Sphere 3D Corp.

EX-99.1 · exhibit99-1.htm

EX-99.1
 9
 exhibit99-1.htm
 EXHIBIT 99.1

      

 Sphere 3D and Cathedra Bitcoin Announce Closing of Business Combination

 Combination creates a scaled data infrastructure platform with 53megawatts of operating capacity and a 100mw+ expansion pipeline ; Combined company retains Sphere 3D's name and US listing (NASDAQ: ANY)

 TORONTO, ONTARIO, AND STAMFORD, CONNECTICUT, June 1, 2026 - (NEWSFILE) - Sphere 3D Corp. (NASDAQ: ANY) (" Sphere ") and Cathedra Bitcoin Inc. (TSX-V: CBIT; OTCQB: CBTTF) (" Cathedra " and together with Sphere, the " Parties ") today announced that they have completed the previously announced plan of arrangement (the " Transaction ") pursuant to which Sphere acquired all of the issued and outstanding shares of Cathedra under the arrangement agreement entered into on March 5, 2026 (the " Agreement "), and Cathedra is now a wholly-owned subsidiary of Sphere (Sphere, together with Cathedra and their subsidiaries following completion of the Transaction, the " Combined Company "). The Transaction was completed by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia). The Transaction was approved at a special meeting of the securityholders of Cathedra and at a meeting of the shareholders of Sphere, and by the Supreme Court of British Columbia.

 "Closing this combination marks a significant milestone for both companies and our shareholders," said Joel Block, Chief Executive Officer of the Combined Company. "We have integrated Cathedra's energy-centric infrastructure platform with Sphere's public-market presence and robust balance sheet to build a larger, more diversified enterprise with a clear growth trajectory. Together, we offer 53 MW of operational capacity, a pipeline exceeding 100 MW of potential expansion, and a NASDAQ-listed platform designed for scalability. We believe the Combined Company is strategically positioned to generate long-term value by seizing opportunities in high-performance computing and digital asset infrastructure."

 Strategic Rationale and Competitive Advantages

 The Transaction is expected to deliver greater scale and an expanded US operating footprint, with the Combined Company owning and operating a portfolio of 53 megawatts ("MW") of power capacity across five data centers in Iowa, Kentucky, and Tennessee. This larger platform is also intended to lay a foundation for potential expansion into high-performance compute. With growing demand for compute-intensive workloads, the Combined Company intends to evaluate select opportunities in adjacent high-performance compute and AI infrastructure, leveraging existing power relationships and site capabilities to maximize returns on its power capacity. The expanded operating scale is expected to improve profitability by spreading fixed overhead costs over a larger revenue and asset base.

 The combination also diversifies the Combined Company's revenue streams across proprietary mining and hosting services. By integrating Sphere's updated mining machine fleet with Cathedra's data center operations and experience, the Combined Company gains exposure to mining economics while maintaining downside protection through fixed-margin hosting contracts with third parties. These strengths are paired with strong growth prospects supported by a scalable development model and access to capital: Cathedra's low-cost development model and infrastructure-first approach, coupled with Sphere's capital markets expertise, position the Combined Company to capitalize on a robust pipeline of over 100 MW of potential expansion opportunities and to further grow its portfolio of infrastructure assets.

 Over time, the Combined Company intends to maximize returns on power capacity by assessing the highest-value applications for its energy resources, including digital asset mining, AI model training, and other compute-intensive workloads that require reliable, cost-effective power at scale.

 The Combined Company's bitcoin mining operations and balance sheet include managed power capacity of 53 MW at five data centers across three U.S. states, comprising both data centers owned by the Combined Company and those leased from and/or operated by third parties, as well as 1.2 EH/s of installed proprietary mining hash rate across data centers owned by the Combined Company and third-party hosting providers.

 Board and Management

 Underpinning these advantages is an experienced leadership team with a clear strategic vision and a deep expertise in digital asset mining, digital infrastructure, energy optimization, and capital markets. Joel Block has assumed the role of Chief Executive Officer of the Combined Company and joins the board of directors, bringing extensive experience in both private and public capital markets and in operating within the digital infrastructure and bitcoin mining arena. Kurt Kalbfleisch, previously Chief Executive Officer and Chief Financial Officer of Sphere, has maintained his role of Chief Financial Officer and joins the board of directors, contributing over two decades of executive leadership experience at multiple NASDAQ-listed companies. Tiah Reppas will continue her role as Chief Accounting Officer of the Combined Company, bringing over two decades of public accounting experience. Thomas Masiero will be Head of Strategy of the Combined Company, bringing significant experience in the development of power capacity and infrastructure.

 The board of directors comprises Tim Hanley, who serves as Chair, together with Marcus Dent, Kurt Kalbfleisch, Nicholas Gates, and Joel Block. Mr. Hanley, Mr. Dent, and Mr. Gates serve as independent directors, focused on robust governance, diverse strategic perspectives, and disciplined execution. Mr. Hanley is a seasoned global executive with significant audit committee and boardroom experience. He spent 17 years at Deloitte, where he led the firm's Global Consumer and Industrial Products practice and grew it to more than $14 billion in annual revenue, and he later served as Acting Keyes Dean of the College of Business at Marquette University. Marcus Dent, founder of TFTC.io and Managing Partner at Ten31, is a media personality and recognized thought leader in the digital assets industry. He previously served as Director of Business Development at Great American Mining, an early innovator in off-grid bitcoin mining using flared natural gas, and has served as a director of Cathedra since 2021. Nicholas Gates is Managing Director, Integrated Projects at Priority Power Management, an Arlington, Texas-based leader in energy management, procurement, and infrastructure development. He brings deep expertise in energy strategy, power procurement, and the development of large-scale power infrastructure.

 Additional Transaction Details

 As a result of the Transaction, Cathedra security holders received common shares of Sphere (the " Sphere Common Shares ") and/or securities exercisable or convertible into Sphere Common Shares. The Combined Company has retained Sphere's name and listing on NASDAQ under the symbol "ANY".

 Pursuant to the terms of the Agreement, Cathedra has amalgamated with S3D Acquisition Corp., a wholly owned subsidiary of Sphere formed to complete the Transaction. Holders of Cathedra subordinate voting shares (" Cathedra SV Shares ") received 0.123014 of a Sphere Common Share for each Cathedra SV Share held (the " SV Exchange Ratio ") and holders of Cathedra multiple voting shares (" Cathedra MV Shares ") received 12.3014 Sphere Common Shares for each Cathedra MV Share held, which provided economically equivalent consideration for both classes of shares. Cathedra's outstanding warrants, stock options and certain restricted share units were exchanged for corresponding Sphere securities in accordance with the applicable exchange ratio. The remaining restricted share units fully vested immediately prior to closing, and the holders thereof received Sphere Common Shares in accordance with the SV Exchange Ratio. In addition, certain key Cathedra shareholders were subject to a 7% post-closing ownership cap, with any consideration that would have otherwise exceeded such cap received in a new series of Sphere non-voting preferred shares having equivalent economic value.

 The securities issued pursuant to the Transaction were not registered under the United States Securities Act of 1933, as amended (the " U.S. Securities Act "), and were issued in reliance on the exemption from the registration requirements of the U.S. Securities Act provided by Section 3(a)(10) thereof and pursuant to similar exemptions from applicable state securities laws.

 Stock Exchange Listing

 The Cathedra SV Shares are expected to be delisted from the TSX Venture Exchange and the OTCQB at the close of trading on June 2, 2026, and Cathedra intends to submit an application to the applicable securities regulators to cease to be a reporting issuer and to terminate its public reporting obligations. The Sphere Common Shares will continue to trade on NASDAQ under the ticker "ANY". Further details regarding the Transaction are set out in the information circular of Cathedra and the proxy statement of Sphere, which are available on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov, respectively.

 Inducement Award

 In connection with the commencement of his employment with the Combined Company, subject to the approval of the Compensation Committee of the Combined Company's board of directors and the Combined Company's board, Mr. Block shall be entitled to a one-time inducement equity award of an aggregate of 500,000 restricted stock units, which shall be settled in Sphere Common Shares, vesting, subject to Mr. Block's continued employment, bi-annually in four equal installments over a two-year period, with the first tranche vesting on the six-month anniversary of the grant date. Such inducement award is a material inducement to Mr. Block entering into employment with the Combined Company and will be granted in accordance with Nasdaq Rule 5635(c)(4). 

 Advisors and Counsel

 Dumoulin Black LLP acted as Canadian legal counsel to Cathedra and Greenberg Traurig, LLP acted as U.S. legal counsel to Cathedra. Evans & Evans, Inc. was the fairness opinion provider to Cathedra on this transaction.

 Second Gate Advisory LLC acted as strategic advisor to Sphere, Meretsky Law Firm acted as Canadian legal counsel to Sphere and Pryor Cashman LLP acted as U.S. legal counsel to Sphere. Rosenblatt Securities was the fairness opinion provider to Sphere on this transaction.

 For further information, please contact:

 Joel Block, CEO, Sphere 3D Corp.

 +1 (647) 952-5049

 investor.relations@sphere3d.com

 Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

 Forward-Looking Statements Disclaimer

 This news release contains certain "forward-looking information" and "forward-looking statements" within the meaning of applicable Canadian and United States securities laws that are based on expectations, estimates and projections as at the date of this news release. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the U.S. Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. The information in this release about future plans and objectives of the Combined Company, are forward-looking information. Other forward-looking information includes, but is not limited to, information concerning: the intentions and future actions of senior management, the intentions, plans and future actions of the Combined Company, as well as its ability to successfully mine digital currency; the anticipated timing for delisting of the Cathedra SV Shares from the TSX Venture Exchange and the OTCQB and submission of an application by Cathedra to cease to be a reporting issuer; revenue and capacity projections of the Combined Company; the expected benefits from the Transaction; the expected growth and capabilities of the Combined Company; the expected improved profitability and increased liquidity of the Combined Company; the construction and operation of expanded blockchain infrastructure as currently planned; the creation of long-term value for the shareholders of the Combined Company; planned growth, vertical integration and expansion into high-performance compute and AI infrastructure; projected reductions in power costs; expected operational, cost and procurement synergies; and the regulatory environment of cryptocurrency in applicable jurisdictions. Any statements that involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "targets", "estimates", "believes", "contemplates", "predicts", "potential", "continue" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "should", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking information and are intended to identify forward-looking information.

 This forward-looking information is based on reasonable assumptions and estimates of management of the Combined Company at the time it was made, including, without limitation, the anticipated timing of the delisting of the Cathedra SV Shares from the TSX Venture Exchange and the OTCQB; the ability of the Combined Company to successfully integrate the businesses and realize anticipated synergies, cost savings and operational efficiencies; the accuracy of projected power costs, energy availability and hosting arrangements; the continued availability of low-cost and reliable power; the performance and deployment of mining equipment and infrastructure; the availability of growth capital on acceptable terms; the ability to execute expansion plans on schedule and within budget; market conditions for bitcoin mining and high-performance computing infrastructure; the price of bitcoin and other digital assets; network difficulty and hash rate conditions; regulatory and tax stability in applicable jurisdictions; general economic, financial and capital markets conditions; and that the Combined Company will have access to the financial and other resources required to carry out its business plans as currently anticipated.

 Additionally, these forward-looking statements may be affected by risks and uncertainties in the business of the Combined Company and general market conditions. Investors are cautioned that forward-looking statements are not based on historical facts but instead reflect the Combined Company's management's expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Combined Company believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed thereon, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Combined Company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are the following: the ultimate timing, outcome and results of integrating the operations of Sphere and Cathedra; the effects of the business combination of Sphere and Cathedra, including the Combined Company's future financial condition, results of operations, strategy and plans; the ability of the Combined Company to realize anticipated synergies in the timeframe expected or at all; changes in capital markets and the ability of the Combined Company to finance operations in the manner expected; the risk of changes in governmental regulations or enforcement practices; changes in general economic, business and political conditions, including changes in the financial markets; changes in applicable laws and regulations both locally and in foreign jurisdictions; compliance with extensive government regulation and the costs associated with compliance; unanticipated costs; the risks and uncertainties associated with foreign markets; the volatility of bitcoin prices and other digital asset markets; changes in network difficulty, hash rate or mining economics; the availability, cost and reliability of power and energy infrastructure; the ability to secure additional power capacity or execute expansion projects on time and within budget; delays in delivery, installation or performance of mining equipment or other critical infrastructure; cybersecurity threats, technology failures or data center outages; counterparty risks relating to hosting clients, equipment suppliers or power providers; the availability and retention of key personnel; the ability to access debt or equity financing on acceptable terms; and risks related to competition in the bitcoin mining and high-performance computing industries.

 Additional factors that could cause results to differ materially from those described above can be found in Sphere's reports filed on Form 10-K, Form 10-Q and Form 8-K and in other filings made by Sphere with the SEC from time to time and available at www.sec.gov and available on Sphere's website at www.sphere3d.gcs-web.com under the "Financials" tab, and in Cathedra's management information circular dated April 2, 2026 available under Cathedra's issuer profile on SEDAR+ at www.sedarplus.ca and in other documents Cathedra files on SEDAR+.

 All forward-looking statements speak only as of the date they are made and are based on information available at that time. Neither the Combined Company nor any of its subsidiaries assumes any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by applicable securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Combined Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended and such changes could be material. Readers should not place undue reliance on forward-looking information.

EX-99.2 · exhibit99-2.htm

EX-99.2
 10
 exhibit99-2.htm
 EXHIBIT 99.2

  

 Cathedra Bitcoin Inc.

 Consolidated Financial Statements

 For the years ended December 31, 2025 and 2024

 (expressed in Canadian dollars, unless otherwise noted)

  

 SRCO Professional Corporation
 Chartered Professional Accountants
 Licensed Public Accountants
 Park Place Corporate Centre
 15 Wertheim Court, Suite 409
 Richmond Hill, ON L4B 3H7, Canada
 Tel: 905 882 9500 & 416 671 7292
 Fax: 905 882 9580
 Email: info@srco.ca
 www.srco.ca

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To the Shareholders and the Board of Directors of Cathedra Bitcoin Inc.

 Opinion on the Consolidated Financial Statements

 We have audited the accompanying consolidated statements of financial position of Cathedra Bitcoin Inc. and its subsidiaries (collectively referred to as the "Company") as of December 31, 2025 and 2024, the related consolidated statements of income or loss and comprehensive income or loss, changes in equity, and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes to the consolidated financial statements, (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

 Going Concern Matter

 The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred losses from operations, has negative cash flows from operating activities, working capital deficiency and has a deficit that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 Basis for Opinion

 These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

  

  
  

 We have served as the Company's auditor since 2022.
 Richmond Hill, Ontario, Canada
 March 24, 2026
 CHARTERED PROFESSIONAL ACCOUNTANTS
 Authorized to practice public accounting by the
 Chartered Professional Accountants of Ontario

 Cathedra Bitcoin Inc.
 Consolidated Statements of Financial Position
 As at December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 As at:
 Notes
  
 December 31,
2025
  
  
 December 31,
2024
  

 ASSETS
  
  
  
  
  
  
  

 Current assets
  
  
  
  
  
  
  

 Cash and cash equivalents
  
 $
 1,083,973
  
 $
 101,367
  

 Digital currencies
 4
  
 584,139
  
  
 6,456,425
  

 Trade and other receivables
 5
  
 932,524
  
  
 1,448,900
  

 Due from related parties
 18
  
 19,792
  
  
 -
  

 Prepaid expenses
 6
  
 1,741,537
  
  
 1,257,493
  

 Deposits
 7
  
 92,104
  
  
 148,309
  

 Other assets
  
  
 383,873
  
  
 413,776
  

 Assets classified as held for sale
 11
  
 -
  
  
 31,127,752
  

 Total current assets
  
 $
 4,837,942
  
 $
 40,954,022
  

 Non-current assets
  
  
  
  
  
  
  

 Deposits
 7
  
 2,295,392
  
  
 2,473,407
  

 Other non-current assets
 8
  
 919,700
  
  
 891,918
  

 Property and equipment
 9
  
 6,201,596
  
  
 7,409,084
  

 Right-of-use assets
 10
  
 1,219,170
  
  
 1,705,863
  

 Investments
 12
  
 1,016,658
  
  
 916,483
  

 Goodwill
 2
  
 15,673,534
  
  
 16,845,242
  

 Total assets
  
 $
 32,163,992
  
 $
 71,196,019
  

 LIABILITIES
  
  
  
  
  
  
  

 Current liabilities
  
  
  
  
  
  
  

 Trade payables and accrued liabilities
 13
  
 2,659,980
  
  
 2,478,212
  

 Due to related parties
 18
  
 1,109,675
  
  
 672,411
  

 Income tax payable
 19
  
 334,900
  
  
 522,299
  

 Contract liabilities
  
  
 791,671
  
  
 149,452
  

 Customer liabilities
  
  
 2,044,454
  
  
 1,328,644
  

 Decommissioning liability
  
  
 30,839
  
  
 32,375
  

 Current portion of lease liabilities
 10
  
 80,053
  
  
 1,132,305
  

 Loans and borrowings
 14
  
 -
  
  
 5,134,121
  

 Liabilities directly associated with assets held for sale
 11
  
 -
  
  
 14,506,358
  

 Total current liabilities
  
 $
 7,051,572
  
 $
 25,956,177
  

 Non-current liabilities
  
  
  
  
  
  
  

 Customer liabilities
  
  
 -
  
  
 747,053
  

 Lease liabilities
 10
  
 1,282,012
  
  
 695,617
  

 Total liabilities
  
 $
 8,333,584
  
 $
 27,398,847
  

 EQUITY
  
  
  
  
  
  
  

 Share capital
 15
  
 22,499,148
  
  
 21,716,754
  

 Reserves
 16
  
 3,910,445
  
  
 3,534,980
  

 Contributed surplus
 17
  
 813,016
  
  
 -
  

 Accumulated other comprehensive income
  
  
 3,544,813
  
  
 5,559
  

 Retained earnings (deficit)
  
  
 (6,937,014
 )
  
 3,019,093
  

 Total shareholders' equity
  
 $
 23,830,408
  
 $
 28,276,386
  

 Non-controlling interest
 11
  
 -
  
  
 15,520,786
  

 Total liabilities and equity
  
 $
 32,163,992
  
 $
 71,196,019
  

 The accompanying notes are an integral part of these consolidated financial statements

 Nature of operations (Note 1)

 Segment reporting (Note 23)

 Events after reporting period (Note 24)

 Approved by the Board of Directors and authorized for issue on March 23, 2026:

 "Joel Block"
 Director 
 "David Jaques"
 Director 

 2

 Cathedra Bitcoin Inc.
 Consolidated Statements of Income or Loss and Comprehensive Income or Loss
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 For the year ended:
 Notes
  
 December 31,
2025
  
  
 December 31,
2024
  

 Revenues
 4,23
  
 21,194,411
  
  
 23,143,723
  

 Cost of revenues
  
  
  
  
  
  
  

 Operating costs
 23
  
 (16,046,553
 )
  
 (16,102,353
 )

 Depreciation
 8,9,10
  
 (4,783,926
 )
  
 (3,168,279
 )

 Gross income
  
 $
 363,932
  
 $
 3,873,091
  

 Realized gain on sale of digital currencies
 4
  
 4,751
  
  
 250,549
  

 Income before operating expenses
  
 $
 368,683
  
 $
 4,123,640
  

 Operating expenses
  
  
  
  
  
  
  

 Director fees
 18
  
 326,178
  
  
 129,001
  

 Management and consulting fees
 18
  
 2,525,353
  
  
 282,141
  

 Office and administration
  
  
 1,144,705
  
  
 428,502
  

 Professional fees
 2,18
  
 1,450,071
  
  
 1,384,919
  

 Salaries and wages
 18
  
 921,780
  
  
 300,562
  

 Share-based compensation
 16,18
  
 895,182
  
  
 217,966
  

 Travel
  
  
 68,117
  
  
 33,142
  

 Total operating expenses
  
 $
 (7,331,386
 )
 $
 (2,776,233
 )

 Operating income (loss)
  
 $
 (6,962,703
 )
 $
 1,347,407
  

 Other income (expenses)
  
  
  
  
  
  
  

 Foreign exchange gain (loss)
  
  
 (2,228,081
 )
  
 2,208,663
  

 Net finance costs
 10,14
  
 (671,909
 )
  
 (1,952,690
 )

 Transaction costs
 2
  
 -
  
  
 (341,841
 )

 Other income
 9,13
  
 75,914
  
  
 -
  

 Impairment of goodwill
 2
  
 (1,171,708
 )
  
 -
  

 Gain on settlement of debt
 14
  
 693,411
  
  
 -
  

 Gain on disposal of subsidiary
 11
  
 167,365
  
  
 -
  

 Unrealized gain (loss) on investment
 12
  
 120,317
  
  
 (14,321
 )

 Income (loss) from continuing operations before tax
  
 $
 (9,977,394
 )
  
 1,247,218
  

 Current income tax expense
 19
  
 -
  
  
 (513,330
 )

 Income (loss) from discontinued operation
 11
  
 290,421
  
  
 (819,276
 )

 Net loss
  
 $
 (9,686,973
 )
 $
 (85,388
 )

 Other comprehensive income (loss)
  
  
  
  
  
  
  

 Items that may be reclassified to income or loss
  
  
  
  
  
  
  

 Exchange differences on translation of foreign operations
  
  
 1,902,986
  
  
 (1,391,457
 )

 Exchange differences on translation of discontinued operation
  
  
 (4,205
 )
  
 1,093,157
  

 Revaluation gain on digital currencies
 4
  
 1,660,137
  
  
 1,451,423
  

 Total comprehensive income (loss)
  
 $
 (6,128,055
 )
 $
 1,067,735
  

  
  
  
  
  
  
  
  

 Net income (loss) for the year attributable to:
  
  
  
  
  
  
  

 Shareholders of the Company
  
  
 (9,956,107
 )
  
 673,835
  

 Non-controlling interest
 11
  
 269,134
  
  
 (759,223
 )

  
  
  
 (9,686,973
 )
  
 (85,388
 )

  
  
  
  
  
  
  
  

 Total comprehensive income (loss) for the year attributable to:

  
  
  
  
  
  

 Shareholders of the Company
  
  
 (6,392,984
 )
  
 733,801
  

 Non-controlling interest
 11
  
 264,929
  
  
 333,934
  

  
  
  
 (6,128,055
 )
  
 1,067,735
  

 Basic and diluted earnings (loss) per common share
 15
 $
 (0.34
 )
 $
 0.03
  

 Weighted average number of subordinated voting shares outstanding on a 'if converted' basis - basic
 15
  
 29,091,882
  
  
 24,363,466
  

 Weighted average number of subordinated voting shares outstanding on a 'if converted' basis - diluted
 15
  
 31,854,927
  
  
 24,363,466
  

 The accompanying notes are an integral part of these consolidated financial statements

 3

 Cathedra Bitcoin Inc.
 Consolidated Statements of Changes in Equity
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

  
  
 Share
capital
  
  
 Reserves
  
  
 Contributed
surplus
  
  
 Accumulated
other
comprehensive
income/(loss)
  
  
 Retained
earnings
(deficit)
  
  
 Shareholders'
equity
  
  
 Non-
controlling
interest
  
  
 Total
equity
  

 Balance - December 31, 2023
 $
 1,278
  
 $
 -
  
 $ 
  
  
 $
 (54,407
 )
 $
 2,345,258
  
 $
 2,292,129
  
 $
 -
  
 $
 2,292,129
  

 Multiple voting shares issued in connection with business combination
  
 21,576,955
  
  
 2,156,429
  
  
 -
  
  
 -
  
  
 -
  
  
 23,733,384
  
  
 -
  
  
 23,733,384
  

 Recognition of non-controlling interest from sale of interest in the subsidiary
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 15,186,852
  
  
 15,186,852
  

 Share-based compensation
  
 -
  
  
 217,966
  
  
 -
  
  
 -
  
  
 -
  
  
 217,966
  
  
 -
  
  
 217,966
  

 Subordinate voting shares issued on RSU vesting
  
 138,521
  
  
 (138,521
 )
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  

 Warrants repricing
  
 -
  
  
 1,299,106
  
  
 -
  
  
 -
  
  
 -
  
  
 1,299,106
  
  
 -
  
  
 1,299,106
  

 Translation adjustment
  
 -
  
  
 -
  
  
 -
  
  
 (1,391,457
 )
  
 -
  
  
 (1,391,457
 )
  
 1,093,157
  
  
 (298,300
 )

 Unrealized gain from revaluation of digital currencies
  
 -
  
  
 -
  
  
 -
  
  
 1,451,423
  
  
 -
  
  
 1,451,423
  
  
 -
  
  
 1,451,423
  

 Net income (loss) for the year
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 673,835
  
  
 673,835
  
  
 (759,223
 )
  
 (85,388
 )

 Balance - December 31, 2024
 $
 21,716,754
  
 $
 3,534,980
  
 $
 -
  
 $
 5,559
  
 $
 3,019,093
  
 $
 28,276,386
  
 $
 15,520,786
  
 $
 43,797,172
  

 Derecognition of subsidiary
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 (14,696,763
 )
  
 (14,696,763
 )

 Share-based compensation
  
 -
  
  
 895,182
  
  
 -
  
  
 -
  
  
 -
  
  
 895,182
  
  
 -
  
  
 895,182
  

 Subordinate voting shares issued on RSU vesting
  
 416,287
  
  
 (416,287
 )
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  

 Repurchase of share purchase warrants for cancellation
  
 -
  
  
 (103,430
 )
  
 -
  
  
 -
  
  
 -
  
  
 (103,430
 )
  
 -
  
  
 (103,430
 )

 Units issued in private placement, net of unit issuance costs
  
 516,107
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 516,107
  
  
 -
  
  
 516,107
  

 Subscriptions receivable
  
 (150,000
 )
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 (150,000
 )
  
 -
  
  
 (150,000
 )

 Shareholder loan forgiveness
  
 -
  
  
 -
  
  
 813,016
  
  
 -
  
  
 -
  
  
 813,016
  
  
 -
  
  
 813,016
  

 Exchange differences on translation of foreign operations
  
 -
  
  
 -
  
  
 -
  
  
 1,902,986
  
  
 -
  
  
 1,902,986
  
  
 (4,205
 )
  
 1,898,781
  

 Reclassification of foreign exchange differences to statement of profit or loss on disposal
  
 -
  
  
 -
  
  
 -
  
  
 (23,869
 )
  
 -
  
  
 (23,869
 )
  
 (1,088,952
 )
  
 (1,112,821
 )

 Unrealized gain from revaluation of digital currencies
  
 -
  
  
 -
  
  
 -
  
  
 1,660,137
  
  
 -
  
  
 1,660,137
  
  
 -
  
  
 1,660,137
  

 Net income (loss) for the year
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 (9,956,107
 )
  
 (9,956,107
 )
  
 269,134
  
  
 (9,686,973
 )

 Balance - December 31, 2025
 $
 22,499,148
  
 $
 3,910,445
  
 $
 813,016
  
 $
 3,544,813
  
 $
 (6,937,014
 )
 $
 23,830,408
  
 $
 -
  
 $
 23,830,408
  

 The accompanying notes are an integral part of these consolidated financial statements

 Business Combination (Note 2)

 Share Capital (Note 15)

 Reserves (Note 16)

 Contributed Surplus (Note 17)

 4

 Cathedra Bitcoin Inc.
 Consolidated Statements of Cash Flows
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 For the year ended:
  
 December 31,
2025
  
  
 December 31,
2024
  

 OPERATING ACTIVITIES
  
  
  
  
  
  

 Net loss for the year
 $
 (9,686,973
 )
 $
 (85,388
 )

  
  
  
  
  
  
  

 Non-cash items:
  
  
  
  
  
  

 Depreciation
  
 4,783,926
  
  
 3,168,279
  

 Share-based compensation
  
 895,182
  
  
 217,966
  

 Net finance costs
  
 671,909
  
  
 1,974,469
  

 Unrealized gain (loss) on investment
  
 (120,317
 )
  
 14,321
  

 Impairment of goodwill
  
 1,171,708
  
  
 -
  

 Write-down of other assets
  
 -
  
  
 565,292
  

 Gain on disposal of subsidiary
  
 (167,365
 )
  
 -
  

 Gain on settlement of debt
  
 (693,411
 )
  
 -
  

 Gain on sale of property and equipment
  
 (54,360
 )
  
 -
  

 Foreign exchange
  
 1,848,151
  
  
 (1,787,983
 )

  
  
  
  
  
  
  

 Changes in non-cash working capital items:
  
  
  
  
  
  

 Digital currencies
  
 (4,209,456
 )
  
 (3,647,863
 )

 Trade and other receivables
  
 253,433
  
  
 (379,974
 )

 Prepaid expenses
  
 (541,063
 )
  
 (634,772
 )

 Deposits
  
 168,153
  
  
 968,808
  

 Other assets
  
 10,406
  
  
 2,238
  

 Trade payables and accrued liabilities
  
 156,270
  
  
 (509,279
 )

 Customer liabilities
  
 733,340
  
  
 (1,091,425
 )

 Advances from (repayment to) related parties
  
 1,495,991
  
  
 (2,540,822
 )

 Income tax payable
  
 (166,020
 )
  
 483,041
  

 Decommissioning liability
  
 -
  
  
 (46,413
 )

 Net cash used in operating activities
 $
 (3,450,496
 )
 $
 (3,329,505
 )

  
  
  
  
  
  
  

 INVESTING ACTIVITIES
  
  
  
  
  
  

 Purchase of property and equipment
 $
 (2,799,325
 )
 $
 -
  

 Acquisition of business, net of cash and cash equivalents acquired
  
 -
  
  
 1,429,575
  

 Proceeds from sale of property and equipment
  
 152,207
  
  
 -
  

 Proceeds from sale of digital currencies, net of fees
  
 12,955,639
  
  
 3,002,559
  

 Net cash generated by investing activities
 $
 10,308,521
  
 $
 4,432,134
  

  
  
  
  
  
  
  

 FINANCING ACTIVITIES
  
  
  
  
  
  

 Payment of lease obligations
 $
 (1,387,028
 )
 $
 (1,016,840
 )

 Proceeds from term loan
  
 3,564,168
  
  
 -
  

 Repayment of term loan
  
 (3,474,841
 )
  
 -
  

 Repayment of principal and interest on convertible loan
  
 (4,586,983
 )
  
 -
  

 Repayment of interest on term loan
  
 (244,131
 )
  
 (100,340
 )

 Repurchase of share purchase warrants for cancellation
  
 (103,430
 )
  
 -
  

 Proceeds from share issuance, net of issuance cost
  
 366,107
  
  
 -
  

 Net cash used in financing activities
 $
 (5,866,138
 )
 $
 (1,117,180
 )

  
  
  
  
  
  
  

 Effect of foreign exchange rate fluctuation
  
 (9,281
 )
  
 (6,270
 )

 Increase (decrease) in cash and cash equivalents
 $
 982,606
  
 $
 (20,821
 )

 Cash and cash equivalents, beginning of year
 $
 101,367
  
 $
 122,188
  

 Cash and cash equivalents, end of year
 $
 1,083,973
  
 $
 101,367
  

 Supplemental cash flow information (Note 22)

 The accompanying notes are an integral part of these consolidated financial statements

 5

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 1.   Nature of Operations

 Cathedra Bitcoin Inc. ("Cathedra", "we", "our" or the "Company") develops and operates high-density compute infrastructure across North America. We host bitcoin mining clients across a portfolio of four data centers (45 megawatts total) in Tennessee and Kentucky. Cathedra also operates a fleet of proprietary bitcoin mining machines at our own and third-party data centers, producing approximately 400 PH/s of hash rate. We are focused on expanding our portfolio of data center infrastructure for high-density compute applications including bitcoin mining and artificial intelligence. Cathedra is headquartered in Vancouver, British Columbia, and our shares trade on the TSX Venture Exchange (the "TSXV") under the symbol CBIT and on the OTCQB Venture Market under the symbol CBTTF. The Company was incorporated under the Business Corporations Act (Ontario) on July 13, 2011, and our registered and records office is located at 170 - 422 Richards Street, Vancouver, British Columbia, Canada, V6B 2Z4.

 These consolidated financial statements ("Financial Statements") have been prepared on a going concern basis which contemplates that the Company will continue operations for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business. During the year ended December 31, 2025, the Company incurred losses from operations of $9,686,973, had negative cash flows from operating activities of $3,450,496, and as of that date, had a working capital deficiency of $2,213,630 and a deficit of $6,937,014. These factors raise substantial doubt about its ability to continue as a going concern. These consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. The Company has relied on its plan to obtain additional equity and debt financing, in addition to operating cash flow, to fund its operations. Although the Company has been successful in the past in obtaining financing and it believes that will continue to be successful, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be available on terms that are advantageous to the Company.

 2.   Business Combination

 On July 23, 2024, the Company completed a business combination (the "Kungsleden Merger") with Kungsleden, Inc. ("Kungsleden"), a developer and operator of alternative high-density compute infrastructure.

 The Kungsleden Merger was completed according to the terms of a share exchange agreement dated March 6, 2024, as amended on June 18, 2024 (together, the "Share Exchange Agreement"), between Cathedra, Kungsleden and Kungsleden's shareholders (the "Vendors").

 Pursuant to the terms of the Share Exchange Agreement, Cathedra acquired all of the outstanding shares of Kungsleden from the Vendors in exchange for 208,446 multiple voting shares of Cathedra (the "Multiple Voting Shares") on the basis of an exchange ratio of one common share of Kungsleden for approximately 6.253429078 Multiple Voting Shares. The 208,446 Multiple Voting Shares issued to the Vendors are convertible into 20,844,600 subordinate voting shares of Cathedra (the "Subordinate Voting Shares"). The Kungsleden Merger resulted in the Vendors owning (on a non-diluted basis) approximately 72.5% of the equity of the Company and existing Cathedra shareholders owning the remaining 27.5% of the equity of the Company. The Vendors hold approximately 80% of the voting rights of Cathedra and existing Cathedra shareholders own the remaining 20%.

 The Kungsleden Merger has been accounted for using the acquisition method under IFRS 3, Business Combinations ("IFRS 3"), which requires that one of Cathedra or Kungsleden be determined to be the acquirer for accounting purposes. The Kungsleden Merger has been accounted for as a reverse take-over of Cathedra by Kungsleden. The entities which are party to the Kungsleden Merger meet the definition of a business. These consolidated financial statements reflect the continuance of Kungsleden and the acquisition and assumption of Cathedra's identifiable assets and liabilities, respectively, at fair value.

 6

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 Kungsleden is deemed to have issued 379,310 common shares in exchange for all of the issued and outstanding shares of Cathedra. The consideration for shares issued is $22,154,165, including $577,210  (Note 14) being the convertible loan equity portion, based on Kungsleden's enterprise value of $93,457,280. The Company issued the following replacement awards: 120,175 stock options, 57,228 restricted share units and 1,704,819 share purchase warrants valued $1,579,219 exercisable into subordinate voting shares of Cathedra; see Note 16 for details on valuation approach and assumptions used to value replacement awards.

  
  
 $
  

 Consideration:
  
  
  

 Deemed share consideration
  
 22,154,165
  

 Replacement awards
  
 1,579,219
  

 Total consideration
  
 23,733,384
  

  
  
  
  

 Assets acquired:
  
  
  

 Cash and cash equivalents
  
 1,429,575
  

 Digital currencies
  
 4,029,042
  

 Other receivables
  
 136,545
  

 Prepaid expenses
  
 349,593
  

 Deposits
  
 1,643,960
  

 Other assets
  
 954,772
  

 Property and equipment
  
 4,986,820
  

 Right-of-use assets
  
 1,510,745
  

 Investments
  
 913,658
  

 Goodwill
  
 16,845,242
  

 Total assets acquired
  
 32,799,952
  

  
  
  
  

 Liabilities assumed:
  
  
  

 Trade payables and accrued liabilities
  
 2,637,725
  

 Interest payable
  
 12,543
  

 Decommissioning liability
  
 77,610
  

 Lease liabilities
  
 1,510,745
  

 Convertible loan
  
 4,827,945
  

 Total liabilities assumed
  
 9,066,568
  

  
  
  
  

 Net assets acquired
  
 23,733,384
  

 Reorganization

 For the period from August 12, 2022, the date of formation, through December 31, 2022 and for the period from January 1, 2023 to September 12, 2023, the Kungsleden Business was operated through Poimen Trust ("Poimen"), a trust certified under the State of Tennessee, controlled by the shareholders of the Company.  The trustees of Poimen also are the shareholders of the Company.  Kungsleden was incorporated to transform the Kungsleden Business from a trust to a corporation through a reorganization under common control ("Transformation").  The Transformation resulted in the transfer of all assets and liabilities and contracts related to the Kungsleden Business at their historical book values from Poimen to Kungsleden on September 13, 2023, the date on which Kungsleden was incorporated.

 Revenues of $3,851,629 and net loss of $2,798,571 from the acquired operations are included in the consolidated statement of income and comprehensive income for the year ended December 31, 2024. Had the acquisition of Cathedra Bitcoin Inc. occurred on January 1, 2024, the consolidated revenues would have been $29,339,761 and the consolidated net loss would have been $1,690,909 for the year ended December 31, 2024. In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same if the acquisition had occurred on January 1, 2024.

 7

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 Transaction costs of $540,274 were incurred in connection with the acquisition including consulting fees, legal and professional fees for brokering and due diligence services and were recognized in the consolidated statement of income and comprehensive income.

 Impairment of goodwill

 Management conducted an impairment assessment of goodwill as of December 31, 2025. For the purposes of impairment testing, the Company considers its ongoing operations as a single cash-generating unit (CGU) that includes all goodwill, property and equipment, other non-current assets, and right-of-use assets, which collectively contribute to generating cash flows from hosting and mining activities. The discounted cash flow model was utilized to estimate value in use, as there was no readily available market price nor any purchase offer received for the business. As a result of this assessment, an impairment loss of $1,171,708 was recognized, as the carrying amount of the CGU, including goodwill, exceeded its recoverable amount.

 The significant assumptions applied in determination of the value in use amount as at December 31, 2025 were as follows:

 Cash flows: Estimated cash flows were projected based on estimated operating results from internal sources as well as industry and market trends. Estimated cash flows are primarily driven by projected revenues based on existing and projected data center capacity, bitcoin mining machine quantities and models with respective efficiencies and operating costs;

 Terminal value growth rate: The terminal growth rate was based on historical and projected consume price inflation, historical and projected economic indicators, and projected industry growth; and

 Pre-tax discount rate: The pre-tax discount rate is reflective of the CGU's weighted average cost of capital ("WACC"). The WACC was estimated based on the risk-free rate, equity risk premium, beta adjustment to the equity risk premium based on a direct comparison approach, an unsystematic risk premium, and cost of debt based on corporate bond yields.

 The following inputs are subject to significant estimation uncertainty and may materially affect the value in use determination:

 Terminal value growth rate of 2%

 WACC of 35%

 Average bitcoin price over the forecast period of approximately US$203,000

 Average hash rate over the forecast period of approximately 1,441 EH/s

 A sensitivity analysis indicates that varying each input individually or collectively by +/- 5% would result in an insignificant change to the impairment amount recorded.

 3.   Material Accounting Policy Information

 Basis of Preparation

 Statement of Compliance

 The Financial Statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB") and interpretations issued by the International Reporting Interpretation Committee ("IFRIC") for all periods presented.

 These Financial Statements were approved and authorized for issuance by the Board of Directors on March 23, 2026.

 These Financial Statements have been prepared on an accrual basis and are based on historical cost basis except for certain financial instruments which are measured at their fair value. In addition, these Financial Statements have been prepared using the accrual basis of accounting except for cash flow information.

 8

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 The Financial Statements of the Company are presented in Canadian dollars unless otherwise indicated.

 Basis of Consolidation

 Subsidiaries

 The Financial Statements include the accounts of the Company and its subsidiaries, which are controlled by the Company. Control is achieved when the parent company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Company controls an investee if, and only if, the Company has all of the following: (i) power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); (ii) exposure, or rights, to variable returns from its involvement with the investee; and (iii) the ability to use its power over the investee to affect its returns.

 The financial statements of the subsidiaries are included in these financial statements from the date that control commences until the date that control ceases. All significant inter-company balances and transactions are eliminated on consolidation. The entities contained in the Financial Statements are as follows:

 Entity Name
 Place of Business
and Operations
 Functional
Currency
 Equity Percentage

 Cathedra Bitcoin Inc. (the "Company") - parent
 Canada
 CAD
 n/a

 HPC Holdings LLC ("HPC Holdings")
 United States
 USD
 100% owned by parent

 Kungsleden, Inc. ("Kungsleden" or "K Inc.")
 United States
 USD
 100% owned by parent

 Buckeye HPC LLC ("Buckeye HPC")
 United States
 USD
 100% owned by HPC Holdings

 Sentinel Technology, LLC
 United States
 USD
 100% owned by K Inc.

 Churchill Technologies LLC
 United States
 USD
 100% owned by K Inc.

 Two Keys Technologies LLC
 United States
 USD
 100% owned by K Inc.

 North Campbell HoldCo LLC
 United States
 USD
 100% owned by K Inc.

 Buckeye Technologies HoldCo LLC ("Buckeye HoldCo")
 United States
 USD
 100% owned by K Inc.

 Buckeye Technologies OpCo LLC ("Buckeye Technologies")
 United States
 USD
 100% owned by Buckeye HoldCo

 North Campbell LandCo LLC
 United States
 USD
 100% owned by North Campbell HoldCo LLC

 North Campbell HostCo LLC
 United States
 USD
 100% owned by North Campbell HoldCo LLC

 Crystal Core LLC
 United States
 USD
 100% owned by K Inc.

 Fortress Blockchain Holdings Corp. ("FBHC")
 Canada
 CAD
 100% owned by parent

 Fortress Blockchain (US) Holdings Corp. ("FBUS")
 United States
 USD
 100% owned by FBHC

 Cathedra Lease Co LLC ("CLC")
 United States
 USD
 100% owned by FBUS

 During the year ended December 31, 2025, the Company established HPC Holdings, Buckeye HPC, Buckeye HoldCo, and Buckeye Technologies to facilitate further business expansion and development opportunities.

 The Company de-consolidated Tirpitz Technology HoldCo LLC along with its wholly owned subsidiaries Tirpitz Technology LandCo LLC and Tirpitz Technology HostCo LLC (collectively, "T Tech") in March 2025 after losing control, see Note 11 for additional information.

 9

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 Functional and Presentation Currency

 Transactions undertaken in foreign currencies are translated into Canadian dollars at daily exchange rates prevailing when the transactions occur. Monetary assets and liabilities denominated in foreign currencies are translated at period-end exchange rates and non-monetary items are translated at historical exchange rates. Realized and unrealized exchange gains and losses are recognized in the consolidated statements of comprehensive income or loss. The assets and liabilities of foreign operations are translated into Canadian dollars using the period-end exchange rates. Income, expenses, and cash flows of foreign operations are translated into Canadian dollars using average exchange rates. Exchange differences resulting from the translation of foreign operations into Canadian dollars are recognized in other comprehensive income or loss and accumulated in equity.

 Comprehensive Income (Loss)

 Total comprehensive income (loss) comprises all components of profit or loss and other comprehensive income (loss). Other comprehensive income (loss) includes gains and losses from translating the financial statements of an entity's whose functional currency differs from the presentation currency and gains from revaluation of digital currencies.

 Standards issued but not yet effective

 Implementation of IFRS 18 - Presentation and Disclosure of Financial Statements

 The introduction of IFRS 18 will provide all entities applying IFRS with more guidance on the presentation and disclosure of information in general purpose financial statements. The new standard will clarify guidance on how to present and disclose information that faithfully represents an entity's assets, liabilities, equity, revenue and expenses. The new standards are applied retrospectively for annual periods beginning on or after 1 January 2027, with early adoption permitted. The Company is currently assessing the expected impact of this standard and has not early adopted IFRS 18.

 Implementation of IFRS S1 - General Requirements for Disclosure of Sustainability-related Financial Information - and IFRS S2 - Climate-related Disclosures

 The adoption of IFRS S1 and S2 will introduce new requirements surrounding sustainability and climate-related disclosures for annual reporting purposes. The Canadian Sustainability Standards Board proposed Canadian-specific modifications to the standards issued by the International Sustainability Standards Board in June 2023. The Canadian specific versions of IFRS S1 and S2 are expected to be available for voluntary adoption starting January 1, 2025. The Canadian Securities Administrators have not yet confirmed whether the new standards will be mandatory for Canadian reporting issuers. The Company is currently assessing the expected impact of adopting these standards.

 Classification and Measurement of Financial Instruments

 In May 2024, the IASB issued amendments to IFRS 9 - Financial Instruments and IFRS 7 - Financial Instruments: Disclosures . The amendments relate to settling financial liabilities using an electronic payment system and assessing contractual cash flow characteristics of financial assets, and create additional disclosure requirements for financial instruments. The amendments are effective for annual periods beginning on or after January 1, 2026, with early adoption permitted. The Company is assessing the impacts to the consolidated financial statements.

 Material Accounting Policies

 Business Combination

 Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred which is measured at acquisition date at fair value, and the amount of any non-controlling interests in the acquiree. For each business combination, the Company elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition-related costs are expensed as incurred and included in general and administrative expenses.

 10

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 The Company determines that it has acquired a business when the acquired set of activities and assets include an input and a substantive process that together significantly contribute to the ability to create outputs. Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests and any previous interest held over the net identifiable assets acquired and liability assumed).

 After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company's CGUs or group of CGUs that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

 If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognized as of that date.

 The measurement period is the period from the date of acquisition to the date that the Company obtains complete information about facts and circumstances that existed as of the acquisition date and is subject to a maximum period of one year.

 Cash and cash equivalents

 Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.

 Digital currencies

 The Company accounts for its digital currencies on hand at the end of a reporting period, if any, under IAS 38, Intangible Assets , as an intangible asset with an indefinite useful life initially measured at cost, deemed to be the fair value upon receipt, and subsequently measured under the revaluation model. Under the revaluation model, increases in the digital currencies' carrying amount is recognized in other comprehensive income and under accumulated other comprehensive income in equity, while decreases are recorded in the consolidated statements of income or loss and comprehensive income or loss. However, increases are recognized in profit or loss to the extent that it reverses a revaluation decrease of digital currencies previously recognized in the statement of profit or loss. There is no recycling of gains from other comprehensive income or loss in the consolidated statements of income or loss and comprehensive income or loss, except to the extent that an increase in fair value reverses a previous decrease in fair value that has been recorded in the consolidated statements of income or loss and comprehensive income or loss, that increase is recorded in the consolidated statements of income or loss and comprehensive income or loss. The fair value of digital currencies on hand at the end of the reporting period is calculated as the quantity of digital currencies on hand multiplied by the price quoted on Coin Metrics (for bitcoin) and Coinbase (for other digital currencies) as at the reporting date. Any difference between the fair value of the digital currencies recorded upon receipt from mining activities, purchases or profit-sharing arrangements and the actual realized price upon disposal are recorded as gain or loss on sale of digital currencies.

 11

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 The Company has continued to classify digital currencies on hand at the end of the year as current assets as management has determined that cryptocurrency markets have sufficient liquidity to allow conversion within the Company's normal operating cycle.

 The Company values its bitcoin based on the price quoted on Coin Metrics which is an average of quoted rates from various cryptocurrency exchanges. Coin Metrics data is derived from real-time (block-by-block) market price with over 400 metrics for over 100 assets and it has data feed of aggregate network data metrics for all of the top cryptocurrency assets. Management considers this fair value to be a level 2 input under IFRS 13 fair value measurement fair value hierarchy as the price on this source represents the average quoted prices on multiple digital currency exchanges.

 Non-monetary transactions

 In the normal course of its business, the Company enters into non-monetary transactions. These non-monetary transactions, which are otherwise payable in cash, are accounted for at their fair value. Non-monetary transactions consist of digital currencies paid for its mining and revenue-sharing fees, digital currencies received from customers for hosting services or proceeds received from sale of a subsidiary. Payments are measured at fair value using the price of the digital currencies provided at the time of the transaction.

 Financial Instruments 

 Financial instruments are accounted for in accordance with IFRS 9, Financial Instruments: Classification and Measurement .  A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

 Financial assets

 On initial recognition, financial assets are recognized at fair value and are subsequently classified and measured at: (i) amortized cost; (ii) fair value through other comprehensive income ("FVOCI"); or (iii) fair value through profit or loss ("FVTPL"). The classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. A financial asset is measured at fair value net of transaction costs that are directly attributable to its acquisition except for financial assets at FVTPL where transaction costs are expensed.

 Financial assets classified and measured at amortized cost are those assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and the contractual terms of the financial asset give rise to cash flows that are solely payments of principal and interest ("SPPI"). Financial assets classified at amortized cost are measured using the effective interest method.

 All financial assets not classified and measured at amortized cost or FVOCI are measured at FVTPL. On initial recognition of an equity instrument that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment's fair value in other comprehensive income.

 The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity.

 The classification determines the method by which the financial assets or financial liabilities are carried on the statement of financial position subsequent to inception and how changes in value are recorded. Cash and cash equivalents and Investments are measured at FVTPL. Financial instruments including trade and other receivables, due from related parties, trade payables and accrued liabilities, due to related parties, and contract liabilities are measured at amortized cost.

 12

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 Impairment of financial assets

 IFRS 9 uses the expected credit loss ("ECL") model. The credit loss model groups receivables based on similar credit risk characteristics and days past due in order to estimate bad debts. The ECL model applies to the Company's receivables.

 An 'expected credit loss' impairment model applies which requires a loss allowance to be recognized based on expected credit losses. The estimated present value of future cash flows associated with the asset is determined and an impairment loss is recognized for the difference between this amount and the carrying amount as follows: the carrying amount of the asset is reduced to estimated present value of the future cash flows associated with the asset, discounted at the financial asset's original effective interest rate, either directly or through the use of an allowance account and the resulting loss is recognized in profit or loss for the period.

 Financial liabilities

 Financial liabilities are designated as either: (i) fair value through profit or loss; or (ii) other financial liabilities. All financial liabilities are classified and subsequently measured at amortized cost except for financial liabilities at FVTPL. The classification determines the method by which the financial liabilities are carried on the statement of financial position subsequent to inception and how changes in value are recorded.

 Accounts payable, interest payable, and loan payable are classified under other financial liabilities and carried on the statement of financial position at amortized cost.

 The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire.  The Company also derecognizes a financial liability when the terms of the liability are modified such that the terms and / or cash flows of the modified instrument are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value. 

 Gains and losses on derecognition are generally recognized in the statement of profit or loss.

 Revenue recognition

 Revenue is recorded at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to a customer.

 The principles in IFRS 15 are applied using the following five steps:

 1.   Identify the contract(s) with a customer

 2.   Identify the performance obligation in the contract

 3.   Determine the transaction price

 4.   Allocate the transaction price to the performance obligations in the contract

 5.   Recognize revenue when (or as) the entity satisfies a performance obligation The Company has concluded that the recognition and measurement of the sale of products in all contracts is consistent with the current revenue recognition practice and therefore does not expect any transitional adjustment.

 For arrangements priced at fiat currency, the Company recognizes revenue based on the contract price. For arrangement priced at cryptocurrency, the Company recognizes revenue based on the spot price of the cryptocurrency to fiat currency on the date when it is earned.

 Hosting revenue

 The Company hosts and provides energized space and operating and maintenance services to third-party mining companies who locate their mining hardware at its data centers. The Company accounts for these agreements as a single performance obligation for services being delivered in a series with delivery being measured by monthly hosting fees of the mining hardware. As such, the Company recognizes revenue over the life of the contract as its series of distinct services are performed over the term of the contracts with its customers. The Company has determined that the contracts do not contain a significant financing component because the expected length of time between the transfer of services and receipt of consideration is less than one year, which are typically one month or less.

 13

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 For certain contracts, the Company may also be entitled to a monthly cash or non-cash profit-sharing fee, which is primarily based on the actual amount of bitcoin mined by the customer's hosted mining equipment during the month. The rate of profit sharing is determined at inception of the contract with subsequent amendments, as applicable, and non-cash consideration is generally paid in bitcoin. Non-cash consideration is measured at fair value at contract inception with changes in fair value attributable to reasons other than the form of consideration (other than price of bitcoin) measured as variable consideration (subject to the constraint on variable consideration) and recognized as hosting services are performed. This amount is recognized in revenue as services are performed. Changes in fair value of the non-cash consideration related for reasons other than changes in form are recognized at the end of each month as the related uncertainly is resolved and amount becomes known.

 Mining revenue

 The Company recognizes revenue from the provision of transaction confirmation services for digital currency blockchains, commonly termed "digital asset mining" or "cryptocurrency mining". As consideration for these services, the Company receives digital currency from each specific blockchain in which it participates ("coins"). Revenue is measured based on the fair value of the coins received. The fair value is determined using the spot price of the coin on the date of mining, based on the daily average from Coin Metrics for bitcoin. A coin is considered earned on the completion and addition of a block to the blockchain, at which time the economic benefit is received and can be reliably measured.

 Contract assets and liabilities

 A contract asset is recognized when the Company recognizes revenue before being unconditionally entitled to consideration under the payment terms set out in the contract. Contract assets are assessed for expected credit losses and are reclassified to receivables when the right to consideration has become unconditional.

 A contract liability is recognized when the customer pays consideration for goods or services before the Company recognizes the related revenue. A contract liability would also be recognized if the Company has an unconditional right to receive non-refundable consideration before the Company recognizes the related revenue. In such cases, a corresponding receivable would also be recognized.

 Customer liabilities

 Customer liabilities include deposits from customers. Deposits from customers are reduced when they are returned back to customers or applied to trade receivables based on the contractual terms between the Company and its customers.

 Other assets

 Parts and peripherals located in the facilities and warehouses are stated at cost, net of write-offs to account for changing market prices for resale. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

 Property and equipment

 Property and equipment are measured at cost, less accumulated depreciation and impairment losses, if any.

 Property and equipment are recorded at purchase cost. Direct labor and other directly attributable costs incurred to construct new assets and upgrade existing assets are capitalized. Repairs and maintenance expenditures are recognized in the consolidated statements of income or loss as incurred. Significant renewals and betterments are capitalized.

 14

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 Property and equipment are depreciated using the straight-line method based on the estimated useful lives of the assets as follows:

 Category
 Useful Life

 Other mining equipment (mining equipment)
 5 years

 Miners (mining equipment)
 3 years

 Infrastructure
 Lower of contractual terms or 10-12 years

 Land
 Infinite

 Land acquired by the Company has an infinite useful life and therefore is not depreciated.

 The depreciation method, useful life and residual value of an asset are reviewed at least at each financial year-end and adjusted, if appropriate.

 When assets are retired or otherwise disposed of, their cost and the related accumulated depreciation are derecognized from the consolidated statements of financial position and the resulting gains or losses on the disposal or sale of the assets are recognized in the consolidated statements of operations.

 An asset under construction is stated at cost until the construction is completed, at which time it is reclassified to the property and equipment account to which it relates. During the construction period until the asset is ready for its intended use or sale, borrowing costs, which include interest expense, are capitalized in proportion to the average amount of accumulated expenditures during the period. Capitalization of borrowing costs ceases when the construction is completed, and the asset is ready for its intended use or sale.

 Leases

 At inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

 The Company recognizes a lease liability and a right-of-use asset at the lease commencement date. The lease liability is initially measured as the present value of future lease payments discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's applicable incremental borrowing rate. The incremental borrowing rate is the rate which the Company would have to pay to borrow, over a similar term and with a similar security, the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment.

 Lease payments included in the measurement of the lease liability comprise the following:

 fixed payments, including in-substance fixed payments, less any lease incentives receivable;

 variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

 amounts expected to be payable by the Company under residual value guarantees;

 the exercise price of a purchase option if the Company is reasonably certain to exercise that option; and

 payments of penalties for terminating the lease, if the Company expects to exercise an option to terminate the lease.

 The lease liability is subsequently measured by:

 increasing the carrying amount to reflect interest on the lease liability;

 reducing the carrying amount to reflect the lease payments made; and

 remeasuring the carrying amount to reflect any reassessment or lease modifications.

 15

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option.

 Whenever the Company incurs an obligation for costs to restore a leased asset to the condition required by the terms and conditions of the lease, a provision is recognized and measured under IAS 37. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset.

 The right-of-use asset is initially measured at cost, which comprises the following:

 the amount of the initial measurement of the lease liability; any lease payments made at or before the commencement date, less any lease incentives received;

 any initial direct costs incurred by the Company; and

 an estimate of costs to be incurred by the Company in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories.

 The right-of-use asset is subsequently measured at cost, less any accumulated depreciation and any accumulated impairment losses, and adjusted for any remeasurement of the lease liability. It is depreciated in accordance with the Company's accounting policy for property and equipment, from the commencement date to the earlier of the end of its useful life or the end of the lease term. Each lease payment is allocated between the lease liability and finance cost. The finance cost is charged to net earnings over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use assets are presented as property and equipment and the lease liabilities are presented as loans on the consolidated statement of financial position.

