WhiteFiber Inc.
11/10/2026 | Press release | Distributed by Public on 11/10/2026 05:51
Quarterly Report for Quarter Ending September 30, 2026 (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 condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q for the period ended September 30, 2026 as well as Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2025 (Annual Report). Except for the statements of historical fact, this Form 10-Q 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 Form 10-Q. 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 Annual Report 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 or 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 indicator 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.
Our business model integrates our data center infrastructure and cloud services to provide scalable, high-performance computing solutions for enterprises, research institutions, and AI and ML driven businesses. Our integrated approach aligns specialized data center operations with GPU-focused cloud services, addressing the unique requirements of AI and ML workloads. These workloads demand greater power density, advanced cooling solutions, and robust bandwidth to handle large-scale data transfers. By operating our data centers, we are able to provide the power to support our cloud services and we believe we can better meet the needs of AI and ML workloads and reduce the complexity associated with procuring power and connectivity from external vendors. We can also design our facilities to accommodate the higher heat loads generated by modern GPUs, potentially shortening deployment timelines for customers who require rapid expansion of their computing infrastructure. From a financial standpoint, our vertically integrated solution allows us to capture additional margin for both our data center and cloud services businesses, avoiding expenses that would otherwise be due to third-party providers.
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.
Drawing on collective industry experience, our data center team is adept at bringing new sites online on an accelerated timeline. We are aggressively pursuing our development pipeline and intend to achieve an estimated 65 MW (gross) of operational data center capacity by the end of the fourth quarter of 2026, a target that is underpinned by assets including our MTL-1, MTL-3, and NC-1 facilities. We also have an additional 65 MW (gross) in development at our MTL-2 facility and Yadkinville properties. As of September 30, 2026, our pipeline of potential data center projects represents approximately 1,500 MW (gross) under management review. We follow a disciplined process prioritizing projects that are backed by customer lease commitments. In select cases, we may pursue early-stage acquisitions based on strong customer demand signals and defined commercialization pathways. Accordingly, the foregoing timelines and capacities are subject to change based on many factors, many of which are outside of our control.
We use a well-defined set of criteria to select our data center sites. We typically target sites with proximity to metro areas and partial infrastructure in place, where we are retrofitting rather than developing greenfield projects. Metropolitan areas are positioned for low-latency to address long-term, specialized AI computer inference needs, and smaller sites reduce risks. A retrofit entails sourcing and acquiring an existing industrial building with underutilized, in-place power connectivity. The period of time from when a site is purchased until construction can begin varies from location to location depending upon, among other things, obtaining required permits and the availability of construction supplies and contractors. Average build time for retrofits is intended to be approximately six months from commencement of construction, which we believe is approximately one-third to one-half of the industry average development timeline for greenfield projects. This average building time is based upon senior management's experience at Enovum prior to its acquisition by the Company, as well as their experience prior to Enovum. We also prioritize sites offering opportunities to increase site power over time, enabling our data centers to grow with customer demand. In addition, we selectively target certain larger opportunities with 50 MW (gross) of power or more, subject to customer demand, to drive AI-driven compute super-clusters. Finally, we prioritize sites powered by sustainable, green energy sources and locked-in power when available. Additionally, to enhance sustainability of certain of our data center projects, we are undertaking heat repurposing projects in connection with sustainability and commercial and residential projects.
We acquired Enovum on October 11, 2024. The transaction included the lease of MTL-1, our 4 MW (gross) Tier-3 high-performance computing ("HPC") data center in Montreal, Canada, which was fully operational and fully leased to customers at the time of acquisition.
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 expected to invest approximately $23.6 million to develop the site to Tier-3 standards with an initial load of 5 MW (gross). Construction is expected to begin during the fourth quarter of 2026.
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 into 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 was 20 years, with two 5-year extensions at the Company's option. In December 2025, we became reasonably certain to exercise the purchase option and notified the lessor of our intent to exercise the purchase option. We had 90 days to complete the purchase, after which the purchase option would expire. The option was exercised on January 14, 2026 and the purchase of MTL-3 closed on May 8, 2026. The facility has been retrofitted to Tier-3 standards and was completed and operational in November 2025. The site has commenced billing Cerebras as of November 1, 2025, in the amount of CAD 1.4 million (approximately 979 thousand USD) monthly for the duration of the five-year contract.
On May 20, 2025, we completed the purchase of a former industrial/manufacturing building from UMI. Pursuant to the Purchase Agreement we agreed to purchase from UMI, an industrial/manufacturing building together with the underlying land located in Madison, North Carolina, which we refer to as "NC-1", 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 May 20, 2025, 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 May 20, 2025. Additionally, the purchase price will increase by an additional $200 thousand 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 May 20, 2025. 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 NC-1 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 NC-1 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 assignment. Refer to Note 18. Commitments and contingencies to our condensed consolidated financial statements for further detail.
On August 16, 2026, the Company entered the Yadkinville Agreement to acquire two properties consisting of land, buildings and related improvements and certain machinery and equipment located in Yadkinville, North Carolina. The total consideration is $60.0 million in cash, including a deposit in escrow of $2.25 million. The transaction closed on October 28, 2026. In connection with the acquisition, the seller will continue to occupy portions of the properties under occupancy and partial leaseback arrangements. These arrangements are expected to offset a portion of property carrying costs as WhiteFiber advances its development plans.
As the business grows, the Company's ability to fund its operating needs will depend on the ongoing ability to generate positive cash flow from our operations and raise capital in the capital markets. Accordingly, the Company has entered into certain credit facilities to finance these areas of growth, including the Syndicated RBC Credit Facility Agreement and discussed here. Refer to Liquidity and capital resources for further discussion on this Facility and other credit facilities of the Company.
Nscale Services Agreement
In November 2025, our wholly owned subsidiary, Enovum NC-1 Bidco, LLC, entered into the Services Agreement with Nscale Services US Inc. and Nscale Global Holdings Limited (collectively, "Nscale") for the provision of colocation and related services at our NC-1 facility. The agreement represents a significant commercial milestone for our high-density data center platform and provides long-term contracted revenue visibility. The initial Service Order pursuant to the Services Agreement represents approximately $865 million in total contracted revenue over a 10-year term, inclusive of contractual annual rate escalators and non-recurring installation services ("NRCs"). Electricity and certain other operating costs are structured as pass-through charges to Nscale. On August 15, 2026, the Company commenced billing for the initial 20 MW of contracted capacity at its NC-1 facility, which was subsequently placed into service on September 23, 2026. As of date of this report, the remaining 20 MW became operational, bringing all 40 MW of contracted IT capacity at NC-1 into operation.
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 aim to provide a high-standard service lease with an Uptime percentage> 99.5%.
We are also developing a capital-light managed service offering through which customers would fund the underlying hardware while we deploy and operate it on their behalf. This offering has not yet generated material revenue.
Global Data Center Infrastructure and Partnerships
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 strategically located data centers. 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 addition, we have leased additional data center capacity in Atlanta, Georgia to expand our cloud services offering with the leases commencing in February 2026. In the third quarter, we entered into a lease for 2.5 MW IT load design Tier-3 data center space in Sydney, Australia, a lease for 2.7 MW IT load design Tier-3+ data center space in Paris, France, and leases for 2.0 MW and 2.7 MW IT load design data centers in Canada to expand our cloud services offering.
Customer Base and Concentration
As of the date of this Form 10-Q, we have five existing customers. Our largest customer accounted for approximately 50% of our cloud services revenue during the nine months ended September 30, 2026. During the period we had discontinuation of three customer orders. The discontinued orders resulted in approximately $5.1 million impact to revenue during the nine months ended September 30, 2026. However, there were new customer orders contracted in the nine months ended September 30, 2026 and through the date of this Form 10-Q for total contracted revenue of approximately $1,447 million over a six months to five-year period. Discontinued customer agreements during the nine months ended September 30, 2026 and through the date of this Form 10-Q include: (i) the Company's Initial Customer, following execution of the Termination Agreement described below; (ii) a customer whose Master Services Agreement and related purchase order, as previously amended, was terminated in January 2026; and (iii) a customer whose service order, entered into in January 2026, was terminated during the period.
