Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

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

The following information should be read in conjunction with the combined financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q for the period ended June 30, 2025 as well as Management's Discussion and Analysis of Financial Condition and Results of Operations included in our prospectus dated August 6, 2025. Except for the statements of historical fact, this report 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 report. 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 and elsewhere in the prospectus dated August 6, 2025, 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 of 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 indicate 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.

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.

On July 30, 2025, we entered into a Contribution Agreement with Bit Digital, pursuant to which Bit Digital agreed to contribute 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 WhiteFiber, upon the effectiveness of WhiteFiber's registration statement on Form S-1 (the "Registration Statement") in connection with WhiteFiber's initial public offering (the "IPO"). For more information, see Note 21. Subsequent Events in our Notes to Unaudited Condensed Combined Financial Statements included elsewhere herein.

We acquired Enovum Data Centers Corp ("Enovum") on October 11, 2024. The transaction included the lease to MTL-1, a fully operational and fully leased to customers 4 MW (gross) Tier-3 datacenter headquartered in Montreal, Canada.

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 expect to invest approximately $23.6 million to develop the site to Tier-3 standards with an initial load of 5 MW (gross). MTL-2 is expected to be completed and operational in the first half of 2026 as we prioritized other builds and preserved capital for more time-sensitive projects.

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 to as 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 is 20 years, with two 5-year extensions at the Company's option. Subject to our receipt of all required permits, the facility is being retrofitted to Tier-3 standards, with development costs expected to total approximately $41 million, and is expected to be completed and operational in the fourth quarter of 2025, with a one-month delay before we expect to begin to generate revenue.

On May 20, 2025 (the "Closing Date"), we completed the purchase of a former industrial/manufacturing building from Unifi Manufacturing, Inc. ("UMI"). Pursuant to the Purchase Agreement we agreed to purchase from UMI, an industrial/manufacturing building together with the underlying land ("NC-1") located in Madison, North Carolina, 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 the Closing Date, 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 the Closing Date. Additionally, the purchase price will increase by an additional $200,000 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 the Closing Date. 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 the Property 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 the Property 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 June 18, 2025, we entered into a definitive credit agreement (the "Facility") with the Royal Bank of Canada ("RBC"). The Facility provides for an aggregate of up to approximately CAD 60 million (approximately $43.8 million) of financing. The proceeds are to be used primarily to refinance the buildout of Tier-3 AI data center at 7300 Trans Canada Highway, Pointe-Claire, Quebec ("MTL-2") as well as $5.8 million of revolving term financing (the "Revolver"). The Facility is non-recourse to the Company. We entered into a three-year USD $18.5 million non-revolving lease facility to finance equipment costs and building improvements to build out the site. The lease facility provides for straight-line amortization of six years and capital moratorium of six months after disbursement is complete. RBC may cancel any unutilized portion of the facility after March 31, 2026. The interest rate is fixed based on the rental rate determined by RBC for the three-year term of the lease.

As part of the Facility, we entered into a three-year $19.6 million non-revolving real estate term loan facility. The purpose of this facility is to refinance the Company's purchase of MTL-2. The interest rate of the real estate term loan facility will be determined at the time of borrowing, or a floating interest rate ranging from RBP plus 0.75% to CORRA ("Canadian Overnight Repo Rate Average") plus 250 bps. Payment of principal and interest is due 30 days after drawdown and is repayable in full on the last day of the three-year term.

The Revolver is being provided by RBC by way of Letters of Credit and Letters of Guaranty with fees to be determined on a transaction by transaction basis. This facility will be available for the 36 month term subject to the issuance of the EDC (Export and Development Canada) Performance Security Guaranty in the amount of $5.8 million and other related supporting documents. We agreed to certain financial covenants included maintaining on a combined basis between MTL-1 and MTL-2: fixed charge coverage of not less than 1.20:1 and a ratio of Net Funded Debt to EBITDA of not greater than 4.25:1 and decreasing to 3.50:1 from December 31, 2027.

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 provide a high-standard service lease with an Uptime percentage> 99.5%.

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 data centers across key regions in Europe, North America and Asia. 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 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.

The following summaries reflect selected GPU cloud service agreements that we 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 a new 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 represents approximately $15 million of annualized revenue and features a two-month prepayment from the customer. The customer elected to defer the commencement date until August 20, 2025, which is the latest allowable date under the agreement. Deployment commenced on August 20, 2025, using the Company's inventory of B200 GPUs.

In August 2024, we executed a binding term sheet with Boosteroid Inc. ("Boosteroid"), a global cloud gaming provider pursuant to which, we finalized initial orders of 489 GPUs, projected to generate approximately $7.9 million in contracted value in the aggregate through November 2029. The GPUs were delivered to respective data centers across the U.S. and Europe and began earning fees in November 2024. On October 9, 2024, we executed a Master Services and Lease Agreement (the "MSA") with Boosteroid, pursuant to which Boosteroid may, from time to time, lease certain equipment, including GPUs, from the Company upon delivery of a purchase order. The MSA provides the general terms and conditions for such equipment leases. Pursuant to the MSA, we are granted a right of first refusal with respect to the next 5,000 servers that Boosteroid leases during the term of the MSA. The MSA provides Boosteroid with the option to expand in increments of 100 servers, up to 50,000 servers, representing a potential contract value of approximately $700 million over the five-year term assuming Boosteroid utilizes the GPUs and services at full capacity for the duration of the contract. Expansion depends upon the internal development roadmap of Boosteroid, Boosteroid has full discretion to decide when and the quantity to pursue separate source orders (for GPU servers) under the MSA. In the third quarter of 2025, the Company finalized additional purchase orders for 302, 120, and 279 GPUs, totaling approximately $10.4 million in contracted value over a five-year term.

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, representing total contracted value of approximately $160,000 for the term. 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 80 H200 GPUs.

On November 14, 2024, we entered into a Terms of Supply and Service Level Agreement (together, the "Agreement") and an Order Form with a new customer. The order form provides for services utilizing a total of 64 H200 GPUs on a month-to-month basis, which either party may terminate upon at least 14 days' written notice prior to any renewal date. It represents annual revenue of approximately $1.2 million. The deployment commenced and revenue generation began on November 15, 2024, using the Company's existing inventory of H200 GPUs. The service under the purchase order concluded in December 2024.

On December 30, 2024, we entered into a Master Services Agreement ("MSA") with a minimum purchase commitment of 32 GPUs, along with an associated purchase order, from a new customer, an AI Compute Fund managed by DNA Holdings Venture Inc. ("DNA Fund"). The purchase order provides for services utilizing a total of 576 H200 GPUs over a 25-month period and terminable by either party upon at least 90 days' written notice prior to any renewal date. It represents an aggregate revenue opportunity of approximately $20.2 million. Concurrently, we placed a purchase order for 130 H200 servers for approximately $30 million. The deployment commenced in February 2025.

In April 2025, the Company signed two additional cloud services agreements with DNA Fund. The first agreement includes 104 NVIDIA H200 GPUs under a 23-month term and was deployed in May 2025. The second agreement includes 512 H200 GPUs under a 24-month term and was deployed in July 2025. With these additions, DNA Fund's total contracted deployment increased to 1,192 GPUs. Combined, the agreements represent approximately $20.8 million of annualized revenue.

On January 6, 2025, we entered into a Master Services Agreement ("MSA") with a minimum purchase commitment of 32 GPUs, along with an associated purchase order, from a new customer. The purchase order provided for services utilizing a total of 32 H200 GPUs over a minimum of six-month period, representing total revenue of approximately $300,000 for the term. The deployment commenced and revenue generation began on January 8, 2025, using the Company's existing inventory of H200 GPUs. The service under the purchase order concluded in April 2025 following a change in the customer's ownership, and the customer paid the remaining contract value as an early termination penalty.

In January 2025, we entered into a Master Services Agreement ("MSA"), along with two associated purchase orders, from a new customer. The purchase orders provide for services utilizing a total of 24 H200 GPUs over a minimum 12-month period, representing total revenue of approximately $450,000 for the term. The deployment commenced and revenue generation began on January 27, 2025, using the Company's existing inventory of H200 GPUs. The service under the purchase order concluded in March 2025 after the customer ceased operations.

On January 30, 2025, we entered into a Master Services Agreement ("MSA") with a minimum purchase commitment of 40 GPUs, along with an associated purchase order, from a new customer. The purchase orders provide for services utilizing a total of 40 H200 GPUs over a minimum of 12 month period, representing total revenue of approximately $750,000 for the term. The deployment commenced and revenue generation began on January 24, 2025, using the Company's existing inventory of H200 GPUs. Between April and July 2025, the Company signed four additional agreements on a month-to-month basis for a total of 184 H200 GPUs, which were terminated in August 2025.

