PART I – FINANCIAL INFORMATION Item 1. Financial Statements 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 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 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 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 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 operations3437 - 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 period4849 - 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 default8085 - 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 & Company136139 Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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 2024175 - 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 comparison213214 Liquidity and Capital Resources 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 payable225 Quantitative and Qualitative Disclosures about Market Risk This section is not applicable as the company is a smaller reporting company - Not applicable for a smaller reporting company229 Controls and Procedures 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 period231 - Identified material weaknesses include: insufficient accounting department resources, inadequate segregation of duties, and ineffective IT user access and program change management controls233234 - Management is continuing its remediation plan, which includes engaging third-party specialists, implementing new systems, and increasing headcount with internal control expertise235238 PART II – OTHER INFORMATION Legal Proceedings 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, ROI242243 - While the company cannot estimate the potential loss from this litigation, an unfavorable outcome could have a material adverse effect on its financial condition248 Risk Factors 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-K251 Other Part II Items 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)252253254255
Ault Alliance(AULT) - 2025 Q2 - Quarterly Report