as reported on a pro forma basis as if the acquisition occurred on January 1, 2025. These pro forma results are not necessarily indicative of the results that would have occurred if the acquisition had occurred on the first day of the period presented, nor does the pro forma financial information purport to represent the results of operations for future periods.

Note 4. Revenue

Revenue Disaggregation

The following table provides the Company’s revenue disaggregated by revenue stream:

Deferred Revenue

Deferred revenue consists primarily of upfront cash deposits and prepayments received from compute power and mining hosting customers in advance of the Company satisfying the related performance obligations, and is recognized as revenue as the Company delivers the underlying services over the applicable contract term. See Note 2 - Summary of Significant Accounting Policies for further discussion of the Company's revenue recognition policies for each revenue stream, including the timing of recognition and the treatment of customer deposits and prepayments.

Revenue recognized from amounts included in deferred revenue as of the beginning of the period was $2,436,527 and $0 for the three months ended September 30, 2026 and 2025, respectively, and $0 for the nine months ended September 30, 2026 and 2025.

Deferred Contract Costs

The Company capitalizes incremental costs of obtaining a contract with a customer, which consist of sales commissions, when it expects to recover them. Capitalized costs are amortized on a straight-line basis over the duration of the contract. The portion of deferred compensation expected to be recognized within one year of the balance sheet date is included in prepaid expenses and other current assets, and the remaining portion is recorded as other assets on the condensed consolidated balance sheets.

During the three and nine months ended September 30, 2026, the Company capitalized $3,443,520 and $3,744,242 of deferred contract costs and recognized amortization of $615,284 and $772,582, respectively. No deferred contract costs were capitalized or amortized during the three and nine months ended September 30, 2025. The Company's current and non-current deferred contract cost balances were $1,503,774 and $1,467,885, respectively, as of September 30, 2026. The Company hadno deferred contract costs as of December 31, 2025.

Deferred contract costs are periodically analyzed for impairment. There wereno impairment losses on deferred contract costs during the three and nine months ended September 30, 2026.

Remaining Performance Obligations

In accordance with ASC 606-10-50-13, the Company is required to include disclosure on its remaining performance obligations as of the end of the current reporting period. The majority of the Company's direct to customer compute power contracts have an expected duration of greater than one year. As of September 30, 2026, the aggregate amount of the transaction price allocated to remaining performance obligations for the Company's direct to customer compute power contracts was $515,026,820, which represents the amount of backlog related to these contracts. $29,051,771 of the remaining performance obligations will be completed and recognized as revenue during 2026, with the remainder recognized between 2027 and 2030.

Note 5. Fair Value of Financial Instruments

The Company accounts for certain assets and liabilities at fair value and classifies these assets and liabilities within the fair value hierarchy (Level 1, Level 2, or Level 3). The Company's other current liabilities have fair values that approximate their carrying values.

The following tables present the fair value hierarchy for the Company’s liabilities measured at fair value on a recurring basis:

Warrant liability. The warrant liability consists of warrants with a nominal exercise price (“penny warrants”; see Note 20 - Warrants). It is valued at intrinsic value, which is the quoted market price of the Company’s common stock less the exercise price. Because the warrants themselves are not quoted, the liability is classified within Level 2.

Convertible notes payable. The convertible notes are valued using a scenario-based analysis that estimates the probability-weighted present value of the settlement outcomes available to the noteholder. The significant unobservable inputs are the discount rates, the timing of payments, and the probability of each settlement scenario.

Additional convertible notes option liability. The option to issue additional notes under each facility is valued based on the fair value of the additional notes as if issued on the measurement date, multiplied by the estimated probability that the additional notes will be issued.

Level 3 Reconciliation

The following table presents a reconciliation of the beginning and ending balances of the Company's Level 3 liabilities for the nine months ended September 30, 2026:

The warrant liability was transferred out of Level 3 to Level 2 on July 16, 2026, when the Company’s common stock began trading publicly and its quoted price became observable. There were no other transfers between levels of the fair value hierarchy during the periods presented.

Note 6. Property and Equipment, Net

The major classifications of property and equipment, including their estimated useful lives, are summarized as follows at the balance sheet dates:

Depreciation expense relating to property and equipment was $5,573,875 and $972,722 for the three months ended September 30, 2026 and 2025, respectively, and $10,453,147 and $2,466,429 for the nine months ended September 30, 2026 and 2025, respectively.

During the nine months ended September 30, 2026, the Company recorded a gain on disposal of property and equipment of $36,298 relating to the sale of equipment. No gain or loss was recorded on sales of property and equipment during the three months ended September 30, 2026.

There wereno impairment losses recognized on property and equipment during the three and nine months ended September 30, 2026 and 2025.

Note 7. Digital Assets, Net

The following table presents changes in the Company's digital assets for the nine months ended September 30, 2026 and 2025:

Note 8. Intangible Assets, Net

As of September 30, 2026 and December 31, 2025, intangible assets, net were comprised of the following:

IPR&D and capitalized software are not amortized until the related research and development is completed or the software is placed in service.

Amortization expense was $44,241 for the three months ended September 30, 2026 and 2025, and $132,723 and $88,482 for the nine months ended September 30, 2026 and 2025, respectively.

The estimated future amortization expense is as follows:

The weighted average remaining amortization period for the Company’s intangible assets as of September 30, 2026 was 2.25 years.

