Sphere 3D (NASDAQ: ANY) completes Cathedra merger, unveils 53MW platform
Rhea-AI Filing Summary
Sphere 3D Corp. has completed its stock-for-stock acquisition of Cathedra Bitcoin Inc., making Cathedra a wholly owned subsidiary and creating a combined data infrastructure platform with 53 megawatts of operating capacity and a pipeline of more than 100 megawatts of potential expansion.
Cathedra securityholders received Sphere common shares, new non-voting Series I Preferred Shares, replacement RSUs and warrants, all issued under a court-approved exemption. Sphere established the Series I Preferred Shares with 8% payment-in-kind dividends for three years and staged conversion rights, subject to Nasdaq share caps and protections.
Leadership was reshaped as Joel Block became Chief Executive Officer and joined the board, while former CEO Kurt Kalbfleisch remains Chief Financial Officer and director. New voting agreements align key holders with board recommendations for 24 months, and indemnity agreements were granted to all directors and officers.
The filing also presents Cathedra’s audited IFRS financials, showing 2025 revenue of $21.2 million and a net loss of $9.7 million, with auditors highlighting substantial doubt about Cathedra’s standalone ability to continue as a going concern before the combination.
Positive
- None.
Negative
- None.
Insights
Sphere 3D closes Cathedra deal, gaining scale but also losses.
Sphere 3D completed its all-share acquisition of Cathedra Bitcoin, adding 53 MW of operating capacity across five U.S. data centers and a development pipeline exceeding 100 MW. The structure uses exchange ratios for multiple share classes and swaps Cathedra warrants and RSUs into Sphere securities.
The creation of non-voting Series I Preferred Shares with 8% annual payment-in-kind dividends and staged conversion concentrates economic exposure while limiting near-term voting dilution. A 7% ownership cap and Nasdaq-driven Exchange Cap constrain how many common shares can be issued on conversion, while certain leadership changes can accelerate convertibility.
Governance shifts are significant: Joel Block becomes CEO and director, Kurt Kalbfleisch remains CFO and director, and new independent directors populate key committees. Cathedra’s 2025 IFRS financials show $21.2 million in revenue and a $9.7 million net loss, with a going-concern warning, so the combined outcome will depend on integration execution and realizing the projected infrastructure and hosting economics.
8-K Event Classification
Key Figures
Key Terms
SVS Exchange Ratio financial
Section 3(a)(10) of the Securities Act regulatory
deemed liquidation financial
going concern financial
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
|
|
|
|
| (State or other jurisdiction | (Commission | (IRS Employer |
| of incorporation) | File Number) | Identification No.) |
(Address of principal executive offices) (ZIP Code)
Registrant’s telephone number, including area code: (
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbols | Name of each exchange on which registered | ||
|
|
|
|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b -2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Introductory Note
As previously announced, on March 5, 2026, Sphere 3D Corp., a company existing under the laws of the Province of Ontario, Canada ("Sphere"), S3D Acquisition Corp., a company existing under the laws of the Province of British Columbia, Canada and a wholly-owned subsidiary of Sphere ("Amalco Sub"), and Cathedra Bitcoin Inc., a company existing under the laws of the Province of British Columbia, Canada ("Cathedra"), entered into an arrangement agreement (the "Arrangement Agreement"), pursuant to which, on the terms and subject to the conditions set forth therein, Sphere agreed to acquire Cathedra in a stock-for-stock transaction (the "Arrangement") pursuant to a plan of arrangement under the Business Corporations Act (British Columbia) (the "Plan of Arrangement"). On June 1, 2026 (the "Closing Date"), pursuant to the terms and conditions set forth in the Arrangement Agreement, Sphere (through Amalco Sub) acquired all of the issued and outstanding subordinate voting shares of Cathedra (the "Cathedra SV Shares") and multiple voting shares of Cathedra (the "Cathedra MV Shares") pursuant to the Plan of Arrangement with Cathedra becoming a wholly-owned subsidiary of Sphere.
The foregoing descriptions of the Arrangement and Arrangement Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Arrangement Agreement, which is included as Exhibit 2.1 to the Current Report on Form 8-K filed by Sphere with the Securities and Exchange Commission (the "SEC") on March 11, 2026 and is incorporated by reference herein.
Item 1.01. Entry into a Material Definitive Agreement.
The information set forth in the Introductory Note and Item 5.02 of this Current Report on Form 8-K is incorporated by reference in its entirety into this Item 1.01.
Employment Agreement for Joel Block
On the Closing Date, Sphere entered into an Employment Agreement (the "Block Employment Agreement") with Joel Block, pursuant to which Mr. Block will serve as Chief Executive Officer of Sphere.
The Block Employment Agreement does not provide for a fixed term, and Mr. Block's employment is "at will," terminable by either Sphere or Mr. Block at any time, with or without cause and with or without notice, subject to the severance provisions described below. Sphere has agreed to use commercially reasonable efforts to cause Mr. Block to be nominated for re-election as a director at each annual general meeting of Sphere's shareholders.
Under the Block Employment Agreement, Mr. Block will receive an annual base salary of $425,000, subject to annual review (with the first review effective as of January 31, 2027).
Mr. Block is eligible to receive an annual discretionary bonus with a target of 125% of his base salary (the "Block Target Bonus"), with the actual amount (which may be more or less than such target) determined by the Sphere Board (as defined below) (or a committee thereof) based on Sphere's performance and individual performance criteria established in consultation with Mr. Block. If the Sphere Board does not communicate written performance criteria by March 31 of the applicable fiscal year, Mr. Block is deemed entitled to the full Block Target Bonus for that year, subject to the other earning conditions in the agreement.
In addition, Mr. Block is eligible to receive annual long-term incentive equity awards ("LTI Awards"), which may include stock options, restricted stock, restricted stock units ("RSUs"), stock appreciation rights, phantom stock or other equity-based awards, granted under Sphere’s equity incentive plan on terms consistent with those applicable to Sphere’s executive officers generally, as determined by the Compensation Committee of the Sphere Board ("Compensation Committee") in its sole discretion. In addition, in connection with the commencement of his employment and pursuant to the Block Employment Agreement, subject to the approval of the Compensation Committee and the Sphere Board, Mr. Block shall be entitled to a one-time inducement equity award of an aggregate of 500,000 RSUs (the "RSUs Grant"), which shall be settled in common shares of Sphere (the "Sphere Common Shares"), vesting, subject to Mr. Block’s continued employment, bi-annually in four equal installments over a two-year period, with the first tranche vesting on the six-month anniversary of the grant date.
In addition, pursuant to the Block Employment Agreement, Mr. Block also remains eligible to receive a $1.6 million transaction-related cash retention bonus (the "Block Cash Bonus"), as provided under his prior employment agreement with Cathedra with respect to the Arrangement, which shall become payable upon satisfaction of two vesting conditions: (i) the achievement of certain performance milestones of the combined company (as described in the Block Employment Agreement); and (ii) either continued employment through January 1, 2027, or a termination of employment other than by Sphere for "Cause" or by Mr. Block without "Good Reason" (each as defined in the Block Employment Agreement). If payable, the Block Cash Bonus is payable in monthly installments of $133,333. If the Sphere Board determines it does not have sufficient cash to make a monthly Block Cash Bonus payment, the payment may be made in fully vested registered Sphere Common Shares with a fair market value equal to the installment amount.
During the term, Mr. Block is entitled to fully paid family health insurance and to participate in Sphere's other executive benefit plans, and is eligible for reimbursement of the cost of certain personal insurance coverage in an amount up to an average of $5,000 per month (not to exceed $60,000 per year).
In the event of a termination of Mr. Block's employment by Sphere without "Cause" or by Mr. Block for "Good Reason" (each as defined in the Block Employment Agreement), and subject to his execution and non-revocation of a release of claims, Mr. Block is entitled to severance benefits consisting of: (i) continued payment of his base salary (at the highest rate in effect during the preceding year) plus 100% of his Block Target Bonus (at the highest rate in effect during the preceding year), with such aggregate amount payable in substantially equal installments over 18 months following termination; (ii) any earned but unpaid annual bonus for a completed fiscal year plus a pro-rated annual bonus for the fiscal year of termination; (iii) 18 months of continued employer-paid COBRA health coverage (or equivalent reimbursement of up to $5,000 per month); and (iv) full accelerated vesting (and, if applicable, exercisability) of all unvested equity awards.
Upon any termination, Mr. Block is also entitled to certain accrued obligations, consisting of accrued but unpaid base salary, unreimbursed business expenses and accrued unused vacation. In the event of a termination due to Mr. Block's disability, he will continue to receive his full base salary and specified benefits for 12 months and will be entitled to a pro-rated portion of his Block Target Bonus through the date of the disability. In the event of Mr. Block's death, his estate will be entitled to the accrued obligations, any bonuses and vested equity awards, and accelerated vesting of his unvested equity awards as of the day immediately prior to his death.
The Block Employment Agreement also contains customary confidentiality and non-solicitation provisions for an agreement of this nature.
The foregoing description of the Block Employment Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to the full text of the Block Employment Agreement, the form of which is attached to this Current Report on Form 8-K as Exhibit 10.1 and is incorporated herein by reference.
Amended and Restated Employment Agreement for Kurt Kalbfleisch
On May 29, 2026, Sphere entered into a Fourth Amended and Restated Employment Agreement (the "Kalbfleisch Employment Agreement") with Kurt Kalbfleisch, pursuant to which Mr. Kalbfleisch will serve as Chief Financial Officer of Sphere.
Under the Kalbfleisch Employment Agreement, Mr. Kalbfleisch will receive an annual base salary of $330,000, subject to annual review (with the first review effective as of January 31, 2027).
Mr. Kalbfleisch is eligible to receive an annual discretionary bonus with a target of 90% of his base salary (the "Kalbfleisch Target Bonus"), with the actual amount (which may be more or less than such target) determined by the Sphere Board (or a committee thereof) based on the company's performance and individual performance criteria established in consultation with Mr. Kalbfleisch. If the Sphere Board does not communicate written performance criteria by March 31 of the applicable fiscal year, Mr. Kalbfleisch is deemed entitled to the full Kalbfleisch Target Bonus for that year, subject to the other earning conditions in the agreement. In addition, the Sphere Board may, in its sole discretion, approve the issuance of restricted stock units and/or options based upon the achievement of certain performance and financial thresholds determined by the Board in consultation with Mr. Kalbfleisch.
Pursuant to the terms of the Kalbfleisch Employment Agreement, upon the consummation of the Arrangement, Mr. Kalbfleisch is entitled to a transaction bonus of $300,000, payable in three equal monthly installments following the Closing. Additionally, Mr. Kalbfleisch is eligible for a retention bonus of $1,095,000 (the "Kalbfleisch Cash Bonus"), payable in monthly installments of $91,250, contingent upon satisfaction of two vesting conditions: (i) the achievement of certain performance milestones of Sphere (as described in the Kalbfleisch Employment Agreement) (the "Performance Condition"); and (ii) either continued employment through January 1, 2027, or a termination of employment other than by Sphere for "Cause" or by Mr. Kalbfleisch without "Good Reason" (each as defined in the Kalbfleisch Employment Agreement). If the Sphere Board determines it does not have sufficient cash to make a monthly Kalbfleisch Cash Bonus payment, the payment may be made in fully vested registered Sphere Common Shares with a fair market value equal to the installment amount.
In the event of a termination of Mr. Kalbfleisch’s employment by the Employer without "Cause" or by Mr. Kalbfleisch for "Good Reason" (each as defined in the Kalbfleisch Employment Agreement), and subject to his execution and non-revocation of a release of claims, Mr. Kalbfleisch is entitled to severance benefits. If such termination occurs on or after January 1, 2027, severance consists of continued payment of his base salary plus 100% of his Target Bonus for a period of 12 months following termination. If such termination occurs prior to January 1, 2027, in lieu of the foregoing severance, Mr. Kalbfleisch is entitled to a conditional severance payment of $1,095,000, payable as salary continuation over 18 months, contingent upon satisfaction of the Performance Condition, plus the health continuation benefits and equity acceleration described below. Receipt of such conditional severance payment precludes receipt of the Kalbfleisch Cash Bonus. In either case, Mr. Kalbfleisch is also entitled to a pro-rata share of his Kalbfleisch Target Bonus through the date of termination and any declared but unpaid bonus from the prior year. He is further entitled to 18 months of employer-paid COBRA health coverage continuation (or equivalent reimbursement of up to $5,000 per month). Subject to certain limited exceptions as set forth in the Kalbfleisch Employment Agreement, all vested and unvested equity awards previously granted to Mr. Kalbfleisch will immediately vest upon such termination.
The Kalbfleisch Employment Agreement also contains customary confidentiality and non-solicitation provisions for an agreement of this nature.
The foregoing description of the Kalbfleisch Employment Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to the full text of the Kalbfleisch Employment Agreement, the form of which is attached to this Current Report on Form 8-K as Exhibit 10.2 and is incorporated herein by reference.
Voting Agreements
Pursuant to the terms of the Arrangement Agreement and effective at the Effective Time, Sphere entered into a Voting Agreement with Thomas Masiero, Jialin Qu, and Joel Block (each, a "Principal Holder"). Pursuant to the terms of the Voting Agreement, each Principal Holder has agreed, for a period of 24 months following the Closing Date (the "Term"), to vote, or cause to be voted, all Sphere Common Shares beneficially owned or controlled by such Principal Holder at each meeting of shareholders in accordance with the recommendations of the Sphere Board (as defined below). During the Term, each Principal Holder has also agreed not to deposit any such Sphere Common Shares into a voting trust or other voting arrangement, and not to solicit proxies or take any action in opposition to, or in competition with, any Sphere Board-recommended proposal; provided that the foregoing voting obligations will not apply to any proposal that would materially and disproportionately adversely impact such Principal Holder compared to other Sphere shareholders. The Voting Agreement terminates automatically upon expiration of the Term and may be terminated earlier by mutual written agreement or by the Principal Holder upon the occurrence of certain events, including a material uncured breach by Sphere, a change of control of Sphere, a delisting of Sphere Common Shares, or Sphere becoming subject to bankruptcy or insolvency proceedings. In addition, solely for the Voting Agreement with Mr. Block, the Voting Agreement may be terminated by Mr. Block if he is terminated (whether or not for cause) from, or resigns from, the position of Chief Executive Officer, or any other officer position, of Sphere.
The foregoing description of the Voting Agreements does not purport to be complete and is subject to, and qualified in its entirety by, reference to the full text of the Voting Agreement with Messrs. Masiero and Qu, the form of which is attached to this Current Report on Form 8-K as Exhibit 10.3, and the Voting Agreement with Mr. Block, the form of which is attached to this Current Report on Form 8-K as Exhibit 10.4, in each case the terms of which are incorporated herein by reference.
Indemnity Agreements
On June 1, 2026, Sphere entered into an Indemnity Agreement with each of Sphere's directors and officers. The form of Indemnity Agreement is substantially the same for each director and officer.
Each Indemnity Agreement provides, among other things and subject to certain limitations in the Indemnity Agreement and the Business Corporations Act (Ontario), that, in connection with such director's or officer's service as a director or officer of Sphere, Sphere will (1) hold harmless and indemnify the director or officer, if he is, or is threatened to be made, a party to a Proceeding (as defined in the Indemnity Agreement); (2) hold harmless and indemnify the director or officer against all Expenses and Liabilities (each as defined in the Indemnity Agreement) actually and reasonably incurred in connection with a Proceeding to the extent that the director or officer is successful in such Proceeding or in defense of any claim, issue, or matter therein; (3) reimburse the director or officer for all Expenses actually and reasonably incurred by the director or officer if he is a witness in any Proceeding or receives a subpoena with respect to any Proceeding; advance Expenses incurred by a director or officer in connection with any Proceeding; and (4) ensure that the officer or director is covered under any insurance policy maintained by the Sphere that provides liability insurance for directors officers or persons serving in a similar capacity for Sphere. The rights provided to each director or officer under the Indemnity Agreement are in addition to any rights he may have under applicable law, including the Business Corporations Act (Ontario), and Sphere's by-laws.
The foregoing description of the Indemnity Agreements does not purport to be complete and is subject to, and qualified in its entirety by, reference to the full text of each Indemnity Agreement, the form of which is attached to this Current Report on Form 8-K as Exhibit 10.5 and the terms of which are incorporated herein by reference
Item 2.01. Completion of Acquisition or Disposition of Assets.
The information set forth in the Introductory Note of this Current Report on Form 8-K is incorporated by reference in its entirety into this Item 2.01.
At the effective time of the Arrangement (the "Effective Time"), among other things:
-
each holder of Cathedra SV Shares received 0.123014 Sphere Common Shares for each Cathedra SV Share held (the "SVS Exchange Ratio");
-
each holder of Cathedra MV Shares received 12.3014 Sphere Common Shares for each Cathedra MV Share held (the "MVS Exchange Ratio");
-
each unvested restricted share unit to acquire Cathedra SV Shares (each, an "Accelerated Cathedra RSU"), other than the Cathedra RSU held by Joel Block described below, fully vested in accordance with its terms and each holder of an Accelerated Cathedra RSU received the number (rounded down to the nearest whole number) of Sphere Common Shares equal to the product of (i) the number of Cathedra SV Shares subject to the Accelerated Cathedra RSU immediately before the Effective Time, multiplied by (ii) the SVS Exchange Ratio;
-
the unvested restricted share unit to acquire Cathedra SV Shares (each, a "Cathedra RSU"), other than an Accelerated Cathedra RSU, held by Joel Block was exchanged for a replacement RSU allowing Mr. Block to receive the number (rounded down to the nearest whole number) of Sphere Common Shares equal to the product of (i) the number of Cathedra SV Shares subject to the original Cathedra RSU immediately before the Effective Time, multiplied by (ii) the SVS Exchange Ratio; and
-
each holder of warrants to acquire Cathedra SV Shares (each, a "Cathedra Warrant") received a replacement warrant allowing the holder to acquire (rounded down to the nearest whole number) of Sphere Common Shares equal to the product of (i) the number of Cathedra SV Shares subject to the original Cathedra Warrant immediately prior to the Effective Time, multiplied by (ii) the SVS Exchange Ratio. The exercise price per Sphere Common Share equaled the quotient (rounded up to the nearest one-hundredth of a cent) of (x) the exercise price per Cathedra SV Share underlying the exchanged Cathedra Warrant immediately prior to the Effective Time divided by (y) the SVS Exchange Ratio, subject to certain adjustments;
provided, however, that certain Cathedra shareholders who would otherwise receive Sphere Common Shares in excess of seven percent (7%) of the then-outstanding Sphere Common Shares (on a non-diluted basis following consummation of the Arrangement as set forth in the Plan of Arrangement) (the "Ownership Cap") instead received, in lieu of the number of Sphere Common Shares in excess of the Ownership Cap, an equivalent number of Series I Preferred Shares (defined below).
Item 3.02. Unregistered Sales of Equity Securities.
The information set forth in the Introductory Note and under Item 2.01 and Item 5.03 of this Current Report on Form 8-K is incorporated by reference in its entirety into this Item 3.02. The securities issued pursuant to the Arrangement Agreement, consisting of (i) 2,405,300 Sphere Common Shares, (ii) 1,387,117 Series I Preferred Shares, (iii) restricted share units in respect of up to an aggregate of 178,073 Sphere Common Shares, issued in exchange for the outstanding Cathedra RSU held by Joel Block, and (iv) warrants to purchase up to an aggregate of 115,867 Sphere Common Shares, at exercise prices ranging from $11.08 to $272.40 per share, issued in exchange for outstanding Cathedra Warrants, were issued in reliance upon Section 3(a)(10) of the Securities Act of 1933, as amended (the "Securities Act"), based on the final order of the Supreme Court of British Columbia issued on May 25, 2026, approving the Plan of Arrangement following a hearing by the court which considered, among other things, the fairness of the Arrangement to the persons affected.
Item 3.03. Material Modification to Rights to Security Holders.
The information set forth in the Introductory Note and under Item 5.03 of this Current Report on Form 8-K is incorporated by reference in its entirety into this Item 3.03.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
The information set forth in the Introductory Note and Item 1.01 of this Current Report on Form 8-K is incorporated by reference in its entirety into this Item 5.02.
Director Resignations and Appointments
Pursuant to the terms of the Arrangement Agreement and effective at the Effective Time, Duncan McEwan and Susan Harnett resigned from the board of directors of Sphere (the "Sphere Board"). The resignations of Mr. McEwan and Ms. Harnett were not the result of any disagreement with Sphere on any matter relating to Sphere's operations, policies or practices. Effective immediately following the Effective Time and as previously approved by the shareholders of Sphere, Kurt Kalbfleisch, Marcus Dent, Joel Block and Nicholas Gates have been appointed to the Sphere Board and current director of Sphere, Timothy Hanley, has been appointed Chairman.
Other than the Arrangement Agreement, there are no arrangements or understandings between any of Messrs. Kalbfleisch, Block, Dent, or Gates and Sphere or any other person pursuant to which each was selected as a director. The Sphere Board has determined that each of Messrs. Dent, Gates and Hanley is independent under the applicable listing rules of The Nasdaq Stock Market LLC and the rules and regulations of the SEC.
Following the appointment of the new directors, the composition of the standing committees of the Sphere Board is as follows:
- Audit Committee: Marcus Dent, Nicholas Gates and Timothy Hanley, with Mr. Hanley serving as Chair;
- Compensation Committee: Marcus Dent, Timothy Hanley and Nicholas Gates, with Mr. Gates serving as Chair; and
- Nominating and Governance Committee: Nicholas Gates, Timothy Hanley and Marcus Dent, with Mr. Dent serving as Chair.
The Sphere Board has determined that each member of the Sphere Audit Committee satisfies the additional independence standards for audit committee members set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Nasdaq Rule 5605(c)(2)(A). The Sphere Board has further determined that Mr. Hanley qualifies as an audit committee financial expert as defined in Item 407(d)(5) of Regulation S-K under the Exchange Act.
Kurt L. Kalbfleisch, age 60, has served as Sphere's Chief Financial Officer since December 1, 2014. Previously, Mr. Kalbfleisch served as Sphere's Chief Executive Officer from November 5, 2025 to the Closing Date and as Acting Chief Executive Officer from January 31, 2025 to November 5, 2025. Mr. Kalbfleisch also served as Chief Financial Officer of Overland Storage, Inc. ("Overland") from February 2008 until his resignation from Overland on July 19, 2022. Previously, Mr. Kalbfleisch served in various other roles at Overland since July 2007, including Senior Vice President, Secretary and Vice President of Finance. Prior to joining Overland, he was a manufacturing budget analyst for McDonnell Douglas Corp. Mr. Kalbfleisch also served on the board of Paladin Group. Mr. Kalbfleisch holds a Bachelor of Arts in Business from Point Loma Nazarene University and a Master of Business Administration from the University of San Diego.
Joel Block, age 42, was appointed Sphere's Chief Executive Officer effective as of the Closing Date. Mr. Block is a seasoned executive with more than 20 years of experience across finance, accounting, operations, and sales. From July 2025 to the Closing Date, Mr. Block served as Chief Executive Officer of Cathedra and Chairman of Cathedra's board of directors. From December 2021 to November 2023, he served as the Chief Financial Officer of US Bitcoin Corp.; prior to this role, from September 2021 to November 2021, he served as US Bitcoin Corp.'s Chief Business Officer. US Bitcoin Corp. merged with Hut 8 Corp. on November 30, 2023. Prior to US Bitcoin Corp., from February 2015 to August 2021 he served as CFO, and then CEO, of Collegewise, one of the US's largest college admissions companies. From 2005 to 2013, he served in a number of roles at Credit Suisse, including as a Vice President on the Institutional Fixed Income Sales team, where he specialized in interest rate derivatives and hedging transactions. He has served on the board of the Young Presidents Organization Orange County Chapter. He received his Bachelor of Business Administration with concentrations in Finance and Accounting and a minor in Statistics from the University of Michigan Ross School of Business.
Marcus Dent, age 34, is the founder of TFTC.io, a media company focused on Bitcoin and Freedom in the Digital Age. He is also a Managing Partner at Ten31, a bitcoin-focused venture capital firm. Previously, Mr. Dent served as Director of Business Development at Great American mining from 2019 to 2021.
Nicholas Gates, age 37, is a seasoned energy executive with over a decade of experience leading large-scale power and infrastructure projects across the U.S. From March 2021 to January 2025, he served as a Senior Business Development Manager at Priority Power Management, LLC ("Priority Power") where he led business development efforts to expand Priority Power's market presence in Bitcoin mining and data centers. Since January 2025, he has served as the Managing Director of Integrated Projects at Priority Power, where he spearheads strategic growth for clients in Bitcoin mining, HPC, and AI through site development and power procurement. He holds both an MBA in Finance and a Bachelor of Science in Business Administration from The University of Tulsa.
Officer Resignations and Appointments
Pursuant to the terms of the Arrangement Agreement and effective immediately following the Effective Time, Kurt Kalbfleisch resigned as Chief Executive Officer of Sphere and Joel Block was appointed Chief Executive Officer of Sphere. Mr. Kalbfleisch remains Sphere's Chief Financial Officer.
Item 5.03. Amendment to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On May 29, 2026, Sphere filed articles of amendment (the "Articles of Amendment") to establish the preferences, limitations and relative rights of a new series of preferred stock designated as the Series I Preferred Stock (the "Series I Preferred Shares"). The Articles of Amendment became effective upon filing. The Sphere Common Shares rank junior to the Series I Preferred Shares in all respects (except as provided in connection with certain liquidation events described below). Sphere's Series H Preferred Shares rank senior to the Series I Preferred Shares.
Holders of Series I Preferred Shares are entitled to receive notice of, and attend in a non-voting capacity, all meetings of shareholders of Sphere (other than meetings of holders of another class meeting separately). 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.
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. Dividends are payable exclusively in additional Series I Preferred Shares ("PIK Shares") at the following rates: (a) 8.00% per annum for the first 12-month period following the Closing; (b) 8.00% per annum for the second 12-month period following the Closing; and (c) 8.00% per annum for the third 12-month period following the Closing. 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 the 36-month anniversary of the Closing.
Each share of Series I Preferred Shares (other than PIK Shares) is convertible into one Sphere Common Share on the following schedule: (x) up to 33-1/3% of such Series I Preferred Shares following the 12-month anniversary of the Closing; (y) up to an aggregate of 66-2/3% of such Series I Preferred Shares following the 24-month anniversary of the Closing; and (z) up to an aggregate of 100% of such Series I Preferred Shares following the 36-month anniversary of the Closing, in each case, excluding any PIK Shares. PIK Shares are convertible into Sphere Common Shares on a one-for-one basis on or after the 36-month anniversary of the Closing.
Notwithstanding the foregoing conversion schedule (including the limitation on conversion of PIK Shares prior to the 36-month anniversary of the Closing), if Joel Block ceases to be Sphere's Chief Executive Officer as a result of (i) a termination of his employment by Sphere without cause, (ii) his resignation for Good Reason (as defined in his employment agreement with Sphere), or (iii) his entry into a mutually agreed separation agreement with Sphere, or if Mr. Block is not included on Sphere's management slate of directors at any meeting of Sphere'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 Sphere Common Shares.
The aggregate number of Sphere 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 Sphere Common Shares that Sphere may issue upon such conversion without breaching its obligations under the rules of the Nasdaq Capital Market, unless Sphere 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. Sphere 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 Sphere Common Shares.
In the event of a voluntary or involuntary liquidation, dissolution or winding-up of Sphere, holders of Series I Preferred Shares are entitled to receive, before any distribution to holders of the Sphere 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 Sphere 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 Sphere Common Shares immediately prior to the liquidation event. After payment of such amounts, holders of Series I Preferred Shares and Sphere Common Shares are not entitled to share in any further distribution of assets of Sphere in connection with such liquidation, dissolution or winding-up.
Certain transactions, including certain sales of all or substantially all of Sphere's undertaking, property or assets, certain mergers, amalgamations or consolidations, and certain sales, exchanges or other dispositions of outstanding Sphere Common Shares or reorganizations or similar transactions in which Sphere's shareholders immediately prior to the transaction do not retain a majority interest or voting power, are treated as deemed liquidations. In a deemed liquidation where the consideration would be receivable by Sphere's shareholders, distributions and payments are to be made to holders of Series I Preferred Shares and Sphere Common Shares on a pro rata basis, treating all outstanding Series I Preferred Shares as if converted into Sphere Common Shares immediately prior to the deemed liquidation. Holders of Series I Preferred Shares and holders of Sphere Common Shares are entitled to receive the same form of consideration in such a deemed liquidation. Sphere is required to provide holders of Series I Preferred Shares with at least 10 business days' prior written notice of the consummation of any deemed liquidation.
Until the date following the 36-month anniversary of the Closing Date, Sphere 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 a pari passu basis with the holders of Sphere Common Shares), or (2) make any return of capital in respect of shares ranking pari passu with the Series I Preferred Shares (unless holders of Series I Preferred Shares participate on a pari passu basis with the holders of Sphere Common Shares). These restrictions do not limit Sphere's ability to redeem or repurchase common share purchase warrants or other securities convertible into or exchangeable for Sphere Common Shares.
The foregoing summary of the Series I Preferred Shares and the Articles of Amendment does not purport to be complete and is subject to, and qualified in its entirety by, the copy of the Articles of Amendment attached as Exhibit 3.1 to this Current Report on Form 8-K, which is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On June 1, 2026, Sphere and Cathedra jointly issued a press release in connection with the consummation of the Arrangement. A copy of the press release is attached hereto as Exhibit 99.1 to and is incorporated by reference herein.
The information in this Item 7.01, including the corresponding Exhibit 99.1, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act or otherwise subject to the liabilities under that section and shall not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
The historical audited consolidated financial statements of Cathedra as of December 31, 2025 and 2024 and for the years ended December 31, 2025 and 2024 and the related notes thereto, together with the reports of SRCO Professional Corporation, independent registered public accounting firm, concerning those financial statements and related notes, are filed as Exhibit 99.2 to this Current Report on Form 8-K and are incorporated by reference. The unaudited consolidated financial statements of Cathedra as of March 31, 2026 and 2025 and for the three months ended March 31, 2026 and 2025 and the related notes thereto are filed as Exhibit 99.3 to this Current Report on Form 8-K and are incorporated by reference.
(b) Pro Forma Financial Information.
The unaudited pro forma condensed combined balance sheet of Sphere and Cathedra as of March 31, 2026 and the unaudited pro forma condensed combined statement of comprehensive income of Sphere and Cathedra for the year ended December 31, 2025 and the three months ended March 31, 2026, including the related notes thereto, giving effect to the Arrangement, are filed as Exhibit 99.4 to this Current Report on Form 8-K and are incorporated herein by reference. The unaudited pro forma financial information gives effect to the Arrangement on the basis of, and subject to, the assumptions set forth in accordance with Article 11 of Regulation S-X.
(d) Exhibits.
| Exhibit Number |
Description |
| 2.1 * | Arrangement Agreement, dated as of March 5, 2026, by and among Sphere 3D Corp., S3D Acquisition Corp. and Cathedra Bitcoin Inc. (incorporated by reference to Exhibit 2.1 of Sphere's Current Report on Form 8-K filed with the SEC on March 11, 2026). |
| 3.1 | Sphere 3D Corp. Articles of Amendment of Series I Preferred Shares. |
| 10.1* | Employment Agreement, by and among Sphere 3D Mining Corp., Sphere 3D Corp., and Joel Block, dated June 1, 2026. |
| 10.2* | Fourth Amended and Restated Employment Agreement, by and among Sphere 3D Corp. and Kurt Kalbfleisch, dated May 29, 2026. |
| 10.3 | Form of Voting Agreement for Thomas Masiero and Gavin Qu. |
| 10.4 | Form of Voting Agreement for Joel Block. |
| 10.5 | Form of Indemnity Agreement. |
| 23.1 | Consent of SRCO Professional Corporation. |
| 99.1 | Press Release dated June 1, 2026. |
| 99.2 | Audited Consolidated Financial Statements of Cathedra for the years ended December 31, 2025 and 2024 and the notes related thereto and the Report of Independent Registered Public Accounting Firm thereon. |
| 99.3 | Unaudited Consolidated Financial Statements of Cathedra as of March 31, 2026 and for the three months ended March 31, 2026 and 2025 and the notes related thereto. |
| 99.4 | Unaudited Pro Forma Condensed Combined Financial Information as of and for the three months ended March 31, 2026 and for the year ended December 31, 2025. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
* Certain of the schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). Sphere agrees to furnish supplementally a copy of all omitted exhibits and schedules to the SEC upon its request.
