Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following information should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q for the period ended September 30, 2025 as well as Management's Discussion and Analysis of Financial Condition and Results of Operations included in our prospectus dated August 6, 2025. Except for the statements of historical fact, this report contains "forward-looking information" and "forward-looking statements reflecting our current expectations that involve risks and uncertainties (collectively, "forward-looking information") that is based on expectations, estimates and projections as at the date of this report. All statements, other than statements of historical fact, included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "intends," "expects," or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investing in our securities involves a high degree of risk. The following discussion may contain forward-looking statements that reflect WhiteFiber, Inc.'s plans, estimates and beliefs. WhiteFiber, Inc.'s actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those factors discussed below, in the IPO Prospectus and in Part II, Item 1.A of this Form 10-Q, particularly in the sections entitled "Cautionary Statement Regarding Forward-Looking Statements" and "Risk Factors." Before making an investment decision, you should carefully consider these risks, uncertainties and forward-looking statements.

The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the SEC and available on its website at http://www.sec.gov. If any material risk was to occur, our business, financial condition or results of operations would likely suffer. In that event, the value of our securities could decline and you could lose part of all of your investment. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. In addition, our past financial performance may not be a reliable indicate of future performance, and historical trends should not be used to anticipate results in the future. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the company does not assume a duty to update these forward-looking statements.

References to "WhiteFiber" or the "Company" refer to WhiteFiber, Inc. and its subsidiaries, giving effect to the Reorganization which occurred on August 6, 2025.

Overview

We believe we are a leading provider of artificial intelligence ("AI") infrastructure solutions. We own high-performance computing ("HPC") data centers and provide cloud-based HPC graphics processing units ("GPU") services, which we term cloud services, for customers such as AI application and machine learning ("ML") developers (the "HPC Business"). Our Tier-3 data centers provide hosting and colocation services. Our cloud services support generative AI workstreams, especially training and inference.

Colocation/Data center services

We design, develop, and operate data centers, through which we offer our hosting and colocation services. Our operational data centers meet the requirements of the Tier-3 standard, including N+1 redundancy architecture, concurrent maintainability, uninterruptible power supply, advanced and highly reliable cooling systems, strict monitoring and management systems, 99.982% uptime and no more than 1.6 hours of downtime annually, service organization control, SOC 2 Type 2, differentiated software supporting AI workloads, high density and robust bandwidth, and infrastructure to support AI workloads.

On July 30, 2025, we entered into a Contribution Agreement with Bit Digital, pursuant to which Bit Digital agreed to contribute its HPC business through the transfer of 100% of the capital shares of its cloud services subsidiary, WhiteFiber AI, Inc. and its wholly-owned subsidiaries WhiteFiber HPC, Inc., WhiteFiber Canada, Inc., WhiteFiber Japan G.K. and WhiteFiber Iceland, ehf, to WhiteFiber, upon the effectiveness of WhiteFiber's registration statement on Form S-1, as amended (File No. 333-288650) (the "Registration Statement"), on August 6, 2025 in connection with WhiteFiber's initial public offering (the "IPO").

We acquired Enovum Data Centers Corp ("Enovum") on October 11, 2024. The transaction included the lease to MTL-1, a fully operational and fully leased to customers 4 MW (gross) Tier-3 datacenter headquartered in Montreal, Canada.

On December 27, 2024, we acquired the real estate and building for a build-to-suit 5 MW (gross) Tier-3 data center expansion project near Montreal, Canada which we refer to as MTL-2. MTL-2, a 160,000 square foot site that was previously used as an encapsulation manufacturing facility, is located in Pointe-Claire, Quebec. We initially funded the purchase of CAD 33.5 million (approximately $23.3 million) with cash on hand. We expect to invest approximately $23.6 million to develop the site to Tier-3 standards with an initial load of 5 MW (gross). However, we have prioritized other builds and preserved capital for more time sensitive projects.

On April 11, 2025, we entered into a lease for a new data center site in Saint-Jerome, Quebec, a suburb of Montreal, MTL-3. The MTL-3 facility spans approximately 202,000 square feet on 7.7 acres and is being developed to as a 7 MW (gross) Tier-3 data center. It will support current contracted capacity, with Cerebras (5 MW IT Load), with future expansion potential subject to utility approvals. The transaction was executed under a lease-to-own structure, which includes a fixed-price purchase option of CAD 24.2 million (approximately $17.3 million) exercisable by December 2025. The lease term is 20 years, with two 5-year extensions at the Company's option. Subject to our receipt of all required permits, the facility is being retrofitted to Tier-3 standards, with development costs expected to total approximately $41 million. Construction at the site was substantially completed by October 2025. The site has commenced billing Cerebras as of November 1, 2025, in the amount of CAD 1.4 million (approximately $979 thousand) monthly for the duration of the five-year contract.

On May 20, 2025 (the "Closing Date"), we completed the purchase of a former industrial/manufacturing building from Unifi Manufacturing, Inc. ("UMI"). Pursuant to the Purchase Agreement we agreed to purchase from UMI, an industrial/manufacturing building together with the underlying land ("NC-1") located in Madison, North Carolina, as well as certain machinery and equipment located thereon for a cash purchase price of $45 million. The purchase price will increase by (i) $8 million, if Duke Energy actually provides, or provides an Electric Services Agreement providing for, at least 99 MW (gross) within two years of the Closing Date, or (ii) $5 million, if Duke Energy actually provides, or provides an Electric Services Agreement providing for, at least 99 MW (gross) more than two years but less than three years after the Closing Date. Additionally, the purchase price will increase by an additional $200,000 per MW over 99 MW (gross) up to a maximum of $5 million if at least 99 MW (gross) are actually delivered, or Duke Energy provides an Electric Services Agreement for the provision of at least 99 MW (gross), within four years of the Closing Date. Separately, the Company entered into a Capacity Agreement with Duke Energy pursuant to which Duke Energy agreed to use commercially reasonable efforts to achieve 24 MW (gross) of service to the Property by September 1, 2025, 40 MW (gross) by April 1, 2026, and 99 MW (gross) within four years of May 16, 2025. Management believes based upon its review of the site and a Duke Energy preliminary transmission study, that the Property may receive and support up to 200 MW (gross) of total electrical supply over an extended period of time, subject to infrastructure upgrades, such as developing new substations and other conditions. On August 4, 2025, Enovum NC-1 Bidco LLC, a subsidiary of the Company, entered into an Assignment and Assumption Agreement with Unifi Manufacturing and Duke Energy Carolinas, LLC, pursuant to which Enovum assumed Unifi's rights and obligations under certain electric service agreements for facilities located in North Carolina. Duke Energy consented to the assignment. Refer to Note 17. Commitments and contingencies for further detail.

On June 18, 2025, we entered into a definitive credit agreement (the "Facility") with the Royal Bank of Canada ("RBC"). The Facility provides for an aggregate of up to approximately CAD 60 million (approximately $43.8 million) of financing. The proceeds are to be used primarily to refinance the buildout of Tier-3 AI data center at 7300 Trans Canada Highway, Pointe-Claire, Quebec ("MTL-2") as well as $5.8 million of revolving term financing (the "Revolver"). The Facility is non-recourse to the Company. We entered into a three-year USD $18.5 million non-revolving lease facility to finance equipment costs and building improvements to build out the site. The lease facility provides for straight-line amortization of six years and capital moratorium of six months after disbursement is complete. RBC may cancel any unutilized portion of the facility after March 31, 2026. The interest rate is fixed based on the rental rate determined by RBC for the three-year term of the lease.

