21. CONVERTIBLE NOTES PAYABLE

Convertible notes payable at December 31, 2025 and 2024, were comprised of the following:

Convertible Promissory Notes – Settled During 2025

During the year ended December 31, 2025, the Company had several convertible promissory notes outstanding, including notes issued in prior periods as well as new notes issued during 2025 in connection with exchange transactions, forbearance arrangements and other financing activities.

Aggregate principal and accrued interest under these notes were either (i) converted into shares of the Company’s Class A common stock or (ii) repaid in cash during 2025. In total, approximately $16.5 million of principal and accrued interest was converted into approximately 10.0 million shares of Class A common stock, and approximately $3.5 million was repaid in cash. As of December 31, 2025, no amounts remained outstanding under these notes.

SJC Convertible Promissory Note

On March 21, 2025, the Company entered into an exchange agreement with an institutional investor, pursuant to which the Company issued to the investor a convertible promissory note in the principal face amount of $4.9 million (the “Exchange Note”) in exchange for the cancellation of (i) a term note issued by the Company on January 14, 2025, with outstanding principal and accrued but unpaid interest of $2.6 million, (ii) a promissory note issued by the Company on March 7, 2025, with outstanding principal and accrued but unpaid interest of $0.5 million, (iii) a promissory note issued by the Company on March 12, 2025, with outstanding principal and accrued but unpaid interest of $1.5 million, and (iv) a promissory note issued by the Company on March 13, 2025, with outstanding principal and accrued but unpaid interest of $0.3 million. The Exchange Note accrues interest at the rate of 15% per annum. The Exchange Note was to mature on December 31, 2025. In January 2026, the Company and the investor entered into an amendment to the Exchange Note, pursuant to which the maturity date of the Exchange Note was extended until June 30, 2026.

The Exchange Note is convertible into shares of Class A common stock at a conversion price equal to the greater of (i) the Floor Price and (ii) the lesser of 75% of the VWAP (as defined in the Exchange Note) of the Class A common stock during the five trading days immediately prior to (A) the date of issuance of the Exchange Note or (B) the date of conversion into shares of Class A common stock, but not greater than $10.00 per share.

During the year ended December 31, 2025, approximately $2.1 million of outstanding principal and $0.2 million of accrued interest under the Exchange Note were converted into 5.8 million shares of the Company’s Class A common stock.

JGB Convertible Promissory Notes

On December 2, 2025, the Company, together with its wholly owned subsidiaries Sentinum and Alliance Cloud Services, LLC (collectively, the “Guarantors”), entered into a Note Purchase Agreement with JGB Capital, LP, JGB Partners, LP and JGB Capital Offshore Ltd., with JGB Collateral, LLC acting as agent. Pursuant to the agreement, the Company issued secured convertible promissory notes in the aggregate principal face amount of $12.8 million, which includes an OID of $0.8 million, for gross proceeds of $12.0 million.

The notes accrue interest at 12.5% per annum, payable monthly in arrears, and mature on December 2, 2027. The notes are convertible into shares of the Company’s Class A common stock at a conversion price equal to the lesser of (i) $0.3235 per share and (ii) 85% of the lowest daily VWAP of the Class A common stock during the three trading days immediately preceding and including the conversion date, but not less than $0.30 per share (the “JGB Floor Price”), subject to customary adjustments.

Beginning 120 days after issuance, if the conversion price is below the JGB Floor Price as of the last trading day of a calendar month, the holders may require the Company to redeem up to $0.25 million of outstanding principal during the subsequent month. The Company may prepay the notes in full, but not in part, commencing on the first anniversary of issuance, subject to specified conditions.

The notes are secured by, among other things, a second priority mortgage on certain real property owned by Alliance Cloud Services, LLC and Bitcoin collateral with a required U.S. dollar value of approximately $16.0 million to be held in a controlled crypto asset account. The Company has agreed to file a registration statement covering the resale of the shares issuable upon conversion of the notes, which registration statement was filed in December 2025.

Embedded Derivatives

The Company identified embedded derivative features within certain convertible promissory notes issued or outstanding during the year ended December 31, 2025 that required bifurcation and separate accounting as derivative liabilities under Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging. These features primarily relate to conversion options with variable pricing mechanisms.

The fair value of the embedded derivative liabilities was estimated using a Monte Carlo simulation model. The model incorporates key assumptions including the Company’s stock price, risk-free interest rate, expected volatility, credit-risk adjusted discount rate, and the specific terms of each conversion feature (including floor price, cap, and VWAP-based pricing). Due to the significant use of unobservable inputs, these derivative liabilities are classified within Level 3 of the fair value hierarchy. See Note 7 for additional information, including the initial recognition and rollforward of embedded derivative liabilities during the year.

The following table summarizes the key inputs used in the valuation of the embedded derivatives at inception:

The Monte Carlo simulation utilized 100,000 iterations and incorporated conversion mechanics, including the floor price and the VWAP-based conversion price as defined in each agreement. The incremental value attributable to the conversion feature was isolated to determine its impact on the overall fair value of the embedded option.

Conversions of Convertible Notes

During the year ended December 31, 2025, principal, accrued and unpaid interest of $22.0 million was converted into 15.8 million shares of Class A common stock of the Company.

Gain (Loss) on Extinguishment of Convertible Notes

During the year ended December 31, 2025, the Company recognized a total net loss on extinguishment of convertible notes of $4.6 million. This amount includes:

Contractual Maturities

Principal maturities of the Company’s convertible notes payable, assuming the exercise of all extensions that are exercisable solely at the Company’s option, as of December 31, 2025, were: