AIB Data Centers Inc.: Form 10-Q for the period ended Jun 30, 2026

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025. This quarterly report includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, that relate to future events or to our future operations or financial performance. This discussion contains forward-looking statements that are based on current expectations, estimates, and assumptions and involve risks and uncertainties, including, but not limited to, our plans, objectives, expectations, and intentions. Actual results and the timing of events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K.

We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements. Such statements speak only as of the date of this Quarterly Report on Form 10-Q, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Effective June 25, 2026, the Company changed its corporate name from BlockchAIn Digital Infrastructure, Inc. to AIB Data Centers Inc.

All dollar amounts referred to in this discussion and analysis are expressed in United States dollars, except where otherwise indicated. References in this section to “we,” “our,” “us,” “AIB,” and the “Company” generally refer to AIB Data Centers Inc. and its consolidated subsidiaries, which include One Blockchain LLC, One Blockchain Nolan LLC (a wholly-owned subsidiary of One Blockchain LLC), Signing Day Sports, Inc. (which became a wholly-owned subsidiary on March 16, 2026 in connection with the Business Combination described below), and AIB CLT1 LLC (which was formed as a wholly-owned subsidiary of AIB Data Centers Inc. on June 23, 2026).

Our management’s discussion and analysis of financial condition and results of operations is intended to assist readers in understanding our financial information from our management’s perspective and is presented as follows:

• Overview
• Strategic Transformation
• Industry Overview
• Expansion Opportunities
• Growth Strategy
• Key Factors Affecting Our Financial Performance
• Recent Developments
• Results of Operations
• Adjusted EBITDA
• Non-GAAP Financial Measures
• Liquidity and Capital Resources
• Related-Party Transactions
• Recently Issued and Proposed Accounting Pronouncements
• Critical Accounting Estimates

Overview

AIB is a power-first developer and operator of purpose-built data center infrastructure for artificial intelligence (“AI”) and high-performance computing (“HPC”) workloads. The Company’s strategic focus is the development, construction and operation of AI/HPC data center campuses supported by long-term customer contracts and dedicated power supply arrangements, beginning with its approximately 65 megawatt (“MW”) CLT-01 Campus (the “CLT-01 Campus”) in South Carolina, which is currently in development. The CLT-01 Campus is being developed at the site of the Company’s existing 40 MW data center facility, which has historically provided hosting services and equipment leasing to third-party bitcoin mining customers and which the Company is repurposing with site improvements to serve as its first AI/HPC campus.

The Company currently generates substantially all of its revenue from bitcoin hosting arrangements at the current site. The Company expects its future revenue to be generated primarily from long-term AI/HPC hosting and colocation contracts at the CLT-01 Campus and at additional greenfield AI/HPC development projects the Company may pursue. The historical results of operations described elsewhere in this Item 2 reflect the de-energized site and may not be indicative of the Company’s future results of operations following commissioning of the CLT-01 Campus and execution of the Company’s AI/HPC strategy. See “Strategic Transformation” and “Recent Developments” below.

Strategic Transformation

The Company has undergone a significant strategic and operational transformation over the past twelve months, evolving from a legacy bitcoin mining hosting business into a developer and operator of purpose-built AI/HPC data center infrastructure. Key steps in this transformation include (i) the completion of the Company’s business combination with Signing Day Sports, Inc. in March 2026 and the Company’s listing on the NYSE American under the ticker symbol “AIB”; (ii) the Company’s corporate rebranding from BlockchAIn Digital Infrastructure, Inc. to AIB Data Centers Inc., effective June 25, 2026; (iii) the completion of the June 2026 underwritten public offering of common stock that generated approximately $63.25 million in gross proceeds, materially strengthening the Company’s balance sheet; (iv) the formation of AIB CLT1 LLC on June 23, 2026 as the special-purpose project subsidiary for the CLT-01 Campus; (v) the execution of a new long-term electric service agreement providing for 65,000 kVA of contract demand at the CLT-01 Campus; and (vi) the diversification of the site’s hosting customer mix beyond a single anchor tenant.

The Company expects its ongoing transformation to include the continued development, construction and commissioning of the CLT-01 Campus; the negotiation and execution of long-term customer contracts, project-level financings, construction contracts and equipment procurement arrangements required to support the CLT-01 Campus and additional greenfield development opportunities; the evaluation of additional AI/HPC campus development opportunities, including the potential 75 MW AI-focused campus in Minnesota described under “Recent Developments” below; and the eventual transition, retrofit or decommissioning of the site as the Company’s AI/HPC platform scales. See “Growth Strategy,” “Key Factors Affecting Our Financial Performance” and “Recent Developments” below.

The Company’s initial AI/HPC campus, CLT-01, is being developed at an existing, energized site rather than through greenfield construction. The site is already grid-interconnected, zoned for industrial and data center use, and equipped with carrier-neutral connectivity, and has operated as an approximately 40 MW facility that the Company is repurposing to approximately 65 MW of contracted utility capacity. Because power availability and utility interconnection timelines have become the primary constraints on new AI/HPC development in most major U.S. markets, the Company believes that converting existing powered land into AI/HPC capacity offers a materially faster and more capital-efficient path to energization than greenfield development. The Company intends to apply this same power-first discipline to its broader development pipeline, which includes both additional repurposing opportunities and greenfield sites, in each case prioritizing deliverable utility capacity as a precondition to significant capital commitment.

Industry Overview

Demand for data center capacity has undergone a step-change over the past several years, driven principally by the rapid scaling of artificial intelligence and other high-performance computing workloads. The training and deployment of large-scale AI models by hyperscale cloud providers, foundation model developers and a growing class of specialized AI infrastructure operators (sometimes referred to as “neoclouds”) has become the dominant driver of new data center capacity requirements globally, and public disclosures by the largest hyperscale operators indicate that aggregate capital expenditure on AI-related compute infrastructure has expanded materially and is expected to remain elevated for the foreseeable future.

Power availability has emerged as the primary constraint on the development of new AI/HPC data center capacity in most major U.S. markets. Utility interconnection queues, transmission constraints and generation-adequacy concerns have extended lead times for large new industrial loads to multiple years in a number of regions, including Northern Virginia, portions of the Electric Reliability Council of Texas (or “ERCOT”) market in Texas, and portions of Pennsylvania-New Jersey-Maryland Interconnection (or “PJM”) and Midcontinent Independent System Operator (or “MISO”). As a result, developers with the ability to secure long-term, dedicated power capacity in geographies with relative power availability, including select markets in the Southeastern United States, have an increasingly differentiated position, and the ability to deliver a fully-powered, purpose-built site on a predictable timeline is now widely regarded as more valuable than site-level or building-level features that historically drove customer selection.

The technical requirements of modern AI training and inference workloads are also driving a fundamental shift away from legacy multi-tenant colocation designs toward purpose-built, high-density facilities. Legacy enterprise and colocation data centers were typically designed to support rack densities of approximately 5 to 15 kilowatts, while current-generation GPU-based AI training deployments commonly require densities ranging from approximately 40 kilowatts per rack to well in excess of 100 kilowatts per rack, with next-generation accelerator platforms expected to push those requirements higher. Supporting these densities has required broad adoption of direct-to-chip and immersion liquid cooling, higher-capacity electrical distribution and structural site design choices that most legacy facilities cannot economically accommodate through retrofit.

The commercial structure of AI/HPC hosting arrangements has also evolved. In contrast to the shorter-term, retail-oriented colocation contracts that historically prevailed in the multi-tenant colocation market, AI/HPC customers increasingly enter into long-term capacity agreements, typically ten years or longer, with fixed monthly service charges, parent-level or affiliate credit support, and structured deposit, prepayment or letter-of-credit mechanics. These contract structures are designed to underwrite the substantial capital investment required to develop purpose-built AI/HPC capacity and, in management’s view, are establishing AI/HPC data center capacity as a long-duration, contracted-revenue digital infrastructure asset class.

Management believes that several long-term industry trends, including the continued scaling of AI training and inference workloads, elevated hyperscaler and neocloud capital expenditure, structural power availability constraints in traditional data center markets, the shift to purpose-built high-density design, and the emergence of long-dated contracted revenue structures, are expected to continue driving demand for the type of power-anchored, purpose-built AI/HPC data center infrastructure the Company is developing. Management believes that the Company’s power-first development strategy, its CLT-01 site with long-term dedicated power capacity, and its focus on long-term contracted customer relationships position the Company to participate in this demand.

Expansion Opportunities

The Company’s growth strategy is anchored by its 65 MW CLT-01 Campus and is designed to scale into a multi-site AI/HPC data center platform in the United States over the next several years. In evaluating and pursuing new sites, the Company applies a “power-first” development discipline that requires deliverable utility capacity, evidenced by an executed electric service agreement, power purchase agreement or equivalent, as a precondition to significant capital commitment, together with a control mechanism over the underlying land, a defined interconnection path, and a site suitable for high-density, purpose-built development.

As of the date of this Quarterly Report, the Company has identified an active development pipeline of approximately 570 MW of AI/HPC capacity across six sites, comprising the CLT-01 Campus and the additional sites described below. The stage of development, contractual status, expected timing and ultimate capacity of each pipeline site vary and are subject to significant execution and financing risk, as further described under “Growth Strategy”. Except for the CLT-01 Campus, none of the pipeline sites described below is subject to a definitive lease, purchase or development agreement as of the date of this Quarterly Report.

• CLT-01 Campus— 65 MW. Existing 40 MW energized facility, with an additional 25 MW of contracted utility capacity added pursuant to the 15-year Electric Service Agreement executed during the second quarter of 2026 as described under “Recent Developments.”
• DFW-A Phase I— 15 MW. Prospective acquisition of an existing powered site. The Company has commenced preliminary diligence and site evaluation. Not subject to a definitive purchase or development agreement.
• MSP-01 — 75 MW. Non-binding letter of intent entered into during the second quarter of 2026 with the related entity that owns the site, together with a $1.2 million refundable land deposit, as described under “Recent Developments” and Note 11 to the accompanying condensed consolidated financial statements.
• DEN-01 — 200 MW. Prospective greenfield AI/HPC campus, in early evaluation stage. Not subject to a definitive purchase, lease or development agreement.
• HSV-01 — 75 MW. Prospective AI/HPC campus, in early evaluation stage. Not subject to a definitive purchase, lease or development agreement.
• DFW-A Expansion — 40 MW. Potential future expansion of DFW-A beyond Phase I, contingent on completion of the DFW-A Phase I acquisition and additional utility capacity.
• CLT-02 — 100 MW. Prospective additional greenfield campus in the region of the CLT-01 Campus, in early evaluation stage. Not subject to a definitive purchase, lease or development agreement.

Development of new AI/HPC data center capacity is capital-intensive and typically requires substantial upfront investment in land, power delivery, buildings, mechanical, electrical and cooling systems, IT infrastructure and long lead-time equipment. The Company expects to fund these investments through a combination of customer deposits, prepayments and other security under long-term customer contracts; project-level and asset-level debt financing; equity or equity-linked issuances; and cash on hand. Depending on the circumstances of a particular project, expansion transactions may take the form of purchases of real property, long-term ground or facility leases, joint ventures with customers or financial partners, or acquisitions of operating or development-stage assets. Certain of these transactions may be undertaken with strategic partners or anchor customers in order to align economic interests, share development risk or reduce the Company’s upfront capital outlay.

There can be no assurance that any of the pipeline sites described above will be completed on the timeline currently anticipated, in the capacity currently anticipated, or at all, or that the Company will achieve the operating or financial results currently expected from these sites.

