AULT Ault Alliance, Inc. - 10-K

ITEM 1A.

RISK FACTORS

An investment in our Class A common stock involves significant risks. You should carefully consider the following risks and all other information set forth in this Annual Report before deciding to invest in our Class A common stock. If any of the events or developments described below occurs, our business, financial condition and results of operations may suffer. In that case, the value of our Class A common stock may decline and you could lose all or part of your investment.

You should consider each of the following risk factors and any other information set forth in this Annual Report and the other reports filed by the Company with the SEC, including the Company’s financial statements and related notes, in evaluating the Company’s business and prospects. The risks and uncertainties described below are not the only ones that impact on the Company’s operations and business. Additional risks and uncertainties not presently known to the Company, or that the Company currently considers immaterial, may also impair its business or operations. If any of the following risks actually occurs, the Company’s business and financial condition, results or prospects could be harmed. Please also read carefully the section entitled “Cautionary Note About Forward-Looking Statements” at the beginning of this Annual Report.

Risks Related to Our Company

We have an evolving business model, which increases the complexity of our business.

Our business model has evolved in the past and continues to do so. In prior years we have added additional types of services and product offerings and in some cases, we have modified or discontinued those offerings. We intend to continue to try to offer additional types of products or services, and we do not know whether any of them will be successful. From time to time we have also modified aspects of our business model relating to our product mix. We do not know whether these or any other modifications will be successful. The additions and modifications to our business have increased the complexity of our business and placed significant strain on our management, personnel, operations, systems, technical performance, financial resources, and internal financial control and reporting functions. Future additions to or modifications of our business are likely to have similar effects. Further, any new business or website we launch that is not favorably received by the market could damage our reputation or our brand. The occurrence of any of the foregoing could have a material adverse effect on our business.

We are heavily dependent on our senior management, and a loss of a member of our senior management team could cause our stock price to suffer .

If we lose the services of Milton C. Ault, III, our Executive Chairman, William B. Horne, our Chief Executive Officer, Henry Nisser, our President and General Counsel, or Ken Cragun, our Chief Financial Officer and/or certain key employees, we may not be able to find appropriate replacements on a timely basis, and our business could be adversely affected. Our existing operations and continued future development depend to a significant extent upon the performance and active participation of these individuals and certain key employees. Although we have entered into employment agreements with Messrs. Ault, Horne and Nisser, and we may enter into employment agreements with additional key employees in the future, we cannot guarantee that we will be successful in retaining the services of these individuals. If we were to lose any of these individuals, we may not be able to find appropriate replacements on a timely basis and our financial condition and results of operations could be materially adversely affected.

We rely on highly skilled personnel and the continuing efforts of our executive officers and, if we are unable to retain, motivate or hire qualified personnel, our business may be severely disrupted.

Our performance largely depends on the talents, knowledge, skills, know-how and efforts of highly skilled individuals and in particular, the expertise held by our Executive Chairman, Milton C. Ault, III. His absence, were it to occur, would materially and adversely impact the development and implementation of our projects and businesses. Our future success depends on our continuing ability to identify, hire, develop, motivate and retain highly skilled personnel for all areas of our organization. Our continued ability to compete effectively depends on our ability to attract, among others, new technology developers and to retain and motivate our existing contractors. If one or more of our executive officers are unable or unwilling to continue in their present positions, we may not be able to replace them readily, if at all. Therefore, our business may be severely disrupted, and we may incur additional expenses to recruit and retain new officers. In addition, if any of our executives joins a competitor or forms a competing company, we may lose some customers.

We may not be able to utilize our net operating loss carryforwards.

As of December 31, 2025, we had federal and state net operating loss carryforwards (“NOLs”) for income tax purposes of approximately $300.8 million and $342.2 million, respectively, after application of the limitations set forth in Section 382 of the Internal Revenue Code. In accordance with Section 382, future utilization of our NOLs is subject to an annual limitation as a result of ownership changes that occurred previously. We also maintain NOLs in various foreign jurisdictions.

Risks Related to Our Indebtedness and Liquidity

We will need to raise additional capital to fund our operations in furtherance of our business plan.

Until we are profitable, we will need to raise additional capital in order to fund our operations in furtherance of our business plan. The proposed financing may include shares of common stock, shares of preferred stock, warrants to purchase shares of common stock or preferred stock, debt securities, units consisting of the foregoing securities, equity investments from strategic development partners or some combination of each. Any additional equity financings may be financially dilutive to, and will be dilutive from an ownership perspective to, our stockholders, and such dilution may be significant based upon the size of such financing. Additionally, we cannot assure that such funding will be available on a timely basis, in needed quantities, or on terms favorable to us, if at all.

If we are unable to comply with the covenants or restrictions contained in the Loan Agreement with our senior secured lender, the lender could declare all amounts outstanding under the Loan Agreement to be due and payable and foreclose on its collateral, which could materially adversely affect our financial condition and operations.

As previously announced, on December 14, 2023, we, along with our wholly owned subsidiaries Sentinum, ACS, BNI Montana, Ault Lending, Ault Aviation and AGREE, entered into the Loan Agreement with institutional lenders, pursuant to which Ault & Company borrowed $36 million and issued Secured Notes to the lenders in the aggregate amount of $38.9 million. Pursuant to the Loan Agreement, we, and the other Guarantors, 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) the Miners, (b) all of the digital 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, Ault Energy, Eco Pack Technologies Limited, and Circle 8 Holdco, (iii) a future advance mortgage by ACS on the Michigan Property, (iv) an aircraft mortgage and security agreement by Ault Aviation on the Aircraft, and (v) deposit account control agreements over certain bank accounts held by certain of our subsidiaries. The Loan Agreement has customary representations, warranties and covenants including restrictions on indebtedness, liens, restricted payments and dividends, investments, asset sales and similar covenants and contains customary events of default.

Further, on December 2, 2025 we, along with its direct and indirect wholly owned subsidiaries Sentinum and ACS (with Sentinum, the “Guarantors”), entered into a Note Purchase Agreement (the “Agreement” and with the Loan Agreement, the Agreements”) with JGB Capital, LP, JGB Partners, LP and JGB Capital Offshore Ltd. (the “Lenders”) as well as JGB Collateral, LLC (the “Agent”). Pursuant to the Agreement, we borrowed $12.8 million from the Investors and issued secured convertible promissory notes to the Investors in such aggregate amount, which includes an original issue discount of $0.8 million (collectively, the “Convertible Notes”).

In connection with the Agreement, we, the Agent and a custodian entered into an Account Control Agreement which governs the terms of a crypto asset account established by the foregoing parties. We have deposited Bitcoin having a U.S. dollar value of $16.0 million therein as collateral for the loans made to the Company under the Agreement and evidenced by the Convertible Notes.

The covenants and other restrictions contained in the Agreements and other current or future debt agreements could, among other things, restrict our ability to dispose of assets, incur additional indebtedness, pay dividends or make other restricted payments, create liens on assets, make investments, loans or advances, make acquisitions, engage in mergers or consolidations and engage in certain transactions with affiliates. These restrictions could limit our ability to plan for or react to market conditions or meet extraordinary capital needs or otherwise restrict corporate activities. In addition, substantially all of our borrowed money obligations are secured by certain of our assets.

A failure to comply with any restrictions or covenants in the Agreements, or to make payments into the Segregated Account when due or make other payments we are obligated to make under Loan Agreement, could have serious consequences to our financial condition or result in a default under the Agreements and under other agreements containing cross-default provisions. A default would permit lenders to accelerate the maturity of the debt under these debt agreements and to foreclose upon collateral securing the debt, among other remedies. Furthermore, an event of default or an acceleration under one of our debt agreements could also cause a cross-default or cross-acceleration of another debt instrument or contractual obligation, which would adversely impact our liquidity. Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations. We may not be granted waivers or other amendments to these debt agreements if for any reason we are unable to comply with these debt agreements, and we may not be able to restructure or refinance our debt on terms acceptable to us, or at all. Whether or not those kinds of actions are successful, we might seek protections of applicable bankruptcy laws. Additionally, all of our indebtedness is senior to the existing common stock in our capital structure. If we were to seek certain restructuring transactions, our creditors would experience better returns as compared to our equity holders. Any of these actions could have a material adverse effect on the value of our equity and on our business, financial performance, and liquidity.

To service any future indebtedness and other obligations, we will require a significant amount of cash.

Our ability to generate cash depends on many factors beyond our control, and any failure to meet our debt service obligations, of which we currently have very few but may in the future incur, including our obligations under our indebtedness or future outstanding shares of preferred stock, could harm our business, financial condition and results of operations. Our ability to make payments on and to refinance any indebtedness and outstanding preferred stock and to fund working capital needs and planned capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, business, legislative, regulatory and other factors that are beyond our control.

If our business does not generate sufficient cash flow from operations or if future borrowings are not available to us in an amount sufficient to enable us and our subsidiaries to pay our indebtedness or make dividend payments with respect to our any shares of preferred stock that we may issue, or to fund our other liquidity needs, we may need to refinance all or a portion of our indebtedness or redeem the preferred stock, on or before the maturity thereof, sell assets, reduce or delay capital investments or seek to raise additional capital, any of which could have a material adverse effect on us.

In addition, we may not be able to effect any of these actions, if necessary, on commercially reasonable terms or at all. Our ability to restructure or refinance our indebtedness or redeem the preferred stock will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt or financings related to the redemption of any shares of preferred stock that we may issue could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. The terms of future debt instruments or preferred stock may limit or prevent us from taking any of these actions. In addition, any failure to make scheduled payments of interest and principal on any future outstanding indebtedness or dividend payments on any shares of preferred stock that we may issue could harm our ability to incur additional indebtedness or otherwise raise capital on commercially reasonable terms or at all. Our inability to generate sufficient cash flow to satisfy any future debt service and other obligations, or to refinance or restructure our obligations on commercially reasonable terms or at all, would have an adverse effect, which could be material, on our business, financial condition and results of operations.

Risks Related to Circle 8

Circle 8 uses substantial leverage in its capital structure which could adversely affect its financial condition. Although Circle 8’s debt-to-EBITDA ratio is below the industry median, operational disruptions or economic shocks could hinder Circle 8’s ability to service its debt and impact its solvency. Additionally, the industry tends to heavily rely on debt to finance expansionary initiatives, whether through organic growth or acquisitions.

While Circle 8 has reduced the amount of outstanding debt from 2024 to 2025, as of December 31, 2025, it still had total outstanding indebtedness of approximately $9.4 million, of which $7.2 million was borrowed from First Citizens Bank (“FCB”) in a senior secured asset-based revolving line of credit, $1.2 million consists of outstanding equipment notes with Flagstar Financial & Leasing (“FFL”), $0.4 million consists of outstanding equipment notes with Manitowoc Finance (“MANF”) and $0.6 million of outstanding vehicle notes with Ford Motor Credit (“FMC”). In addition, Circle 8 has the ability to increase the FCB loan, which availability was $12.8 million as of December 31, 2025. Circle 8 may further increase its debt balance where permitted by incumbent lenders for growth and expansionary purposes. Circle 8’s substantial indebtedness could have important consequences. For example, it may:

increase Circle 8’s vulnerability to general adverse economic, industry and competitive conditions;

require management to dedicate a substantial portion of Circle 8’s cash flow from operations to interest payments and principal repayment, thereby reducing the availability of cash flow to fund working capital, capital expenditures, acquisitions, dividend payments to its owners and other general corporate purposes;

limit Circle 8’s flexibility in planning for, or reacting to, changes in Circle 8’s specific business and the industry in which it operates;

place Circle 8 at a competitive disadvantage compared to its competitors that have less debt; and

limit Circle 8’s ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes.

Circle 8 expects to use cash flow from operations and borrowings under the FCB commitment to meet current and future financial obligations, including funding operations, debt service and capital expenditures. Circle 8’s ability to make these payments depends on future operational performance, which will be affected by financial, business, economic and other factors, many of which Circle 8 cannot control. Circle 8’s business may not generate sufficient cash flow from operations in the future or be able to appropriately adjust operations to suit organic industry developments, which could result in Circle 8’s inability to service its debt obligations, or to fund other liquidity needs. If Circle 8 has insufficient capital to cover its debt obligations, it may be forced to reduce or delay ongoing or growth activities and capital expenditures, sell assets, obtain additional debt or dilutive equity capital or restructure or refinance all or a portion of its debt, including the incumbent FCB, MANF, FFL and FMC loans, and any other incremental loans, on or before maturity. There can be no assurance that Circle 8 will be able to accomplish any of these alternatives on terms acceptable to it or to us, if at all. In addition, the terms of existing or future indebtedness, including the agreements governing the incumbent loans, may limit Circle 8’s ability to pursue any other alternatives.

While Circle 8 has had an industry-leading safety record throughout its history, it operates in a potentially hazardous industry, and any safety incident could significantly impact its operations. A blemish on Circle 8’s safety record could lead to direct consequences such as fines, levies, and increased insurance premiums, as well as indirect consequences such as customers preferring competitors with better safety records.

The lifting solutions business is inherently risky, and accidents can occur due to a variety of factors, including negligence and unforeseeable events. Despite this, Circle 8 has maintained an industry-leading safety record and has not experienced any incidents that have significantly impacted its operations. While Circle 8 has a safety program in place, it cannot guarantee protection against unforeseeable events or “acts of God.” Any safety transgressions can have a material impact on sales and operating results, leading to fines and levies, and potentially causing customers to prefer competitors with better safety records. Therefore, Circle 8 places a great emphasis on maintaining its safety program and continually improving its practices to minimize the risk of incidents occurring.

The lifting solutions business is dependent on the domestic oil markets’ activity, oil pricing, construction and industrial activities, and the overall economic conditions. Any downturn in these areas could adversely affect the demand for lifting solutions, leading to decreased sales and lower lifting solutions prices, which may result in a decline in Circle 8’s revenues, gross margins and operating results.

Circle 8 primarily provides lifting solutions for the U.S. domestic oil market. As such, any downturn in the U.S. domestic oil market or the economy as a whole could result in reduced demand for its services or lower sales prices. Additionally, its business may face temporary or long-term negative impacts due to:

a reduction in extraction levels by customers due to increased costs and break-even oil price and lower levels of reserves due to depletion of existing reserves and resources;

exploration and drilling are capital intensive and results are uncertain, which may limit Circle 8’s current clients’ demand for Circle 8’s services and adversely affect its ability to generate new clients;

until it executes on its expansion program, dependence on a limited number of clients in a niche oil services market could make Circle 8 vulnerable compared to larger industry incumbents with greater client diversity;

unfavorable credit and equity markets affecting end-user access to capital or cost of capital, also potentially increasing the all-in cash costs and break-even oil prices may make operations of its current and future clients no longer economically viable;

adverse changes in federal, state, tribal and local government infrastructure spending;

an increase in the cost of consumables and construction materials related to oil extraction and infrastructure construction;

adverse weather conditions or natural disasters which may affect a particular region;

a decrease in the level of exploration, development, production activity and capital spending by oil and natural gas companies;

an increase in inflationary pressure on materials and labor;

labor issues such as strikes or worker shortages;

a prolonged shutdown of the U.S. government;

an increase in interest rates;

supply chain disruptions;

changes in federal and state regulations related to climate change and greenhouse gas emissions may materially adversely impact Circle 8’s and/or its clients’ revenues, operating results and profitability;

public health crises and epidemics; or

terrorism or hostilities involving the United States and/or its allies.

Weakness or deterioration in the oil services industry, renewables infrastructure construction, plant turn-around and public and industrial infrastructure construction sectors caused by the above or other factors could have a material adverse effect on Circle 8’s financial position, results of operations and cash flows in the future and may also have a material adverse effect on residual values realized on the disposition of the existing and future rental fleet.

Circle 8’s business is highly reliant on the availability of specialized skilled labor, and this dependency is particularly pronounced given the current scarcity of domestic U.S. skilled labor. This scarcity is at an all-time high, which is further compounded as labor requirements to operate in Circle 8 ‘s business becomes even more specialized.

The lifting solutions business requires licensed operators to operate safely and within U.S. domestic regulatory requirements. It takes several months and material funding to be trained to become a licensed crane operator, making the availability of qualified labor scarce for the lifting solutions industry in general and specifically in remote locations in which Circle 8’s client set operates its oil services. Availability of labor may have a significant impact on Circle 8’s ability to service its current client set and to be able to execute on its expansion program.

Additionally, the training and licensing requirements for crane operators can vary by state and even by municipality, which can create further challenges for Circle 8 in sourcing and deploying qualified labor in different geographic locations. Moreover, the competitive labor market for skilled workers in the oil services industry could potentially drive-up labor costs for Circle 8, which would impact its profitability and competitiveness.

Circle 8’s business is, directly and indirectly, dependent on a functioning global supply chain system. The oil and steel markets are global, and many suppliers, vendors, OEM’s and parts manufacturers for Circle 8 and its clients’ industries are offshore.

The lifting solutions business success is heavily dependent on the availability and efficient conversion to elevated utilization rates of the lifting assets. These metrics can be fundamentally impacted by the functionality of the global supply chain, which plays several roles in the lifting solutions business. For example, supply chain disruptions could delay the delivery of critical parts and components needed for maintenance and repair of lifting assets, leading to longer downtime periods and reduced utilization rates.

In addition, fluctuations in commodity prices could impact the cost of raw materials needed to manufacture lifting assets, potentially affecting Circle 8’s profitability. These fluctuations, among others, could impact the efficiency and profitability of Circle 8’s lifting solutions business and can be impacted by a variety of factors, including the following:

possible geopolitical unrest and conflict may impact ability to receive new parts or new cranes in a timely manner, if at all, to optimize utilization and ultimately, profitability;

reliance on foreign suppliers for cranes and exposure to trade embargoes could impede its ability to procure necessary parts and equipment to execute its growth strategies and maintain its fleet;

inflationary pressures resulting from supply chain disruptions and labor shortages could make it difficult for Circle 8 to repair and replace its crane equipment at regular costs;

fuel price escalation could have a material impact on gross profit since it is typically approximately 7% of the operating cost structure in recent history;

oil market sanctions and political pressure on domestic production reduction may adversely impact Circle 8’s core clients and its revenues and profitability; or

steel market sanctions, trade embargoes and other supply chain shocks may adversely impact public and private infrastructure and renewables new construction and maintenance projects, ultimately slowing Circle 8’s strategic transition to diversify its end markets and client base.

Furthermore, as Circle 8 expands its operations, it may need to rely on suppliers and logistics partners in new geographic regions, which could expose Circle 8 to additional supply chain risks.

Circle 8’s reliance on a limited number of equipment manufacturers exposes Circle 8 to significant risks, as the termination or disruption of relationships with any of these manufacturers could adversely impact Circle 8’s ability to obtain equipment in a timely or adequate manner, potentially leading to operational disruptions and financial losses.

Circle 8 purchases most of its equipment from leading, nationally recognized OEMs. For the year ended December 31, 2025, Circle 8 acquired two Manitowoc/Grove cranes and one Liebherr crane, a top-tier heavy equipment manufacturer based in Germany. Historically, Circle 8 has sourced the majority of its fleet from Manitowoc/Grove, a leading worldwide crane manufacturer. Utilizing a primary OEM has reduced the number of parts and inventory items required to be kept on hand, resulting in operational efficiencies and allowing for timely maintenance and repairs. Going forward, Circle 8 intends to continue utilizing Manitowoc/Grove for crane models that align with its core operating needs, while selectively expanding its fleet with higher-capacity Liebherr cranes, particularly in classes exceeding 350 tons. While introducing an additional OEM enhances fleet capability and capacity, it may require incremental investment in parts inventory and technician training and could create supply chain dependencies that may adversely affect the business, financial condition or results of operations if such manufacturers are unable to supply equipment or components in a timely manner.

Circle 8 faces risks related to heightened inflation, recession, financial and credit market disruptions and other economic conditions.

Circle 8’s financial results, operations and forecasts depend significantly on worldwide economic and geopolitical conditions, the demand for Circle 8’s products, and the financial condition of its customers and suppliers. Economic weakness and geopolitical uncertainty have in the past resulted, and may result in the future, in reduced demand for lifting solutions resulting in decreased sales, margins and earnings. The U.S. has experienced significantly heightened inflationary pressures over the last several years. It is difficult to fully mitigate the impact of inflation through price increases passed through to customers that are operating in commodity sector with global end market pricing mechanisms, productivity initiatives and cost savings, which could have an adverse effect on Circle 8’s financial results and position. In addition, if the U.S. economy enters a recession, Circle 8’s sales may decline, which could have an adverse effect on its overall business, operating results and financial condition. Similarly, disruptions in financial and/or credit markets may impact Circle 8’s ability to manage normal commercial relationships with its customers, suppliers and creditors. Further, in the event of a recession or threat of a recession, Circle 8’s customers and suppliers may suffer their own financial and economic challenges and as a result they may demand pricing accommodations, delay payment, or become insolvent, which could harm Circle 8’s ability to meet its customer demands or collect revenue or otherwise could harm the business and its ability to service incumbent loans, ultimately leading to possible insolvency. An economic or credit crisis could occur and impair credit availability and Circle 8’s ability to raise capital as required for ongoing working capital, maintenance capital and expansion capex. A disruption in the financial markets could impair Circle 8’s banking or other business partners, on whom it relies for access to capital. In addition, changes in tax or interest rates in the U.S. or other nations, whether due to recession, economic disruptions or other reasons, could have an adverse effect on Circle 8’s operating results. Economic weakness and geopolitical uncertainty may also lead to asset impairment, restructuring actions or adjust Circle 8’s operating strategy and reduce expenses in response to decreased sales or margins. Circle 8 may not be able to adequately adjust its cost structure in a timely fashion, which could have an adverse effect on its operating results and financial condition. Uncertainty about economic conditions may increase foreign currency volatility in markets in which it transacts business, which could have an adverse effect on Circle 8’s operating results.

The inability to forecast trends accurately may have an adverse impact on Circle 8’s business and financial condition.

An economic downturn or economic uncertainty makes it difficult to forecast trends. For example, rising interest rates in recent years, higher than expected inflation, and several bank failures underscore the potential impact of ongoing economic risks to Circle 8’s operations and financial performance. These factors can lead to increased borrowing costs, reduced consumer spending, and reduced access to credit, among other potential challenges.

This uncertainty makes it difficult to forecast Circle 8’s future operating performance, cash flows and financial position, which could have an adverse impact on its business and financial condition. Additionally, uncertainty regarding future oil and natural gas prices have negatively impacted the exploration, production and construction activity of Circle 8’s customers in those markets. Uncertainty regarding future lifting solutions demand could cause Circle 8 to maintain excess equipment inventory and increase its equipment inventory carrying costs, decrease utilization and cause a technical default in certain covenants. Alternatively, difficulty forecasting, in addition to labor shortages and supply chain disruptions could cause a shortage incremental rental equipment that could result in an inability to satisfy demand for Circle 8 service and a loss of market share.

Circle 8’s revenue and operating results may fluctuate, which could result in a decline in profitability and make it more difficult to grow the business.

Circle 8’s revenue and operating results have historically varied from month to month and quarter to quarter. Periods of decline could result in an overall decline in profitability and make it more difficult to adequately service indebtedness and grow the business using incremental leverage. It can be expected that Circle 8’s quarterly results will continue to fluctuate in the future due to a number of factors, including the following:

general economic conditions in the markets in which Circle 8 operates;

the cyclical nature of Circle 8’s customers’ business, particularly Circle 8’s oil services customer and prospective customers in the construction industry;

sales patterns in general in the construction industry, with sales activity tending to be lower in the winter months, which causes significant volatility in utilization;

changes in the size of Circle 8’s fleet due to rapid growth followed by a slow-down and Circle 8’s ability to service and maintain its fleet in a timely manner;

an overcapacity of fleet in the crane services industry;

severe weather and seismic conditions temporarily affecting the regions in which Circle 8 operates;

supply chain or other disruptions that impact its ability to obtain equipment and other supplies from key suppliers on acceptable terms or at all;

changes in corporate spending for plants and facilities or changes in government spending for infrastructure projects;

changes in interest rates and related changes in Circle 8’s interest expense and debt service obligations; or

the possible need, from time to time, to record impairment charges or other write-offs or charges due to a variety of occurrences, such as the impairment of assets, existing location divestitures, dislocation in the equity and/or credit markets, consolidations or closings, restructurings, or the refinancing of existing indebtedness.

Circle 8 is subject to competition, which may have a material adverse effect on its business by reducing its ability to increase or maintain revenues or profitability.

The full-service crane services and lifting solutions industry is highly competitive and fragmented. Many of the markets in which Circle 8 operates are served by numerous competitors, ranging from global, national and multi-regional equipment rental companies to small, independent businesses with a limited number of locations. Circle 8 has historically competed on the basis of availability, quality, reliability, delivery and price. Some of Circle 8’s competitors have significantly greater financial, marketing and other resources than it does, and may be able to reduce rates. Circle 8 may encounter increased competition from existing competitors or new market entrants in the future, which could have a material adverse effect on its business, financial condition and results of operations.

The cost of new Circle 8 rental fleet units may increase and therefore may require a larger equity investment equipment. In some cases, it may not be possible to procure equipment on a timely basis due to supplier constraints, among other reasons.

The cost of new equipment from manufacturers of Circle 8 fleet may increase because of increased raw material costs, including increases in the cost of steel, which is a primary material used in almost all of the equipment Circle 8 uses, labor shortages, supply chain disruptions or due to increased regulatory requirements, such as those related to emissions. In addition, in an effort to combat climate change, Circle 8’s customers may require Circle 8’s fleet to meet certain standards which may not be able to be met without capital intensive and time-consuming fleet unit retrofits or ultimately cost prohibitive replacements. If such retrofits or replacements cannot be achieved in a timely manner, or at all, Circle 8’s sales, financial results and financial position would be materially adversely impacted. These increases could materially impact Circle 8’s financial condition or results of operations in future periods if Circle 8 is not able to pass such cost increases through to its customers.

Circle 8’s fleet is subject to residual value risk upon disposition.

The market value of any given piece of equipment could be less than its depreciated value at the time it is sold. The market value of used rental equipment depends on several factors, including:

general economic conditions in the markets in which Circle 8 operates;

wear and tear on the equipment relative to its age;

the time of year that it is sold (prices are generally higher during the busy season);

worldwide and domestic demands for used equipment;

the supply of used equipment on the market; and

general economic conditions.

Circle 8 typically includes in operating income the difference between the sales price and the depreciated value of an item of equipment sold. In the year ended December 31, 2023, Circle 8 sold used equipment from its rental fleet, reducing the total number of cranes from 75 to 55, with the average selling price exceeding the net orderly liquidation value. Then, in 2024, Circle 8 slightly increased its fleet size by adding two additional cranes, bringing the total to 57 cranes. However, in 2025, Circle 8 disposed of approximately 10 underutilized and maintenance-intensive cranes. As a result of the condition of the cranes, the aggregate sale price was less than the carrying book value of the cranes, resulting in a loss. While recent equipment sales have generally remained favorable, there can be no assurance that used equipment selling prices will not decline in the future. Any significant downturn in the market for used equipment could have a material adverse effect on Circle 8’s business, financial condition, results of operations, or cash flows.

As Circle 8’s rental fleet ages, its operating costs may increase, it may be unable to pass along such costs to customers, and earnings may decrease. The costs of new fleet units may increase, requiring Circle 8 to spend more for replacement equipment or preventing it from procuring equipment on a timely basis.

Circle 8’s operating performance depends on maintaining a reliable, safe and competitive crane fleet. As equipment ages, maintenance costs may increase and downtime risks may rise, potentially affecting equipment utilization and operating margins. As of the date of this Annual Report, Circle 8’s fleet has an average age of approximately 10 years, which is an increase from approximately nine years as of the date of our prior annual report. If Circle 8’s rental equipment ages, the costs of maintaining such equipment, if not replaced within a certain period of time, will likely increase. When properly maintained, mobile hydraulic and all-terrain cranes can typically remain in productive service for at least 20 years.

The costs of maintenance may materially increase in the future and could lead to material adverse effects on Circle 8’s results of operations. The cost of new equipment for use in Circle 8’s rental fleet could also increase due to increased material costs for its suppliers (including tariffs on raw materials) or other factors beyond Circle 8’s control. For example, the cost of acquiring new cranes has increased in recent years due to inflation, higher steel prices, supply chain disruptions, tariffs on imported equipment and fluctuations in foreign exchange markets. Many mobile cranes used in the United States are manufactured in Europe, particularly in Germany, and tariffs and the strength of the Euro relative to the U.S. dollar may increase the cost of acquiring new equipment and replacement components.

Such increases could materially adversely impact Circle 8’s financial condition and results of operations in future periods. Furthermore, changes in customer demand could cause certain of Circle 8’s existing equipment to become obsolete and require Circle 8 to purchase new equipment at increased costs.

Labor disputes could disrupt Circle 8’s ability to serve its customers and/or lead to higher labor costs.

As of December 31, 2025, Circle 8 had approximately 117 employees in Texas, Louisiana and Oklahoma, none of whom is unionized. While Circle 8 has no current plans to unionize any of its locations, it recognizes the possibility of a branch or group of branches in a state becoming unionized against Circle 8’s wishes in the future. However, Circle 8 is committed to maintaining positive and productive relationships with its employees without union influence, prioritizing open communication and collaboration to address any concerns and ensure a positive work environment.

Any Circle 8 employee’s union organizing efforts or collective bargaining negotiations could potentially lead to work stoppages and/or slowdowns or strikes by certain Circle 8 employees, which could adversely affect its ability to serve its customers.

Climate change, climate change regulations and greenhouse effects may materially adversely impact Circle 8 operations and markets.

Climate change and its association with greenhouse gas emissions is receiving increased attention from the scientific and political communities. The U.S. federal government, certain U.S. states and certain other countries and regions have adopted or are considering legislation or regulation imposing overall caps or taxes on greenhouse gas emissions from certain sectors or facility categories. Such new laws or regulations, or stricter enforcement of existing laws and regulations, could increase the costs of operating Circle 8’s businesses, reduce the demand for its products and services and impact the prices charged to customers, any or all of which could adversely affect Circle 8’s results of operations. Failure to comply with any legislation or regulations could potentially result in substantial fines, criminal sanctions or operational changes. Moreover, even without such legislation or regulation, the perspectives of Circle 8’s customers, employees and other stakeholders regarding climate change are continuing to evolve, and increased awareness of, or any adverse publicity regarding, the effects of greenhouse gases could harm Circle 8’s reputation or reduce customer demand for Circle 8’s products and services. Additionally, as severe weather events become increasingly common, Circle 8’s and its customers’ operations may be disrupted, which could result in increased operational costs or reduced demand for its products and services, which could have an adverse effect on Circle 8’s results of operations. In addition, climate change may also reduce the availability or increase the cost of insurance for weather-related events and may impact the global economy, including as a result of disruptions to supply chains. Circle 8 anticipates that climate change-related risks will increase over time.

Risks Related to Our Bitcoin Operations

Risks Related to Our Bitcoin Strategy and Holdings

Our Bitcoin strategy exposes us to various risks, including risks associated with Bitcoin.

Our Bitcoin digital asset treasury strategy, or DAT, exposes us to various risks, including the following:

Bitcoin is a highly volatile asset. Bitcoin is a highly volatile asset that has traded below $61,000 per Bitcoin and above $126,000 per Bitcoin in the 12 months preceding the date of this Annual Report. The trading price of Bitcoin significantly decreased during prior periods, and such declines may occur again in the future.

Bitcoin does not pay interest or dividends. Bitcoin does not pay interest or other returns and we can only generate cash from our Bitcoin holdings if we sell our Bitcoin or implement strategies to create income streams or otherwise generate cash by using our Bitcoin holdings. Even if we pursue any such strategies, we may be unable to create income streams or otherwise generate cash from our Bitcoin holdings, and any such strategies may subject us to additional risks.

Our Bitcoin holdings could significantly impact our financial results and the market price of our Class A common stock. Our Bitcoin holdings could significantly affect our financial results and as we continue to increase our overall holdings of Bitcoin in the future, they will have a greater impact on our financial results and the market price of our Class A common stock.

Our assets are increasingly concentrated in Bitcoin. As of December 31, 2025, approximately 15% of our total assets consisted of our Bitcoin holdings. We have disclosed that we intend to substantially increase our Bitcoin holdings, which would likely result in the vast majority of our assets being concentrated in Bitcoin holdings. The concentration of our assets in Bitcoin limits our ability to mitigate risk that could otherwise be achieved by holding a more diversified portfolio of treasury assets.

We purchase Bitcoin primarily using proceeds from equity financings. While we mine Bitcoin and hold those Bitcoin on our balance sheet, our ability to achieve the objectives of our DAT depends in significant part on our ability to obtain equity financing. If we are unable to obtain equity financing on favorable terms, or at all, we may not be able to successfully implement our DAT .

Our DAT has not been tested over an extended period of time or under different market conditions. We only recently announced our strategy to acquire and hold Bitcoin as a digital asset treasury. This DAT has not been tested over an extended period of time or under different market conditions. For example, although we believe Bitcoin, due to its limited supply, has the potential to serve as a hedge against inflation in the long term, the short-term price of Bitcoin declined in recent periods during which the inflation rate increased. If Bitcoin prices were to decrease or our DAT otherwise proves unsuccessful, our financial condition, results of operations, and the market price of our Class A common stock would be materially adversely impacted.

We are subject to counterparty risks, including in particular, risks relating to our custodians. Although we have implemented various measures that are designed to mitigate our counterparty risks, including by storing substantially all of the Bitcoin we own in a custody account at U.S.-based, institutional-grade custodian, applicable insolvency law is not fully developed with respect to the holding of digital assets in custodial accounts. If our custodially-held Bitcoin was considered to be the property of our custodian’s estate in the event that any such custodian was to enter bankruptcy, receivership or similar insolvency proceedings, we could be treated as a general unsecured creditor of such custodian, inhibiting our ability to exercise ownership rights with respect to such Bitcoin, or delaying or hindering our access to our Bitcoin holdings, which could ultimately result in the loss of the value related to some or all of such Bitcoin, which in turn would have a material adverse effect on our financial condition as well as the market price of our Class A common stock.

The broader digital assets industry is subject to counterparty risks, which could adversely impact the adoption rate, price, and use of Bitcoin. A series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to companies operating in the digital asset industry have highlighted the counterparty risks applicable to owning and transacting in digital assets. Although these bankruptcies, closures, liquidations and other events have not resulted in any loss or misappropriation of our Bitcoin, nor have such events adversely impacted our access to our Bitcoin, they have, in the short-term, likely negatively impacted the adoption rate and use of Bitcoin. Additional bankruptcies, closures, liquidations, regulatory enforcement actions or other events involving participants in the digital assets industry in the future may further negatively impact the adoption rate, price, and use of Bitcoin, limit the availability to us of financing collateralized by Bitcoin, or create or expose additional counterparty risks.

Changes in the accounting treatment of our Bitcoin holdings could have significant accounting impacts, including increasing the volatility of our results. We adopted ASU 2023-08 as of January 1, 2025, which requires us to measure our Bitcoin holdings at fair value in our statement of financial position, and to recognize gains and losses from changes in the fair value of our Bitcoin in net income each reporting period beginning January 1, 2025. ASU 2023-08 also requires us to provide certain interim and annual disclosures with respect to our Bitcoin holdings. Due in particular to the volatility in the price of Bitcoin, we expect the adoption of ASU 2023-08 to have a material impact on our financial results in future periods, increase the volatility of our financial results, and affect the carrying value of our Bitcoin on our balance sheet. ASU 2023-08 could also have adverse tax consequences. These impacts could in turn have a material adverse effect on our financial results and the market price of our Class A common stock.

The broader digital assets industry, including the technology associated with digital assets, the rate of adoption and development of, and use cases for, digital assets, market perception of digital assets, and the legal, regulatory, and accounting treatment of digital assets are constantly developing and changing, and there may be additional risks in the future that are not possible to predict.

Our Bitcoin strategy subjects us to enhanced regulatory oversight.

In January 2024, the SEC approved the listing and trading of spot Bitcoin exchange traded products (“ETPs”), the shares of which can be sold in public offerings, are traded on U.S. national securities exchanges and have continuous share creation and redemption at net asset value. Even though we are not, and do not function in the manner of, a spot Bitcoin ETP, it is possible that we nevertheless could face regulatory scrutiny from the SEC or other federal or state agencies due to our Bitcoin holdings.

In addition, there has been increasing focus on the extent to which digital assets can be used to launder the proceeds of illegal activities, fund criminal or terrorist activities, or circumvent sanctions regimes, including those sanctions imposed in response to the ongoing conflicts between Russia and Ukraine as well as the one between the United States and Israel against Iran. While we have implemented and maintain policies and procedures reasonably designed to promote compliance with applicable anti-money laundering and sanctions laws and regulations and take care to only acquire our Bitcoin through entities subject to anti-money laundering regulation and related compliance rules in the United States, if we are found to have purchased any of our Bitcoin from bad actors that have used Bitcoin to launder money or persons subject to sanctions, we may be subject to regulatory proceedings and any further transactions or dealings in Bitcoin by us may be restricted or prohibited.

A portion of our Bitcoin holdings currently serves as collateral securing any of our outstanding indebtedness. Further, we may in the future incur indebtedness or enter into other financial instruments in the future that may be collateralized by our Bitcoin holdings. We may also consider pursuing strategies to create income streams or otherwise generate funds using our Bitcoin holdings. These types of Bitcoin-related transactions are the subject of enhanced regulatory oversight. These and any other Bitcoin-related transactions we may enter into, beyond simply acquiring and holding Bitcoin, may subject us to additional regulatory compliance requirements and scrutiny, including under federal and state money services regulations, money transmitter licensing requirements and various commodity and securities laws and regulations.

Additional laws, guidance and policies may be issued by domestic and foreign regulators following the filing for Chapter 11 bankruptcy protection by FTX, one of the world’s largest cryptocurrency exchanges, in November 2022. While the financial and regulatory fallout from FTX’s collapse did not directly impact our business, financial condition or corporate assets, the FTX collapse may have increased regulatory focus on the digital assets industry. Increased enforcement activity and changes in the regulatory environment, including changing interpretations and the implementation of new or varying regulatory requirements by the government or any new legislation affecting Bitcoin, as well as enforcement actions involving or impacting our trading venues, counterparties and custodians, may impose significant costs or significantly limit our ability to hold and transact in Bitcoin.

The concentration of our Bitcoin holdings enhances the risks inherent in our Bitcoin strategy.

As of December 31, 2025, we held approximately 525 Bitcoins, of which 83 Bitcoins were generated from our mining operations and 442 Bitcoins were acquired at an aggregate purchase price of $45.4 million, and we intend to purchase additional Bitcoin and increase our overall holdings of Bitcoin in the future. The concentration of our Bitcoin holdings limits the risk mitigation that we could achieve if we were to purchase a more diversified portfolio of treasury assets, and the absence of diversification enhances the risks inherent in our Bitcoin strategy. The price of Bitcoin has in the past experienced significant declines and any future significant declines in the price of Bitcoin would potentially have a more pronounced impact on our financial condition than if we used our cash to purchase a more diverse portfolio of assets.

The emergence or growth of other digital assets, including those with significant private or public sector backing, could have a negative impact on the price of Bitcoin and adversely affect our business.

As a result of our Bitcoin strategy, our assets are concentrated in our Bitcoin holdings. Accordingly, the emergence or growth of digital assets other than Bitcoin may have a material adverse effect on our financial condition. As of December 31, 2025, Bitcoin was the largest digital asset by market capitalization. However, there are numerous alternative digital assets and many entities, including consortia and financial institutions, are researching and investing resources into private or permissioned blockchain platforms or digital assets that do not use proof-of-work mining like the Bitcoin network. For example, in late 2022, the Ethereum network transitioned to a “proof-of-stake” mechanism for validating transactions that requires significantly less computing power than proof-of-work mining. The Ethereum network has completed another major upgrade since then and may undertake additional upgrades in the future. If the mechanisms for validating transactions in Ethereum and other alternative digital assets are perceived as superior to proof-of-work mining, those digital assets could gain market share relative to Bitcoin.

Other alternative digital assets that compete with Bitcoin in certain ways include “stablecoins,” which are designed to maintain a constant price because of, for instance, their issuers’ promise to hold high-quality liquid assets (such as U.S. dollar deposits and short-term U.S. treasury securities) equal to the total value of stablecoins in circulation. Stablecoins have grown rapidly as an alternative to Bitcoin and other digital assets as a medium of exchange and store of value, particularly on digital asset trading platforms. As of December 31, 2025, two of the eight largest digital assets by market capitalization were U.S. dollar-pegged stablecoins.

Additionally, central banks in some countries have started to introduce digital forms of legal tender. For example, China’s Central Bank Digital Currency (“CBDC”) project was made available to consumers in January 2022, and governments including the United States, the United Kingdom, the European Union, and Israel have been discussing the potential creation of new CBDCs. Whether or not they incorporate blockchain or similar technology, CBDCs, as legal tender in the issuing jurisdiction, could also compete with, or replace, Bitcoin and other digital assets as a medium of exchange or store of value. As a result, the emergence or growth of these or other digital assets could cause the market price of Bitcoin to decrease, which could have a material adverse effect on our business, prospects, financial condition, and operating results.

Risks Related to Our Bitcoin Operations – General

Acceptance and/or widespread use of Bitcoin is uncertain.

Currently, there is a limited use of any Bitcoin in the retail and commercial marketplace, thus contributing to price volatility that could adversely affect an investment in our securities. Banks and other established financial institutions may refuse to process funds for Bitcoin transactions or process wire transfers to or from Bitcoin exchanges, Bitcoin-related companies or service providers, which we have experienced, or maintain accounts for persons or entities transacting in Bitcoin. Conversely, a significant portion of Bitcoin demand is generated by investors seeking a long-term store of value or speculators seeking to profit from the short- or long-term holding of the asset. Price volatility undermines Bitcoin’s role as a medium of exchange, as retailers are much less likely to accept it as a form of payment. Market capitalization for a Bitcoin as a medium of exchange and payment method may always be low.

The relative lack of acceptance of Bitcoins in the retail and commercial marketplace, or a reduction of such use, limits the ability of end users to use them to pay for goods and services. Such lack of acceptance or decline in acceptances could have a material adverse effect on our ability to continue as a going concern or to pursue our business strategy at all, which could have a material adverse effect on our business, prospects or operations and potentially the value of Bitcoins we mine or otherwise acquire or hold for our own account.

The development and acceptance of cryptographic and algorithmic protocols governing the issuance of and transactions in cryptocurrencies is subject to a variety of special economic, geopolitical and regulatory factors, which could slow the growth of the industry in general and our company as a result.

The use of cryptocurrencies, including Bitcoin, to, among other things, buy and sell goods and services and complete transactions, is part of a new and rapidly evolving industry that employs cryptocurrency assets based upon a computer-generated mathematical and/or cryptographic protocol. Large-scale acceptance of cryptocurrencies as a means of payment has not, and may never, occur. The growth of this industry in general, and the use of Bitcoin in particular, is subject to a high degree of uncertainty, and the slowing or stopping of the development or acceptance of developing protocols may occur unpredictably. The factors include, but are not limited to:

the progress of worldwide growth in the adoption and use of Bitcoin and other cryptocurrencies as a medium of exchange;

the experience of businesses in using Bitcoin;

the impact from prominent business leaders in criticizing Bitcoin’s potential harm to the environment and the effect of announcements critical of Bitcoin, such as those made by Elon Musk of Tesla;

governmental and organizational regulation of Bitcoin and other cryptocurrencies and their use, or restrictions on or regulation of access to and operation of the network or similar cryptocurrency systems (such as the 2021 ban in China);

changes in consumer demographics and public tastes and preferences, including as may result from coverage of Bitcoin or other cryptocurrencies by journalists and other sources of information and media;

the maintenance and development of the open-source software protocol of the network;

the increased consolidation of contributors to the Bitcoin blockchain through mining pools and scaling of mining equipment by well-capitalized market participants;

the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;

the use of the networks supporting Bitcoin or other cryptocurrencies for developing smart contracts and distributed applications;

general economic conditions and the regulatory environment relating to Bitcoin and other cryptocurrencies;

the impact of regulators focusing on cryptocurrencies and the costs, financial and otherwise, associated with such regulatory oversight; and

a decline in the popularity or acceptance of Bitcoin could adversely affect an investment in us.

The outcome of these factors could have negative effects on our ability to continue as a going concern or to pursue our business strategy, which could have a material adverse effect on our business, prospects or operations as well as potentially negative effects on the value of any Bitcoin or other cryptocurrencies we mine or otherwise acquire, which would harm investors in our securities. If Bitcoin does not increase its market acceptance as a mechanism to buy and sell goods and services or accrete in value over time, our prospects and your investment in us would diminish.

Political or economic crises may motivate large-scale sales of cryptocurrencies, which could result in a reduction in values of cryptocurrencies such as Bitcoin and adversely affect an investment in us.

Geopolitical crises, in particular major ones such as Russia’s invasion of Ukraine as well as the one between the United States and Israel against Iran, may motivate large-scale purchases of Bitcoin and other cryptocurrencies, which could increase the price of Bitcoin and other cryptocurrencies rapidly. This may increase the likelihood of a subsequent price decrease as crisis-driven purchasing behavior dissipates, adversely affecting the value of our Bitcoin following such downward adjustment. Such risks are similar to the risks of purchasing commodities in general uncertain times, such as the risk of purchasing, holding or selling gold. Alternatively, as an emerging asset class with limited acceptance as a payment system or commodity, global crises and general economic downturn may discourage investment in cryptocurrencies as investors focus their investment on less volatile asset classes as a means of hedging their investment risk.

As an alternative to fiat currencies that are backed by central governments, cryptocurrencies, which are relatively new, are subject to supply and demand forces. How such supply and demand will be impacted by geopolitical events is largely uncertain but could be harmful to us and investors in our Class A common stock. Political or economic crises may motivate large-scale acquisitions or sales of cryptocurrencies either globally or locally. Such events could have a material adverse effect on our ability to continue as a going concern or to pursue our new strategy at all, which could have a material adverse effect on our business, prospects or operations and potentially the value of any Bitcoin or any other cryptocurrencies we mine or otherwise acquire or hold for our own account.

Negative media attention and public perception surrounding energy consumption by cryptocurrency mining may adversely affect our reputation and, consequently, our stock price; particularly in the eyes of some of our investors who may be more interested in our non-crypto operations as a holding company.

Cryptocurrency mining has experienced negative media attention surrounding its perceived high electricity use and environmental impact, which has adversely influenced public perception of the industry as a whole. We believe these factors are overstated for the cryptocurrency mining industry because of the informational disparity between cryptocurrency mining and other energy intensive industries. Cryptocurrency miners (particularly Bitcoin miners) have freely and publicly disclosed their energy consumption statistics because electricity usage, and the associated utility fees, is a cost of production. As increasing numbers of publicly traded cryptocurrency miners enter the market, more data, reliably disclosed in compliance with generally accepted accounting principles in the United States of America (“GAAP”), has become available; however, such data has not been made as readily available for competitive payment systems and fiat currencies.

Nevertheless, this negative media attention and public perception may materially and adversely affect our reputation and, consequently, our stock price, particularly in the eyes of our investors who are more interested in our non-crypto operations as a holding company. As a single company within the broader cryptocurrency industry, we are likely incapable of effectively countering this negative media attention and affecting public perception. Therefore, we may not be able to adequately respond to these external pressures, which may cause a significant decline in the price of our Class A common stock.

Banks and financial institutions may not provide banking services, or may cut off services, to businesses like us that engage in cryptocurrency-related activities.

A number of companies that engage in Bitcoin and/or other cryptocurrency-related activities have been unable to find banks or financial institutions that are willing to provide them with bank accounts and other services. Similarly, a number of companies and individuals or businesses associated with cryptocurrencies may have had and may continue to have their existing bank accounts closed or services discontinued with financial institutions in response to government action. The difficulty that many businesses that provide Bitcoin and/or derivatives on other cryptocurrency-related activities have and may continue to have in finding banks and financial institutions willing to provide them services may be decreasing the usefulness of cryptocurrencies as a payment system and harming public perception of cryptocurrencies, and could decrease their usefulness and harm their public perception in the future.

The usefulness of cryptocurrencies as a payment system and the public perception of cryptocurrencies could be damaged if banks or financial institutions were to close the accounts of businesses engaging in Bitcoin and/or other cryptocurrency-related activities. This could occur as a result of compliance risk, cost, government regulation or public pressure. The risk applies to securities firms, clearance and settlement firms, national securities exchanges and derivatives on commodities exchanges, the over-the-counter market, and the Depository Trust Company (“DTC”), which, if any of such entities adopts or implements similar policies, rules or regulations, could negatively affect our relationships with financial institutions and impede our ability to convert cryptocurrencies to fiat currencies. Such factors could have a material adverse effect on our ability to continue as a going concern or to monetize our mining efforts, which could have a material adverse effect on our business, prospects or operations and harm investors.

The price of cryptocurrencies may be affected by the sale of such cryptocurrencies by other vehicles investing in cryptocurrencies or tracking cryptocurrency markets. Such events could have a material adverse effect on our business, prospects or operations and potentially the value of any Bitcoin we mine.

The global market for cryptocurrency is characterized by supply constraints that differ from those present in the markets for commodities or other assets such as gold and silver. The mathematical protocols under which certain cryptocurrencies are mined permit the creation of a limited, predetermined amount of digital currency, while others have no limit established on total supply. Increased numbers of miners and deployed mining power globally will likely continue to increase the available supply of Bitcoin and other cryptocurrencies, which may depress their market price. Further, large “block sales” involving significant numbers of Bitcoin following appreciation in the market price of Bitcoin may also increase the supply of Bitcoin available on the market, which, without a corresponding increase in customer demand, may cause its price to fall. Currently, the loss of customer demand is also accentuated by disruptions in the crypto assets market. Additionally, to the extent that other vehicles investing in cryptocurrencies or tracking cryptocurrency markets form and come to represent a significant proportion of the customer demand for cryptocurrencies, including the recent approval of Bitcoin exchange traded funds, large redemptions of the securities of those vehicles and the subsequent sale of cryptocurrencies by such vehicles could negatively affect cryptocurrency prices and therefore affect the value of the cryptocurrency inventory we hold. Such events could have a material adverse effect on our business, prospects or operations and potentially the value of any Bitcoin.

Risks Related to Our Bitcoin Operations – Operational and Financial

Risk related to technological advancements and obsolescence of current Bitcoin mining equipment.

Our operations are exposed to the risk of rapid technological advancements in the development and production of Bitcoin mining equipment, which could render our existing mining infrastructure obsolete and adversely impact our financial performance.

The Bitcoin mining industry is characterized by rapid technological change, with companies continually developing and deploying new mining equipment and techniques to enhance computational efficiency and reduce energy consumption. These advancements may outpace our ability to adapt, maintain, and upgrade our mining equipment, thereby negatively affecting our competitive position and operational efficiency. As a result, we may be required to make significant capital investments to acquire and implement new technology to maintain our competitiveness.

If we are unable to anticipate or adapt to such advancements, or if we fail to allocate our resources efficiently, we may be forced to rely on outdated equipment that becomes increasingly inefficient and expensive to maintain. Moreover, the emergence of more advanced mining technologies could lead to an increase in the overall mining difficulty, further reducing the effectiveness of our existing equipment and diminishing our mining rewards.

Additionally, there is a risk that our competitors, who may have greater financial resources and flexibility, will be better positioned to adopt emerging technologies and gain a competitive advantage. This could result in a decline in our market share, revenue, and profitability.

Inability to manage these risks could have a material adverse effect on our business, financial condition, and operating results.

Our future success will depend in part upon the value of Bitcoin. The value of Bitcoin may be subject to pricing risk and has historically been subject to wide swings.

Our operating results from this sector will depend in part upon the value of Bitcoin because it is the sole digital asset we currently mine. Specifically, our revenues from our Bitcoin mining operations are principally based upon two factors: the number of Bitcoin rewards we successfully mine and the value of Bitcoin. We also receive transaction fees paid in Bitcoin by participants who initiated transactions associated with new blocks that we mine. Our strategy currently focuses primarily on Bitcoin (as opposed to other digital assets). Further, our miners are principally utilized for mining Bitcoin and cannot mine other digital assets that are not mined utilizing the “SHA-256 algorithm.” If other digital assets were to achieve acceptance at the expense of Bitcoin, causing the value of Bitcoin to decline, or if Bitcoin were to switch its proof of work algorithm from SHA-256 to another algorithm for which our miners are not specialized, or the value of Bitcoin were to decline for other reasons, particularly if such decline were significant or over an extended period of time, our operating results would be adversely affected, and there could be a material adverse effect on our ability to continue as a going concern or to pursue our business strategy at all, which could have a material adverse effect on our business, prospects or operations, and harm investors.

Bitcoin and other cryptocurrency market prices, which have historically been volatile and are impacted by a variety of factors are determined primarily using data from various exchanges, over-the-counter markets and derivative platforms. Such prices may be subject to factors such as those that impact commodities, more so than business activities, which could be subject to additional influence from fraudulent or illegitimate actors, real or perceived scarcity, and political, economic, regulatory or other conditions. Pricing may be the result of, and may continue to result in, speculation regarding future appreciation in the value of digital assets, or our share price, inflating and making their market prices more volatile or creating “bubble” type risks for both Bitcoin and our shares of Class A common stock.

We may be unable to raise additional capital needed to grow our data center hosting business.

We have operated and expect to continue to operate at a loss as we continue to establish our business model and as Bitcoin prices continue to experience significant volatility. In addition, we expect to need to raise additional capital to expand our operations, pursue our growth strategy and to respond to competitive pressures. Specifically, the expansion of our Michigan Property to potentially 340 MWs of power will require significant capital. We may not be able to obtain additional debt or equity financing on favorable terms, if at all, which could impair our growth and adversely affect our existing operations. The global economy, including credit and financial markets, has recently experienced extreme volatility and disruptions, including diminished credit availability, rising interest and inflation rates, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. Such macroeconomic conditions could also make it more difficult for us to incur additional debt or obtain equity financing. If we raise additional equity financing, our stockholders may experience significant dilution of their ownership interests, and the per share value of our Class A common stock could decline. Further, if we engage in additional debt financing, the holders of debt likely would have priority over the holders of our Class A common stock on order of payment preference. We may be required to accept terms that restrict our ability to incur additional indebtedness, take other actions including accepting terms that require us to maintain specified liquidity or other ratios that could otherwise not be in the interests of our stockholders. Increased credit pressures on the cryptocurrency industry, such as banks, investors and other companies reducing or eliminating their exposure to the cryptocurrency industry through lending, have had and may continue to have a material impact on our business. In light of conditions impacting our industry, it may be more difficult for us to obtain equity or debt financing in the future.

The emergence of competing blockchain platforms or technologies may harm our business as presently conducted by preventing us from realizing the anticipated profits from our investments and forcing us to expend additional capital in an effort to adapt.

If blockchain platforms or technologies which compete with Bitcoin and its blockchain, including competing cryptocurrencies which our miners may not be able to mine, such as cryptocurrencies being developed or that may be developed by popular social media platforms, online retailers, or government sponsored cryptocurrencies, consumers may use such alternative platforms or technologies. If that were to occur, we would face difficulty adapting to such emergent digital ledgers, blockchains, or alternative platforms, cryptocurrencies or other digital assets. This may adversely affect us by preventing us from realizing the anticipated profits from our investments and forcing us to expend additional capital in an effort to adapt. Further, to the extent we cannot adapt, be it due to our specialized miners or otherwise, we could be forced to cease our mining or other cryptocurrency-related operations. Such circumstances would have a material adverse effect on our business, and in turn your investment in our securities.

We rely on one or more third parties for depositing, storing and withdrawing the Bitcoin we receive, which could result in a loss of assets, disputes and other liabilities or risks which could adversely impact our business.

We currently use a custodial wallet to store the Bitcoin we receive. In order to own, transfer and use Bitcoin on the blockchain network, we must have a private and public key pair associated with a network address, commonly referred to as a “wallet.” Each wallet is associated with a unique “public key” and “private key” pair, each of which is a string of alphanumerical characters. To deposit Bitcoin into our digital wallet, we must direct the transaction to the public key of a wallet that our Gemini custodial account controls and provides to us, and broadcast the deposit transaction onto the underlying blockchain network. To withdraw Bitcoin from our custodial account, an assigned account representative must initiate the transaction from our custodial account, then an approver must approve the transaction. Once the custodian has verified that the request is valid and who the recipient is through Know Your Customer/Anti-Money Laundering protocols, the custodian then “signs” a transaction authorizing the transfer. In addition, some cryptocurrency networks require additional information to be provided in connection with any transfer of cryptocurrency such as Bitcoin.

A number of errors or other adverse events can occur in the process of depositing, storing or withdrawing Bitcoin into or from our custodial account, such as typos, mistakes or the failure to include the information required by the blockchain network. For instance, a user may incorrectly enter our wallet’s public key or the desired recipient’s public key when depositing and withdrawing Bitcoin. Additionally, our reliance on third parties such as Gemini and the maintenance of keys to access and utilize our digital wallet will expose us to enhanced cybersecurity risks from unauthorized third parties employing illicit operations such as hacking, phishing and social engineering, notwithstanding the security systems and safeguards employed by us and others. Cyberattacks upon systems across a variety of industries, including the cryptocurrency industry, are increasing in frequency, persistence and sophistication and, in many cases, are being conducted by sophisticated, well-funded, and organized groups and individuals. For example, attacks may be designed to deceive employees and service providers into releasing control of the systems on which we depend to a hacker, while others may aim to introduce computer viruses or malware into such systems with a view to stealing confidential or proprietary data. These attacks may occur on our digital wallet or the systems of our third-party service providers or partners, which could result in asset losses and other adverse consequences. Insurance held by third parties may not cover related losses. Alternatively, we may inadvertently transfer Bitcoin to a wallet address that we do not own, control or hold the private keys to. In addition, a Bitcoin wallet address can only be used to send and receive Bitcoin, and if the Bitcoin is inadvertently sent to an Ethereum or other cryptocurrency wallet address, or if any of the foregoing errors occur, all of the Bitcoin will be permanently and irretrievably lost with no means of recovery. Such incidents could result in asset loss or disputes, any of which could materially and adversely affect our business.

If a malicious actor or botnet obtains control of more than 50% of the processing power on a cryptocurrency network, such actor or botnet could manipulate blockchains to adversely affect us, which would adversely affect an investment in our company and our ability to operate.

If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains a majority of the processing power dedicated to mining a cryptocurrency, it may be able to alter blockchains on which transactions of cryptocurrency reside and rely by constructing fraudulent blocks or preventing certain transactions from completing in a timely manner, or at all. The malicious actor or botnet could control, exclude or modify the ordering of transactions, though it could not generate new units or transactions using such control. The malicious actor could “double-spend” its own cryptocurrency (i.e., spend the same Bitcoin in more than one transaction) and prevent the confirmation of other users’ transactions for as long as it maintained control. To the extent that such malicious actor or botnet does not yield its control of the processing power on the network or the cryptocurrency community does not reject the fraudulent blocks as malicious, reversing any changes made to blockchains may not be possible. The foregoing description is not the only means by which the entirety of blockchains or cryptocurrencies may be compromised but is only an example.

Although we are unaware of any reports of malicious activity or control of blockchains achieved through controlling over 50% of the processing power on the network, it is believed that certain mining pools may have exceeded the 50% threshold in Bitcoin. The possible crossing of the 50% threshold indicates a greater risk that a single mining pool could exert authority over the validation of Bitcoin transactions. To the extent that the Bitcoin community, and the administrators of mining pools, do not act to ensure greater decentralization of Bitcoin mining processing power, the feasibility of a botnet or malicious actor obtaining control of the blockchain’s processing power will increase, because such botnet or malicious actor could more readily infiltrate and seize control over the blockchain by compromising a single mining pool, if the mining pool compromises more than 50% of the mining power on the blockchain, than it could if the mining pool had a smaller share of the blockchain’s total hashing power. Conversely, if the blockchain remains decentralized it is inherently more difficult for the botnet or malicious actor to aggregate enough processing power to gain control of the blockchain. If this were to occur, the public may lose confidence in the Bitcoin blockchain, and blockchain technology more generally. This would likely have a material and adverse effect on the price of Bitcoin, which could have a material adverse effect on our business, financial results and operations, and harm investors.

Our reliance on a third-party mining pool service provider for our mining revenue payouts may have a negative impact on our operations such as a result of cyber-attacks against the mining pool operator and/or our limited recourse against the mining pool operator with respect to rewards paid to us.

We receive crypto asset mining rewards from our mining activity through a third-party mining pool operator. Mining pools allow miners to combine their processing power, increasing their chances of solving a block and getting paid by the network. The rewards are distributed by the pool operator, proportionally to our contribution to the pool’s overall mining power, used to generate each block. Should the pool operator’s system suffer downtime due to a cyber-attack, software malfunction or other similar issues, it will negatively impact our ability to mine and receive revenue. Furthermore, we are dependent on the accuracy of the mining pool operator’s record keeping to accurately record the total processing power provided to the pool for a given Bitcoin mining application in order to assess the proportion of that total processing power we provided.

While we have internal methods of tracking both our power provided and the total used by the pool, the mining pool operator uses its own recordkeeping to determine our proportion of a given reward. We have little means of recourse against the mining pool operator if we determine the proportion of the reward paid out to us by the mining pool operator is incorrect, other than leaving the pool. If we are unable to consistently obtain accurate proportionate rewards from our mining pool operators, we may experience reduced reward for our efforts, which would have an adverse effect on our business and operations.

Bitcoin may have concentrated ownership and large sales or distributions by holders of Bitcoin assets could have an adverse effect on the market price of Bitcoin.

As of April 12, 2026, the largest 86 and 2,026 Bitcoin wallets held approximately 15% and 36%, respectively, of the Bitcoin in circulation. Moreover, it is possible that other persons or entities control multiple wallets that collectively hold a significant number of Bitcoins, even if they individually only hold a small amount, and it is possible that some of these wallets are controlled by the same person or entity. As a result of this concentration of ownership, large sales or distributions by such holders could have an adverse effect on the market price of Bitcoin.

Risks Related to Our Bitcoin Operations – Legal and Regulatory

We are subject to a highly evolving regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations could adversely affect our business, prospects or operations.

Our business is subject to extensive laws, rules, regulations, policies and legal and regulatory guidance, including those governing securities, commodities, crypto asset custody, exchange and transfer, data governance, data protection, cybersecurity and tax. Many of these legal and regulatory regimes were adopted prior to the advent of the Internet, mobile technologies, crypto assets and related technologies. As a result, they do not contemplate or address unique issues associated with the crypto economy, are subject to significant uncertainty, and vary widely across U.S. federal, state and local and international jurisdictions. These legal and regulatory regimes, including the laws, rules and regulations thereunder, evolve frequently and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another. Moreover, the complexity and evolving nature of our business and the significant uncertainty surrounding the regulation of the crypto economy requires us to exercise our judgement as to whether certain laws, rules and regulations apply to us, and it is possible that governmental bodies and regulators may disagree with our conclusions. To the extent we have not complied with such laws, rules and regulations, we could be subject to significant fines and other regulatory consequences, which could adversely affect our business, prospects or operations. As Bitcoin has grown in popularity and in market size, the Federal Reserve Board, U.S. Congress and certain U.S. agencies (e.g., the CFTC, SEC, FinCEN and the FBI) have begun to examine the operations of the Bitcoin network, Bitcoin users and the Bitcoin exchange market. Regulatory developments and/or our business activities may require us to comply with certain regulatory regimes. For example, to the extent that our activities cause us to be deemed a money service business under the regulations promulgated by FinCEN under the authority of the BSA, we may be required to comply with FinCEN regulations, including those that would mandate us to implement certain anti-money laundering programs, make certain reports to FinCEN and maintain certain records.

On November 23, 2022, the governor of New York signed into law a two-year moratorium on new or renewed permits for certain electricity-generating facilities that use fossil fuel and provide energy for proof-of-work digital asset mining operations. While this action does not directly impact our current operations, as our power generation plans are currently located in Michigan and we have no plans to establish any facilities in New York, it may be the beginning of a new wave of climate change regulations aimed at preventing or reducing the growth of Bitcoin mining in jurisdictions in the United States, including potentially jurisdictions in which we now operate or may in the future operate. The above-described developments could also demonstrate the beginning of a regional or global regulatory trend in response to environmental and energy preservation or other concerns surrounding crypto assets, and similar action in a jurisdiction in which we operate or in general could have a devastating effect on our operations. If further regulation follows, it is possible that the Bitcoin mining industry may not be able to adjust to a sudden and dramatic overhaul to our ability to deploy energy towards the operation of mining equipment. We are not currently aware of any legislation in Michigan being a near-term possibility. If further regulatory action is taken by various governmental entities, our business may suffer and investors in our securities may lose part or all of their investment.

We cannot quantify the effects of this regulatory action on our industry as a whole. If further regulation follows, it is possible that our industry may not be able to cope with the sudden and extreme loss of mining power. Because we are unable to influence or predict future regulatory actions taken by governments in China, the United States, or elsewhere, we may have little opportunity or ability to respond to rapidly evolving regulatory positions which may have a materially adverse effect on our industry and, therefore, our business and results of operations.

Ongoing and future regulatory actions may impact our ability to continue to operate, and such actions could affect our ability to continue as a going concern or to pursue our strategy at all, which could have a material adverse effect on our business, prospects or operations.

A particular digital asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty and if a regulator disagrees with our characterization of a digital asset, we may be subject to regulatory scrutiny, investigations, fines, and penalties, which may adversely affect our business, operating results and financial condition. Furthermore, a determination that Bitcoin or any other digital asset that we own or mine is a “security” may adversely affect the value of Bitcoin and our business.

The SEC and its staff have taken the position that certain digital assets fall within the definition of a “security” under the U.S. federal securities laws. The legal test for determining whether any given digital asset is a security, as described below, is a highly complex, fact-driven analysis that may evolve over time, and the outcome is difficult to predict. Our determination that the digital assets we hold are not securities is a risk-based assessment and not a legal standard or one binding on regulators. The SEC generally does not provide advance guidance or confirmation on the status of any particular digital asset as a security. Furthermore, the SEC’s views in this area have evolved over time and it is difficult to predict the direction or timing of any continuing evolution. It is also possible that a change in the governing administration or the appointment of new SEC commissioners could substantially impact the views of the SEC and its staff. Public statements made by senior officials at the SEC indicate that the SEC does not intend to take the position that Bitcoin is a security (as currently offered and sold). However, such statements are not official policy statements by the SEC and reflect only the speakers’ views, which are not binding on the SEC or any other agency or court and cannot be generalized to any other digital asset. As of the date of this Annual Report, with the exception of certain centrally issued digital assets that have received “no-action” letters from the SEC staff, Bitcoin and Ethereum are the only digital assets which senior officials at the SEC have publicly stated are unlikely to be considered securities. As a Bitcoin mining company, we do not believe we are an issuer of any “securities” as defined under the federal securities laws. Our internal process for determining whether the digital assets we hold or plan to hold is based upon the public statements of the SEC and existing case law. The digital assets we hold or plan to hold, other than Bitcoin (if any), may have been created by an issuer as an investment contract under the Howey test,  SEC v. Howey Co ., 328 U.S. 293 (1946), and may be deemed to be securities by the SEC. However, the Company was not the issuer that created these digital assets and is holding them on an interim basis until liquidated. Should the SEC state that Bitcoin should be deemed to be a security, we may no longer be able to hold any Bitcoin. It will then likely become difficult or impossible for such digital asset to be traded, cleared or custodied in the United States through the same channels used by non-security digital assets, which in addition to materially and adversely affecting the trading value of the digital asset is likely to cause substantial volatility and significantly impact its liquidity and market participants’ ability to convert the digital asset into U.S. dollars. Our inability to exchange Bitcoin for fiat or other digital assets (and vice versa) to administer our treasury management objectives may decrease our earnings potential and have an adverse impact on our business and financial condition.

Under the Investment Company Act, a company may fall within the definition of an investment company under section 3(c)(1)(A) thereof if it is or holds itself out as being engaged primarily, or proposes to engage primarily in the business of investing, reinvesting or trading in securities, or under section 3(a)(1)(C) thereof if it is engaged or proposes to engage in business of investing, reinvesting, owning, holding, or trading in securities, and owns or proposes to acquire “investment securities” (as defined therein) having a value exceeding 40% of its total assets (exclusive of government securities and cash items) on an unconsolidated basis. There is no authoritative law, rule or binding guidance published by the SEC regarding the status of digital assets as “securities” or “investment securities” under the Investment Company Act. Although we believe that we are not engaged in the business of investing, reinvesting, or trading in investment securities, and we do not hold ourselves out as being primarily engaged, or proposing to engage primarily, in the business of investing, reinvesting or trading in securities, to the extent the digital assets which we mine, own, or otherwise acquire may be deemed “securities” or “investment securities” by the SEC or a court of competent jurisdiction, we may meet the definition of an investment company. If we fall within the definition of an investment company under the Investment Company Act, we would be required to register with the SEC. If an investment company fails to register, it likely would have to stop doing almost all business, and its contracts would become voidable. Generally speaking, non-U.S. issuers may not register as an investment company without an SEC order.

If the SEC or another regulatory body considers Bitcoin to be a security under U.S. securities laws, we may be required to comply with significant SEC registration and/or other requirements.

In general, novel or unique assets such as Bitcoin and other digital assets may be classified as securities if they meet the definition of investment contracts under U.S. law. In recent years, the offer and sale of digital assets other than Bitcoin, most notably Kik Interactive Inc.’s Kin tokens and Telegram Group Inc.’s TON tokens, have been deemed to be investment contracts by the SEC. While we believe that Bitcoin is unlikely to be considered an investment contract, and thus a security under the investment contract definition, we cannot provide any assurances that digital assets that we mine or otherwise acquire or hold for our own account, including Bitcoin, will never be classified as securities under U.S. law. This would obligate us to comply with registration and other requirements by the SEC and, therefore, cause us to incur significant, non-recurring expenses, thereby materially and adversely impacting an investment in the Company.

Several foreign jurisdictions have taken a broad-based approach to classifying crypto assets as “securities,” while other foreign jurisdictions, such as Switzerland, Malta, and Singapore, have adopted a narrower approach. As a result, certain crypto assets may be deemed to be a “security” under the laws of some jurisdictions but not others. Various foreign jurisdictions may, in the future, adopt additional laws, regulations, or directives that affect the characterization of crypto assets as “securities.” If Bitcoin is deemed to be a security under any U.S. federal, state, or foreign jurisdiction, or in a proceeding in a court of law or otherwise, it may have adverse consequences for Bitcoin. For instance, all transactions in Bitcoin would have to be registered with the SEC or other foreign authority, or conducted in accordance with an exemption from registration, which could severely limit its liquidity, usability and transactability. Moreover, the networks on which such Bitcoin is utilized may be required to be regulated as securities intermediaries, and subject to applicable rules, which could effectively render the network impracticable for its existing purposes. Further, it could draw negative publicity and a decline in the general acceptance of Bitcoin.

Current interpretations require the regulation of Bitcoin under the CEA by the CFTC, and we may be required to register and comply with such regulations. Any disruption of our operations in response to the changed regulatory circumstances may be at a time that is disadvantageous to our investors.

Current and future legislation, regulation by the CFTC and other regulatory developments, including interpretations released by a regulatory authority, may impact the manner in which Bitcoin and other cryptocurrencies are treated for classification and clearing purposes. In particular, derivatives on these assets are not excluded from the definition of “commodity future” by the CFTC. We cannot be certain as to how future regulatory developments will impact the treatment of Bitcoin and other cryptocurrencies under the law.

Bitcoin has been deemed to fall within the definition of a commodity, and we may be required to register and comply with additional regulation under the CEA, including additional periodic report and disclosure standards and requirements. Moreover, we may be required to register as a commodity pool operator and to register as a commodity pool with the CFTC through the National Futures Association. Such additional registrations may result in extraordinary, non-recurring expenses, thereby materially and adversely impacting an investment in us. If we determine not to comply with such additional regulatory and registration requirements, we may seek to cease certain of our operations. Any such action may adversely affect an investment in us.

Additionally, governments may develop and deploy their own blockchain-based digital assets, which may have a material adverse impact on Bitcoin’s price and utility.

We are subject to risks associated with our need for significant electrical power. Government regulators may potentially restrict the ability of electricity suppliers to provide electricity to mining operations, such as ours.

The operation of a Bitcoin mining center, as well as AI hyperscale data centers, can require massive amounts of electrical power. We presently have access to approximately 30 MWs of capacity at our Michigan Facility, which we plan to dedicate to our AI hyperscale data center operations, and 10 MWs of capacity at our Montana Facilities for our mining operations. However, we require additional capacity to operate all of our miners outside the Michigan Facility and Montana Facilities and to support the growing power demands of our AI hyperscale data centers. Our mining operations can only be successful and ultimately profitable if the costs, including electrical power costs, associated with mining a Bitcoin are lower than the price of a Bitcoin. Similarly, our AI hyperscale data centers require a reliable and cost-effective power supply to ensure optimal performance and profitability. As a result, any facilities we establish can only be successful if we can obtain sufficient electrical power on a cost-effective basis. The establishment of new mining and AI hyperscale data centers requires us to find locations where this is the case. There may be significant competition for suitable locations for both mining operations and AI hyperscale data centers. Government regulators may potentially restrict the ability of electricity suppliers to provide electricity to these operations in times of electricity shortage or may otherwise potentially restrict or prohibit the provision of electricity to such operations. Any shortage of electricity supply or increase in electricity cost in a jurisdiction may negatively impact the viability and the expected economic return for our Bitcoin mining activities and AI hyperscale data center operations in that jurisdiction.

Our interactions with a blockchain may expose us to specially designated nationals or blocked persons or cause us to violate provisions of law that did not contemplate distributed ledger technology.

OFAC requires us to comply with its sanction program and not conduct business with persons named on its list of specially designated nationals (“SDN”). However, because of the pseudonymous nature of blockchain transactions, we may inadvertently and without our knowledge engage in transactions with persons named on OFAC’s SDN list. Our internal policies prohibit any transactions with such SDN individuals, but we may not be adequately capable of determining the ultimate identity of the individual with whom we transact with respect to selling digital assets. In addition, in the future OFAC or another regulator may require us to screen transactions for OFAC addresses or other bad actors before including such transactions in a block, which may increase our compliance costs, decrease our anticipated transaction fees and lead to decreased traffic on our network. Any of these factors, consequently, could have a material adverse effect on our business, prospects, financial condition, and operating results.

Moreover, federal law prohibits any U.S. person from knowingly or unknowingly possessing any visual depiction commonly known as child pornography. Recent media reports have suggested that persons have embedded such depictions on one or more blockchains. Because our business requires us to download and retain one or more blockchains to effectuate our ongoing business, it is possible that such digital ledgers contain prohibited depictions without our knowledge or consent. To the extent government enforcement authorities literally enforce these and other laws and regulations that are impacted by decentralized distributed ledger technology, we may be subject to investigation, administrative or court proceedings, and civil or criminal monetary fines and penalties, all of which could harm our reputation and could have a material adverse effect on our business, prospects, financial condition, and operating results.

Risks Related to Our Bitcoin Operations – Technological

The characteristics of crypto assets have been, and may in the future continue to be, exploited to facilitate illegal activity such as fraud, money laundering, tax evasion and ransomware scams; if any of our customers do so or are alleged to have done so, it could adversely affect us.

Digital currencies and the digital currency industry are relatively new and, in many cases, lightly regulated or largely unregulated. Some types of digital currency have characteristics, such as the speed with which digital currency transactions can be conducted, the ability to conduct transactions without the involvement of regulated intermediaries, the ability to engage in transactions across multiple jurisdictions, the irreversible nature of certain digital currency transactions and encryption technology that anonymizes these transactions, that make digital currency particularly susceptible to use in illegal activity such as fraud, money laundering, tax evasion and ransomware scams. Two prominent examples of marketplaces that accepted digital currency payments for illegal activities include Silk Road, an online marketplace on the dark web that, among other things, facilitated the sale of illegal drugs and forged legal documents using digital currencies and AlphaBay, another darknet market that utilized digital currencies to hide the locations of its servers and identities of its users. Both of these marketplaces were investigated and closed by U.S. law enforcement authorities. U.S. regulators, including the SEC, CFTC and Federal Trade Commission, as well as non-U.S. regulators, have taken legal action against persons alleged to be engaged in Ponzi schemes and other fraudulent schemes involving digital currencies. In addition, the FBI has noted the increasing use of digital currency in various ransomware scams.

While our board and management believe that our risk management processes and policies in light of current crypto asset market conditions, which include thorough reviews we conduct as part of our due diligence process, is reasonably designed to detect any such illicit activities conducted by our potential or existing counterparties, we cannot ensure that we will be able to detect any such illegal activity in all instances. Because the speed, irreversibility and anonymity of certain digital currency transactions make them more difficult to track, fraudulent transactions may be more likely to occur. We or our potential banking counterparties may be specifically targeted by individuals seeking to conduct fraudulent transfers, and it may be difficult or impossible for us to detect and avoid such transactions in certain circumstances. If one of our customers (or in the case of digital currency exchanges, their customers) were to engage in or be accused of engaging in illegal activities using digital currency, we could be subject to various fines and sanctions, including limitations on our activities, which could also cause reputational damage and adversely affect our business, financial condition and results of operations.

Incorrect or fraudulent cryptocurrency transactions may be irreversible and it is possible that, through computer or human error, or through theft or criminal action, our cryptocurrency rewards could be transferred in incorrect amounts or to unauthorized third parties.

Cryptocurrency transactions are irrevocable and stolen or incorrectly transferred cryptocurrencies may be irretrievable. As a result, any incorrectly executed or fraudulent cryptocurrency transactions, such as a result of a cybersecurity breach against our Bitcoin holdings, could adversely affect our investments and assets. This is because cryptocurrency transactions are not, from an administrative perspective, reversible without the consent and active participation of the recipient of the cryptocurrencies from the transaction. Once a transaction has been verified and recorded in a block that is added to a blockchain, an incorrect transfer of a cryptocurrency or a theft thereof generally will not be reversible and we may not have sufficient recourse to recover our losses from any such transfer or theft. Further, it is possible that, through computer or human error, or through theft or criminal action, our cryptocurrency rewards could be transferred in incorrect amounts or to unauthorized third parties, or to uncontrolled accounts. If an errant or fraudulent transaction in our Bitcoin were to occur, we would have very limited means of seeking to reverse the transaction or seeking recourse. To the extent that we are unable to recover our losses from such action, error or theft, such events could have a material adverse effect on our business.

Cryptocurrencies, including those maintained by or for us, may be exposed to cybersecurity threats and hacks.

As with any computer code generally, flaws in crypto asset codes, including Bitcoin codes, may be exposed by malicious actors. Several errors and defects have been found previously, including those that disabled some functionality for users and exposed users’ information. Exploitation of flaws in the source code that allow malicious actors to take or create money have previously occurred. Additionally, as AI capabilities improve and are increasingly adopted, we may see cyberattacks created through AI. These attacks could be crafted with an AI tool to directly attack information systems with increased speed and/or efficiency than a human threat actor or create more effective phishing emails. Despite our efforts and processes to prevent breaches, our devices, as well as our miners, computer systems and those of third parties that we use in our operations, are vulnerable to cyber security risks, including cyber-attacks such as viruses and worms, phishing attacks, denial-of-service attacks, physical or electronic break-ins, employee theft or misuse, and similar disruptions from unauthorized tampering with our miners and computer systems or those of third parties that we use in our operations. As technological change occurs, the security threats to our cryptocurrencies will likely change and previously unknown threats may emerge. Human error and the constantly evolving state of cybercrime and hacking techniques may render present security protocols and procedures ineffective in ways which we cannot predict. Such events could have a material adverse effect on our ability to continue as a going concern or to pursue our strategy at all, which could have a material adverse effect on our business, prospects or operations and potentially the value of any Bitcoin we mine or otherwise acquire or hold for our own account.

Our use of third-party mining pools exposes us to additional risks.

We receive Bitcoin rewards from our mining activity through third-party mining pool operators. Mining pools allow miners to combine their processing power, increasing their chances of solving a block and getting paid by the network. The rewards are distributed by the pool operator, proportionally to our contribution to the pool’s overall mining power used to solve a block on the Bitcoin blockchain. Should the pool operator’s system suffer downtime due to a cyber-attack, software malfunction or other issue, it will negatively impact our ability to mine and receive revenue. Furthermore, we are dependent on the accuracy of the mining pool operator’s record keeping to accurately record the total processing power provided to the pool for a given Bitcoin mining application in order to assess the proportion of that total processing power we provided. While we have internal methods of tracking both the hash rate we provide and the total used by the pool, the mining pool operator uses its own record-keeping to determine our proportion of a given reward, which may not match our own. If we are unable to consistently obtain accurate proportionate rewards from our mining pool operators, we may experience reduced rewards for our efforts, which would have an adverse effect on our business and operations.

Risks Related to Omnipresent

Omnipresent intends to operate in an emerging market, which makes it difficult to evaluate its business and prospects. If markets for service robotics develop more slowly than expected, or long-term end-customer adoption rates and demand are slower than expected, Omnipresent’s operating results and growth prospects could be harmed.

While robots have been applied to applications like industrial manufacturing and domestic in-home cleaning, the concept of commercial service robots is relatively new and rapidly evolving, making the business and prospects of Omnipresent difficult to evaluate. The growth and profitability of the service robotics market depends on the increasing level of demand and acceptance of collaborative robots that operate alongside employees, as to which there can be no assurance. If there is pushback against the adoption of robotics in everyday commercial applications, then this market may develop more slowly than Omnipresent expects, which could adversely impact its operating results and ability to grow the business.

Omnipresent intends to operate in an emerging industry that is subject to rapid technological change and will experience increasing competition.

Omnipresent’s future product offerings will compete in a broad competitive landscape that includes incumbent actors, and emerging players in the service robotics space, particularly in the cleaning and indoor delivery automation. Omnipresent’s future competitors may develop new technologies or products that provide superior features or are less expensive than Omnipresent’s anticipated products. Omnipresent’s competitors may respond more quickly to new or emerging technologies, undertake more extensive marketing campaigns, have greater financial, marketing, manufacturing and other resources than it does, or may be more successful in attracting potential customers, employees and strategic partners. If Omnipresent is unable to compete effectively, its business, prospects, financial condition, and operating results will be negatively impacted.

Omnipresent’s business plans require a significant amount of capital. Future capital needs may require us to sell additional equity or debt securities that may dilute our stockholders.

Omnipresent is an embryonic-stage business. While we intend to have Omnipresent initiate operations and to invest in the research and development of its products, we anticipate that we will continue to incur expenses for the foreseeable future as we continue to advance Omnipresent’s products and services, develop its corporate infrastructure, and further its research and development initiatives. Omnipresent is subject to all of the risks typically related to the development of robotics, and it may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect its business. Until Omnipresent can generate a sufficient amount of revenue from the commercialization of its products and services, if ever, we expect to finance Omnipresent’s future cash needs through public or private equity or debt financings, third-party (including government) funding and marketing and distribution arrangements, as well as other collaborations, strategic alliances and licensing arrangements, or any combination of these approaches.

Omnipresent has no experience in operating robots. Unforeseen safety issues with its future products could result in injuries to people which would in turn result in adverse effects on Hyperscale Data’s business and reputation.

Omnipresent’s future robots are expected to operate autonomously in environments, such as restaurants, hotels, casinos, and healthcare facilities, that are surrounded by various moving and stationary physical obstacles and by human and vehicles. Such environments are prone to collisions, unintended interactions and various other incidents. Therefore, there is a possibility that Omnipresent’s robots may be involved in a collision with any number of such obstacles or even a human being. Omnipresent’s future robots are expected to be equipped with advanced sensors that are designed to effectively prevent any such incidents and are intended to stop any motion at the detection of intervening objects. Nevertheless, real-life environments, especially those in crowded areas, are unpredictable and situations may arise in which Omnipresent’s robots may not perform as intended. A highly publicized incident of Omnipresent’s autonomous robots causing injuries to people could lead to negative publicity and subject Omnipresent and thereby our company to litigation. Such litigation or adverse publicity would negatively affect Omnipresent’s brand and harm its business, prospects, financial condition and operating results.

Omnipresent intends to target customers, suppliers and production counterparties that are large corporations with substantial negotiating power, exacting product, quality and warranty standards and potentially competitive internal solutions. If Omnipresent proves unable to sell its future products to these customers or is unable to enter into agreements with customers, suppliers and production counterparties on satisfactory terms, its prospects and results of operations will be adversely affected.

Omnipresent currently has no customers. Several of Omnipresent’s potential customers are large, multinational corporations with substantial negotiating power relative to Omnipresent as well as to our company. These large, multinational corporations are also aware of competitor products and are actively engaging with competitors to determine which products they like better. Meeting the requirements and securing contracts with any of these companies will require a substantial investment of Omnipresent’s time and resource. Omnipresent cannot assure you that any products it may develop and manufacture, if any, will be the one these companies will choose, or that Omnipresent will generate any revenue from the sales of its potential products to these key potential customers. If Omnipresent’s future products, if any, are not selected by these large corporations, its business and future prospects will be materially and adversely affected.

Omnipresent must successfully manage product introductions and transitions in order to become competitive.

In the event that Omnipresent’s products should ever become competitive, as to which there can be no assurance, it must continually develop new and improved robotic solutions that meet changing consumer demands. Moreover, the introduction of new products is a complex task involving significant expenditures in research and development, promotion and sales channel development, and management of existing inventories to reduce the cost associated with returns and slow-moving inventory. Omnipresent must introduce new robotic solutions in a timely and cost-effective manner, and it must secure production orders for those solutions from its contract manufacturers and component suppliers. If Omnipresent ever becomes competitive in its industry, then the maintenance of that status will require that it closely monitor and adapt to the following factors:

the accuracy of Omnipresent’s forecasts for market requirements beyond near-term visibility;

Omnipresent’s ability to anticipate and react to new technologies and evolving consumer trends;

Omnipresent’s development, licensing or acquisition of new technologies;

Omnipresent’s timely completion of new designs and development, if any;

the ability of Omnipresent’s contract manufacturers to cost-effectively manufacture its new robotic solutions;

the availability of materials and key components used in the manufacture of Omnipresent’s new robotic solutions, if any; and

Omnipresent’s ability to attract and retain competent research and development personnel.

If any of these or other factors becomes problematic, Omnipresent may not be able to develop and introduce new robotic solutions in a timely or cost-effective manner, and its anticipated business may be harmed.

Omnipresent expects to rely on third party manufacturers/suppliers for the foreseeable future. This reliance on third parties increases the risk that Omnipresent will not, assuming its business develops, have sufficient quantities of its products or such quantities at an acceptable cost, which could delay, prevent or impair its anticipated development or commercialization efforts.

Omnipresent expects to rely on third party manufacturers/suppliers for the foreseeable future. This reliance on third party manufacturers/suppliers increases the risk that Omnipresent will never have sufficient quantities of its products, should any be developed and manufactured, which could delay, prevent or impair Omnipresent’s development and any future commercialization efforts. Additionally, Omnipresent may be unable to establish any agreements with third-party manufacturers/suppliers or to do so on acceptable terms. Even if Omnipresent is, at some point in the future, able to establish agreements with third-party manufacturers/suppliers, reliance on third-party manufacturers/suppliers entails additional risks, including:

failure of third-party manufacturers/suppliers to comply with regulatory requirements and maintain quality assurance;

breach of the manufacturing/supply agreement by the third party;

failure to manufacture/supply Omnipresent’s anticipated product according to its specifications;

failure to manufacture/supply Omnipresent’s expected product according to its schedule or at all;

misappropriation of Omnipresent’s proprietary information, if any, including its trade secrets and know-how; and

termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for Omnipresent.

If Omnipresent’s future third-party manufacturers/suppliers cannot perform as agreed, Omnipresent may be required to replace such manufacturers/suppliers and it may be unable to replace them on a timely basis or at all. Omnipresent’s anticipated future dependence upon third party manufacturers/suppliers may adversely affect Omnipresent’s ability to commercialize any products that receive marketing approval on a timely and competitive basis.

Components used in Omnipresent’s future products sensors may fail as a result of manufacturing, design or other defects over which it has no control and render its anticipated devices permanently inoperable.

Omnipresent expects to rely on third-party component suppliers to provide certain functionalities needed for the operation and use of Omnipresent’s expected devices. Any errors or defects in such third-party technology could result in errors in any products that Omnipresent may develop and manufacture that could harm its business. If these components have a manufacturing, design or other defect, they can cause Omnipresent’s future products to fail and render them permanently inoperable. As a result, Omnipresent may have to replace these components at its sole cost and expense. Should Omnipresent have a widespread problem of this kind, Omnipresent’s reputation in the market, if one is ever established, could be adversely affected and its replacement of these components would harm its future business.

Risks Related to Our Ault Blockchain Operations

General

All capital that we have invested through Ault Capital in the Ault Blockchain could be lost entirely.

We have, through Ault Capital, committed significant capital to the development, launch, and ongoing operations of the Ault Blockchain. This capital includes funds deployed to develop the network’s technical infrastructure, to fund the administrative and compliance operations of Ault DAO LLC, to acquire 500,000 Project Node Licenses as consideration for the node-selling rights granted to Ault Capital by the Ault DAO, and to fund the development of planned application layer products. The Ault Blockchain is a startup-stage venture operating in a highly speculative and competitive market. New blockchain network projects have historically had very high failure rates, and many have failed to achieve commercial viability despite significant initial investment. There can be no assurance that the capital invested in the Ault Blockchain will generate any return, and the entire investment could be lost. Our stockholders should understand that their indirect exposure to this business segment includes the risk of total loss of our investment. If the Ault Blockchain fails to achieve commercial viability, the write-off of this investment could materially and adversely affect our financial condition and the value of our shares of Class A common stock.

We have never built or operated a public blockchain network, and we may be unable to successfully execute a venture of this technical and operational complexity.

The Ault Blockchain is our first attempt to develop, launch, and operate a public blockchain network: a shared digital record-keeping system open to any participant worldwide. The network is built on the Cosmos SDK, an established open-source software framework used by a number of other blockchain networks, with the EVM serving as the execution environment in place of the native Cosmos execution layer, and with additional modifications specific to Ault Blockchain’s architecture. Building an established framework reduces certain foundational engineering risks compared to writing protocol software entirely from scratch. Commercial customizing and combining these components in a novel configuration, integrating a licensed node program on top of them, and operating the resulting network at commercial scale all require deep specialized expertise that we have not previously developed or exercised. The full lifecycle of blockchain network operation, which includes managing a distributed network of independent validators (the computers that verify and record transactions), designing and implementing token distribution rules, securing smart contracts (self-executing software programs stored on the blockchain), and building a governance structure through which participants make collective decisions, involves disciplines that we are undertaking for the first time simultaneously. Errors in customization, integration, or operational decisions may not become apparent until after launch, when correction may be difficult, costly, or impossible without significant disruption to existing participants. There can be no assurance that we will be able to successfully execute on the development and operation of the Ault Blockchain given our lack of prior experience in this domain. Our inexperience may result in technical material failures, cost overruns, regulatory missteps, or commercial failures that could cause the total loss of our investment and could materially and adversely affect our business, results of operations and financial condition.

We may lack the internal organizational capacity and management bandwidth required to build and operate a public blockchain network while simultaneously operating our existing businesses.

Building and operating a public blockchain network from inception requires the concurrent development of technical infrastructure, governance systems, compliance frameworks, participant onboarding processes, vendor relationships, legal structures, and ecosystem development programs, all of which must be executed simultaneously and many of which we have not done before. Our management team, technical staff, legal resources, and internal compliance infrastructure were assembled around our existing data center and Bitcoin mining businesses, among other businesses we conduct, not around the demands of a blockchain network launch. The demands of operating the Ault Blockchain may divert management’s attention and organizational resources from our existing business segments, potentially reducing the quality of oversight applied to those operations. Conversely, the demands of the existing businesses may limit the bandwidth available to address the challenges that arise in building and operating the Ault Blockchain. Building new internal capabilities, hiring specialized personnel, and developing new operational processes while the network is already live introduces additional risk. Failures of organizational capacity in technical execution, compliance, governance administration, or participant support could result in material harm to the network and to our reputation. There can be no assurance that we have or can develop the organizational capacity required to successfully operate the Ault Blockchain alongside our existing businesses, and any such failure could materially and adversely affect our business, results of operations and financial condition.

A new blockchain network has no established value without participants, and participants may not join a network that does not yet have demonstrated value, a challenge that may prove impossible to overcome.

The utility and commercial viability of the Ault Blockchain depends on attracting and retaining a meaningful base of participants: (i) Node License holders who operate the network’s software, (ii) independent validators who verify and record transactions, (iii) developers who build applications on the network, and (iv) end users who use those applications. The fundamental challenge for any new network is that each of these groups looks to the others before committing. Developers will not build applications on a network that has no users. Users will not adopt a network that has no applications. Validators and node operators will not invest in a network that lacks users and applications and therefore lacks transaction activity and token value. This creates a self-reinforcing vicious circle that is difficult to address; a new network must find a way to create credible early momentum across all of these groups simultaneously, or each group will wait for the others, and the network will remain inactive. Established competing networks have already worked through this challenge and offer participants a proven, active environment. The Ault Blockchain launches without an established user base, without pre-existing application liquidity, and without a proven track record of network reliability. There can be no assurance that the Ault Blockchain will attract sufficient participation across all necessary groups to create self-sustaining activity on the network. If it does not, the network is unlikely to generate meaningful revenue or long-term commercial value. This failure could result in total loss of our investment and could materially and adversely affect our business, results of operations and financial condition.

No secondary market for AULT Tokens may ever develop, which would make the tokens economically worthless and undermine the economic rationale for purchasing a Node License.

The economic rationale for purchasing a Node License and operating a Licensed Mining Node depends, in significant part, on the expectation that AULT tokens (the “Ault Tokens”) earned through node operations can at some point be exchanged for other assets of value, for example by selling them on a digital asset exchange. As of the date of this Annual Report, the AULT Token is not listed on any digital asset exchange, and there can be no assurance that any exchange will list the AULT Token or that any trading market therefor will ever develop. Digital asset exchanges make their own listing decisions based on their own standards, legal requirements, and commercial judgments. Many digital tokens have never been listed on any exchange or have been listed on exchanges that subsequently ceased operating, resulting in a permanent loss of liquidity. Without a trading market, AULT Tokens earned through node operations cannot be converted into other assets. The entire economic return from operating a Licensed Mining Node therefore depends on a trading market materializing, which is not guaranteed. If no trading market develops, or if any market that does develop is too small or illiquid to allow for meaningful transactions, the economic value would be greatly reduced, and the demand for additional licenses would solely rely on the utility of the AULT Tokens to engage with apps on the blockchain and the entire economic model of the Ault Blockchain segment would be fundamentally undermined. This is one of the most material risks facing the Ault Blockchain business and investors should weigh it carefully.

The Ault Blockchain Mainnet launched in March 2026 and we have no meaningful track record from which investors can evaluate the performance or long-term prospects of this business.

The Ault Blockchain network launched its Mainnet in March 2026. We have no meaningful operating history for this business segment, no track record of revenue generation at any commercial scale, and no demonstrated history of network stability, participant growth or application development. The financial results we have generated to date in this segment do not reflect the business at any meaningful stage of commercial operation and should not be relied upon as an indication of what we may achieve in the future. The challenges, expenses, and complications involved in operating a new public blockchain network may be substantially greater than we currently anticipate, and we may encounter unforeseen technical, operational, regulatory, and commercial obstacles for which our limited experience provides little preparation. Investors should recognize that an investment in our company includes exposure to a startup-stage business operating with all the risks associated with early-stage ventures, including the risk of total failure. Our limited operating history makes it impossible to reliably assess our prospects or to forecast our future financial results in this segment.

The node license program is a novel commercial structure with no established market precedent, and the market may not accept it.

The Ault Blockchain’s node license program is a novel commercial structure that has not been tested in the market. Under this program, participants pay a fixed upfront price of $1,500 for a perpetual license that cannot be transferred for at least two years and that entitles them to operate software that earns AULT Tokens (the network’s native token) through a competitive selection process based on uptime and performance. The license also carries a single governance vote, conditional on the holder completing an identity verification process and agreeing to governance rules. This combination of a fixed-price upfront payment, a two-year transfer restriction, a declining token reward schedule, performance-based earnings, and identity-verified governance has not been offered in the market in substantially this form before. There is no body of market experience or investor precedent on which to assess whether this model will attract sufficient demand, whether the economic return will prove attractive to prospective participants over time, or whether the governance structure will function as intended at scale. Prospective purchasers may find the upfront price unattractive relative to the uncertain token earnings, may be deterred by the two-year restriction on transferring the license, may doubt that AULT tokens will ever have meaningful market value, or not value the potential utility of AULT tokens. If the market does not accept the node license model, our initial source of revenue will fail, and we have no established alternative model to offer in its place. The failure of the node license model could result in total loss of our investment and could materially and adversely affect our business, results of operations and financial condition.

A significant failure in the Ault Blockchain business could harm the reputation and operations of our other business segments, and adverse developments in other segments could in turn harm the Ault Blockchain.

We operate multiple business segments, including the Sentinum data center and Bitcoin mining business, under a common parent company with a shared corporate identity, NYSE American listing, management team, and access to capital markets. A significant failure in the Ault Blockchain segment, whether a cybersecurity breach resulting in loss of participant funds, a regulatory enforcement action, a failure to develop or a subsequent collapse of AULT Token value, a major governance dispute, or a high-profile technical failure, could damage investor and institutional confidence in our company as a whole. Such damage could reduce our ability to raise capital, harm banking relationships that support all of our operations, affect our NYSE American listing status, and adversely affect the share price of our Class A common stock in ways that harm all stockholders regardless of whether they are primarily interested in the blockchain or the mining business. The reverse is equally true: adverse developments in our other business segments could undermine the credibility and institutional relationships of the Ault Blockchain by association, making it harder to attract enterprise participants, exchange listings, or regulatory goodwill. There can be no assurance that the business segments can be fully insulated from one another, and reputational contagion between segments could materially and adversely affect all of our business operations.

Ongoing development of the Ault Blockchain requires continued capital investment that may not be available on acceptable terms or at all.

The development of the Ault Blockchain ecosystem, including planned application products, network security, protocol maintenance, institutional partnership development, and participant support, requires sustained investment beyond what may be generated by Node License sales alone. If Node License sales fall short of expectations, if AULT Tokens fail to develop a market value that sustains participant interest, or if planned applications face delays, the funds available for continued development may be insufficient. We may need to seek additional capital through equity or debt financings, which could result in dilution to existing stockholders or increased leverage at a time when capital is already committed across multiple business segments. There can be no assurance that additional capital will be available when needed or on acceptable terms. If we are unable to fund ongoing ecosystem development, the Ault Blockchain may fall behind competing networks, planned applications may be abandoned, and the long-term viability of the business could be materially impaired.

The Ault Blockchain depends on a small number of individuals with specialized knowledge who are not easily replaced, and the loss of any of them could significantly harm our operations.

The development and operation of the Ault Blockchain depends heavily on a small number of technical and strategic personnel who possess specialized knowledge of the network’s design, security architecture, protocol decisions, and development roadmap. This includes our Chief Technology Officer and Blockchain Architect, who has direct responsibility for the technical foundation of the network. Much of this knowledge resides with specific individuals and cannot be quickly transferred to others if those individuals depart. The market for experienced blockchain architects, protocol engineers, and digital asset specialists is highly competitive, and demand for these skills substantially exceeds supply. The loss of any key technical or strategic personnel could delay protocol development, reduce our ability to identify and respond to security vulnerabilities, result in the loss of critical institutional knowledge that is difficult to reconstruct, and harm our relationships with the technical community. There can be no assurance that we will be able to retain our key personnel or recruit qualified replacements on a timely basis. The loss of key personnel could materially and adversely affect our ability to operate and develop the Ault Blockchain.

The Ault Blockchain competes against established blockchain networks with substantially greater resources, participation, and proven track records, and may be unable to compete effectively.

The market for public blockchain infrastructure is highly competitive. Established public blockchain networks have already attracted large communities of developers, large volumes of transaction activity, deep pools of available liquidity, and proven track records of security and reliability. Private and permissioned blockchain networks (networks where participation is restricted to approved parties) operated by established financial institutions and technology companies offer institutional participants an alternative that may be perceived as lower risk and more compatible with existing compliance frameworks. Competing networks may announce new features, attract high-profile application developers, or obtain regulatory approvals that make the Ault Blockchain less attractive by comparison. New blockchain projects with substantial venture capital backing may also enter the market and compete for the same participants and developers. There can be no assurance that the Ault Blockchain’s compliance-oriented design and financial market focus will provide sufficient competitive differentiation to overcome the advantages held by established networks. Failure to compete effectively could result in insufficient participant adoption, reduced demand for Node Licenses, and our inability to generate meaningful revenue, any of which could materially and adversely affect our business, results of operations and financial condition.

Broad declines or periods of negative sentiment in digital asset markets generally could reduce demand for Node Licenses and adversely affect the Ault Blockchain business regardless of the network’s own performance.

The digital asset market includes cryptocurrencies, digital tokens, and related products. It is characterized by extreme price swings, speculative trading, and rapid shifts in public and institutional sentiment that are largely outside our control. Broad declines in digital asset prices, triggered by regulatory actions, macroeconomic pressures, failures of major market participants such as exchanges or lending platforms, or adverse media coverage of the industry, could reduce interest in purchasing Node Licenses, reduce the perceived attractiveness of earning AULT Tokens, and make it harder for any secondary market for AULT Tokens to develop or be sustained. The digital asset market has experienced several severe downturns in which many blockchain projects lost the majority of their value or ceased operations entirely. A new and unproven network like the Ault Blockchain may be more vulnerable to such downturns than established networks with long track records and deep liquidity. There can be no assurance that market conditions will be favorable during the critical early period of the Ault Blockchain’s development. Sustained adverse conditions in digital asset markets could materially and adversely affect our business, results of operations and financial condition.

The long-term strategy for the Ault Blockchain depends on applications that have not been built, and these applications may not be successfully developed or may fail to attract users.

Our long-term strategy for the Ault Blockchain depends in significant part on the development and successful deployment of a series of planned applications built on the network, including a marketplace for tokenized real-world financial assets, a platform for trading digital assets, a lending and borrowing service, a financial data and wallet interface, and an AI analytics platform. None of these applications has been launched as of the date of this Annual Report, and all are at an early stage of planning or development. The development of applications of this type requires technical expertise, regulatory approvals in multiple jurisdictions, adequate funding, and the ability to attract users and liquidity in competitive markets where established alternatives already exist. We may be unable to develop these applications on the timeline we currently anticipate, within the budgets we have planned, or to the technical standard required for them to operate reliably and securely. Even if developed and launched, these applications may fail to attract sufficient users to be commercially viable. Without a functioning set of applications that give participants practical reasons to use the network and to hold AULT Tokens, the network is unlikely to develop the active participation that sustains its long-term value. Failure to develop and deploy planned applications could materially and adversely affect the long-term viability of the Ault Blockchain as well as our business, results of operations and financial condition.

The strategy of building a blockchain network oriented toward tokenized real-world assets depends on legal, custodial, and market infrastructure that does not yet fully exist, and the execution of this strategy may prove more complex and costly than we currently anticipate.

The Ault Blockchain’s long-term strategy is oriented in significant part toward serving as infrastructure for the tokenization of RWAs, meaning the representation of ownership rights in financial instruments and other assets as digital tokens on the network. While we believe this is a significant market opportunity, the legal, custodial, and market infrastructure required to make tokenized RWAs commercially viable at scale is not yet fully developed. Representing ownership of an RWA as a digital token does not by itself transfer legal title or create enforceable property rights; those outcomes depend on the legal frameworks of the jurisdiction where the underlying asset is located, the enforceability of the documentation linking the token to the asset, the reliability and independence of the custodian holding the underlying asset, and the willingness of counterparties, courts, and regulators to recognize the token as a meaningful representation of the underlying interest. These legal and structural questions remain unresolved in many jurisdictions and are being addressed differently across different asset classes and markets. The complexity of establishing legally enforceable tokenized instruments increases substantially when the underlying asset, the token issuer, and the token holder are located in different jurisdictions, each with different property law, securities law, and contract law frameworks. Even if the technical infrastructure of the Ault Blockchain functions as designed, the tokenization strategy may fail to generate commercial traction if the broader legal and market infrastructure does not develop on a timeline compatible with our plans, if institutional participants are unwilling to rely on blockchain-based representations of asset ownership, or if the cost and complexity of establishing legally sound tokenized instruments proves prohibitive for issuers. There can be no assurance that the market for tokenized RWAs will develop at the pace or scale we currently anticipate, and any failure of this strategy to gain commercial traction could materially and adversely affect the long-term value proposition of the Ault Blockchain as well as our business, results of operations and financial condition.

Operational and Financial Risks

The core software underlying the Ault Blockchain is developed primarily by an outside firm rather than an internal team, creating dependency, lack of knowledge continuity, and transition risks that could materially disrupt the network.

