DarkHorse Technologies Inc.

Notes to Condensed Consolidated Financial Statements

1. Organization and Business

DarkHorse Technologies Inc. (the “Company”) is 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. The Company’s common shares trade on the Nasdaq Capital Market (“Nasdaq”) under the symbol “DRK.”

The Company, formerly known as Sphere 3D Corp., changed its name to DarkHorse Technologies Inc. on September 16, 2026. The name change took effect upon completion of the Company’s continuance from the Province of Ontario to the Province of British Columbia. As a result of the continuance, the Company is now governed by the Business Corporations Act (British Columbia) in place of the Business Corporations Act (Ontario). Any reference to the “Company”, “DarkHorse”, “we”, “our”, “us”, or similar terms refers to DarkHorse Technologies Inc. and its subsidiaries.

Business Combination

On March 5, 2026, the Company and Cathedra Bitcoin Inc. (“Cathedra”), entered into a definitive agreement to combine the two companies in an all-stock transaction (the “Arrangement Agreement”). 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., the Company’s 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”).

Share Consolidation

On February 9, 2026, the Company filed an Articles of Amendment to effect a share consolidation (also known as a reverse stock split) of its issued and outstanding common shares in the ratio of 1-for-10. The share consolidation was effective on February 9, 2026. The Company’s 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.

Going Concern

Management has projected that based on our recurring losses and negative cash flows from operating activities at September 30, 2026, cash on hand may not be sufficient to allow the Company 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.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The condensed consolidated financial statements of the Company have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), applied on a basis consistent for all periods. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for a complete set of financial statements. These condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on March 27, 2026. In the opinion of management, all adjustments of a normal recurring nature considered necessary for a fair presentation have been included. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. These condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been appropriately eliminated in consolidation.

Use of Estimates

The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Reclassifications

Certain prior period amounts have been reclassified for consistency with the current period presentation. The reclassifications had no material impact on the Company's consolidated financial statements and related disclosures.

Foreign Currency Translation

The financial statements of one of the Company’s subsidiaries, for which the functional currency is the local currency, are translated into U.S. dollars using the exchange rate at the consolidated balance sheet date for assets and liabilities and a weighted-average exchange rate during the year for revenue, expenses, gains and losses. Translation adjustments are recorded as accumulated other comprehensive income (loss) within shareholders’ equity. Gains or losses from foreign currency transactions are recognized in the condensed consolidated statements of operations. Such transactions resulted in minimal gains or losses for the three and nine months ended September 30, 2026 and 2025. For the Company’s remaining Canadian subsidiaries, the functional currency is deemed to be the U.S. dollar.

Cash and Cash Equivalents

Highly liquid investments with insignificant interest rate risk and original maturities of three months or less, when purchased, are classified as cash equivalents. Cash equivalents are composed of money market funds. Cash and cash equivalents that exceed federally insured limits are maintained with financial institutions. The Company has not experienced any losses related to these balances and believes credit risk to be minimal.

Bitcoin

Bitcoin is included in current assets in the condensed consolidated balance sheets as the Company has the ability to sell it in a highly liquid marketplace, and the sale of Bitcoin is used to fund operating expenses to support operations. Bitcoin is expected to be realized in cash or sold during the Company’s normal operating cycle. Bitcoin held are accounted for as intangible assets with indefinite useful lives. Bitcoin awarded to the Company through its mining activities was included within operating activities on the condensed consolidated statements of cash flows. The proceeds from the sale of Bitcoin are included within operating or investing activities in the condensed consolidated statements of cash flows depending on the length of time the Bitcoin is held. Bitcoin is valued at fair value at the end of each reporting period with changes in fair value recorded in operating expenses in the condensed consolidated statements of operations. The fair value of Bitcoin is measured using the period-end closing price from the Company’s principal market. When Bitcoin is sold, the gains and losses from such transactions are measured as the difference between the cash proceeds and the carrying basis of the Bitcoin as determined on a first in-first out (“FIFO”) basis and are recorded within the same line item, Change in Fair Value of Bitcoin, in the condensed consolidated statements of operations.

Fair Value Measurement

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability.

Fair value measurements are classified and disclosed in one of the following three categories:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Observable inputs other than Level 1 prices, for similar assets or liabilities that are directly or indirectly observable in the marketplace.

Level 3: Unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

The fair value hierarchy requires the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Property and Equipment

Property and equipment primarily consists of mining equipment and infrastructure and is stated at cost, including purchase price, shipping and custom fees, and is depreciated using the straight-line method over the estimated useful lives of the assets, generally three years toten years.

The carrying amounts of property and equipment are reviewed when events or changes in circumstances indicate the assets may not be recoverable. If any such indication exists, the fair value of the asset is estimated in order to determine the extent of the impairment loss, if any.

Leases

The Company determines if an arrangement contains a lease at inception. When an arrangement contains a lease, the Company categorizes leases with contractual terms longer than twelve months as either operating or finance. Finance leases are generally those leases that allow the Company to substantially utilize or pay for the entire asset over its estimated life. Assets acquired under finance leases would be recorded in property and equipment, net. All other leases are categorized as operating leases. As of September 30, 2026, all leases are classified as operating leases.

Right of use (“ROU”) assets and liabilities resulting from operating leases are initially recognized based on the discounted future lease payments over the term of the lease. As the leases typically do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date in determining the discount rate to calculate the present value of future payments. The operating lease ROU asset may also include any lease payments made and exclude lease incentives and initial direct costs incurred. Certain of the Company’s leases include options to extend the lease term. The Company includes renewal options in the lease term only when exercise is reasonably certain; no renewal options were included in the measurement of the Company’s lease liabilities.

Short-term leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Goodwill

Goodwill represents the cost of a business acquisition in excess of the fair value of the net assets acquired. Goodwill is not amortized and is reviewed at least annually for possible impairment. A qualitative assessment may be first performed to determine whether it is more likely than not that a reporting unit is impaired. If through the qualitative assessment, it is determined that it is more likely than not that goodwill is not impaired, no further testing is required. If it is determined more likely than not that goodwill is impaired, or if the Company elects not to first assess qualitative factors, the Company’s impairment testing continues with the estimation of the fair value using a combination of an income (discounted cash flow) approach and a market approach at the reporting unit level. The estimation of the fair value requires significant management judgment with respect to revenue and expense growth rates, changes in working capital and the selection and use of an appropriate discount rate. The estimate of the fair value is based on the best information available as of the date of the assessment. The use of different assumptions would increase or decrease estimated discounted future operating cash flows and could increase or decrease an impairment charge. Management uses its judgment in assessing whether assets may have become impaired between annual impairment tests. Indicators such as adverse business conditions, economic factors, and technological change or competitive activities may signal that an asset has become impaired. For the nine months ended September 30, 2026, there was no impairment of goodwill.

Intangible Assets

For intangible assets purchased in a business combination, the estimated fair values of the assets received are used to establish their recorded values. For intangible assets acquired in a non-monetary exchange, the estimated fair values of the assets transferred (or the estimated fair values of the assets received, if more clearly evident) are used to establish their recorded values. Valuation techniques consistent with the market approach, income approach and/or cost approach are used to measure fair value.

Supplier agreements and customer related intangible assets are typically amortized on a straight-line basis over their economic lives offive years as this method most closely reflects the pattern in which the economic benefits of the assets will be consumed.

Regular reviews of intangible assets are performed to determine if any event has occurred that may indicate that intangible assets with finite useful lives and other long-lived assets are potentially impaired. Triggering events for impairment reviews may be indicators such as adverse industry or economic trends, restructuring actions, lower projections of profitability, or a sustained decline in the Company's market capitalization. Intangible assets are quantitatively assessed for impairment, if necessary, by comparing their estimated fair values to their carrying values. If the carrying value exceeds the fair value, the difference is recorded as an impairment.

Warrants

Warrants are accounted for as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance. Warrants that meet the definition of a derivative financial instrument, and that also meet the equity scope exception criteria, are classified as equity. Equity classified warrants are recorded at their initial fair value and are not subject to fair value remeasurement provided that the criteria for equity classification continues to be met. Warrants that are classified as liabilities are accounted for at fair value, subject to fair value remeasurement at each balance sheet date with changes in fair value recognized in other income, net. The classification of warrants is re-assessed at the end of each reporting period. The fair value of both equity-classified and liability-classified warrants are determined using the Black-Scholes options pricing model (“Black-Scholes model”) which includes Level 3 inputs.

Revenue Recognition

Revenue is accounted for pursuant to ASC 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of ASC 606 is that an entity recognizes revenue when control of promised goods or services transfers to the customer, in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services.

The following table summarizes revenues (in thousands):

Hosting

The Company enters into hosting contracts under which it operates digital asset mining equipment on behalf of third parties within its facilities. The services include energized space, electrical power, environmental management, monitoring, and active troubleshooting. These arrangements do not convey to the customer the right to control an identified asset and are therefore accounted for as service contracts under ASC 606. The Company retains the right to substitute and reallocate the space, racks, containers, and electrical capacity used to deliver the services, and directs how and for what purpose the hosting infrastructure is used, including decisions regarding energization, curtailment, and maintenance.

The Company’s hosting contracts are service contracts that contain a single performance obligation to provide an integrated hosting service, comprising a series of distinct daily service periods that are substantially the same and have the same pattern of transfer to the customer. Because the customer simultaneously receives and consumes the benefits of the Company’s performance as the services are provided, the performance obligation is satisfied over time. The Company measures progress using an output method based on the electrical power delivered to the customer’s equipment during the period, measured in kilowatt-hours, which the Company believes best depicts the transfer of the services. Consideration under the Company’s hosting arrangements consists of (a) a service fee determined as the electrical power consumed by the customer’s equipment, measured in kilowatt-hours, multiplied by a contractual rate or, in certain arrangements, by the Company’s cost of electricity, and (b) in certain arrangements, a share of the net profit or loss generated by the customer’s hosted equipment, calculated as a percentage of the value of the digital assets mined less the cost of electricity consumed. The value of the digital assets for the share of net profit or loss calculation is based on contractual terms. All consideration is denominated in U.S. dollars, except for the share of the net profit or loss, which is denominated in Bitcoin and converted to U.S. dollars. Certain customers settle invoices in Bitcoin or Tether, which the Company promptly converts to U.S. dollars. The Company is the principal in these arrangements: it obtains control of the electricity, hosting infrastructure, and related services before they are transferred to the customer, is primarily responsible for fulfilling its promise to the customer, bears the risks associated with power procurement and site operations, and establishes the prices for its services. Hosting revenue is therefore presented on a gross basis, and the related electricity and site operating costs are presented within cost of revenue.

The share described in (b) above represents variable consideration. It is attributable to the daily service periods to which it relates and is recognized in the period in which the related hosting services are provided. The Company determines the share after the end of each monthly period, once the digital assets mined by the customer’s equipment and the electricity invoiced by the utility are known, such uncertainty is substantially resolved before the related revenue is recognized and no variable consideration is constrained. In periods in which the customer’s hosted equipment generates a net loss, the Company’s share of that loss reduces the transaction price and, accordingly, hosting revenue.

Contract Balances

Accounts receivable represents amounts billed and due from customers and are recorded when the Company has an unconditional right to consideration. Hosting fees billed in arrears give rise to a receivable at the end of the related service period. The Company intends to apply the practical expedient. As of September 30, 2026, the Company has concluded that expected credit losses are immaterial and therefore has not recorded an allowance.

The Company’s hosting contracts may include advance payment terms in the form of monthly prepayments and, in certain cases, upfront payments at contract inception. Advance payments for hosting services are recorded as deferred revenue until the related services are provided as the customer simultaneously receives and consumes the benefits of the Company’s performance over the hosting period.

Amounts received from customers that are refundable and do not relate to the transfer of services, principally security deposits held as collateral for a customer’s performance, are recorded as customer deposits rather than deferred revenue. Customer deposits are refunded, or applied against amounts owed by the customer in accordance with the terms of the contract. When applied to consideration for future services, such amounts are reclassified to deferred revenue. Deferred revenue and customer deposits are classified as current or non-current based on the period in which the related services are expected to be provided or the amounts are otherwise expected to be settled.

The Company applies the practical expedients available under ASC 606 and does not disclose information about performance obligations that are part of contracts with an original expected duration of one year or less, or about variable consideration that is allocated entirely to a wholly unsatisfied distinct service that forms part of a single performance obligation. These expedients do not affect the timing or measurement of revenue recognized but reduce the level of detail otherwise required in the Company’s disclosures.

Mining

The Company is engaged with Bitcoin mining pool operators, its customers, to provide a service to perform hash calculations for the mining pool operator, which is the Company’s only performance obligation. Providing hash calculation services is an output of the Company’s ordinary activities. The Company has a service agreement with Foundry Digital LLC, a cryptocurrency mining pool operator, to provide a service to perform hash calculations. In exchange for providing the service, the Company is entitled to Full Pay Per Share (“FPPS”), which is a fractional share of the fixed Bitcoin award the mining pool operator receives, plus a fractional share of the transaction fees attached to that blockchain less net Bitcoin fees due to the mining pool operator over the measurement period, as applicable. The pay-outs received are based on the expected value from the block reward plus the transaction fee reward, regardless of whether the mining pool operator successfully records a block to the blockchain.

The Company’s fractional share is based on a contractual formula, which primarily calculates the hashrate provided to the mining pool as a percentage of total network hashrate and other inputs. The contracts, which are less than 24 hours and continuously renew throughout the day, are terminable at any time by either party without compensation and the Company’s enforceable right to compensation only begins when the Company starts providing the service to the mining pool operator, which begins daily at midnight Universal Time Coordinated (“UTC”). The terms, conditions, and compensation are at the current market rates, and accordingly the renewal option is not a material right. The contract arises at the point that the Company provides hash calculation services to the mining pool operator, which is the beginning of the contract day at midnight UTC time (contract inception), as customer consumption is in tandem with daily earnings of delivery of the service. According to the customer contract, daily earnings are calculated from midnight-to-23:59:59 UTC time, and the payout is made one hour later at 1:00 AM UTC time.

The Company satisfies its performance obligation over time with daily settlement in Bitcoin. The Company’s performance is completed as it transfers the hashrate computations over the continuously renewed contract periods, which are less than 24 hours. The Company has full control of the mining equipment utilized in the mining pool and if the Company determines it will increase or decrease the processing power of its machines and/or fleet (i.e., for repairs or when power costs are excessive) the service provided to the customer will be adjusted.

The transaction consideration the Company receives is noncash consideration in the form of Bitcoin, which the Company measures at fair value at contract inception, midnight UTC time. The noncash consideration is variable, since the amount of block reward earned depends on the amount of hash calculation services, the amount of transaction fees awarded, and operator fees over the same period. The Company does not constrain this variable consideration because it is probable that a significant reversal in the amount of revenue recognized from the contract will not occur when the uncertainty is subsequently resolved and recognizes the noncash consideration on the same day that control is transferred, which is the same day as contract inception. The fair value used to calculate the noncash consideration is based on the Bitcoin spot price in the Company’s principal market at the beginning of the day (midnight UTC time) at contract inception. Expenses associated with running the Bitcoin mining operations, such as hosting, operating supplies, utilities, and monitoring services are recorded as cost of revenues.

Comprehensive Income (Loss)

Comprehensive income (loss) and its components encompass all changes in equity other than those arising from transactions with shareholders, including net income (loss) and foreign currency translation adjustments, and is disclosed in the condensed consolidated statements of comprehensive income (loss).

Concentration Risk

The Company maintains its cash and cash equivalent balances primarily with major commercial banks. Deposits held with the financial institutions may exceed the amount of insurance provided on such deposits. The Company may be exposed to credit risk in the event of a default by the financial institutions holding the cash and cash equivalents to the extent recorded on the condensed consolidated balance sheets. The accounts offered by the custodian of the Company’s Bitcoin are not insured by the Federal Deposit Insurance Corporation (FDIC). There have not been any losses in such accounts.

For the three and nine months ended September 30, 2026, revenue is concentrated with three customers each representing more than 10% of the Company’s total consolidated revenue.

Share-based Compensation

Share-based awards, and similar equity instruments, granted to employees, non-employee directors, and consultants are accounted for in accordance with the authoritative guidance for share-based compensation. Share-based compensation award types may include stock options and restricted stock units (“RSUs”), restricted stock awards (“RSAs”), and performance stock units (“PSUs”). Share-based compensation expense is recognized on a straight-lined basis over the requisite service period (usually the vesting period) except for options with graded vesting which is recognized pursuant to an accelerated method. Share-based compensation expense for an award with a performance condition is recognized when the achievement of such performance condition is determined to be probable. If the outcome of such performance condition is not determined to be probable or is not met, no compensation expense is recognized and any previously recognized compensation expense is reversed. Forfeitures are recognized as a reduction of share-based compensation expense as they occur.

Operating Segment

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision–making group, in deciding how to allocate resources and assess performance. The Company’s CODM is the Chief Executive Officer and Chief Financial Officer. The Company operates asone operating segment and uses net income or loss as a measure of profit or loss on a consolidated basis in making decisions regarding resource allocation and performance assessment. Additionally, the CODM regularly reviews the Company’s expenses on a consolidated basis. The financial metrics used by the CODM help make key operating decisions, such as determination of capital expenditure purchases and significant acquisitions and allocation of budget between cost of revenues and general and administrative expenses. The measure of segment assets is reported on the condensed consolidated balance sheet as total consolidated assets. The significant expense categories regularly provided to the CODM include cost of revenue, general and administrative expenses, depreciation and amortization, impairments or losses on assets, and the change in fair value of Bitcoin. These expense categories are reported as separate line items in the condensed consolidated statements of operations.

Recently Issued and Adopted Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that are adopted by the Company as of the specified effective date. If not discussed, the Company believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s consolidated financial statements upon adoption.

In September 2025, the FASB issued accounting standards update (“ASU”) No. 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Scope Clarification and Accounting for Certain Contracts and Customer Share-Based Consideration (“ASU 2025-07”), which narrows the types of contracts subject to derivative accounting by excluding those whose payouts depend solely on an entity’s own operational metrics, rather than market-based variables, and clarifies that share-based or warrant consideration received from a customer is accounted for under Topic 606 until the right to retain the instrument is unconditional, after which the guidance in Topic 815 and 321 applies. The amendments are effective for annual periods beginning after December 15, 2026, with early adoption permitted, and may be applied prospectively or on a modified retrospective basis with an option to elect or revoke the fair value option for certain instruments upon transition. The Company is currently evaluating the impact of ASU 2025-07 but does not expect it to have a material effect on its consolidated financial statements.

In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity, which amends existing guidance to allow entities to apply the same principles used in other business combinations when determining the accounting acquirer in a transaction involving a variable interest entity (VIE) that is a business and where consideration is primarily in the form of equity interests. This update addresses comparability concerns and provides for more consistent application of acquisition accounting principles. The amendments are effective for annual periods beginning after December 15, 2026, and interim periods within those years, with early adoption permitted. The Company is currently assessing the potential impact of the standard but does not anticipate that it will have a material impact on its consolidated financial statements.

