Darkhorse Technologies Inc.
11/06/2026 | Press release | Distributed by Public on 11/06/2026 15:07
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 quarterly management's discussion and analysis ("MD&A") should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes of DarkHorse Technologies Inc. (the "Company"), formerly known as Sphere 3D Corp., for the three and nine months ended September 30, 2026. The condensed consolidated financial statements have been presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). Unless the context otherwise requires, any reference to the "Company," "DarkHorse," "we," "our," "us" or similar terms refers to DarkHorse Technologies Inc. and its subsidiaries. Unless otherwise indicated, all references to "$" and "dollars" in this discussion and analysis mean U.S. dollars.
This report includes forward-looking statements that are subject to risks and uncertainties. This forward-looking information includes, but is not limited to, statements with respect to management's expectations regarding the future growth, results of operations, performance and business prospects of DarkHorse. This forward-looking information relates to, among other things, future business plans and business planning process, uses of cash, and may also include other statements that are predictive in nature, or that depend upon or refer to future events or conditions. The words "could", "expects", "may", "will", "anticipates", "assumes", "intends", "plans", "believes", "estimates", "guidance", and similar expressions are intended to identify statements containing forward-looking information, although not all forward-looking statements include such words. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events.
Many factors could cause actual results, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, but not limited to: the inability to maintain compliance with the requirements of the Nasdaq Capital Market ("Nasdaq") and/or inability to maintain listing with Nasdaq; the impact of competition; the investment in technological innovation; the retention or maintenance of key personnel; the possibility of significant fluctuations in operating results; the ability of DarkHorse to maintain business relationships; financial, political or economic conditions; financing risks; future acquisitions; volatility in the market price for the common shares of the Company; compliance by DarkHorse with financial reporting and other requirements as a public company; conflicts of interests; future sales of common shares by DarkHorse's directors, officers and other shareholders; dilution and future sales of common shares. For more information on these risks, you should refer to the Company's filings with the securities regulatory authorities, including the Company's most recently filed Annual Report on Form 10-K, which is available on EDGAR at www.sec.gov and SEDAR+ at www.sedarplus.ca. In evaluating such statements, we urge you to specifically consider various factors identified in this report, any of which could cause actual results to differ materially from those indicated by such forward-looking statements. Forward-looking statements speak only as of the date of this report and we undertake no obligation to publicly update any forward-looking statements to reflect new information, events or circumstances after the date of this report. Actual events or results may differ materially from such statements.
Overview
We are a digital infrastructure company that owns, operates and is expanding scalable power and data center assets for high-performance computing, artificial intelligence ("AI") workloads, and digital asset infrastructure. Following our business combination with Cathedra Bitcoin Inc. completed on June 1, 2026, we now own and operate our power and data center infrastructure. While we currently generate revenue from hosting services provided to third parties under hosting agreements and previously generated revenue from Bitcoin mining, we are actively progressing on the transformation of our sites for high-performance computing ("HPC") and AI infrastructure workloads.
We have approximately 50 megawatts ("MW") of operating power capacity across four data centers located in Kentucky and Tennessee. On September 30, 2026, we entered into a power purchase agreement for an additional 50 MW of power in Hopkinsville, Kentucky, where we currently operate a facility. We have further evolved our pipeline since June 30, 2026, and have a development pipeline exceeding 250 MW. While we are undergoing the transformation of our existing sites to HPC and AI workloads, we will continue to provide hosting services to third parties, including a 30 MW arrangement with Bitdeer across three sites in Tennessee and Kentucky, which we expect to provide more predictable revenue.
To date much of the industry development has generally focused on large facilities for training frontier models, many of which require several hundred megawatts or more at a single location. We believe the next phase of AI growth will be increasingly driven by AI inference, which we expect to favor a broader footprint of smaller sites that can be developed and deployed more rapidly. Management's vision is to evolve DarkHorse into a premier platform that expands access to power and data center capacity for this section of the AI market. We believe certain sites under 50 MW are often overlooked by developers pursuing large training campuses, and we are building DarkHorse to capture that opportunity. As AI adoption moves beyond the training of models into everyday software and business use, we anticipate a growing share of computing demand to come from the inference of the ongoing processing of AI workloads in production. Our energized power positions, located primarily in the Tennessee Valley Authority region, may facilitate faster and a more capital efficient path to deployment relative to projects that have not yet secured interconnection or require additional infrastructure development. Our modular model is designed to transform our current sites from power to revenue on an accelerated timeline making them operational, marketable, and customer-ready. We intend to differentiate through execution, site readiness and community engagement, and to replicate this approach across our growing portfolio. This replicable approach is known as our development program: a consistent process designed to span engineering, utility coordination, procurement, financing and delivery that the same core development team can carry from one site to the next. As part of this program, we work to build direct relationships with the utilities and communities around each site and to match each site's power and infrastructure profile to the workload for which it is best suited; we believe that, with the right match, smaller sites can serve large customers as well. As AI demand continues to outpace available power, we believe DarkHorse is well positioned to be a leader in this segment.
We refer to the facilities we are developing as superintelligence factories, reflecting their design to support demanding AI workloads. Our business is based on developing and placing into service facilities that our tenant can use, earning revenue from that capacity once it is placed into service and repeating this process site by site. Accordingly, management does not believe that pipeline capacity, measured solely in MW, adequately reflects the value of our business or development portfolio. Within our pipeline, we distinguish between capacity that is operating, capacity that is under development, and planned capacity that remains for future development.
We have hosting sites in states that do not have any material state-specific regulatory restrictions on the mining of Bitcoin. However, it is possible that these states or other states in which we may seek to operate may create laws that would impede Bitcoin mining. We do not currently plan to hold Bitcoin and we regularly convert Bitcoin received for services into U.S. dollars.
Effective September 16, 2026, our corporate name changed to DarkHorse Technologies Inc., marking the next phase of the Company's strategic repositioning toward AI and digital infrastructure.
Recent Developments
Site Development Program
We advanced engineering for planned superintelligence factories in the TVA region. This included preparation of an initial basis-of-design package for a Kentucky project and boundary surveys for two Kentucky development sites. In October 2026, our engineering and modular infrastructure partners prepared preliminary layouts for three projects in Kentucky and Tennessee. We also continued coordination with local officials on civil infrastructure and permitting requirements. These activities remain part of pre-construction development. We intend to carry the engineering work, supplier coordination and utility relationships from these projects into a repeatable development program.
Hopkinsville Power Contract
On September 30, 2026, one of our subsidiaries entered into a 50 MW Data Center Project Power Contract with Hopkinsville Electric System, doubling our contracted capacity to 100 MW. Pursuant to the terms of the agreement, we will guarantee up to a maximum aggregate liability of $10.0 million, in connection with the proposed new data center in Hopkinsville, Kentucky. The guaranty is not yet effective. See "Off-Balance Sheet Information" below.
Hosting Agreement
On May 28, 2026, we entered into an agreement with Bitdeer Technologies ("Bitdeer") to host 30 megawatts of capacity at three of our data center sites in Tennessee and Kentucky. These agreements offer contracted mining economics while we assess broader digital infrastructure opportunities, including AI applications. Bitdeer will deploy its SEALMINER A2 Pro Air mining hardware at these sites. Each agreement has an initial term of 12 months, renewable for an additional 12 months unless either party elects otherwise, allowing flexibility as we explore optimal uses of our power-backed infrastructure. During the latter part of the third quarter of 2026, installation was completed for the three sites.
Sale of Iowa Site
On September 1, 2026, we entered into a definitive agreement (the "Iowa Agreement") with Simple Mining, LLC ("Simple Mining") to sell our Iowa site ("Iowa Site") for a purchase price of $1.5 million (the "Purchase Price"). Pursuant to the Iowa Agreement, we have terminated our sublease agreement with Simple Mining with respect to the Iowa Site and assigned all our rights to the mining containers, transformers and related equipment at the Iowa Site to Simple Mining. We received $0.3 million in cash from Simple Mining. For the remaining portion of the Purchase Price, we have entered into an interest-free promissory note with Simple Mining for $1.2 million, payable in equal monthly installments over a 12-month period commencing on December 1, 2026 and continuing through November 1, 2027. The promissory note is secured by certain of Simple Mining's assets until the note is paid in full.