There wereno impairment losses recognized related to intangible assets during the three and nine months ended September 30, 2026 and 2025.

Note 9. Equity Method Investments

T20 Mining Group, LLC

In March 2023, the Company entered into a Limited Liability Company Interest Purchase Agreement with Turn Key Mountain, LLC and 913 Hero, LLC ("T20 Purchase Agreement") to acquire a 50.01% ownership interest in T20 Mining Group, LLC (“T20”). Under the terms of the T20 Purchase Agreement, the Company leased certain equipment to

T20 and promised to contribute $450,090 to T20 for the development of its digital asset mining operations. The Company determined that T20 was a VIE as the Company had a variable interest in T20 and T20 relied on funding from the Company, Turn Key Mountain, LLC, and 913 Hero, LLC to sustain its operations. The Company determined that it was not the primary beneficiary of T20 as power to direct or control its significant activities related to the bitcoin mining hosting was shared with Turn Key Mountain, LLC and 913 Hero, LLC. Accordingly, the Company did not consolidate T20’s results of operations and financial position. As the entity was not consolidated, it was accounted for as an equity method investment. The initial investment in T20 amounted to $1,677,197. The Company was initially entitled to 50.01% of the profits and losses of T20.

In April 2024, the Company entered into a subsequent Limited Liability Company Interest Purchase Agreement with Bishops Bowl Capital, LLC ("Bishops Bowl Purchase Agreement"), whereby the Company sold 10.01% of its ownership interest in T20 to Bishops Bowl for consideration of $1,000,000. As the Company retained significant influence in T20 following its execution of the Bishops Bowl Purchase Agreement, the Company reduced the carrying amount of its equity method investment for the proportion sold in the amount of $164,954 and also recognized a gain of $835,046 related to the difference between the proceeds received and the carrying amount of the equity method investment sold. During the second half of the year ended December 31, 2024, the Company and Bishops Bowl contributed equipment to T20 for the expansion of its digital asset mining operations. The Company increased the carrying amount of its equity method investment for the fair value of the assets contributed in the amount of $926,240 and also recognized a loss of $2,094,030 on the contribution of the assets. In February 2025, the Company contributed additional assets in the amount of $115,210. The additional contributions were made such that each partner’s ownership percentages remained the same, with the Company and Bishops Bowl continuing to own 40% and 60%, respectively, of T20. The Company continued to account for its retained ownership interest of 40% under the equity method until the sale of its interest in T20 in February 2026, as discussed below.

On January 12, 2026, the Company entered into a Limited Liability Company Interest Purchase Agreement to sell its 40% interest in the T20 joint venture to a third party. The transaction closed on February 13, 2026 and the Company received approximately $16,500,000 for the sale. The Company recognized a gain of $12,732,446 on the sale, which is included in gain on sale of equity method investments in the condensed consolidated statements of operations for the nine months ended September 30, 2026.

During the nine months ended September 30, 2026 and 2025, the Company received distributions of $259,163 and $2,422,000 from T20, respectively. During the three months ended September 30, 2026 and 2025, the Company's share of net income in T20 amounted tozero and $179,617, respectively, and $21,994 and $1,606,080 for the nine months ended September 30, 2026 and 2025, respectively, which is included within income from equity method investments in the Company's condensed consolidated statements of operations. As of September 30, 2026 and December 31, 2025, the Company’s investment in T20 amounted tozero and $4,227,130, respectively, and is included in the balance of equity method investments in the accompanying condensed consolidated balance sheets.

Summarized financial information for T20 as of December 31, 2025 is as follows:

From January 1, 2026 to the sale of T20 on February 13, 2026, T20 had net income of $54,985. For the three and nine months ended September 30, 2025, T20 had a net loss of $563,407 and net income of $3,002,750, respectively.

The Cloud Minders LLC

On November 1, 2023, the Company acquired an interest in TCM, a partnership that is involved in GPU cloud hosting services. The Company was initially entitled to 43% of the profit and losses from the investee. The acquisition cost totaled $4,300,000 and consisted of the issuance of the Company's common stock via a convertible note payable with TCM for $3,300,000 (see Note 17 - Convertible Note Payable) and a payable to TCM totaling $1,000,000 to be repaid over 12 months at no interest. Payments commenced on January 1, 2024, and continued on the first of each subsequent month, in exchange for an additional 19,608 (approximately 6%) membership interest to the Company over the twelve months. TCM specializes in HPC and AI infrastructure within the cloud computing industry and offers graphics processing unit server hosting, equipped with the latest hardware for deep learning, data science, graphics rendering, and scientific research applications. Its services include configuration, reliability assurance, testing and validation, security measures, installation, and hardware rental for monetization. Prior to the Acquisition, the Company did not consolidate TCM's results of operations and financial position, as it held significant influence but not control, and accordingly accounted for its investment under the equity method.

During the three and nine months ended September 30, 2025, the Company’s share of net loss in TCM amounted to $0 and $562,143, which is included within income from equity method investments in the Company’s condensed consolidated statements of operations.

On April 1, 2025, the Company acquired 100% of TCM. Therefore, as of April 1, 2025, the Company does not account for TCM as an equity method investment as the entity is consolidated. See Note 3 - Business Combinations for additional details on the acquisition. On April 1, 2025, the Company marked the value of its investment in TCM to its fair value of $17,216,604 immediately prior to the acquisition and recognized a gain of $14,549,536.

