What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-15 compared with 2025-05-20 · 566 added, 350 removed, 107 unchanged (90% of the section changed)

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/or operate data centers at which we mine Bitcoin and offers colocation and hosting services for the emerging artificial

intelligence (“AI”) ecosystems and other industries, and provides products and services that support a diverse range of industries,

including crane rental services, hotel operations, defense, industrial, an AI software platform and a social gaming platform.

we extend credit to select entrepreneurial businesses through a licensed lending subsidiary.

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.

Through its wholly owned subsidiary Sentinum, Inc., Hyperscale

Data owns and operates a data center at which it mines digital assets and offers colocation and hosting services for the emerging artificial

intelligence (“AI”) ecosystems and other industries.

Hyperscale Data’s other wholly owned subsidiary, Ault Capital Group,

(“ACG”), is a diversified holding company pursuing growth by acquiring undervalued businesses and disruptive technologies.

Hyperscale Data currently expects the divestiture

of ACG (the “Divestiture”) to occur in the first quarter of 2026, though there can be no assurance that the Divestiture will

be completed during such quarter.

Upon the occurrence of the Divestiture, the Company would be an owner and operator of data centers to

support high-performance computing services, as well as a holder of digital assets.

Until the Divestiture occurs, the Company will continue

to provide, through ACG and its wholly and majority-owned subsidiaries and strategic investments, mission-critical products that support

a diverse range of industries, including an AI software platform, social gaming platform, equipment rental services, defense/aerospace,

industrial, automotive and hotel operations.

In addition, ACG is actively engaged in extending private credit and structured finance through

a licensed lending subsidiary.

Recent Events and Developments

On February 5, 2025, we entered into an

exchange agreement with an institutional investor, pursuant to which we issued to the investor a convertible promissory note in the principal

face amount of $1.9 million (the “February 2025 Convertible Note”), in exchange for the cancellation of an outstanding term

note we issued to the investor in April 2024.

That note had an outstanding principal amount and accrued but unpaid interest of $1.9 million.

The February 2025 Convertible Note accrued interest at the rate of 15% per annum, unless an event of default (as defined in the February

2025 Convertible Note) occurs, at which time the February 2025 Convertible Note would accrue interest at 18% per annum.

The February 2025

On February 5, 2025, we entered

into an exchange agreement with an institutional investor, pursuant to which we issued to the investor a convertible promissory note in

the principal face amount of $1.9 million (the “February 2025 Convertible Note”), in exchange for the cancellation of an outstanding

term note we issued to the investor in April 2024.

That note had an outstanding principal amount and accrued but unpaid interest of $1.9

The February 2025 Convertible Note accrued interest at the rate of 15% per annum, unless an event of default (as defined in the

February 2025 Convertible Note) occurs, at which time the February 2025 Convertible Note would accrue interest at 18% per annum.

2025 Convertible Note was to mature on May 5, 2025.

9 unchanged sentences

price equal to $2.00, subject to adjustment.

The A&R Forbearance Note accrues interest at the rate of 18% per annum and matures on

May 15, 2025.

On March 14, 2025, we entered into an exchange

agreement with an institutional investor pursuant to which we issued to the investor a convertible promissory note in the principal face

amount of $4.2 million in exchange for the cancellation of (i) a term note issued by us on May 16, 2024, with outstanding principal and

accrued but unpaid interest of $0.7 million, (ii) a term note issued by us on May 20, 2024, with outstanding principal and accrued but

unpaid interest of $1.5 million, and (iii) the February 2025 Convertible Note issued by us on February 5, 2025, with outstanding principal

and accrued but unpaid interest of $2.0 million.

The note accrues interest at the rate of 15% per annum, unless an event of default (as

defined in the note) occurs, at which time the note would accrue interest at 18% per annum.

The A&R Forbearance Note accrues interest at the rate of 18% per annum with a maturity

date of May 15, 2025.

On June 3, 2025, we and the investor entered into an amendment to the A&R Forbearance Note, pursuant to which

the maturity date of the A&R Forbearance Note was extended until June 30, 2025.

On March 14, 2025, we entered

into an exchange agreement with an institutional investor pursuant to which we issued to the investor a convertible promissory note in

the principal face amount of $4.2 million in exchange for the cancellation of (i) a term note issued by us on May 16, 2024, with outstanding

principal and accrued but unpaid interest of $0.7 million, (ii) a term note issued by us on May 20, 2024, with outstanding principal and

accrued but unpaid interest of $1.5 million, and (iii) the February 2025 Convertible Note issued by us on February 5, 2025, with outstanding

principal and accrued but unpaid interest of $2.0 million.

The note accrues interest at the rate of 15% per annum, unless an event of

default (as defined in the note) occurs, at which time the note would accrue interest at 18% per annum.

The note will mature on June 30,

note is convertible into shares of Class A common stock at a conversion price equal to the greater of (i) $0.40 per share (the “Floor

Price”) and (ii) the lesser of 75% of the VWAP (as defined in the note) of the Class A common stock during the five trading days

immediately prior to (A) the date of issuance of the note or (B) the date of conversion into shares of Class A common stock.

On March 21, 2025, we entered into an exchange

agreement with an institutional investor, pursuant to which we issued to the investor a convertible promissory note in the principal face

amount of $4.9 million (the “Exchange Note”) in exchange for the cancellation of (i) a term note issued by us on January 14,

2025, with outstanding principal and accrued but unpaid interest of $2.6 million, (ii) a promissory note issued by us on March 7, 2025,

with outstanding principal and accrued but unpaid interest of $0.5 million, (iii) a promissory note issued by us on March 12, 2025, with

outstanding principal and accrued but unpaid interest of $1.5 million, and (iv) a promissory note issued by us on March 13, 2025, with

outstanding principal and accrued but unpaid interest of $0.3 million.

The Exchange Note accrues interest at the rate of 15% per annum,

unless an event of default (as defined in the Exchange Note) occurs, at which time the note would accrue interest at 18% per annum.

Exchange Note will mature on December 31, 2025.

The note is convertible into shares of Class A common stock at a conversion price equal

to the greater of (i) the Floor Price and (ii) the lesser of 75% of the VWAP (as defined in the Exchange Note) of the Class A common stock

during the five trading days immediately prior to (A) the date of issuance of the Exchange Note or (B) the date of conversion into shares

of Class A common stock, but not greater than $10.00 per share.

On March 31, 2025, we entered into a securities

purchase agreement with an institutional investor pursuant to which we agreed to sell up to 50,000 shares of Series B Convertible Preferred

Stock (“Series B Preferred Stock”) for a total purchase price of up to $50.0 million.