 The Company does not recognize right-of-use assets and lease liabilities for the short-term leases that have a lease term of 12 months or less.

 Goodwill

 Goodwill is not amortized but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on disposal of an entity include the carrying amount of goodwill relating to the entity sold.

 Impairment of non-financial assets

 The Company reviews the carrying amounts of its non-financial assets, including property and equipment, when events or changes in circumstances indicate the assets may not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs. Assets carried at fair value, such as digital currencies, are excluded from impairment analysis.

 Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows to be derived from continuing use of asset or cash generating unit are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Fair value less cost to sell is the amount obtainable from the sale of an asset or cash generating unit in an arm's length transaction between knowledgeable, willing parties, less the cost of disposal. When a binding sale agreement is not available, fair value less costs to sell can be estimated using a discounted cash flow approach with inputs and assumptions consistent with those of a market participant. If the recoverable amount of an asset or cash generating unit is reduced to its recoverable amount, an impairment loss is recognized immediately in the consolidated statement of loss and comprehensive loss. Where an impairment loss subsequently reverses, the carrying amount of the asset or cash generating unit is increased to the revised estimate of its recoverable amount, such that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized.

 16

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 Income taxes

 Prior to the reorganization on September 12, 2023, earnings and losses are included in the personal income tax return of the Company's shareholders. As a result, the Company did not incur any income tax obligation and the financial statements do not include a provision for income taxes.

 Post the Company's reorganization on September 12, 2023, current and deferred income taxes are recognized as income or expense and included in the consolidated statements of profit or loss.  Current income tax assets and liabilities are measured at the amounts expected to be recovered or paid by using the tax rates and tax laws that have been enacted or substantively enacted at each reporting date. Management periodically evaluates positions taken in the tax reporting process with respect to situations in which applicable tax regulation is subject to interpretation. Where appropriate, management establishes provisions based on the amounts expected to be paid to the tax authorities.

 Deferred tax assets and liabilities arise from deductible and taxable temporary differences, respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits.

 Apart from the temporary differences arising from goodwill not deductible for tax purposes, all deferred tax liabilities, and all deferred tax assets to the extent that it is probable that future taxable profits will be available against which the asset can be utilized, are recognized. Deferred tax assets and liabilities are measured using enacted or substantively enacted tax rates and tax laws at each reporting date which are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

 The carrying amount of deferred tax assets is reviewed at each reporting date and reduced if it is no longer probable that sufficient taxable profit will be available to compensate part or all of the benefits of deferred tax assets. Unrecognized deferred tax assets are re-assessed at each reporting date and recognized if it is probable that future taxable profits will be available for recovery. Tax deductions arising from the reversal of deferred tax assets are excluded from estimates of future taxable income.

 Deferred tax assets and liabilities are offset in the consolidated statements of financial position, if and only if it has a legally enforceable right to set off current tax assets and liabilities and the deferred tax assets and liabilities relate to income taxes levied by the same Tax Authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

 The Company determines the recognition and measurement of tax assets and liabilities that contain uncertainty over income tax by considering the assumptions used in the examination of tax treatments by the tax authorities, the probability that the tax authorities will accept uncertain tax treatment and re-consideration or estimation if there is a change in facts and circumstances.

 If the acceptance of tax treatment is probable, the measurement is in line with income tax fillings. If the acceptance of tax treatment is not probable, the Company uses tax amounts using the method that provides a better prediction of resolution (i.e., most likely amount or expected value). Due to the complexity of some of these uncertainties, their ultimate resolution may result in payments that are materially different from current estimates. Any such differences will be reflected as adjustments to income tax expenses in the periods in which they are determined.

 17

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 Convertible loan

 Convertible loans/debentures are financial instruments which are accounted for separately dependent on the nature of their components: a financial liability and an equity instrument. The identification of such components embedded within a convertible instrument requires significant judgment given that it is based on the interpretation of the substance of the contractual arrangement. Where the conversion option has a fixed conversion rate, the financial liability, which represents the obligation to pay coupon interest on the convertible debentures in the future, is initially measured at its fair value and subsequently measured at amortized cost. The residual amount is accounted for as an equity instrument at issuance. Where the conversion option has a variable conversion rate, the conversion option is recognized as a derivative liability measured at fair value through profit and loss. The residual amount is recognized as a financial liability and subsequently measured at amortized cost. The determination of the fair value is also an area of significant judgment given that it is subject to various inputs, assumptions and estimates including: contractual future cash flows, discount rates, credit spreads and volatility. Transaction costs are apportioned to the debt liability and equity components in proportion to the allocation of proceeds.

 All derivative instruments are measured at fair value including embedded derivatives contained within financial or non-financial contracts that are not closely related to the host contract. A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host and accounted for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss .

 The debt component is subsequently accounted for at amortized cost using the effective interest rate method. The embedded derivative is subsequently measured at fair value at each reporting date, with gains and losses in fair value recognized in profit or loss.

 Transaction costs that relate to the issue of the convertible loan are allocated to the liability component and embedded derivative component in proportion to the allocation of the gross proceeds. Transaction costs relating to the embedded derivative liability component are included in the equity component and transaction costs relating to the financial liability component are included in the carrying amount of the liability component and are amortized over the expected life of the convertible loan using the effective interest method.

 Decommissioning liability

 A legal or constructive obligation to incur restoration costs may arise when mining equipment are deployed at hosting facilities. Such cost arising from the restoration of the hosting site to its original condition, discounted to their net present value, are provided for and charged to the statement of loss and comprehensive loss, as soon as the obligation to incur such costs arises.

 Provisions

 Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The timing or amount of the outflow may still be uncertain. Provisions are measured using the best estimate of the expenditure required to settle the present obligation at the end of the reporting period, taking into account risks and uncertainties associated with the obligation. Provisions are discounted where the time value of money is considered material.

 Unit placements

 Proceeds from unit placements are allocated between shares and warrants issued using the residual method. Proceeds are first allocated to shares according to their fair value and any residual in the proceeds is allocated to the warrants.

 18

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 Share-based compensation

 The Company operates a stock option plan and restricted share unit ("RSU") plan. Share-based compensation to employees is measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based compensation to non-employees is measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to reserves. The fair value of options is determined using the Black-Scholes pricing model which incorporates all market vesting conditions on grant date. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.

 Earnings (loss) per share

 Earnings (loss) per share is computed by dividing net income (loss) attributable to equity holders of the Company by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if additional common shares are assumed to be issued under securities that entitle their holders to obtain common shares in the future. For stock options, RSUs, and share purchase warrants, the number of additional shares for inclusion in diluted earnings per share calculations is determined when the exercise price is less than the average market price of the Company's common shares; the stock options and share purchase warrants are assumed to be exercised and the proceeds are used to repurchase common shares at the average market price for the period. The incremental number of common shares issued under stock options and repurchased from proceeds is included in the calculation of diluted earnings per share.

 Common shares that could potentially dilute basic net earnings and net earnings per common share in the future that could be issued from the exercise of share options and warrants are not included in the computation of the diluted earnings per common share because to do so would be anti-dilutive.

 Assets held for sale and discontinued operations

 Assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement.

 An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the asset is recognised at the date of derecognition.

 Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of assets classified as held for sale continue to be recognised.

 Assets classified as held for sale are presented separately from the other assets in the statement of financial position. The liabilities of assets classified as held for sale are presented separately from other liabilities in the statement of financial position.

 A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of income or loss.

 19

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 Use of Estimates, Assumptions, and Judgements

 The preparation of the Financial Statements in accordance with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the Financial Statements and the reported amount of expenses during the reporting period.

 The preparation of the Financial Statements requires the Company to make judgments, apart from those involving estimates, in applying accounting policies. The most significant judgments applying to the Company's Financial Statements include:

 Revenue Recognition

 Revenue is measured based on the fair value of the coins received. The fair value is determined using the spot price of the coin on the date of mining, based on the daily average from Coin Metrics for bitcoin.

 There is currently no specific definitive guidance in IFRS or alternative accounting frameworks for the accounting for the production and mining of digital currencies, and management has exercised significant judgement in determining appropriate accounting treatment for the recognition of revenue for mining of digital currencies. Management has examined various factors surrounding the substance of the Company's operations and the guidance in IFRS 15, Revenue from Contracts with Customers , including the stage of completion being the completion and addition of block to a blockchain and the reliability of the measurement of the digital currency received. In the event authoritative guidance is enacted by the IASB or IFRIC, the Company may be required to change its policies which could result in a change in the Company's financial position and earnings.

 Expected Credit Losses

 The Company recognizes an amount equal to the lifetime ECL on the trade receivables and amounts due from related parties for which there has been a significant increase in credit risk since initial recognition. Loss allowances are measured based on historical experience and forecasted economic conditions. The amount of ECL is sensitive to changes in circumstances of forecast economic conditions.

 Useful Lives of Property and Equipment

 Depreciation of property and equipment is dependent upon estimates of useful lives and residual value which are determined through the use of assumptions. Estimates of residual value and useful lives are based on data and information from various sources including industry practice and historic experience. Although management believes the estimated useful lives of the Company's property and equipment are reasonable, changes in estimates could occur, affecting the expected useful lives and salvage values of the property and equipment.

 Significant Estimates

 Fair Value of Financial Instruments

 The individual fair value attributed to the different components of a financing transaction is determined using valuation techniques. The Company uses judgment to select the methods used to make certain assumptions and in performing the fair value calculations in order to determine (a) the values attributed to each component of a transaction at the time of the issuance; (b) the fair value measurements for certain instruments that require subsequent measurement at fair value on a recurring basis; and (c) for disclosing the fair value of financial instruments subsequently carried at amortized cost. The valuation estimates could be significantly different because of the use of judgment and the inherent uncertainty in estimating the fair value of the instrument that are not quoted in active market.

 20

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 Useful Life and Residual Value

 Depreciation of the assets in the cryptocurrency data center is based on an estimate of the assets' expected life. In order to determine the useful life of the assets in the cryptocurrency mining center, assumptions are required about a range of computing industry market and economic factors, including global hash rates dedicated to proof of work mining, network difficulty, technological changes, release and availability of newer and more efficient hardware and other inputs, and production costs. Based on the data that management has reviewed, management has determined to use the straight-line method of amortization over three years, to best reflect the current expected useful life of mining equipment. Management will review its estimates and assumptions at each reporting date and will revise its assumptions if new information supports the change.

 Impairment of Non-Financial Assets

 Impairment exists when the carrying value of an asset exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. These calculations are based on available data, other observable inputs and projections of cash flows, all of which are subject to estimates and assumptions. Recoverable amounts are also sensitive to assumptions about the future usefulness of in-process development and the related marketing rights.

 Taxes

 The determination of the Company's tax expense for the period and deferred tax assets and liabilities involves significant estimation and judgement by management. In determining these amounts, management interprets tax legislation in a variety of jurisdictions and makes estimates of the expected timing of the reversal of deferred tax assets and liabilities, the deferral and deductibility of certain items and interpretation of the treatment for tax purposes of digital currencies by taxation authorities. Management also makes estimates of future earnings, which affect the extent to which potential future tax benefits may be used. The Company is subject to assessments by various taxation authorities, which may interpret legislation differently. These differences may affect the final amount or the timing of the payments of taxes. The Company provides for such differences where known based on management's best estimate of the probable outcome of these matters.

 Digital Currency Valuation

 Digital currency denominated assets are included in current assets. Digital currencies are carried at their fair value determined by the spot rate based on the daily average from Coin Metrics. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company's earnings and financial position.

 Share-Based Compensation

 The Company utilizes the Black-Scholes Option Pricing Model ("Black-Scholes") to estimate the fair value of stock options granted to directors, officers, employees and consultants. The use of Black-Scholes requires management to make various estimates and assumptions that impact the value assigned to the stock options including the forecast future volatility of the stock price, the risk-free interest rate, dividend yield and the expected life of the stock options. Any changes in these assumptions could have a material impact on the calculation of the share-based compensation; however, the most significant estimate is volatility. Expected future volatility can be difficult to estimate as the Company has had limited history, is in a unique industry, and historical volatility is not necessarily indicative of future volatility.

 Business Combination - Purchase Price Allocation

 The consideration transferred (or deemed consideration) and acquired assets and assumed liabilities are recognized at fair value on the date of the Company effectively obtains control. The measurement of each business combination is based on the information available on the acquisition date. The estimate of fair value of the consideration transferred (or deemed consideration) and acquired intangible assets (including goodwill), property and equipment, other assets and the liabilities assumed are based on estimates and assumptions. The measurement is largely based on the projected cash flows, discount rates and market conditions at the date of acquisition.

 21

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 Areas of significant estimates and judgments also include:

 Collectability of trade and other receivables

 Completeness of trade payables and accrued liabilities

 Valuation of right-of-use assets and lease liabilities

 Valuation of convertible loans

 4.   Digital Currencies and Revenues

 Mining and Profit-Sharing Revenue

 Digital currencies are recorded at their fair value on the date they are received as revenues and are revalued to their fair value at each reporting date. Fair value is determined by using the daily price of bitcoin from Coin Metrics.

  
  
 BTC Units
  
  
 Amount ($)
  

 Bitcoin balance as at December 31, 2023
  
 0.86
  
  
 47,429
  

 Bitcoin acquired in business combination
  
 44.40
  
  
 4,029,042
  

 Bitcoin earned
  
 37.89
  
  
 3,851,629
  

 Bitcoin earned in profit-sharing arrangement
  
 2.33
  
  
 171,570
  

 Bitcoin exchanged for cash and services
  
 (37.38
 )
  
 (3,360,913
 )

 Revaluation gain during the year
  
 -
  
  
 1,451,423
  

 Unrealized translation adjustment
  
 -
  
  
 264,803
  

 Bitcoin balance as at December 31, 2024
  
 48.10
  
  
 6,454,983
  

 Bitcoin earned
  
 61.29
  
  
 8,775,024
  

 Bitcoin exchanged for cash and services
  
 (77.41
 )
  
 (11,653,136
 )

 Bitcoin exchanged for other digital currency
  
 (5.63
 )
  
 (826,640
 )

 Bitcoin pledged as collateral
  
 (50.54
 )
  
 (5,976,307
 )

 Transfer from restricted digital currencies after loan repayment
  
 28.91
  
  
 4,680,732
  

 Revaluation loss during the year
  
 -
  
  
 (822,429
 )

 Unrealized translation adjustment
  
 -
  
  
 (66,308
 )

 Bitcoin balance as at December 31, 2025
  
 4.72
  
  
 565,919
  

 The Company pledged substantial quantity of its bitcoin as collateral for the term loan during the year ended December 31, 2025. The portion of the collateralized bitcoin was used to prepay the term loan early, please see Note 14 for additional information. The restricted bitcoin balances and changes for the year ended December 31, 2025 are as follows:

  
  
 BTC Units
  
  
 Amount ($)
  

 Restricted bitcoin balance as at December 31, 2024
  
 -
  
  
 -
  

 Bitcoin pledged as collateral
  
 50.54
  
  
 5,976,307
  

 Bitcoin withheld to settle the principal and accrued interest
  
 (21.63
 )
  
 (3,521,263
 )

 Transfer to digital currencies after loan repayment
  
 (28.91
 )
  
 (4,680,732
 )

 Revaluation gain during the year
  
 -
  
  
 2,482,936
  

 Unrealized translation adjustment
  
 -
  
  
 (257,248
 )

 Restricted bitcoin balance as at December 31, 2025
  
 -
  
  
 -
  

 22

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 The Company used Tether and USD Coin its business operations to receive payments from its customers and make payments to service providers or suppliers. The balances and changes of these digital currencies are shown below:

  
  
 Tether Units
  
  
 Amount ($)
  

 Tether balance as at December 31, 2024
  
 1,002.13
  
  
 1,442
  

 Tether received as payment in arrangements with customers
  
 3,648,230.10
  
  
 5,111,528
  

 Tether exchanged for cash and services
  
 (5,445,988.80
 )
  
 (7,666,549
 )

 Tether exchanged for other digital currency
  
 597,392.79
  
  
 826,640
  

 Tether purchased with cash
  
 212,676.81
  
  
 295,819
  

 Tether received from sale of discontinued operation
  
 1,000,000.00
  
  
 1,443,800
  

 Revaluation loss
  
 -
  
  
 (370
 )

 Unrealized translation adjustment
  
 -
  
  
 5,910
  

 Tether balance as at December 31, 2025
  
 13,313.03
  
  
 18,220
  

  
  
 USD Coin
 Units
  
  
 Amount ($)
  

 USD Coin balance as at December 31, 2024
  
 -
  
  
 -
  

 USD Coin purchased with cash
  
 799,272.58
  
  
 1,149,993
  

 USD Coin exchanged for cash and services
  
 (799,272.58
 )
  
 (1,149,993
 )

 USD Coin balance as at December 31, 2025
  
 -
  
  
 -
  

 Hosting Revenue

 During the year ended December 31, 2025, the Company generated hosting revenue of $12,248,650 (2024 - $19,292,094). Two customers exceeded 10% of total hosting revenue of the Company with the following percentages representing their respective shares: 41% and 39% (2024 - three customers exceeded 10% of total hosting revenue of the Company with the following percentages representing their respective shares: 45%, 19% and 12%).

 The Company receives monthly prepayments and short-term or long-term deposits from various customers according to the terms of hosting arrangements. The monthly prepayments are classified as contract liabilities, and deposits are classified as customer liabilities in the consolidated statements of financial position.

 5.   Trade and Other Receivables

 Trade receivables are amounts due from customers for services performed in the ordinary course of business and claimed sales tax input tax credits. They are generally due for settlement within 30 days and are therefore all classified as current. Trade receivables are recognized initially at the amount of consideration that is unconditional, unless they contain significant financing components, when they are recognized at fair value. The Company holds the trade receivables with the objective of collecting the contractual cash flows and therefore measure them subsequently at amortized cost using the effective interest method.

 Other receivables represent amounts due from third parties from sale of equipment.

  
  
 December 31,
2025
  
  
 December 31,
2024
  

 Trade receivables
 $
 809,170
  
 $
 1,448,900
  

 Other receivables
  
 123,354
  
  
 -
  

 Total trade and other receivables
 $
 932,524
  
 $
 1,448,900
  

 23

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 6.   Prepaid Expenses

  
  
 December 31,
2025
  
  
 December 31,
2024
  

 General and administrative
 $
 401,173
  
 $
 260,825
  

 Hosting business utilities
  
 1,340,364
  
  
 996,668
  

 Total prepaid expenses
 $
 1,741,537
  
 $
 1,257,493
  

 7.   Deposits

  
  
 December 31,
2025
  
  
 December 31,
2024
  

 Utility deposits
 $
 2,240,568
  
 $
 2,160,374
  

 Lease deposits
  
 146,928
  
  
 313,033
  

 Bitcoin mining deposits
  
 -
  
  
 148,309
  

 Total deposits
 $
 2,387,496
  
 $
 2,621,716
  

 Less: current portion of deposits
  
 92,104
  
  
 148,309
  

 Non-current portion of deposits
 $
 2,295,392
  
 $
 2,473,407
  

 8.   Other Non-Current Assets

 In November 2022 and July 2023, the Company contributed US$450,000 (C$639,167 equivalent) and US$350,000 (C$497,129 equivalent) to regulated power and utility entities as a form of aid in construction for the required infrastructure maintenance pursuant to the terms of the arrangements. The Company amortizes the amounts over the lease term of 10 and 6 years, respectively, the terms of the contracts, on a straight-line basis.

 In December 2025, the Company contributed US$157,111 (C$216,515 equivalent) to regulated power and utility entity as a form of aid in construction for the required infrastructure maintenance pursuant to the terms of the arrangement. The Company amortizes this amount over the lease term of 10 years on a straight-line basis.

 Amortization expense is included in cost of revenues: depreciation in the consolidated statement of income or loss and comprehensive income or loss. For the year ended December 31, 2025, the Company incurred depreciation expense of $148,076 (2024 - $140,400).

 24

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 9.   Property and Equipment

  
  
 Infrastructure
  
  
 Mining
equipment
  
  
 Construction-
in-progress
  
  
 Land
  
  
 Total
  

 Cost
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Balance, December 31, 2023
 $
 3,051,267
  
 $
 780,334
  
 $
 539,862
  
 $
 136,658
  
 $
 4,508,121
  

 Additions from business combination
  
 1,917,194
  
  
 3,069,626
  
  
 -
  
  
 -
  
  
 4,986,820
  

 Additions
  
 -
  
  
 731,146
  
  
 -
  
  
 -
  
  
 731,146
  

 Designated as assets held for sale
  
 (74,287
 )
  
 -
  
  
 (546,229
 )
  
 -
  
  
 (620,516
 )

 Translation adjustment
  
 350,890
  
  
 245,372
  
  
 6,367
  
  
 12,016
  
  
 614,645
  

 Balance, December 31, 2024
 $
 5,245,064
  
 $
 4,826,478
  
 $
 -
  
 $
 148,674
  
 $
 10,220,216
  

 Additions
  
 2,584,379
  
  
 338,119
  
  
 84,307
  
  
 -
  
  
 3,006,805
  

 Disposals
  
 (1,256,173
 )
  
 (1,987,306
 )
  
 -
  
  
 -
  
  
 (3,243,479
 )

 Translation adjustment
  
 (232,267
 )
  
 (214,484
 )
  
 (1,457
 )
  
 (7,057
 )
  
 (455,265
 )

 Balance, December 31, 2025
 $
 6,341,003
  
 $
 2,962,807
  
 $
 82,850
  
 $
 141,617
  
 $
 9,528,277
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Accumulated depreciation and impairment
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Balance, December 31, 2023
 $
 325,518
  
 $
 122,341
  
 $
 -
  
 $
 -
  
 $
 447,859
  

 Additions
  
 911,895
  
  
 1,294,455
  
  
 -
  
  
 -
  
  
 2,206,350
  

 Translation adjustment
  
 90,463
  
  
 66,460
  
  
 -
  
  
 -
  
  
 156,923
  

 Balance, December 31, 2024
 $
 1,327,876
  
 $
 1,483,256
  
 $
 -
  
 $
 -
  
 $
 2,811,132
  

 Additions
  
 1,619,280
  
  
 1,929,175
  
  
 -
  
  
 -
  
  
 3,548,455
  

 Reversal on disposals
  
 (974,101
 )
  
 (1,893,327
 )
  
 -
  
  
 -
  
  
 (2,867,428
 )

 Translation adjustment
  
 (69,186
 )
  
 (96,292
 )
  
 -
  
  
 -
  
  
 (165,478
 )

 Balance, December 31, 2025
 $
 1,903,869
  
 $
 1,422,812
  
 $
 -
  
 $
 -
  
 $
 3,326,681
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Carrying amount
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Balance, December 31, 2023
 $
 2,725,749
  
 $
 657,993
  
 $
 539,862
  
 $
 136,658
  
 $
 4,060,262
  

 Balance, December 31, 2024
 $
 3,917,188
  
 $
 3,343,222
  
 $
 -
  
 $
 148,674
  
 $
 7,409,084
  

 Balance, December 31, 2025
 $
 4,437,134
  
 $
 1,539,995
  
 $
 82,850
  
 $
 141,617
  
 $
 6,201,596
  

 The Company sold infrastructure and mining equipment that are close to the end of their useful lives and realized a gain on sale of $54,360 classified as other income in the consolidated statement of income or loss and comprehensive income or loss.

 25

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 10.   Right-of-Use Assets and Lease Liabilities

 On March 1, 2023, and July 26, 2023, the Company entered into two agreements to lease building property in Kentucky state. The building properties are used by the Company to provide hosting services to arms-length bitcoin mining customers. The leases have an initial term of 10 years and 6 years, respectively, and the Company will make lease payments of US$10,000 and US$1,000 per month, respectively. The Company used 20%, its estimated incremental borrowing rate, to calculate the present value of the lease payments on initial measurement. 

 On July 23, 2024, as part of the business combination with Cathedra (Note 2), the Company acquired right-of-use (ROU) assets and lease liabilities comprising two building property lease agreements (the "CBIT leases") with remaining lease terms of 10 and 18 months. The Company will make lease payments on the CBIT leases of US$103,680 and US$11,200 per month, respectively.

 Effective August 1, 2024, the Company and the lessor amended one of the CBIT leases, changing the monthly payments from US$103,680 to an amount based on electricity consumption, which effectively remained fixed. The lease term was extended by five months, making the new end date August 31, 2025; after this, the lease converted to a month-to-month agreement. As a result of the lease amendments, the Company re-measured its lease liability using interest an interest rate of 20%, the Company's estimated incremental borrowing rate at the time of re-measurement, and a corresponding increase to right-of-use asset.

 In July 2025, the Company entered into a new agreement to lease the property located in Franklin, Kentucky. The lease expires on July 31, 2035. The ROU asset and corresponding lease liability were measured using an interest rate of 20%, the Company's estimated incremental borrowing rate, to calculate the present value of the lease payments on initial measurement.

 Right-of-use assets
  
 Building Properties
  

 Cost
  
  
  

 Balance, December 31, 2023
 $
 737,903
  

 Additions from business combination (Note 2)
  
 1,510,745
  

 Re-measurement of right-of-use asset
  
 235,663
  

 Translation adjustment
  
 143,656
  

 Balance, December 31, 2024
 $
 2,627,967
  

 Additions
  
 705,542
  

 Translation adjustment
  
 (121,067
 )

 Balance, December 31, 2025
 $
 3,212,442
  

  
  
  
  

 Accumulated Depreciation
  
  
  

 Balance, January 1, 2024
 $
 61,203
  

 Depreciation charge in the year
  
 821,529
  

 Translation adjustment
  
 39,372
  

 Balance, December 31, 2024
 $
 922,104
  

 Depreciation charge in the year
  
 1,136,271
  

 Translation adjustment
  
 (65,103
 )

 Balance, December 31, 2025
 $
 1,993,272
  

  
  
  
  

 Carrying value
  
  
  

 Balance, December 31, 2024
 $
 1,705,863
  

 Balance, December 31, 2025
 $
 1,219,170
  

 26

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 The Company is committed to minimum lease payments as follows:

  
  
 December 31,
2025
  
  
 December 31,
2024
  

 Maturity analysis - contractual undiscounted cash flows
  

  
  
  
  

 Less than one year
 $
 345,391
  
 $
 1,347,386
  

 One to five years
  
 1,358,265
  
  
 752,545
  

 More than five years
  
 1,096,480
  
  
 532,393
  

 Total undiscounted lease labilities
 $
 2,800,136
  
 $
 2,632,324
  

  
  
  
  
  
  
  

 Lease liabilities
 $
 1,362,065
  
 $
 1,827,922
  

 Current
 $
 80,053
  
 $
 1,132,305
  

 Non-current
 $
 1,282,012
  
 $
 695,617
  

 During the year ended December 31, 2025, the Company recognized total interest expense of $268,698 (2024 - $274,284) in connection with its lease liabilities.

 11.   Assets Classified as Held for Sale and Discontinued Operation

 The Company formed T Tech in November 2023, initially holding a 100% interest. On January 10, 2024, it reorganized and gave up 75% interest in exchange for contribution promises.

 Subsequently the Company together with other members of T Tech decided to sell T Tech. The Board of Managers, consisting of Cathedra Bitcoin Inc.'s majority shareholders, approved the sale and assets before the year ended December 31, 2024. Accordingly, the assets and liabilities directly associated with those assets were classified as held for sale.