As part of the Facility, we entered into a three-year $19.6 million non-revolving real estate term loan facility. The purpose of this facility is to refinance the Company's purchase of MTL-2. The interest rate of the real estate term loan facility will be determined at the time of borrowing, or a floating interest rate ranging from RBP plus 0.75% to CORRA ("Canadian Overnight Repo Rate Average") plus 250 bps. Payment of principal and interest is due 30 days after drawdown and is repayable in full on the last day of the three-year term.

The Revolver is being provided by RBC by way of Letters of Credit and Letters of Guaranty with fees to be determined on a transaction by transaction basis. This facility will be available for the 36 month term subject to the issuance of the EDC (Export and Development Canada) Performance Security Guaranty in the amount of $5.8 million and other related supporting documents. We agreed to certain financial covenants included maintaining on a combined basis between MTL-1 and MTL-2: fixed charge coverage of not less than 1.20:1 and a ratio of Net Funded Debt to EBITDA of not greater than 4.25:1 and decreasing to 3.50:1 from December 31, 2027.

As of the reporting date, the related credit facilities have not been authorized for use by the lender, as both parties are in the process of negotiating revisions to the existing agreement. These negotiations are intended to result in an amendment to the current credit facility, providing the Company with access to a potential additional non-revolving term loan facility of up to CAD 55 million (approximately $39.5 million). Accordingly, no amounts had been drawn, and no borrowings were available under the credit agreement as at the reporting date.

Cloud Services

We provide specialized cloud services to support generative AI workstreams, especially training and inference, emphasizing cost-effective utility and tailor-made solutions for each client. We are an authorized NVIDIA Preferred Partner through the NVIDIA Partner Network ("NPN"), an authorized partner with SuperMicro Computer Inc.®, an authorized Communications Service Provider ("CSP") with Dell (through Dell's exclusive distributor in Iceland, Advania), an official partnership with Hewlett Packard Enterprise and a commercial relationship with Quanta Computer Inc. ("QCT"). Based on Management's knowledge of the industry, we are proud to be among the first service providers to offer H200, B200, and GB200 servers. We provide a high-standard service lease with an Uptime percentage> 99.5%.

We expect to leverage a global network of data centers for hosting capacity for our GPU business, in many instances, by negotiating with third-party providers to seamlessly integrate our cloud services at data centers across key regions in Europe, North America and Asia. Our initial data center partnership through which we lease capacity is at Blönduós Campus, Iceland, offering a world-class operations team with certified technicians and reliable engineers. The facility has a 45 kW rack density and 6 MW (gross) total capacity. We have executed contracts for 5.5 MW IT load at the data center. The center's energy source is 100% renewable energy, mainly from Blanda Hydro PowerStation, the winner of an IHA Blue Planet Award in 2017.

In April 2025, we received our first shipment of NVIDIA GB200 Grace Blackwell Superchip powered NVIDIA GB200 NVL72 system chips, from Quanta Cloud Technology, a leading provider of data center solutions. We believe that support with proof of concept (POC) access from Quanta will enable us to meet and exceed expectations around delivery and timeline, performance and reliability.

The following summaries reflect selected GPU cloud service agreements that we consider to be material or representative. We have entered into additional agreements that are not individually material and are not included below.

On October 23, 2023, Bit Digital announced that it had commenced AI operations by signing a binding term sheet with a customer (the "Initial Customer") to support the customer's GPU workloads. On December 12, 2023, we finalized a Master Services and Lease Agreement ("MSA"), as amended, with our Initial Customer for the provision of cloud services from a total of 2,048 GPUs over a three-year period. To finance this operation, we entered into a sale-leaseback agreement with a third party, selling 96 AI servers (equivalent to 768 GPUs) and leasing them back for three years. The total contract value with the Initial Customer for the aggregated 2,048 GPUs was estimated to be worth more than $50 million of annualized revenue. On January 22, 2024, approximately 192 servers (equivalent to 1,536 GPUs) were deployed at a specialized data center and began generating revenue, and subsequently on February 2, 2024, approximately an additional 64 servers (equivalent to 512 GPUs) also started to generate revenue.

In the second quarter of 2024, we finalized an agreement to supply our Initial Customer with an additional 2,048 GPUs over a three-year period. To finance this operation, we entered into a sale-leaseback agreement with a third party, agreeing to sell 128 AI servers (equivalent to 1,024 GPUs) and leasing them back for three years. In late July, at the customer's request, we agreed with the customer to temporarily delay the purchase order so the customer could evaluate an upgrade to newer generation Nvidia GPUs. Consequently, the Company and manufacturer postponed the purchase order. In early August, the customer made a non-refundable prepayment of $30.0 million for the services to be rendered under this agreement.

In January 2025, the Company entered into a new agreement to supply its Initial Customer with an additional 464 GPUs for a period of 18 months. This new agreement replaces the prior agreement whereby the Company was to provide the customer with an incremental 2,048 H100 GPUs. The contract represents approximately $15 million of annualized revenue and features a two-month prepayment from the customer. The customer elected to defer the commencement date until August 20, 2025, which is the latest allowable date under the agreement. Deployment commenced on August 20, 2025, using the Company's inventory of B200 GPUs.

In October 2025, the Company's existing parent guaranty arrangement with the Initial Customer was scheduled to expire. Beginning in November 2025, the customer will provide a service deposit to the Company in lieu of the parent guaranty. The deposit will be funded through fifteen consecutive monthly payments of approximately $0.24 million each, totaling $3.6 million, payable from November 2025 through January 2027. The deposit will serve as security for the customer's performance obligations under the amended service agreements. Each monthly payment is expected to be invoiced on the first day of the month and paid within thirty days. The Company will be required to return the deposit in cash upon termination or expiration of the service agreements, provided that all obligations have been fully satisfied and no payment defaults or material breaches exist.

In August 2024, we executed a binding term sheet with Boosteroid Inc. ("Boosteroid"), a global cloud gaming provider pursuant to which, we finalized initial orders of 489 GPUs, projected to generate approximately $7.9 million in contracted value in the aggregate through November 2029. The GPUs were delivered to respective data centers across the U.S. and Europe and began earning fees in November 2024. On October 9, 2024, we executed a Master Services and Lease Agreement (the "MSA") with Boosteroid, pursuant to which Boosteroid may, from time to time, lease certain equipment, including GPUs, from the Company upon delivery of a purchase order. The MSA provides the general terms and conditions for such equipment leases. Pursuant to the MSA, we are granted a right of first refusal with respect to the next 5,000 servers that Boosteroid leases during the term of the MSA. The MSA provides Boosteroid with the option to expand in increments of 100 servers, up to 50,000 servers, representing a potential contract value of approximately $700 million over the five-year term assuming Boosteroid utilizes the GPUs and services at full capacity for the duration of the contract. Expansion depends upon the internal development roadmap of Boosteroid, Boosteroid has full discretion to decide when and the quantity to pursue separate source orders (for GPU servers) under the MSA. In the third quarter of 2025, the Company finalized additional purchase orders for 302, 120, and 279 GPUs, totaling approximately $10.4 million in contracted value over a five-year term.