In May 2025, the FASB also issued ASU 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer, to address diversity in practice and improve the operability of accounting for share-based consideration granted to customers. The amendments clarify how to distinguish between service and performance conditions for vesting, require entities to estimate forfeitures for all share-based consideration payable to customers, and specify that variable consideration guidance in ASC 606 does not apply when measuring such awards. The guidance is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact of this standard on its financial statements but does not expect it to have a material impact on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The guidance is to improve the disclosure of expenses in commonly presented expense captions. The new guidance requires a public entity to provide tabular disclosure, on an annual and interim basis, of amounts for the following expense categories: (1) purchases of inventory, (2) employee compensation, (3) depreciation and (4) intangible asset amortization, as included in each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement that contains any of the expense categories noted. The guidance is effective for 2027 annual reporting, and in the first quarter of 2028 for interim reporting, with early adoption permitted, to be applied on a prospective basis, with retrospective application permitted. The Company will adopt the guidance when it becomes effective, in its 2027 annual reporting and each quarter thereafter, on a prospective basis. The Company is evaluating the impact the updated guidance will have on its disclosures.

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The guidance simplifies credit loss calculations and permits the election of a practical expedient to assume that conditions as of the balance sheet date do not change for the remaining life of the asset when estimating credit losses on current accounts receivable and current contract assets under ASC 606, Revenue from Contracts with Customers. The guidance is effective for annual reporting periods beginning after December 15, 2025. The Company adopted the guidance effective June 1, 2026, on a prospective basis. The adoption of the guidance did not have a material impact on the Company’s consolidated financial statements and disclosures.

3. Acquisition

On June 1, 2026, the Company acquired Cathedra’s digital infrastructure platform and Bitcoin mining operations, which are expected to complement the Company’s existing operations and expand its power portfolio. As described in Note 1, the Combination was effected by way of the Company’s wholly-owned subsidiary, S3D Acquisition Corp., which 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. Immediately following the June 1, 2026 closing, former Cathedra security holders held approximately 33% of the voting rights in the combined company.

The total purchase consideration for the acquisition consisted of 2,405,300 common shares and 1,387,117 Series I preferred shares with a fair value as follows (in thousands):

As a result of the Combination, the Company has transitioned beyond proprietary Bitcoin mining into a vertically integrated data center infrastructure platform, combining the Company’s mining fleet and capital markets access with Cathedra’s energy and power infrastructure assets and data center development capabilities.

The acquisition was accounted for as a business combination under ASC 805 using the acquisition method of accounting. The results of Cathedra’s operations have been included in the Company’s condensed consolidated statements of operations from the acquisition date, and reflect revenue of $2.5 million and a net loss of $0.8 million through September 30, 2026. The transaction was considered a stock-deal for tax purposes and as such a deferred tax liability was recorded to recognize the tax impact for the differences in the book and tax basis of the assets acquired.

The following table summarizes the preliminary purchase price allocation based on the estimated fair values of assets acquired and liabilities assumed as of June 1, 2026 (in thousands):

Goodwill is calculated as the excess of the purchase price over the net assets acquired. The Company expects the goodwill balance not to be deductible for tax purposes. Goodwill is primarily attributed to growth opportunities as well as expected synergies from combining the operations of Cathedra, including its digital infrastructure platform, data center operations, and proprietary Bitcoin mining activities.

During the quarter ended September 30, 2026, the Company recorded a measurement-period adjustment related to the Combination. The adjustment related to accrued liabilities, resulting in an increase in goodwill of $0.1 million. The Company continues to evaluate certain acquisition date estimates and may record additional measurement period adjustments.

The Company has not recognized a liability in the preliminary purchase price allocation for potential supplemental import tariffs described in Note 15. Commitments and Contingencies, because the recognition criteria were not met at the acquisition date. If information obtained during the measurement period, which ends no later than June 1, 2027, about facts and circumstances that existed at the acquisition date indicates that a liability should be recognized, the Company will recognize it as a measurement-period adjustment, with a corresponding adjustment to goodwill.

The Series I preferred shares are not publicly traded and do not have a quoted price in an active market. Accordingly, the fair value of the Series I preferred shares at June 1, 2026 was determined using an option pricing method to allocate the total equity value of the Company, estimated using a market approach, the guideline public company method, and then applying a discount for lack of marketability, resulting in a fair value of $1.93 per Series I preferred share on a non-marketable, minority-interest basis. These inputs, including volatility and a risk-free rate, used in this valuation are Level 3 inputs.

The fair value of property and equipment was estimated by applying the cost approach, which estimates fair value using replacement or reproduction cost of an asset of comparable utility, adjusted for loss in value due to depreciation and economic obsolescence, which are considered Level 3 inputs. The fair value of the customer related intangible asset was determined using a discounted cash flow model that incorporates the excess earnings method, which are considered Level 3 inputs, and will be amortized on a straight-line basis over the projected pattern of economic benefits of five years.

Transaction costs of $3.0 million were incurred in connection with the Combination including consulting fees, legal and professional fees for brokering and due diligence services and were recognized in general and administrative expense in the condensed consolidated statement of operations.

Pro Forma Financial Information

The following unaudited pro forma financial information reflects the acquisition as if it had occurred on January 1, 2025, and includes pro forma adjustments to the Company’s historical financial statements for the indicated periods (in thousands):

The unaudited pro forma financial information is not meant to show what the Company's actual results would have been if the acquisition had happened on the date assumed, and it should not be taken as a prediction of the Company's future financial position or operating results.

4. Fair Value Measurements

The following tables provide a summary of the assets that are measured at fair value on a recurring basis (in thousands):

The carrying amount of cash equivalents, accounts receivable, accounts payable and accrued liabilities are generally considered to be representative of their respective fair values because of the short-term nature of those instruments.

Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis

Non-financial assets such as property and equipment, goodwill, operating lease right-of-use assets, and intangible assets are recorded at fair value when an impairment is recognized or at the time acquired in an asset acquisition or business combination measured using significant unobservable inputs (Level 3). For both the nine months ended September 30, 2026 and 2025, there were impairment charges associated with property and equipment recorded and it reduced the carrying amount of such assets subject to the impairment to their estimated fair value, as discussed in Note 7 Certain Balance Sheet Items. For the nine months ended September 30, 2026, there were impairment charges associated intangibles recorded and it reduced the carrying amount of such assets subject to the impairment to their estimated fair value, as discussed in Note 8 Intangible Assets.