No Offer or Solicitation
This Current Report on Form 8-K is not intended to and does not constitute or form part of any offer to sell or subscribe for or any invitation to purchase or subscribe for any securities in any jurisdiction.
Forward-Look Statements and Cautionary Statements
This communication contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act. Forward-looking statements generally relate to future events, including the timing of the proposed transaction and other information related to the proposed transaction. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these words or other similar terms or expressions. Expectations and beliefs regarding matters discussed herein may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Forward-looking information includes but is not limited to information concerning the intentions, plans and future actions of Sphere and Cathedra. The forward-looking statements contained in this communication are also subject to other risks and uncertainties, including those more fully described in filings with the SEC, including Sphere's reports filed on Form 10-K, Form 10-Q and Form 8-K and in other filings made by Sphere with the SEC from time to time and available at www.sec.gov. These forward-looking statements are based on current expectations, which are subject to change.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: June 3, 2026
| SPHERE 3D CORP. | ||
| By: | /s/ Kurt Kalbfleisch | |
| Kurt Kalbfleisch | ||
| Chief Financial Officer | ||
Sphere 3D and Cathedra Bitcoin Announce Closing of Business Combination
Combination creates a scaled data infrastructure platform with 53megawatts of operating capacity and a 100mw+ expansion pipeline ; Combined company retains Sphere 3D's name and US listing (NASDAQ: ANY)
TORONTO, ONTARIO, AND STAMFORD, CONNECTICUT, June 1, 2026 - (NEWSFILE) - Sphere 3D Corp. (NASDAQ: ANY) ("Sphere") and Cathedra Bitcoin Inc. (TSX-V: CBIT; OTCQB: CBTTF) ("Cathedra" and together with Sphere, the "Parties") today announced that they have completed the previously announced plan of arrangement (the "Transaction") pursuant to which Sphere acquired all of the issued and outstanding shares of Cathedra under the arrangement agreement entered into on March 5, 2026 (the "Agreement"), and Cathedra is now a wholly-owned subsidiary of Sphere (Sphere, together with Cathedra and their subsidiaries following completion of the Transaction, the "Combined Company"). The Transaction was completed by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia). The Transaction was approved at a special meeting of the securityholders of Cathedra and at a meeting of the shareholders of Sphere, and by the Supreme Court of British Columbia.
"Closing this combination marks a significant milestone for both companies and our shareholders," said Joel Block, Chief Executive Officer of the Combined Company. "We have integrated Cathedra's energy-centric infrastructure platform with Sphere's public-market presence and robust balance sheet to build a larger, more diversified enterprise with a clear growth trajectory. Together, we offer 53 MW of operational capacity, a pipeline exceeding 100 MW of potential expansion, and a NASDAQ-listed platform designed for scalability. We believe the Combined Company is strategically positioned to generate long-term value by seizing opportunities in high-performance computing and digital asset infrastructure."
Strategic Rationale and Competitive Advantages
The Transaction is expected to deliver greater scale and an expanded US operating footprint, with the Combined Company owning and operating a portfolio of 53 megawatts ("MW") of power capacity across five data centers in Iowa, Kentucky, and Tennessee. This larger platform is also intended to lay a foundation for potential expansion into high-performance compute. With growing demand for compute-intensive workloads, the Combined Company intends to evaluate select opportunities in adjacent high-performance compute and AI infrastructure, leveraging existing power relationships and site capabilities to maximize returns on its power capacity. The expanded operating scale is expected to improve profitability by spreading fixed overhead costs over a larger revenue and asset base.
The combination also diversifies the Combined Company's revenue streams across proprietary mining and hosting services. By integrating Sphere's updated mining machine fleet with Cathedra's data center operations and experience, the Combined Company gains exposure to mining economics while maintaining downside protection through fixed-margin hosting contracts with third parties. These strengths are paired with strong growth prospects supported by a scalable development model and access to capital: Cathedra's low-cost development model and infrastructure-first approach, coupled with Sphere's capital markets expertise, position the Combined Company to capitalize on a robust pipeline of over 100 MW of potential expansion opportunities and to further grow its portfolio of infrastructure assets.
Over time, the Combined Company intends to maximize returns on power capacity by assessing the highest-value applications for its energy resources, including digital asset mining, AI model training, and other compute-intensive workloads that require reliable, cost-effective power at scale.
The Combined Company's bitcoin mining operations and balance sheet include managed power capacity of 53 MW at five data centers across three U.S. states, comprising both data centers owned by the Combined Company and those leased from and/or operated by third parties, as well as 1.2 EH/s of installed proprietary mining hash rate across data centers owned by the Combined Company and third-party hosting providers.
Board and Management
Underpinning these advantages is an experienced leadership team with a clear strategic vision and a deep expertise in digital asset mining, digital infrastructure, energy optimization, and capital markets. Joel Block has assumed the role of Chief Executive Officer of the Combined Company and joins the board of directors, bringing extensive experience in both private and public capital markets and in operating within the digital infrastructure and bitcoin mining arena. Kurt Kalbfleisch, previously Chief Executive Officer and Chief Financial Officer of Sphere, has maintained his role of Chief Financial Officer and joins the board of directors, contributing over two decades of executive leadership experience at multiple NASDAQ-listed companies. Tiah Reppas will continue her role as Chief Accounting Officer of the Combined Company, bringing over two decades of public accounting experience. Thomas Masiero will be Head of Strategy of the Combined Company, bringing significant experience in the development of power capacity and infrastructure.
The board of directors comprises Tim Hanley, who serves as Chair, together with Marcus Dent, Kurt Kalbfleisch, Nicholas Gates, and Joel Block. Mr. Hanley, Mr. Dent, and Mr. Gates serve as independent directors, focused on robust governance, diverse strategic perspectives, and disciplined execution. Mr. Hanley is a seasoned global executive with significant audit committee and boardroom experience. He spent 17 years at Deloitte, where he led the firm's Global Consumer and Industrial Products practice and grew it to more than $14 billion in annual revenue, and he later served as Acting Keyes Dean of the College of Business at Marquette University. Marcus Dent, founder of TFTC.io and Managing Partner at Ten31, is a media personality and recognized thought leader in the digital assets industry. He previously served as Director of Business Development at Great American Mining, an early innovator in off-grid bitcoin mining using flared natural gas, and has served as a director of Cathedra since 2021. Nicholas Gates is Managing Director, Integrated Projects at Priority Power Management, an Arlington, Texas-based leader in energy management, procurement, and infrastructure development. He brings deep expertise in energy strategy, power procurement, and the development of large-scale power infrastructure.
Additional Transaction Details
As a result of the Transaction, Cathedra security holders received common shares of Sphere (the "Sphere Common Shares") and/or securities exercisable or convertible into Sphere Common Shares. The Combined Company has retained Sphere's name and listing on NASDAQ under the symbol "ANY".
Pursuant to the terms of the Agreement, Cathedra has amalgamated with S3D Acquisition Corp., a wholly owned subsidiary of Sphere formed to complete the Transaction. Holders of Cathedra subordinate voting shares ("Cathedra SV Shares") received 0.123014 of a Sphere Common Share for each Cathedra SV Share held (the "SV Exchange Ratio") and holders of Cathedra multiple voting shares ("Cathedra MV Shares") received 12.3014 Sphere Common Shares for each Cathedra MV Share held, which provided economically equivalent consideration for both classes of shares. Cathedra's outstanding warrants, stock options and certain restricted share units were exchanged for corresponding Sphere securities in accordance with the applicable exchange ratio. The remaining restricted share units fully vested immediately prior to closing, and the holders thereof received Sphere Common Shares in accordance with the SV Exchange Ratio. In addition, certain key Cathedra shareholders were subject to a 7% post-closing ownership cap, with any consideration that would have otherwise exceeded such cap received in a new series of Sphere non-voting preferred shares having equivalent economic value.
The securities issued pursuant to the Transaction were not registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), and were issued in reliance on the exemption from the registration requirements of the U.S. Securities Act provided by Section 3(a)(10) thereof and pursuant to similar exemptions from applicable state securities laws.
Stock Exchange Listing
The Cathedra SV Shares are expected to be delisted from the TSX Venture Exchange and the OTCQB at the close of trading on June 2, 2026, and Cathedra intends to submit an application to the applicable securities regulators to cease to be a reporting issuer and to terminate its public reporting obligations. The Sphere Common Shares will continue to trade on NASDAQ under the ticker "ANY". Further details regarding the Transaction are set out in the information circular of Cathedra and the proxy statement of Sphere, which are available on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov, respectively.
Inducement Award
In connection with the commencement of his employment with the Combined Company, subject to the approval of the Compensation Committee of the Combined Company's board of directors and the Combined Company's board, Mr. Block shall be entitled to a one-time inducement equity award of an aggregate of 500,000 restricted stock units, which shall be settled in Sphere Common Shares, vesting, subject to Mr. Block's continued employment, bi-annually in four equal installments over a two-year period, with the first tranche vesting on the six-month anniversary of the grant date. Such inducement award is a material inducement to Mr. Block entering into employment with the Combined Company and will be granted in accordance with Nasdaq Rule 5635(c)(4).
Advisors and Counsel
Dumoulin Black LLP acted as Canadian legal counsel to Cathedra and Greenberg Traurig, LLP acted as U.S. legal counsel to Cathedra. Evans & Evans, Inc. was the fairness opinion provider to Cathedra on this transaction.
Second Gate Advisory LLC acted as strategic advisor to Sphere, Meretsky Law Firm acted as Canadian legal counsel to Sphere and Pryor Cashman LLP acted as U.S. legal counsel to Sphere. Rosenblatt Securities was the fairness opinion provider to Sphere on this transaction.
For further information, please contact:
Joel Block, CEO, Sphere 3D Corp.
+1 (647) 952-5049
investor.relations@sphere3d.com
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements Disclaimer
This news release contains certain "forward-looking information" and "forward-looking statements" within the meaning of applicable Canadian and United States securities laws that are based on expectations, estimates and projections as at the date of this news release. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the U.S. Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. The information in this release about future plans and objectives of the Combined Company, are forward-looking information. Other forward-looking information includes, but is not limited to, information concerning: the intentions and future actions of senior management, the intentions, plans and future actions of the Combined Company, as well as its ability to successfully mine digital currency; the anticipated timing for delisting of the Cathedra SV Shares from the TSX Venture Exchange and the OTCQB and submission of an application by Cathedra to cease to be a reporting issuer; revenue and capacity projections of the Combined Company; the expected benefits from the Transaction; the expected growth and capabilities of the Combined Company; the expected improved profitability and increased liquidity of the Combined Company; the construction and operation of expanded blockchain infrastructure as currently planned; the creation of long-term value for the shareholders of the Combined Company; planned growth, vertical integration and expansion into high-performance compute and AI infrastructure; projected reductions in power costs; expected operational, cost and procurement synergies; and the regulatory environment of cryptocurrency in applicable jurisdictions. Any statements that involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "targets", "estimates", "believes", "contemplates", "predicts", "potential", "continue" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "should", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking information and are intended to identify forward-looking information.
This forward-looking information is based on reasonable assumptions and estimates of management of the Combined Company at the time it was made, including, without limitation, the anticipated timing of the delisting of the Cathedra SV Shares from the TSX Venture Exchange and the OTCQB; the ability of the Combined Company to successfully integrate the businesses and realize anticipated synergies, cost savings and operational efficiencies; the accuracy of projected power costs, energy availability and hosting arrangements; the continued availability of low-cost and reliable power; the performance and deployment of mining equipment and infrastructure; the availability of growth capital on acceptable terms; the ability to execute expansion plans on schedule and within budget; market conditions for bitcoin mining and high-performance computing infrastructure; the price of bitcoin and other digital assets; network difficulty and hash rate conditions; regulatory and tax stability in applicable jurisdictions; general economic, financial and capital markets conditions; and that the Combined Company will have access to the financial and other resources required to carry out its business plans as currently anticipated.
Additionally, these forward-looking statements may be affected by risks and uncertainties in the business of the Combined Company and general market conditions. Investors are cautioned that forward-looking statements are not based on historical facts but instead reflect the Combined Company's management's expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Combined Company believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed thereon, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Combined Company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are the following: the ultimate timing, outcome and results of integrating the operations of Sphere and Cathedra; the effects of the business combination of Sphere and Cathedra, including the Combined Company's future financial condition, results of operations, strategy and plans; the ability of the Combined Company to realize anticipated synergies in the timeframe expected or at all; changes in capital markets and the ability of the Combined Company to finance operations in the manner expected; the risk of changes in governmental regulations or enforcement practices; changes in general economic, business and political conditions, including changes in the financial markets; changes in applicable laws and regulations both locally and in foreign jurisdictions; compliance with extensive government regulation and the costs associated with compliance; unanticipated costs; the risks and uncertainties associated with foreign markets; the volatility of bitcoin prices and other digital asset markets; changes in network difficulty, hash rate or mining economics; the availability, cost and reliability of power and energy infrastructure; the ability to secure additional power capacity or execute expansion projects on time and within budget; delays in delivery, installation or performance of mining equipment or other critical infrastructure; cybersecurity threats, technology failures or data center outages; counterparty risks relating to hosting clients, equipment suppliers or power providers; the availability and retention of key personnel; the ability to access debt or equity financing on acceptable terms; and risks related to competition in the bitcoin mining and high-performance computing industries.
Additional factors that could cause results to differ materially from those described above can be found in Sphere's reports filed on Form 10-K, Form 10-Q and Form 8-K and in other filings made by Sphere with the SEC from time to time and available at www.sec.gov and available on Sphere's website at www.sphere3d.gcs-web.com under the "Financials" tab, and in Cathedra's management information circular dated April 2, 2026 available under Cathedra's issuer profile on SEDAR+ at www.sedarplus.ca and in other documents Cathedra files on SEDAR+.
All forward-looking statements speak only as of the date they are made and are based on information available at that time. Neither the Combined Company nor any of its subsidiaries assumes any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by applicable securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Combined Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended and such changes could be material. Readers should not place undue reliance on forward-looking information.
Cathedra Bitcoin Inc.
Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(expressed in Canadian dollars, unless otherwise noted)
 |
SRCO Professional Corporation Chartered Professional Accountants Licensed Public Accountants Park Place Corporate Centre 15 Wertheim Court, Suite 409 Richmond Hill, ON L4B 3H7, Canada Tel: 905 882 9500 & 416 671 7292 Fax: 905 882 9580 Email: info@srco.ca www.srco.ca |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Cathedra Bitcoin Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of Cathedra Bitcoin Inc. and its subsidiaries (collectively referred to as the "Company") as of December 31, 2025 and 2024, the related consolidated statements of income or loss and comprehensive income or loss, changes in equity, and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes to the consolidated financial statements, (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
Going Concern Matter
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred losses from operations, has negative cash flows from operating activities, working capital deficiency and has a deficit that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
 |
|
| We have served as the Company's auditor since 2022. Richmond Hill, Ontario, Canada March 24, 2026 |
CHARTERED PROFESSIONAL ACCOUNTANTS Authorized to practice public accounting by the Chartered Professional Accountants of Ontario |
| Cathedra Bitcoin Inc. Consolidated Statements of Financial Position As at December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
| As at: | Notes | December 31, 2025 |
December 31, 2024 |
||||
| ASSETS | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 1,083,973 | $ | 101,367 | |||
| Digital currencies | 4 | 584,139 | 6,456,425 | ||||
| Trade and other receivables | 5 | 932,524 | 1,448,900 | ||||
| Due from related parties | 18 | 19,792 | - | ||||
| Prepaid expenses | 6 | 1,741,537 | 1,257,493 | ||||
| Deposits | 7 | 92,104 | 148,309 | ||||
| Other assets | 383,873 | 413,776 | |||||
| Assets classified as held for sale | 11 | - | 31,127,752 | ||||
| Total current assets | $ | 4,837,942 | $ | 40,954,022 | |||
| Non-current assets | |||||||
| Deposits | 7 | 2,295,392 | 2,473,407 | ||||
| Other non-current assets | 8 | 919,700 | 891,918 | ||||
| Property and equipment | 9 | 6,201,596 | 7,409,084 | ||||
| Right-of-use assets | 10 | 1,219,170 | 1,705,863 | ||||
| Investments | 12 | 1,016,658 | 916,483 | ||||
| Goodwill | 2 | 15,673,534 | 16,845,242 | ||||
| Total assets | $ | 32,163,992 | $ | 71,196,019 | |||
| LIABILITIES | |||||||
| Current liabilities | |||||||
| Trade payables and accrued liabilities | 13 | 2,659,980 | 2,478,212 | ||||
| Due to related parties | 18 | 1,109,675 | 672,411 | ||||
| Income tax payable | 19 | 334,900 | 522,299 | ||||
| Contract liabilities | 791,671 | 149,452 | |||||
| Customer liabilities | 2,044,454 | 1,328,644 | |||||
| Decommissioning liability | 30,839 | 32,375 | |||||
| Current portion of lease liabilities | 10 | 80,053 | 1,132,305 | ||||
| Loans and borrowings | 14 | - | 5,134,121 | ||||
| Liabilities directly associated with assets held for sale | 11 | - | 14,506,358 | ||||
| Total current liabilities | $ | 7,051,572 | $ | 25,956,177 | |||
| Non-current liabilities | |||||||
| Customer liabilities | - | 747,053 | |||||
| Lease liabilities | 10 | 1,282,012 | 695,617 | ||||
| Total liabilities | $ | 8,333,584 | $ | 27,398,847 | |||
| EQUITY | |||||||
| Share capital | 15 | 22,499,148 | 21,716,754 | ||||
| Reserves | 16 | 3,910,445 | 3,534,980 | ||||
| Contributed surplus | 17 | 813,016 | - | ||||
| Accumulated other comprehensive income | 3,544,813 | 5,559 | |||||
| Retained earnings (deficit) | (6,937,014 | ) | 3,019,093 | ||||
| Total shareholders' equity | $ | 23,830,408 | $ | 28,276,386 | |||
| Non-controlling interest | 11 | - | 15,520,786 | ||||
| Total liabilities and equity | $ | 32,163,992 | $ | 71,196,019 |
The accompanying notes are an integral part of these consolidated financial statements
Nature of operations (Note 1)
Segment reporting (Note 23)
Events after reporting period (Note 24)
Approved by the Board of Directors and authorized for issue on March 23, 2026:
| "Joel Block" | Director | "David Jaques" | Director |
| Cathedra Bitcoin Inc. Consolidated Statements of Income or Loss and Comprehensive Income or Loss For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
| For the year ended: | Notes | December 31, 2025 |
December 31, 2024 |
||||
| Revenues | 4,23 | 21,194,411 | 23,143,723 | ||||
| Cost of revenues | |||||||
| Operating costs | 23 | (16,046,553 | ) | (16,102,353 | ) | ||
| Depreciation | 8,9,10 | (4,783,926 | ) | (3,168,279 | ) | ||
| Gross income | $ | 363,932 | $ | 3,873,091 | |||
| Realized gain on sale of digital currencies | 4 | 4,751 | 250,549 | ||||
| Income before operating expenses | $ | 368,683 | $ | 4,123,640 | |||
| Operating expenses | |||||||
| Director fees | 18 | 326,178 | 129,001 | ||||
| Management and consulting fees | 18 | 2,525,353 | 282,141 | ||||
| Office and administration | 1,144,705 | 428,502 | |||||
| Professional fees | 2,18 | 1,450,071 | 1,384,919 | ||||
| Salaries and wages | 18 | 921,780 | 300,562 | ||||
| Share-based compensation | 16,18 | 895,182 | 217,966 | ||||
| Travel | 68,117 | 33,142 | |||||
| Total operating expenses | $ | (7,331,386 | ) | $ | (2,776,233 | ) | |
| Operating income (loss) | $ | (6,962,703 | ) | $ | 1,347,407 | ||
| Other income (expenses) | |||||||
| Foreign exchange gain (loss) | (2,228,081 | ) | 2,208,663 | ||||
| Net finance costs | 10,14 | (671,909 | ) | (1,952,690 | ) | ||
| Transaction costs | 2 | - | (341,841 | ) | |||
| Other income | 9,13 | 75,914 | - | ||||
| Impairment of goodwill | 2 | (1,171,708 | ) | - | |||
| Gain on settlement of debt | 14 | 693,411 | - | ||||
| Gain on disposal of subsidiary | 11 | 167,365 | - | ||||
| Unrealized gain (loss) on investment | 12 | 120,317 | (14,321 | ) | |||
| Income (loss) from continuing operations before tax | $ | (9,977,394 | ) | 1,247,218 | |||
| Current income tax expense | 19 | - | (513,330 | ) | |||
| Income (loss) from discontinued operation | 11 | 290,421 | (819,276 | ) | |||
| Net loss | $ | (9,686,973 | ) | $ | (85,388 | ) | |
| Other comprehensive income (loss) | |||||||
| Items that may be reclassified to income or loss | |||||||
| Exchange differences on translation of foreign operations | 1,902,986 | (1,391,457 | ) | ||||
| Exchange differences on translation of discontinued operation | (4,205 | ) | 1,093,157 | ||||
| Revaluation gain on digital currencies | 4 | 1,660,137 | 1,451,423 | ||||
| Total comprehensive income (loss) | $ | (6,128,055 | ) | $ | 1,067,735 | ||
| Net income (loss) for the year attributable to: | |||||||
| Shareholders of the Company | (9,956,107 | ) | 673,835 | ||||
| Non-controlling interest | 11 | 269,134 | (759,223 | ) | |||
| (9,686,973 | ) | (85,388 | ) | ||||
| Total comprehensive income (loss) for the year attributable to: | |||||||
| Shareholders of the Company | (6,392,984 | ) | 733,801 | ||||
| Non-controlling interest | 11 | 264,929 | 333,934 | ||||
| (6,128,055 | ) | 1,067,735 | |||||
| Basic and diluted earnings (loss) per common share | 15 | $ | (0.34 | ) | $ | 0.03 | |
| Weighted average number of subordinated voting shares outstanding on a 'if converted' basis - basic | 15 | 29,091,882 | 24,363,466 | ||||
| Weighted average number of subordinated voting shares outstanding on a 'if converted' basis - diluted | 15 | 31,854,927 | 24,363,466 |
The accompanying notes are an integral part of these consolidated financial statements
| Cathedra Bitcoin Inc. Consolidated Statements of Changes in Equity For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
| Share capital |
Reserves | Contributed surplus |
Accumulated other comprehensive income/(loss) |
Retained earnings (deficit) |
Shareholders' equity |
Non- controlling interest |
Total equity |
|||||||||||||||||
| Balance - December 31, 2023 | $ | 1,278 | $ | - | $ | $ | (54,407 | ) | $ | 2,345,258 | $ | 2,292,129 | $ | - | $ | 2,292,129 | ||||||||
| Multiple voting shares issued in connection with business combination | 21,576,955 | 2,156,429 | - | - | - | 23,733,384 | - | 23,733,384 | ||||||||||||||||
| Recognition of non-controlling interest from sale of interest in the subsidiary | - | - | - | - | - | - | 15,186,852 | 15,186,852 | ||||||||||||||||
| Share-based compensation | - | 217,966 | - | - | - | 217,966 | - | 217,966 | ||||||||||||||||
| Subordinate voting shares issued on RSU vesting | 138,521 | (138,521 | ) | - | - | - | - | - | - | |||||||||||||||
| Warrants repricing | - | 1,299,106 | - | - | - | 1,299,106 | - | 1,299,106 | ||||||||||||||||
| Translation adjustment | - | - | - | (1,391,457 | ) | - | (1,391,457 | ) | 1,093,157 | (298,300 | ) | |||||||||||||
| Unrealized gain from revaluation of digital currencies | - | - | - | 1,451,423 | - | 1,451,423 | - | 1,451,423 | ||||||||||||||||
| Net income (loss) for the year | - | - | - | - | 673,835 | 673,835 | (759,223 | ) | (85,388 | ) | ||||||||||||||
| Balance - December 31, 2024 | $ | 21,716,754 | $ | 3,534,980 | $ | - | $ | 5,559 | $ | 3,019,093 | $ | 28,276,386 | $ | 15,520,786 | $ | 43,797,172 | ||||||||
| Derecognition of subsidiary | - | - | - | - | - | - | (14,696,763 | ) | (14,696,763 | ) | ||||||||||||||
| Share-based compensation | - | 895,182 | - | - | - | 895,182 | - | 895,182 | ||||||||||||||||
| Subordinate voting shares issued on RSU vesting | 416,287 | (416,287 | ) | - | - | - | - | - | - | |||||||||||||||
| Repurchase of share purchase warrants for cancellation | - | (103,430 | ) | - | - | - | (103,430 | ) | - | (103,430 | ) | |||||||||||||
| Units issued in private placement, net of unit issuance costs | 516,107 | - | - | - | - | 516,107 | - | 516,107 | ||||||||||||||||
| Subscriptions receivable | (150,000 | ) | - | - | - | - | (150,000 | ) | - | (150,000 | ) | |||||||||||||
| Shareholder loan forgiveness | - | - | 813,016 | - | - | 813,016 | - | 813,016 | ||||||||||||||||
| Exchange differences on translation of foreign operations | - | - | - | 1,902,986 | - | 1,902,986 | (4,205 | ) | 1,898,781 | |||||||||||||||
| Reclassification of foreign exchange differences to statement of profit or loss on disposal | - | - | - | (23,869 | ) | - | (23,869 | ) | (1,088,952 | ) | (1,112,821 | ) | ||||||||||||
| Unrealized gain from revaluation of digital currencies | - | - | - | 1,660,137 | - | 1,660,137 | - | 1,660,137 | ||||||||||||||||
| Net income (loss) for the year | - | - | - | - | (9,956,107 | ) | (9,956,107 | ) | 269,134 | (9,686,973 | ) | |||||||||||||
| Balance - December 31, 2025 | $ | 22,499,148 | $ | 3,910,445 | $ | 813,016 | $ | 3,544,813 | $ | (6,937,014 | ) | $ | 23,830,408 | $ | - | $ | 23,830,408 |
The accompanying notes are an integral part of these consolidated financial statements
Business Combination (Note 2)
Share Capital (Note 15)
Reserves (Note 16)
Contributed Surplus (Note 17)
| Cathedra Bitcoin Inc. Consolidated Statements of Cash Flows For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
| For the year ended: | December 31, 2025 |
December 31, 2024 |
||||
| OPERATING ACTIVITIES | ||||||
| Net loss for the year | $ | (9,686,973 | ) | $ | (85,388 | ) |
| Non-cash items: | ||||||
| Depreciation | 4,783,926 | 3,168,279 | ||||
| Share-based compensation | 895,182 | 217,966 | ||||
| Net finance costs | 671,909 | 1,974,469 | ||||
| Unrealized gain (loss) on investment | (120,317 | ) | 14,321 | |||
| Impairment of goodwill | 1,171,708 | - | ||||
| Write-down of other assets | - | 565,292 | ||||
| Gain on disposal of subsidiary | (167,365 | ) | - | |||
| Gain on settlement of debt | (693,411 | ) | - | |||
| Gain on sale of property and equipment | (54,360 | ) | - | |||
| Foreign exchange | 1,848,151 | (1,787,983 | ) | |||
| Changes in non-cash working capital items: | ||||||
| Digital currencies | (4,209,456 | ) | (3,647,863 | ) | ||
| Trade and other receivables | 253,433 | (379,974 | ) | |||
| Prepaid expenses | (541,063 | ) | (634,772 | ) | ||
| Deposits | 168,153 | 968,808 | ||||
| Other assets | 10,406 | 2,238 | ||||
| Trade payables and accrued liabilities | 156,270 | (509,279 | ) | |||
| Customer liabilities | 733,340 | (1,091,425 | ) | |||
| Advances from (repayment to) related parties | 1,495,991 | (2,540,822 | ) | |||
| Income tax payable | (166,020 | ) | 483,041 | |||
| Decommissioning liability | - | (46,413 | ) | |||
| Net cash used in operating activities | $ | (3,450,496 | ) | $ | (3,329,505 | ) |
| INVESTING ACTIVITIES | ||||||
| Purchase of property and equipment | $ | (2,799,325 | ) | $ | - | |
| Acquisition of business, net of cash and cash equivalents acquired | - | 1,429,575 | ||||
| Proceeds from sale of property and equipment | 152,207 | - | ||||
| Proceeds from sale of digital currencies, net of fees | 12,955,639 | 3,002,559 | ||||
| Net cash generated by investing activities | $ | 10,308,521 | $ | 4,432,134 | ||
| FINANCING ACTIVITIES | ||||||
| Payment of lease obligations | $ | (1,387,028 | ) | $ | (1,016,840 | ) |
| Proceeds from term loan | 3,564,168 | - | ||||
| Repayment of term loan | (3,474,841 | ) | - | |||
| Repayment of principal and interest on convertible loan | (4,586,983 | ) | - | |||
| Repayment of interest on term loan | (244,131 | ) | (100,340 | ) | ||
| Repurchase of share purchase warrants for cancellation | (103,430 | ) | - | |||
| Proceeds from share issuance, net of issuance cost | 366,107 | - | ||||
| Net cash used in financing activities | $ | (5,866,138 | ) | $ | (1,117,180 | ) |
| Effect of foreign exchange rate fluctuation | (9,281 | ) | (6,270 | ) | ||
| Increase (decrease) in cash and cash equivalents | $ | 982,606 | $ | (20,821 | ) | |
| Cash and cash equivalents, beginning of year | $ | 101,367 | $ | 122,188 | ||
| Cash and cash equivalents, end of year | $ | 1,083,973 | $ | 101,367 |
Supplemental cash flow information (Note 22)
The accompanying notes are an integral part of these consolidated financial statements
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
1. Nature of Operations
Cathedra Bitcoin Inc. ("Cathedra", "we", "our" or the "Company") develops and operates high-density compute infrastructure across North America. We host bitcoin mining clients across a portfolio of four data centers (45 megawatts total) in Tennessee and Kentucky. Cathedra also operates a fleet of proprietary bitcoin mining machines at our own and third-party data centers, producing approximately 400 PH/s of hash rate. We are focused on expanding our portfolio of data center infrastructure for high-density compute applications including bitcoin mining and artificial intelligence. Cathedra is headquartered in Vancouver, British Columbia, and our shares trade on the TSX Venture Exchange (the "TSXV") under the symbol CBIT and on the OTCQB Venture Market under the symbol CBTTF. The Company was incorporated under the Business Corporations Act (Ontario) on July 13, 2011, and our registered and records office is located at 170 - 422 Richards Street, Vancouver, British Columbia, Canada, V6B 2Z4.
These consolidated financial statements ("Financial Statements") have been prepared on a going concern basis which contemplates that the Company will continue operations for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business. During the year ended December 31, 2025, the Company incurred losses from operations of $9,686,973, had negative cash flows from operating activities of $3,450,496, and as of that date, had a working capital deficiency of $2,213,630 and a deficit of $6,937,014. These factors raise substantial doubt about its ability to continue as a going concern. These consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. The Company has relied on its plan to obtain additional equity and debt financing, in addition to operating cash flow, to fund its operations. Although the Company has been successful in the past in obtaining financing and it believes that will continue to be successful, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be available on terms that are advantageous to the Company.
2. Business Combination
On July 23, 2024, the Company completed a business combination (the "Kungsleden Merger") with Kungsleden, Inc. ("Kungsleden"), a developer and operator of alternative high-density compute infrastructure.
The Kungsleden Merger was completed according to the terms of a share exchange agreement dated March 6, 2024, as amended on June 18, 2024 (together, the "Share Exchange Agreement"), between Cathedra, Kungsleden and Kungsleden's shareholders (the "Vendors").
Pursuant to the terms of the Share Exchange Agreement, Cathedra acquired all of the outstanding shares of Kungsleden from the Vendors in exchange for 208,446 multiple voting shares of Cathedra (the "Multiple Voting Shares") on the basis of an exchange ratio of one common share of Kungsleden for approximately 6.253429078 Multiple Voting Shares. The 208,446 Multiple Voting Shares issued to the Vendors are convertible into 20,844,600 subordinate voting shares of Cathedra (the "Subordinate Voting Shares"). The Kungsleden Merger resulted in the Vendors owning (on a non-diluted basis) approximately 72.5% of the equity of the Company and existing Cathedra shareholders owning the remaining 27.5% of the equity of the Company. The Vendors hold approximately 80% of the voting rights of Cathedra and existing Cathedra shareholders own the remaining 20%.
The Kungsleden Merger has been accounted for using the acquisition method under IFRS 3, Business Combinations ("IFRS 3"), which requires that one of Cathedra or Kungsleden be determined to be the acquirer for accounting purposes. The Kungsleden Merger has been accounted for as a reverse take-over of Cathedra by Kungsleden. The entities which are party to the Kungsleden Merger meet the definition of a business. These consolidated financial statements reflect the continuance of Kungsleden and the acquisition and assumption of Cathedra's identifiable assets and liabilities, respectively, at fair value.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
Kungsleden is deemed to have issued 379,310 common shares in exchange for all of the issued and outstanding shares of Cathedra. The consideration for shares issued is $22,154,165, including $577,210 (Note 14) being the convertible loan equity portion, based on Kungsleden's enterprise value of $93,457,280. The Company issued the following replacement awards: 120,175 stock options, 57,228 restricted share units and 1,704,819 share purchase warrants valued $1,579,219 exercisable into subordinate voting shares of Cathedra; see Note 16 for details on valuation approach and assumptions used to value replacement awards.
| $ | |||
| Consideration: | |||
| Deemed share consideration | 22,154,165 | ||
| Replacement awards | 1,579,219 | ||
| Total consideration | 23,733,384 | ||
| Assets acquired: | |||
| Cash and cash equivalents | 1,429,575 | ||
| Digital currencies | 4,029,042 | ||
| Other receivables | 136,545 | ||
| Prepaid expenses | 349,593 | ||
| Deposits | 1,643,960 | ||
| Other assets | 954,772 | ||
| Property and equipment | 4,986,820 | ||
| Right-of-use assets | 1,510,745 | ||
| Investments | 913,658 | ||
| Goodwill | 16,845,242 | ||
| Total assets acquired | 32,799,952 | ||
| Liabilities assumed: | |||
| Trade payables and accrued liabilities | 2,637,725 | ||
| Interest payable | 12,543 | ||
| Decommissioning liability | 77,610 | ||
| Lease liabilities | 1,510,745 | ||
| Convertible loan | 4,827,945 | ||
| Total liabilities assumed | 9,066,568 | ||
| Net assets acquired | 23,733,384 |
Reorganization
For the period from August 12, 2022, the date of formation, through December 31, 2022 and for the period from January 1, 2023 to September 12, 2023, the Kungsleden Business was operated through Poimen Trust ("Poimen"), a trust certified under the State of Tennessee, controlled by the shareholders of the Company. The trustees of Poimen also are the shareholders of the Company. Kungsleden was incorporated to transform the Kungsleden Business from a trust to a corporation through a reorganization under common control ("Transformation"). The Transformation resulted in the transfer of all assets and liabilities and contracts related to the Kungsleden Business at their historical book values from Poimen to Kungsleden on September 13, 2023, the date on which Kungsleden was incorporated.
Revenues of $3,851,629 and net loss of $2,798,571 from the acquired operations are included in the consolidated statement of income and comprehensive income for the year ended December 31, 2024. Had the acquisition of Cathedra Bitcoin Inc. occurred on January 1, 2024, the consolidated revenues would have been $29,339,761 and the consolidated net loss would have been $1,690,909 for the year ended December 31, 2024. In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same if the acquisition had occurred on January 1, 2024.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
Transaction costs of $540,274 were incurred in connection with the acquisition including consulting fees, legal and professional fees for brokering and due diligence services and were recognized in the consolidated statement of income and comprehensive income.
Impairment of goodwill
Management conducted an impairment assessment of goodwill as of December 31, 2025. For the purposes of impairment testing, the Company considers its ongoing operations as a single cash-generating unit (CGU) that includes all goodwill, property and equipment, other non-current assets, and right-of-use assets, which collectively contribute to generating cash flows from hosting and mining activities. The discounted cash flow model was utilized to estimate value in use, as there was no readily available market price nor any purchase offer received for the business. As a result of this assessment, an impairment loss of $1,171,708 was recognized, as the carrying amount of the CGU, including goodwill, exceeded its recoverable amount.
The significant assumptions applied in determination of the value in use amount as at December 31, 2025 were as follows:
- Cash flows: Estimated cash flows were projected based on estimated operating results from internal sources as well as industry and market trends. Estimated cash flows are primarily driven by projected revenues based on existing and projected data center capacity, bitcoin mining machine quantities and models with respective efficiencies and operating costs;
- Terminal value growth rate: The terminal growth rate was based on historical and projected consume price inflation, historical and projected economic indicators, and projected industry growth; and
- Pre-tax discount rate: The pre-tax discount rate is reflective of the CGU's weighted average cost of capital ("WACC"). The WACC was estimated based on the risk-free rate, equity risk premium, beta adjustment to the equity risk premium based on a direct comparison approach, an unsystematic risk premium, and cost of debt based on corporate bond yields.
The following inputs are subject to significant estimation uncertainty and may materially affect the value in use determination:
- Terminal value growth rate of 2%
- WACC of 35%
- Average bitcoin price over the forecast period of approximately US$203,000
- Average hash rate over the forecast period of approximately 1,441 EH/s
A sensitivity analysis indicates that varying each input individually or collectively by +/- 5% would result in an insignificant change to the impairment amount recorded.
3. Material Accounting Policy Information
Basis of Preparation
Statement of Compliance
The Financial Statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB") and interpretations issued by the International Reporting Interpretation Committee ("IFRIC") for all periods presented.
These Financial Statements were approved and authorized for issuance by the Board of Directors on March 23, 2026.
These Financial Statements have been prepared on an accrual basis and are based on historical cost basis except for certain financial instruments which are measured at their fair value. In addition, these Financial Statements have been prepared using the accrual basis of accounting except for cash flow information.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
The Financial Statements of the Company are presented in Canadian dollars unless otherwise indicated.
Basis of Consolidation
Subsidiaries
The Financial Statements include the accounts of the Company and its subsidiaries, which are controlled by the Company. Control is achieved when the parent company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Company controls an investee if, and only if, the Company has all of the following: (i) power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); (ii) exposure, or rights, to variable returns from its involvement with the investee; and (iii) the ability to use its power over the investee to affect its returns.
The financial statements of the subsidiaries are included in these financial statements from the date that control commences until the date that control ceases. All significant inter-company balances and transactions are eliminated on consolidation. The entities contained in the Financial Statements are as follows:
| Entity Name | Place of Business and Operations |
Functional Currency |
Equity Percentage |
| Cathedra Bitcoin Inc. (the "Company") - parent | Canada | CAD | n/a |
| HPC Holdings LLC ("HPC Holdings") | United States | USD | 100% owned by parent |
| Kungsleden, Inc. ("Kungsleden" or "K Inc.") | United States | USD | 100% owned by parent |
| Buckeye HPC LLC ("Buckeye HPC") | United States | USD | 100% owned by HPC Holdings |
| Sentinel Technology, LLC | United States | USD | 100% owned by K Inc. |
| Churchill Technologies LLC | United States | USD | 100% owned by K Inc. |
| Two Keys Technologies LLC | United States | USD | 100% owned by K Inc. |
| North Campbell HoldCo LLC | United States | USD | 100% owned by K Inc. |
| Buckeye Technologies HoldCo LLC ("Buckeye HoldCo") | United States | USD | 100% owned by K Inc. |
| Buckeye Technologies OpCo LLC ("Buckeye Technologies") | United States | USD | 100% owned by Buckeye HoldCo |
| North Campbell LandCo LLC | United States | USD | 100% owned by North Campbell HoldCo LLC |
| North Campbell HostCo LLC | United States | USD | 100% owned by North Campbell HoldCo LLC |
| Crystal Core LLC | United States | USD | 100% owned by K Inc. |
| Fortress Blockchain Holdings Corp. ("FBHC") | Canada | CAD | 100% owned by parent |
| Fortress Blockchain (US) Holdings Corp. ("FBUS") | United States | USD | 100% owned by FBHC |
| Cathedra Lease Co LLC ("CLC") | United States | USD | 100% owned by FBUS |
During the year ended December 31, 2025, the Company established HPC Holdings, Buckeye HPC, Buckeye HoldCo, and Buckeye Technologies to facilitate further business expansion and development opportunities.
The Company de-consolidated Tirpitz Technology HoldCo LLC along with its wholly owned subsidiaries Tirpitz Technology LandCo LLC and Tirpitz Technology HostCo LLC (collectively, "T Tech") in March 2025 after losing control, see Note 11 for additional information.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
Functional and Presentation Currency
Transactions undertaken in foreign currencies are translated into Canadian dollars at daily exchange rates prevailing when the transactions occur. Monetary assets and liabilities denominated in foreign currencies are translated at period-end exchange rates and non-monetary items are translated at historical exchange rates. Realized and unrealized exchange gains and losses are recognized in the consolidated statements of comprehensive income or loss. The assets and liabilities of foreign operations are translated into Canadian dollars using the period-end exchange rates. Income, expenses, and cash flows of foreign operations are translated into Canadian dollars using average exchange rates. Exchange differences resulting from the translation of foreign operations into Canadian dollars are recognized in other comprehensive income or loss and accumulated in equity.
Comprehensive Income (Loss)
Total comprehensive income (loss) comprises all components of profit or loss and other comprehensive income (loss). Other comprehensive income (loss) includes gains and losses from translating the financial statements of an entity's whose functional currency differs from the presentation currency and gains from revaluation of digital currencies.
Standards issued but not yet effective
Implementation of IFRS 18 - Presentation and Disclosure of Financial Statements
The introduction of IFRS 18 will provide all entities applying IFRS with more guidance on the presentation and disclosure of information in general purpose financial statements. The new standard will clarify guidance on how to present and disclose information that faithfully represents an entity's assets, liabilities, equity, revenue and expenses. The new standards are applied retrospectively for annual periods beginning on or after 1 January 2027, with early adoption permitted. The Company is currently assessing the expected impact of this standard and has not early adopted IFRS 18.
Implementation of IFRS S1 - General Requirements for Disclosure of Sustainability-related Financial Information - and IFRS S2 - Climate-related Disclosures
The adoption of IFRS S1 and S2 will introduce new requirements surrounding sustainability and climate-related disclosures for annual reporting purposes. The Canadian Sustainability Standards Board proposed Canadian-specific modifications to the standards issued by the International Sustainability Standards Board in June 2023. The Canadian specific versions of IFRS S1 and S2 are expected to be available for voluntary adoption starting January 1, 2025. The Canadian Securities Administrators have not yet confirmed whether the new standards will be mandatory for Canadian reporting issuers. The Company is currently assessing the expected impact of adopting these standards.
Classification and Measurement of Financial Instruments
In May 2024, the IASB issued amendments to IFRS 9 - Financial Instruments and IFRS 7 - Financial Instruments: Disclosures. The amendments relate to settling financial liabilities using an electronic payment system and assessing contractual cash flow characteristics of financial assets, and create additional disclosure requirements for financial instruments. The amendments are effective for annual periods beginning on or after January 1, 2026, with early adoption permitted. The Company is assessing the impacts to the consolidated financial statements.
Material Accounting Policies
Business Combination
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred which is measured at acquisition date at fair value, and the amount of any non-controlling interests in the acquiree. For each business combination, the Company elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition-related costs are expensed as incurred and included in general and administrative expenses.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
The Company determines that it has acquired a business when the acquired set of activities and assets include an input and a substantive process that together significantly contribute to the ability to create outputs. Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests and any previous interest held over the net identifiable assets acquired and liability assumed).
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company's CGUs or group of CGUs that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognized as of that date.
The measurement period is the period from the date of acquisition to the date that the Company obtains complete information about facts and circumstances that existed as of the acquisition date and is subject to a maximum period of one year.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.
Digital currencies
The Company accounts for its digital currencies on hand at the end of a reporting period, if any, under IAS 38, Intangible Assets, as an intangible asset with an indefinite useful life initially measured at cost, deemed to be the fair value upon receipt, and subsequently measured under the revaluation model. Under the revaluation model, increases in the digital currencies' carrying amount is recognized in other comprehensive income and under accumulated other comprehensive income in equity, while decreases are recorded in the consolidated statements of income or loss and comprehensive income or loss. However, increases are recognized in profit or loss to the extent that it reverses a revaluation decrease of digital currencies previously recognized in the statement of profit or loss. There is no recycling of gains from other comprehensive income or loss in the consolidated statements of income or loss and comprehensive income or loss, except to the extent that an increase in fair value reverses a previous decrease in fair value that has been recorded in the consolidated statements of income or loss and comprehensive income or loss, that increase is recorded in the consolidated statements of income or loss and comprehensive income or loss. The fair value of digital currencies on hand at the end of the reporting period is calculated as the quantity of digital currencies on hand multiplied by the price quoted on Coin Metrics (for bitcoin) and Coinbase (for other digital currencies) as at the reporting date. Any difference between the fair value of the digital currencies recorded upon receipt from mining activities, purchases or profit-sharing arrangements and the actual realized price upon disposal are recorded as gain or loss on sale of digital currencies.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
The Company has continued to classify digital currencies on hand at the end of the year as current assets as management has determined that cryptocurrency markets have sufficient liquidity to allow conversion within the Company's normal operating cycle.
The Company values its bitcoin based on the price quoted on Coin Metrics which is an average of quoted rates from various cryptocurrency exchanges. Coin Metrics data is derived from real-time (block-by-block) market price with over 400 metrics for over 100 assets and it has data feed of aggregate network data metrics for all of the top cryptocurrency assets. Management considers this fair value to be a level 2 input under IFRS 13 fair value measurement fair value hierarchy as the price on this source represents the average quoted prices on multiple digital currency exchanges.
Non-monetary transactions
In the normal course of its business, the Company enters into non-monetary transactions. These non-monetary transactions, which are otherwise payable in cash, are accounted for at their fair value. Non-monetary transactions consist of digital currencies paid for its mining and revenue-sharing fees, digital currencies received from customers for hosting services or proceeds received from sale of a subsidiary. Payments are measured at fair value using the price of the digital currencies provided at the time of the transaction.
Financial Instruments
Financial instruments are accounted for in accordance with IFRS 9, Financial Instruments: Classification and Measurement. A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
On initial recognition, financial assets are recognized at fair value and are subsequently classified and measured at: (i) amortized cost; (ii) fair value through other comprehensive income ("FVOCI"); or (iii) fair value through profit or loss ("FVTPL"). The classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. A financial asset is measured at fair value net of transaction costs that are directly attributable to its acquisition except for financial assets at FVTPL where transaction costs are expensed.
Financial assets classified and measured at amortized cost are those assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and the contractual terms of the financial asset give rise to cash flows that are solely payments of principal and interest ("SPPI"). Financial assets classified at amortized cost are measured using the effective interest method.
All financial assets not classified and measured at amortized cost or FVOCI are measured at FVTPL. On initial recognition of an equity instrument that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment's fair value in other comprehensive income.
The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity.
The classification determines the method by which the financial assets or financial liabilities are carried on the statement of financial position subsequent to inception and how changes in value are recorded. Cash and cash equivalents and Investments are measured at FVTPL. Financial instruments including trade and other receivables, due from related parties, trade payables and accrued liabilities, due to related parties, and contract liabilities are measured at amortized cost.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
Impairment of financial assets
IFRS 9 uses the expected credit loss ("ECL") model. The credit loss model groups receivables based on similar credit risk characteristics and days past due in order to estimate bad debts. The ECL model applies to the Company's receivables.
An 'expected credit loss' impairment model applies which requires a loss allowance to be recognized based on expected credit losses. The estimated present value of future cash flows associated with the asset is determined and an impairment loss is recognized for the difference between this amount and the carrying amount as follows: the carrying amount of the asset is reduced to estimated present value of the future cash flows associated with the asset, discounted at the financial asset's original effective interest rate, either directly or through the use of an allowance account and the resulting loss is recognized in profit or loss for the period.
Financial liabilities
Financial liabilities are designated as either: (i) fair value through profit or loss; or (ii) other financial liabilities. All financial liabilities are classified and subsequently measured at amortized cost except for financial liabilities at FVTPL. The classification determines the method by which the financial liabilities are carried on the statement of financial position subsequent to inception and how changes in value are recorded.
Accounts payable, interest payable, and loan payable are classified under other financial liabilities and carried on the statement of financial position at amortized cost.
The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognizes a financial liability when the terms of the liability are modified such that the terms and / or cash flows of the modified instrument are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.
Gains and losses on derecognition are generally recognized in the statement of profit or loss.
Revenue recognition
Revenue is recorded at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to a customer.
The principles in IFRS 15 are applied using the following five steps:
1. Identify the contract(s) with a customer
2. Identify the performance obligation in the contract
3. Determine the transaction price
4. Allocate the transaction price to the performance obligations in the contract
5. Recognize revenue when (or as) the entity satisfies a performance obligation The Company has concluded that the recognition and measurement of the sale of products in all contracts is consistent with the current revenue recognition practice and therefore does not expect any transitional adjustment.
For arrangements priced at fiat currency, the Company recognizes revenue based on the contract price. For arrangement priced at cryptocurrency, the Company recognizes revenue based on the spot price of the cryptocurrency to fiat currency on the date when it is earned.
Hosting revenue
The Company hosts and provides energized space and operating and maintenance services to third-party mining companies who locate their mining hardware at its data centers. The Company accounts for these agreements as a single performance obligation for services being delivered in a series with delivery being measured by monthly hosting fees of the mining hardware. As such, the Company recognizes revenue over the life of the contract as its series of distinct services are performed over the term of the contracts with its customers. The Company has determined that the contracts do not contain a significant financing component because the expected length of time between the transfer of services and receipt of consideration is less than one year, which are typically one month or less.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
For certain contracts, the Company may also be entitled to a monthly cash or non-cash profit-sharing fee, which is primarily based on the actual amount of bitcoin mined by the customer's hosted mining equipment during the month. The rate of profit sharing is determined at inception of the contract with subsequent amendments, as applicable, and non-cash consideration is generally paid in bitcoin. Non-cash consideration is measured at fair value at contract inception with changes in fair value attributable to reasons other than the form of consideration (other than price of bitcoin) measured as variable consideration (subject to the constraint on variable consideration) and recognized as hosting services are performed. This amount is recognized in revenue as services are performed. Changes in fair value of the non-cash consideration related for reasons other than changes in form are recognized at the end of each month as the related uncertainly is resolved and amount becomes known.
Mining revenue
The Company recognizes revenue from the provision of transaction confirmation services for digital currency blockchains, commonly termed "digital asset mining" or "cryptocurrency mining". As consideration for these services, the Company receives digital currency from each specific blockchain in which it participates ("coins"). Revenue is measured based on the fair value of the coins received. The fair value is determined using the spot price of the coin on the date of mining, based on the daily average from Coin Metrics for bitcoin. A coin is considered earned on the completion and addition of a block to the blockchain, at which time the economic benefit is received and can be reliably measured.
Contract assets and liabilities
A contract asset is recognized when the Company recognizes revenue before being unconditionally entitled to consideration under the payment terms set out in the contract. Contract assets are assessed for expected credit losses and are reclassified to receivables when the right to consideration has become unconditional.
A contract liability is recognized when the customer pays consideration for goods or services before the Company recognizes the related revenue. A contract liability would also be recognized if the Company has an unconditional right to receive non-refundable consideration before the Company recognizes the related revenue. In such cases, a corresponding receivable would also be recognized.
Customer liabilities
Customer liabilities include deposits from customers. Deposits from customers are reduced when they are returned back to customers or applied to trade receivables based on the contractual terms between the Company and its customers.
Other assets
Parts and peripherals located in the facilities and warehouses are stated at cost, net of write-offs to account for changing market prices for resale. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.
Property and equipment
Property and equipment are measured at cost, less accumulated depreciation and impairment losses, if any.
Property and equipment are recorded at purchase cost. Direct labor and other directly attributable costs incurred to construct new assets and upgrade existing assets are capitalized. Repairs and maintenance expenditures are recognized in the consolidated statements of income or loss as incurred. Significant renewals and betterments are capitalized.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
Property and equipment are depreciated using the straight-line method based on the estimated useful lives of the assets as follows:
| Category | Useful Life |
| Other mining equipment (mining equipment) | 5 years |
| Miners (mining equipment) | 3 years |
| Infrastructure | Lower of contractual terms or 10-12 years |
| Land | Infinite |
Land acquired by the Company has an infinite useful life and therefore is not depreciated.
The depreciation method, useful life and residual value of an asset are reviewed at least at each financial year-end and adjusted, if appropriate.
When assets are retired or otherwise disposed of, their cost and the related accumulated depreciation are derecognized from the consolidated statements of financial position and the resulting gains or losses on the disposal or sale of the assets are recognized in the consolidated statements of operations.
An asset under construction is stated at cost until the construction is completed, at which time it is reclassified to the property and equipment account to which it relates. During the construction period until the asset is ready for its intended use or sale, borrowing costs, which include interest expense, are capitalized in proportion to the average amount of accumulated expenditures during the period. Capitalization of borrowing costs ceases when the construction is completed, and the asset is ready for its intended use or sale.
Leases
At inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Company recognizes a lease liability and a right-of-use asset at the lease commencement date. The lease liability is initially measured as the present value of future lease payments discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's applicable incremental borrowing rate. The incremental borrowing rate is the rate which the Company would have to pay to borrow, over a similar term and with a similar security, the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment.
Lease payments included in the measurement of the lease liability comprise the following:
- fixed payments, including in-substance fixed payments, less any lease incentives receivable;
- variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
- amounts expected to be payable by the Company under residual value guarantees;
- the exercise price of a purchase option if the Company is reasonably certain to exercise that option; and
- payments of penalties for terminating the lease, if the Company expects to exercise an option to terminate the lease.
The lease liability is subsequently measured by:
- increasing the carrying amount to reflect interest on the lease liability;
- reducing the carrying amount to reflect the lease payments made; and
- remeasuring the carrying amount to reflect any reassessment or lease modifications.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option.
Whenever the Company incurs an obligation for costs to restore a leased asset to the condition required by the terms and conditions of the lease, a provision is recognized and measured under IAS 37. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset.
The right-of-use asset is initially measured at cost, which comprises the following:
- the amount of the initial measurement of the lease liability; any lease payments made at or before the commencement date, less any lease incentives received;
- any initial direct costs incurred by the Company; and
- an estimate of costs to be incurred by the Company in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories.
The right-of-use asset is subsequently measured at cost, less any accumulated depreciation and any accumulated impairment losses, and adjusted for any remeasurement of the lease liability. It is depreciated in accordance with the Company's accounting policy for property and equipment, from the commencement date to the earlier of the end of its useful life or the end of the lease term. Each lease payment is allocated between the lease liability and finance cost. The finance cost is charged to net earnings over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use assets are presented as property and equipment and the lease liabilities are presented as loans on the consolidated statement of financial position.
The Company does not recognize right-of-use assets and lease liabilities for the short-term leases that have a lease term of 12 months or less.
Goodwill
Goodwill is not amortized but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Impairment of non-financial assets
The Company reviews the carrying amounts of its non-financial assets, including property and equipment, when events or changes in circumstances indicate the assets may not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs. Assets carried at fair value, such as digital currencies, are excluded from impairment analysis.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows to be derived from continuing use of asset or cash generating unit are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Fair value less cost to sell is the amount obtainable from the sale of an asset or cash generating unit in an arm's length transaction between knowledgeable, willing parties, less the cost of disposal. When a binding sale agreement is not available, fair value less costs to sell can be estimated using a discounted cash flow approach with inputs and assumptions consistent with those of a market participant. If the recoverable amount of an asset or cash generating unit is reduced to its recoverable amount, an impairment loss is recognized immediately in the consolidated statement of loss and comprehensive loss. Where an impairment loss subsequently reverses, the carrying amount of the asset or cash generating unit is increased to the revised estimate of its recoverable amount, such that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
Income taxes
Prior to the reorganization on September 12, 2023, earnings and losses are included in the personal income tax return of the Company's shareholders. As a result, the Company did not incur any income tax obligation and the financial statements do not include a provision for income taxes.
Post the Company's reorganization on September 12, 2023, current and deferred income taxes are recognized as income or expense and included in the consolidated statements of profit or loss. Current income tax assets and liabilities are measured at the amounts expected to be recovered or paid by using the tax rates and tax laws that have been enacted or substantively enacted at each reporting date. Management periodically evaluates positions taken in the tax reporting process with respect to situations in which applicable tax regulation is subject to interpretation. Where appropriate, management establishes provisions based on the amounts expected to be paid to the tax authorities.
Deferred tax assets and liabilities arise from deductible and taxable temporary differences, respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits.
Apart from the temporary differences arising from goodwill not deductible for tax purposes, all deferred tax liabilities, and all deferred tax assets to the extent that it is probable that future taxable profits will be available against which the asset can be utilized, are recognized. Deferred tax assets and liabilities are measured using enacted or substantively enacted tax rates and tax laws at each reporting date which are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced if it is no longer probable that sufficient taxable profit will be available to compensate part or all of the benefits of deferred tax assets. Unrecognized deferred tax assets are re-assessed at each reporting date and recognized if it is probable that future taxable profits will be available for recovery. Tax deductions arising from the reversal of deferred tax assets are excluded from estimates of future taxable income.
Deferred tax assets and liabilities are offset in the consolidated statements of financial position, if and only if it has a legally enforceable right to set off current tax assets and liabilities and the deferred tax assets and liabilities relate to income taxes levied by the same Tax Authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
The Company determines the recognition and measurement of tax assets and liabilities that contain uncertainty over income tax by considering the assumptions used in the examination of tax treatments by the tax authorities, the probability that the tax authorities will accept uncertain tax treatment and re-consideration or estimation if there is a change in facts and circumstances.
If the acceptance of tax treatment is probable, the measurement is in line with income tax fillings. If the acceptance of tax treatment is not probable, the Company uses tax amounts using the method that provides a better prediction of resolution (i.e., most likely amount or expected value). Due to the complexity of some of these uncertainties, their ultimate resolution may result in payments that are materially different from current estimates. Any such differences will be reflected as adjustments to income tax expenses in the periods in which they are determined.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
Convertible loan
Convertible loans/debentures are financial instruments which are accounted for separately dependent on the nature of their components: a financial liability and an equity instrument. The identification of such components embedded within a convertible instrument requires significant judgment given that it is based on the interpretation of the substance of the contractual arrangement. Where the conversion option has a fixed conversion rate, the financial liability, which represents the obligation to pay coupon interest on the convertible debentures in the future, is initially measured at its fair value and subsequently measured at amortized cost. The residual amount is accounted for as an equity instrument at issuance. Where the conversion option has a variable conversion rate, the conversion option is recognized as a derivative liability measured at fair value through profit and loss. The residual amount is recognized as a financial liability and subsequently measured at amortized cost. The determination of the fair value is also an area of significant judgment given that it is subject to various inputs, assumptions and estimates including: contractual future cash flows, discount rates, credit spreads and volatility. Transaction costs are apportioned to the debt liability and equity components in proportion to the allocation of proceeds.
All derivative instruments are measured at fair value including embedded derivatives contained within financial or non-financial contracts that are not closely related to the host contract. A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host and accounted for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss .
The debt component is subsequently accounted for at amortized cost using the effective interest rate method. The embedded derivative is subsequently measured at fair value at each reporting date, with gains and losses in fair value recognized in profit or loss.
Transaction costs that relate to the issue of the convertible loan are allocated to the liability component and embedded derivative component in proportion to the allocation of the gross proceeds. Transaction costs relating to the embedded derivative liability component are included in the equity component and transaction costs relating to the financial liability component are included in the carrying amount of the liability component and are amortized over the expected life of the convertible loan using the effective interest method.
Decommissioning liability
A legal or constructive obligation to incur restoration costs may arise when mining equipment are deployed at hosting facilities. Such cost arising from the restoration of the hosting site to its original condition, discounted to their net present value, are provided for and charged to the statement of loss and comprehensive loss, as soon as the obligation to incur such costs arises.
Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The timing or amount of the outflow may still be uncertain. Provisions are measured using the best estimate of the expenditure required to settle the present obligation at the end of the reporting period, taking into account risks and uncertainties associated with the obligation. Provisions are discounted where the time value of money is considered material.
Unit placements
Proceeds from unit placements are allocated between shares and warrants issued using the residual method. Proceeds are first allocated to shares according to their fair value and any residual in the proceeds is allocated to the warrants.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
Share-based compensation
The Company operates a stock option plan and restricted share unit ("RSU") plan. Share-based compensation to employees is measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based compensation to non-employees is measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to reserves. The fair value of options is determined using the Black-Scholes pricing model which incorporates all market vesting conditions on grant date. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.
Earnings (loss) per share
Earnings (loss) per share is computed by dividing net income (loss) attributable to equity holders of the Company by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if additional common shares are assumed to be issued under securities that entitle their holders to obtain common shares in the future. For stock options, RSUs, and share purchase warrants, the number of additional shares for inclusion in diluted earnings per share calculations is determined when the exercise price is less than the average market price of the Company's common shares; the stock options and share purchase warrants are assumed to be exercised and the proceeds are used to repurchase common shares at the average market price for the period. The incremental number of common shares issued under stock options and repurchased from proceeds is included in the calculation of diluted earnings per share.
Common shares that could potentially dilute basic net earnings and net earnings per common share in the future that could be issued from the exercise of share options and warrants are not included in the computation of the diluted earnings per common share because to do so would be anti-dilutive.
Assets held for sale and discontinued operations
Assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement.
An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the asset is recognised at the date of derecognition.
Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of assets classified as held for sale continue to be recognised.
Assets classified as held for sale are presented separately from the other assets in the statement of financial position. The liabilities of assets classified as held for sale are presented separately from other liabilities in the statement of financial position.
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of income or loss.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
Use of Estimates, Assumptions, and Judgements
The preparation of the Financial Statements in accordance with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the Financial Statements and the reported amount of expenses during the reporting period.
The preparation of the Financial Statements requires the Company to make judgments, apart from those involving estimates, in applying accounting policies. The most significant judgments applying to the Company's Financial Statements include:
Revenue Recognition
Revenue is measured based on the fair value of the coins received. The fair value is determined using the spot price of the coin on the date of mining, based on the daily average from Coin Metrics for bitcoin.
There is currently no specific definitive guidance in IFRS or alternative accounting frameworks for the accounting for the production and mining of digital currencies, and management has exercised significant judgement in determining appropriate accounting treatment for the recognition of revenue for mining of digital currencies. Management has examined various factors surrounding the substance of the Company's operations and the guidance in IFRS 15, Revenue from Contracts with Customers, including the stage of completion being the completion and addition of block to a blockchain and the reliability of the measurement of the digital currency received. In the event authoritative guidance is enacted by the IASB or IFRIC, the Company may be required to change its policies which could result in a change in the Company's financial position and earnings.
Expected Credit Losses
The Company recognizes an amount equal to the lifetime ECL on the trade receivables and amounts due from related parties for which there has been a significant increase in credit risk since initial recognition. Loss allowances are measured based on historical experience and forecasted economic conditions. The amount of ECL is sensitive to changes in circumstances of forecast economic conditions.
Useful Lives of Property and Equipment
Depreciation of property and equipment is dependent upon estimates of useful lives and residual value which are determined through the use of assumptions. Estimates of residual value and useful lives are based on data and information from various sources including industry practice and historic experience. Although management believes the estimated useful lives of the Company's property and equipment are reasonable, changes in estimates could occur, affecting the expected useful lives and salvage values of the property and equipment.