New customer agreements signed during the nine months ended September 30, 2026 and through the date of this Form 10-Q include new service orders entered into with existing customers for additional GPU and CPU/storage capacity, as well as new service orders entered into with new customers, in each case as further described below.
Selected Customer Agreements
The following summaries reflect selected GPU cloud service agreements that were entered into or discontinued during the period, or that we otherwise 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 an 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 features a two-month prepayment from the customer. 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 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 the second quarter of 2026, the Company executed a termination agreement (the "Termination Agreement") with the Initial Customer. The Termination Agreement preserved $12.5 million of previously invoiced, unpaid trade receivables. This preserved balance was fully collected as of June 30, 2026. Prepayment and service deposit balances were applied against other outstanding receivables and the Company recognized a bad debt expense of approximately $2.2 million for the unpreserved remaining receivable balance outstanding. Additionally, under the Termination Agreement the Initial Customer is obligated to pay the Company a fixed termination fee of $12.3 million that was recognized as revenue during the second quarter of 2026. Subsequently, in the third quarter, the termination fee was amended to $15.7 million. The amended amount of $15.7 million was fully collected as of September 30, 2026. Following the service pause and termination of the agreement, the Company redeployed the GPUs previously allocated to the Initial Customer to other customers.
In November 2025, we terminated the MSA and all related purchase orders with DNA Fund in accordance with the terms of the contract. At the time of termination, we had approximately $7.3 million in outstanding accounts receivable. Pursuant to the termination agreement, the customer agreed to repay the outstanding balance. As of the date of this Form 10-Q, we have collected $2.2 million of the outstanding amount. Approximately $5.1 million remains unpaid. All scheduled installment payments are now past due, and no payments have been received since April 2026. We continue to pursue collection of the remaining balance; however, the timing and amount of any future recoveries remain uncertain.
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. 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, which were terminated in January 2026. In February 2026, we entered into another service order with the customer to provide services utilizing a total of 10 H200 GPU servers. The service order has an initial term of 12 months beginning on the services commencement date. The deployment and revenue generation began in March 2026. In March 2026, we entered into another service order with the customer to provide services utilizing a total of 256 H100 GPU servers. The service order has an initial term of 24 months beginning on the services commencement date, with an option to renew for an additional twelve months. The deployment and revenue generation began in the second quarter of 2026. In April 2026, the Company entered into another service order with the customer to provide CPU and storage server services. The service order has an initial term of 24 months beginning on the services commencement date. The deployment and revenue generation began in the second quarter of 2026. In September 2026, we entered into another service order with the customer to provide storage server services. The service order has a term of 19 months beginning on the services commencement date. The deployment and revenue generation began in the third quarter of 2026.
In October 2025, we entered into a two-week service order with a new customer to provide services utilizing a total of 72 B200 GPUs. In January 2026, we entered into an additional two-week service order with this customer for 72 B200 GPUs. These contracts were terminated as of February 2026. In January 2026, we entered into a further service order with this customer to provide services utilizing a total of 384 B200 GPUs. This service order has an initial term of 24 months commencing on the service commencement date, after which it will automatically renew for successive one-month periods unless terminated by either party. Deployment and revenue generation commenced in January 2026.
In February 2026, we entered into a service order with a new customer to provide services utilizing a total of 256 GPUs. The service order has an initial term of 12 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. The deployment and revenue generation began on February 1, 2026. In August 2026, we entered into an additional five-year service order with this customer to provide services utilizing a total of 576 Nvidia B300s GPUs in Iceland. Service under this agreement is targeted to commence in the fourth quarter of 2026.
In March 2026, we entered into a service order with a new customer, Prime Intellect, to provide services utilizing a total of 72 GB200 GPUs. The service order has an initial term of 6 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. The deployment and revenue generation began in March 2026 and services continued to be provided through August 2026. In April 2026, we entered into an additional service order with this customer to provide services utilizing a total of 216 GB200 GPUs. The service order has an initial term of 12 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. The deployment and revenue generation began in July 2026. In August 2026 we entered into a new service order to provide services utilizing a total of 72 GB200 GPUs. The service order has an initial term of 24 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. The deployment and revenue generation began in the third quarter of 2026. Also in August 2026, we entered into an additional service order with this customer to provide services utilizing a total of 576 VR200 (Vera Rubin) GPUs in Canada, representing our first Vera Rubin deployment. The service order has an initial term of 36 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. Services are targeted to commence in the first half of 2027.
In May 2026, we entered into a two-year cloud services agreement with Hyperbolic Labs, Inc. to deploy 512 H200 GPUs from our existing owned fleet. Revenue under this agreement commenced in May 2026.
In May 2026, we entered into a five-year agreement to provide AI compute infrastructure for an investment-grade technology customer in the Paris region utilizing advanced NVIDIA GPU systems. Service under this agreement, which is now expected to commence in the first quarter of 2027, subject to final equipment delivery and acceptance milestones. We have secured third-party data center capacity in France to support the deployment and have entered into a binding term sheet for project-level financing with respect to this deployment (the "France Project Financing"). We are currently in the process of negotiating definitive documentation for the France Project Financing; however, certain material terms remain subject to ongoing negotiation between the parties. The project is supported by customer prepayments, including 12 months of advanced service fees, which we have received, and is expected to be further supported by project-level financing, with limited long-term reliance on our corporate balance sheet and existing cash resources.
In July 2026, we entered into a service order with a new customer to provide services utilizing a total of 128 B300 GPUs. The service order has an initial term of 36 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. Services are targeted to commence in the fourth quarter of 2026.
New Business Developments
In August 2026, we entered into two service orders with a new customer to provide services utilizing a total of 1,392 B300 GPUs and 968 B300 GPUs, respectively. The service orders each have an initial term of 36 months beginning on the services commencement date, after which they automatically renew for successive one-month periods unless terminated by either party. The deployment and revenue generation for each is expected to begin in the fourth quarter of 2026.
In September 2026, we entered into a service order with a new customer to provide services utilizing a total of 1,024 B300 GPUs. The service order has an initial term of 48 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. Services are targeted to commence in the fourth quarter of 2026.
In September 2026, we entered into a master service agreement and an initial service order with a technology customer to provide AI compute infrastructure from a third-party data center in Sydney, Australia, utilizing advanced NVIDIA B300 GPU systems (approximately 1,200 GPUs). The initial service order has a 59-month term. Service is expected to commence in the first quarter of 2027, following delivery of the equipment and customer acceptance. The customer has made a prepayment equal to 12 months of service fees. If service does not commence by the contractual long-stop date, the customer may terminate the service order and receive a refund of the prepayment.
In September 2026, we entered into a statement of work with a new customer to provide management services for a total of 2,048 B300 GPUs. The statement of work has an initial term of 42 months beginning on the services commencement date, which is expected to be the first quarter of 2027.
In October 2026, we entered into a five-year agreement to provide AI compute infrastructure for a global technology customer utilizing advanced NVIDIA GPU systems. Service under this agreement is expected to commence in the second quarter of 2027, subject to final equipment delivery and acceptance milestones. The customer is required to fund a prepayment equal to nine months of service fees, into an escrow account to be released against deployment costs, and the customer's payment obligations are supported by a guarantee from an affiliate of the customer. Under the customer agreement we are subject to customary delivery milestones, including liquidated damages capped at 5% of total contract value for late delivery, and we are required to provide a performance guarantee of $8.75 million.
Reorganization, Initial Public Offering, and Relationship with Bit Digital
We were incorporated by Bit Digital as a Cayman Islands exempted company on August 15, 2024 under the name Celer, Inc., as a holding company for the HPC Business. We changed our name to WhiteFiber, Inc. on October 17, 2024.