The Ault Blockchain network is built on the Cosmos SDK, an established open-source framework for building blockchain networks, with the EVM as the execution environment and additional modifications specific to this network’s architecture. The primary development work on the network’s core software has been performed primarily by an external development firm rather than by an in-house engineering team employed directly by Ault DAO LLC or its affiliates. This arrangement has practical advantages in that it enables us to engage specialized blockchain engineering expertise without building that capability from scratch internally. However, it also creates significant risks. The institutional knowledge of how the network was designed, where its most sensitive components are, what technical decisions were made and why, and how to maintain and upgrade the codebase safely resides primarily outside of our company. If the development relationship were to end (if the firm terminates the engagement, encounters its own business difficulties, or if the commercial terms become unworkable), we may find ourselves responsible for operating a complex technical system without the internal capability to maintain or modify it effectively. Transitioning core development responsibilities to a new firm or building an internal team would take significant time and investment, during which the network’s development roadmap could be disrupted and its ability to respond to security issues or technical failures could be impaired. Even a highly capable and reputable development firm represents a concentration of critical dependency that creates operational risk. There can be no assurance that the development relationship will continue on acceptable terms, and any disruption to it could materially and adversely affect our ability to operate and develop the Ault Blockchain.

There is currently no available insurance product that would cover losses resulting from a smart contract vulnerability, governance attack, or loss of digital asset private keys, meaning any such loss would be unrecoverable.

We, the Ault DAO LLC, and our affiliated entities that hold AULT Tokens or other digital assets are exposed to the risk of loss through smart contract vulnerabilities, cybersecurity breaches, malicious governance actions, or the loss or theft of the private cryptographic keys, i.e., the unique secret codes that control access to digital assets that secure those holdings. Unlike losses in traditional financial systems, where insurance products, regulatory protections, and institutional recovery mechanisms exist, losses of digital assets at the protocol level are generally permanent and unrecoverable. There is currently no widely available insurance product that covers losses of this type at the scale relevant to a commercial blockchain operation. We do not currently hold insurance coverage against digital asset losses arising from protocol-level events. A single significant loss event from an exploitation of a vulnerability in the network’s smart contracts, a successful attack on the private keys of an affiliated entity, or a malicious governance proposal that is passed before it can be identified and blocked could result in a material, permanent loss of digital assets with no recourse or recovery mechanism available. Such a loss could materially and adversely affect the financial position of the affected entities and, on a consolidated basis, that of our company.

Blockchain businesses frequently face difficulty maintaining banking relationships, and the loss of banking access would impair our ability to conduct the fiat currency operations necessary to run the Ault Blockchain business.

Banks, payment processors, and other financial institutions in the United States and internationally have in many cases declined to maintain accounts or provide services to businesses engaged in digital asset activities, a phenomenon commonly referred to as de-banking. The reasons for this include concerns about regulatory compliance, reputational risk, and the perceived complexity of monitoring digital asset businesses for anti-money laundering purposes. Ault DAO LLC and the affiliated entities that support the Ault Blockchain business require banking relationships to pay vendors, receive proceeds from Node License sales conducted in fiat currency, and conduct other ordinary business operations. If any of these entities were to lose their banking relationships, or if financial institutions declined to provide services in connection with the Ault Blockchain business, our ability to operate the business in the normal course would be materially impaired. The risk of de-banking has affected numerous digital asset businesses, including our own other entities that were otherwise well-managed and compliant. There can be no assurance that we will be able to maintain the banking relationships necessary to support our Ault Blockchain operations, and the loss of such relationships could materially and adversely affect our business, results of operations and financial condition.

Affiliated entities that operate as validators or stake AULT Tokens are subject to a protocol-enforced penalties that can permanently reduce their token holdings, and any such event could result in a material financial loss.

The Ault Blockchain uses a proof-of-stake consensus mechanism for block production, in which validators, the participants who verify and record transactions, are required to commit AULT Tokens as economic collateral in order to participate. This collateral is subject to slashing, which is an automatic, protocol-enforced reduction of a validator’s staked token balance in response to defined misbehavior. Slashing events are triggered by downtime beyond specified thresholds, by double-signing (submitting two conflicting versions of the same block), or by censorship of transactions. A slashing event reduces the staked balance of both the validator and of any other participants who have delegated their tokens to that validator, in proportion to each party’s stake. To the extent that Ault Capital, Sentinum, or any of our other affiliates operates as a validator or delegates AULT Tokens to a validator, it is exposed to this risk. Slashing events can result from operational errors, software failures, network connectivity issues, or circumstances outside the direct control of the validator. A material slashing event could result in a permanent, unrecoverable reduction in the AULT Token holdings of an affiliated entity, adversely affecting the financial position of that entity and of our company on a consolidated basis. There can be no assurance that affiliated validators will avoid slashing events, and investors should be aware that this risk is inherent in validator participation.

Affiliated entities hold or may hold a majority of all outstanding Node Licenses, concentrating economic interests and potential governance influence within our corporate group.

Ault Capital received 500,000 Project Node Licenses as consideration for the rights to sell Community Node Licenses on behalf of the Ault DAO. Sentinum and other subsidiaries and affiliates of ours are also potential purchasers of Community Node Licenses. Taken together, these affiliated entities hold or may hold a majority of all one million authorized Node Licenses. Because AULT Tokens are distributed to node operators in proportion to their verified work, holding a majority of node licenses means that a substantial share of all token distributions will flow to entities within our corporate group rather than to independent outside participants. Affiliated entities' combined governance voting is limited to no more than 49.9% of eligible votes, as formally set forth in the network's governing Constitution. unaffiliated node holders cannot rely on this limitation being maintained indefinitely. The concentration of licenses and token distributions within our corporate group creates an asymmetry of economic interest between affiliated and unaffiliated participants. Investors who purchase Community Node Licenses or our stockholders should be aware of this concentration and its potential effect on governance decisions and token economics.

The Ault DAO governance process may produce decisions that are harmful to our interests or to the long-term health of the network, and we have limited ability to prevent such outcomes.

The Ault Blockchain is governed by an on-chain process in which verified node holders vote on proposals to change the network’s rules, allocate treasury funds, or amend the Constitution. We and our subsidiaries and affiliates intend to limit our combined voting to 49.9% of eligible votes, which means that unaffiliated node holders, acting collectively with a simple majority of votes cast, can pass proposals over our objection. Governance proposals that receive enough votes are binding and Ault DAO LLC cannot reverse or override them. This creates the possibility that the governance process produces a number of outcomes adverse to us, such as: (i) changes to the token distribution schedule that reduce the value of our Project Node holdings, (ii) allocation of the Ault DAO community pool (the “Pool”), which is an on-chain treasury controlled by governance votes of verified node holders, treasury to programs that do not benefit the network, (iii) amendments to the Constitution that reduce the protections available to our company or to node holders generally, or (iv) parameter changes that harm network security or performance. Ault DAO LLC may decline to post a proposal for a vote if it appears to violate applicable law, but this screening function is limited to legal compliance and does not extend to commercial or strategic judgments. There can be no assurance that the governance process will consistently produce outcomes that are in the best interests of our company or of the network, and adverse governance outcomes could materially and adversely affect the Ault Blockchain and our business, results of operations and financial condition.

The on-chain treasury funded by network transaction fees is controlled by governance votes that we cannot override, and those funds may be allocated in ways that do not benefit the network.

Ten percent of all transaction fees collected on the Ault Blockchain are directed to the Pool. The Pool is intended to fund grants to developers, liquidity programs, network infrastructure and other activities that support the growth of the Ault Blockchain ecosystem. However, because the allocation of these funds is determined by governance votes, we cannot guarantee that they will be used effectively or in the network’s best interests. The Pool funds could be directed to projects that fail to deliver value, to counterparties that do not perform, or to purposes that benefit a subset of participants at the expense of the broader network. Funds once allocated through a completed governance vote cannot be reversed by Ault DAO LLC. As the Pool grows over time through accumulated transaction fees, the potential scale of misallocation increases. Misallocation of Pool resources could reduce the funding available for genuine network development and could adversely affect the long-term growth and utility of the Ault Blockchain.

The economic arrangements between the Ault Blockchain and our affiliates create potential conflicts of interest that may not be fully aligned with the interests of unaffiliated Node License purchasers.

Several of the economic arrangements at the foundation of the Ault Blockchain involve our subsidiaries and affiliates on both sides of material transactions. Ault Capital received 500,000 Project Node Licenses as consideration for the right to sell Community Node Licenses on behalf of the Ault DAO LLC, an arrangement negotiated between entities under common control rather than between independent parties at arm’s length. Sentinum and other affiliates are potential purchasers of Community Node Licenses, meaning that a portion of the community license revenue may flow from one of our subsidiaries to another rather than from independent outside purchasers. Affiliated entities may also operate as validators or delegate tokens in ways that generate additional distributions within our corporate group. These arrangements create situations in which the interests of our company and our subsidiaries and affiliates, as the dominant economic participants in the network, may differ from the interests of unaffiliated node holders who are making commercial decisions based on the expectation of a fair and independently governed market. While these transactions are disclosed, the absence of arm’s-length negotiation means there is no independent market mechanism to ensure that their terms reflect what would have been agreed between unrelated parties. Investors and Node License purchasers should be aware that these related-party dynamics are present and may affect the governance and economics of the Ault Blockchain in ways that are not fully aligned with their interests.

Our ability to screen Node License purchasers and governance participants depends on third-party identity verification and sanctions screening services, and any failure of those services could impair our compliance operations.

The process by which Node License purchasers and governance participants are verified, including the KYC identity checks and the screening of participants against OFAC sanctions lists depends on third-party service providers that we do not own or control. If these providers experience outages, terminate their commercial relationships with us, provide inaccurate screening results, or fail to keep their screening databases current, our ability to admit participants on a compliant basis could be impaired. A failure in the identity verification or sanctions screening process could result in Node Licenses being sold to prohibited persons or Ault DAO governance access being granted to individuals who should have been excluded, potentially exposing us to enforcement actions by FinCEN, OFAC or other regulators. Replacing a compliance service provider requires time and carries transition risks. There can be no assurance that our third-party compliance service providers will perform reliably or that their services will be deemed adequate by regulators, and any failure in compliance infrastructure could materially and adversely affect our regulatory standing and business operations.

We rely on external vendors and partners for critical functions we cannot fully perform in-house, and the loss of any key relationship could severely disrupt operations.

In addition to its dependence on its primary software development partner, the operation of the Ault Blockchain relies on a range of other external vendors and service providers, including security auditors who assess the network’s code for vulnerabilities, legal counsel with blockchain-specific expertise, the authorized selling agent responsible for distributing Community Node Licenses, cloud infrastructure providers, and other technology service providers. Each of these relationships represents a dependency in that if a critical vendor terminates its engagement, fails to perform its obligations, or encounters its own business difficulties, the service that the vendor provided must be replaced or would at least temporarily not be available to us. The market for vendors with specialized blockchain expertise is limited, and finding qualified replacements on short notice is not always possible. Service interruptions, quality failures, or the departure of key external providers could result in delays to network development, degraded operational performance, compliance gaps, or increased costs. There can be no assurance that all necessary vendor relationships will be maintained on acceptable terms, and the loss of any critical vendor relationship could materially and adversely affect our ability to operate the Ault Blockchain and consequently our business and results of operations. Beyond the primary development relationship, we rely on additional critical outside vendors covering security auditing of the protocol code, providing identity verification and sanctions screening services, enabling access to the authorized selling agent responsible for distributing Community Node Licenses, legal counsel with blockchain-specific expertise, and cloud and technology infrastructure providers. Unlike a mature technology company that owns and controls its full capability stack, we depend on multiple outside parties across nearly every critical function. The departure of any single critical vendor, whether due to termination, business failure, or commercial disagreement, would likely leave us without a capability that we cannot promptly replace internally or source from an alternative provider. There can be no assurance that all vendor relationships will be maintained on acceptable terms, and the loss of any critical relationship could materially and adversely affect our ability to operate and develop the Ault Blockchain as well as our business, results of operations and financial condition.

Legal and Regulatory Risks

If either the AULT Token or the Node Licenses we are selling are determined to be a security under applicable law, we could be required to register token distributions as well as node sales, restructure the network’s economics, or cease operations in their current form.

The SEC has asserted broad jurisdiction over digital tokens that it characterizes as investment contracts under a legal standard known as the Howey test, which asks whether a person invests money in a common enterprise with an expectation of profits derived primarily from the efforts of others. It may take the same position with respect to sales of nodes. The AULT Token is distributed to node operators and validators as compensation for services they perform on the network and is not sold by us; however, we do propose to engage in sales of Node Licenses. There can be no assurance that a court or the SEC will view the token distribution mechanics or Node License sales in the same way. If either the AULT Token or the sale of Node Licenses were determined to be securities, the distribution of AULT Tokens to node operators and validators, or the sale of Node Licenses, could constitute an unregistered offering of securities, which would expose us to enforcement action by the SEC, including civil penalties, disgorgement of profits, and injunctive relief. Registration of the AULT Tokens and/or the Node Licenses as a security would impose substantial ongoing disclosure and compliance obligations and could require fundamental changes to how tokens are distributed and/or Node Licenses are sold, which could disrupt the economic model of the entire network. We have not received a determination from the SEC or any other regulator that neither the AULT Token nor the Node Licenses are not a security, and investors should treat this as a material and unresolved risk. An adverse determination on this question could materially and adversely affect the viability of the Ault Blockchain and our business, financial condition, and results of operations.

The SEC, CFTC, FinCEN, OFAC, or other regulators may take enforcement action against us or the Ault Blockchain in connection with its digital asset activities, and any such action could be materially disruptive.

The regulatory environment for blockchain networks and digital assets in the United States is actively evolving, and multiple federal agencies have enforcement authority over aspects of our business. The SEC, the CFTC, FinCEN and OFAC have all taken enforcement action against digital asset businesses in recent years, and the pace of enforcement has accelerated. Future regulations, interpretive guidance, or enforcement actions could determine that our activities require licenses or registrations that we do not currently hold, could restrict the scope of activities we are permitted to conduct, or could impose compliance obligations that are costly or impractical to satisfy in their current form. Regulatory action can occur with little advance notice and can result in the immediate disruption of business operations while proceedings are pending. Even if we ultimately prevail in any regulatory proceeding, the cost of defense, the management distraction, and the reputational harm associated with a public enforcement action could be substantial. There can be no assurance that our current business model will remain permissible under future regulatory frameworks, and adverse regulatory action could materially and adversely affect our business, financial condition, and results of operations.

The regulatory posture toward digital assets in the United States has shifted materially between presidential administrations and could shift again, creating significant uncertainty for a business built on long-term regulatory assumptions.

The regulatory environment for blockchain networks and digital assets has proven to be unusually sensitive to the political priorities of the executive branch and to the leadership of key federal agencies. Under prior administrations, the SEC pursued aggressive enforcement actions against digital asset businesses using existing securities laws, without issuing comprehensive new rulemaking that would have provided clearer guidance for market participants. Under the current administration, enforcement activity in the digital asset sector has materially decreased, agency leadership has publicly signaled a more permissive approach, and there is active legislative and regulatory work underway aimed at establishing clearer frameworks for digital assets. The Ault Blockchain’s business model and legal positioning have been developed in the context of this current regulatory environment. However, the current posture is not permanent. Presidential administrations change, agency heads are replaced, and the priorities of the SEC, CFTC, and other regulators can shift substantially with each election cycle or even within a single administration. A future administration that returns to a more aggressive enforcement posture, or a change in agency leadership that results in a reversal of current interpretive positions, could directly and materially affect the legality or commercial viability of aspects of the Ault Blockchain’s operations that are currently conducted without regulatory interference. Unlike most industries where regulatory frameworks are relatively stable across administrations, the digital asset industry has experienced and may continue to experience significant swings in the regulatory environment tied directly to electoral outcomes. There can be no assurance that the current regulatory environment will persist, and a materially adverse shift in the political or administrative posture toward digital assets could materially and adversely affect our business, financial condition, and results of operations.

We may be subject to obligations under federal anti-money laundering laws that impose significant compliance costs and operational requirements, and failure to comply could result in material penalties.

The Bank Secrecy Act and the regulations of FinCEN, which is the federal agency responsible for combating money laundering and financial crime, require certain businesses that deal in money or money substitutes to register as money services businesses, maintain anti-money laundering programs, file reports of suspicious activity, and collect and verify customer identification information. FinCEN has issued guidance indicating that certain participants in digital asset markets are subject to these requirements, but the application of these requirements to our specific activities, including the sale of Node Licenses and the operation of the Ault DAO, has not been definitively determined. If we are required to register as a money services business or to implement a more comprehensive anti-money laundering program than we currently operate, the associated compliance costs could be significant and could require changes to our participant onboarding process, our record-keeping practices, and our operational procedures. Failure to comply with applicable anti-money laundering obligations could result in civil monetary penalties, criminal liability, and reputational harm. There can be no assurance that our current compliance measures will be deemed sufficient by FinCEN or other regulators, and any enforcement action in this area could materially and adversely affect our business and results of operations.

We apply identity verification and sanctions screening at our controlled access points, but the Ault Blockchain is a public network and we cannot prevent all protocol-level interaction by sanctioned persons, which may expose us to regulatory risk.

We apply KYC identity verification and screening against the sanctions lists maintained by OFAC to Node License purchasers and to participants in Ault DAO governance. These are the principal points in our business where we exercise direct control over who participates. However, the Ault Blockchain is a public, permissionless network. Like other public blockchain networks, we have no technical mechanism to prevent individuals or entities in OFAC-designated jurisdictions, or persons whose names appear on applicable sanctions lists, from submitting transactions, deploying software, or otherwise interacting with the network at the protocol level without going through our controlled access points. OFAC has previously taken enforcement actions against blockchain-related entities and has designated certain blockchain addresses as prohibited. There can be no assurance that our screening at controlled access points will be deemed sufficient by OFAC, or that we will not face enforcement risk arising from uses of the network by sanctioned persons that are entirely outside our control. An OFAC enforcement action or other sanctions-related proceeding could result in significant monetary penalties and reputational harm, and could materially and adversely affect our business, financial condition, and results of operations.

The Wyoming decentralized autonomous organization limited liability company statute is a new and largely untested area of law, and courts or regulators in other jurisdictions may not recognize or enforce the protections it provides.

Ault DAO LLC is organized under Wyoming’s decentralized autonomous organization limited liability company statute, which provides a legal framework for certain blockchain-based governance structures. This statute is relatively new, has not been extensively tested in litigation, and there is significant uncertainty regarding how courts will interpret its provisions and how it interacts with federal law and the laws of other states and foreign jurisdictions. The Ault DAO, as the on-chain governance body that operates the network, does not fit neatly within any existing legal category recognized outside of states that have adopted DAO LLC statutes. Courts or regulators in jurisdictions where node holders or other participants are located may determine that the Ault DAO or its participants are subject to legal obligations not currently anticipated, including partnership liability, fiduciary duties owed to other participants, or regulatory registration requirements. The Wyoming DAO LLC statute may reduce or eliminate certain fiduciary duties of participants, but there can be no assurance that this protection will be recognized outside Wyoming or that it will fully insulate us or our affiliates from claims arising from governance decisions. Legal uncertainty around the Ault DAO structure could create unpredictable liability exposure for us and could adversely affect the governance and operation of the Ault Blockchain.

Before the network reaches a defined stage of operation, Ault DAO LLC retains the unilateral authority to amend the governing Constitution, which means the terms that Node License purchasers agreed to could change after purchase.

The Ault DAO Constitution, which sets forth the rules governing the network and the rights and obligations of node holders, can be amended unilaterally by Ault DAO LLC prior to the network reaching a defined operational stage or launching formal on-chain governance. This means that the specific terms a Node License a purchaser relied upon at the time of purchase, including the governance voting rights associated with their license, the conditions under which a license may be revoked, and the procedures governing the Ault DAO, could be modified by Ault DAO LLC without the consent of existing license holders and without a governance vote. While we do not intend to use this authority in a manner that is materially adverse to license holders, there can be no assurance that no changes will be made, or that any changes made before governance is fully activated will be viewed as acceptable by existing purchasers. Node License purchasers should be aware that the terms of their participation in the Ault DAO are subject to change during the pre-launch period and that they may have limited recourse if changes are made that they find objectionable. This authority could result in changes that adversely affect the rights or economic interests of node holders and could expose us to claims from purchasers who believe the terms of their license were materially altered after purchase.

The Ault Blockchain operates across multiple regulatory jurisdictions, and adverse regulatory developments in any major jurisdiction could restrict participant access and impair the network’s global growth.

The Ault Blockchain is designed to be accessible to participants in multiple countries, and the regulatory treatment of blockchain networks, digital tokens, and node license programs varies significantly across jurisdictions and is evolving rapidly. In the European Union, the Markets in Crypto-Assets Regulation, which entered into force in 2023, establishes licensing and disclosure requirements for certain categories of digital token issuers and service providers, and its application to our specific activities has not been conclusively determined. In the United Kingdom, the Financial Conduct Authority is developing a broader regulatory framework for digital assets. In the Asia-Pacific region, Singapore, Hong Kong, and Japan each maintains distinct licensing frameworks that may apply to aspects of our operations or to participants located in those jurisdictions. Adverse regulatory developments in any major jurisdiction could prevent residents of that jurisdiction from purchasing Node Licenses, participating in governance, or using applications on the network. Compliance with multiple overlapping and sometimes inconsistent international regulatory frameworks is complex, costly, and subject to change. There can be no assurance that our operations will at all times comply with all applicable international requirements, and regulatory enforcement action in any jurisdiction could restrict our activities and adversely affect our global operations and results of operations.

Planned applications involving tokenized financial assets may require exchange, alternative trading system, or broker-dealer registration that we do not currently hold, and the absence of such registration could prevent these applications from launching.

Our long-term strategy includes the development of application layer products intended to enable the issuance, transfer, and settlement of tokenized representations of financial instruments, including equities, fixed income instruments, commodities, and derivative products. Depending on how these applications are structured and how they function, they may be subject to regulation as securities exchanges, alternative trading systems (platforms that match buyers and sellers of securities outside of a traditional exchange), or broker-dealers under the Exchange Act. None of these registrations are currently held by us or any of our affiliates in connection with Ault Blockchain activities. Obtaining these registrations, if required, would be a lengthy, cumbersome and uncertain process, and there can be no assurance that the required registrations would be granted. If planned applications cannot be launched without registrations that we are unable to obtain, those applications may need to be restructured, limited in scope or abandoned entirely. The failure to launch planned tokenized asset applications would limit the long-term utility and commercial potential of the Ault Blockchain and could materially and adversely affect our business, results of operations and financial condition.

The Ault Blockchain is a public network on which any developer may deploy applications without approval, and harmful or non-compliant applications could expose the network and our company to regulatory scrutiny and reputational harm.

Because the Ault Blockchain is a permissionless network at the application layer, for which any developer anywhere in the world can deploy software programs on it without our knowledge or approval, we have no ability to prevent applications that facilitate illegal activity, operate outside applicable legal frameworks, or otherwise expose the network to harm. Applications built by third parties on the Ault Blockchain could include unlicensed financial services, tools for evading sanctions or money laundering requirements, fraudulent investment schemes, or other harmful products. While we do not operate or endorse third-party applications, regulators may nonetheless scrutinize the network or take enforcement action based on how the network is being used, regardless of our lack of involvement. Reputational damage arising from harmful third-party applications could undermine institutional confidence in the Ault Blockchain, harm relationships with financial institutions and compliance-sensitive partners, and adversely affect demand for Node Licenses. There can be no assurance that harmful applications will not be deployed on the network, and any regulatory or reputational harm arising from such applications could materially and adversely affect our business, results of operations and financial condition.

The accounting and tax treatment of AULT Token distributions received by affiliated entities is uncertain, and adverse determinations could result in unexpected financial and tax liabilities.

Ault Capital will receive AULT Token distributions through its 500,000 Project Node Licenses, and Sentinum and other affiliated entities may receive distributions through any Community Node Licenses they hold. The appropriate accounting treatment for these distributions, including whether and when they should be recognized as income, at what value, and how they should be classified, has not been definitively established under generally accepted accounting principles for token distributions of this type. The Internal Revenue Service has not issued comprehensive guidance covering all aspects of the federal income tax treatment of token emissions received as compensation for services performed on a blockchain network. The timing of income recognition, the character of income, the basis of received tokens for purposes of calculating future gains or losses, and the deductibility of related operating expenses are all subject to interpretive uncertainty. Adverse accounting or tax determinations, whether by our auditors, the IRS, or other tax authorities could result in unexpected tax liabilities, required restatements of previously reported financial results, or changes in how the economics of node operations are reported that could affect investor perceptions of the business. Tax laws and regulations applicable to digital assets are evolving rapidly, and future changes could be applied in ways that create additional liabilities. Investors should be aware that the financial reporting treatment of these items remains subject to change. In addition to accounting uncertainty, the IRS has not issued comprehensive guidance on the federal income tax treatment of all aspects of digital token distributions received as compensation for services performed on a blockchain network. The timing of income recognition, the fair market value at which distributions must be recognized, the character of that income for tax purposes, and the tax basis of tokens received for purposes of calculating future gains or losses are all subject to interpretive uncertainty. For unaffiliated Node License purchasers, similar uncertainties apply and could affect the after-tax economics of license ownership in ways that reduce its attractiveness. Tax laws applicable to digital assets are evolving rapidly in the United States and internationally, and future changes, including changes applied retroactively, could create liabilities that were not anticipated at the time transactions were entered into. Adverse tax or accounting determinations could result in unexpected liabilities, required restatements of previously reported financial results, and could adversely affect our financial condition.

We may be subject to regulatory enforcement proceedings, class action litigation from Node License purchasers, or other legal proceedings that could result in material costs, penalties, and operational disruption.

The novelty of the Ault Blockchain’s business model, the regulatory uncertainty surrounding digital tokens and node license programs, and the involvement of a publicly traded parent company create multiple potential sources of litigation and enforcement exposure. We may face regulatory enforcement actions from the SEC, CFTC, FTC, CFPB, FinCEN, OFAC and state as well as foreign regulators in connection with any aspect of our blockchain activities. We may also face private litigation, including potential class action claims brought by Node License purchasers who allege that the licenses constitute unregistered securities, that our disclosures were misleading, or that changes made to the governing Constitution during the pre-launch period were adverse to their interests. Litigation and regulatory proceedings are costly, time-consuming and distracting to management regardless of their ultimate outcome. An adverse judgment or settlement in any material proceeding could result in significant monetary liability, require operational changes, or result in injunctive relief that restricts our ability to conduct our Ault Blockchain business. There can be no assurance that we will not be subject to material legal proceedings in connection with our Ault Blockchain operations, and the costs and outcomes of any such proceedings could materially and adversely affect our business, results of operations and financial condition.

Participants who lose access to their Node Licenses or earned tokens due to the loss of their private keys may bring claims against us despite the fact that we have no custody of or access to those assets.

Access to and control of a Node License and any AULT Tokens associated with it is secured entirely by the participant’s own private cryptographic key, which is a unique secret code stored in the participant’s own digital wallet software or hardware. We do not hold, store, or have access to any participant’s private key. We cannot restore access to a Node License or to AULT Tokens if a participant loses, forgets or inadvertently destroys their private key. Loss of a private key is permanent and irreversible; there is no central authority that can recover access or reverse the loss. Nevertheless, participants who lose their private keys and thereby permanently lose access to their Node Licenses and any earned token balances may bring legal claims against us alleging that we bear responsibility for the loss, that our disclosures regarding key management risk were inadequate, or that we should have implemented a recovery mechanism. These claims may be brought regardless of the fact that we had no custody of or control over the assets in question and regardless of any disclosures we have made regarding the nature of private key responsibility. Defending such claims is costly even when they are ultimately unsuccessful. The arbitration provision in the Constitution may limit the forum in which such claims can be brought but may not be enforceable in all circumstances. There can be no assurance that we will not face material claims arising from participants’ private key losses, and the costs of defending or resolving such claims could adversely affect our business, results of operations and financial condition.

The governing Constitution limits member claims against us and requires binding arbitration, but these provisions may not be enforceable in all jurisdictions and may not fully protect us from litigation.

The Ault DAO Constitution includes provisions intended to limit our exposure to claims from Ault DAO members, including a provision under which members acknowledge limitations on their ability to bring certain claims against us arising from their Ault DAO membership, and a mandatory arbitration clause requiring that disputes be resolved through binding arbitration administered by the American Arbitration Association, located in New York City, under Wyoming law. Courts in certain jurisdictions have declined to enforce mandatory arbitration clauses in the context of securities claims or consumer protection disputes, and there can be no assurance that these provisions will be enforceable in all circumstances or in all jurisdictions where node holders are located. If a court were to decline to enforce the arbitration clause, we could face class action litigation in court rather than individual arbitration proceedings, substantially increasing the potential cost and complexity of resolving disputes with node holders. Additionally, Ault DAO members may themselves face unexpected legal obligations, including claims by third parties that they have participated in the governance of an entity that caused them harm. The enforceability of the Constitution’s protective provisions is uncertain, and investors should not assume that they provide complete protection against litigation arising from the Ault Blockchain’s operations.

Technology Risks

Protocol and smart contract vulnerabilities; the software underlying the Ault Blockchain, may contain bugs or security flaws that could be exploited to cause permanent, unrecoverable harm to the network and its participants.

The Ault Blockchain network operates through software code, including the core protocol software built on the Cosmos SDK framework and smart contracts deployed on the network. Smart contracts are self-executing software programs stored on a blockchain that automatically carry out defined operations when specified conditions are met. A defining characteristic of blockchain-based systems is that once software is deployed, it is extremely difficult or impossible to correct errors without deploying updated code, which itself introduces new risks during the transition. Bugs, design flaws, or security vulnerabilities in the protocol code or in smart contracts deployed on the network could be discovered and exploited by malicious actors to steal digital assets, generate fraudulent outputs, manipulate governance processes, or disrupt network operations entirely. Security audits of the protocol code, while an important precaution, cannot guarantee the absence of all vulnerabilities. Exploits of this type have resulted in the permanent loss of substantial sums at other blockchain projects. Because losses of digital assets at the protocol level are generally permanent and unrecoverable, and because we do not currently hold insurance covering losses of this kind, a successful exploitation could result in material losses to participants and to affiliated entities holding AULT Tokens, with no mechanism for recovery. Such an event could permanently and irreparably damage confidence in the Ault Blockchain and could materially and adversely affect our business, results of operations and financial condition.

Theft or compromise of the private keys controlling affiliated entities’ AULT Token holdings could result in the permanent loss of significant digital assets, with no ability to recover them.

The AULT tokens held by Ault Capital through its Project Node Licenses, and by Sentinum or other affiliated entities through any Community Node holdings or validator staking activity, are controlled by private cryptographic keys. A private key is a unique secret code that provides exclusive access and control over the digital assets associated with a blockchain address. If a private key is lost, stolen, destroyed, or compromised through a cybersecurity attack, the digital assets associated with it may be permanently and irrecoverably lost. Unlike assets held in traditional financial institutions, there is no central authority that can freeze accounts, reverse unauthorized transactions, or restore access to lost keys on a blockchain network. We and our affiliates store and process sensitive operational information and may hold significant quantities of AULT Tokens and other digital assets that are targets for theft through phishing attacks, insider threats, malware, and other intrusion methods. Cybersecurity incidents affecting blockchain businesses and digital asset holders are frequent and have resulted in significant losses at well-resourced organizations. There can be no assurance that we and our affiliates will maintain security practices sufficient to prevent all incidents, and any compromise of private keys controlling material digital asset holdings could result in significant permanent financial losses to us.

Block production on the Ault Blockchain is concentrated among the top 100 validators, and the compromise or coordination of a significant portion of that group could disrupt or manipulate the network.

All new blocks on the Ault Blockchain are produced by validators, which are participants who commit AULT Tokens as economic collateral and are responsible for verifying and recording transactions. Only the top 100 participants ranked by the quantity of tokens they have staked are eligible to serve as validators at any given time. This concentration means that the security of the entire network depends on the honest and independent behavior of a relatively small group. If a significant number of validators were compromised, experienced simultaneous technical failures, or coordinated with one another to behave dishonestly, they could potentially censor transactions by refusing to include them in blocks, produce conflicting versions of the blockchain in an attempt to reverse prior transactions, or disrupt network operations in ways that undermine participant confidence. The economic incentive created by the risk of slashing, which is the automatic protocol-enforced reduction of staked tokens for misbehavior, is designed to discourage dishonest validator conduct, but it may not be sufficient to deter well-resourced adversaries for whom the potential gain from an attack exceeds the value of their staked collateral. As the network grows and the validator set potentially diversifies, this risk may decrease, but there can be no assurance of this outcome. A successful attack on the validator set could disrupt network operations and materially and adversely affect the Ault Blockchain and our business.

The verifiable random function system that node operators depend on for their participation in the network could produce compromised outputs if a sufficient number of nodes are coordinated or manipulated, undermining network functions that rely on randomness.

The primary service performed by Licensed Mining Node operators at launch is contributing to the network’s randomness beacon through a process called a Verifiable Random Function, or VRF. A VRF is a cryptographic method for generating outputs that can be verified as random and tamper-resistant. Each epoch, approximately every one minute, randomly selected nodes submit a VRF output gated by a lightweight computational task. The outputs of multiple nodes are combined to produce the randomness beacon that the network relies on for governance and application processes requiring unpredictable values. The security of this system depends on the cryptographic soundness of the VRF implementation, the independence of participating nodes, and the integrity of the selection and aggregation process. If the VRF implementation contains a flaw, if a sufficient number of node operators were compromised and coordinated to submit manipulated outputs, or if the selection mechanism could be predicted or gamed, the randomness beacon could be made predictable or manipulable by adversaries. Applications and governance processes that rely on the randomness beacon for fair and unpredictable outcomes could be exploited if the beacon is compromised. A failure of the VRF mechanism could undermine the integrity of core network functions and materially and adversely affect the utility, security, and adoption of the Ault Blockchain.

Governance-approved changes to the network’s software may introduce unforeseen technical problems, and disagreements over upgrades could result in the network splitting into additional, incompatible versions.

The Ault Blockchain protocol is designed to evolve over time through governance-approved upgrades proposed and voted on by Ault DAO members. Protocol upgrades, even those that are technically well-designed and properly reviewed, can introduce unforeseen interactions with existing software deployed on the network, resulting in bugs or security issues that did not exist in the prior version. Additionally, if a proposed upgrade is highly contentious within the governance community, a portion of validators and node operators may refuse to adopt it, resulting in a chain split: a situation in which a new, incompatible version of the network is created and then operates simultaneously and separately, each processing its own transactions and maintaining its own state. A chain split (called a “fork”) divides the network’s participants, liquidity, applications, and economic resources between the two versions and creates significant uncertainty for everyone who depends on the network. Both the technical risk of poorly executed upgrades and the governance risk of contentious ones are inherent to the operation of a decentralized network governed by distributed voting. There can be no assurance that protocol upgrades will be executed without error or that the governance community will reach consensus on major changes without disruption, and any material upgrade failure or chain split could adversely affect the stability and utility of the Ault Blockchain.

The Ault Blockchain is built on open-source components that we do not own or fully control, and vulnerabilities or changes introduced by third-party maintainers could affect the security and stability of the network.

