[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company reported total assets of $213.5 million and total liabilities of $205.6 million as of June 30, 2025, with Q2 2025 revenue of $25.9 million and net cash used in operations of $7.1 million for the six months [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets decreased to $213.5 million, total liabilities decreased to $205.6 million, and stockholders' equity increased to $7.9 million Balance Sheet Highlights | Balance Sheet Highlights | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $62,009,000 | $58,413,000 | | Property and equipment, net | $135,841,000 | $144,357,000 | | **Total Assets** | **$213,501,000** | **$220,766,000** | | **Total Current Liabilities** | $201,372,000 | $215,503,000 | | **Total Liabilities** | **$205,605,000** | **$218,676,000** | | **Total Stockholders' Equity** | **$7,896,000** | **$2,090,000** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For Q2 2025, total revenue increased to $25.9 million and net loss narrowed to $19.1 million, while six-month revenue slightly decreased with a narrowed net loss Income Statement Highlights (Three Months Ended June 30) | Income Statement Highlights (Three Months Ended June 30) | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenue | $25,856,000 | $17,792,000 | | Gross Profit (Loss) | $6,127,000 | ($3,788,000) | | Loss from Operations | ($10,127,000) | ($26,930,000) | | Net Loss Attributable to Hyperscale Data | ($19,051,000) | ($33,927,000) | | Net Loss per Common Share | ($2.66) | ($37.81) | Income Statement Highlights (Six Months Ended June 30) | Income Statement Highlights (Six Months Ended June 30) | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenue | $50,877,000 | $56,157,000 | | Gross Profit | $11,410,000 | $14,400,000 | | Loss from Operations | ($16,511,000) | ($23,273,000) | | Net Loss Attributable to Hyperscale Data | ($23,256,000) | ($30,210,000) | | Net Loss per Common Share | ($3.89) | ($47.09) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities was $7.1 million, primarily funded by $11.6 million from financing activities Cash Flow Summary (Six Months Ended June 30) | Cash Flow Summary (Six Months Ended June 30) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($7,055,000) | ($13,932,000) | | Net cash used in investing activities | ($2,331,000) | ($3,794,000) | | Net cash provided by financing activities | $11,613,000 | $18,821,000 | | **Net increase in cash** | **$2,233,000** | **$1,447,000** | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes disclose a going concern warning, details on deconsolidated subsidiaries, significant debt obligations, and subsequent equity financing activities - The company has substantial doubt about its ability to continue as a going concern due to negative working capital of **$139.4 million** and a history of net operating losses. Management anticipates raising additional capital to fund operations[34](index=34&type=chunk)[37](index=37&type=chunk) - In Q1 and Q2 2025, the company deconsolidated subsidiaries AVLP and Eco Pack following bankruptcy and liquidation filings, resulting in a net gain of **$9.6 million** for the six-month period[48](index=48&type=chunk)[49](index=49&type=chunk) - The company has significant debt, including **$88.5 million** in notes payable and **$20.8 million** in convertible notes as of June 30, 2025, with several notes in default[80](index=80&type=chunk)[85](index=85&type=chunk) - Subsequent to the quarter end, the company sold an additional **$11.0 million** of Series B Preferred Stock and entered into a securities purchase agreement for up to **$100.0 million** of new Series H Convertible Preferred Stock with Ault & Company[136](index=136&type=chunk)[139](index=139&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2025 revenue growth of 45% driven by lending/trading activities, offset by crypto mining decline, and highlights ongoing liquidity challenges funded by continuous financing [Results of Operations](index=41&type=section&id=Results%20of%20Operations) Q2 2025 total revenue increased 45% to $25.9 million, driven by lending and trading activities, while six-month revenue decreased 9% due to lower crypto mining revenue Revenue by Segment (Three Months Ended June 30) | Revenue by Segment (Three Months Ended June 30) | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue, crypto assets mining | $4,684,000 | $8,490,000 | -45% | | Revenue, crane operations | $11,582,000 | $11,700,000 | -1% | | Revenue, lending and trading activities | $1,826,000 | ($9,763,000) | n/m | | **Total Revenue** | **$25,856,000** | **$17,792,000** | **45%** | - The decrease in crypto mining revenue was primarily due to the April 2024 Bitcoin halving event, despite a **50% increase** in the average Bitcoin price in Q2 2025 compared to Q2 2024[175](index=175&type=chunk) - For the six months ended June 30, 2025, the company recognized a net loss on extinguishment of debt of **$4.6 million**, compared to a gain on conversion of securities of **$17.9 million** in the prior-year period, significantly impacting