On August 6, 2025, we issued 27,043,749 ordinary shares, par value $0.01 per share (our "Ordinary Shares", and such shares, the "Contribution Shares"), to Bit Digital pursuant to the terms of a Section 351 Contribution Agreement (the "Contribution Agreement") entered into with Bit Digital on July 30, 2025. Pursuant to the Contribution Agreement, Bit Digital contributed 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 us, upon the effectiveness of the registration statement filed in connection with our IPO and prior to the consummation of the IPO, in exchange for the Contribution Shares. We refer to this transaction as the "Reorganization". WhiteFiber AI became a wholly-owned subsidiary of WhiteFiber, Inc. and Bit Digital became the direct shareholder of WhiteFiber after the Reorganization.
On August 8, 2025, we completed our initial public offering ("IPO") of 9,375,000 Ordinary Shares, at a public offering price of $17.00 per share. The gross proceeds to the Company from the IPO were approximately $159.4 million, before deducting underwriting discounts and commissions and offering expenses of $12.0 million. On September 2, 2025, B. Riley Securities, Inc. and Needham & Company, LLC, as representatives of the several Underwriters of the IPO, fully exercised their option to purchase an additional 1,406,250 Ordinary Shares at the public offering price of $17.00 per share, resulting in additional gross proceeds to the Company of approximately $23.9 million.
After giving effect to the IPO and the full exercise by the Underwriters of their over-allotment option, Bit Digital held approximately 71.5% of our issued and outstanding Ordinary Shares. As of the date of this Form 10-Q, Bit Digital owns approximately 59.7% of WhiteFiber.
Following our IPO, certain of our directors, executive officers and other members of senior management continue to serve as directors, officers and employees of Bit Digital. We have added additional executive officers and senior management to our senior executive team apart from those serving as officers and employees of Bit Digital. We have assembled a senior operating team with approximately 15 years of experience on average for each individual in the data center and cloud services industries. We also appointed additional independent directors upon the commencement of trading of our Ordinary Shares on Nasdaq.
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 our Annual Report. 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 USD) monthly for the duration of the five-year contract.
During the third quarter of 2026, we began delivering capacity to Nscale under NC-1, with the first 20 MW phase commencing on September 23, 2026. As of date of this report, the remaining 20 MW became operational, bringing all 40 MW of contracted IT capacity at NC-1 into operation. Additionally, during the third quarter, we began planning for MTL-2 site and expect construction to begin in the fourth quarter of 2026.
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.
On July 9, 2026, the Company announced initial research and development results for a proprietary cross-data-center networking architecture designed to link geographically separated data centers into a single logical GPU supercluster. Testing demonstrated 111.2 Tbps of bandwidth across 83 kilometers of dark fiber with a guaranteed round-trip latency of 0.9 milliseconds, and the Company has submitted related patent applications and commercially launched the solution in September 2026. However, there can be no assurance that the patents will be issued, that the technology will be commercially accepted, or that the Company will recover its development and commercialization costs, any of which could adversely affect its business, financial condition, and results of operations.
Availability of Additional Financing.
Our ability to fund the continued construction and buildout of our data center facilities and to refinance near-term debt maturities depends on successfully obtaining additional financing on acceptable terms, or at all. If we are unable to do so, our business, operating results, and financial condition could be adversely affected.
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, 2026 and 2025
The following discussion summarizes the results of operations for the three months ended September 30, 2026 and 2025. This information should be read together with our condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q.
|
For The Three Months Ended September 30, |
Variance in | |||||||||||
| 2026 | 2025 | Amount | ||||||||||
| Revenue | $ | 24,017 | $ | 20,180 | $ | 3,837 | ||||||
| Operating costs and expenses | ||||||||||||
| Cost of revenue (exclusive of depreciation shown below) | (10,345 | ) | (6,990 | ) | (3,355 | ) | ||||||
| Depreciation and amortization expenses | (8,077 | ) | (6,371 | ) | (1,706 | ) | ||||||
| General and administrative expenses | (17,998 | ) | (21,323 | ) | 3,325 | |||||||
| Total operating expenses | (36,420 | ) | (34,684 | ) | (1,736 | ) | ||||||
| Loss from operations | (12,403 | ) | (14,504 | ) | 2,101 | |||||||
| Net loss from disposal of property and equipment | - | (338 | ) | 338 | ||||||||
| Interest expense - third parties | (6,426 | ) | - | (6,426 | ) | |||||||
| Interest expense - related parties | (3,987 | ) | - | (3,987 | ) | |||||||
| Induced conversion expense | (80,767 | ) | - | (80,767 | ) | |||||||
| Other income (expense), net | 379 | (845 | ) | 1,224 | ||||||||
| Total other expense, net | (90,801 | ) | (1,183 | ) | (89,618 | ) | ||||||
| Loss before income taxes | (103,204 | ) | (15,687 | ) | (87,517 | ) | ||||||
| Income tax benefit (expense) | 1,769 | (67 | ) | 1,836 | ||||||||
| Net loss | $ | (101,435 | ) | $ | (15,754 | ) | $ | (85,681 | ) | |||
Revenue
We generate revenues primarily from providing cloud services and colocation services. Refer to Note 3. Revenue 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 $0.1 million, or 0.4%, to $18.1 million for the three months ended September 30, 2026 from $18.0 million for the three months ended September 30, 2025. The increase was due to $3.4 million of termination fee revenue recognized under the termination agreement with our Initial Customer. This was largely offset by lower recurring revenue following that customer's termination, which reduced the number of GPUs deployed for them, and was partially offset by revenue from GPUs deployed to new customers in 2026.
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 $5.6 million and $1.7 million for the three months ended September 30, 2026 and 2025, respectively. The increase was primarily due to the MTL-3 site becoming fully operational and generating revenues beginning November 2025 and the commencement of revenue at the NC-1 facility, which contributed $1.1 million of lease income.
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 condensed consolidated statements of operations. Specifically, these costs consist of: (i) cloud services operations - electricity costs, datacenter lease expense, GPU servers lease expense, third-party customer support fees 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, 2026 and 2025, the cost of revenue from cloud services was comprised of the following:
|
For The Three Months Ended September 30, |
||||||||
| 2026 | 2025 | |||||||
| Electricity costs | $ | 823 | $ | 631 | ||||
| Datacenter lease expenses | 1,883 | 1,381 | ||||||
| GPU servers lease expenses | 2,861 | 3,454 | ||||||
| Third-party customer support fees | 1,219 | - | ||||||
| Other costs | 1,121 | 849 | ||||||
| Total | $ | 7,907 | $ | 6,315 | ||||
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, 2026, electricity costs increased by $0.2 million, or 30%, compared to the electricity costs incurred for the three months ended September 30, 2025. The increase primarily resulted from an increase in the number of newer-generation GPU servers deployed in the current year, which consume more energy than the models deployed in 2025.
Datacenter lease expenses. We entered into data center lease agreements for fixed monthly recurring costs.
For the three months ended September 30, 2026, data center lease expenses increased $0.5 million, or 36%, compared to the three months ended September 30, 2025, primarily due to the new leases that commenced in 2026.
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, 2026, GPU server lease expenses decreased by $0.6 million, or (17)%, compared to the GPU servers lease expenses incurred for the three months ended September 30, 2025. The decrease primarily resulted from a lower GPU server leasing rate on the newly onboarded customers, partially offset by an additional payment due to a leasing partner in connection with a termination agreement with a customer.
Third-party customer support fees. We engaged a third party to provide customer support services.
For the three months ended September 30, 2026, third-party customer support fees were $1.2 million.
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, 2026 and 2025, the cost of revenue from colocation services was comprised of the following:
|
For The Three Months Ended September 30, |
||||||||
| 2026 | 2025 | |||||||
| Electricity costs | $ | 709 | $ | 289 | ||||
| Lease expenses | 357 | 166 | ||||||
| Wage expenses | 359 | 92 | ||||||
| Other costs | 1,013 | 128 | ||||||
| Total | $ | 2,438 | $ | 675 | ||||
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, 2026, electricity costs increased by $0.4 million, or 145%, compared to the electricity costs incurred for the three months ended September 30, 2025. Since March 31, 2025, the Company has expanded its data center footprint, including the MTL-3 facility. The increase in electricity costs is primarily attributable to the MTL-3 facility, which was operational during the period ended September 30, 2026 but not operational during the period ended September 30, 2025. Additionally, the increase in the electricity cost was driven in part by the commencement of limited operations at our NC-1 facility on September 23, 2026.