5. Bitcoin

The following table presents the activities of Bitcoin (in thousands):

During the nine months ended September 30, 2026, the Company 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 the condensed consolidated statements of cash flows.

The following table presents Bitcoin holdings (in thousands except for number of Bitcoin):

For the three months ended September 30, 2026 and 2025, the Company had a realized loss on the sale of Bitcoin of $0.1 million and a realized gain of $0.2 million, respectively. For the nine months ended September 30, 2026 and 2025, the Company had a realized loss of $1.2 million and a realized gain of $0.3 million, respectively, on the sale of Bitcoin.

All additions of Bitcoin were generated by the Company’s Bitcoin mining operations, payments received for services, and Bitcoin assumed from acquisition. All dispositions of Bitcoin were the result of sales on the open market and used to fund operations. Bitcoin holdings are not subject to sale restrictions and do not serve as collateral for any agreements. As of September 30, 2026 and December 31, 2025, the Company heldno other cryptocurrency.

6. Notes Receivable, Net

Simple Mining Promissory Note

In September 2026, the Company entered into a secured interest-free promissory note with Simple Mining, LLC (“Simple Mining”) for $1.2 million, payable in equal monthly installments commencing on December 1, 2026 and continuing through November 1, 2027. The long-term portion of the promissory note is included in other non-current assets in the condensed consolidated balance sheets. The promissory note is secured by certain of Simple Mining’s assets until the note is paid in full. See Note 7. Certain Balance Sheet Items for additional information on the promissory note related to the sale of the Iowa Site.

Rainmaker Promissory Note

In September 2020, the Company entered into a Senior Secured Convertible Promissory Note with Rainmaker Worldwide Inc. (the “Rainmaker Note”). The Rainmaker Note is secured as a registered lien under the Uniform Commercial Code and the Personal Property Security Act (Ontario) against the assets of Rainmaker. In January 2025, the Company and Rainmaker entered into Amendment No. 4 to the Rainmaker Note and the principal amount was revised to $4.6 million.

In January 2026, the Company and Rainmaker entered into a settlement agreement to the Rainmaker Note and both parties agreed the outstanding amount would be settled by a one-time payment of $0.5 million by February 27, 2026 (the “Settlement Date”). Such payment was not received by the Settlement Date, and based on the settlement agreement, the amount increases by $50,000 the first business day of each month following the Settlement Date. All amounts related to the Rainmaker Note have been fully reserved.

7. Certain Balance Sheet Items

The following table summarizes other current assets (in thousands):

The following table summarizes property and equipment, net (in thousands):

(1)Construction in progress includes costs related to construction of data centers.

Depreciation expense for property and equipment was $0.5 million and $1.4 million for the three months ended September 30, 2026 and 2025, respectively. Depreciation expense for property and equipment was $2.2 million and $3.9 million for the nine months ended September 30, 2026 and 2025, respectively.

Sale of Iowa Site

On September 1, 2026, the Company entered into a definitive agreement (the “Iowa Agreement”) with Simple Mining to sell the Company’s Iowa site (“Iowa Site”) for a purchase price of $1.5 million (the “Purchase Price”). Pursuant to the Iowa Agreement, the Company has terminated its sublease agreement with Simple Mining with respect to the Iowa Site and assigned all its rights to the mining containers, transformers and related equipment at the Iowa Site to Simple Mining. The Company received $0.3 million in cash and received a $1.2 million interest-free promissory note for the remaining portion of the Purchase Price.

Sale of Mining Machines

On September 1, 2026, the Company entered into a binding term sheet (the “Mining Machine Agreement”) with RepairBit LLC to sell all of the Company’s existing fleet of mining machines, for estimated aggregate proceeds of approximately $2.9 million, of which $1.3 million was sold as of September 30, 2026. The mining machines are to be sold and delivered over a 90-day period which began on September 1, 2026. The Company retains ownership of the miners until payments for such miners are received. As of September 30, 2026, there was property and equipment, consisting of mining machines, with a carrying value of $1.6 million classified as held for sale in the condensed consolidated balance sheet. Subsequent to September 30, 2026, additional proceeds of $0.6 million were received related to the Mining Machine Agreement.

In February 2026, the Company completed the sale of older generation mining equipment not in service for proceeds of $1.2 million, which was applied to the purchase of new mining equipment.

The Company had a loss on the sale of property and equipment of $1.2 million and $1.4 million, inclusive of $0.3 million related to property and equipment sold under the Mining Machine Agreement, during the three and nine months ended September 30, 2026, respectively. The Company had a loss on the sale of property and equipment of $0.8 million and $1.7 million during the three and nine months ended September 30, 2025, respectively.

For the three and nine months ended September 30, 2026, the Company recorded an impairment charge, using the fair value market approach, to mining equipment ofnil and $7.0 million, respectively related to the change in market conditions and decline in Bitcoin prices. For both the three and nine months ended September 30, 2025, the Company recorded an impairment to property and equipment for the net book value of unrepairable mining equipment of $0.5 million.

The following table summarizes other non-current assets (in thousands):

Other Investments - assumed in Acquisition

The Company holds an investment in Low Time Preference Fund II, LLC, a private venture capital fund that qualifies as an investment company and reports member-level net asset value (“NAV”). This investment is measured at fair value using NAV as a practical expedient. As of September 30, 2026, the investment had a fair value of approximately $0.3 million. The fund is a private pooled investment vehicle with no public market and no observable pricing; valuation is based on NAV information provided by the fund’s asset manager. Because the investment is measured using the NAV practical expedient, it is excluded from the fair value hierarchy. The Company has no unfunded commitments related to this investment. During the three and nine months ended September 30, 2026, the Company recognized $10,000 of unrealized losses in the condensed consolidated statement of operations.

The Company holds 35,000,000 common shares of Silvermoon Inc. (“Silvermoon”), an equity security accounted for using the measurement alternative because the security does not have a readily determinable fair value. The investment is carried at cost, adjusted for impairment and observable price changes. As of September 30, 2026, no impairments or observable price changes were identified. Although the Company holds more than 20% of Silvermoon’s outstanding shares, it has no representation on Silvermoon’s board and no participation in the policy-making processes; therefore, the equity method is not applied. As of September 30, 2026, the investment’s carrying amount was approximately $0.3 million.