The securities purchase agreement provides

that the transaction shall be conducted through 49 separate tranche closings, provided, however, that the investor has the ability, exercisable

in its sole discretion, to purchase any number of shares of Series B Preferred Stock prior to the dates of the tranche closings provided

for in the securities purchase agreement.

The initial tranche closing, which is expected to close promptly after the investor has converted

out of the Exchange Note, will consist of the sale and issuance to the investor of 2,000 shares of Series B Preferred Stock for an aggregate

of $2.0 million.

Pursuant to the securities purchase agreement, provided certain closing conditions have been met, the investor shall

purchase up to 4,800 shares of Series B Preferred Stock on a monthly basis, with the investor being required to purchase 1,000 shares

Each share of Series B Preferred Stock has

a stated value of $1,000.00 and is convertible into shares of Class A common stock at a at a conversion price equal to the greater of

(i) $0.40 (the “Floor Price”) and (ii) 75% of our lowest VWAP during the five trading days immediately preceding conversion,

The note is convertible into shares of Class A common stock at a conversion price equal to the greater of (i) $0.40 per share (the

“Floor Price”) and (ii) the lesser of 75% of the VWAP (as defined in the note) of the Class A common stock during the five

trading days immediately prior to (A) the date of issuance of the note or (B) the date of conversion into shares of Class A common stock.

On March 21, 2025, we entered

into an exchange agreement with an institutional investor, pursuant to which we issued to the investor a convertible promissory note in

the principal face amount of $4.9 million (the “Exchange Note”) in exchange for the cancellation of (i) a term note issued

by us on January 14, 2025, with outstanding principal and accrued but unpaid interest of $2.6 million, (ii) a promissory note issued by

us on March 7, 2025, with outstanding principal and accrued but unpaid interest of $0.5 million, (iii) a promissory note issued by us

on March 12, 2025, with outstanding principal and accrued but unpaid interest of $1.5 million, and (iv) a promissory note issued by us

on March 13, 2025, with outstanding principal and accrued but unpaid interest of $0.3 million.

The Exchange Note accrues interest at the

rate of 15% per annum, unless an event of default (as defined in the Exchange Note) occurs, at which time the note would accrue interest

at 18% per annum.

The Exchange Note will mature on December 31, 2025.

The note is convertible into shares of Class A common stock at a

conversion price equal to the greater of (i) the Floor Price and (ii) the lesser of 75% of the VWAP (as defined in the Exchange Note)

of the Class A common stock during the five trading days immediately prior to (A) the date of issuance of the Exchange Note or (B) the

date of conversion into shares of Class A common stock, but not greater than $10.00 per share.

On March 31, 2025, we entered

into a securities purchase agreement with an institutional investor pursuant to which we agreed to sell up to 50,000 shares of Series

B Convertible Preferred Stock (“Series B Preferred Stock”) for a total purchase price of up to $50.0 million.

The securities

purchase agreement provides that the transaction shall be conducted through 49 separate tranche closings, provided, however, that the

investor has the ability, exercisable in its sole discretion, to purchase any number of shares of Series B Preferred Stock prior to the

dates of the tranche closings provided for in the securities purchase agreement.

The initial tranche closing, which is expected to close

promptly after the investor has converted out of the Exchange Note, will consist of the sale and issuance to the investor of 2,000 shares

of Series B Preferred Stock for an aggregate of $2.0 million.

Pursuant to the securities purchase agreement, provided certain closing

conditions have been met, the investor shall purchase up to 4,800 shares of Series B Preferred Stock on a monthly basis, with the investor

being required to purchase 1,000 shares per month.

Each share of Series B Preferred

Stock has a stated value of $1,000.00 and is convertible into shares of Class A common stock at a at a conversion price equal to the greater

of (i) $0.40 (the “Floor Price”) and (ii) 75% of our lowest VWAP during the five trading days immediately preceding conversion,

subject to a maximum price of $10.00 per share, as adjusted for certain corporate actions.

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Series B Preferred Stock are entitled to vote with the Class A common stock as a single class on an as-converted basis.

April 1, 2025, we issued to an institutional investor a convertible promissory note in the principal face amount of $1.7 million

in consideration for an advance we received of $1.5 million.

2025, we issued to an institutional investor a convertible promissory note in the principal face amount of $1.7 million in consideration

for an advance we received of $1.5 million.

The note accrues interest at the rate of 15% per annum.

The note will mature

on September 30, 2025.

The note is convertible into shares of Class A common stock at a conversion price equal to the greater of (i)

the Floor Price and (ii) the lesser of 75% of the VWAP (as defined in the note) of the Class A common stock during the five trading days

immediately prior to (A) the date of issuance of the note or (B) the date of conversion into shares of Class A common stock.

On April 8, 2025, we issued to an accredited

investor a convertible promissory note in the principal face amount of $110,000 in consideration for $100,000.

The note accrues interest

at the rate of 15% per annum, unless an event of default (as defined in the note) occurs, at which time the note would accrue interest

at 18% per annum.

The note will mature on September

The note is convertible into shares of Class A common stock at a conversion

price equal to the greater of (i) $0.45 and (ii) the lesser of (A) 75% of the VWAP (as defined in the note) of the Class A common stock

during the five trading days immediately prior to the date of issuance of the note or (B) 75% of the lowest VWAP of the Class A common

stock during the five trading days immediately prior to the date of conversion into shares of Class A common stock.

On April 15, 2025, we issued to two accredited

investors convertible promissory notes in the aggregate principal face amount of $5 million in aggregate gross consideration of $4 million

in cash paid by the investors, prior to placement agent fees and expenses of approximately $460,000.

The notes were issued with an original

issue discount of twenty percent (20%), or $1 million.

The notes do not accrue interest unless an event of default (as defined in the

notes) occurs, at which time the notes would accrue interest at 20% per annum.

The note is convertible into shares of Class A common stock at a conversion price equal to the greater of (i) the Floor Price

and (ii) the lesser of 75% of the VWAP (as defined in the note) of the Class A common stock during the five trading days immediately prior

to (A) the date of issuance of the note or (B) the date of conversion into shares of Class A common stock.

On April 8, 2025, we issued

to an accredited investor a convertible promissory note in the principal face amount of $110,000 in consideration for $100,000.

accrues interest at the rate of 15% per annum, unless an event of default (as defined in the note) occurs, at which time the note would

accrue interest at 18% per annum.

The note will mature on September 30, 2025.

The note is convertible into shares of Class A common stock

at a conversion price equal to the greater of (i) $0.45 and (ii) the lesser of (A) 75% of the VWAP (as defined in the note) of the Class

A common stock during the five trading days immediately prior to the date of issuance of the note or (B) 75% of the lowest VWAP of the

Class A common stock during the five trading days immediately prior to the date of conversion into shares of Class A common stock.