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, 2026, datacenter lease expenses increased by $0.2 million, or 115%, compared to the datacenter lease expenses incurred for the three months ended September 30, 2025. This is primarily attributed to expense for MTL-3 data center, which was recorded as general and administrative expense in the third quarter of 2025 as the data center was not yet operational.
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, 2026, wage expenses increased by $0.3 million, or 290%, compared to the wage expenses incurred for three months ended September 30, 2025. The increase was primarily attributable to additional employees hired following the IPO and the operations of the MTL-3 site as well as the commencement of limited operations at our NC-1 facility.
Depreciation and amortization expenses
For the three months ended September 30, 2026 and 2025, depreciation and amortization expenses were $8.1 million and $6.4 million, respectively, based on an estimated useful life of property, plant, and equipment and intangible assets. The increase in depreciation and amortization expenses is attributable to additional assets placed in service since September 30, 2025, specifically cloud equipment, resulting in higher expense being recognized.
General and administrative expenses
For the three months ended September 30, 2026, our general and administrative expenses, totaling $18.1 million, were primarily comprised of share-based compensation expenses for employees of $2.7 million, salary and bonus expenses of $2.8 million, professional and consulting expenses of $4.8 million (including $1.1 million of share-based compensation), other expenses of $6.1 million, commission expense of $0.2 million, marketing expenses of $1.0 million, and travel expenses of $0.3 million.
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 expense of $0.3 million, marketing expenses of $0.2 million, and travel expenses of $0.2 million.
General and administrative expenses for the three months ended September 30, 2026 were lower than for the three months ended September 30, 2025 by $3.2 million, or 15%. The decrease was primarily due to (i) lower share-based compensation of $3.7 million and (ii) lower professional and consulting fees of $4.9 million, which reflected a $6.1 million decrease in consulting fees, partially offset by $1.2 million of higher legal fees. The decrease in these categories also reflects lower costs allocated from Bit Digital under the TSA, which were $0.6 million compared to $4.0 million in the prior-year period. These decreases were partially offset by (i) higher other expenses of $3.6 million which relates primarily to a $2.8 million increase in start-up costs that do not meet the criteria for capitalization and a $0.4 million increase in bad debt expense, (ii) higher salary and bonus expenses of $1.2 million due to additional employees hired following the IPO, and (iii) higher marketing expenses of $0.4 million.
Interest expense
Interest expense - third parties was $6.4 million for the three months ended September 30, 2026, compared to $nil for the three months ended September 30, 2025, and interest expense - related parties was $4.0 million for the three months ended September 30, 2026, compared to $nil for the three months ended September 30, 2025. The increase in interest expense - third parties was primarily attributable to borrowings under the 2031 Notes, 2032 Notes, B. Riley Facility, Iceland Facility and Syndicated RBC Credit Facility Agreement. The increase in interest expense - related parties was primarily attributable to borrowings under the Delayed Draw Term Loan Facility with Bit Digital, including the tranche repaid in August 2026, as well as amortization of related debt discounts and deferred financing costs.
Induced conversion expense
For the three months ended September 30, 2026, we recorded induced conversion expense of $80.8 million, compared to $nil for the three months ended September 30, 2025. In August 2026, we settled $198.15 million aggregate principal amount of the 2031 Notes in privately negotiated transactions in exchange for $118.0 million of cash, excluding accrued interest, and 6,271,534 ordinary shares with a fair value of $169.8 million. The expense represents the excess of the fair value of the consideration transferred over the fair value of the consideration issuable under the original conversion terms. Refer to Note 10. Debt, for more information.
Income tax benefit (expense)
Provision for income taxes consists of federal, state and foreign income taxes. Our income tax provision for the three months ended September 30, 2026 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. We continue to maintain a valuation allowance against the deferred tax assets in Canada, France, Singapore and Japan 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 macroeconomy, politics and profitability of the business.
Our future effective income tax rate depends on various factors, such as tax legislation, the geographic composition of our pre-tax income, the amount of our pre-tax income as business activities fluctuate, non-deductible expenses, non-taxable capital gain in certain jurisdiction, change of valuation allowance and the effectiveness of our tax planning strategies. The Organization for Economic Co-operation and Development ("OECD") has introduced a global minimum tax framework ("Pillar Two") that generally applies to multinational enterprise groups with consolidated annual revenues of €750 million or more and is intended to ensure a minimum effective tax rate of 15% in each jurisdiction in which such groups operate. Certain jurisdictions have enacted, or are considering enacting, legislation implementing these rules. Based on the Company's current consolidated revenue, for the nine months ended September 30, 2026, the Company is not within the scope of the Pillar Two rules. However, the Company continues to monitor developments related to the implementation of these rules, and future growth or changes in the Company's operations could result in the Company becoming subject to Pillar Two in future periods.
For more details on the Company's tax profile, see Note 14. Income Taxes to our condensed consolidated financial statements.
Results of operations for the nine months ended September 30, 2026 and 2025
The following discussion summarizes the results of operations for the nine months ended September 30, 2026 and 2025. This information should be read together with our condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q.
|
For The Nine Months Ended September 30, |
Variance in | |||||||||||
| 2026 | 2025 | Amount | ||||||||||
| Revenue | $ | 74,779 | $ | 55,603 | $ | 19,176 | ||||||
| Operating costs and expenses | ||||||||||||
| Cost of revenue (exclusive of depreciation shown below) | (30,786 | ) | (20,808 | ) | (9,978 | ) | ||||||
| Depreciation and amortization expenses | (21,085 | ) | (15,342 | ) | (5,743 | ) | ||||||
| Impairment of capitalized software assets | (5,006 | ) | - | (5,006 | ) | |||||||
| General and administrative expenses | (50,580 | ) | (41,076 | ) | (9,504 | ) | ||||||
| Total operating expenses | (107,457 | ) | (77,226 | ) | (30,231 | ) | ||||||
| Loss from operations | (32,678 | ) | (21,623 | ) | (11,055 | ) | ||||||
| Net gain (loss) from disposal of property and equipment | 1,822 | (338 | ) | 2,160 | ||||||||
| Interest expense - third parties | (12,999 | ) | - | (12,999 | ) | |||||||
| Interest expense - related parties | (5,425 | ) | - | (5,425 | ) | |||||||
| Induced conversion expense | (80,767 | ) | - | (80,767 | ) | |||||||
| Other income (expense), net | 159 | (91 | ) | 250 | ||||||||
| Total other expense, net | (97,210 | ) | (429 | ) | (96,781 | ) | ||||||
| Loss before income taxes | (129,888 | ) | (22,052 | ) | (107,836 | ) | ||||||
| Income tax benefit (expense) | 1,435 | (1,107 | ) | 2,542 | ||||||||
| Net loss | $ | (128,453 | ) | $ | (23,159 | ) | $ | (105,294 | ) | |||
Revenue
We generate revenues primarily from providing cloud services and colocation services. Refer to Note 3. Revenue 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 $9.2 million, or 18.6%, to $58.7 million for the nine months ended September 30, 2026 from $49.5 million for the nine months ended September 30, 2025. The increase was primarily due to an increase in deployed GPU servers to existing customers in 2026. The decrease in our monthly GPU service revenue from the termination of our agreement with our Initial Customer was substantially offset by $15.7 million of termination fee revenue recorded, and therefore was not a significant driver of the change in revenue.
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 $15.1 million and $5.1 million for the nine months ended September 30, 2026 and 2025, respectively. The increase was primarily due to the MTL-3 site becoming fully operational and generating revenues beginning November 2025 and the revenue generated from the NC-1 facility, which contributed $1.1 million of lease income.