Other Current Liabilities

The following table summarizes other current liabilities (in thousands):

8. Intangible Assets

The following table summarizes intangible assets, net (in thousands):

Amortization expense for intangible assets was $0.1 million and $0.4 million for the three months ended September 30, 2026 and 2025, respectively. Amortization expense of intangible assets was $0.9 million and $1.1 million for the nine months ended September 30, 2026 and 2025, respectively.

Estimated amortization expense for intangible assets is approximately $27,000 for the remainder of 2026 and approximately $0.1 million for each of the fiscal years 2027, 2028, 2029, and 2030.

For the three and nine months ended September 30, 2026, an impairment charge of $0.2 million and $0.8 million, respectively, was recorded to supplier agreements related to the decline in Bitcoin prices and the change in the Company’s business strategy for Bitcoin mining. The indicated fair value was compared to the carrying value of the finite-lived asset, and as a result of the analysis, impairment charges were recorded. For the three and nine months ended September 30, 2025, there wereno impairments recognized.

9. Preferred Shares

Series I Preferred Shares

On May 29, 2026, the Company filed articles of amendment to create a new series of preferred shares, being, an unlimited number of Series I Preferred Shares (the “Series I Preferred Shares”), and to provide for the rights, privileges, restrictions and conditions attaching thereto.

Holders of outstanding Series I Preferred Shares are entitled to receive dividends, subject to applicable law and the rights of the holders of Series H Preferred Shares, payable annually on June 1 of each applicable calendar year, or on the next business day if such date is not a business day and are noncumulative. Dividends are payable exclusively in additional Series I Preferred Shares (“PIK Shares”) at 8.0% per annum for the 36-month period following June 1, 2026. The number of Series I Preferred Shares issuable on each dividend payment date is calculated based on the number of Series I Preferred Shares held by the applicable holder on that date, rounded down to the nearest whole share. Holders of Series I Preferred Shares have no right to receive dividends after June 1, 2029.

Each share of Series I Preferred Shares (other than PIK Shares) is convertible intoone common share of the Company on the following schedule: (x) up to 33-1/3% of such Series I Preferred Shares following the 12-month anniversary of June 1, 2026; (y) up to an aggregate of 66-2/3% of such Series I Preferred Shares following the 24-month anniversary of June 1, 2026; and (z) up to an aggregate of 100% of such Series I Preferred Shares following the 36-month anniversary of June 1, 2026, in each case, excluding any PIK Shares. PIK Shares are convertible into the Company’s common shares on a one-for-one basis on or after June 1, 2029.

The Company’s common shares rank junior to the Series I Preferred Shares in all respects (except as provided in connection with certain liquidation events described below). The Company’s Series H Preferred Shares rank senior to the Series I Preferred Shares. The Series I Preferred Shares carry no general voting rights, except for certain limited protective voting rights as expressly provided in the articles of amendment and as otherwise required by law.

The aggregate number of the Company’s common shares issuable upon conversion of the Series I Preferred Shares is subject to a cap (the “Exchange Cap”) equal to the maximum number of the Company’s common shares that may be issued upon such conversion without breaching its obligations under the rules of Nasdaq, unless the Company obtains shareholder approval for issuances in excess of such amount. The Exchange Cap is allocated pro rata among the holders of Series I Preferred Shares. The Company is not required under any circumstance to settle any conversion of the Series I Preferred Shares in cash and may settle any such conversion through the delivery of unregistered common shares.

If the Company’s Chief Executive Officer (“CEO”) ceases to be the CEO of the Company as a result of (i) a termination of his employment by the Company without cause, (ii) his resignation for good reason (as defined in his employment agreement with the Company), or (iii) his entry into a mutually agreed separation agreement with the Company, or if the CEO is not included on the Company's management slate of directors at any meeting of the Company's shareholders, then, effective upon such occurrence, each holder of Series I Preferred Shares may convert, in whole or in part and at any time thereafter, all of its Series I Preferred Shares, including all PIK Shares previously issued to such holder, into the Company’s common shares.

In the event of a voluntary or involuntary liquidation, dissolution or winding-up of the Company, holders of Series I Preferred Shares are entitled to receive, before any distribution to holders of the Company’s common shares or other junior shares, an amount per Series I Preferred Share equal to the greater of (i) the closing sale price of the Company’s common shares on the trading day immediately preceding such event and (ii) the amount such holder would have received had its Series I Preferred Shares been converted into common shares immediately prior to the liquidation event. After payment of such amounts, holders of Series I Preferred Shares and common shares are not entitled to share in any further distribution of assets of the Company in connection with such liquidation, dissolution or winding-up.

Until June 1, 2029, the Company may not, without the approval of the holders of a majority of the then outstanding Series I Preferred Shares: (1) make any return of capital in respect of shares ranking junior to the Series I Preferred Shares (unless holders of Series I Preferred Shares participate on an equal and proportionate basis with the holders of common shares), or (2) make any return of capital in respect of shares ranking equal with the Series I Preferred Shares (unless holders of Series I Preferred Shares participate on an equal and proportionate basis with the holders of common shares). These restrictions do not limit the Company's ability to redeem or repurchase common share purchase warrants or other securities convertible into or exchangeable for the Company’s common shares.

Series H Preferred Shares

On October 1, 2021, the Company filed articles of amendment to create a series of preferred shares, being, an unlimited number of Series H Preferred Shares and to provide for the rights, privileges, restrictions and conditions attaching thereto. The Series H Preferred Shares are convertible into 14.286 common shares for every Series H Preferred Share. Each holder of the Series H Preferred Shares, may, subject to prior shareholder approval, convert all or any part of the Series H Preferred Shares provided that after such conversion the common shares issuable, together with all the common shares held by the shareholder in the aggregate would not exceed 9.99% of the total number of outstanding common shares of the Company. Each Series H Preferred Share has a stated value of $1,000. The Series H Preferred Shares are non-voting anddo not accrue dividends. Features of the Series H Preferred Shares include; in the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, deemed liquidation or any other distribution of the assets of the Company among its shareholders for the purpose of winding-up its affairs, the Series H Preferred Shares shall entitle each of the holders thereof to receive an amount equal to the Series H subscription price per Series H Preferred Share, as defined in the agreement, to be paid before any amount is paid or any assets of the Company are distributed to the holders of its common shares.

In accordance with the authoritative guidance for distinguishing liabilities from equity, the Company has determined that its Series H preferred shares carry certain redemption features beyond the control of the Company. Accordingly, the Series H Preferred Shares are presented as temporary equity.