From January 1, 2025 to the acquisition on April 1, 2025, TCM had a net loss of $1,307,308.

Note 10. Joint Ventures

In October 2025, the Company entered into a joint venture agreement with ME Luna Qumulus LLC (“Moonshot”) to form QAI Moon, which serves as the manager for two additional joint ventures: SPRE Brooklyn and SPRE NKC (collectively, the “QAI Moon JVs”).

Under the QAI Moon Operating Agreement, the Company holds a 51% interest and Moonshot holds a 49% interest. The Company appoints three of thefive managers on the Board of Managers, giving it majority governance rights over significant decisions such as approving budgets, financing arrangements, and strategic initiatives.

For its ownership interests in QAI Moon, the Company contributed $213,000, funded through a share exchange rather than a direct cash payment. Under this arrangement, the Company issued 19,723 common shares valued at $10.80 per share for a total value of $213,000. The Company received distributions from QAI Moon of $111,180 and $264,180 during the three and nine months ended September 30, 2026, respectively.

For SPRE Brooklyn, QAI Moon contributed $900 and holds 900 Common Units, which comprises 100% of the entity’s ownership interests. The Company received distributions from SPRE Brooklyn of $10,000 during the three and nine months ended September 30, 2026.

For SPRE NKC, the Operating Agreement is between QAI Moon, LLC, DAF Compute LLC, and TCM. QAI Moon contributed $300 and holds 300 Common Units which represents 100% of the voting rights while DAF Compute LLC contributed $3,000,000 and holds 350 Preferred Units and TCM contributed $3,000,000 and holds 350 Preferred Units, for a total of 700 Preferred Units. Preferred Units provide economic rights only and do not carry any voting rights. The Company received distributions from SPRE NKC of $364,000 during the three and nine months ended September 30, 2026.

The QAI Moon JVs were formed to provide HPC infrastructure and services. Based on the governance structure and capital requirements, QAI Moon, SPRE Brooklyn and SPRE NKC are VIEs, as they rely on the Company's capital to sustain future operating expenses. The Company is the primary beneficiary of the QAI Moon JVs, as it has the power to direct their most significant activities and has the obligation to absorb losses or the right to receive benefits that could be significant through its equity interests held. Accordingly, the Company consolidates the assets, liabilities, and results of operations of the QAI Moon JVs.

As of September 30, 2026, the Company’s condensed consolidated balance sheets included $25,405,658 of assets and $20,143,036 of liabilities of the QAI Moon JVs, which are consolidated. Upon consolidating the QAI Moon JVs, no gain or loss was recognized. The Company's total risk of loss is the total $3,214,200 contributed into the QAI Moon JVs, as noted above.

Note 11. Deposits on Power Equipment

The Company makes deposits that represent prepayments made to premier suppliers and manufacturers to purchase compute power and related equipment at a preset price. The prepayments are applied to the purchase price when the vendor ships the equipment. As of September 30, 2026, the Company had outstanding deposits for power equipment totaling $6,423,857, of which $2,137,972 was classified as current and $4,285,885 as non-current on the condensed consolidated balance sheets, based on the expected timing of delivery of the related equipment. As of December 31, 2025, the Company had outstanding deposits for power equipment totaling $13,622,641, of which $7,238,383 was classified as current and $6,384,258 as non-current on the condensed consolidated balance sheets, based on the expected timing of delivery of the related equipment.

Note 12. Transactions with Related Parties

As of and for the three and nine months ended September 30, 2026 and 2025, the Company had the following related party transactions:

•As of September 30, 2026 and December 31, 2025, the Company had an outstanding loan payable due to a related affiliate ofone of the shareholders in the principal amounts ofzero and $1,849,888, respectively. See Note 16 - Notes Payable, for additional information regarding the terms of this related party loan.

•As of September 30, 2026 and December 31, 2025, the Company had an outstanding loan payable due toone of the shareholders in the principal amount of $2,000,000. See Note 16 - Notes Payable, for additional information regarding the terms of this related party loan.

•The Company had a line of credit with an affiliate of one of the shareholders, which was repaid and terminated in March 2025. See Note 13 - Line of Credit.

•During the nine months ended September 30, 2026, the Company recognized bitcoin mining operating expenses of $17,660 from T20, representing activity prior to the sale of the Company's interest in T20 in February 2026, upon which T20 ceased to be a related party. During the three and nine months ended September 30, 2025, the Company recognized bitcoin mining operating expenses of $255,111 and $531,438 from T20, respectively. As of September 30, 2026 and December 31, 2025, amounts payable to T20 totaled $0 and $42,118, respectively, and are included in accounts payable on the Company’s condensed consolidated balance sheets.

•During the nine months ended September 30, 2026, the Company recognized equipment rental income of $26,256 from T20, representing activity prior to the sale of the Company's interest in T20 in February 2026, upon which T20 ceased to be a related party. During the three and nine months ended September 30, 2025, the Company recognized equipment rental income of $15,803 and $23,705 from T20, respectively. As of September 30, 2026 and December 31, 2025, amounts receivable from these entities totaled $0 and $26,786 and are included in accounts receivable on the Company’s condensed consolidated balance sheets.