On April 15, 2025, we issued

to two accredited investors convertible promissory notes in the aggregate principal face amount of $5 million in aggregate gross consideration

of $4 million in cash paid by the investors, prior to placement agent fees and expenses of approximately $460,000.

The notes were issued

with an original issue discount of twenty percent (20%), or $1 million.

The notes do not accrue interest unless an event of default (as

defined in the notes) occurs, at which time the notes would accrue interest at 20% per annum.

The notes will mature on September 30, 2025.

are convertible into shares of Class A common stock at a conversion price equal to the greater of (i) $0.40 and (ii) 80% of the lowest

closing price of the Class A common stock during the five trading days immediately prior to the date of conversion into shares of Class

A common stock.

On May 13, 2025, the we entered

The notes are convertible into shares of Class A common stock at a conversion price equal to the greater of (i) $0.40 and (ii) 80% of

the lowest closing price of the Class A common stock during the five trading days immediately prior to the date of conversion into shares

of Class A common stock.

On May 13, 2025, we entered

into an OID only term note agreement with an institutional investor with a principal amount of $1.4 million and an OID of $0.1 million.

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Ault entered into a personal guaranty agreement for the benefit of the investor.

On June 6, 2025, we entered

into a settlement agreement (the “Agreement”) with our defense affiliate Gresham Worldwide, Inc.

GIGA’s senior secured lenders pursuant in its Chapter 11 bankruptcy proceedings.

While the Agreement is subject to court approval,

GIGA is expected to emerge from bankruptcy as a subsidiary of the Company on or before October 1, 2025.

On June 9, 2025, Sentinum

entered into a Hosting Services Agreement (the “Agreement”) with a data center hosting company (the “Service Provider”).

Under the Agreement, the Service Provider will provide Sentinum with operations and asset management services and access to approximately

20 megawatts of energy capacity and other critical infrastructure to be used for Sentinum’s Bitcoin mining operations.

The Agreement

has an initial term of one year with automatic one-year renewals unless either Sentinum or the Service Provider elects to terminate the

Agreement 90 days prior to the end of the current term.

Sentinum anticipates deploying approximately 6,800 S19j miners (the “Miners”)

at the Service Provider’s data center.

Sentinum will pay the Service

Provider a non-refundable fee of $10 per Miner for the setup, installation and configuration of the Miners (the “Initial Setup Fee”)

as well as an initial deposit of $800,000 (the “Initial Deposit” and together with the Initial Setup Fee, the “Initial

The Initial Fees shall be paid out of Bitcoin rewards and Bitcoin transaction fee awards (the “Earned BTC”)

that would otherwise be due to Customer until such time as 100% of the Initial Fees have been paid.

Thereafter, Sentinum is entitled to

70% of the Earned BTC and the Service Provider is entitled to 30%.

The Agreement provides that, during periods of high demand on the utility

grid, the Service Provider has the option to curtail the electrical load to the facility and redirect the electrical load to the utility

Upon any curtailment, the net profits from such energy sales shall be equally split between Sentinum and the Service Provider.

On July 31, 2025, we entered into a securities purchase agreement (the

“July 2025 SPA”) with Ault & Company, Inc.

(“Ault & Company”), pursuant to which we agreed to sell, in

one or more closings, to Ault & Company up to 100,000 shares of Series H convertible preferred stock (“Series H Preferred Stock”)

for a total purchase price of up to $100.0 million.

The July 2025 SPA provides that the financing may be conducted through one or more

As of the date of this filing, no shares of Series H Preferred Stock have been sold, nor has the Certificate of Designations

been filed with the State of Delaware, the jurisdiction where we are incorporated.

Each share of Series H Preferred

Stock has a stated value of $1,000.00 and is convertible into shares of class A common stock at a conversion price equal to the greater

of (i) $0.10 per share and (ii) the lesser of (A) $0.79645 or (B) 105% of the volume weighted average price of the class A common stock

during the five trading days immediately prior to the date of conversion.

The conversion price is subject to adjustment in the event of

an issuance of Class A common stock at a price per share lower than the conversion price then in effect, as well as upon customary stock

splits, stock dividends, combinations or similar events.

The holders of Series H Preferred Stock are entitled to cumulative cash dividends

at an annual rate of 9.5%, or $95.00 per share, based on the stated value per share.

Dividends shall accrue for 10 years from the date

of issuance of such shares of Series H Preferred Stock and are payable monthly in arrears.

For the first two years, we may elect to pay

the dividend amount in shares of Class A common stock rather than cash.

The holders of the Series H Preferred Stock are entitled to vote

with the Class A common stock as a single class on an as-converted basis.

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.

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

August 14, 2024, GIGA filed a petition for reorganization under Chapter 11 of the bankruptcy

The filing placed GIGA under the control of the bankruptcy court, which oversees its reorganization and restructuring process.

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 year ended December 31, 2024.

On April 30, 2024, we had a change in plan of sale for our four hotels

owned and operated by Ault Global Real Estate Equities, Inc.

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 determination 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 year ended December 31, 2024.

Deconsolidation of Avalanche International

March 28, 2025, AVLP, a majority-owned subsidiary of our, filed a voluntary petition for liquidation under Chapter 7 of the U.S.

March 28, 2025, AVLP, a majority-owned subsidiary of ours, filed a voluntary petition for liquidation under Chapter 7 of the U.S.

As a result of the filing, AVLP became subject to the control of the bankruptcy court, and we no longer maintained a controlling

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In connection with the deconsolidation, we

recognized a gain of $10.0 million, which is included in the condensed consolidated statement of operations for the three months ended

March 31, 2025.

recognized a gain of $10.0 million, which is included in the condensed consolidated statement of operations for the six months ended June

We evaluated the criteria for discontinued operations and determined that the operations of AVLP did not meet the requirements

for such classification.

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.

Deconsolidation of Eco Pack Technologies Limited

April 16, 2025, Eco Pack, a majority-owned subsidiary of ours, filed a voluntary liquidation under the insolvency regulations in the UK.

As a result of the filing, we no longer maintained a controlling financial interest.

Accordingly, we deconsolidated Eco Pack effective

as of the filing date.

In connection with the deconsolidation, we recognized a loss of $0.4 million, which is included in the condensed

consolidated statement of operations for the six months ended June 30, 2025.

We evaluated the criteria for discontinued operations and

determined that the operations of Eco Pack did not meet the requirements for such classification.

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 AI software platform, social gaming platform, equipment rental services, defense,

industrial 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.

