RELATED PARTY TRANSACTIONS |
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| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RELATED PARTY TRANSACTIONS | 12. RELATED PARTY TRANSACTIONS
The Company is a controlled subsidiary of Hyperscale, and as a result Hyperscale and its subsidiaries are deemed related parties.
Allocation of General Corporate Expenses
Hyperscale provides human resources, accounting and other services to the Company, which are included as allocations of these expenses. The allocation method calculates an appropriate share of other overhead costs by using Company revenue as a percentage of total revenue. This method is reasonable and consistently applied. Costs incurred in connection with the allocation of these costs are reflected in selling, general and administrative of $75,000 and $64,000 for the three months ended June 30, 2026, and 2025, respectively and $131,000 and $128,000 for the six months ended June 30, 2026, and 2025, respectively.
Related Party Notes and Advances Payable
Related party notes and advances payable were used for working capital purposes and were comprised of the following:
The Hyperscale advance payable provides a credit limit on cash advanced, excluding accrued interest, of $8,000,000 and may be advanced against until the maturity date of December 31, 2026. This related party payable accrues interest at 10% per annum, has no fixed terms of repayment and is recorded as related party notes and advances payable in the Company’s condensed consolidated balance sheets.
Summary of interest expense, related party, recorded on the condensed consolidated statement of operations:
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