•An executive officer of the Company guaranteed, jointly and severally with certain other third parties, TCM’s obligations under its January 2025 credit agreement with a bank. In consideration for the guaranty, TCM agreed to pay the director monthly payments anticipated to total approximately $50,000 over five years and to grant 80,625 non-qualified stock options. During the nine months ended September 30, 2026, the Company paid $7,588 under this arrangement.

•The Company is party to finance lease agreements with four entities in which a shareholder holds a capital interest. Additional details related to these lease agreements are provided in Note 25 - Leases.

Note 13. Line of Credit

In September 2023, the Company secured a line of credit with Trailhead Growth, LP, a related party, with a maximum principal amount of $300,000 at an interest rate of 12%. The line of credit was collateralized by a blanket lien on certain assets and was guaranteed by certain of the Company's shareholders. The line of credit had a maturity date of October 1, 2024, which was amended in April 2024 to increase the maximum principal amount to $700,000 and reduce the interest rate to 6%. The Company made its first and only advance under the line of credit in May 2024, in the amount of $648,262, which included $6,418 of origination fees. The Company repaid the line of credit in full on March 31, 2025, and the line of credit was terminated upon repayment. There wasno outstanding balance under the line of credit as of September 30, 2026 or December 31, 2025. Interest expense for the three and nine months ended September 30, 2025 related to the line of credit was $0 and $9,955, respectively.

Note 14. USD.AI Protocol Loans

On September 19, 2025, the Company entered into a $500,000,000 USD.AI protocol. The facility allows the Company to borrow stablecoins against up to 70% of its approved GPU deployments. The Company is under no obligation to draw financing under the USD.AI protocol. On February 13, 2026, the Company made its first draw for approximately

$4,282,000, which bears interest at 12% and is scheduled to mature and be repaid in February 2029. On April 17, 2026, the Company completed its second draw for approximately $16,400,000, which bears interest at 12% and is scheduled to mature and be repaid in April 2029. On August 6, 2026, the Company completed its third draw for approximately $15,332,000, which bears interest at 15% and is scheduled to be repaid in September 2029. At September 30, 2026, the Company had an outstanding balance of $32,534,266. Interest expense for the three and nine months ended September 30, 2026 was $914,825 and $1,447,052, respectively.

Note 15. Accrued Expenses

Accrued expenses were comprised of the following:

Note 16. Notes Payable

On March 19, 2021, the Company entered into a $2,000,000 convertible balloon note with Trailhead Income, LP, a related party. The note bears interest at 12% and originally matured on September 1, 2025. On June 19, 2025, the Company extended the note to October 1, 2026. The note is secured by certain mining equipment. Interest-only payments are due on a quarterly basis through the maturity date. As of September 30, 2026 and December 31, 2025, the outstanding principal balance on the note was $2,000,000.

On February 15, 2022, the Company entered into a $1,849,888 balloon note with GC Opportunities 2 Private Fund, a related party. The note bore interest at 12% and had a stated maturity of February 15, 2026. The note was secured by certain mining equipment. The note was amended on October 4, 2022 to provide a onetime waiver of payment default for unpaid monthly interest due for July 15, 2022, August 15, 2022 and September 2022, and to defer interest due for six months from July 2022 to December 2022, until maturity. The Company repaid the loan in full in January 2026. As of September 30, 2026 and December 31, 2025, the outstanding principal balance waszero and $1,849,888, respectively.

On April 11, 2022, the Company entered intotwo notes with Caterpillar Financial Services Corporation for an aggregate of $228,314. The notes bear interest at 1.49% and mature on April 11, 2027. The notes are secured by track loaders. Payments of principal and interest are due on a monthly basis through maturity. As of September 30, 2026 and December 31, 2025, the outstanding principal balance was $13,758 and $62,549, respectively.

In January 2025, TCM purchased previously leased equipment for $6,454,466, financed through a loan payable to a commercial bank in the amount of $6,450,000 at prime, subject to a 5% floor. The loan calls for principal and interest payments totaling $129,552 beginning in March 2025, and matures in January 2030. As part of the April 1, 2025 acquisition of TCM, the Company acquired this loan. As of September 30, 2026 and December 31, 2025, the outstanding principal balance was $4,550,569 and $5,437,993, respectively.

On October 17, 2025, the Company entered into a $2,500,000 loan with a third party. The interest rate is variable based on the secured overnight financing rate ("SOFR") plus 3.0%. The loan matures on April 20, 2028 with payments of principal and interest due on a monthly basis through maturity. As of September 30, 2026 and December 31, 2025, the outstanding principal balance was $2,097,048 and $2,430,979, respectively.

On August 12, 2026, the Company entered into a $51,517,440 loan with a third party. The note bears interest at 13.0%. The loan matures on September 1, 2029 with payments of principal and interest due on a monthly basis through maturity, with an end of term payment of 9.5% of the initial loan balance. The note is secured by server assets. As of September 30, 2026 and December 31, 2025, the outstanding principal balance was $50,264,626 and $0, respectively.

On September 25, 2026, the Company entered into a $3,500,000 interest-only loan with a commercial bank. The interest rate is variable based on SOFR plus 2.25%. The loan matures on October 5, 2027 with interest payments due on a monthly basis through maturity. As of September 30, 2026 and December 31, 2025, the outstanding principal balance was $3,500,000 and $0, respectively.