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, third-party customer support fees 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, 2026 and 2025, the cost of revenue from cloud services was comprised of the following:
|
For The Nine Months Ended September 30, |
||||||||
| 2026 | 2025 | |||||||
| Electricity costs | $ | 2,467 | $ | 1,821 | ||||
| Datacenter lease expenses | 4,857 | 4,020 | ||||||
| GPU servers lease expenses | 12,177 | 10,951 | ||||||
| Third-party customer support fees | 2,617 | - | ||||||
| Other costs | 2,531 | 2,141 | ||||||
| Total | $ | 24,649 | $ | 18,933 | ||||
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, 2026, electricity costs increased by $0.6 million, or 35%, compared to the electricity costs incurred for the nine months ended September 30, 2025. 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, 2026, data center lease expenses increased $0.8 million, or 21%, compared to the nine months ended September 30, 2025, primarily due to the new leases that commenced in 2026.
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, 2026, GPU server lease expenses increased $1.2 million, or 11%, compared to the GPU server lease expenses incurred for the nine months ended September 30, 2025. The increase primarily resulted from a one time amount due upon finalizing a termination agreement with a customer, partially offset by a lower GPU server leasing rate on the newly onboarded customers.
Third-party customer support fees. We engaged a third party to provide customer support services.
For the nine months ended September 30, 2026, third-party customer support fees were $2.6 million.
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, 2026 and 2025, the cost of revenue from colocation services was comprised of the following:
|
For The Nine Months Ended September 30, |
||||||||
| 2026 | 2025 | |||||||
| Electricity costs | $ | 2,298 | $ | 782 | ||||
| Lease expenses | 894 | 473 | ||||||
| Wage expenses | 817 | 262 | ||||||
| Other costs | 2,128 | 358 | ||||||
| Total | $ | 6,137 | $ | 1,875 | ||||
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, 2026, electricity costs increased by $1.5 million, or 194%, compared to the electricity costs incurred for the nine months ended September 30, 2025. Since March 31, 2025, the Company has expanded its data center footprint, including the MTL-3 facility. The increase in electricity costs is primarily attributable to the MTL-3 facility, which was operational during the period ended September 30, 2026 but not operational during the period ended September 30, 2025. Additionally, the increase in the electricity cost was driven in part by the commencement of limited operations at our NC-1 facility on September 23, 2026.
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, 2026, datacenter lease expenses increased by $0.4 million, or 89%, compared to the datacenter lease expenses incurred for the nine months ended September 30, 2025. This is primarily attributed to expense for MTL-3 data center, which was recorded as general and administrative expense until the fourth quarter of 2025 as the data center was not yet operational.
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, 2026, wage expenses increased by $0.6 million, or 212%, compared to the nine months ended September 30, 2025. The increase was primarily attributable to the operations of MTL-3 site and the limited commencement of operations at our NC-1 facility.
Depreciation and amortization expenses
For the nine months ended September 30, 2026 and 2025, depreciation and amortization expenses were $21.1 million and $15.3 million, respectively, based on an estimated useful life of property, plant, and equipment and intangible assets. The increase in depreciation and amortization expenses is attributable to additional assets placed in service, resulting in higher expense being recognized.
Impairment of capitalized software assets
For the nine months ended September 30, 2026 and 2025, impairment of capitalized software assets were $5.0 million and $nil, respectively. In the second quarter of 2026, the Company determined that it would discontinue further investment in, and use of, its internally-developed software platform. As a result of this decision, effective June 4, 2026, the Company recorded an impairment charge of the remaining book value of $5.0 million during the nine months ended September 30, 2026.
General and administrative expenses
For the nine months ended September 30, 2026, our general and administrative expenses, totaling $50.7 million, were primarily comprised of share-based compensation expenses of $11.2 million, salary and bonus expenses of $8.0 million, professional and consulting expenses of $14.7 million (including share-based compensation expenses of $3.6 million), other expenses of $12.5 million, marketing expenses of $2.1 million, commission expenses of $0.3 million and travel expenses of $0.3 million.
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.
General and administrative expenses for the nine months ended September 30, 2026 were higher than for the nine months ended September 30, 2025 by $9.6 million, or 23%. The increase was primarily attributable to (i) higher other expenses of $8.6 million, which included a $3.8 million increase in start-up costs that do not meet the criteria for capitalization and a $2.6 million increase in bad debt expense, (ii) higher salary and bonus expenses of $4.0 million due to additional employees hired following the IPO, and (iii) higher marketing expenses of $0.6 million. These increases reflect the Company's expanded operations and personnel base following the IPO and continued investment in infrastructure and technology development. The increases were partially offset by (i) lower professional and consulting fees of $2.4 million, which reflected an $8.6 million decrease in consulting fees, partially offset by $3.6 million of RSUs granted to consultants and $1.2 million of higher legal fees, and (ii) lower share-based compensation of $0.8 million. Costs allocated from Bit Digital were also lower, at $3.0 million compared to $6.7 million in the prior-year period.
Interest expense
Interest expense - third parties was $13.0 million for the nine months ended September 30, 2026, compared to $nil for the nine months ended September 30, 2025, and interest expense - related parties was $5.4 million for the nine months ended September 30, 2026, compared to $nil for the nine months ended September 30, 2025. The increase in interest expense - third parties was primarily attributable to borrowings under the 2031 Notes, 2032 Notes, B. Riley Facility, Iceland Facility and Royal Bank of Canada credit facilities. The increase in interest expense - related parties was primarily attributable to borrowings under the Delayed Draw Term Loan Facility with Bit Digital Capital, Inc., including the tranche repaid in August 2026, as well as amortization of related deferred financing costs.
Induced conversion expense
For the nine months ended September 30, 2026, we recorded induced conversion expense of $80.8 million, compared to $nil for the nine months ended September 30, 2025. In August 2026, we settled $198.15 million aggregate principal amount of the 2031 Notes in privately negotiated transactions in exchange for $118.0 million of cash, excluding accrued interest, and 6,271,534 ordinary shares with a fair value of $169.8 million. The expense represents the excess of the fair value of the consideration transferred over the fair value of the consideration issuable under the original conversion terms. Refer to Note 10. Debt, for more information.
Income tax benefit (expense)
Provision for income taxes consists of federal, state and foreign income taxes. Our income tax provision for the nine months ended September 30, 2026 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 Canada and Japan. We continue to maintain a valuation allowance against the deferred tax assets in Canada, France, Singapore and Japan 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 macroeconomy, politics and profitability of the business.
Our future effective income tax rate depends on various factors, such as tax legislation, the geographic composition of our pre-tax income, the amount of our pre-tax income as business activities fluctuate, non-deductible expenses, non-taxable capital gain in certain jurisdiction, change of valuation allowance and the effectiveness of our tax planning strategies. The Organization for Economic Co-operation and Development ("OECD") has introduced a global minimum tax framework ("Pillar Two") that generally applies to multinational enterprise groups with consolidated annual revenues of €750 million or more and is intended to ensure a minimum effective tax rate of 15% in each jurisdiction in which such groups operate. Certain jurisdictions have enacted, or are considering enacting, legislation implementing these rules. Based on the Company's current consolidated revenue, for the nine months ended September 30, 2026, the Company is not within the scope of the Pillar Two rules. However, the Company continues to monitor developments related to the implementation of these rules, and future growth or changes in the Company's operations could result in the Company becoming subject to Pillar Two in future periods.
For more details on the Company's tax profile, see Note 14. Income Taxes to our condensed consolidated financial statements.