 The major classes of assets classified as held for sales and liabilities directly associated with the assets classified as held for sale as at December 31, 2024 are as follows:

 Assets
  
  
  

 Cash and cash equivalents
  
 85,209
  

 Digital currencies
  
 1,358,212
  

 Trade receivables
  
 3,381,400
  

 Prepaid expenses
  
 310,802
  

 Property and equipment
  
 16,560,053
  

 Deposits
  
 9,432,076
  

  
 $
 31,127,752
  

  
  
  
  

 Liabilities
  
  
  

 Trade payables and accrued liabilities
 $
 3,029,087
  

 Due to related parties
  
 5,616,772
  

 Contract liabilities
  
 1,668,665
  

 Customer liabilities
  
 4,191,834
  

  
 $
 14,506,358
  

  
  
  
  

 Net assets directly associated with assets classified as held for sale
 $
 16,621,394
  

 27

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 The results of T Tech's operations for the years ended December 31, 2025 and 2024 are as follows:

 Year ended:
  
 December 31,
2025
  
  
 December 31,
2024
  

 Revenues
 $
 1,318,623
  
 $
 11,531,580
  

 Cost of revenues
  
 1,963,286
  
  
 12,213,498
  

 Operating expenses
  
 121,411
  
  
 41,863
  

 Operating loss
 $
 766,074
  
 $
 723,781
  

 Other income (expense)
  
 (118,590
 )
  
 (95,495
 )

 Exchange differences on translation of foreign operations reclassified to profit or loss
  
 1,175,085
  
  
 -
  

 Income/(loss) before tax from discontinued operation
 $
 290,421
  
 $
 (819,276
 )

 Tax expense
  
 -
  
  
 -
  

 Profit/(loss) from discontinued operation
 $
 290,421
  
 $
 (819,276
 )

 The net cash flow generated by T Tech for the years ended December 31, 2025 and 2024 are as follows:

 Year ended:
  
 December 31,
2025
  
  
 December 31,
2024
  

 Operating
  
 (884,664
 )
  
 (7,789,748
 )

 Investing
  
 -
  
  
 (7,161,729
 )

 Financing
  
 -
  
  
 15,059,044
  

 Effect of foreign exchange rate fluctuation
  
 -
  
  
 (28,176
 )

 Net cash inflow/(outflow)
 $
 (884,664
 )
 $
 79,391
  

 The Company received full consideration from the sale of T Tech during the year ended December 31, 2025. The Company fulfilled all conditions of the sale in September 2025 and recognized a gain on disposal of subsidiary of $167,365 upon closing of the sale. T Tech was de-consolidated effective March 1, 2025 subsequent to receipt of the first tranche of the consideration and takeover by the buyer, accordingly assets classified as held for sale, liabilities directly associated with those assets and non-controlling interest were de-recognized.

 12.   Investments

 Initial valuation of investments is based on the acquisition cost, which approximates the fair value. Subsequent valuations reflect asset appraisals, as well as market transaction data, such as financing rounds. The Company's holdings in private companies are generally valued utilizing net asset values. As of December 31, 2025 and 2024, Cathedra held the following investments without exercise of significant influence over them:

 Low Time Preference Fund II, LLC

 On November 12, 2021, Cathedra subscribed for limited liability company interests in Low Time Preference Fund II, LLC, for a total value of $312,925 (US$250,000). As of December 31, 2025, the fair value of this investment is $403,768 (December 31, 2024 - $404,327) with unrealized gain of $19,583 (2024 - unrealized loss of $14,321) recognized in the consolidated statement of income or loss.

 Silvermoon Inc.

 On May 5, 2022, Cathedra received 35,000,000 common shares of Silvermoon Inc. ("Silvermoon") as part a non-arm's length share exchange agreement for giving up a 100% ownership in The Good Shepherd Land and Livestock Company Limited, a UK based legal entity. Cathedra held 35,000,000 common shares as of July 23, 2024, and December 31, 2024 and 2025, which represents approximately 21.6% of the issued and outstanding common shares of Silvermoon. The Company exercised no significant influence as of July 23, 2024, and December 31, 2024 and 2025, therefore the investment is classified and accounted for at FVTPL. The fair value of Silvermoon was primarily driven by the underlying 4.25 acres of land in South West United Kingdom which includes 4 dairy buildings which was fair valued based on a third party appraiser who prepared a summary of comparable properties.

 28

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 As of December 31, 2025, the fair value of this investment is $612,890 (December 31, 2024 - $512,156) with unrealized gain of $100,734 (2024 - $nil) recognized in the consolidated statement of income or loss.

 13.   Trade Payables and Accrued Liabilities

  
  
 December 31,
2025
  
  
 December 31,
2024
  

 Trade payables
 $
 1,232,380
  
 $
 889,736
  

 Accrued liabilities
  
 1,427,600
  
  
 1,588,476
  

 Total trade payables and accrued liabilities
 $
 2,659,980
  
 $
 2,478,212
  

 14.   Loans and borrowings

 Convertible loan

 In connection with the closing of business combination, the Company amended the conversion price of 3.5% senior secured convertible debentures of the Company due November 11, 2025, originally issued to the debenture holder on November 11, 2021 (the "Debentures"), from $23.40 to $4.50. The aggregate principal amount of the Debentures was $5,733,728 as of December 31, 2024.

 The Company applied a debt modification accounting for the change in terms in accordance with IFRS 9, Financial Instruments . The market rate of 18.5% was used to estimate a liability component of the convertible loan.

 Liability Component

 Balance, December 31, 2023
 $
 -
  

 Recognized in business combination (Note 2)
  
 4,827,945
  

 Accretion (i)
  
 306,176
  

 Balance, December 31, 2024
 $
 5,134,121
  

 (i) Accretion expense is included in net finance costs in the consolidated statement of income or loss.

 Equity Component

 The equity component of convertible loan of $577,210 was recognized in the business combination (Note 2).

 On March 19, 2025, the Company restructured its outstanding debt whereby the convertible loan's principal amount was extinguished through repayment of the outstanding principal with $4,586,982 plus accrued interest. In addition, the holder of the convertible loan agreed to surrender 363,233 SV share purchase warrants of the Company for cancellation. The balance as of December 31, 2025 and the change for the year then ended is as follows:

 Balance, December 31, 2024
 $
 5,134,121
  

 Accretion
  
 190,869
  

 Repayment of interest
  
 (44,596
 )

 Repayment of principal
  
 (4,586,983
 )

 Gain from debt settlement
  
 (693,411
 )

 Balance, December 31, 2025
 $
 -
  

 Term loan

 Concurrently, the Company entered into a new term loan of US$2,494,693 ($3,589,364 equivalent) to partially repay the outstanding principal amount of the convertible loan. The loan is secured by approximately 50 of the Company's bitcoin, carries interest at a rate of 13% per annum, payable monthly; and is interest-only until maturity on March 18, 2026. The Company prepaid this loan in full in July 2025.

 29

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 Balance, December 31, 2024
 $
 -
  

 Proceeds, net of deferred finance cost
  
 3,564,168
  

 Amortization of deferred financing cost
  
 53,143
  

 Repayment
  
 (3,483,199
 )

 Translation adjustment
  
 (134,112
 )

 Balance, December 31, 2025
 $
 -
  

 At inception, the Company recognized deferred financing cost of $54,277, which was fully amortized over term of the loan. The Company paid $200,856 in term loan interest.

 15.   Share Capital

 On July 22, 2024, in connection with the business combination the Company altered the articles of the corporation, which was approved by the Company's shareholders at its annual and special meeting of shareholders:

 a.   Changed the name of its common shares to "subordinate voting shares" (SV shares);

 b.   Created a new class of multiple voting shares (MV shares) convertible into 100 subordinate voting shares;

 c.   Added special rights and restrictions to the subordinate voting shares and the multiple voting shares, pursuant to which, among other things, the holders of the multiple voting shares are entitled to 1.52 votes per multiple voting share held. On an "as converted" basis, assuming the conversion of the multiple voting shares to subordinate voting shares, the holders of multiple voting shares will have 1.52 votes per subordinate voting share compared to 1 vote per subordinate voting share by the holders of the subordinate voting shares.

 Authorized

 Unlimited number of subordinate voting shares without par value. Each subordinate voting share entitles the holder to one vote.

 Unlimited number of multiple voting shares without par value. Each multiple voting share is convertible into 100 subordinate voting shares and entitles the holder to 1.52 votes.

 The consolidated financial statements for the years ended December 31, 2025 and 2024 incorporate the 30-to-1 share consolidation, which became effective on October 16, 2025. All shares and per share amounts have been restated to reflect the share consolidation retrospectively.

 Issued and Outstanding

 On February 7, 2025, the Company issued 3,248 SV shares for vested RSUs.

 On July 31, 2025, the Company issued 135,690 SV shares for vested RSUs.

 On December 2, 2025, the Company completed a non-brokered private placement of an aggregate of 430,000 units of the Company at a price of $1.25 per unit for aggregate gross proceeds of $537,500. Each unit consists of one SV share and one SV share purchase warrant, with each entitling the holder thereof to acquire one additional SV share at an exercise price of $1.88 per share for a period of two years following the closing date of the private placement.

 Upon the closing of the business combination on July 23, 2024, 7,917,119 SV shares and 208,446 MV shares were issued and outstanding.

 On August 7, 2024, the Company issued 19,356 SV shares to its employees from exercising of vested RSUs.

 On October 16, 2024, the Company issued 31,489 SV shares from exercising of vested RSUs.

 30

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 Post-merger share capital

 Multiple voting shares (MV shares)
  
 No.
  
  
 Amount ($)
  

 Kungsleden's common shares on the acquisition date
  
 33,333
  
  
 1,278
  

 Share exchange ratio (Note 2)
  
 6.253429078
  
  
 -
  

 MV shares issued in exchange for Kungsleden's common shares
  
 208,446
  
  
 21,576,955
  

 Balance, December 31, 2024 and 2025
  
 208,446
  
  
 21,578,233
  

  
  
  
  
  
  
  

 Subordinate voting shares (SV shares)
  
 No.
  
  
 Amount ($)
  

 Cathedra's common shares on the acquisition date
  
 7,917,119
  
  
 -
  

 Exchange ratio
  
 1.00
  
  
 -
  

 SV shares of the Resulting Issuer
  
 7,917,119
  
  
 -
  

 Issued on RSU exercise
  
 50,845
  
  
 138,521
  

 Balance, December 31, 2024
  
 7,967,964
  
  
 138,521
  

 Issued on RSU exercise
  
 138,938
  
  
 416,287
  

 Issued in connection to the non-brokered private placement
  
 430,000
  
  
 516,107
  

 Subscriptions receivables (a)
  
  
  
  
 (150,000
 )

 Balance, December 31, 2025
  
 8,536,902
  
  
 920,915
  

  
  
  
  
  
  
  

  
  
  
  
  
  
  

  
  
 December 31,
2025
  
  
 December 31,
2024
  

 An equivalent number of SV shares based on an a 'if converted' basis (convertible from MV shares)
  
 20,844,600
  
  
 20,844,600
  

 SV shares outstanding
  
 8,536,902
  
  
 7,967,964
  

 The total SV shares, including SV shares on an a 'if converted' basis
  
 29,381,502
  
  
 28,812,564
  

 (a) The Company collected the entire $150,000 subscriptions subsequent to year-end date.

 16.   Reserves

 Replacement Awards in Business Combination

 The stock options were fair valued using the Black Scholes option pricing model. The weighted average inputs used in the Black Scholes model were as follows:

 Share price on business combination date
 $
 3.00
  

 Exercise price
 $
 15.00
  

 Risk-free interest rate
  
 3.60%
  

 Expected annualized share volatility
  
 130.00%
  

 Expected dividend yield
  
 0.00%
  

 Expected life (years)
  
 1.95
  

 Fair value of stock option
 $
 0.90
  

 The share purchase warrants were fair valued using the Black Scholes option pricing model. The weighted average inputs used in the Black Scholes model were as follows:

 Share price on business combination date
 $
 3.00
  

 Exercise price
 $
 28.20
  

 Risk-free interest rate
  
 3.58%
  

 Expected annualized share volatility
  
 130.00%
  

 Expected dividend yield
  
 0.00%
  

 Expected life (years)
  
 1.97
  

 Fair value of share purchase warrant
 $
 0.90
  

 The restricted share units were valued using the fair value of SV share of the Company on the issuance date.

 31

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 Restricted Share Units (RSU)

 On July 22, 2024, the Company implemented a long-term equity incentive plan ("LTIP"), comprising a rolling option plan covering up to 10% of the issued and outstanding SV shares, as well as a fixed plan for up to 2,875,139 SV shares designated as RSUs. Subsequently, the fixed allocation of SV shares reserved for RSUs was increased to 2,895,166 SV shares following approval by the shareholders at the annual general meeting held on December 12, 2025.

 For the year ended December 31, 2025, the Company recognized share-based compensation of $728,880 (2024 - $217,966).

 A summary of changes in restricted share units outstanding for the years ended December 31, 2025 and 2024 follows:

 Balance, December 31, 2023
  
 -
  

 Granted as replacement for Cathedra's RSUs
  
 57,228
  

 Granted (a)
  
 271,380
  

 Cancelled/Forfeited (b)
  
 (3,133
 )

 Exercised
  
 (50,846
 )

 Balance, December 31, 2024
  
 274,629
  

 Granted (c)
  
 2,672,584
  

 Cancelled/Forfeited
  
 (45,230
 )

 Exercised
  
 (138,938
 )

 Balance, December 31, 2025
  
 2,763,045
  

 (a)   1/3 of RSUs to vest annually until July 23, 2027

 (b)   To settle withholding tax obligations due to the issuance of SV shares to its employees

 (c)   The Company granted RSUs as follows:

 On September 29, 2025, the Company granted 1,447,584 RSUs to the employee of the Company. The award vests in three equal annual installments on each of the first, second, and third anniversaries of the grant date, subject to accelerated vesting upon a Change of Control.

 On December 2, 2025, the Company granted 445,000 RSUs to directors, officers and consultants of the Company, 210,000 of which vest on the first anniversary of the grant date and the remainder of RSUs vest as follows:  One-third vests on the first anniversary of the grant date, with the remaining balance vesting in eight equal quarterly installments on each of March 2, June 2, September 2, and December 2 until fully vested.

 On December 16, 2025, the Company granted 780,000 RSUs to directors, officers and consultant of the Company with the following vesting terms: One-third vests on the first anniversary of the grant date, with the remaining balance vesting in eight equal quarterly installments on each of March 16, June 16, September 16, and December 16 until fully vested.

 Stock Options

 A summary of changes in stock options follows:

  
  
 Number of
stock options
  
  
 Weighted
average
exercise price
  

 Balance, December 31, 2023
  
 -
  
  
 -
  

 Granted as replacement for Cathedra's stock options
  
 120,175
  
  
 15.00
  

 Expired
  
 (3,333
 )
  
 15.30
  

 Balance, December 31, 2024
  
 116,842
  
  
 15.00
  

 Granted (a)
  
 615,873
  
  
 1.44
  

 Cancelled
  
 (7,922
 )
  
 14.33
  

 Balance, December 31, 2025
  
 724,793
  
  
 13.42
  

 32

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 (a)   The Company granted stock options as follows:

 On February 1, 2025, the Company granted 15,873 stock options to the newly hired employee. All the stock options vest on 12-month anniversary from the grant date.

 On December 2, 2025, the Company granted 600,000 stock options to a consultant and directors of the Company, 100,000 of which vest immediately and the remainder of stock options vest as follows:  One-third vests on the first anniversary of the grant date, with the remaining balance vesting in eight equal quarterly installments on each of March 2, June 2, September 2, and December 2 until fully vested.

 The stock options outstanding and exercisable as of December 31, 2025, are as follows:

 Exercise price ($)
 Number of stock options
outstanding
 Weighted average remaining
life

                         1.42
                   600,000
                     4.92

                       2.25
                     15,873
                     4.09

                       3.90
                         333
                       1.82

                       10.50
                       2,961
                       1.38

                       12.30
                       2,961
                       1.03

                     14.55
                     8,333
                     0.65

                       14.70
                   66,666
                     0.67

                       15.00
                       1,000
                       2.14

                       16.80
                     21,666
                     0.73

                       18.00
                     5,000
                       2.14

 Outstanding
                     724,793
                           4.28

 Exercisable
                     208,920
                           2.77

 The weighted average exercise price of options outstanding and exercisable as of December 31, 2025, is $8.52 (2024 - $15.00)

 For the year ended December 31, 2025, the Company recognized share-based compensation from stock options of $166,302 (2024 - $nil).

 The granted stock options were fair valued using the Black Scholes option pricing model. The weighted average inputs used in the Black Scholes model were as follows:

 Share price
 $
 1.44
  

 Exercise price
 $
 1.44
  

 Risk-free interest rate
  
 2.63%
  

 Expected annualized share volatility
  
 121.57%
  

 Expected dividend yield
  
 0.00%
  

 Expected life (years)
  
 3.97
  

 Fair value of stock option
 $
 1.13
  

 Warrants

 During the year ended December 31, 2024, the Company repriced 1,227,320 SV share warrants and included a mandatory acceleration provision if the SV share closing price exceeds the SV share price of $4.50 continuously for 10 days. As a result of the warrant repricing, the Company recorded a financing fee of $1,299,106, which is included in net finance costs in the consolidated statement of income and comprehensive income. The following weighted average inputs were used in the Black Scholes option-pricing model:

 33

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

  
 Weighted average

 Grant date share price
 3.00

 Exercise price
 3.60

 Expected life (years)
 1.96

 Volatility
 109.49%

 Dividend yield
 0%

 Risk free rate
 2.91%

 A summary of changes in warrants outstanding for the years ended December 31, 2025 and 2024 is as follows:

  
  
 Number of
warrants
  
  
 Weighted
average
exercise price
  

 Balance, December 31, 2023
  
 -
  
  
 -
  

 Issued as replacement for Cathedra's warrants
  
 1,704,820
  
  
 28.20
  

 Balance, December 31, 2024
  
 1,704,820
  
  
 11.10
  

 Issued (Note 15)
  
 430,000
  
  
 1.88
  

 Cancelled (a)(b)
  
 (836,733
 )
  
 3.60
  

 Balance, December 31, 2025
  
 1,298,087
  
  
 12.90
  

 (a)   In March 2025, the holder of the convertible debenture agreed to surrender 363,233 pursuant to the terms of the debt settlement agreement, see additional details in Note 14.

 (b)   In May 2025, the Company purchased for cancellation an aggregate of 473,500 subordinate voting share purchase warrants for an aggregate amount of US$75,002 ($103,430). The warrants had an exercise price of $3.60.

 The warrants outstanding as of December 31, 2025 and 2024 are as follows:

  
  
  
  
  
  
  
 December 31, 2025
  
  
  
  
  
 December 31, 2024
  

  
 Exercise
price ($)
  
  
 Number of warrants
outstanding
  
  
 Weighted average
remaining life
  
  
 Number of
warrants
outstanding
  
  
 Weighted average
remaining life
  

  
 1.88
  
  
 430,000
  
  
 1.92
  
  
 -
  
  
 -
  

  
 3.60
  
  
 390,588
  
  
 0.34
  
  
 1,227,320
  
  
 1.70
  

  
 16.20
  
  
 89,582
  
  
 1.38
  
  
 89,582
  
  
 2.38
  

  
 18.90
  
  
 29,589
  
  
 0.23
  
  
 29,589
  
  
 1.23
  

  
 23.70
  
  
 89,582
  
  
 1.38
  
  
 89,582
  
  
 2.38
  

  
 31.20
  
  
 89,582
  
  
 1.38
  
  
 89,582
  
  
 2.38
  

  
 38.70
  
  
 89,582
  
  
 1.38
  
  
 89,582
  
  
 2.38
  

  
 46.20
  
  
 89,582
  
  
 1.38
  
  
 89,582
  
  
 2.38
  

  
 12.90
  
  
 1,298,087
  
  
 1.22
  
  
 1,704,819
  
  
 1.87
  

 17.   Contributed Surplus

 During the year ended December 31, 2025, the Company's shareholders agreed to forgive $813,016 of shareholder debt, which was recognized as a capital contribution within contributed surplus in the consolidated statement of financial position.

 34

 Cathedra Bitcoin Inc.
 Notes to Consolidated Financial Statements
 For the years ended December 31, 2025 and 2024
 ( Expressed in Canadian dollars, unless otherwise noted )

 18.   Related Party Transactions and Balances

 Key Management Compensation

 Key management personnel include those persons with authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of the Co…

EX-99.3 · exhibit99-3.htm

EX-99.3
 11
 exhibit99-3.htm
 EXHIBIT 99.3

  

  

 Cathedra Bitcoin Inc.

 Condensed Consolidated Interim Financial Statements

 For the three months ended Mar 31, 202 6 and 2025

 (expressed in Canadian dollars, unless otherwise noted)

  

  

  

 Cathedra Bitcoin Inc.
 Condensed Consolidated Interim Statements of Financial Position
 As at March 31, 2026 and December 31, 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 As at:
  
 Notes
  
  
 March 31, 2026
 (unaudited)
  
  
 December 31,
2025
 (audited)
  

 ASSETS
  
  
  
  
  
  
  
  
  

 Current assets
  
  
  
  
  
  
  
  
  

 Cash and cash equivalents
  
  
  
 $
 326,101
  
 $
 1,083,973
  

 Digital currencies
  
 4
  
  
 381,107
  
  
 584,139
  

 Trade and other receivables
  
  
  
  
 1,197,189
  
  
 932,524
  

 Due from related parties
  
 15
  
  
 44,594
  
  
 19,792
  

 Prepaid expenses
  
 5
  
  
 1,346,765
  
  
 1,741,537
  

 Deposits
  
 6
  
  
 -
  
  
 92,104
  

 Other assets
  
  
  
  
 387,383
  
  
 383,873
  

 Total current assets
  
  
  
 $
 3,683,139
  
 $
 4,837,942
  

 Non-current assets
  
  
  
  
  
  
  
  
  

 Deposits
  
 6
  
  
 2,334,413
  
  
 2,295,392
  

 Other non-current assets
  
  
  
  
 893,851
  
  
 919,700
  

 Property and equipment
  
 7
  
  
 5,989,530
  
  
 6,201,596
  

 Right-of-use assets
  
 8
  
  
 1,201,300
  
  
 1,219,170
  

 Investments
  
 10
  
  
 1,116,006
  
  
 1,016,658
  

 Goodwill
  
  
  
  
 15,673,534
  
  
 15,673,534
  

 Total assets
  
  
  
 $
 30,891,773
  
 $
 32,163,992
  

 LIABILITIES
  
  
  
  
  
  
  
  
  

 Current liabilities
  
  
  
  
  
  
  
  
  

 Trade payables and accrued liabilities
  
 11
  
  
 3,070,831
  
  
 2,659,980
  

 Due to related parties
  
 15
  
  
 1,146,368
  
  
 1,109,675
  

 Income tax payable
  
  
  
  
 246,998
  
  
 334,900
  

 Contract liabilities
  
  
  
  
 543,751
  
  
 791,671
  

 Customer liabilities
  
  
  
  
 2,937,515
  
  
 2,044,454
  

 Decommissioning liability
  
  
  
  
 -
  
  
 30,839
  

 Current portion of lease liabilities
  
 8
  
  
 85,553
  
  
 80,053
  

 Total current liabilities
  
  
  
 $
 8,031,016
  
 $
 7,051,572
  

 Non-current liabilities
  
  
  
  
  
  
  
  
  

 Lease liabilities
  
 8
  
  
 1,280,774
  
  
 1,282,012
  

 Total liabilities
  
  
  
 $
 9,311,790
  
 $
 8,333,584
  

 EQUITY
  
  
  
  
  
  
  
  
  

 Share capital
  
 13
  
  
 22,649,148
  
  
 22,499,148
  

 Reserves
  
 14
  
  
 4,605,982
  
  
 3,910,445
  

 Contributed surplus
  
  
  
  
 813,016
  
  
 813,016
  

 Accumulated other comprehensive income
  
  
  
  
 2,855,447
  
  
 3,544,813
  

 Deficit
  
  
  
  
 (9,343,610
 )
  
 (6,937,014
 )

 Total shareholders' equity
  
  
  
 $
 21,579,983
  
 $
 23,830,408
  

 Total liabilities and equity
  
  
  
 $
 30,891,773
  
 $
 32,163,992
  

 The accompanying notes are an integral part of these condensed consolidated interim financial statements

 Nature of operations (Note 1)

 Segment reporting (Note 19)

 Events after reporting period (Note 20)

 Approved by the Board of Directors and authorized for issue on May 28, 2026:

 "Joel Block"
 Director
  
 "David Jaques"
 Director
  

 2

 Cathedra Bitcoin Inc.
 Condensed Consolidated Interim Statements of Loss and Comprehensive Loss
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 For the three months ended:
  
 Note
  
  
 March 31, 2026
 (unaudited)
  
  
 March 31, 2025
 (unaudited)
  

 Revenues
  
 4
  
 $
 3,654,149
  
 $
 6,503,290
  

 Cost of revenues
  
  
  
  
  
  
  
  
  

 Operating costs
  
  
  
  
 (3,545,454
 )
  
 (4,310,679
 )

 Depreciation
  
 7,8
  
  
 (485,007
 )
  
 (1,527,172
 )

 Gross income (loss)
  
  
  
 $
 (376,312
 )
 $
 665,439
  

 Realized gain on sale of digital currencies
  
 4
  
  
 3,519
  
  
 156,388
  

 Income (loss) before operating expenses
  
  
  
 $
 (372,793
 )
 $
 821,827
  

 Operating expenses
  
  
  
  
  
  
  
  
  

 Director fees
  
 15
  
  
 64,126
  
  
 77,659
  

 Management and consulting fees
  
 15
  
  
 269,239
  
  
 361,512
  

 Office and administration
  
  
  
  
 444,378
  
  
 538,920
  

 Professional fees
  
  
  
  
 1,037,033
  
  
 344,331
  

 Salaries and wages
  
 15
  
  
 166,755
  
  
 89,152
  

 Share-based compensation
  
 14,15
  
  
 695,537
  
  
 100,025
  

 Total operating expenses
  
  
  
 $
 (2,677,068
 )
 $
 (1,511,599
 )

 Operating loss
  
  
  
 $
 (3,049,861
 )
 $
 (689,772
 )

 Other income (expenses)
  
  
  
  
  
  
  
  
  

 Foreign exchange gain (loss)
  
  
  
  
 709,604
  
  
 (94,517
 )

 Net finance costs
  
 8,12
  
  
 (67,925
 )
  
 (297,332
 )

 Transaction costs
  
  
  
  
 -
  
  
 7,048
  

 Gain on debt settlement
  
 12
  
  
 -
  
  
 693,411
  

 Unrealized gain (loss) on investment
  
 10
  
  
 91,067
  
  
 (4,383
 )

 Loss from continuing operations before income taxes
  
  
  
 $
 (2,317,115
 )
 $
 (385,545
 )

 Current income tax expense
  
  
  
  
 (89,481
 )
  
 (38,621
 )

 Income from discontinued operation
  
 9
  
  
 -
  
  
 290,421
  

 Net loss
  
  
  
 $
 (2,406,596
 )
 $
 (133,745
 )

 Other comprehensive loss
  
  
  
  
  
  
  
  
  

 Items that may be reclassified to income or loss
  
  
  
  
  
  
  
  
  

 Exchange differences on translation of foreign operations
  
  
  
  
 (604,115
 )
  
 (18,100
 )

 Exchange differences on translation of discontinued operation
  
 9
  
  
 -
  
  
 (1,875
 )

 Item that will not be reclassified to income or loss:
  
  
  
  
  
  
  
  
  

 Revaluation loss on digital currencies.
  
 4
  
  
 (85,251
 )
  
 (924,466
 )

 Total comprehensive loss
  
  
  
 $
 (3,095,962
 )
 $
 (1,078,186
 )

  
  
  
  
  
  
  
  
  
  

 Net loss for the period attributable to:
  
  
  
  
  
  
  
  
  

 Shareholders of the Company
  
  
  
  
 (2,406,596
 )
  
 (405,209
 )

 Non-controlling interest
  
 9
  
  
 -
  
  
 271,464
  

  
  
  
  
  
 (2,406,596
 )
  
 (133,745
 )

  
  
  
  
  
  
  
  
  
  

 Total comprehensive loss for the period attributable to:
  
  
  
  
  
  
  
  
  

 Shareholders of the Company
  
  
  
  
 (3,095,962
 )
  
 (1,347,775
 )

 Non-controlling interest
  
 9
  
  
 -
  
  
 269,589
  

  
  
  
  
  
 (3,095,962
 )
  
 (1,078,186
 )

  
  
  
  
  
  
  
  
  
  

 Basic and diluted loss per share
  
  
  
 $
 (0.08
 )
 $
 (0.01
 )

 Weighted average number of common shares outstanding - basic and diluted
  
  
  
  
 29,381,662
  
  
 29,063,423
  

 The accompanying notes are an integral part of these condensed consolidated interim financial statements

 3

 Cathedra Bitcoin Inc.
 Condensed Consolidated Interim Statements of Changes in Equity
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

  
  
 Share
capital
  
  
 Reserves
  
  
 Contributed
surplus
  
  
 Accumulated
other
comprehensive
income/(loss)
  
  
 Retained
earnings
(deficit)
  
  
 Shareholders'
equity
  
  
 Non-
controlling
interest
  
  
 Total
equity
  

 Balance - December 31, 2024
 $
 21,716,754
  
 $
 3,534,980
  
 $
 -
  
 $
 5,559
  
 $
 3,019,093
  
 $
 28,276,386
  
 $
 15,520,786
  
 $
 43,797,172
  

 De-recognition of non-controlling interest
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 (14,699,093
 )
  
 (14,699,093
 )

 Share-based compensation
  
 -
  
  
 100,025
  
  
 -
  
  
 -
  
  
 -
  
  
 100,025
  
  
 -
  
  
 100,025
  

 Subordinate voting shares issued on RSU vesting
  
 8,852
  
  
 (8,852
 )
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  

 Exchange differences on translation of foreign operations
  
 -
  
  
 -
  
  
 -
  
  
 (18,100
 )
  
 -
  
  
 (18,100
 )
  
 (1,875
 )
  
 (19,975
 )

 Reclassification of foreign exchange differences to statement of profit or loss on disposal
  
 -
  
  
 -
  
  
 -
  
  
 (83,803
 )
  
 83,803
  
  
 -
  
  
 (1,091,282
 )
  
 (1,091,282
 )

 Unrealized loss from revaluation of digital currencies
  
 -
  
  
 -
  
  
 -
  
  
 (924,466
 )
  
 -
  
  
 (924,466
 )
  
 -
  
  
 (924,466
 )

 Net income (loss) for the period
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 (405,209
 )
  
 (405,209
 )
  
 271,464
  
  
 (133,745
 )

 Balance - March 31, 2025 (unaudited)
 $
 21,725,606
  
 $
 3,626,153
  
 $
 -
  
 $
 (1,020,810
 )
 $
 2,697,687
  
 $
 27,028,636
  
 $
 -
  
 $
 27,028,636
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Balance - December 31, 2025
 $
 22,499,148
  
 $
 3,910,445
  
 $
 813,016
  
 $
 3,544,813
  
 $
 (6,937,014
 )
 $
 23,830,408
  
 $
 -
  
 $
 23,830,408
  

 Share-based compensation
  
 -
  
  
 695,537
  
  
 -
  
  
 -
  
  
 -
  
  
 695,537
  
  
 -
  
  
 695,537
  

 Subscriptions receivable collected
  
 150,000
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 150,000
  
  
 -
  
  
 150,000
  

 Exchange differences on translation of foreign operations
  
 -
  
  
 -
  
  
 -
  
  
 (604,115
 )
  
 -
  
  
 (604,115
 )
  
 -
  
  
 (604,115
 )

 Unrealized loss from revaluation of digital currencies
  
 -
  
  
 -
  
  
 -
  
  
 (85,251
 )
  
 -
  
  
 (85,251
 )
  
 -
  
  
 (85,251
 )

 Net income (loss) for the period
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 (2,406,596
 )
  
 (2,406,596
 )
  
 -
  
  
 (2,406,596
 )

 Balance - March 31, 2026 (unaudited)
 $
 22,649,148
  
 $
 4,605,982
  
 $
 813,016
  
 $
 2,855,447
  
 $
 (9,343,610
 )
 $
 21,579,983
  
 $
 -
  
 $
 21,579,983
  

 The accompanying notes are an integral part of these condensed consolidated interim financial statements

 Business Combination (Note 2)

 Share Capital (Note 13)

 Reserves (Note 14)

 4

 Cathedra Bitcoin Inc.
 Condensed Consolidated Interim Statements of Cash Flows
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 For the three months ended:
  
 March 31, 2026
 (unaudited)
  
  
 March 31, 2025
 (unaudited)
  

 OPERATING ACTIVITIES
  
  
  
  
  
  

 Net loss for the period
 $
 (2,406,596
 )
 $
 (133,745
 )

  
  
  
  
  
  
  

 Non-cash items:
  
  
  
  
  
  

 Depreciation
  
 485,007
  
  
 1,527,172
  

 Share-based compensation
  
 695,537
  
  
 100,025
  

 Net finance costs
  
 67,925
  
  
 297,332
  

 Unrealized gain (loss) on investment
  
 (91,067
 )
  
 4,383
  

 Gain on settlement of debt
  
 -
  
  
 (693,411
 )

 Foreign exchange
  
 (750,164
 )
  
 94,517
  

  
  
  
  
  
  
  

 Changes in non-cash working capital items:
  
  
  
  
  
  

 Digital currencies
  
 (716,632
 )
  
 (2,575,580
 )

 Trade and other receivables
  
 148,578
  
  
 (214,273
 )

 Prepaid expenses
  
 412,776
  
  
 198,286
  

 Deposits
  
 92,177
  
  
 -
  

 Other assets
  
 2,967
  
  
 4,696
  

 Trade payables and accrued liabilities
  
 421,124
  
  
 217,127
  

 Customer liabilities
  
 587,420
  
  
 (72,683
 )

 Advances from (repayment to) related parties
  
 -
  
  
 232,357
  

 Other liability
  
 -
  
  
 (360,685
 )

 Income tax payable
  
 (92,106
 )
  
 -
  

 Decommissioning liability
  
 (30,863
 )
  
 -
  

 Net cash used in operating activities
 $
 (1,173,917
 )
 $
 (1,374,482
 )

  
  
  
  
  
  
  

 INVESTING ACTIVITIES
  
  
  
  
  
  

 Purchase of property and equipment
 $
 (265,770
 )
 $
 -
  

 Proceeds from sale of property and equipment
  
 13,717
  
  
 -
  

 Acquisition of business, net of cash and cash equivalents acquired
  
 -
  
  
 1,435,211
  

 Expenditure on other non-current asset
  
 (215,509
 )
  
 -
  

 Purchase of digital currencies, net of fees
  
 (44,755
 )
  
 (29,235
 )

 Proceeds from sale of digital currencies, net of fees
  
 885,212
  
  
 1,838,820
  

 Net cash generated by investing activities
 $
 372,895
  
 $
 3,244,796
  

  
  
  
  
  
  
  

 FINANCING ACTIVITIES
  
  
  
  
  
  

 Payment of lease obligations
 $
 (86,417
 )
 $
 (461,566
 )

 Proceeds from term loan
  
 -
  
  
 3,580,426
  

 Repayment of principal and interest on convertible loan
  
 -
  
  
 (4,631,579
 )

 Proceeds from share issuance, net of issuance cost
  
 150,000
  
  
 -
  

 Net cash provided by (used in) financing activities
 $
 63,583
  
 $
 (1,512,719
 )

 Effect of foreign exchange rate fluctuation
  
 (20,433
 )
  
 96
  

 Increase (decrease) in cash and cash equivalents
 $
 (757,872
 )
 $
 357,691
  

 Cash and cash equivalents, beginning of period
 $
 1,083,973
  
 $
 101,367
  

 Cash and cash equivalents, end of period
 $
 326,101
  
 $
 459,058
  

 Supplemental cash flow information (Note 18)

 The accompanying notes are an integral part of these condensed consolidated interim financial statements

 5

 Cathedra Bitcoin Inc.
 Notes to Condensed Consolidated Interim Financial Statements
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 1.   Nature of Operations

 Cathedra Bitcoin Inc. ("Cathedra", "we", "our" or the "Company") develops and operates high-density compute infrastructure across North America. We host bitcoin mining clients across a portfolio of four data centers (45 megawatts total) in Tennessee and Kentucky. Cathedra also operates a fleet of proprietary bitcoin mining machines at our own and third-party data centers, producing approximately 400 PH/s of hash rate. We are focused on expanding our portfolio of data center infrastructure for high-density compute applications including bitcoin mining and artificial intelligence. Cathedra is headquartered in Vancouver, British Columbia, and our shares trade on the TSX Venture Exchange (the "TSXV") under the symbol CBIT and on the OTCQB Venture Market under the symbol CBTTF. The Company was incorporated under the Business Corporations Act (Ontario) on July 13, 2011, and our registered and records office is located at 170 - 422 Richards Street, Vancouver, British Columbia, Canada, V6B 2Z4.

 These condensed consolidated interim financial statements ("Financial Statements") have been prepared on a going concern basis which contemplates that the Company will continue operations for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business. During the three months ended March 31, 2026, the Company incurred a net loss of $2,406,596, had negative cash flows from operating activities of $1,173,917, and as of that date, had a working capital deficiency of $4,347,877 and a deficit of $9,343,610. These factors raise substantial doubt about its ability to continue as a going concern. These Financial Statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. The Company has relied on its plan to obtain additional equity and debt financing, in addition to operating cash flow, to fund its operations. Although the Company has been successful in the past in obtaining financing and it believes that will continue to be successful, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be available on terms that are advantageous to the Company.

 2.   Business Combination

 On July 23, 2024, the Company completed a business combination (the "Kungsleden Merger") with Kungsleden, Inc. ("Kungsleden"), a developer and operator of alternative high-density compute infrastructure.

 The Kungsleden Merger was completed according to the terms of a share exchange agreement dated March 6, 2024, as amended on June 18, 2024 (together, the "Share Exchange Agreement"), between Cathedra, Kungsleden and Kungsleden's shareholders (the "Vendors").

 Pursuant to the terms of the Share Exchange Agreement, Cathedra acquired all of the outstanding shares of Kungsleden from the Vendors in exchange for 208,446 multiple voting shares of Cathedra (the "Multiple Voting Shares") on the basis of an exchange ratio of one common share of Kungsleden for approximately 6.253429078 Multiple Voting Shares. The 208,446 Multiple Voting Shares issued to the Vendors are convertible into 20,844,600 subordinate voting shares of Cathedra (the "Subordinate Voting Shares"). The Kungsleden Merger resulted in the Vendors owning (on a non-diluted basis) approximately 72.5% of the equity of the Company and existing Cathedra shareholders owning the remaining 27.5% of the equity of the Company. The Vendors hold approximately 80% of the voting rights of Cathedra and existing Cathedra shareholders own the remaining 20%.

 The Kungsleden Merger has been accounted for using the acquisition method under IFRS 3, Business Combinations ("IFRS 3"), which requires that one of Cathedra or Kungsleden be determined to be the acquirer for accounting purposes. The Kungsleden Merger has been accounted for as a reverse take-over of Cathedra by Kungsleden. The entities which are party to the Kungsleden Merger meet the definition of a business. These consolidated financial statements reflect the continuance of Kungsleden and the acquisition and assumption of Cathedra's identifiable assets and liabilities, respectively, at fair value.

 6

 Cathedra Bitcoin Inc.
 Notes to Condensed Consolidated Interim Financial Statements
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 Kungsleden is deemed to have issued 379,310 common shares in exchange for all of the issued and outstanding shares of Cathedra. The consideration for shares issued is $22,154,165, including $577,210  (Note 14) being the convertible loan equity portion, based on Kungsleden's enterprise value of $93,457,280. The Company issued the following replacement awards: 120,175 stock options, 57,228 restricted share units and 1,704,819 share purchase warrants valued $1,579,219 exercisable into subordinate voting shares of Cathedra.

  
  
 $
  

 Consideration:
  
  
  

 Deemed share consideration
  
 22,154,165
  

 Replacement awards
  
 1,579,219
  

 Total consideration
  
 23,733,384
  

  
  
  
  

 Assets acquired:
  
  
  

 Cash and cash equivalents
  
 1,429,575
  

 Digital currencies
  
 4,029,042
  

 Other receivables
  
 136,545
  

 Prepaid expenses
  
 349,593
  

 Deposits
  
 1,643,960
  

 Inventories
  
 954,772
  

 Property and equipment
  
 4,986,820
  

 Right-of-use assets
  
 1,510,745
  

 Investments
  
 913,658
  

 Goodwill
  
 16,845,242
  

 Total assets acquired
  
 32,799,952
  

  
  
  
  

 Liabilities assumed:
  
  
  

 Trade payables and accrued liabilities
  
 2,637,725
  

 Interest payable
  
 12,543
  

 Decommissioning liability
  
 77,610
  

 Lease liabilities
  
 1,510,745
  

 Convertible loan
  
 4,827,945
  

 Total liabilities assumed
  
 9,066,568
  

  
  
  
  

 Net assets acquired
  
 23,733,384
  

 Impairment of goodwill

 Management conducted an impairment assessment of goodwill as of December 31, 2025. For the purposes of impairment testing, the Company considers its ongoing operations as a single cash-generating unit (CGU) that includes all goodwill, property and equipment, other non-current assets, and right-of-use assets, which collectively contribute to generating cash flows from hosting and mining activities. The discounted cash flow model was utilized to estimate value in use, as there was no readily available market price nor any purchase offer received for the business. As a result of this assessment, an impairment loss of $1,171,708 was recognized, as the carrying amount of the CGU, including goodwill, exceeded its recoverable amount.

 The significant assumptions applied in determination of the value in use amount as at December 31, 2025 were as follows:

 Cash flows: Estimated cash flows were projected based on estimated operating results from internal sources as well as industry and market trends. Estimated cash flows are primarily driven by projected revenues based on existing and projected data center capacity, bitcoin mining machine quantities and models with respective efficiencies and operating costs;

 7

 Cathedra Bitcoin Inc.
 Notes to Condensed Consolidated Interim Financial Statements
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 Terminal value growth rate: The terminal growth rate was based on historical and projected consume price inflation, historical and projected economic indicators, and projected industry growth; and

 Pre-tax discount rate: The pre-tax discount rate is reflective of the CGU's weighted average cost of capital ("WACC"). The WACC was estimated based on the risk-free rate, equity risk premium, beta adjustment to the equity risk premium based on a direct comparison approach, an unsystematic risk premium, and cost of debt based on corporate bond yields.

 The following inputs are subject to significant estimation uncertainty and may materially affect the value in use determination:

 Terminal value growth rate of 2%

 WACC of 35%

 Average bitcoin price over the forecast period of approximately US$203,000

 Average hash rate over the forecast period of approximately 1,441 EH/s

 A sensitivity analysis indicates that varying each input individually or collectively by +/- 5% would result in an insignificant change to the impairment amount recorded.

 3.   Material Accounting Policy Information

 Basis of Preparation

 Statement of Compliance

 The Interim Financial Statements as at March 31, 2026, and for the three months then ended have been prepared in accordance with International Accounting Standard ("IAS 34") Interim Financial Reporting. The Interim Financial Statements should be read in conjunction with the Company's Audited Financial Statements for the year ended December 31, 2025. Selected explanatory notes are included in the Interim Financial Statements to explain events and transactions that are significant to an understanding of the changes in the Company's financial position and performance since the last audited financial statements.

 These interim financial statements have been prepared on an accrual basis and are based on historical cost basis except for a certain financial instrument which is measured at their fair value.

 The Interim Financial Statements of the Company are presented in Canadian dollars unless otherwise indicated, the reporting currency of the Company.

 Basis of Consolidation

 Subsidiaries

 The Financial Statements include the accounts of the Company and its subsidiaries, which are controlled by the Company. Control is achieved when the parent company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Company controls an investee if, and only if, the Company has all of the following: (i) power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); (ii) exposure, or rights, to variable returns from its involvement with the investee; and (iii) the ability to use its power over the investee to affect its returns.

 The financial statements of the subsidiaries are included in these financial statements from the date that control commences until the date that control ceases. All significant inter-company balances and transactions are eliminated on consolidation. The entities contained in the Financial Statements are as follows:

 8

 Cathedra Bitcoin Inc.
 Notes to Condensed Consolidated Interim Financial Statements
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 Entity Name
  
 Place of Business
and Operations
  
  
 Functional
Currency
  
  
 Equity Percentage
  

 Cathedra Bitcoin Inc. (the "Company") - parent
  
 Canada
  
  
 CAD
  
  
 n/a
  

 HPC Holdings LLC ("HPC Holdings")
  
 United States
  
  
 USD
  
  
 100% owned by parent
  

 Kungsleden, Inc. ("Kungsleden" or "K Inc.")
  
 United States
  
  
 USD
  
  
 100% owned by parent
  

 Buckeye HPC LLC ("Buckeye HPC")
  
 United States
  
  
 USD
  
  
 100% owned by HPC Holdings
  

 Sentinel Technology, LLC
  
 United States
  
  
 USD
  
  
 100% owned by K Inc.
  

 Churchill Technologies LLC
  
 United States
  
  
 USD
  
  
 100% owned by K Inc.
  

 Two Keys Technologies LLC
  
 United States
  
  
 USD
  
  
 100% owned by K Inc.
  

 North Campbell HoldCo LLC
  
 United States
  
  
 USD
  
  
 100% owned by K Inc.
  

 Buckeye Technologies HoldCo LLC ("Buckeye HoldCo")
  
 United States
  
  
 USD
  
  
 100% owned by K Inc.
  

 Buckeye Technologies OpCo LLC ("Buckeye Technologies")
  
 United States
  
  
 USD
  
  
 100% owned by Buckeye HoldCo
  

 North Campbell LandCo LLC
  
 United States
  
  
 USD
  
  
 100% owned by North Campbell HoldCo LLC
  

 North Campbell HostCo LLC
  
 United States
  
  
 USD
  
  
 100% owned by North Campbell HoldCo LLC
  

 Crystal Core LLC
  
 United States
  
  
 USD
  
  
 100% owned by K Inc.
  

 Fortress Blockchain Holdings Corp. ("FBHC")
  
 Canada
  
  
 CAD
  
  
 100% owned by parent
  

 Fortress Blockchain (US) Holdings Corp. ("FBUS")
  
 United States
  
  
 USD
  
  
 100% owned by FBHC
  

 Cathedra Lease Co LLC ("CLC")
  
 United States
  
  
 USD
  
  
 100% owned by FBUS
  

 During the year ended December 31, 2025, the Company established HPC Holdings, Buckeye HPC, Buckeye HoldCo, and Buckeye Technologies to facilitate further business expansion and development opportunities.

 The Company de-consolidated Tirpitz Technology HoldCo LLC along with its wholly owned subsidiaries Tirpitz Technology LandCo LLC and Tirpitz Technology HostCo LLC (collectively, "T Tech") in March 2025 after losing control, see Note 9 for additional information.

 9

 Cathedra Bitcoin Inc.
 Notes to Condensed Consolidated Interim Financial Statements
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 Functional and Presentation Currency

 Transactions undertaken in foreign currencies are translated into Canadian dollars at daily exchange rates prevailing when the transactions occur. Monetary assets and liabilities denominated in foreign currencies are translated at period-end exchange rates and non-monetary items are translated at historical exchange rates. Realized and unrealized exchange gains and losses are recognized in the consolidated statements of comprehensive income or loss. The assets and liabilities of foreign operations are translated into Canadian dollars using the period-end exchange rates. Income, expenses, and cash flows of foreign operations are translated into Canadian dollars using average exchange rates. Exchange differences resulting from the translation of foreign operations into Canadian dollars are recognized in other comprehensive income or loss and accumulated in equity.

 Comprehensive Income (Loss)

 Total comprehensive income (loss) comprises all components of profit or loss and other comprehensive income (loss). Other comprehensive income (loss) includes gains and losses from translating the financial statements of an entity's whose functional currency differs from the presentation currency and gains from revaluation of digital currencies.

 Material Accounting Policies

 Material accounting policies applied to these Interim Financial Statements are the same as those applied and disclosed in Note 3 of the Company's audited consolidated financial statements for the year ended December 31, 2025.

 Use of Estimates, Assumptions, and Judgements

 Critical accounting estimates, assumptions and judgements applied to these Interim Financial Statements are the same as those applied to the Company's audited consolidated financial statements for the year ended December 31, 2025.

 4.   Digital Currencies and Revenues

 Mining and Profit-Sharing Revenue

 Digital currencies are recorded at their fair value on the date they are received as revenues and are revalued to their fair value at each reporting date. Fair value is determined by using the daily price of bitcoin from Coin Metrics.

  
  
 BTC Units
  
  
 Amount ($)
  

 Bitcoin balance as at December 31, 2024
  
 48.10
  
  
 6,454,983
  

 Bitcoin earned
  
 61.29
  
  
 8,775,024
  

 Bitcoin exchanged for cash and services
  
 (77.41
 )
  
 (11,653,136
 )

 Bitcoin exchanged for other digital currency
  
 (5.63
 )
  
 (826,640
 )

 Bitcoin pledged as collateral
  
 (50.54
 )
  
 (5,976,307
 )

 Transfer from restricted digital currencies after loan repayment
  
 28.91
  
  
 4,680,732
  

 Revaluation loss
  
 -
  
  
 (822,429
 )

 Unrealized translation adjustment
  
 -
  
  
 (66,308
 )

 Bitcoin balance as at December 31, 2025
  
 4.72
  
  
 565,919
  

 Bitcoin earned
  
 7.92
  
  
 859,574
  

 Bitcoin exchanged for cash and services
  
 (7.99
 )
  
 (905,935
 )

 Bitcoin exchanged for other digital currency
  
 (1.00
 )
  
 (92,631
 )

 Revaluation loss
  
 -
  
  
 (85,251
 )

 Unrealized translation adjustment
  
 -
  
  
 5,551
  

 Bitcoin balance as at March 31, 2026
  
 3.65
  
  
 347,227
  

 10

 Cathedra Bitcoin Inc.
 Notes to Condensed Consolidated Interim Financial Statements
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 The Company pledged substantial quantity of its bitcoin as collateral for the term loan during the three months ended March 31, 2025. The restricted bitcoin balances and changes for the year ended December 31, 2025 and three months ended March 31, 2026 are as follows:

  
  
 BTC Units
  
  
 Amount ($)
  

 Restricted bitcoin balance as at December 31, 2024
  
 -
  
  
 -
  

 Bitcoin pledged as collateral
  
 50.54
  
  
 5,976,307
  

 Bitcoin withheld to settle the principal and accrued interest
  
 (21.63
 )
  
 (3,521,263
 )

 Transfer to digital currencies after loan repayment
  
 (28.91
 )
  
 (4,680,732
 )

 Revaluation gain
  
 -
  
  
 2,482,936
  

 Unrealized translation adjustment
  
 -
  
  
 (257,248
 )

 Restricted bitcoin balance as at December 31, 2025 and March 31, 2026
  
 -
  
  
 -
  

 The Company used Tether and USD Coin its business operations to receive payments from its customers and make payments to service providers or suppliers. The balances and changes of these digital currencies are shown below:

  
  
 Tether Units
  
  
 Amount ($)
  

 Tether balance as at December 31, 2024
  
 1,002.13
  
  
 1,442
  

 Tether received as payment in arrangements with customers
  
 3,648,230.10
  
  
 5,111,528
  

 Tether exchanged for cash and services
  
 (5,445,988.80
 )
  
 (7,666,549
 )

 Tether exchanged for other digital currency
  
 597,392.79
  
  
 826,640
  

 Tether purchased with cash
  
 212,676.81
  
  
 295,819
  

 Tether received from sale of discontinued operation
  
 1,000,000.00
  
  
 1,443,800
  

 Revaluation loss
  
 -
  
  
 (370
 )

 Unrealized translation adjustment
  
 -
  
  
 5,910
  

 Tether balance as at December 31, 2025
  
 13,313.03
  
  
 18,220
  

 Tether received as payment in arrangements with customers
  
 25,225.01
  
  
 34,924
  

 Tether exchanged for cash and services
  
 (82,000.00
 )
  
 (112,401
 )

 Tether exchanged for other digital currency
  
 67,791.72
  
  
 92,631
  

 Unrealized translation adjustment
  
 -
  
  
 506
  

 Tether balance as at March 31, 2026
  
 24,329.76
  
  
 33,880
  

  
  
 USD Coin
Units
  
  
 Amount ($)
  

 USD Coin balance as at December 31, 2024
  
 -
  
  
 -
  

 USD Coin purchased with cash
  
 799,272.58
  
  
 1,149,993
  

 USD Coin exchanged for cash and services
  
 (799,272.58
 )
  
 (1,149,993
 )

 USD Coin balance as at December 31, 2025 and March 31, 2026
  
 -
  
  
 -
  

 Hosting Revenue

 During the three months ended March 31, 2026, the Company generated hosting revenue of $2,794,575 (2025 - $3,897,584). Two customers exceeded 10% of total hosting revenue of the Company with the following percentages representing their respective shares: 41% and 39% (2025 - two customers accounted for 92% of total hosting revenue of the Company with the following percentages representing their respective shares: 55% and 37%).

 The Company receives monthly prepayments and short-term or long-term deposits from various customers according to the terms of hosting arrangements. The monthly prepayments are classified as contract liabilities, and deposits are classified as customer liabilities in the consolidated statements of financial position.

 11

 Cathedra Bitcoin Inc.
 Notes to Condensed Consolidated Interim Financial Statements
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 5.   Prepaid Expenses

  
  
 March 31,
 2026
  
  
 December 31,
2025
  

 General and administrative
 $
 339,091
  
 $
 401,173
  

 Hosting business utilities
  
 1,007,674
  
  
 1,340,364
  

 Total prepaid expenses
 $
 1,346,765
  
 $
 1,741,537
  

 6.   Deposits

  
  
 March 31,
2026
  
  
 December 31,
2025
  

 Utility deposits
 $
 2,278,657
  
 $
 2,240,568
  

 Lease deposits
  
 55,756
  
  
 146,928
  

 Total deposits
 $
 2,334,413
  
 $
 2,387,496
  

 Less: current portion of deposits
  
 -
  
  
 92,104
  

 Non-current portion of deposits
 $
 2,334,413
  
 $
 2,295,392
  

 12

 Cathedra Bitcoin Inc.
 Notes to Condensed Consolidated Interim Financial Statements
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 7.   Property and Equipment

  
  
 Infrastructure
  
  
 Mining
equipment
  
  
 Construction-
in-progress
  
  
 Land
  
  
 Total
  

 Cost
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Balance, December 31, 2024
 $
 5,245,064
  
 $
 4,826,478
  
 $
 -
  
 $
 148,674
  
 $
 10,220,216
  

 Additions
  
 2,584,379
  
  
 338,119
  
  
 84,307
  
  
 -
  
  
 3,006,805
  

 Disposals
  
 (1,256,173
 )
  
 (1,987,306
 )
  
 -
  
  
 -
  
  
 (3,243,479
 )

 Translation adjustment
  
 (232,267
 )
  
 (214,484
 )
  
 (1,457
 )
  
 (7,057
 )
  
 (455,265
 )

 Balance, December 31, 2025
 $
 6,341,003
  
 $
 2,962,807
  
 $
 82,850
  
 $
 141,617
  
 $
 9,528,277
  

 Additions
  
 -
  
  
 -
  
  
 108,023
  
  
 -
  
  
 108,023
  

 Disposals
  
 (13,717
 )
  
 -
  
  
 -
  
  
 -
  
  
 (13,717
 )

 Translation adjustment
  
 87,072
  
  
 50,368
  
  
 3,156
  
  
 2,408
  
  
 143,004
  

 Balance, March 31, 2026
 $
 6,414,358
  
 $
 3,013,175
  
 $
 194,029
  
 $
 144,025
  
 $
 9,765,587
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Accumulated depreciation and impairment
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Balance, December 31, 2024
 $
 1,327,876
  
 $
 1,483,256
  
 $
 -
  
 $
 -
  
 $
 2,811,132
  

 Additions
  
 1,619,280
  
  
 1,929,175
  
  
 -
  
  
 -
  
  
 3,548,455
  

 Reversal on disposals
  
 (974,101
 )
  
 (1,893,327
 )
  
 -
  
  
 -
  
  
 (2,867,428
 )

 Translation adjustment
  
 (69,186
 )
  
 (96,292
 )
  
 -
  
  
 -
  
  
 (165,478
 )

 Balance, December 31, 2025
 $
 1,903,869
  
 $
 1,422,812
  
 $
 -
  
 $
 -
  
 $
 3,326,681
  

 Additions
  
 228,431
  
  
 173,229
  
  
 -
  
  
 -
  
  
 401,660
  

 Disposals
  
 (13,717
 )
  
 -
  
  
 -
  
  
 -
  
  
 (13,717
 )

 Translation adjustment
  
 34,440
  
  
 26,993
  
  
 -
  
  
 -
  
  
 61,433
  

 Balance, March 31, 2026
 $
 2,153,023
  
 $
 1,623,034
  
 $
 -
  
 $
 -
  
 $
 3,776,057
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Carrying amount
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Balance, December 31, 2025
 $
 4,437,134
  
 $
 1,539,995
  
 $
 82,850
  
 $
 141,617
  
 $
 6,201,596
  

 Balance, March 31, 2026
 $
 4,261,335
  
 $
 1,390,141
  
 $
 194,029
  
 $
 144,025
  
 $
 5,989,530
  

 13

 Cathedra Bitcoin Inc.
 Notes to Condensed Consolidated Interim Financial Statements
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 8.   Right-of-Use Assets and Lease Liabilities

 On March 1, 2023, and July 26, 2023, the Company entered into two agreements to lease building property in Kentucky state. The building properties are used by the Company to provide hosting services to arms-length bitcoin mining customers. The leases have an initial term of 10 years and 6 years, respectively, and the Company will make lease payments of US$10,000 and US$1,000 per month, respectively. The Company used 20%, its estimated incremental borrowing rate, to calculate the present value of the lease payments on initial measurement. 