Notes payable at September 30, 2026 and December 31, 2025 consisted of the following:

Maturities of notes payable are as follows:

Note 17. Convertible Notes Payable

TCM Convertible Note

On November 1, 2023, the Company entered into a Convertible Promissory Note Agreement (the "Note") with TCM at a face value of $3,900,000 and an initial fair value of $3,300,000, issued as consideration in the Company's acquisition of an equity method investment in TCM (see Note 9). The Company recognized $135,334 of interest expense related to the Note for the nine months ended September 30, 2025. Immediately prior to the acquisition of TCM, the Company repaid the Note in full on March 31, 2025 and recognized a loss on extinguishment of $153,834 in the condensed consolidated statements of operations.

March 2026 Convertible Note

On March 26, 2026, the Company entered into a securities purchase agreement (the "March Securities Purchase Agreement") with a third party (the "Investor"), pursuant to which the Company agreed to issue and sell to the Investor senior secured convertible notes (the "March 2026 Note") in an aggregate principal amount of up to $45,000,000 (the "Facility").

The Facility consists of an initial tranche in the principal amount of $15,000,000, which was funded on March 26, 2026, and subsequent tranches in an aggregate principal amount of up to $30,000,000. The March 2026 Note bears interest at 7% per annum and the initial tranche matures on July 16, 2028. The March 2026 Note is convertible into shares of the Company's common stock at $11.50 per share. The Company incurred $1,174,000 in debt issuance costs related to the March 2026 Note.

Due to certain embedded features within the convertible note, the Company elected the fair value option to account for this note, including the embedded features. The initial fair value of the note was determined to be $36,875,000. The fair value of the convertible note was determined based on Level 3 inputs using a scenario-based analysis that estimated the fair value of the convertible notes based on the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to the noteholder. The significant unobservable input assumptions that can significantly change the fair value included (i) the discount rates, (ii) the timing of payments, and (iii) the probability of certain settlement scenarios. The Company recorded a change in fair value on the convertible note of $13,684,169 for the nine months ended September 30, 2026.

The option for the Company to issue additional notes up to $30 million was determined to be a freestanding instrument that was recognized at fair value as of the date of the March Securities Purchase Agreement. The fair value of this option was determined to be $30,991,850 and was determined based upon the fair value of the additional notes as if it were issued today multiplied by the probability of issuance. As the aggregate fair value of the note and the option was in excess of the proceeds received, the Company recorded a loss on issuance of convertible note of $54,640,850, which includes the $1,174,000 in debt issuance costs. The Company recorded a change in fair value on the option of $19,437,950 for the nine months ended September 30, 2026.

June 2026 Convertible Note

On June 3, 2026, the Company entered into a securities purchase agreement (the "June Securities Purchase Agreement") with the Investor, pursuant to which the Company agreed to issue and sell to the Investor senior secured convertible notes (the "June 2026 Note") in an aggregate principal amount of up to $45,000,000 (the "Second Facility").

The Second Facility consists of an initial tranche in the principal amount of $15,000,000, which was funded on June 3, 2026, and subsequent tranches in an aggregate principal amount of up to $30,000,000. The June 2026 Note bears interest at 7% per annum and the initial tranche matures on July 16, 2028. The June 2026 Note is convertible into shares of the Company's common stock at $24.25 per share. The Company incurred $1,075,000 in debt issuance costs related to the June 2026 Note.

Due to certain embedded features within the convertible note, the Company elected the fair value option to account for this note, including the embedded features. The initial fair value of the note was determined to be $20,986,000. The fair value of the convertible note was determined based on Level 3 inputs using a scenario-based analysis that estimated the fair value of the convertible notes based on the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to the noteholder. The significant unobservable input assumptions that can significantly change the fair value included (i) the discount rates, (ii) the timing of payments, and (iii) the probability of certain settlement scenarios. The Company recorded a change in fair value on the convertible note of $2,345,889 for the nine months ended September 30, 2026.

The option for the Company to issue additional notes up to $30 million was determined to be a freestanding instrument that was recognized at fair value as of the date of the June Securities Purchase Agreement. The fair value of this option was determined to be $11,580,000 and was determined based upon the fair value of the additional notes as if it were issued today multiplied by the probability of issuance. As the aggregate fair value of the note and the option was in excess of the proceeds received, the Company recorded a loss on issuance of convertible note of $19,241,000, which includes the $1,075,000 in debt issuance costs. The Company recorded a change in fair value on the option of $950,450 for the nine months ended September 30, 2026.

Note 18. Income Taxes

The tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each quarter, the Company updates its estimate of its annual effective tax rate, and if the estimated annual effective tax rate changes, the Company makes a cumulative adjustment in such period. The quarterly tax provision, and estimate of the Company’s annual effective tax rate, are subject to variation due to several factors, including variability in pre-tax income or loss, changes in how the Company conducts business, changes in forecast, and tax law developments.

The Company’s effective tax rate was (0.3)% and 0.2% for the three and nine months ended September 30, 2026, primarily due to the partial valuation allowance recorded as a result of the TCM acquisition in April 2025. The effective tax rate for the three and nine months ended September 30, 2025, was 0.0% and 25.5%, respectively, caused by recording a deferred tax liability for identified intangibles acquired in the TCM acquisition.