Significant Estimates
Fair Value of Financial Instruments
The individual fair value attributed to the different components of a financing transaction is determined using valuation techniques. The Company uses judgment to select the methods used to make certain assumptions and in performing the fair value calculations in order to determine (a) the values attributed to each component of a transaction at the time of the issuance; (b) the fair value measurements for certain instruments that require subsequent measurement at fair value on a recurring basis; and (c) for disclosing the fair value of financial instruments subsequently carried at amortized cost. The valuation estimates could be significantly different because of the use of judgment and the inherent uncertainty in estimating the fair value of the instrument that are not quoted in active market.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
Useful Life and Residual Value
Depreciation of the assets in the cryptocurrency data center is based on an estimate of the assets' expected life. In order to determine the useful life of the assets in the cryptocurrency mining center, assumptions are required about a range of computing industry market and economic factors, including global hash rates dedicated to proof of work mining, network difficulty, technological changes, release and availability of newer and more efficient hardware and other inputs, and production costs. Based on the data that management has reviewed, management has determined to use the straight-line method of amortization over three years, to best reflect the current expected useful life of mining equipment. Management will review its estimates and assumptions at each reporting date and will revise its assumptions if new information supports the change.
Impairment of Non-Financial Assets
Impairment exists when the carrying value of an asset exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. These calculations are based on available data, other observable inputs and projections of cash flows, all of which are subject to estimates and assumptions. Recoverable amounts are also sensitive to assumptions about the future usefulness of in-process development and the related marketing rights.
Taxes
The determination of the Company's tax expense for the period and deferred tax assets and liabilities involves significant estimation and judgement by management. In determining these amounts, management interprets tax legislation in a variety of jurisdictions and makes estimates of the expected timing of the reversal of deferred tax assets and liabilities, the deferral and deductibility of certain items and interpretation of the treatment for tax purposes of digital currencies by taxation authorities. Management also makes estimates of future earnings, which affect the extent to which potential future tax benefits may be used. The Company is subject to assessments by various taxation authorities, which may interpret legislation differently. These differences may affect the final amount or the timing of the payments of taxes. The Company provides for such differences where known based on management's best estimate of the probable outcome of these matters.
Digital Currency Valuation
Digital currency denominated assets are included in current assets. Digital currencies are carried at their fair value determined by the spot rate based on the daily average from Coin Metrics. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company's earnings and financial position.
Share-Based Compensation
The Company utilizes the Black-Scholes Option Pricing Model ("Black-Scholes") to estimate the fair value of stock options granted to directors, officers, employees and consultants. The use of Black-Scholes requires management to make various estimates and assumptions that impact the value assigned to the stock options including the forecast future volatility of the stock price, the risk-free interest rate, dividend yield and the expected life of the stock options. Any changes in these assumptions could have a material impact on the calculation of the share-based compensation; however, the most significant estimate is volatility. Expected future volatility can be difficult to estimate as the Company has had limited history, is in a unique industry, and historical volatility is not necessarily indicative of future volatility.
Business Combination - Purchase Price Allocation
The consideration transferred (or deemed consideration) and acquired assets and assumed liabilities are recognized at fair value on the date of the Company effectively obtains control. The measurement of each business combination is based on the information available on the acquisition date. The estimate of fair value of the consideration transferred (or deemed consideration) and acquired intangible assets (including goodwill), property and equipment, other assets and the liabilities assumed are based on estimates and assumptions. The measurement is largely based on the projected cash flows, discount rates and market conditions at the date of acquisition.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
Areas of significant estimates and judgments also include:
- Collectability of trade and other receivables
- Completeness of trade payables and accrued liabilities
- Valuation of right-of-use assets and lease liabilities
- Valuation of convertible loans
4. Digital Currencies and Revenues
Mining and Profit-Sharing Revenue
Digital currencies are recorded at their fair value on the date they are received as revenues and are revalued to their fair value at each reporting date. Fair value is determined by using the daily price of bitcoin from Coin Metrics.
| BTC Units | Amount ($) | |||||
| Bitcoin balance as at December 31, 2023 | 0.86 | 47,429 | ||||
| Bitcoin acquired in business combination | 44.40 | 4,029,042 | ||||
| Bitcoin earned | 37.89 | 3,851,629 | ||||
| Bitcoin earned in profit-sharing arrangement | 2.33 | 171,570 | ||||
| Bitcoin exchanged for cash and services | (37.38 | ) | (3,360,913 | ) | ||
| Revaluation gain during the year | - | 1,451,423 | ||||
| Unrealized translation adjustment | - | 264,803 | ||||
| Bitcoin balance as at December 31, 2024 | 48.10 | 6,454,983 | ||||
| Bitcoin earned | 61.29 | 8,775,024 | ||||
| Bitcoin exchanged for cash and services | (77.41 | ) | (11,653,136 | ) | ||
| Bitcoin exchanged for other digital currency | (5.63 | ) | (826,640 | ) | ||
| Bitcoin pledged as collateral | (50.54 | ) | (5,976,307 | ) | ||
| Transfer from restricted digital currencies after loan repayment | 28.91 | 4,680,732 | ||||
| Revaluation loss during the year | - | (822,429 | ) | |||
| Unrealized translation adjustment | - | (66,308 | ) | |||
| Bitcoin balance as at December 31, 2025 | 4.72 | 565,919 |
The Company pledged substantial quantity of its bitcoin as collateral for the term loan during the year ended December 31, 2025. The portion of the collateralized bitcoin was used to prepay the term loan early, please see Note 14 for additional information. The restricted bitcoin balances and changes for the year ended December 31, 2025 are as follows:
| BTC Units | Amount ($) | |||||
| Restricted bitcoin balance as at December 31, 2024 | - | - | ||||
| Bitcoin pledged as collateral | 50.54 | 5,976,307 | ||||
| Bitcoin withheld to settle the principal and accrued interest | (21.63 | ) | (3,521,263 | ) | ||
| Transfer to digital currencies after loan repayment | (28.91 | ) | (4,680,732 | ) | ||
| Revaluation gain during the year | - | 2,482,936 | ||||
| Unrealized translation adjustment | - | (257,248 | ) | |||
| Restricted bitcoin balance as at December 31, 2025 | - | - |
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
The Company used Tether and USD Coin its business operations to receive payments from its customers and make payments to service providers or suppliers. The balances and changes of these digital currencies are shown below:
| Tether Units | Amount ($) | |||||
| Tether balance as at December 31, 2024 | 1,002.13 | 1,442 | ||||
| Tether received as payment in arrangements with customers | 3,648,230.10 | 5,111,528 | ||||
| Tether exchanged for cash and services | (5,445,988.80 | ) | (7,666,549 | ) | ||
| Tether exchanged for other digital currency | 597,392.79 | 826,640 | ||||
| Tether purchased with cash | 212,676.81 | 295,819 | ||||
| Tether received from sale of discontinued operation | 1,000,000.00 | 1,443,800 | ||||
| Revaluation loss | - | (370 | ) | |||
| Unrealized translation adjustment | - | 5,910 | ||||
| Tether balance as at December 31, 2025 | 13,313.03 | 18,220 |
| USD Coin Units |
Amount ($) | |||||
| USD Coin balance as at December 31, 2024 | - | - | ||||
| USD Coin purchased with cash | 799,272.58 | 1,149,993 | ||||
| USD Coin exchanged for cash and services | (799,272.58 | ) | (1,149,993 | ) | ||
| USD Coin balance as at December 31, 2025 | - | - |
Hosting Revenue
During the year ended December 31, 2025, the Company generated hosting revenue of $12,248,650 (2024 - $19,292,094). Two customers exceeded 10% of total hosting revenue of the Company with the following percentages representing their respective shares: 41% and 39% (2024 - three customers exceeded 10% of total hosting revenue of the Company with the following percentages representing their respective shares: 45%, 19% and 12%).
The Company receives monthly prepayments and short-term or long-term deposits from various customers according to the terms of hosting arrangements. The monthly prepayments are classified as contract liabilities, and deposits are classified as customer liabilities in the consolidated statements of financial position.
5. Trade and Other Receivables
Trade receivables are amounts due from customers for services performed in the ordinary course of business and claimed sales tax input tax credits. They are generally due for settlement within 30 days and are therefore all classified as current. Trade receivables are recognized initially at the amount of consideration that is unconditional, unless they contain significant financing components, when they are recognized at fair value. The Company holds the trade receivables with the objective of collecting the contractual cash flows and therefore measure them subsequently at amortized cost using the effective interest method.
Other receivables represent amounts due from third parties from sale of equipment.
| December 31, 2025 |
December 31, 2024 |
|||||
| Trade receivables | $ | 809,170 | $ | 1,448,900 | ||
| Other receivables | 123,354 | - | ||||
| Total trade and other receivables | $ | 932,524 | $ | 1,448,900 |
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
6. Prepaid Expenses
| December 31, 2025 |
December 31, 2024 |
|||||
| General and administrative | $ | 401,173 | $ | 260,825 | ||
| Hosting business utilities | 1,340,364 | 996,668 | ||||
| Total prepaid expenses | $ | 1,741,537 | $ | 1,257,493 |
7. Deposits
| December 31, 2025 |
December 31, 2024 |
|||||
| Utility deposits | $ | 2,240,568 | $ | 2,160,374 | ||
| Lease deposits | 146,928 | 313,033 | ||||
| Bitcoin mining deposits | - | 148,309 | ||||
| Total deposits | $ | 2,387,496 | $ | 2,621,716 | ||
| Less: current portion of deposits | 92,104 | 148,309 | ||||
| Non-current portion of deposits | $ | 2,295,392 | $ | 2,473,407 |
8. Other Non-Current Assets
In November 2022 and July 2023, the Company contributed US$450,000 (C$639,167 equivalent) and US$350,000 (C$497,129 equivalent) to regulated power and utility entities as a form of aid in construction for the required infrastructure maintenance pursuant to the terms of the arrangements. The Company amortizes the amounts over the lease term of 10 and 6 years, respectively, the terms of the contracts, on a straight-line basis.
In December 2025, the Company contributed US$157,111 (C$216,515 equivalent) to regulated power and utility entity as a form of aid in construction for the required infrastructure maintenance pursuant to the terms of the arrangement. The Company amortizes this amount over the lease term of 10 years on a straight-line basis.
Amortization expense is included in cost of revenues: depreciation in the consolidated statement of income or loss and comprehensive income or loss. For the year ended December 31, 2025, the Company incurred depreciation expense of $148,076 (2024 - $140,400).
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
9. Property and Equipment
| Infrastructure | Mining equipment |
Construction- in-progress |
Land | Total | |||||||||||
| Cost | |||||||||||||||
| Balance, December 31, 2023 | $ | 3,051,267 | $ | 780,334 | $ | 539,862 | $ | 136,658 | $ | 4,508,121 | |||||
| Additions from business combination | 1,917,194 | 3,069,626 | - | - | 4,986,820 | ||||||||||
| Additions | - | 731,146 | - | - | 731,146 | ||||||||||
| Designated as assets held for sale | (74,287 | ) | - | (546,229 | ) | - | (620,516 | ) | |||||||
| Translation adjustment | 350,890 | 245,372 | 6,367 | 12,016 | 614,645 | ||||||||||
| Balance, December 31, 2024 | $ | 5,245,064 | $ | 4,826,478 | $ | - | $ | 148,674 | $ | 10,220,216 | |||||
| Additions | 2,584,379 | 338,119 | 84,307 | - | 3,006,805 | ||||||||||
| Disposals | (1,256,173 | ) | (1,987,306 | ) | - | - | (3,243,479 | ) | |||||||
| Translation adjustment | (232,267 | ) | (214,484 | ) | (1,457 | ) | (7,057 | ) | (455,265 | ) | |||||
| Balance, December 31, 2025 | $ | 6,341,003 | $ | 2,962,807 | $ | 82,850 | $ | 141,617 | $ | 9,528,277 | |||||
| Accumulated depreciation and impairment | |||||||||||||||
| Balance, December 31, 2023 | $ | 325,518 | $ | 122,341 | $ | - | $ | - | $ | 447,859 | |||||
| Additions | 911,895 | 1,294,455 | - | - | 2,206,350 | ||||||||||
| Translation adjustment | 90,463 | 66,460 | - | - | 156,923 | ||||||||||
| Balance, December 31, 2024 | $ | 1,327,876 | $ | 1,483,256 | $ | - | $ | - | $ | 2,811,132 | |||||
| Additions | 1,619,280 | 1,929,175 | - | - | 3,548,455 | ||||||||||
| Reversal on disposals | (974,101 | ) | (1,893,327 | ) | - | - | (2,867,428 | ) | |||||||
| Translation adjustment | (69,186 | ) | (96,292 | ) | - | - | (165,478 | ) | |||||||
| Balance, December 31, 2025 | $ | 1,903,869 | $ | 1,422,812 | $ | - | $ | - | $ | 3,326,681 | |||||
| Carrying amount | |||||||||||||||
| Balance, December 31, 2023 | $ | 2,725,749 | $ | 657,993 | $ | 539,862 | $ | 136,658 | $ | 4,060,262 | |||||
| Balance, December 31, 2024 | $ | 3,917,188 | $ | 3,343,222 | $ | - | $ | 148,674 | $ | 7,409,084 | |||||
| Balance, December 31, 2025 | $ | 4,437,134 | $ | 1,539,995 | $ | 82,850 | $ | 141,617 | $ | 6,201,596 |
The Company sold infrastructure and mining equipment that are close to the end of their useful lives and realized a gain on sale of $54,360 classified as other income in the consolidated statement of income or loss and comprehensive income or loss.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
10. Right-of-Use Assets and Lease Liabilities
On March 1, 2023, and July 26, 2023, the Company entered into two agreements to lease building property in Kentucky state. The building properties are used by the Company to provide hosting services to arms-length bitcoin mining customers. The leases have an initial term of 10 years and 6 years, respectively, and the Company will make lease payments of US$10,000 and US$1,000 per month, respectively. The Company used 20%, its estimated incremental borrowing rate, to calculate the present value of the lease payments on initial measurement.
On July 23, 2024, as part of the business combination with Cathedra (Note 2), the Company acquired right-of-use (ROU) assets and lease liabilities comprising two building property lease agreements (the "CBIT leases") with remaining lease terms of 10 and 18 months. The Company will make lease payments on the CBIT leases of US$103,680 and US$11,200 per month, respectively.
Effective August 1, 2024, the Company and the lessor amended one of the CBIT leases, changing the monthly payments from US$103,680 to an amount based on electricity consumption, which effectively remained fixed. The lease term was extended by five months, making the new end date August 31, 2025; after this, the lease converted to a month-to-month agreement. As a result of the lease amendments, the Company re-measured its lease liability using interest an interest rate of 20%, the Company's estimated incremental borrowing rate at the time of re-measurement, and a corresponding increase to right-of-use asset.
In July 2025, the Company entered into a new agreement to lease the property located in Franklin, Kentucky. The lease expires on July 31, 2035. The ROU asset and corresponding lease liability were measured using an interest rate of 20%, the Company's estimated incremental borrowing rate, to calculate the present value of the lease payments on initial measurement.
| Right-of-use assets | Building Properties | ||
| Cost | |||
| Balance, December 31, 2023 | $ | 737,903 | |
| Additions from business combination (Note 2) | 1,510,745 | ||
| Re-measurement of right-of-use asset | 235,663 | ||
| Translation adjustment | 143,656 | ||
| Balance, December 31, 2024 | $ | 2,627,967 | |
| Additions | 705,542 | ||
| Translation adjustment | (121,067 | ) | |
| Balance, December 31, 2025 | $ | 3,212,442 | |
| Accumulated Depreciation | |||
| Balance, January 1, 2024 | $ | 61,203 | |
| Depreciation charge in the year | 821,529 | ||
| Translation adjustment | 39,372 | ||
| Balance, December 31, 2024 | $ | 922,104 | |
| Depreciation charge in the year | 1,136,271 | ||
| Translation adjustment | (65,103 | ) | |
| Balance, December 31, 2025 | $ | 1,993,272 | |
| Carrying value | |||
| Balance, December 31, 2024 | $ | 1,705,863 | |
| Balance, December 31, 2025 | $ | 1,219,170 |
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
The Company is committed to minimum lease payments as follows:
| December 31, 2025 |
December 31, 2024 |
|||||
| Maturity analysis - contractual undiscounted cash flows | ||||||
| Less than one year | $ | 345,391 | $ | 1,347,386 | ||
| One to five years | 1,358,265 | 752,545 | ||||
| More than five years | 1,096,480 | 532,393 | ||||
| Total undiscounted lease labilities | $ | 2,800,136 | $ | 2,632,324 | ||
| Lease liabilities | $ | 1,362,065 | $ | 1,827,922 | ||
| Current | $ | 80,053 | $ | 1,132,305 | ||
| Non-current | $ | 1,282,012 | $ | 695,617 |
During the year ended December 31, 2025, the Company recognized total interest expense of $268,698 (2024 - $274,284) in connection with its lease liabilities.
11. Assets Classified as Held for Sale and Discontinued Operation
The Company formed T Tech in November 2023, initially holding a 100% interest. On January 10, 2024, it reorganized and gave up 75% interest in exchange for contribution promises.
Subsequently the Company together with other members of T Tech decided to sell T Tech. The Board of Managers, consisting of Cathedra Bitcoin Inc.'s majority shareholders, approved the sale and assets before the year ended December 31, 2024. Accordingly, the assets and liabilities directly associated with those assets were classified as held for sale.
The major classes of assets classified as held for sales and liabilities directly associated with the assets classified as held for sale as at December 31, 2024 are as follows:
| Assets | |||
| Cash and cash equivalents | 85,209 | ||
| Digital currencies | 1,358,212 | ||
| Trade receivables | 3,381,400 | ||
| Prepaid expenses | 310,802 | ||
| Property and equipment | 16,560,053 | ||
| Deposits | 9,432,076 | ||
| $ | 31,127,752 | ||
| Liabilities | |||
| Trade payables and accrued liabilities | $ | 3,029,087 | |
| Due to related parties | 5,616,772 | ||
| Contract liabilities | 1,668,665 | ||
| Customer liabilities | 4,191,834 | ||
| $ | 14,506,358 | ||
| Net assets directly associated with assets classified as held for sale | $ | 16,621,394 |
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
The results of T Tech's operations for the years ended December 31, 2025 and 2024 are as follows:
| Year ended: | December 31, 2025 |
December 31, 2024 |
||||
| Revenues | $ | 1,318,623 | $ | 11,531,580 | ||
| Cost of revenues | 1,963,286 | 12,213,498 | ||||
| Operating expenses | 121,411 | 41,863 | ||||
| Operating loss | $ | 766,074 | $ | 723,781 | ||
| Other income (expense) | (118,590 | ) | (95,495 | ) | ||
| Exchange differences on translation of foreign operations reclassified to profit or loss | 1,175,085 | - | ||||
| Income/(loss) before tax from discontinued operation | $ | 290,421 | $ | (819,276 | ) | |
| Tax expense | - | - | ||||
| Profit/(loss) from discontinued operation | $ | 290,421 | $ | (819,276 | ) |
The net cash flow generated by T Tech for the years ended December 31, 2025 and 2024 are as follows:
| Year ended: | December 31, 2025 |
December 31, 2024 |
||||
| Operating | (884,664 | ) | (7,789,748 | ) | ||
| Investing | - | (7,161,729 | ) | |||
| Financing | - | 15,059,044 | ||||
| Effect of foreign exchange rate fluctuation | - | (28,176 | ) | |||
| Net cash inflow/(outflow) | $ | (884,664 | ) | $ | 79,391 |
The Company received full consideration from the sale of T Tech during the year ended December 31, 2025. The Company fulfilled all conditions of the sale in September 2025 and recognized a gain on disposal of subsidiary of $167,365 upon closing of the sale. T Tech was de-consolidated effective March 1, 2025 subsequent to receipt of the first tranche of the consideration and takeover by the buyer, accordingly assets classified as held for sale, liabilities directly associated with those assets and non-controlling interest were de-recognized.
12. Investments
Initial valuation of investments is based on the acquisition cost, which approximates the fair value. Subsequent valuations reflect asset appraisals, as well as market transaction data, such as financing rounds. The Company's holdings in private companies are generally valued utilizing net asset values. As of December 31, 2025 and 2024, Cathedra held the following investments without exercise of significant influence over them:
Low Time Preference Fund II, LLC
On November 12, 2021, Cathedra subscribed for limited liability company interests in Low Time Preference Fund II, LLC, for a total value of $312,925 (US$250,000). As of December 31, 2025, the fair value of this investment is $403,768 (December 31, 2024 - $404,327) with unrealized gain of $19,583 (2024 - unrealized loss of $14,321) recognized in the consolidated statement of income or loss.
Silvermoon Inc.
On May 5, 2022, Cathedra received 35,000,000 common shares of Silvermoon Inc. ("Silvermoon") as part a non-arm's length share exchange agreement for giving up a 100% ownership in The Good Shepherd Land and Livestock Company Limited, a UK based legal entity. Cathedra held 35,000,000 common shares as of July 23, 2024, and December 31, 2024 and 2025, which represents approximately 21.6% of the issued and outstanding common shares of Silvermoon. The Company exercised no significant influence as of July 23, 2024, and December 31, 2024 and 2025, therefore the investment is classified and accounted for at FVTPL. The fair value of Silvermoon was primarily driven by the underlying 4.25 acres of land in South West United Kingdom which includes 4 dairy buildings which was fair valued based on a third party appraiser who prepared a summary of comparable properties.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
As of December 31, 2025, the fair value of this investment is $612,890 (December 31, 2024 - $512,156) with unrealized gain of $100,734 (2024 - $nil) recognized in the consolidated statement of income or loss.
13. Trade Payables and Accrued Liabilities
| December 31, 2025 |
December 31, 2024 |
|||||
| Trade payables | $ | 1,232,380 | $ | 889,736 | ||
| Accrued liabilities | 1,427,600 | 1,588,476 | ||||
| Total trade payables and accrued liabilities | $ | 2,659,980 | $ | 2,478,212 |
14. Loans and borrowings
Convertible loan
In connection with the closing of business combination, the Company amended the conversion price of 3.5% senior secured convertible debentures of the Company due November 11, 2025, originally issued to the debenture holder on November 11, 2021 (the "Debentures"), from $23.40 to $4.50. The aggregate principal amount of the Debentures was $5,733,728 as of December 31, 2024.
The Company applied a debt modification accounting for the change in terms in accordance with IFRS 9, Financial Instruments. The market rate of 18.5% was used to estimate a liability component of the convertible loan.
Liability Component
| Balance, December 31, 2023 | $ | - | |
| Recognized in business combination (Note 2) | 4,827,945 | ||
| Accretion (i) | 306,176 | ||
| Balance, December 31, 2024 | $ | 5,134,121 |
(i) Accretion expense is included in net finance costs in the consolidated statement of income or loss.
Equity Component
The equity component of convertible loan of $577,210 was recognized in the business combination (Note 2).
On March 19, 2025, the Company restructured its outstanding debt whereby the convertible loan's principal amount was extinguished through repayment of the outstanding principal with $4,586,982 plus accrued interest. In addition, the holder of the convertible loan agreed to surrender 363,233 SV share purchase warrants of the Company for cancellation. The balance as of December 31, 2025 and the change for the year then ended is as follows:
| Balance, December 31, 2024 | $ | 5,134,121 | |
| Accretion | 190,869 | ||
| Repayment of interest | (44,596 | ) | |
| Repayment of principal | (4,586,983 | ) | |
| Gain from debt settlement | (693,411 | ) | |
| Balance, December 31, 2025 | $ | - |
Term loan
Concurrently, the Company entered into a new term loan of US$2,494,693 ($3,589,364 equivalent) to partially repay the outstanding principal amount of the convertible loan. The loan is secured by approximately 50 of the Company's bitcoin, carries interest at a rate of 13% per annum, payable monthly; and is interest-only until maturity on March 18, 2026. The Company prepaid this loan in full in July 2025.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
| Balance, December 31, 2024 | $ | - | |
| Proceeds, net of deferred finance cost | 3,564,168 | ||
| Amortization of deferred financing cost | 53,143 | ||
| Repayment | (3,483,199 | ) | |
| Translation adjustment | (134,112 | ) | |
| Balance, December 31, 2025 | $ | - |
At inception, the Company recognized deferred financing cost of $54,277, which was fully amortized over term of the loan. The Company paid $200,856 in term loan interest.
15. Share Capital
On July 22, 2024, in connection with the business combination the Company altered the articles of the corporation, which was approved by the Company's shareholders at its annual and special meeting of shareholders:
a. Changed the name of its common shares to "subordinate voting shares" (SV shares);
b. Created a new class of multiple voting shares (MV shares) convertible into 100 subordinate voting shares;
c. Added special rights and restrictions to the subordinate voting shares and the multiple voting shares, pursuant to which, among other things, the holders of the multiple voting shares are entitled to 1.52 votes per multiple voting share held. On an "as converted" basis, assuming the conversion of the multiple voting shares to subordinate voting shares, the holders of multiple voting shares will have 1.52 votes per subordinate voting share compared to 1 vote per subordinate voting share by the holders of the subordinate voting shares.
Authorized
Unlimited number of subordinate voting shares without par value. Each subordinate voting share entitles the holder to one vote.
Unlimited number of multiple voting shares without par value. Each multiple voting share is convertible into 100 subordinate voting shares and entitles the holder to 1.52 votes.
The consolidated financial statements for the years ended December 31, 2025 and 2024 incorporate the 30-to-1 share consolidation, which became effective on October 16, 2025. All shares and per share amounts have been restated to reflect the share consolidation retrospectively.
Issued and Outstanding
- On February 7, 2025, the Company issued 3,248 SV shares for vested RSUs.
- On July 31, 2025, the Company issued 135,690 SV shares for vested RSUs.
- On December 2, 2025, the Company completed a non-brokered private placement of an aggregate of 430,000 units of the Company at a price of $1.25 per unit for aggregate gross proceeds of $537,500. Each unit consists of one SV share and one SV share purchase warrant, with each entitling the holder thereof to acquire one additional SV share at an exercise price of $1.88 per share for a period of two years following the closing date of the private placement.
- Upon the closing of the business combination on July 23, 2024, 7,917,119 SV shares and 208,446 MV shares were issued and outstanding.
- On August 7, 2024, the Company issued 19,356 SV shares to its employees from exercising of vested RSUs.
- On October 16, 2024, the Company issued 31,489 SV shares from exercising of vested RSUs.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
Post-merger share capital
| Multiple voting shares (MV shares) | No. | Amount ($) | ||||
| Kungsleden's common shares on the acquisition date | 33,333 | 1,278 | ||||
| Share exchange ratio (Note 2) | 6.253429078 | - | ||||
| MV shares issued in exchange for Kungsleden's common shares | 208,446 | 21,576,955 | ||||
| Balance, December 31, 2024 and 2025 | 208,446 | 21,578,233 | ||||
| Subordinate voting shares (SV shares) | No. | Amount ($) | ||||
| Cathedra's common shares on the acquisition date | 7,917,119 | - | ||||
| Exchange ratio | 1.00 | - | ||||
| SV shares of the Resulting Issuer | 7,917,119 | - | ||||
| Issued on RSU exercise | 50,845 | 138,521 | ||||
| Balance, December 31, 2024 | 7,967,964 | 138,521 | ||||
| Issued on RSU exercise | 138,938 | 416,287 | ||||
| Issued in connection to the non-brokered private placement | 430,000 | 516,107 | ||||
| Subscriptions receivables (a) | (150,000 | ) | ||||
| Balance, December 31, 2025 | 8,536,902 | 920,915 | ||||
| December 31, 2025 |
December 31, 2024 |
|||||
| An equivalent number of SV shares based on an a 'if converted' basis (convertible from MV shares) | 20,844,600 | 20,844,600 | ||||
| SV shares outstanding | 8,536,902 | 7,967,964 | ||||
| The total SV shares, including SV shares on an a 'if converted' basis | 29,381,502 | 28,812,564 |
(a) The Company collected the entire $150,000 subscriptions subsequent to year-end date.
16. Reserves
Replacement Awards in Business Combination
The stock options were fair valued using the Black Scholes option pricing model. The weighted average inputs used in the Black Scholes model were as follows:
| Share price on business combination date | $ | 3.00 | |
| Exercise price | $ | 15.00 | |
| Risk-free interest rate | 3.60% | ||
| Expected annualized share volatility | 130.00% | ||
| Expected dividend yield | 0.00% | ||
| Expected life (years) | 1.95 | ||
| Fair value of stock option | $ | 0.90 |
The share purchase warrants were fair valued using the Black Scholes option pricing model. The weighted average inputs used in the Black Scholes model were as follows:
| Share price on business combination date | $ | 3.00 | |
| Exercise price | $ | 28.20 | |
| Risk-free interest rate | 3.58% | ||
| Expected annualized share volatility | 130.00% | ||
| Expected dividend yield | 0.00% | ||
| Expected life (years) | 1.97 | ||
| Fair value of share purchase warrant | $ | 0.90 |
The restricted share units were valued using the fair value of SV share of the Company on the issuance date.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
Restricted Share Units (RSU)
On July 22, 2024, the Company implemented a long-term equity incentive plan ("LTIP"), comprising a rolling option plan covering up to 10% of the issued and outstanding SV shares, as well as a fixed plan for up to 2,875,139 SV shares designated as RSUs. Subsequently, the fixed allocation of SV shares reserved for RSUs was increased to 2,895,166 SV shares following approval by the shareholders at the annual general meeting held on December 12, 2025.
For the year ended December 31, 2025, the Company recognized share-based compensation of $728,880 (2024 - $217,966).
A summary of changes in restricted share units outstanding for the years ended December 31, 2025 and 2024 follows:
| Balance, December 31, 2023 | - | ||
| Granted as replacement for Cathedra's RSUs | 57,228 | ||
| Granted (a) | 271,380 | ||
| Cancelled/Forfeited (b) | (3,133 | ) | |
| Exercised | (50,846 | ) | |
| Balance, December 31, 2024 | 274,629 | ||
| Granted (c) | 2,672,584 | ||
| Cancelled/Forfeited | (45,230 | ) | |
| Exercised | (138,938 | ) | |
| Balance, December 31, 2025 | 2,763,045 |
(a) 1/3 of RSUs to vest annually until July 23, 2027
(b) To settle withholding tax obligations due to the issuance of SV shares to its employees
(c) The Company granted RSUs as follows:
- On September 29, 2025, the Company granted 1,447,584 RSUs to the employee of the Company. The award vests in three equal annual installments on each of the first, second, and third anniversaries of the grant date, subject to accelerated vesting upon a Change of Control.
- On December 2, 2025, the Company granted 445,000 RSUs to directors, officers and consultants of the Company, 210,000 of which vest on the first anniversary of the grant date and the remainder of RSUs vest as follows: One-third vests on the first anniversary of the grant date, with the remaining balance vesting in eight equal quarterly installments on each of March 2, June 2, September 2, and December 2 until fully vested.
- On December 16, 2025, the Company granted 780,000 RSUs to directors, officers and consultant of the Company with the following vesting terms: One-third vests on the first anniversary of the grant date, with the remaining balance vesting in eight equal quarterly installments on each of March 16, June 16, September 16, and December 16 until fully vested.
Stock Options
A summary of changes in stock options follows:
| Number of stock options |
Weighted average exercise price |
|||||
| Balance, December 31, 2023 | - | - | ||||
| Granted as replacement for Cathedra's stock options | 120,175 | 15.00 | ||||
| Expired | (3,333 | ) | 15.30 | |||
| Balance, December 31, 2024 | 116,842 | 15.00 | ||||
| Granted (a) | 615,873 | 1.44 | ||||
| Cancelled | (7,922 | ) | 14.33 | |||
| Balance, December 31, 2025 | 724,793 | 13.42 |
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
(a) The Company granted stock options as follows:
- On February 1, 2025, the Company granted 15,873 stock options to the newly hired employee. All the stock options vest on 12-month anniversary from the grant date.
- On December 2, 2025, the Company granted 600,000 stock options to a consultant and directors of the Company, 100,000 of which vest immediately and the remainder of stock options vest as follows: One-third vests on the first anniversary of the grant date, with the remaining balance vesting in eight equal quarterly installments on each of March 2, June 2, September 2, and December 2 until fully vested.