On November 6, 2024, we entered into a Master Services Agreement ("MSA") with a minimum purchase commitment of 16 GPUs, along with an associated purchase order, from a new customer. The purchase order provides for services utilizing a total of 16 H200 GPUs over a minimum of a six-month period, representing total contracted value of approximately $160,000 for the term. The deployment commenced on November 7, 2024, using the Company's existing inventory of H200 GPUs. The service under the purchase order concluded in May 2025. Between May 2025 and September 2025, the Company signed six additional agreements on a month-to-month basis for a total of 88 H200 GPUs, of which 80 remained in deployment as of the date of this report.

On November 14, 2024, we entered into a Terms of Supply and Service Level Agreement (together, the "Agreement") and an Order Form with a new customer. The order form provides for services utilizing a total of 64 H200 GPUs on a month-to-month basis, which either party may terminate upon at least 14 days' written notice prior to any renewal date. It represents annual revenue of approximately $1.2 million. The deployment commenced and revenue generation began on November 15, 2024, using the Company's existing inventory of H200 GPUs. The service under the purchase order concluded in December 2024.

On December 30, 2024, we entered into a Master Services Agreement ("MSA") with a minimum purchase commitment of 32 GPUs, along with an associated purchase order, from a new customer, an AI Compute Fund managed by DNA Holdings Venture Inc. ("DNA Fund"). The purchase order provides for services utilizing a total of 576 H200 GPUs over a 25-month period and terminable by either party upon at least 90 days' written notice prior to any renewal date. It represents an aggregate revenue opportunity of approximately $20.2 million. Concurrently, we placed a purchase order for 130 H200 servers for approximately $30 million. The deployment commenced in February 2025.

In April 2025, the Company signed two additional cloud services agreements with DNA Fund. The first agreement includes 104 NVIDIA H200 GPUs under a 23-month term and was deployed in May 2025. The second agreement includes 512 H200 GPUs under a 24-month term and was deployed in July 2025. With these additions, DNA Fund's total contracted deployment increased to 1,192 GPUs. Combined, the agreements represent approximately $20.8 million of annualized revenue.

On January 6, 2025, we entered into a Master Services Agreement ("MSA") with a minimum purchase commitment of 32 GPUs, along with an associated purchase order, from a new customer. The purchase order provided for services utilizing a total of 32 H200 GPUs over a minimum of six-month period, representing total revenue of approximately $300,000 for the term. The deployment commenced and revenue generation began on January 8, 2025, using the Company's existing inventory of H200 GPUs. The service under the purchase order concluded in April 2025 following a change in the customer's ownership, and the customer paid the remaining contract value as an early termination penalty.

In January 2025, we entered into a Master Services Agreement ("MSA"), along with two associated purchase orders, from a new customer. The purchase orders provide for services utilizing a total of 24 H200 GPUs over a minimum 12-month period, representing total revenue of approximately $450,000 for the term. The deployment commenced and revenue generation began on January 27, 2025, using the Company's existing inventory of H200 GPUs. The service under the purchase order concluded in March 2025 after the customer ceased operations.

On January 30, 2025, we entered into a Master Services Agreement ("MSA") with a minimum purchase commitment of 40 GPUs, along with an associated purchase order, from a new customer. The purchase orders provide for services utilizing a total of 40 H200 GPUs over a minimum of 12 month period, representing total revenue of approximately $750,000 for the term. The deployment commenced and revenue generation began on January 24, 2025, using the Company's existing inventory of H200 GPUs. In October 2025, the purchase order was amended to reduce the number of H200 GPUs from 40 to 8 and to extend the term of service through May 2027. Between April and July 2025, the Company signed four additional agreements on a month-to-month basis for a total of 184 H200 GPUs, which were terminated in August 2025.

In March 2025, we entered a strategic partnership with Shadeform, Inc., the premier multi-cloud GPU marketplaces, to bring on-demand NVIDIA B200 GPUs to customers beginning in May 2025.

In August and September 2025, we entered into three service orders with a new customer. Each order form provides for services utilizing a total of 64 B200 GPUs on a weekly basis, which either party may terminate by not extending it with mutual written agreement. In September, the customer renewed one order form for an additional week for services utilizing a total of 64 B200 GPUs. As of the reporting date, no additional renewals have occurred.

In September 2025, we entered into a service order with a new customer, which provides services utilizing a total of 16 B200 GPUs on a monthly basis, automatically renewing for an additional one month period unless and until otherwise terminated upon at least seven days' prior written notice. The deployment commenced and revenue generation began on September 23, 2025.

In October 2025, we entered into a service order with a new customer to provide services utilizing a total of 48 H200 GPUs. The service order has an initial term of 36 months, representing total contracted value of approximately $2.2 million, after which it automatically renews for successive one-month periods unless terminated by either party. The deployment commenced and revenue generation began on October 21, 2025.

In November 2025, we entered into a service order with a new customer to provide services utilizing a total of 128 B200 GPUs. The service order has an initial term of 12 months, representing total contracted value of approximately $3.0 million, after which it automatically renews for successive one-month periods unless terminated by either party. Deployment and revenue generation is scheduled to begin on December 1, 2025.

Key Factors that May Affect Future Results of Operations

We believe that the growth of our business and our future success are dependent upon many factors including those described under "Risk Factors" included elsewhere in this report and under the heading "Risk Factors" in our IPO Prospectus. While these factors present significant opportunities for us, they also pose challenges that we must successfully address in order to sustain the growth of our business and enhance our results of operations.

Timely Completion of, and Expansion of Capabilities at, our Existing Data Center Projects.

Our future revenue growth is, in part, dependent on our ability to leverage our development capabilities at our data center sites. We substantially completed construction of our MTL-3 facility by the end of October 2025. The site has commenced billing its customer, Cerebras, as of November 1, 2025, in the amount of CAD 1.4 million (approximately $979 thousand) monthly for the duration of the five-year contract. We intend to complete the first phase of construction 24 MW (gross) of NC-1 facility in the first quarter of 2026. Management expects NC-1 to start generating revenue in May of 2026. Management expects the second phase of construction 30 MW (gross) to be completed in the second quarter of 2026 and start generating revenues 30 days after completion. We have prioritized these projects and put a hold on the build for MTL-2. We expect to increase revenue from our existing sites by securing additional allocations of utility power, subject to our receipt of funding and required permits through ongoing engagement with the utility and relevant authorities. In addition, at certain new and existing sites, we intend to deploy natural gas fuel cell generation technology to increase available power and revenue potential. Our ability to secure the required funding and permits in accordance with our implementation plans may cause variability in our revenue growth in future quarters.

Development of Data Center Pipeline.

We intend to rapidly develop additional sites from our expansion pipeline in targeted locations to secure a strategic presence across North America. By developing a robust HPC data center platform across North America, we expect to enhance redundancy, mitigate geo-location risks, and ensure our services are available where clients need them most. We expect our strategically placed WhiteFiber data centers in smaller urban areas will deliver carrier hotel-level connectivity, while our larger deployments will power AI-driven computing super-clusters, driving innovation and efficiency.

Expansion of Cloud Services.

We have made investments in research and development of our cloud service technology and services. Cloud services are highly competitive, rapidly evolving, and require significant investment, including development and operational costs, to meet the changing needs and expectations of our existing users and attract new users. Our ability to deploy certain cloud service technologies critical for our products and services and for our business strategy may depend on the availability and pricing of third-party equipment and technical infrastructure. In the future, we are looking to generate significant revenues from our cloud services, but such revenue growth depends upon certain third-party providers which may be beyond our control and creates uncertainty that we will be able to generate consistent revenue.

In addition to the key factors described above, we may also generate revenue through the monetization of excess or unused power capacity, resale or leasing of high-performance computing (HPC) hardware, licensing of software or infrastructure designs, and strategic partnerships that expand our service offerings. However, these potential revenue streams are at an early stage and are not expected to materially contribute to our near-term results.

Results of operations for the three months ended September 30, 2025 and 2024

The following discussion summarizes the results of operations for the three months ended September 30, 2025 and 2024. This information should be read together with our condensed consolidated financial statements and related notes included elsewhere in this report.

		For The Three Months Ended September 30,								Variance in
		2025				2024				Amount
Revenue		$	20,179,766			$	12,281,447			$	7,898,319
Operating costs and expenses
Cost of revenue (exclusive of depreciation shown below)			(6,989,495	)			(5,459,667	)			(1,529,828	)
Depreciation and amortization expenses			(6,371,178	)			(4,324,751	)			(2,046,427	)
General and administrative expenses			(21,323,157	)			(3,344,402	)			(17,978,755	)
Total operating expenses			(34,683,830	)			(13,128,820	)			(21,555,010	)
Loss from operations			(14,504,064	)			(847,373	)			(13,656,691	)
Net loss from disposal of property, plant and equipment			(338,222	)			-				(338,222	)
Other (loss) income, net			(844,732	)			866,429				(1,711,161	)
Total other (loss) income, net			(1,182,954	)			866,429				(2,049,383	)
(Loss) income before provision for income taxes			(15,687,018	)			19,056				(15,706,074	)
Income tax expenses			(66,698	)			(383,619	)			316,921
Net loss		$	(15,753,716	)		$	(364,563	)		$	(15,389,153	)

Revenue

We generate revenues primarily from providing cloud services and colocation services. Refer to Note 3. Revenue from Contracts with Customers for further information.

Cloud services revenue is derived from providing customers with access to high-performance computing ("HPC") infrastructure, including GPU clusters optimized for AI workloads. Our contracts are structured as usage-based or committed-capacity agreements, typically with pricing based on the type and quantity of GPUs deployed, duration of use, and associated infrastructure. Key factors that impact cloud services revenue include the number and performance class of GPUs deployed, hardware utilization, power availability at hosting sites, and the timing of new customer onboarding.

Colocation services revenue is generated from leasing data center space, power, and related infrastructure to customers who operate their own hardware. These contracts are generally multi-year agreements with fixed monthly fees based on committed power capacity (typically measured in kilowatts). Factors that affect colocation revenue include timing of site development and energization, contracted power levels, and customer expansion activity.

Revenue from cloud services

In the fourth quarter of 2023, we established our cloud-based HPC graphics processing units services, which we term cloud services, a new business line to provide services to support generative AI workstreams. The Company commenced offering cloud services to customers in January 2024.

Our revenue from cloud services increased by $5.9 million, or 48.4%, to $18.0 million for the three months ended September 30, 2025 from $12.2 million for the three months ended September 30, 2024. The increase was primarily due to an increase in deployed GPU servers to new and existing customers in the third quarter of 2025, offset by a $2.0 million service credit accrued and expected to be issued to a customer under the terms of the contract.

Revenue from colocation services

In the fourth quarter of 2024, we acquired Enovum which holds our data center business that provides customers with physical space, power, and cooling within data center facilities.

Our revenue from colocation services was $1.7 million and $nil for the three months ended September 30, 2025 and 2024, respectively.

Cost of revenue

We incur cost of revenue from cloud services and colocation services.

The Company's cost of revenue consists primarily of direct production costs associated with its core operations, excluding depreciation and amortization, which are separately stated in the Company's consolidated statements of operations. Specifically, these costs consist of: (i) cloud services operations - electricity costs, datacenter lease expense, GPU servers lease expense, and other relevant costs and (ii) colocation services - electricity costs, lease costs, data center employees' wage expenses, and other relevant costs.

Cost of revenue - cloud services

For the three months ended September 30, 2025 and 2024, the cost of revenue from cloud services was comprised of the following:

		For The Three Months Ended September 30,
		2025				2024
Electricity costs		$	631,099			$	210,200
Datacenter lease expenses			1,380,553				1,021,758
GPU servers lease expenses			3,454,308				3,874,752
Other costs			848,588				352,957
Total		$	6,314,548			$	5,459,667

Electricity costs. These expenses were incurred by the data centers for the HPC equipment and were closely correlated with the number of deployed GPU servers.

For the three months ended September 30, 2025, electricity costs increased by $0.4 million, or 200%, compared to the electricity costs incurred for the three months ended September 30, 2024. The increase primarily resulted from an increase in the number of deployed GPU servers.

Datacenter lease expenses. We entered into data center lease agreements for fixed monthly recurring costs.

For the three months ended September 30, 2025, data center lease expenses increased by $0.4 million, or 35%, compared to the data center lease expenses incurred for the three months ended September 30, 2024. The increase primarily resulted from one additional datacenter lease entered after the third quarter of 2024.

GPU servers lease expenses. We entered into a GPU servers lease agreement to support our cloud services. The lease payment depends on the usage of the GPU servers.

For the three months ended September 30, 2025, GPU servers lease expenses decreased by $0.4 million, or 11%. The decrease primarily resulted from the application of a previously issued credit in connection with downtime that occurred in prior periods.

Cost of revenue - Colocation Services

In the fourth quarter of 2024, we acquired Enovum which provides colocation services. For the three months ended September 30, 2025 and 2024, the cost of revenue from colocation services was comprised of the following:

		For The Three Months Ended September 30,
		2025				2024
Electricity costs		$	288,797			$	-
Lease expenses			166,114				-
Wage expenses			92,494				-
Other costs			127,542				-
Total		$	674,947			$	-

Electricity costs. These expenses were closely correlated with the number of deployed servers hosted by the data center.

For the three months ended September 30, 2025, electricity costs totaled $0.3 million. We had no electricity costs for the three months ended September 30, 2024 as we acquired Enovum in the fourth quarter of 2024, which provides colocation services.

Lease expenses. These expenses were incurred by the data center for lease agreement for a fixed monthly recurring cost.

For the three months ended September 30, 2025 , data center lease expenses totaled $0.2 million. We had no data center lease expenses for the three months ended September 30, 2024 as we acquired Enovum in the fourth quarter of 2024, which provides colocation services.

Wage expenses. These expenses represent the salaries and benefits of data center employees involved in the operation of our facilities.

For the three months ended September 30, 2025, wage expenses totaled $0.1 million. We had no wage expenses for the three months ended September 30, 2024 as we acquired Enovum in the fourth quarter of 2024, which provides colocation services.

Depreciation and amortization expenses

For the three months ended September 30, 2025 and 2024, depreciation and amortization expenses were $6.4 million and $4.3 million, respectively, based on an estimated useful life of property, plant, and equipment and intangible assets.

Effective January 1, 2025, we changed our estimate of the useful lives for our cloud service equipment from three to five years. The change was made to better reflect the expected usage patterns and economic benefits of the assets. Refer to Note 2. Summary of Significant Accounting Policies to our condensed consolidated financial statements.

General and administrative expenses

For the three months ended September 30, 2025, our general and administrative expenses, totaling $21.3 million, were primarily comprised of share-based compensation expenses of $6.4 million, salary and bonus expenses of $1.5 million, professional and consulting expenses of $9.6 million, other expenses of $2.5 million, commission expenses of $0.3 million, marketing expenses of $0.7 million, and travel expenses of $0.2 million.

For the three months ended September 30, 2024, our general and administrative expenses, totaling $3.3 million, were primarily comprised of share-based compensation expenses of $1.3 million, salary and bonus expenses of $0.5 million, professional and consulting expenses of $0.9 million, commission expense of $0.3 million, marketing expenses of $0.2 million, and travel expenses of $0.1 million.

The General and administrative expenses during the three months ended September 30, 2025 was significantly higher compared to the three months ended September 30, 2024 primarily attributable to higher share-based compensation expenses. In addition, salary and bonus expenses increased due to additional employees hired following the IPO. Professional and consulting fees were also higher, reflecting consulting costs charged by Bit Digital to WhiteFiber per the TSA agreement. The increase further included start-up and development costs that did not qualify for capitalization.

Income tax expenses

Provision for income taxes consists of federal, state and foreign income taxes. Our income tax provision for the three months ended September 30, 2025 is primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, and the valuation allowance applied to the Company's deferred tax assets in the United States. We continue to maintain a valuation allowance against the deferred tax assets in United States as the Company does not expect those deferred tax assets are "more likely than not" to be realized in the near future, particularly due to the uncertainty on macroeconomics, politics and profitability of the business.

Our income tax provision was $0.1 million and $0.4 million for the three months ended September 30, 2025 and 2024, respectively. The income tax provision during the three months ended September 30, 2025 was lower compared to the three months ended September 30, 2024 primarily due to the income tax benefits of $1.0 million generated from Enovum's operating loss and partially offset by an increase of income tax expenses due to the higher operating profits from White Fiber Iceland.

Results of operations for the nine months ended September 30, 2025 and 2024

The following discussion summarizes the results of operations for the nine months ended September 30, 2025 and 2024. This information should be read together with our condensed consolidated financial statements and related notes included elsewhere in this report.

		For The Nine Months Ended September 30,								Variance in
		2025				2024				Amount
Revenue		$	55,603,277			$	33,040,480			$	22,562,797
Operating costs and expenses
Cost of revenue (exclusive of depreciation shown below)			(20,807,506	)			(13,212,295	)			(7,595,211	)
Depreciation and amortization expenses			(15,341,535	)			(11,528,569	)			(3,812,966	)
General and administrative expenses			(41,077,642	)			(5,802,810	)			(35,274,832	)
Total operating expenses			(77,226,683	)			(30,543,674	)			(46,683,009	)
(Loss) income from operations			(21,623,406	)			2,496,806				(24,120,212	)
Net loss from disposal of property, plant and equipment			(338,222	)			-				(338,222	)
Other (loss) income, net			(90,412	)			1,036,399				(1,126,811	)
Other (loss) income, net			(428,634	)			1,036,399				(1,465,033	)
(Loss) income before provision for income taxes			(22,052,040	)			3,533,205				(25,585,245	)
Income tax expenses			(1,107,232	)			(1,126,193	)			18,961
Net (loss) income		$	(23,159,272	)		$	2,407,012			$	(25,566,284	)

Revenue

We generate revenues primarily from providing cloud services and colocation services. Refer to Note 3. Revenue from Contracts with Customers for further information.

Cloud services revenue is derived from providing customers with access to high-performance computing infrastructure, including GPU clusters optimized for AI workloads. Our contracts are structured as usage-based or committed-capacity agreements, typically with pricing based on the type and quantity of GPUs deployed, duration of use, and associated infrastructure. Key factors that impact cloud services revenue include the number and performance class of GPUs deployed, hardware utilization, power availability at hosting sites, and the timing of new customer onboarding.

Colocation services revenue is generated from leasing data center space, power, and related infrastructure to customers who operate their own hardware. These contracts are generally multi-year agreements with fixed monthly or annual fees based on committed power capacity (typically measured in kilowatts). Factors that affect colocation revenue include timing of site development and energization, contracted power levels, and customer expansion activity.

Revenue from cloud services

In the fourth quarter of 2023, we established our cloud-based HPC graphics processing units services, which we term cloud services, a new business line to provide cloud services to support generative AI workstreams. The Company commenced offering cloud services to customers in January 2024.

Our revenue from cloud services increased by $16.8 million, or 51.2%, to $49.5 million for the nine months ended September 30, 2025 from $32.7 million for the nine months ended September 30, 2024. The increase was primarily due to an increase in deployed GPU servers to new and existing customers during the first nine months ended September 30, 2025.

Revenue from colocation services

In the fourth quarter of 2024, we acquired Enovum which provides customers with physical space, power, and cooling within data center facilities.

Our revenue from colocation services was $5.1 million and $nil for the nine months ended September 30, 2025 and 2024, respectively.

Cost of revenue

We incur cost of revenue from cloud services and colocation services.

The Company's cost of revenue consists primarily of direct production costs associated with its core operations, excluding depreciation and amortization, which are separately stated in the Company's consolidated statements of operations. Specifically, these costs consist of: (i) cloud services operations - electricity costs, datacenter lease expense, GPU servers lease expense, and other relevant costs and (ii) colocation services - electricity costs, lease costs, data center employees' wage expenses, and other relevant costs.

Cost of revenue - cloud services

For the nine months ended September 30, 2025 and 2024, the cost of revenue from cloud services was comprised of the following:

		For The Nine Months Ended September 30,
		2025				2024
Electricity costs		$	1,819,950			$	436,621
Datacenter lease expenses			4,020,206				2,327,868
GPU servers lease expenses			10,951,164				9,786,992
Other costs			2,141,357				660,814
Total		$	18,932,677			$	13,212,295

Electricity costs. These expenses were incurred by the data centers for the HPC equipment and were closely correlated with the number of deployed GPU servers.

For the nine months ended September 30, 2025, electricity costs increased by $1.4 million, or 317%, compared to the electricity costs incurred for the nine months ended September 30, 2024. The increase primarily resulted from an increase in the number of deployed GPU servers.

Datacenter lease expenses. We entered into data center lease agreements for fixed monthly recurring costs.

For the nine months ended September 30, 2025, data center lease expenses increased by $1.7 million, or 73%, compared to the data center lease expenses incurred for the nine months ended September 30, 2024. The increase primarily resulted from two additional datacenter leases entered into after the second quarter of 2024.