Sale of Mining Machines
On September 1, 2026, we entered into a binding term sheet (the "Mining Machine Agreement") with RepairBit LLC to sell all of our existing fleet of mining machines, for estimated aggregate proceeds of $2.9 million. The mining machines are to be sold and delivered over a 90-day period which began on September 1, 2026. We retain ownership of the miners until payments for such miners are received.
Potential Supplemental Import Tariffs
On August 18, 2026, we received a notice from the U.S. Customs and Border Protection (the "CBP") asserting Chinese origin supplemental import tariffs on certain Bitcoin miners purchased in 2022 by a subsidiary acquired in the Combination. Management believes the CBP's allegations are without merit, and in September 2026 we filed a protest with the CBP. See "Liquidity and Capital Resources" below and Note 15. Commitments and Contingencies to our condensed consolidated financial statements.
Business Combination
As previously announced, on March 5, 2026, we entered into a definitive agreement with Cathedra Bitcoin Inc. ("Cathedra"), a company that builds, develops and operates power infrastructure facilities for use in high-density computing, to combine in an all-stock transaction. On June 1, 2026, the business combination was effected by way of a plan of arrangement under the Business Corporations Act (British Columbia), pursuant to which S3D Acquisition Corp., our wholly-owned subsidiary, acquired all of the issued and outstanding shares of Cathedra in a share-for-share transaction, and Cathedra became a wholly-owned subsidiary of the Company (the "Combination"). For purchase consideration, we issued 2,405,300 common shares and 1,387,117 preferred shares of the Company with an aggregate fair value of $7.3 million.
Share Consolidation
On February 9, 2026, we filed an Articles of Amendment to effect a share consolidation (also known as a reverse stock split) of our issued and outstanding common shares in the ratio of 1-for-10. The share consolidation was effective on February 9, 2026. Our common shares began trading on an adjusted basis on Nasdaq at the opening of trading on February 10, 2026. All share and per share amounts have been restated for all periods presented to reflect the share consolidation.
Results of Operations
The Third Quarter of 2026 Compared with the Third Quarter of 2025
Revenue
We generated revenues of $3.0 million and $2.6 million, respectively, during the third quarter of 2026 and 2025. The increase in revenue of $0.4 million is primarily due to an increase in revenue of $2.1 million from our acquisition, offset by a decrease in Bitcoin mining revenue of $1.7 million due to our change in Bitcoin mining exposure to be structured primarily through hosting and profit share arrangements and change in business strategy to focus on HPC and AI infrastructure workloads. We expect to continue to expand our revenue mix and utilization for the remainder of 2026.
Operating Expenses
Cost of Revenue (exclusive of depreciation and amortization expense)
Direct cost of revenue totaled $3.3 million and $2.0 million in the third quarter of 2026 and 2025, respectively. The 2026 amount includes $2.6 million of costs attributable to revenue from the acquisition completed on June 1, 2026.
General and Administrative Expense
General and administrative expenses were $3.3 million and $1.5 million for the third quarter of 2026 and 2025, respectively. The $1.8 million increase was primarily due to a $0.8 million increase in share-based compensation, $0.4 million increase in outside service contractors, $0.4 million increase in legal fees, and $0.2 million increase in investor relations and public reporting costs.
Depreciation and Amortization Expense
Depreciation and amortization expense was $0.6 million and $1.7 million for the third quarter of 2026 and 2025, respectively. The decrease is primarily due to the disposal of machines.
Loss on Disposal of Property and Equipment
Loss on disposal of property and equipment was $1.2 million and $0.8 million for the third quarter of 2026 and 2025, respectively, and related to the sale of our Iowa mining site and the sale of mining equipment.