The stock options outstanding and exercisable as of December 31, 2025, are as follows:
| Exercise price ($) | Number of stock options outstanding |
Weighted average remaining life |
| 1.42 | 600,000 | 4.92 |
| 2.25 | 15,873 | 4.09 |
| 3.90 | 333 | 1.82 |
| 10.50 | 2,961 | 1.38 |
| 12.30 | 2,961 | 1.03 |
| 14.55 | 8,333 | 0.65 |
| 14.70 | 66,666 | 0.67 |
| 15.00 | 1,000 | 2.14 |
| 16.80 | 21,666 | 0.73 |
| 18.00 | 5,000 | 2.14 |
| Outstanding | 724,793 | 4.28 |
| Exercisable | 208,920 | 2.77 |
The weighted average exercise price of options outstanding and exercisable as of December 31, 2025, is $8.52 (2024 - $15.00)
For the year ended December 31, 2025, the Company recognized share-based compensation from stock options of $166,302 (2024 - $nil).
The granted stock options were fair valued using the Black Scholes option pricing model. The weighted average inputs used in the Black Scholes model were as follows:
| Share price | $ | 1.44 | |
| Exercise price | $ | 1.44 | |
| Risk-free interest rate | 2.63% | ||
| Expected annualized share volatility | 121.57% | ||
| Expected dividend yield | 0.00% | ||
| Expected life (years) | 3.97 | ||
| Fair value of stock option | $ | 1.13 |
Warrants
During the year ended December 31, 2024, the Company repriced 1,227,320 SV share warrants and included a mandatory acceleration provision if the SV share closing price exceeds the SV share price of $4.50 continuously for 10 days. As a result of the warrant repricing, the Company recorded a financing fee of $1,299,106, which is included in net finance costs in the consolidated statement of income and comprehensive income. The following weighted average inputs were used in the Black Scholes option-pricing model:
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
| Weighted average | |
| Grant date share price | 3.00 |
| Exercise price | 3.60 |
| Expected life (years) | 1.96 |
| Volatility | 109.49% |
| Dividend yield | 0% |
| Risk free rate | 2.91% |
A summary of changes in warrants outstanding for the years ended December 31, 2025 and 2024 is as follows:
| Number of warrants |
Weighted average exercise price |
|||||
| Balance, December 31, 2023 | - | - | ||||
| Issued as replacement for Cathedra's warrants | 1,704,820 | 28.20 | ||||
| Balance, December 31, 2024 | 1,704,820 | 11.10 | ||||
| Issued (Note 15) | 430,000 | 1.88 | ||||
| Cancelled (a)(b) | (836,733 | ) | 3.60 | |||
| Balance, December 31, 2025 | 1,298,087 | 12.90 |
(a) In March 2025, the holder of the convertible debenture agreed to surrender 363,233 pursuant to the terms of the debt settlement agreement, see additional details in Note 14.
(b) In May 2025, the Company purchased for cancellation an aggregate of 473,500 subordinate voting share purchase warrants for an aggregate amount of US$75,002 ($103,430). The warrants had an exercise price of $3.60.
The warrants outstanding as of December 31, 2025 and 2024 are as follows:
| December 31, 2025 | December 31, 2024 | |||||||||||||
| Exercise price ($) |
Number of warrants outstanding |
Weighted average remaining life |
Number of warrants outstanding |
Weighted average remaining life |
||||||||||
| 1.88 | 430,000 | 1.92 | - | - | ||||||||||
| 3.60 | 390,588 | 0.34 | 1,227,320 | 1.70 | ||||||||||
| 16.20 | 89,582 | 1.38 | 89,582 | 2.38 | ||||||||||
| 18.90 | 29,589 | 0.23 | 29,589 | 1.23 | ||||||||||
| 23.70 | 89,582 | 1.38 | 89,582 | 2.38 | ||||||||||
| 31.20 | 89,582 | 1.38 | 89,582 | 2.38 | ||||||||||
| 38.70 | 89,582 | 1.38 | 89,582 | 2.38 | ||||||||||
| 46.20 | 89,582 | 1.38 | 89,582 | 2.38 | ||||||||||
| 12.90 | 1,298,087 | 1.22 | 1,704,819 | 1.87 |
17. Contributed Surplus
During the year ended December 31, 2025, the Company's shareholders agreed to forgive $813,016 of shareholder debt, which was recognized as a capital contribution within contributed surplus in the consolidated statement of financial position.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
18. Related Party Transactions and Balances
Key Management Compensation
Key management personnel include those persons with authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of the Company's Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO"), Chief Operating Officer and President ("COO"), Chief Fields Operation and Manufacturing Officer ("CMO"), Chief Technology Officer ("CTO"), Chief Administration Officer ("CAO") and Directors of the Company. CMO and CTO departed the Company in January 2025 and April 2025, respectively. Former CEO and COO of the Company departed in July 2025, the new CEO was appointed immediately after the departure of the former CEO.
The remuneration of directors and other members of key management personnel during the years ended December 31, 2025 and 2024 are as follows:
| For the year ended: | December 31, 2025 |
December 31, 2024 |
||||
| Director fees | $ | 326,178 | $ | 129,001 | ||
| Management, consulting and professional fees | 2,145,369 | 225,079 | ||||
| Transaction costs | - | 341,841 | ||||
| Share-based payments | 777,716 | 217,966 | ||||
| Salaries and wages | 767,365 | 213,718 | ||||
| Total | $ | 4,016,628 | $ | 1,127,605 |
As of December 31, 2025, the Company has a total due to related parties balance of $1,109,675 (December 31, 2024 - $672,411) to directors and management of the Company. During the year ended December 31, 2025, the shareholders of the Company forgave a debt of $813,016, see the additional information in Note 17. The Company has a total due from related parties balance of $19,792 (December 31, 2024 - $nil) from management of the Company, arising from short-term advances and reimbursable expenses incurred in the ordinary course of business; and is expected to be settled in the near term. The balances are unsecured, due on demand and bear no interest.
19. Income Taxes
A reconciliation of the expected current income tax expense/(recovery) is as follows:
| Year ended: | December 31, 2025 |
December 31, 2024 |
||||
| Income/(loss) from before income taxes | $ | (9,686,973 | ) | $ | 427,942 | |
| Statutory tax rate | 26.7% | 27.0% | ||||
| Expected income tax expense (recovery) | (2,589,775 | ) | 115,544 | |||
| Change in statutory, foreign tax, foreign exchange rates and other | 20,723 | - | ||||
| Permanent difference | 1,451,449 | 197,285 | ||||
| Utilization of non-capital losses | (288,404 | ) | - | |||
| Adjustment to prior years provision versus statutory tax returns and expiry of non-capital losses | 217,537 | - | ||||
| Change in deferred tax benefits not recognized | 1,188,470 | 200,501 | ||||
| Current income tax expense (recovery) | $ | - | $ | 513,330 |
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
The approximate tax effect of each item that gives rise to the Company's deferred tax assets as at December 31, 2025 and 2024 are as follows:
| Year ended: | December 31, 2025 |
December 31, 2024 |
||||
| Deferred income tax assets | ||||||
| Non-capital losses | $ | 11,215,729 | $ | 11,462,004 | ||
| Property and equipment | 887,292 | 866,275 | ||||
| Other | 287,678 | 139,214 | ||||
| Total | $ | 12,390,699 | $ | 12,467,493 | ||
| Allowance | (12,390,699 | ) | (12,467,493 | ) | ||
| Net deferred income tax assets | $ | - | $ | - |
The Company has the following deductible temporary differences that have been recognized:
| Year ended: | December 31, 2025 |
Expiry date range |
December 31, 2024 |
Expiry date range |
||||||||
| Non-capital losses: | ||||||||||||
| Canada | $ | 10,767,059 | 2038 to 2045 | $ | 9,470,086 | 2038 to 2024 | ||||||
| USA | $ | 32,474,299 | No expiry | $ | 32,981,781 | No expiry |
Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the Company can utilize the benefits therefrom.
20. Financial Instruments and Risk Management
The Company's financial instruments are exposed to certain financial risks, including currency risk, credit risk, liquidity risk and commodity price risk.
Credit Risk
Credit risk is the risk of loss associated with a counterparty's inability to fulfill its payment obligations. The financial instruments that represent a potential concentration of credit risk consist primarily of cash, digital currencies, deposits, trade and other receivables. Under certain of our hosting agreements, we are obligated to pay security deposits to the hosting provider at the beginning of the term. If one or more of our hosting providers suffers an adverse credit event, we may be unable to recover part or all of the outstanding deposits. We limit our exposure to credit loss by holding our cash with reputable, well-capitalized financial institutions and performing careful due diligence on potential hosting partners prior to entering into a binding agreement which would require us to pay a security deposit. The carrying amount of financial assets represents the maximum credit exposure for each.
The carrying amount of financial and digital assets represents the maximum credit exposure.
| December 31, 2025 |
December 31, 2024 |
|||||
| Cash and cash equivalents | $ | 1,083,973 | $ | 101,367 | ||
| Digital currencies | 584,139 | 6,456,425 | ||||
| Trade receivables | 932,524 | 1,448,900 | ||||
| Deposits | 2,387,496 | 2,621,716 | ||||
| $ | 4,988,132 | $ | 10,628,408 |
We believe the Company has no significant credit risk other than what is disclosed herein.
Liquidity Risk
Liquidity risk is the risk that we will not be able to meet our financial obligations. We manage our liquidity risk by ensuring that we have enough cash to meet our near-term financial liabilities at all times. As at December 31, 2025, we had a working capital deficit of $2,213,630 (2024 - working capital of $14,997,845).
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
Cash flows related to trade payables and accrued liabilities, customer liabilities and convertible loan included below may occur at different times or amounts. A maturity analysis of our outstanding obligations relating to continuing operations of December 31, 2025 is as follows:
| Undiscounted Contractual Cash Flows | |||||||||||||||
| Total carrying amount |
Contractual cash flows |
Less than 1 year |
1 - 5 years | More than 5 years |
|||||||||||
| As at December 31, 2025 |
$ | $ | $ | $ | $ | ||||||||||
| Trade payables and accrued liabilities | 2,659,980 | 2,659,980 | 2,659,980 | - | - | ||||||||||
| Due to related parties | 1,109,675 | 1,109,675 | 1,109,675 | - | - | ||||||||||
| Contract liabilities | 791,671 | 791,671 | 791,671 | - | - | ||||||||||
| Customer liabilities | 2,044,454 | 2,044,454 | 2,044,454 | - | - | ||||||||||
| Lease liabilities | 1,362,065 | 2,800,136 | 345,391 | 1,358,265 | 1,096,480 | ||||||||||
| Total | 7,967,845 | 9,405,916 | 6,951,171 | 1,358,265 | 1,096,480 | ||||||||||
Market Risk
Market risk is the risk of loss that may arise from changes in market factors such as Bitcoin prices, interest rates, foreign exchange rates and equity prices.
Digital Currency Price Volatility
As of December 31, 2025, we held a digital currency balance in bitcoin and Tether that is subject to market pricing and price volatility. Bitcoin prices are affected by various forces including global supply and demand, interest rates, exchanges rates, inflation or deflation and the political and economic conditions. Further, bitcoin has no underlying backing or contracts to enforce recovery of invested amounts. Our profitability is related to the current and future market price of bitcoin; in addition, we may not be able to liquidate our holdings of bitcoin at our desired price if necessary. Investing in bitcoin is speculative, prices are volatile, and market movements are difficult to predict. Supply and demand for such currencies change rapidly and are affected by a variety of factors, including regulation and general economic trends. Bitcoin has a limited history, its fair values have historically been volatile, and the value of our bitcoin holdings could decline rapidly. A decline in the market price of bitcoin could negatively impact our future operations. Historical performance of bitcoin is not indicative of its future performance. We recorded a loss on revaluation of digital currencies in the amount of $nil during the year ended December 31, 2025 (2024 - $nil).
We do not hedge our bitcoin holdings, but we actively monitor bitcoin pricing, market volatility and our own liquidity needs to determine an appropriate risk mitigation strategy on a continuous basis.
Interest Rate Risk
The interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. We are exposed to interest rate risk on the variable rate of interest we earn on bank deposits. The interest rate risk on bank deposits is insignificant, as our deposits are all short-term. The coupon on our outstanding convertible debenture is fixed and therefore has limited exposure to changes in interest rates.
Foreign Currency Risk
Foreign currency risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective functional currency. We are exposed to currency risk as we have legal entities domiciled in the United States which hold financial assets in US dollars and bitcoin while our functional currency is the Canadian dollar. We do not hedge our exposure to fluctuations in foreign exchange rates.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
If the US dollar had changed against the Canadian dollar by 10% at period end, the Company's net income and comprehensive income would change by approximately $212,000 (2024 - $71,000), resulting from the translation of the US dollar denominated financial instruments.
Custody Risk
We hold our digital currencies with a third-party custodian. Our custody strategy is designed to balance security and availability of our bitcoin. We continuously monitor our cash and digital currency holdings with our third-party custodian.
Our current service provider for digital currency custody is an institutional counterparty that is licensed, regulated, and insured. At any time, in excess of 98% of our bitcoin holdings (excluding any bitcoin that is being traded at that time) is held in a cold-storage, multi-signature, segregated trust account that is titled in the name of one of our US subsidiaries. Prior to onboarding with our current custodian, we performed extensive due diligence, examining the new custodian's internal control procedures to ensure security, availability, integrity, and confidentiality of the custodian's information and systems. Our current custodian maintains SOC 1 Type II and SOC 2 Type II compliance, which we review periodically to ensure the custodian maintains a secure technology infrastructure and that its systems are designed and operating effectively.
Loss of Access Risk
The loss of access to the private keys associated with our digital currency holdings may be irreversible and could adversely affect an investment. An amount of digital currency is spendable only by whoever possesses the private key associated with the address on which the digital currency is held. To the extent a private key is lost, destroyed, or otherwise compromised, and no backup is accessible, we may be unable to access the associated digital currency. As of December 31, 2025, 4.72 bitcoin equivalent to $565,919 (December 31, 2024 - 48.10 bitcoin equivalent to $6,454,983) and 13,313.03 tether equivalent to $18,220 (December 31, 2024 - 1,002.13 equivalent to $1,442) are held with our third-party custodian in our name.
Fair Value Hierarchy
We apply the following fair value hierarchy for financial instruments that are carried at fair value. The hierarchy prioritizes the inputs used in the valuation methodologies in measuring fair value into three levels.
The three levels are defined as follows:
- Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
- Level 2 - inputs to valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
- Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement.
We hold investments in private companies that are classified as FVTPL and is recorded at fair value using unobservable inputs; it is therefore classified as level 3 within the fair value hierarchy. The net asset value of the private company is used to adjust the investment to fair value.
The carrying value of our trade receivables, due to and from related parties, trade payables and accrued liabilities, deposits, and convertible loan approximates fair value because of the relatively short periods to maturity of these instruments and the low credit risk.
21. Capital Management
Our objective when managing capital is to provide attractive risk-adjusted returns to shareholders while accounting for liquidity needs.
We include equity, comprised of share capital and deficit, in the definition of capital.
| Cathedra Bitcoin Inc. Notes to Consolidated Financial Statements For the years ended December 31, 2025 and 2024 (Expressed in Canadian dollars, unless otherwise noted) |
Our primary objective with respect to capital management is to ensure that we have sufficient cash resources to fund our ongoing operations and to pursue potential growth opportunities. To secure the additional capital necessary to pursue certain plans, we may attempt to raise additional funds through the issuance of securities.
We monitor capital on the basis of maintaining sufficient liquidity to satisfy our financial obligations.
22. Supplemental Cash Flow Information
Non-cash transactions for the years ended December 31, 2025, and 2024 are as follows:
| For the year ended December 31: | 2025 | 2024 | ||||
| Right-of-use asset and lease liability recognized at inception | $ | 705,542 | $ | - | ||
| Property and equipment additions in trade payables and accrued liabilities | 420,926 | - | ||||
| Subordinate voting shares issued on vesting of RSUs | 416,287 | 138,521 | ||||
| Property and equipment contribution by the shareholder | - | 724,579 | ||||
| Property and equipment classified as held for sale | - | 546,229 |
23. Segment Reporting
Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. The Company uses the management approach to determine reportable operating segments. The management approach considers the internal organization and reporting used by the Company's chief operating decision maker ("CODM"), for making decisions, allocating resources and assessing performance.
Based on the management's assessment, the Company determined that it has the following operating segments:
| December 31, 2025 | Bitcoin Mining | Hosting | Corporate | Total | ||||||||
| ($) | ($) | ($) | ($) | |||||||||
| Revenues | 8,775,024 | 12,419,387 | - | 21,194,411 | ||||||||
| Cost of revenues | 6,141,121 | 14,689,358 | - | 20,830,479 | ||||||||
| Net income/(loss) | (5,334,679 | ) | 821,746 | (5,174,040 | ) | (9,686,973 | ) | |||||
| Non-current assets | 16,069,674 | 10,365,623 | 890,753 | 27,326,050 |
| December 31, 2024 | Bitcoin Mining | Hosting | Corporate | Total | ||||||||
| ($) | ($) | ($) | ($) | |||||||||
| Revenues | 3,851,629 | 19,292,094 | - | 23,143,723 | ||||||||
| Cost of revenues | 3,443,479 | 15,827,153 | - | 19,270,632 | ||||||||
| Net income/(loss) | (235,577 | ) | 1,284,585 | (1,134,396 | ) | (85,388 | ) | |||||
| Non-current assets | 21,895,127 | 7,430,387 | 916,483 | 30,241,997 |
24. Events After Reporting Period
On March 5, 2026, the Company and Sphere 3D Corp. ("Sphere") entered into a definitive agreement to combine in an all-stock transaction. Under the terms of the definitive arrangement agreement Sphere agreed to acquire all of the issued and outstanding shares of Cathedra (the "Transaction"), subject to customary closing conditions, including regulatory, court, and shareholder approvals, such that upon consummation of the Transaction, Cathedra will be a wholly-owned subsidiary of Sphere. Upon completion of the Transaction, Cathedra security holders will receive common shares of Sphere (the "Sphere Common Shares") and/or securities exercisable or convertible into Sphere Common Shares totalling approximately 49% of the issued and outstanding share capital of Sphere immediately following closing on a partially diluted basis.
Cathedra Bitcoin Inc.
Condensed Consolidated Interim Financial Statements
For the three months ended Mar 31, 2026 and 2025
(expressed in Canadian dollars, unless otherwise noted)
| Cathedra Bitcoin Inc. Condensed Consolidated Interim Statements of Financial Position As at March 31, 2026 and December 31, 2025 (Expressed in Canadian dollars, unless otherwise noted) |
| As at: | Notes | March 31, 2026 (unaudited) |
December 31, 2025 (audited) |
||||||
| ASSETS | |||||||||
| Current assets | |||||||||
| Cash and cash equivalents | $ | 326,101 | $ | 1,083,973 | |||||
| Digital currencies | 4 | 381,107 | 584,139 | ||||||
| Trade and other receivables | 1,197,189 | 932,524 | |||||||
| Due from related parties | 15 | 44,594 | 19,792 | ||||||
| Prepaid expenses | 5 | 1,346,765 | 1,741,537 | ||||||
| Deposits | 6 | - | 92,104 | ||||||
| Other assets | 387,383 | 383,873 | |||||||
| Total current assets | $ | 3,683,139 | $ | 4,837,942 | |||||
| Non-current assets | |||||||||
| Deposits | 6 | 2,334,413 | 2,295,392 | ||||||
| Other non-current assets | 893,851 | 919,700 | |||||||
| Property and equipment | 7 | 5,989,530 | 6,201,596 | ||||||
| Right-of-use assets | 8 | 1,201,300 | 1,219,170 | ||||||
| Investments | 10 | 1,116,006 | 1,016,658 | ||||||
| Goodwill | 15,673,534 | 15,673,534 | |||||||
| Total assets | $ | 30,891,773 | $ | 32,163,992 | |||||
| LIABILITIES | |||||||||
| Current liabilities | |||||||||
| Trade payables and accrued liabilities | 11 | 3,070,831 | 2,659,980 | ||||||
| Due to related parties | 15 | 1,146,368 | 1,109,675 | ||||||
| Income tax payable | 246,998 | 334,900 | |||||||
| Contract liabilities | 543,751 | 791,671 | |||||||
| Customer liabilities | 2,937,515 | 2,044,454 | |||||||
| Decommissioning liability | - | 30,839 | |||||||
| Current portion of lease liabilities | 8 | 85,553 | 80,053 | ||||||
| Total current liabilities | $ | 8,031,016 | $ | 7,051,572 | |||||
| Non-current liabilities | |||||||||
| Lease liabilities | 8 | 1,280,774 | 1,282,012 | ||||||
| Total liabilities | $ | 9,311,790 | $ | 8,333,584 | |||||
| EQUITY | |||||||||
| Share capital | 13 | 22,649,148 | 22,499,148 | ||||||
| Reserves | 14 | 4,605,982 | 3,910,445 | ||||||
| Contributed surplus | 813,016 | 813,016 | |||||||
| Accumulated other comprehensive income | 2,855,447 | 3,544,813 | |||||||
| Deficit | (9,343,610 | ) | (6,937,014 | ) | |||||
| Total shareholders' equity | $ | 21,579,983 | $ | 23,830,408 | |||||
| Total liabilities and equity | $ | 30,891,773 | $ | 32,163,992 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements
Nature of operations (Note 1)
Segment reporting (Note 19)
Events after reporting period (Note 20)
Approved by the Board of Directors and authorized for issue on May 28, 2026:
| "Joel Block" | Director | "David Jaques" | Director |
| Cathedra Bitcoin Inc. Condensed Consolidated Interim Statements of Loss and Comprehensive Loss For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
| For the three months ended: | Note | March 31, 2026 (unaudited) |
March 31, 2025 (unaudited) |
||||||
| Revenues | 4 | $ | 3,654,149 | $ | 6,503,290 | ||||
| Cost of revenues | |||||||||
| Operating costs | (3,545,454 | ) | (4,310,679 | ) | |||||
| Depreciation | 7,8 | (485,007 | ) | (1,527,172 | ) | ||||
| Gross income (loss) | $ | (376,312 | ) | $ | 665,439 | ||||
| Realized gain on sale of digital currencies | 4 | 3,519 | 156,388 | ||||||
| Income (loss) before operating expenses | $ | (372,793 | ) | $ | 821,827 | ||||
| Operating expenses | |||||||||
| Director fees | 15 | 64,126 | 77,659 | ||||||
| Management and consulting fees | 15 | 269,239 | 361,512 | ||||||
| Office and administration | 444,378 | 538,920 | |||||||
| Professional fees | 1,037,033 | 344,331 | |||||||
| Salaries and wages | 15 | 166,755 | 89,152 | ||||||
| Share-based compensation | 14,15 | 695,537 | 100,025 | ||||||
| Total operating expenses | $ | (2,677,068 | ) | $ | (1,511,599 | ) | |||
| Operating loss | $ | (3,049,861 | ) | $ | (689,772 | ) | |||
| Other income (expenses) | |||||||||
| Foreign exchange gain (loss) | 709,604 | (94,517 | ) | ||||||
| Net finance costs | 8,12 | (67,925 | ) | (297,332 | ) | ||||
| Transaction costs | - | 7,048 | |||||||
| Gain on debt settlement | 12 | - | 693,411 | ||||||
| Unrealized gain (loss) on investment | 10 | 91,067 | (4,383 | ) | |||||
| Loss from continuing operations before income taxes | $ | (2,317,115 | ) | $ | (385,545 | ) | |||
| Current income tax expense | (89,481 | ) | (38,621 | ) | |||||
| Income from discontinued operation | 9 | - | 290,421 | ||||||
| Net loss | $ | (2,406,596 | ) | $ | (133,745 | ) | |||
| Other comprehensive loss | |||||||||
| Items that may be reclassified to income or loss | |||||||||
| Exchange differences on translation of foreign operations | (604,115 | ) | (18,100 | ) | |||||
| Exchange differences on translation of discontinued operation | 9 | - | (1,875 | ) | |||||
| Item that will not be reclassified to income or loss: | |||||||||
| Revaluation loss on digital currencies. | 4 | (85,251 | ) | (924,466 | ) | ||||
| Total comprehensive loss | $ | (3,095,962 | ) | $ | (1,078,186 | ) | |||
| Net loss for the period attributable to: | |||||||||
| Shareholders of the Company | (2,406,596 | ) | (405,209 | ) | |||||
| Non-controlling interest | 9 | - | 271,464 | ||||||
| (2,406,596 | ) | (133,745 | ) | ||||||
| Total comprehensive loss for the period attributable to: | |||||||||
| Shareholders of the Company | (3,095,962 | ) | (1,347,775 | ) | |||||
| Non-controlling interest | 9 | - | 269,589 | ||||||
| (3,095,962 | ) | (1,078,186 | ) | ||||||
| Basic and diluted loss per share | $ | (0.08 | ) | $ | (0.01 | ) | |||
| Weighted average number of common shares outstanding - basic and diluted | 29,381,662 | 29,063,423 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements
| Cathedra Bitcoin Inc. Condensed Consolidated Interim Statements of Changes in Equity For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
| Share capital |
Reserves | Contributed surplus |
Accumulated other comprehensive income/(loss) |
Retained earnings (deficit) |
Shareholders' equity |
Non- controlling interest |
Total equity |
|||||||||||||||||
| Balance - December 31, 2024 | $ | 21,716,754 | $ | 3,534,980 | $ | - | $ | 5,559 | $ | 3,019,093 | $ | 28,276,386 | $ | 15,520,786 | $ | 43,797,172 | ||||||||
| De-recognition of non-controlling interest | - | - | - | - | - | - | (14,699,093 | ) | (14,699,093 | ) | ||||||||||||||
| Share-based compensation | - | 100,025 | - | - | - | 100,025 | - | 100,025 | ||||||||||||||||
| Subordinate voting shares issued on RSU vesting | 8,852 | (8,852 | ) | - | - | - | - | - | - | |||||||||||||||
| Exchange differences on translation of foreign operations | - | - | - | (18,100 | ) | - | (18,100 | ) | (1,875 | ) | (19,975 | ) | ||||||||||||
| Reclassification of foreign exchange differences to statement of profit or loss on disposal | - | - | - | (83,803 | ) | 83,803 | - | (1,091,282 | ) | (1,091,282 | ) | |||||||||||||
| Unrealized loss from revaluation of digital currencies | - | - | - | (924,466 | ) | - | (924,466 | ) | - | (924,466 | ) | |||||||||||||
| Net income (loss) for the period | - | - | - | - | (405,209 | ) | (405,209 | ) | 271,464 | (133,745 | ) | |||||||||||||
| Balance - March 31, 2025 (unaudited) | $ | 21,725,606 | $ | 3,626,153 | $ | - | $ | (1,020,810 | ) | $ | 2,697,687 | $ | 27,028,636 | $ | - | $ | 27,028,636 | |||||||
| Balance - December 31, 2025 | $ | 22,499,148 | $ | 3,910,445 | $ | 813,016 | $ | 3,544,813 | $ | (6,937,014 | ) | $ | 23,830,408 | $ | - | $ | 23,830,408 | |||||||
| Share-based compensation | - | 695,537 | - | - | - | 695,537 | - | 695,537 | ||||||||||||||||
| Subscriptions receivable collected | 150,000 | - | - | - | - | 150,000 | - | 150,000 | ||||||||||||||||
| Exchange differences on translation of foreign operations | - | - | - | (604,115 | ) | - | (604,115 | ) | - | (604,115 | ) | |||||||||||||
| Unrealized loss from revaluation of digital currencies | - | - | - | (85,251 | ) | - | (85,251 | ) | - | (85,251 | ) | |||||||||||||
| Net income (loss) for the period | - | - | - | - | (2,406,596 | ) | (2,406,596 | ) | - | (2,406,596 | ) | |||||||||||||
| Balance - March 31, 2026 (unaudited) | $ | 22,649,148 | $ | 4,605,982 | $ | 813,016 | $ | 2,855,447 | $ | (9,343,610 | ) | $ | 21,579,983 | $ | - | $ | 21,579,983 |
The accompanying notes are an integral part of these condensed consolidated interim financial statements
Business Combination (Note 2)
Share Capital (Note 13)
Reserves (Note 14)
| Cathedra Bitcoin Inc. Condensed Consolidated Interim Statements of Cash Flows For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
| For the three months ended: | March 31, 2026 (unaudited) |
March 31, 2025 (unaudited) |
||||
| OPERATING ACTIVITIES | ||||||
| Net loss for the period | $ | (2,406,596 | ) | $ | (133,745 | ) |
| Non-cash items: | ||||||
| Depreciation | 485,007 | 1,527,172 | ||||
| Share-based compensation | 695,537 | 100,025 | ||||
| Net finance costs | 67,925 | 297,332 | ||||
| Unrealized gain (loss) on investment | (91,067 | ) | 4,383 | |||
| Gain on settlement of debt | - | (693,411 | ) | |||
| Foreign exchange | (750,164 | ) | 94,517 | |||
| Changes in non-cash working capital items: | ||||||
| Digital currencies | (716,632 | ) | (2,575,580 | ) | ||
| Trade and other receivables | 148,578 | (214,273 | ) | |||
| Prepaid expenses | 412,776 | 198,286 | ||||
| Deposits | 92,177 | - | ||||
| Other assets | 2,967 | 4,696 | ||||
| Trade payables and accrued liabilities | 421,124 | 217,127 | ||||
| Customer liabilities | 587,420 | (72,683 | ) | |||
| Advances from (repayment to) related parties | - | 232,357 | ||||
| Other liability | - | (360,685 | ) | |||
| Income tax payable | (92,106 | ) | - | |||
| Decommissioning liability | (30,863 | ) | - | |||
| Net cash used in operating activities | $ | (1,173,917 | ) | $ | (1,374,482 | ) |
| INVESTING ACTIVITIES | ||||||
| Purchase of property and equipment | $ | (265,770 | ) | $ | - | |
| Proceeds from sale of property and equipment | 13,717 | - | ||||
| Acquisition of business, net of cash and cash equivalents acquired | - | 1,435,211 | ||||
| Expenditure on other non-current asset | (215,509 | ) | - | |||
| Purchase of digital currencies, net of fees | (44,755 | ) | (29,235 | ) | ||
| Proceeds from sale of digital currencies, net of fees | 885,212 | 1,838,820 | ||||
| Net cash generated by investing activities | $ | 372,895 | $ | 3,244,796 | ||
| FINANCING ACTIVITIES | ||||||
| Payment of lease obligations | $ | (86,417 | ) | $ | (461,566 | ) |
| Proceeds from term loan | - | 3,580,426 | ||||
| Repayment of principal and interest on convertible loan | - | (4,631,579 | ) | |||
| Proceeds from share issuance, net of issuance cost | 150,000 | - | ||||
| Net cash provided by (used in) financing activities | $ | 63,583 | $ | (1,512,719 | ) | |
| Effect of foreign exchange rate fluctuation | (20,433 | ) | 96 | |||
| Increase (decrease) in cash and cash equivalents | $ | (757,872 | ) | $ | 357,691 | |
| Cash and cash equivalents, beginning of period | $ | 1,083,973 | $ | 101,367 | ||
| Cash and cash equivalents, end of period | $ | 326,101 | $ | 459,058 |
Supplemental cash flow information (Note 18)
The accompanying notes are an integral part of these condensed consolidated interim financial statements
| Cathedra Bitcoin Inc. Notes to Condensed Consolidated Interim Financial Statements For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
1. Nature of Operations
Cathedra Bitcoin Inc. ("Cathedra", "we", "our" or the "Company") develops and operates high-density compute infrastructure across North America. We host bitcoin mining clients across a portfolio of four data centers (45 megawatts total) in Tennessee and Kentucky. Cathedra also operates a fleet of proprietary bitcoin mining machines at our own and third-party data centers, producing approximately 400 PH/s of hash rate. We are focused on expanding our portfolio of data center infrastructure for high-density compute applications including bitcoin mining and artificial intelligence. Cathedra is headquartered in Vancouver, British Columbia, and our shares trade on the TSX Venture Exchange (the "TSXV") under the symbol CBIT and on the OTCQB Venture Market under the symbol CBTTF. The Company was incorporated under the Business Corporations Act (Ontario) on July 13, 2011, and our registered and records office is located at 170 - 422 Richards Street, Vancouver, British Columbia, Canada, V6B 2Z4.