Growth Strategy

The Company’s near-term growth strategy centers on the development, construction, commissioning and operation of the CLT-01 Campus, which the Company expects to serve as the anchor asset of its AI/HPC platform and to generate long-term contracted revenue at scale following commissioning. As part of this strategy, the Company has (i) formed AIB CLT1 LLC as the project-level subsidiary that is expected to hold the CLT-01 Campus assets, contracts and financings; (ii) secured a new long-term electric service agreement providing for 65,000 kVA of contract demand at the CLT-01 Campus; and (iii) begun evaluating additional greenfield AI/HPC development opportunities, including the potential 75 MW campus in Minnesota described under “Recent Developments” below.

Execution of the Company’s growth strategy will require significant capital investment and depends on a number of factors, many of which are outside the Company’s control, including (i) the negotiation and execution of definitive long-term customer contracts, construction contracts, equipment procurement arrangements and financing agreements on acceptable terms; (ii) the timely delivery of long lead-time electrical, mechanical, cooling, generator and IT infrastructure equipment; (iii) permitting, interconnection and other regulatory approvals; (iv) the availability of skilled construction and operations labor in the relevant markets; and (v) the performance of the Company’s counterparties. The Company has not yet commissioned any purpose-built AI/HPC capacity and has not yet generated revenue from long-term AI/HPC customer contracts. There can be no assurance that the Company will complete the CLT-01 Campus or any other planned project on the timeline or on the terms currently contemplated, or achieve the operating or financial results currently expected from its AI/HPC strategy.

The Company is currently in negotiations with a single prospective tenant for a long-term lease covering the entire approximately 65 MW of capacity at the CLT-01 Campus. This represents an expansion in scope from the arrangements previously disclosed in the Company’s Registration Statement on Form S-1 (File No. 333-296413), which contemplated draft lease agreements covering approximately 26 MW of utility load (20 MW of IT load) with a global cloud provider and a non-binding letter of intent for an additional approximately 5 MW. As of August 13, 2026, the parties had not executed a definitive lease, and execution remains subject to the negotiation and completion of definitive documentation, technical and commercial diligence, credit review, financing arrangements and other customary conditions. The Company has not yet commenced service under, or generated revenue from, any long-term AI/HPC customer contract, and there can be no assurance that a definitive lease will be executed on the timeline or terms currently contemplated, or at all.

Key Factors Affecting Our Financial Performance

Execution of AI/HPC Development Strategy

The Company’s future financial performance depends primarily on its ability to successfully develop, construct, commission and operate its planned AI/HPC data center capacity, beginning with the CLT-01 Campus, and to enter into long-term customer contracts for that capacity on economic terms consistent with the Company’s expectations. The Company’s AI/HPC development strategy targets campuses of less than 150 MW leased primarily to specialized AI cloud providers, sometimes referred to as “neoclouds,” rather than to hyperscale cloud or internet platform tenants. This segment of the market has different leasing characteristics than the hyperscale segment. Capacity is generally leased on the basis of critical IT load, with rent quoted in dollars per kilowatt of reserved power per month rather than per square foot. Based on third-party industry data, large-scale deployments in primary North American markets have recently transacted in a range of approximately $140 to $160 per kilowatt of critical IT load per month, equivalent to approximately $1.7 million to $1.9 million per megawatt per year, with average asking rates for wholesale colocation capacity of approximately $196 per kilowatt per month for smaller deployments in the second half of 2025.

Because the Company has not yet commissioned any purpose-built AI/HPC capacity and is in the early stages of executing its AI/HPC development strategy, the Company’s historical and current results of operations are not indicative of the Company’s expected future results following commissioning of the CLT-01 Campus and execution of the Company’s AI/HPC strategy. The Company’s ability to execute on this strategy is subject to a number of significant risks and uncertainties, including those described under “Growth Strategy” above and in the Company’s risk factors.

Transition of Hosting Operations

The Company’s reported revenue, gross margin, Adjusted EBITDA and net loss for the periods presented in this Quarterly Report have been generated primarily by bitcoin mining hosting arrangements. The Company expects revenue from those hosting arrangements to decline over time as customer contracts expire or are restructured, as the site is eventually transitioned, retrofitted or decommissioned to support the Company’s AI/HPC platform, and as new AI/HPC capacity at the CLT-01 Campus and other planned projects is placed into service. The timing and magnitude of these changes are inherently uncertain. During the transition period, the Company’s reported results are expected to continue to reflect the operating economics of the site and to be materially affected by the factors described under “Market Price of Digital Assets,” “Electricity Costs” and “Our Competition and Customers” below. Investors should not view the Company’s historical or current results as indicative of the Company’s future results following execution of its AI/HPC strategy.

The Company expects revenue and gross profit from legacy hosting arrangements to continue to decline as it advances the CLT-01 Campus, and expects its results of operations in future periods to be determined principally by the timing of commissioning and the execution of long-term AI/HPC customer contracts.

Market Price of Digital Assets — Legacy Operations Exposure

The Company’s historical results of operations, and its results of operations for the periods presented in this Quarterly Report, reflect hosting services provided to third-party bitcoin mining customers. Those customers’ willingness and ability to continue operating, and, indirectly, the revenue the Company generates from them during the transition period, depends in part on the profitability of bitcoin mining, which is itself a function of the spot price of bitcoin, network mining difficulty, block reward economics following the April 2024 halving, and the customers’ individual power costs and mining equipment efficiency. The price of bitcoin has historically been, and is expected to continue to be, subject to substantial volatility.

Because the Company is transitioning away from bitcoin mining hosting and toward AI/HPC infrastructure, and because the Company’s future revenue is expected to be generated primarily by long-term AI/HPC customer contracts at the CLT-01 Campus and future greenfield sites, the management believes the Company’s future financial performance will be materially less sensitive to fluctuations in the prices of digital asset than its historical performance. However, until hosting arrangements have wound down and new AI/HPC capacity has been placed into service, sustained declines in the price of bitcoin, sustained increases in network mining difficulty, or other factors that materially reduce the profitability of the Company’s hosting customers could accelerate the decline in revenue, reduce the Company’s ability to renew or restructure hosting arrangements on favorable terms, and could have a material adverse effect on the Company’s near-term results of operations, in each case notwithstanding the Company’s strategic transition. See “Transition of Hosting Operations” above.

Electricity Costs

Electricity cost is the largest operating cost for the hosting services provided to customers. The cost and availability of electricity are affected primarily by changes in seasonal demand, with peak demand during the summer months driving higher costs and increased curtailments to support grid operators. Severe winter weather can increase the cost of electricity and the frequency of curtailments when it results in damage to power transmission infrastructure that reduces the grid’s ability to deliver power. Geopolitical and macroeconomic factors, such as overseas military or economic conflict, can adversely affect electricity costs by raising the cost of power generation inputs such as natural gas. Other events outside our control can also impact electricity costs and availability.

Our Competition and Customers

The success of our HPC hosting business depends on our ability to develop new capacity, retain and expand relationships with existing customers, and attract new customers.

We face significant competition across the HPC hosting value chain, including for (i) sites with access to reliable, low-cost high-density power, (ii) the capital required to develop or retrofit such sites, (iii) long-lead critical equipment (including power distribution, transformers, switchgear, and liquid-cooling systems), and (iv) skilled development, construction, and operations personnel. Our competitors include data center REITs, purpose-built HPC and AI infrastructure developers, hyperscalers building or leasing capacity for their own use, and bitcoin miners repurposing existing sites for HPC hosting.

We believe our contracted high-power capacity at CLT-01 currently under development, together with the experience and relationships of our development and operations team, position us to compete for the current strong demand for HPC hosting capacity.

Recent Developments

Public Offering of Common Stock

On June 5, 2026, the Company entered into an underwriting agreement with Lucid Capital Markets, LLC in connection with an underwritten public offering of 33,333,334 shares of its common stock at a public offering price of $1.65 per share. The offering closed on June 8, 2026. In addition, the Company granted the underwriter a 45-day option to purchase up to an additional 4,999,999 shares of common stock. On June 15, 2026, Lucid exercised the over-allotment option in full. On June 17, 2026, the Company closed its sale of an additional 4,999,999 shares of common stock in connection with the full exercise of the over-allotment option. As a result, the Company issued an aggregate of 38,333,333 shares of common stock and received gross proceeds of approximately $63.25 million before underwriting discounts, commissions, and other offering-related expenses.

The Company intends to use the net proceeds from the offering for working capital, deposits on long lead-time equipment, land acquisition activities, capital expenditures associated with the development of its digital infrastructure platform, and other general corporate purposes. The offering significantly enhanced the Company’s liquidity position and provides additional capital to support the Company’s strategic focus on the development of infrastructure for artificial intelligence and high-performance computing workloads.

The Company believes the proceeds from the public offering provide funding necessary to advance its strategic transition toward AI and HPC-focused infrastructure and support the development of future data center capacity. Management expects a portion of the proceeds to be used to support infrastructure investments associated with the Company’s planned expansion initiatives, including the Minnesota development opportunity and the recently executed long-term power arrangement in South Carolina.

Minnesota Development Opportunity

During the second quarter of 2026, the Company entered into a non-binding letter of intent and paid a refundable $1.2 million deposit related to a potential development site in Minnesota. The Company is evaluating the development of an approximately 75 MW AI-focused data center campus at the location. No definitive acquisition, lease or development agreements have been executed as of June 30, 2026, and the project remains subject to negotiation of definitive agreements, financing availability and customary approvals. The deposit is recorded within prepaid expenses and other current assets on the condensed consolidated balance sheet as of June 30, 2026.

Business Combination with Signing Day Sports, Inc.

On May 27, 2025, the Company entered into the BCA with Signing Day Sports, as amended on November 10, 2025 and as further amended on December 22, 2025.

Effective March 16, 2026 (the “transaction date”), the Company and SGN completed the business combination under the BCA. Following the closing, the Company is the parent entity of both SGN and One Blockchain LLC, and the Company commenced trading on the NYSE American on March 17, 2026 under the ticker symbol “AIB.”

The Business Combination was accounted for as a reverse merger. Refer to Note 4 for the impact of the BCA on the condensed consolidated financial statements.

Utility Cost Management and True-Up Adjustments

The estimated true-up accrual was $151,247 and $545,260 as of June 30, 2026 and 2025, respectively, and is recorded in accounts payable and accrued expenses. The 2025 actual true-up charge was received during the quarter for $933,620 and is recorded in accounts payable and accrued expenses. Of the $933,620 actual true-up charge, $101,132 was related to interest. Other costs included in cost of revenues include fees for network services and water fees.

Formation of AIB CLT1 LLC

On June 23, 2026, the Company formed AIB CLT1 LLC as a wholly-owned limited liability company subsidiary to serve as the special-purpose project entity for the development, ownership and operation of the CLT-01 Campus. AIB CLT1 LLC is expected to hold the project-level real property interests, ground lease, material customer, construction, equipment procurement and vendor contracts, and project-level financings relating to the CLT-01 Campus. The financial position and results of operations of AIB CLT1 LLC are consolidated in the Company’s condensed consolidated financial statements from the date of formation.

Transition and Decommissioning of Bitcoin Mining Hosting Operations

On June 5, 2026, the Company de-energized the site’s bitcoin mining hosting operations following a decline in the price of bitcoin, which had fallen from over $93,000 at the start of 2026 to approximately $62,000 on that date, rendering the Company’s hosting arrangements uneconomic at prevailing customer hashprice levels. The price of bitcoin has remained between approximately $60,000 and $65,000 through the date of this filing. The site remained de-energized as of June 30, 2026, and as of August 13, 2026, the Company has not resumed hosting operations at the site.

The de-energization coincides with the Company’s strategic transition to AI/HPC hosting. Development of the 65 MW CLT-01 Campus is proceeding independently of the shutdown of the site’s bitcoin mining hosting operations. As of June 30, 2026, the Company had not committed to a formal plan of abandonment, retirement or asset disposal with respect to the site, and no asset impairment, asset retirement obligation, restructuring liability or held-for-sale classification has been recorded in connection with the transition as of the balance sheet date. The Company continues to execute upon the strategy of redeploying the site’s power and infrastructure to support higher-density AI and HPC workloads in coordination with the CLT-01 Campus. Any such future actions may result in the recognition of asset retirement obligations, accelerated depreciation, impairment charges or other transition-related costs in future periods, the amounts and timing of which cannot be reasonably estimated at this time.

Results of Operations

As described under “Overview,” “Strategic Transformation” and “Key Factors Affecting Our Financial Performance” above, the Company’s results of operations for the periods presented reflect the operation of the 40 MW site under bitcoin mining hosting arrangements. The Company has not yet placed into service any material AI/HPC capacity and has not yet generated revenue from long-term AI/HPC customer contracts. Accordingly, the period-over-period changes in revenue, cost of revenues, gross margin and operating expenses discussed below reflect the operating economics of the site and the transition of the site’s customer mix, and are not intended to serve as a forecast of the Company’s future results of operations following commissioning of the CLT-01 Campus and execution of the Company’s AI/HPC strategy.

Three Months Ended June 30, 2026 and 2025

Revenues

Revenue for the three months ended June 30, 2026 was $2.9 million, a decrease of $1.8 million, or 39%, from $4.7 million for the three months ended June 30, 2025. The decrease reflects the June 5, 2026 de-energization of the site in response to a decline in the price of bitcoin, which eliminated variable hosting revenue at the site for the remainder of the quarter.

Costs and Operating Expenses

Cost of revenue and gross margin. The largest components of our cost of revenues are utility-related expenses, including electricity, bandwidth access and other infrastructure costs. Cost of revenues totaled $3.4 million for the three months ended June 30, 2026, a decrease of $0.8 million, or 18%, compared to $4.2 million for the three months ended June 30, 2025.

Gross profit declined to a loss of $0.5 million for the three months ended June 30, 2026, compared to profit of $0.5 million for the same period in 2025, a decrease of approximately $1.0 million. Gross margin decreased to a loss of approximately 18% for the three months ended June 30, 2026 from approximately 12% for the same period in 2025. Fluctuations in gross profit (loss) are largely affected by two principal factors:

1. Pricing. The average effective billing rate can fluctuate due to competitive pricing adjustments in alignment with contract provisions, bitcoin prices, and the evolving mix of customer contracts. However, the average effective billing rate per kWh decreased over the period from approximately $0.069 during the three months ending June 30, 2025 to approximately $0.063 during the three months ending June 30, 2026. This decrease largely reflects price concessions passed to the tenants as per the signed contracts due to the low prices of bitcoin.

2. Energy costs. The Company’s average per-kWh energy procurement cost increased from approximately $0.049 during the three months ending June 30, 2025 to approximately $0.066 during the three months ending June 30, 2026 under the terms of the Company’s existing energy supply agreement. Several factors impacted the increased energy cost including the extra true up expense recognized in Q2 2026 relating to 2025 consumption and pricing. Two unanticipated factors drove the additional unexpected true up expense for 2025. First being the severe, prolonged drought cut hydro production (which is largely run-of-river and nearly free to generate), forcing the utility provider, Duke, to buy more natural gas in 2025. Second being a huge jump in natural gas transportation costs for the region, which played as large or larger a role in the budget overage than the commodity price itself. Important to note, transportation costs are not linear and they won’t rise and fall with the gas price.

The decrease in gross profit was primarily attributable to increased energy costs, which were not able to be passed through to customers. Total energy volume billed to customers decreased to approximately 46 GWh for the three months ended June 30, 2026 from approximately 69 GWh for the three months ended June 30, 2025.

Operating expenses. Total costs and operating expenses were $6.5 million for the three months ended June 30, 2026, or 223% of total revenues, compared to $5.3 million, or 111% of total revenues, for the three months ended June 30, 2025. The increase of $1.2 million, or 23%, was primarily attributable to a $1.8 million increase in selling, general, and administrative expenses related to advisory shares, consulting arrangements, public company costs, and transaction-related expenses, offset by a $0.8 million decrease in cost of revenues due to lower energy consumption resulting from the de-energization of the site. Depreciation expense also accounted for $0.1 million of the increase as well as $0.1 million in advertising expenses.

Operating (Loss) / Income

Operating loss was $3.6 million for the three months ended June 30, 2026, compared to operating loss of $0.5 million for the three months ended June 30, 2025, a swing of approximately $3.1 million. Approximately $1.8 million of the $3.1 million increase was attributable to higher selling, general and administrative expenses, consisting principally of advisory share consideration, consulting arrangements, public company costs and transaction-related expenses incurred in connection with the Business Combination and the Company’s transition to a listed AI/HPC infrastructure platform. The balance reflects the gross-margin compression discussed above with the largest contributor being the de-energization of the site in response to a decline in the price of bitcoin.

Other Income

There was $0.1 million of other income for the three months ended June 30, 2026, consisting primarily of interest income earned on funds held in institutional money market funds following the Company’s June 2026 equity offering. There was no other income or loss recognized during the three months ended June 30, 2025.

Net (Loss) / Income

Net loss was $3.5 million for the three months ended June 30, 2026, compared to net loss of $0.5 million for the three months ended June 30, 2025, an increase in net loss of approximately $3.0 million, driven by the items discussed above.

Six Months Ended June 30, 2026 and 2025

Revenues

Revenue for the six months ended June 30, 2026 was $7.8 million, a decrease of $1.4 million, or 15%, from $9.2 million for the six months ended June 30, 2025. The decrease was primarily attributable to the Company’s June 5, 2026 de-energization of the site in response to a decline in the price of bitcoin, which eliminated variable hosting revenue at the site for the remainder of the quarter which significantly reduced hosting revenue during the latter portion of the second quarter.