10. Share Capital

Private Placement

On September 11, 2026, the Company 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, the Company 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. Pursuant to the terms of the purchase agreement, the securities issued in the Private Placement are subject to a contractual lock-up period ofsix months. Three directors of the Company participated in the Private Placement, Timothy Hanley, the Company’s Chairman of the Board of Directors; Nicholas Gates, a director of the Company; and Joel Block, director and Chief Executive Officer of the Company, for a total of 333,332 Units for aggregate gross proceeds of approximately $1.0 million.

The warrants contain standard anti-dilution adjustments to the exercise price including for share splits, share dividends, rights offerings and pro rata distributions. A holder will not have the right to exercise any portion of the warrants if the holder (together with its affiliates) would beneficially own in excess of 4.99%,9.99%, or 19.99%, as applicable to such holder, of the number of the Company's common shares outstanding immediately after giving effect to the exercise, as such beneficial ownership is determined in accordance with the terms of the warrants. Upon notice to the Company, a holder may increase or decrease its beneficial ownership limitation, provided that the limitation may not exceed 19.99%.

Shareholder Rights Plan

On August 7, 2026, the Board of Directors of the Company adopted a shareholder rights plan, pursuant to a shareholder rights plan agreement dated as of August 10, 2026 (the “Rights Agreement”). The Rights Agreement is intended to ensure, to the extent possible, that all shareholders of the Company are treated fairly in connection with a take-over bid or other acquisition of Voting Shares (as defined in the Rights Agreement) that could result in a person becoming the beneficial owner of 20% or more of the outstanding Voting Shares of the Company. Pursuant to the Rights Agreement, one common share purchase right (each, a “Right”) will attach to each Voting Share outstanding as of the close of business on August 20, 2026 (the “Record Time”), and to each Voting Share issued after the Record Time and prior to the earlier of the Separation Time and the Expiration Time (each as defined in the Rights Agreement). From and after the Separation Time and prior to the Expiration Time, each Right entitles its holder to purchaseone common share of the Company at an exercise price equal tothree times the market price of a common share determined as of the Separation Time, subject to adjustment in accordance with the Rights Agreement. Upon the occurrence of certain triggering events, each Right, other than Rights beneficially owned by an Acquiring Person (as defined in the Rights Agreement) or certain related persons, will entitle its holder to purchase common shares having an aggregate market value equal totwo times the exercise price of the Right. Alternatively, in certain circumstances, the Company may exchange each outstanding Right, other than Rights that have become void under the Rights Agreement, forone common share, subject to adjustment. The Rights will expire on August 10, 2027, unless earlier redeemed, exchanged or otherwise terminated in accordance with the Rights Agreement.

At-the-Market Offering Program

On January 3, 2025, the Company 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, the Company was 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 (the “Placement Shares”). On July 31, 2026, the Company 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 in transactions that are deemed to be “at the market offering” as defined in Rule 415 of the Securities Act of 1933, as amended. Neither the Company nor the Sales Agents are obligated to sell any Placement Shares pursuant to the Amended ATM Agreement. For the three months ended September 30, 2026 and 2025, the Company issued and sold 911,274 and 91,746 common shares, respectively, for $1.7 million and $0.6 million of net proceeds, respectively. For the nine months ended September 30, 2026 and 2025, the Company issued and sold 2,059,998 and 112,791 common shares, respectively, for $4.2 million and $0.7 million of net proceeds, respectively.

Unlimited authorized shares of common shares atno par value are available to the Company. At September 30, 2026, the following table summarizes outstanding warrants to purchase common shares:

(1)These warrants were assumed from the June 1, 2026 Cathedra acquisition and have exercise prices ranging from $11.08 to $272.40, expiration dates ranging from November 2026 to December 2027, expected volatility of 121.2%, and risk-free interest rate of 3.8%-3.9%.

11. Equity Incentive Plan

Stock Options

The fair value of option awards are estimated on the date of grant using the Black-Scholes model. Expected volatility was based on historical volatility of the Company’s common shares. The expected term of options granted was based on the simplified method. The risk-free interest rate was based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. The dividend yield assumption was based on the expectation ofno future dividend payments. Option awards can be granted for a maximum term of up to 10 years.

The assumptions used in the Black-Scholes model were as follows:

The following table summarizes option activity:

Restricted Stock Units

The following table summarizes RSU activity:

The estimated fair value of RSUs was based on the closing market value of the Company’s common shares on the date of grant. RSUs typically vest over a period of 12 months tothree years from the original date of grant. The total grant date fair value of RSUs vested during the nine months ended September 30, 2026 and 2025 was approximately $1.6 million and $1.0 million, respectively. The fair value of RSUs vested during the nine months ended September 30, 2026 and 2025 was approximately $1.3 million and $0.7 million, respectively.

Restricted Stock Units with a Performance Condition

In July 2025, the Company entered into a financial advisory agreement and issued to non-employees RSU grants with a performance condition, of which 50% of the RSUs were vested on the date of grant and the common shares issued. On June 1, 2026, the outstanding RSUs vested upon the achievement of the specific performance condition. The total grant date fair value of RSUs vested during the nine months ended September 30, 2026 and 2025 was $0.2 million andnil, respectively. The fair value of RSUs with a performance condition vested during the nine months ended September 30, 2026 and 2025 was $0.1 million andnil, respectively.

The following table summarizes RSU with performance condition activity:

Restricted Stock Awards

During the nine months ended September 30, 2026, there were 262,677 RSAs granted in lieu of cash payment for services performed. The fair value of the RSAs granted of approximately $0.5 million was based on the closing price of the Company’s common shares on the date of grant. There wereno RSAs granted during the nine months ended September 30, 2025.

Share-Based Compensation Expense

The following compensation expense related to share-based compensation awards was recorded (in thousands):

Total unrecognized estimated compensation cost by type of award and the weighted-average remaining requisite service period over which such expense is expected to be recognized (in thousands, unless otherwise noted):

12. Net Loss per Share

Basic net loss per share is computed by dividing net loss applicable to common shareholders by the weighted-average number of common shares outstanding during the period. Common share purchase warrants, options and RSUs outstanding, and preferred shares are considered common share equivalents and are only included in the calculation of diluted earnings per common share when net income is reported and their effect is dilutive. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted weighted average shares outstanding due to the Company’s net loss position.