In March 2025, we entered a strategic partnership with Shadeform, Inc., the premier multi-cloud GPU marketplaces, to bring on-demand NVIDIA B200 GPUs to customers beginning in May 2025.

In April 2025, we received our first shipment of NVIDIA GB200 Grace Blackwell Superchip powered NVIDIA GB200 NVL72 system chips, from Quanta Cloud Technology, a leading provider of data center solutions. We believe that support with proof of concept (POC) access from Quanta will enable us to meet and exceed expectations around delivery and timeline, performance and reliability.

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 and in our final prospectus to the Registration Statement filed with the Securities and Exchange Commission ("SEC") on August 8, 2025, 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 intend to complete our MTL-2 facility in the first half of 2026 as we prioritized other builds and preserved capital for more time-sensitive projects, our MTL-3 facility in the fourth quarter of 2025, and the first 24 MW (gross) of NC-1 in the first quarter of 2026. While NC-1 is expected to be completed in the first quarter of 2026, management expects it will start generating revenue in May 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.

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 June 30, 2025 and 2024

The following discussion summarizes combined results of operations for the three months ended June 30, 2025 and 2024. This information should be read together with our combined financial statements and related notes included elsewhere in this report.

		For The Three Months Ended June 30,								Variance in
		2025				2024				Amount
Revenue		$	18,662,249			$	12,589,701			$	6,072,547
Operating costs and expenses
Cost of revenue (exclusive of depreciation shown below)			(7,201,168	)			(4,595,301	)			(2,605,867	)
Depreciation and amortization expenses			(5,140,713	)			(4,322,291	)			(818,422	)
General and administrative expenses			(15,476,832	)			(1,261,489	)			(14,215,343	)
Total operating expenses			(27,818,713	)			(10,179,081	)			(17,639,632	)
(Loss) income from operations			(9,156,464	)			2,410,620				(11,567,085	)
Other income, net			769,003				86,679				682,325
(Loss) income before provision for income taxes			(8,387,461	)			2,497,299				(10,884,760	)
Income tax expenses			(445,931	)			(552,234	)			106,303
Net (loss) income		$	(8,833,392	)		$	1,945,065			$	(10,778,457	)

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 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 $4.1 million, or 32.8%, to $16.6 million for the three months ended June 30, 2025 from $12.5 million for the three months ended June 30, 2024. The increase was primarily due to an increase in deployed GPU servers in the first quarter of 2025, and the $1.3 million service credit issued to the customer as compensation for decreased utilization during the initial deployment period, which included testing and optimization phases, in the first quarter of 2024.

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 $1.7 million and $0 for the three months ended June 30, 2025 and 2024, respectively.

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, 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 three months ended June 30, 2025 and 2024, the cost of revenue from cloud services was comprised of the following:

		For The Three Months Ended June 30,
		2025				2024
Electricity costs		$	598,748			$	143,043
Datacenter lease expenses			1,365,599				605,220
GPU servers lease expenses			3,749,471				3,830,061
Other costs			799,470				16,977
Total		$	6,513,288			$	4,595,301

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 June 30, 2025, electricity costs increased by $0.5 million, or 319%, compared to the electricity costs incurred for the three months ended June 30, 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 three months ended June 30, 2025, data center lease expenses increased by $0.8 million, or 126%, compared to the data center lease expenses incurred for the three months ended June 30, 2024. The increase primarily resulted from two additional datacenter leases entered after the second quarter of 2024.

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 June 30, 2025, GPU servers lease expenses were relatively consistent with the same period in 2024, with a slight decrease of $0.1 million, or 2%.

Cost of revenue - Colocation Services

In the fourth quarter of 2024, we acquired Enovum which provides colocation services. For the three months ended June 30, 2025 and 2024, the cost of revenue from colocation services was comprised of the following:

		For The Three Months Ended June 30,
		2025				2024
Electricity costs		$	270,003			$	-
Lease expenses			156,740				-
Wage expenses			169,543				-
Other costs			91,594				-
Total		$	687,880			$	-

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

For the three months ended June 30, 2025, electricity costs totaled $0.3 million. We had no electricity costs for the three months ended June 30, 2024 as we acquired Enovum in the fourth quarter of 2024, which provides colocation services.

