WhiteFiber Q3 2026 net loss widens to $101M
Remaining performance obligations for WhiteFiber's ASC 606 customer contracts totaled $729.0 million at September 30, 2026.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
WhiteFiber, Inc. reported nine-month revenue of $74.8 million for the period ended September 30, 2026, versus $55.6 million in 2025; third-quarter revenue was $24.0 million versus $20.2 million. Nine-month revenue included $58.7 million from cloud services and $15.1 million from colocation. Net loss was $128.5 million for the nine months, compared with $23.2 million a year earlier, including $80.8 million of induced conversion expense; third-quarter net loss was $101.4 million versus $15.8 million.
Operating activities provided $211.3 million in cash in the first nine months, compared with $23.8 million used in 2025; deferred revenue contributed $226.5 million to operating cash flow. Investing activities used $523.7 million, including $549.8 million of purchases and deposits for property, plant and equipment. Cash, cash equivalents and restricted cash totaled $147.6 million at September 30, 2026, and convertible notes payable, net, were $330.1 million. Remaining ASC 606 performance obligations were $729.0 million at September 30, 2026; this excludes contracts with original expected duration of one year or less and variable consideration allocated entirely to wholly unsatisfied performance obligations.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNine-month revenue was $74.8 million, versus $55.6 million in 2025.
- Moderate pointOperating cash flow provided $211.3 million, versus $23.8 million used in 2025.
Negative
- Major pointNine-month net loss was $128.5 million, versus $23.2 million in 2025.
- Minor pointInduced conversion expense was $80.8 million in the third quarter of 2026.
Filing Explained
WhiteFiber reports that a third-quarter induced conversion of part of its 2031 notes was completed, issuing 6,271,534 ordinary shares. The issuance increases the share count and reduces existing holders’ percentage ownership, absent offsetting changes.
Key Figures
Key Terms
Remaining performance obligations financial
Induced conversion expense financial
Zero-strike call technical
Current expected credit losses financial
Sales-type lease financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much revenue did WYFI report for the first nine months of 2026?
What was WYFI's net loss in the third quarter and first nine months of 2026?
How much remaining performance obligation did WYFI report?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended
For the transition period from __________ to __________
Commission file number:
| (Exact name of registrant as specified in its charter) |
| (State
or other jurisdiction of incorporation or organization) |
(I.R.S.
Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number:
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company | |||
If an emerging growth company, indicate by checkmark 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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of November 6, 2026, the registrant had
TABLE OF CONTENTS
| CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | ii | |
| PART I | ||
| Item 1. | Financial Statements. | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 44 |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk. | 73 |
| Item 4. | Controls and Procedures. | 73 |
| PART II | ||
| Item 1. | Legal Proceedings. | 74 |
| Item 1A. | Risk Factors. | 74 |
| Item 2. | Unregistered Sales of Equity Securities. | 74 |
| Item 3. | Defaults Upon Senior Securities. | 76 |
| Item 4. | Mine Safety Disclosures. | 76 |
| Item 5. | Other Information. | 76 |
| Item 6. | Exhibits. | 77 |
| SIGNATURES | 78 | |
i
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements regarding us and our business strategies, market potential, future financial performance and other matters that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this report, including statements regarding our strategy, future financial condition, future operations, plans, objectives of management, and expected market growth, are forward-looking statements. The words “believe,” “expect,” “estimate,” “could,” “should,” “intend,” “may,” “might,” “will,” “target,” “potential,” “goal,” “objective,” “plan,” “seek,” “anticipate,” “project” and similar expressions, among others, generally identify “forward-looking statements,” which speak only as of the date the statements were made. In particular, information included under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other sections of this report contains forward-looking statements. Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of WhiteFiber’s (as defined below) management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. Whether any such forward-looking statements are in fact achieved will depend on future events, some of which are beyond WhiteFiber’s control.
You should realize that if underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, our actual results and financial condition could vary materially from expectations and projections expressed or implied in our forward-looking statements. Risks and uncertainties include, but are not limited to:
| ● | our ability to integrate the operations of Enovum (as defined below) and any hereafter acquired companies into our HPC Business (as defined below) segment; |
| ● | our ability to purchase GPUs (as defined below) on a timely basis to service our cloud service customers; |
| ● | supply chain disruptions, which may have a material adverse effect on the Company’s performance; |
| ● | our failure to effectively manage our growth, strategic investments, combination, joint ventures, acquisitions or alliances, which could disrupt our business; |
| ● | the loss of any member of our executive management team; |
| ● | capital markets and interest rate risks; |
| ● | significant customer concentration; |
| ● | our failure to innovate and provide cloud services to our customers and partners; |
| ● | a substantial decrease in the demand for data centers; |
| ● | volatility in the supply and price of power in the open markets; |
| ● | our limited history of operating as an independent public company; |
| ● | export restitution and tariffs, particularly with Canada concerning our supplies and operations; |
| ● | issues in the development and use of AI (as defined below); |
ii
| ● | regulations that target AI, and governmental regulations; |
| ● | other legal obligations related to data privacy, data protection and information security; |
| ● | our ability to obtain project-level or permanent financing on favorable terms, or at all, to fund the construction and buildout of our data center facilities; |
| ● | risks related to the timing of data center construction, commissioning, and deployment of IT load at our facilities, including the NC-1 campus, which may be subject to delays beyond our control; |
| ● | our reliance on anchor tenants at key data center sites, including our dependence on Nscale as the sole contracted tenant at our NC-1 campus; and |
| ● | other factors discussed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, in Part II, Item 1.A of this Form 10-Q and in other reports that the Company files from time to time with the SEC. |
You should not place undue reliance upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this report primarily on our current expectations, estimates, forecasts and projections about future events and trends that we believe may affect our business, results of operations, financial condition and prospects. Although we believe that we have a reasonable basis for each forward-looking statement contained in this report, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors, including those discussed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report, in our other filings with the U.S. Securities and Exchange Commission and in the documents in which such forward-looking statements appear. These factors, risks, trends and uncertainties could cause actual results or events to differ materially from those anticipated. Additional risks and uncertainties of which we are unaware, or that we currently deem immaterial, also may become important factors that affect us. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this report. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
All forward-looking statements made in this report are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this report, and WhiteFiber does not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, and changes in future operating results over time or otherwise. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements.
Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data.
iii
Item 1. Financial Statements and Supplementary Data
WHITEFIBER, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2026 and December 31, 2025
(Expressed in thousands, except for the number of shares)
| September 30, 2026 |
December 31, 2025 |
|||||||
| (audited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Net investment in lease - current, net | ||||||||
| Other current assets, net | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Deposits for property, plant, and equipment | ||||||||
| Property, plant, and equipment, net | ||||||||
| Goodwill | ||||||||
| Intangible assets, net | ||||||||
| Operating lease right-of-use assets, net | ||||||||
| Finance lease right-of-use assets, net | - | |||||||
| Net investment in lease - non-current, net | ||||||||
| Investment security | ||||||||
| Deferred tax assets | ||||||||
| Other non-current assets, net | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Current portion of deferred revenue | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Current portion of finance lease liabilities | - | |||||||
| Short-term debt and current portion of long-term debt - third parties, net | - | |||||||
| Short-term debt - related parties, net | - | |||||||
| Income tax payable | - | |||||||
| Other payables and accrued liabilities | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Non-current portion of deferred revenue | ||||||||
| Non-current portion of operating lease liabilities | ||||||||
| Convertible notes payable, net | - | |||||||
| Long-term debt - third parties, net | - | |||||||
| Deferred tax liabilities | ||||||||
| Other long-term liabilities | - | |||||||
| Amounts due to related parties | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
| Commitments and contingencies (Note 18) | ||||||||
| Shareholders’ equity | ||||||||
| Preference shares, $ | - | - | ||||||
| Ordinary shares, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive (loss) income | ( | ) | ||||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
WHITEFIBER, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS AND
COMPREHENSIVE LOSS
For the Three and Nine Months Ended September 30, 2026 and 2025
(Expressed in thousands, except per share data)
| For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues | ||||||||||||||||
| Cloud services | $ | $ | $ | $ | ||||||||||||
| Colocation services | ||||||||||||||||
| Other | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Operating costs and expenses | ||||||||||||||||
| Cost of revenue (exclusive of depreciation shown below) | ||||||||||||||||
| Cloud services | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Colocation services | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Depreciation and amortization expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Impairment of capitalized software assets | - | - | ( | ) | - | |||||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net (loss) gain from disposal of property and equipment | - | ( | ) | ( | ) | |||||||||||
| Interest expense - third parties | ( | ) | - | ( | ) | - | ||||||||||
| Interest expense - related parties | ( | ) | - | ( | ) | - | ||||||||||
| Induced conversion expense | ( | ) | - | ( | ) | - | ||||||||||
| Other income (expense), net | ( | ) | ( | ) | ||||||||||||
| Total other expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax benefit (expense) | ( | ) | ( | ) | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive loss | ||||||||||||||||
| Foreign currency translation adjustment | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of ordinary shares outstanding | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
| Loss per share | ||||||||||||||||
| Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
WHITEFIBER, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
For the Three and Nine Months Ended September 30, 2026 and 2025
(Expressed in thousands, except for the number of shares)
| Ordinary Shares |
Par Value |
Additional Paid-in capital |
Retained Earnings/ (Accumulated Deficit) |
Accumulated Other Comprehensive (Loss) Income |
Total Shareholders’ Equity |
|||||||||||||||||||
| Balances as of December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Net Parent Investment | - | - | - | - | ||||||||||||||||||||
| Other comprehensive loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Net income | - | - | - | - | ||||||||||||||||||||
| Balances as of March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Net Parent Investment | - | - | - | - | ||||||||||||||||||||
| Other comprehensive income | - | - | - | - | ||||||||||||||||||||
| Net loss | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||
| Balances as of June 30, 2025 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Share-based compensation expense | - | - | ( | ) | - | - | ( | ) | ||||||||||||||||
| Net Parent Investment | - | - | - | - | ||||||||||||||||||||
| Issuance of common stock/initial public offering, net of offering costs | - | - | ||||||||||||||||||||||
| Issuance of common stock/over-allotment option exercise, net of offering costs | - | - | ||||||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to employees | - | - | ||||||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to consultants | - | - | ||||||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to director | - | - | - | |||||||||||||||||||||
| Other comprehensive loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Net loss | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||
| Balances as of September 30, 2025 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Balances, December 31, 2025 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Share-based compensation expense | - | - | - | - | ||||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to employees | - | - | ||||||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to consultants | - | - | ||||||||||||||||||||||
| Purchase of zero-strike call option in connection with issuance of convertible notes | - | - | ( | ) | - | - | ( | ) | ||||||||||||||||
| Other comprehensive loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Net loss | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||
| Balances as of March 31, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Share-based compensation expense | - | - | ( | ) | - | - | ( | ) | ||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to employees | - | - | ||||||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to consultants | - | - | - | |||||||||||||||||||||
| Redemption of exchangeable shares | ( | ) | - | - | - | |||||||||||||||||||
| Other comprehensive loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Net loss | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||
| Balances as of June 30, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Share-based compensation expense | - | - | - | - | ||||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to employees | - | - | ||||||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to consultants | - | - | ||||||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to director | - | - | - | |||||||||||||||||||||
| Induced conversion on 2031 Notes | - | - | ||||||||||||||||||||||
| Other comprehensive income | - | - | - | - | ||||||||||||||||||||
| Net loss | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||
| Balances as of September 30, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
WHITEFIBER, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2026 and 2025
(Expressed in thousands)
| For the Nine Months Ended September 30, |
||||||||
| 2026 | 2025 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization expenses | ||||||||
| Amortization of discount on convertible note issued | - | |||||||
| Induced conversion expense | - | |||||||
| Amortization of discount on debt - third parties | - | |||||||
| Amortization of discount on debt - related parties | - | |||||||
| Share-based compensation expenses | ||||||||
| Impairment of capitalized software assets | - | |||||||
| (Gain) loss from disposal of property, plant, and equipment | ( | ) | ||||||
| Gain on net investment in lease | ( | ) | - | |||||
| Current expected credit losses | ||||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Net investment in lease | ||||||||
| Other current assets | ( | ) | ||||||
| Right-of-use assets | ||||||||
| Other non-current assets | ( | ) | ||||||
| Accounts payable | ||||||||
| Income tax payable | ( | ) | ||||||
| Other payables and accrued liabilities | ||||||||
| Other long-term liabilities | ( | ) | ||||||
| Deferred revenue | ( | ) | ||||||
| Lease liabilities | ( | ) | ( | ) | ||||
| Deferred tax liabilities | ( | ) | ||||||
| Amounts due to related parties | ( | ) | ||||||
| Net Cash Provided by (Used in) Operating Activities | ( | ) | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Purchases of and deposits made for property, plant, and equipment | ( | ) | ( | ) | ||||
| Proceeds from disposal of property, plant and equipment | ||||||||
| Net Cash Used in Investing Activities | ( | ) | ( | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Net transfers from parent | - | |||||||
| Proceeds from issuance of ordinary shares/initial public offering, net of offering costs | - | |||||||
| Proceeds from issuance of ordinary shares/over-allotment option exercise, net of offering costs | - | |||||||
| Net proceeds from issuance of convertible debt | - | |||||||
| Purchase of zero-strike call option | ( | ) | - | |||||
| Net proceeds from issuance of debt - third parties | - | |||||||
| Net proceeds from issuance of debt - related parties | - | |||||||
| Repayment of debt - third parties | ( | ) | - | |||||
| Repayment of debt - related parties | ( | ) | - | |||||
| Repayment of convertible notes in induced conversion | ( | ) | - | |||||
| Repayment of finance lease liabilities | ( | ) | - | |||||
| Net Cash Provided by Financing Activities | ||||||||
| Net increase in cash, cash equivalents and restricted cash | ||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ) | ( | ) | ||||
| Cash, cash equivalents and restricted cash, beginning of period | ||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | ||||||
| Supplemental Cash Flow Information | ||||||||
| Cash paid for interest expense – third parties | $ | - | ||||||
| Cash paid for interest expense – related parties | $ | - | ||||||
| Cash paid for income taxes, net of (refunds) | $ | $ | ||||||
| Non-cash Transactions of Investing and Financing Activities | ||||||||
| Right of use assets exchanged for operating lease liabilities | $ | $ | ||||||
| Extinguishment of finance lease by acquiring underlying assets | $ | - | ||||||
| Reclassification of deposits to property, plant and equipment | $ | $ | ||||||
| Net transfers from net investment in sales-type leases to property and equipment | $ | |||||||
| Construction in progress included in Other payables and accrued liabilities | $ | - | ||||||
| Debt issuance costs included in Other payables and accrued liabilities | $ | - | ||||||
| Unamortized issuance costs on repurchase notes included in Additional paid in capital | $ | - | ||||||
| Ordinary shares issued in induced conversion of convertible notes | $ | - | ||||||
Reconciliation of cash, cash equivalents and restricted cash
| September 30, 2026 |
December 31, 2025 |
|||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
WHITEFIBER, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND PRINCIPAL ACTIVITIES
WhiteFiber, Inc. (“WhiteFiber” or “the Company”) is a leading provider of high-performance computing (“HPC”) data centers and cloud-based HPC graphics processing units (“GPU”) services, which we term cloud services, for customers such as artificial intelligence (“AI”) applications and machine learning (“ML”) developers. Our HPC Tier-3 data centers provide hosting and colocation services. Our cloud services support generative AI workstreams, especially training and inference. WhiteFiber ordinary shares, par value $
On August 8, 2025, we completed the initial public offering (“IPO” or “Offering”) of our Ordinary Shares at a public offering price of $
Prior to the consummation of the Offering, the Company entered into a contribution agreement (the “Contribution Agreement”) with Bit Digital Inc. (“Bit Digital” or “BTBT”), pursuant to which Bit Digital contributed (the “Contribution”) its HPC business through the transfer of
The accompanying unaudited condensed consolidated financial statements reflect the activities of the Company and each of the following entities:
| Name | Background | Ownership | |||
| WhiteFiber AI, Inc. (“WF AI”) | ● | ||||
| ● | Incorporated on | ||||
| ● | Engaged in cloud services | ||||
| WhiteFiber Iceland ehf (“WF Iceland”) | ● | ||||
| ● | Incorporated on | ||||
| ● | |||||
| WhiteFiber HPC, Inc. (“WF HPC”) | ● | ||||
| ● | Incorporated on | ||||
| ● | |||||
| Enovum Data Centers Corp (“Enovum”) | ● | ||||
| ● | Acquired on | ||||
| ● | |||||
| Enovum MTL I LP (“MTL-1”) | ● | ||||
| ● | Partnership entered into on | ||||
| ● | |||||
| Enovum MTL II LP (“MTL-2”) | ● | ||||
| ● | Partnership entered into on | ||||
| ● | |||||
| Enovum Saint-Jerome LP (“MTL-3”) | ● | ||||
| ● | Partnership entered into on | ||||
| ● | |||||
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| WhiteFiber Canada, Inc. (“WF Canada”) | ● | ||||
| ● | Incorporated on | ||||
| ● | |||||
| Enovum NC-1 BIDCO, LLC (“Enovum NC”) | ● | ||||
| ● | Incorporated on | ||||
| ● | |||||
| WhiteFiber Japan GK (“WF Japan”) | ● | ||||
| ● | Incorporated on | ||||
| ● | |||||
| WhiteFiber Australia II Pty Ltd | ● | ||||
| ● | Incorporated on | ||||
| ● |
| WhiteFiber APAC PTE Ltd | ● | ||||
| ● | Incorporated on | ||||
| ● | |||||
| WhiteFiber Singapore I PTE Ltd | ● | ||||
| ● | Incorporated on | ||||
| ● | |||||
| WhiteFiber (BVI) I Ltd | ● | ||||
| ● | Incorporated on | ||||
| ● |
| WhiteFiber France I SAS | ● | ||||
| ● | Incorporated on | ||||
| ● |
| Enovum NC-1 Venture LLC | ● | ||||
| ● | Incorporated on | ||||
| ● |
| WhiteFiber Singapore IV PTE Ltd | ● | ||||
| ● | Incorporated on | ||||
| ● |
| WhiteFiber Australia III Pty Ltd | ● | ||||
| ● | Incorporated on | ||||
| ● |
| WhiteFiber Australia V Pty Ltd | ● | ||||
| ● | Incorporated on | ||||
| ● |
6
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and principles of consolidation
The Company’s accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Unless otherwise indicated, amounts are stated in thousands of U.S. dollars, except for share and per share data. The financial statements presented for periods on or after August 6, 2025, the date on which the Contribution was completed, are presented on a consolidated basis, and include the financial position, results of operations and cash flows of the Company. The financial statements for the periods prior to August 6, 2025 are presented on a combined basis, and reflect the historical combined financial position, results of operations and cash flows of WhiteFiber, as the operations were under common control of Bit Digital and reflect the historical combined financial position, results of operations and cash flows of those legal entities. Intercompany transactions and balances have been eliminated.
The financial information for the periods prior to August 6, 2025 represents the historical combined financial position and results of operation of WhiteFiber AI, incorporated on October 19, 2023. The results of Enovum (as defined below) are reflected following its acquisition on October 11, 2024. This information is derived from the consolidated financial statements and accompanying records of Bit Digital using the historical results of operations and historical basis of assets and liabilities of the Company. All revenues and costs as well as assets and liabilities directly associated with the business activity of the Company are included in the condensed combined financial statements. The financial statements also include expense allocations for certain functions provided by Bit Digital, including, but not limited to, certain general corporate expenses related to finance, tax, investor relations, and marketing. These general corporate expenses are included in the condensed consolidated statements of operations within general and administrative expenses. Direct usage has been used to attribute expenses that are specifically identifiable to the Company, where practicable. In certain instances, these expenses have been allocated to the Company primarily based on the percentage of revenue or other allocation methodologies that are considered to be a reasonable reflection of the utilization of the services provided relative to the benefits received. The allocations may not, however, reflect the expense the Company would have incurred as a stand-alone company for the period presented. These costs also may not be indicative of the expenses that the Company will incur in the future or would have incurred if the Company had obtained these services from a third party.
For the period beginning August 6, 2025, the condensed consolidated financial information represents the Company’s financial position and results of operation as a stand-alone public company. Following the Reorganization and IPO, the Company may perform certain functions using its own resources or purchased services. For an interim period following the Reorganization and IPO, however, some of these functions will continue to be provided by Bit Digital, under the Transition Services Agreement entered into between WhiteFiber and Bit Digital on July 30, 2025 (the “Transition Services Agreement”).
Management believes all adjustments necessary for a fair statement of balance sheet, results of operations, and cash flows have been made. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. The Company believes that the disclosures are adequate to make the information presented not misleading. The results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of the results for the full year.
Use of estimates
In preparing the condensed consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the condensed consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the valuation of current assets, useful lives of property, plant, and equipment, impairment of long-lived assets, intangible assets and goodwill, valuation of assets and liabilities acquired in business combinations, provision necessary for contingent liabilities and realization of deferred tax assets. Actual results could differ from those estimates.
Fair value of financial instruments
ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are 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 the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. |
| ● | Level 3 - inputs to the valuation methodology are unobservable. |
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The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, restricted cash, deposits, accounts receivable, other receivables, accounts payable, and other payables, approximate their fair values because of the short-term nature of these assets and liabilities. Non-financial assets, such as intangible assets, right-of-use assets, and property, plant and equipment, are adjusted to fair value when there is an indication of impairment and the carrying amount exceeds the asset’s projected undiscounted cash flows. These assets are recorded at fair value only upon recognition of an impairment charge.
Fair value of the convertible notes at each reporting period was estimated based on significant inputs that are observable in the market, which represent Level 2 measurements within the fair value hierarchy.
Cash and cash equivalents
Cash includes cash on hand and demand deposits in accounts maintained with commercial banks. The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents.
Restricted cash
Restricted cash represents cash balances that support an outstanding letter of credit to third parties related to security deposits and other purposes and are restricted from withdrawal.
Accounts receivable, net
Accounts receivable consist of amounts due from our customers. Receivables are recorded at the invoiced amount less current expected credit losses for any potentially uncollectable accounts under the current expected credit loss (“CECL”) impairment model and presents the net amount of the financial instrument expected to be collected. The CECL impairment model requires an estimate of expected credit losses, measured over the contractual life of an instrument, that considers forecasts of future economic conditions in addition to information about past events and current conditions. In accordance with ASC 326, Measurement of Credit Losses on Financial Instruments (“ASC 326”), the Company evaluates the collectability of outstanding accounts receivable balances to determine current expected credit losses that reflects its best estimate of the lifetime expected credit losses. Uncollectible accounts are written off against the current expected credit losses when collection does not appear probable.
In determining the amount of the current expected credit losses, the Company considers historical collection history based on past due status, the current aging of receivables, customer-specific credit risk factors, including their current financial condition, current market conditions, and probable future economic conditions which inform adjustments to historical loss patterns. Credit loss expense, inclusive of credit loss expense on all categories of financial assets, is recorded within General and administrative expenses in the condensed consolidated statements of operations and comprehensive income (loss).