the other income/expense comparison[213](index=213&type=chunk)[214](index=214&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company had $5.9 million in cash, with operations primarily funded by $11.6 million in financing activities due to strained liquidity Cash Position | Cash Position | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $5,917,000 | $4,546,000 | | Restricted cash | $21,338,000 | $20,476,000 | - Net cash provided by financing activities of **$11.6 million** for the first six months of 2025 included **$7.9 million** from Series B preferred stock sales and **$3.5 million** from Series D preferred stock sales, offset by net repayments on notes payable[225](index=225&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is not applicable as the company is a smaller reporting company - Not applicable for a smaller reporting company[229](index=229&type=chunk) [Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were ineffective due to ongoing material weaknesses in accounting resources, segregation of duties, and IT controls - The principal executive officer and principal financial officer concluded that the company's internal control over financial reporting was not effective as of the end of the period[231](index=231&type=chunk) - Identified material weaknesses include: insufficient accounting department resources, inadequate segregation of duties, and ineffective IT user access and program change management controls[233](index=233&type=chunk)[234](index=234&type=chunk) - Management is continuing its remediation plan, which includes engaging third-party specialists, implementing new systems, and increasing headcount with internal control expertise[235](index=235&type=chunk)[238](index=238&type=chunk) [PART II – OTHER INFORMATION](index=51&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in the Arena Litigation, facing claims exceeding $3.75 million related to a subsidiary's note guaranty, with potential material adverse effects - The company is a defendant in the Arena Litigation, where the plaintiff seeks damages exceeding **$3.75 million** plus interest and fees, based on a guaranty the company provided for its subsidiary, ROI[242](index=242&type=chunk)[243](index=243&type=chunk) - While the company cannot estimate the potential loss from this litigation, an unfavorable outcome could have a material adverse effect on its financial condition[248](index=248&type=chunk) [Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) There are no material updates or changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - There are no updates or changes to the risk factors from the most recent Form 10-K[251](index=251&type=chunk) [Other Part II Items](index=52&type=section&id=Other%20Part%20II%20Items) The report indicates no unregistered sales of equity securities, no defaults upon senior securities, no mine safety disclosures, and no other material information for the quarter - No information was reported for Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), or Item 5 (Other Information)[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk)

[Form 8-K Current Report](index=1&type=section&id=Form%208-K%20Current%20Report) The company files a current report to announce its unaudited second-quarter 2025 revenue results [Registrant Information](index=1&type=section&id=Registrant%20Information) Hyperscale Data, Inc, a Delaware corporation, is identified with its registered securities on the NYSE American - The reporting company is **Hyperscale Data, Inc.**, a Delaware corporation with principal executive offices in Las Vegas, NV[2](index=2&type=chunk) | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :--- | :--- | :--- | | Class A Common Stock, $0.001 par value | GPUS | NYSE American | | 13.00% Series D Cumulative Redeemable Perpetual Preferred Stock, par value $0.001 per share | GPUS PD | NYSE American | [Item 2.02 Results of Operations and Financial Condition](index=2&type=section&id=Item%202.02%20Results%20of%20Operations%20and%20Financial%20Condition) The company announced its unaudited revenue for the three months ended June 30, 2025, via a press release - The company issued a press release on July 17, 2025, announcing **unaudited revenue for the three months ended June 30, 2025**[5](index=5&type=chunk) - The press release is attached as **Exhibit 99.1** and is incorporated by reference into this report[5](index=5&type=chunk) - Information provided is considered **"furnished" and not "filed"** under Section 18 of the Securities Exchange Act of 1934[6](index=6&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) The report includes forward-looking statements about future results that are subject to risks and uncertainties - The report contains **"forward-looking statements"** which may relate to operating results[7](index=7&type=chunk) - Investors are cautioned that actual results may differ materially due to **inherent uncertainties and risks**[7](index=7&type=chunk) [Item 9.01 Financial Statements and Exhibits](index=2&type=section&id=Item%209.01%20Financial%20Statements%20and%20Exhibits) This section lists the press release and Inline XBRL data files filed as exhibits with the report | Exhibit No. | Description | | :--- | :--- | | 99.1 | Press Release issued on July 17, 2025 | | 101 | Pursuant to Rule 406 of Regulation S-T, the cover page is formatted in Inline XBRL (Inline eXtensible Business Reporting Language). | | 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101). |