These condensed consolidated interim financial statements ("Financial Statements") have been prepared on a going concern basis which contemplates that the Company will continue operations for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business. During the three months ended March 31, 2026, the Company incurred a net loss of $2,406,596, had negative cash flows from operating activities of $1,173,917, and as of that date, had a working capital deficiency of $4,347,877 and a deficit of $9,343,610. These factors raise substantial doubt about its ability to continue as a going concern. These Financial Statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. The Company has relied on its plan to obtain additional equity and debt financing, in addition to operating cash flow, to fund its operations. Although the Company has been successful in the past in obtaining financing and it believes that will continue to be successful, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be available on terms that are advantageous to the Company.
2. Business Combination
On July 23, 2024, the Company completed a business combination (the "Kungsleden Merger") with Kungsleden, Inc. ("Kungsleden"), a developer and operator of alternative high-density compute infrastructure.
The Kungsleden Merger was completed according to the terms of a share exchange agreement dated March 6, 2024, as amended on June 18, 2024 (together, the "Share Exchange Agreement"), between Cathedra, Kungsleden and Kungsleden's shareholders (the "Vendors").
Pursuant to the terms of the Share Exchange Agreement, Cathedra acquired all of the outstanding shares of Kungsleden from the Vendors in exchange for 208,446 multiple voting shares of Cathedra (the "Multiple Voting Shares") on the basis of an exchange ratio of one common share of Kungsleden for approximately 6.253429078 Multiple Voting Shares. The 208,446 Multiple Voting Shares issued to the Vendors are convertible into 20,844,600 subordinate voting shares of Cathedra (the "Subordinate Voting Shares"). The Kungsleden Merger resulted in the Vendors owning (on a non-diluted basis) approximately 72.5% of the equity of the Company and existing Cathedra shareholders owning the remaining 27.5% of the equity of the Company. The Vendors hold approximately 80% of the voting rights of Cathedra and existing Cathedra shareholders own the remaining 20%.
The Kungsleden Merger has been accounted for using the acquisition method under IFRS 3, Business Combinations ("IFRS 3"), which requires that one of Cathedra or Kungsleden be determined to be the acquirer for accounting purposes. The Kungsleden Merger has been accounted for as a reverse take-over of Cathedra by Kungsleden. The entities which are party to the Kungsleden Merger meet the definition of a business. These consolidated financial statements reflect the continuance of Kungsleden and the acquisition and assumption of Cathedra's identifiable assets and liabilities, respectively, at fair value.
| Cathedra Bitcoin Inc. Notes to Condensed Consolidated Interim Financial Statements For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
Kungsleden is deemed to have issued 379,310 common shares in exchange for all of the issued and outstanding shares of Cathedra. The consideration for shares issued is $22,154,165, including $577,210 (Note 14) being the convertible loan equity portion, based on Kungsleden's enterprise value of $93,457,280. The Company issued the following replacement awards: 120,175 stock options, 57,228 restricted share units and 1,704,819 share purchase warrants valued $1,579,219 exercisable into subordinate voting shares of Cathedra.
| $ | |||
| Consideration: | |||
| Deemed share consideration | 22,154,165 | ||
| Replacement awards | 1,579,219 | ||
| Total consideration | 23,733,384 | ||
| Assets acquired: | |||
| Cash and cash equivalents | 1,429,575 | ||
| Digital currencies | 4,029,042 | ||
| Other receivables | 136,545 | ||
| Prepaid expenses | 349,593 | ||
| Deposits | 1,643,960 | ||
| Inventories | 954,772 | ||
| Property and equipment | 4,986,820 | ||
| Right-of-use assets | 1,510,745 | ||
| Investments | 913,658 | ||
| Goodwill | 16,845,242 | ||
| Total assets acquired | 32,799,952 | ||
| Liabilities assumed: | |||
| Trade payables and accrued liabilities | 2,637,725 | ||
| Interest payable | 12,543 | ||
| Decommissioning liability | 77,610 | ||
| Lease liabilities | 1,510,745 | ||
| Convertible loan | 4,827,945 | ||
| Total liabilities assumed | 9,066,568 | ||
| Net assets acquired | 23,733,384 |
Impairment of goodwill
Management conducted an impairment assessment of goodwill as of December 31, 2025. For the purposes of impairment testing, the Company considers its ongoing operations as a single cash-generating unit (CGU) that includes all goodwill, property and equipment, other non-current assets, and right-of-use assets, which collectively contribute to generating cash flows from hosting and mining activities. The discounted cash flow model was utilized to estimate value in use, as there was no readily available market price nor any purchase offer received for the business. As a result of this assessment, an impairment loss of $1,171,708 was recognized, as the carrying amount of the CGU, including goodwill, exceeded its recoverable amount.
The significant assumptions applied in determination of the value in use amount as at December 31, 2025 were as follows:
- Cash flows: Estimated cash flows were projected based on estimated operating results from internal sources as well as industry and market trends. Estimated cash flows are primarily driven by projected revenues based on existing and projected data center capacity, bitcoin mining machine quantities and models with respective efficiencies and operating costs;
| Cathedra Bitcoin Inc. Notes to Condensed Consolidated Interim Financial Statements For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
- Terminal value growth rate: The terminal growth rate was based on historical and projected consume price inflation, historical and projected economic indicators, and projected industry growth; and
- Pre-tax discount rate: The pre-tax discount rate is reflective of the CGU's weighted average cost of capital ("WACC"). The WACC was estimated based on the risk-free rate, equity risk premium, beta adjustment to the equity risk premium based on a direct comparison approach, an unsystematic risk premium, and cost of debt based on corporate bond yields.
The following inputs are subject to significant estimation uncertainty and may materially affect the value in use determination:
- Terminal value growth rate of 2%
- WACC of 35%
- Average bitcoin price over the forecast period of approximately US$203,000
- Average hash rate over the forecast period of approximately 1,441 EH/s
A sensitivity analysis indicates that varying each input individually or collectively by +/- 5% would result in an insignificant change to the impairment amount recorded.
3. Material Accounting Policy Information
Basis of Preparation
Statement of Compliance
The Interim Financial Statements as at March 31, 2026, and for the three months then ended have been prepared in accordance with International Accounting Standard ("IAS 34") Interim Financial Reporting. The Interim Financial Statements should be read in conjunction with the Company's Audited Financial Statements for the year ended December 31, 2025. Selected explanatory notes are included in the Interim Financial Statements to explain events and transactions that are significant to an understanding of the changes in the Company's financial position and performance since the last audited financial statements.
These interim financial statements have been prepared on an accrual basis and are based on historical cost basis except for a certain financial instrument which is measured at their fair value.
The Interim Financial Statements of the Company are presented in Canadian dollars unless otherwise indicated, the reporting currency of the Company.
Basis of Consolidation
Subsidiaries
The Financial Statements include the accounts of the Company and its subsidiaries, which are controlled by the Company. Control is achieved when the parent company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Company controls an investee if, and only if, the Company has all of the following: (i) power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); (ii) exposure, or rights, to variable returns from its involvement with the investee; and (iii) the ability to use its power over the investee to affect its returns.
The financial statements of the subsidiaries are included in these financial statements from the date that control commences until the date that control ceases. All significant inter-company balances and transactions are eliminated on consolidation. The entities contained in the Financial Statements are as follows:
| Cathedra Bitcoin Inc. Notes to Condensed Consolidated Interim Financial Statements For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
| Entity Name | Place of Business and Operations |
Functional Currency |
Equity Percentage | ||||||
| Cathedra Bitcoin Inc. (the "Company") - parent | Canada | CAD | n/a | ||||||
| HPC Holdings LLC ("HPC Holdings") | United States | USD | 100% owned by parent | ||||||
| Kungsleden, Inc. ("Kungsleden" or "K Inc.") | United States | USD | 100% owned by parent | ||||||
| Buckeye HPC LLC ("Buckeye HPC") | United States | USD | 100% owned by HPC Holdings | ||||||
| Sentinel Technology, LLC | United States | USD | 100% owned by K Inc. | ||||||
| Churchill Technologies LLC | United States | USD | 100% owned by K Inc. | ||||||
| Two Keys Technologies LLC | United States | USD | 100% owned by K Inc. | ||||||
| North Campbell HoldCo LLC | United States | USD | 100% owned by K Inc. | ||||||
| Buckeye Technologies HoldCo LLC ("Buckeye HoldCo") | United States | USD | 100% owned by K Inc. | ||||||
| Buckeye Technologies OpCo LLC ("Buckeye Technologies") | United States | USD | 100% owned by Buckeye HoldCo | ||||||
| North Campbell LandCo LLC | United States | USD | 100% owned by North Campbell HoldCo LLC | ||||||
| North Campbell HostCo LLC | United States | USD | 100% owned by North Campbell HoldCo LLC | ||||||
| Crystal Core LLC | United States | USD | 100% owned by K Inc. | ||||||
| Fortress Blockchain Holdings Corp. ("FBHC") | Canada | CAD | 100% owned by parent | ||||||
| Fortress Blockchain (US) Holdings Corp. ("FBUS") | United States | USD | 100% owned by FBHC | ||||||
| Cathedra Lease Co LLC ("CLC") | United States | USD | 100% owned by FBUS |
During the year ended December 31, 2025, the Company established HPC Holdings, Buckeye HPC, Buckeye HoldCo, and Buckeye Technologies to facilitate further business expansion and development opportunities.
The Company de-consolidated Tirpitz Technology HoldCo LLC along with its wholly owned subsidiaries Tirpitz Technology LandCo LLC and Tirpitz Technology HostCo LLC (collectively, "T Tech") in March 2025 after losing control, see Note 9 for additional information.
| Cathedra Bitcoin Inc. Notes to Condensed Consolidated Interim Financial Statements For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
Functional and Presentation Currency
Transactions undertaken in foreign currencies are translated into Canadian dollars at daily exchange rates prevailing when the transactions occur. Monetary assets and liabilities denominated in foreign currencies are translated at period-end exchange rates and non-monetary items are translated at historical exchange rates. Realized and unrealized exchange gains and losses are recognized in the consolidated statements of comprehensive income or loss. The assets and liabilities of foreign operations are translated into Canadian dollars using the period-end exchange rates. Income, expenses, and cash flows of foreign operations are translated into Canadian dollars using average exchange rates. Exchange differences resulting from the translation of foreign operations into Canadian dollars are recognized in other comprehensive income or loss and accumulated in equity.
Comprehensive Income (Loss)
Total comprehensive income (loss) comprises all components of profit or loss and other comprehensive income (loss). Other comprehensive income (loss) includes gains and losses from translating the financial statements of an entity's whose functional currency differs from the presentation currency and gains from revaluation of digital currencies.
Material Accounting Policies
Material accounting policies applied to these Interim Financial Statements are the same as those applied and disclosed in Note 3 of the Company's audited consolidated financial statements for the year ended December 31, 2025.
Use of Estimates, Assumptions, and Judgements
Critical accounting estimates, assumptions and judgements applied to these Interim Financial Statements are the same as those applied to the Company's audited consolidated financial statements for the year ended December 31, 2025.
4. Digital Currencies and Revenues
Mining and Profit-Sharing Revenue
Digital currencies are recorded at their fair value on the date they are received as revenues and are revalued to their fair value at each reporting date. Fair value is determined by using the daily price of bitcoin from Coin Metrics.
| BTC Units | Amount ($) | |||||
| Bitcoin balance as at December 31, 2024 | 48.10 | 6,454,983 | ||||
| Bitcoin earned | 61.29 | 8,775,024 | ||||
| Bitcoin exchanged for cash and services | (77.41 | ) | (11,653,136 | ) | ||
| Bitcoin exchanged for other digital currency | (5.63 | ) | (826,640 | ) | ||
| Bitcoin pledged as collateral | (50.54 | ) | (5,976,307 | ) | ||
| Transfer from restricted digital currencies after loan repayment | 28.91 | 4,680,732 | ||||
| Revaluation loss | - | (822,429 | ) | |||
| Unrealized translation adjustment | - | (66,308 | ) | |||
| Bitcoin balance as at December 31, 2025 | 4.72 | 565,919 | ||||
| Bitcoin earned | 7.92 | 859,574 | ||||
| Bitcoin exchanged for cash and services | (7.99 | ) | (905,935 | ) | ||
| Bitcoin exchanged for other digital currency | (1.00 | ) | (92,631 | ) | ||
| Revaluation loss | - | (85,251 | ) | |||
| Unrealized translation adjustment | - | 5,551 | ||||
| Bitcoin balance as at March 31, 2026 | 3.65 | 347,227 |
| Cathedra Bitcoin Inc. Notes to Condensed Consolidated Interim Financial Statements For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
The Company pledged substantial quantity of its bitcoin as collateral for the term loan during the three months ended March 31, 2025. The restricted bitcoin balances and changes for the year ended December 31, 2025 and three months ended March 31, 2026 are as follows:
| BTC Units | Amount ($) | |||||
| Restricted bitcoin balance as at December 31, 2024 | - | - | ||||
| Bitcoin pledged as collateral | 50.54 | 5,976,307 | ||||
| Bitcoin withheld to settle the principal and accrued interest | (21.63 | ) | (3,521,263 | ) | ||
| Transfer to digital currencies after loan repayment | (28.91 | ) | (4,680,732 | ) | ||
| Revaluation gain | - | 2,482,936 | ||||
| Unrealized translation adjustment | - | (257,248 | ) | |||
| Restricted bitcoin balance as at December 31, 2025 and March 31, 2026 | - | - |
The Company used Tether and USD Coin its business operations to receive payments from its customers and make payments to service providers or suppliers. The balances and changes of these digital currencies are shown below:
| Tether Units | Amount ($) | |||||
| Tether balance as at December 31, 2024 | 1,002.13 | 1,442 | ||||
| Tether received as payment in arrangements with customers | 3,648,230.10 | 5,111,528 | ||||
| Tether exchanged for cash and services | (5,445,988.80 | ) | (7,666,549 | ) | ||
| Tether exchanged for other digital currency | 597,392.79 | 826,640 | ||||
| Tether purchased with cash | 212,676.81 | 295,819 | ||||
| Tether received from sale of discontinued operation | 1,000,000.00 | 1,443,800 | ||||
| Revaluation loss | - | (370 | ) | |||
| Unrealized translation adjustment | - | 5,910 | ||||
| Tether balance as at December 31, 2025 | 13,313.03 | 18,220 | ||||
| Tether received as payment in arrangements with customers | 25,225.01 | 34,924 | ||||
| Tether exchanged for cash and services | (82,000.00 | ) | (112,401 | ) | ||
| Tether exchanged for other digital currency | 67,791.72 | 92,631 | ||||
| Unrealized translation adjustment | - | 506 | ||||
| Tether balance as at March 31, 2026 | 24,329.76 | 33,880 |
| USD Coin Units |
Amount ($) | |||||
| USD Coin balance as at December 31, 2024 | - | - | ||||
| USD Coin purchased with cash | 799,272.58 | 1,149,993 | ||||
| USD Coin exchanged for cash and services | (799,272.58 | ) | (1,149,993 | ) | ||
| USD Coin balance as at December 31, 2025 and March 31, 2026 | - | - |
Hosting Revenue
During the three months ended March 31, 2026, the Company generated hosting revenue of $2,794,575 (2025 - $3,897,584). Two customers exceeded 10% of total hosting revenue of the Company with the following percentages representing their respective shares: 41% and 39% (2025 - two customers accounted for 92% of total hosting revenue of the Company with the following percentages representing their respective shares: 55% and 37%).
The Company receives monthly prepayments and short-term or long-term deposits from various customers according to the terms of hosting arrangements. The monthly prepayments are classified as contract liabilities, and deposits are classified as customer liabilities in the consolidated statements of financial position.
| Cathedra Bitcoin Inc. Notes to Condensed Consolidated Interim Financial Statements For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
5. Prepaid Expenses
| March 31, 2026 |
December 31, 2025 |
|||||
| General and administrative | $ | 339,091 | $ | 401,173 | ||
| Hosting business utilities | 1,007,674 | 1,340,364 | ||||
| Total prepaid expenses | $ | 1,346,765 | $ | 1,741,537 |
6. Deposits
| March 31, 2026 |
December 31, 2025 |
|||||
| Utility deposits | $ | 2,278,657 | $ | 2,240,568 | ||
| Lease deposits | 55,756 | 146,928 | ||||
| Total deposits | $ | 2,334,413 | $ | 2,387,496 | ||
| Less: current portion of deposits | - | 92,104 | ||||
| Non-current portion of deposits | $ | 2,334,413 | $ | 2,295,392 |
| Cathedra Bitcoin Inc. Notes to Condensed Consolidated Interim Financial Statements For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
7. Property and Equipment
| Infrastructure | Mining equipment |
Construction- in-progress |
Land | Total | |||||||||||
| Cost | |||||||||||||||
| Balance, December 31, 2024 | $ | 5,245,064 | $ | 4,826,478 | $ | - | $ | 148,674 | $ | 10,220,216 | |||||
| Additions | 2,584,379 | 338,119 | 84,307 | - | 3,006,805 | ||||||||||
| Disposals | (1,256,173 | ) | (1,987,306 | ) | - | - | (3,243,479 | ) | |||||||
| Translation adjustment | (232,267 | ) | (214,484 | ) | (1,457 | ) | (7,057 | ) | (455,265 | ) | |||||
| Balance, December 31, 2025 | $ | 6,341,003 | $ | 2,962,807 | $ | 82,850 | $ | 141,617 | $ | 9,528,277 | |||||
| Additions | - | - | 108,023 | - | 108,023 | ||||||||||
| Disposals | (13,717 | ) | - | - | - | (13,717 | ) | ||||||||
| Translation adjustment | 87,072 | 50,368 | 3,156 | 2,408 | 143,004 | ||||||||||
| Balance, March 31, 2026 | $ | 6,414,358 | $ | 3,013,175 | $ | 194,029 | $ | 144,025 | $ | 9,765,587 | |||||
| Accumulated depreciation and impairment | |||||||||||||||
| Balance, December 31, 2024 | $ | 1,327,876 | $ | 1,483,256 | $ | - | $ | - | $ | 2,811,132 | |||||
| Additions | 1,619,280 | 1,929,175 | - | - | 3,548,455 | ||||||||||
| Reversal on disposals | (974,101 | ) | (1,893,327 | ) | - | - | (2,867,428 | ) | |||||||
| Translation adjustment | (69,186 | ) | (96,292 | ) | - | - | (165,478 | ) | |||||||
| Balance, December 31, 2025 | $ | 1,903,869 | $ | 1,422,812 | $ | - | $ | - | $ | 3,326,681 | |||||
| Additions | 228,431 | 173,229 | - | - | 401,660 | ||||||||||
| Disposals | (13,717 | ) | - | - | - | (13,717 | ) | ||||||||
| Translation adjustment | 34,440 | 26,993 | - | - | 61,433 | ||||||||||
| Balance, March 31, 2026 | $ | 2,153,023 | $ | 1,623,034 | $ | - | $ | - | $ | 3,776,057 | |||||
| Carrying amount | |||||||||||||||
| Balance, December 31, 2025 | $ | 4,437,134 | $ | 1,539,995 | $ | 82,850 | $ | 141,617 | $ | 6,201,596 | |||||
| Balance, March 31, 2026 | $ | 4,261,335 | $ | 1,390,141 | $ | 194,029 | $ | 144,025 | $ | 5,989,530 |
| Cathedra Bitcoin Inc. Notes to Condensed Consolidated Interim Financial Statements For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
8. Right-of-Use Assets and Lease Liabilities
On March 1, 2023, and July 26, 2023, the Company entered into two agreements to lease building property in Kentucky state. The building properties are used by the Company to provide hosting services to arms-length bitcoin mining customers. The leases have an initial term of 10 years and 6 years, respectively, and the Company will make lease payments of US$10,000 and US$1,000 per month, respectively. The Company used 20%, its estimated incremental borrowing rate, to calculate the present value of the lease payments on initial measurement.
On July 23, 2024, as part of the business combination with Cathedra (Note 2), the Company acquired right-of-use (ROU) assets and lease liabilities comprising two building property lease agreements (the "CBIT leases") with remaining lease terms of 10 and 18 months. The Company will make lease payments on the CBIT leases of US$103,680 and US$11,200 per month, respectively.
Effective August 1, 2024, the Company and the lessor amended one of the CBIT leases, changing the monthly payments from US$103,680 to an amount based on electricity consumption, which effectively remained fixed. The lease term was extended by five months, making the new end date August 31, 2025; after this, the lease converted to a month-to-month agreement. As a result of the lease amendments, the Company re-measured its lease liability using interest an interest rate of 20%, the Company's estimated incremental borrowing rate at the time of re-measurement, and a corresponding increase to right-of-use asset.
In July 2025, the Company entered into a new agreement to lease the property located in Franklin, Kentucky. The lease expires on July 31, 2035. The ROU asset and corresponding lease liability were measured using an interest rate of 20%, the Company's estimated incremental borrowing rate, to calculate the present value of the lease payments on initial measurement.
| Right-of-use assets | Building Properties | ||
| Cost | |||
| Balance, December 31, 2024 | $ | 2,627,967 | |
| Additions | 705,542 | ||
| Translation adjustment | (121,067 | ) | |
| Balance, December 31, 2025 | $ | 3,212,442 | |
| Additions | - | ||
| Translation adjustment | 54,611 | ||
| Balance, March 31, 2026 | $ | 3,267,053 | |
| Accumulated Depreciation | |||
| Balance, December 31, 2024 | $ | 922,104 | |
| Depreciation charge in the year | 1,136,271 | ||
| Translation adjustment | (65,103 | ) | |
| Balance, December 31, 2025 | $ | 1,993,272 | |
| Depreciation charge in the year | 37,980 | ||
| Translation adjustment | 34,501 | ||
| Balance, March 31, 2026 | $ | 2,065,753 | |
| Carrying value | |||
| Balance, December 31, 2025 | $ | 1,219,170 | |
| Balance, March 31, 2026 | $ | 1,201,300 |
| Cathedra Bitcoin Inc. Notes to Condensed Consolidated Interim Financial Statements For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
The Company is committed to minimum lease payments as follows:
| March 31, 2026 | December 31, 2025 | |||||
| Maturity analysis - contractual undiscounted cash flows | ||||||
| Less than one year | $ | 351,263 | $ | 345,391 | ||
| One to five years | 1,377,173 | 1,358,265 | ||||
| More than five years | 1,031,486 | 1,096,480 | ||||
| Total undiscounted lease labilities | $ | 2,759,922 | $ | 2,800,136 | ||
| Lease liabilities | $ | 1,366,327 | $ | 1,362,065 | ||
| Current | $ | 85,553 | $ | 80,053 | ||
| Non-current | $ | 1,280,774 | $ | 1,282,012 |
During the three months ended March 31, 2026, the Company recognized total interest expense of $67,852 (2025 - $78,665) in connection with its lease liabilities.
9. Assets Classified as Held for Sale and Discontinued Operation
The Company formed T Tech in November 2023, initially holding a 100% interest. On January 10, 2024, it reorganized and gave up 75% interest in exchange for contribution promises.
Subsequently the Company together with other members of T Tech decided to sell T Tech. The Board of Managers, consisting of Cathedra Bitcoin Inc.'s majority shareholders, approved the sale and assets before the year ended December 31, 2024. Accordingly, the assets and liabilities directly associated with those assets were classified as held for sale.
The results of T Tech's operations for the three months ended March 31, 2025 is as follows:
| Three months ended: | March 31, 2025 | ||
| Revenues | $ | 1,318,623 | |
| Cost of revenues | 1,963,286 | ||
| Operating expenses | 121,411 | ||
| Operating loss | $ | 766,074 | |
| Other income (expense) | (118,590 | ) | |
| Exchange differences on translation of foreign operations reclassified to profit or loss | 1,175,085 | ||
| Income/(loss) before tax from discontinued operation | $ | 290,421 | |
| Tax expense | - | ||
| Income/(loss) from discontinued operation | $ | 290,421 |
The net cash flows generated by T Tech for the three months ended March 31, 2025 is as follows:
| Three months ended: | March 31, 2025 | ||
| Operating | (884,664 | ) | |
| Investing | - | ||
| Financing | - | ||
| Effect of foreign exchange rate fluctuation | - | ||
| Net cash inflow/(outflow) | $ | (884,664 | ) |
10. Investments
Initial valuation of investments is based on the acquisition cost, which approximates the fair value. Subsequent valuations reflect asset appraisals, as well as market transaction data, such as financing rounds. The Company's holdings in private companies are generally valued utilizing net asset values. As of March 31, 2026, Cathedra holds the following investments without exercise of significant influence over them:
| Cathedra Bitcoin Inc. Notes to Condensed Consolidated Interim Financial Statements For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
Low Time Preference Fund II, LLC
On November 12, 2021, Cathedra subscribed for limited liability company interests in Low Time Preference Fund II, LLC, for a total value of $312,925 (US$250,000). As of March 31, 2026, the fair value of this investment is $503,116 (December 31, 2025 - $403,768) with unrealized gain of $91,067 (2025 - $20,421) recognized in the condensed consolidated interim statement of loss.
Silvermoon Inc.
On May 5, 2022, Cathedra received 35,000,000 common shares of Silvermoon Inc. ("Silvermoon") as part a non-arm's length share exchange agreement for giving up a 100% ownership in The Good Shepherd Land and Livestock Company Limited, a UK based legal entity. Cathedra held 35,000,000 common shares as of March 31, 2025, December 31, 2025 and March 31, 2026, which represents approximately 21.6% of the issued and outstanding common shares of Silvermoon. The Company does not exercise significant influence over investee, therefore the investment is classified and accounted for at FVTPL. As of March 31, 2026, the fair value of this investment is $612,890 (December 31, 2025 - $612,890) with unrealized loss of $nil (2025 - $24,804) recognized in the condensed consolidated interim statement of loss. The fair value of the investment was determined by reference to the underlying value of assets held by Silvermoon.
11. Trade Payables and Accrued Liabilities
| March 31, 2026 | December 31, 2025 |
|||||
| Trade payables | $ | 1,200,045 | $ | 1,232,380 | ||
| Accrued liabilities | 1,870,786 | 1,427,600 | ||||
| Total trade payables and accrued liabilities | $ | 3,070,831 | $ | 2,659,980 |
12. Loans and Borrowings
Convertible loan
On March 19, 2025, the Company restructured its outstanding debt whereby the convertible loan's principal amount was extinguished through repayment of the outstanding principal with $4,586,982 plus accrued interest. In addition, the holder of the convertible loan agreed to surrender 363,233 SV share purchase warrants of the Company for cancellation. The balance as of March 31, 2026 and the change for the three months then ended is as follows:
| Balance, December 31, 2024 | $ | 5,134,121 | |
| Accretion | 190,869 | ||
| Repayment of interest | (44,596 | ) | |
| Repayment of principal | (4,586,983 | ) | |
| Gain from debt settlement | (693,411 | ) | |
| Balance, December 31, 2025 and March 31, 2026 | $ | - |
| Cathedra Bitcoin Inc. Notes to Condensed Consolidated Interim Financial Statements For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
Term loan
Concurrently, the Company entered into a new loan of US$2,494,693 ($3,589,364 equivalent) to partially repay the outstanding principal amount of the convertible loan. The loan is secured by approximately 50 of the Company's bitcoin, carries interest at a rate of 13% per annum, payable monthly; and is interest-only until maturity on March 18, 2026.
| Balance, December 31, 2024 | $ | - | |
| Proceeds, net of deferred finance cost | 3,564,168 | ||
| Amortization of deferred financing cost | 53,143 | ||
| Repayment | (3,483,199 | ) | |
| Translation adjustment | (134,112 | ) | |
| Balance, December 31, 2025 and March 31, 2026 | $ | - |
At inception, the Company recognized deferred financing cost of $54,277 , which is amortized over term of the loan. The Company paid $200,856 in term loan interest.
13. Share Capital
On July 22, 2024, in connection with the business combination the Company altered the articles of the corporation, which was approved by the Company's shareholders at its annual and special meeting of shareholders:
a. Changed the name of its common shares to "subordinate voting shares";
b. Created a new class of multiple voting shares convertible into 100 subordinate voting shares;
c. Added special rights and restrictions to the subordinate voting shares and the multiple voting shares, pursuant to which, among other things, the holders of the multiple voting shares are entitled to 1.52 votes per multiple voting share held. On an "as converted" basis, assuming the conversion of the multiple voting shares to subordinate voting shares, the holders of multiple voting shares will have 1.52 votes per subordinate voting share compared to 1 vote per subordinate voting share by the holders of the subordinate voting shares.
Authorized
Unlimited number of subordinate voting shares without par value. Each subordinate voting share entitles the holder to one vote.
Unlimited number of multiple voting shares without par value. Each multiple voting share is convertible into 100 subordinate voting shares and entitles the holder to 1.52 votes. The condensed consolidated interim financial statements for the three months ended March 31, 2026 and 2025 incorporate the 30-to-1 share consolidation, which became effective on October 16, 2025. All shares and per share amounts have been restated to reflect the share consolidation retrospectively.
Issued and Outstanding
- On February 7, 2025, the Company issued 3,248 SV shares for vested RSUs.
- On July 31, 2025, the Company issued 135,690 SV shares for vested RSUs.
- On December 2, 2025, the Company completed a non-brokered private placement of an aggregate of 430,000 units of the Company at a price of $1.25 per unit for aggregate gross proceeds of $537,500. Each unit consists of one SV share and one SV share purchase warrant, with each entitling the holder thereof to acquire one additional SV share at an exercise price of $1.88 per share for a period of two years following the closing date of the private placement.
| Cathedra Bitcoin Inc. Notes to Condensed Consolidated Interim Financial Statements For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
Post-merger share capital
| Multiple voting shares ( MV shares) | No. | Amount ($) | ||||
| Kungsleden's common shares on the acquisition date | 33,333 | 1,278 | ||||
| Share exchange ratio (Note 2) | 6.253429078 | - | ||||
| MVS issued in exchange for Kungsleden's common shares | 208,446 | 21,576,955 | ||||
| Balance, December 31, 2025 and March 31, 2026 | 208,446 | 21,578,233 | ||||
| Subordinate voting shares (SV shares) | No. | Amount ($) | ||||
| Cathedra's common shares on the acquisition date | 7,917,119 | - | ||||
| Exchange ratio | 1.00 | - | ||||
| SV shares of the Resulting Issuer | 7,917,119 | - | ||||
| Issued on RSU exercise | 50,845 | 138,521 | ||||
| Balance, December 31, 2024 | 7,967,964 | 138,521 | ||||
| Issued on RSU exercise | 138,938 | 416,287 | ||||
| Issued in connection to the non-brokered private placement | 430,000 | 516,107 | ||||
| Subscriptions receivable (a) | (150,000 | ) | ||||
| Balance, December 31, 2025 | 8,536,902 | 920,915 | ||||
| Subscriptions received (a) | 150,000 | |||||
| Balance, March 31, 2026 | 8,536,902 | 1,070,915 | ||||
| March 31, 2026 |
December 31, 2025 |
|||||
| An equivalent number of SV shares based on an a 'if converted' basis (convertible from MV shares) | 20,844,600 | 20,844,600 | ||||
| SV shares outstanding | 8,536,902 | 8,536,902 | ||||
| The total SV shares on an a 'if converted' basis | 29,381,502 | 29,381,502 |
14. Reserves
Restricted Share Units (RSU)
On July 22, 2024, the Company implemented a long-term equity incentive plan ("LTIP"), comprising a rolling option plan covering up to 10% of the issued and outstanding SV shares, as well as a fixed plan for up to 2,875,139 SV shares designated as RSUs. Subsequently, the fixed allocation of SV shares reserved for RSUs was increased to 2,895,166 SV shares following approval by the shareholders at the annual general meeting held on December 12, 2025.
For the three months ended March 31, 2026, the Company recognized share-based compensation of $599,293 (2025 - $95,834) attributable to RSUs.
A summary of changes in restricted share units outstanding is as follows:
| Balance, December 31, 2024 | 274,629 | ||
| Granted (a) | 2,672,584 | ||
| Cancelled/Forfeited | (45,230 | ) | |
| Exercised | (138,938 | ) | |
| Balance, December 31, 2025 and March 31, 2026 | 2,763,045 |
(a) The Company granted RSUs as follows:
- On September 29, 2025, the Company granted 1,447,584 RSUs to the employee of the Company. The award vests in three equal annual installments on each of the first, second, and third anniversaries of the grant date, subject to accelerated vesting upon a Change of Control.
