Hyperscale Data, Inc. 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2024 ¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ________ to ________. Commission file number 1-12711 HYPERSCALE DATA, INC. ( Exact name of registrant as specified in its charter ) Delaware 94-1721931 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) 11411 Southern Highlands Parkway , Suite 240 Las Vegas , NV 89141 (Address of principal executive offices) (Zip code) ( 949 ) 444-5464 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: 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 PRD NYSE American Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding year (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨ Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x Smaller reporting company x Emerging growth company ¨ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x At November 19, 2024, the registrant had outstanding 38,846,318 shares of Class A common stock. HYPERSCALE DATA, INC. TABLE OF CONTENTS Page PART I – FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 F-1 Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2024 and 2023 F-3 Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2024 and 2023 F-4 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 F-8 Notes to Condensed Consolidated Financial Statements F-10 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 1 Item 3. Quantitative and Qualitative Disclosures about Market Risk 14 Item 4. Controls and Procedures 14 PART II – OTHER INFORMATION Item 1. Legal Proceedings 16 Item 1A. Risk Factors 17 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 17 Item 3. Defaults Upon Senior Securities 17 Item 4. Mine Safety Disclosures 17 Item 5. Other Information 17 Item 6. Exhibits 18 Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements that involve a number of risks and uncertainties. Words such as “anticipates,” “expects,” “intends,” “goals,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” “will,” “would,” “should,” “could,” and variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, uncertain events or assumptions, and other characterizations of future events or circumstances are forward-looking statements. Such statements are based on management’s expectations as of the date of this filing and involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include those described throughout this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K/A for the year ended December 31, 2023, particularly the “Risk Factors” sections of such reports. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements in this Quarterly Report on Form 10-Q do not reflect the potential impact of any divestitures, mergers, acquisitions, or other business combinations that had not been completed as of the date of filing of this Quarterly Report on Form 10-Q. In addition, the forward-looking statements in this Quarterly Report on Form 10-Q are made as of the date of this filing, and we do not undertake, and expressly disclaim any duty to update such statements, whether as a result of new information, new developments or otherwise, except to the extent that disclosure may be required by law. PART I – FINANCIAL INFORMATION Item 1. Financial Statements. HYPERSCALE DATA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) September 30, December 31, 2024 2023 ASSETS CURRENT ASSETS Cash and cash equivalents $ 7,190,000 $ 6,105,000 Restricted cash 8,259,000 4,962,000 Marketable equity securities 687,000 27,000 Accounts receivable, net 6,824,000 6,736,000 Inventories 1,823,000 1,790,000 Investment in promissory notes and other, related party 14,786,000 3,968,000 Loans receivable, current 1,169,000 1,234,000 Prepaid expenses and other current assets 4,240,000 5,221,000 Current assets of discontinued operations - 32,367,000 TOTAL CURRENT ASSETS 44,978,000 62,410,000 Cash and marketable securities held in trust account 804,000 2,200,000 Intangible assets, net 3,682,000 4,047,000 Goodwill 295,000 295,000 Property and equipment, net 160,874,000 195,666,000 Right-of-use assets 3,570,000 3,409,000 Investments in common stock and equity securities, related party 2,231,000 679,000 Investments in other equity securities 5,274,000 21,767,000 Other assets 9,785,000 8,717,000 TOTAL ASSETS $ 231,493,000 $ 299,190,000 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses $ 58,474,000 $ 55,422,000 Operating lease liability, current 1,442,000 1,376,000 Notes payable, current 87,730,000 11,692,000 Notes payable, related party, current 171,000 2,375,000 Convertible notes payable, current 9,725,000 7,375,000 Guarantee liability 38,900,000 38,900,000 Current liabilities of discontinued operations - 22,664,000 TOTAL CURRENT LIABILITIES 196,442,000 139,804,000 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. F- 1 HYPERSCALE DATA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (continued) (Unaudited) September 30, December 31, 2024 2023 LONG TERM LIABILITIES Operating lease liability, non-current 2,339,000 2,163,000 Notes payable, non-current 16,760,000 85,420,000 Convertible notes payable, non-current 9,453,000 9,453,000 Deferred underwriting commissions of Ault Disruptive Technologies Corporation (“Ault Disruptive”) subsidiary 3,450,000 3,450,000 TOTAL LIABILITIES 228,444,000 240,290,000 COMMITMENTS AND CONTINGENCIES Redeemable non-controlling interests in equity of subsidiaries 804,000 2,224,000 STOCKHOLDERS’ EQUITY Series A Convertible Preferred Stock, $ 25 stated value per share, $ 0.001 par value – 1,000,000 shares authorized; 7,040 shares issued and outstanding at September 30, 2024 and December 31, 2023 (liquidation preference of $ 176,000 as of September 30, 2024 and December 31, 2023) - - Series C Convertible Preferred Stock, $ 1,000 stated value per share, share, $ 0.001 par value – 75,000 shares authorized; 44,300 and 41,500 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively (liquidation preference of $ 44,300,000 and $ 41,500,000 at September 30, 2024 and December 31, 2023, respectively) - - Series D Cumulative Redeemable Perpetual Preferred Stock, $ 25 stated value per share, $ 0.001 par value – 2,000,000 shares authorized; 323,835 shares and 425,197 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively (liquidation preference of $ 8,096,000 and $ 10,630,000 as of September 30, 2024 and December 31, 2023, respectively) - - Class A Common Stock, $ 0.001 par value – 500,000,000 shares authorized; 38,846,318 and 4,483,459 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively 39,000 4,000 Class B Common Stock, $ 0.001 par value – 25,000,000 shares authorized; 0 shares issued and outstanding at September 30, 2024 and December 31, 2023 - - Additional paid-in capital 661,606,000 644,852,000 Accumulated deficit ( 627,124,000 ) ( 567,469,000 ) Accumulated other comprehensive loss ( 1,222,000 ) ( 2,097,000 ) Treasury stock, at cost ( 30,571,000 ) ( 30,571,000 ) TOTAL HYPERSCALE DATA STOCKHOLDERS’ EQUITY 2,728,000 44,719,000 Non-controlling interest ( 483,000 ) 11,957,000 TOTAL STOCKHOLDERS’ EQUITY 2,245,000 56,676,000 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 231,493,000 $ 299,190,000 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. F- 2 HYPERSCALE DATA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) For the Three Months Ended For the Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Revenue $ 2,215,000 $ 17,554,000 $ 5,785,000 $ 25,754,000 Revenue, crypto assets mining 5,264,000 7,558,000 25,201,000 23,273,000 Revenue, hotel and real estate operations 5,680,000 5,737,000 14,377,000 13,148,000 Revenue, crane operations 12,327,000 12,490,000 36,945,000 37,726,000 Revenue, lending and trading activities 5,575,000 ( 249,000 ) 4,911,000 4,337,000 Total revenue 31,061,000 43,090,000 87,219,000 104,238,000 Cost of revenue, products 1,178,000 13,209,000 3,470,000 19,213,000 Cost of revenue, crypto assets mining 9,388,000 10,228,000 26,971,000 28,057,000 Cost of revenue, hotel and real estate operations 3,498,000 3,279,000 9,633,000 9,086,000 Cost of revenue, crane operations 7,957,000 7,642,000 23,704,000 22,671,000 Cost of revenue, lending and trading activities 495,000 - 495,000 1,180,000 Total cost of revenue 22,516,000 34,358,000 64,273,000 80,207,000 Gross profit 8,545,000 8,732,000 22,946,000 24,031,000 Operating expenses Research and development 4,598,000 1,097,000 4,811,000 3,304,000 Selling and marketing 4,755,000 7,638,000 12,528,000 24,990,000 General and administrative 11,996,000 16,339,000 33,730,000 53,051,000 Impairment of property and equipment 11,791,000 3,895,000 19,746,000 3,895,000 Impairment of goodwill and intangible assets - - - 35,570,000 Impairment of mined crypto assets - 113,000 - 376,000 Total operating expenses 33,140,000 29,082,000 70,815,000 121,186,000 Loss from operations ( 24,595,000 ) ( 20,350,000 ) ( 47,869,000 ) ( 97,155,000 ) Other income (expense): Interest and other income 766,000 278,000 2,118,000 3,612,000 Interest expense ( 7,766,000 ) ( 6,137,000 ) ( 18,825,000 ) ( 35,180,000 ) Gain on conversion of investment in equity securities to marketable equity securities - - 17,900,000 - (Loss) gain on extinguishment of debt ( 240,000 ) ( 1,546,000 ) 502,000 ( 1,700,000 ) Loss from investment in unconsolidated entity - - ( 1,958,000 ) - Impairment of equity securities - - ( 6,266,000 ) ( 9,555,000 ) Provision for loan losses, related party - - ( 3,068,000 ) - Change in fair value of warrant liability - 499,000 - 2,655,000 Gain (loss) on the sale of fixed assets 32,000 ( 32,000 ) 64,000 2,728,000 Total other expense, net ( 7,208,000 ) ( 6,938,000 ) ( 9,533,000 ) ( 37,440,000 ) Loss before income taxes ( 31,803,000 ) ( 27,288,000 ) ( 57,402,000 ) ( 134,595,000 ) Income tax provision (benefit) 52,000 ( 565,000 ) 47,000 551,000 Net loss from continuing operations ( 31,855,000 ) ( 26,723,000 ) ( 57,449,000 ) ( 135,146,000 ) Net gain (loss) from discontinued operations 2,216,000 ( 1,359,000 ) ( 779,000 ) ( 4,658,000 ) Net loss ( 29,639,000 ) ( 28,082,000 ) ( 58,228,000 ) ( 139,804,000 ) Net loss attributable to non-controlling interest 4,090,000 6,311,000 2,469,000 8,704,000 Net loss attributable to Hyperscale Data, Inc. ( 25,549,000 ) ( 21,771,000 ) ( 55,759,000 ) ( 131,100,000 ) Preferred dividends ( 1,326,000 ) ( 412,000 ) ( 3,894,000 ) ( 963,000 ) Net loss available to common stockholders $ ( 26,875,000 ) $ ( 22,183,000 ) $ ( 59,653,000 ) $ ( 132,063,000 ) Basic and diluted net gain (loss) per common share: Continuing operations $ ( 0.77 ) $ ( 93.39 ) $ ( 2.03 ) $ ( 1,201.94 ) Discontinued operations 0.06 ( 6.09 ) ( 0.03 ) ( 43.94 ) Net loss per common share $ ( 0.71 ) $ ( 99.48 ) $ ( 2.06 ) $ ( 1,245.88 ) Weighted average basic and diluted common shares outstanding 37,901,000 223,000 28,907,000 106,000 Comprehensive loss Net loss available to common stockholders $ ( 26,875,000 ) $ ( 22,183,000 ) $ ( 59,653,000 ) $ ( 132,063,000 ) Foreign currency translation adjustment ( 221,000 ) ( 282,000 ) ( 621,000 ) ( 702,000 ) Other comprehensive loss ( 221,000 ) ( 282,000 ) ( 621,000 ) ( 702,000 ) Total comprehensive loss $ ( 27,096,000 ) $ ( 22,465,000 ) $ ( 60,274,000 ) $ ( 132,765,000 ) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. F- 3 HYPERSCALE DATA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) Three Months Ended September 30, 2024 Accumulated Preferred Stock Additional Other Non- Total Series A Series C Series D Class A Common Stock Paid-In Accumulated Comprehensive Controlling Treasury Stockholders’ Shares Par Amount Shares Par Amount Shares Par Amount Shares Amount Capital Deficit Loss Interest Stock Equity BALANCES, July 1, 2024 7,040 $ - 44,000 $ - 323,835 $ - 35,846,318 $ 36,000 $ 660,036,000 $ ( 600,282,000 ) $ ( 2,497,000 ) $ ( 440,000 ) $ ( 30,571,000 ) $ 26,282,000 Issuance of Series C preferred stock, related party - - 300 - - - - - 286,000 - - - - 286,000 Fair value of warrants issued in connection with Series C preferred stock, related party - - - - - - - - 14,000 - - - - 14,000 Stock-based compensation - - - - - - - - 374,000 - - - - 374,000 Issuance of Class A common stock for conversion of debt - - - - - - 3,000,000 3,000 897,000 - - - - 900,000 Distribution to Circle 8 Crane Services, LLC (“Circle 8”) non-controlling interest - - - - - - - - - - - ( 55,000 ) - ( 55,000 ) Net loss attributable to Hyperscale Data, Inc. - - - - - - - - - ( 25,549,000 ) - - - ( 25,549,000 ) Series A preferred dividends ($0.63 per share) - - - - - - - - - ( 4,000 ) - - - ( 4,000 ) Series C preferred dividends ($24.05 per share) - - - - - - - - - ( 1,059,000 ) - - - ( 1,059,000 ) Series D preferred dividends ($0.81 per share) - - - - - - - - - ( 263,000 ) - - - ( 263,000 ) Foreign currency translation adjustments - - - - - - - - - - ( 221,000 ) - - ( 221,000 ) Net loss attributable to non-controlling interest - - - - - - - - - - - ( 2,861,000 ) - ( 2,861,000 ) Deconsolidation of subsidiary - - - - - - - - - - 1,495,000 2,873,000 - 4,368,000 Other - - - - - - - - ( 1,000 ) 33,000 1,000 - - 33,000 BALANCES, September 30, 2024 7,040 $ - 44,300 $ - 323,835 $ - 38,846,318 $ 39,000 $ 661,606,000 $ ( 627,124,000 ) $ ( 1,222,000 ) $ ( 483,000 ) $ ( 30,571,000 ) $ 2,245,000 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. F- 4 HYPERSCALE DATA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) Three Months Ended September 30, 2023 Accumulated Preferred Stock Additional Other Non- Total Series A Series B Series D Class A Common Stock Paid-In Accumulated Comprehensive Controlling Treasury Stockholders’ Shares Par Amount Shares Par Amount Shares Par Amount Shares Amount Capital Deficit Loss Interest Stock Equity BALANCES, July 1, 2023 7,040 $ - 125,000 $ - - 425,197 $ - 61,056 $ - $ 573,388,000 $ ( 444,371,000 ) $ ( 1,450,000 ) $ 23,853,000 $ ( 29,919,000 ) $ 121,501,000 Stock-based compensation - - - - - - - - 959,000 - - 1,622,000 - 2,581,000 Issuance of common stock for cash - - - - - - 428,305 - 20,415,000 - - - - 20,415,000 Financing cost in connection with sales of common stock - - - - - - - - ( 715,000 ) - - - - ( 715,000 ) Issuance of common stock for conversion of preferred stock liabilities - - - - - - 4,236 - 584,000 - - - - 584,000 Common stock issued in connection with issuance of notes payable - - - - - - 1,590 - 162,000 - - - - 162,000 Remeasurement of Ault Disruptive subsidiary temporary equity - - - - - - - - - ( 530,000 ) - - - ( 530,000 ) Increase in ownership interest of subsidiary - - - - - - - - - - - ( 352,000 ) - ( 352,000 ) Sale of subsidiary stock to non-controlling interests - - - - - - - - - - - 343,000 - 343,000 Purchase of treasury stock - Ault Alpha LP (“Ault Alpha”) - - - - - - - - - - - - ( 621,000 ) ( 621,000 ) Net loss attributable to Hyperscale Data, Inc. - - - - - - - - - - ( 21,771,000 ) - - - ( 21,771,000 ) Series A preferred dividends ($0.63 per share) - - - - - - - - - ( 4,000 ) - - - ( 4,000 ) Series D preferred dividends ($0.81 per share) - - - - - - - - - ( 345,000 ) - - - ( 345,000 ) Foreign currency translation adjustments - - - - - - - - - - ( 651,000 ) - - ( 651,000 ) Net loss attributable to non-controlling interest - - - - - - - - - - - ( 6,668,000 ) - ( 6,668,000 ) Distribution of securities of TurnOnGreen, Inc. (“TurnOnGreen”) to Hyperscale Data Class A common stockholders ($36.00 per share) - - - - - - - - ( 5,500,000 ) - - 10,700,000 - 5,200,000 Other - - - - - - - - ( 2,000 ) ( 67,000 ) ( 1,000 ) - - ( 70,000 ) BALANCES, September 30, 2023 7,040 $ - 125,000 $ - - 425,197 $ - 495,187 $ - $ 589,291,000 $ ( 467,088,000 ) $ ( 2,102,000 ) $ 29,498,000 $ ( 30,540,000 ) $ 119,059,000 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. F- 5 HYPERSCALE DATA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) Nine Months Ended September 30, 2024 Accumulated Preferred Stock Additional Other Non- Total Series A Series C Series D Class A Common Stock Paid-In Accumulated Comprehensive Controlling Treasury Stockholders’ Shares Par Amount Shares Par Amount Shares Par Amount Shares Amount Capital Deficit Loss Interest Stock Equity BALANCES, January 1, 2024 7,040 $ - 41,500 $ - 425,197 $ - 4,483,459 $ 4,000 $ 644,852,000 $ ( 567,469,000 ) $ ( 2,097,000 ) $ 11,957,000 $ ( 30,571,000 ) $ 56,676,000 Issuance of Series C preferred stock, related party - - 2,800 - - - - - 2,601,000 - - - - 2,601,000 Fair value of warrants issued in connection with Series C preferred stock, related party - - - - - - - - 199,000 - - - - 199,000 Stock-based compensation 1,189,000 - - - - 1,189,000 Issuance of Class A common stock for cash - - - - - - 25,609,079 26,000 14,573,000 - - - - 14,599,000 Financing cost in connection with sales of Class A common stock - - - - - - - - ( 513,000 ) - - - - ( 513,000 ) Issuance of Class A common stock for conversion of debt - - - - - - 8,780,979 9,000 3,607,000 - - - - 3,616,000 Increase in ownership interest of subsidiary - - - - - - - - - - - ( 893,000 ) - ( 893,000 ) Sale of subsidiary stock to non-controlling interests - - - - - - - - - - - 1,778,000 - 1,778,000 Distribution to Circle 8 non-controlling interest - - - - - - - - - - - ( 281,000 ) - ( 281,000 ) Conversion of RiskOn International, Inc. (“ROI”) convertible note - - - - - - - - - - - 863,000 - 863,000 Net loss attributable to Hyperscale Data, Inc. - - - - - - - - - ( 55,759,000 ) - - - ( 55,759,000 ) Series A preferred dividends ($1.88 per share) - - - - - - - - - ( 13,000 ) - - - ( 13,000 ) Series C preferred dividends ($71.22 per share) - - - - - - - - - ( 3,091,000 ) - - - ( 3,091,000 ) Series D preferred dividends ($2.44 per share) - - - - - - - - - ( 790,000 ) - - - ( 790,000 ) Foreign currency translation adjustments - - - - - - - - - - ( 621,000 ) - - ( 621,000 ) Net loss attributable to non-controlling interest - - - - - - - - - - - ( 2,469,000 ) - ( 2,469,000 ) Distribution of securities of TurnOnGreen to Hyperscale Data Class A common stockholders ($2.02 per share) - - - - - - - - ( 4,900,000 ) - - 4,900,000 - - Distribution of ROI investment in White River Energy Corp. (“White River”) to ROI shareholders - - - - - - - - - - - ( 19,210,000 ) - ( 19,210,000 ) Deconsolidation of subsidiary - - - - - - - - - - 1,495,000 2,873,000 - 4,368,000 Other - - - - ( 101,362 ) - ( 27,199 ) - ( 2,000 ) ( 2,000 ) 1,000 ( 1,000 ) - ( 4,000 ) BALANCES, September 30, 2024 7,040 $ - 44,300 $ - 323,835 $ - 38,846,318 $ 39,000 $ 661,606,000 $ ( 627,124,000 ) $ ( 1,222,000 ) $ ( 483,000 ) $ ( 30,571,000 ) $ 2,245,000 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. F- 6 HYPERSCALE DATA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) Nine Months Ended September 30, 2023 Accumulated Preferred Stock Additional Other Non- Total Series A Series B Series D Class A Common Stock Paid-In Accumulated Comprehensive Controlling Treasury Stockholders’ Shares Par Amount Shares Par Amount Shares Par Amount Shares Amount Capital Deficit Loss Interest Stock Equity BALANCES, January 1, 2023 7,040 $ - 125,000 $ - - 172,838 $ - 50,966 $ - $ 565,905,000 $ ( 329,078,000 ) $ ( 1,100,000 ) $ 17,496,000 $ ( 29,235,000 ) $ 223,988,000 Issuance of Class A common stock for restricted stock awards - - - - - - 199 - - - - - - - Series D preferred stock issued for cash - - - - 252,359 - - - 6,309,000 - - - - 6,309,000 Preferred stock offering costs - - - - - - - - ( 3,431,000 ) - - - - ( 3,431,000 ) Stock-based compensation - - - - - - - - 5,642,000 - - 3,546,000 - 9,188,000 Issuance of Class A common stock for cash - - - - - - 436,696 - 25,327,000 - - - - 25,327,000 Financing cost in connection with sales of Class A common stock - - - - - - - - ( 847,000 ) - - - - ( 847,000 ) Issuance of Class A common stock for conversion of preferred stock liabilities - - - - - - 5,736 - 912,000 - - - - 912,000 Class A common stock issued in connection with issuance of notes payable - - - - - - 1,590 - 162,000 - - - - 162,000 Remeasurement of Ault Disruptive subsidiary temporary equity - - - - - - - - - ( 5,945,000 ) - - - ( 5,945,000 ) Increase in ownership interest of subsidiary - - - - - - - - 13,000 - - ( 1,597,000 ) - ( 1,584,000 ) Non-controlling position at ROI subsidiary acquired - - - - - - - - - - - 6,357,000 - 6,357,000 Sale of subsidiary stock to non-controlling interests - - - - - - - - - - - 3,915,000 - 3,915,000 Distribution to Circle 8 non-controlling interest - - - - - - - - - - - ( 500,000 ) - ( 500,000 ) Purchase of treasury stock - Ault Alpha - - - - - - - - - - - - ( 1,306,000 ) ( 1,306,000 ) Net loss attributable to Hyperscale Data, Inc. - - - - - - - - - - ( 131,100,000 ) - - - ( 131,100,000 ) Series A preferred dividends ($1.25 per share) - - - - - - - - - ( 13,000 ) - - - ( 13,000 ) Series D preferred dividends ($1.62 per share) - - - - - - - - - ( 762,000 ) - - - ( 762,000 ) Foreign currency translation adjustments - - - - - - - - - - ( 1,001,000 ) - - ( 1,001,000 ) Net loss attributable to non-controlling interest - - - - - - - - - - - ( 10,420,000 ) - ( 10,420,000 ) Distribution of securities of TurnOnGreen to Hyperscale Data Class A common stockholders ($50.50 per share) - - - - - - - - ( 10,700,000 ) - - 10,700,000 - - Other - - - - - - - - ( 1,000 ) ( 190,000 ) ( 1,000 ) 1,000 1,000 ( 190,000 ) BALANCES, September 30, 2023 7,040 $ - 125,000 $ - - 425,197 $ - 495,187 $ - $ 589,291,000 $ ( 467,088,000 ) $ ( 2,102,000 ) $ 29,498,000 $ ( 30,540,000 ) $ 119,059,000 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. F- 7 HYPERSCALE DATA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the Nine Months Ended September 30, 2024 2023 Cash flows from operating activities: Net loss $ ( 58,228,000 ) $ ( 139,804,000 ) Net loss from discontinued operations ( 779,000 ) ( 4,658,000 ) Net loss from continuing operations ( 57,449,000 ) ( 135,146,000 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 19,653,000 22,378,000 Amortization of debt discount 8,422,000 22,756,000 Amortization of right-of-use assets 1,162,000 1,335,000 Impairment of goodwill and intangible assets - 35,570,000 Stock-based compensation 2,940,000 7,594,000 Gain on the sale of fixed assets ( 64,000 ) ( 2,728,000 ) Impairment of property and equipment 19,746,000 3,895,000 Impairment of equity securities 6,266,000 11,555,000 Impairment of crypto assets - 376,000 Realized gain on the sale of crypto assets ( 649,000 ) ( 404,000 ) Change in fair value of crypto assets ( 24,000 ) - Revenue, crypto assets mining ( 19,563,000 ) ( 23,273,000 ) Realized gains on sale of marketable securities ( 7,463,000 ) ( 33,140,000 ) Gain on conversion of investment in equity securities to marketable equity securities ( 17,900,000 ) - Unrealized gains on marketable securities ( 266,000 ) ( 2,554,000 ) Realized losses on non-marketable equity securities 5,083,000 - Unrealized losses on investments in common stock, related parties 557,000 3,752,000 Income from cash held in trust ( 41,000 ) ( 2,561,000 ) Loss from investment in unconsolidated entity 1,958,000 - Provision for loan losses 495,000 1,180,000 Provision for loan losses, related party 5,668,000 - Change in the fair value of warrant liability - ( 2,655,000 ) Gain on extinguishment of debt ( 502,000 ) - Proceeds from the sale of crypto assets 20,038,000 21,330,000 Other ( 1,194,000 ) 1,550,000 Changes in operating assets and liabilities: Marketable equity securities 10,755,000 71,159,000 Accounts receivable ( 342,000 ) ( 4,792,000 ) Inventories ( 42,000 ) ( 1,554,000 ) Prepaid expenses and other current assets ( 182,000 ) ( 762,000 ) Other assets ( 3,026,000 ) ( 4,023,000 ) Accounts payable and accrued expenses 3,471,000 13,333,000 Lease