Provision for Loss on Other Assets
Provision for loss on other assets was $0.4 million and $0.3 million for the third quarter of 2026 and 2025, respectively. During the third quarter of 2026, we received notice that Evolution Technology, LLC was insolvent and has ceased business operations and as such we recorded a $0.4 million provision for loss on other assets related to prepaid services. For the third quarter of 2025, a loss of $0.3 million was recorded for the remaining portion of the Rebel Mining Company settlement that is in default.
Impairment of Property and Equipment
Impairment of property and equipment was nil and $0.5 million for the third quarter of 2026 and 2025, respectively. For the third quarter of 2025, an impairment of $0.5 million was recorded for unrepairable mining equipment.
Impairment of Intangible Assets
Impairment of intangible assets was $0.2 million and nil for the third quarter of 2026 and 2025, respectively. For the third quarter of 2026, the Company recorded an impairment charge of $0.2 million to supplier agreements related to the change in our business strategy for Bitcoin mining.
Change in Fair Value of Bitcoin
Change in fair value of Bitcoin was a gain of $0.2 million and $0.1 million for the third quarter of 2026 and 2025, respectively. The gain was the change in fair value of Bitcoin held, as well as the gain or loss from when Bitcoin was sold.
Non-Operating Income and Expenses
Investment Loss
Investment loss was nil and $0.2 million for the third quarter of 2026 and 2025, respectively, and the prior year related to our equity investment in Core Scientific Inc.
The First Nine Months of 2026 Compared with the First Nine Months of 2025
Revenue
We generated revenues of $7.4 million and $8.5 million during the first nine months of 2026 and 2025, respectively. The decrease in revenue of $1.1 million is due to our change in Bitcoin mining exposure to be structured primarily through hosting and profit share arrangements and change in business strategy to focus on HPC and AI infrastructure workloads, and the decline in the fair value of Bitcoin. The decrease is offset by revenue of $2.5 million beginning June 1, 2026 from our acquisition. We expect to continue to expand our revenue mix and utilization for the remainder of 2026.
Operating Expenses
Cost of Revenue (exclusive of depreciation and amortization expense)
Direct cost of revenue totaled $7.2 million and $6.5 million, respectively, in the first nine months of 2026 and 2025. The $0.7 million increase was primarily driven by an increase in cost of revenue of $3.4 million beginning June 1, 2026 from our acquisition, offset by lower hosting fees related to machines taken offline and sold.
General and Administrative Expense
General and administrative expenses were $10.6 million and $6.8 million for the first nine months of 2026 and 2025, respectively. The increase of $3.8 million was primarily due to an increase of $1.9 million in costs related to our acquisition completed during the prior quarter, $1.6 million increase in share-based compensation, $0.4 million increase in outside service contractors, and $0.4 million increase in investor relations and public reporting costs. These increases were offset by a decrease in legal fees of $0.6 million related to the resolution of the Gryphon Digital Mining, Inc. litigation, and a decrease of $0.2 million in insurance expense.
Depreciation and Amortization Expense
Depreciation and amortization expense was $3.1 million and $5.0 million for the first nine months of 2026 and 2025, respectively. The decrease of $1.9 million was primarily due to less depreciation related to our Bitcoin mining machines due to the disposal of machines.
Impairment of Property and Equipment
Impairment of property and equipment was $7.0 million and $0.5 million for the first nine months of 2026 and 2025, respectively. For the first nine months of 2026, an impairment of $7.0 million was recorded for the estimated market value of mining equipment primarily due to the change in market conditions and decline in Bitcoin prices. For the first nine months of 2025 an impairment of $0.5 million was recorded for unrepairable mining equipment and idle mining equipment not expected to return to use.
Loss on Disposal of Property and Equipment
Loss on disposal of property and equipment was $1.4 million and $1.7 million for the first nine months of 2026 and 2025, respectively, and primarily related to the sale of our Iowa mining site and the sale of mining equipment.
Impairment of Intangible Assets
Impairment of intangible assets was $0.8 million and nil for the first nine months of 2026 and 2025, respectively. For the first nine months of 2026, the Company recorded impairment charges to supplier agreements of $0.6 million related to the decline in Bitcoin prices and $0.2 million related to the change in our business strategy for Bitcoin mining.