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 AI software platform, social gaming platform, equipment rental services,

defense, industrial 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.

are a Delaware corporation with our corporate office located at 11411 Southern Highlands Pkwy, Suite 190, Las Vegas, NV 89141.

1 unchanged sentence

Results of Operations

Results of Operations for the Three Months Ended March 31, 2025 and 2024

The following table summarizes the results

of our operations for the three months ended March 31, 2025 and 2024.

For the Three Months Ended March 31,

Results of Operations for the Three Months Ended June 30, 2025 and

The following table summarizes

the results of our operations for the three months ended June 30, 2025 and 2024.

For the Three Months Ended June 30,

Revenue, crane operations

10 unchanged sentences

Total cost of revenue

Gross profit (loss)

Operating expenses

2 unchanged sentences

General and administrative

Impairment of property and equipment

Total operating expenses

(Loss) income from operations

Loss from operations

(10,127,000 )

(26,930,000 )

Other income (expense):

1 unchanged sentence

Interest expense

Loss on extinguishment of debt

Loss from investment in unconsolidated entity

Impairment of equity securities

Gain on deconsolidation of subsidiary

Loss on the sale of fixed assets

Total other expense, net

(12,855,000 )

Loss before income taxes

(17,467,000 )

(39,785,000 )

Income tax benefit

Net loss from continuing operations

(17,338,000 )

(39,781,000 )

Net income from discontinued operations

(17,338,000 )

(39,441,000 )

Net (income) loss attributable to non-controlling interest

Net loss attributable to Hyperscale Data

(19,051,000 )

(33,927,000 )

Preferred dividends

Net loss available to common stockholders

$ (21,266,000 )

$ (35,235,000 )

Comprehensive loss

Net loss available to common stockholders

$ (21,266,000 )

$ (35,235,000 )

Other comprehensive loss

Foreign currency translation adjustment

Other comprehensive loss

Total comprehensive loss

$ (21,266,000 )

$ (35,423,000 )

Revenues by business category

for the three months ended June 30, 2025 and 2024 were as follows:

For the Three Months Ended June 30,

Revenue, crypto assets mining

$ (3,806,000 )

Revenue, commercial real estate leases

Revenue, crane operations

Revenue, lending and trading activities

Total revenue

n/m - not meaningful

Revenues from Sentinum’s

crypto assets mining operations decreased $3.8 million to $4.7 million for the three months ended June 30, 2025, compared to $8.5 million

for the three months ended June 30, 2024.

The decrease was due primarily to a $1.7 million decline in revenue from mined crypto assets

at Sentinum owned and operated facilities coupled with a $2.2 million decline in revenue from Sentinum crypto mining equipment hosted

at third-party facilities.

The $1.7 million decrease in revenue from mined crypto assets at Sentinum owned and operated facilities was

due to the April 2024 Bitcoin halving event that occurred on the Bitcoin network and a 45% increase in the average Bitcoin mining difficulty

level, partially offset by a 50% increase in the average Bitcoin price for the three months ended June 30, 2025, compared to the corresponding

period in 2024.

No revenue was generated from third-party hosted mining operations in 2025.

Energy revenues from Circle

8’s crane operations declined slightly by $0.1 million, or 1%, for the three months ended June 30, 2025, compared to the same period

The modest decrease reflects a slowdown in demand from oil and gas customers, as many exploration projects were delayed or scaled

back amid continued market uncertainty.

Key contributing factors included fluctuations in crude oil prices, softer global demand, trade-related

concerns, and higher borrowing costs, all of which impacted the pace of new project starts and the need for crane services.

Revenues from AGREE’s hotel operations increased

by $0.2 million, or 5%, for the three months ended June 30, 2025, compared to the same period in 2024.

The modest increase reflects stable

occupancy levels and consistent average daily rates, indicating steady performance in our hotel operations year-over-year.

from our lending and trading activities increased $11.6 million to approximately $1.8 million for the three months ended June 30,

2025, compared to negative $9.8 million the same period in 2024.

Revenues from our lending and trading activities were $1.8 million

for the three months ended June 30, 2025, primarily due to a $1.4 million realized gain from the sale of an investment in other

equity securities and $0.3 million in fee income during the three months ended June 30, 2025.

Revenues from our lending and trading

activities were negative $9.8 million for the three months ended June 30, 2024, primarily due to a $9.4 million unrealized loss on

2.5 million shares of White River Energy Corp.

(“White River”) common stock and a $0.5 million unrealized loss from our

investment in Alzamend included in revenue from lending and trading activities.

from our trading activities for the three months ended June 30, 2025 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

TurnOnGreen’s revenues

increased by $0.5 million, to $1.7 million for the three months ended June 30, 2025, compared to $1.2 million in the corresponding period

This rise was primarily due to higher sales from a single customer in the defense industry during the three months ended June

Other revenues decreased by

$0.3 million, to $0.5 million for the three months ended June 30, 2025, compared to $0.7 million in the corresponding period in 2024.

This decline was primarily due to lower corporate aircraft charter revenue from third parties.

Gross Margins

Gross margins improved to

24% for the three months ended June 30, 2025, compared to negative 21% for the same period in 2024.

The improvement was primarily driven

by the strong performance of our lending and trading activities, which positively impacted gross margins in the current period, in contrast

to their negative contribution in the prior-year period.

In both periods, gross margins were adversely affected by low or negative contributions

from our crypto asset mining operations.

Excluding the impact of lending and trading activities and crypto asset mining, adjusted gross

margins were 35% and 34% for the three months ended June 30, 2025 and 2024, respectively.

Research and Development

Research and development expenses

remained consistent at $0.1 million for both the three months ended June 30, 2025 and 2024.

Selling and Marketing

Selling and marketing expenses were $6.3 million for the three months

ended June 30, 2025, compared to $3.7 million for the three months ended June 30, 2024, an increase of $2.6 million, or 69%.

was primarily the result of a $2.6 million increase in sales and marketing expenses at RiskOn International, Inc.

from higher advertising and promotion costs.

General and Administrative

General and administrative

expenses were $9.9 million for the three months ended June 30, 2025, compared to $11.4 million for the same period in 2024, representing

a decrease of $1.5 million, or 13%.

The decrease was primarily driven by the deconsolidation of AVLP and Eco Pack, the completion and

wind-down of Ault Disruptive Technologies Corporation (“Ault Disruptive”) following the full redemption of its public shares,

and a reduction in stock-based compensation expense.

Impairment of Property and Equipment

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 determination not to sell.

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 three months ended June 30, 2024.

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.

Other Expense, Net

Other expense, net was $7.3

million for the three months ended June 30, 2025, compared to other expense, net of $12.9 million for the three months ended June

Interest and other income

totaled $1.1 million and $0.7 million for the three months ended June 30, 2025 and 2024, respectively.

Interest expense totaled $7.6

million for the three months ended June 30, 2025, compared to $5.3 million for the same period in 2024.

The increase was primarily driven

by higher amortization of debt discount associated with new convertible notes issued during the second quarter of 2025.

These notes included

embedded derivative features and incurred transaction-related costs, which contributed to the higher non-cash interest expense recognized

during the period.

Cumulative downward adjustments

for impairments for our equity securities without readily determinable fair values held at were $6.3 million for the three months ended

June 30, 2024.

No such impairments were recognized during the three months ended June 30, 2025.

Income Tax Provision

Our effective tax rate from

continuing operations was a benefit of 0.7% for the three months ended June 30, 2025, compared to 0.0% for the same period in 2024.

recorded an income tax benefit of $0.1 million and $4,000 for the three months ended June 30, 2025 and 2024, respectively.

Results of Operations for the Six Months Ended June 30, 2025 and

The following table summarizes

the results of our operations for the six months ended June 30, 2025 and 2024.

For the Six Months Ended June 30,

Revenue, crane operations

Revenue, crypto assets mining

Revenue, hotel and real estate operations

Revenue, lending and trading activities

Revenue, other

Total revenue

Cost of revenue, crane operations

Cost of revenue, crypto assets mining

Cost of revenue, hotel and real estate operations

Cost of revenue, lending and trading activities

Cost of revenue, other

Total cost of revenue

Operating expenses

Research and development

Selling and marketing

General and administrative

Impairment of property and equipment

Total operating expenses

Loss from operations

(16,511,000 )

(23,273,000 )

Other income (expense):

Interest and other income

Interest expense

(11,503,000 )

(10,950,000 )

Gain on conversion of investment in equity securities to marketable equity securities

1 unchanged sentence

Loss from investment in unconsolidated entity

Impairment of equity securities

Gain on deconsolidation of subsidiary

2 unchanged sentences

Total other expense, net

(Loss) income before income taxes

Income tax provision (benefit)

Net (loss) income from continuing operations

Loss before income taxes

(22,131,000 )

(25,598,000 )

Income tax benefit

Net loss from continuing operations

(22,061,000 )

(25,593,000 )

Net loss from discontinued operations

Net (loss) income

Net loss (income) attributable to non-controlling interest

Net (loss) income attributable to Hyperscale Data, Inc.

(22,061,000 )

(28,589,000 )

Net income attributable to non-controlling interest

Net loss attributable to Hyperscale Data

(23,256,000 )

(30,210,000 )

Preferred dividends

Net (loss) income available to common stockholders

Net loss available to common stockholders

$ (27,437,000 )

$ (32,778,000 )

Comprehensive loss

Net (loss) income available to common stockholders

Net loss available to common stockholders

$ (27,437,000 )

$ (32,778,000 )

Other comprehensive (loss) income

Foreign currency translation adjustment

Other comprehensive income

Total comprehensive (loss) income

Other comprehensive income (loss)

Total comprehensive loss

$ (27,431,000 )

Revenues by business category for the three

months ended March 31, 2025 and 2024 were as follows:

For the Three Months Ended March 31,

Sentinum, Inc.

$ (32,903,000 )

Revenues by business category

for the six months ended June 30, 2025 and 2024 were as follows:

For the Six Months Ended June 30,

Revenue, crypto assets mining

5 unchanged sentences

$ (5,280,000 )

Revenues from Sentinum’s crypto assets

mining operations decreased $6.2 million to $5.2 million for the three months ended March 31, 2025, compared to $11.4 million for the

three months ended March 31, 2024.

The decrease was due primarily to a $3.7 million decline in revenue from mined crypto assets at

Sentinum owned and operated facilities coupled with a $2.6 million decline in revenue from Sentinum crypto mining equipment hosted at

third-party facilities.

The $5.2 million decrease in revenue from mined crypto assets at Sentinum owned and operated facilities was due

to the April 2024 Bitcoin halving event that occurred on the Bitcoin network and a 42% increase in the average Bitcoin mining difficulty

level, partially offset by a 74% increase in the average Bitcoin price for the three months ended March 31, 2025, compared to the corresponding

n/m - not meaningful

Revenues from Sentinum’s

crypto assets mining operations decreased $10.1 million to $9.9 million for the six months ended June 30, 2025, compared to $19.9 million

for the six months ended June 30, 2024.

The decrease was due primarily to a $5.3 million decline in revenue from mined crypto assets

at Sentinum owned and operated facilities coupled with a $4.7 million decline in revenue from Sentinum crypto mining equipment hosted

at third-party facilities.

The $5.3 million decrease in revenue from mined crypto assets at Sentinum owned and operated facilities was

due to the April 2024 Bitcoin halving event that occurred on the Bitcoin network and a 42% increase in the average Bitcoin mining difficulty

level, partially offset by a 61% increase in the average Bitcoin price for the six months ended June 30, 2025, compared to the corresponding

period in 2024.

Energy revenues from Circle 8’s crane

operations increased by $0.9 million, or 7%, for the three months ended March 31, 2025, compared to the same period in 2024.

was primarily driven by reduced pricing pressure and improved utilization of the crane fleet relative to the prior-year period.

Revenues from our lending and trading activities

decreased $9.1 million to approximately $0 for the three months ended March 31, 2025, compared to the same period in 2024.

14, 2024, RiskOn International, Inc.

(“ROI”) transferred 2.5 million shares of White River Energy Corp.

(“White River”)

common stock with a recorded value of $0.5 million and a fair value of $7.5 million at the date of transfer to Ault Lending, LLC (“Ault

As of March 31, 2024, the 2.5 million shares of White River common stock held by Ault Lending had a fair value of $9.4

million and Ault Lending recorded an unrealized gain of $8.9 million during the quarter ended March 31, 2024 included in revenue from

lending and trading activities.

Revenues from our trading activities for

the three months ended March 31, 2025 included net gains on equity securities, including unrealized gains and losses from market price

These gains and losses have caused, and will continue to cause, significant volatility in our periodic earnings.

TurnOnGreen’s revenues increased by

$0.4 million, to $1.6 million for the three months ended March 31, 2025, compared to $1.2 million in the corresponding period in 2024.

This rise was primarily due to higher sales from a single customer in the defense industry during the three months ended March 31, 2025.

Other revenues increased by $0.5 million,

to $0.8 million for the three months ended March 31, 2025, compared to $0.3 million in the corresponding period in 2024.

This rise was

primarily due to higher corporate aircraft charter revenue from third parties.

No revenue was generated from third-party hosted mining operations in 2025.

Energy revenues from Circle

8’s crane operations grew by $0.7 million, or 3%, for the six months ended June 30, 2025, compared to the same period in 2024.

increase was driven by a strong start to the year, as oil and gas companies launched new projects amid renewed optimism following the

presidential inauguration.

However, this early momentum slowed in the second quarter as broader economic pressures and uncertainty in

commodity markets dampened demand for crane services.

Revenues from AGREE’s hotel operations increased

by $0.4 million, or 5%, for the six months ended June 30, 2025, compared to the same period in 2024.

The modest increase reflects stable

occupancy levels and consistent average daily rates, indicating steady performance in our hotel operations year-over-year.

from our lending and trading activities decreased $2.5 million to approximately $1.8 million for the six months ended June 30, 2025, compared

to the same period in 2024, primarily due to a $1.4 million realized gain from the sale of an investment in other equity securities and

$0.3 million in fee income during the six months ended June 30, 2025.

Revenues from our lending and trading activities were negative $0.7

million for the three months ended June 30, 2024, primarily due to a $0.4 million unrealized loss from our investment in Alzamend included

in revenue from lending and trading activities.

from our trading activities for the six months ended June 30, 2025 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

TurnOnGreen’s revenues

increased by $0.8 million, to $3.3 million for the six months ended June 30, 2025, compared to $2.5 million in the corresponding

period in 2024.

This rise was primarily due to higher sales from a single customer in the defense industry during the six months ended

June 30, 2025.

Other revenues increased by

$0.2 million, to $1.2 million for the six months ended June 30, 2025, compared to $1.0 million in the corresponding period in 2024.

rise was primarily due to higher corporate aircraft charter revenue from third parties.

Gross Margins

Gross margins declined to 21% for the three

months ended March 31, 2025, compared to 47% for the same period in 2024.

The decrease was primarily driven by the performance of our

lending and trading activities, which negatively impacted gross margins in the current period but contributed favorably in the prior-year

In both periods, gross margins were further pressured by low or negative gross margin contributions from our crypto asset mining

Excluding the impact of lending and trading activities as well as crypto asset mining, adjusted gross margins were 36% and

35% for the three months ended March 31, 2025 and 2024, respectively.

Gross margins decreased to

22% for the six months ended June 30, 2025, compared to 26% for the same period in 2024.

The decline was primarily driven by unfavorable

margins from our crypto asset mining operations, partially offset by favorable contributions from our lending and trading activities.

Gross margins of 22% for the six months ended June 30, 2025 reflected a similar mix of negative mining performance and positive trading

Excluding the impact of lending and trading activities and crypto asset mining, adjusted gross margins for the six months ended

June 30, 2025 and 2024 would have been 35% and 34%, respectively.

Research and Development

Research and development expenses remained

consistent at $0.1 million for both the three months ended March 31, 2025 and 2024.

Research and development expenses

remained consistent at $0.2 million for both the six months ended June 30, 2025 and 2024.

Selling and Marketing

Selling and marketing expenses were $2.3

million for the three months ended March 31, 2025, compared to $4.0 million for the three months ended March 31, 2024, a decrease of $1.7

million, or 42%.

The decrease was primarily the result of a $1.6 million decrease in sales and marketing expenses at ROI from lower advertising

and promotion costs.

Selling and marketing expenses

were $8.6 million for the six months ended June 30, 2025, compared to $7.8 million for the six months ended June 30, 2024, an increase

of $0.8 million, or 11%.

The increase was primarily the result of a $1.0 million increase in sales and marketing expenses at ROI from

higher advertising and promotion costs.

General and Administrative

General and administrative expenses were

$9.2 million for the three months ended March 31, 2025, compared to $10.4 million for the three months ended March 31, 2024, a decrease

of $1.2 million, or 11% primarily due to lower professional fees, lower stock compensation and lower salaries and benefits expense.

General and administrative

expenses were $19.1 million for the six months ended June 30, 2025, compared to $21.7 million for the six months ended June 30, 2024,

a decrease of $2.7 million.

The decrease was primarily driven by the deconsolidation of AVLP and Eco Pack, the completion and wind-down

of Ault Disruptive following the full redemption of its public shares, and a reduction in stock-based compensation expense.

Impairment of Property and Equipment

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 determination not to sell.

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 six months ended June 30, 2024.

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.

Other Expense, Net

Other expense, net was $4.0 million for

the three months ended March 31, 2025, compared to other expense, net of $10.5 million for the three months ended March 31, 2024.

Interest and other income totaled $0.2 million

and $0.5 million for the three months ended March 31, 2025 and 2024, respectively.

Interest expense was $6.4

million for the three months ended March 31, 2025, compared to $5.6 million for the three months ended March 31, 2024.

Interest expense

for the three months ended March 31, 2025 included contractual interest of $3.8 million, amortization of debt discount of $0.1 million

and forbearance and extension fees of $12,000.

Interest expense for the three months ended March 31, 2024 included amortization of debt

discount of $2.1 million, contractual interest of $2.0 million and forbearance and extension fees of $1.5 million.

For the three months ended

March 31, 2024, we recognized a noncash gain of $17.9 million related to the conversion of White River common stock by ROI into marketable

equity securities.

During the period, ROI transferred 6.7 million shares of White River common stock with a fair value of $19.2 million

at the date of transfer.

In connection with these transfers, ROI converted a portion of its White River Series A convertible preferred

stock into common stock.

No such gains were recognized during the three months ended March 31, 2025.

the three months ended March 31, 2025, we recognized a total net loss on extinguishment of convertible notes of $4.6 million.

Other expense, net was $5.6

million for the six months ended June 30, 2025, compared to other expense, net of $2.3 million for the six months ended June 30,

Interest and other income

totaled $1.3 million and $1.2 million for the six months ended June 30, 2025 and 2024, respectively.

Interest expense was $11.5 million for the six months ended June 30,

2025, a slight increase from $11.0 million for the same period in 2024.

For the six months ended June

30, 2024, we recognized a noncash gain of $17.9 million related to the conversion of White River common stock by ROI into marketable equity

During the period, ROI transferred 6.7 million shares of White River common stock with a fair value of $19.2 million at the

date of transfer.

In connection with these transfers, ROI converted a portion of its White River Series A convertible preferred stock

into common stock.

No such gains were recognized during the six months ended June 30, 2025.

the six months ended June 30, 2025, we recognized a total net loss on extinguishment of convertible notes of $4.6 million.