liabilities ( 1,364,000 ) ( 1,595,000 ) Net cash (used in) provided by operating activities from continuing operations ( 3,857,000 ) 2,576,000 Net cash used in operating activities from discontinued operations ( 6,366,000 ) ( 4,734,000 ) Net cash used in operating activities ( 10,223,000 ) ( 2,158,000 ) Cash flows from investing activities: Purchase of property and equipment ( 4,762,000 ) ( 14,607,000 ) Acquisition of non-controlling interests - ( 1,584,000 ) Investments in loans receivable ( 434,000 ) ( 182,000 ) Investments in non-marketable equity securities - ( 10,702,000 ) Proceeds from the sale of fixed assets 671,000 4,515,000 Investment in notes receivable, related party ( 3,413,000 ) ( 2,361,000 ) Other ( 109,000 ) ( 132,000 ) Net cash used in investing activities from continuing operations ( 8,047,000 ) ( 25,053,000 ) Net cash (used in) provided by investing activities from discontinued operations ( 3,799,000 ) 2,184,000 Net cash used in investing activities ( 11,846,000 ) ( 22,869,000 ) F- 8 HYPERSCALE DATA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Unaudited) For the Nine Months Ended September 30, 2024 2023 Cash flows from financing activities: Gross proceeds from sales of Class A common stock $ 14,599,000 $ 25,327,000 Financing cost in connection with sales of Class A common stock ( 513,000 ) ( 847,000 ) Proceeds from sales of Series D preferred stock - 6,309,000 Financing cost in connection with sales of Series D preferred stock - ( 3,431,000 ) Proceeds from sales of Series C preferred stock and warrants, related party 2,800,000 - Proceeds from subsidiaries’ sale of stock to non-controlling interests 1,778,000 3,915,000 Distribution to Circle 8 non-controlling interest ( 281,000 ) ( 500,000 ) Proceeds from notes payable 49,237,000 81,026,000 Repayment of margin accounts - ( 767,000 ) Payments on notes payable ( 47,006,000 ) ( 95,815,000 ) Payments on convertible notes payable, related party ( 193,000 ) - Payments on notes payable, related party ( 1,908,000 ) - Payments of preferred dividends ( 3,894,000 ) ( 963,000 ) Purchase of treasury stock - ( 1,306,000 ) Proceeds from sales of convertible notes 6,700,000 9,169,000 Payments on convertible notes ( 1,280,000 ) ( 660,000 ) Net cash provided by financing activities from continuing operations 20,039,000 21,457,000 Net cash provided by financing activities from discontinued operations 2,552,000 2,316,000 Net cash provided by financing activities 22,591,000 23,773,000 Effect of exchange rate changes on cash and cash equivalents ( 442,000 ) ( 311,000 ) Net increase (decrease) in cash and cash equivalents and restricted cash 80,000 ( 1,565,000 ) Cash and cash equivalents and restricted cash at beginning of period - continuing operations 11,068,000 11,860,000 Cash and cash equivalents and restricted cash at beginning of period - discontinued operations 4,301,000 2,195,000 Cash and cash equivalents and restricted cash at beginning of period 15,369,000 14,055,000 Cash and cash equivalents and restricted cash at end of period 15,449,000 12,490,000 Less cash and cash equivalents and restricted cash of discontinued operations at end of period - 2,114,000 Cash and cash equivalents and restricted cash of continued operations at end of period $ 15,449,000 $ 10,376,000 Supplemental disclosures of cash flow information: Cash paid during the period for interest - continuing operations $ 9,775,000 $ 8,641,000 Cash paid during the period for interest - discontinued operations $ 946,000 $ 862,000 Non-cash investing and financing activities: Settlement of accounts payable with crypto assets $ 31,000 $ 20,000 Settlement of interest payable with crypto assets $ 142,000 $ - Settlement of note payable with crypto assets $ 506,000 $ - Conversion of convertible notes payable into shares of Class A common stock $ 3,616,000 $ - Conversion of convertible notes payable, related party into shares of Class A common stock $ - $ 400,000 Conversion of debt and equity securities to marketable securities $ 4,996,000 $ 23,703,000 Conversion of loans receivable to marketable securities $ - $ 5,430,000 Exchange of related party advances for investment in other equity securities, related party $ 2,000,000 $ - Recognition of new operating lease right-of-use assets and lease liabilities $ 1,889,000 $ 3,952,000 Remeasurement of Ault Disruptive temporary equity $ - $ 5,945,000 Preferred stock exchanged for notes payable $ - $ 9,224,000 Notes payable exchanged for convertible notes payable $ - $ 2,200,000 Notes payable exchanged for notes payable, related party $ - $ 11,645,000 Dividend of ROI investment in White River to ROI shareholders $ 19,210,000 $ - Redeemable non-controlling interests in equity of subsidiaries paid with cash and marketable securities held in trust account $ 1,463,000 $ 120,064,000 Dividend paid in TurnOnGreen common stock in additional paid-in capital $ 4,900,000 $ 10,700,000 F- 9 1. DESCRIPTION OF BUSINESS Hyperscale Data, Inc. (f/k/a Ault Alliance, Inc.), a Delaware corporation (“Hyperscale Data” or the “Company”) is a diversified holding company pursuing growth by acquiring and developing undervalued businesses and disruptive technologies with a global impact. Through its wholly- and majority-owned subsidiaries and strategic investments, the Company owns and operates a data center at which it mines Bitcoin and offers colocation and hosting services for the emerging artificial intelligence ecosystems and other industries, and provides mission-critical products that support a diverse range of industries, including a metaverse platform, oil exploration, crane services, defense/aerospace, industrial, automotive, medical/biopharma and hotel operations. In addition, the Company extends credit to select entrepreneurial businesses through a licensed lending subsidiary. The Company has the following reportable segments: · Energy and Infrastructure (“Energy”) – crane operations and oil exploration; · Technology and Finance (“Fintech”) – commercial lending, activist investing, and stock trading; · Sentinum, Inc. (“Sentinum”) – crypto assets mining operations and colocation and hosting services for the emerging artificial intelligence ecosystems and other industries; · TurnOnGreen – electric vehicle electrification infrastructure and commercial electronics solutions; · ROI – immersive metaverse platform, media, and digital learning; and · Ault Global Real Estate Equities, Inc. (“AGREE”) – hotel operations and other commercial real estate holdings. The Company had a change to its reportable segments due to the discontinued operations of its majority owned subsidiary, Gresham Worldwide, Inc. (“GIGA”). See Note 4 below. On September 10, 2024, the Company changed its name from Ault Alliance, Inc. to Hyperscale Data, Inc. and its Class A common stock ticker symbol was changed to “GPUS.” The name change did not affect the rights of security holders of the Company. 2. LIQUIDITY AND FINANCIAL CONDITION As of September 30, 2024, the Company had cash and cash equivalents of $ 7.2 million (excluding restricted cash of $ 8.3 million), negative working capital of $ 151.5 million and a history of net operating losses. The Company has financed its operations principally through issuances of convertible debt, promissory notes and equity securities. These factors create substantial doubt about the Company’s ability to continue as a going concern for at least one year after the date that these condensed consolidated financial statements are issued. The condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. In making this assessment management performed a comprehensive analysis of the Company’s current circumstances, including its financial position, cash flow and cash usage forecasts, as well as obligations and debts. Although management has a long history of successful capital raises, the analysis used to determine the Company’s ability as a going concern does not include cash sources beyond the Company’s direct control that management expects to be available within the next 12 months. Management expects that the Company’s existing cash and cash equivalents, accounts receivable and marketable securities as of September 30, 2024, will not be sufficient to enable the Company to fund its anticipated level of operations through one year from the date these financial statements are issued. Management anticipates raising additional capital through the private and public sales of the Company’s equity or debt securities and selling its marketable securities as well as crypto assets, or a combination thereof. Although management believes that such capital sources will be available, there can be no assurances that financing will be available to the Company when needed in order to allow the Company to continue its operations, or if available, on terms acceptable to the Company. If the Company does not raise sufficient capital in a timely manner, among other things, the Company may be forced to scale back or cease its operations altogether. F- 10 3. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Regulation S-X and do not include all the information and disclosures required by generally accepted accounting principles in the United States of America (“GAAP”). The Company has made estimates and judgments affecting the amounts reported in the Company’s condensed consolidated financial statements and the accompanying notes. The actual results experienced by the Company may differ materially from the Company’s estimates. The condensed consolidated financial information is unaudited but reflects all normal adjustments that are, in the opinion of management, necessary to provide a fair statement of results for the interim periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2023 (the “2023 Annual Report”) as amended, filed with the Securities and Exchange Commission (the “SEC”) on September 24, 2024. The condensed consolidated balance sheet as of December 31, 2023 was derived from the Company’s audited 2023 financial statements contained in the above referenced 2023 Annual Report. Results of the three and nine months ended September 30, 2024, are not necessarily indicative of the results to be expected for the full year ending December 31, 2024. Prior Period Revision - Statement of Cash Flows For the nine months ended September 30, 2024, the Company disclosed the borrowings of lines of credit and repayments of lines of credit as separate line items within notes payable activity of the financing activities section of the consolidated statement of cash flows. The Company has corrected these line items for the nine months ended September 30, 2023 for comparability purposes. Significant Accounting Policies Other than as noted below, there have been no material changes to the Company’s significant accounting policies previously disclosed in the 2023 Annual Report. Revenue Recognition Crypto Assets Mining The Company has entered into a crypto assets mining pool by executing a contract with a mining pool operator to provide hash calculation services to the mining pool. The Company’s customer, as defined in Accounting Standards Codification (“ASC”) 606-10-20, is the mining pool operator with which the Company has agreed to the terms of service and user service agreement. The Company supplies hash calculation services, in exchange for consideration, to the pool operator who in turn provides transaction verification services to third parties via a mining pool that includes other participants. The Company’s performance obligation is the provision of hash calculation services to the pool operator and this performance obligation is an output of the Company’s ordinary activities for which it decides when to provide services under the contract. The Company’s enforceable right to compensation begins only when, and lasts as long as, the Company provides hash calculation services to the mining pool operator and is created as power is provided over time. The only consideration due to the Company relates to the provision of hash calculation services. The contract with the pool operator provides both parties the unilateral enforceable right to terminate the contract at any time without penalty. The customer termination option results in a contract that continuously renews throughout the day and therefore has a duration of less than 24 hours. The implied renewal option is not a material right because there are no upfront or incremental fees in the initial contract and the terms, conditions, and compensation amount for the renewal options are at the then market rates. Providing such hash calculation services is the only performance obligation in the Company’s contracts with mining pool operators. The transaction consideration the Company receives, if any, is non-cash consideration in the form of Bitcoin. Changes in the fair value of the non-cash consideration due to form of the consideration (changes in the market price of Bitcoin) are not included in the transaction price and are therefore not included in revenue. The mining pool operator charges fees to cover the costs of maintaining the pool and are deducted from amounts the Company may otherwise earn and are treated as a reduction to the consideration earned. Fees fluctuate and historically have been approximately 0.3% per reward earned, on average. The Company participated in mining pools that used the full pay-per-share (“FPPS”) payout method for the nine months ended September 30, 2024. The Company is entitled to compensation once it begins to perform hash calculations for the pool operator in accordance with the operator’s specifications over a 24-hour period beginning midnight UTC and ending 23:59:59 UTC on a daily basis. The non-cash consideration that the Company is entitled to for providing hash calculations to the pool operator under the FPPS payout method is made up of block rewards and transaction fees less pool operator fees determined as follows: · The non-cash consideration in the form of a block reward is based on the total blocks expected to be generated on the Bitcoin network for the daily 24-hour period beginning midnight UTC and ending 23:59:59 UTC in accordance with the following formula: the daily hash calculations that the Company provided to the pool operator as a percent of the Bitcoin network’s implied hash calculations as determined by the network difficulty, multiplied by the total Bitcoin network block rewards expected to be generated for the same daily period. F- 11 · The non-cash consideration in the form of transaction fees paid by transaction requestors is based on the share of standard transaction fees over the daily 24-hour period beginning midnight UTC and ending 23:59:59 UTC. The pool operator calculates the standard transaction fee during the 24-hour period using a rolling 144 block moving average of actual transaction fees. · The block reward and transaction fees earned by the Company are reduced by mining pool fees charged by the operator for operating the pool based on a rate schedule per the mining pool contract. The mining pool fee is only incurred to the extent the Company performs hash calculations and generates revenue in accordance with the pool operator’s payout formula during the same 24-hour period beginning midnight UTC daily. The contract is in effect until terminated by either party. All consideration pursuant to this arrangement is variable. It is not probable that a significant reversal of cumulative revenue will occur. The Company is able to calculate the payout based on the contractual formula, non-cash revenue is estimated and recognized based on the fair value of Bitcoin on the date of contract inception. Fair value of the crypto assets consideration is determined using the midnight UTC spot price of the Company’s principal market for Bitcoin. The Company recognizes non-cash consideration on the same day that control of the contracted service is transferred to the pool operator, which is the same day as the contract inception. There is no significant financing component in these transactions. Expenses associated with running the crypto assets mining business, such as equipment depreciation and electricity costs, are recorded as a component of cost of revenues. Revenue Recognition Hotel Operations The primary sources of revenue include room and food and beverage revenue from the Company’s hotels. Rooms revenue represents revenue from the occupancy of the Company’s hotel rooms, which is driven by the occupancy and average daily rate charged. Rooms revenue includes revenue from guest no-shows, daily use, and early/late departure fees. The contracts for room stays with customers are generally short in duration and revenues are recognized as services are provided over the course of the hotel stay at the daily transaction price agreed to under the contract. Food and beverage revenue consists of revenue from the restaurants and lounges, in room dining and mini bars, and banquet/catering revenue from group and social functions. Payment of the transaction price is due immediately when the customer purchases the goods and services. Therefore, revenue is recognized at a point in time when the physical possession has transferred to the customer. Reclassifications Certain prior period amounts have been reclassified for comparative purposes to conform to the current-period financial statement presentation, including the discontinued operations presentation of GIGA financial results. These reclassifications had no effect on previously reported results of operations. Recently Issued Accounting Standards On December 14, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires entities to disclose specific rate reconciliations, amount of income taxes separated by federal and individual jurisdiction, and the amount of income (loss) from continuing operations before income tax expense (benefit) disaggregated between federal, state, and foreign. The new standard is effective for the Company for its fiscal year beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the impact of adopting the standard. On November 27, 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 is designed to improve the reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker. The new standard is effective for the Company for its fiscal year beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the impact of adopting the standard. F- 12 In March 2024, the FASB issued ASU No. 2024-01 Compensation - Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards (“ASU 2024-01”). ASU 2024-01 improves clarity and operability without changing the guidance. ASU 2024-01 is effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2024 and early adoption is permitted. The Company does not expect the adoption of ASU 2024-01 to have a material impact on its consolidated financial statements. 4. DECONSOLIDATION OF SUBSIDIARY AND DISCONTINUED OPERATIONS Presentation of GIGA as Discontinued Operations On August 14, 2024, GIGA, filed a petition for reorganization under Chapter 11 of the bankruptcy laws. The filing placed GIGA under the control of the bankruptcy court, which oversees its reorganization and restructuring process. The Company assessed the inherent uncertainties associated with the outcome of the Chapter 11 reorganization process and the anticipated duration thereof, and concluded that it was appropriate to deconsolidate GIGA and its subsidiaries effective on the petition date. The Company recognized a gain on deconsolidation of GIGA of $ 2.0 million included in net gain (loss) from discontinued operations. In connection with the Chapter 11 reorganization process , the Company concluded that the operations of GIGA met the criteria for discontinued operations as this strategic shift that will have a significant effect on the Company’s operations and financial results. As a result, the Company has presented the results of operations, cash flows and financial position of GIGA as discontinued operations in the accompanying consolidated financial statements and notes for all periods presented. The following table presents the assets and liabilities of GIGA operations: Schedule of presents the assets and liabilities September 30, December 31, 2024 2023 Cash and cash equivalents $ - $ 3,601,000 Restricted cash - 700,000 Accounts receivable - 4,350,000 Inventories - 6,643,000 Prepaid expenses and other current assets - 4,859,000 Intangible assets, net - 1,707,000 Goodwill - 5,794,000 Property and equipment, net - current - 1,690,000 Right-of-use assets - 3,023,000 Total assets discontinued operations - 32,367,000 Accounts payable and accrued expenses - 14,005,000 Operating lease liability - 3,098,000 Notes payable - 1,174,000 Convertible notes payable - 4,388,000 Liabilities discontinued operations - 22,664,000 Net assets of discontinued operations $ - $ 9,703,000 Net assets of discontinued operations excludes $ 14.0 million of intercompany notes payable to Hyperscale Data and Ault lending as of December 31, 2024. F- 13 The following table presents the results of GIGA operations: Schedule of operations For the Three Months Ended For the Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Revenue, products $ 10,678,000 $ 10,277,000 $ 30,862,000 $ 27,724,000 Cost of revenue, products 7,824,000 7,216,000 23,339,000 20,035,000 Gross profit 2,854,000 3,061,000 7,523,000 7,689,000 Operating expenses Research and development 906,000 672,000 2,617,000 2,111,000 Selling and marketing 286,000 396,000 1,166,000 1,415,000 General and administrative 2,923,000 2,496,000 8,033,000 9,783,000 Total operating expenses 4,115,000 3,564,000 11,816,000 13,309,000 Loss from operations ( 1,261,000 ) ( 503,000 ) ( 4,293,000 ) ( 5,620,000 ) Other income (expense): Interest and other income 1,554,000 105,000 1,594,000 105,000 Interest expense ( 415,000 ) ( 257,000 ) ( 1,662,000 ) ( 870,000 ) Change in fair value of warrant liability - ( 1,061,000 ) - - Total other income (expense), net 1,139,000 ( 1,213,000 ) ( 68,000 ) ( 765,000 ) Loss before income taxes ( 122,000 ) ( 1,716,000 ) ( 4,361,000 ) ( 6,385,000 ) Income tax benefit - - ( 15,000 ) ( 11,000 ) Net loss ( 122,000 ) ( 1,716,000 ) ( 4,346,000 ) ( 6,374,000 ) Net loss attributable to non-controlling interest 325,000 357,000 1,554,000 1,716,000 Net income (loss) available to common stockholders $ 203,000 $ ( 1,359,000 ) $ ( 2,792,000 ) $ ( 4,658,000 ) The net gain (loss) from discontinued operations for the three and nine months ended September 30, 2024 on the condensed consolidated statement of operations and comprehensive loss includes the gain on deconsolidation as follows: Schedule of gain on deconsolidation For the Three Months Ended September 30, 2024 For the Nine Months Ended September 30, 2024 GIGA net income (loss) $ 203,000 $ ( 2,792,000 ) Gain on deconsolidation 2,013,000 2,013,000 Net gain (loss) from discontinued operations $ 2,216,000 $ ( 779,000 ) F- 14 The cash flow activity related to discontinued operations is presented separately on the statement of cash flows as summarized below: Schedule of statement of cash flows For the Nine Months Ended September 30, 2024 2023 Cash flows from operating activities: Net loss $ ( 4,346,000 ) $ ( 6,374,000 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 618,000 618,000 Amortization of right-of-use assets 684,000 807,000 Amortization of intangibles 157,000 220,000 Stock-based compensation ( 858,000 ) 1,594,000 Changes in operating assets and liabilities: Accounts receivable ( 1,638,000 ) ( 783,000 ) Inventories 