Provision for Loss on Other Assets
Provision for loss on other assets was $0.4 million and $0.3 million for the first nine months of 2026 and 2025, respectively. During the first nine months of 2026, we received notice that Evolution Technology, LLC was insolvent and has ceased business operations and as such we recorded a $0.4 million provision for loss on other assets related to prepaid services. For the first nine months of 2025, a loss of $0.3 million was recorded for the remaining portion of the Rebel Mining Company settlement that is in default.
Change in Fair Value of Bitcoin
Change in fair value of Bitcoin was a loss of $0.6 million and a gain of $0.4 million for the first nine months of 2026 and 2025, respectively. The loss in the first nine months of 2026 and the gain in the first nine months of 2025 were from the change in fair value of Bitcoin held, as well as the gains and losses from when Bitcoin was sold.
Non-Operating Income and Expenses
Investment Gain
Investment gain was nil and $0.4 million for the first nine months of 2026 and 2025, respectively, and the prior year related to gains on our equity investment in Core Scientific Inc.
Liquidity and Capital Resources
Our principal sources of liquidity are our existing cash and cash equivalents. We expect to fund our operations going forward with existing cash resources, revenue from our operations, and cash that we may raise through future financing transactions. At September 30, 2026, we had cash and cash equivalents of $8.8 million compared to cash and cash equivalents of $3.7 million at December 31, 2025. As of September 30, 2026, we had working capital of $7.6 million, reflecting an increase of $0.8 million since December 31, 2025.
On September 11, 2026, we completed a private placement financing (the "Private Placement") for proceeds of $4.8 million, net of $0.2 million in costs. Pursuant to the Private Placement, we issued and sold an aggregate of 1,666,661 units (the "Units") at a purchase price of $3.00 per Unit. Each Unit consists of (i) one common share of the Company and (ii) one five-year warrant to purchase one common share at an exercise price of $3.50 per share. The price per Unit and the exercise price of the warrant represent a 29% and 51% premium, respectively, to our closing share price on September 4, 2026. Pursuant to the terms of the purchase agreement, the securities issued in the Private Placement are
subject to a contractual lock-up period of six months. Three of our directors participated in the Private Placement, Timothy Hanley, Chairman of our Board of Directors; Nicholas Gates, a director; and Joel Block, director and our Chief Executive Officer, for a total of 333,332 Units for aggregate gross proceeds of approximately $1.0 million. We intend to use the net proceeds from the Private Placement for working capital and general corporate purposes, including funding our AI and HPC development in the Tennessee Valley Authority region. If all of the warrants are exercised for cash, we would expect to receive additional gross proceeds of approximately $5.8 million.
At-the-Market Offering Program. On January 3, 2025, we entered into a sales agreement (the "ATM Agreement") with A.G.P./Alliance Global Partners ("AGP"), as sales agent. In accordance with the terms of the ATM Agreement, we were able to offer and sell from time to time through or to AGP, as agent or principal, the Company's common shares having an aggregate offering price of up to $8.0 million.
On July 31, 2026, we entered into an Amended and Restated Sales Agreement (the "Amended ATM Agreement") with A.G.P. and Maxim Group LLC ("Maxim" and, together with A.G.P., the "Sales Agents") for the purpose of amending the ATM Agreement to provide for the addition of Maxim as a sales agent thereunder and to effect conforming changes related thereto. The Amended ATM Agreement otherwise retains all material terms of the original ATM Agreement. The Amended ATM Agreement provides for the sale of common shares having an aggregate offering price of up to $10.3 million (the "Placement Shares") in transactions that are deemed to be "at the market offerings" as defined in Rule 415 under the Securities Act of 1933, as amended. The Amended ATM Agreement can be terminated by either party by giving two days written notice. We expect that any proceeds received from the facility will be used primarily for working capital and general corporate purposes and in furtherance of our corporate strategy. Neither we nor the Sales Agents are obligated to sell any Placement Shares pursuant to the Amended ATM Agreement. For the three and nine months ended September 30, 2026, under the ATM Agreement the Company issued and sold 911,274 and 2,059,998 common shares, respectively, for $1.7 million and $4.2 million of net proceeds, respectively.