GPU servers lease expenses. We entered into a GPU servers lease agreement to support our cloud services. The lease payment depends on the usage of the GPU servers.

For the nine months ended September 30, 2025, GPU servers lease expenses increased by $1.2 million, or 12%, compared to the GPU servers lease expenses incurred for the nine months ended September 30, 2024. The increase primarily resulted from a higher average number of GPU servers leased.

Cost of revenue - Colocation Services

In the fourth quarter of 2024, we acquired Enovum which provides colocation services. For the nine months ended September 30, 2025 and 2024, the cost of revenue from colocation services was comprised of the following:

		For The Nine Months Ended September 30,
		2025				2024
Electricity costs		$	781,857			$	-
Lease expenses			473,391				-
Wage expenses			262,037				-
Other costs			357,544				-
Total		$	1,874,829			$	-

Electricity costs. These expenses were closely correlated with the number of deployed servers hosted by the data center.

For the nine months ended September 30, 2025, electricity costs totaled $0.8 million. We had no electricity costs for the nine months ended September 30, 2024 as we acquired Enovum in the fourth quarter of 2024, which provides colocation services.

Lease expenses. These expenses were incurred by the data center for lease agreement for a fixed monthly recurring cost.

For the nine months ended September 30, 2025, data center lease expenses totaled $0.5 million. We had no data center lease expenses for the nine months ended September 30, 2024 as we acquired Enovum in the fourth quarter of 2024, which provides colocation services.

Wage expenses. These expenses represent the salaries and benefits of data center employees involved in the operation of our facilities.

For the nine months ended September 30, 2025, wage expenses totaled $0.3 million. We had no wage expenses for the nine months ended September 30, 2024 as we acquired Enovum in the fourth quarter of 2024, which provides colocation services.

Depreciation and amortization expenses

For the nine months ended September 30, 2025 and 2024, depreciation and amortization expenses were $15.3 million and $11.5 million, respectively, based on an estimated useful life of property, plant, and equipment and intangible assets.

Effective January 1, 2025, we changed our estimate of the useful lives for our cloud service equipment from three to five years. The change was made to better reflect the expected usage patterns and economic benefits of the assets. Refer to Note 2. Summary of Significant Accounting Policies to our condensed consolidated financial statements

General and administrative expenses

For the nine months ended September 30, 2025, our general and administrative expenses, totaling $41.1 million, were primarily comprised of share based compensation expenses of $13.0 million, salary and bonus expenses of $4.0 million, professional and consulting expenses of $17.1 million, other expenses of $4.3 million, marketing expenses of $1.5 million, commission expenses of $0.8 million and travel expenses of $0.4 million.

For the nine months ended September 30, 2024, our general and administrative expenses, totaling $5.8 million, were primarily comprised of share based compensation expenses of $1.3 million, salary and bonus expenses of $1.2 million, professional and consulting expenses of $1.3 million, commission expense of $0.9 million, marketing expenses of $0.5 million, other expenses of $0.4 million and travel expenses of $0.2 million.

The General and administrative expenses during the nine months ended September 30, 2025 were higher compared to the nine months ended September 30, 2024 primarily attributable to higher share-based compensation. In addition, salary and bonus expenses increased due to additional employees hired following the IPO. Professional and consulting fees were also higher, reflecting RSUs granted to consultants, consulting costs charged by Bit Digital to WhiteFiber per the TSA agreement. The increase further included start-up costs that do not meet the criteria for capitalization. These increases reflect the Company's expanded operations and personnel base following the IPO and continued investment in infrastructure and technology development.

Income tax expenses

Provision for income taxes consists of federal, state and foreign income taxes. Our income tax provision for the nine months ended September 30, 2025 is primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, and the valuation allowance applied to the Company's deferred tax assets in the United States. We continue to maintain a valuation allowance against the deferred tax assets in United States as the Company does not expect those deferred tax assets are "more likely than not" to be realized in the near future, particularly due to the uncertainty on macroeconomics, politics and profitability of the business.

Our income tax provision was $1.1 million and $1.1 million for the nine months ended September 30, 2025 and 2024 respectively. The income tax provision is materially consistent between nine months ended September 30, 2025 and 2024.

Discussion of Certain Balance Sheet Items as of September 30, 2025 and December 31, 2024

The following table sets forth selected information from our condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024. This information should be read together with our condensed consolidated financial statements and related notes included elsewhere in this report.

		September 30, 2025				December 31, 2024				Variance in Amount
ASSETS
Current Assets
Cash and cash equivalents		$	166,490,556			$	11,671,984			$	154,818,572
Restricted cash			3,732,792				3,732,792				-
Accounts receivable, net			17,441,029				5,267,863				12,173,166
Net investment in lease - current, net			4,126,623				2,546,519				1,580,104
Other current assets, net			19,763,083				23,285,682				(3,522,599	)
Total Current Assets			211,554,083				46,504,840				165,049,243
Non-current assets
Deposits for property, plant and equipment			9,879,576				35,743,011				(25,863,435	)
Property, plant, and equipment, net			244,084,322				89,203,483				154,880,839
Goodwill			19,848,419				19,383,291				465,128
Intangible assets, net			12,808,901				13,028,730				(219,829	)
Operating lease right-of-use assets			42,214,486				14,544,118				27,670,368
Net investment in lease - non-current, net			10,798,088				6,782,479				4,015,609
Investment security			1,000,000				1,000,000				-
Deferred tax asset			106,784				104,642				2,142
Amounts due from related parties			1,483,526				-				1,483,526
Other non-current assets, net			1,296,718				2,838,269				(1,541,551	)
Total Non-Current Assets			343,520,820				182,628,023				160,892,797
Total Assets		$	555,074,903			$	229,132,863			$	325,942,040
LIABILITIES
Current Liabilities
Accounts payable		$	5,361,367			$	2,346,510			$	3,014,857
Current portion of deferred revenue			7,774,675				30,698,458				(22,923,783	)
Current portion of operating lease liability			5,286,640				4,372,544				914,096
Income tax payable			759,475				985,191				(225,716	)
Other payables and accrued liabilities			13,210,275				7,357,839				5,852,436
Total Current Liabilities			32,392,432				45,760,542				(13,368,110	)
Non-current portion of operating lease liability			36,069,430				9,010,577				27,058,853
Non-current portion of deferred revenue			13,671				73,494				(59,823	)
Deferred tax liability			4,984,110				3,776,124				1,207,986
Other long-term liabilities			196,343				785,371				(589,028	)
Amounts due to related parties			367,033				-				367,033
Total non-current liabilities			41,630,587				13,645,566				27,985,021
Total Liabilities		$	74,023,019			$	59,406,108			$	14,616,911

Cash and cash equivalents

Cash and cash equivalents primarily consist of funds deposited with banks, which are highly liquid and are unrestricted to withdrawal or use. The total balance of cash and cash equivalents were $166.5 million and $11.7 million as of September 30, 2025 and December 31, 2024, respectively. The increase in the balance of cash and cash equivalents was a result of net cash of $327.0 million provided by financing activities, partially offset by net cash of $11.3 million used in operating activities and net cash of $160.8 million used in investing activities.