1,514,000 1,091,000 Prepaid expenses and other current assets ( 1,516,000 ) ( 706,000 ) Lease liabilities ( 667,000 ) ( 916,000 ) Accounts payable and accrued expenses ( 314,000 ) ( 285,000 ) Net cash used in operating activities ( 6,366,000 ) ( 4,734,000 ) Cash flows from investing activities: Purchase of property and equipment ( 249,000 ) ( 177,000 ) Cash decrease upon deconsolidation ( 3,550,000 ) - Net cash used in investing activities ( 3,799,000 ) ( 177,000 ) Cash flows from financing activities: Proceeds from notes payable 2,552,000 2,316,000 Cash contributions from parent 3,383,000 2,361,000 Net cash provided by financing activities 5,935,000 4,677,000 Effect of exchange rate changes on cash and cash equivalents ( 71,000 ) 153,000 Net increase in cash and cash equivalents and restricted cash ( 4,301,000 ) ( 81,000 ) Cash and cash equivalents and restricted cash at beginning of period 4,301,000 2,195,000 Cash and cash equivalents and restricted cash at end of period $ - $ 2,114,000 Supplemental disclosures of cash flow information: Cash paid during the period for interest $ 946,000 $ 862,000 5. CHANGE IN PLAN OF SALE OF AGREE HOTEL PROPERTIES On April 30, 2024, the Company had a change in plan of sale for its four hotels owned and operated by AGREE. As a result, as of April 30, 2024, the assets no longer met the held for sale criteria and were required to be reclassified as held and used at the lower of adjusted carrying value or the fair value at the date of the not to sell. For presentation purposes, the assets and liabilities previously held for sale as of December 31, 2023, were reclassified in the December 31, 2023 balance sheet in the accompanying financial statements back to their original asset and liability groups at their previous carrying values. In connection with this change in plan of sale, the Company recorded a loss on impairment of property and equipment related to the real estate assets of AGREE of $ 8.0 million during the nine months ended September 30, 2024. The fair values of property and equipment related to the real estate assets of AGREE were based on a discounted cash flow income approach for the hotel properties and a comparable sales market approach for the vacant land assets. F- 15 6. REVENUE DISAGGREGATION The following tables summarize disaggregated customer contract revenues and the source of the revenue for the three months ended September 30, 2024 and 2023. Revenues from lending and trading activities included in consolidated revenues were primarily interest, dividend and other investment income, which are not considered to be revenues from contracts with customers under GAAP. The Company’s disaggregated revenues consisted of the following for the three months ended September 30, 2024: Schedule of disaggregated revenues TurnOnGreen Fintech Sentinum AGREE Energy ROI Holding Co. Total Primary Geographical Markets North America $ 1,227,000 $ - $ 5,432,000 $ 5,512,000 $ 12,327,000 $ 54,000 $ 845,000 $ 25,397,000 Europe 1,000 - - - 26,000 - - 27,000 Middle East and other 62,000 - - - - - - 62,000 Revenue from contracts with customers 1,290,000 - 5,432,000 5,512,000 12,353,000 54,000 845,000 25,486,000 Revenue, lending and trading activities (North America) - 5,575,000 - - - - - 5,575,000 Total revenue $ 1,290,000 $ 5,575,000 $ 5,432,000 $ 5,512,000 $ 12,353,000 $ 54,000 $ 845,000 $ 31,061,000 Major Goods or Services Power supply units and systems $ 1,290,000 $ - $ - $ - $ - $ - $ - $ 1,290,000 Revenue from mined crypto assets at Sentinum owned and operated facilities - - 4,362,000 - - - - 4,362,000 Revenue from Sentinum crypto mining equipment hosted at third-party facilities - - 902,000 - - - - 902,000 Hotel and real estate operations - - 168,000 5,512,000 - - - 5,680,000 Crane rental - - - - 12,327,000 - - 12,327,000 Other - - - - 26,000 54,000 845,000 925,000 Revenue from contracts with customers 1,290,000 - 5,432,000 5,512,000 12,353,000 54,000 845,000 25,486,000 Revenue, lending and trading activities - 5,575,000 - - - - - 5,575,000 Total revenue $ 1,290,000 $ 5,575,000 $ 5,432,000 $ 5,512,000 $ 12,353,000 $ 54,000 $ 845,000 $ 31,061,000 Timing of Revenue Recognition Goods and services transferred at a point in time $ 22,000 $ - $ 5,432,000 $ 5,512,000 $ 26,000 $ 54,000 $ 845,000 $ 11,891,000 Services transferred over time 1,268,000 - - - 12,327,000 - - 13,595,000 Revenue from contracts with customers $ 1,290,000 $ - $ 5,432,000 $ 5,512,000 $ 12,353,000 $ 54,000 $ 845,000 $ 25,486,000 The Company’s disaggregated revenues consisted of the following for the nine months ended September 30, 2024: TurnOnGreen Fintech Sentinum AGREE Energy ROI Holding Co. Total Primary Geographical Markets North America $ 3,565,000 $ - $ 25,926,000 $ 13,652,000 $ 36,945,000 $ 121,000 $ 1,819,000 $ 82,028,000 Europe 15,000 - - - 94,000 - - 109,000 Middle East and other 171,000 - - - - - - 171,000 Revenue from contracts with customers 3,751,000 - 25,926,000 13,652,000 37,039,000 121,000 1,819,000 82,308,000 Revenue, lending and trading activities (North America) - 4,911,000 - - - - - 4,911,000 Total revenue $ 3,751,000 $ 4,911,000 $ 25,926,000 $ 13,652,000 $ 37,039,000 $ 121,000 $ 1,819,000 $ 87,219,000 Major Goods or Services Power supply units and systems $ 3,751,000 $ - $ - $ - $ - $ - $ - $ 3,751,000 Revenue from mined crypto assets at Sentinum owned and operated facilities - - 19,563,000 - - - - 19,563,000 Revenue from Sentinum crypto mining equipment hosted at third-party facilities - - 5,638,000 - - - - 5,638,000 Hotel and real estate operations - - 725,000 13,652,000 - - - 14,377,000 Crane rental - - - - 36,945,000 - - 36,945,000 Other - - - - 94,000 121,000 1,819,000 2,034,000 Revenue from contracts with customers 3,751,000 - 25,926,000 13,652,000 37,039,000 121,000 1,819,000 82,308,000 Revenue, lending and trading activities - 4,911,000 - - - - - 4,911,000 Total revenue $ 3,751,000 $ 4,911,000 $ 25,926,000 $ 13,652,000 $ 37,039,000 $ 121,000 $ 1,819,000 $ 87,219,000 Timing of Revenue Recognition Goods and services transferred at a point in time $ 31,000 $ - $ 25,926,000 $ 13,652,000 $ 94,000 $ 121,000 $ 1,817,000 $ 41,643,000 Services transferred over time 3,720,000 - - - 36,945,000 - - 40,665,000 Revenue from contracts with customers $ 3,751,000 $ - $ 25,926,000 $ 13,652,000 $ 37,039,000 $ 121,000 $ 1,817,000 $ 82,308,000 F- 16 The Company’s disaggregated revenues consisted of the following for the three months ended September 30, 2023: TurnOnGreen Fintech Sentinum AGREE SMC ROI Energy Total Primary Geographical Markets North America $ 1,075,000 $ - $ 7,891,000 $ 5,404,000 $ 15,931,000 $ 18,000 $ 12,929,000 $ 43,248,000 Europe 66,000 - - - - - - 66,000 Middle East and other 25,000 - - - - - - 25,000 Revenue from contracts with customers 1,166,000 - 7,891,000 5,404,000 15,931,000 18,000 12,929,000 43,339,000 Revenue, lending and trading activities (North America) - ( 249,000 ) - - - - - ( 249,000 ) Total revenue $ 1,166,000 $ ( 249,000 ) $ 7,891,000 $ 5,404,000 $ 15,931,000 $ 18,000 $ 12,929,000 $ 43,090,000 Major Goods or Services Power supply units & systems $ 1,074,000 $ - $ - $ - $ - $ - $ - $ 1,074,000 Revenue from mined crypto assets at Sentinum owned and operated facilities - - 6,389,000 - - - - 6,389,000 Revenue from Sentinum crypto mining equipment hosted at third-party facilities - - 1,169,000 - - - - 1,169,000 Hotel and real estate operations - - 333,000 5,404,000 - - - 5,737,000 Karaoke machines and related consumer goods - - - - 15,931,000 - - 15,931,000 Crane rental - - - - - - 12,490,000 12,490,000 Other 92,000 - - - 18,000 439,000 549,000 Revenue from contracts with customers 1,166,000 - 7,891,000 5,404,000 15,931,000 18,000 12,929,000 43,339,000 Revenue, lending and trading activities - ( 249,000 ) - - - - - ( 249,000 ) Total revenue $ 1,166,000 $ ( 249,000 ) $ 7,891,000 $ 5,404,000 $ 15,931,000 $ 18,000 $ 12,929,000 $ 43,090,000 Timing of Revenue Recognition Goods transferred at a point in time $ 1,160,000 $ - $ 7,891,000 $ 5,404,000 $ 15,931,000 $ 18,000 $ 439,000 $ 30,843,000 Services transferred over time 6,000 - - - - - 12,490,000 12,496,000 Revenue from contracts with customers $ 1,166,000 $ - $ 7,891,000 $ 5,404,000 $ 15,931,000 $ 18,000 $ 12,929,000 $ 43,339,000 The Company’s disaggregated revenues consisted of the following for the nine months ended September 30, 2023: TurnOnGreen Fintech Sentinum AGREE SMC ROI Energy Total Primary Geographical Markets North America $ 2,400,000 $ - $ 24,389,000 $ 12,032,000 $ 21,939,000 $ 63,000 $ 38,604,000 $ 99,427,000 Europe 77,000 - - - - - 109,000 186,000 Middle East and other 288,000 - - - - - - 288,000 Revenue from contracts with customers 2,765,000 - 24,389,000 12,032,000 21,939,000 63,000 38,713,000 99,901,000 Revenue, lending and trading activities (North America) - 4,337,000 - - - - 4,337,000 Total revenue $ 2,765,000 $ 4,337,000 $ 24,389,000 $ 12,032,000 $ 21,939,000 $ 63,000 $ 38,713,000 $ 104,238,000 Major Goods or Services Power supply units & systems $ 2,544,000 $ - $ - $ - $ - $ - $ - $ 2,544,000 Revenue from mined crypto assets at Sentinum owned and operated facilities - - 21,103,000 - - - - 21,103,000 Revenue from Sentinum crypto mining equipment hosted at third-party facilities - - 2,170,000 - - - - 2,170,000 Hotel and real estate operations - - 1,116,000 12,032,000 - - - 13,148,000 Karaoke machines and related consumer goods - - - - 21,939,000 - - 21,939,000 Crane rental - - - - - - 37,726,000 37,726,000 Other 221,000 - - - 63,000 987,000 1,271,000 Revenue from contracts with customers 2,765,000 - 24,389,000 12,032,000 21,939,000 63,000 38,713,000 99,901,000 Revenue, lending and trading activities - 4,337,000 - - - - - 4,337,000 Total revenue $ 2,765,000 $ 4,337,000 $ 24,389,000 $ 12,032,000 $ 21,939,000 $ 63,000 $ 38,713,000 $ 104,238,000 Timing of Revenue Recognition Goods transferred at a point in time $ 11,000 $ - $ 24,389,000 $ 12,032,000 $ 21,939,000 $ 63,000 $ 987,000 $ 59,421,000 Services transferred over time 2,754,000 - - - - - 37,726,000 40,480,000 Revenue from contracts with customers $ 2,765,000 $ - $ 24,389,000 $ 12,032,000 $ 21,939,000 $ 63,000 $ 38,713,000 $ 99,901,000 F- 17 7. FAIR VALUE OF FINANCIAL INSTRUMENTS The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy: Fair value, assets measured on recurring basis Fair Value Measurement at September 30, 2024 Total Level 1 Level 2 Level 3 Assets: Investment in common stock of Alzamend Neuro, Inc. (“Alzamend”) – a related party $ 131,000 $ 131,000 $ - $ - Investments in marketable equity securities 687,000 687,000 - - Crypto assets 65,000 65,000 - - Total assets measured at fair value $ 883,000 $ 883,000 $ - $ - Liabilities: Warrant and embedded conversion feature liabilities $ 8,000 $ - $ - $ 8,000 Total liabilities measured at fair value $ 8,000 $ - $ - $ 8,000 Fair Value Measurement at December 31, 2023 Total Level 1 Level 2 Level 3 Assets: Investment in common stock of Alzamend – a related party $ 679,000 $ 679,000 $ - $ - Investments in marketable equity securities 27,000 27,000 - - Cash and marketable securities held in trust account 2,200,000 2,200,000 - - Total assets measured at fair value $ 2,906,000 $ 2,906,000 $ - $ - Liabilities: Warrant and embedded conversion feature liabilities $ 970,000 $ - $ - $ 970,000 Total liabilities measured at fair value $ 970,000 $ - $ - $ 970,000 The Company assesses the inputs used to measure fair value using the three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market. For investments where little or no public market exists, management’s determination of fair value is based on the best available information which may incorporate management’s own assumptions and involves a significant degree of judgment, taking into consideration various factors including earnings history, financial condition, recent sales prices of the issuer’s securities and liquidity risks. The changes in Level 3 fair value hierarchy during the three and nine months ended September 30, 2024 and 2023 were as follows: Schedule of changes in fair value hierarchy Level 3 Balance at Beginning of Period Fair Value Adjustments Grants Level 3 Balance at End of Period Nine months ended September 30, 2024 Warrant liabilities $ 60,000 $ ( 52,000 ) $ - $ 8,000 Embedded conversion feature liabilities $ 910,000 $ ( 910,000 ) $ - $ - Nine months ended September 30, 2023 Warrant liabilities $ 651,000 $ ( 4,981,000 ) $ 4,330,000 $ - Embedded conversion feature liabilities $ 2,316,000 $ ( 3,439,000 ) $ 1,352,000 $ 229,000 Level 3 Balance at Beginning of Period Fair Value Adjustments Grants Level 3 Balance at End of Period Three months ended September 30, 2024 Warrant liabilities $ 578,000 $ ( 570,000 ) $ - $ 8,000 Embedded conversion feature liabilities $ 155,000 $ ( 155,000 ) $ - $ - Three months ended September 30, 2023 Warrant liabilities $ 2,446,000 $ ( 2,446,000 ) $ - $ - Embedded conversion feature liabilities $ 2,577,000 $ ( 2,348,000 ) $ - $ 229,000 F- 18 8. Equity Investments for Which Measurement Alternative Has Been Selected As of September 30, 2024 and December 31, 2023, the Company held equity investments in other securities valued at $ 5.3 million and $ 21.8 million, respectively, that were valued using a measurement alternative. These investments are included in other equity securities in the accompanying consolidated balance sheets. The Company has made cumulative downward adjustments for impairments for equity securities that do not have readily determinable fair values for the nine months ended September 30, 2024 and 2023, totaling $ 6.3 million and $ 11.6 million, respectively. Approximately $ 6.3 million of the impairment charge for the nine months ended September 30, 2024 was reflected in other income (expense) on the condensed consolidated statement of operations and comprehensive loss. Approximately $ 9.6 million of the impairment charge for the nine months ended September 30, 2023 was reflected in other income (expense) and $2.0 million of the impairment charge related to Fintech lending operations and was recorded against revenue from lending and trading activities on the condensed consolidated statement of operations and comprehensive loss. 9. Marketable EQUITY Securities Marketable equity securities with readily determinable market prices consisted of the following as of September 30, 2024 and December 31, 2023: Schedule of marketable securities Marketable equity securities at September 30, 2024 Gross unrealized Gross unrealized Cost gains losses Fair value Common shares $ 5,476,000 $ 672,000 $ ( 5,461,000 ) $ 687,000 Marketable equity securities at December 31, 2023 Gross unrealized Gross unrealized Cost gains losses Fair value Common shares $ 5,119,000 $ 12,000 $ ( 5,104,000 ) $ 27,000 The Company’s investment in marketable equity securities is revalued on each balance sheet date. 10. CRYPTO ASSETS The following table presents revenue from mined crypto assets for the three and nine months ended September 30, 2024 and 2023: Schedule of revenue from crypto assets For the Three Months Ended For the Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Revenue from mined crypto assets at Sentinum owned and operated facilities $ 4,362,000 $ 6,389,000 $ 19,563,000 $ 21,103,000 Revenue from Sentinum crypto mining equipment hosted at third-party facilities 902,000 1,169,000 5,638,000 2,170,000 Revenue, crypto assets mining $ 5,264,000 $ 7,558,000 $ 25,201,000 $ 23,273,000 F- 19 The following table presents the activities of the crypto assets (included in prepaid expenses and other current assets) for the nine months ended September 30, 2024 and 2023: Schedule of activities of the crypto assets For the Nine Months Ended September 30, 2024 2023 Balance at January 1 $ 546,000 $ 554,000 Additions of mined crypto assets 19,563,000 21,103,000 Sale of crypto assets ( 20,038,000 ) ( 21,330,000 ) Payments to vendors with crypto assets ( 31,000 ) ( 20,000 ) Payment of notes payable with crypto assets ( 506,000 ) - Payment of interest payable with crypto assets ( 142,000 ) - Realized gain on sale of crypto assets 649,000 404,000 Unrealized gain on crypto assets 24,000 - Impairment of mined crypto assets - ( 376,000 ) Balance at September 30 $ 65,000 $ 335,000 11. PROPERTY AND EQUIPMENT, NET At September 30, 2024 and December 31, 2023, property and equipment consisted of: Schedule of property and equipment September 30, 2024 December 31, 2023 Building, land and improvements $ 92,850,000 $ 100,184,000 Crypto assets mining equipment 12,162,000 50,640,000 Crane rental equipment 34,500,000 34,469,000 Computer, software and related equipment 11,276,000 10,533,000 Aircraft 15,983,000 15,983,000 Other property and equipment 11,503,000 11,066,000 178,274,000 222,875,000 Accumulated depreciation and amortization ( 17,400,000 ) ( 27,209,000 ) Property and equipment, net $ 160,874,000 $ 195,666,000 Summary of depreciation expense: Schedule of depreciation For the Three Months Ended For the Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Depreciation expense $ 7,533,000 $ 9,894,000 $ 19,174,000 $ 21,823,000 Impairment of Property and Equipment During the three months ended September 30, 2024, due to increases in the Bitcoin mining difficulty level, which compounded the continued impact of the Bitcoin halving event, we concluded that indicated that an impairment triggering event had occurred. Testing performed indicated the estimated fair value of the Company’s miners to be less than their net carrying value as of September 30, 2024, and an impairment charge of $ 10.5 million was recognized, decreasing the net carrying value of the Company’s crypto assets mining equipment to their estimated fair value. The Company valued the miners using an income approach utilizing a discounted cash flow and a discount rate of 20%. The Company estimated the cash flow from the miners over a two-year period assuming a utilization rate of 98%, a mining difficulty level of 101.6 trillion, a Bitcoin price of $ 76,000 and a power cost of $0.055 per kilowatt-hour. The estimated fair value of the Company’s miners is classified in Level 3 of the fair value hierarchy with no observable inputs using a discounted cash flow methodology. In addition, the Company has recorded $ 1.2 million and $ 9.2 million in impairment charges related to real estate assets of AGREE during the three and nine months ended September 30, 2024, respectively. F- 20 12. INTANGIBLE ASSETS, NET At September 30, 2024 and December 31, 2023, intangible assets consisted of: Schedule of intangible asset Useful Life September 30, 2024 December 31, 2023 Definite lived intangible assets: Developed technology 7 years $ 2,081,000 $ 1,949,000 Customer list 10 years 1,290,000 1,290,000 Trade names 12 years 1,030,000 1,030,000 4,401,000 4,269,000 Accumulated amortization ( 719,000 ) ( 222,000 ) Total definite-lived intangible assets $ 3,682,000 $ 4,047,000 Certain of the Company’s trade names and trademarks were determined to have an indefinite life. The remaining definite-lived intangible assets are primarily being amortized on a straight-line basis over their estimated useful lives. Summary of amortization expense: Schedule of amortization expense For the Three Months Ended For the Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Amortization expense $ 371,000 $ 226,000 $ 479,000 $ 541,000 As of September 30, 2024, intangible assets subject to amortization have an average remaining useful life of 6.9 years. The following table presents estimated amortization expense for each of the succeeding five calendar years and thereafter. Schedule of estimated amortization expense 2024 (remainder) $ 124,000 2025 494,000 2026 494,000 2027 494,000 2028 494,000 2029 370,000 Thereafter 1,212,000 $ 3,682,000 13. INVESTMENTS – RELATED PARTIES Investments in Alzamend, Ault & Company, Inc. (“Ault & Company”) and GIGA at September 30, 2024 and December 31, 2023, were comprised of the following: Investment in Promissory Notes, Related Parties – Ault & Company and GIGA (Recorded in “Investment in Promissory Notes and Other, Related Party” on the Condensed Consolidated Balance Sheets) Schedule of investment Interest September 30, December 31, Rate Due Date 2024 2023 Promissory note, related party 8 % December 31, 2024 $ 2,500,000 $ 2,500,000 10% Senior Secured Convertible Promissory Note - GIGA 10 % December 31, 2024 4,383,000 - 12% Senior Secured Subordinated Convertible Promissory Note - GIGA 10 % December 31, 2024 6,750,000 - 12% Senior Secured Subordinated Convertible Promissory Note - GIGA 12 % June 30, 2025 5,194,000 - Debtor in possession Loan Agreement - GIGA 6 % October 28, 2024 80,000 - Accrued interest receivable GIGA 768,000 - Accrued interest receivable Ault & Company 568,000 568,000 Other 211,000 900,000 Allowance for credit losses ( 5,668,000 ) - Total investment in promissory notes and other, related parties $ 14,786,000 $ 3,968,000 F- 21 Summary of interest income, related party, recorded within interest and other income on the condensed consolidated statement of operations: Schedule of Interest income, related party For the Three Months Ended For the Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Interest income, related party $ 557,000 $ 50,000 $ 1,144,000 $ 150,000 At each reporting date, the Company applies its judgment to evaluate the collectability of the note receivable and makes a provision based on the assessed amount of expected credit loss. This judgment is based on parameters such as interest rates, market conditions and creditworthiness of the creditor. The Company determined that the collectability of certain notes receivables is doubtful based on information available. Upon the deconsolidation of the GIGA, the Company established an allowance for credit losses of $2.6 million related to notes receivable from GIGA included in net gain (loss) from discontinued operations. During the three months ended March 31, 2024, due to uncertainties surrounding collection, the Company recorded a loan loss reserve of $ 3.1 million related to the promissory note from Ault & Company recorded in provision for loan losses, related party, reversed the related accrued receivable and did not record interest income on the note. Investment in Alzamend Series B Convertible Preferred Stock, Warrants and Common Stock, Related Parties – Alzamend (Recorded in “Investments in Common Stock and Equity Securities, Related Party” on the Condensed Consolidated Balance Sheets) Schedule of investment in common stock Investments in common stock, related parties at September 30, 2024 Cost Gross unrealized losses Fair value Common shares $ 24,697,000 $ ( 24,566,000 ) $ 131,000 Alzamend series B convertible preferred stock, warrants 2,100,000 - 2,100,000 $ 26,797,000 $ ( 24,566,000 ) $ 2,231,000 Investments in common stock, related parties at December 31, 2023 Cost Gross unrealized losses Fair value Common shares $ 24,688,000 $ ( 24,009,000 ) $ 679,000 The following tables summarize the changes in the Company’s investments in Alzamend common stock during the three and nine months ended September 30, 2024 and 2023: Schedule of investment in warrants and common stock For the Three Months Ended September 30, 2024 2023 Balance at July 1 $ 304,000 $ 5,836,000 Investment in common stock of Alzamend - - Unrealized loss in common stock of Alzamend ( 173,000 ) ( 3,124,000 ) Balance at September 30 $ 131,000 $ 2,712,000 For the Nine Months Ended September 30, 2024 2023 Balance at January 1 $ 679,000 $ 6,449,000 Investment in common stock of Alzamend 9,000 15,000 Unrealized loss in common stock of Alzamend ( 557,000 ) ( 3,752,000 ) Balance at September 30 $ 131,000 $ 2,712,000 Ault Lending, LLC (“Ault Lending”) Investment in Alzamend Series B Convertible Preferred Stock and Warrants Schedule of investment in warrants and preferred stock September 30, December 31, 2024 2023 Investment in Alzamend preferred stock $ 2,100,000 $ - Total investment in other investments securities, related party $ 2,100,000 $ - In connection with a securities purchase agreement entered into with Alzamend in January 2024, the Company purchased 2,100 shares of Alzamend Series B Convertible Preferred Stock and warrants to purchase 2.1 million shares of Alzamend common stock with a five-year term and an exercise price of $1.20 per share for a total purchase price of $2.1 million. The Agreement provides that Ault Lending may purchase up to $6 million of Alzamend Series B Convertible Preferred Stock in one or more closings. There have been additional closings subsequent to January 2024. F- 22 The Company has elected to account for investment in other investments securities, related party, using a measurement alternative under which they are measured at cost and adjusted for observable price changes and impairments. Messrs. Ault, Horne and Nisser are each paid $ 50,000 annually by Alzamend. 