Note 19. Shareholders' Equity

Preferred Stock

On September 30, 2025, the Company effected the conversion of all shares of Preferred Stock into Common Stock, as agreed to by all holders of Preferred Stock. Accordingly, there wereno shares of Preferred Stock outstanding as of September 30, 2026 or December 31, 2025. As a result, there isno liquidation preference as of September 30, 2026 or December 31, 2025.

The conversion did not occur in accordance with the original terms of the Preferred Stock as the Company provided the holders of the Preferred Stock withone share of Common Stock for every share of Preferred Stock outstanding, plus an additional share of Common Stock for every $10.80 of unpaid liquidation preference prior to the conversion transaction. As such, the transaction was accounted for as an extinguishment of preferred stock.

Prior to September 30, 2025, the Company had designated Series A, Series B, Series C and Series D Preferred Stock, all of which converted into Common Stock on September 30, 2025.

On July 14, 2026, the Company’s Second Amended and Restated Articles of Incorporation became effective, authorizing 100,000,000 shares of Preferred Stock, no par value. No shares of Preferred Stock were authorized as of December 31, 2025.

Common Stock

As of September 30, 2026 and December 31, 2025, the Company was authorized to issue up to 1,000,000,000 and 500,000,000 shares of common stock, respectively, with no par value. The increase took effect on July 14, 2026, when the Company’s Second Amended and Restated Articles of Incorporation became effective. Each holder of common stock is entitled toone vote for each share held of record on all matters to be voted on by such holders. Holders of common stock are entitled to receive dividends, if declared. Upon liquidation, dissolution or winding-up, holders of common stock are entitled to share ratably in the net assets legally available for distribution after payment of all debts and other liabilities. As of September 30, 2026, there were 34,699,038 shares of common stock outstanding.

On July 14, 2026, the Company issued 1,140,930 shares of common stock to Chardan Capital Markets LLC as compensation for financial advisory services provided in connection with the Company’s direct listing. The shares were valued at $26,412,529, based on the fair value of the Company’s common stock on the issuance date. The Company recorded the amount as professional fees within general and administrative expenses.

Note 20. Warrants

Type 1 Warrants

The warrants to purchase common stock were issued during the year ended December 31, 2022 in conjunction with Series A Preferred Stock in satisfaction of outstanding debt. The warrants were not considered indexed to the issuer’s stock pursuant to ASC 815, as the warrants are subject to vesting upon the thirty-six (36) mensiversaries of the issuance date, at a rate of one thirty-sixth (1/36 th) per month. At the option of the Company, the Company can return to the holder any cash it previously received from the holder. Upon the occurrence of such return of capital, the vesting schedule recasts based on amount returned and remaining time period to vest. As this contingency is based on the underlying capital account of the warrant holder it violates the fixed-for-fixed option pricing model. As such, the Company recorded the warrants as liabilities initially measured at fair value with subsequent changes in fair value recognized in earnings each reporting period.961,256 of the warrants are pre-funded warrants.

The Type 1 warrants are "penny warrants", meaning they have an exercise price of $0.01 ($0.03 after the Reverse Stock Split). The fair value of these penny warrants was calculated as the Company's stock price less the exercise price of $0.01 ($0.03 after the Reverse Stock Split) (i.e., intrinsic value). The grant date fair value of the Type 1 Warrants was $692,103. The fair value of the warrants as of September 30, 2026 and December 31, 2025 was $828,232 and $1,382,955, respectively.

Type 2 Warrants

During the nine months ended September 30, 2026, third parties performed professional services for the Company and were issued 91,454 warrants to purchase common stock as payment for the services. The measurement of fair value of the warrants was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance. The warrants issued are not redeemable in cash at the choice of the holder, are not mandatorily redeemable into common stock, and are classified as equity instruments.

On May 1, 2026 the Company issued 86,393 warrants to purchase common stock to a commercial partner as consideration for entering into a contract. Fifty percent (50%) of the warrant interests provided for herein vest insix equal monthly installments beginning on May 1, 2026. The remaining fifty percent (50%) of the warrant interests vest ineighteen equal monthly installments beginning on November 1, 2026. The measurement of fair value of the Warrants was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance. The warrants issued are not redeemable in cash at the choice of the holder, are not mandatorily redeemable into common stock, and are classified as equity instruments. The Company recognizes the fair value of the warrants within equity over the vesting period of the warrants.

On July 1, 2026 the Company issued 35,498 warrants to consultants in exchange for a software platform they developed. The Company has elected an accounting policy to account for equity interests issued in an asset acquisition, such as this software purchase, as a share-based payment under ASC 718, Compensation – Stock Compensation. The warrants vest in fullsix months after issuance and are classified as equity instruments as they are not redeemable in cash at the holder’s option and are not mandatorily redeemable. The Company measured the fair value of the warrants at the issuance date using a Black-Scholes model, and it recognizes that fair value within equity over the vesting period.