· A gain of $0.3 million resulting from the conversion of $0.7 million of convertible notes into 0.2 million

shares of Class A common stock, which had a fair value of $0.4 million at the time of conversion;

· A loss of $2.6 million related to the issuance of the A&R Forbearance Note.

The A&R Forbearance

Note, with a principal amount of $3.5 million, was determined to be substantially different from the original note due to significant

changes in terms, including the addition of a conversion feature and increased principal amount.

As such, extinguishment accounting was

applied, and a loss was recognized based on the difference between the value of the A&R Forbearance Note and the net carrying amount

of the original note;

· A loss of $1.0 million related to the Orchid convertible promissory note issued on March 14, 2025.

the principal amount of the new note equaled the aggregate principal and accrued interest of the notes exchanged, the fair value of the

new note, including the embedded derivative liability, exceeded the carrying amount of the original notes.

· A loss of $2.6 million was recognized in connection with the February 25, 2025 issuance of an amended

and restated forbearance agreement with an institutional investor.

As part of this agreement, we issued an amended and restated convertible

promissory note (the “A&R Forbearance Note”) with a principal amount of $3.5 million.

The A&R Forbearance Note was

determined to be substantially different from the original note due to significant modifications, including an increased principal balance

and the addition of a conversion feature.

Accordingly, the original note was derecognized, and extinguishment accounting was applied.

The $2.6 million loss reflects the excess of the value of the A&R Forbearance Note over the net carrying amount of the original note;

· A loss of $1.0 million related to a convertible promissory note issued on March 14, 2025.

principal amount of the new note equaled the aggregate principal and accrued interest of the notes exchanged, the fair value of the new

note, including the embedded derivative liability, exceeded the carrying amount of the original notes.

As a result, a loss on extinguishment

of $1.0 million was recognized;

· A loss of $1.3 million related to the SJC convertible promissory note issued on March 21, 2025.

the principal of the new note matched the principal and accrued interest of the exchanged notes, the combined fair value of the new note

and its embedded derivative exceeded the carrying amount of the original instruments.

Accordingly, a $1.3 million loss on extinguishment

was recognized.

During the three months ended March 31,

2024, ROI investors converted $2.3 million of ROI senior secured convertible notes with a fair value of $0.9 million at the time of conversion.

As a result, ROI recognized a $1.4 million gain on extinguishment of debt.

Loss from investment in unconsolidated entity

was $0.7 million for the three months ended March 31, 2024, representing our share of losses from our equity method investment in Algorhythm

Holdings, Inc.

On March 28, 2025, AVLP, a majority-owned

subsidiary of ours, filed a voluntary petition for liquidation under Chapter 7 of the U.S.

· A loss of $1.3 million related to a convertible promissory note issued on March 21, 2025.

principal of the new note matched the principal and accrued interest of the exchanged notes, the combined fair value of the new note and

its embedded derivative exceeded the carrying amount of the original instruments.

Accordingly, a $1.3 million loss on extinguishment was

During the six months ended

June 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.

During the three months ended June 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.

Loss from investment in unconsolidated

entity was $1.3 million for the six months ended June 30, 2024, representing our share of losses from our equity method investment in

Algorhythm Holdings, Inc.

On March 28, 2025, AVLP, formerly a

majority-owned subsidiary of ours, filed a voluntary petition for liquidation under Chapter 7 of the U.S.

Bankruptcy Code.

As a result of the filing,

AVLP became subject to the control of the bankruptcy court, and we no longer maintained a controlling financial interest.

we deconsolidated AVLP effective as of the petition date.

In connection with the deconsolidation, we recognized a gain of $10.0 million,

which is included in the condensed consolidated statement of operations for the three months ended March 31, 2025.

During the three months ended March 31,

2024, we recorded a $3.1 million loan loss reserve related to the promissory note from Ault & Company, Inc.

(“Ault & Company”),

due to uncertainties surrounding collection.

The reserve was recorded within provision for loan losses – related party.

of the filing, AVLP became subject to the control of the bankruptcy court, and we no longer maintained a controlling financial interest.

Accordingly, we deconsolidated AVLP effective as of the petition date.

In connection with the deconsolidation, we recognized a gain of

$10.0 million, which is included in the condensed consolidated statement of operations for the six months ended June 30, 2025.

April 16, 2025, Eco Pack, formerly a majority-owned subsidiary of ours, filed a voluntary liquidation under the insolvency regulations in the UK.

As a result of the filing, we no longer maintained a controlling financial interest.

Accordingly, we deconsolidated Eco Pack effective

as of the filing date.

In connection with the deconsolidation, we recognized a loss of $0.4 million, which is included in the condensed

consolidated statement of operations for the six months ended June 30, 2025.

During the six months ended June 30, 2024, we recorded a $3.1 million

loan loss reserve related to the promissory note from Ault & Company due to uncertainties surrounding collection.

The reserve was

recorded within provision for loan losses – related party.

Income Tax Provision

Our effective tax rate from continuing operations

was 1.3% for the three months ended March 31, 2025, compared to 0.0% for the same period in 2024.

We recorded an income tax provision

of $0.1 million for the three months ended March 31, 2025, and recognized an income tax benefit of $1,000 for the three months ended March

Our effective tax rate from

continuing operations was a benefit of 0.3% for the six months ended June 30, 2025, compared to 0.0% for the same period in 2024.

an income tax benefit of $0.1 million and $5,000 for the six months ended June 30, 2025 and 2024, respectively.

Liquidity and Capital Resources

As of March 31, 2025, we had cash and cash

equivalents of $4.2 million, excluding restricted cash of $20.4 million, compared to $4.5 million in cash and cash equivalents and $20.5

million in restricted cash as of December 31, 2024.

The decrease in cash and cash equivalents was primarily driven by cash used in operating

activities, debt repayments, and purchases of property and equipment.

These outflows were partially offset by cash inflows from financing

activities, including the sale of preferred stock and proceeds from notes payable and convertible notes.

Net cash used in operating activities totaled

$4.0 million for the three months ended March 31, 2025, compared to $10.2 million for the three months ended March 31, 2024.

used in operating activities for the three months ended March 31, 2025 included $5.2 million proceeds from the sale of crypto assets

from our Sentinum crypto assets mining operations, offset by operating losses and changes in working capital.

As of June 30, 2025, we had

cash and cash equivalents of $5.9 million, excluding restricted cash of $21.3 million, compared to $4.5 million in cash and cash equivalents

and $20.5 million in restricted cash as of December 31, 2024.

The increase in cash and cash equivalents was primarily driven by cash inflows

from financing activities, including the sale of preferred stock and proceeds from notes payable and convertible notes.