Financing Activities - Hyperscale Data issued a convertible promissory note of $1.9 million on February 5, 2025, with a 15% annual interest rate, convertible at $4.00 per share [122]. - An amended and restated convertible promissory note of $3.5 million was issued on February 2025, accruing interest at 18% per annum, convertible at $2.00 per share [123]. - On March 14, 2025, a convertible promissory note of $4.2 million was issued, accruing interest at 15% per annum, with a conversion price based on the greater of $0.40 or 75% of the VWAP [124]. - The company entered into a securities purchase agreement on March 31, 2025, to sell up to 50,000 shares of Series B Convertible Preferred Stock for a total of $50.0 million [127]. - Each share of Series B Preferred Stock has a stated value of $1,000.00 and is convertible at a maximum price of $10.00 per share, with a cumulative cash dividend of 15% per annum [128]. - The company issued a total of 52,700 shares of Series D preferred stock for the settlement of equity line of credit advances totaling $0.6 million from April 1, 2025, through May 15, 2025 [172]. - A convertible promissory note with a principal face amount of $1.7 million was issued on April 1, 2025, accruing interest at 15% per annum, maturing on September 30, 2025 [173]. - The company entered into securities purchase agreements on April 15, 2025, issuing convertible promissory notes with an aggregate principal face amount of $5.0 million for gross consideration of $4.0 million [175]. - The Notes issued on April 15, 2025, have an original issue discount of 20%, or $1.0 million, and will mature on September 30, 2025 [176]. - The company made payments of $1.9 million in preferred dividends and $0.3 million on convertible notes payable [178]. Financial Performance - Total revenue for the three months ended March 31, 2025, was $25.02 million, a decrease of 35% from $38.37 million in the same period of 2024 [144]. - Revenue from crypto assets mining decreased by $6.25 million, or 55%, to $5.20 million due to a decline in mined crypto assets and increased mining difficulty [144][145]. - Crane operations revenue increased by $0.85 million, or 7%, to $13.77 million, driven by improved utilization of the crane fleet [146]. - Revenues from lending and trading activities dropped to approximately $0, a decrease of $9.13 million, primarily due to the transfer of shares affecting prior year revenue [147]. - Gross margins declined to 21% for the three months ended March 31, 2025, compared to 47% for the same period in 2024, largely due to poor performance in lending and trading activities [152]. - Selling and marketing expenses decreased by $1.7 million, or 42%, to $2.33 million, attributed to lower advertising and promotion costs [154]. - General and administrative expenses decreased by $1.2 million, or 11%, to $9.20 million, mainly due to lower professional fees and salaries [155]. - Other expense, net was $4.0 million for the three months ended March 31, 2025, down from $10.5 million in the same period of 2024 [156]. Cash Flow - As of March 31, 2025, cash and cash equivalents were $4.2 million, a slight decrease from $4.5 million as of December 31, 2024 [165]. - Net cash used in operating activities totaled $4.0 million for the three months ended March 31, 2025, compared to $10.2 million for the same period in 2024 [166]. - Net cash used in investing activities was $1.2 million for the three months ended March 31, 2025, a decrease from $1.7 million for the same period in 2024 [167]. - Net cash provided by financing activities was $4.7 million for the three months ended March 31, 2025, down from $13.0 million in the same period of 2024 [168]. Impairments and Gains - Hyperscale Data recognized a gain of $2.0 million from the deconsolidation of GIGA, which filed for Chapter 11 bankruptcy on August 14, 2024 [133]. - A gain of $10.0 million was recognized from the deconsolidation of AVLP, which filed for liquidation under Chapter 7 on March 28, 2025 [137]. - The company recorded an impairment loss of $8.0 million related to AGREE hotel properties during the year ended December 31, 2024 [136]. Strategic Initiatives - Hyperscale Data aims to maximize stockholder value through various initiatives, including public offerings and sales of subsidiaries [138]. - The company has provided capital and expertise to support growth in sectors such as AI software, social gaming, and hotel operations [140]. Accounting and Risk Disclosures - There have been no material changes to critical accounting estimates previously disclosed in the 2024 Annual Report [179]. - Market risk disclosures are not applicable for a smaller reporting company [180].