Discussion of Certain Balance Sheet Items as of September 30, 2026 and December 31, 2025
The following table sets forth selected information from our condensed consolidated balance sheets as of September 30, 2026 and December 31, 2025. This information should be read together with our condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q.
|
September 30, 2026 |
December 31, 2025 |
Variance in Amount |
||||||||||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | $ | 138,544 | $ | 114,441 | $ | 24,103 | ||||||
| Restricted cash | 9,012 | 3,857 | 5,155 | |||||||||
| Accounts receivable, net | 39,794 | 23,922 | 15,872 | |||||||||
| Net investment in lease - current, net | 2,644 | 4,261 | (1,617 | ) | ||||||||
| Other current assets, net | 24,607 | 21,269 | 3,338 | |||||||||
| Total current assets | 214,601 | 167,750 | 46,851 | |||||||||
| Non-current assets | ||||||||||||
| Deposits for property, plant, and equipment | 158,437 | 52,738 | 105,699 | |||||||||
| Property, plant, and equipment, net | 746,735 | 336,639 | 410,096 | |||||||||
| Goodwill | 19,474 | 20,146 | (672 | ) | ||||||||
| Intangible assets, net | 11,872 | 12,821 | (949 | ) | ||||||||
| Operating lease right-of-use assets, net | 68,422 | 11,574 | 56,848 | |||||||||
| Finance lease right-of-use assets, net | - | 12,602 | (12,602 | ) | ||||||||
| Net investment in lease - non-current, net | 7,706 | 9,687 | (1,981 | ) | ||||||||
| Investment security | 1,000 | 1,000 | - | |||||||||
| Deferred tax assets | 10,205 | 2,594 | 7,611 | |||||||||
| Other non-current assets, net | 35,386 | 23,801 | 11,585 | |||||||||
| Total non-current assets | 1,059,237 | 483,602 | 575,635 | |||||||||
| Total assets | $ | 1,273,838 | $ | 651,352 | $ | 622,486 | ||||||
| LIABILITIES | ||||||||||||
| Current liabilities | ||||||||||||
| Accounts payable | $ | 8,516 | $ | 8,101 | $ | 415 | ||||||
| Current portion of deferred revenue | 54,636 | 7,997 | 46,639 | |||||||||
| Current portion of operating lease liabilities | 12,955 | 5,208 | 7,747 | |||||||||
| Current portion of finance lease liabilities | - | 12,911 | (12,911 | ) | ||||||||
| Short-term debt and current portion of long-term debt - third parties, net | 11,873 | - | 11,873 | |||||||||
| Short-term debt - related parties, net | 29,989 | - | 29,989 | |||||||||
| Income tax payable | 455 | - | 455 | |||||||||
| Other payables and accrued liabilities | 68,074 | 48,308 | 19,766 | |||||||||
| Total current liabilities | 186,498 | 82,525 | 103,973 | |||||||||
| Non-current portion of deferred revenue | 251,398 | 71,554 | 179,844 | |||||||||
| Non-current portion of operating lease liabilities | 56,297 | 5,277 | 51,020 | |||||||||
| Convertible notes payable, net | 330,088 | - | 330,088 | |||||||||
| Long-term debt - third parties, net | 30,683 | - | 30,683 | |||||||||
| Deferred tax liabilities | 10,704 | 5,699 | 5,005 | |||||||||
| Other long-term liabilities | 6,279 | - | 6,279 | |||||||||
| Amounts due to related parties | 7,710 | 3,833 | 3,877 | |||||||||
| Total non-current liabilities | 693,159 | 86,363 | 606,796 | |||||||||
| Total liabilities | $ | 879,657 | $ | 168,888 | $ | 710,769 | ||||||
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 was $138.5 million and $114.4 million as of September 30, 2026 and December 31, 2025, respectively. The increase was primarily attributable to $211.3 million of net cash provided by operating activities and $342.1 million of net cash provided by financing activities, partially offset by $523.7 million of net cash used in investing activities, coupled with a $0.4 million unfavorable effect of foreign currency translation.
Restricted cash
Restricted cash primarily represents cash balances that support an outstanding letter of credit to third parties related to security deposits and are restricted from withdrawal. The increase of $5.2 million was primarily attributable to $4.0 million held in an escrow account, a $0.6 million increase in cash collateral for the letter of credit in Iceland and $0.5 million deposit held as collateral for a secured corporate credit card. As of September 30, 2026 and December 31, 2025, the fixed maximum amount guaranteed under the letter of credit was $9.0 million and $3.9 million, respectively.
Accounts receivable, net
Accounts receivable, net consists of amounts due from our customers. The total balance of accounts receivable, net was $39.8 million and $23.9 million as of September 30, 2026 and December 31, 2025, respectively. The increase in the balance of accounts receivable is attributable primarily to $33.8 million relating to prepayment billings that were offset by the settlement of $17.7 million of receivables relating to the timing of collections and write-offs relating to one of our discontinued 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 $2.6 million and $7.7 million, respectively as of September 30, 2026 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 $4.3 million and $9.7 million, respectively as of December 31, 2025. The decrease in the balance of net investment in lease was a result of the termination of a sales-type leases totaling $1.4 million and $3.2 million of lease payments collected from equipment leasing customers, partially offset by $1.0 million in interest income earned.
Other current assets, net
Other current assets, net were $24.6 million and $21.3 million as of September 30, 2026 and December 31, 2025, respectively. The $3.3 million increase was primarily due to increases of $4.6 million in receivables from third parties, $2.6 million in funds held in escrow, and $0.2 million in deferred contract costs, partially offset by decreases of $2.7 million in prepayments to third parties and $1.2 million in prepaid consulting services. The net increase of $0.2 million in deferred contract costs reflected a $1.2 million reclassification of the current portion from other non-current assets, partially offset by a $1.0 million decrease related to an advisory services agreement, which was amortized and subsequently written off upon termination of the related agreement with a cloud services customer.
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, 2025, the balance as of September 30, 2026 increased by $105.7 million, mainly due to prepayments of $185.9 million for property and equipment, offset by the reclassification of $80.2 million to property and equipment.
Property, plant, and equipment, net
Property, plant, and equipment primarily consist of service equipment used in our Cloud services and Colocation businesses, internally developed software used in our Cloud services business, and construction in progress ("CIP") representing assets received but not yet put into service in our Cloud services and Colocation businesses.
As of September 30, 2026, the Cloud service equipment had a net book value, including CIP, of $105.9 million. As of December 31, 2025, the Cloud service equipment and internally developed software had a net book value, including CIP, of $124.0 million. Compared with December 31, 2025, the balance as of September 30, 2026 decreased by $18.1 million, mainly due to the sale of H200 servers with carrying value of $23.8 million as well as the one-time write-off due to the discontinuation of the internally developed software operations in the amount of $5.0 million.
As of September 30, 2026, the Colocation service equipment had a net book value, including CIP, of $640.8 million. As of December 31, 2025, the Colocation service equipment had a net book value, including CIP, of $212.6 million. Compared with December 31, 2025, the balance as of September 30, 2026 increased by $428.2 million, mainly due to $409.3 million of development costs for the construction of NC-1 facility, $1.1 million of development costs for the MTL-2 facility, $18.2 million for the acquisition of the MTL-3 property as well as infrastructure, CIP and building improvement costs incurred of $4.7 million for MTL-3 in Saint-Jerome and of $2.2 million for MTL-1 in Montreal, in part, by an increase in accumulated depreciation of $3.3 million as well as a foreign-exchange impact of $4 million.
Operating and finance lease right-of-use assets and lease liabilities
As of September 30, 2026, our operating and finance right-of-use assets and lease liabilities were $68.4 million and $69.3 million, respectively. As of December 31, 2025, the Company's operating and finance right-of-use assets and lease liabilities were $24.2 million and $23.4 million, respectively.
The increase in right-of-use assets of $44.2 million was due to addition of $63.3 million for operating leases, partially offset by the amortization of the right-of-use assets totaling $6.3 million for the nine months ended September 30, 2026 and the reduction of $12.6M resulting from the Company's acquisition of the underlying leased assets under its existing finance lease, which was reclassified to property and equipment.
The increase in lease liabilities of $45.9 million was primarily due to the addition of $63.3 million for operating leases, partially offset by lease payments totaling $16.6 million for the nine months ended September 30, 2026.
Other non-current assets, net
Other non-current assets, net were $35.4 million as of September 30, 2026, compared to $23.8 million as of December 31, 2025, an increase of $11.6 million. The increase was primarily due to a $1.3 million increase in deferred financing costs, $10.2 million increase in deposits for a new data center colocation agreement, and $0.8 million increase in prepayment to third parties, partially offset by a $1.2 million decrease in deferred contract costs which was reclassified to current.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in relation to the Enovum acquisition. As of September 30, 2026 and December 31, 2025, the Company recorded goodwill in the amount of $19.5 million and $20.1 million, respectively, with the change attributable to foreign currency translation adjustments.