The Ault Blockchain is built on open-source software frameworks, principally the Cosmos SDK, along with other open-source libraries and components. Open-source software is developed and maintained by distributed communities of contributors who are not employed by or accountable to us. These contributors may introduce bugs or security vulnerabilities, make changes that are incompatible with our specific implementation, or cease actively maintaining components that the network depends on. We may not have advance notice of material changes to open-source components, and third-party maintainers may modify or discontinue components in ways that require costly or time-consuming adaptation. Security vulnerabilities in widely used open-source components have historically resulted in significant losses across multiple blockchain projects simultaneously. Because the Cosmos SDK and the EVM are used by many blockchain networks, a vulnerability discovered in either could affect the Ault Blockchain alongside numerous other networks, potentially before a patch is available. There can be no assurance that open-source components on which the Ault Blockchain depends will remain free of undiscovered vulnerabilities or that they will continue to be maintained in ways that are compatible with the network’s requirements, and any such issue could materially adversely affect the security and stability of the Ault Blockchain.

The Ault Blockchain’s planned cross-chain connectivity relies on LayerZero, an external cross-chain messaging protocol that we do not own or control, and any failure, vulnerability, or adverse change affecting LayerZero could disrupt the network’s cross-chain functionality.

The Ault Blockchain’s planned cross-chain connectivity, which would allow participants to move supported digital assets between the Ault Blockchain and other networks, is intended to be implemented through integration with LayerZero, an established external protocol that enables communication and asset transfers between different blockchain networks. LayerZero is developed and operated by a third party and is not owned, controlled, or operated by our company or any of our affiliates. The security and reliability of cross-chain functionality on the Ault Blockchain therefore depends in significant part on the security, continued operation, and governance decisions of LayerZero. Cross-chain messaging and asset transfer protocols have been among the most frequently targeted systems in the digital asset ecosystem, with multiple significant exploits resulting in substantial losses at various blockchain projects. A security incident affecting LayerZero could result in the loss of assets being transferred across chains involving the Ault Blockchain. Changes to LayerZero’s protocol, governance, or commercial terms could affect how the integration functions or whether it remains available. We cannot control the development direction, security practices, or business decisions of LayerZero. There can be no assurance that the LayerZero integration will operate securely or remain available as planned, and any failure or disruption affecting LayerZero could materially and adversely affect the Ault Blockchain’s cross-chain capabilities and our business, results of operations and financial condition.

The Ault Blockchain may not perform as designed under real-world conditions, and performance failures could drive participants and developers to competing networks.

The Ault Blockchain is designed to confirm transactions in approximately one second and to support the performance demands of financial market applications. These performance characteristics have been designed and tested in controlled environments, but a blockchain network’s actual performance under real-world conditions, including variable transaction volumes, diverse software deployed by third parties, and the behavior of a geographically distributed set of validators and nodes, may differ materially from its designed specifications. Network congestion, software conflicts, hardware limitations of validator operators, or unforeseen interactions between the protocol and applications deployed on it could result in slower transaction confirmation times, higher transaction fees, or reduced reliability at moments of peak demand. For a network positioning itself to serve financial market participants who require consistent and reliable performance, failures of this kind could be particularly damaging to adoption and reputation. Participants and developers who experience performance problems may migrate to established competing networks that have longer track records of reliable operation. There can be no assurance that the Ault Blockchain will perform to its designed specifications under all real-world conditions, and material performance failures could adversely affect adoption, participant retention, and our business, results of operations and financial condition.

The blockchain technology underlying the Ault Blockchain is evolving rapidly, and the network’s current architecture could become technically outdated relative to newer networks, reducing its competitiveness.

The blockchain technology sector is characterized by rapid and continuous innovation. New consensus mechanisms, execution environments, programming languages, privacy techniques, and scalability solutions are being developed and deployed at a pace that makes it difficult to predict what the competitive technical landscape will look like over the multi-year horizon required for the Ault Blockchain to reach commercial maturity. The Cosmos SDK and the EVM, on which the Ault Blockchain is built, are established and well-supported technologies today, but they may be superseded by more capable or efficient alternatives. If competing networks adopt superior technology that enables meaningfully better performance, lower costs, stronger security, or new capabilities that the Ault Blockchain cannot easily replicate, the Ault Blockchain’s relative technical attractiveness could diminish. Adapting to significant changes in the underlying technology landscape would require substantial development effort, governance approval, and potentially disruptive protocol upgrades. There can be no assurance that the Ault Blockchain will keep pace with technological developments in the broader blockchain ecosystem, and technical obsolescence relative to competing networks could adversely affect adoption and the long-term commercial viability of the business.

Risks Related to Our Status as a Holding Company

Our inability to successfully integrate new acquisitions could adversely affect our combined business; our operations are widely disbursed.

Our growth strategy through acquisitions is fraught with risk. Since 2017, we have acquired the Michigan Facility, a majority interest in TurnOnGreen, the four hotel properties in and around Madison, Wisconsin, substantially all the assets and certain specified liabilities of Circle 8 and a position in ROI that we consolidate as a VIE. We also acquired all or majority interests in other companies and a certain real property located in St. Petersburg, Florida, all of which we either sold off or are currently no longer consolidated as a result of bankruptcy. Our strategy and business plan are dependent on our ability to successfully integrate acquisitions. In addition, while we are based in Las Vegas, NV, our finance and legal departments are located elsewhere in the U.S., and certain subsidiary’s operations are located across the U.S. and internationally. These distant locations and others that we may become involved with in the future will stretch our resources and management time. Further, failure to quickly and adequately integrate all of these operations and personnel could adversely affect our combined business and our ability to achieve our objectives and strategy. No assurance can be given that we will realize synergies in the areas we currently operate.

If we make any additional acquisitions, they may disrupt or have a negative impact on our business.

We have plans to eventually make additional acquisitions. Whenever we make acquisitions, we could have difficulty integrating the acquired companies’ personnel and operations with our own. In addition, the key personnel of the acquired business may not be willing to work for us. We cannot predict the effect expansion may have on our core business. Regardless of whether we are successful in making an acquisition, the negotiations could disrupt our ongoing business, distract our management and employees and increase our expenses. In addition to the risks described above, acquisitions are accompanied by a number of inherent risks, including, without limitation, the following:

If senior management and/or management of future acquired companies terminate their employment prior to our completion of integration;

difficulty of integrating acquired products, services or operations;

integration of new employees and management into our culture while maintaining focus on operating efficiently and providing consistent, high-quality goods and services;

potential disruption of the ongoing businesses and distraction of our management and the management of acquired companies;

unanticipated issues with transferring customer relationships;

complexity associated with managing our combined company;

difficulty of incorporating acquired rights or products into our existing business;

difficulties in disposing of the excess or idle facilities of an acquired company or business and expenses in maintaining such facilities;

difficulties in maintaining uniform standards, controls, procedures and policies;

potential impairment of relationships with employees and customers as a result of any integration of new management personnel;

potential inability or failure to achieve additional sales and enhance our customer base through cross-marketing of the products to new and existing customers;

effect of any government regulations which relate to the business acquired; and

potential unknown liabilities associated with acquired businesses or product lines, or the need to spend significant amounts to retool, reposition or modify the marketing and sales of acquired products or the defense of any litigation, whether or not successful, resulting from actions of the acquired company prior to our acquisition.

Our business could be severely impaired if and to the extent that we are unable to succeed in addressing any of these risks or other problems encountered in connection with these acquisitions, many of which cannot be presently identified, these risks and problems could disrupt our ongoing business, distract our management and employees, increase our expenses and adversely affect our results of operations.

We may not be able to successfully identify suitable acquisition targets and complete acquisitions to meet our growth strategy, and even if we are able to do so, we may not realize the full anticipated benefits of such acquisitions, and our business, financial conditions and results of operations may suffer.

Increasing revenues through acquisitions is one of the key components of our growth strategy. Identifying suitable acquisition candidates can be difficult, time-consuming and costly, and we may not be able to identify suitable candidates or complete acquisitions in a timely manner, on a cost-effective basis or at all.

We will have to pay cash, incur debt, or issue equity as consideration in any future acquisitions, each of which could adversely affect our financial condition or the market price of our Class A common stock. The sale of equity or issuance of equity-linked debt to finance any future acquisitions could result in dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and could limit our flexibility in managing our business due to covenants or other restrictions contained in debt instruments.

Further, we may not be able to realize the anticipated benefits of completed acquisitions. Some acquisition targets may not have a developed business or are experiencing inefficiencies and incur losses. Additionally, small defense contractors which we consider suitable acquisition targets may be uniquely dependent on their prior owners and the loss of such owners’ services following the completion of acquisitions may adversely affect their business. Therefore, we may lose our investment in the event that the acquired businesses do not develop as planned, we cannot retain key employees or that we are unable to achieve the anticipated cost efficiencies or reduction of losses.

Additionally, our acquisitions have previously required, and any similar future transactions may also require, significant management efforts and expenditures. Regardless of whether we are successful in making an acquisition, the negotiations could disrupt our ongoing business, divert the attention of our management and key employees and increase our expenses.

Because we face significant competition for acquisition and business opportunities, including from numerous companies with a business plan similar to ours, it may be difficult for us to fully execute our business strategy. Additionally, our subsidiaries also operate in highly competitive industries, limiting their ability to gain or maintain their positions in their respective industries.

We expect to encounter intense competition for acquisition and business opportunities from both strategic investors and other entities having a business objective similar to ours, such as private investors (which may be individuals or investment partnerships), blank check companies including special purpose acquisition companies, and other entities, domestic and international, competing for the type of businesses that we may acquire. Many of these competitors possess greater technical, human and other resources, or more local industry knowledge, or greater access to capital, than we do, and our financial resources may be relatively limited when contrasted with those of many of these competitors. These factors may place us at a competitive disadvantage in successfully completing future acquisitions and investments.

In addition, while we believe that there are numerous target businesses that we could potentially acquire or invest in, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. We may need to obtain additional financing in order to consummate future acquisitions and investment opportunities and cannot assure you that any additional financing will be available to us on acceptable terms, or at all, or that the terms of our existing financing arrangements will not limit our ability to do so. This inherent competitive limitation gives others an advantage in pursuing acquisition and investment opportunities.

Furthermore, our subsidiaries also face competition from both traditional and new market entrants that may adversely affect them as well, as discussed elsewhere in these risk factors.

Future acquisitions or business opportunities could involve unknown risks that could harm our business and adversely affect our financial condition and results of operations .

We are a diversified holding company that owns interests in a number of different businesses across several industries. We have in the past, and intend in the future, to acquire businesses or make investments, directly or indirectly through our subsidiaries, that involve unknown risks, some of which will be particular to the industry in which the investment or acquisition targets operate, including risks in industries with which we are not familiar or experienced. There can be no assurance our due diligence investigations will identify every matter that could have a material adverse effect on us or the entities that we may acquire. We may be unable to adequately address the financial, legal and operational risks raised by such investments or acquisitions, especially if we are unfamiliar with the relevant industry, which can lead to significant losses on material investments. The realization of any unknown risks could expose us to unanticipated costs and liabilities and prevent or limit us from realizing the projected benefits of the investments or acquisitions, which could adversely affect our financial condition and liquidity. In addition, our financial condition, results of operations and the ability to service our debt may be adversely impacted depending on the specific risks applicable to any business we invest in or acquire and our ability to address those risks.

We face certain risks associated with the acquisition or disposition of businesses and lack of control over certain of our investments.

In pursuing our corporate strategy, we may acquire, dispose of or exit businesses or reorganize existing investments. The success of this strategy is dependent upon our ability to identify appropriate opportunities, negotiate transactions on favorable terms and ultimately complete such transactions.

In the course of our acquisitions, we may not acquire 100% ownership of certain of our operating subsidiaries or we may face delays in completing certain acquisitions, including in acquiring full ownership of certain of our operating companies. Once we complete acquisitions or reorganizations there can be no assurance that we will realize the anticipated benefits of any transaction, including revenue growth, operational efficiencies or expected synergies. If we fail to recognize some or all of the strategic benefits and synergies expected from a transaction, goodwill and intangible assets may be impaired in future periods. The negotiations associated with the acquisition and disposition of businesses could also disrupt our ongoing business, distract management and employees or increase our expenses.

In addition, we may not be able to integrate acquisitions successfully and we could incur or assume unknown or unanticipated liabilities or contingencies, which may impact our results of operations. If we dispose of or otherwise exit certain businesses, there can be no assurance that we will not incur certain disposition related charges, or that we will be able to reduce overhead related to the divested assets.

In the ordinary course of our business, we evaluate the potential disposition of assets and businesses that may no longer help us meet our objectives or that no longer fit with our broader strategy. When we decide to sell assets or a business, we may encounter difficulty in finding buyers or alternative exit strategies on acceptable terms in a timely manner, which could delay the accomplishment of our strategic objectives, or we may dispose of a business at a price or on terms which are less than we had anticipated. In addition, there is a risk that we sell a business whose subsequent performance exceeds our expectations, in which case our decision would have potentially sacrificed enterprise value.

Our development stage companies may never produce revenues or income.

We have made investments in and own stakes, either majority or minority, in a certain development stage companies. Each of these companies is at an early stage of development and is subject to all business risks associated with a new enterprise, including constraints on their financial and personnel resources, lack of established credit, the need to establish meaningful and beneficial vendor and customer relationships and uncertainties regarding product development and future revenues. We anticipate that many of these companies will continue to incur substantial additional operating losses for at least the next several years and expect their losses to increase as research and development efforts expand. There can be no assurance as to when or whether any of these companies will be able to develop significant sources of revenue or that any of their respective operations will become profitable, even if any of them is able to commercialize any products. As a result, we may not realize any returns on our investments in these companies for a significant period of time, if at all, which could adversely affect our business, results of operations, financial condition or liquidity.

Divestitures and contingent liabilities from divested businesses could adversely affect our business and financial results .

We continually evaluate the performance and strategic fit of all of our businesses and may sell businesses or product lines. Divestitures involve risks, including difficulties in the separation of operations, services, products and personnel, the diversion of management’s attention from other business concerns, the disruption of our business, the potential loss of key employees and the retention of uncertain contingent liabilities, including environmental liabilities, related to the divested business. When we decide to sell assets or a business, we may encounter difficulty in finding buyers or alternative exit strategies on acceptable terms in a timely manner, which could delay the achievement of our strategic objectives. We may also dispose of a business at a price or on terms that are less desirable than we had anticipated, which could result in significant asset impairment charges, including those related to goodwill and other intangible assets, that could have a material adverse effect on our financial condition and results of operations. In addition, we may experience greater dis-synergies than expected, the impact of the divestiture on our revenue growth may be larger than projected, and some divestitures may be dilutive to earnings. There can be no assurance whether the strategic benefits and expected financial impact of the divestiture will be achieved. We cannot assure you that we will be successful in managing these or any other significant risks that we encounter in divesting a business or product line, and any divestiture we undertake could materially and adversely affect our business, financial condition, results of operations and cash flows.

Risks Related to Related Party Transactions

There may be conflicts of interest between our company and certain of our related parties and their respective directors and officers which might not be resolved in our favor. More importantly, there may be conflicts between certain of our related parties and their respective directors and officers which might not be resolved in our favor. These risks are set forth below appurtenant to the relevant related party.

Ault & Company

Our relationship with Ault & Company may enhance the difficulty inherent in obtaining financing for us as well as expose us to certain conflicts of interest.

As of April 12, 2026, Ault & Company, of which Milton C. (Todd) Ault, III is the chief executive officer, beneficially owned 376,775,861 shares of our common stock, consisting of (i) 2,500,005 shares of Class A Common Stock owned, (ii) 14,679,698 shares of Class B Common Stock that are convertible into the same number of shares of Class A Common Stock and carry the voting power of 146,796,980 shares of Class A Common Stock, (iii) 347,222,219 shares of Class A Common Stock issuable upon conversion of 50,000 shares of Series C Convertible Preferred Stock that carry the voting power of 464,576 shares of Class A Common Stock, (iv) 6,666,666 shares of Class A Common Stock issuable upon conversion of 960 shares of Series G Convertible Preferred Stock that carry the voting power of 153,748 shares of Class A Common Stock, (v) 5,068,221 shares of Class A Common Stock issuable upon conversion of 4,000 shares of Series H Convertible Preferred Stock that carry the voting power of 5,068,221 shares of Class A Common Stock and (vi) 639,052 shares of Class A Common Stock underlying presently exercisable warrants. As of April 12, 2026, Ault & Company beneficially owns approximately 47.72% of our common stock.

In addition, pursuant to the (i) December 2024 SPA, Ault & Company has the right to purchase up to an additional $49.0 million of Series G Preferred Stock and Series G Warrants and (ii) July 2025 SPA, Ault & Company has the right to purchase up to an additional $96.0 million of Series H Preferred Stock, which would further increase its beneficial ownership. Given the close relationship between Ault & Company, on the one hand, and our company, on the other, it is not inconceivable that we could further amend the December 2024 SPA or July 2025 SPA or enter into additional securities purchase agreements with Ault & Company.

Although we have relied on Ault & Company to finance us in the past, we cannot assure you that Ault & Company will assist us in the future. We would far prefer to rely on Ault & Company’s assistance compared to other sources of financing as the terms they provide us are in general more favorable to us than we could obtain elsewhere. However, Messrs. Ault, Horne and Nisser could face a conflict of interest in that they serve on the board of directors of each of Ault & Company and our company. If they determine that an investment in our company is not in Ault & Company’s best interest, we could be forced to seek financing from other sources that would not necessarily be likely to provide us with equally favorable terms.

Other conflicts of interest between us, on the one hand, and Ault & Company, on the other hand, may arise relating to commercial or strategic opportunities or initiatives. Mr. Ault, as the controlling stockholder of Ault & Company, may not resolve such conflicts in our favor. For example, we cannot assure you that Ault & Company would not pursue opportunities to provide financing to other entities whether or not it currently has a relationship with such other entities. Furthermore, our ability to explore alternative sources of financing other than Ault & Company may be constrained due to Mr. Ault’s vision for us and he may not wish for us to receive any financing at all other than from entities that he controls.

ROI

Our relationship with ROI may expose us to certain conflicts of interest.

As of April 14, 2026, we beneficially own 2,085,765 shares of ROI’s common stock, consisting of (i) 1,001,108 shares held by Ault Lending, (ii) 421,290 shares issuable upon the conversion of outstanding shares of Series A Convertible Redeemable Preferred Stock (“ROI Series A Preferred”) we own, and (iii) 663,367 shares issuable upon the conversion of outstanding shares of ROI Series D Preferred we own. While as of April 14, 2026, we beneficially owned approximately 6.3% of ROI’s outstanding common stock, we own shares of Series B Convertible Preferred Stock (“ROI Series B Preferred”) and additional shares of ROI Series D Preferred that cannot be converted unless we first obtain shareholder approval, in addition to beneficial ownership blockers and other restrictions. If shareholder approval was obtained and there were no restrictions on the conversion of the securities we own, as of April 14, 2026, then we would beneficially own 85.3% of ROI’s common stock.

Messrs. Ault and Nisser could face a conflict of interest in that they serve on the board of directors of each of ROI and our company.

Risks Related to RiskOn International and BitNile.com

Risks Related to RiskOn International and BitNile.com - General

BNC has no operating history in the predictions market industry, and its prior sweepstakes gaming operations are not indicative of future performance in its new business.

BNC recently discontinued its prior sweepstakes gaming operations and is now developing the Platform as a predictions market. A predictions market is an online marketplace in which users take positions on the probable outcome of future real-world events and receive settlements determined by verified actual results. BNC has no operating history in this business, and its experience developing and operating a sweepstakes gaming platform is not directly transferable to the regulatory, technical, and commercial requirements of operating a predictions market. There can be no assurance that BNC will successfully complete the development of the Platform, obtain the regulatory authorizations required to operate, or generate revenue sufficient to sustain its operations. The absence of an operating history in this business makes it virtually impossible to evaluate BNC’s prospects and increases the risk that BNC will not achieve its objectives. If BNC is unable to successfully execute its business plan, it would have a material adverse effect on its business, results of operations and financial condition.

The Platform is currently in alpha testing and is not yet commercially available, and BNC may face significant delays or obstacles in completing development and launching to a broader user base.

The Platform is currently in alpha testing, a stage of development in which a limited version of the software is made available to a restricted number of users in permitted jurisdictions for the purpose of identifying technical issues and validating core functionality. The Platform has not been made commercially available and is not yet generating revenue, and may never do so. The completion of development and launch of the Platform to a broader user base is subject to a number of risks, technical obstacles, software defects, unanticipated costs, delays in obtaining regulatory authorizations, and difficulty attracting sufficient users and market liquidity. If BNC experiences material delays in completing development, encounters technical problems that cannot be resolved on a timely basis, or is unable to satisfy regulatory requirements prior to launch, BNC’s business, results of operations and financial condition would be materially and adversely affected.

The Platform’s availability is restricted to permitted jurisdictions, which significantly limits BNC’s addressable market and may constrain revenue growth.

Due to the complex and evolving regulatory environment applicable to predictions markets in the United States and internationally, the Platform will be available only in jurisdictions where such operations are permitted under applicable national, federal and state law. A substantial portion of the United States population may reside in jurisdictions where BNC determines it cannot operate the Platform without obtaining additional regulatory authorizations that are not yet in place. This geographic restriction significantly limits the number of users BNC can serve and the revenue it can generate. Additionally, jurisdictions that currently permit BNC’s operations may enact new laws or issue new regulations, or may reinterpret existing laws, in ways that restrict or prohibit BNC’s activities, requiring BNC to suspend service to users in those jurisdictions. Any material reduction in the jurisdictions in which the Platform is available could have a material adverse effect on BNC’s business, results of operations and financial condition.

Predictions markets require sufficient two-sided market liquidity to function effectively, and BNC may be unable to attract and maintain the user base necessary to support a viable marketplace.

A predictions market functions by matching users who hold opposing views on the outcome of a given event, such that one user’s position is offset by another’s. For the Platform to provide a functional trading experience, BNC must attract and retain a sufficiently large and active user base to ensure that users can find counterparties for their positions across a meaningful range of available markets. If BNC is unable to build sufficient market depth and liquidity, users may find the Platform less useful than competing platforms, leading to lower engagement and higher rates of user attrition. Thin liquidity in individual markets may also result in wide bid-ask spreads, which refers to the gap between the price at which a user can take a position and the price at which the opposing position is available, reducing the value of the Platform to users. There can be no assurance that BNC will attract the volume of users necessary to sustain a liquid marketplace, and the failure to do so could materially and adversely affect BNC’s business and prospects.

BNC faces competition from well-capitalized and, in certain cases, already-regulated predictions market platforms, and the competitive landscape is expanding rapidly.

The predictions market industry includes competitors that have already established user bases, obtained formal regulatory authorizations, and developed brand recognition. Kalshi, Inc. operates as a federally regulated designated contract market authorized by the CFTC, the federal agency that oversees commodity and derivatives markets in the United States, giving it the ability to serve domestic retail users under an established regulatory framework. Polymarket, which has received an amended order of designation from the CFTC and has begun a phased rollout to United States users, has established significant brand recognition internationally and processes substantial trading volume. Beyond an established platform like Polymarket, the predictions market space is experiencing a rapid influx of well-capitalized new entrants. Robinhood Markets, Inc. and Coinbase Global, Inc. have each announced plans to offer predictions market products. FanDuel and DraftKings, which operate large, established domestic sports betting platforms with existing user bases, regulatory licenses, and significant marketing resources, have each signaled their respective intent to enter into the predictions market space. BNC has not yet launched commercially, has not obtained comparable regulatory authorization to these entities, and has no established brand recognition in the predictions market industry. There can be no assurance that BNC will be able to compete effectively, if at all, with existing or future competitors, and the failure to do so would have a material adverse effect on BNC’s business, results of operations and financial condition.

BNC’s Platform depends on third-party data providers to supply verified real-world event outcomes for settlement purposes, and disruptions in those services could impair the Platform’s ability to settle markets accurately and on time.

The BitNile.com predictions market platform relies on third-party data providers, sometimes referred to as oracles, to supply verified information about the outcomes of real-world events, such as election results, sporting event scores, or economic data releases. This information is used to determine the settlement of open market positions on the Platform. If a third-party data provider supplies inaccurate, delayed, or incomplete information, or if BNC’s data provider relationships are disrupted for any reason, including technical failures, commercial disputes, or the provider’s cessation of operations, BNC may be unable to settle markets accurately or on time. Settlement errors or delays could result in user complaints, regulatory scrutiny, and reputational harm. BNC may have limited recourse against data providers whose information proves inaccurate, and users who suffer losses as a result of settlement errors may seek recourse against BNC and our company directly. Any of the foregoing could have a material adverse effect on BNC’s as well as our business, results of operations and financial condition.

BNC’s products and internal systems rely on software and hardware that is highly technical, and any errors, bugs, or vulnerabilities in these systems could adversely affect BNC’s business.

BNC’s Platform and internal systems rely on software and hardware, including systems developed or maintained internally and by third parties, that is highly technical and complex. BNC’s systems are expected to contain errors, bugs, or vulnerabilities, some of which may be difficult to detect and may only be discovered after the Platform has been made available to users. Errors, bugs, vulnerabilities, or design defects in the software and hardware on which BNC relies may lead to a negative user experience, compromised ability of the Platform to perform in a manner consistent with BNC’s terms, delayed product introductions or enhancements, billing or settlement errors, compromised ability to protect user data or BNC’s intellectual property, or reductions in BNC’s ability to provide some or all of its services. Any failures to properly address or mitigate technical limitations in BNC’s systems could result in damage to BNC’s reputation, loss of users, prevention of its ability to generate revenue, regulatory inquiries and litigation, any of which could adversely affect BNC’s business and financial results.

BNC’s ability to grow its user base and generate revenue depends on its ability to attract and retain users in a market where user switching costs are low and competing platforms are readily accessible.

The success of BNC’s business depends substantially on its ability to attract new users and retain existing users on the Platform. Users of online financial and prediction platforms generally face low switching costs, meaning they can move from one platform to another with relative ease if they find a competing offering more attractive, more liquid, or more reliable. BNC has no established brand recognition in the predictions market industry, and it will compete for users against platforms that have already developed user communities, invested in marketing, and established reputations for reliability. If BNC’s Platform does not offer a sufficiently differentiated or superior user experience, if competing platforms offer better market selection or pricing, or if BNC experiences technical disruptions that impair the user experience, BNC may be unable to attract or retain sufficient users to support its business. There can be no assurance that BNC will build a sustainable user base, and the failure to do so could materially and adversely affect BNC’s business, results of operations and financial condition.

BNC’s ability to access payment processing services and maintain banking relationships may be constrained by the regulatory uncertainty surrounding the predictions market industry.

Platforms operating in industries subject to regulatory uncertainty, including the predictions market industry, may face difficulty accessing payment processing services and maintaining banking relationships. Payment processors and financial institutions may decline to serve predictions market platforms, impose restrictive terms, or terminate existing relationships if they determine that the regulatory or reputational risk associated with the industry is unacceptable to them. The loss of one or more payment processing relationships could impair BNC’s ability to accept user deposits, process user withdrawals, or operate the Platform’s financial infrastructure, any of which could significantly disrupt BNC’s business. Similarly, if BNC is unable to maintain adequate banking relationships, its ability to hold and transfer funds associated with user accounts and Platform operations may be materially impaired. There can be no assurance that BNC will be able to establish or maintain the payment processing and banking relationships necessary to operate the Platform, and the failure to do so could have a material adverse effect on BNC’s business, results of operations and financial condition.

Risks Related to Government Regulation and Enforcement Regarding BNC

The predictions market industry is subject to complex and evolving federal and state regulation, and BNC may be required to obtain regulatory authorizations it has not yet obtained before it can operate commercially in certain jurisdictions.

Predictions markets may, depending on their structure and the nature of the contracts offered, be subject to regulation as event contracts under the CEA administered by the CFTC; as gambling or gaming activities under applicable state law; or under a combination of federal and state frameworks. The regulatory requirements applicable to BNC’s Platform are not yet fully settled, and BNC has not yet obtained all regulatory authorizations that may be required to operate the Platform commercially. If BNC is required to obtain a designation as a designated contract market, registration as a swap execution facility, or other regulatory authorization from the CFTC or another federal or state regulator, the process of obtaining such authorization could be lengthy, costly, and uncertain, and there can be no assurance that BNC will be successful in doing so. Operating the Platform without required authorizations could expose BNC to regulatory enforcement action, including civil penalties, disgorgement of revenues, and orders requiring BNC to cease operations. Any of the foregoing would materially and adversely affect BNC’s business, results of operations and financial condition.

The CFTC has broad authority over event contracts, and regulatory action by the CFTC could require BNC to restructure or discontinue certain aspects of its business.

The CFTC, the federal agency that oversees commodity and derivatives markets in the United States, has asserted jurisdiction over certain types of event contracts, which are financial instruments whose value is determined by the outcome of a specific real-world event. If the CFTC determines that contracts offered on the Platform constitute event contracts subject to CFTC oversight, BNC could be required to register with the CFTC, operate under a designated contract market or other regulated structure, or modify or discontinue contracts that the CFTC deems impermissible. The CFTC has broad authority to designate certain contracts as contrary to the public interest and to prohibit their listing or trading. Changes in CFTC policy, new rulemaking, or enforcement actions targeting predictions market platforms could require BNC to make significant changes to its business model or cease offering certain markets entirely. In March 2026, the CFTC issued a staff advisory outlining current regulatory expectations for listing and trading event contracts and published an advance notice of proposed rulemaking signaling its intent to develop a comprehensive regulatory framework for these markets. This rulemaking process, while potentially providing greater regulatory clarity, could impose requirements on BNC that are costly to comply with or that restrict aspects of BNC’s intended operations. Any of the foregoing could materially and adversely affect BNC’s business, results of operations and financial condition.

The question of whether federal regulation of predictions market platforms preempts state gambling and gaming laws is actively contested in courts across multiple jurisdictions, and an adverse outcome could materially restrict BNC’s operations.

A central and unresolved legal question facing the predictions market industry is whether federal regulation of event contracts under the CEA preempts, meaning supersedes, state laws governing gambling and gaming activities. Predictions market platforms that operate under federal regulatory frameworks have argued that their federal designation insulates them from state enforcement. State regulators in numerous jurisdictions have taken the opposing view, asserting that predictions market contracts constitute gambling under state law and that federal regulation does not displace the states’ traditional authority to regulate gambling within their borders. This dispute has produced active litigation in multiple jurisdictions. As of the date of this filing, more than twenty civil lawsuits are pending in federal and state courts addressing this question, and at least one state has pursued criminal charges against a predictions market platform. Courts have issued conflicting rulings, with certain federal courts temporarily blocking state enforcement actions and certain state courts issuing preliminary injunctions against predictions market operators. A bipartisan coalition of attorneys general representing thirty-nine states and the District of Columbia has urged federal courts to uphold state authority to regulate predictions markets. The outcome of this litigation, and any Congressional action in response to it, could determine the jurisdictions in which BNC is able to operate, the regulatory framework under which BNC must operate, and the legal risks to which BNC is exposed. An adverse resolution of this federal-state preemption question could require BNC to obtain state gambling licenses in numerous jurisdictions, restrict BNC’s access to a substantial portion of the domestic user market, or require BNC to cease operations in certain states entirely, any of which could have a material adverse effect on BNC’s business, results of operations and financial condition.

Certain U.S. states may characterize predictions markets as gambling or gaming activities subject to state licensing requirements, and certain states have pursued civil and criminal enforcement actions against predictions market platforms.

In addition to federal regulatory considerations, individual U.S. states have their own laws governing gambling, gaming, and wagering activities. Certain states may independently characterize the contracts offered on the Platform as gambling activities subject to state licensing, registration, or bonding requirements, regardless of whether such contracts are permissible under federal commodity law. The characterization of predictions market contracts as gambling under state law is not a theoretical risk: as of the date of this filing, multiple state attorneys general have filed civil lawsuits seeking to shut down predictions market operations in their respective states, courts in at least two states have issued preliminary injunctions against predictions market platforms, and at least one state has filed criminal charges against a predictions market operator. If BNC’s Platform is characterized as illegal gambling under the law of one or more states, BNC could be subject to civil enforcement actions, injunctions barring BNC from serving users in those states, criminal charges, fines, and reputational harm. Any of the foregoing could materially and adversely affect BNC’s business, results of operations and financial condition, and could require BNC to cease or curtail its intended operations.

Event contracts relating to sports outcomes are subject to heightened regulatory and legal scrutiny and may be subject to state sports betting licensing requirements in addition to federal commodity regulation.

Among the categories of predictions market contracts that have drawn the most significant regulatory and legal scrutiny are contracts whose outcomes are determined by the results of sporting events, including professional and collegiate sports competitions. State regulators and courts have taken the position that sports event contracts offered on predictions market platforms are functionally equivalent to sports wagers subject to state sports betting licensing laws, regardless of the platform’s federal regulatory status. This characterization has been the basis for civil and criminal enforcement actions by state attorneys general, class action lawsuits filed on behalf of users, and legislative proposals in a number of states. To the extent BNC offers contracts whose outcomes are determined by sporting events, BNC may be subject to state sports betting licensing requirements in addition to any applicable federal regulatory requirements. Compliance with state sports betting licensing requirements in all jurisdictions where BNC serves users would require BNC to obtain licenses from state gaming commissions, submit to state regulatory oversight, and comply with state-specific responsible gambling requirements, which could be costly and time-consuming. If BNC is unable or unwilling to obtain required state sports betting licenses, BNC may be required to restrict or discontinue sports event contracts on the Platform in certain or all jurisdictions, which could materially limit the Platform’s market appeal and revenue potential.

BNC is subject to know-your-customer and anti-money laundering compliance obligations that could increase its operating costs and restrict its ability to onboard users.

Platforms that accept user funds and settle financial positions are subject to regulatory requirements designed to prevent money laundering and other illicit financial activity. These requirements, commonly referred to as KYC and AML rules, obligate BNC to verify the identity of its users, monitor transactions for suspicious activity, and in certain cases file reports with relevant regulatory authorities. KYC refers to the process of verifying user identity through the collection and review of identifying information and documents. AML refers to the broader set of policies, procedures, and controls designed to detect and prevent the use of the Platform for illegal financial activity. Compliance with KYC and AML requirements may increase BNC’s operating costs, create friction in the user onboarding process, and result in BNC being unable to serve users who are unwilling or unable to complete the required verification process. Failure to comply with applicable KYC and AML requirements could expose BNC to regulatory enforcement action, fines, and reputational harm, any of which could materially and adversely affect BNC’s business, results of operations and financial condition.

BNC may be subject to consumer protection claims and problem gambling liability as regulators and courts increasingly characterize predictions market activity as a form of gambling with associated public health consequences.

State regulators, courts, and public health advocacy organizations have increasingly characterized predictions market platforms as gambling operations that carry the same consumer protection and problem gambling risks associated with traditional sports betting. The National Council on Problem Gambling has formally called on predictions market platforms to adopt responsible gambling measures on the basis that trading on event outcomes poses the same consumer risks as other forms of betting. This characterization has prompted calls for predictions market platforms to comply with responsible gambling requirements including age verification, self-exclusion programs, spending limits, and addiction warnings that apply to licensed gambling operators. To the extent BNC’s Platform is characterized as a gambling product, BNC may face claims that it failed to implement adequate consumer protections, that it engaged in deceptive marketing, or that it contributed to gambling-related harm suffered by users. Product liability litigation has been filed against established gambling platforms in multiple jurisdictions on similar theories. Any such claims against BNC, whether or not they have merit, could result in significant litigation costs, damages awards, regulatory requirements to modify BNC’s business practices, and reputational harm that reduces user trust. If BNC is required to implement comprehensive responsible gambling programs, the associated costs and operational requirements could materially increase BNC’s operating expenses and restrict its user acquisition activities.