- On December 2, 2025, the Company granted 445,000 RSUs to directors, officers and consultants of the Company, 210,000 of which vest on the first anniversary of the grant date and the remainder of RSUs vest as follows: One-third vests on the first anniversary of the grant date, with the remaining balance vesting in eight equal quarterly installments on each of March 2, June 2, September 2, and December 2 until fully vested.
| Cathedra Bitcoin Inc. Notes to Condensed Consolidated Interim Financial Statements For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
- On December 16, 2025, the Company granted 780,000 RSUs to directors, officers and consultant of the Company with the following vesting terms: One-third vests on the first anniversary of the grant date, with the remaining balance vesting in eight equal quarterly installments on each of March 16, June 16, September 16, and December 16 until fully vested.
Stock Options
A summary of changes in stock options is as follows:
| Number of stock options |
Weighted average exercise price |
|||||
| Balance, December 31, 2024 | 116,842 | 15.00 | ||||
| Granted (a) | 615,873 | 1.44 | ||||
| Cancelled | (7,922 | ) | 14.33 | |||
| Balance, December 31, 2025 and March 31, 2026 | 724,793 | 3.49 |
(a) The Company granted stock options as follows:
- On February 1, 2025, the Company granted 15,873 stock options to the newly hired employee. All the stock options vest on 12-month anniversary from the grant date.
- On December 2, 2025, the Company granted 600,000 stock options to a consultant and directors of the Company, 100,000 of which vest immediately and the remainder of stock options vest as follows: One-third vests on the first anniversary of the grant date, with the remaining balance vesting in eight equal quarterly installments on each of March 2, June 2, September 2, and December 2 until fully vested.
The stock options were fair valued using the Black Scholes option pricing model. The weighted average inputs used in the Black Scholes model were as follows:
| Share price | $ | 1.44 | |
| Exercise price | $ | 1.44 | |
| Risk-free interest rate | 2.63% | ||
| Expected annualized share volatility | 121.57% | ||
| Expected dividend yield | 0.00% | ||
| Expected life (years) | 3.97 | ||
| Fair value of stock option | $ | 1.13 |
The stock options outstanding and exercisable as of March 31, 2026, are as follows:
| Exercise price ($) | Number of stock options outstanding |
Weighted average remaining life |
|||||||
| 1.42 | 600,000 | 4.68 | |||||||
| 2.25 | 15,873 | 3.84 | |||||||
| 3.90 | 333 | 1.57 | |||||||
| 10.50 | 2,961 | 1.13 | |||||||
| 12.30 | 2,961 | 0.78 | |||||||
| 14.55 | 8,333 | 0.41 | |||||||
| 14.70 | 66,666 | 0.42 | |||||||
| 15.00 | 1,000 | 1.89 | |||||||
| 16.80 | 21,666 | 0.48 | |||||||
| 18.00 | 5,000 | 1.89 | |||||||
| Outstanding | 724,793 | 4.04 | |||||||
| Exercisable | 224,793 | 2.62 |
| Cathedra Bitcoin Inc. Notes to Condensed Consolidated Interim Financial Statements For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
The weighted average exercise price of options exercisable as of March 31, 2026, is $8.08 (December 31, 2025 - $8.52).
For the three months ended March 31, 2026, the Company recognized share-based compensation from stock options of $96,244 (2025 - $4,191).
Warrants
A summary of changes in warrants outstanding is as follows:
| Number of warrants |
Weighted average exercise price |
|||||
| Balance, December 31, 2024 | 1,704,820 | 11.10 | ||||
| Issued | 430,000 | 1.88 | ||||
| Cancelled (a)(b) | (836,733 | ) | 3.60 | |||
| Balance, December 31, 2025 | 1,298,087 | 12.90 | ||||
| Expired (a)(b) | (356,077 | ) | 4.87 | |||
| Balance, March 31, 2026 | 942,010 | 15.94 |
(a) In March 2025, the holder of the convertible debenture agreed to surrender 363,233 pursuant to the terms of the debt settlement agreement, see additional details in Note 14.
(b) In May 2025, the Company purchased for cancellation an aggregate of 473,500 subordinate voting share purchase warrants for an aggregate amount of US$75,002 ($103,430). The warrants had an exercise price of $3.60.
On March 26, 2026, 326,488 warrants exercisable at $3.60 and 29,589 warrants exercisable at $18.90 expired unexercised.
The warrants outstanding as of March 31, 2026 are as follows:
| March 31, 2026 | December 31, 2025 | |||||||||||
| Exercise price ($) |
Number of warrants outstanding |
Weighted average remaining life |
Number of warrants outstanding |
Weighted average remaining life |
||||||||
| 1.88 | 430,000 | 1.67 | 430,000 | 1.92 | ||||||||
| 3.60 | 64,100 | 0.62 | 390,588 | 0.34 | ||||||||
| 16.20 | 89,582 | 1.14 | 89,582 | 1.38 | ||||||||
| 18.90 | - | - | 29,589 | 0.23 | ||||||||
| 23.70 | 89,582 | 1.14 | 89,582 | 1.38 | ||||||||
| 31.20 | 89,582 | 1.14 | 89,582 | 1.38 | ||||||||
| 38.70 | 89,582 | 1.14 | 89,582 | 1.38 | ||||||||
| 46.20 | 89,582 | 1.14 | 89,582 | 1.38 | ||||||||
| 15.94 | 942,010 | 1.35 | 1,298,087 | 1.22 |
15. Related Party Transactions and Balances
Key Management Compensation
Key management personnel include those persons with authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of the Company's Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO"), Chief Operating Officer and President ("COO"), Chief Fields Operation and Manufacturing Officer ("CMO"), Chief Technology Officer ("CTO"), Chief Administration Officer ("CAO") and Directors of the Company. CMO and CTO departed the Company in January 2025 and April 2025, respectively. Former CEO and COO of the Company departed in July 2025, the new CEO was appointed immediately after the departure of the former CEO.
| Cathedra Bitcoin Inc. Notes to Condensed Consolidated Interim Financial Statements For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
The remuneration of directors and other members of key management personnel during the three months ended March 31, 2026 and 2025 are as follows:
| For the three months ended: | March 31, 2026 | March 31, 2025 | ||||
| Director fees | $ | 64,126 | $ | 77,659 | ||
| Management, consulting and professional fees | 66,913 | 210,124 | ||||
| Share-based payments | 578,003 | 113,998 | ||||
| Salaries and wages | 123,457 | 48,588 | ||||
| Total | $ | 832,499 | $ | 450,369 |
As of March 31, 2026, the Company has a total due to related parties balance of $1,146,368 (December 31, 2025 - $1,109,675) to directors and management of the Company. The Company has a total due from related parties balance of $44,594 (December 31, 2025 - $19,792) from management of the Company, arising from short-term advances and reimbursable expenses incurred in the ordinary course of business; and is expected to be settled in the near term. The balances are unsecured, due on demand and bear no interest.
16. Financial Instruments and Risk Management
The Company's financial instruments are exposed to certain financial risks, including currency risk, credit risk, liquidity risk and commodity price risk.
Credit Risk
Credit risk is the risk of loss associated with a counterparty's inability to fulfill its payment obligations. The financial instruments that represent a potential concentration of credit risk consist primarily of cash and cash equivalents, digital currencies, restricted digital currencies, deposits, and trade receivables. Under certain of our hosting agreements, we are obligated to pay security deposits to the hosting provider at the beginning of the term. If one or more of our hosting providers suffers an adverse credit event, we may be unable to recover part or all of the outstanding deposits. We limit our exposure to credit loss by holding our cash with reputable, well-capitalized financial institutions and performing careful due diligence on potential hosting partners prior to entering into a binding agreement which would require us to pay a security deposit. The carrying amount of financial assets represents the maximum credit exposure for each.
The carrying amount of financial and digital assets represents the maximum credit exposure.
| March 31, 2026 |
December 31, 2025 |
|||||
| Cash and cash equivalents | $ | 326,101 | $ | 1,083,973 | ||
| Digital currencies | 381,107 | 584,139 | ||||
| Trade receivables | 1,197,189 | 932,524 | ||||
| Deposits | 2,334,413 | 2,387,496 | ||||
| $ | 4,238,810 | $ | 4,988,132 |
We believe the Company has no significant credit risk other than what is disclosed herein.
Liquidity Risk
Liquidity risk is the risk that we will not be able to meet our financial obligations. We manage our liquidity risk by ensuring that we have enough cash to meet our near-term financial liabilities at all times. As at March 31, 2026, we had a working capital deficit of $4,347,877 (December 31, 2025 - working capital deficit of $2,213,630).
| Cathedra Bitcoin Inc. Notes to Condensed Consolidated Interim Financial Statements For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
Cash flows related to trade payables and accrued liabilities, customer liabilities and convertible loan included below may occur at different times or amounts. A maturity analysis of our outstanding obligations relating to continuing operations of March 31, 2026 is as follows:
| Undiscounted Contractual Cash Flows | |||||||||||||||
| Total carrying amount |
Contractual cash flows |
Less than 1 year |
1 - 5 years | More than 5 years |
|||||||||||
| As at March 31, 2026 | $ | $ | $ | $ | $ | ||||||||||
| Trade payables and accrued liabilities | 3,070,831 | 3,070,831 | 3,070,831 | - | - | ||||||||||
| Due to related parties | 1,146,368 | 1,146,368 | 1,146,368 | - | - | ||||||||||
| Contract liabilities | 543,751 | 543,751 | 543,751 | - | - | ||||||||||
| Customer liabilities | 2,937,515 | 2,937,515 | 2,937,515 | - | - | ||||||||||
| Lease liabilities | 1,366,327 | 2,759,922 | 351,263 | 1,377,173 | 1,031,486 | ||||||||||
| Total | 9,064,792 | 10,458,387 | 8,049,728 | 1,377,173 | 1,031,486 | ||||||||||
Market Risk
Market risk is the risk of loss that may arise from changes in market factors such as Bitcoin prices, interest rates, foreign exchange rates and equity prices.
Digital Currency Price Volatility
As of March 31, 2026, we held a digital currency balance in bitcoin and Tether ("USDT") that is subject to market pricing and price volatility. Bitcoin prices are affected by various forces including global supply and demand, interest rates, exchanges rates, inflation or deflation and the political and economic conditions. Further, bitcoin has no underlying backing or contracts to enforce recovery of invested amounts. Our profitability is related to the current and future market price of bitcoin; in addition, we may not be able to liquidate our holdings of bitcoin at our desired price if necessary. Investing in bitcoin is speculative, prices are volatile, and market movements are difficult to predict. Supply and demand for such currencies change rapidly and are affected by a variety of factors, including regulation and general economic trends. Bitcoin has a limited history, its fair values have historically been volatile, and the value of our bitcoin holdings could decline rapidly. A decline in the market price of bitcoin could negatively impact our future operations. Historical performance of bitcoin is not indicative of its future performance. We recorded a loss on revaluation of digital currencies of $85,251 during the three months ended March 31, 2026 (2025 - $924,466) in the statement of other comprehensive loss.
We do not hedge our bitcoin holdings, but we actively monitor bitcoin pricing, market volatility and our own liquidity needs to determine an appropriate risk mitigation strategy on a continuous basis.
Interest Rate Risk
The interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. We are exposed to interest rate risk on the variable rate of interest we earn on bank deposits. The interest rate risk on bank deposits is insignificant, as our deposits are all short-term. The coupon on our outstanding term loan is fixed and therefore has limited exposure to changes in interest rates.
Foreign Currency Risk
Foreign currency risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective functional currency. We are exposed to currency risk as we have legal entities domiciled in the United States which hold financial assets in US dollars and bitcoin while our functional currency is the Canadian dollar. We do not hedge our exposure to fluctuations in foreign exchange rates.
| Cathedra Bitcoin Inc. Notes to Condensed Consolidated Interim Financial Statements For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
If the US dollar had changed against the Canadian dollar by 10% at period end, the Company's net income and comprehensive income would change by approximately $577,000, resulting from the translation of the US dollar denominated financial instruments.
Custody Risk
We hold our digital currencies with a third-party custodian. Our custody strategy is designed to balance security and availability of our digital currency. We continuously monitor our cash and cash equivalents and digital currency holdings with our third-party custodian.
Our current service provider for digital currency custody is an institutional counterparty that is licensed, regulated, and insured. At any time, in excess of 98% of our digital currency holdings (excluding any digital currency that is being traded at that time) is held in a cold-storage, multi-signature, segregated trust account that is titled in the name of one of our US subsidiaries. Prior to onboarding with our current custodian, we performed extensive due diligence, examining the new custodian's internal control procedures to ensure security, availability, integrity, and confidentiality of the custodian's information and systems. Our current custodian maintains SOC 1 Type II and SOC 2 Type II compliance, which we review periodically to ensure the custodian maintains a secure technology infrastructure and that its systems are designed and operating effectively.
Loss of Access Risk
The loss of access to the private keys associated with our bitcoin holdings may be irreversible and could adversely affect an investment. An amount of digital currency is spendable only by whoever possesses the private key associated with the address on which the digital currency is held. To the extent a private key is lost, destroyed, or otherwise compromised, and no backup is accessible, we may be unable to access the associated digital currency. As of March 31, 2026, 3.65 bitcoin equivalent to $347,227 (December 31, 2025 - 4.72 bitcoin equivalent to $565,919) and 24,329.76 tether equivalent to $33,880 (December 31, 2025 - 13,313.03 tether equivalent to $18,220) are held with our third-party custodian in our name.
Fair Value Hierarchy
We apply the following fair value hierarchy for financial instruments that are carried at fair value. The hierarchy prioritizes the inputs used in the valuation methodologies in measuring fair value into three levels.
The three levels are defined as follows:
- Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
- Level 2 - inputs to valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
- Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement.
We hold investments in private companies that are classified as FVTPL and is recorded at fair value using unobservable inputs; it is therefore classified as level 3 within the fair value hierarchy. The net asset value of the private company is used to adjust the investment to fair value.
The carrying value of our trade receivables, due to and from related parties, trade payables and accrued liabilities, deposits, and convertible loan approximates fair value because of the relatively short periods to maturity of these instruments and the low credit risk.
17. Capital Management
Our objective when managing capital is to provide attractive risk-adjusted returns to shareholders while accounting for liquidity needs.
| Cathedra Bitcoin Inc. Notes to Condensed Consolidated Interim Financial Statements For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
We include equity, comprised of share capital and deficit, in the definition of capital.
Our primary objective with respect to capital management is to ensure that we have sufficient cash resources to fund our ongoing operations and to pursue potential growth opportunities. To secure the additional capital necessary to pursue certain plans, we may attempt to raise additional funds through the issuance of securities.
We monitor capital on the basis of maintaining sufficient liquidity to satisfy our financial obligations.
18. Supplemental Cash Flow Information
Non-cash transactions for the three months ended March 31, 2026, and 2025 are as follows:
| For the three months ended March 31: | 2026 | 2025 | ||||
| Subordinate voting shares issued on vesting of RSUs | $ | - | 8,852 |
19. Segment Reporting
Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. The Company uses the management approach to determine reportable operating segments. The management approach considers the internal organization and reporting used by the Company's chief operating decision maker ("CODM"), for making decisions, allocating resources and assessing performance.
Based on the management's assessment, the Company determined that it has the following operating segments:
Three months ended March 31, 2026:
| March 31, 2026 | Bitcoin Mining ($) |
Hosting ($) |
Corporate ($) |
Total ($) |
||||||||
| Revenues | 859,574 | 2,794,575 | - | 3,654,149 | ||||||||
| Cost of revenues | 569,147 | 3,461,314 | - | 4,030,461 | ||||||||
| Net income/(loss) | (121,564 | ) | (828,819 | ) | (1,456,213 | ) | (2,406,596 | ) | ||||
| Non-current assets | 38,857,097 | (5,650,676 | ) | (5,997,787 | ) | 27,208,634 |
Three months ended March 31, 2025:
| March 31, 2025 | Bitcoin Mining ($) |
Hosting ($) |
Corporate ($) |
Total ($) |
||||||||
| Revenue | 2,605,706 | 3,897,584 | - | 6,503,290 | ||||||||
| Cost of revenue | 1,868,672 | 3,969,179 | - | 5,837,851 | ||||||||
| Net income/(loss) | (719,483 | ) | 675,501 | (89,763 | ) | (133,745 | ) | |||||
| Non-current assets | 10,090,849 | (4,149,369 | ) | 22,755,338 | 28,696,818 |
20. Events After Reporting Period
On May 18, 2026, the Company granted 132,121 restricted share units ("RSUs") to a consultant under its equity incentive plan. These RSUs are subject to the accelerated vesting.
On May 28, 2026, the Company cancelled 724,793 stock options that were outstanding.
On March 5, 2026, the Company entered into an arrangement agreement with Sphere 3D Corp. ("Sphere 3D") providing for the combination of the Company and Sphere 3D by way of a statutory plan of arrangement (the "Arrangement") under the Business Corporations Act (British Columbia). On May 15, 2026, securityholders of the Company approved the Arrangement and, on May 26, 2026, the Supreme Court of British Columbia issued the final order. The Arrangement is expected to close on June 1, 2026. The following terms are expected to have a material impact on the Company's capital structure and share-based compensation expense in the period in which the Arrangement is completed:
| Cathedra Bitcoin Inc. Notes to Condensed Consolidated Interim Financial Statements For the three months ended March 31, 2026 and 2025 (Expressed in Canadian dollars, unless otherwise noted) |
- Each SV Share will be exchanged for 0.123015 of a Sphere 3D common share, and each MV Share for 12.3015 Sphere 3D common shares (the "Exchange Ratios"). Former shareholders of the Company are expected to hold approximately 39.3% of Sphere 3D on a partially-diluted basis at closing.
- Holders whose pro forma post-closing ownership of Sphere 3D would otherwise exceed 7% will receive that excess in non-voting Series I Preferred Shares of Sphere 3D, convertible into Sphere 3D common shares in three equal tranches on the first, second and third anniversaries of closing.
- Each outstanding share purchase warrant will be exchanged for a Sphere 3D replacement warrant, adjusted by the Exchange Ratios.
- All unvested RSUs (including the 132,121 RSUs granted on May 18, 2026) will vest immediately prior to the effective time and be settled in SV Shares that participate in the Arrangement.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information ("Unaudited Pro Forma Financial Information") has been prepared based on the historical audited consolidated financial statements of Sphere 3D Corp. ("Sphere") and Cathedra Bitcoin Inc. ("Cathedra"), as indicated below, and is intended to provide information about how the acquisition of Cathedra by Sphere in a stock-for-stock transaction (the "Arrangement") would have affected Sphere's historical financial statements. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in Sphere's Current Report on Form 8-K filed on June 3, 2026 (the "8-K").
The unaudited pro forma condensed combined balance sheet ("Unaudited Pro Forma Balance Sheet") as of March 31, 2026 gives effect to the Arrangement as if it occurred on March 31, 2026 and combines the historical balance sheets of Sphere and Cathedra as of such date. The unaudited pro forma condensed combined statement of operations ("Unaudited Pro Forma Statement of Operations") for the year ended December 31, 2025 and the three months ended March 31, 2026 combines the historical audited consolidated statement of operations of Sphere and the historical audited consolidated income statement of Cathedra for the year ended December 31, 2025, and the historical unaudited condensed consolidated statement of operations of Sphere and the historical unaudited condensed consolidated interim statement of Cathedra for the three months ended March 31, 2026, as if the Arrangement had occurred on January 1, 2025.
The Unaudited Pro Forma Financial Information has been prepared based on, and should be read in conjunction with:
-
the historical audited consolidated financial statements of Sphere for the year ended December 31, 2025, included in Sphere's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on March 27, 2026;
-
the historical unaudited condensed consolidated financial statements of Sphere for the three months ended March 31, 2026, included in Sphere's quarterly report on Form 10-Q filed with the SEC on May 15, 2026;
-
the historical audited consolidated financial statements of Cathedra for the year ended December 31, 2025, included in the 8-K;
-
the historical unaudited consolidated financial statements of Cathedra for the three months ended March 31, 2026, included in the 8-K;
-
the accompanying notes to the Unaudited Pro Forma Financial Information; and
-
other information relating to Sphere and Cathedra contained in Sphere's Proxy Statement on Schedule 14A filed with the SEC on April 16, 2026 (the "Proxy Statement"). See the section titled "Additional Information" of the Proxy Statement.
The Unaudited Pro Forma Financial Information is presented for informational purposes only. The information has been prepared in accordance with Article 11 of Regulation S-X, as amended by Release No. 33-10786 "Amendments to Financial Disclosures about Acquired and Disposed Businesses," using the assumptions set forth in the notes to the Unaudited Pro Forma Financial Information. The Arrangement will be recorded as a business combination using the acquisition method of accounting under United States generally accepted accounting principles ("GAAP"). See section titled "The Arrangement—Accounting Treatment" of the Proxy Statement. Sphere, as the accounting acquirer, will record the acquired assets and assumed liabilities of Cathedra at their fair values as of the acquisition date. Sphere and Cathedra have determined a preliminary estimated purchase price calculated as described in Note 2 to the Unaudited Pro Forma Financial Information. The Unaudited Pro Forma Financial Information is not necessarily indicative of the financial position and results of operations that actually would have been achieved had the Arrangement occurred as of the dates indicated herein, nor do they purport to project the future financial position and operating results of the Combined Company. The Unaudited Pro Forma Financial Information also does not reflect the costs of any integration activities or cost savings or synergies expected to be achieved as a result of the Arrangement, which are described in the section titled "The Arrangement—Sphere's Reasons for the Arrangement" of the Proxy Statement, and, accordingly, does not attempt to predict or suggest future results.
39
Table of Contents
The Unaudited Pro Forma Financial Information is based on the assumptions and adjustments that are described in the accompanying notes. The Unaudited Pro Forma Financial Information and pro forma adjustments have been prepared based on preliminary estimates of fair value of acquired assets and liabilities assumed. Differences between these preliminary estimates and the final acquisition accounting are likely to occur and these differences could be material. The actual amounts recorded as of the completion of the Arrangement may also differ materially from the information presented in the Unaudited Pro Forma Financial Information as a result of, among other factors, the amount of cash used in operations between the signing of the Arrangement and the closing of the Arrangement, completion of the fair value analysis of the Sphere Series I Preferred Stock, acquired assets and liabilities assumed and other changes in Sphere's and Cathedra's assets and liabilities that occur prior to the completion of the Arrangement.
The Unaudited Pro Forma Financial Information does not give effect to the potential impact of current financial conditions, regulatory matters, operating efficiencies or other savings or expenses that may be associated with the integration of the two companies, if any.
The Transaction Accounting Adjustments represent management of Sphere's ("Sphere Management") best estimates and are based upon currently available information and certain assumptions that Sphere Management believes are reasonable and supportable. As the Unaudited Pro Forma Financial Information has been prepared based on these assumptions, the final amounts recorded may differ materially from the information presented herein.
Sphere has elected not to present Sphere Management's adjustments, which depict synergies and dis-synergies of the Arrangement, and will only be presenting transaction accounting adjustments in the Unaudited Pro Forma Financial Information. Therefore, the Unaudited Pro Forma Statement of Operations does not include the effects of the costs associated with any integration or restructuring activities resulting from the Arrangement, as they are nonrecurring in nature. In addition, the Unaudited Pro Forma Financial Information does not give effect to any anticipated synergies, operating efficiencies, tax savings, or cost savings that may be associated with the Arrangement.
Given Sphere's history of net losses and full valuation allowance on its net deferred tax assets, the pro forma adjustments to the Unaudited Pro Forma Statement of Operations resulted in no income tax adjustment to the pro forma financials.
Additionally, as discussed in Note 3, certain reclassifications were made to conform the historical presentation of Cathedra's consolidated financial statements to that of Sphere's financial statement presentation. The accounting policies used in the preparation of the Unaudited Pro Forma Financial Information are those set out in Sphere's audited financial statements for the year ended December 31, 2025. Sphere Management conducted a preliminary evaluation of accounting policies used by Cathedra compared to accounting policies used by Sphere and identified certain adjustments as described below. Following the completion of the Arrangement, Sphere will conduct a comprehensive review of Cathedra's accounting policies, and as a result of that review, Sphere may identify differences which may have a material impact on the Unaudited Pro Forma Financial Information.
40
Table of Contents
Sphere 3D Corp
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
(in thousands)
As of March 31, 2026
| Historical | Pro Forma | |||||||||||||||||||||||
| Sphere 3D | Cathedra | Cathedra | Adjustments | Cathedra | Transaction | |||||||||||||||||||
| in GAAP USD |
in IFRS CAD |
in IFRS USD |
to GAAP USD |
in GAAP USD |
Accounting Adjustments |
Notes | Combined Results |
|||||||||||||||||
| Assets | 3.B | 3.C | ||||||||||||||||||||||
| Current Assets: | ||||||||||||||||||||||||
| Cash and cash equivalents | $ | 3,145 | $ | 326 | $ | 234 | $ | - | $ | 234 | $ | - | $ | 3,379 | ||||||||||
| Digital currencies | 1,785 | 381 | 273 | 1 | 274 | - | 2,059 | |||||||||||||||||
| Trade and other receivables | - | 1,197 | 859 | - | 859 | 859 | ||||||||||||||||||
| Due from related parties | - | 45 | 32 | - | 32 | - | 32 | |||||||||||||||||
| Other current assets | 1,794 | 1,734 | 1,244 | - | 1,244 | (471 | ) | 3.D | 2,567 | |||||||||||||||
| Total current assets | 6,724 | 3,683 | 2,642 | 1 | 2,643 | (471 | ) | 8,896 | ||||||||||||||||
| Property and equipment, net | 13,552 | 5,990 | 4,296 | 641 | 4,937 | - | 18,489 | |||||||||||||||||
| Deposits | - | 2,334 | 1,674 | - | 1,674 | - | 1,674 | |||||||||||||||||
| Goodwill | - | 15,674 | 11,242 | - | 11,242 | (15,479 | ) | 3.E | 2,558 | |||||||||||||||
| 7,266 | 2 | |||||||||||||||||||||||
| (471 | ) | 2 | ||||||||||||||||||||||
| Intangible assets, net | 1,238 | - | - | - | - | - | 1,238 | |||||||||||||||||
| Right-of-use assets | - | 1,201 | 862 | - | 862 | - | 862 | |||||||||||||||||
| Investments | - | 1,116 | 800 | - | 800 | 800 | ||||||||||||||||||
| Other non-current assets | 225 | 894 | 641 | (641 | ) | - | - | 225 | ||||||||||||||||
| Total assets | $ | 21,739 | $ | 30,892 | $ | 22,157 | $ | 1 | $ | 22,158 | $ | (9,155 | ) | $ | 34,742 | |||||||||
| Liabilities and Shareholders' Equity | 3.B | 3.C | ||||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||||||
| Accounts payable | $ | 197 | $ | 3,071 | $ | 2,203 | $ | (1,382 | ) | $ | 821 | $ | 2,218 | 3.F | $ | 3,236 | ||||||||
| Accrued liabilities | $ | 693 | - | - | 1,382 | 1,382 | - | 2,075 | ||||||||||||||||
| Due to related parties | - | 1,146 | 822 | (400 | ) | 422 | - | 422 | ||||||||||||||||
| Accrued payroll and employee compensation | 836 | - | - | 400 | 400 | 490 | 3.G | 1,726 | ||||||||||||||||
| Income tax payable | - | 247 | 177 | - | 177 | - | 177 | |||||||||||||||||
| Contract liabilities | - | 544 | 390 | - | 390 | - | 390 | |||||||||||||||||
| Customer liabilities | - | 2,938 | 2,107 | - | 2,107 | (471 | ) | 3.D | 1,636 | |||||||||||||||
| Current portion of lease liabilities | - | 86 | 61 | - | 61 | - | 61 | |||||||||||||||||
| Total current liabilities | 1,726 | 8,032 | 5,760 | - | 5,760 | 2,237 | 9,723 | |||||||||||||||||
| Lease liabilities | - | 1,281 | 919 | - | 919 | - | 919 | |||||||||||||||||
| Total liabilities | 1,726 | 9,313 | 6,679 | - | 6,679 | 2,237 | 10,642 | |||||||||||||||||
| Temporary equity | 18 | - | - | - | - | - | 18 | |||||||||||||||||
| Shareholders' equity: | ||||||||||||||||||||||||
| Preferred shares - Sphere 3D Corp. | 2,677 | 2 | 2,677 | |||||||||||||||||||||
| Common shares - Sphere 3D Corp. | 504,215 | 4,589 | 2 | 509,539 | ||||||||||||||||||||
| 735 | 3.H | |||||||||||||||||||||||
| Common shares - Cathedra | 22,649 | 16,245 | - | 16,245 | (16,245 | ) | 3.E | - | ||||||||||||||||
| Accumulated other comprehensive loss | (1,811 | ) | 2,855 | 2,048 | (1,053 | ) | (126) | 126 | 3.E | (1,811 | ) | |||||||||||||
| (1,121 | ) | |||||||||||||||||||||||
| Accumulated deficit | (482,409 | ) | (9,344 | ) | (6,702 | ) | 1,053 | (4,527) | 4,527 | 3.E | (486,323 | ) | ||||||||||||
| 1,121 | ||||||||||||||||||||||||
| 1 | (471 | ) | 2 | |||||||||||||||||||||
| (735 | ) | 3.H | ||||||||||||||||||||||
| (490 | ) | 3.G | ||||||||||||||||||||||
| (2,218 | ) | 3.F | ||||||||||||||||||||||
| Reserves | - | 4,606 | 3,304 | - | 3,304 | (3,304 | ) | 3.E | - | |||||||||||||||
| Contributed surplus | - | 813 | 583 | - | 583 | (583 | ) | 3.E | - | |||||||||||||||
| Shareholders' equity | 19,995 | 21,579 | 15,478 | 1 | 15,479 | (11,392 | ) | 24,082 | ||||||||||||||||
| Total liabilities, temporary equity, and shareholders' equity | $ | 21,739 | $ | 30,892 | $ | 22,157 | $ | 1 | $ | 22,158 | $ | (9,155 | ) | $ | 34,742 | |||||||||
41
Table of Contents
Sphere 3D Corp.
UNAUDITED CONDENSED COMBINED STATEMENT OF OPERATIONS
(in thousands, except share and per share data)
For the Three Months Ended March 31, 2026
| Historical | Pro Forma | ||||||||||||||||||||||||
| Sphere 3D | Cathedra | Cathedra | Adjustments | Cathedra | |||||||||||||||||||||
| in GAAP USD |
in IFRS CAD |
in IFRS USD |
in GAAP USD |
in GAAP USD |
Transaction Accounting Adjustments |
Notes | Combined Results |
||||||||||||||||||
| Revenues: | 3.B | 3.C | |||||||||||||||||||||||
| Total revenues | $ | 1,916 | $ | 3,654 | $ | 2,662 | $ | 1 | $ | 2,663 | $ | (920 | ) | 3.D | $ | 3,659 | |||||||||
| Operating costs and expenses: | |||||||||||||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization shown below) | 1,603 | 3,545 | 2,583 | - | 2,583 | (920 | ) | 3.D | 3,266 | ||||||||||||||||
| General and administrative | 2,451 | 2,678 | 1,951 | - | 1,951 | (46 | ) | 3.H | 3,128 | ||||||||||||||||
| (1,228 | ) | 3.F | |||||||||||||||||||||||
| Depreciation and amortization | 1,145 | 485 | 353 | - | 353 | 1,498 | |||||||||||||||||||
| Loss on disposal of property and equipment | 241 | - | - | - | - | - | 241 | ||||||||||||||||||
| Change in fair value of digital currencies | 606 | (4 | ) | (3 | ) | 73 | 70 | - | 676 | ||||||||||||||||
| Total operating expenses | 6,046 | 6,704 | 4,884 | 73 | 4,957 | (2,194 | ) | 8,809 | |||||||||||||||||
| Loss from operations | (4,130 | ) | (3,050 | ) | (2,222 | ) | (72 | ) | (2,294 | ) | 1,274 | (5,150 | ) | ||||||||||||
| Other income (expense): | |||||||||||||||||||||||||
| Investment gain | - | - | - | 66 | 66 | - | 66 | ||||||||||||||||||
| Other income, net | 25 | - | - | - | - | - | 25 | ||||||||||||||||||
| Foreign exchange gain (loss) | - | 710 | 517 | (542 | ) | (25 | ) | - | (25 | ) | |||||||||||||||
| Interest expense | - | (68 | ) | (49 | ) | - | (49 | ) | - | (49 | ) | ||||||||||||||
| Unrealized gain on investment | 91 | 66 | (66 | ) | - | - | - | ||||||||||||||||||
| Net (loss) income before taxes | (4,105 | ) | (2,317 | ) | (1,688 | ) | (614 | ) | (2,302 | ) | 1,274 | (5,133 | ) | ||||||||||||
| Provision for income taxes | 1 | 89 | 65 | - | 65 | 66 | |||||||||||||||||||
| Net (loss) from continuing operations | $ | (4,106 | ) | $ | (2,406 | ) | $ | (1,753 | ) | $ | (614 | ) | $ | (2,367 | ) | $ | 1,274 | $ | (5,199 | ) | |||||
| Basic and diluted net loss per common share | $ | (1.18 | ) | $ | (0.08 | ) | $ | (0.06 | ) | $ | (0.08 | ) | $ | (0.82 | ) | ||||||||||
| Weighted average number of common shares outstanding - basic and diluted | 3,480,663 | 29,381,662 | 29,381,662 | 29,381,662 | 2,840,484 | 3.J | 6,321,147 | ||||||||||||||||||
Sphere 3D Corp.