Intangible assets, net
Intangible assets pertain to customer relationships acquired in connection with the acquisition of Enovum. Refer to Note 13. Goodwill and Intangible Assets for further information. As of September 30, 2026 and December 31, 2025, the total balance of intangible assets was $11.9 million and $12.8 million, respectively, with the decrease relating to amortization during the period.
Accounts payable
Accounts payable primarily consists of amounts due for costs related to HPC services. Compared with December 31, 2025, the balance of accounts payable increased by $0.4 million in the nine months ended September 30, 2026, largely due to a one-time amount due upon finalizing a termination agreement with a GPU servers leasing partner in the current year, and timing of unpaid bills for our cloud services in the nine months ended September 30, 2026.
Deferred revenue
As of September 30, 2026, the Company's current and non-current portion of deferred revenue was $54.6 million and $251.4 million, respectively, compared to $8.0 million and $71.6 million, respectively, as of December 31, 2025. The increase in deferred revenue of $226.5 million reflects $229.4 million prepayments from customers for cloud services and data center services to be rendered in the future, partially offset by the recognition of $2.9 million in revenue related to the successful fulfillment of performance obligations from our cloud services and data center services as well as a decrease due to net settlement of receivables and liabilities with a customer upon contract termination.
Other payables and accrued liabilities
Other payables and accrued liabilities were $68.1 million as of September 30, 2026, compared to $48.3 million as of December 31, 2025, an increase of $19.8 million. The increase was primarily due to an increase in payables of $6.6 million which primarily related to the NC-1 facility. The balance also includes approximately $1.1 million of accrued issuance costs for the 2032 Notes, $0.8 million accrued expenses for lender's counsel fees in connection with financing arrangements, an increase in deferred share-based compensation liability of $5.5 million, accrued liabilities for non-fixed assets of $3.9 million, interest payable of $2.5 million and fixed asset payables of $0.6 million. These increases were partially offset by a decrease in commissions payable of $1.6 million following the write-off relating to the termination agreement of one of our customers, a decrease relating to bonus payable of $0.9 million and a decrease in short-term customer deposits of $0.6 million.
Short-term and long-term debt, net
Short-term and long-term debt, net consists of amounts borrowed under several credit facilities entered into by the Company and its subsidiaries during the nine months ended September 30, 2026, including term loan facilities and a Delayed Draw Term Loan Facility used to finance the Company's operations.
As of September 30, 2026 and December 31, 2025, the total balance of our short-term and long-term debt, net was $72.5 million and $nil, respectively, with the change attributable to proceeds drawn under the new facilities during the period, net of related debt issuance costs, discounts, and repayments of principal. Refer to Note 10. Debt, for more information.
Convertible notes payable, net
The convertible notes payable relates to the purchase agreements entered into by the Company in connection with the issuance of its 2031 and 2032 Notes. In January 2026, the Company issued $230.0 million aggregate principal amount of 4.50% convertible senior notes due 2031, and in August 2026, the Company issued $310.0 million aggregate principal amount of 5.00% convertible senior notes due 2032. In August 2026, $198.15 million aggregate principal amount of the 2031 Notes was settled in privately negotiated transactions related to the issuance of the 2032 Notes.
As of September 30, 2026 and December 31, 2025, the net carrying amount of the Company's convertible notes payable was $330.1 million and $nil, respectively. Refer to Note 10. Debt, for more information.
Other long-term liabilities
As of September 30, 2026 and December 31, 2025, the Company's other long-term liabilities were $6.3 million and $nil, respectively. The increase of $6.3 million was primarily attributable to long-term customer deposits.
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, 2026 and 2025 are presented in the table below:
|
For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Reconciliation of non-GAAP (loss) income from operations: | ||||||||||||||||
| Net loss | $ | (101,435 | ) | $ | (15,754 | ) | $ | (128,453 | ) | $ | (23,159 | ) | ||||
| Depreciation and amortization expenses | 8,077 | 6,371 | 21,085 | 15,342 | ||||||||||||
| Interest expense - third parties | 6,426 | - | 12,999 | - | ||||||||||||
| Interest expense - related parties | 3,987 | - | 5,425 | - | ||||||||||||
| Income tax (benefit) expense | (1,769 | ) | 67 | (1,435 | ) | 1,107 | ||||||||||
| EBITDA | (84,714 | ) | (9,316 | ) | (90,379 | ) | (6,710 | ) | ||||||||
| Adjustments: | ||||||||||||||||
| Induced conversion expense | 80,767 | - | 80,767 | - | ||||||||||||
| Impairment of capitalized software assets | - | - | 5,006 | - | ||||||||||||
| Net loss (gain) from disposal of property, plant and equipment | - | 338 | (1,822 | ) | 338 | |||||||||||
| Share-based compensation expenses | 3,923 | 11,255 | 14,940 | 17,876 | ||||||||||||
| Adjusted EBITDA | $ | (24 | ) | $ | 2,277 | $ | 8,512 | $ | 11,504 | |||||||
Liquidity and capital resources
As of September 30, 2026, our principal sources of liquidity were cash and cash equivalents of $138.5 million, and accounts receivable, net of $39.8 million.
Working capital is the difference between the Company's current assets and current liabilities. As of September 30, 2026, we had working capital of $28.1 million as compared with working capital of $85.2 million as of December 31, 2025.
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 and our demonstrated ability to secure financing when needed, we believe that we will be able to meet our short-term liquidity needs.
Convertible note
In January 2026, we issued $230.0 million aggregate principal amount of 4.50% convertible senior notes due 2031, resulting in net proceeds of approximately $102.1 million after deducting the Zero Strike Call Option premium, initial purchasers' discounts and offering expenses. The issuance enhances our liquidity and provides additional capital to fund upcoming development projects, including construction activities and other strategic growth initiatives.
In August 2026, we issued $310.0 million aggregate principal amount of our 5.00% Convertible Senior Notes due 2032 (the "2032 Notes"), consisting of an initial issuance of $270.0 million and an additional $40.0 million issued pursuant to the initial purchasers' exercise of their overallotment option. The 2032 Notes mature on September 1, 2032, unless earlier converted, redeemed or repurchased in accordance with their terms.
Concurrently with the pricing of the 2032 Notes offering, we entered into privately negotiated transactions with certain holders of the 2031 Notes to convert or repurchase approximately $198.2 million aggregate principal amount of the outstanding 2031 Notes. The transactions were completed on August 21, 2026, through a combination of cash payments and the issuance of approximately 6.3 million ordinary shares. In connection with these transactions, we recognized an induced conversion expense of approximately $80.8 million during the three months ended September 30, 2026.
The 2031 Notes bear interest at 4.50% per annum, payable semiannually in arrears on February 1 and August 1, and mature on February 1, 2031. The 2032 Notes bear interest at 5.00% per annum and mature on September 1, 2032. Based on the principal amounts outstanding as of September 30, 2026, the combined annual contractual cash interest obligation is approximately $16.9 million, excluding amortization of debt issuance costs and any additional interest payable under the indentures.
The issuance of the 2032 Notes increased our outstanding indebtedness and provided additional financing to support our capital requirements and planned development activities. The partial conversion and repurchase of the 2031 Notes reduced the outstanding principal of those notes and resulted in the recognition of a significant noncash and cash-related induced conversion expense. The transactions also affect our future interest obligations, liquidity requirements and potential dilution from conversion of the outstanding notes.
As of September 30, 2026, approximately $31.9 million aggregate principal amount of the 2031 Notes and $310.0 million aggregate principal amount of the 2032 Notes remained outstanding.
Iceland facility agreement
WhiteFiber Iceland ehf., a subsidiary of the Company, entered into a secured term loan facility with Landsbankinn hf. in March 2026, providing up to $20.0 million of available borrowings. The Facility bears interest at a floating rate per annum equal to the sum of (i) three month CME Term SOFR (or any successor benchmark), and (ii) an applicable margin of 4.25% per annum and has an initial two-year term, extendable up to four years. The loan is guaranteed by WhiteFiber, Inc. and WhiteFiber AI, Inc.
