NOTE 13 — COMMITMENTS AND CONTINGENCIES

Leases

The Company's former corporate office and warehouse lease (“Office Lease”) is not included in the disclosures below. The subsidiary holding this lease was classified as held for sale and its results presented within discontinued operations effective June 30, 2026. See Note 3, Discontinued Operations, for further information regarding this lease and the related disposal group.

Land Leases (Edge Data Centers)

The Company leases multiple land locations for the deployment and operation of its modular Edge Data Centers (“EDCs”) with varying monthly lease payments. Certain lease arrangements include nominal ($1) monthly payments, while others include variable payments to the landlord under revenue-sharing arrangements calculated as a percentage of revenues generated from colocation services at the respective site, or the provision of a free rack within the data center valued at fair market value. Variable lease payments are excluded from the measurement of operating lease liabilities and are expensed as incurred. Certain landlords for these sites may also be customers of the Company, renting server rack space within the data centers.

As of June 30, 2026, the Company had multiple land leases outstanding in support of its EDC platform (Abilene, Corpus Christi, Dumas, Hereford, Lubbock, and Victoria), located primarily in Texas. In addition, the Company leases land in Amarillo, Texas from Region 16 Education Service Center under a pre-existing ground lease effective December 20, 2024 (predating the current EDC population by more than one year); a related generator sub-arrangement under which the Company acts as lessor is described separately below. These leases generally carry initial terms of five to ten years, with one five-year renewal option, and require the Company to pay real estate taxes, common area maintenance charges, and utilities, and to maintain insurance coverage. The Company is responsible for all costs associated with site preparation and installation of improvements, including modular structures and backup power systems. Given the growth in the number of land leases during the current and prior periods, the Company presents the following disclosures in the aggregate for this class of underlying asset, consistent with ASC 842-20-50.

The following table shows supplemental information related to the Company's land leases:

Weighted average discount rate: 10.0%. Weighted average remaining lease term: 9.3 years.

As of June 30, 2026, the minimum lease payments due under these land operating leases are as follows:

The right-of-use asset associated with these land leases was $600,506 as of June 30, 2026. See Note 1, Summary of Significant Accounting Policies, for the Company's materiality threshold applied to lease accounting under ASC 842.

Master Lease Agreement

On November 1, 2024, the Company entered into a Master Lease Agreement (“MLA”) for a total lease obligation of $2,662,282, classified as a finance lease under ASC 842 due to a $1 bargain purchase option at the end of the lease term. In the third quarter of 2025, the Company exercised its purchase option and settled the remaining obligation early with a payment of $2,150,000, derecognizing the related right-of-use asset and lease liability and recording the equipment as a fixed asset. There is no remaining lease cost, liability, or right-of-use asset associated with the MLA as of June 30, 2026.

Lessor Arrangement — Region 16 Education Service Center

The Company accounts for leases as a lessor in accordance with ASC 842-30. The Company is the lessor under a master capital lease agreement entered into during the second quarter of 2025 with Region 16 Education Service Center (“Region 16”) for a 500kW generator. Under the terms of the agreement, Region 16 leases the generator for a period of 84 months beginning June 1, 2025, with monthly payments of $4,035 and a $1 buyout option at the end of the lease term. The lease is classified as a sales-type finance lease under ASC 842 due to the presence of a bargain purchase option and a lease term covering a substantial portion of the asset's useful life. The present value of the lease payments was calculated to be $282,772 at inception, using an implied annual interest rate of 5.29%.

As of June 30, 2026, the Company's net investment in the lease (lease receivable) was $245,543, of which $36,307 was classified as current and $209,236 as non-current. Interest income recognized on the lease receivable was $3,325 and $6,765 for the three and six months ended June 30, 2026, respectively.

GPU-as-a-Service Arrangement

The Company has entered into a master service agreement with Hydra Host, Inc. containing commitments to key vendors to purchase GPU servers, networking equipment, and related infrastructure to support its GPU-as-a-service operations. Hydra Host, Inc., as the operator under the arrangement, will arrange asset purchases with vendors and configure, install, operate, and maintain the servers on the Company’s behalf and secure a customer for the Company. As of June 30, 2026, the aggregate estimated cost of these commitments is approximately $145 million. The Company had deposited approximately $68.8 million with Hydra Host as of June 30, 2026 to secure the respective GPUs and server assets from third-party vendors. Since under the arrangement the risk of loss for the purchased equipment does not transfer to the Company until the equipment is delivered, these deposits are included in Deposits on equipment in the accompanying consolidated balance sheet as of June 30, 2026. The remaining commitments are expected to be funded through a combination of senior debt financing and customer prepayments.

The Company will secure senior debt financing to fund approximately 70% of its GPU infrastructure investments after approximately $43.5 million in funding has been provided to the GPU vendor through Hydra Host. The debt will be secured by the underlying GPU server assets which the Company is required to insure and will include customary covenants and reserve requirements. Interest rates vary based on market conditions and the future customer risk profile.

Hydra Host has secured a customer for the Company, and this customer provided a deposit of $18,770,228 to the Company in May 2026, which is included in contract liabilities, in the accompanying consolidated balance sheet as of June 30, 2026.

In June 2026, the Company entered into a purchase agreement to acquire a data center facility located at 8 Corporate Ridge Parkway, Columbus, Georgia, together with approximately 13.7 acres of land, for a purchase price of $30.0 million, to house the GPU servers supporting the Company’s GPU-as-a-service operations. The purchase price consists of $15.0 million in cash and a $15.0 million two-year seller promissory note secured by a first-lien security deed on the property. A deposit of $2.8 million was paid into escrow upon execution of the letter of intent and is included in Deposit on real estate on the accompanying consolidated balance sheet as of June 30, 2026. The purchase closed subsequent to June 30, 2026 (see Note 18).  

The seller note bears interest at zero percent per annum through maturity and is payable in $5.0 million principal installments as incremental utility and/or on-site generation power capacity is made available to the property above 5 MW, in 5 MW increments, up to a total of 20 MW (an additional 15 MW). The note may be prepaid at any time without penalty. At the lender’s election, principal payments may be settled in shares of the Company’s common stock at $10.50 per share, subject to the conditions set forth in the note. The Company also holds an option to purchase two on-site generators and receive assignment of related tax benefits for $1.5 million in additional cash.

The facility is in the process of being equipped to support the operation of 2,304 NVIDIA B300 GPUs, which will be operated by Hydra Host on the Company’s behalf for a third-party client.

Revenue will be significantly concentrated with a single customer agreement for use of all purchased GPU servers. In the arrangement, the Company bears the full risk of customer nonpayment, as the third party operator, Hydra Host, does not guarantee customer credit performance. Management will monitor customer payment history and credit exposure on an ongoing basis.

The Company will retain ownership of the GPU servers at the conclusion of the customer contract and is exposed to residual value risk related to changes in technology, pricing, and market demand. The Company will evaluate GPU server assets and related deposits on equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.