Congressional legislation addressing the regulatory framework for predictions markets could alter the conditions under which BNC operates, with outcomes that may be favorable or adverse to BNC’s business.

The rapid growth of the predictions market industry and the ongoing legal disputes between predictions market platforms and state regulators have attracted significant Congressional attention. A bipartisan group of state attorneys general has urged Congress to act on the question of federal versus state authority over predictions market platforms, and legislation has been introduced in Congress that would establish new requirements and restrictions applicable to predictions market operators. The outcome of any Congressional action in this area is unpredictable. Legislation that establishes a clear federal framework and preempts state enforcement could benefit platforms that are positioned to comply with federal requirements. Legislation that imposes restrictive requirements, limits permissible contract categories, or grants states greater authority to regulate predictions markets could significantly increase BNC’s compliance costs or restrict the scope of BNC’s operations. Because BNC’s business is at an early stage of development, changes in the regulatory framework resulting from Congressional action could require BNC to redesign aspects of the Platform before launch, obtain new regulatory authorizations, or abandon certain planned features or market categories. There can be no assurance that Congressional action, if any, will be favorable to BNC’s business model, and any adverse legislative development could have a material adverse effect on BNC’s business, results of operations and financial condition.

Numerous foreign jurisdictions have already classified predictions market platforms as illegal gambling and banned their operation, which may significantly restrict BNC’s ability to serve international users.

The regulatory treatment of predictions market platforms outside the United States is highly fragmented, and a substantial and growing number of foreign jurisdictions have already determined that predictions market activity constitutes illegal gambling and have taken active steps to prohibit or restrict it. Singapore has classified predictions market platforms as illegal under its Gambling Control Act 2022 and has formally blocked access to major platforms in the country. Australia’s Communications and Media Authority has determined that predictions market platforms constitute prohibited and unlicensed regulated interactive gambling services and blocked access to them. New Zealand’s Department of Internal Affairs has ruled that predictions markets are prohibited under the Gambling Act 2003 and the Racing Industry Act 2020. Within the European Union, authorities in multiple member states, including the Netherlands, France, Belgium, Italy, Poland, Romania, and Spain, have banned or ordered cessation of predictions market operations, treating event-based contracts as unlicensed online gambling. Argentina’s judiciary has issued a nationwide ban against a major predictions market platform. Thailand has announced plans to block predictions market platforms as illegal gambling. In the United Kingdom, predictions markets relating to politics, sports, and entertainment are treated as gambling and require an operating license from the Gambling Commission. To the extent BNC seeks to serve users in any of these jurisdictions, it would be required to obtain the applicable gambling or other licenses, and there can be no assurance that such licenses would be obtainable. BNC’s failure to comply with applicable foreign laws could expose BNC to enforcement action in those jurisdictions, including civil and criminal penalties, orders blocking access to the Platform, and reputational harm. Any of the foregoing could materially and adversely affect BNC’s ability to expand internationally and could have a material adverse effect on BNC’s business, results of operations and financial condition.

The regulatory framework for predictions markets in certain foreign jurisdictions is actively evolving, and changes in those frameworks could affect BNC’s ability to operate in markets that are currently accessible.

In addition to jurisdictions that have already prohibited predictions market activity, a number of foreign markets are currently developing or actively reconsidering their regulatory frameworks for predictions market platforms in ways that could restrict BNC’s future operations. Within the European Union, there is no unified regulatory framework for predictions markets, and the regulatory landscape varies significantly across member states. The EU’s Markets in Crypto-Assets regulation, known as MiCA, which is scheduled to be fully implemented in 2026, will apply to predictions market platforms that use cryptocurrency assets in connection with their operations and will require those platforms to obtain a Crypto-Asset Service Provider license to continue operating in EU member states. Canada presents a mixed regulatory environment, with varying levels of access and regulatory clarity across provinces. Brazil’s regulators are actively debating whether predictions market platforms fall under the authority of the country’s securities commission or its Ministry of Finance, and the outcome of that determination could impose significant compliance requirements on any platform seeking to serve Brazilian users. Denmark currently permits access to predictions market platforms but its gaming authority retains the ability to block platforms that it determines are actively targeting the local market. Because the regulatory environment in many of these jurisdictions is subject to rapid change, platforms that currently have access to users in those markets may find that access restricted or prohibited on short notice. If foreign jurisdictions in which BNC seeks to operate adopt laws or regulations that restrict or prohibit predictions market activity, BNC’s international growth prospects could be materially impaired, which could have a material adverse effect on BNC’s business, results of operations and financial condition.

BNC’s geographic access controls may be insufficient to prevent users in prohibited jurisdictions from accessing the Platform, which could expose BNC to regulatory enforcement in those jurisdictions.

BNC intends to implement geographic access controls, commonly referred to as geo-blocking, to restrict access to the Platform to users located in jurisdictions where BNC’s operations are permitted under applicable law. Geo-blocking works by identifying a user’s approximate location based on their internet protocol address, or IP address, a numerical identifier assigned to internet-connected devices, and restricting access to the Platform if the user’s address corresponds to a prohibited jurisdiction. However, geo-blocking is not a perfect or fully reliable method of location verification. Users in prohibited jurisdictions may circumvent geo-blocking controls through the use of virtual private networks, or VPNs, which are tools that allow users to mask their actual location by routing their internet traffic through servers in other countries, or through other technical methods. If users in jurisdictions where the Platform is not authorized gain access to the Platform and conduct transactions, BNC may be subject to regulatory enforcement action in those jurisdictions, even if BNC made reasonable good-faith efforts to restrict access. Enforcement actions in jurisdictions where BNC does not intend to operate could expose BNC to civil and criminal penalties, reputational harm, and orders that affect BNC’s broader operations, as currently anticipated. Additionally, in jurisdictions where regulatory status is uncertain, the failure to implement adequate geographic access controls could be cited as evidence that BNC is targeting users in those jurisdictions, which could accelerate regulatory action. There can be no assurance that BNC’s geographic access controls will be sufficient to prevent unauthorized access by users in prohibited jurisdictions, and any resulting enforcement action could have a material adverse effect on BNC’s business, results of operations and financial condition.

Changes in law or regulatory policy applicable to predictions markets could require BNC to make significant changes to its business model or cease operations in certain jurisdictions.

The legal and regulatory framework applicable to predictions markets in the United States is at an early stage of development and is subject to significant change. Federal or state legislators or regulators may enact new laws or adopt new regulations that restrict or prohibit the type of products BNC intends to offer, require BNC to obtain new regulatory authorizations, impose new consumer protection requirements, or otherwise alter the conditions under which BNC can operate. Because BNC’s business model is specifically tailored to the predictions market model, any change in law or regulatory policy that adversely affects the legal status or operating conditions for predictions market platforms could require BNC to make fundamental changes to its business or exit certain markets entirely. BNC intends to monitor regulatory developments and adapt its operations accordingly, but there can be no assurance that BNC will be able to do so on a timely or cost-effective basis. If applicable law or regulatory policy changes in a manner adverse to BNC’s business, BNC’s business, results of operations and financial condition could be materially and adversely affected.

Risks Related to Data, Security, and Intellectual Property

Security breaches, cyberattacks, and attempts to manipulate market outcomes could undermine trust in the Platform and materially harm BNC’s business.

BNC’s predictions market platform involves the collection, storage, and transmission of user data, including personal identification information gathered through the user verification process, account balances, and records of user positions and settlement history. Unauthorized access to this data, or to the systems that determine market settlement outcomes, could result in the theft or misuse of sensitive information, manipulation of market results, and significant harm to users who rely on the Platform’s integrity. Cyberattacks targeting predictions market platforms may include hacking, malware, phishing, distributed denial-of-service attacks, and social engineering schemes designed to compromise user accounts or disrupt Platform availability. In addition, bad actors may attempt to exploit software vulnerabilities or manipulate third-party data feeds to cause the Platform to settle markets on the basis of inaccurate information. BNC takes measures intended to detect and respond to these threats; however, no security system is impenetrable, and BNC may not be able to prevent all attacks. Any successful cyberattack or material security breach could trigger regulatory investigations, expose BNC to litigation, require significant remediation expenditures, and cause reputational harm that reduces user confidence in the Platform. Any of the foregoing could materially and adversely affect BNC’s business, results of operations and financial condition.

The collection and handling of user personal data, including information gathered through the user verification process, exposes BNC to data privacy compliance obligations and the risk of regulatory enforcement.

In connection with BNC’s user verification and account management processes, BNC collects and retains personal information about its users, including identification documents, financial account information, and transaction records. The collection, storage, transmission, and use of this information is subject to a range of federal and state data privacy laws, including the California Consumer Privacy Act (the “CCPA”) and other applicable state privacy statutes, as well as any federal privacy or data security requirements applicable to BNC’s business. To the extent BNC serves users in foreign jurisdictions, additional data privacy requirements may apply, including the General Data Protection Regulation (the “GDPR”), which governs the collection and processing of personal data of individuals located in the European Union and imposes significant requirements on organizations that handle such data, including mandatory breach notification, data subject access rights, and requirements for lawful bases for data processing. Compliance with these laws would require BNC to implement and maintain data security practices, provide users with certain rights with respect to their personal information, and respond to regulatory inquiries or user requests in a timely manner. If BNC fails to comply with applicable data privacy requirements, it could be subject to regulatory enforcement action, civil litigation, fines, and reputational harm. Additionally, any data breach or unauthorized disclosure of user personal information could trigger notification obligations, regulatory scrutiny, and loss of user trust, any of which could materially and adversely affect BNC’s business, results of operations and financial condition.

BNC’s products and internal systems rely on software and hardware developed in part by third parties, and BNC has limited visibility into and control over the security and reliability practices of those providers.

BNC relies on third-party technology vendors to provide certain software, infrastructure, and data services that are integral to the operation of the Platform. BNC has limited ability to oversee the security protocols, development practices, and operational resilience of these third-party providers. If a vendor experiences a security incident, suffers a service disruption, ceases operations, or fails to meet its contractual obligations to BNC, the Platform’s availability or functionality may be impaired. Transitioning to an alternative provider on short notice could be time-consuming, technically complex, and costly, and may not be possible without a period of service disruption. The concentration of critical functions in a small number of vendors heightens BNC’s exposure to any one provider’s operational difficulties. Any disruption to third-party services on which BNC relies could adversely affect the user experience and BNC’s ability to operate the Platform, and could materially and adversely affect BNC’s business, results of operations and financial condition.

BNC may be unable to adequately protect its intellectual property, and third parties may assert that BNC’s Platform or technology infringes their intellectual property rights.

BNC’s competitive position depends in part on its ability to protect its proprietary technology, platform design, and related intellectual property. BNC may not be able to prevent competitors from developing similar technology or from using features or designs that are functionally equivalent to BNC’s. In addition, BNC may in the future be subject to claims by third parties alleging that the Platform or its underlying technology infringes their patents, trademarks, copyrights, or other intellectual property rights. Responding to such claims, regardless of their merit, could be time-consuming and costly, and an adverse outcome could require BNC to pay damages, license technology from third parties on unfavorable terms, or modify or discontinue aspects of the Platform. Any of the foregoing could have a material adverse effect on BNC’s business, results of operations and financial condition.

Risks Related to askROI

We rely on an exclusive LLM licensing arrangement and a platform development agreement with the same primary developer, even though we maintain ownership of the askROI platform’s IP.

askROI’s AI-driven offerings depend on a proprietary LLM licensed under an exclusive agreement (the “License Agreement”) with a third-party provider (the “Licensor”), which also serves as the primary developer of our platform under a separate development agreement. Although we retain ownership of the askROI Platform’s intellectual property, our day-to-day innovation and updates rely heavily on the Licensor’s technical expertise, resources and timely performance.

If the License Agreement is terminated, expires, or becomes subject to unfavorable terms, we could lose or face restrictions on the proprietary LLM functionality integral to our product’s performance. Similarly, if disputes arise or the development agreement is breached, whether due to missed milestones, shifting priorities, or misaligned strategic objectives, our ability to maintain, enhance, and scale the platform could be severely compromised. Even though we technically own the underlying software, replacing a primary developer or transitioning to an alternative solution could be time-consuming, costly and risky, potentially delaying product rollouts and damaging customer relationships.

Because both the License Agreement and the platform development hinge on a single partner, a deterioration in our relationship with the Licensor could simultaneously threaten our AI functionality and our capacity to enhance the capability of the askROI Platform. Such a scenario would materially and adversely affect our competitiveness, financial condition, and prospects for growth.

Despite our multi-LLM routing model, performance or reliability issues with our primary development partner’s LLM could still harm our product quality and reputation.

Our “routing model” allows us to tap into multiple LLMs, theoretically reducing reliance on one provider. However, our primary developer and Licensor remains the key source of certain proprietary AI functionalities and platform support, meaning that ongoing performance or reliability problems with its LLM technology could still cause significant product disruptions. Security breaches, downtime, or limited adaptability in the Licensor’s services may reduce customer satisfaction, delay important product updates or damage our brand. Since we do not control the Licensor’s internal operations, we are vulnerable to technical or strategic changes that could negatively impact our services.

askROI faces risks commonly associated with start-up companies.

askROI faces risks commonly associated with start-up companies. As a start-up company, askROI may face difficulties in validating market demand for its AI-powered insights platform, which could adversely impact its ability to attract and acquire customers. Further, enterprise sales cycles can be lengthy, particularly for a start-up company without an established track record. Prolonged sales cycles could strain askROI’s cash flow and hinder growth, and (iii) reliance on a few large customers could make askROI vulnerable to revenue volatility and adversely impact its bargaining power. If any of the foregoing risks were to materialize, askROI’s business and future prospects could be materially and adversely affected.

askROI faces adoption and integration and other challenges.

askROI faces adoption and integration challenges. Complex onboarding processes or steep learning curves could slow customer adoption and time-to-value realization. Further, its software could be difficult to integrate with a customer’s legacy systems, leading to challenges with customers’ legacy systems and tools. Any difficulties associated with the integration of different systems could limit askROI’s market penetration and customer satisfaction. In addition, the Licensor’s development team may have limited capacity to support askROI’s platform development needs, particularly if askROI were to begin seeing significant growth and require more rapid iterations and customizations. Also, the LLM technology may not be optimized for the scale and performance requirements of askROI’s growing user base, leading to performance bottlenecks and customer dissatisfaction. Additionally, as a new entrant in the market, askROI may struggle to establish brand awareness and credibility, making it harder to attract customers and partners. Similarly, any negative publicity or customer complaints could disproportionately impact askROI’s reputation as a startup, hindering its growth and ability to compete against established players. If any of the foregoing risks were to materialize, askROI’s business and future prospects could be materially and adversely affected.

Rapidly changing AI regulation may require significant adjustments and investments.

Governments and regulatory bodies worldwide are introducing new laws and guidelines for AI, data privacy, and automated decision-making. These regulations may force us to modify certain features, require additional transparency or auditing tools, or limit our platform’s functionality. Complying with emerging or conflicting rules across jurisdictions could raise operating costs or delay product rollouts. Failure to meet these requirements could result in fines, legal action, or reputational harm.

Data privacy and security laws could increase compliance costs and limit our flexibility.

Various jurisdictions are adopting stricter data privacy and security regulations, such as the GDPR in the EU and certain U.S. state privacy laws. We must continually enhance our security measures, encryption protocols, and data handling procedures to remain compliant. These changes could increase our operational expenses. Any failure to comply with evolving data protection requirements may lead to enforcement actions, penalties, or erosion of customer trust.

Established technology companies with greater resources may outcompete us.

Larger technology firms with substantial financial and technical resources continue to expand their AI-driven offerings, sometimes bundling analytics solutions into broader enterprise software suites. These competitors may benefit from existing customer relationships, extensive R&D budgets, and powerful marketing capabilities. If they introduce more advanced or cost-effective solutions, we may find it difficult to retain or attract customers, thereby adversely impacting our revenue and market share.

Our future success depends on ongoing innovation and technological advancements.

The market for AI-driven analytics is evolving rapidly. We must invest in research and development to remain competitive in natural language processing, data visualization, and user experience. If we fail to keep pace with or anticipate market trends, or if the capabilities of our platform lag behind those of our competitors, our solutions may become less attractive, resulting in lost revenue and diminished market position.

Our platform’s integration with third-party tools and systems may present technical and operational risks.

askROI relies on seamless integration with a wide range of external applications, including customer relations management platforms, file storage providers, and communication tools. If these third parties modify their application programming interfaces, introduce incompatibilities, or discontinue services, we may need to invest significant resources to maintain compatibility. Difficulties integrating with common enterprise systems could hamper our ability to onboard new customers efficiently.

We rely on secure workspaces and knowledge bases that may still pose data exposure risks.

Even though we do not train the underlying LLM on customers’ proprietary information, we host and index their data within dedicated workspaces. Any unauthorized access, security breach, or deficiency in our data-protection measures could expose confidential information, leading to legal liability, regulatory scrutiny and reputational damage.

Inaccurate or biased AI outputs could expose us to reputational and legal risks.

Our AI-driven insights may occasionally generate incorrect or biased results. Such outcomes could lead customers to make flawed business decisions, undermine confidence in our platform, or result in litigation. Ongoing model validation and prompt issue resolution are crucial to mitigating these risks.

Our proprietary rights could be inadequately protected, leading to IP disputes.

The unique components of our platform and certain enhancements we develop may be subject to intellectual property protection. If we fail to enforce or defend our rights, or if third parties allege that our technology infringes on their IP, we could face costly litigation and be required to alter or cease certain offerings. Such disputes can disrupt operations and harm our reputation.

Customer retention risks could pose a challenge for askROI.

askROI may experience difficulties in retaining customers. Any failure on its part to achieve strong product-market fit could lead to high customer churn rates, as businesses may not perceive sufficient value in askROI’s offerings. Further, as a newly formed entity, askROI may struggle to provide the level of customer support expected by enterprise clients, which could have a materially adverse impact on customer satisfaction and retention. Finally, low barriers to entry and minimal switching costs in the AI and analytics market could make it easier for customers to move to competitors, thereby increasing askROI’s customer retention risks. If any of these developments were to occur, askROI’s business and future prospects could be materially and adversely affected.

Ethical AI concerns.

The AI industry is commonly associated with ethical concerns, whether real or perceived, which askROI must overcome in order to successfully develop its business. Such concerns include the risk that unintended biases in askROI’s AI models could lead to discriminatory or unfair outcomes, damage the entity’s reputation and expose it to legal risks, and that difficulty in providing clear explanations for AI-generated insights could erode customer trust and hinder adoption of askROI’s product offerings. If askROI cannot substantially mitigate or prevent such concerns from arising, its business and future prospects could be materially and adversely affected.

Uncertain legal interpretations of emerging AI regulations could lead to operational constraints.

Because AI-related laws and guidelines are still developing, legal interpretations can vary widely across different regulators and courts. We may need to adjust our platform functionality or compliance processes in response to evolving interpretations, which could divert resources from other initiatives and slow innovation.

If we fail to effectively manage our growth, our business could suffer.

Rapid or poorly managed growth could lead to operational inefficiencies, resource strains, and quality control issues. We may also face challenges in maintaining our corporate culture or onboarding new staff quickly. If we cannot scale responsibly, product quality or customer satisfaction could decline, harming our market reputation.

Risks Related to the OnlyBulls Platform

The OnlyBulls platform depends on third-party market data providers, and any disruption to or termination of those relationships could impair our ability to deliver core platform functionality.

Market data and pricing information displayed on the OnlyBulls platform are sourced through third-party market data aggregators. askROI does not independently generate, maintain, or distribute the pricing and market data on which the platform’s research and monitoring features depend. If one or more of these providers experiences extended service outages, modifies its data licensing terms in ways that increase askROI’s costs or restrict the types of data available to askROI, or terminates or elects not to renew its agreement with askROI, askROI may be unable to deliver real-time market data to users without significant interruption. Transitioning to an alternative data provider could require significant technical integration work and may result in periods during which the platform’s data coverage is incomplete or delayed. Any sustained degradation in data availability or accuracy could reduce user engagement, harm askROI’s reputation, and materially and adversely affect its business, results of operations and financial condition.

askROI’s integration with third-party charting providers exposes askROI to risks associated with those providers’ continued availability, pricing, and terms of service.

Interactive charting functionality on the OnlyBulls platform is delivered through integrations with one or more third-party financial charting and data visualization platforms. askROI does not control these providers’ technical infrastructure, pricing models, or terms of service. If a charting provider modifies its application programming interface (the standardized technical connection through which OnlyBulls accesses its charting tools), introduces pricing changes that materially increase askROI’s costs, or restricts or discontinues access to embedded charting capabilities, askROI may be required to invest significant resources to rebuild this functionality using an alternative provider. Such a transition could degrade the user experience during the integration period, result in increased operating costs, or cause askROI to lose users to competing platforms that offer comparable charting capabilities. These developments could materially and adversely affect askROI’s business, financial condition, and results of operations.

The DeFi self-custody wallet functionality on the OnlyBulls platform relies on Privy as its wallet infrastructure provider, and any disruption to that relationship could impair or disable askROI’s wallet offering.

The DeFi self-custody wallet embedded in the OnlyBulls platform is powered by Privy, a wallet-as-a-service provider whose infrastructure manages the hardware-secured key management systems that enable users to store, send, receive, and manage digital assets within the platform. askROI does not operate its own independent wallet infrastructure but relies on Privy for all underlying wallet technical systems. If Privy experiences service disruptions, security incidents, regulatory challenges, or ceases operations, the wallet functionality of OnlyBulls could be impaired or become unavailable. Migrating to an alternative wallet infrastructure provider would require substantial technical effort and could result in a period during which users are unable to access or transact with their digital asset holdings. Any such disruption could result in reputational harm, user attrition, potential legal claims from affected users, and a material adverse effect on askROI’s business and financial condition.

Users of the OnlyBulls DeFi self-custody wallet bear sole responsibility for maintaining access to their authentication credentials, and the permanent loss of those credentials may result in the irreversible loss of all digital assets held in the wallet.

The OnlyBulls wallet is built on an embedded wallet architecture in which users access and control their wallet through authentication credentials rather than through a traditional seed phrase. The private key underlying each wallet is managed using hardware-secured environments and distributed key management techniques, such that it is never directly exposed to the user during ordinary use. Instead, wallet access is protected by the authentication method the user establishes at account creation, which may include an email address, a linked social login account, a passkey, biometric authentication such as a fingerprint or facial recognition, or a multi-factor authentication method such as a verification code delivered to a mobile device or generated by an authentication application.

Because wallet access depends on these authentication credentials, users who lose access to the account or device through which they authenticate may lose access to their wallet and the digital assets held within it. For example, a user who loses access to the email account associated with their wallet, loses the device on which their passkey or biometric authentication is registered, or loses access to their multi-factor authentication application without a backup method may be unable to access their wallet. askROI does not maintain independent copies of users’ authentication credentials and has no technical ability to restore wallet access on a user’s behalf in the event of lost or compromised credentials.

Users who choose to export their private key directly assume full responsibility for the storage and security of that key. An exported private key that is lost, destroyed, or stolen cannot be recovered or reset by askROI or any third party, and any digital assets associated with a wallet whose private key has been lost will be permanently inaccessible. Digital asset holdings are generally not insured by any government program, and losses resulting from inaccessible credentials or stolen keys may be unrecoverable. Investors should be aware that users who suffer such losses may file complaints or legal claims toward askROI, which could result in reputational harm and could materially and adversely affect askROI’s business and financial condition.

Digital asset swap functionality within OnlyBulls depends on decentralized exchange aggregators that askROI does not control, and users may experience losses or service failures associated with those protocols.

Users of the OnlyBulls DeFi self-custody wallet may exchange one digital asset for another using one or more decentralized exchange aggregators (software protocols that source available trading liquidity from multiple digital asset venues to facilitate asset swaps). These protocols operate as open-source, decentralized software and are not controlled by, or affiliated with, askROI. askROI cannot guarantee the continued availability, security, or performance of any such protocol. Smart contracts (self-executing software programs stored on a blockchain that automatically carry out transactions when specified conditions are met) underlying these protocols may contain undiscovered vulnerabilities, and any exploits or failures in those contracts could result in user losses for which askROI may face reputational or legal exposure. Additionally, liquidity conditions in digital asset markets can change rapidly, resulting in swap executions at prices materially different from those anticipated by users. If users experience losses or poor execution quality through this feature, askROI’s reputation could suffer and askROI could become subject to regulatory scrutiny or legal claims that could materially and adversely affect its business and financial condition.

askROI relies on multiple third-party providers for on-ramp and off-ramp services enabling users to convert between traditional currency and digital assets, and disruptions to any of these providers could impair this functionality.

The OnlyBulls platform enables users to purchase digital assets using traditional currency (on-ramp) and to convert digital assets back into traditional currency (off-ramp) through arrangements with multiple third-party service providers. askROI does not independently process these conversions and depends on these providers for the availability, pricing, and regulatory compliance of conversion services. If one or more of these providers experiences service outages, imposes transaction limits or geographic restrictions, loses a required regulatory authorization, or ceases operations, users’ ability to move funds into or out of digital assets on askROI’s platform could be disrupted. The fragmented nature of askROI’s on-ramp and off-ramp provider relationships means that a single provider failure may not fully impair the service, but could reduce capacity, increase fees, or limit available payment methods. There can be no assurance that askROI will be able to maintain a sufficient number of capable providers on acceptable terms, and any material reduction in on-ramp or off-ramp functionality could reduce user activity on the platform and materially and adversely affect askROI’s business and results of operations.

The DeFi self-custody wallet and related transaction features of OnlyBulls may be subject to money transmission licensing requirements, anti-money laundering obligations or other financial services regulations that could constrain askROI’s operations or require significant compliance investment.

The DeFi self-custody wallet, on-ramp and off-ramp conversion services, and peer-to-peer transaction functionality offered through OnlyBulls may implicate federal and state regulations governing money transmission, digital asset custody, and financial services. FinCEN and various state financial regulatory agencies have asserted jurisdiction over certain digital asset activities under anti-money laundering and Bank Secrecy Act frameworks. Depending on the characterization of askROI’s wallet and conversion services, askROI or its third-party service providers may be required to register as a Money Services Business, obtain state money transmitter licenses in one or more jurisdictions, or comply with KYC and AML verification requirements, which involve confirming the identity of users and monitoring transactions for indicators of illegal activity. Failure to satisfy applicable licensing or compliance obligations, whether by askROI or a service provider on whose compliance askROI relies, could result in regulatory enforcement actions, financial penalties, cessation of wallet operations and reputational harm. Compliance with a patchwork of state-by-state licensing requirements and evolving federal guidance could require substantial investment and could materially and adversely affect askROI’s ability to offer the full wallet feature set across all geographies.

AI-generated research outputs on the OnlyBulls platform could be incorrect, misleading, or misinterpreted as personalized investment advice, exposing askROI to regulatory scrutiny and legal claims.

The OnlyBulls platform integrates an AI-powered research assistant that responds to user queries with analysis and information drawn from publicly available data. As with all LLMs, the research assistant may produce outputs that are factually incorrect, incomplete, or inconsistent, a phenomenon commonly referred to as “hallucination,” in which an AI system generates information that appears plausible but is inaccurate or fabricated. Users who rely on these outputs when making investment or trading decisions could incur financial losses. Although the platform is designed as an informational research tool and not as a provider of personalized investment advice, there can be no assurance that regulators, courts, or users will not characterize certain AI-generated outputs as constituting investment advisory services subject to registration and oversight under the Investment Advisers Act of 1940 or analogous state statutes. Any such characterization could require askROI to register as an investment adviser, substantially modify or restrict the research assistant’s functionality, or expose askROI to enforcement actions and civil liability. These risks could materially and adversely affect askROI’s business, financial condition, and results of operations.

Periods of volatility or sustained declines in digital asset markets could reduce user engagement with the OnlyBulls platform and adversely affect askROI’s business.

A significant portion of the OnlyBulls platform’s appeal to users is tied to their interest in monitoring and managing digital asset holdings. The digital asset market has historically experienced extreme price volatility, prolonged bear markets, and periods of significantly reduced trading activity. During such periods, user interest in financial research tools and digital asset management platforms may decline materially. Reduced user engagement could lower adoption rates, increase user attrition, and decrease the frequency with which users interact with the platform’s wallet, swap, and research features. Because askROI is in an early stage of building its user base for OnlyBulls, sustained declines in digital asset market activity could impair revenue growth and make it more difficult to achieve the scale necessary to support the platform’s operating costs. These developments could materially and adversely affect askROI’s business and financial condition.

The DeFi self-custody wallet functionality of OnlyBulls presents heightened cybersecurity risks, and any breach or theft of digital assets could result in significant losses and reputational harm.

Platforms that enable users to store and transact in digital assets are frequent targets of sophisticated cyberattacks, including phishing schemes, social engineering, smart contract exploits, and direct attacks on wallet infrastructure. Although askROI relies on Privy for wallet infrastructure and does not independently custody user assets, a successful attack on Privy’s systems, on any component of the swap or conversion infrastructure, or on askROI’s own systems, could result in the theft or permanent loss of user digital asset holdings. Unlike traditional bank deposits, digital asset holdings are generally not insured by any government program, and losses resulting from theft or technical failure may be unrecoverable. Users whose authentication credentials or exported private keys are compromised through phishing, malware, account takeover, or other means have limited or no recourse to recover stolen assets, as transactions on a blockchain are generally irreversible once confirmed. Even if askROI is not directly at fault, any security incident affecting user assets could generate significant reputational damage, legal claims and regulatory scrutiny. There can be no assurance that the security measures employed by askROI, Privy, or other service providers will be sufficient to prevent all unauthorized access or asset loss, and any such incident could materially and adversely affect askROI’s business, financial condition, and results of operations.

User misunderstanding of the scope of OnlyBulls’ functionality could result in reputational harm and regulatory scrutiny if users believe the platform offers securities trading capabilities, which it does not provide.

The OnlyBulls platform displays real-time securities data, charts, and AI-generated market analysis. The platform does not currently offer the ability to purchase, sell, or execute trades in any securities. Users who misinterpret the platform as providing securities execution services, or who expect trading functionality that is not present, may file complaints with regulators, initiate legal claims or generate negative publicity that damages askROI’s reputation. Additionally, any future expansion of OnlyBulls’ functionality to include securities trading or order routing services would require askROI or an affiliated broker-dealer to obtain the appropriate registrations and licenses from the SEC, FINRA or applicable state securities regulators, and askROI’s failure to do so could result in enforcement actions. The introduction of any securities execution feature without the requisite regulatory approvals could materially and adversely affect askROI’s business, financial condition, and results of operations.

Risks Related to the Purchase, Ownership and Custody of Precious Metals

We currently have no experience as a company in purchasing, owning, holding or liquidating precious metals.

We currently intend to use a portion of our available capital to purchase precious metals, including gold and/or silver. We have no prior experience as a company in purchasing, owning, holding or liquidating precious metals and there are significant risks involved in developing processes and procedures to purchase, safely store and liquidate such precious metals. Any failure or delay in the development of proper processes and procedures could adversely impact our operations, assets and results of operations. We may also choose to collaborate with third parties that have experience in purchasing, storing and liquidating precious metals, either to augment our own personnel or in lieu of our own personnel and systems. We may not be able to enter into collaborations or hire consultants or external service providers to assist us in purchasing, storing and liquidating precious metals on acceptable financial terms, or at all. In addition, our revenues and our profitability, if any, may be lower if we rely on third parties for these functions than if we were to handle them ourselves. We likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to purchasing, storing and liquidating our precious metals effectively. If we are not successful in developing the proper processes and procedures for purchasing, storing and liquidating precious metals, either on our own or through arrangements with one or more third parties, we could incur significant losses.

The price of precious metals is volatile.

The price of precious metals, especially gold and silver, has fluctuated widely in recent years. During the past 52-week period (through April 12, 2026), the price of gold has ranged between $5,627 per troy ounce and $3,123 per troy ounce and the price of silver has ranged between $121 per troy ounce and $32 per troy ounce. As of April 12, 2026, the price of gold and silver was approximately $4,710 and $73 per troy ounce, respectively.

Precious metals, have experienced, and continue to experience, significant price and volume volatility. Several factors may affect the price of precious metals, including:

Global supply and demand, which is influenced by such factors as precious metals’ uses in jewelry, technology and industrial applications, purchases made by investors in the form of bars, coins and other precious metal products, forward selling by precious metal producers, purchases made by precious metal producers to unwind precious metal hedge positions, central bank purchases and sales, and production and cost levels in major precious metal-producing countries such as China, the United States and Australia;

Global or regional political, economic or financial events and situations, especially those unexpected in nature, such as the current conflict in the Middle East;

Investors’ expectations with respect to the rate of inflation;

Currency exchange rates;

Interest rates;

The price of Bitcoin, should investors view Bitcoin as a digital store of value;

Investment and trading activities of hedge funds and commodity funds; and

Other economic variables such as income growth, economic output, and monetary policies.

Crises may motivate large-scale sales of precious metals which could decrease the price of precious metals and adversely affect an investment in our company.

The possibility of large-scale distress sales of precious metals in times of crisis may have a negative impact on the price of precious metals and adversely affect an investment in our company and our Class A common stock. For example, the 1998 Asian financial crisis resulted in significant sales of gold by individuals, which depressed the price of gold. Crises in the future may impair precious metals’ price performance which could, in turn, adversely affect an investment in our Class A common stock.

The price of precious metals may be affected by the sale of precious metals by ETFs or other exchange traded vehicles tracking such markets.

To the extent existing exchange traded funds, or ETFs, or other exchange traded vehicles tracking gold or silver markets represent a significant proportion of demand for physical gold or silver bullion, large redemptions of the securities of these ETFs or other exchange traded vehicles could negatively affect physical gold or silver bullion prices and the value of our Class A common stock.

Substantial sales of precious metals by the official sector could adversely affect our investment in precious metals.

The official sector consists of central banks, other governmental agencies and international organizations that buy, sell and hold precious metals as part of their reserve assets. The official sector holds a significant amount of precious metals, most of which is static, meaning that it is held in vaults and is not bought, sold, leased or swapped or otherwise mobilized in the open market. For example, since 1999, most sales of gold have been made in a coordinated manner under the terms of the Central Bank Gold Agreement, as amended, under which 21 of the world’s major central banks (including the European Central Bank) agree to limit the level of their gold sales and lending to the market. In the event that future economic, political or social conditions or pressures require members of the official sector to liquidate their precious metals assets all at once or in an uncoordinated manner, the demand for precious metals might not be sufficient to accommodate the sudden increase in the supply of precious metals to the market. Consequently, the price of precious metals could decline significantly, which would adversely affect our investment in precious metals.

Our precious metals may be subject to loss, damage, theft or restriction on access.