Deposits for property, plant, and equipment
The deposits for property, plant and equipment represent advance payments for purchases of property, plant and equipment. The Company initially recognizes deposits for property, plant, and equipment when cash is advanced to suppliers. Subsequently, the Company derecognizes and reclassifies deposits for property, plant, and equipment to property, plant, and equipment when control is transferred to and obtained by the Company.
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Below is the roll forward of the balance of deposits for property, plant and equipment for the nine months ended September 30, 2026 and for the year ended December 31, 2025, respectively.
| September 30, 2026 | December 31, 2025 | |||||||
| Opening balance | $ | $ | ||||||
| Reclassification to property, plant, and equipment | ( | ) | ( | ) | ||||
| Addition of deposits for property, plant, and equipment | ||||||||
| Ending balance | $ | $ | ||||||
Property, plant, and equipment, net
Property, plant, and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets or declining-balance method. Direct costs related to developing or obtaining software for internal use are capitalized as property, plant, and equipment. Capitalized software costs are amortized over the software’s useful life when the software is placed in service.
| Estimated Useful Life | ||
| Cloud service equipment | ||
| Colocation service equipment | ||
| Building | ||
| Leasehold improvements | ||
| Purchased and internally developed software | ||
| Other property and equipment |
Land acquired by the Company has an unlimited useful life and therefore is not depreciated.
Impairment of long-lived assets
Management reviews long-lived assets, including finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination. Goodwill is not subject to amortization, and instead, assessed for impairment annually at the end of each fiscal year, or more frequently when events or changes in circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount in accordance with ASC 350 – Intangibles - Goodwill and Other.
The impairment assessment involves an option to first assess qualitative factors to determine whether events or circumstances exist that lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment is not performed, or after assessing the totality of the events or circumstances, we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative assessment for potential impairment is performed.
The quantitative goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not impaired. An impairment loss is recognized for any excess of the carrying amount of the reporting unit over its fair value up to the amount of goodwill allocated to the reporting unit.
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Finite-lived intangible assets
Intangible assets are recorded at cost less any accumulated amortization and any accumulated impairment losses. Intangible assets acquired through business combinations are measured at fair value at the acquisition date.
Intangible assets with finite lives are comprised of customer relationships and are amortized on a straight-line basis over their estimated useful lives. The Company assesses the appropriateness of finite-lived classification at least annually. Additionally, the carrying value and remaining useful lives of finite lived assets are reviewed annually to identify any circumstances that may indicate potential impairment or the need for a revision to the amortization period. A finite-lived intangible asset is considered to be impaired if its carrying value exceeds the estimated future undiscounted cash flows expected to be generated from it. We apply judgment in selecting the assumptions used in the estimated future undiscounted cash flow analysis. Impairment is measured by the amount that the carrying value exceeds fair value. The useful life of customer relationships is
Business combinations
The Company accounts for business combinations under the acquisition method of accounting in accordance with ASC 805 - Business Combinations, by recognizing the identifiable tangible and intangible assets acquired and liabilities assumed, measured at the acquisition date fair value. The determination of fair value involves assumptions, estimates, and judgments. The initial allocation of the purchase price is considered preliminary and therefore subject to change until the end of the measurement period (up to one year from the acquisition date). Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net assets acquired.
Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred.
Investment security
As of September 30, 2026 and December 31, 2025, investment security represents the Company’s investment in a privately held company via a simple agreement for future equity (“SAFE”).
SAFE investments provide the Company with the right to participate in future equity financing of preferred stock. The Company accounted for this investment under ASC 320, Investments - Debt Securities and elected the fair value option for the SAFE investment under ASC 825, Financial Instruments, which requires financial instruments to be remeasured to fair value each reporting period, with changes in fair value recorded in the condensed consolidated statements of operations. The fair value estimate includes significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy.
Leases
Leases as Lessee
The Company determines whether an arrangement contains a lease at the inception of the arrangement. If a lease is determined to exist, the term of such lease is assessed based on the date on which the underlying asset is made available for the Company’s use by the lessor. The Company’s assessment of the lease term reflects the non-cancelable term of the lease, inclusive of any rent-free periods and/or periods covered by early-termination options which the Company is reasonably certain of not exercising, as well as periods covered by renewal options which the Company is reasonably certain of exercising. The Company also determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition, and the presentation reflected in the condensed consolidated statements of operations over the lease term.
For leases with a term exceeding 12 months, an operating lease liability is recorded on the Company’s condensed consolidated balance sheet at lease commencement reflecting the present value of its fixed minimum payment obligations over the lease term. A corresponding operating lease right-of-use asset equal to the initial lease liability is also recorded, adjusted for any prepayment and/or initial direct costs incurred in connection with execution of the lease and reduced by any lease incentives received. For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in its leasing arrangements are typically not readily determinable. The Company’s incremental borrowing rate reflects the rate it would pay to borrow on a secured basis and incorporates the term and economic environment of the associated lease. Variable lease costs are recognized in the period in which the obligation for those payments is incurred and not included in the measurement of right-of-use assets and operating lease liabilities.
For the Company’s operating leases, fixed lease payments are recognized as lease expense on a straight-line basis over the lease term. For leases with a term of 12 months or less, any fixed lease payments are recognized on a straight-line basis over the lease term and are not recognized on the Company’s condensed consolidated balance sheet as an accounting policy election. Leases qualifying for the short-term lease exception were insignificant.
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For finance leases where the Company is the lessee, the Company recognizes a right-of-use asset and a corresponding lease liability at lease commencement, measured in a manner consistent with operating leases. Subsequently, fixed lease payments are recognized as amortization of the right-of-use asset and interest expense is recognized on the outstanding lease liability using the effective interest method. Finance lease right-of-use assets are amortized into depreciation and amortization expense on a straight-line basis over the lease term or, if the lease transfers ownership of the underlying asset to the Company, the life of the leased asset.
Leases as Lessor
At contract inception, the Company determines whether an arrangement contains a lease, which exists when the customer obtains the right to control the use of an identified asset, such as a dedicated data hall, for a period of time in exchange for consideration. In making this determination, the Company considers whether it has a substantive right to substitute alternative space. Colocation arrangements that do not convey such a right are accounted for under ASC 606.
The lease term includes the noncancellable period and any periods covered by options the customer is reasonably certain to exercise to extend, or not to exercise to terminate, the lease. Lease commencement occurs when the Company makes the underlying asset available for use by the customer, which may precede the contractual billing start date. The Company’s data center leases are classified as operating leases.
For its dedicated data center leases, the Company has elected the lessor practical expedient to combine facility operations and maintenance services with the associated lease component and accounts for the combined component under ASC 842 because the lease component is predominant. Electricity and remote hands services are accounted for separately under ASC 606. Fixed consideration is allocated between lease and nonlease components based on relative standalone selling prices, and variable consideration for electricity and remote hands services is allocated entirely to those services.
For arrangements in which the Company acts as lessor, leases are classified at commencement as sales-type, direct financing or operating leases. Operating lease classification is applied when the criteria for the other classifications are not met, including certain arrangements involving variable lease payments. Lease commencement occurs when the underlying asset becomes available for customer use. For sales-type leases where the Company is the lessor, the Company recognizes a net investment in lease, which comprises the present value of the future lease payments and any unguaranteed residual value. Interest income is recognized over the lease term at a constant periodic discount rate on the remaining balance of the lease net investment using the rate implicit in the lease and is included in “Revenues.” Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which will be recorded in “Other income, net.”
Operating lease revenue is recognized over the lease term beginning at commencement. Advance payments are recorded as deferred lease revenue and recognized over the applicable revenue recognition period. The Company recognizes lease payments in income over the lease term on a straight-line basis and is included in “Revenues.” Differences between amounts billed or received and straight-line lease income are recorded as deferred lease revenue or a straight-line rent receivable. Variable lease payments are recognized as income in the period in which they are earned. Initial direct costs are deferred and recognized as expense over the lease term. Assets subject to operating leases remain in property, plant and equipment and continue to be depreciated.
For operating subleases where the Company is the lessor, the Company recognizes lease payments in income over the lease term on a straight-line basis and is included in “Other income, net.”
Debt
Notes and loans payable (short-term and long-term debt)
Notes and loans payable are presented as short-term and long-term debt in the consolidated balance sheet and recognized initially at the amount of proceeds received, net of related debt discount and debt issuance costs, and are subsequently measured at amortized cost using the effective interest method. Interest expense is recognized in the condensed consolidated statements of operations over the term of the related debt. Notes and loans payable are classified as current or long-term debt liabilities based on their contractual maturities, or earlier if a default, cross-default, or other contractual provision entitles the lender to accelerate repayment within twelve months of the balance sheet date. The Company has also borrowed funds from a related party that holds a majority ownership interest in the Company. Such related-party debt is accounted for on the same basis as the Company’s third-party notes and loans payable and is presented separately from third-party debt on the condensed consolidated balance sheets. See Note 17. Related Parties, for further details.
Convertible note payable
The Company accounts for its convertible note under ASC 470-20, Debt with Conversion and Other Options and ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity and/or ASC 815, depending on the specific terms of the debt agreement.
For convertible notes for which the embedded conversion feature is determined not to be clearly and closely related to the debt host and does not qualify for the scope exception under ASC 815-40, the Company bifurcates the embedded conversion feature and accounts for it separately as a derivative liability. Such derivative liabilities are initially measured at fair value, with subsequent changes in fair value recognized in the condensed consolidated statements of operations. The remaining proceeds are allocated to the debt host, which is recorded as convertible notes, net of debt discount and issuance costs.
For convertible notes for which the embedded conversion feature is determined to be clearly and closely related to the debt host and does qualify for the scope exception under ASC 815-40, the Company records the entire convertible notes at face value net of debt issuance costs.
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If any of the conditions to the convertibility of the convertible notes are satisfied, or the convertible notes become due within one year, then the Company may be required under applicable accounting standards to reclassify the carrying value of the convertible senior notes as a current, rather than a long-term liability.
Debt issuance costs related to the convertible notes were capitalized and recorded as a contra-liability and are presented net against the balance of the convertible notes on the condensed consolidated balance sheet. Debt issuance costs consist of underwriting, legal and other direct costs related to the issuance of the convertible notes and are amortized to interest expense over the term of the convertible notes using the effective interest method.
Zero-strike call
The Company accounts for zero-strike call options as either equity instruments or liabilities in accordance with ASC 480 and/or derivative liabilities in accordance ASC 815, depending on the specific terms of the agreement. The Company evaluates the terms of such instruments to determine whether they are indexed to the Company’s own stock and qualify for equity classification under ASC 815-40. To the extent these criteria are met, the Zero-strike call option is equity-classified, which is not remeasured each reporting period and is recorded as a reduction to additional paid-in-capital within shareholders’ equity when purchased. The transaction is accounted for separately from the convertible notes and does not impact the accounting for convertible notes.
Revenue recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The Company recognizes revenue when it transfers its services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange.
The Company also recognizes lease income from arrangements accounted for as operating leases in accordance with ASC 842, Leases (“ASC 842”), generally on a straight-line basis over the applicable lease term.
Refer to Note 3, Revenue, and Note 6, Leases, for additional information.
Contract costs
Capitalized contract costs represent the costs directly related and incremental to the origination of new contracts, including commissions that are incurred directly related to obtaining customer contracts. We amortize the deferred contract costs on a straight-line basis over the expected period of benefit. These amounts are included in the accompanying condensed consolidated balance sheets, with the capitalized costs to be amortized to commission expense over the expected period of benefit included in Other current assets and Non-current assets and commission expense payable included in Other current liabilities and Other long-term liabilities.
Deferred revenue
Deferred revenue primarily pertains to prepayments received from customers for services that have not yet commenced as of September 30, 2026. Deferred revenues are recognized as revenue when recognition criteria have been met.
Remaining performance obligation
Remaining performance obligations represent the transaction price of contracts for work that has not yet been performed. The amount represents estimated revenue expected to be recognized in the future related to the unsatisfied portion of the performance obligation.
Cost of revenue
The Company’s cost of revenue consists primarily of (i) direct production costs related to our cloud services, including cloud services operations - electricity costs, data center lease expense, GPU servers lease expense, third party customer support fee, and other relevant costs, and (ii) direct production costs related to our colocation services, including electricity costs, lease costs, data center employees’ wage expenses, and other relevant costs.
Cost of revenue excludes depreciation expenses, which are separately stated in the Company’s condensed consolidated statements of operations.
Foreign currency
Accounts expressed in foreign currencies are translated into U.S. dollars. Functional currency assets and liabilities are translated into U.S. dollars generally using rates of exchange prevailing at the balance sheet date of each respective subsidiary and the related translation adjustments are recorded as a separate component of accumulated other comprehensive income, net of any related taxes, in total equity. Income statement accounts expressed in functional currencies are translated using average exchange rates during the period. Functional currencies are generally the currencies of the local operating environment. Financial statement accounts expressed in currencies other than the functional currency of a consolidated entity are remeasured into that entity’s functional currency resulting in exchange gains or losses recorded in other income (expense), net.
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Operating segments
Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. Our CODM is comprised of the Chief Executive Officer and Chief Financial Officer who use segment gross profit (loss) to assess the performance of the business of our reportable operating segments. Asset information is not used by the CODM to evaluate performance or allocate resources.
Income taxes
We account for current and deferred income taxes in accordance with the authoritative guidance, which requires that the income tax impact is to be recognized in the period in which the law is enacted. Current income tax expense represents taxes paid or payable for the current period. Deferred tax assets and liabilities are recognized using enacted tax rates for the future tax impact of temporary differences between the financial statement and tax bases of recorded assets and liabilities. A valuation allowance is recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized based on historical and projected future taxable income over the periods in which the temporary differences are expected to be recovered or settled on each jurisdiction.
In accordance with the authoritative guidance on accounting for uncertainty in income taxes, we recognize liabilities for uncertain tax positions based on the two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained in audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than
Earnings (loss) per share
Basic earnings (loss) per share is computed by dividing net income (loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares or resulted in the issuance of ordinary share participating in the earnings of the entity.
Related party transactions
The Company accounts for related party transactions in accordance with ASC 850, Related Party Disclosures. Related parties include the Company’s principal shareholders, subsidiaries, affiliates, directors, executive officers, and entities under common control or significant influence, as well as any immediate family members of such persons.
Transactions with related parties are identified and recorded based on written agreements or other substantiating documentation and are undertaken in the ordinary course of business. Management evaluates whether terms of related party transactions are consistent with those that could be obtained in arm’s-length transactions. Significant related party balances and transactions are disclosed in the financial statements when material.
The Company discloses the nature of its related-party relationships, the type and amounts of transactions, outstanding balances (including receivables and payables), and any commitments or guarantees with related parties in the notes to the financial statements. Amounts due from or to related parties are generally unsecured, non-interest-bearing, and settled in cash unless otherwise disclosed.
In preparing the financial statements, management evaluates whether any related-party transactions require elimination upon consolidation, recognition of gain or loss, or reclassification, and ensures that appropriate disclosures are made for all material transactions.
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Commitments and contingencies
In the normal course of business, the Company is subject to contingencies, such as legal proceedings and claims arising out of its business, which cover a wide range of matters. Liabilities for contingencies are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
If the assessment of a contingency indicates that it is probable that a material loss is incurred and the amount of the liability can be estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.
The Company may also enter into contractual arrangements that result in commitments, including purchase obligations. In addition, the Company may be subject to contingent consideration obligations related to asset acquisitions, which involve potential future payments contingent upon the achievement of specified conditions or milestones.
Share-based compensation
The Company’s eligible employees have traditionally participated in Bit Digital’s share-based compensation plans and continued to do so until the IPO was completed. The Company recognized compensation expenses for its employees and non-employees, in addition to an allocation portion of share-based compensation expenses associated with Bit Digital’s shared employees.
On February 6, 2025, the Board of Directors of WhiteFiber adopted the 2025 Omnibus Equity Incentive Plan (the “2025 Plan”) pursuant to which
After the IPO, the Company’s eligible employees participate in WhiteFiber’s share-based compensation plans. The Company accounts for share-based compensation in accordance with ASC 718, Compensation and ASC 505, Equity, which require all share-based payments to employees and members of the board of directors to be recognized as expense in the consolidated financial statements based on their grant date fair values. The Company has elected not to estimate forfeitures of its share-based compensation awards but recognizes the reversal of compensation expense in the period in which the forfeiture occurs. The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the grant-date fair value of the awards.
The Company has granted RSUs to certain employees and non-employees. Some of the RSUs contain a performance condition, and vesting is determined based on achievement of a performance metric. Compensation expense is recognized on a straight-line basis over the service period based on the expected attainment of a performance metric. At each reporting period, the Company reassesses the probability of the achievement of the performance metric, and any increase or decrease in share-based compensation expense resulting from an adjustment in the number of shares expected to vest is treated as a cumulative catch-up in the period of adjustment.
Reclassification
Certain items in the financial statements of the comparative period have been reclassified to conform to the financial statements for the current period. The reclassification has no impact on the total assets and total liabilities as of September 30, 2026 or on the statements of operations for the three and nine months ended September 30, 2026.
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Recent accounting pronouncements
The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its condensed consolidated financial statements and ensures that there are proper controls in place to ascertain that the Company’s condensed consolidated financial statements properly reflect the change.
In November 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as induced conversions. The Company adopted this guidance effective January 1, 2026. During the third quarter of 2026, the Company applied this guidance in accounting for the induced conversion of a portion of its
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”). ASU 2024-03 requires, in the notes to the financial statements, disclosures of specified information about certain costs and expenses included in income statement captions. In January 2025, the FASB issued ASU 2025-01, which clarified the effective date of ASU 2024-03. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact the updated guidance will have on its disclosures.
In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity (“ASU 2025-03”), which amends the guidance for identifying the accounting acquirer in transactions involving the acquisition of a variable interest entity that meets the definition of a business. The new standard is effective for the Company for its annual periods beginning January 1, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting the standard.
3. REVENUE
The Company is currently engaged in high performance computing (“HPC”) business, including cloud services and colocation services through its operation of HPC data centers.
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”) and lease income from arrangements containing leases in accordance with ASC 842, Leases (“ASC 842”).
For arrangements within the scope of ASC 606, the Company recognizes revenue when or as control of promised services is transferred to customers in an amount reflecting the consideration to which the Company expects to be entitled in exchange for those services.
To determine revenue recognition for contracts with customers under ASC 606, the Company performs the following five steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.
Disaggregation of revenues
Revenue disaggregated by reportable segment is presented in Note 16. Segment Reporting.
Cloud services
The Company provides cloud services to support customers’ generative AI workstreams. We have determined that cloud services are a single continuous service comprised of a series of distinct services that are substantially the same and have the same pattern of transfer (i.e., distinct days of service).
These services are consumed as they are received, and the Company recognizes revenue over time using the variable allocation exception as it satisfies performance obligations. We apply this exception because we concluded that the nature of our obligations and the variability of the payment terms based on the number of GPUs providing HPC services are aligned and uncertainty related to the consideration is resolved on a daily basis as we satisfy our obligations. The Company recognizes revenue net of consideration payable to customers, such as service credits, and accounted for as a reduction of the transaction price in accordance with guidance in ASC 606-10-32-25.
The Company’s cloud services revenue has been generated from Iceland initially. Beginning in 2026, the Company began generating cloud service revenue in the United States as well as an immaterial amount of revenue in Canada, representing a small portion of total revenue, through services provided to a third-party customer following the deployment of the GPU server in one of its Canadian data centers.
15
Data center/Colocation services
Colocation services generate revenue from Canada and the United States by providing customers with physical space, power, and cooling within the Company’s data center facilities. Certain colocation arrangements convey to customers the right to control the use of identified data center assets for a specified period and are accounted for as leases under ASC 842.
Our revenue is primarily derived from recurring revenue streams, mainly (1) colocation services, which include the leasing of cabinet space and power, and (2) connectivity services, which include cross-connects. Additionally, the remainder of our revenue is from non-recurring revenue, which primarily includes installation services related to a customer’s initial deployment.
Revenues from recurring revenue streams are billed monthly and recognized ratably over the term of the contract, generally one to ten years for data center colocation customers. Non-recurring installation fees, although generally paid upfront upon installation, are deferred and recognized ratably over the contract term. For arrangements accounted for as leases, nonrecurring charges allocated to the lease component are included in fixed lease payments and recognized on a straight-line basis over the lease term. The difference between straight-line license revenue and amounts billed or received is recorded as deferred revenue in the condensed consolidated balance sheets.
For operating leases, lease income from fixed payments is generally recognized on a straight-line basis over the lease term, commencing when the underlying asset is made available for use by the customer.
For contracts containing lease and nonlease components, the Company has elected the lessor practical expedient provided by ASC 842. When the applicable criteria are met, the combined component is accounted for under ASC 842 if the lease component predominates, or under ASC 606 if the nonlease component predominates.
We guarantee certain service levels, such as uptime, as outlined in individual customer contracts. If these service levels are not achieved due to any failure of the physical infrastructure or offerings, or in the event of certain instances of damage to customer infrastructure within our data center, we would reduce revenue, or lease income for arrangements accounted for as leases, for any credits or cash payments given to the customer.
Contract costs
The Company capitalizes commission expenses directly related to obtaining customer contracts, which would not have been incurred if the contract had not been obtained. As of September 30, 2026, capitalized costs to obtain a contract totaled $
Contract assets
Contract assets primarily consist of revenue allocated to complimentary services provided to customers as part of contractual arrangements. As of September 30, 2026 and December 31, 2025, there were no contract assets.
Contract liabilities
The Company’s contract liabilities consist of deferred revenue and customer deposits related to contracts accounted for under ASC 606. As of September 30, 2026 and December 31, 2025, contract liabilities were $
During the three months ended September 30, 2026 and 2025, $
16
Remaining performance obligation
The following table presents estimated revenue expected to be recognized in the future related to the unsatisfied portion of the performance obligation for contracts with customers accounted for under ASC 606 as of September 30, 2026:
| 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | Total | ||||||||||||||||||||||
| Colocation Services | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Cloud Services | ||||||||||||||||||||||||||||
| Total remaining performance obligations | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
The Company has elected to apply the practical expedient under ASC 606-10-50-14(a) and exclude from this table contracts with an original expected duration of one year or less. These contracts primarily relate to cloud services, with the remaining performance obligations generally expected to be satisfied within one year.
The amounts presented in the table above also exclude variable consideration allocated entirely to wholly unsatisfied performance obligations. Such amounts have been excluded from the disclosure of remaining performance obligations under ASC 606-10-50-14(b).
For contracts with customers accounted for under ASC 842, refer to Note 6. Leases.
4. ACQUISITIONS
Real Estate Acquisition – Madison, North Carolina
On May 20, 2025, the Company acquired the building and land, together with all the related improvements owned by Unifi Manufacturing, Inc. (“Unifi Transaction”) that were located in Madison, North Carolina. The total consideration consisted of $
The acquired set of assets did not meet the definition of a business as defined in ASC 805, Business Combinations, as no substantive processes or employees were acquired. The assets acquired consisted primarily of land, building and related equipment, which are included in Property, plant, and equipment, net on the condensed consolidated balance sheets. The fair value of the tangible assets acquired was estimated to be $
In connection with the agreement, additional contingent consideration may become payable to the seller based on the timing and availability of power at the site (see Note 18. Commitments and Contingencies).
Real Estate Acquisition – Saint-Jérôme, Québec
On May 8, 2026, the Company acquired the land and building comprising its MTL-3 facility in Saint-Jérôme, Québec, for a fixed purchase price of CAD $
The acquired set of assets did not meet the definition of a business as defined in ASC 805, Business Combinations, as no substantive processes or employees were acquired. The assets acquired consisted primarily of land, building and related equipment, which are included in Property, plant, and equipment, net on the condensed consolidated balance sheets. The fair value of the tangible assets acquired was estimated to be $
5. OTHER CURRENT ASSETS, NET
Other current assets were comprised of the following:
| September 30, 2026 | December 31, 2025 | |||||||
| Funds held in escrow | $ | $ | ||||||
| Prepaid consulting service expenses | ||||||||
| Deferred contract costs | ||||||||
| Prepayment to third parties (a) | ||||||||
| Receivable from third parties (b) | ||||||||
| Others | ||||||||
| Total | $ | $ | ||||||
| (a) |
| (b) |
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6. LEASES
Leases as Lessee
The Company leases data center capacity, cloud infrastructure, and office space under non-cancelable lease arrangements. These leases, including a data center lease acquired as part of the Enovum acquisition in 2024, generally have terms ranging from approximately
On April 11, 2025, the Company entered into a
During the three months ended September 30, 2026, the Company commenced new operating lease arrangements primarily related to data center facilities in France, Australia and Canada. These arrangements resulted in the recognition of approximately $
As of September 30, 2026 and December 31, 2025, right-of-use asset and lease liabilities consisted of the following:
| September 30, 2026 | December 31, 2025 | |||||||
| Operating right-of-use assets | $ | $ | ||||||
| Finance right-of-use assets | - | |||||||
| Total right-of-use-assets | $ | $ | ||||||
| Operating lease liabilities | $ | $ | ||||||
| Finance lease liabilities | - | $ | ||||||
| Total lease liabilities | $ | $ | ||||||
Operating right-of-use assets are recorded net of accumulated amortization of $
Finance lease right-of-use asset is recorded net of accumulated amortization of $
For the three months ended September 30, 2026 and 2025, the Company’s amortization on the operating lease right-of-use assets totaled $
For the nine months ended September 30, 2026 and 2025, the Company’s amortization on the operating lease right-of-use assets totaled $
For the three months ended September 30, 2026 and 2025, there was no finance lease interest expense or amortization expense, respectively.
For the nine months ended September 30, 2026, the Company’s interest expense and amortization on the finance lease was $
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The following table presents the components of the Company’s lease expense. GPU lease expenses and data center lease expenses related to operational data centers are included in cost of revenue; data center lease expenses incurred during construction and office lease expenses are included in general and administrative expenses:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Operating lease costs | $ | $ | $ | $ | ||||||||||||
| Finance lease costs | - | - | - | |||||||||||||
| Short-term lease costs | ||||||||||||||||
| Sublease income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total lease costs | $ | $ | $ | $ | ||||||||||||
The Company entered into a GPU server lease agreement effective January 2024 for its cloud services designed to support generative AI workstreams. The lease payment depends on the usage of the GPU servers and the Company concludes that the lease payments are variable and will be recognized when they are incurred. For the three months ended September 30, 2026 and 2025, the GPU server lease expense amounted to $
Additional information regarding the Company’s leasing activities as a lessee is as follows:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Operating cash outflows from operating leases | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Operating cash outflows from finance lease | $ | - | $ | - | $ | ( | ) | $ | - | |||||||
| Financing cash outflows from finance lease | $ | - | $ | - | $ | ( | ) | $ | - | |||||||
| Weighted average remaining lease term – operating lease | ||||||||||||||||
| Weighted average remaining lease term – finance lease | - | - | - | - | ||||||||||||
| Weighted average discount rate – operating leases | % | % | % | % | ||||||||||||
| Weighted average discount rate – finance lease | - | - | - | - | ||||||||||||
The following table represents our future minimum operating lease payments as of September 30, 2026:
| Year | Amount | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total undiscounted lease payments | ||||
| Less: present value discount | ( | ) | ||
| Present value of operating lease liabilities | $ | |||
Leases Not Yet Commenced
In July 2026, the Company entered into an agreement with a data center provider for colocation services at a data center facility in Canada. The agreement provides for 2.7 megawatts of critical IT capacity for an initial term of
19
Leases as Lessor
The Company enters into lease arrangements for data storage and cloud service equipment, as well as dedicated data center capacity and related colocation services. These arrangements generally have lease terms ranging from approximately two to ten years.
Sales-Type Leases
Lease income from sales-type leases is primarily recognized as interest income over the lease term. The Company’s exposure to credit risk is limited to net investment in leases.
The components of lease income for the sales-type lease were as follows:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Interest income related to net investment in lease | $ | $ | $ | $ | ||||||||||||
Interest income is included in the condensed consolidated statements of operations under the caption “Revenue - Other.”
The components of net investment in sales-type leases were as follows:
| September 30, 2026 | December 31, 2025 | |||||||
| Net investment in lease - lease payment receivable | $ | $ | ||||||
In the second quarter of 2026, the Company terminated an existing sales-type lease with a customer, derecognizing $
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The following table illustrates the Company’s future minimum receipts for sales-type lease as of September 30, 2026:
| Year | Sales-Type Lease | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Total future minimum receipts | ||||
| Unearned interest income | ( | ) | ||
| Less: Current expected credit losses | ( | ) | ||
| Net investment in lease, net | $ | |||
The present value of minimum sales-type receipts of $
Operating Lease Income
The Company enters into operating lease arrangements to provide dedicated data center capacity and related colocation services to customers. Operating lease income from fixed lease payments and fixed nonrecurring charges allocated to lease components, is recognized on a straight-line basis over the respective lease terms, commencing when the underlying assets are made available for the customers’ use. Variable lease income is recognized in the period in which the underlying changes in facts and circumstances occur.
The Company also enters into sublease arrangements for portions of its leased data center capacity. These subleases generally include fixed payments with automatic renewal options, unless the sub-tenant provides at least
The Company receives advance payments from customers under certain operating lease arrangements, which are recognized as lease income over the respective lease terms in accordance with ASC 842. As of September 30, 2026 and December 31, 2025, deferred lease income related to these arrangements was $
For the nine months ended September 30, 2026, the Company recognized operating lease income of $
The following table illustrates the future lease payments to be received by the Company under its operating lease arrangements, including data center leases and subleases, as of September 30, 2026:
| Year | Operating Lease | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total future receipts | $ | |||
7. PROPERTY, PLANT, AND EQUIPMENT, NET
Property, plant, and equipment, net was comprised of the following:
| September 30, 2026 | December 31, 2025 | |||||||
| Cloud service equipment | $ | $ | ||||||
| Colocation service equipment | ||||||||
| Purchased and internally developed software | ||||||||
| Land | ||||||||
| Building | - | |||||||
| Leasehold improvements | ||||||||
| Other property and equipment | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Construction in progress | ||||||||
| Property, plant, and equipment, net | $ | $ | ||||||
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For the three months ended September 30, 2026 and 2025, depreciation and amortization expenses for property, plant and equipment were $
As of September 30, 2026 and December 31, 2025, accrued purchases for property, plant and equipment totaled $
On May 8, 2026, the Company acquired the MTL-3 property following the exercise of the purchase option under the related data center lease agreement (refer to Note 6. Leases). The purchase price of CAD $
During the three months ended September 30, 2026, the Company placed its NC-1 data center into service and reclassified the related costs from construction in progress to buildings and colocation service equipment within property and equipment, net. Depreciation of these assets commenced when they were ready for their intended use.
In the second quarter of 2026, we had an impairment charge of $
During 2024 and 2025, the Company purchased data storage and network equipment that was subsequently derecognized from property, plant and equipment upon entering into sales-type lease arrangements, with the related assets recorded as net investments in leases, totaling approximately $
Disposals of Property, Plant and Equipment
For the nine months ended September 30, 2026, the Company sold 126 H200s GPU for a total consideration of approximately $
In the second quarter of 2026, the Company determined that it would discontinue further investment in, and use of, its internally-developed software platform. As a result of this decision, effective June 4, 2026, the Company recorded an impairment charge of the remaining book value of $
22
8. INVESTMENT SECURITY
As of September 30, 2026 and December 31, 2025, investment security represents the Company’s investment of $
On May 30, 2024 (the “Effective Date”), and subsequently amended June 30, 2024, the Company entered into a SAFE agreement for an initial investment amount of $
The Company accounted for this investment under ASC 320, Investments – Debt Securities and elected the fair value option for the SAFE investment pursuant to ASC 825, Financial Instruments, which requires financial instruments to be remeasured to fair value each reporting period, with changes in fair value recorded in the condensed consolidated statements of operations. The fair value estimate includes significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The decision to elect the fair value option is determined on an instrument-by-instrument basis on the date the instrument is initially recognized, is applied to the entire instrument and is irrevocable once elected. For instruments measured at fair value, embedded conversion or other features are not required to be separated from the host instrument. Issuance costs related to convertible securities carried at fair value are not deferred and are recognized as incurred on the condensed consolidated statements of operations.
On August 10, 2026, Canopy and SAIHEAT Limited (“SAIHEAT”) announced that they had entered into a definitive merger agreement pursuant to which Canopy would become a wholly owned subsidiary of SAIHEAT in a stock-for-stock transaction. In connection with the proposed merger, SAIHEAT is expected to be renamed Canopy Wave Holdings Inc.
In connection with the proposed merger, the Company and Canopy entered into a Surrender and Termination Agreement pursuant to which the Company’s existing SAFE investment will be surrendered and terminated, effective upon the closing of the merger, in exchange for a cash payment of $
As of September 30, 2026, the proposed merger had not been completed and the SAFE had not been surrendered or terminated. Accordingly, the Company continued to recognize its existing SAFE investment, with a carrying value of $
At September 30, 2026, the Company performed a qualitative assessment to identify if events or circumstances indicate that the investment is impaired or that an observable price change has occurred. We considered available information about Canopy’s operations and industry conditions. No events or circumstances were identified that would indicate the investment is impaired or that an observable price change occurred. The Company did not recognize any upward or downward adjustment to the value of the investment for the three or nine months ended September 30, 2026.
23
PIPE Investment
On August 10, 2026, the Company entered into the PIPE Share Purchase Agreement with SAIHEAT Limited, an exempted company incorporated under the laws of the Cayman Islands (“SAIHEAT”). Pursuant to the PIPE Share Purchase Agreement, the Company purchased from SAIHEAT, an aggregate of
The PIPE investment was entered into in connection with the proposed merger between SAIHEAT and Canopy, pursuant to which Canopy would become a wholly owned subsidiary of SAIHEAT. The consummation of the PIPE investment is contingent upon the completion of the proposed merger and the satisfaction of certain closing conditions.
As of September 30, 2026, the proposed merger had not been completed, and the PIPE Shares had not been issued to the Company. Accordingly, the Company had not recognized an investment in the PIPE Shares in its condensed consolidated balance sheet as of September 30, 2026. Upon completion of the transaction, the Company expects to account for the PIPE Shares in accordance with the applicable U.S. GAAP guidance for equity securities.
The Company expects to have neither control nor significant influence through investment in PIPE Shares. Four members of Bit Digital’s management, including Erke Huang, Bit Digital’s Chief Financial Officer, participated in the PIPE transaction in their personal capacity as investors and invested $
9. OTHER NON-CURRENT ASSETS, NET
Other non-current assets were comprised of the following:
| September 30, 2026 | December 31, 2025 | |||||||
| Deposits (a) | $ | $ | ||||||
| Deferred contract costs | ||||||||
| Deferred financing costs | - | |||||||
| Prepayment to third parties | - | |||||||
| Others | ||||||||
| Less: Current expected credit losses | ( | ) | - | |||||
| Total | $ | $ | ||||||
| (a) |
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10. DEBT
2031 Convertible notes
On January 26, 2026, the Company issued $
The net proceeds from the 2031 Notes offering, after deducting initial purchasers’ discounts and offering expenses, were approximately $
Noteholders may convert their 2031 Notes at their option prior to the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, the Company will satisfy its conversion obligation by paying or delivering, as the case may be, cash, its ordinary shares, or a combination of cash and ordinary shares, at the Company’s election, in the manner and subject to the terms and conditions set forth in the Indenture. The conversion rate is initially
Holders may require the Company to repurchase the 2031 Notes for cash on February 6, 2029 or upon the occurrence of certain fundamental changes, in each case subject to the terms of the governing indenture, at
The Indenture contains customary terms and covenants, including certain bankruptcy and insolvency-related events of default, the occurrence of which will result in the outstanding 2031 Notes automatically becoming due and payable, and certain non-bankruptcy and insolvency-related events of default, upon the occurrence of which either the Trustee or the holders of at least
In August 2026, the Company repurchased $
The Company accounts for the remaining 2031 Notes as a single liability instrument at amortized cost, net of unamortized debt issuance costs. As of September 30, 2026, the Company classified the 2031 Notes as a long-term liability. Although the 2031 Notes are currently convertible, the Company has the intent and the ability to settle any conversion in shares of its common stock and therefore does not expect that settlement of the 2031 Notes will require the use of current assets or the creation of other current liabilities. Holders may require repurchase of the 2031 Notes for cash on February 6, 2029, which is more than twelve months after September 30, 2026.
25
Zero-Strike Call Option Transaction
In connection with the issuance of the 2031 Notes in January 2026, the Company entered into a zero-strike call option transaction (“Zero-Strike Call Option”) with one of the initial purchasers or its affiliate (the “Option Counterparty”). Pursuant to the Call Option Transaction, the Company paid a premium equal to approximately $
2032 Convertible Senior Notes
On August 21, 2026, the Company completed a private offering of $
The initial conversion rate is
The Company accounts for the 2032 Notes as a single instrument. As of September 30, 2026, the Company has classified the 2032 Notes as a long-term liability. Although the 2032 Notes are currently convertible, the Company has the intent and the ability to settle any conversion in shares of its common stock, and therefore does not expect that settlement of the 2032 Notes will require the use of current assets or the creation of other current liabilities. Holders may require repurchase of the 2032 Notes for cash on September 6, 2030, which is more than twelve months after September 30, 2026.
Partial Repurchase of 2031 Notes
On August 18, 2026, the Company entered into binding, privately negotiated transactions with certain holders of its 2031 Notes to repurchase an aggregate principal amount of $198.15 million of
The Company concluded that the repurchase transactions qualified for induced conversion accounting under ASC 470-20, including the amendments in ASU 2024-04. The Company measured the inducement expense as the excess of the fair value of the consideration transferred over the fair value of consideration issuable under the original conversion privileges, measured as of August 18, 2026, the date of binding acceptance. The Company recognized induced conversion expense of approximately $
Upon settlement on August 21, 2026, the Company derecognized the carrying amount of the settled 2031 Notes, including related unamortized issuance costs, and recorded the applicable amounts in additional paid-in capital.
26
The following table summarizes the balances of the convertible notes:
| As of September 30, 2026 | ||||||||||||
| 2031 Notes | 2032 Notes | Total | ||||||||||
| Convertible notes | $ | $ | $ | |||||||||
| Less: unamortized debt issuance costs and debt discount | ( | ) | ( | ) | ( | ) | ||||||
| Subtotal | ||||||||||||
| Less: current portion | - | - | - | |||||||||
| Convertible notes, net of current portion | $ | $ | $ | |||||||||
For the three and nine months ended September 30, 2026, interest expense related to the convertible notes totaled $
Accrued interest related to the convertible notes as of September 30, 2026 was $
The following table summarizes the balances of the Company’s other short-term and long-term debts:
| Principal Amount | Unamortized Debt Discount and Issuance Costs | Net Carrying Amount | ||||||||||
| Short-Term Debt: | ||||||||||||
| Delayed Draw Term Loan Facility | $ | $ | ( | ) | $ | |||||||
| Iceland Facility - Current | - | |||||||||||
| Syndicated RBC Credit Facility Agreement - Current | - | |||||||||||
| Long-Term Debt: | ||||||||||||
| Iceland Facility - Non-current | ( | ) | ||||||||||
| Syndicated RBC Credit Facility Agreement - Non-current | ( | ) | ||||||||||
| Total term debt | $ | |||||||||||
Short-term debt – related parties, net on the condensed consolidated balance sheet as of September 30, 2026 of $
Iceland Facility
On March 23, 2026, WhiteFiber Iceland ehf. (the “Borrower”), a subsidiary of the Company, entered into a secured term loan facility agreement (the “Facility”) with Landsbankinn hf, which provides for borrowings of up to $
No separate guarantee liability is recognized in the consolidated financial statements as the guarantees provided by the Guarantors are intercompany arrangements that are eliminated upon consolidation under ASC 810-10-45-18. The guarantees are disclosed herein pursuant to the disclosure requirements of ASC 460-10-50-4.
Borrowings under the Facility bear interest at a floating rate per annum equal to the sum of (i) three month CME Term SOFR (or any successor benchmark), and (ii) an applicable margin of
27
The Facility is secured by first-ranking security over (i)
The Facility may be drawn in multiple tranches during an availability period, with up to two drawdowns permitted and a minimum draw amount of $
In connection with the entry into the Facility, the Borrower paid an arrangement fee of $
The Facility permits voluntary prepayments, subject in certain cases to prepayment fees, and includes mandatory prepayment provisions in connection with specified events, including certain asset disposals and insurance proceeds, all as set out in the facility agreement.
As of September 30, 2026, the aggregate outstanding principal balance, net of unamortized debt discount and issuance costs, under the Facility was $
Royal Bank of Canada Facility
On June 18, 2025, the Company entered into a non-recourse credit facility (“Credit Facility”) with the Royal Bank of Canada (“RBC”). The Credit Facility provides for an aggregate of up to approximately CAD
The agreement is non-recourse and comprised of three separate facilities:
| ● | Non-revolving three-year lease facility in the amount of $ | |
| ● | Non-revolving term loan facility in the amount of $ | |
| ● | Revolver by way of letters of credit and letters of guaranty with fees to be determined on a transaction-by-transaction basis. This facility was available for the 36-month term subject to the issuance of the EDC (Export and Development Canada) Performance Security Guaranty in the amount of $ |
28
The Company agreed to certain financial covenants including maintaining on a combined basis between MTL-1 and MTL-2: fixed charge coverage of not less than
On April 27, 2026, the Company entered into an amended credit agreement (“Amended Credit Agreement”) with RBC. This agreement replaces the original Credit Agreement dated June 18, 2025, as subsequently amended on July 4, 2025. The Amended Credit Agreement provides for an authorized credit facility of CAD $
Borrowings under the facility bore interest, at the Company’s option, at either (i) Daily Simple CORRA plus
Additionally, RBC provided a CAD $
On July 15, 2026, the Amended Credit agreement was repaid in full and refinanced through the Syndicated RBC Credit Facility agreement described below. The revolving facility from the Amended credit agreement in the form of Letters of Credit and Letters of Guarantee remains in place.
Syndicated RBC Credit Facility Agreement
On July 6, 2026, the Company’s wholly-owned subsidiary, Enovum Data Center Corp. entered into a syndicated credit agreement (“Syndicated RBC Credit Facility Agreement”). The Syndicated RBC Credit Facility Agreement provides for an aggregate of up to approximately CAD $
Borrowings under the Syndicated RBC Credit Facility Agreement bear interest, at the Company’s option, at either (i) CORRA-based benchmark rate for such interest period plus
29
The Syndicated RBC Credit Facility is secured by first-ranking security interests over substantially all present and future personal property and assets of the borrower and the guarantors, together with first-ranking mortgages on certain owned real estate, including the Company’s MTL-2 and MTL-3 properties and related improvements and equipment
The Company has agreed to certain financial covenants, including a minimum debt service coverage ratio and a maximum Net funded debt to EBITDA ratio. As of September 30, 2026, the Company was in compliance with all financial covenants under the Syndicated RBC Credit Facility Agreement.
On July 15, 2026, the Company drew a CORRA loan amount of CAD $
Delayed Draw Term Loan Facility
On May 20, 2026, Enovum NC-1 Venture, LLC (the “Borrower”), a subsidiary of the Company, entered into a Delayed Draw Term Loan Facility and Security Agreement (the “Delayed Draw Term Loan Facility”) with Bit Digital Capital, Inc. (the “Lender”), a subsidiary of Bit Digital, providing up to $
The available borrowing may be increased to $
The Delayed Draw Term Loan Facility bears interest at an initial rate of
The Delayed Draw Term Loan Facility is secured by first-ranking security over
In connection with the entry into the Delayed Draw Term Loan Facility, the Borrower is required to pay a commitment fee to the lender.
The Delayed Draw Term Loan Facility permits voluntary prepayments and includes mandatory prepayment provisions in connection with specified events, all as set out in the facility agreement.
On May 26, 2026 the Company executed two draw downs, for $
On July 27, 2026, an additional $
30
On August 21, 2026, the Company, the Lender and the Guarantor agreed to extend the maturity of the $
As of September 30, 2026, the Delayed Draw Term Loan Facility had an average effective interest rate of
On October 27, 2026, the Company received an additional draw down of $
B. Riley Facility
As discussed above, on May 26, 2026, Bit Digital assigned to B. Riley a $
On August 24, 2026, the Company repaid the $
11. SHARE-BASED COMPENSATION
Certain employees of the Company have historically participated in Bit Digital’s 2023 Omnibus Equity Incentive Plan and 2025 Omnibus Equity Incentive Plan (collectively, the “Bit Digital Plan”) which provide long-term incentive compensation to employees, consultants, officers and directors. Until the IPO was completed, certain employees of the Company continued to participate in the share-based compensation plans authorized and managed by Bit Digital.
On February 6, 2025, the Board of Directors of WhiteFiber adopted the 2025 Omnibus Equity Incentive Plan (the “2025 Plan”) which provides for share-based compensation such as restricted stock units (“RSUs”), incentive and non-statutory stock options, restricted shares, share appreciation rights and share payments may be granted to any directors, employees and consultants of the Company or affiliated companies and up to
From time to time, the Company grants equity awards under its 2025 Plan to employees of Bit Digital as consideration for services rendered to the Company. These awards are settled in the Company’s ordinary shares and are accounted for as share-based compensation to non-employee consultants and included within general and administrative expenses.
All awards granted under 2025 plan will settle in WhiteFiber’s ordinary shares and are approved by WhiteFiber’s Compensation Committee of the Board of Directors.
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Restricted Stock Units
As of December 31, 2025, the Company had
In May 2025, the Company entered into a director agreement with Ms. Ichi Shih, Chair of the Audit Committee. Pursuant to the terms of the agreement, as amended on August 6, 2025, Ms. Shih was allocated
In August 2025, in connection with WhiteFiber’s initial public offering,
In 2025, the Company granted
In 2025, the Company granted
In 2024, Bit Digital entered into equity award agreements with certain Enovum employees, pursuant to which such employees have the opportunity to earn additional compensation in the form of Bit Digital’s performance RSUs (“PSU”) tied to Enovum’s achievement of Growth EBITDA associated with new data center sites. Following WhiteFiber’s IPO, the agreements were amended such that any earned PSUs are issued pursuant to the WhiteFiber, Inc. 2025 Omnibus Incentive Plan and settled in WhiteFiber RSUs. PSUs vest upon cumulative Growth EBITDA reaching CAD $
In August 2026, the Company entered into a second amendment to the director agreement with Ms. Shih, effective August 1, 2026. Pursuant to the terms of the amendment, Ms. Shih was awarded
During the nine months ended September 30, 2026, the Company granted
During the nine months ended September 30, 2026, the Company granted
During the nine months ended September 30, 2026, the Company granted
During the nine months ended September 30, 2026, the Company granted
For the three months ended September 30, 2026 and 2025, the Company recognized share-based compensation expenses of $
As of September 30, 2026, the Company had
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Other share-based compensation
For the three months ended September 30, 2026 and 2025, the Company recognized share-based compensation expenses of $nil and $
For the three months ended March 31, 2026, the Company granted
For the three months ended June 30, 2026, the Company granted
For the three months ended September 30, 2026, the Company granted
For the three months ended September 30, 2026 and 2025, the Company recognized total share-based compensation expenses of $
12. SHARE CAPITAL
Ordinary shares
On August 8, 2025, WhiteFiber completed its initial public offering (the “Offering”) of
As of December 31, 2025, there were
During the nine months ended September 30, 2026,
In May 2026,
In August 2026,
As of September 30, 2026, there were
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13. GOODWILL AND INTANGIBLE ASSETS
Goodwill
The components of goodwill as of September 30, 2026 are as follows:
| As of September 30, 2026 | ||||
| Enovum Data Centers Corp. | $ | |||
| Total goodwill | $ | |||
Finite-lived intangible assets
Finite-lived intangible assets consist of customer relationships. Intangible assets with definite lives are amortized over their estimated useful lives.
The following table presents the Company’s finite-lived intangible assets as of September 30, 2026:
| As of September 30, 2026 | ||||||||||||
| Cost | Accumulated amortization | Net | ||||||||||
| Customer relationships | $ | $ | ( | ) | $ | |||||||
| Total | $ | $ | ( | ) | $ | |||||||
The following table presents the Company’s finite-lived intangible assets as of December 31, 2025:
| As of December 31, 2025 | ||||||||||||
| Cost | Accumulated amortization | Net | ||||||||||
| Customer relationships | $ | $ | ( | ) | $ | |||||||
| Total | $ | $ | ( | ) | $ | |||||||
The following table presents the Company’s estimated future amortization of finite-lived intangible assets as of September 30, 2026:
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | $ |
Amortization expense for finite-lived intangible assets for the three months ended September 30, 2026 and September 30, 2025 was $
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14. INCOME TAXES
The following table provides details of income taxes:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net loss before income taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| (Benefit from) provision for income taxes | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Effective tax rate | % | ( | )% | % | ( | )% | ||||||||||
The effective tax rate was
Numerous foreign jurisdictions have enacted legislation to adopt a minimum effective tax rate described in the Global Anti-Base Erosion, or Pillar Two, model rules issued by the Organization for Economic Co-operation and Development (“OECD”). Under such rules, a minimum effective tax rate of
On January 5, 2026, the OECD released comprehensive administrative guidance on the “side-by-side system” to streamline Pillar Two’s global minimum tax rules, which would exclude U.S. parented groups from certain Pillar Two provisions in recognition of existing U.S. minimum tax rules. The side-by-side safe harbor election will be effective beginning in 2026, once adopted into domestic legislation, with the transitional safe harbor extended through 2027 to facilitate the implementation of this permanent system. Overall, the rules are not expected to have a material adverse impact on our results of operations, financial position, or cash flows. On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the U.S., which contains a broad range of tax reform provisions affecting businesses. The legislation did not have a material impact on our financial statements.
15. EARNINGS (LOSS) PER SHARE
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of ordinary share outstanding | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
| Loss per share | ||||||||||||||||
| Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
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Basic earnings (loss) per share is computed by dividing net income (loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. The computation of diluted net loss per share does not include dilutive ordinary share equivalents in the weighted average shares outstanding, as they would be anti-dilutive.
For the three months ended September 30, 2026,
For the nine months ended September 30, 2026,
For the three months ended September 30, 2025,
For the nine months ended September 30, 2025,
16. SEGMENT REPORTING
The Company has
The cloud services segment generates revenue from providing high performance computing services to support generative AI workstreams. Cost of revenue consists of direct production costs, including electricity costs, data center lease expense, GPU servers lease expense, third-party customer support fees, and other relevant costs, but excluding depreciation and amortization.
Colocation services generate revenue by providing customers with physical space, power and cooling within the data center facility. Cost of revenue consists of direct production costs related to our HPC data center services, including electricity costs, lease costs, data center employees’ wage expenses, and other relevant costs but excluding depreciation and amortization.
The CODM analyzes the performance of the segments based on reportable segment revenue and reportable segment cost of revenue. No operating segments have been aggregated to form the reportable segments.
Other than the $
All Other revenue is generated from equipment leases with external customers.
All revenue and cost of revenue from intersegment transactions have been eliminated in the condensed consolidated statements of operations and comprehensive (loss) income.
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The following tables present segment revenue and segment gross profit reviewed by the CODM:
Three Months Ended September 30, 2026
| Cloud services | Colocation services | Total | ||||||||||
| Revenue from external customers | $ | $ | $ | |||||||||
| Intersegment revenue | - | |||||||||||
| Segment revenue | ||||||||||||
| Reconciliation of revenue | ||||||||||||
| Other revenue (a) | ||||||||||||
| Elimination of intersegment revenue | ( | ) | ||||||||||
| Total consolidated revenue | ||||||||||||
| Less: | ||||||||||||
| Electricity costs | ||||||||||||
| Datacenter lease expense | ||||||||||||
| GPU lease expense | - | |||||||||||
| Wage expense | - | |||||||||||
| Third-party customer support fees | - | |||||||||||
| Other segment items (b) | ||||||||||||
| Intersegment cost of revenue | - | |||||||||||
| Segment cost of revenue | ||||||||||||
| Reconciliation of cost of revenue | ||||||||||||
| Elimination of intersegment cost of revenue | ( | ) | ||||||||||
| Total consolidated cost of revenue | ||||||||||||
| Segment gross profit | $ | $ | $ | |||||||||
| (a) |
| (b) |
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Three Months Ended September 30, 2025
| Cloud services | Colocation services | Total | ||||||||||
| Revenue from external customers | $ | $ | $ | |||||||||
| Reconciliation of revenue | ||||||||||||
| Other revenue (a) | ||||||||||||
| Total consolidated revenue | ||||||||||||
| Less: | ||||||||||||
| Electricity costs | ||||||||||||
| Datacenter lease expense | ||||||||||||
| GPU lease expense | - | |||||||||||
| Wage expense | - | |||||||||||
| Other segment items (b) | ||||||||||||
| Segment cost of revenue | ||||||||||||
| Segment gross profit | $ | $ | $ | |||||||||
| (a) |
| (b) |
The following tables present segment revenue and segment gross profit reviewed by the CODM:
Nine Months Ended September 30, 2026
| Cloud services | Colocation services | Total | ||||||||||
| Revenue from external customers | $ | $ | $ | |||||||||
| Intersegment revenue | - | |||||||||||
| Segment revenue | ||||||||||||
| Reconciliation of revenue | ||||||||||||
| Other revenue (a) | ||||||||||||
| Elimination of intersegment revenue | ( | ) | ||||||||||
| Total consolidated revenue | ||||||||||||
| Less: | ||||||||||||
| Electricity costs | ||||||||||||
| Datacenter lease expense | ||||||||||||
| GPU lease expense | - | |||||||||||
| Wage expense | - | |||||||||||
| Third-party customer support fees | - | |||||||||||
| Other segment items (b) | ||||||||||||
| Intersegment cost of revenue | - | |||||||||||
| Segment cost of revenue | ||||||||||||
| Reconciliation of cost of revenue | ||||||||||||
| Elimination of intersegment cost of revenue | ( | ) | ||||||||||
| Total consolidated cost of revenue | ||||||||||||
| Segment gross profit | $ | $ | $ | |||||||||
| (a) |
| (b) |
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Nine Months Ended September 30, 2025
| Cloud services | Colocation services | Total | ||||||||||
| Revenue from external customers | $ | $ | $ | |||||||||
| Reconciliation of revenue | ||||||||||||
| Other revenue (a) | ||||||||||||
| Total consolidated revenue | ||||||||||||
| Less: | ||||||||||||
| Electricity costs | ||||||||||||
| Datacenter lease expense | ||||||||||||
| GPU lease expense | - | |||||||||||
| Wage expense | - | |||||||||||
| Other segment items (b) | ||||||||||||
| Segment cost of revenue | ||||||||||||
| Segment gross profit | $ | $ | $ | |||||||||
| (a) |
| (b) |
The following table presents the reconciliation of segment gross profit to net income before taxes:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Segment gross profit | $ | $ | $ | $ | ||||||||||||
| Reconciling Items: | ||||||||||||||||
| Other revenue (a) | ||||||||||||||||
| Depreciation and amortization expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Impairment of capitalized software assets | - | - | ( | ) | - | |||||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net (loss) gain from disposal of property and equipment | - | ( | ) | ( | ) | |||||||||||
| Other income (expense), net | ( | ) | ( | ) | ||||||||||||
| Interest expense - third parties | ( | ) | - | ( | ) | - | ||||||||||
| Interest expense - related parties | ( | ) | - | ( | ) | - | ||||||||||
| Induced conversion expense | ( | ) | - | ( | ) | - | ||||||||||
| Net loss before taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| (a) |
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17. RELATED PARTIES
Related-party transactions
WhiteFiber AI’s subsidiary, WhiteFiber Iceland ehf, appointed Daniel Jonsson as its part-time Chief Executive Officer starting November 7, 2023, for a six-month term with a three-month probation. After the initial period, the employment shall be automatically renewed for successive period(s) of 6 months each, unless agreed otherwise in writing or unless terminated earlier in accordance with the terms of the employment agreement. His compensation includes a monthly salary of $
In August 2025, the Company entered into a Professional Services Agreement (“PSA”) with Pruitt Hall, a member of the Company’s Board of Directors, pursuant to which he provides consulting services in connection with the construction of the NC-1 facility. Under the PSA, the Company pays consulting fees ranging from $
Corporate Restructuring and Capital Contributions
Prior to the consummation of the Offering, the Company entered into a Contribution Agreement with Bit Digital, pursuant to which Bit Digital contributed its HPC business through the transfer of
On August 8, 2025, WhiteFiber completed its initial public offering (the “Offering”) of
Transition Services Agreement post-IPO
In addition, prior to the consummation of the Offering, Bit Digital entered into the Transition Services Agreement with WhiteFiber, pursuant to which Bit Digital will provide certain services to WhiteFiber, on a transitional basis which will generally be up to 24 months following the effective date of the Registration Statement. The Transition Services Agreement provides for the performance of certain services by Bit Digital for the benefit of WhiteFiber, or in some cases certain services provided by WhiteFiber for the benefit of Bit Digital, for a limited period of time after the Offering, including certain services provided by Sam Tabar, our Chief Executive Officer, and Erke Huang, then our Chief Financial Officer and a Director. During such transition period, Messrs. Tabar and Huang held the same positions with Bit Digital as well as WhiteFiber. At that time, Messrs. Tabar and Huang committed to provide the requisite time and effort to fulfill their responsibilities as full-time officers of WhiteFiber, supervising a full staff and are expected to provide certain services, representing not more than approximately
40
Allocation of pre-IPO corporate expenses
Prior to the IPO, Bit Digital provided certain corporate support services to WhiteFiber, including finance, tax, investor relations, and marketing, but did not historically charge the WhiteFiber entities for those services. Bit Digital allocated a portion of Bit Digital’s general corporate expenses to WhiteFiber to reflect the costs of services that benefited WhiteFiber during the periods presented in the financial statements up to the date of the IPO. For the nine months ended September 30, 2025, the Company was allocated $
Following the IPO, WhiteFiber became a separate public company, and certain services continued to be provided by Bit Digital only on a temporary basis under the Transition Services Agreement. Accordingly, the post-IPO treatment should reflect the actual services provided under that agreement. For further details, refer to “Transition Services Agreement post-IPO”.
Guarantees
Bit Digital previously issued a guarantee to a third party on behalf of WhiteFiber Iceland ehf, making Bit Digital jointly and severally liable for WhiteFiber Iceland’s payment obligations related to hosting Services fees and electrical costs pursuant to a colocation agreement.
On September 25, 2025, the guarantee was assumed by WhiteFiber which became directly responsible for such obligations. Following the assumption, Bit Digital is no longer a guarantor under the agreement.
On March 25, 2026, WhiteFiber Iceland ehf. (the “Borrower”), a subsidiary of the Company, entered into a secured term loan facility agreement (the “Facility”) with Landsbankinn hf, which provides for borrowings of up to $
On May 20, 2026, Enovum NC-1 Venture, LLC (the “Borrower”), a subsidiary of the Company, entered into a Delayed Draw Term Loan Facility and Security Agreement (the “Delayed Draw Term Loan Facility”) with Bit Digital Capital, Inc. (the “Lender”), a subsidiary of Bit Digital, providing up to $
On July 15, 2026 Enovum NC-Bidco, LLC (the “Principal”), a subsidiary of the Company, entered into a $
Delayed Draw Term Loan Facility and Security Agreement
On May 20, 2026, the Company, entered into a Delayed Draw Term Loan Facility and Security Agreement (the “Delayed Draw Term Loan Facility”) with Bit Digital Capital, Inc., a subsidiary of Bit Digital, providing up to $
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18. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
From time to time, the Company may be a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.
Contingent Consideration Liabilities
Unifi Transaction
As part of the Unifi Transaction (See Note 4. Acquisition), the Company may be required to make additional contingent payments to the seller based on the timing and availability of electric service to the property, as follows:
| ● | A contingent payment of $ |
| ● | If an Electric Service Agreement for at least 99 MW is provided, or the property receives 99 MW of power within three years, the Company may instead be required to make a contingent payment of $ |
| ● | If an Electric Service Agreement is provided, or the property receives more than 99 MW of power within four years, the Company may be required to make an additional payment of $ |
As of September 30, 2026 the Company has not received an Electric Service Agreement of at least or more than 99 MW. Thus, no contingent payment is payable as of the reporting date.
Electric Service Agreement with Duke Energy
An existing Electric Service Agreement (“ESA”) with Duke Energy Carolinas, LLC (“Duke Energy”) for the provision of electric power to the facility located at 805 Island Drive, Madison, North Carolina was assigned to the Company’s wholly owned subsidiary, Enovum NC-1 Bidco LLC, from Unifi as of August 4, 2025.
The ESA establishes a minimum monthly bill for electric service, based on Duke Energy’s Rate of $
The ESA represents a continuing commitment to purchase power at or above the established minimum levels throughout the contract term. As such, the Company is obligated to pay the minimum monthly charges regardless of operational activity.
Under the termination clause, either party may cancel the ESA with at least 60 days’ written notice. In the event of early termination, the Company remains liable for all amounts due under the ESA through the termination date and may incur additional charges associated with the Extra Facilities if service is discontinued prior to the expiration of the facilities term.
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On July 15, 2026, the Company obtained a $
As of September 30, 2026 management has no present intention to reduce operations at Madison or terminate the ESA. Accordingly, no liability has been recognized in the financial statements in connection with the ESA.
19. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date of issuance of these unaudited condensed consolidated financial statements and determined that, except as disclosed below, there were no subsequent events requiring recognition or disclosure in the financial statements.
Additional Advance Under Delayed Draw Term Loan Facility
On October 27, 2026, the Company received an additional advance of $
Real Estate Acquisition – Yadkinville, North Carolina
On August 16, 2026, the Company entered into a Real Estate Purchase and Sale Agreement with Unifi Manufacturing, Inc. (the “Yadkinville Agreement”) to acquire two properties consisting of land, buildings and related improvements and certain machinery and equipment located in Yadkinville, North Carolina. The total consideration is $
The properties comprise approximately 120 acres of land and
In connection with the agreement, the seller may become entitled to additional contingent consideration of up to $
Following closing, the seller will continue to occupy portions of the properties under short-term occupancy arrangements and subsequently lease back a portion of one property for a five-year term.
NC-1 Project Financing
On November 9, 2026, the Company’s indirect wholly owned subsidiaries, Enovum NC-1 Midco, LLC (“Holdings”) and Enovum NC-1 Bidco, LLC (the “Borrower”), entered into a Term Loan Credit Agreement (the “NC-1 Credit Agreement”) with Morgan Stanley Senior Funding, Inc., as administrative agent and collateral agent, and a consortium of lenders party thereto, providing a $
Loans bear interest, at the Borrower’s election, at Term SOFR (subject to a
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following information should be read in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q for the period ended September 30, 2026 as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2025 (Annual Report). Except for the statements of historical fact, this Form 10-Q contains “forward-looking information” and “forward-looking statements reflecting our current expectations that involve risks and uncertainties (collectively, “forward-looking information”) that is based on expectations, estimates and projections as at the date of this Form 10-Q. All statements, other than statements of historical fact, included herein are “forward-looking statements.” These forward-looking statements are often identified by the use of forward-looking terminology such as “believes,” “intends,” “expects,” or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investing in our securities involves a high degree of risk. The following discussion may contain forward-looking statements that reflect WhiteFiber, Inc.’s plans, estimates and beliefs. WhiteFiber, Inc.’s actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those factors discussed below, in the Annual Report and in Part II, Item 1.A of this Form 10-Q, particularly in the sections entitled “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors.” Before making an investment decision, you should carefully consider these risks, uncertainties and forward-looking statements.
The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company’s periodic reports that are filed with the SEC and available on its website at http://www.sec.gov. If any material risk was to occur, our business, financial condition or results of operations would likely suffer. In that event, the value of our securities could decline and you could lose part or all of your investment. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. In addition, our past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results in the future. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
References to “WhiteFiber” or the “Company” refer to WhiteFiber, Inc. and its subsidiaries, giving effect to the Reorganization which occurred on August 6, 2025.
Overview
We believe we are a leading provider of artificial intelligence (“AI”) infrastructure solutions. We own high-performance computing (“HPC”) data centers and provide cloud-based HPC graphics processing units (“GPU”) services, which we term cloud services, for customers such as AI application and machine learning (“ML”) developers (the “HPC Business”). Our Tier-3 data centers provide hosting and colocation services. Our cloud services support generative AI workstreams, especially training and inference.
Our business model integrates our data center infrastructure and cloud services to provide scalable, high-performance computing solutions for enterprises, research institutions, and AI and ML driven businesses. Our integrated approach aligns specialized data center operations with GPU-focused cloud services, addressing the unique requirements of AI and ML workloads. These workloads demand greater power density, advanced cooling solutions, and robust bandwidth to handle large-scale data transfers. By operating our data centers, we are able to provide the power to support our cloud services and we believe we can better meet the needs of AI and ML workloads and reduce the complexity associated with procuring power and connectivity from external vendors. We can also design our facilities to accommodate the higher heat loads generated by modern GPUs, potentially shortening deployment timelines for customers who require rapid expansion of their computing infrastructure. From a financial standpoint, our vertically integrated solution allows us to capture additional margin for both our data center and cloud services businesses, avoiding expenses that would otherwise be due to third-party providers.
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Colocation/Data center services
We design, develop, and operate data centers, through which we offer our hosting and colocation services. Our operational data centers meet the requirements of the Tier-3 standard, including N+1 redundancy architecture, concurrent maintainability, uninterruptible power supply, advanced and highly reliable cooling systems, strict monitoring and management systems, 99.982% uptime and no more than 1.6 hours of downtime annually, service organization control, SOC 2 Type 2, differentiated software supporting AI workloads, high density and robust bandwidth, and infrastructure to support AI workloads.
Drawing on collective industry experience, our data center team is adept at bringing new sites online on an accelerated timeline. We are aggressively pursuing our development pipeline and intend to achieve an estimated 65 MW (gross) of operational data center capacity by the end of the fourth quarter of 2026, a target that is underpinned by assets including our MTL-1, MTL-3, and NC-1 facilities. We also have an additional 65 MW (gross) in development at our MTL-2 facility and Yadkinville properties. As of September 30, 2026, our pipeline of potential data center projects represents approximately 1,500 MW (gross) under management review. We follow a disciplined process prioritizing projects that are backed by customer lease commitments. In select cases, we may pursue early-stage acquisitions based on strong customer demand signals and defined commercialization pathways. Accordingly, the foregoing timelines and capacities are subject to change based on many factors, many of which are outside of our control.
We use a well-defined set of criteria to select our data center sites. We typically target sites with proximity to metro areas and partial infrastructure in place, where we are retrofitting rather than developing greenfield projects. Metropolitan areas are positioned for low-latency to address long-term, specialized AI computer inference needs, and smaller sites reduce risks. A retrofit entails sourcing and acquiring an existing industrial building with underutilized, in-place power connectivity. The period of time from when a site is purchased until construction can begin varies from location to location depending upon, among other things, obtaining required permits and the availability of construction supplies and contractors. Average build time for retrofits is intended to be approximately six months from commencement of construction, which we believe is approximately one-third to one-half of the industry average development timeline for greenfield projects. This average building time is based upon senior management’s experience at Enovum prior to its acquisition by the Company, as well as their experience prior to Enovum. We also prioritize sites offering opportunities to increase site power over time, enabling our data centers to grow with customer demand. In addition, we selectively target certain larger opportunities with 50 MW (gross) of power or more, subject to customer demand, to drive AI-driven compute super-clusters. Finally, we prioritize sites powered by sustainable, green energy sources and locked-in power when available. Additionally, to enhance sustainability of certain of our data center projects, we are undertaking heat repurposing projects in connection with sustainability and commercial and residential projects.
We acquired Enovum on October 11, 2024. The transaction included the lease of MTL-1, our 4 MW (gross) Tier-3 high-performance computing (“HPC”) data center in Montreal, Canada, which was fully operational and fully leased to customers at the time of acquisition.
On December 27, 2024, we acquired the real estate and building for a build-to-suit 5 MW (gross) Tier-3 data center expansion project near Montreal, Canada which we refer to as MTL-2. MTL-2, a 160,000 square foot site that was previously used as an encapsulation manufacturing facility, is located in Pointe-Claire, Quebec. We initially funded the purchase of CAD 33.5 million (approximately $23.3 million) with cash on hand. We expected to invest approximately $23.6 million to develop the site to Tier-3 standards with an initial load of 5 MW (gross). Construction is expected to begin during the fourth quarter of 2026.
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On April 11, 2025, we entered into a lease for a new data center site in Saint-Jerome, Quebec, a suburb of Montreal, MTL-3. The MTL-3 facility spans approximately 202,000 square feet on 7.7 acres and is being developed into a 7 MW (gross) Tier-3 data center. It will support current contracted capacity, with Cerebras (5 MW IT Load), with future expansion potential subject to utility approvals. The transaction was executed under a lease-to-own structure, which includes a fixed-price purchase option of CAD 24.2 million (approximately $17.3 million) exercisable by December 2025. The lease term was 20 years, with two 5-year extensions at the Company’s option. In December 2025, we became reasonably certain to exercise the purchase option and notified the lessor of our intent to exercise the purchase option. We had 90 days to complete the purchase, after which the purchase option would expire. The option was exercised on January 14, 2026 and the purchase of MTL-3 closed on May 8, 2026. The facility has been retrofitted to Tier-3 standards and was completed and operational in November 2025. The site has commenced billing Cerebras as of November 1, 2025, in the amount of CAD 1.4 million (approximately 979 thousand USD) monthly for the duration of the five-year contract.
On May 20, 2025, we completed the purchase of a former industrial/manufacturing building from UMI. Pursuant to the Purchase Agreement we agreed to purchase from UMI, an industrial/manufacturing building together with the underlying land located in Madison, North Carolina, which we refer to as “NC-1”, as well as certain machinery and equipment located thereon for a cash purchase price of $45 million. The purchase price will increase by (i) $8 million, if Duke Energy actually provides, or provides an Electric Services Agreement providing for, at least 99 MW (gross) within two years of May 20, 2025, or (ii) $5 million, if Duke Energy actually provides, or provides an Electric Services Agreement providing for, at least 99 MW (gross) more than two years but less than three years after May 20, 2025. Additionally, the purchase price will increase by an additional $200 thousand per MW over 99 MW (gross) up to a maximum of $5 million if at least 99 MW (gross) are actually delivered, or Duke Energy provides an Electric Services Agreement for the provision of at least 99 MW (gross), within four years of May 20, 2025. Separately, the Company entered into a Capacity Agreement with Duke Energy pursuant to which Duke Energy agreed to use commercially reasonable efforts to achieve 24 MW (gross) of service to NC-1 by September 1, 2025, 40 MW (gross) by April 1, 2026, and 99 MW (gross) within four years of May 16, 2025. Management believes based upon its review of the site and a Duke Energy preliminary transmission study, that NC-1 may receive and support up to 200 MW (gross) of total electrical supply over an extended period of time, subject to infrastructure upgrades, such as developing new substations and other conditions. On August 4, 2025, Enovum NC-1 Bidco LLC, a subsidiary of the Company, entered into an Assignment and Assumption Agreement with Unifi Manufacturing and Duke Energy Carolinas, LLC, pursuant to which Enovum assumed Unifi’s rights and obligations under certain electric service agreements for facilities located in North Carolina. Duke Energy consented to assignment. Refer to Note 18. Commitments and contingencies to our condensed consolidated financial statements for further detail.
On August 16, 2026, the Company entered the Yadkinville Agreement to acquire two properties consisting of land, buildings and related improvements and certain machinery and equipment located in Yadkinville, North Carolina. The total consideration is $60.0 million in cash, including a deposit in escrow of $2.25 million. The transaction closed on October 28, 2026. In connection with the acquisition, the seller will continue to occupy portions of the properties under occupancy and partial leaseback arrangements. These arrangements are expected to offset a portion of property carrying costs as WhiteFiber advances its development plans.
As the business grows, the Company’s ability to fund its operating needs will depend on the ongoing ability to generate positive cash flow from our operations and raise capital in the capital markets. Accordingly, the Company has entered into certain credit facilities to finance these areas of growth, including the Syndicated RBC Credit Facility Agreement and discussed here. Refer to Liquidity and capital resources for further discussion on this Facility and other credit facilities of the Company.
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Nscale Services Agreement
In November 2025, our wholly owned subsidiary, Enovum NC-1 Bidco, LLC, entered into the Services Agreement with Nscale Services US Inc. and Nscale Global Holdings Limited (collectively, “Nscale”) for the provision of colocation and related services at our NC-1 facility. The agreement represents a significant commercial milestone for our high-density data center platform and provides long-term contracted revenue visibility. The initial Service Order pursuant to the Services Agreement represents approximately $865 million in total contracted revenue over a 10-year term, inclusive of contractual annual rate escalators and non-recurring installation services (“NRCs”). Electricity and certain other operating costs are structured as pass-through charges to Nscale. On August 15, 2026, the Company commenced billing for the initial 20 MW of contracted capacity at its NC-1 facility, which was subsequently placed into service on September 23, 2026. As of date of this report, the remaining 20 MW became operational, bringing all 40 MW of contracted IT capacity at NC-1 into operation.
Cloud Services
We provide specialized cloud services to support generative AI workstreams, especially training and inference, emphasizing cost-effective utility and tailor-made solutions for each client. We are an authorized NVIDIA Preferred Partner through the NVIDIA Partner Network (“NPN”), an authorized partner with SuperMicro Computer Inc.®, an authorized Communications Service Provider (“CSP”) with Dell (through Dell’s exclusive distributor in Iceland, Advania), an official partnership with Hewlett Packard Enterprise and a commercial relationship with Quanta Computer Inc. (“QCT”). Based on management’s knowledge of the industry, we are proud to be among the first service providers to offer H200, B200, and GB200 servers. We aim to provide a high-standard service lease with an Uptime percentage> 99.5%.
We are also developing a capital-light managed service offering through which customers would fund the underlying hardware while we deploy and operate it on their behalf. This offering has not yet generated material revenue.
Global Data Center Infrastructure and Partnerships
We expect to leverage a global network of data centers for hosting capacity for our GPU business, in many instances, by negotiating with third-party providers to seamlessly integrate our cloud services at strategically located data centers. Our initial data center partnership through which we lease capacity is at Blönduós Campus, Iceland, offering a world-class operations team with certified technicians and reliable engineers. The facility has a 45 kW rack density and 6 MW (gross) total capacity. We have executed contracts for 5.5 MW IT load at the data center. The center’s energy source is 100% renewable energy, mainly from Blanda Hydro PowerStation, the winner of an IHA Blue Planet Award in 2017.
In addition, we have leased additional data center capacity in Atlanta, Georgia to expand our cloud services offering with the leases commencing in February 2026. In the third quarter, we entered into a lease for 2.5 MW IT load design Tier-3 data center space in Sydney, Australia, a lease for 2.7 MW IT load design Tier-3+ data center space in Paris, France, and leases for 2.0 MW and 2.7 MW IT load design data centers in Canada to expand our cloud services offering.
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Customer Base and Concentration
As of the date of this Form 10-Q, we have five existing customers. Our largest customer accounted for approximately 50% of our cloud services revenue during the nine months ended September 30, 2026. During the period we had discontinuation of three customer orders. The discontinued orders resulted in approximately $5.1 million impact to revenue during the nine months ended September 30, 2026. However, there were new customer orders contracted in the nine months ended September 30, 2026 and through the date of this Form 10-Q for total contracted revenue of approximately $1,447 million over a six months to five-year period. Discontinued customer agreements during the nine months ended September 30, 2026 and through the date of this Form 10-Q include: (i) the Company’s Initial Customer, following execution of the Termination Agreement described below; (ii) a customer whose Master Services Agreement and related purchase order, as previously amended, was terminated in January 2026; and (iii) a customer whose service order, entered into in January 2026, was terminated during the period.
New customer agreements signed during the nine months ended September 30, 2026 and through the date of this Form 10-Q include new service orders entered into with existing customers for additional GPU and CPU/storage capacity, as well as new service orders entered into with new customers, in each case as further described below.
Selected Customer Agreements
The following summaries reflect selected GPU cloud service agreements that were entered into or discontinued during the period, or that we otherwise consider to be material or representative. We have entered into additional agreements that are not individually material and are not included below.
On October 23, 2023, Bit Digital announced that it had commenced AI operations by signing a binding term sheet with a customer (the “Initial Customer”) to support the customer’s GPU workloads. On December 12, 2023, we finalized a Master Services and Lease Agreement (“MSA”), as amended, with our Initial Customer for the provision of cloud services from a total of 2,048 GPUs over a three-year period. To finance this operation, we entered into a sale-leaseback agreement with a third party, selling 96 AI servers (equivalent to 768 GPUs) and leasing them back for three years. The total contract value with the Initial Customer for the aggregated 2,048 GPUs was estimated to be worth more than $50 million of annualized revenue. On January 22, 2024, approximately 192 servers (equivalent to 1,536 GPUs) were deployed at a specialized data center and began generating revenue, and subsequently on February 2, 2024, approximately an additional 64 servers (equivalent to 512 GPUs) also started to generate revenue.
In the second quarter of 2024, we finalized an agreement to supply our Initial Customer with an additional 2,048 GPUs over a three-year period. To finance this operation, we entered into a sale-leaseback agreement with a third party, agreeing to sell 128 AI servers (equivalent to 1,024 GPUs) and leasing them back for three years. In late July, at the customer’s request, we agreed with the customer to temporarily delay the purchase order so the customer could evaluate an upgrade to newer generation Nvidia GPUs. Consequently, the Company and manufacturer postponed the purchase order. In early August, the customer made a non-refundable prepayment of $30.0 million for the services to be rendered under this agreement.
In January 2025, the Company entered into an agreement to supply its Initial Customer with an additional 464 GPUs for a period of 18 months. This new agreement replaces the prior agreement whereby the Company was to provide the customer with an incremental 2,048 H100 GPUs. The contract features a two-month prepayment from the customer. Deployment commenced on August 20, 2025, using the Company’s inventory of B200 GPUs.
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In October 2025, the Company’s existing parent guaranty arrangement with the Initial Customer was scheduled to expire. Beginning in November 2025, the customer will provide a service deposit to the Company in lieu of the parent guaranty. The deposit will be funded through fifteen consecutive monthly payments from November 2025 through January 2027. The deposit will serve as security for the customer’s performance obligations under the amended service agreements. Each monthly payment is expected to be invoiced on the first day of the month and paid within thirty days. The Company will be required to return the deposit in cash upon termination or expiration of the service agreements, provided that all obligations have been fully satisfied and no payment defaults or material breaches exist.
In the second quarter of 2026, the Company executed a termination agreement (the “Termination Agreement”) with the Initial Customer. The Termination Agreement preserved $12.5 million of previously invoiced, unpaid trade receivables. This preserved balance was fully collected as of June 30, 2026. Prepayment and service deposit balances were applied against other outstanding receivables and the Company recognized a bad debt expense of approximately $2.2 million for the unpreserved remaining receivable balance outstanding. Additionally, under the Termination Agreement the Initial Customer is obligated to pay the Company a fixed termination fee of $12.3 million that was recognized as revenue during the second quarter of 2026. Subsequently, in the third quarter, the termination fee was amended to $15.7 million. The amended amount of $15.7 million was fully collected as of September 30, 2026. Following the service pause and termination of the agreement, the Company redeployed the GPUs previously allocated to the Initial Customer to other customers.
In November 2025, we terminated the MSA and all related purchase orders with DNA Fund in accordance with the terms of the contract. At the time of termination, we had approximately $7.3 million in outstanding accounts receivable. Pursuant to the termination agreement, the customer agreed to repay the outstanding balance. As of the date of this Form 10-Q, we have collected $2.2 million of the outstanding amount. Approximately $5.1 million remains unpaid. All scheduled installment payments are now past due, and no payments have been received since April 2026. We continue to pursue collection of the remaining balance; however, the timing and amount of any future recoveries remain uncertain.
On November 6, 2024, we entered into a Master Services Agreement (“MSA”) with a minimum purchase commitment of 16 GPUs, along with an associated purchase order, from a new customer. The purchase order provides for services utilizing a total of 16 H200 GPUs over a minimum of a six-month period. The deployment commenced on November 7, 2024, using the Company’s existing inventory of H200 GPUs. The service under the purchase order concluded in May 2025. Between May 2025 and September 2025, the Company signed six additional agreements on a month-to-month basis for a total of 88 H200 GPUs, which were terminated in January 2026. In February 2026, we entered into another service order with the customer to provide services utilizing a total of 10 H200 GPU servers. The service order has an initial term of 12 months beginning on the services commencement date. The deployment and revenue generation began in March 2026. In March 2026, we entered into another service order with the customer to provide services utilizing a total of 256 H100 GPU servers. The service order has an initial term of 24 months beginning on the services commencement date, with an option to renew for an additional twelve months. The deployment and revenue generation began in the second quarter of 2026. In April 2026, the Company entered into another service order with the customer to provide CPU and storage server services. The service order has an initial term of 24 months beginning on the services commencement date. The deployment and revenue generation began in the second quarter of 2026. In September 2026, we entered into another service order with the customer to provide storage server services. The service order has a term of 19 months beginning on the services commencement date. The deployment and revenue generation began in the third quarter of 2026.
In October 2025, we entered into a two-week service order with a new customer to provide services utilizing a total of 72 B200 GPUs. In January 2026, we entered into an additional two-week service order with this customer for 72 B200 GPUs. These contracts were terminated as of February 2026. In January 2026, we entered into a further service order with this customer to provide services utilizing a total of 384 B200 GPUs. This service order has an initial term of 24 months commencing on the service commencement date, after which it will automatically renew for successive one-month periods unless terminated by either party. Deployment and revenue generation commenced in January 2026.
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In February 2026, we entered into a service order with a new customer to provide services utilizing a total of 256 GPUs. The service order has an initial term of 12 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. The deployment and revenue generation began on February 1, 2026. In August 2026, we entered into an additional five-year service order with this customer to provide services utilizing a total of 576 Nvidia B300s GPUs in Iceland. Service under this agreement is targeted to commence in the fourth quarter of 2026.
In March 2026, we entered into a service order with a new customer, Prime Intellect, to provide services utilizing a total of 72 GB200 GPUs. The service order has an initial term of 6 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. The deployment and revenue generation began in March 2026 and services continued to be provided through August 2026. In April 2026, we entered into an additional service order with this customer to provide services utilizing a total of 216 GB200 GPUs. The service order has an initial term of 12 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. The deployment and revenue generation began in July 2026. In August 2026 we entered into a new service order to provide services utilizing a total of 72 GB200 GPUs. The service order has an initial term of 24 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. The deployment and revenue generation began in the third quarter of 2026. Also in August 2026, we entered into an additional service order with this customer to provide services utilizing a total of 576 VR200 (Vera Rubin) GPUs in Canada, representing our first Vera Rubin deployment. The service order has an initial term of 36 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. Services are targeted to commence in the first half of 2027.
In May 2026, we entered into a two-year cloud services agreement with Hyperbolic Labs, Inc. to deploy 512 H200 GPUs from our existing owned fleet. Revenue under this agreement commenced in May 2026.
In May 2026, we entered into a five-year agreement to provide AI compute infrastructure for an investment-grade technology customer in the Paris region utilizing advanced NVIDIA GPU systems. Service under this agreement, which is now expected to commence in the first quarter of 2027, subject to final equipment delivery and acceptance milestones. We have secured third-party data center capacity in France to support the deployment and have entered into a binding term sheet for project-level financing with respect to this deployment (the “France Project Financing”). We are currently in the process of negotiating definitive documentation for the France Project Financing; however, certain material terms remain subject to ongoing negotiation between the parties. The project is supported by customer prepayments, including 12 months of advanced service fees, which we have received, and is expected to be further supported by project-level financing, with limited long-term reliance on our corporate balance sheet and existing cash resources.
In July 2026, we entered into a service order with a new customer to provide services utilizing a total of 128 B300 GPUs. The service order has an initial term of 36 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. Services are targeted to commence in the fourth quarter of 2026.
New Business Developments
In August 2026, we entered into two service orders with a new customer to provide services utilizing a total of 1,392 B300 GPUs and 968 B300 GPUs, respectively. The service orders each have an initial term of 36 months beginning on the services commencement date, after which they automatically renew for successive one-month periods unless terminated by either party. The deployment and revenue generation for each is expected to begin in the fourth quarter of 2026.
In September 2026, we entered into a service order with a new customer to provide services utilizing a total of 1,024 B300 GPUs. The service order has an initial term of 48 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. Services are targeted to commence in the fourth quarter of 2026.
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In September 2026, we entered into a master service agreement and an initial service order with a technology customer to provide AI compute infrastructure from a third-party data center in Sydney, Australia, utilizing advanced NVIDIA B300 GPU systems (approximately 1,200 GPUs). The initial service order has a 59-month term. Service is expected to commence in the first quarter of 2027, following delivery of the equipment and customer acceptance. The customer has made a prepayment equal to 12 months of service fees. If service does not commence by the contractual long-stop date, the customer may terminate the service order and receive a refund of the prepayment.
In September 2026, we entered into a statement of work with a new customer to provide management services for a total of 2,048 B300 GPUs. The statement of work has an initial term of 42 months beginning on the services commencement date, which is expected to be the first quarter of 2027.
In October 2026, we entered into a five-year agreement to provide AI compute infrastructure for a global technology customer utilizing advanced NVIDIA GPU systems. Service under this agreement is expected to commence in the second quarter of 2027, subject to final equipment delivery and acceptance milestones. The customer is required to fund a prepayment equal to nine months of service fees, into an escrow account to be released against deployment costs, and the customer’s payment obligations are supported by a guarantee from an affiliate of the customer. Under the customer agreement we are subject to customary delivery milestones, including liquidated damages capped at 5% of total contract value for late delivery, and we are required to provide a performance guarantee of $8.75 million.
Reorganization, Initial Public Offering, and Relationship with Bit Digital
We were incorporated by Bit Digital as a Cayman Islands exempted company on August 15, 2024 under the name Celer, Inc., as a holding company for the HPC Business. We changed our name to WhiteFiber, Inc. on October 17, 2024.
On August 6, 2025, we issued 27,043,749 ordinary shares, par value $0.01 per share (our “Ordinary Shares”, and such shares, the “Contribution Shares”), to Bit Digital pursuant to the terms of a Section 351 Contribution Agreement (the “Contribution Agreement”) entered into with Bit Digital on July 30, 2025. Pursuant to the Contribution Agreement, Bit Digital contributed its HPC Business through the transfer of 100% of the capital shares of its cloud services subsidiary, WhiteFiber AI, Inc. and its wholly-owned subsidiaries WhiteFiber HPC, Inc., WhiteFiber Canada, Inc., WhiteFiber Japan G.K. and WhiteFiber Iceland, ehf, to us, upon the effectiveness of the registration statement filed in connection with our IPO and prior to the consummation of the IPO, in exchange for the Contribution Shares. We refer to this transaction as the “Reorganization”. WhiteFiber AI became a wholly-owned subsidiary of WhiteFiber, Inc. and Bit Digital became the direct shareholder of WhiteFiber after the Reorganization.
On August 8, 2025, we completed our initial public offering (“IPO”) of 9,375,000 Ordinary Shares, at a public offering price of $17.00 per share. The gross proceeds to the Company from the IPO were approximately $159.4 million, before deducting underwriting discounts and commissions and offering expenses of $12.0 million. On September 2, 2025, B. Riley Securities, Inc. and Needham & Company, LLC, as representatives of the several Underwriters of the IPO, fully exercised their option to purchase an additional 1,406,250 Ordinary Shares at the public offering price of $17.00 per share, resulting in additional gross proceeds to the Company of approximately $23.9 million.
After giving effect to the IPO and the full exercise by the Underwriters of their over-allotment option, Bit Digital held approximately 71.5% of our issued and outstanding Ordinary Shares. As of the date of this Form 10-Q, Bit Digital owns approximately 59.7% of WhiteFiber.
Following our IPO, certain of our directors, executive officers and other members of senior management continue to serve as directors, officers and employees of Bit Digital. We have added additional executive officers and senior management to our senior executive team apart from those serving as officers and employees of Bit Digital. We have assembled a senior operating team with approximately 15 years of experience on average for each individual in the data center and cloud services industries. We also appointed additional independent directors upon the commencement of trading of our Ordinary Shares on Nasdaq.
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Key Factors that May Affect Future Results of Operations
We believe that the growth of our business and our future success are dependent upon many factors including those described under “Risk Factors” included elsewhere in our Annual Report. While these factors present significant opportunities for us, they also pose challenges that we must successfully address in order to sustain the growth of our business and enhance our results of operations.
Timely Completion of, and Expansion of Capabilities at, our Existing Data Center Projects.
Our future revenue growth is, in part, dependent on our ability to leverage our development capabilities at our data center sites.
We substantially completed construction of our MTL-3 facility by the end of October 2025. The site has commenced billing its customer, Cerebras, as of November 1, 2025, in the amount of CAD 1.4 million (approximately $979 thousand USD) monthly for the duration of the five-year contract.
During the third quarter of 2026, we began delivering capacity to Nscale under NC-1, with the first 20 MW phase commencing on September 23, 2026. As of date of this report, the remaining 20 MW became operational, bringing all 40 MW of contracted IT capacity at NC-1 into operation. Additionally, during the third quarter, we began planning for MTL-2 site and expect construction to begin in the fourth quarter of 2026.
We expect to increase revenue from our existing sites by securing additional allocations of utility power, subject to our receipt of funding and required permits through ongoing engagement with the utility and relevant authorities. In addition, at certain new and existing sites, we intend to deploy natural gas fuel cell generation technology to increase available power and revenue potential. Our ability to secure the required funding and permits in accordance with our implementation plans may cause variability in our revenue growth in future quarters.
Development of Data Center Pipeline.
We intend to rapidly develop additional sites from our expansion pipeline in targeted locations to secure a strategic presence across North America. By developing a robust HPC data center platform across North America, we expect to enhance redundancy, mitigate geo-location risks, and ensure our services are available where clients need them most. We expect our strategically placed WhiteFiber data centers in smaller urban areas will deliver carrier hotel-level connectivity, while our larger deployments will power AI-driven computing super-clusters, driving innovation and efficiency.
Expansion of Cloud Services.
We have made investments in research and development of our cloud service technology and services. Cloud services are highly competitive, rapidly evolving, and require significant investment, including development and operational costs, to meet the changing needs and expectations of our existing users and attract new users. Our ability to deploy certain cloud service technologies critical for our products and services and for our business strategy may depend on the availability and pricing of third-party equipment and technical infrastructure. In the future, we are looking to generate significant revenues from our cloud services, but such revenue growth depends upon certain third-party providers which may be beyond our control and creates uncertainty that we will be able to generate consistent revenue.
On July 9, 2026, the Company announced initial research and development results for a proprietary cross-data-center networking architecture designed to link geographically separated data centers into a single logical GPU supercluster. Testing demonstrated 111.2 Tbps of bandwidth across 83 kilometers of dark fiber with a guaranteed round-trip latency of 0.9 milliseconds, and the Company has submitted related patent applications and commercially launched the solution in September 2026. However, there can be no assurance that the patents will be issued, that the technology will be commercially accepted, or that the Company will recover its development and commercialization costs, any of which could adversely affect its business, financial condition, and results of operations.
Availability of Additional Financing.
Our ability to fund the continued construction and buildout of our data center facilities and to refinance near-term debt maturities depends on successfully obtaining additional financing on acceptable terms, or at all. If we are unable to do so, our business, operating results, and financial condition could be adversely affected.
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In addition to the key factors described above, we may also generate revenue through the monetization of excess or unused power capacity, resale or leasing of high-performance computing (HPC) hardware, licensing of software or infrastructure designs, and strategic partnerships that expand our service offerings. However, these potential revenue streams are at an early stage and are not expected to materially contribute to our near-term results.
Results of operations for the three months ended September 30, 2026 and 2025
The following discussion summarizes the results of operations for the three months ended September 30, 2026 and 2025. This information should be read together with our condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q.
| For The Three Months Ended September 30, | Variance in | |||||||||||
| 2026 | 2025 | Amount | ||||||||||
| Revenue | $ | 24,017 | $ | 20,180 | $ | 3,837 | ||||||
| Operating costs and expenses | ||||||||||||
| Cost of revenue (exclusive of depreciation shown below) | (10,345 | ) | (6,990 | ) | (3,355 | ) | ||||||
| Depreciation and amortization expenses | (8,077 | ) | (6,371 | ) | (1,706 | ) | ||||||
| General and administrative expenses | (17,998 | ) | (21,323 | ) | 3,325 | |||||||
| Total operating expenses | (36,420 | ) | (34,684 | ) | (1,736 | ) | ||||||
| Loss from operations | (12,403 | ) | (14,504 | ) | 2,101 | |||||||
| Net loss from disposal of property and equipment | - | (338 | ) | 338 | ||||||||
| Interest expense - third parties | (6,426 | ) | - | (6,426 | ) | |||||||
| Interest expense - related parties | (3,987 | ) | - | (3,987 | ) | |||||||
| Induced conversion expense | (80,767 | ) | - | (80,767 | ) | |||||||
| Other income (expense), net | 379 | (845 | ) | 1,224 | ||||||||
| Total other expense, net | (90,801 | ) | (1,183 | ) | (89,618 | ) | ||||||
| Loss before income taxes | (103,204 | ) | (15,687 | ) | (87,517 | ) | ||||||
| Income tax benefit (expense) | 1,769 | (67 | ) | 1,836 | ||||||||
| Net loss | $ | (101,435 | ) | $ | (15,754 | ) | $ | (85,681 | ) | |||
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Revenue
We generate revenues primarily from providing cloud services and colocation services. Refer to Note 3. Revenue further information.
Cloud services revenue is derived from providing customers with access to high-performance computing (“HPC”) infrastructure, including GPU clusters optimized for AI workloads. Our contracts are structured as usage-based or committed-capacity agreements, typically with pricing based on the type and quantity of GPUs deployed, duration of use, and associated infrastructure. Key factors that impact cloud services revenue include the number and performance class of GPUs deployed, hardware utilization, power availability at hosting sites, and the timing of new customer onboarding.
Colocation services revenue is generated from leasing data center space, power, and related infrastructure to customers who operate their own hardware. These contracts are generally multi-year agreements with fixed monthly fees based on committed power capacity (typically measured in kilowatts). Factors that affect colocation revenue include timing of site development and energization, contracted power levels, and customer expansion activity.
Revenue from cloud services
In the fourth quarter of 2023, we established our cloud-based HPC graphics processing units services, which we term cloud services, a new business line to provide services to support generative AI workstreams. The Company commenced offering cloud services to customers in January 2024.
Our revenue from cloud services increased by $0.1 million, or 0.4%, to $18.1 million for the three months ended September 30, 2026 from $18.0 million for the three months ended September 30, 2025. The increase was due to $3.4 million of termination fee revenue recognized under the termination agreement with our Initial Customer. This was largely offset by lower recurring revenue following that customer’s termination, which reduced the number of GPUs deployed for them, and was partially offset by revenue from GPUs deployed to new customers in 2026.
Revenue from colocation services
In the fourth quarter of 2024, we acquired Enovum which holds our data center business that provides customers with physical space, power, and cooling within data center facilities.
Our revenue from colocation services was $5.6 million and $1.7 million for the three months ended September 30, 2026 and 2025, respectively. The increase was primarily due to the MTL-3 site becoming fully operational and generating revenues beginning November 2025 and the commencement of revenue at the NC-1 facility, which contributed $1.1 million of lease income.
Cost of revenue
We incur cost of revenue from cloud services and colocation services.
The Company’s cost of revenue consists primarily of direct production costs associated with its core operations, excluding depreciation and amortization, which are separately stated in the Company’s condensed consolidated statements of operations. Specifically, these costs consist of: (i) cloud services operations — electricity costs, datacenter lease expense, GPU servers lease expense, third-party customer support fees and other relevant costs and (ii) colocation services — electricity costs, lease costs, data center employees’ wage expenses, and other relevant costs.
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Cost of revenue — cloud services
For the three months ended September 30, 2026 and 2025, the cost of revenue from cloud services was comprised of the following:
| For The Three Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Electricity costs | $ | 823 | $ | 631 | ||||
| Datacenter lease expenses | 1,883 | 1,381 | ||||||
| GPU servers lease expenses | 2,861 | 3,454 | ||||||
| Third-party customer support fees | 1,219 | - | ||||||
| Other costs | 1,121 | 849 | ||||||
| Total | $ | 7,907 | $ | 6,315 | ||||
Electricity costs. These expenses were incurred by the data centers for the HPC equipment and were closely correlated with the number of deployed GPU servers.
For the three months ended September 30, 2026, electricity costs increased by $0.2 million, or 30%, compared to the electricity costs incurred for the three months ended September 30, 2025. The increase primarily resulted from an increase in the number of newer-generation GPU servers deployed in the current year, which consume more energy than the models deployed in 2025.
Datacenter lease expenses. We entered into data center lease agreements for fixed monthly recurring costs.
For the three months ended September 30, 2026, data center lease expenses increased $0.5 million, or 36%, compared to the three months ended September 30, 2025, primarily due to the new leases that commenced in 2026.
GPU servers lease expenses. We entered into a GPU servers lease agreement to support our cloud services. The lease payment depends on the usage of the GPU servers.
For the three months ended September 30, 2026, GPU server lease expenses decreased by $0.6 million, or (17)%, compared to the GPU servers lease expenses incurred for the three months ended September 30, 2025. The decrease primarily resulted from a lower GPU server leasing rate on the newly onboarded customers, partially offset by an additional payment due to a leasing partner in connection with a termination agreement with a customer.
Third-party customer support fees. We engaged a third party to provide customer support services.
For the three months ended September 30, 2026, third-party customer support fees were $1.2 million.
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Cost of revenue — Colocation Services
In the fourth quarter of 2024, we acquired Enovum which provides colocation services. For the three months ended September 30, 2026 and 2025, the cost of revenue from colocation services was comprised of the following:
| For The Three Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Electricity costs | $ | 709 | $ | 289 | ||||
| Lease expenses | 357 | 166 | ||||||
| Wage expenses | 359 | 92 | ||||||
| Other costs | 1,013 | 128 | ||||||
| Total | $ | 2,438 | $ | 675 | ||||
Electricity costs. These expenses were closely correlated with the number of deployed servers hosted by the data center.
For the three months ended September 30, 2026, electricity costs increased by $0.4 million, or 145%, compared to the electricity costs incurred for the three months ended September 30, 2025. Since March 31, 2025, the Company has expanded its data center footprint, including the MTL-3 facility. The increase in electricity costs is primarily attributable to the MTL-3 facility, which was operational during the period ended September 30, 2026 but not operational during the period ended September 30, 2025. Additionally, the increase in the electricity cost was driven in part by the commencement of limited operations at our NC-1 facility on September 23, 2026.
Lease expenses. These expenses were incurred by the data center for lease agreement for a fixed monthly recurring cost.
For the three months ended September 30, 2026, datacenter lease expenses increased by $0.2 million, or 115%, compared to the datacenter lease expenses incurred for the three months ended September 30, 2025. This is primarily attributed to expense for MTL-3 data center, which was recorded as general and administrative expense in the third quarter of 2025 as the data center was not yet operational.
Wage expenses. These expenses represent the salaries and benefits of data center employees involved in the operation of our facilities.
For the three months ended September 30, 2026, wage expenses increased by $0.3 million, or 290%, compared to the wage expenses incurred for three months ended September 30, 2025. The increase was primarily attributable to additional employees hired following the IPO and the operations of the MTL-3 site as well as the commencement of limited operations at our NC-1 facility.
Depreciation and amortization expenses
For the three months ended September 30, 2026 and 2025, depreciation and amortization expenses were $8.1 million and $6.4 million, respectively, based on an estimated useful life of property, plant, and equipment and intangible assets. The increase in depreciation and amortization expenses is attributable to additional assets placed in service since September 30, 2025, specifically cloud equipment, resulting in higher expense being recognized.
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General and administrative expenses
For the three months ended September 30, 2026, our general and administrative expenses, totaling $18.1 million, were primarily comprised of share-based compensation expenses for employees of $2.7 million, salary and bonus expenses of $2.8 million, professional and consulting expenses of $4.8 million (including $1.1 million of share-based compensation), other expenses of $6.1 million, commission expense of $0.2 million, marketing expenses of $1.0 million, and travel expenses of $0.3 million.
For the three months ended September 30, 2025, our general and administrative expenses, totaling $21.3 million, were primarily comprised of share-based compensation expenses of $6.4 million, salary and bonus expenses of $1.5 million, professional and consulting expenses of $9.6 million, other expenses of $2.5 million, commission expense of $0.3 million, marketing expenses of $0.2 million, and travel expenses of $0.2 million.
General and administrative expenses for the three months ended September 30, 2026 were lower than for the three months ended September 30, 2025 by $3.2 million, or 15%. The decrease was primarily due to (i) lower share-based compensation of $3.7 million and (ii) lower professional and consulting fees of $4.9 million, which reflected a $6.1 million decrease in consulting fees, partially offset by $1.2 million of higher legal fees. The decrease in these categories also reflects lower costs allocated from Bit Digital under the TSA, which were $0.6 million compared to $4.0 million in the prior-year period. These decreases were partially offset by (i) higher other expenses of $3.6 million which relates primarily to a $2.8 million increase in start-up costs that do not meet the criteria for capitalization and a $0.4 million increase in bad debt expense, (ii) higher salary and bonus expenses of $1.2 million due to additional employees hired following the IPO, and (iii) higher marketing expenses of $0.4 million.
Interest expense
Interest expense – third parties was $6.4 million for the three months ended September 30, 2026, compared to $nil for the three months ended September 30, 2025, and interest expense – related parties was $4.0 million for the three months ended September 30, 2026, compared to $nil for the three months ended September 30, 2025. The increase in interest expense – third parties was primarily attributable to borrowings under the 2031 Notes, 2032 Notes, B. Riley Facility, Iceland Facility and Syndicated RBC Credit Facility Agreement. The increase in interest expense – related parties was primarily attributable to borrowings under the Delayed Draw Term Loan Facility with Bit Digital, including the tranche repaid in August 2026, as well as amortization of related debt discounts and deferred financing costs.
Induced conversion expense
For the three months ended September 30, 2026, we recorded induced conversion expense of $80.8 million, compared to $nil for the three months ended September 30, 2025. In August 2026, we settled $198.15 million aggregate principal amount of the 2031 Notes in privately negotiated transactions in exchange for $118.0 million of cash, excluding accrued interest, and 6,271,534 ordinary shares with a fair value of $169.8 million. The expense represents the excess of the fair value of the consideration transferred over the fair value of the consideration issuable under the original conversion terms. Refer to Note 10. Debt, for more information.
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Income tax benefit (expense)
Provision for income taxes consists of federal, state and foreign income taxes. Our income tax provision for the three months ended September 30, 2026 is primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, and the valuation allowance applied to the Company’s deferred tax assets. We continue to maintain a valuation allowance against the deferred tax assets in Canada, France, Singapore and Japan as the Company does not expect those deferred tax assets are “more likely than not” to be realized in the near future, particularly due to the uncertainty on macroeconomy, politics and profitability of the business.
Our future effective income tax rate depends on various factors, such as tax legislation, the geographic composition of our pre-tax income, the amount of our pre-tax income as business activities fluctuate, non-deductible expenses, non-taxable capital gain in certain jurisdiction, change of valuation allowance and the effectiveness of our tax planning strategies. The Organization for Economic Co-operation and Development (“OECD”) has introduced a global minimum tax framework (“Pillar Two”) that generally applies to multinational enterprise groups with consolidated annual revenues of €750 million or more and is intended to ensure a minimum effective tax rate of 15% in each jurisdiction in which such groups operate. Certain jurisdictions have enacted, or are considering enacting, legislation implementing these rules. Based on the Company’s current consolidated revenue, for the nine months ended September 30, 2026, the Company is not within the scope of the Pillar Two rules. However, the Company continues to monitor developments related to the implementation of these rules, and future growth or changes in the Company’s operations could result in the Company becoming subject to Pillar Two in future periods.
For more details on the Company’s tax profile, see Note 14. Income Taxes to our condensed consolidated financial statements.
Results of operations for the nine months ended September 30, 2026 and 2025
The following discussion summarizes the results of operations for the nine months ended September 30, 2026 and 2025. This information should be read together with our condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q.
| For The Nine Months Ended September 30, | Variance in | |||||||||||
| 2026 | 2025 | Amount | ||||||||||
| Revenue | $ | 74,779 | $ | 55,603 | $ | 19,176 | ||||||
| Operating costs and expenses | ||||||||||||
| Cost of revenue (exclusive of depreciation shown below) | (30,786 | ) | (20,808 | ) | (9,978 | ) | ||||||
| Depreciation and amortization expenses | (21,085 | ) | (15,342 | ) | (5,743 | ) | ||||||
| Impairment of capitalized software assets | (5,006 | ) | - | (5,006 | ) | |||||||
| General and administrative expenses | (50,580 | ) | (41,076 | ) | (9,504 | ) | ||||||
| Total operating expenses | (107,457 | ) | (77,226 | ) | (30,231 | ) | ||||||
| Loss from operations | (32,678 | ) | (21,623 | ) | (11,055 | ) | ||||||
| Net gain (loss) from disposal of property and equipment | 1,822 | (338 | ) | 2,160 | ||||||||
| Interest expense - third parties | (12,999 | ) | - | (12,999 | ) | |||||||
| Interest expense - related parties | (5,425 | ) | - | (5,425 | ) | |||||||
| Induced conversion expense | (80,767 | ) | - | (80,767 | ) | |||||||
| Other income (expense), net | 159 | (91 | ) | 250 | ||||||||
| Total other expense, net | (97,210 | ) | (429 | ) | (96,781 | ) | ||||||
| Loss before income taxes | (129,888 | ) | (22,052 | ) | (107,836 | ) | ||||||
| Income tax benefit (expense) | 1,435 | (1,107 | ) | 2,542 | ||||||||
| Net loss | $ | (128,453 | ) | $ | (23,159 | ) | $ | (105,294 | ) | |||
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Revenue
We generate revenues primarily from providing cloud services and colocation services. Refer to Note 3. Revenue for further information.
Cloud services revenue is derived from providing customers with access to high-performance computing infrastructure, including GPU clusters optimized for AI workloads. Our contracts are structured as usage-based or committed-capacity agreements, typically with pricing based on the type and quantity of GPUs deployed, duration of use, and associated infrastructure. Key factors that impact cloud services revenue include the number and performance class of GPUs deployed, hardware utilization, power availability at hosting sites, and the timing of new customer onboarding.
Colocation services revenue is generated from leasing data center space, power, and related infrastructure to customers who operate their own hardware. These contracts are generally multi-year agreements with fixed monthly or annual fees based on committed power capacity (typically measured in kilowatts). Factors that affect colocation revenue include timing of site development and energization, contracted power levels, and customer expansion activity.
Revenue from cloud services
In the fourth quarter of 2023, we established our cloud-based HPC graphics processing units services, which we term cloud services, a new business line to provide cloud services to support generative AI workstreams. The Company commenced offering cloud services to customers in January 2024.
Our revenue from cloud services increased by $9.2 million, or 18.6%, to $58.7 million for the nine months ended September 30, 2026 from $49.5 million for the nine months ended September 30, 2025. The increase was primarily due to an increase in deployed GPU servers to existing customers in 2026. The decrease in our monthly GPU service revenue from the termination of our agreement with our Initial Customer was substantially offset by $15.7 million of termination fee revenue recorded, and therefore was not a significant driver of the change in revenue.
Revenue from colocation services
In the fourth quarter of 2024, we acquired Enovum which provides customers with physical space, power, and cooling within data center facilities.
Our revenue from colocation services was $15.1 million and $5.1 million for the nine months ended September 30, 2026 and 2025, respectively. The increase was primarily due to the MTL-3 site becoming fully operational and generating revenues beginning November 2025 and the revenue generated from the NC-1 facility, which contributed $1.1 million of lease income.
Cost of revenue
We incur cost of revenue from cloud services and colocation services.
The Company’s cost of revenue consists primarily of direct production costs associated with its core operations, excluding depreciation and amortization, which are separately stated in the Company’s consolidated statements of operations. Specifically, these costs consist of: (i) cloud services operations — electricity costs, datacenter lease expense, GPU servers lease expense, third-party customer support fees and other relevant costs and (ii) colocation services — electricity costs, lease costs, data center employees’ wage expenses, and other relevant costs.
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Cost of revenue — cloud services
For the nine months ended September 30, 2026 and 2025, the cost of revenue from cloud services was comprised of the following:
| For The Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Electricity costs | $ | 2,467 | $ | 1,821 | ||||
| Datacenter lease expenses | 4,857 | 4,020 | ||||||
| GPU servers lease expenses | 12,177 | 10,951 | ||||||
| Third-party customer support fees | 2,617 | - | ||||||
| Other costs | 2,531 | 2,141 | ||||||
| Total | $ | 24,649 | $ | 18,933 | ||||
Electricity costs. These expenses were incurred by the data centers for the HPC equipment and were closely correlated with the number of deployed GPU servers.
For the nine months ended September 30, 2026, electricity costs increased by $0.6 million, or 35%, compared to the electricity costs incurred for the nine months ended September 30, 2025. The increase primarily resulted from an increase in the number of deployed GPU servers.
Datacenter lease expenses. We entered into data center lease agreements for fixed monthly recurring costs.
For the nine months ended September 30, 2026, data center lease expenses increased $0.8 million, or 21%, compared to the nine months ended September 30, 2025, primarily due to the new leases that commenced in 2026.
GPU servers lease expenses. We entered into a GPU servers lease agreement to support our cloud services. The lease payment depends on the usage of the GPU servers.
For the nine months ended September 30, 2026, GPU server lease expenses increased $1.2 million, or 11%, compared to the GPU server lease expenses incurred for the nine months ended September 30, 2025. The increase primarily resulted from a one time amount due upon finalizing a termination agreement with a customer, partially offset by a lower GPU server leasing rate on the newly onboarded customers.
Third-party customer support fees. We engaged a third party to provide customer support services.
For the nine months ended September 30, 2026, third-party customer support fees were $2.6 million.
Cost of revenue — Colocation Services
In the fourth quarter of 2024, we acquired Enovum which provides colocation services. For the nine months ended September 30, 2026 and 2025, the cost of revenue from colocation services was comprised of the following:
| For The Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Electricity costs | $ | 2,298 | $ | 782 | ||||
| Lease expenses | 894 | 473 | ||||||
| Wage expenses | 817 | 262 | ||||||
| Other costs | 2,128 | 358 | ||||||
| Total | $ | 6,137 | $ | 1,875 | ||||
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Electricity costs. These expenses were closely correlated with the number of deployed servers hosted by the data center.
For the nine months ended September 30, 2026, electricity costs increased by $1.5 million, or 194%, compared to the electricity costs incurred for the nine months ended September 30, 2025. Since March 31, 2025, the Company has expanded its data center footprint, including the MTL-3 facility. The increase in electricity costs is primarily attributable to the MTL-3 facility, which was operational during the period ended September 30, 2026 but not operational during the period ended September 30, 2025. Additionally, the increase in the electricity cost was driven in part by the commencement of limited operations at our NC-1 facility on September 23, 2026.
Lease expenses. These expenses were incurred by the data center for lease agreement for a fixed monthly recurring cost.
For the nine months ended September 30, 2026, datacenter lease expenses increased by $0.4 million, or 89%, compared to the datacenter lease expenses incurred for the nine months ended September 30, 2025. This is primarily attributed to expense for MTL-3 data center, which was recorded as general and administrative expense until the fourth quarter of 2025 as the data center was not yet operational.
Wage expenses. These expenses represent the salaries and benefits of data center employees involved in the operation of our facilities.
For the nine months ended September 30, 2026, wage expenses increased by $0.6 million, or 212%, compared to the nine months ended September 30, 2025. The increase was primarily attributable to the operations of MTL-3 site and the limited commencement of operations at our NC-1 facility.
Depreciation and amortization expenses
For the nine months ended September 30, 2026 and 2025, depreciation and amortization expenses were $21.1 million and $15.3 million, respectively, based on an estimated useful life of property, plant, and equipment and intangible assets. The increase in depreciation and amortization expenses is attributable to additional assets placed in service, resulting in higher expense being recognized.
Impairment of capitalized software assets
For the nine months ended September 30, 2026 and 2025, impairment of capitalized software assets were $5.0 million and $nil, respectively. In the second quarter of 2026, the Company determined that it would discontinue further investment in, and use of, its internally-developed software platform. As a result of this decision, effective June 4, 2026, the Company recorded an impairment charge of the remaining book value of $5.0 million during the nine months ended September 30, 2026.
General and administrative expenses
For the nine months ended September 30, 2026, our general and administrative expenses, totaling $50.7 million, were primarily comprised of share-based compensation expenses of $11.2 million, salary and bonus expenses of $8.0 million, professional and consulting expenses of $14.7 million (including share-based compensation expenses of $3.6 million), other expenses of $12.5 million, marketing expenses of $2.1 million, commission expenses of $0.3 million and travel expenses of $0.3 million.
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For the nine months ended September 30, 2025, our general and administrative expenses, totaling $41.1 million, were primarily comprised of share-based compensation expenses of $13.0 million, salary and bonus expenses of $4.0 million, professional and consulting expenses of $17.1 million, other expenses of $4.3 million, marketing expenses of $1.5 million, commission expenses of $0.8 million and travel expenses of $0.4 million.
General and administrative expenses for the nine months ended September 30, 2026 were higher than for the nine months ended September 30, 2025 by $9.6 million, or 23%. The increase was primarily attributable to (i) higher other expenses of $8.6 million, which included a $3.8 million increase in start-up costs that do not meet the criteria for capitalization and a $2.6 million increase in bad debt expense, (ii) higher salary and bonus expenses of $4.0 million due to additional employees hired following the IPO, and (iii) higher marketing expenses of $0.6 million. These increases reflect the Company’s expanded operations and personnel base following the IPO and continued investment in infrastructure and technology development. The increases were partially offset by (i) lower professional and consulting fees of $2.4 million, which reflected an $8.6 million decrease in consulting fees, partially offset by $3.6 million of RSUs granted to consultants and $1.2 million of higher legal fees, and (ii) lower share-based compensation of $0.8 million. Costs allocated from Bit Digital were also lower, at $3.0 million compared to $6.7 million in the prior-year period.
Interest expense
Interest expense – third parties was $13.0 million for the nine months ended September 30, 2026, compared to $nil for the nine months ended September 30, 2025, and interest expense – related parties was $5.4 million for the nine months ended September 30, 2026, compared to $nil for the nine months ended September 30, 2025. The increase in interest expense – third parties was primarily attributable to borrowings under the 2031 Notes, 2032 Notes, B. Riley Facility, Iceland Facility and Royal Bank of Canada credit facilities. The increase in interest expense – related parties was primarily attributable to borrowings under the Delayed Draw Term Loan Facility with Bit Digital Capital, Inc., including the tranche repaid in August 2026, as well as amortization of related deferred financing costs.
Induced conversion expense
For the nine months ended September 30, 2026, we recorded induced conversion expense of $80.8 million, compared to $nil for the nine months ended September 30, 2025. In August 2026, we settled $198.15 million aggregate principal amount of the 2031 Notes in privately negotiated transactions in exchange for $118.0 million of cash, excluding accrued interest, and 6,271,534 ordinary shares with a fair value of $169.8 million. The expense represents the excess of the fair value of the consideration transferred over the fair value of the consideration issuable under the original conversion terms. Refer to Note 10. Debt, for more information.
Income tax benefit (expense)
Provision for income taxes consists of federal, state and foreign income taxes. Our income tax provision for the nine months ended September 30, 2026 is primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, and the valuation allowance applied to the Company’s deferred tax assets in Canada and Japan. We continue to maintain a valuation allowance against the deferred tax assets in Canada, France, Singapore and Japan as the Company does not expect those deferred tax assets are “more likely than not” to be realized in the near future, particularly due to the uncertainty on macroeconomy, politics and profitability of the business.
Our future effective income tax rate depends on various factors, such as tax legislation, the geographic composition of our pre-tax income, the amount of our pre-tax income as business activities fluctuate, non-deductible expenses, non-taxable capital gain in certain jurisdiction, change of valuation allowance and the effectiveness of our tax planning strategies. The Organization for Economic Co-operation and Development (“OECD”) has introduced a global minimum tax framework (“Pillar Two”) that generally applies to multinational enterprise groups with consolidated annual revenues of €750 million or more and is intended to ensure a minimum effective tax rate of 15% in each jurisdiction in which such groups operate. Certain jurisdictions have enacted, or are considering enacting, legislation implementing these rules. Based on the Company’s current consolidated revenue, for the nine months ended September 30, 2026, the Company is not within the scope of the Pillar Two rules. However, the Company continues to monitor developments related to the implementation of these rules, and future growth or changes in the Company’s operations could result in the Company becoming subject to Pillar Two in future periods.
For more details on the Company’s tax profile, see Note 14. Income Taxes to our condensed consolidated financial statements.
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Discussion of Certain Balance Sheet Items as of September 30, 2026 and December 31, 2025
The following table sets forth selected information from our condensed consolidated balance sheets as of September 30, 2026 and December 31, 2025. This information should be read together with our condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q.
| September 30, 2026 | December 31, 2025 | Variance in Amount | ||||||||||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | $ | 138,544 | $ | 114,441 | $ | 24,103 | ||||||
| Restricted cash | 9,012 | 3,857 | 5,155 | |||||||||
| Accounts receivable, net | 39,794 | 23,922 | 15,872 | |||||||||
| Net investment in lease - current, net | 2,644 | 4,261 | (1,617 | ) | ||||||||
| Other current assets, net | 24,607 | 21,269 | 3,338 | |||||||||
| Total current assets | 214,601 | 167,750 | 46,851 | |||||||||
| Non-current assets | ||||||||||||
| Deposits for property, plant, and equipment | 158,437 | 52,738 | 105,699 | |||||||||
| Property, plant, and equipment, net | 746,735 | 336,639 | 410,096 | |||||||||
| Goodwill | 19,474 | 20,146 | (672 | ) | ||||||||
| Intangible assets, net | 11,872 | 12,821 | (949 | ) | ||||||||
| Operating lease right-of-use assets, net | 68,422 | 11,574 | 56,848 | |||||||||
| Finance lease right-of-use assets, net | - | 12,602 | (12,602 | ) | ||||||||
| Net investment in lease - non-current, net | 7,706 | 9,687 | (1,981 | ) | ||||||||
| Investment security | 1,000 | 1,000 | - | |||||||||
| Deferred tax assets | 10,205 | 2,594 | 7,611 | |||||||||
| Other non-current assets, net | 35,386 | 23,801 | 11,585 | |||||||||
| Total non-current assets | 1,059,237 | 483,602 | 575,635 | |||||||||
| Total assets | $ | 1,273,838 | $ | 651,352 | $ | 622,486 | ||||||
| LIABILITIES | ||||||||||||
| Current liabilities | ||||||||||||
| Accounts payable | $ | 8,516 | $ | 8,101 | $ | 415 | ||||||
| Current portion of deferred revenue | 54,636 | 7,997 | 46,639 | |||||||||
| Current portion of operating lease liabilities | 12,955 | 5,208 | 7,747 | |||||||||
| Current portion of finance lease liabilities | - | 12,911 | (12,911 | ) | ||||||||
| Short-term debt and current portion of long-term debt - third parties, net | 11,873 | - | 11,873 | |||||||||
| Short-term debt - related parties, net | 29,989 | - | 29,989 | |||||||||
| Income tax payable | 455 | - | 455 | |||||||||
| Other payables and accrued liabilities | 68,074 | 48,308 | 19,766 | |||||||||
| Total current liabilities | 186,498 | 82,525 | 103,973 | |||||||||
| Non-current portion of deferred revenue | 251,398 | 71,554 | 179,844 | |||||||||
| Non-current portion of operating lease liabilities | 56,297 | 5,277 | 51,020 | |||||||||
| Convertible notes payable, net | 330,088 | - | 330,088 | |||||||||
| Long-term debt - third parties, net | 30,683 | - | 30,683 | |||||||||
| Deferred tax liabilities | 10,704 | 5,699 | 5,005 | |||||||||
| Other long-term liabilities | 6,279 | - | 6,279 | |||||||||
| Amounts due to related parties | 7,710 | 3,833 | 3,877 | |||||||||
| Total non-current liabilities | 693,159 | 86,363 | 606,796 | |||||||||
| Total liabilities | $ | 879,657 | $ | 168,888 | $ | 710,769 | ||||||
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Cash and cash equivalents
Cash and cash equivalents primarily consist of funds deposited with banks, which are highly liquid and are unrestricted to withdrawal or use. The total balance of cash and cash equivalents was $138.5 million and $114.4 million as of September 30, 2026 and December 31, 2025, respectively. The increase was primarily attributable to $211.3 million of net cash provided by operating activities and $342.1 million of net cash provided by financing activities, partially offset by $523.7 million of net cash used in investing activities, coupled with a $0.4 million unfavorable effect of foreign currency translation.
Restricted cash
Restricted cash primarily represents cash balances that support an outstanding letter of credit to third parties related to security deposits and are restricted from withdrawal. The increase of $5.2 million was primarily attributable to $4.0 million held in an escrow account, a $0.6 million increase in cash collateral for the letter of credit in Iceland and $0.5 million deposit held as collateral for a secured corporate credit card. As of September 30, 2026 and December 31, 2025, the fixed maximum amount guaranteed under the letter of credit was $9.0 million and $3.9 million, respectively.
Accounts receivable, net
Accounts receivable, net consists of amounts due from our customers. The total balance of accounts receivable, net was $39.8 million and $23.9 million as of September 30, 2026 and December 31, 2025, respectively. The increase in the balance of accounts receivable is attributable primarily to $33.8 million relating to prepayment billings that were offset by the settlement of $17.7 million of receivables relating to the timing of collections and write-offs relating to one of our discontinued customers.
Net investment in lease, net
Net investment in lease, net represents the present value of the lease payments not yet received from lessees. The current and non-current balance of net investment in lease was $2.6 million and $7.7 million, respectively as of September 30, 2026 due to sales-type lease agreements as a lessor for its cloud service equipment. The current and non-current balance of net investment in lease was $4.3 million and $9.7 million, respectively as of December 31, 2025. The decrease in the balance of net investment in lease was a result of the termination of a sales-type leases totaling $1.4 million and $3.2 million of lease payments collected from equipment leasing customers, partially offset by $1.0 million in interest income earned.
Other current assets, net
Other current assets, net were $24.6 million and $21.3 million as of September 30, 2026 and December 31, 2025, respectively. The $3.3 million increase was primarily due to increases of $4.6 million in receivables from third parties, $2.6 million in funds held in escrow, and $0.2 million in deferred contract costs, partially offset by decreases of $2.7 million in prepayments to third parties and $1.2 million in prepaid consulting services. The net increase of $0.2 million in deferred contract costs reflected a $1.2 million reclassification of the current portion from other non-current assets, partially offset by a $1.0 million decrease related to an advisory services agreement, which was amortized and subsequently written off upon termination of the related agreement with a cloud services customer.
Deposits for property, plant, and equipment
The deposits for property, plant, and equipment consists of advance payments for property, plant and equipment. The balance is derecognized once the control of the property, plant, and equipment is transferred to and obtained by us.
Compared with December 31, 2025, the balance as of September 30, 2026 increased by $105.7 million, mainly due to prepayments of $185.9 million for property and equipment, offset by the reclassification of $80.2 million to property and equipment.
Property, plant, and equipment, net
Property, plant, and equipment primarily consist of service equipment used in our Cloud services and Colocation businesses, internally developed software used in our Cloud services business, and construction in progress (“CIP”) representing assets received but not yet put into service in our Cloud services and Colocation businesses.
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As of September 30, 2026, the Cloud service equipment had a net book value, including CIP, of $105.9 million. As of December 31, 2025, the Cloud service equipment and internally developed software had a net book value, including CIP, of $124.0 million. Compared with December 31, 2025, the balance as of September 30, 2026 decreased by $18.1 million, mainly due to the sale of H200 servers with carrying value of $23.8 million as well as the one-time write-off due to the discontinuation of the internally developed software operations in the amount of $5.0 million.
As of September 30, 2026, the Colocation service equipment had a net book value, including CIP, of $640.8 million. As of December 31, 2025, the Colocation service equipment had a net book value, including CIP, of $212.6 million. Compared with December 31, 2025, the balance as of September 30, 2026 increased by $428.2 million, mainly due to $409.3 million of development costs for the construction of NC-1 facility, $1.1 million of development costs for the MTL-2 facility, $18.2 million for the acquisition of the MTL-3 property as well as infrastructure, CIP and building improvement costs incurred of $4.7 million for MTL-3 in Saint-Jerome and of $2.2 million for MTL-1 in Montreal, in part, by an increase in accumulated depreciation of $3.3 million as well as a foreign-exchange impact of $4 million.
Operating and finance lease right-of-use assets and lease liabilities
As of September 30, 2026, our operating and finance right-of-use assets and lease liabilities were $68.4 million and $69.3 million, respectively. As of December 31, 2025, the Company’s operating and finance right-of-use assets and lease liabilities were $24.2 million and $23.4 million, respectively.
The increase in right-of-use assets of $44.2 million was due to addition of $63.3 million for operating leases, partially offset by the amortization of the right-of-use assets totaling $6.3 million for the nine months ended September 30, 2026 and the reduction of $12.6M resulting from the Company’s acquisition of the underlying leased assets under its existing finance lease, which was reclassified to property and equipment.
The increase in lease liabilities of $45.9 million was primarily due to the addition of $63.3 million for operating leases, partially offset by lease payments totaling $16.6 million for the nine months ended September 30, 2026.
Other non-current assets, net
Other non-current assets, net were $35.4 million as of September 30, 2026, compared to $23.8 million as of December 31, 2025, an increase of $11.6 million. The increase was primarily due to a $1.3 million increase in deferred financing costs, $10.2 million increase in deposits for a new data center colocation agreement, and $0.8 million increase in prepayment to third parties, partially offset by a $1.2 million decrease in deferred contract costs which was reclassified to current.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in relation to the Enovum acquisition. As of September 30, 2026 and December 31, 2025, the Company recorded goodwill in the amount of $19.5 million and $20.1 million, respectively, with the change attributable to foreign currency translation adjustments.
Intangible assets, net
Intangible assets pertain to customer relationships acquired in connection with the acquisition of Enovum. Refer to Note 13. Goodwill and Intangible Assets for further information. As of September 30, 2026 and December 31, 2025, the total balance of intangible assets was $11.9 million and $12.8 million, respectively, with the decrease relating to amortization during the period.
Accounts payable
Accounts payable primarily consists of amounts due for costs related to HPC services. Compared with December 31, 2025, the balance of accounts payable increased by $0.4 million in the nine months ended September 30, 2026, largely due to a one-time amount due upon finalizing a termination agreement with a GPU servers leasing partner in the current year, and timing of unpaid bills for our cloud services in the nine months ended September 30, 2026.
Deferred revenue
As of September 30, 2026, the Company’s current and non-current portion of deferred revenue was $54.6 million and $251.4 million, respectively, compared to $8.0 million and $71.6 million, respectively, as of December 31, 2025. The increase in deferred revenue of $226.5 million reflects $229.4 million prepayments from customers for cloud services and data center services to be rendered in the future, partially offset by the recognition of $2.9 million in revenue related to the successful fulfillment of performance obligations from our cloud services and data center services as well as a decrease due to net settlement of receivables and liabilities with a customer upon contract termination.
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Other payables and accrued liabilities
Other payables and accrued liabilities were $68.1 million as of September 30, 2026, compared to $48.3 million as of December 31, 2025, an increase of $19.8 million. The increase was primarily due to an increase in payables of $6.6 million which primarily related to the NC-1 facility. The balance also includes approximately $1.1 million of accrued issuance costs for the 2032 Notes, $0.8 million accrued expenses for lender’s counsel fees in connection with financing arrangements, an increase in deferred share-based compensation liability of $5.5 million, accrued liabilities for non-fixed assets of $3.9 million, interest payable of $2.5 million and fixed asset payables of $0.6 million. These increases were partially offset by a decrease in commissions payable of $1.6 million following the write-off relating to the termination agreement of one of our customers, a decrease relating to bonus payable of $0.9 million and a decrease in short-term customer deposits of $0.6 million.
Short-term and long-term debt, net
Short-term and long-term debt, net consists of amounts borrowed under several credit facilities entered into by the Company and its subsidiaries during the nine months ended September 30, 2026, including term loan facilities and a Delayed Draw Term Loan Facility used to finance the Company’s operations.
As of September 30, 2026 and December 31, 2025, the total balance of our short-term and long-term debt, net was $72.5 million and $nil, respectively, with the change attributable to proceeds drawn under the new facilities during the period, net of related debt issuance costs, discounts, and repayments of principal. Refer to Note 10. Debt, for more information.
Convertible notes payable, net
The convertible notes payable relates to the purchase agreements entered into by the Company in connection with the issuance of its 2031 and 2032 Notes. In January 2026, the Company issued $230.0 million aggregate principal amount of 4.50% convertible senior notes due 2031, and in August 2026, the Company issued $310.0 million aggregate principal amount of 5.00% convertible senior notes due 2032. In August 2026, $198.15 million aggregate principal amount of the 2031 Notes was settled in privately negotiated transactions related to the issuance of the 2032 Notes.
As of September 30, 2026 and December 31, 2025, the net carrying amount of the Company’s convertible notes payable was $330.1 million and $nil, respectively. Refer to Note 10. Debt, for more information.
Other long-term liabilities
As of September 30, 2026 and December 31, 2025, the Company’s other long-term liabilities were $6.3 million and $nil, respectively. The increase of $6.3 million was primarily attributable to long-term customer deposits.
Non-GAAP Financial Measures
In addition to consolidated U.S. GAAP financial measures, we consistently evaluate our use of and calculation of the non-GAAP financial measures, such as EBITDA and Adjusted EBITDA. These non-GAAP financial measures have not been calculated in accordance with GAAP and should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results. In addition, EBITDA and Adjusted EBITDA should not be construed as indicators of our operating performance, liquidity or cash flows generated by operating, investing and financing activities, as there may be significant factors or trends that they fail to address. We caution investors that non-GAAP financial information, by its nature, departs from traditional accounting conventions. Therefore, its use can make it difficult to compare our current results with our results from other reporting periods and with the results of other companies.
EBITDA is computed as net income before interest, taxes, depreciation, and amortization. Adjusted EBITDA is a financial measure defined as our EBITDA adjusted to eliminate the effects of certain non-cash and/or non-recurring items that do not reflect our ongoing strategic business operations, which management believes results in a performance measurement that represents a key indicator of the Company’s core business operations. The adjustments currently include non-cash expenses such as share-based compensation expenses.
We believe Adjusted EBITDA can be an important financial measure because it allows management, investors, and our board of directors to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period-to-period by making such adjustments.
Adjusted EBITDA is provided in addition to and should not be considered to be a substitute for, or superior to net income, the comparable measures under U.S. GAAP. Further, Adjusted EBITDA should not be considered as an alternative to revenue growth, net income, diluted earnings per share or any other performance measure derived in accordance with U.S. GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. Adjusted EBITDA has limitations as an analytical tool, and you should not consider such measures either in isolation or as substitutes for analyzing our results as reported under U.S. GAAP.
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Reconciliations of Adjusted EBITDA to the most comparable U.S. GAAP financial metric for the three months ended and nine months ended September 30, 2026 and 2025 are presented in the table below:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Reconciliation of non-GAAP (loss) income from operations: | ||||||||||||||||
| Net loss | $ | (101,435 | ) | $ | (15,754 | ) | $ | (128,453 | ) | $ | (23,159 | ) | ||||
| Depreciation and amortization expenses | 8,077 | 6,371 | 21,085 | 15,342 | ||||||||||||
| Interest expense - third parties | 6,426 | - | 12,999 | - | ||||||||||||
| Interest expense - related parties | 3,987 | - | 5,425 | - | ||||||||||||
| Income tax (benefit) expense | (1,769 | ) | 67 | (1,435 | ) | 1,107 | ||||||||||
| EBITDA | (84,714 | ) | (9,316 | ) | (90,379 | ) | (6,710 | ) | ||||||||
| Adjustments: | ||||||||||||||||
| Induced conversion expense | 80,767 | - | 80,767 | - | ||||||||||||
| Impairment of capitalized software assets | - | - | 5,006 | - | ||||||||||||
| Net loss (gain) from disposal of property, plant and equipment | - | 338 | (1,822 | ) | 338 | |||||||||||
| Share-based compensation expenses | 3,923 | 11,255 | 14,940 | 17,876 | ||||||||||||
| Adjusted EBITDA | $ | (24 | ) | $ | 2,277 | $ | 8,512 | $ | 11,504 | |||||||
Liquidity and capital resources
As of September 30, 2026, our principal sources of liquidity were cash and cash equivalents of $138.5 million, and accounts receivable, net of $39.8 million.
Working capital is the difference between the Company’s current assets and current liabilities. As of September 30, 2026, we had working capital of $28.1 million as compared with working capital of $85.2 million as of December 31, 2025.
Prior to the Reorganization, as part of Bit Digital, the Company relied on Bit Digital to meet its working capital and financing requirements prior to generating revenue. We had primarily funded our operations through operating cash flows and equity financing provided by Bit Digital via public and private securities offerings of Bit Digital’s ordinary shares.
Following the Reorganization, our capital structure and sources of liquidity changed from our historical capital structure because we are no longer participating in Bit Digital’s cash management process. The Company’s ability to fund its operating needs in the future will depend on the ongoing ability to generate positive cash flow from our operations and raise capital in the capital markets on our own. Based upon our history of generating strong cash flows and our demonstrated ability to secure financing when needed, we believe that we will be able to meet our short-term liquidity needs.
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Convertible note
In January 2026, we issued $230.0 million aggregate principal amount of 4.50% convertible senior notes due 2031, resulting in net proceeds of approximately $102.1 million after deducting the Zero Strike Call Option premium, initial purchasers’ discounts and offering expenses. The issuance enhances our liquidity and provides additional capital to fund upcoming development projects, including construction activities and other strategic growth initiatives.
In August 2026, we issued $310.0 million aggregate principal amount of our 5.00% Convertible Senior Notes due 2032 (the “2032 Notes”), consisting of an initial issuance of $270.0 million and an additional $40.0 million issued pursuant to the initial purchasers’ exercise of their overallotment option. The 2032 Notes mature on September 1, 2032, unless earlier converted, redeemed or repurchased in accordance with their terms.
Concurrently with the pricing of the 2032 Notes offering, we entered into privately negotiated transactions with certain holders of the 2031 Notes to convert or repurchase approximately $198.2 million aggregate principal amount of the outstanding 2031 Notes. The transactions were completed on August 21, 2026, through a combination of cash payments and the issuance of approximately 6.3 million ordinary shares. In connection with these transactions, we recognized an induced conversion expense of approximately $80.8 million during the three months ended September 30, 2026.
The 2031 Notes bear interest at 4.50% per annum, payable semiannually in arrears on February 1 and August 1, and mature on February 1, 2031. The 2032 Notes bear interest at 5.00% per annum and mature on September 1, 2032. Based on the principal amounts outstanding as of September 30, 2026, the combined annual contractual cash interest obligation is approximately $16.9 million, excluding amortization of debt issuance costs and any additional interest payable under the indentures.
The issuance of the 2032 Notes increased our outstanding indebtedness and provided additional financing to support our capital requirements and planned development activities. The partial conversion and repurchase of the 2031 Notes reduced the outstanding principal of those notes and resulted in the recognition of a significant noncash and cash-related induced conversion expense. The transactions also affect our future interest obligations, liquidity requirements and potential dilution from conversion of the outstanding notes.
As of September 30, 2026, approximately $31.9 million aggregate principal amount of the 2031 Notes and $310.0 million aggregate principal amount of the 2032 Notes remained outstanding.
Iceland facility agreement
WhiteFiber Iceland ehf., a subsidiary of the Company, entered into a secured term loan facility with Landsbankinn hf. in March 2026, providing up to $20.0 million of available borrowings. The Facility bears interest at a floating rate per annum equal to the sum of (i) three month CME Term SOFR (or any successor benchmark), and (ii) an applicable margin of 4.25% per annum and has an initial two-year term, extendable up to four years. The loan is guaranteed by WhiteFiber, Inc. and WhiteFiber AI, Inc.
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The Facility allows for up to two drawdowns (minimum $5 million each), with quarterly principal repayments beginning three months after initial borrowing. On April 24, 2026, the Company drew down $18.0 million under the Facility. On September 11, 2026, the Company drew down $2.0 million, which was the remaining commitment available under the Facility. As of September 30, 2026, $17.8 million was outstanding under the Facility, net of $2.25 million of the principal repayments, with an average effective interest rate of 10.35%, which includes an average stated interest rate of 7.94%. The Facility is secured by first-ranking security over (i) 100% of the Company’s shareholding in WhiteFiber Iceland ehf., (ii) designated assets (including GPU servers, CPU servers, IB switches and equipment accessories) at the date of the agreement, and (iii) material assets acquired thereafter (to be secured within 60 days), in each case until all obligations are fully satisfied.
Royal Bank of Canada credit facility
On July 6, 2026, the Company entered into a syndicated credit agreement. The Syndicated Credit Facility Agreement provides for an aggregate of up to approximately CAD $115 million (approximately $80.8 million) to refinance the Amended Credit Agreement and finance its data centers business. The agreement also includes an accordion feature that permits the Company to increase by up to an additional CAD $25 million (approximately $17.7 million) to refinance the Amended Credit Agreement, subject to the satisfaction of specified conditions. The Syndicated Credit Facility Agreement is a non-revolving facility, and amounts repaid or prepaid may not be reborrowed.