Costs and Operating Expenses

Cost of revenue and gross margin. The largest components of our cost of revenues are utility-related expenses, including electricity, bandwidth access and other infrastructure costs. Cost of revenues totaled $7.8 million for the six months ended June 30, 2026, an increase of $0.3 million, or 4%, compared to $7.5 million for the six months ended June 30, 2025.

Gross profit declined to less than $0.1 million for the six months ended June 30, 2026, compared to gross profit of $1.8 million for the same period in 2025, a decrease of approximately $1.7 million. Gross margin decreased to approximately 1% for the six months ended June 30, 2026 from approximately 19% for the same period in 2025. Fluctuations in gross profit are largely affected by two principal factors:

1. Pricing. The average effective billing rate can fluctuate due to competitive pricing adjustments in alignment with contract provisions, bitcoin prices, and the evolving mix of customer contracts. However, the average effective billing rate per kWh reduced over the period from approximately $0.066 during the six months ending June 30, 2025 to approximately $0.063 during the six months ending June 30, 2026. This decrease largely reflects price concessions passed to the tenants as per the signed contracts due to the low prices of bitcoin. The prices of bitcoin have remained low since Q4 of 2025 and have demonstrated minimal sign of recovery through to the end of Q2 2026.

2. Energy costs. The Company’s average per-kWh energy procurement cost increased from approximately $0.049 during the six months ending June 30, 2025 to approximately $0.057 during the six months ending June 30, 2026 under the terms of the Company’s existing energy supply agreement. Once again, several factors impacted the increased energy cost including the extra true up expense recognized in Q2 2026 relating to 2025 consumption and pricing. Two unanticipated factors drove the additional unexpected true up expense for 2025. First being the severe, prolonged drought cut hydro production (which is largely run-of-river and nearly free to generate), forcing the utility provider, Duke, to buy more natural gas in 2025. Second being a huge jump in natural gas transportation costs for the region, which played as large or larger a role in the budget overage than the commodity price itself. Important to note, transportation costs are not linear and they won’t rise and fall with the gas price.

The decrease in gross profit was primarily attributable to increased energy costs, which were not able to be passed through to customers. Total energy volume billed to customers decreased to approximately 123 GWh for the six months ended June 30, 2026 from approximately 140 GWh for the six months ended June 30, 2025.

Operating expenses. Total costs and operating expenses were $11.7 million for the six months ended June 30, 2026, or 149% of total revenues, compared to $9.4 million, or 101% of total revenues, for the six months ended June 30, 2025. The increase of $2.3 million, or 25%, was primarily attributable to a $1.8 million increase in selling, general, and administrative related to advisory shares consulting arrangements, public company costs, and transaction-related expenses as well as a $0.3 million increase in cost of revenues reflecting higher per-kWh energy costs despite lower billable volume and energy consumption resulting from the de-energization of the site. Cost of revenues also increased due to the impact of the 2025 true-up costs. Depreciation expense also accounted for $0.1 million of the increase as well as $0.1 million in advertising expenses.

Operating (Loss) / Income

Operating loss was $3.9 million for the six months ended June 30, 2026, compared to operating loss of $0.1 million for the six months ended June 30, 2025, a swing of approximately $3.8 million. The change was primarily driven by the gross-margin compression discussed above with the largest contributor being the de-energization of the site in response to a decline in the price of bitcoin coupled with the unanticipated larger true up energy expense from 2025 passed along in 2026.

Other Income

There was $0.1 million of other income for the six months ended June 30, 2026, consisting primarily of interest income earned on funds held in institutional money market funds following the Company’s June 2026 equity offering, compared to other income of $0.1 million for the six months ended June 30, 2025 primarily attributable to the gain on disposal of assets held for sale recognized during the six months ended June 30, 2025.

Net (Loss) / Income

Net loss was $3.8 million for the six months ended June 30, 2026, compared to net loss of $0.1 million for the six months ended June 30, 2025, an increase in net loss of approximately $3.7 million, driven by the items discussed above.

Adjusted EBITDA

Adjusted EBITDA is a key factor in how we assess the operating performance of our data center and develop our growth strategies and expansion decisions. We define Adjusted EBITDA as net income or loss excluding income tax expense, interest income, interest expense, other income and expense items, gain or loss on asset sales, depreciation, amortization, transaction costs, and non-recurring legal and professional fees, as presented below:

Adjusted EBITDA for the six months ended June 30, 2026 was a loss of $3.2 million, a decrease of $3.9 million, or 552%, from Adjusted EBITDA of $0.7 million for the six months ended June 30, 2025.

Non-Recurring Legal and Professional Fees

Represents legal and professional fees incurred in connection with corporate transaction and financing activities, including a terminated financing transaction and advisory arrangements related to the Company’s Business Combination. Management does not consider these costs indicative of ongoing operating performance.

Non-GAAP Financial Measures

Non-GAAP financial measures are not a substitute for financial information prepared in accordance with U.S. GAAP. Non-GAAP financial measures should not be considered in isolation, but should be considered together with the most directly comparable GAAP financial measures and the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures. We have presented Adjusted EBITDA to provide investors with an additional tool to evaluate our results of operations in a manner that focuses on what management believes to be our core, ongoing business operations. We believe the inclusion of this non-GAAP financial measure allows for meaningful comparisons between the Company’s core business operating results and those of other companies and provides the Company with an important tool for financial and operating decision-making and for evaluating its core business operating results over different periods of time.

Investors should note that the non-GAAP financial measure used by us may not be the same, or calculated in the same manner, as similarly titled measures of other companies. Investors should therefore exercise caution when comparing our non-GAAP financial measures to similarly titled measures of other companies.

Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to operating income or any other measure of performance derived in accordance with GAAP. Although management utilizes and presents Adjusted EBITDA, we do so only supplementally and do not consider it a substitute for, or superior to, the information provided by GAAP financial results. Adjusted EBITDA is not meant to be considered in isolation and should be read in conjunction with the consolidated financial statements.

We exclude depreciation and amortization from Adjusted EBITDA because they do not reflect our current or future cash spending levels to support our business and are based on the estimated useful lives of our data center assets, which estimates may vary from actual performance. We also exclude gain or loss on asset sales as it represents profit or loss not meaningful in evaluating current or future operating performance. Additionally, we exclude transaction costs and reimbursement transaction costs, which relate to costs incurred in connection with business combinations and the transaction with Signing Day Sports, including advisory, legal, accounting, valuation and other professional or consulting fees, to enhance comparability of our financial results with our historical operations. The frequency and amount of such charges vary significantly based on the size and timing of the transactions. Management does not consider these costs indicative of our ongoing operating performance and believes their exclusion enhances period-over-period comparability as the Company executes its transition toward AI and HPC infrastructure development.

Liquidity and Capital Resources

The Company manages its liquidity through a combination of operating cash flows and related-party financing arrangements. The Company also maintains flexibility through related-party arrangements, including a non-interest-bearing loan receivable from VCV Digital Infrastructure Holdings LLC and a standby letter of credit secured by a related party to support energy procurement obligations. Prior to the Business Combination with Signing Day Sports, Inc. on March 16, 2026, the Company also managed liquidity through member contributions; following the closing of the Business Combination, the Company has access to the public capital markets as a NYSE American-listed registrant.

During the second quarter of 2026, the Company strengthened its balance sheet through the completion of its underwritten public offering. The offering generated aggregate gross proceeds of approximately $63.25 million, including the exercise in full of the underwriter’s over-allotment option. Net proceeds from the offering were recorded within stockholders’ equity, net of underwriting discounts, commissions, and other offering costs.

The closing of the June 2026 public offering materially improved the Company’s liquidity profile and reduced its dependence on related-party funding arrangements. Management believes the capital raised provides the Company with greater flexibility to pursue expansion opportunities, including investments in power infrastructure, land acquisition opportunities, AI and HPC-focused data center development projects, deposits on long lead-time equipment and other strategic initiatives. As a result of the offering, management believes the Company is in a significantly stronger position to execute its long-term growth strategy and pursue opportunities that may not have been available prior to the offering and will be adequate to meet the Company’s obligations and planned expenditures for the foreseeable future.

The Company’s execution of its AI/HPC infrastructure strategy, including the development, construction and commissioning of the CLT-01 Campus, is expected to require capital significantly in excess of the net proceeds from the June 2026 public offering and the Company’s current cash on hand. Development of a purpose-built AI/HPC campus of the type the Company is pursuing at CLT-01 typically requires substantial investment in land, power delivery, buildings, mechanical, electrical and cooling systems and IT infrastructure, in addition to deposits and progress payments on long lead-time equipment, working capital, interest during construction and other financing-related costs. The Company currently expects to fund these requirements through a combination of customer deposits, prepayments and other security under long-term customer contracts; project-level and asset-level debt financing; additional equity or equity-linked issuances, subject to any applicable contractual lock-up and blackout restrictions; and cash on hand. There can be no assurance that the Company will be able to obtain any of these sources of financing on acceptable terms or at all, and the Company’s ability to do so will depend on capital markets conditions, project-specific execution risk, counterparty performance and other factors, some of which are outside the Company’s control. A failure to obtain adequate financing on acceptable terms could delay, scale back or prevent the Company’s planned AI/HPC development activities.

Cash Flows:

Comparison of Cash Flows for the Six Months Ended June 30, 2026 and 2025

Cash and cash equivalents was $52.8 million as of June 30, 2026, compared to less than $0.01 million as of June 30, 2025, an increase of approximately $52.8 million. The increase reflected the net impact of the following cash flow activities:

Operating activities. Net cash used in operating activities was $4.7 million for the six months ended June 30, 2026, compared to net cash used in operating activities of $1.0 million for the six months ended June 30, 2025, an increase of $3.7 million. The majority of cash used in operating activities was due to decreases in accounts payable and contract liabilities of $1.5 million and $2.3 million, respectively, in addition to an increase in accounts receivable by $0.3 million during the period. Although the Company recorded a net loss of $3.8 million in the current period compared to net loss of $0.1 million in the prior-year period, cash flows used in operating activities was offset by an increase of $2.0 million in other current liabilities as well as benefited from approximately $0.7 million of non-cash consulting and advisory share consideration recorded in connection with the Business Combination.

Investing activities. There was $1.0 million in cash used in investing activities for the six months ended June 30, 2026, compared to net cash provided by investing activities of $1.1 million for the six months ended June 30, 2025. Cash used in the current period is due to $1.2 million refundable deposit related to the proposed Minnesota development site offset by cash of $0.3 million provided by the cash acquired in reverse merger. In addition, the Company incurred approximately $0.4 million of construction-in-progress additions that remained unpaid as of June 30, 2026 and therefore were not reflected as investing cash outflows during the period. The prior period reflected $1.0 million in proceeds from a related party loan receivable as well as $0.1 million of proceeds from the sale of assets previously classified as held for sale.

Financing activities. Net cash provided by financing activities was $58.4 million for the six months ended June 30, 2026, compared to net cash used in financing activities of $0.3 million for the six months ended June 30, 2025. Net cash provided by financing activities during the six months ended June 30, 2026 was attributable to $59.0 million in net proceeds received from the Company’s June 2026 public offering, partially offset by $0.6 million repayments of consideration payable. The prior-year period reflected $1.4 million of distributions, partially offset by $1.2 million of contributions.