14. EQUITY METHOD INVESTMENT Equity Investments in Unconsolidated Entity – Algorhythm Holdings, Inc. (f/k/a The Singing Machine Company) (“SMC”) The following table summarizes the changes in the Company’s equity investments in an unconsolidated entity, SMC, included in other assets on the condensed consolidated balance sheet, during the nine months ended September 30, 2024: Schedule of equity investments in unconsolidated entity – SMC Rollforward investment in unconsolidated entity Amount Beginning balance - January 1, 2024 $ 1,957,000 Loss from investment in unconsolidated entity ( 1,957,000 ) Ending balance - September 30, 2024 $ - There was no activity in the investment in the unconsolidated entity account during the three months ended September 30, 2024, prior to the transition from the equity method of accounting on September 5, 2024, as described below. Consequently, the beginning balance, activity, and ending balance for this period were all zero. On September 5, 2024, three of the Company’s employees resigned from the board of directors of SMC. As a result of the resignations, and as the Company owned less than 20% of SMC at the time, the Company no longer had the ability to exert significant influence over the operating and financial policies of SMC. The Company discontinued the equity method of accounting for the investment in SMC on September 5, 2024. As a result, the Company changed its accounting for SMC to an investment in marketable equity securities and recognized the investment at fair value, with a gain of $1.3 million recognized as revenue from lending and trading activities in the condensed consolidated statement of operations and comprehensive loss. 15. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Other current liabilities at September 30, 2024 and December 31, 2023 consisted of: Schedule of other current liabilities September 30, December 31, 2024 2023 Accounts payable $ 20,419,000 $ 26,777,000 Accrued payroll and payroll taxes 8,773,000 8,237,000 Warrant liabilities 8,000 60,000 Interest payable 8,669,000 4,197,000 Accrued legal 2,439,000 2,340,000 Other accrued expenses 18,166,000 13,811,000 $ 58,474,000 $ 55,422,000 16. DIVIDEND PAYABLE IN TURNONGREEN COMMON STOCK In March 2024, the Company, in connection with a planned distribution of its common stock holdings of TurnOnGreen, announced the distribution to its stockholders of 25.0 million shares of TurnOnGreen common stock and warrants to purchase 25.0 million shares of TurnOnGreen common stock, which resulted in an adjustment to additional paid in capital and increase to non-controlling interest of $ 4.9 million based on the recorded value of the Company’s holdings in TurnOnGreen at the record date of the distribution. 17. ROI Transfers of White River Common Stock In January of 2024, ROI announced that it had concluded that, for regulatory reasons, ROI would be unable to effect the distribution of its shares of common stock of White River as contemplated by a registration statement previously filed by White River. In an effort to attempt to fulfill its original intent to transfer the shares to ROI shareholders of record as of September 30, 2022, ROI would send such shareholders an agreement whereby qualified shareholders can demonstrate to ROI’s satisfaction that they in fact were beneficial shareholders of ROI’s common or preferred stock as of September 30, 2022 and affirm that they are “accredited investors” by July 26, 2024. F- 23 During the nine months ended September 30, 2024, ROI transferred 12.0 million shares of White River common stock with a fair value of $ 19.2 million at the date of transfer to certain of its accredited investors to resolve the matters discussed above. In conjunction with the transfers to non-controlling interests, shares of ROI’s investment in White River’s Series A Convertible Preferred Stock were converted into shares of White River common stock, resulting in a non-cash $ 17.9 million gain on conversion. Ault Lending Transfer On February 14, 2024, ROI transferred 2.5 million shares of White River common stock with a carryover basis of $0.5 million and a fair value of $7.5 million on the date of transfer to Ault Lending. 18. REDEEMABLE NONCONTROLLING INTERESTS IN EQUITY OF SUBSIDIARY LIABILITY The Company records redeemable noncontrolling interests in equity of subsidiaries to reflect the economic interests of the common stockholders in Ault Disruptive. Redemption of Shares On September 27, 2024, Ault Disruptive announced that it will redeem all of its outstanding shares of common stock which occurred as of the close of business on October 11, 2024, because Ault Disruptive would not consummate an initial business combination within the time period required by its Amended and Restated Certificate of Incorporation, as amended. During the nine months ended September 30, 2024, shares of Ault Disruptive common stock were redeemed for an aggregate redemption amount of $ 1.5 million. On October 11, 2024, all remaining shares of Ault Disruptive common stock were redeemed for a redemption amount of $ 0.8 million. The following table summarizes the changes in the Company’s redeemable noncontrolling interests in equity of subsidiaries during the three months ended September 30, 2024 and 2023: Redeemable noncontrolling interests in equity of subsidiary liability For the Three Months Ended September 30, 2024 2023 Redeemable noncontrolling interests in equity of subsidiaries as of July 1 $ 795,000 $ 1,951,000 Remeasurement of carrying value to redemption value 9,000 228,000 Redeemable noncontrolling interests in equity of subsidiaries as of September 30 $ 804,000 $ 2,179,000 The following table summarizes the changes in the Company’s redeemable noncontrolling interests in equity of subsidiaries during the nine months ended September 30, 2024 and 2023: For the Nine Months Ended September 30, 2024 2023 Redeemable noncontrolling interests in equity of subsidiaries as of January 1 $ 2,224,000 $ 117,993,000 Redemption of Ault Disruptive common stock ( 1,463,000 ) ( 120,064,000 ) Remeasurement of carrying value to redemption value 43,000 4,250,000 Redeemable noncontrolling interests in equity of subsidiaries as of September 30 $ 804,000 $ 2,179,000 Merger Agreement On June 23, 2024, Ault Disruptive entered into a Merger Agreement with GIGA, intending for GIGA to become a majority owned subsidiary and for Ault Disruptive to be renamed Gresham Worldwide, Inc., trading under the ticker “GWWI” on the NYSE American. However, due to GIGA’s bankruptcy filing, the merger agreement was subsequently terminated. On August 14, 2024, GIGA filed a petition for reorganization under Chapter 11 of the bankruptcy laws. F- 24 19. NOTES PAYABLE Notes payable at September 30, 2024 and December 31, 2023, were comprised of the following: Schedule of notes payable Collateral Guarantors Interest rate Due date September 30, 2024 December 31, 2023 AGREE secured construction loans AGREE hotels - 7.0 % January 1, 2025 $ 68,750,000 $ 67,632,000 Circle 8 revolving credit facility Circle 8 cranes with a book value of $29.6 million - 10.0 % December 16, 2025 13,651,000 15,907,000 16% promissory note (in default) - Ault & Company and Milton C. Ault, III 16.0 % (default rate of 24.0%) July 15, 2024 5,572,000 2,572,000 Circle 8 equipment financing notes Circle 8 equipment with a book value of $4.3 million - 10.5 % September 15, 2025 through June 15, 2027 3,829,000 5,629,000 15% term notes (in default as of November 1, 2024) - Milton C. Ault, III 15.0 % (default rate of 22.99%) October 31, 2024 5,399,000 - 8% demand loans - - 8.0 % Upon demand - 950,000 Sentinum note payable - - 12.5 % - - 1,067,000 ROI promissory note (in default) - - 15.0 % (default rate of 18.0%) April 30, 2024 2,094,000 - Other ($0.9 million in default) - - - - 5,501,000 3,808,000 Total notes payable $ 104,796,000 $ 97,565,000 Less: Unamortized debt discounts ( 306,000 ) ( 453,000 ) Total notes payable, net $ 104,490,000 $ 97,112,000 Less: current portion ( 87,730,000 ) ( 11,692,000 ) Notes payable – long-term portion $ 16,760,000 $ 85,420,000 F- 25 OID Only Term Note On July 2, 2024, the Company entered into a term note agreement with institutional investors for the sale of up to $ 2.6 million in term notes, of which the principal amount of $ 1.8 million was immediately funded. A term note was issued at a discount, with net proceeds to the Company of $ 1.5 million. The term note does not accrue any interest. The term note was scheduled to mature on August 2, 2024. The term note is guaranteed by Mr. Ault. The term note maturity was extended to October 16, 2024 , and an extension fee of $ 0.2 million accrues monthly until the term note is paid in full. The term note is included in “Other” in the table above. ROI 15% Term Note On February 9, 2024, ROI entered into a $ 1.77 million term note agreement with an institutional investor bearing interest of 15 % . The term note was issued at a discount, with net proceeds to ROI of $ 1.75 million. The term note was scheduled to mature February 14, 2024. This note has been guaranteed by Ault & Company and Mr. Ault. The term note was subsequently amended to increase the principal amount due to $ 2.1 million, increase the interest rate to 18 % and extend the maturity date to April 30, 2024 . The term note is in default as of May 1, 2024. 15% Term Notes Between April 29, 2024 and August 29, 2024, the Company entered into note agreements totaling $ 5.7 million with an institutional investor bearing interest of 15 % . The term notes were issued at a discount, with net proceeds to the Company of $ 5.1 million. The term notes were amended to extend the maturity dates to October 31, 2024 . The note is default as of November 1, 2024. $20 Million Credit Agreement On June 4, 2024 the Company entered into a Loan Agreement (the “Credit Agreement”) with two institutional investors (collectively, the “Lender”). The Credit Agreement provides for an unsecured, non-revolving credit facility with an aggregate draw limit of $ 20.0 million. However, the Company is restricted to having no more than $ 2.0 million in principal amount of outstanding advances at any given time under the Credit Agreement. As of September 30, 2024, $ 2.0 million has been advanced, exclusive of a $ 0.4 million original issue discount (“OID”). All loans under the Credit Agreement will be evidenced by a promissory note. The Lender made an Advance to the Company of $1.5 million on the execution date. The advances are due December 4, 2024 , provided, however, that if on such date, the Company has executed an equity line of credit agreement relating to the sale of shares of the Company’s 13.00% Series D Cumulative Redeemable Perpetual Preferred Stock, has an effective registration statement relating thereto and is not currently in default under such agreement, then the maturity date shall be automatically extended until June 4, 2025. The Lender is not obligated to make any further Advances under the Credit Agreement after the maturity date. Advances under the Credit Agreement will include the addition of an OID of 20 % to the amount of each Advance and all Advances will bear interest at the rate of 15.0% per annum and may be repaid at any time without penalty or premium. The obligations of the Company under the Credit Agreement are secured by a guaranty provided by Milton C. Ault, the Executive Chairman of the Company. Circle 8 revolving credit facility On October 16, 2024, Circle 8 was in default related to reporting requirements under the terms of their revolving credit facility. Circle 8 was able to obtain a waiver on November 19, 2024 to cure the event of default. Notes Payable Maturities The contractual maturities of the Company’s notes payable, assuming the exercise of all extensions that are exercisable solely at the Company’s option, as of September 30, 2024 were: Schedule of maturities Year 2024 (remainder) $ 19,261,000 2025 84,124,000 2026 879,000 2027 266,000 2028 266,000 $ 104,796,000 F- 26 Interest Expense Schedule of interest expense For the Three Months Ended For the Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Contractual interest expense $ 5,350,000 $ 4,986,000 $ 10,725,000 $ 9,645,000 Forbearance fees 1,050,000 518,000 3,300,000 7,319,000 Amortization of debt discount 1,366,000 634,000 4,800,000 18,216,000 Total interest expense $ 7,766,000 $ 6,138,000 $ 18,825,000 $ 35,180,000 20. NOTES PAYABLE, RELATED PARTY Notes payable, related party at September 30, 2024 and December 31, 2023, were comprised of the following: Schedule of notes payable, related party Interest rate Due date September 30, 2024 December 31, 2023 Notes from officers – Hyperscale Data 18 % - $ - $ 98,000 Notes from officers - TurnOnGreen 14 % Past due 46,000 51,000 Notes from board member - ROI No interest Upon demand - 90,000 Ault & Company advances No interest Upon demand - 1,909,000 Other related party advances No interest Upon demand 125,000 124,000 Total notes payable $ 171,000 $ 2,272,000 Summary of interest expense, related party, recorded within interest expense on the condensed consolidated statement of operations: Schedule of interest expense, related party For the Three Months Ended For the Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Interest expense, related party $ 1,000 $ - $ 20,000 $ - 21. CONVERTIBLE NOTES Convertible notes payable at September 30, 2024 and December 31, 2023, were comprised of the following: Schedule of convertible notes payable Conversion price per share Interest rate Due date September 30, 2024 December 31, 2023 Convertible promissory note –OID only - in default 90% of 5-day VWAP OID Only September 28, 2024 $ 393,000 $ 1,673,000 10% OID convertible promissory note – in default as of October 20, 2024 $ 0.17 18 % October 19, 2024 4,730,000 - Avalanche International Corp. (“AVLP”) convertible promissory notes, principal $ 0.35 (AVLP stock) 7 % August 22, 2025 9,911,000 9,911,000 ROI senior secured convertible note - in default (1) $ 0.11 (ROI stock) OID Only April 27, 2024 4,245,000 6,513,000 Fair value of embedded conversion options - 910,000 Total convertible notes payable 19,279,000 19,007,000 Less: unamortized debt discounts ( 101,000 ) ( 2,179,000 ) Total convertible notes payable, net of financing cost, long term $ 19,178,000 $ 16,828,000 Less: current portion ( 9,725,000 ) ( 7,375,000 ) Convertible notes payable, net of financing cost – long-term portion $ 9,453,000 $ 9,453,000 (1) See Arena litigation discussed in Note 22 below. F- 27 10% OID Convertible Promissory Note On July 18, 2024, the Company entered into a note purchase agreement (the “Purchase Agreement”) with an institutional investor (the “Investor”) pursuant to which the Investor purchased from the Company, on July 19, 2024, in a registered direct offering, a $ 5.4 million 10% OID Convertible Promissory Note (the “Note”). The Note was sold to the Investor for a purchase price of $ 4.9 million, which included an OID of $0.5 million. The Note accrues interest at the rate of 15 % . The Note matured on October 19, 2024 and is in default as of October 20, 2024. The Note is convertible into shares of Class A common stock at a conversion price of $ 0.17 per share. During the three and nine months ended September 30, 2024, the Investor converted $ 0.7 million of the Note into 3.0 million shares of Class A common stock that had a fair value of $ 0.9 million at the time of conversion and the Company recognized a $ 0.2 million loss on extinguishment of debt. 6% Convertible Promissory Notes On March 11, 2024, the Company entered into a note purchase agreement with two institutional investors pursuant to which the investors agreed to acquire, and the Company agreed to issue and sell in a registered direct offering to the investors an aggregate of $ 2.0 million convertible promissory notes, bearing interest of 6 % . The convertible promissory notes were converted into shares of Class A common stock in May 2024 at a conversion price of $ 0.35 per share and the Company recognized a $ 0.7 million loss on extinguishment of debt. ROI Gain on Extinguishment of Senior Secured Convertible Notes During the nine months ended September 30, 2024, ROI converted $ 2.3 million of ROI senior secured convertible notes that had a fair value of $ 0.9 million at the time of conversion and recognized a $ 1.4 million gain on extinguishment of debt. Contractual Maturities The contractual maturities of the Company’s convertible notes payable, assuming the exercise of all extensions that are exercisable solely at the Company’s option, as of September 30, 2024 were: Schedule of contractual maturities Year Principal 2024 $ 9,368,000 2025 9,911,000 $ 19,279,000 Significant inputs associated with the embedded conversion options include: Schedule of weighted average assumptions September 30, 2024 December 31, 2023 At Inception Contractual term in years Variable 2.7 1.0 Volatility 75 % 82 % 111 % Dividend yield 0 % 0 % 0 % Risk-free interest rate 4.0 % 4.0 % 3.5 % Activity related to the embedded conversion option derivative liabilities for the nine months ended September 30, 2024 was as follows: Schedule of derivative liabilities Balance as of January 1, 2024 $ 910,000 Change in fair value ( 910,000 ) Ending balance as of September 30, 2024 $ - F- 28 22. COMMITMENTS AND CONTINGENCIES Contingencies Litigation Matters The Company is involved in litigation arising from other matters in the ordinary course of business. The Company is regularly subject to claims, suits, regulatory and government investigations, and other proceedings involving labor and employment, commercial disputes, and other matters. Such claims, suits, regulatory and government investigations, and other proceedings could result in fines, civil penalties, or other adverse consequences. Certain of these outstanding matters include speculative, substantial or indeterminate monetary amounts. The Company records a liability when it believes that it is probable that a loss has been incurred and the amount can be reasonably estimated. If the Company determines that a loss is reasonably possible and the loss or range of loss can be estimated, the Company discloses the reasonably possible loss. The Company evaluates developments in its legal matters that could affect the amount of liability that has been previously accrued, and the matters and related reasonably possible losses disclosed, and makes adjustments as appropriate. Significant judgment is required to determine both likelihood of there being and the estimated amount of a loss related to such matters. Arena Litigation Arena Investors, LP (ROI Litigation) On May 30, 2024, Arena Investors, LP (“Arena”), in its capacity as collateral agent for five noteholders, filed a filed a Complaint (the “ROI Complaint”) in the Supreme Court of the State of New York, County of New York against the Company and ROI, in action captioned Arena Investors, LP v. Ault Alliance, Inc. and RiskOn International, Inc. , Index No. 652792/2024. The ROI Complaint asserts a cause of action for breach of contract against the Company based on a Guaranty, dated April 27, 2023, and entered into, amongst others, the Company and Arena, and seeks damages in the amount of in excess of $ 3.75 million, plus interest, attorneys’ fees, costs, expenses, and disbursements. The ROI Complaint also asserts a cause of action for breach of contract against ROI based on an alleged breach of that certain Security Agreement, dated April 27, 2023, and entered into among ROI and Arena. In connection with this cause of action, Arena seeks, among other things, costs and expenses from the Company and ROI. On July 31, 2024, the Company and ROI filed a motion to dismiss seeking to partially dismiss the ROI Complaint, as against the Company, and to dismiss the Compliant, in its entirety, as against ROI. The Motion has been fully briefed and is currently pending before the Court. Based on the Company’s assessment of the facts underlying the claims, the uncertainty of litigation, and the preliminary stage of the case, the Company cannot reasonably estimate the potential loss or range of loss that may result from this action. Notwithstanding, the Company has recorded the unpaid portion of the notes. An unfavorable outcome may have a material adverse effect on the Company’s business, financial condition and results of operations. Arena Investors, LP (Gresham Litigation) On June 6, 2024, Arena, in its capacity as collateral agent for Arena and Walleye Opportunities Master Fund Ltd. (“Walleye”), filed a Complaint (the “Complaint”) in the Supreme Court of the State of New York, County of New York against the Company and GIGA, in action captioned Arena Investors, LP v. Gresham Worldwide, Inc. f/k/a Giga-Tronics Incorporated and Ault Alliance, Inc. , Index No. 652898/2024. On July 8, 2024, Arena filed an Amended Complaint (the “Amended Complaint”) in the above-referenced action. The Amended Complaint asserts a cause of action against the Company for declaratory and injunctive relief seeking an injunction enjoining the Company, and its agent, affiliates, servants, and employees from taking actions in breach of that certain Subordination Agreement, dated January 9, 2023, and entered into among Walleye, Arena, and the Company. F- 29 The Amended Complaint also asserts causes of action for breach of contract against GIGA based on two discrete convertible promissory notes (the “Notes”) that GIGA entered into with each of Arena and Walleye, as well as a claim for breach duty of good faith and fair dealing, against GIGA, and seeks, among other things, monetary damages in excess of $ 4.2 million, with interest thereon, attorneys’ fees, costs, and disbursements. The Amended Complaint further asserts another cause of action against GIGA for breach of contract seeking declaratory and injunctive relief based on alleged inspection rights contained in a Security Agreement, dated January 9, 2023 (the “Security Agreement”), and entered into between the Walleye, Arena, and GIGA, which seeks the issuance of an injunction related to such alleged inspection rights, plus the costs and out-of-pocket expenses associated with the enforcement of same. On July 12, 2024, the Court granted injunctive relief to Arena and ordered GIGA to comply with the inspection rights provision of the Security Agreement by July 17, 2024. On July 19, 2024, Arena voluntarily discontinued its cause of action for breach duty of good faith and fair dealing claim against GIGA. On July 29, 2024, the Company and GIGA filed a motion to dismiss, strike, and for sanctions (the “Motion”), in response to the Amended Complaint, on the grounds that, amongst other things, the underlying Notes are criminally usurious under New York. On August 14, 2024, GIGA filed a petition for reorganization under Chapter 11 of the bankruptcy laws. On November 12, 2024, GIGA removed the state court action to the United States District Court for the Southern District of New York. Based on the Company’s assessment of the facts underlying the claims, the uncertainty of litigation, and the preliminary stage of the case, the Company cannot reasonably estimate the potential loss or range of loss that may result from this action. Notwithstanding, the Company has recorded the unpaid portion of the Notes. An unfavorable outcome may have a material adverse effect on the Company’s business, financial condition and results of operations. Other Litigation Matters With respect to the Company’s other outstanding matters, based on the Company’s current knowledge, the Company believes that the amount or range of reasonably possible loss will not, either individually or in aggregate, have a material adverse effect on the Company’s business, consolidated financial position, results of operations, or cash flows. However, the outcome of such matters is inherently unpredictable and subject to significant uncertainties. The Company had accrued loss contingencies related to litigation matters of $ 2.4 million and $ 2.3 million as of September 30, 2024 and December 31, 2023, respectively. 23. STOCKHOLDERS’ EQUITY Reverse Stock Split On January 12, 2024, pursuant to the authorization provided by the Company’s stockholders at the annual meeting of stockholders, the Company’s board of directors approved an amendment to the Certificate of Incorporation to effectuate a reverse stock split of the Company’s issued and outstanding common stock by a ratio of one-for-twenty-five (the “1-for-25 Reverse Split”). The 1-for-25 Reverse Split did not affect the number of authorized shares of common stock, preferred stock or their respective par value per share. As a result of the 1-for-25 Reverse Split, each twenty-five shares of common stock issued and outstanding prior to the 1-for-25 Reverse Split were converted into one share of common stock. The 1-for-25 Reverse Split became effective in the State of Delaware on January 16, 2024. 2023 Issuances Common ATM Offering During the three and nine months ended September 30, 2024, the Company sold an aggregate of 0 and 25.6 million shares of Class A common stock pursuant to the At-The-Market issuance sales agreement, as amended, entered into with Ascendiant Capital Markets, LLC in 2023 (the “2023 Common ATM Offering”) for gross proceeds of $ 0 and $ 14.6 million, respectively. F- 30 Series C Convertible Preferred Stock Offering, Related Party During the three and nine months ended September 30, 2024, the Company sold to Ault & Company an aggregate of 300 and 2,800 shares of Series C Preferred Stock and Warrants to purchase 0.1 million and 0.8 million shares of Class A common stock, for a total purchase price of $ 0.3 million and $ 2.8 million, respectively. Amendment to Loan and Guarantee Agreement On September 17, 2024, the loan and guarantee agreement, dated as of December 14, 2023, as amended, pursuant to which the Company has guaranteed financial obligations of Ault & Company borrowings, was amended regarding the Company’s obligations to fund the restricted cash Segregated Account. The Company agreed to deposit in the Segregated Account: (i) $0.4 million monthly commencing on September 30, 2024 and ending on February 28, 2025; and (ii) $0.5 million monthly commencing on March 31, 2025 and ending on the earlier of the term loan maturity date, prepayment of the term loan in full or the date on which the balance of the Segregated Account exceeds 110% of the outstanding balance of the term loan. As of September 30, 2024, the Company had deposited $ 6.5 million in the Segregated Account. In October 2024, the Company deposited an additional $ 0.4 million in the Segregated Account. ELOC Purchase Agreement On June 20, 2024, the Company entered into a purchase agreement, as amended on November 1, 2024 (the “ELOC Purchase Agreement”) with Orion Equity Partners, LLC (“Orion”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, the Company has the right to direct Orion to purchase up to an aggregate of $ 37.5 million of shares of the Company’s 13.00 % Series D Cumulative Redeemable Perpetual Preferred Stock, par value $ 0.001 per share (the “Preferred Shares”) over the 36 -month term of the ELOC Purchase Agreement at a purchase price equal to 91% of the average closing stock price during the seven consecutive trading days immediately preceding a given purchase date. Under the ELOC Purchase Agreement, after the satisfaction of certain commencement conditions, including, without limitation, the effectiveness of a resale registration statement registering the Preferred Shares for sale (the “Registration Statement”). The ELOC Purchase Agreement may be terminated by the Company at any time after commencement, at its discretion, provided that at the time of termination, the Company does not have any outstanding amounts owed to the Lenders, who are affiliates of Orion, pursuant to the Credit Agreement. There have been no purchases under the ELOC Purchase Agreement. 24. INCOME TAXES The Company calculates its interim income tax provision in accordance with ASC Topic 270, Interim Reporting, and ASC Topic 740, Income Taxes. The Company’s effective tax rate (“ETR”) from continuing operations was 0.1 % and 2.0 % for the three months ended September 30, 2024 and 2023, respectively, and ( 0.21 % ) and 0.4 % for the nine months ended September 30, 2024 and 2023, respectively. The Company recorded an income tax provision of $ 67,000 and $ 0.1 million for the three months ended September 30, 2024 and 2023, respectively, and an income tax provision of $ 47,000 and an income tax provision of $ 0.5 million for the nine months ended September 30, 2024 and 2023, respectively. The difference between the ETR and federal statutory rate of 21 % is primarily attributable to items recorded for GAAP but permanently disallowed for U.S. federal income tax purposes and changes in valuation allowance. F- 31 25. NET LOSS PER SHARE Net loss per share is computed by dividing the net loss to common stockholders by the weighted average number of common shares outstanding. The calculation of the basic and diluted earnings per share is the same for all periods presented as the effect of the potential common stock equivalents is anti-dilutive due to the Company’s net loss position for all periods presented. Anti-dilutive securities, which are convertible into or exercisable for the Company’s common stock, consisted of the following at September 30, 2024 and 2023: Schedule of net loss per share September 30, September 30, 2024 2023 Convertible preferred stock 264,322,000 - Warrants 15,006,000 2,000 Convertible notes 315,000 - Stock options 1,000 1,000 Total 279,644,000 3,000 F- 32 26. SEGMENT AND CUSTOMERS INFORMATION The Company had the following reportable segments as of September 30, 2024 and 2023; see Note 1 for a brief description of the Company’s business. The following data presents the revenues, expenditures and other operating data of the Company and its operating segments for the three and nine months ended September 30, 2024: Schedule of operating segments Nine Months Ended September 30, 2024 TurnOnGreen Fintech Sentinum AGREE Energy ROI Holding Co. Total Revenue $ 3,751,000 $ - $ - $ - $ 94,000 $ 121,000 $ 1,819,000 $ 5,785,000 Revenue, crypto assets mining - - 25,201,000 - - - - 25,201,000 Revenue, hotel and real estate operations - - 725,000 13,652,000 - - - 14,377,000 Revenue, crane operations - - - - 36,945,000 - - 36,945,000 Revenue, lending and trading activities - 4,911,000 - - - - - 4,911,000 Total revenues $ 3,751,000 $ 4,911,000 $ 25,926,000 $ 13,652,000 $ 37,039,000 $ 121,000 $ 1,819,000 $ 87,219,000 Depreciation and amortization expense $ 73,000 $ - $ 12,322,000 $ 2,162,000 $ 3,513,000 $ 57,000 $ 1,526,000 $ 19,653,000 Impairment of property and equipment $ - $ - $ 10,500,000 $ 9,246,000 $ - $ - $ - $ 19,746,000 (Loss) income from operations $ ( 2,781,000 ) $ 3,634,000 $ ( 11,066,000 ) $ ( 8,850,000 ) $ 1,464,000 $ ( 15,891,000 ) $ ( 14,379,000 ) $ ( 47,869,000 ) Interest expense $ - $ ( 5,000 ) $ ( 122,000 ) $ ( 5,345,000 ) $ ( 2,693,000 ) $ ( 2,215,000 ) $ ( 8,445,000 ) $ ( 18,825,000 ) Capital expenditures for the nine months ended September 30, 2024 $ 53,000 $ - $ 1,675,000 $ 774,000 $ 2,054,000 $ 112,000 $ 95,000 $ 4,763,000 Segment identifiable assets as of September 30, 2024 $ 3,755,000 $ 12,787,000 $ 37,249,000 $ 81,331,000 $ 50,537,000 $ 1,309,000 $ 44,230,000 $ 231,198,000 Three Months Ended September 30, 2024 TurnOnGreen Fintech Sentinum AGREE Energy ROI Holding Co. Total Revenue $ 1,290,000 $ - $ - $ - $ 26,000 $ 54,000 $ 845,000 $ 2,215,000 Revenue, crypto assets mining - - 5,264,000 - - - - 5,264,000 Revenue, hotel and real estate operations - - 168,000 5,512,000 - - - 5,680,000 Revenue, crane operations - - - - 12,327,000 - - 12,327,000 Revenue, lending and trading activities - 5,575,000 - - - - - 5,575,000 Total revenues $ 1,290,000 $ 5,575,000 $ 5,432,000 $ 5,512,000 $ 12,353,000 $ 54,000 $ 845,000 $ 31,061,000 Depreciation and amortization expense $ 25,000 $ - $ 4,170,000 $ 1,771,000 $ 1,426,000 $ 19,000 $ 493,000 $ 7,904,000 Impairment of property and equipment $ - $ - $ 10,500,000 $ 1,291,000 $ - $ - $ - $ 11,791,000 (Loss) income from operations $ ( 1,479,000 ) $ 4,484,000 $ ( 13,887,000 ) $ ( 1,268,000 ) $ 514,000 $ ( 8,877,000 ) $ ( 4,082,000 ) $ ( 24,595,000 ) Interest expense $ 157,000 $ 3,000 $ ( 4,000 ) $ ( 2,362,000 ) $ ( 682,000 ) $ 328,000 $ ( 5,206,000 ) $ ( 7,766,000 ) Capital expenditures for the three months ended September 30, 2024 $ 45,000 $ - $ 690,000 $ 112,000 $ 188,000 $ 53,000 $ 22,000 $ 1,110,000 F- 33 The following data presents the revenues, expenditures and other operating data of the Company and its operating segments for the three and nine months ended September 30, 2023: Nine Months Ended September 30, 2023 TurnOnGreen Fintech Sentinum AGREE Ault Disruptive SMC Energy ROI Holding Co. Total Revenue, product $ 2,765,000 $ - $ - $ - $ - $ 21,939,000 $ 987,000 $ 63,000 $ - $ 25,754,000 Revenue, crypto assets mining - - 23,273,000 - - - - - - 23,273,000 Revenue, hotel and real estate operations 1,116,000 12,032,000 13,148,000 Revenue, lending and trading activities - 4,337,000 - - - - - - - 4,337,000 Revenue, crane operations - - - - - - 37,726,000 - - 37,726,000 Total revenues $ 2,765,000 $ 4,337,000 $ 24,389,000 $ 12,032,000 $ - $ 21,939,000 $ 38,713,000 $ 63,000 $ - $ 104,238,000 Depreciation and amortization expense $ 68,000 $ - $ 14,362,000 $ 2,408,000 $ - $ 779,000 $ 3,053,000 $ 152,000 $ 1,556,000 $ 22,378,000 (Loss) income from operations $ ( 4,067,000 ) $ 1,091,000 $ ( 4,363,000 ) $ ( 349,000 ) $ ( 1,052,000 ) $ ( 4,598,000 ) $ ( 30,216,000 ) $ ( 33,590,000 ) $ ( 20,011,000 ) $ ( 97,155,000 ) Capital expenditures for the nine months ended September 30, 2023 $ 131,000 $ - $ 1,426,000 $ 6,035,000 $ - $ 383,000 $ 3,319,000 $ 407,000 $ 2,906,000 $ 14,607,000 Segment identifiable assets as of December 31, 2023 $ 4,995,000 $ 17,027,000 $ 59,903,000 $ 90,991,000 $ 2,347,000 $ - $ 51,254,000 $ 9,937,000 $ 43,943,000 $ 280,397,000 Three Months Ended September 30, 2023 TurnOnGreen Fintech Sentinum AGREE Ault Disruptive SMC Energy ROI Holding Co. Total Revenue, product $ 1,166,000 $ - $ - $ - $ - $ 15,931,000 $ 439,000 $ 18,000 $ - $ 17,554,000 Revenue, crypto assets mining - - 7,558,000 - - - - - - 7,558,000 Revenue, commercial real estate leases 333,000 5,404,000 5,737,000 Revenue, lending and trading activities - ( 249,000 ) - - - - - - - ( 249,000 ) Revenue, crane operations - - - - - - 12,490,000 - - 12,490,000 Total revenues $ 1,166,000 $ ( 249,000 ) $ 7,891,000 $ 5,404,000 $ - $ 15,931,000 $ 12,929,000 $ 18,000 $ - $ 43,090,000 Depreciation and amortization expense $ 24,000 $ - $ 5,792,000 $ 774,000 $ - $ 338,000 $ 1,073,000 $ 32,000 $ 528,000 $ 8,561,000 (Loss) income from operations $ ( 1,498,000 ) $ ( 1,039,000 ) $ ( 2,661,000 ) $ 1,050,000 $ ( 214,000 ) $ 181,000 $ 2,505,000 $ ( 13,315,000 ) $ ( 5,359,000 ) $ ( 20,350,000 ) Capital expenditures for the three months ended September 30, 2023 $ 121,000 $ - $ 261,000 $ 518,000 $ - $ 199,000 $ 1,983,000 $ - $ 314,000 $ 3,396,000 F- 34 27. CONCENTRATIONS OF CREDIT AND REVENUE RISK Significant customers are those that represent more than 10% of the Company’s total revenue or accounts receivable balances for the periods and as of each balance sheet date presented. For each significant customer, revenue as a percentage of total revenue and gross accounts receivable as a percentage of total gross accounts receivable as of the periods presented were as follows: Schedule of gross accounts receivable Accounts Receivable Revenue September 30, December 31, For the Three Months Ended September 30, For the Nine Months Ended September 30, 2024 2023 2024 2023 2024 2023 Customer A * * 14 % * 22 % * Customer B * * * * * 11 % Customer C * 17 % * * * * * less than 10% 28. SUBSEQUENT EVENTS Additional Closings of Series C Preferred Stock, Related Party In October and November 2024, the Company sold to Ault & Company an aggregate of 2,230 shares of Series C Preferred Stock and Warrants to purchase 0.7 million shares of Class A common stock, for a total purchase price of $2.2 million. Agreement to Sell St. Petersburg Property On October 2, 2024, Third Avenue Apartments LLC, a wholly owned indirect subsidiary of the Company, entered into a contract of sale with a third-party purchaser and agreed to sell its real estate property in St. Petersburg, Florida for $ 13.2 million. The closing of the sale of the property is expected to occur on or before December 31, 2024. The Company is obligated to pay $ 11 million of the purchase price into the segregated account for the benefit of its senior secured lenders. Based on the expected sale price of the St. Petersburg property, the Company recorded an impairment charge of $ 1.3 million during the three and nine months ended September 30, 2024 in the condensed consolidated statement of operations and comprehensive loss. 10.00% Series E Cumulative Redeemable Perpetual Preferred Stock (the “Series E Preferred Stock”) On November 11, 2024 the Company filed a Certificate of Designation, Rights and Preferences (the “Certificate of Designation”) with the Secretary of State of the State of Delaware to establish the preferences, voting powers, limitations as to dividends or other distributions, qualifications, terms and conditions of redemption and other terms and conditions of the Company’s Series E Preferred Stock. The following is a summary description of those terms and the general effect of the issuance of the shares of Series E Preferred Stock on the Company’s other classes of registered securities. The Series E Preferred Stock will, as to dividend rights and rights as to the distribution of assets upon the Company’s liquidation, dissolution or winding-up, rank: (1) senior to all classes or series of Common Stock and to all other equity securities issued by the Company other than equity securities referred to in clauses (2) and (3); (2) on parity with any future class or series of the Company’s equity securities expressly designated as ranking on parity with the Series E Preferred Stock, (3) junior to the Company’s Series A Cumulative Redeemable Perpetual Preferred Stock and its Series C Convertible Preferred Stock; and all equity securities issued by the Company expressly designated as ranking senior to the Series E Preferred Stock; and (4) junior to all the Company’s existing and future indebtedness. To the extent the shares of Series E Preferred Stock are issued, the Company will pay cumulative cash dividends on the Series E Preferred Stock when, as and if declared by its board of directors (or a duly authorized committee of its board of directors), only out of funds legally available for payment of dividends. Dividends on the Series E Preferred Stock will accrue on the stated amount of $25.00 per share of the Series E Preferred Stock at a rate per annum equal to 10.00% (equivalent to $3.00 per year), payable monthly in arrears. The Series E Preferred Stock is redeemable by the Company. Holders of shares of the Series E Preferred Stock generally will have no voting rights, except as required by law and as provided in the Certificate of Designation. Voting rights for holders of the Series E Preferred Stock exist primarily with respect to material and adverse changes in the terms of the Series E Preferred Stock and the creation of additional classes or series of preferred stock that rank senior to the Series E Preferred Stock. F- 35 Further, unless the Company has received the approval of two-thirds of the votes entitled to be cast by the holders of Series E Preferred Stock, the Company will not effect any consummation of a binding share exchange or reclassification of the Series E Preferred Stock or a merger or consolidation of the Company with another entity, unless (a) the shares of Series E Preferred Stock remain outstanding or, in the case of a merger or consolidation with respect to which the Company is not the surviving entity, the shares of Series E Preferred Stock are converted into or exchanged for preference securities, or (b) such shares remain outstanding or such preference securities are not materially less favorable than the Series E Preferred Stock immediately prior to such consummation. Reverse Stock Split At the June 28, 2024 annual meeting of stockholders, voted upon and approved Proposal 5, an amendment to the Company’s Certificate of Incorporation to effect a Reverse Split with a ratio of not less than one-for-two and not more than one-for-thirty-five at any time prior to June 27, 2025, with the exact ratio to be set at a whole number within this range as determined by the Company’s board of directors in its sole discretion. On October 24, 2024, the board of directors authorized a special committee of the board to determine the ratio of the reverse split. On November 8, 2024, the special committee approved a one-for-thirty-five reverse split of the Class A common stock that will be effective in the State of Delaware on Friday, November 22, 2024. The Company anticipates that beginning with the opening of trading on Monday, November 25, 2024, the Company’s Class A common stock will trade on the NYSE American on a split-adjusted basis. Special Dividend of Class B Common Stock On November 15, 2024, the Company announced that it plans to issue a special one-time dividend (the “Distribution”) of 5.0 million shares of its Class B Common Stock (the “Class B Common Stock”) to all holders of its Class A Common Stock (the “Class A Common Stock”) and the Series C Convertible Preferred Stock on an as-converted basis. The record date for the Distribution is November 29, 2024. Stockholders who own the Company’s Class A Common Stock at the close of trading on that date will be eligible to receive the shares of Class B Common Stock. Further, the Company has set a payment date of December 16, 2024, subject to adjustment. On the record date, the Company anticipates there will be approximately 1.1 million shares of Class A Common Stock and approximately 5.9 million Class A Common Stock equivalents, based on the current conversion price of the Company’s Series C Convertible Preferred Stock, issued and outstanding (collectively, the “Eligible Capital Stock”), for an aggregate of approximately 7.0 million shares of Eligible Capital Stock. Consequently, the number of shares of Class B Common Stock issuable is approximately 0.71 for each share of Eligible Capital Stock. The foregoing figures reflect the implementation of the one-for-thirty-five reserve stock split that will be effectuated on November 25, 2024. The Class B Common Stock is identical to the currently outstanding Class A Common Stock, with the exception that each share thereof carries ten times the voting power of a share of Class A Common Stock. The Class B Common Stock is convertible at any time after the payment date into Class A Common Stock on a one-for-one basis. F- 36 ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS In this quarterly report on Form 10-Q (the “Quarterly Report”), the “Company,” “Hyperscale Data,” “we,” “us” and “our” refer to Hyperscale Data, Inc., a Delaware corporation. Hyperscale Data is a diversified holding company pursuing growth by acquiring undervalued businesses and disruptive technologies with a global impact. Through our wholly and majority owned subsidiaries and strategic investments, we own and operate a data center at which we mine Bitcoin and offer colocation and hosting services for the emerging artificial intelligence ecosystems and other industries, and provide mission-critical products that support a diverse range of industries, including metaverse platform, oil exploration, crane services, defense/aerospace, industrial, automotive, medical/biopharma and hotel operations. In addition, we own and operate hotels and extend credit to select entrepreneurial businesses through a licensed lending subsidiary. Recent Events and Developments On December 14, 2023, we, along with our wholly owned subsidiaries Sentinum, Third Avenue, ACS, BNI Montana, Ault Lending, Ault Aviation and AGREE (collectively with our company, Sentinum, Third Avenue, ACS, BNI Montana, Ault Lending and Ault Aviation, the “Guarantors”) entered into a Loan and Guaranty Agreement (the “2023 Loan Agreement”) with institutional lenders, pursuant to which Ault & Company, Inc. (“Ault & Company”), a related party, borrowed $36 million and issued secured promissory notes to the lenders in the aggregate amount of $38.9 million (collectively, the “Secured Notes”; and the transaction, the “Loan”). The 2023 Loan Agreement was amended as of April 15, 2024. Pursuant to the 2023 Loan Agreement, the Guarantors, as well as Milton C. Ault, III, our Executive Chairman and the Chief Executive Officer of Ault & Company, agreed to act as guarantors for repayment of the Secured Notes. In addition, certain Guarantors entered into various agreements as collateral in support of the guarantee of the Secured Notes, including (i) a security agreement by Sentinum, pursuant to which Sentinum granted to the Lenders a security interest in (a) 19,226 Antminers (the “Miners”), (b) all of the crypto currency mined or otherwise generated from the Miners and (c) the membership interests of ACS, (ii) a security agreement by the Company, Ault Lending, BNI Montana and AGREE, pursuant to which those entities granted to the lenders a security interest in substantially all of their assets, as well as a pledge of equity interests in Ault Aviation, AGREE, Sentinum, Third Avenue, Ault Energy, LLC, our wholly owned subsidiary (“Ault Energy”), ADTC, Eco Pack, and Circle 8 Holdco, (iii) a mortgage and security agreement by Third Avenue on the real estate property owned by Third Avenue in St. Petersburg, Florida (the “Florida Property”), (iv) a future advance mortgage by ACS on the real estate property owned by ACS in Dowagiac, Michigan (the “Michigan Property”), (v) an aircraft mortgage and security agreement by Ault Aviation on a private aircraft owned by Ault Aviation (the “Aircraft”), and (vi) deposit account control agreements over certain bank accounts held by certain of our subsidiaries. In addition, pursuant to the 2023 Loan Agreement, we agreed to establish a segregated deposit account (the “Segregated Account”), which would be used as a further guarantee of repayment of the Secured Notes. $3.5 million of cash was paid into the Segregated Account on the closing date. We are required to have the minimum balance in the Segregated Account be not less than $7 million, $15 million, $20 million and $27.5 million on the five-month, nine-month, one-year and two-year anniversaries of the closing date, respectively. In addition, starting on March 31, 2024, we were required to deposit $0.3 million monthly into the Segregated Account, which increases to $0.4 million monthly starting March 31, 2025. Further, we agreed to deposit into the Segregated Account, (i) up to the first $7 million of net proceeds, if any, from the sale of the Hilton Garden Inn in Madison West, the Residence Inn in Madison West, the Courtyard in Madison West, and the Hilton Garden Inn in Rockford; (ii) 50% of cash dividends (on a per dividend basis) received from Circle 8 on or after June 30, 2024; (iii) 30% of the net proceeds from any bond offerings we conduct, which shall not exceed $9 million in the aggregate; and (iv) 25% of the net proceeds from cash flows, collections and revenues from loans or other investments made by Ault Lending (including but not limited to sales of loans or investments, dividends, interest payments and amortization payments), which shall not exceed $5 million in the aggregate. In addition, if we decide to sell certain assets, we further agreed to deposit funds into the Segregated Account from the sale of those assets, including, (i) $15 million from the sale of the Florida Property, (ii) $11 million from the sale of the Aircraft, (iii) $17 million from the sale of the Michigan Property, (iv) $350 per Miner, subject to a de minimis threshold of $1 million, and (v) $10 million from the sale of Circle 8. On May 15, 2024, the 2023 Loan Agreement was amended to extend the date by which we were required to have a specified minimum balance in the Segregated Account from May 15, 2024 to July 22, 2024 and the specified minimum balance to be in the account as of such date was increased from $7 million to $7.4 million. On July 25, 2024, the 2023 Loan Agreement was further amended to extend the date by which we were required to have a specified minimum balance in the Segregated Account from July 22, 2024 to July 31, 2024 and to require that we deposit $600,000 in the Segregated account on July 25, 2024. 1 On January 12, 2024, pursuant to the approval provided by our stockholders at the annual meeting of stockholders, we filed an Amendment to our Certificate of Incorporation with the State of Delaware to effectuate a reverse stock split of our common stock affecting both the authorized and issued and outstanding number of such shares by a ratio of one-for-twenty-five. The reverse stock split became effective on January 16, 2024. All share amounts in this report have been updated to reflect the reverse stock split. On January 31, 2024, Ault Lending entered into a securities purchase agreement (the “January 2024 SPA”) with Alzamend Neuro, Inc. (“Alzamend”), pursuant to which Alzamend agreed to sell, in one or more closings, to Ault Lending up to 6,000 shares of Series B convertible preferred stock (the “ALZN Series B Preferred”) and warrants to purchase up to 6.0 million shares of Alzamend common stock (the “ALZN Series B Warrants”) for a total purchase price of up to $6.0 million. On January 31, 2024, Ault Lending purchased 1,220 shares of ALZN Series B Preferred and warrants to purchase 122,000 shares for a total purchase price of $1.22 million. The purchase price was paid by the cancellation of $1.22 million of cash advances made by Ault Lending to Alzamend between November 9, 2023 and January 31, 2023. Each share of ALZN Series B Preferred has a stated value of $1.00 per share and is convertible into a number of shares of Alzamend’s common stock determined by dividing the stated value by $10.00, subject to adjustment in the event of an issuance of Alzamend common stock at a price per share lower than the conversion price, as well as upon customary stock splits, stock dividends, combinations or similar events. The ALZN Series B Warrants are exercisable on the first business day after the six-month anniversary of issuance and have a five-year term, expiring on the fifth anniversary of the initial exercise date. The exercise price of the ALZN Series B Warrants is $12.00, subject to adjustment in the event of an issuance of Alzamend common stock at a price per share lower than the conversion price, as well as upon customary stock splits, stock dividends, combinations or similar events. On each of March 7, 2024, March 8, 2024, March 18, 2024, March 19, 2024 and April 17, 2024 pursuant to the securities purchase agreement we entered into with Ault & Company, dated as of November 6, 2023 (the “November 2023 SPA”), we sold to Ault & Company 500 shares of Series C Convertible Preferred Stock and warrants to purchase 147,820 shares of common stock to the Purchaser, for a purchase price of $0.5 million. On August 2, 2024, pursuant to the November 2023 SPA, we sold to Ault & Company 300 shares of Series C Convertible Preferred Stock and warrants to purchase 88,692 shares of common stock to the Purchaser, for a purchase price of $500,000. As of the date of this report, Ault & Company has purchased an aggregate of 44,300 shares of Series C Convertible Preferred Stock and warrants to purchase an aggregate of 13,096,823 shares of common stock, for an aggregate purchase price of $44.3 million. On March 11, 2024, we entered into a note purchase agreement with two institutional investors (the “Buyers”) pursuant to which the Buyers purchased from the Company, on March 12, 2024 in a registered direct offering to the Buyers an aggregate of $2.0 million principal face amount convertible promissory notes (the “Notes”). The Notes were sold to the Buyers for an aggregate purchase price of $1.8 million, which reflects an original issue discount of $0.2 million. The Notes accrue interest at the rate of 6% per annum, unless an event of default (as defined in the Notes) occurs, at which time the Notes would accrue interest at 12% per annum. The Notes were subsequently converted in full into shares of common stock at a conversion price of $0.35 per share. On March 26, 2024, pursuant to the January 2024 SPA, Ault Lending purchased 780 shares of ALZN Series B Preferred Stock and ALZN Series B Warrants to purchase 78,000 shares of Alzamend common, for a purchase price of $0.8 million. As of the date of this report, Ault Lending has purchased an aggregate of 2,000 shares of ALZN Series B Preferred and ALZN Series B Warrants to purchase an aggregate of 0.2 million shares of Alzamend common stock, for an aggregate purchase price of $2.0 million. On March 25, 2024 we entered into an amendment to the (i) November 2023 SPA, (ii) the related Certificate of Designation of Preferences, Rights and Limitations of the Series C Preferred Convertible Stock and (iii) the number of Series C Warrants, to provide for (A) an increase in the dollar amount of the Series C Convertible Preferred Stock that Ault & Company may purchase from us from $50.0 million to $75.0 million and (B) extended the date of on which the final closing may occur to June 30, 2024, subject to Ault & Company’s ability to further extended such date for ninety days. On April 15, 2024, we established a record date for our final distribution of securities of TurnOnGreen. Stockholders as of this date were entitled to 0.83 shares of TurnOnGreen common stock, along with warrants to purchase 0.83 shares of TurnOnGreen common stock (the “TurnOnGreen Securities”) for every share of our common stock they held on the record date. The final distribution was paid on April 29, 2024. We distributed 25.0 million TurnOnGreen Securities in the final distribution. Effective April 29, 2024, we issued to an accredited investor a term note with a principal face amount of $1.7 million. The note bears interest at the rate of 15% per annum and the note was issued with an original issuance discount. The maturity date of the note was May 17, 2024. The note contained a standard and customary event of default for failure to make payments when due under the note. The purchase price for the note was $1.6 million. The term note was amended on May 16, 2024 to extend the maturity date to June 15, 2024 and further amended on June 18, 2024 to extend the maturity date to July 31, 2024. 2 On June 4, 2024, we entered into a Loan Agreement (the “2024 Credit Agreement”) with OREE Lending Company, LLC and Helios Funds LLC, as lenders. The 2024 Credit Agreement provides for an unsecured, non-revolving credit facility in an aggregate draw limit of up to $20.0 million, provided, however, that at no point will we be allowed to have outstanding loans under the 2024 Credit Agreement in a principal amount received of more than $2.0 million. The lenders made a loan to the Company of $1.5 million on June 4, 2024. The loans under the 2024 Credit Agreement are due December 4, 2024, provided, however, that if on such date, we have executed an equity line of credit agreement relating to the sale of shares of the Series D Preferred Stock, which was executed on June 20, 2024, have an effective registration statement relating thereto and are not currently in default under such agreement, then the maturity date shall be automatically extended until June 4, 2025. The lenders are not obligated to make any further loans under the 2024 Credit Agreement after the maturity date described above. Loans under the 2024 Credit Agreement will be evidenced by promissory notes (the “Promissory Notes”) and will include the addition of an original issuance discount of 20% to the amount of each loan and all loans will bear interest at the rate of 15.0% per annum and may be repaid at any time without penalty or premium. On June 23, 2024, Ault Disruptive entered into an Agreement and Plan of Merger (as it may be amended, supplemented or otherwise modified from time to time, the “Merger Agreement”) by and among Ault Disruptive, ADRT Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of Ault Disruptive (“Merger Sub”), and Gresham Worldwide, Inc., a California corporation (“GIGA”). The transactions contemplated by the Merger Agreement are referred to herein as the “Business Combination.” Pursuant to the Merger Agreement and subject to the terms and conditions set forth therein, the Merger Sub was intended to merge with and into GIGA (the “Merger”), with GIGA being the surviving corporation and thereby becoming a wholly owned subsidiary of Ault Disruptive. Upon the Closing of the Business Combination (the “Effective Time”), it was expected that Ault Disruptive would be renamed Gresham Worldwide, Inc., and thereafter remain listed on the NYSE American under a new ticker symbol, “GWWI.” However, on August 14, 2024, GIGA filed a petition for reorganization under Chapter 11 of the bankruptcy laws. Consequently, Ault Disruptive was required to terminate the Merger Agreement, which it did on August 15, 2024. Ault Disruptive does not presently intend to enter into a new agreement and plan of merger with a third party. On September 27, 2024, Ault Disruptive announced that it will redeem all of its outstanding shares of common stock which occurred as of the close of business on October 11, 2024, because Ault Disruptive would not consummate an initial business combination within the time period required by its Amended and Restated Certificate of Incorporation, as amended. During the nine months ended September 30, 2024, shares of Ault Disruptive common stock were redeemed for an aggregate redemption amount of $1.5 million. On October 11, 2024, all remaining shares of Ault Disruptive common stock were redeemed for a redemption amount of $0.8 million. On July 18, 2024, we entered into a note purchase agreement with an institutional investor pursuant to which the institutional investor agreed to acquire, and we agreed to issue and sell in a registered direct offering to the institutional investor, a $5.4 million 10% OID Convertible Promissory Note (the “OID Note”). The OID Note was sold to the institutional investor for a purchase price of $4.9 million, an original issue discount of $0.5 million. The OID Note will accrue interest at the rate of 15% per annum, unless an event of default occurs, at which time the OID Note would accrue interest at 18% per annum. The OID Note will mature on October 19, 2024. In addition, the OID Note is convertible at any time after NYSE American approval of a Supplemental Listing Application into shares of our common stock at a conversion price of $0.22 per share (the “OID Conversion Price”), subject to adjustment. However, we may not issue shares of common stock upon conversion of the OID Note to the extent such issuance would result in an aggregate number of shares of common stock exceeding 19.99% of the total shares of common stock issued and outstanding as of July 18, 2024, in accordance with the rules and regulations of the New York Stock Exchange (the “NYSE Limit”) unless we first obtain stockholder approval (“Stockholder Approval”). If, on September 2, 2024 (the “Adjustment Date”), the closing bid price of our common stock is lower than the OID Conversion Price, then the OID Conversion Price will be reduced to 85% of the closing bid price of the common stock on September 2, 2024. However, if after July 19, 2024, and prior to the date on which Stockholder Approval is obtained, the holder of the OID Note has converted a portion of the outstanding amount under the OID Note into shares of our common stock in an aggregate amount equal to the NYSE Limit, then the Adjustment Date will be extended by such number of days between such date and the date on which we obtain Stockholder Approval. On September 17, 2024, the loan and guarantee agreement, dated as of December 14, 2023, as amended, pursuant to which we have guaranteed financial obligations of Ault & Company borrowings, was amended regarding our obligations to fund the restricted cash Segregated Account. 3 We agreed to deposit in the Segregated Account: (i) $0.4 million monthly commencing on September 30, 2024 and ending on February 28, 2025; and (ii) $0.5 million monthly commencing on March 31, 2025 and ending on the earlier of the term loan maturity date, prepayment of the term loan in full or the date on which the balance of the Segregated Account exceeds 110% of the outstanding balance of the term loan. As of September 30, 2024 we had deposited $6.5 million in the Segregated Account. In October 2024, we deposited an additional $0.4 million in the Segregated Account. On August 2, 2024, pursuant to the November 2023 SPA we entered into with Ault & Company, we sold 300 shares of Series C Convertible Preferred Stock and warrants to purchase 0.1 million shares of common stock to Ault & Company, for a purchase price of $0.3 million. In October and November 2024, we sold to Ault & Company an aggregate of 2,230 shares of Series C Preferred Stock and Warrants to purchase 0.7 million shares of Class A common stock, for a total purchase price of $2.2 million. On November 11, 2024 we filed a Certificate of Designation, Rights and Preferences (the “Certificate of Designation”) with the Secretary of State of the State of Delaware to establish the preferences, voting powers, limitations as to dividends or other distributions, qualifications, terms and conditions of redemption and other terms and conditions of our Series E Preferred Stock. The following is a summary description of those terms and the general effect of the issuance of the shares of Series E Preferred Stock on our other classes of registered securities. The Series E Preferred Stock will, as to dividend rights and rights as to the distribution of assets upon our liquidation, dissolution or winding-up, rank: (1) senior to all classes or series of Common Stock and to all other equity securities issued by us other than equity securities referred to in clauses (2) and (3); (2) on parity with any future class or series of our equity securities expressly designated as ranking on parity with the Series E Preferred Stock, (3) junior to our Series A Cumulative Redeemable Perpetual Preferred Stock and its Series C Convertible Preferred Stock; and all equity securities issued by us expressly designated as ranking senior to the Series E Preferred Stock; and (4) junior to all our existing and future indebtedness. To the extent the shares of Series E Preferred Stock are issued, we will pay cumulative cash dividends on the Series E Preferred Stock when, as and if declared by its board of directors (or a duly authorized committee of its board of directors), only out of funds legally available for payment of dividends. Dividends on the Series E Preferred Stock will accrue on the stated amount of $25.00 per share of the Series E Preferred Stock at a rate per annum equal to 10.00% (equivalent to $3.00 per year), payable monthly in arrears. The Series E Preferred Stock is redeemable by us. Holders of shares of the Series E Preferred Stock generally will have no voting rights, except as required by law and as provided in the Certificate of Designation. Voting rights for holders of the Series E Preferred Stock exist primarily with respect to material and adverse changes in the terms of the Series E Preferred Stock and the creation of additional classes or series of preferred stock that rank senior to the Series E Preferred Stock. Further, unless we have received the approval of two-thirds of the votes entitled to be cast by the holders of Series E Preferred Stock, we will not effect any consummation of a binding share exchange or reclassification of the Series E Preferred Stock or a merger or consolidation of us with another entity, unless (a) the shares of Series E Preferred Stock remain outstanding or, in the case of a merger or consolidation with respect to which we are not the surviving entity, the shares of Series E Preferred Stock are converted into or exchanged for preference securities, or (b) such shares remain outstanding or such preference securities are not materially less favorable than the Series E Preferred Stock immediately prior to such consummation. At the June 28, 2024 annual meeting of stockholders, voted upon and approved Proposal 5, an amendment to our Certificate of Incorporation to effect a Reverse Split with a ratio of not less than one-for-two and not more than one-for-thirty-five at any time prior to June 27, 2025, with the exact ratio to be set at a whole number within this range as determined by our board of directors in its sole discretion. On October 24, 2024, the board of directors authorized a special committee of the board to determine the ratio of the reverse split. On November 8, 2024, the special committee approved a one-for-thirty-five reverse split of the Class A common stock that will be effective in the State of Delaware on Friday, November 22, 2024. We anticipate that beginning with the opening of trading on Monday, November 25, 2024, our Class A common stock will trade on the NYSE American on a split-adjusted basis. On November 15, 2024, we announced that we plan to issue a special one-time dividend (the “Distribution”) of 5.0 million shares of our Class B Common Stock (the “Class B Common Stock”) to all holders of our Class A Common Stock (the “Class A Common Stock”) and the Series C Convertible Preferred Stock on an as-converted basis. The record date for the Distribution is November 29, 2024. Stockholders who own our Class A Common Stock at the close of trading on that date will be eligible to receive the shares of Class B Common Stock. Further, we have set a payment date of December 16, 2024, subject to adjustment. On the record date, we anticipate there will be approximately 1.1 million shares of Class A Common Stock and approximately 5.9 million Class A Common Stock equivalents, based on the current conversion price of our Series C Convertible Preferred Stock, issued and outstanding (collectively, the “Eligible Capital Stock”), for an aggregate of approximately 7.0 million shares of Eligible Capital Stock. Consequently, the number of shares of Class B Common Stock issuable is approximately 0.71 for each share of Eligible Capital Stock. The foregoing figures reflect the implementation of the one-for-thirty-five reserve stock split that will be effectuated on November 25, 2024. The Class B Common Stock is identical to the currently outstanding Class A Common Stock, with the exception that each share thereof carries ten times the voting power of a share of Class A Common Stock. The Class B Common Stock is convertible at any time after the payment date into Class A Common Stock on a one-for-one basis. 