 On July 23, 2024, as part of the business combination with Cathedra (Note 2), the Company acquired right-of-use (ROU) assets and lease liabilities comprising two building property lease agreements (the "CBIT leases") with remaining lease terms of 10 and 18 months. The Company will make lease payments on the CBIT leases of US$103,680 and US$11,200 per month, respectively.

 Effective August 1, 2024, the Company and the lessor amended one of the CBIT leases, changing the monthly payments from US$103,680 to an amount based on electricity consumption, which effectively remained fixed. The lease term was extended by five months, making the new end date August 31, 2025; after this, the lease converted to a month-to-month agreement. As a result of the lease amendments, the Company re-measured its lease liability using interest an interest rate of 20%, the Company's estimated incremental borrowing rate at the time of re-measurement, and a corresponding increase to right-of-use asset.

 In July 2025, the Company entered into a new agreement to lease the property located in Franklin, Kentucky. The lease expires on July 31, 2035. The ROU asset and corresponding lease liability were measured using an interest rate of 20%, the Company's estimated incremental borrowing rate, to calculate the present value of the lease payments on initial measurement.

 Right-of-use assets
  
 Building Properties
  

 Cost
  
  
  

 Balance, December 31, 2024
 $
 2,627,967
  

 Additions
  
 705,542
  

 Translation adjustment
  
 (121,067
 )

 Balance, December 31, 2025
 $
 3,212,442
  

 Additions
  
 -
  

 Translation adjustment
  
 54,611
  

 Balance, March 31, 2026
 $
 3,267,053
  

  
  
  
  

 Accumulated Depreciation
  
  
  

 Balance, December 31, 2024
 $
 922,104
  

 Depreciation charge in the year
  
 1,136,271
  

 Translation adjustment
  
 (65,103
 )

 Balance, December 31, 2025
 $
 1,993,272
  

 Depreciation charge in the year
  
 37,980
  

 Translation adjustment
  
 34,501
  

 Balance, March 31, 2026
 $
 2,065,753
  

  
  
  
  

 Carrying value
  
  
  

 Balance, December 31, 2025
 $
 1,219,170
  

 Balance, March 31, 2026
 $
 1,201,300
  

 14

 Cathedra Bitcoin Inc.
 Notes to Condensed Consolidated Interim Financial Statements
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 The Company is committed to minimum lease payments as follows:

  
  
 March 31, 2026
  
  
 December 31, 2025
  

 Maturity analysis - contractual undiscounted cash flows

  
  
  
  
  

 Less than one year
 $
 351,263
  
 $
 345,391
  

 One to five years
  
 1,377,173
  
  
 1,358,265
  

 More than five years
  
 1,031,486
  
  
 1,096,480
  

 Total undiscounted lease labilities
 $
 2,759,922
  
 $
 2,800,136
  

  
  
  
  
  
  
  

 Lease liabilities
 $
 1,366,327
  
 $
 1,362,065
  

 Current
 $
 85,553
  
 $
 80,053
  

 Non-current
 $
 1,280,774
  
 $
 1,282,012
  

 During the three months ended March 31, 2026, the Company recognized total interest expense of $67,852 (2025 - $78,665) in connection with its lease liabilities.

 9.   Assets Classified as Held for Sale and Discontinued Operation

 The Company formed T Tech in November 2023, initially holding a 100% interest. On January 10, 2024, it reorganized and gave up 75% interest in exchange for contribution promises.

 Subsequently the Company together with other members of T Tech decided to sell T Tech. The Board of Managers, consisting of Cathedra Bitcoin Inc.'s majority shareholders, approved the sale and assets before the year ended December 31, 2024. Accordingly, the assets and liabilities directly associated with those assets were classified as held for sale.

 The results of T Tech's operations for the three months ended March 31, 2025 is as follows:

 Three months ended:
  
 March 31, 2025
  

 Revenues
 $
 1,318,623
  

 Cost of revenues
  
 1,963,286
  

 Operating expenses
  
 121,411
  

 Operating loss
 $
 766,074
  

 Other income (expense)
  
 (118,590
 )

 Exchange differences on translation of foreign operations reclassified to profit or loss
  
 1,175,085
  

 Income/(loss) before tax from discontinued operation
 $
 290,421
  

 Tax expense
  
 -
  

 Income/(loss) from discontinued operation
 $
 290,421
  

 The net cash flows generated by T Tech for the three months ended March 31, 2025 is as follows:

 Three months ended:
  
 March 31, 2025
  

 Operating
  
 (884,664
 )

 Investing
  
 -
  

 Financing
  
 -
  

 Effect of foreign exchange rate fluctuation
  
 -
  

 Net cash inflow/(outflow)
 $
 (884,664
 )

 10.   Investments

 Initial valuation of investments is based on the acquisition cost, which approximates the fair value. Subsequent valuations reflect asset appraisals, as well as market transaction data, such as financing rounds. The Company's holdings in private companies are generally valued utilizing net asset values. As of March 31, 2026, Cathedra holds the following investments without exercise of significant influence over them:

 15

 Cathedra Bitcoin Inc.
 Notes to Condensed Consolidated Interim Financial Statements
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 Low Time Preference Fund II, LLC

 On November 12, 2021, Cathedra subscribed for limited liability company interests in Low Time Preference Fund II, LLC, for a total value of $312,925 (US$250,000). As of March 31, 2026, the fair value of this investment is $503,116 (December 31, 2025 - $403,768) with unrealized gain of $91,067 (2025 - $20,421) recognized in the condensed consolidated interim statement of loss.

 Silvermoon Inc.

 On May 5, 2022, Cathedra received 35,000,000 common shares of Silvermoon Inc. ("Silvermoon") as part a non-arm's length share exchange agreement for giving up a 100% ownership in The Good Shepherd Land and Livestock Company Limited, a UK based legal entity. Cathedra held 35,000,000 common shares as of March 31, 2025, December 31, 2025 and March 31, 2026, which represents approximately 21.6% of the issued and outstanding common shares of Silvermoon. The Company does not exercise significant influence over investee, therefore the investment is classified and accounted for at FVTPL. As of March 31, 2026, the fair value of this investment is $612,890 (December 31, 2025 - $612,890) with unrealized loss of $nil (2025 - $24,804) recognized in the condensed consolidated interim statement of loss. The fair value of the investment was determined by reference to the underlying value of assets held by Silvermoon.

 11.   Trade Payables and Accrued Liabilities

  
  
 March 31, 2026
  
  
 December 31,
2025
  

 Trade payables
 $
 1,200,045
  
 $
 1,232,380
  

 Accrued liabilities
  
 1,870,786
  
  
 1,427,600
  

 Total trade payables and accrued liabilities
 $
 3,070,831
  
 $
 2,659,980
  

 12.   Loans and Borrowings

 Convertible loan

 On March 19, 2025, the Company restructured its outstanding debt whereby the convertible loan's principal amount was extinguished through repayment of the outstanding principal with $4,586,982 plus accrued interest. In addition, the holder of the convertible loan agreed to surrender 363,233 SV share purchase warrants of the Company for cancellation. The balance as of March 31, 2026 and the change for the three months then ended is as follows:

 Balance, December 31, 2024
 $
 5,134,121
  

 Accretion
  
 190,869
  

 Repayment of interest
  
 (44,596
 )

 Repayment of principal
  
 (4,586,983
 )

 Gain from debt settlement
  
 (693,411
 )

 Balance, December 31, 2025 and March 31, 2026
 $
 -
  

 16

 Cathedra Bitcoin Inc.
 Notes to Condensed Consolidated Interim Financial Statements
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 Term loan

 Concurrently, the Company entered into a new loan of US$2,494,693 ($3,589,364 equivalent) to partially repay the outstanding principal amount of the convertible loan. The loan is secured by approximately 50 of the Company's bitcoin, carries interest at a rate of 13% per annum, payable monthly; and is interest-only until maturity on March 18, 2026.

 Balance, December 31, 2024
 $
 -
  

 Proceeds, net of deferred finance cost
  
 3,564,168
  

 Amortization of deferred financing cost
  
 53,143
  

 Repayment
  
 (3,483,199
 )

 Translation adjustment
  
 (134,112
 )

 Balance, December 31, 2025 and March 31, 2026
 $
 -
  

 At inception, the Company recognized deferred financing cost of $54,277 , which is amortized over term of the loan. The Company paid $200,856 in term loan interest.

 13.   Share Capital

 On July 22, 2024, in connection with the business combination the Company altered the articles of the corporation, which was approved by the Company's shareholders at its annual and special meeting of shareholders:

 a.   Changed the name of its common shares to "subordinate voting shares";

 b.   Created a new class of multiple voting shares convertible into 100 subordinate voting shares;

 c.   Added special rights and restrictions to the subordinate voting shares and the multiple voting shares, pursuant to which, among other things, the holders of the multiple voting shares are entitled to 1.52 votes per multiple voting share held. On an "as converted" basis, assuming the conversion of the multiple voting shares to subordinate voting shares, the holders of multiple voting shares will have 1.52 votes per subordinate voting share compared to 1 vote per subordinate voting share by the holders of the subordinate voting shares.

 Authorized

 Unlimited number of subordinate voting shares without par value. Each subordinate voting share entitles the holder to one vote.

 Unlimited number of multiple voting shares without par value. Each multiple voting share is convertible into 100 subordinate voting shares and entitles the holder to 1.52 votes. The condensed consolidated interim financial statements for the three months ended March 31, 2026 and 2025 incorporate the 30-to-1 share consolidation, which became effective on October 16, 2025. All shares and per share amounts have been restated to reflect the share consolidation retrospectively.

 Issued and Outstanding

 On February 7, 2025, the Company issued 3,248 SV shares for vested RSUs.

 On July 31, 2025, the Company issued 135,690 SV shares for vested RSUs.

 On December 2, 2025, the Company completed a non-brokered private placement of an aggregate of 430,000 units of the Company at a price of $1.25 per unit for aggregate gross proceeds of $537,500. Each unit consists of one SV share and one SV share purchase warrant, with each entitling the holder thereof to acquire one additional SV share at an exercise price of $1.88 per share for a period of two years following the closing date of the private placement.

 17

 Cathedra Bitcoin Inc.
 Notes to Condensed Consolidated Interim Financial Statements
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 Post-merger share capital

 Multiple voting shares ( MV shares)
  
 No.
  
  
 Amount ($)
  

 Kungsleden's common shares on the acquisition date
  
 33,333
  
  
 1,278
  

 Share exchange ratio (Note 2)
  
 6.253429078
  
  
 -
  

 MVS issued in exchange for Kungsleden's common shares
  
 208,446
  
  
 21,576,955
  

 Balance, December 31, 2025 and March 31, 2026
  
 208,446
  
  
 21,578,233
  

  
  
  
  
  
  
  

 Subordinate voting shares (SV shares)
  
 No.
  
  
 Amount ($)
  

 Cathedra's common shares on the acquisition date
  
 7,917,119
  
  
 -
  

 Exchange ratio
  
 1.00
  
  
 -
  

 SV shares of the Resulting Issuer
  
 7,917,119
  
  
 -
  

 Issued on RSU exercise
  
 50,845
  
  
 138,521
  

 Balance, December 31, 2024
  
 7,967,964
  
  
 138,521
  

 Issued on RSU exercise
  
 138,938
  
  
 416,287
  

 Issued in connection to the non-brokered private placement
  
 430,000
  
  
 516,107
  

 Subscriptions receivable (a)
  
  
  
  
 (150,000
 )

 Balance, December 31, 2025
  
 8,536,902
  
  
 920,915
  

 Subscriptions received (a)
  
  
  
  
 150,000
  

 Balance, March 31, 2026
  
 8,536,902
  
  
 1,070,915
  

  
  
  
  
  
  
  

  
  
 March 31,
2026
  
  
 December 31,
2025
  

 An equivalent number of SV shares based on an a 'if converted' basis (convertible from MV shares)
  
 20,844,600
  
  
 20,844,600
  

 SV shares outstanding
  
 8,536,902
  
  
 8,536,902
  

 The total SV shares on an a 'if converted' basis
  
 29,381,502
  
  
 29,381,502
  

 14.   Reserves

 Restricted Share Units (RSU)

 On July 22, 2024, the Company implemented a long-term equity incentive plan ("LTIP"), comprising a rolling option plan covering up to 10% of the issued and outstanding SV shares, as well as a fixed plan for up to 2,875,139 SV shares designated as RSUs. Subsequently, the fixed allocation of SV shares reserved for RSUs was increased to 2,895,166 SV shares following approval by the shareholders at the annual general meeting held on December 12, 2025.

 For the three months ended March 31, 2026, the Company recognized share-based compensation of $599,293 (2025 - $95,834) attributable to RSUs.

 A summary of changes in restricted share units outstanding is as follows:

 Balance, December 31, 2024
  
 274,629
  

 Granted (a)
  
 2,672,584
  

 Cancelled/Forfeited
  
 (45,230
 )

 Exercised
  
 (138,938
 )

 Balance, December 31, 2025 and March 31, 2026
  
 2,763,045
  

 (a)   The Company granted RSUs as follows:

 On September 29, 2025, the Company granted 1,447,584 RSUs to the employee of the Company. The award vests in three equal annual installments on each of the first, second, and third anniversaries of the grant date, subject to accelerated vesting upon a Change of Control.

 On December 2, 2025, the Company granted 445,000 RSUs to directors, officers and consultants of the Company, 210,000 of which vest on the first anniversary of the grant date and the remainder of RSUs vest as follows:  One-third vests on the first anniversary of the grant date, with the remaining balance vesting in eight equal quarterly installments on each of March 2, June 2, September 2, and December 2 until fully vested.

 18

 Cathedra Bitcoin Inc.
 Notes to Condensed Consolidated Interim Financial Statements
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 On December 16, 2025, the Company granted 780,000 RSUs to directors, officers and consultant of the Company with the following vesting terms: One-third vests on the first anniversary of the grant date, with the remaining balance vesting in eight equal quarterly installments on each of March 16, June 16, September 16, and December 16 until fully vested.

 Stock Options

 A summary of changes in stock options is as follows:

  
  
 Number of
stock options
  
  
 Weighted
average
exercise price
  

 Balance, December 31, 2024
  
 116,842
  
  
 15.00
  

 Granted (a)
  
 615,873
  
  
 1.44
  

 Cancelled
  
 (7,922
 )
  
 14.33
  

 Balance, December 31, 2025 and March 31, 2026
  
 724,793
  
  
 3.49
  

 (a)   The Company granted stock options as follows:

 On February 1, 2025, the Company granted 15,873 stock options to the newly hired employee. All the stock options vest on 12-month anniversary from the grant date.

 On December 2, 2025, the Company granted 600,000 stock options to a consultant and directors of the Company, 100,000 of which vest immediately and the remainder of stock options vest as follows:  One-third vests on the first anniversary of the grant date, with the remaining balance vesting in eight equal quarterly installments on each of March 2, June 2, September 2, and December 2 until fully vested.

 The stock options were fair valued using the Black Scholes option pricing model. The weighted average inputs used in the Black Scholes model were as follows:

 Share price
 $
 1.44
  

 Exercise price
 $
 1.44
  

 Risk-free interest rate
  
 2.63%
  

 Expected annualized share volatility
  
 121.57%
  

 Expected dividend yield
  
 0.00%
  

 Expected life (years)
  
 3.97
  

 Fair value of stock option
 $
 1.13
  

 The stock options outstanding and exercisable as of March 31, 2026, are as follows:

  
 Exercise price ($)
  
  
 Number of stock options
outstanding
  
  
 Weighted average remaining
life
  

  
 1.42
  
  
 600,000
  
  
 4.68
  

  
 2.25
  
  
 15,873
  
  
 3.84
  

  
 3.90
  
  
 333
  
  
 1.57
  

  
 10.50
  
  
 2,961
  
  
 1.13
  

  
 12.30
  
  
 2,961
  
  
 0.78
  

  
 14.55
  
  
 8,333
  
  
 0.41
  

  
 14.70
  
  
 66,666
  
  
 0.42
  

  
 15.00
  
  
 1,000
  
  
 1.89
  

  
 16.80
  
  
 21,666
  
  
 0.48
  

  
 18.00
  
  
 5,000
  
  
 1.89
  

 Outstanding
  
  
  
  
 724,793
  
  
 4.04
  

 Exercisable
  
  
  
  
 224,793
  
  
 2.62
  

 19

 Cathedra Bitcoin Inc.
 Notes to Condensed Consolidated Interim Financial Statements
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 The weighted average exercise price of options exercisable as of March 31, 2026, is $8.08 (December 31, 2025 - $8.52).

 For the three months ended March 31, 2026, the Company recognized share-based compensation from stock options of $96,244 (2025 - $4,191).

 Warrants

 A summary of changes in warrants outstanding is as follows:

  
  
 Number of
warrants
  
  
 Weighted
average
exercise price
  

 Balance, December 31, 2024
  
 1,704,820
  
  
 11.10
  

 Issued
  
 430,000
  
  
 1.88
  

 Cancelled (a)(b)
  
 (836,733
 )
  
 3.60
  

 Balance, December 31, 2025
  
 1,298,087
  
  
 12.90
  

 Expired (a)(b)
  
 (356,077
 )
  
 4.87
  

 Balance, March 31, 2026
  
 942,010
  
  
 15.94
  

 (a)   In March 2025, the holder of the convertible debenture agreed to surrender 363,233 pursuant to the terms of the debt settlement agreement, see additional details in Note 14.

 (b)   In May 2025, the Company purchased for cancellation an aggregate of 473,500 subordinate voting share purchase warrants for an aggregate amount of US$75,002 ($103,430). The warrants had an exercise price of $3.60.

 On March 26, 2026, 326,488 warrants exercisable at $3.60 and 29,589 warrants exercisable at $18.90 expired unexercised.

 The warrants outstanding as of March 31, 2026 are as follows:

  
  
  
  
  
 March 31, 2026
  
  
  
  
  
 December 31, 2025
  

 Exercise
price ($)
  
 Number of warrants
outstanding
  
  
 Weighted average
remaining life
  
  
 Number of
warrants
outstanding
  
  
 Weighted average
remaining life
  

 1.88
  
 430,000
  
  
 1.67
  
  
 430,000
  
  
 1.92
  

 3.60
  
 64,100
  
  
 0.62
  
  
 390,588
  
  
 0.34
  

 16.20
  
 89,582
  
  
 1.14
  
  
 89,582
  
  
 1.38
  

 18.90
  
 -
  
  
 -
  
  
 29,589
  
  
 0.23
  

 23.70
  
 89,582
  
  
 1.14
  
  
 89,582
  
  
 1.38
  

 31.20
  
 89,582
  
  
 1.14
  
  
 89,582
  
  
 1.38
  

 38.70
  
 89,582
  
  
 1.14
  
  
 89,582
  
  
 1.38
  

 46.20
  
 89,582
  
  
 1.14
  
  
 89,582
  
  
 1.38
  

 15.94
  
 942,010
  
  
 1.35
  
  
 1,298,087
  
  
 1.22
  

 15.   Related Party Transactions and Balances

 Key Management Compensation

 Key management personnel include those persons with authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of the Company's Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO"), Chief Operating Officer and President ("COO"), Chief Fields Operation and Manufacturing Officer ("CMO"), Chief Technology Officer ("CTO"), Chief Administration Officer ("CAO") and Directors of the Company. CMO and CTO departed the Company in January 2025 and April 2025, respectively. Former CEO and COO of the Company departed in July 2025, the new CEO was appointed immediately after the departure of the former CEO.

 20

 Cathedra Bitcoin Inc.
 Notes to Condensed Consolidated Interim Financial Statements
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 The remuneration of directors and other members of key management personnel during the three months ended March 31, 2026 and 2025 are as follows:

 For the three months ended:
  
 March 31, 2026
  
  
 March 31, 2025
  

 Director fees
 $
 64,126
  
 $
 77,659
  

 Management, consulting and professional fees
  
 66,913
  
  
 210,124
  

 Share-based payments
  
 578,003
  
  
 113,998
  

 Salaries and wages
  
 123,457
  
  
 48,588
  

 Total
 $
 832,499
  
 $
 450,369
  

 As of March 31, 2026, the Company has a total due to related parties balance of $1,146,368 (December 31, 2025 - $1,109,675) to directors and management of the Company. The Company has a total due from related parties balance of $44,594 (December 31, 2025 - $19,792) from management of the Company, arising from short-term advances and reimbursable expenses incurred in the ordinary course of business; and is expected to be settled in the near term. The balances are unsecured, due on demand and bear no interest.

 16.   Financial Instruments and Risk Management

 The Company's financial instruments are exposed to certain financial risks, including currency risk, credit risk, liquidity risk and commodity price risk.

 Credit Risk

 Credit risk is the risk of loss associated with a counterparty's inability to fulfill its payment obligations. The financial instruments that represent a potential concentration of credit risk consist primarily of cash and cash equivalents, digital currencies, restricted digital currencies, deposits, and trade receivables. Under certain of our hosting agreements, we are obligated to pay security deposits to the hosting provider at the beginning of the term. If one or more of our hosting providers suffers an adverse credit event, we may be unable to recover part or all of the outstanding deposits. We limit our exposure to credit loss by holding our cash with reputable, well-capitalized financial institutions and performing careful due diligence on potential hosting partners prior to entering into a binding agreement which would require us to pay a security deposit. The carrying amount of financial assets represents the maximum credit exposure for each.

 The carrying amount of financial and digital assets represents the maximum credit exposure.

  
  
 March 31,
 2026
  
  
 December 31,
2025
  

 Cash and cash equivalents
 $
 326,101
  
 $
 1,083,973
  

 Digital currencies
  
 381,107
  
  
 584,139
  

 Trade receivables
  
 1,197,189
  
  
 932,524
  

 Deposits
  
 2,334,413
  
  
 2,387,496
  

  
 $
 4,238,810
  
 $
 4,988,132
  

 We believe the Company has no significant credit risk other than what is disclosed herein.

 Liquidity Risk

 Liquidity risk is the risk that we will not be able to meet our financial obligations. We manage our liquidity risk by ensuring that we have enough cash to meet our near-term financial liabilities at all times. As at March 31, 2026, we had a working capital deficit of $4,347,877 (December 31, 2025 - working capital deficit of $2,213,630).

 21

 Cathedra Bitcoin Inc.
 Notes to Condensed Consolidated Interim Financial Statements
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 Cash flows related to trade payables and accrued liabilities, customer liabilities and convertible loan included below may occur at different times or amounts. A maturity analysis of our outstanding obligations relating to continuing operations of March 31, 2026 is as follows:

  
  
 Undiscounted Contractual Cash Flows
  

  
  
 Total
carrying
amount
  
  
 Contractual
cash flows
  
  
 Less than 1
year
  
  
 1 - 5 years
  
  
 More than 5
years
  

 As at March 31, 2026
  
 $
  
  
 $
  
  
 $
  
  
 $
  
  
 $
  

 Trade payables and accrued liabilities
  
 3,070,831
  
  
 3,070,831
  
  
 3,070,831
  
  
 -
  
  
 -
  

 Due to related parties
  
 1,146,368
  
  
 1,146,368
  
  
 1,146,368
  
  
 -
  
  
 -
  

 Contract liabilities
  
 543,751
  
  
 543,751
  
  
 543,751
  
  
 -
  
  
 -
  

 Customer liabilities
  
 2,937,515
  
  
 2,937,515
  
  
 2,937,515
  
  
 -
  
  
 -
  

 Lease liabilities
  
 1,366,327
  
  
 2,759,922
  
  
 351,263
  
  
 1,377,173
  
  
 1,031,486
  

 Total
  
 9,064,792
  
  
 10,458,387
  
  
 8,049,728
  
  
 1,377,173
  
  
 1,031,486
  

 Market Risk

 Market risk is the risk of loss that may arise from changes in market factors such as Bitcoin prices, interest rates, foreign exchange rates and equity prices.

 Digital Currency Price Volatility

 As of March 31, 2026, we held a digital currency balance in bitcoin and Tether ("USDT") that is subject to market pricing and price volatility. Bitcoin prices are affected by various forces including global supply and demand, interest rates, exchanges rates, inflation or deflation and the political and economic conditions. Further, bitcoin has no underlying backing or contracts to enforce recovery of invested amounts. Our profitability is related to the current and future market price of bitcoin; in addition, we may not be able to liquidate our holdings of bitcoin at our desired price if necessary. Investing in bitcoin is speculative, prices are volatile, and market movements are difficult to predict. Supply and demand for such currencies change rapidly and are affected by a variety of factors, including regulation and general economic trends. Bitcoin has a limited history, its fair values have historically been volatile, and the value of our bitcoin holdings could decline rapidly. A decline in the market price of bitcoin could negatively impact our future operations. Historical performance of bitcoin is not indicative of its future performance. We recorded a loss on revaluation of digital currencies of $85,251 during the three months ended March 31, 2026 (2025 - $924,466) in the statement of other comprehensive loss.

 We do not hedge our bitcoin holdings, but we actively monitor bitcoin pricing, market volatility and our own liquidity needs to determine an appropriate risk mitigation strategy on a continuous basis.

 Interest Rate Risk

 The interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. We are exposed to interest rate risk on the variable rate of interest we earn on bank deposits. The interest rate risk on bank deposits is insignificant, as our deposits are all short-term. The coupon on our outstanding term loan is fixed and therefore has limited exposure to changes in interest rates.

 Foreign Currency Risk

 Foreign currency risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective functional currency. We are exposed to currency risk as we have legal entities domiciled in the United States which hold financial assets in US dollars and bitcoin while our functional currency is the Canadian dollar. We do not hedge our exposure to fluctuations in foreign exchange rates.

 22

 Cathedra Bitcoin Inc.
 Notes to Condensed Consolidated Interim Financial Statements
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 If the US dollar had changed against the Canadian dollar by 10% at period end, the Company's net income and comprehensive income would change by approximately $577,000, resulting from the translation of the US dollar denominated financial instruments.

 Custody Risk

 We hold our digital currencies with a third-party custodian. Our custody strategy is designed to balance security and availability of our digital currency. We continuously monitor our cash and cash equivalents and digital currency holdings with our third-party custodian.

 Our current service provider for digital currency custody is an institutional counterparty that is licensed, regulated, and insured. At any time, in excess of 98% of our digital currency holdings (excluding any digital currency that is being traded at that time) is held in a cold-storage, multi-signature, segregated trust account that is titled in the name of one of our US subsidiaries. Prior to onboarding with our current custodian, we performed extensive due diligence, examining the new custodian's internal control procedures to ensure security, availability, integrity, and confidentiality of the custodian's information and systems. Our current custodian maintains SOC 1 Type II and SOC 2 Type II compliance, which we review periodically to ensure the custodian maintains a secure technology infrastructure and that its systems are designed and operating effectively.

 Loss of Access Risk

 The loss of access to the private keys associated with our bitcoin holdings may be irreversible and could adversely affect an investment. An amount of digital currency is spendable only by whoever possesses the private key associated with the address on which the digital currency is held. To the extent a private key is lost, destroyed, or otherwise compromised, and no backup is accessible, we may be unable to access the associated digital currency. As of March 31, 2026, 3.65 bitcoin equivalent to $347,227 (December 31, 2025 - 4.72 bitcoin equivalent to $565,919) and 24,329.76 tether equivalent to $33,880 (December 31, 2025 - 13,313.03 tether equivalent to $18,220) are held with our third-party custodian in our name.

 Fair Value Hierarchy

 We apply the following fair value hierarchy for financial instruments that are carried at fair value. The hierarchy prioritizes the inputs used in the valuation methodologies in measuring fair value into three levels.

 The three levels are defined as follows:

 Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

 Level 2 - inputs to valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

 Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 We hold investments in private companies that are classified as FVTPL and is recorded at fair value using unobservable inputs; it is therefore classified as level 3 within the fair value hierarchy. The net asset value of the private company is used to adjust the investment to fair value.

 The carrying value of our trade receivables, due to and from related parties, trade payables and accrued liabilities, deposits, and convertible loan approximates fair value because of the relatively short periods to maturity of these instruments and the low credit risk.

 17.   Capital Management

 Our objective when managing capital is to provide attractive risk-adjusted returns to shareholders while accounting for liquidity needs.