Anti-dilutive common share equivalents excluded from the computation of diluted net loss per share were as follows:

13. Related Party Transactions

Consultant Agreement

On June 1, 2026, the Company assumed a consulting agreement which provides for an individual, who is an existing shareholder of the Company that owns more than 5.0% of the Company’s outstanding common shares, to act as a head of strategy (the “Head of Strategy”). On July 1, 2026, the Company terminated the prior consulting agreement and entered into a new consulting agreement with its Head of Strategy. Under the new agreement, the Head of Strategy provides senior strategic and advisory services and supports the development of the Company’s business strategy. The agreement has an initial term of 12 months and automatically renews for additional periods of 12 months unless either party provides written notice of non‑renewal in accordance with the agreement. The annual consulting fee is $0.4 million, payable in equal monthly installments. The Company may terminate the agreement at any time for just cause, as defined in the agreement. If the Company terminates the agreement without just cause, the consultant is entitled to a termination fee of $0.4 million, payable on the effective date of termination.

On June 1, 2026, in connection with the Combination, the Head of Strategy, in his capacity as a former shareholder of Cathedra, was issued 665,107 Series I Preferred Shares with a fair value of $1.3 million. On June 8, 2026, the Head of Strategy was granted 250,000 RSUs that vest overtwo years and have a grant date fair value of $0.9 million. For both the three and nine months ended September 30, 2026, the Company recorded $0.1 million of share-based compensation expense related to these awards.

At September 30, 2026, the Company had an aggregate of $0.1 million in accounts payable and accrued liabilities due to the Head of Strategy, and recorded $0.1 million of expense for both the three and nine months ended September 30, 2026.

Private Placement

In September 2026, three directors of the Company participated in the Private Placement completed on September 11, 2026. See Note 10. Share Capital for more information.

14. Leases

On June 1, 2026, the Company assumed operating leases in its acquisition of Cathedra. As of September 30, 2026, the Company had operating leases primarily for land and buildings used for operations. Rent expense is recognized on a straight‑line basis over the respective lease terms within operating expenses. For both the three and nine months ended September 30, 2026, rent expense related to operating leases was $0.1 million.

Additional information regarding leasing activities is as follows (in thousands, unless otherwise noted):

The following table presents future minimum lease payments (in thousands):

15. Commitments and Contingencies

Power Supply Agreements

The Company maintains long‑term prepaid electric power supply agreements with regional utilities to support its data‑center operations. Under these agreements, the Company prepays monthly power charges and maintains cash security deposits. The Company generally makes aggregate monthly prepayments of approximately $1.0 million. As of September 30, 2026, the Company had prepaid utility costs and security deposits with utility providers of $0.4 million and $1.7 million, respectively.

The agreements generally include initial terms of 60 months with automatic annual renewals. Each contract provides between 10 MW and 15 MW of electrical capacity for the Company’s hosting and mining operations and contains standard payment, renewal, default, and disconnection provisions. These commitments represent material future cash obligations related to the Company’s ongoing operations. No contingencies exist under these agreements as of September 30, 2026.

Hosting Agreements

On April 19, 2024, the Company entered into a Master Hosting Agreement with Simple Mining LLC (“Simple Mining”) for provision of rack space, network services, electrical connections, routine facility maintenance, and technical support of certain of the Company’s mining equipment (as amended, the “Simple Mining Hosting Agreement”). Effective November 22, 2025, the Simple Mining Hosting Agreement was mutually terminated. For the three and nine months ended September 30, 2025, the Company incurred costs under the Simple Mining Hosting Agreement of $0.8 million and $3.4 million, respectively.

On October 18, 2023, the Company entered into a Hosting Agreement with Joshi Petroleum, LLC for provision of rack space, network services, electrical connections, routine facility maintenance, and technical support of certain of the Company’s mining equipment. Effective January 2, 2026, the Joshi Hosting Agreement was assigned to Evolution Technology LLC (the “Evolution Agreement”). In September 2026, the Company recorded a $0.4 million provision for loss on other assets for its deposit and prepaid services upon notice that Evolution Technology, LLC was insolvent and had ceased business operations. For the three months ended September 30, 2026 and 2025, the Company incurred costs under the Evolution Agreement ofnil and $0.4 million, respectively. For the nine months ended September 30, 2026 and 2025, the Company incurred costs under the Evolution Agreement of $0.1 million and $1.2 million, respectively.

On April 4, 2023, the Company entered into a Master Hosting Services Agreement with Rebel Mining Company, LLC (the “Rebel Hosting Agreement”) for provision of rack space, network services, electrical connections, routine facility maintenance, and technical support of certain of the Company’s mining equipment. On January 16, 2025, the Company terminated the Rebel Hosting Agreement and agreed to a settlement amount of $2.4 million payable to the Company in satisfaction of all obligations of the Rebel Hosting Agreement and it constitutes a final settlement of all amounts owed by either party of the Rebel Hosting Agreement. During 2025, the Company recorded a $0.3 million loss on other assets for the remaining outstanding portion of the settlement that is in default. For the three and nine months ended September 30, 2025, the Company incurred costs under the Rebel Hosting agreement ofnil and $0.1 million, respectively.

Compensation Obligations

The employment agreements for the Company’s 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 withintwo years, or by June 1, 2028, the bonus becomes payable in 12 equal monthly installments, in either cash or common shares, at the discretion of the Company. 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. The Company will continue to evaluate the likelihood of achieving the milestone and assess any accrual required.

Letters of Credit

During the ordinary course of business, the Company provides standby letters of credit to third parties as required for certain transactions initiated by the Company. As of September 30, 2026, the Company hadno outstanding standby letters of credit.

Potential Supplemental Import Tariffs

On August 18, 2026, the Company 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 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, the Company's 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 intends to defend against these claims vigorously. In September 2026, the Company filed a protest with the CBP.

Litigation

The Company is, from time to time, subject to claims and suits arising in the ordinary course of business. The Company cannot predict the final outcome of such proceedings. Where appropriate, the Company vigorously defends such claims, lawsuits and proceedings. Paid expenses related to the defense of such claims are recorded by the Company as incurred and paid. On the basis of current information, the Company does not believe there is a reasonable possibility that a material loss, if any, will result from any claims, lawsuits and proceedings to which the Company is subject to either individually, or in the aggregate.

16. Subsequent Events

On October 18, 2026, the Company entered into a purchase and sale agreement to acquire property in Hopkinsville, Kentucky, for $0.3 million, and is subject to customary closing conditions. The transaction is expected to close within 120 days from the execution of the agreement.