4 Presentation of GIGA as Discontinued Operations On August 14, 2024, our majority owned subsidiary, Gresham Worldwide, Inc. (“ GIGA”), filed a petition for reorganization under Chapter 11 of the bankruptcy laws. The filing placed GIGA under the control of the bankruptcy court, which oversees its reorganization and restructuring process. We assessed the inherent uncertainties associated with the outcome of the Chapter 11 reorganization process and the anticipated duration thereof, and concluded that it was appropriate to deconsolidate GIGA and its subsidiaries effective on the petition date. We recognized a gain on deconsolidation of GIGA of $2.0 million included in net gain (loss) from discontinued operations. In connection with the Chapter 11 reorganization process , we concluded that the operations of GIGA met the criteria for discontinued operations as this strategic shift that will have a significant effect on our operations and financial results. As a result, we have presented the results of operations, cash flows and financial position of GIGA as discontinued operations in the accompanying consolidated financial statements and notes for all periods presented. Change in Plan of Sales of AGREE Hotel Properties On April 30, 2024, we had a change in plan of sale for our four hotels owned and operated by AGREE. As a result, as of April 30, 2024, the assets no longer met the held for sale criteria and were required to be reclassified as held and used at the lower of adjusted carrying value or the fair value at the date of the not to sell. For presentation purposes, the assets and liabilities previously held for sale as of December 31, 2023, were reclassified in the December 31, 2023 balance sheet in the accompanying financial statements back to their original asset and liability groups at their previous carrying values. In connection with this change in plan of sale, we recorded a loss on impairment of property and equipment related to the real estate assets of AGREE of $8.0 million during the nine months ended September 30, 2024. General As a holding company, our business objective is to increase stockholder value through developing and growing our subsidiaries. Under the strategy we have adopted, we are focused on managing and financially supporting our existing subsidiaries and partner companies, with the goal of pursuing monetization opportunities and maximizing the value returned to stockholders. We have, are and will consider initiatives including, among others: public offerings, the sale of individual partner companies, the sale of certain or all partner company interests in secondary market transactions, or a combination thereof, as well as other opportunities to maximize stockholder value. We anticipate returning value to stockholders after satisfying our debt obligations and working capital needs. From time to time, we engage in discussions with other companies interested in our subsidiaries or partner companies, either in response to inquiries or as part of a process we initiate. To the extent we believe that a subsidiary or partner company’s further growth and development can best be supported by a different ownership structure or if we otherwise believe it is in our stockholders’ best interests, we will seek to sell all or a portion of our position in the subsidiary or partner company. These sales may take the form of privately negotiated sales of stock or assets, mergers and acquisitions, public offerings of the subsidiary or partner company’s securities and, in the case of publicly traded partner companies, sales of their securities in the open market. Our plans may include taking subsidiaries or partner companies public through rights offerings and directed share subscription programs. We will continue to consider these (or similar) initiatives and the sale of certain subsidiary or partner company interests in secondary market transactions to maximize value for our stockholders. In recent years, we have provided capital and relevant expertise to fuel the growth of businesses in metaverse platform, oil exploration, crane services, defense/aerospace, industrial, automotive, medical/biopharma and hotel operations. We have provided capital to subsidiaries as well as partner companies in which we have an equity interest or may be actively involved, influencing development through board representation and management support. We are a Delaware corporation with our corporate office located at 11411 Southern Highlands Pkwy, Suite 240, Las Vegas, NV 89141. Our phone number is 949-444-5464 and our website address is www.hyperscaledata.com. 5 Results of Operations Results of Operations for the Three Months Ended September 30, 2024 and 2023 The following table summarizes the results of our operations for the three months ended September 30, 2024 and 2023. For the Three Months Ended September 30, 2024 2023 Revenue $ 2,215,000 $ 17,554,000 Revenue, crypto assets mining 5,264,000 7,558,000 Revenue, hotel and real estate operations 5,680,000 5,737,000 Revenue, crane operations 12,327,000 12,490,000 Revenue, lending and trading activities 5,575,000 (249,000 ) Total revenue 31,061,000 43,090,000 Cost of revenue, products 1,178,000 13,209,000 Cost of revenue, crypto assets mining 9,388,000 10,228,000 Cost of revenue, hotel and real estate operations 3,498,000 3,279,000 Cost of revenue, crane operations 7,957,000 7,642,000 Cost of revenue, lending and trading activities 495,000 - Total cost of revenue 22,516,000 34,358,000 Gross profit 8,545,000 8,732,000 Operating expenses Research and development 4,598,000 1,097,000 Selling and marketing 4,755,000 7,638,000 General and administrative 11,996,000 16,339,000 Impairment of property and equipment 11,791,000 3,895,000 Impairment of mined crypto assets - 113,000 Total operating expenses 33,140,000 29,082,000 Loss from operations (24,595,000 ) (20,350,000 ) Other income (expense): Interest and other income 766,000 278,000 Interest expense (7,766,000 ) (6,137,000 ) Loss on extinguishment of debt (240,000 ) (1,546,000 ) Change in fair value of warrant liability - 499,000 Gain (loss) on the sale of fixed assets 32,000 (32,000 ) Total other expense, net (7,208,000 ) (6,938,000 ) Loss before income taxes (31,803,000 ) (27,288,000 ) Income tax provision (benefit) 52,000 (565,000 ) Net loss from continuing operations (31,855,000 ) (26,723,000 ) Net gain (loss) from discontinued operations 2,216,000 (1,359,000 ) Net loss (29,639,000 ) (28,082,000 ) Net loss attributable to non-controlling interest 4,090,000 6,311,000 Net loss attributable to Hyperscale Data, Inc. (25,549,000 ) (21,771,000 ) Preferred dividends (1,326,000 ) (412,000 ) Net loss available to common stockholders $ (26,875,000 ) $ (22,183,000 ) Comprehensive loss Net loss available to common stockholders $ (26,875,000 ) $ (22,183,000 ) Other comprehensive income (loss) Foreign currency translation adjustment (221,000 ) (282,000 ) Other comprehensive income (221,000 ) (282,000 ) Total comprehensive loss $ (27,096,000 ) $ (22,465,000 ) 6 Revenues Revenues by segment for the three months ended September 30, 2024 and 2023 were as follows: For the Three Months Ended September 30, Increase 2024 2023 (Decrease) % Sentinum Revenue, crypto assets mining $ 5,264,000 $ 7,558,000 $ (2,294,000 ) -30 % Revenue, commercial real estate leases 168,000 333,000 (165,000 ) -50 % Energy Revenue, crane operations 12,327,000 12,490,000 (163,000 ) -1 % Other 26,000 439,000 (413,000 ) -94 % Fintech Revenue, lending and trading activities 5,575,000 (249,000 ) 5,824,000 -2339 % AGREE 5,512,000 5,404,000 108,000 2 % SMC - 15,931,000 (15,931,000 ) -100 % TurnOnGreen 1,290,000 1,166,000 124,000 11 % ROI 54,000 18,000 36,000 200 % Other 845,000 - 845,000 - Total revenue $ 31,061,000 $ 43,090,000 $ (12,029,000 ) -28 % Sentinum Revenues from Sentinum’s crypto assets mining operations decreased by $2.2 million, primarily due to an estimated $5.3 million unfavorable impact from the April 19, 2024 Bitcoin halving event on the Bitcoin network, coupled with a 76% increase in the average Bitcoin mining difficulty level for the three months ended September 30, 2024, compared to the corresponding period in 2023. This decrease was partially offset by a 128% increase in the average Bitcoin price and a $0.3 million reduction in revenue from Sentinum’s crypto mining equipment hosted at third-party facilities for the three months ended September 30, 2024, compared to the corresponding period in 2023. Halving is a key part of the Bitcoin protocol and serves to control the overall supply and reduce the risk of inflation in crypto assets using a proof-of-work consensus algorithm. The Bitcoin halving event reduced the block subsidy by half from 6.25 to 3.125 Bitcoin. Transaction fees were not directly impacted by the halving. Energy Energy revenues from Circle 8’s crane operations decreased by $0.2 million, or 1%, for the three months ended September 30, 2024, remaining essentially flat compared to the prior period. Fintech Revenues from our lending and trading activities were $5.6 million for the three months ended September 30, 2024, driven primarily by $2.6 million in realized gains from trading activities, $2.6 million in fee income, and $0.6 million in unrealized gains on investment positions. In comparison, revenues from lending and trading activities for the same period in 2023 were negative $0.2 million, due to a $3.0 million unrealized loss from our investment in Alzamend and $0.8 million in net unrealized losses on investments in marketable equity securities, partially offset by $3.0 million in realized gains from trading activities and $0.5 million dividend income. Revenues from our trading activities for the three months ended September 30, 2024 included net gains on equity securities, including unrealized gains and losses from market price changes. These gains and losses have caused, and will continue to cause, significant volatility in our periodic earnings. 7 SMC Due to the significant change in our ownership and voting rights, we determined that we no longer met the criteria of the primary beneficiary and, accordingly, we deconsolidated SMC as of November 20, 2023. SMC revenues were $0 for the three months ended September 30, 2024, a decrease of $15.9 million compared to the corresponding period in 2023. TurnOnGreen TurnOnGreen's revenues increased by $0.1 million for the three months ended September 30, 2024, compared to the corresponding period in 2023. This rise was primarily due to higher sales from a single, higher-margin customer in the defense industry during the three months ended September 30, 2024. Gross Margins Gross margins rose to 28% for the three months ended September 30, 2024, compared to 20% for the same period in 2023. This increase was influenced by our lending and trading activities, which contributed favorably in 2024 but had a negative impact in 2023. In both periods, gross margins were adversely affected by negative margins from our crypto assets mining operations. Excluding the impacts of both our lending and trading activities and our crypto assets mining operations, adjusted gross margins for the three months ended September 30, 2024, and 2023 would have been 38% and 33%, respectively. Gross margins improved due to the deconsolidation of the lower margin of SMC business. Research and Development Research and development expenses increased by $3.5 million for the three months ended September 30, 2024, due to increased expenditures related to development work on ROI’s BitNile gaming platform. Selling and Marketing Selling and marketing expenses were $4.8 million for the three months ended September 30, 2024, compared to $7.6 million for the three months ended September 30, 2023, a decrease of $2.9 million, or 38%. The decrease was primarily the result of a $2.0 million decrease in sales and marketing expenses at ROI primarily due to lower advertising and promotion costs and a $1.2 million decrease in sales and marketing expenses from SMC due to the deconsolidation of SMC as of November 20, 2023 . General and Administrative General and administrative expenses were $12.0 million for the three months ended September 30, 2024, compared to $16.3 million for the three months ended September 30, 2023, a decrease of $4.3 million, or 27%. General and administrative expenses decreased from the comparative prior period, mainly due to the following: · $2.8 million decrease in general and administrative expenses from SMC due to the deconsolidation of SMC as of November 20, 2023; · $1.4 million lower professional fees; and · $1.4 million lower salaries and benefits. Partially offset by: · $1.0 million higher operating expenses at AGREE; and · $0.9 million higher operating expenses at Circle 8. Impairment of Property and Equipment During the three months ended September 30, 2024, due to increases in the Bitcoin mining difficulty level, which compounded the continued impact of the Bitcoin halving event, we concluded that indicated that an impairment triggering event had occurred. Testing performed indicated the estimated fair value of our miners to be less than their net carrying value as of September 30, 2024, and an impairment charge of $10.5 million was recognized, decreasing the net carrying value of our crypto assets mining equipment to their estimated fair value. In addition, we recorded $1.2 million in impairment charges related to real estate assets of AGREE during the three months ended September 30, 2024. Other Income (Expense), Net Other expense, net was $7.2 million for the three months ended September 30, 2024, compared to other expense, net of $6.9 million for the three months ended September 30, 2023. Interest and other income was $0.8 million for the three months ended September 30, 2024, compared to $0.3 million for the three months ended September 30, 2023. 8 Interest expense was $7.8 million for the three months ended September 30, 2024, compared to $6.1 million for the three months ended September 30, 2023. Interest expense for the three months ended September 30, 2024 included contractual interest of $5.4 million, amortization of debt discount of $1.4 million and forbearance and extension fees of $1.1 million. Interest expense for the three months ended September 30, 2023 included contractual interest of $5.0 million, amortization of debt discount of $0.6 million and forbearance and extension fees of $0.5 million. During the three months ended September 30, 2024, an investor converted $0.7 million of a convertible note into 3.0 million shares of Class A common stock that had a fair value of $0.9 million at the time of conversion and we recognized a $0.2 million loss on extinguishment of debt. Income Tax Provision (Benefit) The income tax provision (benefit) was $52,000 and ($0.6) million during the three months ended September 30, 2024 and 2023, respectively. The effective income tax provision (benefit) rate was 0.2% and (2.1%) for the three months ended September 30, 2024 and 2023, respectively. The lower income tax provision during the three months ended September 30, 2024 related primarily to lower dividend income compared to the prior year period as a result of the decline in cash and marketable securities held in the trust account as a result of redemptions of Ault Disruptive common stock subject to possible redemption. 9 Results of Operations for the Nine Months Ended September 30, 2024 and 2023 The following table summarizes the results of our operations for the nine months ended September 30, 2024 and 2023. For the Nine Months Ended September 30, 2024 2023 Revenue $ 5,785,000 $ 25,754,000 Revenue, crypto assets mining 25,201,000 23,273,000 Revenue, hotel and real estate operations 14,377,000 13,148,000 Revenue, crane operations 36,945,000 37,726,000 Revenue, lending and trading activities 4,911,000 4,337,000 Total revenue 87,219,000 104,238,000 Cost of revenue, products 3,470,000 19,213,000 Cost of revenue, crypto assets mining 26,971,000 28,057,000 Cost of revenue, hotel and real estate operations 9,633,000 9,086,000 Cost of revenue, crane operations 23,704,000 22,671,000 Cost of revenue, lending and trading activities 495,000 1,180,000 Total cost of revenue 64,273,000 80,207,000 Gross profit 22,946,000 24,031,000 Operating expenses Research and development 4,811,000 3,304,000 Selling and marketing 12,528,000 24,990,000 General and administrative 33,730,000 53,051,000 Impairment of property and equipment 19,746,000 3,895,000 Impairment of goodwill and intangible assets - 35,570,000 Impairment of mined crypto assets - 376,000 Total operating expenses 70,815,000 121,186,000 Loss from operations (47,869,000 ) (97,155,000 ) Other income (expense): Interest and other income 2,118,000 3,612,000 Interest expense (18,825,000 ) (35,180,000 ) Gain on conversion of investment in equity securities to marketable equity securities 17,900,000 - Gain (loss) on extinguishment of debt 502,000 (1,700,000 ) Loss from investment in unconsolidated entity (1,958,000 ) - Impairment of equity securities (6,266,000 ) (9,555,000 ) Provision for loan losses, related party (3,068,000 ) - Change in fair value of warrant liability - 2,655,000 Gain on the sale of fixed assets 64,000 2,728,000 Total other expense, net (9,533,000 ) (37,440,000 ) Loss before income taxes (57,402,000 ) (134,595,000 ) Income tax provision 47,000 551,000 Net loss from continuing operations (57,449,000 ) (135,146,000 ) Net loss from discontinued operations (779,000 ) (4,658,000 ) Net loss (58,228,000 ) (139,804,000 ) Net loss attributable to non-controlling interest 2,469,000 8,704,000 Net loss attributable to Hyperscale Data, Inc. (55,759,000 ) (131,100,000 ) Preferred dividends (3,894,000 ) (963,000 ) Net loss available to common stockholders $ (59,653,000 ) $ (132,063,000 ) Comprehensive loss Net loss available to common stockholders $ (59,653,000 ) $ (132,063,000 ) Other comprehensive income (loss) Foreign currency translation adjustment (621,000 ) (702,000 ) Other comprehensive income (621,000 ) (702,000 ) Total comprehensive loss $ (60,274,000 ) $ (132,765,000 ) 10 Revenues Revenues by segment for the nine months ended September 30, 2024 and 2023 were as follows: For the Nine Months Ended September 30, Increase 2024 2023 (Decrease) % Sentinum Revenue, crypto assets mining $ 25,201,000 $ 23,273,000 $ 1,928,000 8 % Revenue, commercial real estate leases 725,000 1,116,000 (391,000 ) -35 % Energy Revenue, crane operations 36,945,000 37,726,000 (781,000 ) -2 % Other 94,000 987,000 (893,000 ) -90 % Fintech Revenue, lending and trading activities 4,911,000 4,337,000 574,000 13 % AGREE 13,652,000 12,032,000 1,620,000 13 % SMC - 21,939,000 (21,939,000 ) -100 % TurnOnGreen 3,751,000 2,765,000 986,000 36 % ROI 121,000 63,000 58,000 92 % Other 1,819,000 - 1,819,000 - Total revenue $ 87,219,000 $ 104,238,000 $ (17,019,000 ) -16 % Sentinum Revenues from Sentinum’s crypto assets mining operations increased $4.2 million due primarily to a $3.5 million increase in revenue from Sentinum crypto mining equipment hosted at third-party facilities and a 128% increase in the average Bitcoin price, partially offset by an 76% increase in the average Bitcoin mining difficulty level for the nine months ended September 30, 2024, compared to the corresponding period in 2023, and an $9.7 million unfavorable impact from the April 19, 2024 Bitcoin halving event occurred on the Bitcoin network. Energy Energy revenues from Circle 8’s crane operations decreased by $0.8 million, or 2%, for the nine months ended September 30, 2024, remaining essentially flat compared to the prior period. This decrease was primarily due to lower utilization of the crane fleet, as five cranes were out of service during the three months ended June 30, 2024. Fintech Revenues from our lending and trading activities were $4.9 million for the nine months ended September 30, 2024, driven primarily by $2.5 million in realized gains from trading activities and $2.7 million in fee income, partially offset by a $0.6 million unrealized loss from our investment in Alzamend. In comparison, revenues from lending and trading activities for the same period in 2023 were $4.3 million, driven primarily by $8.5 million in net realized and unrealized gains on investments in marketable equity securities and $1.6 million in dividend income, partially offset by a $3.6 million unrealized loss from our investment in Alzamend and a $2.0 million impairment for equity securities that do not have readily determinable fair values related to Fintech lending operations. Revenues from our trading activities for the nine months ended September 30, 2024 included net gains on equity securities, including unrealized gains and losses from market price changes. These gains and losses have caused, and will continue to cause, significant volatility in our periodic earnings. SMC Due to the significant change in our ownership and voting rights, we determined that we no longer met the criteria of the primary beneficiary and, accordingly, we deconsolidated SMC as of November 20, 2023. SMC revenues were $0 for the nine months ended September 30, 2024, a decrease of $21.9 million compared to the corresponding period in 2023. 11 TurnOnGreen TurnOnGreen's revenues increased by $1.0 million for the nine months ended September 30, 2024, compared to the corresponding period in 2023. This rise was primarily due to higher sales from a single, higher-margin customer in the defense industry during the nine months ended September 30, 2024. Gross Margins Gross margins rose to 26% for the nine months ended September 30, 2024, compared to 23% for the same period in 2023. This increase was influenced by our lending and trading activities, which contributed favorably to our gross margins for the nine months ended September 30, 2024 and 2023. In both periods, gross margins were adversely affected by negative margins from our crypto assets mining operations. Excluding the impacts of both our lending and trading activities and our crypto assets mining operations, adjusted gross margins for the nine months ended September 30, 2024, and 2023 would have been 36% and 33%, respectively. Gross margins improved due to the deconsolidation of the lower margin of SMC business. Research and Development Research and development expenses increased by $1.5 million for the nine months ended September 30, 2024, due to increased expenditures primarily related to development work on ROI’s BitNile gaming platform. Selling and Marketing Selling and marketing expenses were $12.5 million for the nine months ended September 30, 2024, compared to $25.0 million for the nine months ended September 30, 2023, a decrease of $12.5 million, or 48%. The decrease was primarily the result of an $10.2 million decrease in sales and marketing expenses at ROI primarily due to lower advertising and promotion costs and a $2.4 million decrease in sales and marketing expenses from SMC due to the deconsolidation of SMC as of November 20, 2023 . General and Administrative General and administrative expenses were $33.7 million for the nine months ended September 30, 2024, compared to $53.1 million for the nine months ended September 30, 2023, a decrease of $19.3 million, or 36%. General and administrative expenses decreased from the comparative prior period, mainly due to the following: · $7.9 million decrease in general and administrative expenses from SMC due to the deconsolidation of SMC as of November 20, 2023 ; · $4.6 million lower stock compensation expense; · $4.0 million lower salaries and benefits; · $1.2 million lower professional fees; and · $1.2 million lower performance bonus related to realized gains on trading activities. Impairment of Property and Equipment During the three months ended September 30, 2024, due to increases in the Bitcoin mining difficulty level, which compounded the continued impact of the Bitcoin halving event, we concluded that indicated that an impairment triggering event had occurred. Testing performed indicated the estimated fair value of our miners to be less than their net carrying value as of September 30, 2024, and an impairment charge of $10.5 million was recognized, decreasing the net carrying value of our crypto assets mining equipment to their estimated fair value. In addition, we recorded $9.2 million in impairment charges related to real estate assets of AGREE during the nine months ended September 30, 2024. Other Income (Expense), Net Other expense, net was $9.5 million for the nine months ended September 30, 2024, compared to other expense, net of $37.4 million for the nine months ended September 30, 2023. Interest and other income was $2.1 million for the nine months ended September 30, 2024, compared to $3.6 million for the nine months ended September 30, 2023. The decrease in interest and other income is primarily due to the decline in Ault Disruptive’s interest income as a result of the decline in cash and marketable securities held in the trust account as a result of redemptions of Ault Disruptive common stock subject to possible redemption. Interest expense was $18.8 million for the nine months ended September 30, 2024, compared to $35.2 million for the nine months ended September 30, 2023. Interest expense for the nine months ended September 30, 2024 included contractual interest of $10.7 million, amortization of debt discount of $4.8 million, and forbearance and extension fees of $3.3 million. Interest expense for the nine months ended September 30, 2023 included amortization of debt discount of $18.2 million, contractual interest of $9.6 million and forbearance and extension fees of $7.3 million. 