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

For the three months ended June 30, 2025 , data center lease expenses totaled $0.2 million. We had no data center lease expenses for the three months ended June 30, 2024 as we acquired Enovum in the fourth quarter of 2024, which provides colocation services.

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 June 30, 2025, wage expenses totaled $0.2 million. We had no wage expenses for the three months ended June 30, 2024 as we acquired Enovum in the fourth quarter of 2024, which provides colocation services.

Depreciation and amortization expenses

For the three months ended June 30, 2025 and 2024, depreciation and amortization expenses were $5.1 million and $4.3 million, respectively, based on an estimated useful life of property, plant, and equipment and intangible assets.

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 combined financial statements.

General and administrative expenses

For the three months ended June 30, 2025, our general and administrative expenses, totaling $15.5 million, were primarily comprised of share based compensation expenses of $6.5 million, salary and bonus expenses of $1.3 million, professional and consulting expenses of $5.7 million, marketing expenses of $0.5 million, and travel expenses of $0.2 million.

For the three months ended June 30, 2024, our general and administrative expenses, totaling $1.3 million, were primarily comprised of share based compensation expenses of $0.2 million, salary and bonus expenses of $0.3 million, professional and consulting expenses of $0.3 million, and marketing expenses of $0.2 million.

Income tax expenses

Provision for income taxes consists of federal, state and foreign income taxes. Our income tax provision for the three months ended June 30, 2025, 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 the United States and Canada. We continue to maintain a valuation allowance against the deferred tax assets in United States and Canada 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 income tax provision was $0.4 million and $0.6 million for the three months ended June 30, 2025, and 2024, respectively. The income tax provision was lower during the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to the operating loss incurred by Enovum in Canada.

Results of operations for the six months ended June 30, 2025 and 2024

The following discussion summarizes combined results of operations for the six months ended June 30, 2025 and 2024. This information should be read together with our combined financial statements and related notes included elsewhere in this report.

		For The Six Months Ended June 30,								Variance in
		2025				2024				Amount
Revenue		$	35,423,511			$	20,759,033			$	14,664,478
Operating costs and expenses
Cost of revenue (exclusive of depreciation shown below)			(13,818,011	)			(7,752,628	)			(6,065,383	)
Depreciation and amortization expenses			(8,970,357	)			(7,203,818	)			(1,766,539	)
General and administrative expenses			(19,754,485	)			(2,458,408	)			(17,296,077	)
Total operating expenses			(42,542,853	)			(17,414,854	)			(25,127,999	)
(Loss) income from operations			(7,119,342	)			3,344,179				(10,463,521	)
Other income, net			754,320				169,971				584,349
(Loss) income before provision for income taxes			(6,365,022	)			3,514,150				(9,879,172	)
Income tax expenses			(1,040,534	)			(742,575	)			(297,959	)
Net (loss) income		$	(7,405,556	)		$	2,771,575			$	(10,177,131	)

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 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 $10.9 million, or 52.9%, to $31.4 million for the six months ended June 30, 2025 from $20.6 million for the six months ended June 30, 2024. The increase was primarily due to an increase in deployed GPU servers in the first quarter of 2025, and the $1.3 million service credit issued to the customer as compensation for decreased utilization during the initial deployment period, which included testing and optimization phases, in the first quarter of 2024.

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 $3.4 million and $0 for the six months ended June 30, 2025 and 2024, respectively.

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, 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 six months ended June 30, 2025 and 2024, the cost of revenue from cloud services was comprised of the following:

		For The Six Months Ended June 30,
		2025				2024
Electricity costs		$	1,188,851			$	226,421
Datacenter lease expenses			2,639,653				1,306,110
GPU servers lease expenses			7,496,856				5,912,240
Other costs			1,292,769				307,857
Total		$	12,618,129			$	7,752,628

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 six months ended June 30, 2025, electricity costs increased by $1.0 million, or 425%, compared to the electricity costs incurred for the six months ended June 30, 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 six months ended June 30, 2025, data center lease expenses increased by $1.3 million, or 102%, compared to the data center lease expenses incurred for the six months ended June 30, 2024. The increase primarily resulted from two additional datacenter leases entered after the second quarter of 2024.