These inflows

were partially offset by cash used in operating activities, debt repayments and purchases of property and equipment.

Net cash used in operating

activities for the three months ended March 31, 2024 included $0.6 million cash used in operating activities from discontinued operations.

Net cash used in investing activities was

$1.2 million for the three months ended March 31, 2025, compared to net cash used in investing activities of $1.7 million for the three

months ended March 31, 2024.

Net cash used investing activities for the three months ended March 31, 2025 included capital expenditures

activities totaled $7.1 million for the six months ended June 30, 2025, compared to $13.9 million for the six months ended June 30,

Cash used in operating activities for the six months ended June 30, 2025 included $9.9 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 six months ended June 30, 2024 included $3.8 million cash used in operating activities from discontinued

Net cash used in investing

activities was $2.3 million for the six months ended June 30, 2025, compared to net cash used in investing activities of $3.8 million

for the six months ended June 30, 2024.

Net cash used investing activities for the six months ended June 30, 2025 included capital expenditures

of $3.3 million partially offset by proceeds from collections on notes receivable, related party of $1.9 million.

Net cash used in

investing activities for the three months ended March 31, 2024 included $1.4 million cash provided by investing activities from discontinued

Net cash provided by financing activities

was $4.7 million for the three months ended March 31, 2025, compared to $13.0 million for the three months ended March 31, 2024,

investing activities for the six months ended June 30, 2024 included $1.6 million cash provided by investing activities from discontinued

Net cash provided by financing

activities was $11.6 million for the six months ended June 30, 2025, compared to $18.8 million for the six months ended June 30,

2024, and primarily reflects the following transactions:

• $29.1 million gross proceeds from notes payable, offset by $30.2 million payments on notes payable;

• $7.9 million gross proceeds from sales of Series B preferred stock;

• $5.0 million gross proceeds from convertible notes payable, offset by $0.3 million payments on convertible

notes payable;

• $3.5 million gross proceeds from sales of Series D preferred stock;

• $4.2 million payments of preferred dividends;

· $0.9 million gross proceeds from sales of Series G preferred stock, related party;

· $0.3 million payments on convertible notes payable.

Net cash provided by financing activities

for the three months ended March 31, 2024 included $0.5 million cash used in financing activities from discontinued operations.

Financing Transactions Subsequent to March 31, 2025

Sales of Series G Preferred Stock and Warrants

In April 2025, we sold to

Ault & Company 100 shares of Series G preferred stock and Series G warrants to purchase 16,898 shares of Class A common stock, for

an aggregate purchase price of $0.1 million.

Issuances of Series D Preferred Stock

From April 1, 2025 through

May 15, 2025, we issued a total of 52,700 shares of our Series D preferred stock for the settlement of equity line of credit advances

totaling $0.6 million.

April 2025 Convertible Promissory Note

On April 1, 2025, we issued to an institutional

investor, a convertible promissory note in the principal face amount of $1.7 million (the “April 2025 Note”) in consideration

for an advance of $1.5 million previously made by the investor to us (the “Transaction”).

The April 2025 Note has a principal

face amount of $1.7 million and was issued with an OID of 10%.

The April 2025 Note accrues interest at the rate of 15% per annum, unless

an event of default (as defined in the April 2025 Note) occurs, at which time the April 2025 Note would accrue interest at 18% per annum.

The April 2025 Note will mature on September 30, 2025.

The April 2025 Note is convertible into shares of our class A common stock at any

time after NYSE approval of the SLAP at a conversion price equal to the greater of (i) $0.40 per share, which shall not be adjusted for

stock dividends, stock splits, stock combinations and other similar transactions and (ii) the lesser of 75% of the VWAP (as defined in

the April 2025 Note) of the Class A common stock during the five trading days immediately prior to the closing date or the date of conversion.

April 8, 2025 Convertible Note

On April 8, 2025, we issued to an accredited

investor a convertible promissory note in the principal face amount of $110,000 in consideration for $100,000.

The note accrues interest

at the rate of 15% per annum, unless an event of default (as defined in the note) occurs, at which time the note would accrue interest

at 18% per annum.

The note will mature on September 30, 2025.

The note is convertible into shares of Class A common stock at a conversion

price equal to the greater of (i) $0.45 and (ii) the lesser of (A) 75% of the VWAP (as defined in the note) of the Class A common

stock during the five trading days immediately prior to the date of issuance of the note or (B) 75% of the lowest daily VWAP of the Class

A common stock during the five trading days immediately prior to the date of conversion into shares of Class A common stock.

April 15, 2025 Convertible Promissory Notes

On April 15, 2025, we entered into securities

purchase agreements (the “Agreements”) with institutional investors (the “Investors”), pursuant to which we issued

to the Investors convertible promissory notes in the aggregate principal face amount of $5.0 million (the “Notes”) in

aggregate gross consideration of $4.0 million in cash paid by the Investors to us, prior to placement agent fees and expenses of approximately

$0.5 million (the “Transaction”).

The Notes have an aggregate principal face

amount of $5.0 million and were issued with an original issue discount of 20%, or $1.0 million.

The Notes do not accrue interest unless

an event of default at which time the Notes would accrue interest at 20% per annum.

The Notes will mature on September 30, 2025.

are convertible into shares (the “Conversion Shares”) of the Company’s class A common stock at any time after NYSE American

approval of the supplemental listing application at a conversion price equal to the greater of (i) $0.40 per share (the “Floor Price”),

which Floor Price shall not be adjusted for stock dividends, stock splits, stock combinations and other similar transactions and (ii)

80% of the lowest closing price of the Class A common stock during the five trading days immediately prior to the date of conversion into

shares of Class A common stock.

May 13, 2025 OID Only Term

2025, we entered into an OID only term note agreement with an institutional investor with a principal amount of $1.4 million and an OID

of $0.1 million.

The maturity date of the promissory note is May 27, 2025.

Ault entered into a personal guaranty agreement for the

benefit of the investor.

• $0.9 million gross proceeds from sales of Series G preferred stock,

related party.

Net cash provided by financing

activities for the six months ended June 30, 2024 included $1.3 million cash provided by financing activities from discontinued operations.

Financing Transactions Subsequent to June

Sales of Series B Convertible Preferred Stock

From July 1, 2025 through

August 14, 2025, we sold a total of 10,955 shares of our Series B convertible preferred stock for cash totaling $11.0 million.

Critical Accounting Estimates

There have been

no material changes to our critical accounting estimates previously disclosed in the 2024 Annual Report.

have been no material changes to our critical accounting estimates previously disclosed in the 2024 Annual Report.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable

for a smaller reporting company.

applicable for a smaller reporting company.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis