Operating leases

The Company has active operating lease arrangements for office space and warehouse facilities. The Company is typically required to make fixed minimum rent payments relating to its right to use the underlying leased assets. Although these leases have terms that are either month-to-month or terms that are one year or less (with renewal options), the Company concluded that the term renewal options are reasonably certain to be exercised, and the Company classified such leases as operating leases in accordance with the provisions of ASC 842.

On April 1, 2026, the Company entered into a nine-month lease arrangement with CAVOK Air Texas LLC ("CAVOK") (with automatic one-year renewals). This lease is treated as an operating lease in accordance with the provisions of ASC 842. Therefore, the Company recognized operating lease liabilities with corresponding ROU assets based on the present value of the minimum rental payments of such leases. The Company shall fund approximately $250,000 in parking lot and infrastructure improvements associated with grading, stabilization, drainage, striping, lighting, electrical preparation, charging-readiness, staging areas, asphalt and concrete work, and related site improvements supporting approximately 100 vehicle parking and charging spaces.

On March 1, 2026, the Company entered into a one-year lease arrangement with TexOil Ventures LLC ("TexOil") (with one-year renewal options) for pilot infrastructure and computing operations. This lease is treated as an operating lease in accordance with the provisions of ASC 842. Therefore, the Company recognized operating lease liabilities with corresponding ROU assets based on the present value of the minimum rental payments of such leases. The Company paid a nonrefundable deposit of $390,000 and will make monthly payments of $38,500 to TexOil. The Company granted TexOil a first-priority security interest in all computing and mining equipment located at the leased site. Upon default by the Company and expiration of the applicable cure period, TexOil may foreclose and take title to such equipment under the Texas Uniform Commercial Code.

On April 1, 2025, the Company entered into a three-year sub-lease arrangement with Maddox Medical (with renewal options), an entity of which Jason Maddox, the Chief Financial Officer of the Company, is the sole stockholder, to lease a facility in Houston, Texas for its corporate and administrative operations. This lease is treated as an operating lease in accordance with the provisions of ASC 842. Therefore, the Company recognized operating lease liabilities with corresponding ROU assets based on the present value of the minimum rental payments of such leases. 

The Company's lease agreements do not provide an implicit borrowing rate. Therefore, the Company used a benchmark approach to derive an appropriate incremental borrowing rate. The Company benchmarked itself against other companies of similar credit ratings and comparable credit quality and derived an incremental borrowing rate to discount each of its lease liabilities based on the remaining lease terms.

Quantitative information regarding the Company’s leases is as follows:

Future minimum payments under operating leases are as follows: