Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included elsewhere in this Annual Report. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See "Forward-Looking Statements and Risk Factor Summary" for a discussion of the uncertainties, risks, and assumptions associated with these statements. Actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors, including those set forth under "Risk Factors" and elsewhere in this Annual Report.

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 AI infrastructure solutions. We own HPC data centers and provide cloud-based HPC GPU services, which we term cloud services, for customers such as AI application and 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.

On July 30, 2025, we entered into the Contribution Agreement with Bit Digital in connection with our IPO, pursuant to which, on August 6, 2025, Bit Digital contributed its HPC business to us 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, in exchange for 27,043,749 Ordinary Shares.

Colocation/Data Center Service

The Company designs, develops, and operates Tier-3 data centers that provide hosting and colocation services with high reliability infrastructure, including N+1 redundancy, advanced cooling, and strict monitoring systems designed to support AI workloads. Its strategy focuses on rapidly developing retrofit data centers in metro areas with existing power infrastructure, allowing for significantly faster deployment than greenfield projects. The current portfolio includes facilities such as MTL-1, MTL-2, MTL-3 in Quebec and NC-1 in North Carolina, with a goal of reaching approximately 76 MW of total capacity by the end of 2026 and a broader development pipeline of roughly 1,500 MW under review. During 2025, the Company prioritized projects with committed customer demand and long-term contracts, including a major services agreement at the NC-1 facility expected to generate approximately $865 million of contracted revenue over 10 years, with electricity and certain operating costs passed through to the customer.

Cloud Service

The Company provides specialized GPU-based cloud infrastructure tailored for generative AI training and inference workloads, offering customized solutions and high service reliability. The business leverages partnerships with major hardware providers such as NVIDIA, SuperMicro, Dell, Hewlett Packard Enterprise, and QCT, and deploys advanced GPU architectures including H200, B200, and GB200 systems. Rather than building all infrastructure itself, the Company uses a global network of third-party data centers to host GPU clusters. Revenue is generated through a series of service agreements and MSAs with customers for GPU capacity and AI compute services, ranging from short-term deployments to multi-year contracts. Key agreements include large GPU deployments for AI workloads and cloud gaming providers such as Boosteroid, with some contracts offering significant expansion potential and long-term recurring revenue streams.

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 this 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.

We intend to complete the first phase of construction 27MW (gross) of NC-1 facility April 2026. Management expects NC-1 to start generating revenue in June of 2026. Management expects the second phase of construction 27MW (gross) to be completed in the second quarter of 2026 and start generating revenues 30 days after completion. We have prioritized these projects and put a hold on the build for MTL-2. 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.

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 Years Ended December 31, 2025 and 2024

The following discussion summarizes the results of operations for the years ended December 31, 2025 and 2024. This information should be read together with our consolidated financial statements and related notes included elsewhere in this report.

		For The Years Ended December 31,								Variance in
		2025				2024				Amount
Revenue		$	79,164,252			$	47,639,237			$	31,525,015
Operating costs and expenses
Cost of revenue (exclusive of depreciation shown below)			(30,036,898	)			(20,215,831	)			(9,821,067	)
Depreciation and amortization expenses			(23,440,884	)			(16,511,406	)			(6,929,478	)
General and administrative expenses			(52,507,246	)			(10,283,615	)			(42,223,631	)
Total operating expenses			(105,985,028	)			(47,010,852	)			(58,974,176	)
(Loss) income from operations			(26,820,776	)			628,385				(27,449,161	)
Net loss from disposal of property, plant and equipment			(372,993	)			-				(372,993	)
Other income, net			1,425,399				1,615,634				(190,235	)
Total other income, net			1,052,406				1,615,634				(563,228	)
(Loss) income before provision for income taxes			(25,768,370	)			2,244,019				(28,012,389	)
Income tax benefits (expenses)			1,085,832				(874,177	)			1,960,009
Net loss		$	(24,682,538	)		$	1,369,842			$	(26,052,380	)

Revenue

We generate revenues primarily from providing cloud services and colocation services. Refer to Note 3. Revenue from Contracts with Customers for 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 $23.0 million, or 50.4%, to $68.8 million for the year ended December 31, 2025 from $45.7 million for the year ended December 31, 2024. The increase was primarily due to an increase in deployed GPU servers to new and existing customers during the year of 2025, offset by a $2.0 million service credit accrued and expected to be issued to a customer under the terms of the contract.

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 $8.9 million and $1.4 million for the years ended December 31, 2025 and 2024, respectively. The increase is due to a full year of revenue reported in 2025 and only two and a half months in 2024.

Cost of Revenue

We incur cost of revenue from cloud services and colocation services.

The Company's cost of revenue consists primarily of direct production costs associated with its core operations, excluding depreciation and amortization, which are separately stated in the Company's consolidated statements of operations. Specifically, these costs consist of: (i) cloud services operations - electricity costs, datacenter lease expense, GPU servers lease expense, third-party customer support fees, and other relevant costs and (ii) colocation services - electricity costs, lease costs, data center employees' wage expenses, and other relevant costs.

Cost of Revenue - Cloud Services

For the years ended December 31, 2025 and 2024, the cost of revenue from cloud services was comprised of the following:

		For The Years Ended December 31,
		2025				2024
Electricity costs		$	2,450,710			$	1,198,060
Datacenter lease expenses			5,410,230				3,558,987
GPU servers lease expenses			14,741,928				13,640,737
Third-party customer support fees			1,124,902				-
Other costs			2,858,593				1,327,546
Total		$	26,586,363			$	19,725,330

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 year ended December 31, 2025, electricity costs increased by $1.3 million, or 105%, compared to the electricity costs incurred for the year ended December 31, 2024. 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 year ended December 31, 2025, data center lease expenses increased by $1.9 million, or 52%, compared to the data center lease expenses incurred for the year ended December 31, 2024. The increase primarily resulted from two additional datacenter lease entered after the second quarter of 2024.

GPU servers lease expenses.We entered into GPU servers lease agreements to support our cloud services. The lease payments depend on the usage of the GPU servers.

For the year ended December 31, 2025, GPU servers lease expenses increased by $1.1 million, or 8%. The increase primarily resulted from a higher utilization of leased GPU servers.

Third-party customer support fees. Beginning in 2025, we engaged a third party to provide customer support services. For the year ended December 31, 2025, third-party customer support fees were $1.1 million.

Cost of revenue - Colocation Services

In the fourth quarter of 2024, we acquired Enovum which provides colocation services. For the years ended December 31, 2025 and 2024, the cost of revenue from colocation services was comprised of the following:

		For the Years Ended December 31,
		2025				2024
Electricity costs		$	1,438,218			$	188,559
Lease expenses			1,025,851				149,260
Wage expenses			406,787				12,156
Other costs			579,679				140,526
Total		$	3,450,535			$	490,501

Electricity costs. These expenses were closely correlated with the number of deployed servers hosted by the data center.

For the year ended December 31, 2025, electricity costs increased by $1.2 million, or 663% compared to the electricity costs incurred for the year ended December 31, 2024 as we acquired Enovum in the fourth quarter of 2024.

Lease expenses. These expenses were incurred by the data center for lease agreement for a fixed monthly recurring cost.

For the year ended December 31, 2025, data center lease expenses increased by $0.8 million, or 587%, compared to the data center lease expenses incurred for the year ended December 31, 2024. We had two and a half months of data center lease expenses for the year ended December 31, 2024 as we acquired Enovum in the fourth quarter of 2024.

Wage expenses. These expenses represent the salaries and benefits of data center employees involved in the operation of our facilities.

For the year ended December 31, 2025, wage expenses increased by $0.4 million, or 3246%, compared to the wage expenses incurred for the year ended December 31, 2024 as we acquired Enovum in the fourth quarter of 2024.

Depreciation and amortization expenses

For the years ended December 31, 2025 and 2024, depreciation and amortization expenses were $23.4 million and $16.5 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 in 2025, specifically cloud equipment, resulting in higher expense being recognized.

Effective January 1, 2025, we changed our estimate of the useful lives for our cloud service equipment from three to five years. The change was made to better reflect the expected usage patterns and economic benefits of the assets. Refer to Note 2. Summary of Significant Accounting Policies to our consolidated financial statements.

General and administrative expenses

For the year ended December 31, 2025, our general and administrative expenses, totaling $52.5 million, were primarily comprised of share-based compensation expenses of $14.0 million, salary and bonus expenses of $6.9 million, professional and consulting expenses of $20.6 million, other expenses of $6.3 million, commission expenses of $1.2 million, marketing expenses of $2.2 million, and travel expenses of $0.7 million.

For the year ended December 31, 2024, our general and administrative expenses, totaling $10.3 million, were primarily comprised of share-based compensation expenses of $3.2 million, salary and bonus expenses of $2.1 million, professional and consulting expenses of $2.1 million, commission expense of $1.1 million, marketing expenses of $0.8 million, and travel expenses of $0.3 million.