There is a risk that some or all of our precious metals held could be lost, damaged or stolen. Access to our precious metals could also be restricted by natural events (such as an earthquake) or human actions (such as a terrorist attack). In addition, we may not be able or willing to insure our precious metals on such terms and conditions to cover the full replacement value of the precious metals. Any of these events may adversely affect our operations and, consequently, an investment in our securities.

Risks Related to Gresham

Risks Related to Gresham’s Business and Financial Condition

Gresham has historically incurred net losses and negative cash flow and Gresham’s operating results may significantly vary from quarter to quarter, so it may not be able to achieve or sustain profitability .

For the year ended December 31, 2025, Gresham reported revenue of $40.05 million and a net loss of $2.9 million. Gresham expects to continue to incur substantial expenditures to develop and market Gresham’s products and services and Gresham is likely to continue to incur losses and negative operating cash flow in the foreseeable future. As the result of Gresham’s lack of working capital, it faces a number of challenges:

Gresham filed for Chapter 11 bankruptcy on August 14, 2024, which has harmed and will continue to adversely affect its reputation among many, but most importantly, among prospective investors and customers for its products;

Gresham owes $8.7 million to us and cannot repay such funds absent forbearance agreements from us, which forbearance cannot be assured; and

Delayed payments to vendors and service providers as a result of the bankruptcy may affect Greshams ability to operate efficiently. Certain service providers have not been paid and have cut back or no longer provide services, and will in all likelihood require prepayment for any future services.

In addition, Gresham’s operating results have in the past been subject to quarter-to-quarter fluctuations, and Gresham expects that these fluctuations will continue, and may increase in magnitude, in future periods. Demand for Gresham’s products is driven by many factors, including the availability of funding for Gresham’s products in Gresham’s customers’ budgets. There is a trend for some of Gresham’s customers to place large orders near the end of a quarter or fiscal year, in part to spend remaining available budget funds. Seasonal fluctuations in customer demand for Gresham’s products driven by budgetary and other concerns can create corresponding fluctuations in period-to-period revenue, and Gresham therefore cannot assure you that Gresham’s results in one period are necessarily indicative of Gresham’s results in any future period. In addition, the number and timing of large individual sales and the ability to obtain acceptances of those sales, where applicable, have been difficult for Gresham to predict, and large individual sales have, in some cases, occurred in quarters subsequent to those that Gresham anticipated, or have not occurred at all. The loss or deferral of one or more significant sales in a quarter could harm Gresham’s operating results for such quarter. It is possible that, in some quarters, Gresham’s operating results will be below the expectations of public market analysts or investors. Finally, supply chain issues have occurred in the past and may in the future affect future quarters.

A large percentage of Gresham’s current revenue is derived from prime defense contractors to the United States government and its allies, and the loss of these relationships, a reduction in government funding or a change in government spending priorities or bidding processes could have an adverse impact on Gresham’s business, financial condition, results of operations and cash flow.

The defense programs may compete with other policy needs, which may be viewed as more necessary. For example, budget and appropriations decisions made by the governments of the United States, the United Kingdom and Israel are outside of Gresham’s control and have long-term consequences for Gresham’s business. Government spending priorities and levels remain uncertain and difficult to predict and are affected by numerous factors, and the purchase of Gresham’s products could be defunded in favor of other governmental priorities. The prolonged delay experienced in providing new aid to Ukraine and delays in providing certain weapons to Israel are evidence of the political uncertainties. While defense budgets in countries around the world have generally increased in nominal terms, there can be no assurance that such increases will continue for the foreseeable future. A change in government spending priorities or an increase in non-procurement spending at the expense of Gresham’s product offerings, or a reduction in total defense spending, could have material adverse consequences on Gresham’s business.

If Gresham’s reputation or relationships with the governments of the United States, the United Kingdom, Israel or the limited number of defense contractors with which Gresham works were harmed, Gresham’s future revenues and cash flows would be adversely affected.

Gresham derives most of its revenue from the governments of the United States, the United Kingdom and Israel as well defense contractors across the world that supply those countries and their allies. Gresham’s reputation and relationships with various government entities and agencies, in particular with the United States Department of Defense and Ministries of Defense in the United Kingdom and Israel, and the limited number of defense contractors serving these agencies, are key factors in maintaining and growing these revenues and winning bids for new business. Negative press reports or publicity, regardless of accuracy, could harm Gresham’s reputation. If Gresham’s reputation or relationships with government agencies were to be negatively affected, or if Gresham is suspended or barred from contracting with government agencies for any reason, the amount of business with government and other customers would decrease and Gresham’s financial condition and results of operations would be adversely affected.

Because Gresham engages in fixed fee contracts with Gresham’s customers, it faces pressure on Gresham’s gross profit margins and operating costs from inflation .

Gresham’s financial condition, results of operations, and liquidity may be negatively impacted by increased levels of inflation. Gresham is not able to predict the timing and effect of inflation, or its duration and severity. Inflation may cause Gresham’s costs to purchase inventory to be higher than it had planned and reduce Gresham’s gross profit margins. Also, inflation tends to increase Gresham’s compensation and other costs. Because of the fixed price contracts Gresham’s enters into, Gresham may not be able to sell Gresham’s products to Gresham’s customers at correspondingly increased prices to cover the impact of inflation, resulting in decreased profit margins.

The effects of Russia’s invasion of Ukraine, the conflict in the Middle East involving Iran, the Houthis, Hamas, Hezbollah’s rocket attacks in Northern Israel and tensions elsewhere in the world on the capital markets and the economy is uncertain, and Gresham may be faced with a recessionary economy and economic uncertainty including possible adverse effects upon the capital markets.

Russia’s invasion of Ukraine, the conflict in the Middle East involving Iran, the Houthis, Hamas, Hezbollah’s rocket attacks in Northern Israel have created increased uncertainty in the capital markets and caused, among other matters, increased inflation. This may make it more difficult for Gresham to raise capital and the result may be more expense and dilution. Gresham cannot predict how these factors will affect the capital markets, but the impact may be materially adverse and may delay or prevent it from completing future financings. These conditions may adversely affect Gresham’s ability to access capital on favorable terms, potentially increasing financing costs and shareholder dilution. The Company cannot predict the duration or full impact of these factors, which could materially delay or prevent future financing activities.

Gresham’s subsidiary, Enertec, operates a production facility in Karmiel, Israel, and Gresham’s business, financial condition and results of operations may be adversely affected by geopolitical risks and military activity in the region.

Israel has been and may continue to be subject to geopolitical instability, armed conflicts, and security threats, including ongoing hostilities involving Iran, Lebanon, and other regional actors. These conditions have resulted, and may continue to result, in disruptions to economic activity, infrastructure, and supply chains.

Enertec’s operations may be adversely impacted by these conditions in several ways, including:

potential physical damage to facilities or infrastructure, including the Karmiel production site, as a result of missile attacks or other military actions;

disruptions to operations due to air raid alerts, security restrictions, or other emergency measures;

reduced workforce availability as a result of mandatory military reserve duty call-ups or other personnel constraints;

delays or interruptions in the supply of raw materials or components, or the ability to deliver products to customers; and

broader economic or financial market instability in Israel.

While Enertec has implemented certain contingency and business continuity measures, there can be no assurance that such measures will be sufficient to mitigate the impact of future disruptions. Any significant escalation in regional hostilities or prolonged disruption could materially and adversely affect Enertec’s operations, which in turn could have a material adverse effect on Gresham’s business, financial condition, and results of operations.

If the inflationary pressures in the United States and elsewhere where Gresham operates continue at current levels or increase, Gresham could experience reduced margins and lose future business.

While the inflation rate is lower than it has been it remains elevated; as a result, inflationary pressures are affecting Gresham’s gross profit margins particularly since Gresham lacks the capital to accumulate material inventory. Most of Gresham’s contracts (except with Relec) are fixed price which reduces Gresham’s margins when inflation occurs. Reducing Gresham’s selling prices results in further reduction of Gresham’s margins. This customer pricing pressure may also result in the loss of contracts and/or future business. Finally, Gresham is experiencing rising labor and other costs which may further increase its losses. If inflation continues at current levels or increases, Gresham could experience reduced margins or lose future business.

If Gresham loses key personnel, it could have a material adverse effect on Gresham’s financial condition, results of operations and growth prospects.

Gresham’s success will depend on the continued contributions of key officers and employees. The loss of the services of key officers and employees, whether such loss is through resignation or other causes, or the inability to attract additional qualified personnel, could have a material adverse effect on Gresham’s financial condition, results of operations, and growth prospects. In March 2024, Enertec’s Chief Executive Officer passed away. The replacement of Enertec’s former Chief Executive Officer by Enertec’s Chief Operating Officer has not had a material adverse effect to date, though it is possible that the loss of Enertec’s CEO in 2024 may still adversely affect the business.

Gresham’s success will depend on the continued contributions of key officers and employees. The loss of the services of key officers and employees, whether such loss is through resignation or other causes, or the inability to attract additional qualified personnel, could have a material adverse effect on Gresham’s financial condition, results of operations and growth prospects.

We do not know if the loss of key employees will result in any adverse effects. However, if Gresham were to lose Marcus Charuvastra and/or Yasmine Misuraca, Gresham’s two executive officers, or Nissim Ovadia, Enertec’s Chief Executive Officer, Gresham’s business would be materially and adversely affected.

Gresham’s sales and profitability may be affected by changes in economic, business and industry conditions.

If the economic climate in the United States or abroad deteriorates, customers or potential customers could reduce or delay their orders. This may lead to longer sales cycles, delays in purchase decisions, payment and collection, and can also result in downward price pressures, causing Gresham’s sales and profitability to decline. In addition, general economic uncertainty and general declines in capital spending in the defense electronics sector make it difficult to predict changes in the purchasing requirements of Gresham’s customers and the markets Gresham serves. There are many other factors which could affect Gresham’s business, including:

Political factors, which result in a reduction of defense expenditures;

The end of the Russian war in Ukraine, the end of the conflict in Israel whether with Iran, Hames and/or Hezbollah, stability in the Middle East or easing of tensions in Asia;

The introduction and market acceptance of new technologies, products and services including AI;

New competitors and new forms of competition;

The size and timing of customer orders (for retail distributed physical product);

The size and timing of capital expenditures by Gresham’s customers;

Adverse changes in the credit quality of Gresham’s customers and suppliers;

Changes in the pricing policies of, or the introduction of, new products and services by Gresham or its competitors;

Changes in the terms of Gresham’s contracts with its customers or suppliers;

The availability of products and schedule for deliveries from Gresham’s suppliers; and

Variations in product costs and the mix of products sold.

These trends and factors could adversely affect Gresham’s business, results of operations and financial condition and diminish Gresham’s ability to achieve its strategic objectives.

Gresham has been significantly short of capital needed to acquire parts for manufacture of Gresham’s products to complete orders. At times, Gresham has not had the cash available to make advance payments for the purchase of parts, and then, as a consequence, Gresham would not receive the parts from Gresham’s vendors required to finish a customer order. This would then delay the delivery of Gresham’s products to customers and would also delay recognition of the resulting revenue and the receipt of cash from the customer. There can be no assurance that Gresham will not operate at a loss during the current or future fiscal years.

Gresham’s future profitability depends upon many factors, including several that are beyond Gresham’s control. These factors include, without limitation:

changes in the demand for Gresham’s products and services;

changes in the timing of desired customer deliveries;

the availability of working capital;

Gresham’s ability to deliver new product developments and introductions on a timely basis;

Gresham’s loss of key customers or contracts;

Gresham’s ability to hire engineers and other technical personnel;

the introduction of competitive products;

the failure to gain market acceptance of Gresham’s new and existing products; and

changes in technology which cause some of Gresham’s products to be obsolete.

Risks Related to Gresham’s Sales, Business Development and Competition

Gresham’s sales cycles can be long and unpredictable, and Gresham’s sales efforts require considerable time and expense. As a result, Gresham’s sales and revenue are difficult to predict and may vary substantially from period to period, which may cause Gresham’s operating results to fluctuate significantly.

The timing of Gresham’s revenues is difficult to predict. Factors that may contribute to these fluctuations include Gresham’s dependence on the defense industry, a limited number of customers, the nature and length of Gresham’s sales cycles for Gresham’s products and services, the duration and delivery schedules within Gresham’s customer contracts and Gresham’s ability to timely develop, produce and upgrade Gresham’s products.

Most of Gresham’s revenues are generated from a limited number of relatively large orders that Gresham receives from prime defense contractors and government agencies. Gresham spends substantial time and resources on its sales efforts without any assurance that its efforts will produce any sales. In addition, purchases of Gresham’s products are frequently subject to budget constraints (including constraints imposed by governmental agencies), multiple approvals, and unplanned administrative, processing and other delays. Even if Gresham receives a purchase order from a customer, there may be circumstances or terms relating to the purchase that delay Gresham’s ability to recognize revenue from that purchase, which makes Gresham’s revenue difficult to forecast. As a result, it is difficult to predict whether a sale will be completed, the particular fiscal period in which a sale will be completed or the fiscal period in which revenue from a sale will be recognized, if at all. For these reasons, Gresham’s operating results may vary significantly from quarter to quarter. Such unpredictable operating results may adversely impact the trading price of Gresham’s common stock.

Gresham’s sales are significantly dependent on the defense industry and a limited number of customers.

Most of Gresham’s current product and service offerings are directed towards the defense marketplace, which has a limited number of customers. If the defense market demand decreases, Gresham’s sales may be less than projected with a resulting decline in revenues. As a result, Gresham’s business depends upon continued United States, Israeli, the United Kingdom’s and other countries’ government expenditures on defense systems for which Gresham provides support. Gresham’s business, prospects, financial condition, operating results, and the trading price of Gresham’s common stock could be materially harmed by, among other causes, the following:

Budgetary constraints, including mandated automatic spending cuts, affecting across-the-board government spending, or specific agencies in particular, and changes in available funding;

A shift in expenditures away from defense programs that Gresham supplies;

United States government shutdowns due to, among other reasons, a failure by elected officials to fund the government and other potential delays in the appropriations process;

Delays in the payment of Gresham’s invoices by government payment offices; and

Changes in the political climate and general economic conditions, including a slowdown of the economy or unstable economic conditions and responses to conditions, such as emergency spending, which reduce funds available for other government priorities. The United Kingdom economy is now in a recession.

Additionally, the loss of any one customer may have a material adverse effect on future operating results and financial condition. Gresham’s product backlog also has a number of risks and uncertainties, such as the cancellation or deferral of orders, dispute over performance of Gresham’s products and Gresham’s ability to collect amounts due under these orders. If any of these events were to occur, actual shipments could be lower than projected and revenues could decline, which would have an adverse effect on Gresham’s operating results and liquidity.

Gresham faces intense industry competition and product obsolescence, which, in turn, could increase Gresham’s losses.

Gresham operates in an industry that is characterized by intense competition. Gresham’s competitors continuously engage in efforts to expand their business relationships with the same major defense contractors and the government with which Gresham enters into contracts and will continue these efforts in the future, and the governments may choose to use other contractors. Gresham believes that the principal competitive factors in Gresham’s markets are breadth of product line, quality of products, stability, reliability and reputation of the provider, along with cost. Quantity discounts, price erosion, and rapid product obsolescence due to technological improvements are therefore common in Gresham’s industry as competitors strive to retain or expand their market share. Product obsolescence can lead to increases in unsaleable inventory that may need to be written off and, therefore, could reduce Gresham’s profitability. Additionally, as Gresham is seeing with Microsource, the United States military’s decision to discontinue ordering certain aircraft where Microsource acts as a supplier, results in Gresham’s loss of orders.

Because Gresham’s competitors have greater resources, Gresham may not be able to compete effectively.

Several of Gresham’s competitors, including, among others, K&L Microwave, Q Microwave, Amplitech, Qorvo, Northrop Grumman, Teledyne, Textron, Keysight, Rohde & Schwarz and National Instruments have substantially greater research and development, manufacturing, marketing, financial, technological personnel and managerial resources than Gresham does. These resources also make these competitors better able to withstand difficult market conditions than Gresham can. Gresham cannot provide assurance that any products developed by these competitors will not gain greater market acceptance than any that Gresham develops.

Gresham’s products compete and will compete with similar, if not identical, products produced by Gresham’s competitors. These competitive products could be marketed by well-established, successful companies that possess greater financial, marketing, distribution personnel, and other resources than Gresham does. These companies can implement extensive advertising and promotional campaigns. They can introduce new products to new markets more rapidly. In certain instances, competitors with greater financial resources may be able to enter a market in direct competition with Gresham, offering attractive marketing tools to encourage the sale of products that compete with Gresham’s products or present cost features that customers may find attractive.

The markets for some of Gresham’s products (such as its commercial products in the United Kingdom) are also subject to specific competitive risks because these markets are highly price sensitive. Gresham’s competitors have competed in the past by lowering prices on certain products. If they do so again, Gresham may be forced to respond by lowering its own prices. That would reduce revenue and increase losses. Failure to anticipate and respond to price competition may also further reduce Gresham’s revenue and increase its losses.

The sale of Gresham’s products is dependent upon its ability to satisfy the proprietary requirements of its customers.

Gresham depends upon a narrow range of products and services for the majority of its revenue. Gresham’s success in marketing its products depends upon their continued acceptance by its customers. In some cases, these customers require that Gresham’s products meet their own proprietary requirements. If Gresham is unable to satisfy such requirements, or forecast and adapt to changes in such requirements, its business could be materially harmed.

Risks Related to Gresham’s Operations

If Gresham is unable to identify, attract, train and retain qualified personnel, especially its design and technical personnel, Gresham’s business and results of operations would be materially and adversely affected and it may not be able to effectively execute its business strategy.

Gresham’s performance and future success largely depend on Gresham’s continuing ability to identify, attract, train, retain and motivate qualified personnel, including its management, sales and marketing, finance and in particular its engineering, design and technical personnel. For example, Gresham currently has a limited number of qualified personnel for the assembling, tuning and testing processes. Members of Gresham’s technical staff are nearing retirement, and it may be difficult to replace them, given their experience and expertise. To the extent skilled engineering and manufacturing personnel can be beneficially utilized across divisions, Gresham will look to do so. In addition, Gresham will need additional staff to drive Microphase’s forecasted growth and to allow Enertec to handle larger orders. Further Enertec’s recruiting efforts are challenged by the conflicts in Israel and the priority of the military. Gresham does not know whether it can expand its workforce as needed. Gresham’s engineering, design and technical personnel represent a significant asset. The competition for qualified personnel in the defense industry in the United States, the United Kingdom and Israel is intense and constrains Gresham’s ability to attract qualified personnel. The loss of the services of one or more of Gresham’s key employees, especially its key engineering, design and technical personnel, or Gresham’s inability to attract, retain and motivate qualified personnel could have a material adverse effect on its business, financial condition and operating results.

Gresham’s strategic focus on purpose-built electronics solutions and concurrent cost reduction plans may be ineffective or may limit its ability to compete.

Gresham devotes significant resources to developing and manufacturing designed-in electronics solutions for its customers. Each product typically represents a uniquely tailored solution for a specific customer’s requirements. Failure to meet these customer product requirements or a failure to meet production schedules and/or product quality standards may put Gresham at risk with one or more of these customers. Moreover, changes in market conditions, such loss of distribution contracts with key foreign manufacturers, and changes in the needs and requirements of Gresham’s customers may affect their purchasing decisions. The loss of one or more of Gresham’s significant custom electronics solution customers or suppliers would have a material adverse impact on its revenue, business or financial condition.

A significant portion of Gresham’s contracts are fixed-price contracts that could subject it to losses in the event of cost overruns or a material increase in inflation.

Gresham negotiates most of its contracts on a fixed-price basis, which allows it to benefit from cost savings but also subjects it to the risk of potential cost overruns, particularly for firm fixed-price contracts, because Gresham assumes the entire cost burden. If Gresham’s initial estimates are incorrect, it can lose money on these contracts. Government contracts can expose Gresham to potentially large losses because the government can hold Gresham responsible for completing a project or, in certain circumstances, paying the entire cost of Gresham’s replacement by another provider regardless of the size or foreseeability of any cost overruns that occur over the life of the contract. Because many of these contracts involve new technologies and applications, unforeseen events such as technological difficulties, fluctuations in the price of raw materials, problems with Gresham’s suppliers and cost overruns, can result in the contractual price becoming less favorable or even unprofitable to Gresham. Furthermore, if Gresham fails to meet contract deadlines or specifications, Gresham may need to renegotiate contracts on less favorable terms, be forced to pay penalties or liquidated damages or suffer major losses if the customer exercises its right to terminate. In addition, some of Gresham’s contracts have provisions relating to cost controls and audit rights, and if Gresham fails to meet the terms specified in those contracts, it may not realize their full benefits. Cost overruns could have an adverse impact on Gresham’s operating results.

Gresham’s subsidiaries purchase a significant amount of their components and products outside of the countries in which they operate.

With the exception of Microphase and Microsource, which source all of their components from United States suppliers, Gresham purchases many components from foreign manufacturers. In addition, Gresham has a substantial majority of its commercial products assembled, packaged, and tested by subcontractors located outside the United States These activities are subject to the uncertainties associated with international business operations, including trade barriers and other restrictions, changes in trade policies, governmental regulations, currency exchange fluctuations, reduced protection for intellectual property, war and other military activities, terrorism, material changes in social, political, pandemic, or economic conditions, and other disruptions or delays in production or shipments, any of which could have a materially adverse effect on Gresham’s business and operating results.

Risks Related to the Chapter 11 Case

As a result of the Chapter 11 Case, Gresham’s financial results may be volatile and may not reflect historical trends .

Due to the Chapter 11 Case, Gresham expects its financial results to continue to be volatile as restructuring activities and expenses, contract terminations and rejections, and claims assessments significantly impact Gresham’s consolidated financial statements. As a result, Gresham’s historical financial performance is likely not indicative of Gresham’s financial performance after the Petition Date. In addition, the amounts reported in subsequent consolidated financial statements may materially change relative to historical consolidated financial statements, due to, among other things, revisions to Gresham’s operating plans pursuant to a plan of reorganization. Gresham also may be required to adopt fresh start accounting, in which case Gresham’s assets and liabilities will be recorded at fair value as of the fresh start reporting date. Such value may differ materially from the recorded values of assets and liabilities on Gresham’s consolidated balance sheets. Gresham’s financial results after the application of fresh start accounting also may be different from historical trends.

Gresham has experienced, and may continue to experience, increased levels of employee attrition as a result of the Chapter 11 Case .

As a result of the Chapter 11 Case, Gresham has experienced, and may continue to experience, increased levels of employee attrition, and Gresham’s employees have faced, and likely will continue to face, considerable distraction and uncertainty. A loss of key personnel or material erosion of employee morale could adversely affect Gresham’s business and results of operations. Gresham’s ability to engage, motivate and retain key employees or take other measures intended to motivate and incentivize key employees to remain with it through the pendency of the Chapter 11 Case may be limited by restrictions on implementation of incentive programs under the Bankruptcy Code. The loss of services of members of Gresham’s senior management team and other employees could impair Gresham’s ability to execute Gresham’s strategy and implement operational initiatives, which would be likely to have a material adverse effect on Gresham’s business, financial condition and results of operations.

Risks Related to TurnOnGreen

TurnOnGreen can provide no assurance of any successful expansion of its operations.

TurnOnGreen’s significant increase in the scope and scale of our operations, including the hiring of additional personnel, has resulted in substantially higher operating expenses. TurnOnGreen anticipates that its operating expenses will continue to increase. Expansion of its operations may also make significant demands on its management, finances and other resources. Its ability to manage future growth, should it occur, will depend on the expansion of its accounting and other internal management systems and the implementation and subsequent improvement of a variety of systems, procedures and controls. TurnOnGreen cannot assure you that significant problems will not arise in these areas. Failure to expand and improve these systems, procedures, and controls efficiently and at a pace consistent with TurnOnGreen’s business growth could have a material adverse effect on its business, financial condition, and results of operations. Additionally, TurnOnGreen cannot assure you that its efforts to expand marketing, sales, manufacturing, and customer support will generate additional sales or profitability in the future.

Changes in U.S. and international trade policies, particularly with respect to China, and key trading countries, may adversely impact TurnOnGreen’s business and operating results.

TurnOnGreen relies on foreign third-party manufacturers and component suppliers located in China, Taiwan, Israel, and other countries. The U.S. government has taken actions that may result in changes to U.S. and international trade policies. In April 2025, the U.S. government announced tariffs on imports from China that may reach a combined total rate of up to at least 145%, including the 20% tariff implemented in February 2025. Tariffs of 10% were also imposed on imports from Taiwan and Israel. If maintained or expanded to additional countries, tariffs and potential trade disputes with China or other countries could increase TurnOnGreen’s costs of revenue and operating expenses. The extent and duration of tariffs, and their impact on global economic conditions and TurnOnGreen’s business, remain uncertain.

TurnOnGreen is in a highly competitive EV charging services industry and there can be no assurance that TurnOnGreen will be able to compete with many of its competitors, which are larger and have greater financial resources.

TurnOnGreen faces strong competition from other EV charging providers, some of which are able to duplicate aspects of its business model. Many competitors have substantially greater financial, marketing, and development resources than TurnOnGreen has. In addition, barriers to entry in certain segments of the EV charging services market are relatively low. As a result, competitors may independently develop services that are substantially equivalent or superior to their services. Therefore, an investment in TurnOnGreen is very risky and speculative.

TurnOnGreen’s competitors may also provide customers with greater capabilities or benefits in areas such as technical qualifications, past contract performance, geographic presence, and pricing. Furthermore, competitors with greater resources may develop competing technologies, secure broader contracts, or recruit TurnOnGreen’s employees by offering more attractive compensation packages.

Risks Related to Ownership of Our Class A Common Stock and Future Offerings

You may experience future dilution as a result of future equity offerings.

In order to raise additional capital, we may in the future offer additional shares of our Class A common stock or other securities convertible into or exchangeable for our Class A common stock at varying prices. We cannot predict whether future issuances of shares of our Class A common stock or the availability of shares for resale in the open market will decrease the market price per share of our Class A common stock. We are not restricted from issuing additional shares of Class A common stock, including any securities that are convertible into or exchangeable for, or that represent the right to receive shares of Class A common stock. Sales of a substantial number of shares of our Class A common stock in the public market or the perception that such sales might occur, including, for example, sales under our existing Second ATM Offering, could materially adversely affect the market price of the shares of our Class A common stock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our stockholders bear the risk of any future stock issuances reducing the market price of our Class A common stock and diluting their stock holdings in us.

Our Class A common stock price is volatile.

Our Class A common stock is listed on the NYSE American. In the past, our trading price has fluctuated widely, depending on many factors that may have little to do with our operations or business prospects. During the past 52-week period (through April 13, 2026), our stock closed at prices between $9.98 per share and $0.13 per share, as reported on Nasdaq.com. On April 13, 2026, the price of our Class A common stock closed at $0.15 per share.

Stock markets, in general, have experienced, and continue to experience, significant price and volume volatility, and the market price of our Class A common stock may continue to be subject to similar market fluctuations unrelated to our operating performance or prospects. This increased volatility, coupled with depressed economic conditions, could continue to have a depressive effect on the market price of our Class A common stock. The following factors, many of which are beyond our control, may influence our stock price:

the status of our growth strategy including the development of new products with any proceeds we may be able to raise in the future;

announcements of technological or competitive developments;

announcements or expectations of additional financing efforts;

our ability to market new and enhanced products on a timely basis;

changes in laws and regulations affecting our business;

commencement of, or involvement in, litigation involving us;

regulatory developments affecting us, our customers or our competitors;

announcements regarding patent or other intellectual property litigation or the issuance of patents to us or our competitors or updates with respect to the enforceability of patents or other intellectual property rights generally in the US or internationally;

actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;

changes in the market’s expectations about our operating results;

our operating results failing to meet the expectations of securities analysts or investors in a particular period;

changes in the economic performance or market valuations of our competitors;

additions or departures of our executive officers;

sales or perceived sales of our common stock by us, our insiders or our other stockholders;

share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; and

general economic, industry, political and market conditions and overall fluctuations in the financial markets in the United States and abroad.

In addition, the securities markets have, from time to time, experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. Any of these factors could result in large and sudden changes in the volume and trading price of our Class A common stock and could cause our stockholders to incur substantial losses. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted securities class action litigation against that company. If we were involved in a class action suit or other securities litigation, it would divert the attention of our senior management, require us to incur significant expense and, whether or not adversely determined, have a material adverse effect on our business, financial condition, results of operations and prospects.

Volatility in our Class A common stock price may subject us to securities litigation.

Stock markets, in general, have experienced, and continue to experience, significant price and volume volatility, and the market price of our Class A common stock may continue to be subject to similar market fluctuations unrelated to our operating performance or prospects. This increased volatility, coupled with depressed economic conditions, could have a depressing effect on the market price of our Class A common stock.

In addition, the securities markets have, from time to time, experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. Any of these factors could result in large and sudden changes in the volume and trading price of our Class A common stock and could cause our stockholders to incur substantial losses. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted securities class action litigation against that company. If we were involved in a class action suit or other securities litigation, it would divert the attention of our senior management, require us to incur significant expense and, whether or not adversely determined, have a material adverse effect on our business, financial condition, results of operations and prospects.

We have a substantial number of convertible notes, warrants and preferred stock outstanding that could affect our price.

Due to a number of financings, we have a substantial number of shares that are subject to issuance pursuant to outstanding convertible debt, warrants and options. As of April 12, 2026, the number of shares of Class A common stock subject to convertible notes, warrants, class B common stock, Series C Convertible Preferred Stock, Series G Preferred Stock and Series H Preferred Stock were 50,930,616, 639,105, 24,153,459, 347,222,219, 6,666,666 and 27,777,778 respectively. The issuance of Class A common stock pursuant to convertible notes, warrants and preferred stock at conversion or exercise prices lower than market prices may have the effect of limiting an increase in the market price of our Class A common stock.

Risks Related to the Planned Divestiture of Ault Capital

Completion of the Divestiture could result in a decline in the price of our Class A common stock.

We currently do not anticipate that any of the ACG Shares will be listed on any market, exchange or trading system at the time of the Divestiture, so we do not expect the NYSE American to adjust the value of our Class A common stock upon the completion of the Divestiture. As the distribution of the Series F Preferred Stock was completed more than a year ago, we believe that the market may have already adjusted the value of the Class A common stock to reflect the planned Divestiture. However, upon the completion of the Divestiture, the assets and revenue of Ault Capital will no longer be consolidated into our financial statements. As such, it is possible that the price of our Class A common stock may then decline after the Divestiture, as some stockholders may perceive that the market value of Ault Capital will be removed from our valuation at that time.

The Divestiture might not be completed or not be completed within the envisaged time frame.

The Divestiture process is complex, time-consuming and involves significant costs and expenses. There are risks and uncertainties relating to the execution of the Divestiture, including the timing and certainty of the completion of the Divestiture. When we made the distribution of the Series F Preferred Stock, we initially contemplated completing the Divestiture by December 31, 2025. Due to various factors, including legal and regulatory hurdles to the Divestiture, we currently expect the Divesture of Ault Capital to occur in the second quarter of 2027. However, that time frame may change again in the future or the Divestiture could never occur. If we are unable to complete the Divestiture effectively or within the envisaged time frame, we may incur temporary interruptions in business operations. In addition, any further delays in completing the Divestiture could disrupt our business and have a material adverse effect on our business, financial condition, liquidity and results of operations.

Certain of our executive officers and directors may have actual or potential conflicts of interest after the Divestiture.

While we currently anticipate that, following the Divestiture, certain of our executive officers and directors will only be executive officers and/or directors of one of the resulting companies (Ault Capital or Hyperscale), we anticipate that at least some of the executive officers and/or directors may have positions with both entities. In addition, some of the executive officers and/or directors may also be executive officers and/or directors of Ault & Company, which owns a majority of the Series F Preferred Stock (and thus will own a majority of Ault Capital after the Divestiture) and is currently the largest beneficial owner of Hyperscale Data. In addition, certain of the executive officers and directors will continue to have a financial interest in shares of common stock of the other entity following the Divestiture. These overlapping positions of management and/or cross ownership could create, or appear to create, potential conflicts of interest that could have different implications for Hyperscale Data and Ault Capital.

General Risk Factors

Our limited operating history makes it difficult to evaluate our future business prospects and to make decisions based on our historical performance .

Although our executive officers have been engaged in the industries in which we operate for varying degrees of time, we did not begin operations of our current business until recently. We have a very limited operating history in our current form, which makes it difficult to evaluate our business on the basis of historical operations. As a consequence, it is difficult, if not impossible, to forecast our future results based upon our historical data. Reliance on our historical results may not be representative of the results we will achieve, and for certain areas in which we operate, principally those unrelated to defense contracting, will not be indicative at all. Because of the uncertainties related to our lack of historical operations, we may be hindered in our ability to anticipate and timely adapt to increases or decreases in sales, product costs or expenses. If we make poor budgetary decisions as a result of unreliable historical data, we could be less profitable or incur losses, which may result in a decline in our stock price.

Deterioration of global economic conditions could adversely affect our business .

The global economy and capital and credit markets have experienced exceptional turmoil and upheaval over the past several years. Ongoing concerns about the systemic impact of potential long-term and widespread recession and potentially prolonged economic recovery, volatile energy costs, fluctuating commodity prices and interest rates, volatile exchange rates, geopolitical issues, including the conflicts between Russia and Ukraine as well as the one between the United States and Israel against Iran, natural disasters and pandemic illness, instability in credit markets, cost and terms of credit, consumer and business confidence and demand, a changing financial, regulatory and political environment, and substantially increased unemployment rates have all contributed to increased market volatility and diminished expectations for many established and emerging economies, including those in which we operate. Furthermore, austerity measures that certain countries may agree to as part of any debt crisis or disruptions to major financial trading markets may adversely affect world economic conditions and have an adverse impact on our business. These general economic conditions could have a material adverse effect on our cash flow from operations, results of operations and overall financial condition.

The availability, cost and terms of credit also have been and may continue to be adversely affected by illiquid markets and wider credit spreads. Concern about the stability of the markets generally, and the strength of counterparties specifically, has led many lenders and institutional investors to reduce credit to businesses and consumers. These factors have led to a decrease in spending by businesses and consumers over the past several years, and a corresponding slowdown in global infrastructure spending.

Continued uncertainty in the U.S. and international markets and economies and prolonged stagnation in business and consumer spending may adversely affect our liquidity and financial condition, and the liquidity and financial condition of our customers, including our ability to access capital markets and obtain capital lease financing to meet liquidity needs.

If we fail to establish and maintain an effective system of internal control over financial reporting, we may not be able to report our financial results accurately or prevent fraud. Any inability to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading price of our Class A common stock.

Effective internal control over financial reporting is necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed. As a result, our small size and any current internal control deficiencies may adversely affect our financial condition, results of operations and access to capital. We have carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the most recent period covered by this report. Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weakness described below.

A material weakness is a deficiency, or a combination of deficiencies, within the meaning of Public Company Accounting Oversight Board (“PCAOB”) Audit Standard No. 5, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weakness which has caused management to conclude that as of December 31, 2025, our internal control over financial reporting (“ICFR”) was not effective at the reasonable assurance level.