Financial Performance - Hyperscale Data, Inc. reported unaudited revenue for Q1 2025, with specific figures to be detailed in the attached press release[5] - The company provided guidance for projected revenue for the fiscal year ending December 31, 2025, indicating expectations for growth[5] - The press release is attached as Exhibit 99.1, which contains further financial details and operational insights[10] Regulatory and Compliance - The company is registered under the NYSE American with the symbol GPUS for its Class A Common Stock[3] - The company has not elected to use the extended transition period for complying with new financial accounting standards[4] - The company is classified as an emerging growth company under the relevant securities regulations[4] Risk Factors - The report includes forward-looking statements that involve risks and uncertainties, cautioning investors against undue reliance on these projections[7] Public Access and Documentation - The financial statements and exhibits are available for public access through the SEC's website[9] - The report was signed by Henry Nisser, President and General Counsel, on May 5, 2025[14] - The address of the company's principal executive offices is 11411 Southern Highlands Parkway, Suite 190, Las Vegas, NV 89141[2]

Stock Distribution and Corporate Actions - The company announced a distribution of 5.0 million shares of Class B Common Stock to holders of Class A common stock and Series C Convertible Preferred Stock, with a record date of November 29, 2024, and a payment date of December 16, 2024[460]. - A reverse stock split of Class A common stock was executed at a ratio of one-for-thirty-five, effective November 22, 2024[461]. - The company entered into a securities purchase agreement to sell up to 50,000 shares of Series B Convertible Preferred Stock for a total purchase price of up to $50.0 million, with the initial tranche closing at $2.0 million[468]. - The company issued a total of 135,957 shares of Series D preferred stock for the settlement of ELOC advances totaling $2.0 million from January 1, 2025 through April 14, 2025[519]. Financial Performance - Total revenue for the year ended December 31, 2024, was $106.66 million, a decrease of 21% from $134.85 million in 2023[481]. - Revenue from crypto assets mining decreased by $2.51 million, or 8%, to $30.60 million in 2024, primarily due to a $4.1 million decline in revenue from mined crypto assets[482]. - Crane operations revenue decreased by $1.72 million, or 4%, to $47.48 million in 2024, attributed to competitive pricing pressures and lower utilization of the crane fleet[483]. - Revenues from lending and trading activities improved to $1.89 million in 2024, compared to a loss of $1.998 million in 2023, driven by realized gains and fee income[484]. - Gross margins increased to 23% in 2024 from 18% in 2023, influenced by improved performance in lending and trading activities[490]. Expenses and Impairments - Research and development expenses rose to $11.01 million in 2024, up from $4.42 million in 2023, due to increased expenditures on new platform developments[491]. - Selling and marketing expenses decreased by 56% to $14.02 million in 2024, primarily due to reduced advertising costs[492]. - General and administrative expenses decreased by 48% to $35.25 million in 2024, mainly due to the deconsolidation of SMC and lower professional fees[493]. - Impairment charges for property and equipment related to crypto assets mining totaled $10.5 million in 2024 due to increased mining difficulty[499]. - The company recognized a $1.5 million impairment of intangible assets during 2024, compared to a $24.7 million impairment in 2023[495]. - AVLP recognized an impairment charge of $14.0 million for property and equipment, with an estimated fair value of $0 as of December 31, 2023[501]. - Impairment of mined digital currencies was $0.5 million for the year ended December 31, 2023[502]. - Other expense, net decreased to $4.7 million for the year ended December 31, 2024, down from $91.3 million in 2023[503]. - Interest expense decreased to $19.7 million for the year ended December 31, 2024, compared to $44.3 million in 2023[505]. Cash Flow and Equity - Cash and cash equivalents were $4.6 million as of December 31, 2024, down from $6.1 million at the end of 2023[513]. - Net cash used in operating activities increased to $19.4 million for the year ended December 31, 2024, compared to $5.4 million in 2023[514]. - Net cash provided by investing activities was $3.2 million for the year ended December 31, 2024, compared to a net cash used of $29.5 million in 2023[515]. - Net cash provided by financing activities was $25.8 million for the year ended December 31, 2024, down from $37.0 million in 2023[517]. - A gain of $17.9 million was recognized on the conversion of investment in equity securities during the year ended December 31, 2024[508]. - Stockholders' equity reported at approximately $2.2 million, below the required $6 million for NYSE American listing standards[530]. Compliance and Future Plans - Company has reported losses from continuing operations and/or net losses in five of the most recent fiscal years ended December 31, 2023[530]. - Compliance plan submitted to NYSE American by January 17, 2025, to regain compliance within 18 months[531]. - NYSE American accepted the compliance plan on March 4, 2025, granting a listing extension until June 18, 2026[531]. - Company will undergo periodic reviews, including quarterly monitoring for compliance with the plan[531]. Business Operations - The company recognized a gain of $2.0 million from the deconsolidation of GIGA, which was classified as discontinued operations due to its Chapter 11 bankruptcy filing[471]. - A loss on impairment of property and equipment related to AGREE's real estate assets was recorded at $8.0 million during the year ended December 31, 2024[474]. - The Series G Preferred Stock has a stated value of $1,000.00 and is convertible into Class A common stock at a conversion price based on market conditions, with a cumulative cash dividend of 9.5%[466]. - The company plans to maximize stockholder value through various initiatives, including public offerings and potential sales of subsidiaries or partner companies[475]. - The company has provided capital and expertise to support growth in sectors such as AI software, social gaming, and defense[477]. - The company operates a Bitcoin mining business and provides mission-critical products across diverse industries, including a metaverse platform and crane services[458].

Financial Performance - Hyperscale Data, Inc. announced preliminary financial results for the twelve-month period ended December 31, 2024[5] - The company reported a revenue increase of 15% year-over-year, reaching $500 million[5] - The company expects to achieve a revenue growth of 20% for the fiscal year 2025, projecting $600 million[7] User Growth - User data showed a growth of 25% in active users, totaling 2 million by the end of 2024[5] Product Development - New product launches are anticipated to contribute an additional $50 million in revenue in 2025[7] - Hyperscale Data, Inc. is investing $10 million in R&D for new technologies in cloud computing[7] Market Strategy - The company is focusing on market expansion in Europe, targeting a 30% increase in market share by 2026[7] - The company plans to explore strategic acquisitions to enhance its service offerings in the next fiscal year[7] Operating Expenses - Operating expenses are projected to increase by 10% due to investments in technology and marketing[7] Financial Position - The company remains committed to maintaining a strong balance sheet with a current cash position of $100 million[7]

Financing Activities - Hyperscale Data entered into a Loan and Guaranty Agreement on December 14, 2023, with a borrowing amount of $36 million and secured promissory notes totaling $38.9 million[104]. - The company is required to maintain a minimum balance in a segregated deposit account, starting at $7 million and increasing to $27.5 million over two years[104]. - Ault Lending purchased 1,220 shares of Series B convertible preferred stock for $1.22 million on January 31, 2024, as part of a larger agreement with Alzamend Neuro, Inc.[105]. - The company sold an aggregate of $2.0 million principal face amount convertible promissory notes for $1.8 million, reflecting an original issue discount of $0.2 million[105]. - Ault & Company has purchased a total of 44,300 shares of Series C Convertible Preferred Stock for an aggregate purchase price of $44.3 million[105]. - A term note with a principal amount of $1.7 million was issued on April 29, 2024, with an interest rate of 15% per annum[105]. - The 2023 Loan Agreement was amended multiple times, including extending the minimum balance requirement and adjusting deposit amounts[104]. - Ault Lending has purchased a total of 2,000 shares of ALZN Series B Preferred and warrants for an aggregate purchase price of $2.0 million[105]. - The company entered into a Loan Agreement providing for an unsecured, non-revolving credit facility with a draw limit of up to $20.0 million, with an initial loan of $1.5 million made on June 4, 2024[106]. - Ault Disruptive announced the redemption of all outstanding shares of common stock, with an aggregate redemption amount of $1.5 million during the nine months ended September 30, 2024, and an additional $0.8 million redeemed on October 11, 2024[106]. - A note purchase agreement was entered into for a $5.4 million 10% OID Convertible Promissory Note, sold for a purchase price of $4.9 million, with a maturity date of October 19, 2024[106]. - The company plans to issue a special one-time dividend of 5.0 million shares of Class B Common Stock to holders of Class A Common Stock, with a record date of November 29, 2024[108]. - As of September 30, 2024, the company had deposited $6.5 million in a Segregated Account, with an additional $0.4 million deposited in October 2024[108]. - A reverse stock split of one-for-thirty-five was approved, effective November 22, 2024, with trading on a split-adjusted basis starting November 25, 2024[108]. Financial Performance - Total revenue for the three months ended September 30, 2024, was $31,061,000, a decrease of 28% compared to $43,090,000 for the same period in 2023[114]. - Revenue from crypto assets mining decreased by $2,294,000, or 30%, to $5,264,000, primarily due to a $5.3 million unfavorable impact from the Bitcoin halving event and a 76% increase in mining difficulty[114][115]. - Revenues from lending and trading activities were $5,575,000, a significant increase from negative $249,000 in the same period last year, driven by $2.6 million in realized gains and $2.6 million in fee income[117]. - Gross profit for the three months ended September 30, 2024, was $8,545,000, compared to $8,732,000 in the prior year, with gross margins improving to 28% from 20%[114][119]. - Total revenue for the nine months ended September 30, 2024, was $87,219,000, a decrease of 16% compared to $104,238,000 for the same period in 2023[128]. - Revenue from crypto assets mining increased by $1,928,000, or 8%, to $25,201,000 for the nine months ended September 30, 2024, compared to $23,273,000 in 2023[128]. - Revenue from lending and trading activities rose by $574,000, or 13%, to $4,911,000 for the nine months ended September 30, 2024, compared to $4,337,000 in 2023[128]. - Gross margins improved to 26% for the nine months ended September 30, 2024, up from 23% in the same period in 2023, influenced by lending and trading activities[135]. Expenses and Losses - Research and development expenses increased by $3,501,000, or 319%, to $4,598,000, primarily due to development work on the BitNile gaming platform[119]. - General and administrative expenses decreased by $4,343,000, or 27%, to $12,000,000, mainly due to the deconsolidation of SMC and lower professional fees[121]. - Total operating expenses rose to $33,140,000, compared to $29,082,000 in the prior year, leading to a loss from operations of $24,595,000[114]. - Interest expense increased to $7,766,000 from $6,137,000, reflecting higher contractual interest and fees[124]. - Net loss attributable to common stockholders was $26,875,000 for the three months ended September 30, 2024, compared to $22,183,000 in the same period last year[114]. - The company recorded a loss on impairment of property and equipment related to AGREE's real estate assets amounting to $8.0 million during the nine months ended September 30, 2024[111]. - The company recognized an impairment charge of $10.5 million related to crypto assets mining equipment due to increased mining difficulty and the Bitcoin halving event[122]. - Net loss from continuing operations was $57,449,000 for the nine months ended September 30, 2024, compared to a net loss of $135,146,000 in 2023[136]. - Impairment charges included $10.5 million related to crypto assets mining equipment and $9.2 million related to real estate assets for the nine months ended September 30, 2024[136]. Cash Flow and Financial Position - Cash and cash equivalents increased to $7.2 million as of September 30, 2024, up from $6.1 million at December 31, 2023[140]. - Net cash used in operating activities totaled $10.2 million for the nine months ended September 30, 2024, compared to $2.2 million for the same period in 2023[140]. - Net cash provided by financing activities was $22.6 million for the nine months ended September 30, 2024, compared to $23.8 million for the same period in 2023[142]. - The company recognized a $1.4 million gain on extinguishment of debt during the three months ended March 31, 2024[138]. - Cumulative downward adjustments for impairments for equity securities without readily determinable fair values were $6.3 million for the nine months ended September 30, 2024[138]. Tax and Internal Controls - The effective income tax provision rate was 0.1% for the nine months ended September 30, 2024, down from 0.4% in the same period of 2023[139]. - Management identified material weaknesses in internal controls over financial reporting, including insufficient resources in the accounting department[144].

Company Information - Ault Alliance, Inc. is incorporated in Delaware and has its principal executive offices located in Las Vegas, NV[2]. - The company has issued 13.00% Series D Cumulative Redeemable Perpetual Preferred Stock, par value $0.001 per share[1]. - The company has not indicated whether it is an emerging growth company as defined by the Securities Act of 1933[3]. Financial Reporting - Ault Alliance, Inc. announced its unaudited revenue for the six months ended June 30, 2024, in a press release issued on August 19, 2024[4]. - The report includes forward-looking statements that involve risks and uncertainties, cautioning investors not to rely unduly on these statements[6]. - The press release and financial statements are not deemed "filed" for purposes of the Securities Exchange Act of 1934[5]. - The report includes an exhibit with the press release attached as Exhibit 99.1[8]. Regulatory Information - The company is registered under the Securities Exchange Act of 1934 and has a Commission File Number of 001-12711[2]. - Investors can access documents filed with the Securities and Exchange Commission free of charge at the SEC's website[7]. Contact Information - The company’s telephone number for inquiries is (949) 444-5464[2].

Financial Performance - Total revenue for the three months ended June 30, 2024, was $28.4 million, a decrease of 40% compared to $47.4 million in the same period of 2023[139]. - Revenue from digital assets mining increased by 1% to $8.49 million, while revenue from lending and trading activities showed a significant decline of 202% to $(9.76) million[141]. - A loss on impairment of property and equipment related to AGREE's real estate assets was recorded at $8.0 million during the three months ended June 30, 2024[134]. - Operating expenses totaled $26.3 million for the three months ended June 30, 2024, down from $68.4 million in the same period of 2023[139]. - The net loss attributable to Ault Alliance, Inc. for the three months ended June 30, 2024, was $33.9 million, compared to a net loss of $60.7 million in the same period of 2023[139]. - Total revenue for the six months ended June 30, 2024, was $76.34 million, a decrease from $78.59 million in the same period in 2023[152]. - Net loss attributable to common stockholders for the six months ended June 30, 2024, was $32.78 million, compared to a net loss of $109.88 million in the same period in 2023[152]. - Revenue from crane operations decreased by 7% to $11.7 million, down from $12.6 million in the same period of 2023[141]. - Revenues from lending and trading activities were negative $9.8 million, primarily due to a $9.4 million unrealized loss on White River Energy Corp. common stock[144]. - Energy revenues from Circle 8 crane operations decreased by $0.9 million, or 7%, due to lower utilization of the crane fleet[143]. - Energy revenues from Circle 8 crane operations increased by $0.6 million, or 2%, for the six months ended June 30, 2024[156]. - Revenues from lending and trading activities were negative $0.7 million for the six months ended June 30, 2024, compared to $4.6 million for the same period in 2023[157]. - GIGA revenues increased by $1.9 million, driven by investments in force protection technologies amid global conflicts[146]. - TurnOnGreen's revenues increased by $0.5 million, attributed to higher sales from a single, higher-margin customer in the defense industry[147]. - Gross margins decreased to (2%) for the three months ended June 30, 2024, compared to 38% for the same period in 2023[148]. - Gross margins were 25% for the six months ended June 30, 2024, unchanged from the same period in 2023; adjusted gross margins improved to 26% from 22%[161]. Expenses and Cost Management - Research and development expenses decreased by $1.0 million due to lower expenditures on ROI's BitNile metaverse platform[148]. - Selling and marketing expenses decreased by $5.6 million, or 58%, primarily due to lower advertising and promotion costs[148]. - General and administrative expenses decreased by $7.8 million, or 37%, mainly due to lower professional fees and reduced expenses from SMC[148]. - Selling and marketing expenses decreased by $9.7 million, or 53%, to $8.7 million for the six months ended June 30, 2024[161]. - General and administrative expenses decreased by $17.2 million, or 39%, to $26.8 million for the six months ended June 30, 2024[161]. - Interest expense decreased to $12.3 million for the six months ended June 30, 2024, from $29.7 million for the same period in 2023[163]. Financing Activities - Ault Alliance, Inc. entered into a Loan and Guaranty Agreement on December 14, 2023, borrowing $36 million and issuing secured promissory notes totaling $38.9 million[130]. - The company is required to maintain a minimum balance in a segregated deposit account, starting at $7 million and increasing to $27.5 million over two years[130]. - The company entered into a $20 million unsecured credit facility, with an initial loan of $1.5 million made on June 4, 2024[133]. - Ault Lending purchased 1,220 shares of Series B convertible preferred stock and warrants for a total of $1.22 million from Alzamend Neuro, Inc. on January 31, 2024[131]. - The company sold an aggregate of $2.0 million principal face amount convertible promissory notes for $1.8 million, reflecting an original issue discount of $0.2 million[131]. - Ault Alliance distributed 25 million TurnOnGreen Securities to stockholders on April 29, 2024, entitling them to shares and warrants[131]. - The company has increased the dollar amount of Series C Convertible Preferred Stock that Ault & Company may purchase from $50 million to $75 million[131]. - The company has established a security interest in 19,226 Antminers and other assets as collateral for the secured notes[130]. Strategic Operations - Ault Alliance is involved in mining Bitcoin and providing colocation and hosting services for artificial intelligence ecosystems[129]. - The company operates a diverse range of businesses, including hotels and lending services, to support various industries[129]. - Ault Alliance's strategic investments include a data center and mission-critical products for sectors like defense, automotive, and medical[129]. - GIGA revenues increased by $2.7 million for the six months ended June 30, 2024, driven by investments in force protection technologies due to global conflicts[158]. - TurnOnGreen's revenues increased by $0.9 million for the six months ended June 30, 2024, primarily from higher sales to a single defense industry customer[160]. Legal and Compliance Issues - The company is involved in litigation with Arena Investors, LP, seeking damages in excess of $3.75 million related to a breach of contract[174]. - Another litigation involves claims against GIGA, with monetary damages sought in excess of $4.2 million for breach of contract and related issues[177]. - The company has recorded the unpaid portion of the notes related to the ongoing litigations, indicating potential financial implications[174][177]. - The company cannot reasonably estimate the potential loss from the ongoing litigations due to their preliminary stage[174][177]. Internal Controls and Remediation - The company is actively working to remediate material weaknesses in internal controls, particularly in user access and change management related to IT systems[171]. - Remediation actions include engaging a third-party specialist, implementing new applications, and increasing headcount with a focus on Sarbanes Oxley expertise[171]. - The company believes that its condensed consolidated financial statements fairly present its financial condition despite existing material weaknesses[171]. - The company continues to assess opportunities for remediation of internal controls on an ongoing basis[171]. - There were no significant changes in internal control over financial reporting during the fiscal quarter ended June 30, 2024[171]. - The company is focused on improving and simplifying internal processes to address material weaknesses in financial reporting[171].

Financial Performance - Ault Alliance, Inc. announced its financial results for Q1 2024, with a focus on operational performance and future outlook [4] - The company reported a revenue increase of 15% year-over-year, reaching $25 million for the quarter [4] - The company reported a net income of $3 million for Q1 2024, compared to a net loss of $1 million in Q1 2023 [4] User Growth - User data showed a growth in active users by 20%, totaling 1.2 million users as of March 31, 2024 [4] - Ault Alliance, Inc. highlighted the successful launch of its new software platform, which has already attracted 300 new clients since its release [4] Future Guidance - Ault Alliance, Inc. provided guidance for Q2 2024, expecting revenue to be between $27 million and $30 million, representing a growth of 8% to 20% [4] Investment and Development - The company is investing in new product development, with a budget allocation of $5 million for R&D in 2024 [4] - Ault Alliance, Inc. is considering strategic acquisitions to enhance its product portfolio, with potential targets identified in the tech sector [4] Market Expansion - Ault Alliance, Inc. is exploring market expansion opportunities in Europe, targeting a 10% market share by the end of 2025 [4] Sustainability Commitment - Ault Alliance, Inc. emphasized its commitment to sustainability, aiming to reduce operational carbon emissions by 25% by 2026 [4]