Restricted cash

Restricted cash represents cash balances that support an outstanding letter of credit to third parties related to security deposits and are restricted from withdrawal. As of September 30, 2025 and December 31, 2024, the fixed maximum amount guaranteed under the letter of credit was $3.7 million and $3.7 million, respectively.

Accounts receivable, net

Accounts receivable, net consists of amounts due from our customers. The total balance of accounts receivable, net was $17.4 million and $5.3 million as of September 30, 2025 and December 31, 2024, respectively. The increase in the balance of accounts receivable is attributable to unpaid invoices from our customers.

Net investment in lease, net

Net investment in lease, net represents the present value of the lease payments not yet received from lessees. The current and non-current balance of net investment in lease was $4.1 million and $10.8 million, respectively as of September 30, 2025 due to sales-type lease agreements as a lessor for its cloud service equipment. The current and non-current balance of net investment in lease was $2.5 million and $6.8 million, respectively as of December 31, 2024.

Other current assets, net

Other current assets, net were $19.8 million and $23.3 million as of September 30, 2025 and December 31, 2024, respectively. The decrease in the balance of other current assets was mainly attributable to a decrease in prepayment to third parties of $7.2 million, partially offset by an increase in prepaid consulting services of $2.0 million, an increase in contract assets of $0.8 million, and an increase in receivable from third parties of $0.8 million.

Deposits for property, plant, and equipment

The deposits for property, plant, and equipment consists of advance payments for property, plant and equipment. The balance is derecognized once the control of the property, plant, and equipment is transferred to and obtained by us.

Compared with December 31, 2024, the balance as of September 30, 2025 decreased by $25.9 million, mainly due to the reclassification of property and equipment of $103.5 million offset by prepayment of $77.6 million for property and equipment.

Property, plant, and equipment, net

Property, plant, and equipment primarily consisted of equipment used in our HPC businesses as well as construction in progress representing assets received but not yet put into service.

As of September 30, 2025, the HPC equipment had a net book value of $244.1 million. As of December 31, 2024, the HPC equipment had a net book value of $89.2 million. Compared with December 31, 2024, the balance as of September 30, 2025 increased by $154.9 million, mainly due to the reclassification of property and equipment of $103.5 million from deposits for property, plant and equipment; the real estate acquisition of $45.0 million in North Carolina; and development costs incurred for the construction of MTL-3 in Montreal of $29.1 million offset, in part, by increase in accumulated depreciation of $14.8 million and reclassification of servers and network equipment of $7.9 million to net investment in leases upon commencement of leases of this equipment to customers.

Operating lease right-of-use assets and operating lease liability

As of September 30, 2025, operating right-of-use assets and operating lease liabilities were $42.2 million and $41.4 million, respectively. As of December 31, 2024, the Company's operating lease right-of-use assets and operating lease liability were $14.5 million and $13.4 million, respectively.

The increase in operating lease right-of-use assets and total operating lease liability of $27.7 million and $28.0 million respectively, were due to the additional leases of $31.2 million, partially offset by the amortization of the operating lease right-of-use assets totaling $3.7 million for the nine months ended September 30, 2025.

Investment security

As of September 30, 2025 and December 31, 2024, our portfolio consists of an investment in a privately held company via a simple agreement for future equity ("SAFE"). The total balance of our investment security was $1.0 million and $1.0 million as of September 30, 2025 and December 31, 2024, respectively.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in relation of in Enovum acquisition. Refer to Note 12. Goodwill And Intangible Assets of our condensed consolidated financial statements for further information. As of September 30, 2025 and December 31, 2024, the Company recorded goodwill in the amount of $19.8 million and $19.4 million, respectively.

Intangible Assets, net

Intangible assets pertain to customer relationships acquired in connection with the acquisition of Enovum. Refer to Note 12. Goodwill and Intangible Assets for further information. As of September 30, 2025 and December 31, 2024, the total balance of intangible assets was $12.8 million and $13.0 million, respectively.

Accounts payable

Accounts payable primarily consists of amounts due for costs related to HPC services. Compared with December 31, 2024, the balance of accounts payable increased by $3.0 million in the nine months ended September 30, 2025, largely due to the unpaid bills for our cloud services in the nine months ended September 30, 2025.

Deferred revenue

Deferred revenue pertains to prepayments received from customers for HPC business.

As of September 30, 2025, the Company's current and non-current portion of deferred revenue was $7.8 million and $14,000, respectively, compared to $30.7 million and $0.1 million, respectively, as of December 31, 2024. The decrease in deferred revenue of $23.0 million reflects the recognition of $26.3 million in revenue related to the successful fulfillment of performance obligations from our HPC services, partially offset by $3.3 million prepayments from customers for HPC services to be rendered in the future.

Non-GAAP Financial Measures

In addition to consolidated U.S. GAAP financial measures, we consistently evaluate our use of and calculation of the non-GAAP financial measures, such as EBITDA and Adjusted EBITDA. These non-GAAP financial measures have not been calculated in accordance with GAAP and should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results. In addition, EBITDA and Adjusted EBITDA should not be construed as indicators of our operating performance, liquidity or cash flows generated by operating, investing and financing activities, as there may be significant factors or trends that they fail to address. We caution investors that non-GAAP financial information, by its nature, departs from traditional accounting conventions. Therefore, its use can make it difficult to compare our current results with our results from other reporting periods and with the results of other companies.

EBITDA is computed as net income before interest, taxes, depreciation, and amortization. Adjusted EBITDA is a financial measure defined as our EBITDA adjusted to eliminate the effects of certain non-cash and/or non-recurring items that do not reflect our ongoing strategic business operations, which management believes results in a performance measurement that represents a key indicator of the Company's core business operations. The adjustments currently include non-cash expenses such as share-based compensation expenses.

We believe Adjusted EBITDA can be an important financial measure because it allows management, investors, and our board of directors to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period-to-period by making such adjustments.

Adjusted EBITDA is provided in addition to and should not be considered to be a substitute for, or superior to net income, the comparable measures under U.S. GAAP. Further, Adjusted EBITDA should not be considered as an alternative to revenue growth, net income, diluted earnings per share or any other performance measure derived in accordance with U.S. GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. Adjusted EBITDA has limitations as an analytical tool, and you should not consider such measures either in isolation or as substitutes for analyzing our results as reported under U.S. GAAP.

Reconciliations of Adjusted EBITDA to the most comparable U.S. GAAP financial metric for the three months ended and nine months ended September 30, 2025 and 2024 are presented in the table below:

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2025				2024				2025				2024
Reconciliation of non-GAAP income (loss) from operations:
Net (loss) income		$	(15,753,716	)		$	(364,563	)		$	(23,159,272	)		$	2,407,012
Depreciation and amortization expenses			6,371,178				4,324,751				15,341,535				11,528,569
Income tax expenses			66,698				383,619				1,107,232				1,126,193
EBITDA			(9,315,840	)			4,343,807				(6,710,505	)			15,061,774
Adjustments:
Net loss from disposal of property, plant and equipment			338,222				-				338,222				-
Share-based compensation expenses			11,254,690				1,297,489				17,876,451				1,382,004
Adjusted EBITDA		$	2,277,072			$	5,641,296			$	11,504,168			$	16,443,778

Liquidity and capital resources

As of September 30, 2025, our principal sources of liquidity were cash and cash equivalents of $166.5 million, and accounts receivable, net of $17.4 million.