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 six months ended June 30, 2025, GPU servers lease expenses increased by $1.6 million, or 27%, compared to the GPU servers lease expenses incurred for the six months ended June 30, 2024. The increase primarily resulted from a higher average number of GPU servers leased.

Cost of revenue - Colocation Services

In the fourth quarter of 2024, we acquired Enovum which provides colocation services. For the six months ended June 30, 2025 and 2024, the cost of revenue from colocation services was comprised of the following:

		For The Six Months Ended June 30,
		2025				2024
Electricity costs		$	493,060			$	-
Lease expenses			307,277				-
Wage expenses			169,543				-
Other costs			230,002				-
Total		$	1,199,882			$	-

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

For the six months ended June 30, 2025, electricity costs totaled $0.5 million. We had no electricity costs for the six months ended June 30, 2024 as we acquired Enovum in the fourth quarter of 2024, which provides colocation services.

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

For the six months ended June 30, 2025, data center lease expenses totaled $0.3 million. We had no data center lease expenses for the six months ended June 30, 2024 as we acquired Enovum in the fourth quarter of 2024, which provides colocation services.

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

For the six months ended June 30, 2025, wage expenses totaled $0.2 million. We had no wage expenses for the six months ended June 30, 2024 as we acquired Enovum in the fourth quarter of 2024, which provides colocation services.

Depreciation and amortization expenses

For the six months ended June 30, 2025 and 2024, depreciation and amortization expenses were $9.0 million and $7.2 million, respectively, based on an estimated useful life of property, plant, and equipment and intangible assets.

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 combined financial statements

General and administrative expenses

For the six months ended June 30, 2025, our general and administrative expenses, totaling $19.8 million, were primarily comprised of share based compensation expenses of $6.7 million, salary and bonus expenses of $2.5 million, professional and consulting expenses of $7.4 million, marketing expenses of $0.8 million, and travel expenses of $0.3 million.

For the six months ended June 30, 2024, our general and administrative expenses, totaling $2.5 million, were primarily comprised of share based compensation expenses of $0.3 million, salary and bonus expenses of $0.6 million, professional and consulting expenses of $0.6 million, and marketing expenses of $0.3 million.

Income tax expenses

Provision for income taxes consists of federal, state and foreign income taxes. Our income tax provision for the six months ended June 30, 2025, 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 the United States and Canada. We continue to maintain a valuation allowance against the deferred tax assets in United States and Canada 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 income tax provision was $1.0 million and $0.7 million for the six months ended June 30, 2025, and 2024, respectively. The income tax provision was higher during the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to the $0.5 million tax expense increase resulting from larger operating profit from White Fiber Iceland, partially offset by $0.2 million of tax benefits resulting from Evonum's operating loss in Canada.

Discussion of Certain Balance Sheet Items as of June 30, 2025 and December 31, 2024

The following table sets forth selected information from our combined balance sheets as of June 30, 2025 and December 31, 2024. This information should be read together with our combined financial statements and related notes included elsewhere in this report.

		June 30, 2025				December 31, 2024				Variance in Amount
ASSETS
Current Assets
Cash and cash equivalents		$	16,397,894			$	11,671,984			$	4,725,910
Restricted cash			3,732,792				3,732,792				-
Accounts receivable			6,491,562				5,267,863				1,223,699
Net investment in lease - current			3,517,921				2,546,519				971,402
Other current assets			20,151,049				23,285,682				(3,134,633	)
Total Current Assets			50,291,218				46,504,840				3,786,378
Non-current assets
Deposits for property, plant and equipment			14,364,613				35,743,011				(21,378,398	)
Property, plant, and equipment, net			229,956,425				89,203,483				140,752,942
Operating lease right-of-use assets			44,160,980				14,544,118				29,616,862
Net investment in lease - non-current			9,367,633				6,782,479				2,585,154
Other non-current assets			3,665,765				2,838,269				827,496
Investment securities			1,000,000				1,000,000				-
Deferred tax asset			108,358				104,642				3,716
Intangible assets			13,210,056				13,028,730				181,326
Goodwill			20,190,268				19,383,291				806,977
Total Non-Current Assets			336,024,098				182,628,023				153,396,075
Total Assets		$	386,315,316			$	229,132,863			$	157,182,453
LIABILITIES
Current Liabilities
Accounts payable		$	1,258,988			$	2,346,510			$	(1,087,522	)
Income tax payable			759,481				985,191				(225,710	)
Current portion of deferred revenue			11,640,667				30,698,458				(19,057,791	)
Current portion of operating lease liability			5,160,985				4,372,544				788,441
Other payables and accrued liabilities			16,177,823				7,357,839				8,819,984
Total Current Liabilities			34,997,944				45,760,542				(10,762,598	)
Non-current portion of operating lease liability			37,946,832				9,010,577				28,936,255
Non-current portion of deferred revenue			28,046				73,494				(45,448	)
Deferred tax liability			4,981,833				3,776,124				1,205,709
Other long-term liabilities			392,686				785,371				(392,685	)
Total non-current liabilities			43,349,397				13,645,566				29,703,831
Total Liabilities		$	78,347,341			$	59,406,108			$	18,941,233

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 $16.4 million and $11.7 million as of June 30, 2025 and December 31, 2024, respectively. The increase in the balance of cash and cash equivalents was a result of net cash of $6.8 million used in operating activities, net cash of $131.0 million used in investing activities, and net cash of $142.7 million provided by financing 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 June 30, 2025 and December 31, 2024, the fixed maximum amount guaranteed under the letter of credit was $3.7 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 was $6.5 million and $5.3 million as of June 30, 2025 and December 31, 2024, respectively. The increase in the balance of accounts receivable is attributable to unpaid invoices from our customers.

Net investment in lease

Net investment in lease 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 $3.5 million and $9.4 million, respectively as of June 30, 2025. 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.

Other current assets

Other current assets were $20.2 million and $23.3 million as of June 30, 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 $7.2 million and a decrease in receivable from third parties of $0.2 million, partially offset by an increase in prepaid consulting services of $1.8 million and an increase in contract assets of $0.8 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 June 30, 2025 decreased by $21.4 million, mainly due to the receipt of property and equipment of $86.3 million offset by prepayment of $64.9 million for property and equipment.

Property, plant, and equipment, net

Property, plant, and equipment primarily consisted of equipment used in our HPC businesses as well as construction in progress representing assets received but not yet put into service.

As of June 30, 2025, the HPC equipment had a net book value of $230.0 million. As of December 31, 2024, the HPC equipment had a net book value of $89.2 million.

Operating lease right-of-use assets and operating lease liability

As of June 30, 2025, operating right-of-use assets and operating lease liabilities were $44.2 million and $43.1 million, respectively. As of December 31, 2024, the Company's operating lease right-of-use assets and operating lease liability were $14.5 million and $13.4 million, respectively.

The increase in operating lease right-of-use assets and total operating lease liability of $29.7 million and $29.7 million respectively, were due to the additional leases for $30.5 million, partially offset by the amortization of the operating lease right-of-use assets totaling $2.3 million for the six months ended June 30, 2025.

Investment security

As of June 30, 2025 and December 31, 2024, our portfolio consists of an investment in a privately held company via a simple agreement for future equity ("SAFE"). The total balance of our investment security was $1.0 million and $1.0 million as of June 30, 2025 and December 31, 2024, respectively.

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 11. Goodwill And Intangible Assets of our combined financial statements for further information. As of June 30, 2025 and December 31, 2024, the Company recorded goodwill in the amount of $20.2 million and $19.4 million, respectively.

Intangible Assets

Intangible assets pertain to customer relationships acquired in connection with the acquisition of Enovum. Refer to Note 11. Goodwill and Intangible Assets for further information. As of June 30, 2025 and December 31, 2024, the total balance of intangible assets was $13.2 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 decreased by $1.1 million in the six months ended June 30, 2025, largely due to a higher volume of payments made.

Deferred revenue

Deferred revenue pertains to prepayments received from customers for HPC business.

As of June 30, 2025, the Company's current and non-current portion of deferred revenue was $11.6 million and $28 thousand, respectively, compared to $30.7 million and $0.1 million, respectively, as of December 31, 2024. The decrease in deferred revenue of $19.1 million reflects the recognition of $22.5 million in revenue related to the successful fulfillment of performance obligations from our HPC services, partially offset by $3.4 million prepayments from customers for HPC services to be rendered in the future.

Non-GAAP Financial Measures

In addition to combined 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 three months ended and six months ended June 30, 2025 and 2024 are presented in the table below:

		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2025				2024				2025				2024
Reconciliation of non-GAAP income (loss) from operations:
Net (loss) income		$	(8,833,392	)		$	1,945,065			$	(7,405,556	)		$	2,771,575
Depreciation and amortization expenses			5,140,713				4,322,291				8,970,357				7,203,818
Income tax expenses			445,931				552,234				1,040,534				742,575
EBITDA			(3,246,748	)			6,819,590				2,605,335				10,717,968
Adjustments:
Share-based compensation expenses			6,529,582				170,857				6,667,595				262,015
Adjusted EBITDA		$	3,282,834			$	6,990,447			$	9,272,930			$	10,979,983

Liquidity and capital resources

As of June 30, 2025, our principal sources of liquidity were cash and cash equivalents of $16.4 million, restricted cash of $3.7 million, and accounts receivable of $6.5 million.

As of June 30, 2025, we had working capital of $15.3 million as compared to 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.

Historically, as part of Bit Digital, the Company relied on Bit Digital to meet its working capital and financing requirements prior to generating revenue. To date, we have 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 will change from our historical capital structure because we will no longer participate 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.

We believe that our cash on hand and anticipated cash from operations, together with the net proceeds from our IPO, 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 six months ended June 30,
		2025				2024
Net Cash (Used) Provided in Operating Activities		$	(6,832,638	)			335,794
Net Cash Used in Investing Activity			(130,960,748	)			(4,395,151	)
Net Cash Provided by Financing Activity			142,723,173				11,185,364
Net (decrease) increase in cash, cash equivalents and restricted cash			4,929,787				7,126,007
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(203,877	)			-
Cash, cash equivalents and restricted cash, beginning of year			15,404,776				652,566
Cash, cash equivalents and restricted cash, end of year		$	20,130,686				7,778,573

Operating Activities

Net cash used in operating activities was $6.8 million for the six months ended June 30, 2025, derived mainly from (i) a net loss of $7.4 million for the six months ended June 30, 2025 adjusted for depreciation expenses of property and equipment of $9.0 million and (ii) net changes in our operating assets and liabilities, principally comprising of a decrease in deferred revenue of $19.0 million, a decrease in other current assets of $3.3 million, an increase in accounts receivable of $1.2 million, a decrease in accounts payable of $1.1 million, a decrease in other long-term liabilities of $0.4 million, an increase in other payables and accrued liabilities of $8.5 million, a decrease in net investment in lease of $1.3 million, a decrease in lease liability of $2.2 million, and an increase in deferred tax liability of $1.0 million.

Net cash provided by operating activities was $0.3 million for the six months ended June 30, 2024, derived mainly from (i) a net income of $2.8 million for the six months ended June 30, 2024 adjusted for depreciation expenses of property and equipment of $7.2 million and (ii) net changes in our operating assets and liabilities, principally comprising of a decrease in deferred revenue of $13.1 million, a decrease in other current assets of $8.9 million, a decrease in other non-current assets of $0.2 million, an increase in accounts payable of $1.7 million, a decrease in other payables and accrued liabilities of $4.4 million, a decrease in net investment in lease of $0.5 million, and an increase in deferred tax liability of $0.4 million.

Investing Activity

Net cash used in investing activity was $131.0 million for the six months ended June 30, 2025, attributable to purchases of and deposits made for property, plant, and equipment of $131.0 million.

Net cash used in investing activity was $4.4 million for the six months ended June 30, 2024, primarily attributable to purchases of and deposits made for property, plant, and equipment of $3.4 million and investment in SAFE of $1.0 million.

Financing Activity

Net cash provided by financing activity was $142.7 million for the six months ended June 30, 2025, attributable to net transfers from parent of $142.7 million.

Net cash provided by financing activity was $11.2 million for the six months ended June 30, 2024, attributable to net transfers from parent of $11.2 million.

Royal Bank of Canada Credit Facility

On June 18, 2025, the Company entered into a definitive credit agreement with the Royal Bank of Canada ("RBC"), the largest bank in Canada, to finance its data centers business. The 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. Refer to the Overview section above for further details.

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 combined 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 combined 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 combined financial statements. For a summary of significant accounting policies, refer to Note 2. Summary of Significant Accounting Policies in our Notes to Unaudited Condensed Combined 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 this offering; (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.