The summary of stock warrant activity is as follows:

The total fair value of warrants granted during three and nine months ended September 30, 2026 amounted to $1,797,048 and $3,026,781, respectively. The total fair value of warrants granted during three and nine months ended September 30, 2025 amounted to $697,620. The Black-Scholes model utilized the following inputs to value the warrants granted:

Note 21. Stock-Based Compensation

The Company grants equity awards under the QumulusAI, Inc. 2026 Equity Incentive Plan (the “2026 Plan”), which became effective on July 14, 2026 and replaced the Global Digital Holdings, Inc. 2022 Option Plan, as amended (the “2022 Plan”). All options outstanding as of September 30, 2026 were granted under the 2022 Plan, and all restricted stock units (“RSUs”) were granted under the 2026 Plan.

2026 Equity Incentive Plan

The Company’s Board of Directors approved the 2026 Plan on May 7, 2026, and the Company’s shareholders approved it on June 16, 2026. The 2026 Plan became effective on July 14, 2026, upon the effectiveness of the Company’s Registration Statement on Form S-1, and terminates on July 13, 2036. The 2026 Plan permits the grant of stock options, stock appreciation rights, restricted stock awards, RSUs, deferred stock units, performance awards, non-employee director awards, and other stock-based awards to employees, non-employee directors, and consultants. The Compensation Committee administers the 2026 Plan and determines the terms of each award, including vesting. Stock options and stock appreciation rights must have an exercise or grant price of at least 100% of the fair market value of a share on the grant date and may not be exercisable more thanten years after the grant date.

A maximum of 4,770,000 shares of common stock was initially available for issuance under the 2026 Plan, of which no more than 1,770,000 may be issued upon exercise of incentive stock options. The share reserve increases automatically on January 1 of each year from 2027 through 2036 by the lesser of 5% of the shares of common stock outstanding on the preceding December 31 and an amount determined by the Board. Shares withheld to pay an exercise price or taxes, or not issued on a net exercise, are not available for future grant. Shares subject to awards that expire, are forfeited, or are settled in cash become available again. As of September 30, 2026,1,682,303 shares remained available for grant under the 2026 Plan. In August 2026, the Company registered the shares issuable under the 2026 Plan on a Registration Statement on Form S-8.

2022 Option Plan

The 2022 Plan was originally sponsored by WAHA and SPRE. In connection with the December 2022 roll-up into the Company, the shares authorized and the options outstanding under the plan were converted at the Company’s conversion ratio. All share and option amounts in this note reflect that conversion and the September 30, 2025 reverse stock split.

The 2022 Plan permitted the grant of incentive stock options and non-qualified stock options to employees, consultants and directors of the Company and its affiliates. Options were granted at an exercise price not less than the fair market value on the grant date and are exercisable for up toten years from the grant date (five years for incentive stock options granted to holders of more than 10% of the Company’s voting power). The option vesting schedule is determined at the time of the grant. The 2022 Plan provides for accelerated vesting of unvested options in the event of a change in control. As of the effective date of the 2026 Plan, no further awards may be granted under the 2022 Plan. Awards outstanding under the 2022 Plan remain outstanding in accordance with their terms, and shares from forfeited or expired 2022 Plan awards are not added to the 2026 Plan reserve.

Stock Options

The following is a summary of stock option activity during the nine months ended September 30, 2026 and for the year ended December 31, 2025:

For the three and nine months ended September 30, 2026, there wereno options granted, exercised, or canceled. For the three and nine months ended September 30, 2025, the total fair value of the options granted amounted to $221,600 and $3,489,371, respectively. The Black-Scholes model utilized the following inputs to value the options granted during the nine months ended September 30, 2025:

The Company recognized $116,078 and $549,271 of stock-based compensation expense related to stock options during the three months ended September 30, 2026 and 2025, respectively, and $357,887 and $799,823 during the nine months ended September 30, 2026 and 2025, respectively. Stock-based compensation is recorded in general and administrative expenses in the Company’s condensed consolidated statements of operations. As of September 30, 2026, unamortized stock-based compensation expense related to unvested stock options was $177,623, which is expected to be recognized over a weighted-average period of 1.3 years.

Restricted Stock Units ("RSUs")

RSUs were first granted in the third quarter of 2026 under the 2026 Plan and generally vest over four years based on continued service. The fair value of an RSU is based on the closing price of the Company’s common stock on the grant date. The Company accounts for forfeitures as they occur.

The following is a summary of RSU activity during the nine months ended September 30, 2026.

The Company recognized $3,812,821 of stock-based compensation expense related to RSUs during the three and nine months ended September 30, 2026, of which $3,478,282 was recorded in general and administrative expenses and $334,539 was recorded in sales and marketing expenses in the Company’s condensed consolidated statements of operations. As of September 30, 2026, unamortized stock-based compensation expense related to unvested RSUs was $14,324,953, which is expected to be recognized over a weighted-average period of 3.37 years. As of September 30, 2026,456,817 restricted stock units are vested without shares of Common Stock being issued, with all of these shares due as of September 30, 2026.

Note 22. Earnings (Net Loss) per Share

The following table sets forth the computation of the basic and diluted net loss per share:

The table below sets forth all outstanding potentially dilutive securities which were not included in the calculation of diluted earnings per share because their impact would have been antidilutive.

Note 23. Segment Reporting

As part of the acquisition of TCM on April 1, 2025, (See Note 3 - Business Combination), the Company acquired a new revenue stream, “Revenue from compute power” (See Note 2). Accordingly, as of April 1, 2025, the Company operates astwo reporting segments. The Company's segments are Bitcoin and HPC. The Bitcoin segment's business is focused on bitcoin mining and hosting. The HPC segment's business is focused on compute power.