Management has projected that based on our recurring losses and negative cash flows from operating activities, cash on hand may not be sufficient to allow us to continue operations and there is substantial doubt about our ability to continue as a going concern within 12 months from the date of issuance of our financial statements if we are unable to raise additional funding for operations. We expect our working capital needs to increase in the future as we continue to expand and enhance our operations. Our ability to raise additional funds for working capital through equity or debt financings or other sources may depend on the financial success of our business and successful implementation of our key strategic initiatives, financial, economic and market conditions and other factors, some of which are beyond our control. We require additional capital and if we are unsuccessful in raising that capital at a reasonable cost and at the required times, or at all, we may not be able to continue our business operations or we may be unable to advance our growth initiatives, either of which could adversely impact our business, financial condition and results of operations. To mitigate these risks, we expect that recently contracted hosting agreements should further support these efforts.
Significant changes from our current forecasts, including but not limited to: (i) shortfalls from projected earnings; (ii) increases in operating costs; (iii) decreases in the value of cryptocurrency; and (iv) if we do not maintain compliance with the requirements of Nasdaq and/or we do not maintain our listing with Nasdaq, it could have a material adverse impact on our ability to access the level of funding necessary to continue operations at current levels. These factors, among others, should they occur may result in our inability to continue as a going concern within 12 months from the date of issuance of our financial statements. The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business and do not include any adjustments that might result from the outcome of this uncertainty.
Potential Supplemental Import Tariffs. On August 18, 2026, we received a notice from the CBP asserting Chinese origin supplemental import tariffs on certain Bitcoin miners purchased in 2022 by a subsidiary acquired in June 2026. The subsidiary received documentation during importation from the seller validating the non-Chinese origin. The documentation included both a certificate of origin and certificate of manufacture certifying the non-Chinese origin of the miners. In the event that the CBP were to successfully prevail in their allegations of Chinese origin and assert import duties for Chinese origin to this batch of Bitcoin miners, our total tariff liability in respect to these previously purchased miners could be up to $2.3 million, including statutory interest. Management believes the CBP allegation of Chinese origin on the imported miners to be without merit and intend to defend against these claims vigorously. In September 2026, we filed a protest with the CBP.
Contingent Compensation Obligations. The employment agreements for our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") provide for retention bonuses of $1.6 million and $1.1 million, respectively, contingent upon the achievement of specified operational milestones. If the operational milestone is achieved at any time within two years, or by June 1, 2028, the bonus becomes payable in 12 equal monthly installments, in either cash or common shares, at our discretion. In addition, under the CFO's employment agreement, if certain conditions constituting "good reason" occur prior to January 1, 2027, the CFO's $1.1 million amount would become payable over an 18-month period beginning after the operational milestone is achieved.
On July 31, 2026, the CFO delivered formal notice that the conditions of good reason under his employment agreement had been met in connection with his transition from CEO to CFO following the consummation of the Combination. The notice states that it was provided solely to preserve the CFO's future rights to receive the $1.1 million payment and that he does not currently intend to resign. To trigger the conditional severance payment, the CFO would be required to formally resign by November 28, 2026, and the operational milestone would also need to be achieved, as specified in his employment agreement.
As of September 30, 2026, no liability has been recorded. However, the potential future payment could represent a material cash commitment depending on the timing of milestone achievement and the form of settlement elected. We will continue to evaluate the likelihood of achieving the milestone and assess any resulting impact on liquidity, capital resources, and future cash flows.
Power Supply Agreements. We maintain long-term prepaid electric power supply agreements with regional utilities to support our data-center operations. Under these agreements, we prepay monthly power charges and maintain cash security deposits. As of September 30, 2026, our aggregate monthly power prepayment is $1.0 million.
The following table shows a summary of our cash flows (used in) provided by operating activities, investing activities, and financing activities (in thousands):
|
Nine Months Ended September 30, |
||||||||||||||
| 2026 | 2025 | |||||||||||||
| Net cash used in operating activities | $ | (13,505) | $ | (13,395) | ||||||||||
| Net cash provided by investing activities | $ | 9,615 | $ | 12,597 | ||||||||||
| Net cash provided by financing activities | $ | 9,006 | $ | 650 | ||||||||||
Net cash used in operating activities. The use of cash during the first nine months of 2026 was primarily a result of our net loss of $23.7 million, offset by $9.6 million in noncash items.
Net cash provided by investing activities. During the first nine months of 2026, we received $7.6 million from proceeds from the sale of Bitcoin, $1.5 million of proceeds from the sale of property and equipment, consisting primarily of mining machines and equipment, and acquired $0.5 million of cash in our acquisition of Cathedra. During the first nine months of 2025, we received $7.6 million of proceeds from the sale of Bitcoin, $8.0 million from proceeds from the sale of investment in equity securities, and $0.5 million of proceeds from the sale of older mining machines; offset by $3.5 million of payments for the purchase of property and equipment consisting of infrastructure for our Iowa mining site and newer generation mining machines.
Net cash provided by financing activities. For the first nine months of 2026 and 2025, we received $4.2 million and $0.7 million, respectively, of net proceeds from the issuance of common shares through our ATM Agreement. In 2026, we received $4.8 million, net of $0.2 million of issuance costs, from our private placement completed in September 2026.
During the first nine months of 2026, we received approximately $0.7 million of customer payments in Tether (USDT), which were immediately converted into U.S. dollars. Because the conversion occurred upon receipt and resulted in no gain or loss, the transaction is reflected as a cash inflow from operating activities in our condensed consolidated statements of cash flows.
Contractual Obligations and Commitments
Subsequent to September 30, 2026, we have an aggregate of contractual commitments of $1.0 million related to pre-construction activities. These commitments are expected to be settled within the next 12 months and funded from available cash resources. The related expenditures were not incurred as of September 30, 2026 and, accordingly, have not been reflected in the condensed consolidated financial statements.
Off-Balance Sheet Information
Hopkinsville Offered Funding Commitment
We have secured an option to acquire approximately 20 acres of land in Hopkinsville, Kentucky and have proposed developing a new data center at the site drawing approximately 50 MW, supported by a new 65 MW substation that we have offered to fund at an estimated cost of $8.0 million to $10.0 million. The remaining 15 MW of capacity would be made available to other Hopkinsville Electric System ("HES") customers. HES has publicly indicated that the TVA could supply the additional capacity without affecting service to its approximately 13,000 existing customers. As of September 30, 2026, the proposal has not yet received all requisite regulatory approvals which could affect the project's feasibility, timing, or scope, as such we are not committed to the offered estimated cost at this time.
Power Contract Guaranty
On September 30, 2026, one of our subsidiaries entered into a 50 MW Data Center Project Power Contract with HES, pursuant to which we will guarantee the payment and performance of all of our subsidiary's obligations under the contract, up to a maximum aggregate liability of $10.0 million. The contract has an initial term of ten years and ongoing automatic renewal terms for successive periods of five years. The contract is dependent upon the development of a new data center in Hopkinsville, as discussed above, and as of September 30, 2026, other than the land option secured there has been no development of the site and the guaranty is not effective.
Standby Letters of Credit
During the ordinary course of business, we may provide standby letters of credit to third parties as required for certain transactions initiated by us. As of September 30, 2026, we have no standby letters of credit outstanding.
Critical Accounting Estimates
The discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. We review our estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. Management has determined that there are no critical accounting estimates that require disclosure.
Recent Accounting Pronouncements
Refer to Note 2 - Summary of Significant Accounting Policies to our condensed consolidated financial statements for a discussion of recent accounting pronouncements and their effect, if any, on us.
Darkhorse Technologies Inc. published this content on November 06, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 06, 2026 at 21:08 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]