As of September 30, 2025, we had working capital of $179.2 million as compared with working capital of $0.7 million as of December 31, 2024. Working capital is the difference between the Company's current assets and current liabilities.

Prior to the Reorganization, as part of Bit Digital, the Company relied on Bit Digital to meet its working capital and financing requirements prior to generating revenue. We had primarily funded our operations through operating cash flows and equity financing provided by Bit Digital via public and private securities offerings of Bit Digital's ordinary shares.

Following the Reorganization, our capital structure and sources of liquidity changed from our historical capital structure because we are no longer participating in Bit Digital's cash management process. The Company's ability to fund its operating needs in the future will depend on the ongoing ability to generate positive cash flow from our operations and raise capital in the capital markets on our own. Based upon our history of generating strong cash flows, we believe that we will be able to meet our short-term liquidity needs.

We believe that our cash on hand and anticipated cash from operations, together with the net proceeds from our IPO, will be sufficient to finance our operations for at least the next twelve months from the date of this report. However, there can be no assurance that we will not require additional financing or that future financing can obtain these funds on acceptable terms or at all or that we can maintain or increase our current revenues.

Our future capital requirements will depend on many factors, including the revenue growth rate, the success of future product development and capital investment required, and the timing and extent of spending to support further sales and marketing and research and development efforts. In addition, we expect to incur additional costs as a result of operating as a public company. In the event that additional financing is required from outside sources, we cannot be sure that any additional financing will be available to us on acceptable terms if at all. If we are unable to raise additional capital when desired, our business, operating results, and financial condition could be adversely affected.

Cash flows

		For the nine months ended September 30,
		2025				2024
Net Cash (Used in) Provided in Operating Activities		$	(23,759,342	)			19,959,815
Net Cash (Used in) Investing Activity			(145,468,237	)			(7,188,504	)
Net Cash Provided by Financing Activity			324,077,471				13,700,740
Net (decrease) increase in cash, cash equivalents and restricted cash			154,849,892				26,472,051
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(31,320	)			-
Cash, cash equivalents and restricted cash, beginning of year			15,404,776				652,566
Cash, cash equivalents and restricted cash, end of year		$	170,223,348				27,124,617

Operating Activities

Net cash used in operating activities was $23.8 million for the nine months ended September 30, 2025, derived mainly from (i) a net loss of $23.2 million for the nine months ended September 30, 2025 adjusted for depreciation expenses of property and equipment of $15.3 million and (ii) net changes in our operating assets and liabilities, principally comprising of a decrease in deferred revenue of $23.0 million, a decrease in other current assets of $0.7 million, an increase in accounts receivable of $12.2 million, an increase in accounts payable of $3.0 million, a decrease in other long-term liabilities of $0.6 million, a decrease in net investment in lease of $2.3 million, a decrease in lease liability of $3.4 million, and an increase in deferred tax liability of $1.1 million.

Net cash provided from our operating activities was $20.0 million for the nine months ended September 30, 2024, derived mainly from (i) a net income of $2.4 million for the nine months ended September 30, 2024 adjusted for depreciation expenses of property and equipment of $11.5 million and (ii) net changes in our operating assets and liabilities, principally comprising of an increase in deferred revenue of $16.9 million, an increase in other current assets of $8.8 million, increase in accounts receivable of $3.9 million, an increase in accounts payable of $2.2 million, a decrease in other long-term liabilities of $1.9 million, an increase in income tax payable of $1.0 million, a decrease in other payables and accrued liabilities of $0.9 million, and a decrease in net investment in lease of $0.8 million.

Investing Activity

Net cash used in investing activity was $160.8 million for the nine months ended September 30, 2025, attributable to purchases of and deposits made for property, plant, and equipment of $161.8 million, partially offset by proceeds from disposal of property, plant and equipment of $1.0 million.

Net cash used in investing activities was $7.2 million for the nine months ended September 30, 2024, primarily attributable to purchases of and deposits made for property and equipment of $6.2 million and investment in a SAFE of $1.0 million.

Financing Activity

Net cash provided by financing activity was $327.0 million for the nine months ended September 30, 2025, attributable to net transfers from parent of $157.4 million, $147.4 million proceeds from issuance of ordinary shares at initial public offering and $22.2 million proceeds from issuance of ordinary shares at the exercise of the over-allotment option.

Net cash provided by financing activity was $13.7 million for the nine months ended September 30, 2024, attributable to net transfers from parent.

Royal Bank of Canada Credit Facility

On June 18, 2025, the Company entered into a definitive credit agreement with the Royal Bank of Canada ("RBC"), the largest bank in Canada, to finance its data centers business. The facility provides up to CAD $60 million (approximately USD $43.8) in aggregate financing. Proceeds will be used to support the continued buildout of the Company's HPC data center portfolio. As of the reporting date, the facility had not yet been authorized for use, as the Company and RBC are negotiating amendments to the existing agreement, including a potential additional non-revolving term loan of up to CAD $55 million (approximately USD $39.5 million). Refer to the Overview section above for further details.

Off-Balance Sheet Arrangements

During the periods presented, we did not have any off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements. These financial statements are prepared in accordance with U.S. GAAP, which requires the Company to make estimates and assumptions that affect the reported amounts of our assets, liabilities, revenues, and expenses, to disclose contingent assets and liabilities on the dates of the condensed consolidated financial statements, and to disclose the reported amounts of revenues and expenses incurred during the financial reporting periods. The most significant estimates and assumptions include, but are not limited to, the valuation of current assets, useful lives of property, plant, and equipment, impairment of long-lived assets, intangible assets and goodwill, valuation of assets and liabilities acquired in business combinations, provision necessary for contingent liabilities and realization of deferred tax assets. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates as a result of changes in our estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe critical accounting policies as disclosed in this release reflect the more significant judgments and estimates used in preparation of our condensed consolidated financial statements. For a summary of significant accounting policies, refer to Note 2. Summary of Significant Accounting Policies in our Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere herein.

Recently Issued Accounting Pronouncements

There have been no recently issued accounting pronouncements that have had, or are expected to have, a material impact on our results of operations, financial position and/or cash flows.

Emerging Growth Company Status

We are an "emerging growth company," as defined in the JOBS Act, enacted in April 2012. We intend to take advantage of certain exemptions under the JOBS Act from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. In addition, an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this provision of the JOBS Act. As a result, we will not be subject to new or revised accounting standards at the same time as other public companies that are not emerging growth companies. Therefore, our consolidated financial statements may not be comparable to those of companies that comply with new or revised accounting pronouncements as of public company effective dates.

We will remain an emerging growth company and may take advantage of these exemptions until the earliest of: (i) the last day of the fiscal year following the fifth anniversary of the consummation of this offering; (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion; (iii) the last day of the fiscal year in which we are deemed to be a "large accelerated filer" as defined in Rule 12b-2 under the Securities and Exchange Act of 1934, as amended (the "Exchange Act") which would occur if the market value of our Ordinary Shares held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year; or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.