The HPC segment was not a part of the Company until the segment was acquired on April 1, 2025. The Bitcoin segment’s operations have remained consistent for all periods presented, however, the Company only hadone operating and reportable segment prior to the acquisition.

The Company's Chief Operating Decision Maker ("CODM") is its Chief Executive Officer. The CODM uses segment operating income (loss), segment gross profit and segment net income (loss) before income tax to assess segment performance. Segment operating income (loss) is used by the Company’s CODM to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into specific service offerings within the segment, such as for entering into significant contracts, hiring of key management or executive personnel, or making significant capital investment decisions. The CODM also reviews segment gross profit to assess operating efficiency and cost structure within each segment, which helps inform short‑term operational decisions and identify trends affecting segment performance. In addition, the CODM reviews segment net income (loss) before income tax to evaluate overall segment profitability after considering all revenues and expenses attributable to the segment, and to inform broader, longer‑term resource allocation and strategic planning decisions.

As of September 30, 2026, the Bitcoin and HPC segments had total assets of $25,189,674 and $368,872,677, respectively. As of December 31, 2025, the Bitcoin and HPC segments had total assets of $14,419,727 and $77,314,766, respectively. The entire goodwill balance of $31,416,827 as of September 30, 2026 and December 31, 2025 was allocated to the HPC segment.

Revenue and costs are directly attributed to the Company's segments, and the revenues recognized as well as the costs incurred in generating those revenues within each segment are distinguishable based on the information systems in which each segment’s financial information gets recorded. There are no intersegment revenues or other transactions between thetwo segments that are eliminated in consolidation by the Company for external reporting.

Summary information regarding the Company’s operating segments along with the reconciliation of the Company’s segment net income, segment operating loss and segment gross profit to the Company's consolidated net loss before income taxes is as follows for the three and nine months ended September 30, 2026 and 2025:

Summary information regarding the reportable segment depreciation and amortization expense for the three and nine months ended September 30, 2026 and 2025 are as follows:

Note 24. Commitments and Contingencies

In the normal course of business, the Company may become subject to legal actions, claims, and proceedings. The Company records a liability for claims, including settlements and judgments, when a loss is probable and the amount can be reasonably estimated. If the estimate of a probable loss is a range, the Company records the best estimate within the range, or the minimum amount if no amount within the range is a better estimate than any other. The Company discloses a contingent liability, even if the loss is not probable or the amount is not estimable, if there is a reasonable possibility that a material loss may have been incurred. As of September 30, 2026 and December 31, 2025, the Company had no outstanding litigation. In management’s opinion, any liability that may result from legal actions, claims, or proceedings that arise, individually or in the aggregate, would not be expected to have a material effect on the Company’s results of operations, financial position or cash flows.

The Company has various ground leases for bitcoin mining facilities in Oklahoma and Texas that expire on varying dates through 2034 and various equipment leases. For additional information see Note 25.

Note 25. Leases

Operating Leases

The Company entered intotwo lease agreements in Oklahoma and Texas for land during the year ended December 31, 2024. Both leases expire during 2034. Certain lease arrangements include renewal options and escalation clauses.

Maturities of operating lease liabilities as of September 30, 2026, were as follows:

Total operating lease expense was $68,639 and $69,415 for the three months ended September 30, 2026 and 2025, respectively; and $207,445 and $209,925 for the nine months ended September 30, 2026 and 2025, respectively. Operating lease expense is recorded in general and administrative expenses in the Company's condensed consolidated statements of operations. The weighted-average discount rate and remaining lease term in years as of September 30, 2026 was 10.25% and 7.37, respectively. Total amortization expense for the ROU asset was $29,285 and $25,595 for the three months ended September 30, 2026 and 2025, respectively; and $93,923 and $79,565 for the nine months ended September 30, 2026 and 2025, respectively.

Finance Leases

The Company leases computer equipment under finance lease agreements with four related party entities. See Note 12 - Transactions with Related Parties for additional information. These leases were acquired through the TCM acquisition on April 1, 2025. The lease obligations mature on various dates from 2027 through 2030.

Maturities of finance lease liabilities as of September 30, 2026, were as follows:

The components of finance lease expense for the three and nine months ended September 30, 2026 and 2025 are as follows:

The weighted-average discount rate and remaining lease term in years as of September 30, 2026 was 13.70% and 2.79, respectively.

Supplemental cash flow information and non-cash activity related to leases are as follows:

Note 26. Subsequent Events

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued.

Sale of SPRE Denton TX, LLC

On November 5, 2026, the Company entered into an agreement to sell its Denton, Texas facility by selling all of the membership interests in its wholly owned subsidiary, SPRE Denton TX, LLC, to a third party for $2,022,017, subject to certain third-party approvals. The Company received $50,000 in cash andtwo promissory notes from the third party totaling $1,972,017, each bearing interest at 7% per annum and payable in monthly installments beginning April 1, 2027 (over 60 and 84 months, respectively). The notes are secured by a pledge of the membership interests. In addition, beginning January 1, 2027, the third party will pay 15% of the facility’s net monthly revenue, which will be applied to reduce the principal of the notes.