The Facility allows for up to two drawdowns (minimum $5 million each), with quarterly principal repayments beginning three months after initial borrowing. On April 24, 2026, the Company drew down $18.0 million under the Facility. On September 11, 2026, the Company drew down $2.0 million, which was the remaining commitment available under the Facility. As of September 30, 2026, $17.8 million was outstanding under the Facility, net of $2.25 million of the principal repayments, with an average effective interest rate of 10.35%, which includes an average stated interest rate of 7.94%. The Facility is secured by first-ranking security over (i) 100% of the Company's shareholding in WhiteFiber Iceland ehf., (ii) designated assets (including GPU servers, CPU servers, IB switches and equipment accessories) at the date of the agreement, and (iii) material assets acquired thereafter (to be secured within 60 days), in each case until all obligations are fully satisfied.
Royal Bank of Canada credit facility
On July 6, 2026, the Company entered into a syndicated credit agreement. The Syndicated Credit Facility Agreement provides for an aggregate of up to approximately CAD $115 million (approximately $80.8 million) to refinance the Amended Credit Agreement and finance its data centers business. The agreement also includes an accordion feature that permits the Company to increase by up to an additional CAD $25 million (approximately $17.7 million) to refinance the Amended Credit Agreement, subject to the satisfaction of specified conditions. The Syndicated Credit Facility Agreement is a non-revolving facility, and amounts repaid or prepaid may not be reborrowed.
On July 15, 2026 the Company drew a CORRA loan amount of CAD $36.8 million (approximately $26.2 million) under the Syndicated Credit Facility Agreement.
Delayed Draw Term Loan Facility
On May 20, 2026, Enovum NC-1 Venture, LLC, a subsidiary of the Company, entered into a Delayed Draw Term Loan Facility and Security Agreement with Bit Digital Capital, Inc., a subsidiary of Bit Digital, providing up to $100 million of available borrowings (which may be increased to $150 million), to support near-term growth initiatives in both its data centers and cloud services businesses. The facility is guaranteed by WhiteFiber Operating Partnership, LP and is secured by a first-ranking security interest over 100% of the Company's shareholding in Enovum NC-1 Topco, Inc., subject to a collateral step-down upon the Borrower obtaining permanent financing for NC-1.
The Delayed Draw Term Loan Facility bears interest at an initial rate of 9.5% per annum, subject to a step-down upon completion of certain development and leasing milestones at the NC-1 facility, and includes a MOIC Amount payable at maturity. On May 26, 2026, the Company drew down $50.0 million in two tranches ($20.0 million and $30.0 million) at an original issue discount of 3%, with each tranche maturing in 90 days (extendable by 30 days by mutual agreement). Concurrent with funding, the $20.0 million tranche was assigned by Bit Digital to B. Riley Securities, Inc. These tranches were each repaid in full as of September 30, 2026. On July 27, 2026 and July 31, 2026, the Company drew down an additional $20.0 million and $10.0 million, respectively, each with a 180-day maturity, extendable by mutual agreement of the parties. The Delayed Draw Term Loan Facility provides the Company with near-term capital while it pursues longer-term permanent financing. As of September 30, 2026, the Delayed Draw Term Loan Facility had a net carrying value of $29.4 million and accreted MOIC of $0.6 million. It had an average effective interest rate of 25.7% which exceeded the contractual interest rate due to the inclusion of the contractual MOIC payment.
On October 27, 2026, the Company received an additional $70.0 million advance under its existing Delayed Draw Term Loan Facility and Security Agreement, dated May 20, 2026. The additional borrowing has a maturity of 116 days from the funding date, subject to extension by mutual agreement of the parties in accordance with the terms of the agreement. The additional borrowing provides the Company with financing to support its liquidity requirements.
NC-1 Project Financing Update
On November 9, 2026, our subsidiaries entered into the NC-1 Credit Agreement, providing $300.0 million of term loan commitments as described in Note 19, "Subsequent Events." No loans had been funded as of the date of this report, and funding remains subject to project-readiness, customer-acceptance and other conditions. If funded, proceeds may be used for permitted purposes, subject to the terms and conditions of the NC-1 Credit Agreement. There can be no assurance that funding will occur within the applicable commitment periods or at all.
Our development pipeline is capital intensive, and depending on construction costs, leasing pace, and financing market conditions, our existing capital resources may not be sufficient to fund both this pipeline and our near-term debt maturities without accessing additional capital, whether through indebtedness, equity or equity-linked securities, project-level financing, or otherwise. Our future capital requirements will depend on many factors, including our ability to refinance or extend near-term debt maturities described above, 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, |
||||||||
| 2026 | 2025 | |||||||
| Net Cash Provided by (Used in) Operating Activities | $ | 211,312 | $ | (23,759 | ) | |||
| Net Cash Used in Investing Activity | (523,722 | ) | (145,468 | ) | ||||
| Net Cash Provided by Financing Activity | 342,114 | 324,077 | ||||||
| Net increase in cash, cash equivalents and restricted cash | 29,704 | 154,850 | ||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (446 | ) | (32 | ) | ||||
| Cash, cash equivalents and restricted cash, beginning of period | 118,298 | 15,405 | ||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 147,556 | $ | 170,223 | ||||
Operating Activity
Net cash provided by operating activities was $211.3 million for the nine months ended September 30, 2026, derived mainly from (i) a net loss of $128.5 million for the nine months ended September 30, 2026 adjusted for depreciation and amortization expenses of property and equipment of $21.1 million, amortization of discount on convertible note issued of $0.8 million, induced conversion expense of $80.8 million, amortization of discount on our third parties and related parties debt of $2.5 million, share-based compensation of $14.9 million, impairment of capitalized software assets of $5.0 million, gain from disposal of property, plant, and equipment of $1.8 million, gain from net investment in lease of $0.7 million and current expected credit losses of $2.7 million and a (ii) net changes in our operating assets and liabilities, principally comprising of an increase to other assets of $15.0 million, a decrease in right-of-use assets of $6.4 million, an increase in deferred revenue of $226.5 million, a decrease in lease liabilities of $4.7 million, an increase in accounts receivable of $18.6 million, a decrease in net investment in lease of $3.6 million, an increase in accounts payable of $0.5 million, an increase of income tax payable of $0.5 million, an increase in other payables and accrued liabilities of $7.1 million, an increase of other long-term liabilities of $6.3 million, a decrease in deferred tax liabilities of $2.5 million, and an increase in amounts due to related parties of $4.5 million. The increase in deferred revenue was primarily attributable to customer prepayments received from future services, which was the primary driver of operating cash flow.
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 $3.6 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.
Investing Activity
Net cash used in investing activity was $523.7 million for the nine months ended September 30, 2026, attributable to purchases of and deposits made for property, plant, and equipment of $549.8 million, partially offset by proceeds from disposal of property, plant and equipment of $26.1 million.
Net cash used in investing activity was $145.5 million for the nine months ended September 30, 2025, attributable to purchases of and deposits made for property, plant, and equipment of $146.5 million, partially offset by proceeds from disposal of property, plant and equipment of $1.0 million.
Financing Activity
Net cash provided by financing activity was $342.1 million for the nine months ended September 30, 2026, attributable to net proceeds from issuance of convertible debt of $522.7 million, net proceeds from issuance of debt - third parties of $64.2 million, net proceeds from issuance of debt - related parties of $58.1 million, partially offset by purchase of zero-strike call option of $120.0 million, repayment of debt - third parties of $22.3 million, repayment of debt - related parties of $30.0 million, repayment of convertible notes in note exchange transaction of $118.0 million and repayment of finance lease liabilities of $12.6 million.
Net cash provided by financing activity was $324.1 million for the nine months ended September 30, 2025, attributable to net transfers from parent of $157.4 million, $144.5 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.
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 our IPO; (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.
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