UNAUDITED CONDENSED COMBINED STATEMENT OF OPERATIONS
(in thousands, except share and per share data)
For the Year Ended December 31, 2025
| Historical | Pro Forma | ||||||||||||||||||||||||
| Sphere 3D | Cathedra | Cathedra | Adjustments | Cathedra | |||||||||||||||||||||
| in GAAP USD |
in IFRS CAD |
in IFRS USD |
in GAAP USD |
in GAAP USD |
Transaction Accounting Adjustments |
Notes | Combined Results |
||||||||||||||||||
| Revenues: | 3.B | 3.C | |||||||||||||||||||||||
| Total revenues | $ | 11,181 | $ | 21,194 | $ | 15,143 | ($109 | ) | $ | 15,034 | $ | (313 | ) | 3.D | 25,902 | ||||||||||
| Operating costs and expenses: | |||||||||||||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization shown below) | 8,554 | 16,047 | 11,476 | - | 11,476 | (313 | ) | 3.D | 19,717 | ||||||||||||||||
| General and administrative | 8,266 | 7,331 | 5,246 | - | 5,246 | 781 | 3.H | 18,330 | |||||||||||||||||
| 3,430 | 3.F | ||||||||||||||||||||||||
| 490 | 3.G | ||||||||||||||||||||||||
| 117 | 3.I | ||||||||||||||||||||||||
| Depreciation and amortization | 6,878 | 4,784 | 3,421 | - | 3,421 | 10,299 | |||||||||||||||||||
| Impairment of property and equipment | 7,185 | - | - | - | - | - | 7,185 | ||||||||||||||||||
| Loss on disposal of property and equipment | 1,652 | - | - | - | - | - | 1,652 | ||||||||||||||||||
| Impairment of goodwill and other assets | 300 | - | - | 855 | 855 | - | 1,155 | ||||||||||||||||||
| Change in fair value of digital currencies | 345 | (5 | ) | (1 | ) | (1,191 | ) | (1,192 | ) | - | (847 | ) | |||||||||||||
| Total operating expenses | 33,180 | 28,157 | 20,142 | (336 | ) | 19,806 | 4,505 | 57,491 | |||||||||||||||||
| Loss from operations | (21,999 | ) | (6,963 | ) | (4,999 | ) | 227 | (4,772 | ) | (4,818 | ) | (31,589 | ) | ||||||||||||
| Other income (expense): | |||||||||||||||||||||||||
| Investment gain | 438 | 75 | 54 | 88 | 142 | - | 580 | ||||||||||||||||||
| Other income, net | 81 | - | - | - | - | - | 81 | ||||||||||||||||||
| Foreign exchange gain (loss) | - | (2,228 | ) | (1,587 | ) | 1,595 | 8 | - | 8 | ||||||||||||||||
| Interest expense | - | (672 | ) | (479 | ) | - | (479 | - | (479 | ) | |||||||||||||||
| Impairment of goodwill | (1,172 | ) | (855 | ) | 855 | - | - | - | |||||||||||||||||
| Unrealized gain on investment | 120 | 88 | (88 | ) | - | - | - | ||||||||||||||||||
| Gain on disposal of subsidiary | - | 167 | 117 | - | 117 | - | 117 | ||||||||||||||||||
| Gain on settlement of debt | - | 693 | 495 | - | 495 | - | 495 | ||||||||||||||||||
| Net (loss) income before taxes | (21,480 | ) | (9,980 | ) | (7,166 | ) | 2,677 | (4,489 | ) | (4,818 | ) | (30,787 | ) | ||||||||||||
| Provision for income taxes | 2 | - | - | - | - | 2 | |||||||||||||||||||
| Net (loss) from continuing operations | $ | (21,482 | ) | $ | (9,980 | ) | $ | (7,166 | ) | 2,677 | $ | (4,489 | ) | $ | (4,818 | ) | $ | (30,789 | ) | ||||||
| Basic and diluted net loss per common share | $ | (7.37 | ) | $ | (0.34 | ) | $ | (0.25 | ) | $ | (0.15 | ) | $ | (5.35 | ) | ||||||||||
| Weighted average number of common shares outstanding - basic and diluted | 2,914,607 | 29,091,882 | 29,091,882 | 29,091,882 | 2,840,484 | 3.J | 5,755,091 | ||||||||||||||||||
42
Table of Contents
SPHERE 3D CORP.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(Expressed in U.S. Dollars)
1. BASIS OF PRESENTATION
After completion of the Arrangement, the consolidated financial statements of the consolidated entity will be prepared and presented in accordance with GAAP. The Unaudited Pro Forma Financial Information includes (all financial information is prepared in accordance with GAAP):
| (a) | the Unaudited Pro Forma Balance Sheet as of March 31, 2026 combines (i) the unaudited condensed consolidated balance sheet of Sphere as of March 31, 2026, as included in Sphere's Quarterly Report on Form 10-Q filed with the SEC on May 15, 2026, and (ii) the unaudited consolidated balance sheet of Cathedra as of March 31, 2026, as included in the 8-K, giving effect to the Arrangement as if it had been completed on March 31, 2026; |
| (b) | the Unaudited Pro Forma Statement of Operations from continuing operations for the three months ended March 31, 2026 combines (i) the unaudited condensed consolidated statement of operations of Sphere, as included in Sphere's Quarterly Report on Form 10-Q filed with the SEC on May 15, 2026, and (ii) the unaudited consolidated statement of income or loss of Cathedra for the three months ended March 31, 2026, as included in the 8-K, giving effect to the Arrangement as if it had been completed on January 1, 2025; and | |
| (c) | the Unaudited Pro Forma Statement of Operations from continuing operations for the year ended December 31, 2025 combines (i) the audited consolidated statement of operations of Sphere, as included in Sphere's Annual Report on Form 10-K filed with the SEC on March 27, 2026, and (ii) the audited consolidated statement of income or loss of Cathedra for the year ended December 31, 2025, as included in the 8-K, giving effect to the Arrangement as if it had been completed on January 1, 2025. |
The Unaudited Pro Forma Financial Information should be read in conjunction with the historical consolidated financial statements and notes included therein of Sphere and Cathedra, as referred to above. Further review may identify differences between the accounting policies of Sphere and Cathedra that, when conformed, could have a material impact on the financial statements of Sphere, after the consummation of the Arrangement (the "Combined Company"). At this time, Sphere and Cathedra have made adjustments to align accounting policies and are not aware of any remaining accounting policy differences that would have a material impact on the Unaudited Pro Forma Financial Information of the Combined Company.
The Arrangement reflected in the Unaudited Pro Forma Financial Information has been prepared using the acquisition method of accounting in accordance with ASC 805, Business Combinations, under GAAP. Based on the definitions of control, Sphere is considered the legal and accounting acquirer. Under the acquisition method, the total estimated consideration is calculated as described in Note 2 to the Unaudited Pro Forma Financial Information. In accordance with the accounting guidance for business combinations, the assets acquired and liabilities assumed of Cathedra will be measured at their estimated fair values. The Unaudited Pro Forma Financial Information has accounted for Cathedra's assets and liabilities based on their historical amounts as no valuation has been completed at this time to determine their respective fair values.
It is Sphere Management's opinion that the Unaudited Pro Forma Financial Information includes all adjustments necessary for the fair presentation of the Arrangement described herein. The Unaudited Pro Forma Financial Information has been presented for informational purposes only and is not intended to reflect the results of operations or the financial position of Sphere which would have actually resulted had the Arrangement been effected on the dates indicated. Furthermore, the Unaudited Pro Forma Financial Information is not necessarily indicative of the results of operations that may be obtained in the future. Actual amounts recorded upon completion of the Arrangement will differ from those recorded in the Unaudited Pro Forma Financial Information and the differences may be material.
Certain amounts included herein have been subject to rounding adjustments. Accordingly, amounts shown as totals in certain tables may not be the arithmetic aggregation of the amounts that precede them.
43
Table of Contents
2. ACQUISITION OF CATHEDRA
Sphere Management has estimated the preliminary consideration and has not yet completed an external valuation analysis of the fair market value of Cathedra's assets to be acquired and liabilities to be assumed. As a result, Sphere Management has estimated the allocation of the preliminary purchase price to Cathedra's assets and liabilities. This preliminary purchase price allocation has been used to prepare the pro forma adjustments in the Unaudited Pro Forma Balance Sheet. The final purchase price allocation will be determined when the final purchase price has been determined, the final assets and liabilities and any asset sales are known, and detailed valuations and any other studies and calculations deemed necessary have been completed. The final purchase price and purchase price allocation could differ materially from the preliminary purchase price and purchase price allocation used to prepare the pro forma adjustments resulting from changes to assets and liabilities and to the ultimate purchase consideration, and operations during the intervening period to the closing of the Arrangement, among other factors.
Pursuant to the terms of the Arrangement Agreement, Sphere issued 2,405,300 Sphere Common Shares and 1,387,117 Sphere Series I Preferred Stock (the "Series I Shares") to the shareholders of Cathedra to acquire 100% of the issued and outstanding common shares of Cathedra as well as Replacement Warrants and share-based awards. This preliminary purchase price is based on the aggregate number of shares of Sphere Common Shares outstanding at the closing of the Arrangement using $1.90, the fair value of the Sphere Common Shares as of May 29, 2026, the last business day prior to the closing of the Arrangement on June 1, 2026. The fair value of the Series I Shares was estimated using a market approach to estimate the equity value of Sphere and further adjusted for lack of marketability. This is a preliminary estimate and the actual fair value may differ upon completion of the formal valuation analysis. A preliminary accounting assessment was performed over Sphere Series I Shares to determine the balance sheet classification. The preliminary conclusion resulted in permanent equity classification, which is subject to further accounting assessment and may be subject to change at the time the accounting assessment is completed.
The following table summarizes the preliminary estimated consideration:
| Number of Shares issued |
Estimated Fair Value Per Share of Sphere Common Share |
Estimated Consideration (in thousands) |
||||||||||
| Sphere Series I Shares issued | 1,387,117 | $ | 1.93 | $ | 2,677 | |||||||
| Sphere Common Shares issued | 2,405,300 | $ | 1.90 | $ | 4,570 | |||||||
| Black-Scholes value of Cathedra Replacement Warrants | 115,867 | $ | 0.16 | $ | 19 | |||||||
| Total number of Sphere Common Shares issued or reserved for issuance | 2,521,167 | $ | 4,589 | |||||||||
| Total Estimated Consideration | $ | 7,266 |
44
Table of Contents
| 3) | PRO FORMA ADJUSTMENTS |
The adjustments reflect the acquisition method of accounting, which takes into account the total consideration transferred for Cathedra's assets and liabilities based on their historical amounts as no valuation has occurred at this time to determine their respective fair values.
| A. | The preliminary estimated consideration transferred and assets acquired and liabilities assumed are recorded as follows (in thousands): |
| Cash and cash equivalents | $ | 234 | |
| Digital currencies | 274 | ||
| Trade and other receivables | 859 | ||
| Due from related parties and other current assets | 1,276 | ||
| Property and equipment, net | 4,937 | ||
| Investments | 800 | ||
| Right of use assets | 862 | ||
| Deposits | 1,674 | ||
| Accounts payable, accrued expenses and other liabilities | (5,228 | ) | |
| Lease liabilities | (980 | ) | |
| Net assets acquired | $ | 4,708 | |
| Preliminary estimated consideration | $ | 7,266 | |
| Excess to be allocated to intangible assets and goodwill | $ | 2,558 |
| A final determination of fair value may differ materially from the preliminary estimates and will include Sphere Management's final valuation. The final valuation may change the calculation of consideration, which could affect the fair value assigned to the assets acquired and liabilities assumed and could result in a change to the Unaudited Pro Forma Financial Information. | ||
| B. | The Unaudited Pro Forma Financial Information is presented in U.S. dollars ("USD"), which is also the functional currency of Sphere. Since Cathedra's historical consolidated financial statements are presented in Canadian dollars ("CAD"), the historical financial information of Cathedra used in the Unaudited Pro Forma Financial Information has been translated into USD using the following historical CAD to USD exchange rates: | |
|
Period-end exchange rate as of March 31, 2026: $0.72 Average exchange rate for the three months ended March 31, 2026: $0.73 Average exchange rate for the year ended December 31, 2025: $0.71 |
| C. | The effects of converting Cathedra's historical financial information from International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS") Accounting Standards to GAAP have been estimated and included in the Unaudited Pro Forma Financial Information. Further adjustments may be identified. | |
| Certain reclassifications were made to conform the historical presentation of Cathedra consolidated financial statements to that of Sphere's financial statement presentation as follows: | ||
| Presentation in Cathedra's IFRS Financial Statements | Presentation in Unaudited Pro forma Financial Information |
As of and for the Three Months Ended March 31, 2026 (in thousands) |
For the Year Ended December 31, 2025 (in thousands) |
|||||
| Prepaid expenses | Other current assets | $ | 966 | |||||
| Other assets | Other current assets | $ | 278 | |||||
| Trade payables and accrued liabilities | Accounts payable | $ | 821 | |||||
| Accrued expenses | $ | 1,382 | ||||||
| Accrued payroll and employee compensation | $ | 400 | ||||||
| Revenues | Total revenues | $ | 2,663 | $ | 15,034 | |||
| Operating costs | Cost of revenue (exclusive of depreciation and amortization shown below) | $ | 2,583 | $ | 11,476 | |||
| Depreciation | Depreciation and amortization | $ | 353 | $ | 3,421 | |||
| Realized gain on sale of digital currencies | Change in fair value of digital currencies | $ | 70 | $ | (1,192 | ) | ||
| Director fees | General and administrative | $ | 47 | $ | 233 | |||
| Management and consulting fees | General and administrative | $ | 196 | $ | 1,821 | |||
| Office and administration | General and administrative | $ | 324 | $ | 811 | |||
| Professional fees | General and administrative | $ | 755 | $ | 1,034 | |||
| Salaries and wages | General and administrative | $ | 122 | $ | 659 | |||
| Share-based compensation | General and administrative | $ | 507 | $ | 639 | |||
| Travel | General and administrative | $ | - | $ | 49 | |||
| Net finance costs | Interest expense | $ | (49 | ) | $ | (479 | ) | |
| Other income | Investment gain | $ | - | $ | 54 | |||
| Impairment of goodwill | Impairment of goodwill and other assets | $ | - | $ | 855 | |||
| Unrealized gain on investment | Investment gain | $ | 66 | $ | 88 |
45
Table of Contents
The financial information below illustrates the impact of adjustments made to Cathedra's consolidated financial statements as prepared in accordance with IFRS, in order to present them on a basis consistent with the Sphere's accounting presentation in accordance with GAAP.
As of March 31, 2026
| Historical | |||||||||||||||||||||
| Cathedra | Cathedra | Adjustments | Adjustments | Cathedra | |||||||||||||||||
| in IFRS CAD | in IFRS USD | Reclassification | to GAAP | in GAAP USD | |||||||||||||||||
| Assets | 3.B | 3.C | 3.C | ||||||||||||||||||
| Current Assets: | |||||||||||||||||||||
| Cash and cash equivalents | $ | 326 | $ | 234 | - | - | $ | 234 | |||||||||||||
| Digital currencies | 381 | 273 | - | $ | 1 | 3.C.1 | 274 | ||||||||||||||
| Trade and other receivables | 1,197 | 859 | - | - | 859 | ||||||||||||||||
| Due from related parties | 45 | 32 | - | - | 32 | ||||||||||||||||
| Other current assets | 1,734 | 1,244 | - | - | 1,244 | ||||||||||||||||
| Total current assets | 3,683 | 2,642 | - | 1 | 2,643 | ||||||||||||||||
| Property and equipment, net | 5,990 | 4,296 | - | $ | 641 | 3.C.2 | 4,937 | ||||||||||||||
| Deposits | 2,334 | 1,674 | - | - | 1,674 | ||||||||||||||||
| Goodwill | 15,674 | 11,242 | - | - | 11,242 | ||||||||||||||||
| Right-of-use assets | 1,201 | 862 | - | - | 862 | ||||||||||||||||
| Investments | 1,116 | 800 | - | - | 800 | ||||||||||||||||
| Other non-current assets | 894 | 641 | - | (641 | ) | 3.C.2 | - | ||||||||||||||
| Total assets | $ | 30,892 | $ | 22,157 | $ | - | $ | 1 | $ | 22,158 | |||||||||||
| Liabilities and Shareholders' Equity | |||||||||||||||||||||
| Current liabilities: | |||||||||||||||||||||
| Accounts payable | $ | 3,071 | $ | 2,203 | $ | (1,382 | ) | 3.C.3 | - | $ | 821 | ||||||||||
| Accrued liabilities | - | - | 1,382 | 3.C.3 | - | 1,382 | |||||||||||||||
| Due to related parties | 1,146 | 822 | (400 | ) | 3.C.3 | - | 422 | ||||||||||||||
| Accrued payroll and employee compensation | - | - | 400 | 3.C.3 | - | 400 | |||||||||||||||
| Income tax payable | 247 | 177 | - | - | 177 | ||||||||||||||||
| Contract liabilities | 544 | 390 | - | - | 390 | ||||||||||||||||
| Customer liabilities | 2,938 | 2,107 | - | - | 2,107 | ||||||||||||||||
| Current portion of lease liabilities | 86 | 61 | - | - | 61 | ||||||||||||||||
| Total current liabilities | 8,032 | 5,760 | - | - | 5,760 | ||||||||||||||||
| Lease liabilities | 1,281 | 919 | - | 919 | |||||||||||||||||
| Total liabilities | 9,313 | 6,679 | - | - | 6,679 | ||||||||||||||||
| Shareholders' equity: | |||||||||||||||||||||
| Common shares - Cathedra | 22,649 | 16,245 | - | - | 16,245 | ||||||||||||||||
| Accumulated other comprehensive loss | 2,855 | 2,048 | - | (1,053 | ) | 3.C.4 | (126 | ) | |||||||||||||
| (1,121 | ) | 3.C.5 | |||||||||||||||||||
| Accumulated deficit | (9,344 | ) | (6,702 | ) | - | 1,053 | 3.C.4 | (4,527 | ) | ||||||||||||
| 1,121 | 3.C.5 | ||||||||||||||||||||
| 1 | 3.C.1 | ||||||||||||||||||||
| Reserves | 4,606 | 3,304 | - | - | 3,304 | ||||||||||||||||
| Contributed surplus | 813 | 583 | - | - | 583 | ||||||||||||||||
| Shareholders' equity | 21,579 | 15,478 | - | 1 | 15,479 | ||||||||||||||||
| Total liabilities, temporary equity, and shareholders' equity | $ | 30,892 | $ | 22,157 | $ | - | $ | 1 | $ | 22,158 | |||||||||||
46
Table of Contents
For the Three Months Ended March 31, 2026
| Historical | ||||||||||||||||||||
| Cathedra | Cathedra | Adjustments | Adjustments | Cathedra | ||||||||||||||||
| in IFRS CAD |
in IFRS USD |
Reclassification | in GAAP USD |
in GAAP USD |
||||||||||||||||
| Revenues: | 3.B | 3.C | 3.C | |||||||||||||||||
| Total revenues | $ | 3,654 | $ | 2,662 | $ | - | $ | 1 | 3.C.8 | $ | 2,663 | |||||||||
| Operating costs and expenses: | ||||||||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization shown below) | 3,545 | 2,583 | - | - | 2,583 | |||||||||||||||
| General and administrative | 2,678 | 1,951 | - | - | 1,951 | |||||||||||||||
| Depreciation and amortization | 485 | 353 | - | - | 353 | |||||||||||||||
| Change in fair value of digital currencies | (4 | ) | (3 | ) | - | 73 | 3.C.5 | 70 | ||||||||||||
| Total operating expenses | 6,704 | 4,884 | - | 73 | 4,957 | |||||||||||||||
| Loss from operations | (3,050 | ) | (2,222 | ) | - | (72 | ) | (2,294 | ) | |||||||||||
| Other income (expense): | ||||||||||||||||||||
| Investment gain | - | - | 66 | 3.C.7 | - | 66 | ||||||||||||||
| Foreign exchange gain (loss) | 710 | 517 | - | (542 | ) | 3.C.4 | (25 | ) | ||||||||||||
| Interest expense | (68 | ) | (49 | ) | - | - | (49 | ) | ||||||||||||
| Unrealized gain on investment | 91 | 66 | (66 | ) | 3.C.7 | - | - | |||||||||||||
| Net (loss) income before taxes | (2,317 | ) | (1,688 | ) | - | (614 | ) | (2,302 | ) | |||||||||||
| Provision for income taxes | 89 | 65 | - | - | 65 | |||||||||||||||
| Net (loss) from continuing operations | $ | (2,406 | ) | $ | (1,753 | ) | - | $ | (614 | ) | $ | (2,367 | ) | |||||||
| Basic and diluted net loss per common share | $ | (0.08 | ) | $ | (0.06 | ) | $ | (0.08 | ) | |||||||||||
| Weighted average number of common shares outstanding - basic and diluted | 29,381,662 | 29,381,662 | 29,381,662 | |||||||||||||||||
For the Year Ended December 31, 2025
| Historical | |||||||||||||||||||||
| Cathedra in IFRS |
Cathedra in IFRS |
Adjustments | Adjustments to |
Cathedra in GAAP |
|||||||||||||||||
| CAD | USD | Reclassification | GAAP | USD | |||||||||||||||||
| Revenues: | 3.B | 3.C | 3.C | ||||||||||||||||||
| Total revenues | $ | 21,194 | $ | 15,143 | - | $ | (109 | ) | 3.C.8 | $ | 15,034 | ||||||||||
| Operating costs and expenses: | |||||||||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization shown below) | 16,047 | 11,476 | - | - | 11,476 | ||||||||||||||||
| General and administrative | 7,331 | 5,246 | - | - | 5,246 | ||||||||||||||||
| Depreciation and amortization | 4,784 | 3,421 | - | - | 3,421 | ||||||||||||||||
| Impairment of goodwill and other assets | - | - | 855 | 3.C.6 | - | 855 | |||||||||||||||
| Change in fair value of digital currencies | (5 | ) | (1 | ) | (1,191 | ) | 3.C.5 | (1,192 | ) | ||||||||||||
| Total operating expenses | 28,157 | 20,142 | 855 | (1,191 | ) | 19,806 | |||||||||||||||
| Loss from operations | (6,963 | ) | (4,999 | ) | (855 | ) | 1,082 | (4,772 | ) | ||||||||||||
| Other income (expense): | |||||||||||||||||||||
| Investment gain | 75 | 54 | 88 | 3.C.7 | - | 142 | |||||||||||||||
| Foreign exchange gain (loss) | (2,228 | ) | (1,587 | - | 1,595 | 3.C.4 | 8 | ||||||||||||||
| Interest expense | (672 | ) | (479 | ) | - | - | (479 | ) | |||||||||||||
| Impairment of goodwill | (1,172 | ) | (855 | ) | 855 | 3.C.6 | - | - | |||||||||||||
| Unrealized gain on investment | 120 | 88 | (88 | ) | 3.C.7 | - | - | ||||||||||||||
| Gain on disposal of subsidiary | 167 | 117 | - | - | 117 | ||||||||||||||||
| Gain on settlement of debt | 693 | 495 | - | - | 495 | ||||||||||||||||
| Net (loss) income before taxes | (9,980 | ) | (7,166 | ) | - | 2,677 | (4,489 | ) | |||||||||||||
| Provision for income taxes | - | - | - | - | |||||||||||||||||
| Net (loss) from continuing operations | $ | (9,980 | ) | $ | (7,166 | ) | $ | - | $ | 2,677 | $ | (4,489 | ) | ||||||||
| Basic and diluted net loss per common share | $ | (0.34 | ) | $ | (0.25 | ) | $ | (0.15 | ) | ||||||||||||
| Weighted average number of common shares outstanding - basic and diluted | 29,091,882 | 29,091,882 | 29,091,882 | ||||||||||||||||||
Adjustments herein represent the alignment of the accounting policies and reclassifications, including the following:
| 1. | Adjustment to record the fair value of digital currencies measured using the period-end closing price rather than as an intangible asset with an indefinite useful life initially measured at cost, and subsequently measured under the revaluation model to conform to Sphere's accounting policy; |
| 2. | Reclassification to present costs of infrastructure within property plant and equipment rather than other non-current assets to conform to Sphere's accounting policy; | |
| 3. | Reclassification of amounts within accounts payable, accrued expenses and due to related parties to conform to Sphere's balance sheet presentation; | |
| 4. | Adjustment to present cumulative translation adjustments within accumulated other comprehensive loss rather than accumulated deficit and other income (expense) to conform to Sphere's accounting policy; | |
| 5. | Adjustment to present the changes in fair market value of digital currencies within operating expenses and accumulated deficit rather than other comprehensive loss and accumulated other comprehensive loss to conform to Sphere's accounting policy; | |
| 6. | Reclassification of impairment of goodwill from other income (expense) to total operating expenses to conform to Sphere's accounting policy; | |
| 7. | Reclassification of unrealized gain on investment to investment gain to conform to Sphere's accounting policy; and | |
| 8. | Revenue adjustment to measure the contract consideration at fair value at contract inception based on the Bitcoin spot price at the beginning of the day, with a corresponding increase to net loss from continuing operations rather than the spot price on the date of receipt to conform to Sphere's accounting policy. |
| D. | The adjustment reflects the elimination of related party prepaid, deposits, customer liabilities, and intra-entity transactions between Sphere and Cathedra upon consummation of the Arrangement. | |
| E. | The adjustment reflects the elimination of Cathedra's shareholders' equity, which consists of Cathedra shares, reserves, contributed surplus and accumulated deficit, which will be eliminated upon consolidation. | |
| F. | Sphere and Cathedra incurred acquisition-related transaction costs of approximately $3.4 million, comprised of professional, legal and accounting fees of $2.4 million, and $1.0 million in strategic advisory fees related to the Arrangement. These costs will not affect Sphere's combined statement of operations beyond 12 months after the acquisition date. The adjustment for the three-months ended March 31, 2026 excludes the non-recurring acquisition-related transaction costs that are reflected in the acquisition cost adjustment for the year ended December 31, 2025. |
|
| G. | The adjustment reflects a transaction bonus issued by Sphere in connection within the consummation of the Arrangement (this adjustment is considered to be a one-time charge and is not expected to recur). | |
| H. | The adjustment reflects Sphere restricted stock units that accelerate in accordance with the terms of the applicable equity plans (this adjustment is considered to be a one-time charge and is not expected to recur). The adjustment for the three-months ended March 31, 2026 excludes the expense related to the restricted stock units that accelerated upon completion of the Arrangement and reflected in the adjustment for the year ended December 31, 2025. |
Table of Contents
| I. | As of May 29, 2026, approximately 2.9 million Cathedra restricted stock units ("Cathedra RSUs") were issued and outstanding. Certain Cathedra RSUs were exchanged for restricted share units to acquire Sphere Common Shares (the "Replacement RSUs") with the remaining Cathedra RSUs accelerated in accordance with their terms at the closing of the Arrangement. As a result, Sphere issued Replacement RSUs to acquire 178,073 Sphere Common Shares to one Cathedra RSU holder. The fair value of the Replacement RSU has been determined to be approximately $0.3 million using the closing stock price on May 29, 2026. The fair value of the Cathedra RSUs that accelerated in accordance with their terms at the closing of the Arrangement was approximately $0.3 million, which represents the fair-value-measure of the vested portion of the Cathedra RSUs and is considered part of the consideration. The Replacement RSUs of $0.3 million are treated as a post-combination expense and will be recognized over the remaining 2.4 years post combination service period. Approximately $0.1 million post-acquisition share-based compensation is reflected in the Unaudited Pro Forma Statement of Operations for the year ended December 31, 2025. | |
| J. | Shares used in computing basic and diluted net loss per share as if the Arrangement had occurred on January 1, 2025 are as follows: |
| (in thousands, except share and per share data) | Three Months Ended March 31, 2026 |
|||
| Numerator (basic and diluted) | ||||
| Pro forma net loss from continuing operations | $ | (5,199 | ) | |
| Denominator (basic and diluted) | ||||
| Historical weighted-average shares outstanding | 3,480,663 | |||
| Shares of Sphere Common Shares as consideration transferred | 2,227,227 | |||
| Cathedra's equity awards converted to Sphere Common Shares | 178,073 | |||
| Sphere's equity awards converted to Sphere Common Shares | 435,184 | |||
| Total weighted average shares outstanding (basic and diluted) | 6,321,147 | |||
| Pro forma loss per share | ||||
| Basic and diluted | $ | (0.82 | ) | |
| (in thousands, except share and per share data) | Year Ended December 31, 2025 |
|||
| Numerator (basic and diluted) | ||||
| Pro forma net loss from continuing operations | $ | (30,789 | ) | |
| Denominator (basic and diluted) | ||||
| Historical weighted-average shares outstanding | 2,914,607 | |||
| Shares of Sphere Common Shares as consideration transferred | 2,227,227 | |||
| Cathedra's equity awards converted to Sphere Common Shares | 178,073 | |||
| Sphere's equity awards converted to Sphere Common Shares | 435,184 | |||
| Total weighted average shares outstanding (basic and diluted) | 5,755,091 | |||
| Pro forma loss per share | ||||
| Basic and diluted | $ | (5.35 | ) |
A net loss cannot be diluted. When a company is in a net loss position, basic and diluted loss per share are the same.
The computation of pro forma diluted weighted-average shares outstanding excludes the following:
| Three Months Ended March 31, 2026 |
||
| Series H Preferred Shares Common Share Equivalents | 2,300 | |
| Series I Shares Common Share Equivalents | 1,387,117 | |
| Sphere Options | 48,551 | |
| Sphere Warrants and Cathedra Replacement Warrants | 1,440,401 | |
| Sphere RSUs and Cathedra Replacement RSU | 396,704 |
| Year Ended December 31, 2025 |
||
| Series H Preferred Shares Common Share Equivalents | 2,300 | |
| Series I Shares Common Share Equivalents | 1,387,117 | |
| Sphere Options | 56,586 | |
| Sphere Warrants and Cathedra Replacement Warrants | 1,440,401 | |
| Sphere RSUs and Cathedra Replacement RSU | 357,238 |
FAQ
What transaction did Sphere 3D Corp. (ANY) complete with Cathedra Bitcoin?
How many Sphere 3D securities were issued in the Cathedra transaction?
What operating scale does the combined Sphere 3D and Cathedra business have?
How did Cathedra Bitcoin perform financially before the Sphere 3D merger?
What leadership and board changes occurred at Sphere 3D after the Cathedra deal?
Filing Exhibits & Attachments
16 documentsPress Releases
Agreements & Contracts
Financial & Certifications
Other Documents
- EX-3.1 EXHIBIT 3.1 45.0 KB
- EX-101 XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT 4.4 KB
- EX-101 XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT 707 B
- EX-101 XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT 21.7 KB
- EX-101 XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT 45.3 KB
- EX-101 XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT 24.3 KB