 23

 Cathedra Bitcoin Inc.
 Notes to Condensed Consolidated Interim Financial Statements
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 We include equity, comprised of share capital and deficit, in the definition of capital.

 Our primary objective with respect to capital management is to ensure that we have sufficient cash resources to fund our ongoing operations and to pursue potential growth opportunities. To secure the additional capital necessary to pursue certain plans, we may attempt to raise additional funds through the issuance of securities.

 We monitor capital on the basis of maintaining sufficient liquidity to satisfy our financial obligations.

 18.   Supplemental Cash Flow Information

 Non-cash transactions for the three months ended March 31, 2026, and 2025 are as follows:

 For the three months ended March 31:
  
 2026
  
  
 2025
  

 Subordinate voting shares issued on vesting of RSUs
 $
 -
  
  
 8,852
  

 19.   Segment Reporting

 Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. The Company uses the management approach to determine reportable operating segments. The management approach considers the internal organization and reporting used by the Company's chief operating decision maker ("CODM"), for making decisions, allocating resources and assessing performance.

 Based on the management's assessment, the Company determined that it has the following operating segments:

 Three months ended March 31, 2026:

 March 31, 2026
  
 Bitcoin Mining
($)
  
  
 Hosting
($)
  
  
 Corporate
($)
  
  
 Total
($)
  

 Revenues
  
 859,574
  
  
 2,794,575
  
  
 -
  
  
 3,654,149
  

 Cost of revenues
  
 569,147
  
  
 3,461,314
  
  
 -
  
  
 4,030,461
  

 Net income/(loss)
  
 (121,564
 )
  
 (828,819
 )
  
 (1,456,213
 )
  
 (2,406,596
 )

 Non-current assets
  
 38,857,097
  
  
 (5,650,676
 )
  
 (5,997,787
 )
  
 27,208,634
  

 Three months ended March 31, 2025:

 March 31, 2025
  
 Bitcoin Mining
($)
  
  
 Hosting
($)
  
  
 Corporate
($)
  
  
 Total
($)
  

 Revenue
  
 2,605,706
  
  
 3,897,584
  
  
 -
  
  
 6,503,290
  

 Cost of revenue
  
 1,868,672
  
  
 3,969,179
  
  
 -
  
  
 5,837,851
  

 Net income/(loss)
  
 (719,483
 )
  
 675,501
  
  
 (89,763
 )
  
 (133,745
 )

 Non-current assets
  
 10,090,849
  
  
 (4,149,369
 )
  
 22,755,338
  
  
 28,696,818
  

 20.   Events After Reporting Period

 On May 18, 2026, the Company granted 132,121 restricted share units ("RSUs") to a consultant under its equity incentive plan. These RSUs are subject to the accelerated vesting.

 On May 28, 2026, the Company cancelled 724,793 stock options that were outstanding.

 On March 5, 2026, the Company entered into an arrangement agreement with Sphere 3D Corp. ("Sphere 3D") providing for the combination of the Company and Sphere 3D by way of a statutory plan of arrangement (the "Arrangement") under the Business Corporations Act (British Columbia). On May 15, 2026, securityholders of the Company approved the Arrangement and, on May 26, 2026, the Supreme Court of British Columbia issued the final order. The Arrangement is expected to close on June 1, 2026. The following terms are expected to have a material impact on the Company's capital structure and share-based compensation expense in the period in which the Arrangement is completed:

 24

 Cathedra Bitcoin Inc.
 Notes to Condensed Consolidated Interim Financial Statements
 For the three months ended March 31, 2026 and 2025
 ( Expressed in Canadian dollars, unless otherwise noted )

 Each SV Share will be exchanged for 0.123015 of a Sphere 3D common share, and each MV Share for 12.3015 Sphere 3D common shares (the "Exchange Ratios"). Former shareholders of the Company are expected to hold approximately 39.3% of Sphere 3D on a partially-diluted basis at closing.

 Holders whose pro forma post-closing ownership of Sphere 3D would otherwise exceed 7% will receive that excess in non-voting Series I Preferred Shares of Sphere 3D, convertible into Sphere 3D common shares in three equal tranches on the first, second and third anniversaries of closing.

 Each outstanding share purchase warrant will be exchanged for a Sphere 3D replacement warrant, adjusted by the Exchange Ratios.

 All unvested RSUs (including the 132,121 RSUs granted on May 18, 2026) will vest immediately prior to the effective time and be settled in SV Shares that participate in the Arrangement.

 25

EX-99.4 · exhibit99-4.htm

EX-99.4
 12
 exhibit99-4.htm
 EXHIBIT 99.4

 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 The following unaudited pro forma condensed combined financial information (" Unaudited Pro Forma Financial Information ") has been prepared based on the historical audited consolidated financial statements of Sphere 3D Corp. (" Sphere ") and Cathedra Bitcoin Inc. (" Cathedra "), as indicated below, and is intended to provide information about how the acquisition of Cathedra by Sphere in a stock-for-stock transaction (the " Arrangement ") would have affected Sphere's historical financial statements. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in Sphere's Current Report on Form 8-K filed on June 3, 2026 (the " 8-K ").

 The unaudited pro forma condensed combined balance sheet (" Unaudited Pro Forma Balance Sheet ") as of March 31, 2026 gives effect to the Arrangement as if it occurred on March 31, 2026 and combines the historical balance sheets of Sphere and Cathedra as of such date. The unaudited pro forma condensed combined statement of operations (" Unaudited Pro Forma Statement of Operations ") for the year ended December 31, 2025 and the three months ended March 31, 2026 combines the historical audited consolidated statement of operations of Sphere and the historical audited consolidated income statement of Cathedra for the year ended December 31, 2025, and the historical unaudited condensed consolidated statement of operations of Sphere and the historical unaudited condensed consolidated interim statement of Cathedra for the three months ended March 31, 2026, as if the Arrangement had occurred on January 1, 2025.

 The Unaudited Pro Forma Financial Information has been prepared based on, and should be read in conjunction with:

 the historical audited consolidated financial statements of Sphere for the year ended December 31, 2025, included in Sphere's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the " SEC ") on March 27, 2026;

 the historical unaudited condensed consolidated financial statements of Sphere for the three months ended March 31, 2026, included in Sphere's quarterly report on Form 10-Q filed with the SEC on May 15, 2026;

 the historical audited consolidated financial statements of Cathedra for the year ended December 31, 2025, included in the 8-K;

 the historical unaudited consolidated financial statements of Cathedra for the three months ended March 31, 2026, included in the 8-K;

 the accompanying notes to the Unaudited Pro Forma Financial Information; and

 other information relating to Sphere and Cathedra contained in Sphere's Proxy Statement on Schedule 14A filed with the SEC on April 16, 2026 (the " Proxy Statement "). See the section titled " Additional  Information " of the Proxy Statement.

 The Unaudited Pro Forma Financial Information is presented for informational purposes only. The information has been prepared in accordance with Article 11 of Regulation S-X, as amended by Release No. 33-10786 "Amendments to Financial Disclosures about Acquired and Disposed Businesses," using the assumptions set forth in the notes to the Unaudited Pro Forma Financial Information. The Arrangement will be recorded as a business combination using the acquisition method of accounting under United States generally accepted accounting principles (" GAAP "). See section titled " The Arrangement—Accounting Treatment " of the Proxy Statement. Sphere, as the accounting acquirer, will record the acquired assets and assumed liabilities of Cathedra at their fair values as of the acquisition date. Sphere and Cathedra have determined a preliminary estimated purchase price calculated as described in Note 2 to the Unaudited Pro Forma Financial Information. The Unaudited Pro Forma Financial Information is not necessarily indicative of the financial position and results of operations that actually would have been achieved had the Arrangement occurred as of the dates indicated herein, nor do they purport to project the future financial position and operating results of the Combined Company. The Unaudited Pro Forma Financial Information also does not reflect the costs of any integration activities or cost savings or synergies expected to be achieved as a result of the Arrangement, which are described in the section titled " The Arrangement—Sphere's Reasons for the Arrangement " of the Proxy Statement, and, accordingly, does not attempt to predict or suggest future results.

 39

 Table of Contents

 The Unaudited Pro Forma Financial Information is based on the assumptions and adjustments that are described in the accompanying notes. The Unaudited Pro Forma Financial Information and pro forma adjustments have been prepared based on preliminary estimates of fair value of acquired assets and liabilities assumed. Differences between these preliminary estimates and the final acquisition accounting are likely to occur and these differences could be material. The actual amounts recorded as of the completion of the Arrangement may also differ materially from the information presented in the Unaudited Pro Forma Financial Information as a result of, among other factors, the amount of cash used in operations between the signing of the Arrangement and the closing of the Arrangement, completion of the fair value analysis of the Sphere Series I Preferred Stock, acquired assets and liabilities assumed and other changes in Sphere's and Cathedra's assets and liabilities that occur prior to the completion of the Arrangement.

 The Unaudited Pro Forma Financial Information does not give effect to the potential impact of current financial conditions, regulatory matters, operating efficiencies or other savings or expenses that may be associated with the integration of the two companies, if any.

 The Transaction Accounting Adjustments represent management of Sphere's (" Sphere Management ") best estimates and are based upon currently available information and certain assumptions that Sphere Management believes are reasonable and supportable. As the Unaudited Pro Forma Financial Information has been prepared based on these assumptions, the final amounts recorded may differ materially from the information presented herein.

 Sphere has elected not to present Sphere Management's adjustments, which depict synergies and dis-synergies of the Arrangement, and will only be presenting transaction accounting adjustments in the Unaudited Pro Forma Financial Information. Therefore, the Unaudited Pro Forma Statement of Operations does not include the effects of the costs associated with any integration or restructuring activities resulting from the Arrangement, as they are nonrecurring in nature. In addition, the Unaudited Pro Forma Financial Information does not give effect to any anticipated synergies, operating efficiencies, tax savings, or cost savings that may be associated with the Arrangement.

 Given Sphere's history of net losses and full valuation allowance on its net deferred tax assets, the pro forma adjustments to the Unaudited Pro Forma Statement of Operations resulted in no income tax adjustment to the pro forma financials.

 Additionally, as discussed in Note 3, certain reclassifications were made to conform the historical presentation of Cathedra's consolidated financial statements to that of Sphere's financial statement presentation. The accounting policies used in the preparation of the Unaudited Pro Forma Financial Information are those set out in Sphere's audited financial statements for the year ended December 31, 2025. Sphere Management conducted a preliminary evaluation of accounting policies used by Cathedra compared to accounting policies used by Sphere and identified certain adjustments as described below. Following the completion of the Arrangement, Sphere will conduct a comprehensive review of Cathedra's accounting policies, and as a result of that review, Sphere may identify differences which may have a material impact on the Unaudited Pro Forma Financial Information.

 40

 Table of Contents

 Sphere 3D Corp

 UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

 (in thousands)

 As of March 31, 2026

  
  
 Historical
  
  
 Pro Forma
  

  
  
 Sphere 3D
  
  
 Cathedra
  
  
 Cathedra
  
  
 Adjustments
  
  
 Cathedra
  
  
 Transaction
  
  
  
  
  
  
  

  
  
 in 
GAAP
 USD
  
  
 in IFRS
 CAD
  
  
 in IFRS
 USD
  
  
 to GAAP
 USD
  
  
 in
GAAP
 USD
  
  
 Accounting
 Adjustments
  
  
 Notes
  
  
 Combined
 Results
  

 Assets
  
  
  
  
  
  
  
 3.B
  
  
 3.C
  
  
  
  
  
  
  
  
  
  
  
  
  

 Current Assets:
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Cash and cash equivalents
 $
 3,145
  
 $
 326
  
 $
 234
  
 $
 -
  
 $
 234
  
 $
 -
  
  
  
  
 $
 3,379
  

 Digital currencies
  
 1,785
  
  
 381
  
  
 273
  
  
 1
  
  
 274
  
  
 -
  
  
  
  
  
 2,059
  

 Trade and other receivables
  
 -
  
  
 1,197
  
  
 859
  
  
 -
  
  
 859
  
  
  
  
  
  
  
  
 859
  

 Due from related parties
  
 -
  
  
 45
  
  
 32
  
  
 -
  
  
 32
  
  
 -
  
  
  
  
  
 32
  

 Other current assets
  
 1,794
  
  
 1,734
  
  
 1,244
  
  
 -
  
  
 1,244
  
  
 (471
 )
  
 3.D
  
  
 2,567
  

 Total current assets
  
 6,724
  
  
 3,683
  
  
 2,642
  
  
 1
  
  
 2,643
  
  
 (471
 )
  
  
  
  
 8,896
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Property and equipment, net
  
 13,552
  
  
 5,990
  
  
 4,296
  
  
 641
  
  
 4,937
  
  
 -
  
  
  
  
  
 18,489
  

 Deposits
  
 -
  
  
 2,334
  
  
 1,674
  
  
 -
  
  
 1,674
  
  
 -
  
  
  
  
  
 1,674
  

 Goodwill
  
 -
  
  
 15,674
  
  
 11,242
  
  
 -
  
  
 11,242
  
  
 (15,479
 )
  
 3.E
  
  
 2,558
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 7,266
  
  
 2
  
  
  
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 (471
 )
  
 2
  
  
  
  

 Intangible assets, net
  
 1,238
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
  
  
  
 1,238
  

 Right-of-use assets
  
 -
  
  
 1,201
  
  
 862
  
  
 -
  
  
 862
  
  
 -
  
  
  
  
  
 862
  

 Investments
  
 -
  
  
 1,116
  
  
 800
  
  
 -
  
  
 800
  
  
  
  
  
  
  
  
 800
  

 Other non-current assets
  
 225
  
  
 894
  
  
 641
  
  
 (641
 )
  
 -
  
  
 -
  
  
  
  
  
 225
  

 Total assets
 $
 21,739
  
 $
 30,892
  
 $
 22,157
  
 $
 1
  
 $
 22,158
  
 $
 (9,155
 )
  
  
  
 $
 34,742
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Liabilities and Shareholders' Equity
  
  
  
  
  
  
  
 3.B
  
  
 3.C
  
  
  
  
  
  
  
  
  
  
  
  
  

 Current liabilities:
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Accounts payable
 $
 197
  
 $
 3,071
  
 $
 2,203
  
 $
 (1,382
 )
 $
 821
  
 $
 2,218
  
  
 3.F
  
 $
 3,236
  

 Accrued liabilities
 $
 693
  
  
 -
  
  
 -
  
  
 1,382
  
  
 1,382
  
  
 -
  
  
  
  
  
 2,075
  

 Due to related parties
  
 -
  
  
 1,146
  
  
 822
  
  
 (400
 )
  
 422
  
  
 -
  
  
  
  
  
 422
  

 Accrued payroll and employee compensation
  
 836
  
  
 -
  
  
 -
  
  
 400
  
  
 400
  
  
 490
  
  
 3.G
  
  
 1,726
  

 Income tax payable
  
 -
  
  
 247
  
  
 177
  
  
 -
  
  
 177
  
  
 -
  
  
  
  
  
 177
  

 Contract liabilities
  
 -
  
  
 544
  
  
 390
  
  
 -
  
  
 390
  
  
 -
  
  
  
  
  
 390
  

 Customer liabilities
  
 -
  
  
 2,938
  
  
 2,107
  
  
 -
  
  
 2,107
  
  
 (471
 )
  
 3.D
  
  
 1,636
  

 Current portion of lease liabilities
  
 -
  
  
 86
  
  
 61
  
  
 -
  
  
 61
  
  
 -
  
  
  
  
  
 61
  

 Total current liabilities
  
 1,726
  
  
 8,032
  
  
 5,760
  
  
 -
  
  
 5,760
  
  
 2,237
  
  
  
  
  
 9,723
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Lease liabilities
  
 -
  
  
 1,281
  
  
 919
  
  
 -
  
  
 919
  
  
 -
  
  
  
  
  
 919
  

 Total liabilities
  
 1,726
  
  
 9,313
  
  
 6,679
  
  
 -
  
  
 6,679
  
  
 2,237
  
  
  
  
  
 10,642
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Temporary equity
  
 18
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
  
  
  
 18
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Shareholders' equity:
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

     Preferred shares - Sphere 3D Corp.
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 2,677
  
  
 2
  
  
 2,677
  

 Common shares - Sphere 3D Corp.
  
 504,215
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 4,589
  
  
 2
  
  
 509,539
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 735
  
  
 3.H
  
  
  
  

 Common shares - Cathedra
  
  
  
  
 22,649
  
  
 16,245
  
  
 -
  
  
 16,245
  
  
 (16,245
 )
  
 3.E
  
  
 -
  

 Accumulated other comprehensive loss
  
 (1,811
 )
  
 2,855
  
  
 2,048
  
  
 (1,053
 )
  
 (126)
  
  
 126
  
  
 3.E
  
  
 (1,811
 )

  
  
  
  
  
  
  
  
  
  
  
 (1,121
 )
  
  
  
  
  
  
  
  
  
  
  
  

 Accumulated deficit
  
 (482,409
 )
  
 (9,344
 )
  
 (6,702
 )
  
 1,053
  
  
 (4,527)
  
  
 4,527
  
  
 3.E
  
  
 (486,323
 )

  
  
  
  
  
  
  
  
  
  
  
 1,121
  
  
  
  
  
  
  
  
  
  
  
  
  

  
  
  
  
  
  
  
  
  
  
  
 1
  
  
  
  
  
 (471
 )
  
 2
  
  
  
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 (735
 )
  
 3.H
  
  
  
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 (490
 )
  
 3.G
  
  
  
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 (2,218
 )
  
 3.F
  
  
  
  

 Reserves
  
 -
  
  
 4,606
  
  
 3,304
  
  
 -
  
  
 3,304
  
  
 (3,304
 )
  
 3.E
  
  
 -
  

 Contributed surplus
  
 -
  
  
 813
  
  
 583
  
  
 -
  
  
 583
  
  
 (583
 )
  
 3.E
  
  
 -
  

 Shareholders' equity
  
 19,995
  
  
 21,579
  
  
 15,478
  
  
 1
  
  
 15,479
  
  
 (11,392
 )
  
  
  
  
 24,082
  

 Total liabilities, temporary equity, and shareholders' equity
 $
 21,739
  
 $
 30,892
  
 $
 22,157
  
 $
 1
  
 $
 22,158
  
 $
 (9,155
 )
  
  
  
 $
 34,742
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 41

 Table of Contents

 Sphere 3D Corp.

 UNAUDITED CONDENSED COMBINED STATEMENT OF OPERATIONS

 (in thousands, except share and per share data)

 For the Three Months Ended March 31, 2026

  
  
 Historical
  
  
  
 Pro Forma
  

  
  
 Sphere 3D
  
  
 Cathedra
  
  
 Cathedra
  
  
 Adjustments
  
  
 Cathedra
  
  
  
  
  
  
  
  
  
  
  

  
  
 in
GAAP
 USD
  
  
 in IFRS
 CAD
  
  
 in IFRS
 USD
  
  
 in
GAAP
 USD
  
  
 in
GAAP
 USD
  
  
  
 Transaction
 Accounting
 Adjustments
  
  
 Notes
  
  
 Combined
 Results
  

 Revenues:
  
  
  
  
  
  
  
 3.B
  
  
 3.C
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Total revenues
 $
 1,916
  
 $
 3,654
  
 $
 2,662
  
 $
 1
  
 $
 2,663
  
  
 $
 (920
 )
  
 3.D
  
 $
 3,659
  

 Operating costs and expenses:
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Cost of revenue (exclusive of depreciation and amortization shown below)
  
 1,603
  
  
 3,545
  
  
 2,583
  
  
 -
  
  
 2,583
  
  
  
 (920
 )
  
 3.D
  
  
 3,266
  

 General and administrative
  
 2,451
  
  
 2,678
  
  
 1,951
  
  
 -
  
  
 1,951
  
  
  
 (46
 )
  
 3.H
  
  
 3,128
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 (1,228
 )
  
 3.F
  
  
  
  

 Depreciation and amortization
  
 1,145
  
  
 485
  
  
 353
  
  
 -
  
  
 353
  
  
  
  
  
  
  
  
  
 1,498
  

 Loss on disposal of property and equipment
  
 241
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
  
 -
  
  
  
  
  
 241
  

 Change in fair value of digital currencies
  
 606
  
  
 (4
 )
  
 (3
 )
  
 73
  
  
 70
  
  
  
 -
  
  
  
  
  
 676
  

 Total operating expenses
  
 6,046
  
  
 6,704
  
  
 4,884
  
  
 73
  
  
 4,957
  
  
  
 (2,194
 )
  
  
  
  
 8,809
  

 Loss from operations
  
 (4,130
 )
  
 (3,050
 )
  
 (2,222
 )
  
 (72
 )
  
 (2,294
 )
  
  
 1,274
  
  
  
  
  
 (5,150
 )

 Other income (expense):
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Investment gain
  
 -
  
  
 -
  
  
 -
  
  
 66
  
  
 66
  
  
  
 -
  
  
  
  
  
 66
  

 Other income, net
  
 25
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
  
 -
  
  
  
  
  
 25
  

 Foreign exchange gain (loss)
  
 -
  
  
 710
  
  
 517
  
  
 (542
 )
  
 (25
 )
  
  
 -
  
  
  
  
  
 (25
 )

 Interest expense
  
 -
  
  
 (68
 )
  
 (49
 )
  
 -
  
  
 (49
 )
  
  
 -
  
  
  
  
  
 (49
 )

 Unrealized gain on investment
  
  
  
  
 91
  
  
 66
  
  
 (66
 )
  
 -
  
  
  
 -
  
  
  
  
  
 -
  

 Net (loss) income before taxes
  
 (4,105
 )
  
 (2,317
 )
  
 (1,688
 )
  
 (614
 )
  
 (2,302
 )
  
  
 1,274
  
  
  
  
  
 (5,133
 )

 Provision for income taxes
  
 1
  
  
 89
  
  
 65
  
  
 -
  
  
 65
  
  
  
  
  
  
  
  
  
 66
  

 Net (loss) from continuing operations
 $
 (4,106
 )
 $
 (2,406
 )
 $
 (1,753
 )
 $
 (614
 )
 $
 (2,367
 )
  
 $
 1,274
  
  
  
  
 $
 (5,199
 )

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Basic and diluted net loss per common share
 $
 (1.18
 )
 $
 (0.08
 )
 $
 (0.06
 )
  
  
  
 $
 (0.08
 )
  
  
  
  
  
  
  
 $
 (0.82
 )

 Weighted average number of common shares outstanding - basic and diluted
  
 3,480,663
  
  
 29,381,662
  
  
 29,381,662
  
  
  
  
  
 29,381,662
  
  
  
 2,840,484
  
  
 3.J
  
  
 6,321,147
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Sphere 3D Corp.

 UNAUDITED CONDENSED COMBINED STATEMENT OF OPERATIONS

 (in thousands, except share and per share data)

 For the Year Ended December 31, 2025

  
  
 Historical
  
  
  
 Pro Forma
  

  
  
 Sphere 3D
  
  
 Cathedra
  
  
 Cathedra
  
  
 Adjustments
  
  
 Cathedra
  
  
  
  
  
  
  
  
  
  
  

  
  
 in
GAAP
 USD
  
  
 in IFRS
 CAD
  
  
 in IFRS
 USD
  
  
 in GAAP
 USD
  
  
 in GAAP
 USD
  
  
  
 Transaction
 Accounting
 Adjustments
  
  
 Notes
  
  
 Combined
 Results
  

 Revenues:
  
  
  
  
  
  
  
 3.B
  
  
 3.C
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Total revenues
 $
 11,181
  
 $
 21,194
  
 $
 15,143
  
  
 ($109
 )
 $
 15,034
  
  
 $
 (313
 )
  
 3.D
  
  
 25,902
  

 Operating costs and expenses:
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Cost of revenue (exclusive of depreciation and amortization shown below)
  
 8,554
  
  
 16,047
  
  
 11,476
  
  
 -
  
  
 11,476
  
  
  
 (313
 )
  
 3.D
  
  
 19,717
  

 General and administrative
  
 8,266
  
  
 7,331
  
  
 5,246
  
  
 -
  
  
 5,246
  
  
  
 781
  
  
 3.H
  
  
 18,330
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 3,430
  
  
 3.F
  
  
  
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 490
  
  
 3.G
  
  
  
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 117
  
  
 3.I
  
  
  
  

 Depreciation and amortization
  
 6,878
  
  
 4,784
  
  
 3,421
  
  
 -
  
  
 3,421
  
  
  
  
  
  
  
  
  
 10,299
  

 Impairment of property and equipment
  
 7,185
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
  
 -
  
  
  
  
  
 7,185
  

 Loss on disposal of property and equipment
  
 1,652
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
  
 -
  
  
  
  
  
 1,652
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Impairment of goodwill and other assets
  
 300
  
  
 -
  
  
 -
  
  
 855
  
  
 855
  
  
  
 -
  
  
  
  
  
 1,155
  

 Change in fair value of digital currencies
  
 345
  
  
 (5
 )
  
 (1
 )
  
 (1,191
 )
  
 (1,192
 )
  
  
 -
  
  
  
  
  
 (847
 )

 Total operating expenses
  
 33,180
  
  
 28,157
  
  
 20,142
  
  
 (336
 )
  
 19,806
  
  
  
 4,505
  
  
  
  
  
 57,491
  

 Loss from operations
  
 (21,999
 )
  
 (6,963
 )
  
 (4,999
 )
  
 227
  
  
 (4,772
 )
  
  
 (4,818
 )
  
  
  
  
 (31,589
 )

 Other income (expense):
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Investment gain
  
 438
  
  
 75
  
  
 54
  
  
 88
  
  
 142
  
  
  
 -
  
  
  
  
  
 580
  

 Other income, net
  
 81
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
  
 -
  
  
  
  
  
 81
  

 Foreign exchange gain (loss)
  
 -
  
  
 (2,228
 )
  
 (1,587
 )
  
 1,595
  
  
 8
  
  
  
 -
  
  
  
  
  
 8
  

 Interest expense
  
 -
  
  
 (672
 )
  
 (479
 )
  
 -
  
  
 (479
  
  
  
 -
  
  
  
  
  
 (479
 )

 Impairment of goodwill
  
  
  
  
 (1,172
 )
  
 (855
 )
  
 855
  
  
 -
  
  
  
 -
  
  
  
  
  
 -
  

 Unrealized gain on investment
  
  
  
  
 120
  
  
 88
  
  
 (88
 )
  
 -
  
  
  
 -
  
  
  
  
  
 -
  

 Gain on disposal of subsidiary
  
 -
  
  
 167
  
  
 117
  
  
 -
  
  
 117
  
  
  
 -
  
  
  
  
  
 117
  

 Gain on settlement of debt
  
 -
  
  
 693
  
  
 495
  
  
 -
  
  
 495
  
  
  
 -
  
  
  
  
  
 495
  

 Net (loss) income before taxes
  
 (21,480
 )
  
 (9,980
 )
  
 (7,166
 )
  
 2,677
  
  
 (4,489
 )
  
  
 (4,818
 )
  
  
  
  
 (30,787
 )

 Provision for income taxes
  
 2
  
  
 -
  
  
 -
  
  
 -
  
  
 -
  
  
  
  
  
  
  
  
  
 2
  

 Net (loss) from continuing operations
 $
 (21,482
 )
 $
 (9,980
 )
 $
 (7,166
 )
  
 2,677
  
 $
 (4,489
 )
  
 $
 (4,818
 )
  
  
  
 $
 (30,789
 )

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Basic and diluted net loss per common share
 $
 (7.37
 )
 $
 (0.34
 )
 $
 (0.25
 )
  
  
  
 $
 (0.15
 )
  
  
  
  
  
  
  
 $
 (5.35
 )

 Weighted average number of common shares outstanding - basic and diluted
  
 2,914,607
  
  
 29,091,882
  
  
 29,091,882
  
  
  
  
  
 29,091,882
  
  
  
 2,840,484
  
  
 3.J
  
  
 5,755,091
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 42

 Table of Contents

 SPHERE 3D CORP.

 NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 (Expressed in U.S. Dollars)

 1. BASIS OF PRESENTATION

 After completion of the Arrangement, the consolidated financial statements of the consolidated entity will be prepared and presented in accordance with GAAP. The Unaudited Pro Forma Financial Information includes (all financial information is prepared in accordance with GAAP):

  
 (a)
 the Unaudited Pro Forma Balance Sheet as of March 31, 2026 combines (i) the unaudited condensed consolidated balance sheet of Sphere as of March 31, 2026, as included in Sphere's Quarterly Report on Form 10-Q filed with the SEC on May 15, 2026, and (ii) the unaudited consolidated balance sheet of Cathedra as of March 31, 2026, as included in the 8-K, giving effect to the Arrangement as if it had been completed on March 31, 2026;

  
 (b)
 the Unaudited Pro Forma Statement of Operations from continuing operations for the three months ended March 31, 2026 combines (i) the unaudited  condensed consolidated statement of operations of Sphere, as included in Sphere's Quarterly Report on Form 10-Q filed with the SEC on May 15, 2026, and (ii) the unaudited consolidated statement of income or loss of Cathedra for the three months ended March 31, 2026, as included in the 8-K, giving effect to the Arrangement as if it had been completed on January 1, 2025; and

  
  
  

  
 (c)
 the Unaudited Pro Forma Statement of Operations from continuing operations for the year ended December 31, 2025 combines (i) the audited consolidated statement of operations of Sphere, as included in Sphere's Annual Report on Form 10-K filed with the SEC on March 27, 2026, and (ii) the audited consolidated statement of income or loss of Cathedra for the year ended December 31, 2025, as included in the 8-K, giving effect to the Arrangement as if it had been completed on January 1, 2025.

 The Unaudited Pro Forma Financial Information should be read in conjunction with the historical consolidated financial statements and notes included therein of Sphere and Cathedra, as referred to above. Further review may identify differences between the accounting policies of Sphere and Cathedra that, when conformed, could have a material impact on the financial statements of Sphere, after the consummation of the Arrangement (the " Combined Company "). At this time, Sphere and Cathedra have made adjustments to align accounting policies and are not aware of any remaining accounting policy differences that would have a material impact on the Unaudited Pro Forma Financial Information of the Combined Company.

 The Arrangement reflected in the Unaudited Pro Forma Financial Information has been prepared using the acquisition method of accounting in accordance with ASC 805, Business Combinations, under GAAP. Based on the definitions of control, Sphere is considered the legal and accounting acquirer. Under the acquisition method, the total estimated consideration is calculated as described in Note 2 to the Unaudited Pro Forma Financial Information. In accordance with the accounting guidance for business combinations, the assets acquired and liabilities assumed of Cathedra will be measured at their estimated fair values. The Unaudited Pro Forma Financial Information has accounted for Cathedra's assets and liabilities based on their historical amounts as no valuation has been completed at this time to determine their respective fair values.

 It is Sphere Management's opinion that the Unaudited Pro Forma Financial Information includes all adjustments necessary for the fair presentation of the Arrangement described herein. The Unaudited Pro Forma Financial Information has been presented for informational purposes only and is not intended to reflect the results of operations or the financial position of Sphere which would have actually resulted had the Arrangement been effected on the dates indicated. Furthermore, the Unaudited Pro Forma Financial Information is not necessarily indicative of the results of operations that may be obtained in the future. Actual amounts recorded upon completion of the Arrangement will differ from those recorded in the Unaudited Pro Forma Financial Information and the differences may be material.

 Certain amounts included herein have been subject to rounding adjustments. Accordingly, amounts shown as totals in certain tables may not be the arithmetic aggregation of the amounts that precede them.

 43

 Table of Contents

 2. ACQUISITION OF CATHEDRA

 Sphere Management has estimated the preliminary consideration and has not yet completed an external valuation analysis of the fair market value of Cathedra's assets to be acquired and liabilities to be assumed. As a result, Sphere Management has estimated the allocation of the preliminary purchase price to Cathedra's assets and liabilities. This preliminary purchase price allocation has been used to prepare the pro forma adjustments in the Unaudited Pro Forma Balance Sheet. The final purchase price allocation will be determined when the final purchase price has been determined, the final assets and liabilities and any asset sales are known, and detailed valuations and any other studies and calculations deemed necessary have been completed. The final purchase price and purchase price allocation could differ materially from the preliminary purchase price and purchase price allocation used to prepare the pro forma adjustments resulting from changes to assets and liabilities and to the ultimate purchase consideration, and operations during the intervening period to the closing of the Arrangement, among other factors.

 Pursuant to the terms of the Arrangement Agreement, Sphere issued 2,405,300 Sphere Common Shares and 1,387,117 Sphere Series I Preferred Stock (the " Series I Shares ") to the shareholders of Cathedra to acquire 100% of the issued and outstanding common shares of Cathedra as well as Replacement Warrants and share-based awards. This preliminary purchase price is based on the aggregate number of shares of Sphere Common Shares outstanding at the closing of the Arrangement using $1.90, the fair value of the Sphere Common Shares as of May 29, 2026, the last business day prior to the closing of the Arrangement on June 1, 2026. The fair value of the Series I Shares was estimated using a market approach to estimate the equity value of Sphere and further adjusted for lack of marketability. This is a preliminary estimate and the actual fair value may differ upon completion of the formal valuation analysis. A preliminary accounting assessment was performed over Sphere Series I Shares to determine the balance sheet classification. The preliminary conclusion resulted in permanent equity classification, which is subject to further accounting assessment and may be subject to change at the time the accounting assessment is completed.

 The following table summarizes the preliminary estimated consideration:

  
  
 Number of
Shares
issued
  
  
 Estimated Fair
Value Per
Share of
Sphere
Common
Share
  
  
  
  
  
 Estimated
Consideration
(in thousands)
  

 Sphere Series I Shares issued
  
 1,387,117
  
 $
 1.93
  
  
  
  
 $
 2,677
  

  
  
  
  
  
  
  
  
  
  
  
  
  

 Sphere Common Shares issued
  
 2,405,300
  
 $
 1.90
  
 $
 4,570
  
  
  
  

 Black-Scholes value of Cathedra Replacement Warrants
  
 115,867
  
 $
 0.16
  
 $
 19
  
  
  
  

 Total number of Sphere Common Shares issued or reserved for issuance
  
 2,521,167
  
  
  
  
  
  
  
 $
 4,589
  

 Total Estimated Consideration
  
  
  
  
  
  
  
  
  
 $
 7,266
  

 44

 Table of Contents

 3)
 PRO FORMA ADJUSTMENTS

 The adjustments reflect the acquisition method of accounting, which takes into account the total consideration transferred for Cathedra's assets and liabilities based on their historical amounts as no valuation has occurred at this time to determine their respective fair values.

  
 A.
 The preliminary estimated consideration transferred and assets acquired and liabilities assumed are recorded as follows (in thousands):

 Cash and cash equivalents
 $
 234
  

 Digital currencies
  
 274
  

 Trade and other receivables
  
 859
  

 Due from related parties and other current assets
  
 1,276
  

 Property and equipment, net
  
 4,937
  

 Investments
  
 800
  

 Right of use assets
  
 862
  

 Deposits
  
 1,674
  

 Accounts payable, accrued expenses and other liabilities
  
 (5,228
 )

 Lease liabilities
  
 (980
 )

 Net assets acquired
 $
 4,708
  

 Preliminary estimated consideration
 $
 7,266
  

 Excess to be allocated to intangible assets and goodwill
 $
 2,558
  

  
  
  

  
  
 A final determination of fair value may differ materially from the preliminary estimates and will include Sphere Management's final valuation. The final valuation may change the calculation of consideration, which could affect the fair value assigned to the assets acquired and liabilities assumed and could result in a change to the Unaudited Pro Forma Financial Information.

  
  
  

  
 B.
 The Unaudited Pro Forma Financial Information is presented in U.S. dollars (" USD "), which is also the functional currency of Sphere. Since Cathedra's historical consolidated financial statements are presented in Canadian dollars (" CAD "), the historical financial information of Cathedra used in the Unaudited Pro Forma Financial Information has been translated into USD using the following historical CAD to USD exchange rates:

  
  
  

  
  

 Period-end exchange rate as of March 31, 2026: $0.72

 Average exchange rate for the three months ended March 31, 2026: $0.73

 Average exchange rate for the year ended December 31, 2025: $0.71

  
 C.
 The effects of converting Cathedra's historical financial information from International Financial Reporting Standards as issued by the International Accounting Standards Board (" IFRS ") Accounting Standards to GAAP have been estimated and included in the Unaudited Pro Forma Financial Information. Further adjustments may be identified.

  
  
  

  
  
 Certain reclassifications were made to conform the historical presentation of Cathedra consolidated financial statements to that of Sphere's financial statement presentation as follows:

  
  
  

 Presentation in Cathedra's IFRS Financial Statements
  
 Presentation in Unaudited Pro forma
 Financial Information
  
 As of and
for the
Three
Months
Ended
March 31,
2026
 (in thousands)
  
  
   For the
Year
Ended
December
31, 2025
 (i n thousands)
  

 Prepaid expenses
  
 Other current assets
 $
 966
  
  
  
  

 Other assets
  
 Other current assets
 $
 278
  
  
  
  

 Trade payables and accrued liabilities
  
 Accounts payable
 $
 821
  
  
  
  

  
  
 Accrued expenses
 $
 1,382
  
  
  
  

  
  
 Accrued payroll and employee compensation
 $
 400
  
  
  
  

 Revenues
  
 Total revenues
 $
 2,663
  
 $
 15,034
  

 Operating costs
  
 Cost of revenue (exclusive of depreciation and amortization shown below)
 $
 2,583
  
 $
 11,476
  

 Depreciation
  
 Depreciation and amortization
 $
 353
  
 $
 3,421
  

 Realized gain on sale of digital currencies
  
 Change in fair value of digital currencies
 $
 70
  
 $
 (1,192
 )

 Director fees
  
 General and administrative
 $
 47
  
 $
 233
  

 Management and consulting fees
  
 General and administrative
 $
 196
  
 $
 1,821
  

 Office and administration
  
 General and administrative
 $
 324
  
 $
 811
  

 Professional fees
  
 General and administrative
 $
 755
  
 $
 1,034
  

 Salaries and wages
  
 General and administrative
 $
 122
  
 $
 659
  

 Share-based compensation
  
 General and administrative
 $
 507
  
 $
 639
  

 Travel
  
 General and administrative
 $
 -
  
 $
 49
  

 Net finance costs
  
 Interest expense
 $
 (49
 )
 $
 (479
 )

 Other income
  
 Investment gain
 $
 -
  
 $
 54
  

 Impairment of goodwill
  
 Impairment of goodwill and other assets
 $
 -
  
 $
 855
  

 Unrealized gain on investment
  
 Investment gain
 $
 66
  
 $
 88
  

 45

 Table of Contents

 The financial information below illustrates the impact of adjustments made to Cathedra's consolidated financial statements as prepared in accordance with IFRS, in order to present them on a basis consistent with the Sphere's accounting presentation in accordance with GAAP.

 As of March 31, 2026

  
  
 Historical
  

  
  
 Cathedra
  
  
 Cathedra
  
  
 Adjustments
  
  
  
  
  
 Adjustments
  
  
  
  
  
 Cathedra
  

  
  
 in IFRS CAD
  
  
 in IFRS USD
  
  
 Reclassification
  
  
  
  
  
 to GAAP
  
  
  
  
  
 in GAAP USD
  

 Assets
  
  
  
  
 3.B
  
  
 3.C
  
  
  
  
  
 3.C
  
  
  
  
  
  
  

 Current Assets:
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Cash and cash equivalents
 $
 326
  
 $
 234
  
  
 -
  
  
  
  
  
 -
  
  
  
  
 $
 234
  

 Digital currencies
  
 381
  
  
 273
  
  
 -
  
  
  
  
 $
 1
  
  
 3.C.1
  
  
 274
  

 Trade and other receivables
  
 1,197
  
  
 859
  
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 859
  

 Due from related parties
  
 45
  
  
 32
  
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 32
  

 Other current assets
  
 1,734
  
  
 1,244
  
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 1,244
  

 Total current assets
  
 3,683
  
  
 2,642
  
  
 -
  
  
  
  
  
 1
  
  
  
  
  
 2,643
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Property and equipment, net
  
 5,990
  
  
 4,296
  
  
 -
  
  
  
  
 $
 641
  
  
 3.C.2
  
  
 4,937
  

 Deposits
  
 2,334
  
  
 1,674
  
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 1,674
  

 Goodwill
  
 15,674
  
  
 11,242
  
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 11,242
  

 Right-of-use assets
  
 1,201
  
  
 862
  
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 862
  

 Investments
  
 1,116
  
  
 800
  
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 800
  

 Other non-current assets
  
 894
  
  
 641
  
  
 -
  
  
  
  
  
 (641
 )
  
 3.C.2
  
  
 -
  

 Total assets
 $
 30,892
  
 $
 22,157
  
 $
 -
  
  
  
  
 $
 1
  
  
  
  
 $
 22,158
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Liabilities and Shareholders' Equity
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Current liabilities:
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Accounts payable
 $
 3,071
  
 $
 2,203
  
 $
 (1,382
 )
  
 3.C.3
  
  
 -
  
  
  
  
 $
 821
  

 Accrued liabilities
  
 -
  
  
 -
  
  
 1,382
  
  
 3.C.3
  
  
 -
  
  
  
  
  
 1,382
  

 Due to related parties
  
 1,146
  
  
 822
  
  
 (400
 )
  
 3.C.3
  
  
 -
  
  
  
  
  
 422
  

 Accrued payroll and employee compensation
  
 -
  
  
 -
  
  
 400
  
  
 3.C.3
  
  
 -
  
  
  
  
  
 400
  

 Income tax payable
  
 247
  
  
 177
  
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 177
  

 Contract liabilities
  
 544
  
  
 390
  
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 390
  

 Customer liabilities
  
 2,938
  
  
 2,107
  
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 2,107
  

 Current portion of lease liabilities
  
 86
  
  
 61
  
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 61
  

 Total current liabilities
  
 8,032
  
  
 5,760
  
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 5,760
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Lease liabilities
  
 1,281
  
  
 919
  
  
  
  
  
  
  
  
 -
  
  
  
  
  
 919
  

 Total liabilities
  
 9,313
  
  
 6,679
  
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 6,679
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Shareholders' equity:
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Common shares - Cathedra
  
 22,649
  
  
 16,245
  
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 16,245
  

 Accumulated other comprehensive loss
  
 2,855
  
  
 2,048
  
  
 -
  
  
  
  
  
 (1,053
 )
  
 3.C.4
  
  
 (126
 )

  
  
  
  
  
  
  
  
  
  
  
  
  
  
 (1,121
 )
  
 3.C.5
  
  
  
  

 Accumulated deficit
  
 (9,344
 )
  
 (6,702
 )
  
 -
  
  
  
  
  
 1,053
  
  
 3.C.4
  
  
 (4,527
 )

  
  
  
  
  
  
  
  
  
  
  
  
  
  
 1,121
  
  
 3.C.5
  
  
  
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
 1
  
  
 3.C.1
  
  
  
  

 Reserves
  
 4,606
  
  
 3,304
  
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 3,304
  

 Contributed surplus
  
 813
  
  
 583
  
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 583
  

 Shareholders' equity
  
 21,579
  
  
 15,478
  
  
 -
  
  
  
  
  
 1
  
  
  
  
  
 15,479
  

 Total liabilities, temporary equity, and shareholders' equity
 $
 30,892
  
 $
 22,157
  
 $
 -
  
  
  
  
 $
 1
  
  
  
  
 $
 22,158
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 46

 Table of Contents

 For the Three Months Ended March 31, 2026

  
  
 Historical
  

  
  
 Cathedra
  
  
 Cathedra
  
  
 Adjustments
  
  
  
  
 Adjustments
  
  
  
  
  
 Cathedra
  

  
  
 in IFRS
 CAD
  
  
 in IFRS
 USD
  
  
 Reclassification
  
  
  
  
 in 
GAAP
 USD
  
  
  
  
  
 in GAAP
 USD
  

 Revenues:
  
  
  
  
 3.B
  
  
 3.C
  
  
  
  
 3.C
  
  
  
  
  
  
  

 Total revenues
 $
 3,654
  
 $
 2,662
  
 $
 -
  
  
  
 $
 1
  
  
 3.C.8
  
 $
 2,663
  

 Operating costs and expenses:
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Cost of revenue (exclusive of depreciation and amortization shown below)
  
 3,545
  
  
 2,583
  
  
 -
  
  
  
  
 -
  
  
  
  
  
 2,583
  

 General and administrative
  
 2,678
  
  
 1,951
  
  
 -
  
  
  
  
 -
  
  
  
  
  
 1,951
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Depreciation and amortization
  
 485
  
  
 353
  
  
 -
  
  
  
  
 -
  
  
  
  
  
 353
  

 Change in fair value of digital currencies
  
 (4
 )
  
 (3
 )
  
 -
  
  
  
  
 73
  
  
 3.C.5
  
  
 70
  

 Total operating expenses
  
 6,704
  
  
 4,884
  
  
 -
  
  
  
  
 73
  
  
  
  
  
 4,957
  

 Loss from operations
  
 (3,050
 )
  
 (2,222
 )
  
 -
  
  
  
  
 (72
 )
  
  
  
  
 (2,294
 )

 Other income (expense):
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Investment gain
  
 -
  
  
 -
  
  
 66
  
 3.C.7
  
  
 -
  
  
  
  
  
 66
  

 Foreign exchange gain (loss)
  
 710
  
  
 517
  
  
 -
  
  
  
  
 (542
 )
  
 3.C.4
  
  
 (25
 )

 Interest expense
  
 (68
 )
  
 (49
 )
  
 -
  
  
  
  
 -
  
  
  
  
  
 (49
 )

 Unrealized gain on investment
  
 91
  
  
 66
  
  
 (66
 )
 3.C.7
  
  
 -
  
  
  
  
  
 -
  

 Net (loss) income before taxes
  
 (2,317
 )
  
 (1,688
 )
  
 -
  
  
  
  
 (614
 )
  
  
  
  
 (2,302
 )

 Provision for income taxes
  
 89
  
  
 65
  
  
 -
  
  
  
  
 -
  
  
  
  
  
 65
  

 Net (loss) from continuing operations
 $
 (2,406
 )
 $
 (1,753
 )
  
 -
  
  
  
 $
 (614
 )
  
  
  
 $
 (2,367
 )

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Basic and diluted net loss per common share
 $
 (0.08
 )
 $
 (0.06
 )
  
  
  
  
  
  
  
  
  
  
  
 $
 (0.08
 )

 Weighted average number of common shares outstanding - basic and diluted
  
 29,381,662
  
  
 29,381,662
  
  
  
  
  
  
  
  
  
  
  
  
  
 29,381,662
  

 For the Year Ended December 31, 2025

  
  
 Historical
  

  
  
 Cathedra
 in IFRS
  
  
 Cathedra
 in IFRS
  
  
 Adjustments
  
  
  
  
  
 Adjustments
 to
  
  
  
  
  
 Cathedra
 in
GAAP
  

  
  
 CAD
  
  
 USD
  
  
 Reclassification
  
  
  
  
  
 GAAP
  
  
  
  
  
 USD
  

 Revenues:
  
  
  
  
 3.B
  
  
 3.C
  
  
  
  
  
 3.C
  
  
  
  
  
  
  

 Total revenues
 $
 21,194
  
 $
 15,143
  
  
 -
  
  
  
  
 $
 (109
 )
  
 3.C.8
  
 $
 15,034
  

 Operating costs and expenses:
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Cost of revenue (exclusive of depreciation and amortization shown below)
  
 16,047
  
  
 11,476
  
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 11,476
  

 General and administrative
  
 7,331
  
  
 5,246
  
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 5,246
  

 Depreciation and amortization
  
 4,784
  
  
 3,421
  
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 3,421
  

 Impairment of goodwill and other assets
  
 -
  
  
 -
  
  
 855
  
  
 3.C.6
  
  
 -
  
  
  
  
  
 855
  

 Change in fair value of digital currencies
  
 (5
 )
  
 (1
 )
  
  
  
  
  
  
  
 (1,191
 )
  
 3.C.5
  
  
 (1,192
 )

 Total operating expenses
  
 28,157
  
  
 20,142
  
  
 855
  
  
  
  
  
 (1,191
 )
  
  
  
  
 19,806
  

 Loss from operations
  
 (6,963
 )
  
 (4,999
 )
  
 (855
 )
  
  
  
  
 1,082
  
  
  
  
  
 (4,772
 )

 Other income (expense):
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Investment gain
  
 75
  
  
 54
  
  
 88
  
  
 3.C.7
  
  
 -
  
  
  
  
  
 142
  

 Foreign exchange gain (loss)
  
 (2,228
 )
  
 (1,587
  
  
 -
  
  
  
  
  
 1,595
  
  
 3.C.4
  
  
 8
  

 Interest expense
  
 (672
 )
  
 (479
 )
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 (479
 ) 

 Impairment of goodwill
  
 (1,172
 )
  
 (855
 )
  
 855
  
  
 3.C.6
  
  
 -
  
  
  
  
  
 -
  

 Unrealized gain on investment
  
 120
  
  
 88
  
  
 (88
 )
  
 3.C.7
  
  
 -
  
  
  
  
  
 -
  

 Gain on disposal of subsidiary
  
 167
  
  
 117
  
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 117
  

 Gain on settlement of debt
  
 693
  
  
 495
  
  
 -
  
  
  
  
  
 -
  
  
  
  
  
 495
  

 Net (loss) income before taxes
  
 (9,980
 )
  
 (7,166
 )
  
 -
  
  
  
  
  
 2,677
  
  
  
  
  
 (4,489
 )

 Provision for income taxes
  
 -
  
  
 -
  
  
  
  
  
  
  
  
 -
  
  
  
  
  
 -
  

 Net (loss) from continuing operations
 $
 (9,980
 )
 $
 (7,166
 )
 $
 -
  
  
  
  
 $
 2,677
  
  
  
  
 $
 (4,489
 )

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Basic and diluted net loss per common share
 $
 (0.34
 )
 $
 (0.25
 )
  
  
  
  
  
  
  
  
  
  
  
  
 $
 (0.15
 )

 Weighted average number of common shares outstanding - basic and diluted
  
 29,091,882
  
  
 29,091,882
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 29,091,882
  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

 Adjustments herein represent the alignment of the accounting policies and reclassifications, including the following:

  
 1.
 Adjustment to record the fair value of digital currencies measured using the period-end closing price rather than as an intangible asset with an indefinite useful life initially measured at cost, and subsequently measured under the revaluation model to conform to Sphere's accounting policy;

  
 2.
 Reclassification to present costs of infrastructure within property plant and equipment rather than other non-current assets to conform to Sphere's accounting policy;

  
  
  

  
 3.
 Reclassification of amounts within accounts payable, accrued expenses and due to related parties to conform to Sphere's balance sheet presentation;

  
  
  

  
 4.
 Adjustment to present cumulative translation adjustments within accumulated other comprehensive loss rather than accumulated deficit and other income (expense) to conform to Sphere's accounting policy;

  
  
  

  
 5.
 Adjustment to present the changes in fair market value of digital currencies within operating expenses and accumulated deficit rather than other comprehensive loss and accumulated other comprehensive loss to conform to Sphere's accounting policy;

  
  
  

  
 6.
 Reclassification of impairment of goodwill from other income (expense) to total operating expenses to conform to Sphere's accounting policy;

  
  
  

  
 7.
 Reclassification of unrealized gain on investment to investment gain to conform to Sphere's accounting policy; and

  
  
  

  
 8.
 Revenue adjustment to measure the contract consideration at fair value at contract inception based on the Bitcoin spot price at the beginning of the day, with a corresponding increase to net loss from continuing operations rather than the spot price on the date of receipt to conform to Sphere's accounting policy.

  
 D.
 The adjustment reflects the elimination of related party prepaid, deposits, customer liabilities, and intra-entity transactions between Sphere and Cathedra upon consummation of the Arrangement.

  
  
  

  
 E.
 The adjustment reflects the elimination of Cathedra's shareholders' equity, which consists of Cathedra shares, reserves, contributed surplus and accumulated deficit, which will be eliminated upon consolidation.

  
  
  

  
 F.
 Sphere and Cathedra incurred acquisition-related transaction costs of approximately $3.4 million, comprised of professional, legal and accounting fees of $2.4 million, and $1.0 million in strategic advisory fees related to the Arrangement. These costs will not affect Sphere's combined statement of operations beyond 12 months after the acquisition date.
 
The adjustment for the three-months ended March 31, 2026 excludes the non-recurring acquisition-related transaction costs that are reflected in the acquisition cost adjustment for the year ended December 31, 2025.

  
  
  

  
 G.
 The adjustment reflects a transaction bonus issued by Sphere in connection within the consummation of the Arrangement (this adjustment is considered to be a one-time charge and is not expected to recur).

  
  
  

  
 H.
 The adjustment reflects Sphere restricted stock units that accelerate in accordance with the terms of the applicable equity plans (this adjustment is considered to be a one-time charge and is not expected to recur).
 
The adjustment for the three-months ended March 31, 2026 excludes the expense related to the restricted stock units that accelerated upon completion of the Arrangement and reflected in the adjustment for the year ended December 31, 2025.

 Table of Contents

  
 I.
 As of May 29, 2026, approximately 2.9 million Cathedra restricted stock units (" Cathedra RSUs ") were issued and outstanding. Certain Cathedra RSUs were exchanged for restricted share units to acquire Sphere Common Shares (the " Replacement RSUs ") with the remaining Cathedra RSUs accelerated in accordance with their terms at the closing of the Arrangement. As a result, Sphere issued Replacement RSUs to acquire 178,073 Sphere Common Shares to one Cathedra RSU holder. The fair value of the Replacement RSU has been determined to be approximately $0.3 million using the closing stock price on May 29, 2026. The fair value of the Cathedra RSUs that accelerated in accordance with their terms at the closing of the Arrangement was approximately $0.3 million, which represents the fair-value-measure of the vested portion of the Cathedra RSUs and is considered part of the consideration. The Replacement RSUs of $0.3 million are treated as a post-combination expense and will be recognized over the remaining 2.4 years post combination service period. Approximately $0.1 million post-acquisition share-based compensation is reflected in the Unaudited Pro Forma Statement of Operations for the year ended December 31, 2025.

  
  
  

  
 J.
 Shares used in computing basic and diluted net loss per share as if the Arrangement had occurred on January 1, 2025 are as follows:

 (in thousands, except share and per share data)
  
  
 Three Months
Ended
 March 31,
 2026
  

 Numerator (basic and diluted)
  
  
  
  

 Pro forma net loss from continuing operations
  
 $
 (5,199
 )

  
  
  
  
  

 Denominator (basic and diluted)
  
  
  
  

 Historical weighted-average shares outstanding
  
  
 3,480,663
  

 Shares of Sphere Common Shares as consideration transferred
  
  
 2,227,227
  

 Cathedra's equity awards converted to Sphere Common Shares
  
  
 178,073
  

 Sphere's equity awards converted to Sphere Common Shares
  
  
 435,184
  

 Total weighted average shares outstanding (basic and diluted)
  
  
 6,321,147
  

  
  
  
  
  

 Pro forma loss per share
  
  
  
  

 Basic and diluted
  
 $
 (0.82
 )

  
  
  
  
  

 (in thousands, except share and per share data)
  
  
 Year Ended
 December 31,
 2025
  

 Numerator (basic and diluted)
  
  
  
  

 Pro forma net loss from continuing operations
  
 $
 (30,789
 )

  
  
  
  
  

 Denominator (basic and diluted)
  
  
  
  

 Historical weighted-average shares outstanding
  
  
 2,914,607
  

 Shares of Sphere Common Shares as consideration transferred
  
  
 2,227,227
  

 Cathedra's equity awards converted to Sphere Common Shares
  
  
 178,073
  

 Sphere's equity awards converted to Sphere Common Shares
  
  
 435,184
  

 Total weighted average shares outstanding (basic and diluted)
  
  
 5,755,091
  

  
  
  
  
  

 Pro forma loss per share
  
  
  
  

 Basic and diluted
  
 $
 (5.35
 )

 A net loss cannot be diluted. When a company is in a net loss position, basic and diluted loss per share are the same.

 The computation of pro forma diluted weighted-average shares outstanding excludes the following:

  
 Three Months
Ended
 March 31,
 2026
  

 Series H Preferred Shares Common Share Equivalents
 2,300
  

 Series I Shares Common Share Equivalents
 1,387,117
  

 Sphere Options
 48,551
  

 Sphere Warrants and Cathedra Replacement Warrants
 1,440,401
  

 Sphere RSUs and Cathedra Replacement RSU
 396,704
  

  
 Year Ended
 December 31,
 2025
  

 Series H Preferred Shares Common Share Equivalents
 2,300
  

 Series I Shares Common Share Equivalents
 1,387,117
  

 Sphere Options
 56,586
  

 Sphere Warrants and Cathedra Replacement Warrants
 1,440,401
  

 Sphere RSUs and Cathedra Replacement RSU
 357,238