The General and administrative expenses during the year ended December 31, 2025 was significantly higher compared to the year ended December 31, 2024 primarily attributable to higher share-based compensation expenses. In addition, salary and bonus expenses increased due to additional employees hired following the IPO. Professional and consulting fees were also higher, reflecting RSUs granted to consultants and consulting costs charged by Bit Digital to WhiteFiber per the TSA agreement. The increase further included start-up and development costs. These increases reflect the Company's expanded operations and personnel base following the IPO and continued investment in infrastructure and technology development.

Income tax expenses

The following table provides details of income taxes:

		For the Year Ended December 31,
		2025				2024
(Loss) income before income taxes		$	(25,768,370	)		$	2,244,019
Provision for (Benefit from) income taxes		$	(1,085,832	)		$	874,177
Effective tax rate			4.2	%			39.0	%

Tax expense was decreased by $2.0M or 34.7% lower as a percentage of income before taxes during the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to the overall loss, mix of earnings in the jurisdictions where we have major operations and no GILTI inclusion in 2025.

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 Organisation 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 year ended December 31, 2025, 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 13. Income Taxes to our consolidated financial statements.

Discussion of Certain Balance Sheet Items as of December 31, 2025 and December 31, 2024

The following table sets forth selected information from our consolidated balance sheets as of December 31, 2025 and December 31, 2024. This information should be read together with our consolidated financial statements and related notes included elsewhere in this report.

		December 31, 2025				December 31, 2024				Variance in Amount
ASSETS
Current Assets
Cash and cash equivalents		$	114,441,279			$	11,671,984			$	102,769,295
Restricted cash			3,856,819				3,732,792				124,027
Accounts receivable, net			23,921,591				5,267,863				18,653,728
Net investment in lease - current, net			4,260,877				2,546,519				1,714,358
Other current assets, net			21,269,431				23,285,682				(2,016,251	)
Total Current Assets			167,749,997				46,504,840				121,245,157
Non-current assets
Deposits for property, plant, and equipment			52,738,419				35,743,011				16,995,408
Property, plant, and equipment, net			336,638,607				89,203,483				247,435,124
Goodwill			20,145,663				19,383,291				762,372
Intangible assets, net			12,820,574				13,028,730				(208,156	)
Right-of-use assets			24,176,446				14,544,118				9,632,328
Net investment in lease - non-current, net			9,686,949				6,782,479				2,904,470
Investment security			1,000,000				1,000,000				-
Deferred tax assets			2,594,430				104,642				2,489,788
Other non-current assets, net			23,801,113				2,838,269				20,962,844
Total Non-Current Assets			483,602,201				182,628,023				300,974,178
Total Assets		$	651,352,198			$	229,132,863			$	422,219,335
LIABILITIES
Current Liabilities
Accounts payable		$	8,100,894			$	2,346,510			$	5,754,384
Current portion of deferred revenue			7,997,054				30,698,458				(22,701,404	)
Current portion of lease liabilities			18,119,325				4,372,544				13,746,781
Income tax payable			217				985,191				(984,974	)
Other payables and accrued liabilities			48,308,052				7,357,839				40,950,213
Total Current Liabilities			82,525,542				45,760,542				36,765,000
Non-current portion of lease liabilities			5,276,703				9,010,577				(3,733,874	)
Non-current portion of deferred revenue			71,554,398				73,494				71,480,904
Deferred tax liabilities			5,698,918				3,776,124				1,922,794
Other long-term liabilities			-				785,371				(785,371	)
Amounts due to related parties			3,832,597				-				3,832,597
Total Non-Current Liabilities			86,362,616				13,645,566				72,717,050
Total Liabilities		$	168,888,158			$	59,406,108			$	109,482,050

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 were $114.4 million and $11.7 million as of December 31, 2025 and December 31, 2024, respectively. The increase in the balance of cash and cash equivalents was a result of net cash of $323.8 million provided by financing activities and net cash of $45.7 million provided by operating activities offset by net cash of $267.3 million used in investing activities.

Restricted cash

Restricted cash represents cash balances that support an outstanding letter of credit to third parties related to security deposits and are restricted from withdrawal. As of December 31, 2025 and December 31, 2024, the fixed maximum amount guaranteed under the letter of credit was $3.9 million and $3.7 million, respectively.

Accounts receivable, net

Accounts receivable, net consists of amounts due from our customers. The total balance of accounts receivable, net was $23.9 million and $5.3 million as of December 31, 2025 and December 31, 2024, respectively. The increase in the balance of accounts receivable is attributable to unpaid invoices from our customers due to the timing of invoicing and cash collections.

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 $4.3 million and $9.7 million, respectively as of December 31, 2025 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 $2.5 million and $6.8 million, respectively as of December 31, 2024. The increase is attributable to three new sales-types leases entered into during 2025.

Other current assets, net

Other current assets, net were $21.3 million and $23.3 million as of December 31, 2025 and December 31, 2024, respectively. The decrease in the balance of other current assets was mainly attributable to a decrease in prepayment to third parties of $6.6 million, partially offset by an increase funds held in escrow of $4.0 million and an increase in deferred contract costs of $1.2 million.

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, 2024, the balance as of December 31, 2025 increased by $17 million, mainly due to deposits made for property, plant and equipment of $138.0 million offset by the reclassification to property, plant and equipment of $121.0 million as equipment was received and placed into service.

Property, plant, and equipment, net

Property, plant, and equipment primarily consist of service equipment used in our Cloud services and Colocation businesses, internally developed software used in our Cloud services business, and construction in progress ("CIP") representing assets received but not yet put into service in our Cloud services and Colocation businesses.

As of December 31, 2025, the Cloud service equipment and internally developed software had a net book value of $114.1 million. As of December 31, 2024, the Cloud equipment and internally developed software had a net book value of $47.7 million. Compared with December 31, 2024, the balance as of December 31, 2025 increased by $66.4 million, mainly due to the reclassification of property and equipment of $91.1 million from deposits for property, plant and equipment and costs capitalized for internally developed software of $4.1 million, offset by increase in accumulated depreciation of $21 million and reclassification of servers and network equipment of $7.9 million to net investment in leases upon commencement of leases of this equipment to customers.

As of December 31, 2025, the Colocation service equipment had a net book value of $65.5 million. As of December 31, 2024, the Colocation service equipment had a net book value of $16.9 million. Compared with December 31, 2024, the balance as of December 31, 2025 increased by $48.6 million, mainly due to development costs incurred for the construction of MTL-3 in Montreal of $47.0 million and infrastructure costs incurred for MTL-1 in Montreal of $3.0 million offset, in part, by increase in accumulated depreciation of $1.4 million.

As of December 31, 2025, CIP assets related to our Cloud business was $9.6 million, compared to $nil as of December 31, 2024. The increase was primarily attributable to GPU servers received in late December 2025 that had not yet been installed and placed into service as of December 31, 2025.

As of December 31, 2025, the CIP assets in our Colocation business had a book value of $157.0 million. As of December 31, 2024, the construction in progress in our Colocation business had a book value of $24.6 million. Compared with December 31, 2024, the balance as of December 31, 2025 increased by $132.4 million mainly due to the real estate acquisition of $45.0 million in North Carolina as well as development costs incurred thereafter of $75.1 million for the construction of NC-1 facility during the fourth quarter attributable to the agreement with Nscale.

Lease right-of-use assets and lease liabilities

As of December 31, 2025, right-of-use assets and lease liabilities were $24.2 million and $23.4 million, respectively. As of December 31, 2024, the Company's right-of-use assets and lease liabilities were $14.5 million and $13.4 million, respectively.

The increase in right-of-use assets of $9.6 million was due to the addition of a finance lease of $12.7 million for MTL-3 and $1.5 million for other operating leases, partially offset by the amortization of the right-of-use assets totaling $4.7 million for the year ended December 31, 2025.

The increase in lease liabilities of $10.0 million, was due to the addition of a finance lease of $13.0 million for MTL-3, and $1.5 million for other operating leases as well as increase in interest accrued on lease liabilities of $2.2 million offset by the lease payments totaling $6.8 million for the year ended December 31, 2025.

Other non-current assets, net

Other non-current assets, net were $23.8 million as of December 31, 2025, compared to $2.8 million as of December 31, 2024, an increase of $21.0 million. The increase was primarily due to $22.0 million of deferred contract costs related to commission fees incurred in connection with the execution of the MSA with Nscale.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in relation of in Enovum acquisition. Refer to Note 12. Goodwill And Intangible Assets to our consolidated financial statements for further information. As of December 31, 2025 and December 31, 2024, the Company recorded goodwill in the amount of $20.1 million and $19.4 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 12. Goodwill and Intangible Assets to our consolidated financial statements for further information. As of December 31, 2025 and December 31, 2024, the total balance of intangible assets was $12.8 million and $13.0 million, respectively.

Accounts payable

Accounts payable primarily consists of amounts due for costs related to HPC services. Compared with December 31, 2024, the balance of accounts payable increased by $5.8 million in the year ended December 31, 2025, largely due to the unpaid bills for our cloud services in the year ended December 31, 2025.

Deferred revenue

As of December 31, 2025, the Company's current and non-current portion of deferred revenue was $8.0 million and $71.6 million, respectively, compared to $30.7 million and $73,494, respectively, as of December 31, 2024. The increase in deferred revenue of $48.8 million reflects the recognition of $26.5 million in revenue related to the successful fulfillment of performance obligations from our HPC services, partially offset by $4.7 million prepayments from customers for HPC services to be rendered in the future, and $70.6 million in a prepayment from Nscale pursuant to the MSA entered into in November 2025.

Other payables and accrued liabilities

Other payables and accrued liabilities were $48.3 million as of December 31, 2025, compared to $7.4 million as of December 31, 2024, an increase of $41.0 million. The increase was primarily due to a $26.6 million increase in payables related to construction in progress associated with development work at the NC-1 facility, reflecting increased construction activity during the period, and a $13.7 million increase in commissions payable to real estate brokers in connection with the Nscale MSA.

Non-GAAP Financial Measures

In addition to consolidated U.S. GAAP financial measures, we consistently evaluate our use of and calculation of the non-GAAP financial measures, such as EBITDA and Adjusted EBITDA. These non-GAAP financial measures have not been calculated in accordance with GAAP and should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results. In addition, EBITDA and Adjusted EBITDA should not be construed as indicators of our operating performance, liquidity or cash flows generated by operating, investing and financing activities, as there may be significant factors or trends that they fail to address. We caution investors that non-GAAP financial information, by its nature, departs from traditional accounting conventions. Therefore, its use can make it difficult to compare our current results with our results from other reporting periods and with the results of other companies.

EBITDA is computed as net income before interest, taxes, depreciation, and amortization. Adjusted EBITDA is a financial measure defined as our EBITDA adjusted to eliminate the effects of certain non-cash and/or non-recurring items that do not reflect our ongoing strategic business operations, which management believes results in a performance measurement that represents a key indicator of the Company's core business operations. The adjustments currently include non-cash expenses such as share-based compensation expenses.

We believe Adjusted EBITDA can be an important financial measure because it allows management, investors, and our board of directors to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period-to-period by making such adjustments.

Adjusted EBITDA is provided in addition to and should not be considered to be a substitute for, or superior to net income, the comparable measures under U.S. GAAP. Further, Adjusted EBITDA should not be considered as an alternative to revenue growth, net income, diluted earnings per share or any other performance measure derived in accordance with U.S. GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. Adjusted EBITDA has limitations as an analytical tool, and you should not consider such measures either in isolation or as substitutes for analyzing our results as reported under U.S. GAAP.

Reconciliations of Adjusted EBITDA to the most comparable U.S. GAAP financial metric for the years ended December 31, 2025 and 2024 are presented in the table below:

		For the Years Ended December 31,
		2025				2024
Reconciliation of non-GAAP income (loss) from operations:
Net (loss) income		$	(24,682,538	)		$	1,369,842
Depreciation and amortization expenses			23,440,884				16,511,406
Interest expense			3,516				-
Income tax (benefits) expenses			(1,085,832	)			874,177
EBITDA			(2,323,970	)			18,755,425
Adjustments:
Net loss from disposal of property, plant and equipment			372,993				-
Share-based compensation expenses			19,246,208				3,170,697
Adjusted EBITDA		$	17,295,231			$	21,926,122

Liquidity and capital resources

As of December 31, 2025, our principal sources of liquidity were cash and cash equivalents of $114.4 million, and accounts receivable, net of $24.0 million.

As of December 31, 2025, we had working capital of $85.2 million as compared with working capital of $0.7 million as of December 31, 2024. Working capital is the difference between the Company's current assets and current liabilities.

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, we believe that we will be able to meet our short-term liquidity needs.

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 $102.5 million after deducting the Zero Strike Call Premium, initial purchasers' discounts and estimated offering expenses. The issuance enhances our liquidity and provides additional capital to fund upcoming development projects, including construction activities and other strategic growth initiatives.

The Notes bear interest at 4.50% per annum, payable semiannually beginning August 1, 2026, and mature on February 1, 2031, unless earlier converted, redeemed, or repurchased. The Notes increase our long-term indebtedness and will require annual cash interest payments of approximately $10.4 million.

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 million of available borrowings. The facility bears interest at a floating rate per annum equal to the sum of (i) three month CME Term SOFR (or any successor benchmark), and (ii) an applicable margin of 4.25% per annum and has an initial two-year term, extendable up to four years. The loan is guaranteed by WhiteFiber, Inc. and WhiteFiber AI, Inc.

The Facility allows for up to two drawdowns (minimum $5 million each), with quarterly principal repayments beginning three months after initial borrowing. As of the issuance date of the financial statements, no amounts have been drawn under the facility. 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.

We believe that our cash on hand and anticipated cash from operations, together with the net proceeds from our IPO as well as the Notes, will be sufficient to finance our operations for at least the next twelve months from the date of this report. However, there can be no assurance that we will not require additional financing or that future financing can obtain these funds on acceptable terms or at all or that we can maintain or increase our current revenues.

Our future capital requirements will depend on many factors, including 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 Years Ended December 31,
		2025				2024
Net Cash Provided in Operating Activities		$	45,655,356			$	18,749,568
Net Cash (Used in) Investing Activity			(267,250,549	)			(80,026,998	)
Net Cash Provided by Financing Activity			323,765,353				76,437,919
Net increase in cash, cash equivalents and restricted cash			102,170,160				15,160,489
Effect of exchange rate changes on cash, cash equivalents and restricted cash			723,162				(408,279	)
Cash, cash equivalents and restricted cash, beginning of year			15,404,776				652,566
Cash, cash equivalents and restricted cash, end of year		$	118,298,098			$	15,404,776

Operating Activities

Net cash used in operating activities was $45.7 million for the year ended December 31, 2025, derived mainly from (i) a net loss of $24.7 million for the year ended December 31, 2025 adjusted for depreciation and amortization expenses of property, plant and equipment of $23.4 million as well as share-based compensation of $16.9 million and (ii) net changes in our operating assets and liabilities, principally comprising of an increase in right-of-use assets of $4.6 million, an increase in accounts receivable of $18.8 million, an increase in net investment in lease of $3.3 million, an increase in other assets of $18.9 million, an increase in accounts payable of $5.6 million, an increase in other payables and accrued liabilities of $14.5 million, net increase in deferred revenue of $48.7 million, an increase in lease liability of $4.1 million, and an increase in amounts due to related parties of $3.2 million.

Net cash provided from our operating activities was $18.7 million for the year ended December 31, 2024, derived mainly from (i) a net income of $1.4 million for the year ended December 31, 2024 adjusted for depreciation expenses of property, plant and equipment of $16.5 million and (ii) net changes in our operating assets and liabilities, principally comprising of an increase in right-of-use assets of $2.7 million, an increase in accounts receivable of $4.7 million, a decrease in net investment in lease of $4.8 million, an increase in other assets of $5.3 million, a decrease in other payables and accrued liabilities of $1.7 million, a decrease in other long-term liabilities of $1.1 million, an increase in deferred revenue of $17.2 million and an increase in lease liability of $2.7 million.

Investing Activities

Net cash used in investing activities was $267.3 million for the year ended December 31, 2025, attributable to purchases of and deposits made for property, plant, and equipment of $268.4 million, partially offset by proceeds from disposal of property, plant and equipment of $1.2 million.

Net cash used in investing activities was $80.0 million for the year ended December 31, 2024, primarily attributable to purchases of and deposits made for property and equipment of $79.0 million and investment in a SAFE of $1.0 million.

Financing Activities

Net cash provided by financing activities was $323.8 million for the year ended December 31, 2025, attributable to net transfers from parent of $157.4 million, $144.3 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.

Net cash provided by financing activities was $76.4 million for the year ended December 31, 2024, attributable to net transfers from parent.

Royal Bank of Canada Credit Facility

On June 18, 2025, the Company entered into the Credit Facility with RBC, to finance its data centers business. The Credit Facility provides up to CAD $60 million (approximately USD $43.8) in aggregate financing. Proceeds will be used to support the continued buildout of the Company's HPC data center portfolio. As of the reporting date, the facility had not yet been authorized for use, as the Company and RBC are negotiating amendments to the existing agreement, including a potential additional non-revolving term loan of up to CAD $55 million (approximately USD $39.5 million). Of this amount, CAD $24.5 million (approximately USD $17.9 million) will be used to purchase the MTL-3 facility.

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 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 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 consolidated financial statements. For a summary of significant accounting policies, refer to Note 2. Summary of Significant Accounting Policies in our Notes to 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 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.