Related-Party Transactions

We engage in various transactions with related parties in the ordinary course of business. During the reporting periods, the Company reimbursed an affiliate for administrative and operational expenses incurred on its behalf. The Company also maintained a loan receivable from VCV Digital Infrastructure Holdings LLC (“VCV DIH”), which is under common ownership with the Company and is therefore a related party. The loan was used to support surety bond and letter of credit requirements and is non-interest-bearing. Management believes the loan is fully collectible based on the collateral structure and the financial condition of the borrower. In addition, a subsidiary of VCV DIH, Blue Ridge Digital Mining LLC, is a customer of the Company’s hosting operations, and VCV DIH maintains the surety bond supporting certain obligations under the Company’s Energy Services Agreement.

The Company also has receivables from and payables to other affiliated entities arising from operational activities. These balances are expected to be settled in the ordinary course of business.

During the six months ended June 30, 2026, the Company also entered into a non-binding arrangement with a related party regarding a potential AI/HPC data center development site in Minnesota and paid a refundable land deposit of $1.2 million. No definitive acquisition, lease or development agreements had been executed as of June 30, 2026, and the deposit is reflected in prepaid expenses and other current assets. VCV Minnesota is owned by Tiger Cloud LLC (“Tiger Cloud”), which is a significant shareholder of the Company, beneficially owning approximately 19.9% of the Company’s outstanding common stock as of August 13, 2026. The Company continues to evaluate the opportunity and negotiate potential definitive agreements with the related party.

Management monitors related-party balances and transactions to ensure transparency and compliance with applicable accounting standards. All related-party transactions are disclosed in the condensed consolidated financial statements and are reviewed periodically for appropriateness and collectability.

Recently Issued and Proposed Accounting Pronouncements

For information on new accounting pronouncements and the impact of these pronouncements on our condensed consolidated financial statements, see Note 2 – “Summary of Significant Accounting Policies” in the notes to our condensed consolidated financial statements.

Critical Accounting Estimates

We describe our most significant accounting policies in Note 2, “Summary of Significant Accounting Policies” in the notes to the condensed consolidated financial statements. We have identified the policies below as those that require significant judgments, assumptions and estimates and that have a significant impact on our financial condition and results of operations. These policies are considered critical because they may result in fluctuations in our reported results from period to period due to the significant judgments, estimates and assumptions about complex and inherently uncertain matters, and because the use of different judgments, assumptions or estimates could have a material impact on our financial condition or results of operations. We evaluate our critical accounting estimates on an ongoing basis and update them as appropriate based on changing conditions.

Utility True-Up Adjustment

The Company procures electricity through a local utility provider and is subject to an annual true-up process that reconciles estimated energy costs with actual consumption and final rates. Management must estimate the true-up accrual at each reporting period, which directly impacts cost of revenues. This estimate involves significant judgment, particularly in forecasting usage patterns, rate changes and the timing of adjustments.

Emerging Growth Company and Smaller Reporting Company Status

As an emerging growth company under the JOBS Act, we can take advantage of an extended transition period for complying with new or revised accounting standards. We have elected to avail ourselves of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we may adopt the new or revised standard at the time private companies adopt it, until such time that we either irrevocably elect to opt out of the extended transition period or no longer qualify as an emerging growth company. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies.

Subject to certain conditions set forth in the JOBS Act, if, as an emerging growth company, we choose to rely on such exemptions, we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be required of non-emerging growth companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, or (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of CEO compensation to median employee compensation. We will continue to remain an emerging growth company until the earliest of: (i) the last day of the fiscal year following the fifth anniversary of the date of our first sale of common equity securities pursuant to an effective registration statement; (ii) the last day of the fiscal year in which our total annual gross revenue is equal to or more than $1.235 billion; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer as defined in Rule 12b-2 under the Exchange Act.

We are also a smaller reporting company as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2026. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were not effective due to two material weaknesses that have been identified by management. Specifically, it was determined that we had inadequate segregation of duties within accounting processes due to limited personnel and we had insufficient written policies and procedures for accounting, IT and financial reporting and record keeping. Following the completion of the Business Combination in March 2026, management has begun to address these issues. Management, with the oversight of the Board of Directors, is committed to remediating the material weaknesses described above and has implemented, and continues to implement, measures designed to strengthen the Company’s internal control over financial reporting.

During the period, and following the completion of the Business Combination in March 2026, the Company:

• Implemented Procore, a project and construction cost-management system, to standardize the capture, approval, and documentation of project and capital-expenditure activity and to establish a consistent audit trail;
• Drafted and implemented a formal procurement policy governing the authorization, approval, and documentation of purchasing activity;
• Drafted and implemented a formal capital-expenditure policy establishing authorization thresholds, approval requirements, and supporting-documentation standards;
• Hired a Vice President, Finance–Operations to oversee operational finance and support the design and operation of financial reporting controls; and
• Expanded the Company’s shared-services team, enabling a meaningful improvement in the segregation of incompatible duties across accounting processes;

Subsequent to June 30, 2026, the Company has also taken, or is in the process of taking, the following additional actions:

• Commenced implementation of Brex as its corporate spend-management and expense platform, which, when fully deployed, will introduce system-enforced approval workflows and role-based access over disbursements; and
• Initiated recruitment for a Vice President, Finance / Corporate Controller to further strengthen the Company’s accounting and financial reporting function.

The Company expects to continue enhancing its written policies and procedures and to further build out its finance and accounting personnel as it executes its growth strategy. While remediation activities have been implemented and management believes significant progress has been made; the controls have not operated for a sufficient period of time for management to conclude that the material weakness has been fully remediated as of June 30, 2026.

Changes in Internal Control Over Financial Reporting

During the quarter ended June 30, 2026, management implemented several remediation measures designed to address the material weaknesses in internal control over financial reporting described above, including the implementation of Procore, the adoption of procurement and capital expenditure policies, the hiring of a Vice President, Finance-Operations, and the expansion of the Company’s shared-services team to improve segregation of duties. While management believes these actions strengthen the Company’s internal control environment, the controls have not operated for a sufficient period to conclude that the material weaknesses have been fully remediated as of June 30, 2026. Other than these remediation activities, there were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2026 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.