We identified material weaknesses related to (i) insufficient accounting personnel and resources, which limited our ability to perform timely and effective review and analysis of financial reporting information, including complex accounting matters, and (ii) limitations in segregation of duties due to the size and structure of the organization. These conditions increase the risk that errors or misstatements may not be prevented or detected on a timely basis. Management evaluated these deficiencies in the aggregate and concluded that they represent material weaknesses in internal control over financial reporting.

We are currently working to improve and simplify our internal processes and implement enhanced controls to address the material weakness in our internal control over financial reporting and to remedy the ineffectiveness of our disclosure controls and procedures. This material weakness 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.

If our accounting controls and procedures are circumvented or otherwise fail to achieve their intended purposes, our business could be seriously harmed.

We evaluate our disclosure controls and procedures as of the end of each fiscal quarter, and annually review and evaluate our internal control over financial reporting in order to comply with the SEC’s rules relating to internal control over financial reporting adopted pursuant to the Sarbanes-Oxley Act of 2002. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. If we fail to maintain effective internal control over financial reporting or our management does not timely assess the adequacy of such internal control, we may be subject to regulatory sanctions, and our reputation may decline.

Our internal computer systems may fail or suffer security breaches, which could result in a material disruption of our operations .

Like any other business, we rely on e-mail and other digital communications methods as part of our normal operations. As such, our internal computer systems and servers could fail or suffer security breaches, possibly resulting in a material disruption to our operations. The secure operation of our IT networks and systems as well as the secure processing and maintenance of information is critical to our operations and business strategy. Notwithstanding these priorities, we have experienced attempts at cybercrime such as phishing and other electronic fraud, including efforts to misdirect payments to imposter vendors and service providers. After experiencing a financial loss due to e-mail fraud in November 2021, we have instituted greater internal controls and procedures, both electronic and non-electronic, to combat such fraudulent conduct. We also maintain an insurance policy to cover any losses or injuries suffered from cybercrime of this nature; however, it may not be sufficient to cover all damages. Despite our efforts, attempts at fraud such as spoofed e-mails, requests for payment and similar deceptions have become commonplace in the world of e-commerce and are expected to continue. If we are unable to prevent such security breaches in the future, these events or circumstances could materially and adversely affect our operations, financial condition and operating results and impair our ability to execute our business strategy.

We face significant competition, including changes in pricing.

The markets for our products and services are both competitive and price sensitive. Many competitors have significant financial, operations, sales and marketing resources, plus experience in research and development, and compete with us by offering lower prices. Competitors could develop new technologies that compete with our products to achieve a lower unit price. If a competitor develops lower cost and/or superior technology or cost-effective alternatives to our products and services, our business could be seriously harmed.

The markets for some of our products are also subject to specific competitive risks because these markets are highly price sensitive. Our competitors have competed in the past by lowering prices on certain products. If they do so again, we may be forced to respond by lowering our prices. This would reduce sales revenues and increase losses. Failure to anticipate and respond to price competition may also impact sales and aggravate losses.

Many of our competitors are larger and have greater financial and other resources than we do.

Our products compete and will compete with similar if not identical products produced by our competitors. These competitive products could be marketed by well-established, successful companies that possess greater financial, marketing, distribution personnel, and other resources than we do. Using said resources, these companies can implement extensive advertising and promotional campaigns, both generally and in response to specific marketing efforts by competitors. They can introduce new products to new markets more rapidly. In certain instances, competitors with greater financial resources may be able to enter a market in direct competition with us, offering attractive marketing tools to encourage the sale of products that compete with our products or present cost features that consumers may find attractive.

Our growth strategy is subject to a significant degree of risk.

Our growth strategy through acquisitions involves a significant degree of risk. Some of the companies that we have identified as acquisition targets or made a significant investment in may not have a developed business or are experiencing inefficiencies and incur losses. Therefore, we may lose our investment in the event that these companies’ businesses do not develop as planned or that they are unable to achieve the anticipated cost efficiencies or reduction of losses.

Further, in order to implement our growth plan, we have hired additional staff and consultants to review potential investments and implement our plan. As a result, we have substantially increased our infrastructure and costs. If we fail to quickly find new companies that provide revenue to offset our costs, we will continue to experience losses. No assurance can be given that our product development and investments will produce sufficient revenues to offset these increases in expenditures.

Changes in the U.S. tax and other laws and regulations may adversely affect our business.

The U.S. Government may revise tax laws, regulations or official interpretations in ways that could have a significant adverse effect on our business, including modifications that could reduce the profits that we can effectively realize from our international operations, or that could require costly changes to those operations, or the way in which they are structured. For example, the effective tax rates for most U.S. companies reflect the fact that income earned and reinvested outside the U.S. is generally taxed at local rates, which may be much lower than U.S. tax rates. If we expand abroad and there are changes in tax laws, regulations or interpretations that significantly increase the tax rates on non-U.S. income, our effective tax rate could increase and our profits could be reduced. If such increases resulted from our status as a U.S. company, those changes could place us at a disadvantage to our non-U.S. competitors if those competitors remain subject to lower local tax rates.

Our sales and profitability may be affected by changes in economic, business and industry conditions .

If the economic climate in the U.S. or abroad deteriorates, customers or potential customers could reduce or delay their technology investments. Reduced or delayed technology and entertainment investments could decrease our sales and profitability. In this environment, our customers may experience financial difficulty, cease operations and fail to budget or reduce budgets for the purchase of our products and professional services. This may lead to longer sales cycles, delays in purchase decisions, payment and collection, and can also result in downward price pressures, causing our sales and profitability to decline. In addition, general economic uncertainty and general declines in capital spending in the information technology sector make it difficult to predict changes in the purchasing requirements of our customers and the markets we serve. There are many other factors which could affect our business, including:

The introduction and market acceptance of new technologies, products and services;

New competitors and new forms of competition;

The size and timing of customer orders (for retail distributed physical product);

The size and timing of capital expenditures by our customers;

Adverse changes in the credit quality of our customers and suppliers;

Changes in the pricing policies of, or the introduction of, new products and services by us or our competitors;

Changes in the terms of our contracts with our customers or suppliers;

The availability of products from our suppliers; and

Variations in product costs and the mix of products sold.

These trends and factors could adversely affect our business, profitability and financial condition and diminish our ability to achieve our strategic objectives.

The rights of the holders of common stock may be impaired by the potential issuance of preferred stock.

Our certificate of incorporation gives our Board the right to create new series of preferred stock. As a result, the Board may, without stockholder approval, issue preferred stock with voting, dividend, conversion, liquidation or other rights which could adversely affect the voting power and equity interest of the holders of common stock. Preferred stock, which could be issued with the right to more than one vote per share, could be utilized as a method of discouraging, delaying or preventing a change of control. The possible impact on takeover attempts could adversely affect the price of our Class A common stock. We may issue shares of preferred stock in the future.

The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.

We are a public company and subject to the reporting requirements of the Exchange Act, and the Sarbanes-Oxley Act of 2002. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal controls for financial reporting. For example, Section 404 of the Sarbanes-Oxley Act requires that our management report on the effectiveness of our internal controls structure and procedures for financial reporting. Section 404 compliance may divert internal resources and will take a significant amount of time and effort to complete. If we fail to maintain compliance under Section 404, or if our internal control over financial reporting continues to not be effective as defined under Section 404, we could be subject to sanctions or investigations by the NYSE American, the SEC, or other regulatory authorities. Furthermore, investor perceptions of our company may suffer, and this could cause a decline in the market price of our Class A common stock. Any failure of our internal controls could have a material adverse effect on our stated results of operations and harm our reputation. If we are unable to implement these changes effectively or efficiently, it could harm our operations, financial reporting or financial results and could result in an adverse opinion on internal controls from our independent auditors. We may need to hire a number of additional employees with public accounting and disclosure experience in order to meet our ongoing obligations as a public company, particularly if we become fully subject to Section 404 and its auditor attestation requirements, which will increase costs. Our management team and other personnel will need to devote a substantial amount of time to new compliance initiatives and to meeting the obligations that are associated with being a public company, which may divert attention from other business concerns, which could have a material adverse effect on our business, financial condition and results of operations.

We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.

We are required to comply with certain provisions of Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”). Section 404 requires that we document and test our internal control over financial reporting and issue management’s assessment of our internal control over financial reporting. Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Based on our assessment, as of December 31, 2025, we concluded that our internal control over financial reporting contained material weaknesses.

The weakness will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and our management has concluded, through testing, that these controls are operating effectively. If we fail to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, the accuracy and timeliness of the filing of our annual and quarterly reports may be materially adversely affected and could cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our Class A common stock. In addition, a material weakness in the effectiveness of our internal control over financial reporting could result in an increased chance of fraud and the loss of customers, reduce our ability to obtain financing and require additional expenditures to comply with these requirements, each of which could have a material adverse effect on our business, results of operations and financial condition.

The elimination of monetary liability against our directors, officers and employees under law and the existence of indemnification rights for or obligations to our directors, officers and employees may result in substantial expenditures by us and may discourage lawsuits against our directors, officers and employees.

Our certificate of incorporation contains a provision permitting us to eliminate the personal liability of our directors to us and our stockholders for damages for the breach of a fiduciary duty as a director or officer to the extent provided by Delaware law. We have entered into indemnification agreements with each of our directors and executive officers and may also have contractual indemnification obligations under current and/or future employment agreements with other officers. The foregoing indemnification obligations could result in us incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which we may be unable to recoup. These provisions and the resulting costs may also discourage us from bringing a lawsuit against directors and officers for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our stockholders against our directors and officers even though such actions, if successful, might otherwise benefit us and our stockholders.

We do not anticipate paying cash dividends on our common stock and, accordingly, stockholders must rely on stock appreciation for any return on their investment.

We have never declared or paid cash dividends on our Class A common stock and do not expect to do so in the foreseeable future. The declaration of dividends is subject to the discretion of our Board and will depend on various factors, including our operating results, financial condition, future prospects and any other factors deemed relevant by our Board. You should not rely on an investment in our company if you require dividend income from your investment in our company. The success of your investment will likely depend entirely upon any future appreciation of the market price of our Class A common stock, which is uncertain and unpredictable. There is no guarantee that our Class A common stock will appreciate in value.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Note Regarding Forward-Looking Statements

This Annual Report on Form 10-K contains forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Such forward-looking statements include statements regarding, among others, (a) our expectations about possible business combinations, (b) our growth strategies, (c) our future financing plans, and (d) our anticipated needs for working capital. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “approximate,” “estimate,” “believe,” “intend,” “plan,” “budget,” “could,” “forecast,” “might,” “predict,” “shall” or “project,” or the negative of these words or other variations on these words or comparable terminology. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found in this Annual Report.

Forward-looking statements are based on our current expectations and assumptions regarding our business, potential target businesses, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” in this Annual Report, changes in local, regional, national or global political, economic, business, competitive, market (supply and demand) and regulatory conditions and the following:

Adverse economic conditions;

Our ability to effectively execute our business plan;

Inability to raise sufficient additional capital to operate our business;

Our ability to manage our expansion, growth and operating expenses;

Our ability to evaluate and measure our business, prospects and performance metrics;

Our ability to compete and succeed in highly competitive and evolving industries;

Our ability to respond and adapt to changes in technology and customer behavior;

Our ability to protect our intellectual property and to develop, maintain and enhance a strong brand; and

Other specific risks referred to in the section entitled “ Risk Factors ”.

We caution you therefore that you should not rely on any of these forward-looking statements as statements of historical fact or as guarantees or assurances of future performance. All forward-looking statements speak only as of the date of this Annual Report. We undertake no obligation to update any forward-looking statements or other information contained herein unless required by law.

Information regarding market and industry statistics contained in this Annual Report is included based on information available to us that we believe is accurate. It is generally based on academic and other publications that are not produced for purposes of securities offerings or economic analysis. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue and market acceptance of products and services. Except as required by U.S. federal securities laws, we have no obligation to update forward-looking information to reflect actual results or changes in assumptions or other factors that could affect those statements. See the section entitled “ Risk Factors ” for a more detailed discussion of risks and uncertainties that may have an impact on our future results.

In this Annual Report, the “Company,” “we,” “us” and “our” refer to Hyperscale Data, Inc., a Delaware corporation, which was incorporated in September 2017. We are an artificial intelligence (“AI”) data center company anchored by Bitcoin. Through our wholly owned subsidiary, Sentinum, Inc. (“Sentinum”), we own and operate a large-scale data center platform that integrates AI compute infrastructure with Bitcoin mining operations under a unified, parallel compute model. This hybrid architecture enables us to generate compute power for enterprise AI workloads through NVIDIA graphic processing unit clusters, while also operating high-efficiency Bitcoin mining systems that contribute to the Bitcoin network and our growing digital asset treasury.

Through our other wholly owned subsidiary, Ault Capital Group, Inc. (“Ault Capital”), we currently hold a portfolio of diversified businesses and strategic investments spanning commercial lending and trading, hotel operations, crane rental, AI-driven software platforms and commercial electronics. We anticipate completing the planned divestiture of Ault Capital in 2027, at which time we expect to operate as a focused AI data center and Bitcoin infrastructure company.

Our direct and indirect wholly owned subsidiaries include:

Sentinum, Inc. (“Sentinum”);

Alliance Cloud Services, LLC (“ACS”);

BNI Montana, LLC (“BNI Montana”);

Ault Lending, LLC (“Ault Lending”);

Gresham Worldwide, Inc. (“Gresham”), which wholly owns Enertec Systems 2001 Ltd. (“Enertec”), Relec Electronics Ltd. (“Relec”) and Giga-tronics Incorporated (“GIGA”) and holds a controlling interest in Microphase Corporation (“Microphase”);

RiskOn International, Inc., formerly known as BitNile Metaverse, Inc. (“ROI”), which wholly owns BitNile.com, Inc. (“BNC”);

askROI, Inc. (“askROI”);

Ault Global Real Estate Equities, Inc. (“AGREE”);

Ault Aviation, LLC (“Ault Aviation”);

Circle 8 Holdco LLC (“Circle 8 Holdco”), which wholly owns Circle 8 Crane Services, LLC (“Circle 8”); and

TurnOnGreen, Inc. (“TurnOnGreen”), which wholly owns TOG Technologies, Inc. (“TOG Technologies”) and Digital Power Corporation (“Digital Power”).

Recent Events and Developments

On December 2, 2025, we issued to JGB Capital, LP, JGB Partners, LP and JGB Capital Offshore Ltd. the Convertible Notes in the aggregate principal face amount of $12.8 million in consideration for an aggregate of $12.0 million paid to us. The Convertible Notes bear interest at 12.5% per annum, mature on December 2, 2027, and are convertible into Conversion Shares at a conversion price equal to the lower of (i) $0.3235 per share and (ii) 85% of the lowest daily volume-weighted average price during the three trading days immediately preceding and including the applicable conversion date, but not less than $0.40.

On December 19, 2025, we entered into an At-the-Market Issuance Sales Agreement with Spartan Capital Securities, LLC (“Spartan”), as sales agent to sell shares of our Class A common stock, having an aggregate offering price of up to $50 million from time to time, through an “at the market offering” (the “Second ATM Offering”) as defined in Rule 415 under the Securities Act. On December 19, 2025, we filed a prospectus supplement with the SEC relating to the offer and sale of up to $50 million of Class A common stock in the Second ATM Offering. On January 16, 2026, we amended the At-the-Market Issuance Sales Agreement and filed a prospectus supplement to indicate that Spartan will serve as the lead sales agent and to add Wilson-Davis as an additional sales agent.

As of April 12, 2026, we have sold 91.6 million shares of our Class A common stock under the Second ATM Offering for gross proceeds of approximately $18.1 million.

On February 13, 2026, we entered into an At-the-Market Issuance Sales Agreement with Wilson Davis, as sales agent to sell shares of our 13.00% Series D Cumulative Redeemable Perpetual Preferred Stock, par value $0.001 per share (the “Series D Preferred”), having an aggregate offering price of up to $35.4 million from time to time, through an “at the market offering” (the “Series Preferred D ATM Offering”) as defined in Rule 415 under the Securities Act. On February 13, 2026, we filed a prospectus supplement with the SEC relating to the offer and sale of up to $35.4 million of Series D Preferred in the Series D Preferred ATM Offering.

As of April 12, 2026, we have sold 2,909 shares of our Series D Preferred under the Series D Preferred ATM Offering for gross proceeds of approximately $65,000.

Presentation of Gresham

On August 14, 2024, Gresham filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code. Upon the filing, Gresham became subject to the jurisdiction and oversight of the bankruptcy court. As a result of the loss of control over Gresham’s significant operating and financial decisions, we determined that we no longer maintained a controlling financial interest in Gresham and deconsolidated Gresham and its subsidiaries effective as of the petition date.

Upon deconsolidation, we recognized a gain on deconsolidation of approximately $2.0 million, which is included in net gain (loss) from discontinued operations in the consolidated statement of operations for the year ended December 31, 2024.

On June 6, 2025, we entered into a settlement agreement with Gresham and Gresham’s senior secured lenders. On August 29, 2025, the United States Bankruptcy Court for the District of Arizona confirmed Gresham’s Plan of Reorganization (the “Plan”). Pursuant to the confirmed Plan, certain senior lender claims were resolved in exchange for settlement payments, which were funded prior to emergence.

The Plan became effective on November 28, 2025 (the “Effective Date”), at which time Gresham emerged from Chapter 11 bankruptcy.

On November 28, 2025, upon the Effective Date of the Plan, we regained control of Gresham and obtained 100% of the voting equity of the reorganized entity. Because we had previously deconsolidated Gresham during the bankruptcy proceedings and regained control upon emergence, the transaction was accounted for as a business combination under Accounting Standards Codification (“ASC”) 805, Business Combinations. Gresham has been reconsolidated beginning on November 28, 2025.

Gresham’s primary operations are in the defense and aerospace markets and consist principally of the Enertec, Microphase and Relec businesses. Management believes the reconsolidation strengthens our position in mission-critical electronic components and power systems and enhances our long-term growth profile.

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 Ault Global Real Estate Equities, Inc. (“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 year ended December 31, 2024.

Deconsolidation of Avalanche International Corp. (“AVLP”)

On March 28, 2025, AVLP, 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. 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 consolidated statement of operations for the year ended December 31, 2025. We evaluated the criteria for discontinued operations and determined that the operations of AVLP did not meet the requirements for such classification.

Deconsolidation of Eco Pack Technologies Limited (“Eco Pack”)

On 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 consolidated statement of operations for the year ended December 31, 2025. We evaluated the criteria for discontinued operations and determined that the operations of Eco Pack did not meet the requirements for such classification.

Deconsolidation of a Subsidiary of RiskOn International, Inc. (“ROI”)

During the year ended December 31, 2025, we recognized a gain of $2.7 million in connection with the bankruptcy proceedings for a subsidiary of ROI. We deconsolidated the subsidiary as we determined that we no longer maintained a controlling financial interest in the subsidiary. The gain recognized reflects the derecognition of the subsidiary’s remaining assets, liabilities, and equity balances. We evaluated the criteria for discontinued operations and determined that the operations of the subsidiary did not meet the requirements for such classification.

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, working capital needs and other senior capital commitments.

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, 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.

We are a Delaware corporation with our corporate office located at 11411 Southern Highlands Pkwy, Suite 190, Las Vegas, NV 89141. Our phone number is 949-444-5464 and our website address is www.hyperscaledata.com.

Results of Operations

Results of Operations for the Years ended December 31, 2025 and 2024

The following table summarizes the results of our operations for the years ended December 31, 2025 and 2024.

For the Year Ended December 31,

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

Gross profit

Operating expenses

General and administrative

Selling and marketing

Research and development

Change in fair value of crypto assets

Impairment of property and equipment

Impairment of goodwill and intangible assets

Total operating expenses

Loss from operations

Other income (expense):

Interest and other income

Interest expense

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

(Loss) gain on extinguishment of debt

Loss from investment in unconsolidated entity

Impairment of equity securities

Change in fair value of embedded derivative liabilities

Gain on deconsolidation of subsidiary

(Loss) gain on the sale of fixed assets

Total other expense, net

Loss before income taxes

Income tax provision

Net loss from continuing operations

Net loss from discontinued operations

Net loss

Net (loss) income attributable to non-controlling interest

Net loss attributable to Hyperscale Data, Inc.

Preferred dividends

Net loss attributable to common stockholders

Comprehensive loss

Net loss attributable to common stockholders

Other comprehensive income (loss)

Foreign currency translation adjustment

Other comprehensive income (loss)

Total comprehensive loss

Revenues

Revenues by segment for the years ended December 31, 2025 and 2024 were as follows:

For the Year Ended December 31,

Increase

(Decrease)

Sentinum

Revenue, crypto assets mining

Revenue, commercial real estate leases

Energy

Revenue, crane operations

Other

AGREE

TurnOnGreen

Gresham

Fintech

Revenue, lending and trading activities

Other

Total revenue

n/m - not meaningful

Sentinum

Revenues from Sentinum’s crypto assets mining operations decreased $9.3 million to $21.3 million for the year ended December 31, 2025, compared to $30.6 million for the year ended December 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 $5.6 million decline in revenue from Sentinum crypto mining equipment hosted at third-party facilities. The $3.7 million decrease in revenue from mined crypto assets at Sentinum owned and operated facilities was due in part to the April 2024 Bitcoin halving event, which reduced the block reward on the Bitcoin network, as well as a 47% increase in the average Bitcoin mining difficulty level, partially offset by a 54% increase in the average Bitcoin price for the year ended December 31, 2025, compared to the corresponding period in 2024. No revenue was generated from third-party hosted mining operations in 2025.

Energy

Energy revenues from Circle 8’s crane operations declined by $2.0 million, or 4%, to $45.5 million for the year ended December 31, 2025, compared to $47.5 million for the same period in 2024. The 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 and trade-related concerns, all of which impacted the pace of new project starts and the need for crane services.

AGREE

Revenues from AGREE’s hotel operations increased by $0.9 million, or 5%, to $19.0 million for the year ended December 31, 2025, compared to $18.0 million for the same period in 2024. The increase reflects incremental improvements in both occupancy and average daily rates, indicating continued progress in hotel performance year-over-year.

TurnOnGreen

TurnOnGreen’s revenues increased by $2.3 million, to $7.2 million for the year ended December 31, 2025, compared to $4.9 million in the corresponding period in 2024. This increase was primarily due to a new defense customer that contributed $1.1 million in new revenue, increased revenue of $0.7 million from one of our existing defense industry customers and $0.7 million increased revenue from two of our commercial and telecom customers, partially offset by decreased sales of $0.2 million from one of medical customers during the year ended December 31, 2025.

Gresham

Revenue attributable to Gresham was $3.4 million for the year ended December 31, 2025, compared to no revenue in the prior year. The increase reflects our acquisition of Gresham upon its emergence from bankruptcy on November 28, 2025. As a result, Gresham’s operating results were consolidated only for the period subsequent to emergence in 2025, representing approximately one month of activity during the year, whereas no comparable revenue was included in 2024.

Fintech

Revenues from our lending and trading activities decreased by approximately $0.2 million to $1.7 million for the year ended December 31, 2025, compared to revenues of approximately $1.9 million for the year ended December 31, 2024. The decrease was primarily attributable to realized losses on related-party investments, lower fee income and reduced realized trading gains.

Fee income declined to approximately $0.3 million for the year ended December 31, 2025, compared to approximately $2.3 million for the year ended December 31, 2024. Realized trading gains decreased to approximately $1.8 million from approximately $3.2 million in the prior year. In addition, during the year ended December 31, 2025, we recognized approximately $0.4 million of realized losses on related-party investments, primarily related to equity investments in Alzamend. In addition, interest income improved to approximately $0.6 million for the year ended December 31, 2025, compared to negative $0.2 million for the year ended December 31, 2024. The prior year also included a $2.4 million impairment of equity securities that did not recur during the year ended December 31, 2025.

Revenues from our trading activities for the years ended December 31, 2025 and 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 relating to our Fintech segment.

Other

Other revenues decreased by $0.1 million, to $2.7 million for the year ended December 31, 2025, compared to $2.8 million in the corresponding period in 2024. This decrease was primarily due to lower corporate aircraft charter revenue from third parties.

Gross Margins

Gross margins decreased to 21% for the year ended December 31, 2025, compared to 23% for the same period in 2024. The decrease was primarily attributable to margin fluctuations within our crypto asset mining and lending activities. Excluding the impact of lending and trading activities and crypto asset mining, adjusted gross margin increased to 36% for the year ended December 31, 2025, compared to 34% for the year ended December 31, 2024, reflecting improved gross margins at AGREE and higher product segment margins driven by growth in higher margin TurnOnGreen revenue.

General and Administrative

General and administrative expenses were $50.0 million for the year ended December 31, 2025, compared to $35.2 million for the year ended December 31, 2024, an increase of $14.8 million. The increase was primarily driven by higher salaries and benefits, higher performance-based bonuses at Ault Lending, partially offset by the deconsolidation of AVLP and Eco Pack, the completion and wind-down of Ault Disruptive Technologies Corporation following the full redemption of its public shares and a reduction in stock-based compensation expense.

Selling and Marketing

Selling and marketing expenses were $18.3 million for the year ended December 31, 2025, compared to $14.0 million for the year ended December 31, 2024, an increase of $4.3 million, or 31%. The increase was primarily the result of increased sales and marketing expenses at ROI, including higher levels of advertising and promotional activity.

Research and Development

Research and development expenses decreased by $6.2 million for the year ended December 31, 2025, primarily due to decreased expenditures related to development work on ROI’s Bitnile social gaming platform.

Impairment of Goodwill and Intangible Assets

During the year ended December 31, 2024, we recognized $1.5 million impairment of intangible assets related to Eco Pack.

Impairment of Property and Equipment

During the year ended December 31, 2025, as part of our annual impairment assessment of long-lived assets, we evaluated the carrying value of our investment in oil and gas properties. Based on this assessment, which considered current commodity price assumptions, expected production profiles, estimated future development costs, and discounted projected cash flows, we concluded that the carrying amount of certain oil and gas properties exceeded their estimated fair value. Accordingly, we recorded an impairment charge of approximately $3.0 million to reduce the carrying value of these properties to their estimated fair value as of December 31, 2025.

During the year ended December 31, 2024, due to increases in the Bitcoin mining difficulty level, which compounded the impact of the Bitcoin halving event that occurred earlier in 2024, we concluded 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 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.

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 $9.2 million during the year ended December 31, 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.

Other Expense, Net

Other expense, net was $3.0 million and $4.7 million for the years ended December 31, 2025 and 2024, respectively.

Interest and other income totaled $2.8 million and $2.2 million for the years ended December 31, 2025 and 2024, respectively.

Interest expense totaled $16.1 million for the year ended December 31, 2025, compared to $20.7 million for the same period in 2024. Interest expense is lower due to lower debt balances as well as lower forbearance fees and amortization of debt discount.

For the year ended December 31, 2024, we recognized a noncash gain of $17.9 million related to the conversion of White River Holdings Corp. (“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 year ended December 31, 2025.

During the year ended December 31, 2025, we recognized a total net loss on extinguishment of convertible notes of $3.4 million. This amount includes:

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 $1.3 million related to a convertible promissory note issued on March 21, 2025. Although 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;

A loss of $1.0 million related to a convertible promissory note issued on March 14, 2025. Although 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. As a result, a loss on extinguishment of $1.0 million was recognized;

A gain on extinguishment of debt of $1.1 million related to the pay-off of an ROI note payable ; and

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.

During the year ended December 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 year ended December 31, 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 year ended December 31, 2024, an investor converted $1.2 million of a convertible note into 0.2 million shares of Class A common stock that had a fair value of $1.5 million at the time of conversion and we recognized a $0.3 million loss on extinguishment of debt.

Loss from investment in unconsolidated entity was $2.0 million for the year ended December 31, 2024, representing our share of losses from our equity method investment in Algorhythm Holdings, Inc.

Cumulative downward adjustments for impairments of our equity securities without readily determinable fair values held at December 31, 2025 and 2024 were $0 and $6.3 million, respectively.

Change in fair value of embedded derivative liabilities was a gain of $3.2 million for the year ended December 31, 2025, compared to a gain of $1.0 million for the year ended December 31, 2024. The gain in 2025 reflects the remeasurement of embedded conversion features within certain convertible promissory notes issued during the year, with changes in our stock price and other valuation assumptions impacting the estimated fair value of these derivative liabilities

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. 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 consolidated statement of operations for the year ended December 31, 2025.

On 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 consolidated statement of operations for the year ended December 31 , 2025.

During the year ended December 31 , 2025, we recognized a gain of $2.7 million in connection with the bankruptcy proceedings for a subsidiary of ROI. We deconsolidated the subsidiary as we determined that we no longer maintained a controlling financial interest in the subsidiary. The gain recognized reflects the derecognition of the subsidiary’s remaining assets, liabilities, and equity balances.

(Loss) gain on the sale of fixed assets was a loss of $1.8 million for the year ended December 31, 2025, compared to a gain of $0.1 million for the year ended December 31, 2024.

Income Tax Provision

Our effective tax rate from continuing operations was a provision of 0.4% for the year ended December 31, 2025, compared to 0.1% for the year ended December 31, 2024. We recorded an income tax provision of $0.3 million and $0.1 million for the years ended December 31, 2025 and 2024, respectively.

Liquidity and Capital Resources

As of December 31, 2025, we had cash and cash equivalents of $13.1 million, excluding restricted cash of $36.2 million, compared to $4.5 million in cash and cash equivalents, excluding $20.5 million in restricted cash, as of December 31, 2024. Total cash, cash equivalents and restricted cash increased to $49.2 million at December 31, 2025 from $25.0 million at December 31, 2024. The increase was primarily driven by significant cash inflows from financing activities during 2025, partially offset by cash used in operating and investing activities.

Net cash used in operating activities totaled $62.5 million for the year ended December 31, 2025, compared to $19.4 million for the year ended December 31, 2024. Cash used in operating activities for the year ended December 31, 2025 included $13.1 million proceeds from the sale of crypto assets from our Sentinum crypto assets mining operations and $4.0 million proceeds from the sale of an investment in equity securities, offset by operating losses and changes in working capital. Net cash used in operating activities for the year ended December 31, 2024 included $6.4 million cash used in operating activities from discontinued operations.

Net cash used in investing activities was $70.2 million for the year ended December 31, 2025, compared to net cash provided by investing activities of $3.2 million for the year ended December 31, 2024.

Cash used in investing activities during 2025 primarily included:

$45.5 million of purchases of crypto assets;

$24.5 million of purchases of property and equipment;

$11.1 million investment in notes receivable, related party;

$2.8 million investments in loans receivable; and

$0.6 million investments in non-marketable equity securities.

These uses were partially offset by:

$5.2 million net cash acquired in the acquisition of Gresham;

$3.0 million proceeds from the sale of fixed assets;

$2.2 million proceeds from sale of investments in common stock, related party; and

$3.8 million in collections and principal payments on loans and notes receivable.

Investing activities in 2024 included $3.8 million cash used by discontinued operations and significant proceeds from asset sales.

Net cash provided by financing activities was $156.3 million for the year ended December 31, 2025, compared to $25.8 million for the year ended December 31, 2024.

Financing cash inflows during 2025 primarily consisted of:

$125.0 million gross proceeds from sales of Class A common stock, net of $3.9 million financing costs;

$51.2 million gross proceeds from notes payable

$32.4 million gross proceeds from sales of Series B preferred stock;

$17.2 million gross proceeds from convertible notes;

$5.0 million gross proceeds from sales of Series G and Series H preferred stock and warrants, related party; and

$1.5 million of proceeds from related party notes payable.

These inflows were partially offset by:

$57.3 million payments on notes payable;

$8.6 million payments of preferred dividends;

$6.2 million payments on convertible notes; and

$0.1 million distribution to a non-controlling interest.

Financing activities in 2024 included $2.6 million cash provided by discontinued operations.

Financing Transactions Subsequent to December 31, 2025

Issuance of Class A Common Stock pursuant to the ATM Offering

From January 1, 2026 through April 12, 2026, we received gross proceeds of $18.1 million through the sale of 91.6 million shares of our Class A common stock through the ATM offering.

Issuance of Series D Preferred Stock Pursuant to the ATM Offering

From January 1, 2026 through April 12, 2026, we received gross proceeds of $65,000 from the issuance of 2,909 shares of our Series D Preferred Stock pursuant to our Series D ATM offering.

Circle 8 Financing

In March 2026, Circle 8 entered into a secured promissory note in the principal amount of $1.5 million for the purchase of a crane. The secured promissory note accrues interest at 5.9% per annum and will mature in March 2031.

Term Notes

In January and February 2026, we issued two short-term term notes to an institutional investor for aggregate gross proceeds of $10.0 million. The notes were originally scheduled to mature in March and April 2026, respectively, and require periodic principal repayments prior to maturity. We amended the note that matured in March 2026 to extend its maturity date to April 7, 2026. In connection with the extension, we agreed to pay an extension fee of approximately $0.1 million, which was added to the outstanding principal balance. The note has been repaid in full.

Critical Accounting Estimates

The preparation of our consolidated financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. We consider an accounting estimate to be critical if (i) it requires significant judgment and involves a high degree of estimation uncertainty, and (ii) changes in the estimate could have a material impact on our consolidated financial statements. Our most critical accounting estimates are described below.

Fair Value of Bitcoin and Digital Assets

We account for Bitcoin in accordance with Accounting Standards Update 2023-08, Accounting for and Disclosure of Crypto Assets and measure such assets at fair value each reporting period, with changes in fair value recognized in earnings. The determination of fair value requires judgment in identifying the principal market and selecting appropriate pricing sources, which are based on quoted prices in active markets. Due to the significant volatility in Bitcoin prices, changes in market prices may result in material fluctuations in our results of operations. For example, a hypothetical 10% change in the price of Bitcoin as of December 31, 2025 would have resulted in a change in the carrying value of approximately $4.6 million.

Impairment of Long-Lived Assets (including Mining Equipment and Data Center Infrastructure)

We evaluate long-lived assets, including Bitcoin mining equipment and data center infrastructure, for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. The recoverability test requires significant judgment in estimating future undiscounted cash flows, which are dependent on key assumptions including Bitcoin prices, network mining difficulty, power costs, expected useful lives of mining equipment, and our strategic transition toward AI and high-performance computing operations. Changes in these assumptions, particularly sustained declines in Bitcoin prices or increases in mining difficulty, could materially impact the outcome of impairment analyses and result in future impairment charges.

Fair Value of Convertible Instruments and Embedded Derivatives

We have issued various convertible preferred stock and convertible debt instruments that may contain embedded features requiring bifurcation and fair value measurement. The determination of fair value involves significant judgment and the use of complex valuation models, including Monte Carlo simulations and Black-Scholes models. Key assumptions used in these models include the expected volatility of our common stock, risk-free interest rates, expected term, and probability of conversion or settlement. Changes in these assumptions could result in material changes to the fair value of derivative liabilities and corresponding gains or losses recognized in earnings.

Accounting for Business Combinations and Reorganization Transactions

We account for acquisitions and reorganization transactions, including our involvement with Gresham, using significant judgment in determining the fair value of assets acquired and liabilities assumed. These estimates may include valuations of inventory, property and equipment, identifiable intangible assets, and contingent liabilities. We may engage third-party valuation specialists to assist in these determinations. Adjustments to these estimates may be recorded during the measurement period as additional information becomes available. Changes in assumptions or circumstances could result in material adjustments to previously recorded amounts and impact our financial position and results of operations.