12 Gain on conversion of investment in equity securities to marketable equity securities of $17.9 million relates to ROI conversion of White River common stock. During the nine months ended September 30, 2024, ROI transferred 14.5 million shares of White River common stock with a fair value of $19.2 million at the date of transfer. In conjunction with the transfers, ROI converted a portion of their White River’s Series A Convertible Preferred Stock into common stock and recorded a noncash $17.9 million gain on conversion. During the three months ended March 31, 2024, ROI converted $2.3 million of ROI senior secured convertible notes that had a fair value of $0.9 million at the time of conversion and recognized a $1.4 million gain on extinguishment of debt. During the three months ended September 30, 2024, holders of our convertible notes converted $2.0 million of convertible notes that had a fair value of $2.7 million at the time of conversion and recognized a $0.7 million loss on extinguishment of debt. During the three months ended September 30, 2024, an investor converted $0.7 million of a convertible note into 3.0 million shares of Class A common stock that had a fair value of $0.9 million at the time of conversion and we recognized a $0.2 million loss on extinguishment of debt. Loss from investment in unconsolidated entity was $2.0 million for the nine months ended September 30, 2024, representing our share of losses from our equity method investment in SMC. For the nine months ended September 30, 2024, the provision for loan losses on the related party note receivable from Ault & Company was $3.1 million, due to uncertainties regarding collection. This compares to no provision for the same period in 2023. Cumulative downward adjustments for impairments for our equity securities without readily determinable fair values held at were $6.3 million for the nine months ended September 30, 2024. Income Tax Provision The income tax provision was $47,000 and $0.5 million during the nine months ended September 30, 2024 and 2023, respectively. The effective income tax provision rate was 0.1% and 0.4% for the nine months ended September 30, 2024 and 2023, respectively. The lower income tax provision during the nine months ended September 30, 2024 related primarily to lower dividend income compared to the prior year period as a result of the decline in cash and marketable securities held in the trust account as a result of redemptions of Ault Disruptive common stock subject to possible redemption. Liquidity and Capital Resources On September 30, 2024, we had cash and cash equivalents of $7.2 million (excluding restricted cash of $8.3 million), compared to cash and cash equivalents of $6.1 million (excluding restricted cash of $5.0 million) at December 31, 2023. The increase in cash and cash equivalents was primarily due to cash provided by financing activities related to the sale of common and preferred stock, as well as proceeds from notes payable and convertible notes, partially offset by the payment of debt, purchases of property and equipment and cash used in operating activities. 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 nine months ended September 30, 2023. Cash used in operating activities for the nine months ended September 30, 2024 included $20.0 million proceeds from the sale of crypto assets from our Sentinum crypto assets mining operations, offset by operating losses and changes in working capital. Net cash used in operating activities for the nine months ended September 30, 2024 included $6.4 million cash used in operating activities from discontinued operations. Net cash used in investing activities was $11.8 million for the nine months ended September 30, 2024, compared to $22.9 million for the nine months ended September 30, 2023. Net cash used in investing activities for the nine months ended September 30, 2024 was primarily related to $4.8 million capital expenditures. Net cash used in investing activities for the nine months ended September 30, 2024 included $3.8 million cash used in investing activities from discontinued operations. 13 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 nine months ended September 30, 2023, and primarily reflects the following transactions: · During the period between January 1, 2024 through March 13, 2024, we sold an aggregate of 25.6 million shares of common stock pursuant to the At-The-Market issuance sales agreement, as amended, entered into with Ascendiant Capital Markets, LLC in 2023 (the “2023 Common ATM Offering”) for gross proceeds of $14.6 million and effective March 14, 2024, the 2023 Common ATM Offering was terminated ; · $49.3 million proceeds from notes payable, partially offset by $47.0 million payments on notes payable; · $6.7 million proceeds from convertible notes payable, partially offset by $1.3 million payments on notes payable; · $2.8 million proceeds from sales of Series C preferred stock, related party; · $1.8 million proceeds from subsidiaries’ sale of stock to non-controlling interests; · $3.9 million payments of preferred dividends; and · $1.9 million payments on notes payable, related party. Net cash provided by financing activities for the nine months ended September 30, 2024 included $2.6 million cash provided by financing activities from discontinued operations. Financing Transactions Subsequent to September 30, 2024 In October 2024, we sold to Ault & Company an aggregate of 1,400 shares of Series C Preferred Stock and Warrants to purchase 0.4 million shares of Class A common stock, for a total purchase price of $1.4 million. Critical Accounting Estimates There have been no material changes to our critical accounting estimates previously disclosed in the 2023 Annual Report. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable for a smaller reporting company. ITEM 4. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures We have established disclosure controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to management, including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Our principal executive officer and principal financial officer, with the assistance of other members of the Company’s management, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report. Based upon our evaluation, each of our principal executive officer and principal financial officer has concluded that the Company’s internal control over financial reporting was not effective as of the end of the period covered by this Quarterly Report because the Company has not yet completed its remediation of the material weakness previously identified and disclosed in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2023, the end of its most recent fiscal year. Management has identified the following material weaknesses: 1. We do not have sufficient resources in our accounting department, which restricts our ability to gather, analyze and properly review information related to financial reporting, including applying complex accounting principles relating to consolidation accounting, related party transactions, fair value estimates, accounting contingencies and analysis of financial instruments for proper classification in the consolidated financial statements, in a timely manner; 14 2. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties during our assessment of our disclosure controls and procedures and concluded that the control deficiency that resulted represented a material weakness; 3. Our primary user access controls (i.e., provisioning, de-provisioning, privileged access and user access reviews) to ensure appropriate authorization and segregation of duties that would adequately restrict user and privileged access to the financially relevant systems and data to appropriate personnel were not designed and/or implemented effectively. We did not design and/or implement sufficient controls for program change management to certain financially relevant systems affecting our processes; and 4. The Company did not design and/or implement user access controls to ensure appropriate segregation of duties or program change management controls for certain financially relevant systems impacting the Company’s processes around revenue recognition and crypto assets to ensure that IT program and data changes affecting the Company’s (i) financial IT applications, (ii) crypto assets mining equipment, and (iii) underlying accounting records, are identified, tested, authorized and implemented appropriately to validate that data produced by its relevant IT system(s) were complete and accurate. Automated process-level controls and manual controls that are dependent upon the information derived from such financially relevant systems were also determined to be ineffective as a result of such deficiency. In addition, the Company has not effectively designed a manual key control to detect material misstatements in revenue. Planned Remediation Management continues to work to improve its controls related to our material weaknesses, specifically relating to user access and change management surrounding our IT systems and applications. Management will continue to implement measures to remediate material weaknesses, such that these controls are designed, implemented, and operating effectively. The remediation actions include: (i) enhancing design and documentation related to both user access and change management processes and control activities; and (ii) developing and communicating additional policies and procedures to govern the area of IT change management. In order to achieve the timely implementation of the above, management has commenced the following actions and will continue to assess additional opportunities for remediation on an ongoing basis: · Engaging a third-party specialist to assist management with improving the Company’s overall control environment, focusing on change management and access controls; · Implementing new applications and systems that are aligned with management’s focus on creating strong internal controls; and · Continuing to increase headcount across the Company, with a particular focus on hiring individuals with strong Sarbanes Oxley and internal control backgrounds. We are currently working to improve and simplify our internal processes and implement enhanced controls, as discussed above, to address the material weaknesses in our internal control over financial reporting and to remedy the ineffectiveness of our disclosure controls and procedures. These material weaknesses will not be considered to be remediated until the applicable remediated controls are operating for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. Despite the existence of these material weaknesses, we believe that the condensed consolidated financial statements included in the period covered by this Quarterly Report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles. Changes in Internal Controls over Financial Reporting. Except as detailed above, during the fiscal quarter ended September 30, 2024, there were no significant changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected or are reasonably likely to materially affect our internal control over financial reporting. 15 PART II — OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Litigation Matters The Company is involved in litigation arising from other matters in the ordinary course of business. We are regularly subject to claims, suits, regulatory and government investigations, and other proceedings involving labor and employment, commercial disputes, and other matters. Such claims, suits, regulatory and government investigations, and other proceedings could result in fines, civil penalties, or other adverse consequences. Certain of these outstanding matters include speculative, substantial or indeterminate monetary amounts. We record a liability when we believe that it is probable that a loss has been incurred and the amount can be reasonably estimated. If we determine that a loss is reasonably possible and the loss or range of loss can be estimated, we disclose the reasonably possible loss. We evaluate developments in our legal matters that could affect the amount of liability that has been previously accrued, and the matters and related reasonably possible losses disclosed, and make adjustments as appropriate. Significant judgment is required to determine both likelihood of there being and the estimated amount of a loss related to such matters. Arena Litigation Arena Investors, LP (ROI Litigation) On May 30, 2024, Arena Investors, LP (“Arena”), in its capacity as collateral agent for five noteholders, filed a filed a Complaint (the “ROI Complaint”) in the Supreme Court of the State of New York, County of New York against the Company and ROI, in action captioned Arena Investors, LP v. Ault Alliance, Inc. and RiskOn International, Inc. , Index No. 652792/2024. The ROI Complaint asserts a cause of action for breach of contract against the Company based on a Guaranty, dated April 27, 2023, and entered into, amongst others, the Company and Arena, and seeks damages in the amount of in excess of $3.75 million, plus interest, attorneys’ fees, costs, expenses, and disbursements. The ROI Complaint also asserts a cause of action for breach of contract against ROI based on an alleged breach of that certain Security Agreement, dated April 27, 2023, and entered into among ROI and Arena. In connection with this cause of action, Arena seeks, among other things, costs and expenses from the Company and ROI. On July 31, 2024, the Company and ROI filed a motion to dismiss seeking to partially dismiss the ROI Complaint, as against the Company, and to dismiss the Compliant, in its entirety, as against ROI. The Motion has been fully briefed and is currently pending before the Court. Based on the Company’s assessment of the facts underlying the claims, the uncertainty of litigation, and the preliminary stage of the case, the Company cannot reasonably estimate the potential loss or range of loss that may result from this action. Notwithstanding, the Company has recorded the unpaid portion of the notes. An unfavorable outcome may have a material adverse effect on the Company’s business, financial condition and results of operations. Arena Investors, LP (Gresham Litigation) On June 6, 2024, Arena, in its capacity as collateral agent for Arena and Walleye Opportunities Master Fund Ltd. (“Walleye”), filed a Complaint (the “Complaint”) in the Supreme Court of the State of New York, County of New York against the Company and GIGA, in action captioned Arena Investors, LP v. Gresham Worldwide, Inc. f/k/a Giga-Tronics Incorporated and Ault Alliance, Inc. , Index No. 652898/2024. On July 8, 2024, Arena filed an Amended Complaint (the “Amended Complaint”) in the above-referenced action. The Amended Complaint asserts a cause of action against the Company for declaratory and injunctive relief seeking an injunction enjoining the Company, and its agent, affiliates, servants, and employees from taking actions in breach of that certain Subordination Agreement, dated January 9, 2023, and entered into among Walleye, Arena, and the Company. 16 The Amended Complaint also asserts causes of action for breach of contract against GIGA based on two discrete convertible promissory notes (the “Notes”) that GIGA entered into with each of Arena and Walleye, as well as a claim for breach duty of good faith and fair dealing, against GIGA, and seeks, among other things, monetary damages in excess of $4.2 million, with interest thereon, attorneys’ fees, costs, and disbursements. The Amended Complaint further asserts another cause of action against GIGA for breach of contract seeking declaratory and injunctive relief based on alleged inspection rights contained in a Security Agreement, dated January 9, 2023 (the “Security Agreement”), and entered into between the Walleye, Arena, and GIGA, which seeks the issuance of an injunction related to such alleged inspection rights, plus the costs and out-of-pocket expenses associated with the enforcement of same. On July 12, 2024, the Court granted injunctive relief to Arena and ordered GIGA to comply with the inspection rights provision of the Security Agreement by July 17, 2024. On July 19, 2024, Arena voluntarily discontinued its cause of action for breach duty of good faith and fair dealing claim against GIGA. On July 29, 2024, the Company and GIGA filed a motion to dismiss, strike, and for sanctions (the “Motion”), in response to the Amended Complaint, on the grounds that, amongst other things, the underlying Notes are criminally usurious under New York. On August 14, 2024, GIGA filed a petition for reorganization under Chapter 11 of the bankruptcy laws On November 12, 2024, GIGA removed the state court action to the United States District Court for the Southern District of New York. Based on the Company’s assessment of the facts underlying the claims, the uncertainty of litigation, and the preliminary stage of the case, the Company cannot reasonably estimate the potential loss or range of loss that may result from this action. Notwithstanding, the Company has recorded the unpaid portion of the Notes. An unfavorable outcome may have a material adverse effect on the Company’s business, financial condition and results of operations. Other Litigation Matters With respect to our other outstanding matters, based on our current knowledge, we believe that the amount or range of reasonably possible loss will not, either individually or in aggregate, have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows. However, the outcome of such matters is inherently unpredictable and subject to significant uncertainties. ITEM 1A. RISK FACTORS There are no updates or changes to the risk factors set forth in our Annual Report on Form 10-K/A for the year ended December 31, 2023. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ITEM 5. OTHER INFORMATION None . 17 ITEM 6. EXHIBITS Exhibit Number Description 3.1 Certificate of Incorporation, dated September 22, 2017. Incorporated herein by reference to the Current Report on Form 8-K filed on December 29, 2017 as Exhibit 3.1 thereto. 3.2 Certificate of Designations of Rights and Preferences of 10% Series A Cumulative Redeemable Perpetual Preferred Stock, dated September 13, 2018. Incorporated herein by reference to the Current Report on Form 8-K filed on September 14, 2018 as Exhibit 3.1 thereto. 3.3 Certificate of Amendment to Certificate of Incorporation, dated January 2, 2019. Incorporated by reference to the Current Report on Form 8-K filed on January 3, 2019 as Exhibit 3.1 thereto. 3.4 Certificate of Amendment to Certificate of Incorporation (1-for-20 Reverse Stock Split of Common Stock), dated March 14, 2019. Incorporated herein by reference to the Current Report on Form 8-K filed on March 14, 2019 as Exhibit 3.1 thereto. 3.5 Certificate of Ownership and Merger. Incorporated by reference to the Current Report on Form 8-K filed on January 19, 2021 as Exhibit 2.1 thereto. 3.6 Certificate of Ownership and Merger, as filed with the Secretary of State of the State of Delaware on December 1, 2021. Incorporated by reference to the Current Report on Form 8-K filed on December 13, 2021 as Exhibit 3.1 thereto. 3.7 Certificate of Designation, Preferences and Rights relating to the 13.00% Series D Cumulative Redeemable Perpetual Preferred Stock, dated May 25, 2022. Incorporated by reference to the Registration Statement on Form 8-A filed on May 26, 2022 as Exhibit 3.6 thereto. 3.8 Certificate of Increase of the Designated Number of Shares of 13.00% Series D Cumulative Redeemable Perpetual Preferred Stock, dated June 10, 2022. Incorporated by reference to the Current Report on Form 8-K filed on June 14, 2022 as Exhibit 3.1 thereto. 3.9 Certificate of Correction to the Certificate of Designation, Rights and Preferences of 13.00% Series D Cumulative Redeemable Perpetual Preferred Stock, dated June 16, 2022. Incorporated by reference to the Current Report on Form 8-K filed on June 17, 2022 as Exhibit 3.1 thereto. 3.10 Certificate of Amendment to Certificate of Incorporation (1-for-300 Reverse Stock Split of Common Stock), dated May 15, 2023. Incorporated herein by reference to the Current Report on Form 8-K filed on May 16, 2023 as Exhibit 3.1 thereto. 3.11 Certificate of Elimination of the Series E convertible redeemable preferred stock of Hyperscale Data, Inc. Incorporated herein by reference to the Current Report on Form 8-K filed on August 18, 2023 as Exhibit 3.1 thereto. 3.12 Certificate of Elimination of the Series F convertible redeemable preferred stock of Hyperscale Data, Inc. Incorporated herein by reference to the Current Report on Form 8-K filed on August 18, 2023 as Exhibit 3.2 thereto. 3.13 Certificate of Elimination of the Series G convertible redeemable preferred stock of Hyperscale Data, Inc. Incorporated herein by reference to the Current Report on Form 8-K filed on August 18, 2023 as Exhibit 3.3 thereto. 3.14 Certificate of Designation of Preferences, Rights and Limitations of Series C Cumulative Preferred Stock, dated November 15, 2023. Incorporated herein by reference to the Current Report on Form 8-K filed on November 21, 2023 as Exhibit 3.1 thereto. 3.15 Certificate of Elimination of the Series B convertible redeemable preferred stock of Hyperscale Data, Inc. Incorporated herein by reference to the Current Report on Form 8-K filed on December 12, 2023 as Exhibit 3.1 thereto. 3.16 Certificate of Amendment to Certificate of Incorporation filed with the Delaware Secretary of State on January 12, 2024. Incorporated by reference to the Current Report on Form 8-K filed on January 12, 2024 as Exhibit 3.2 thereto. 3.17 Second Amended and Restated Bylaws, effective as of January 11, 2024. Incorporated by reference to the Current Report on Form 8-K filed on January 12, 2024 as Exhibit 3.1 thereto. 3.18 Certificate of Increase to Certificate Designations of Preferences, Rights and Limitations of Series C Convertible Preferred Stock. Incorporated herein by reference to the Current Report on Form 8-K filed on April 4, 2024 as Exhibit 3.1 thereto. 3.19 Certificate of Amendment to Certificate of Incorporation filed with the Delaware Secretary of State on September 6, 2024 and effective September 10, 2024. Incorporated herein by reference to the Current Report on Form 8-K filed on September 6, 2024 as Exhibit 3.1 thereto. 10.1 Note Purchase Agreement, dated July 18, 2024, by and among the Company and Esousa Group Holdings, LLC. Incorporated by reference to the Current Report on Form 8-K filed on July 19, 2024 as Exhibit 10.1 thereto. 10.2 Form of Note. Incorporated by reference to the Current Report on Form 8-K filed on July 19, 2024 as Exhibit 4.1 thereto. 31.1* Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a). 31.2* Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a). 32.1** Certification of Chief Executive Officer and Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code. 18 101.INS* Inline XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH* Inline XBRL Taxonomy Extension Schema Document. 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). ____________________ * Filed herewith. ** Furnished herewith. 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: November 19, 2024 HYPERSCALE DATA, INC. By: /s/ William B. Horne William B. Horne Chief Executive Officer (Principal Executive Officer) By: /s/ Kenneth S. Cragun Kenneth S. Cragun Chief Financial Officer (Principal Accounting Officer) 20