On July 15, 2026 the Company drew a CORRA loan amount of CAD $36.8 million (approximately $26.2 million) under the Syndicated Credit Facility Agreement.
Delayed Draw Term Loan Facility
On May 20, 2026, Enovum NC-1 Venture, LLC, a subsidiary of the Company, entered into a Delayed Draw Term Loan Facility and Security Agreement with Bit Digital Capital, Inc., a subsidiary of Bit Digital, providing up to $100 million of available borrowings (which may be increased to $150 million), to support near-term growth initiatives in both its data centers and cloud services businesses. The facility is guaranteed by WhiteFiber Operating Partnership, LP and is secured by a first-ranking security interest over 100% of the Company’s shareholding in Enovum NC-1 Topco, Inc., subject to a collateral step-down upon the Borrower obtaining permanent financing for NC-1.
The Delayed Draw Term Loan Facility bears interest at an initial rate of 9.5% per annum, subject to a step-down upon completion of certain development and leasing milestones at the NC-1 facility, and includes a MOIC Amount payable at maturity. On May 26, 2026, the Company drew down $50.0 million in two tranches ($20.0 million and $30.0 million) at an original issue discount of 3%, with each tranche maturing in 90 days (extendable by 30 days by mutual agreement). Concurrent with funding, the $20.0 million tranche was assigned by Bit Digital to B. Riley Securities, Inc. These tranches were each repaid in full as of September 30, 2026. On July 27, 2026 and July 31, 2026, the Company drew down an additional $20.0 million and $10.0 million, respectively, each with a 180-day maturity, extendable by mutual agreement of the parties. The Delayed Draw Term Loan Facility provides the Company with near-term capital while it pursues longer-term permanent financing. As of September 30, 2026, the Delayed Draw Term Loan Facility had a net carrying value of $29.4 million and accreted MOIC of $0.6 million. It had an average effective interest rate of 25.7% which exceeded the contractual interest rate due to the inclusion of the contractual MOIC payment.
On October 27, 2026, the Company received an additional $70.0 million advance under its existing Delayed Draw Term Loan Facility and Security Agreement, dated May 20, 2026. The additional borrowing has a maturity of 116 days from the funding date, subject to extension by mutual agreement of the parties in accordance with the terms of the agreement. The additional borrowing provides the Company with financing to support its liquidity requirements.
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NC-1 Project Financing Update
On November 9, 2026, our subsidiaries entered into the NC-1 Credit Agreement, providing $300.0 million of term loan commitments as described in Note 19, “Subsequent Events.” No loans had been funded as of the date of this report, and funding remains subject to project-readiness, customer-acceptance and other conditions. If funded, proceeds may be used for permitted purposes, subject to the terms and conditions of the NC-1 Credit Agreement. There can be no assurance that funding will occur within the applicable commitment periods or at all.
Our development pipeline is capital intensive, and depending on construction costs, leasing pace, and financing market conditions, our existing capital resources may not be sufficient to fund both this pipeline and our near-term debt maturities without accessing additional capital, whether through indebtedness, equity or equity-linked securities, project-level financing, or otherwise. Our future capital requirements will depend on many factors, including our ability to refinance or extend near-term debt maturities described above, the revenue growth rate, the success of future product development and capital investment required, and the timing and extent of spending to support further sales and marketing and research and development efforts. In addition, we expect to incur additional costs as a result of operating as a public company. In the event that additional financing is required from outside sources, we cannot be sure that any additional financing will be available to us on acceptable terms if at all. If we are unable to raise additional capital when desired, our business, operating results, and financial condition could be adversely affected.
Cash flows
| For The Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Net Cash Provided by (Used in) Operating Activities | $ | 211,312 | $ | (23,759 | ) | |||
| Net Cash Used in Investing Activity | (523,722 | ) | (145,468 | ) | ||||
| Net Cash Provided by Financing Activity | 342,114 | 324,077 | ||||||
| Net increase in cash, cash equivalents and restricted cash | 29,704 | 154,850 | ||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (446 | ) | (32 | ) | ||||
| Cash, cash equivalents and restricted cash, beginning of period | 118,298 | 15,405 | ||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 147,556 | $ | 170,223 | ||||
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Operating Activity
Net cash provided by operating activities was $211.3 million for the nine months ended September 30, 2026, derived mainly from (i) a net loss of $128.5 million for the nine months ended September 30, 2026 adjusted for depreciation and amortization expenses of property and equipment of $21.1 million, amortization of discount on convertible note issued of $0.8 million, induced conversion expense of $80.8 million, amortization of discount on our third parties and related parties debt of $2.5 million, share-based compensation of $14.9 million, impairment of capitalized software assets of $5.0 million, gain from disposal of property, plant, and equipment of $1.8 million, gain from net investment in lease of $0.7 million and current expected credit losses of $2.7 million and a (ii) net changes in our operating assets and liabilities, principally comprising of an increase to other assets of $15.0 million, a decrease in right-of-use assets of $6.4 million, an increase in deferred revenue of $226.5 million, a decrease in lease liabilities of $4.7 million, an increase in accounts receivable of $18.6 million, a decrease in net investment in lease of $3.6 million, an increase in accounts payable of $0.5 million, an increase of income tax payable of $0.5 million, an increase in other payables and accrued liabilities of $7.1 million, an increase of other long-term liabilities of $6.3 million, a decrease in deferred tax liabilities of $2.5 million, and an increase in amounts due to related parties of $4.5 million. The increase in deferred revenue was primarily attributable to customer prepayments received from future services, which was the primary driver of operating cash flow.
Net cash used in operating activities was $23.8 million for the nine months ended September 30, 2025, derived mainly from (i) a net loss of $23.2 million for the nine months ended September 30, 2025 adjusted for depreciation expenses of property and equipment of $15.3 million and (ii) net changes in our operating assets and liabilities, principally comprising of a decrease in deferred revenue of $23.0 million, a decrease in other current assets of $3.6 million, an increase in accounts receivable of $12.2 million, an increase in accounts payable of $3.0 million, a decrease in other long-term liabilities of $0.6 million, a decrease in net investment in lease of $2.3 million, a decrease in lease liability of $3.4 million, and an increase in deferred tax liability of $1.1 million.
Investing Activity
Net cash used in investing activity was $523.7 million for the nine months ended September 30, 2026, attributable to purchases of and deposits made for property, plant, and equipment of $549.8 million, partially offset by proceeds from disposal of property, plant and equipment of $26.1 million.
Net cash used in investing activity was $145.5 million for the nine months ended September 30, 2025, attributable to purchases of and deposits made for property, plant, and equipment of $146.5 million, partially offset by proceeds from disposal of property, plant and equipment of $1.0 million.
Financing Activity
Net cash provided by financing activity was $342.1 million for the nine months ended September 30, 2026, attributable to net proceeds from issuance of convertible debt of $522.7 million, net proceeds from issuance of debt – third parties of $64.2 million, net proceeds from issuance of debt – related parties of $58.1 million, partially offset by purchase of zero-strike call option of $120.0 million, repayment of debt – third parties of $22.3 million, repayment of debt – related parties of $30.0 million, repayment of convertible notes in note exchange transaction of $118.0 million and repayment of finance lease liabilities of $12.6 million.
Net cash provided by financing activity was $324.1 million for the nine months ended September 30, 2025, attributable to net transfers from parent of $157.4 million, $144.5 million proceeds from issuance of ordinary shares at initial public offering and $22.2 million proceeds from issuance of ordinary shares at the exercise of the over-allotment option.
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Off-Balance Sheet Arrangements
During the periods presented, we did not have any off-balance sheet arrangements.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements. These financial statements are prepared in accordance with U.S. GAAP, which requires the Company to make estimates and assumptions that affect the reported amounts of our assets, liabilities, revenues, and expenses, to disclose contingent assets and liabilities on the dates of the condensed consolidated financial statements, and to disclose the reported amounts of revenues and expenses incurred during the financial reporting periods. The most significant estimates and assumptions include, but are not limited to, the valuation of current assets, useful lives of property, plant, and equipment, impairment of long-lived assets, intangible assets and goodwill, valuation of assets and liabilities acquired in business combinations, provision necessary for contingent liabilities and realization of deferred tax assets. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates as a result of changes in our estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe critical accounting policies as disclosed in this release reflect the more significant judgments and estimates used in preparation of our condensed consolidated financial statements. For a summary of significant accounting policies, refer to Note 2. Summary of Significant Accounting Policies in our Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere herein.
Recently Issued Accounting Pronouncements
There have been no recently issued accounting pronouncements that have had, or are expected to have, a material impact on our results of operations, financial position and/or cash flows.
Emerging Growth Company Status
We are an “emerging growth company,” as defined in the JOBS Act, enacted in April 2012. We intend to take advantage of certain exemptions under the JOBS Act from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. In addition, an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this provision of the JOBS Act. As a result, we will not be subject to new or revised accounting standards at the same time as other public companies that are not emerging growth companies. Therefore, our consolidated financial statements may not be comparable to those of companies that comply with new or revised accounting pronouncements as of public company effective dates.
We will remain an emerging growth company and may take advantage of these exemptions until the earliest of: (i) the last day of the fiscal year following the fifth anniversary of the consummation of our IPO; (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion; (iii) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) which would occur if the market value of our Ordinary Shares held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year; or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Disclosure under this Item is not required for this interim reporting period pursuant to Item 305 of Regulation S-K.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Principal Executive Officer and our Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosures.
Based on this evaluation, our management, with the participation of our Principal Executive Officer and our Principal Financial Officer, concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this Form 10-Q.
Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in conducting a cost-benefit analysis of possible controls and procedures.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting during the nine months ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may become involved in various disputes and litigation matters that arise in the ordinary course of business. We are not presently a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or taken together have a material adverse effect on our business, results of operations, cash flows or financial condition. For more information, refer to Note 18. Commitments and Contingencies in our Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere herein.
Item 1A. Risk Factors
In addition to the information set forth in this Quarterly Report on Form 10-Q, including the information set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in our condensed consolidated financial statements and the related notes, you should carefully consider the risk factors disclosed in the section entitled “Risk Factors” in our Annual Report and the other reports that we have filed with the SEC. Any of the risks discussed in such reports, as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial, could materially and adversely affect our results of operations, financial condition or prospects. The following risk factor supplements the risk factors previously disclosed in our Annual Report and subsequent Quarterly Reports on Form 10-Q and should be read together with those disclosures.
Increased scrutiny of data center development and changes in governmental or utility policies could delay or restrict our expansion, limit power availability and increase our costs.
Our ability to develop, retrofit, expand and operate our data centers depends on obtaining and maintaining governmental and utility approvals and securing sufficient power and related infrastructure on commercially acceptable terms. Concerns about electricity affordability, grid reliability, water consumption, noise, emissions and land use could lead federal, state, provincial and local authorities, regulators and utilities in the United States and Canada to impose additional requirements or restrictions on data centers and the infrastructure needed to serve them. Changes in political leadership or governmental priorities could intensify this scrutiny or result in changes in applicable laws, policies, regulatory interpretation or enforcement.
These developments could delay or prevent permitting, interconnection or approval of generation, transmission, distribution or other utility infrastructure, limit additional power allocations, impose development moratoria or require data center customers to bear a greater share of infrastructure costs. Such requirements or restrictions could affect retrofits, expansions and subsequent development phases, including at sites we have acquired, projects for which we have incurred substantial expenditures or facilities for which we have obtained initial approvals. Our planned expansion at NC-1 and development of our recently acquired Yadkinville properties in North Carolina depend in part on additional power availability and related infrastructure. Existing power arrangements, site approvals or the commencement of operations at a facility do not assure that additional capacity will be available for future phases on the terms or schedule we anticipate.
Approval or power availability delays and additional requirements could require project redesigns, mitigation measures or further capital contributions, postpone revenue generation, increase construction and financing costs and impair our ability to meet customer commitments. Although certain electricity and operating costs may be passed through to customers under our agreements, we may be unable to recover all additional development, infrastructure or other costs, recover our investment or achieve expected returns. Any of these outcomes could materially adversely affect our business, financial condition, results of operations, cash flows and growth prospects.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Recent Sales of Unregistered Securities
2031 Convertible Senior Notes
On January 26, 2026, we completed a private offering of $230.0 million aggregate principal amount of 4.500% Convertible Senior Notes due 2031 (the “2031 Notes”), including the exercise in full of the initial purchasers’ option to purchase an additional $20.0 million aggregate principal amount of 2031 Notes. The 2031 Notes are general senior unsecured obligations of the Company. The 2031 Notes were issued pursuant to an Indenture, dated January 26, 2026 (the “Indenture”), between the Company and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). The 2031 Notes will mature on February 1, 2031 (the “Maturity Date”), unless earlier converted, redeemed or repurchased. The 2031 Notes will bear interest at a rate of 4.500% per year, payable semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2026. Holders may convert their 2031 Notes at their option prior to the close of business on the second scheduled trading day immediately preceding the Maturity Date. Upon conversion, the Company will satisfy its conversion obligation by paying or delivering, as the case may be, cash, its Ordinary Shares, or a combination of cash and Ordinary Shares, at the Company’s election, in the manner and subject to the terms and conditions set forth in the Indenture. The conversion rate is initially 38.5981 ordinary shares per $1 thousand principal amount of the 2031 Notes (equivalent to an initial conversion price of approximately $25.91 per ordinary share), which represents an approximately 27.5% conversion premium over the last reported sale price of $20.32 per ordinary share on the Nasdaq Capital Market on January 21, 2026. The conversion rate is subject to customary adjustments upon the occurrence of certain events, as described in the Indenture. In August 2026, we settled $198.15 million aggregate principal amount of the 2031 Notes in privately negotiated transactions, as described below. Following settlement, $31.85 million aggregate principal amount of the 2031 Notes remained outstanding.
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On February 6, 2029 or if the Company undergoes a “Fundamental Change” (as defined in the Indenture), in each case subject to certain conditions and except as set forth in the Indenture, noteholders may require the Company to repurchase for cash all or any portion of their 2031 Notes at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the relevant repurchase date.
The Company may not redeem the 2031 Notes prior to February 6, 2029, except in connection with certain tax-related events as described below. The Company may redeem for cash all or any portion of the 2031 Notes, at our option, on or after February 6, 2029 and prior to the 41st scheduled trading day immediately preceding the maturity date, if the last reported sale price of our ordinary shares has been at least 130% of the conversion price for the 2031 Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of optional redemption. However, the Company may not redeem less than all of the outstanding 2031 Notes at its option unless at least $75.0 million aggregate principal amount of 2031 Notes are outstanding and not called for optional redemption as of the time it sends the related notice of optional redemption (and after giving effect to the delivery of such notice of optional redemption). The Company may also redeem for cash, in whole but not in part, the 2031 Notes, subject to certain conditions, upon the occurrence of certain changes to the laws, rules or regulations of a relevant taxing jurisdiction (as defined in the Indenture). The redemption price is equal to 100% of the principal amount of the 2031 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
In connection with the issuance of the 2031 Notes, the Company entered into a privately negotiated zero-strike call option transaction with Barclays Bank PLC, through its agent Barclays Capital Inc. (the “Option Counterparty” and, such transaction, the “Call Option Transaction”), with an expiration date that is scheduled to occur shortly after the Maturity Date. Pursuant to the Call Option Transaction, the Company paid a premium equal to approximately $120.0 million for the right to receive, without further payment, 5,905,511 Ordinary Shares (subject to customary adjustment), with delivery thereof by the Option Counterparty at expiry, subject to early settlement of the Call Option Transaction in whole or in part at the Option Counterparty’s discretion.
The net proceeds from the sale of the 2031 Notes were approximately $222.1 million, after deducting the initial purchasers’ discounts and offering expenses payable by the Company. The Company used approximately $120.0 million of the net proceeds from the 2031 Notes to pay the cost of the Call Option Transaction. The remaining net proceeds are expected to be used primarily for data center expansion, including to partially fund the lease or purchase of additional property or properties on which to build additional WhiteFiber data centers, to construct those facilities, to enter into additional energy service agreements for each additional site, to purchase related equipment, and for potential acquisitions, partnerships and joint ventures related thereto, and for working capital and general corporate purposes.
The Company offered and sold the Notes to the initial purchasers in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and the Notes were initially resold by the initial purchasers to persons whom the initial purchasers reasonably believed to be qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A under the Securities Act. The Company relied on these exemptions from registration based in part on representations made by the initial purchasers in purchase agreement, dated January 21, 2026, by and among the Company and the representatives of the initial purchasers named therein. The Notes and the Ordinary Shares issuable upon conversion of the Notes, if any, have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. To the extent that any Ordinary Shares are issued upon conversion of the Notes, they will be issued in transactions anticipated to be exempt from registration under the Securities Act by virtue of Section 3(a)(9) thereof, because no commission or other remuneration is expected to be paid in connection with conversion of the Notes, and any resulting issuance of Ordinary Shares. Initially, a maximum of 11,318,898 Ordinary Shares may be issued upon conversion of the Notes based on the initial maximum conversion rate of 49.2126 Ordinary Shares per $1,000 principal amount of the Notes, which is subject to customary anti-dilution adjustment provisions.
2032 Convertible Senior Notes
On August 21, 2026, we completed a private offering of $310.0 million aggregate principal amount of 5.00% Convertible Senior Notes due 2032 (the “2032 Notes”), including $40.0 million aggregate principal amount issued upon the exercise in full of the initial purchasers’ option to purchase additional notes. The 2032 Notes are general senior unsecured obligations of the Company and rank equally in right of payment with the 2031 Notes. The 2032 Notes were issued pursuant to an Indenture, dated August 21, 2026 (the “2032 Indenture”), between the Company and U.S. Bank Trust Company, National Association, as trustee. The 2032 Notes will mature on September 1, 2032, unless earlier converted, redeemed or repurchased. The 2032 Notes bear interest at a rate of 5.00% per year, payable semiannually in arrears on March 1 and September 1 of each year, beginning on March 1, 2027. The net proceeds from the offering, after deducting the initial purchasers’ discounts and offering expenses, were approximately $298.5 million. We used approximately $118.5 million of the net proceeds to pay the cash consideration including accrued and unpaid interest for the concurrent note exchange transactions described below, and we intend to use the remaining net proceeds primarily for data center expansion, including related property, construction, energy service agreements and equipment (including GPU servers), and for working capital and general corporate purposes.
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Holders may convert their 2032 Notes at their option prior to the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, we will satisfy our conversion obligation by paying or delivering, as the case may be, cash, our ordinary shares, or a combination of cash and ordinary shares, at our election, in the manner and subject to the terms and conditions set forth in the 2032 Indenture. The conversion rate is initially 29.5530 ordinary shares per $1,000 principal amount of the 2032 Notes (equivalent to an initial conversion price of approximately $33.84 per ordinary share). The conversion rate is subject to customary adjustments upon the occurrence of certain events, and, following certain corporate events or our delivery of a notice of redemption, the conversion rate will be increased in certain circumstances for holders who elect to convert in connection with such events, as described in the 2032 Indenture.
On September 6, 2030, or if the Company undergoes a “Fundamental Change” (as defined in the 2032 Indenture), in each case, subject to certain conditions and except as set forth in the 2032 Indenture, noteholders may require the Company to repurchase for cash all or any portion of their 2032 Notes at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the relevant repurchase date.
The Company may not redeem the 2032 Notes prior to September 6, 2030, except in connection with certain tax law changes described below. The Company may redeem for cash all or any portion of the 2032 Notes, at our option, on or after September 6, 2030 and prior to the 41st scheduled trading day immediately preceding the maturity date, if the last reported sale price of our ordinary shares has been at least 130% of the conversion price for the 2032 Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of optional redemption. However, the Company may not redeem less than all of the outstanding 2032 Notes at its option unless at least $75.0 million aggregate principal amount of 2032 Notes are outstanding and not called for optional redemption as of the time it sends the related notice of optional redemption (and after giving effect to the delivery of such notice). The Company may also redeem for cash, in whole but not in part, the 2032 Notes, subject to certain conditions, upon the occurrence of certain changes to the laws, rules or regulations of a relevant taxing jurisdiction (as defined in the 2032 Indenture). The redemption price is equal to 100% of the principal amount of the 2032 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
Partial Repurchase of 2031 Notes
On August 18, 2026, we entered into privately negotiated agreements with certain holders of the 2031 Notes to repurchase $198.15 million aggregate principal amount of the 2031 Notes in exchange for cash and ordinary shares. The transactions settled on August 21, 2026, and we paid approximately $118.5 million in cash, including approximately $0.5 million of accrued interest, and issued 6,271,534 ordinary shares. We accounted for the transactions as induced conversions under ASC 470-20, including the amendments in ASU 2024-04, and recognized induced conversion expense of approximately $80.8 million for the three and nine months ended September 30, 2026. Following settlement, $31.85 million aggregate principal amount of the 2031 Notes remained outstanding.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
10b5-1 Trading Arrangements
During the nine months ended September 30, 2026, no director or officer of the Company
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Item 6. Exhibits.
(a) Exhibits.
| Exhibit No. | Document Description | |
| 3.1 | Certificate of Incorporation,as amended (incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-1 (333-288650), filed on July 11, 2025). | |
| 3.2 | Amended and Restated Memorandum and Articles of Association of WhiteFiber, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on August 8, 2025). | |
| 4.1 | Indenture, dated January 26, 2026, between WhiteFiber, Inc. and U.S. Bank Trust Company, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on January 26, 2026). | |
| 4.2 | Form of Global Note representing WhiteFiber, Inc.’s 4.500% Convertible Senior Notes due 2031 (included within Exhibit 4.1). | |
| 4.3 | Real Estate Purchase Agreement and Sale Agreement, dated August 16, 2026, between Enovum Data Centers Corp. and Unifi Manufacturing, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K/A, filed on August 26, 2026). | |
| 4.4 | Indenture, dated August 21, 2026, between WhiteFiber, Inc. and U.S. Bank Trust Company, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed on August 21, 2026). | |
| 10.1 | Delayed Draw Term Loan Facility and Security Agreement effective May 20, 2026, by and among Enovum NC-1 Venture, LLC, Bit Digital Capital, Inc. and White Fiber Operating Partnership LP. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed May 27, 2026). | |
| 10.2† | Syndicated RBC Credit Facility Agreement, dated as of July 6, 2026, by and among Enovum Data Centers Corp., as Borrower, the Guarantors party thereto, the Lenders party thereto, and Royal Bank of Canada, as Administrative Agent (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, filed August 12, 2026). | |
| 31.1* | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2* | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1* | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). | |
| 32.2* | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). | |
| 101.INS** | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).** | |
| 101.SCH** | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL** | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF** | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB** | Inline XBRL Taxonomy Extension Labels Linkbase Document. | |
| 101.PRE** | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
| † | Certain identified information has been excluded from this exhibit, because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed. |
| * | Filed herewith (unless otherwise noted as being furnished herewith). |
| ** | XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| WhiteFiber, Inc. | ||
| Date: November 10, 2026 | By: | /s/ Sam Tabar |
| Sam Tabar | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: November 10, 2026 | By: | /s/ Justin Zhu |
| Justin Zhu | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) |
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