WYFI 10-Q
WhiteFiber, Inc. (WYFI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended
For the transition period from __________ to __________
Commission file number:
| (Exact name of registrant as specified in its charter) |
| (State
or other jurisdiction of incorporation or organization) |
(I.R.S.
Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number:
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company | |||
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of August 10, 2026, the registrant had
TABLE OF CONTENTS
| CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | ii | |
| PART I | ||
| Item 1. | Financial Statements. | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 38 |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk. | 60 |
| Item 4. | Controls and Procedures. | 60 |
| PART II | ||
| Item 1. | Legal Proceedings. | 61 |
| Item 1A. | Risk Factors. | 61 |
| Item 2. | Unregistered Sales of Equity Securities. | 61 |
| Item 3. | Defaults Upon Senior Securities. | 62 |
| Item 4. | Mine Safety Disclosures. | 62 |
| Item 5. | Other Information. | 62 |
| Item 6. | Exhibits. | 63 |
| SIGNATURES | 64 | |
i
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements regarding us and our business strategies, market potential, future financial performance and other matters that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this report, including statements regarding our strategy, future financial condition, future operations, plans, objectives of management, and expected market growth, are forward-looking statements. The words “believe,” “expect,” “estimate,” “could,” “should,” “intend,” “may,” “might,” “will,” “target,” “potential,” “goal,” “objective,” “plan,” “seek,” “anticipate,” “project” and similar expressions, among others, generally identify “forward-looking statements,” which speak only as of the date the statements were made. In particular, information included under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other sections of this report contain forward-looking statements. Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of WhiteFiber’s (as defined below) management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. Whether any such forward-looking statements are in fact achieved will depend on future events, some of which are beyond WhiteFiber’s control.
You should realize that if underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, our actual results and financial condition could vary materially from expectations and projections expressed or implied in our forward-looking statements. Risks and uncertainties include, but are not limited to:
| ● | our ability to integrate the operations of Enovum (as defined below) and any hereafter acquired companies into our HPC Business (as defined below) segment; |
| ● | our ability to purchase GPUs (as defined below) on a timely basis to service our cloud service customers; |
| ● | supply chain disruptions, which may have a material adverse effect on the Company’s performance; |
| ● | our failure to effectively manage our growth, strategic investments, combination, joint-ventures, acquisitions or alliances, which could disrupt our business; |
| ● | the loss of any member of our executive management team |
| ● | capital markets and interest rate risks; |
| ● | significant customer concentration; |
| ● | our failure to innovate and provide cloud services to our customers and partners; |
| ● | a substantial decrease in the demand for data centers; |
| ● | volatility in the supply and price of power in the open markets; |
| ● | our limited history of operating as an independent public company; |
| ● | export restitution and tariffs, particularly with Canada concerning our supplies and operations; |
| ● | issues in the development and use of AI (as defined below); |
| ● | regulations that target AI, and governmental regulations; |
| ● | other legal obligations related to data privacy, data protection and information security; |
| ● | our ability to obtain project-level or permanent financing on favorable terms, or at all, to fund the construction and buildout of our data center facilities; |
| ● | risks related to the timing of data center construction, commissioning, and deployment of IT load at our facilities, including the NC-1 campus, which may be subject to delays beyond our control; |
| ● | our reliance on anchor tenants at key data center sites, including our dependence on Nscale as the sole contracted tenant at our NC-1 campus; and |
| ● | other factors discussed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, in Part II, Item 1.A of this Form 10-Q and in other reports that the Company files from time to time with the SEC. |
ii
You should not place undue reliance upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this report primarily on our current expectations, estimates, forecasts and projections about future events and trends that we believe may affect our business, results of operations, financial condition and prospects. Although we believe that we have a reasonable basis for each forward-looking statement contained in this report, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors, including those matters discussed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report as well as other factors which may be identified from time to time in our other filings with the U.S. Securities and Exchange Commission, or in the documents where such forward-looking statements appear, include factors, risks, trends and uncertainties that could cause actual results or events to differ materially from those anticipated. Additional risks and uncertainties of which we are unaware, or that we currently deem immaterial, also may become important factors that affect us. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this report. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
All forward-looking statements made in this report are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this report, and WhiteFiber does not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, and changes in future operating results over time or otherwise. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements.
Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data.
iii
Item 1. Financial Statements and Supplementary Data
WHITEFIBER, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
As of June 30, 2026 and December 31, 2025
(Expressed in thousands, except for the number of shares)
| June 30, 2026 |
December 31, 2025 |
|||||||
| (audited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Net investment in lease - current, net | ||||||||
| Other current assets, net | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Deposits for property, plant, and equipment | ||||||||
| Property, plant, and equipment, net | ||||||||
| Goodwill | ||||||||
| Intangible assets, net | ||||||||
| Operating lease right of use assets, net | ||||||||
| Finance lease right of use assets, net | ||||||||
| Net investment in lease - non-current, net | ||||||||
| Investment security | ||||||||
| Deferred tax assets | ||||||||
| Other non-current assets, net | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Current portion of deferred revenue | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Current portion of finance lease liabilities | ||||||||
| Short-term debt and current portion of long-term debt - third parties, net | ||||||||
| Short-term debt - related parties, net | ||||||||
| Income tax payable | ||||||||
| Other payables and accrued liabilities | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Non-current portion of deferred revenue | ||||||||
| Non-current portion of operating lease liabilities | ||||||||
| Convertible note payable, net | ||||||||
| Long-term debt - third parties, net | ||||||||
| Deferred tax liabilities | ||||||||
| Other long-term liabilities | ||||||||
| Amounts due to related parties | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
| Commitments and contingencies (Note 18) | ||||||||
| Shareholders’ equity | ||||||||
| Preference shares, $ | ||||||||
| Ordinary shares, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive (loss) income | ( | ) | ||||||
| Total Shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
WHITEFIBER, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS AND
COMPREHENSIVE LOSS
For the Three and Six Months Ended June 30, 2026 and 2025
(Expressed in thousands, except for the number of shares)
| For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues | ||||||||||||||||
| Cloud services | $ | $ | $ | $ | ||||||||||||
| Colocation services | ||||||||||||||||
| Other | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Operating costs and expenses | ||||||||||||||||
| Cost of revenue (exclusive of depreciation shown below) | ||||||||||||||||
| Cloud services | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Colocation services | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Depreciation and amortization expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Impairment of capitalized software assets | ( | ) | ( | ) | ||||||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net gain from disposal of property and equipment | ||||||||||||||||
| Interest expense - third parties | ( | ) | ( | ) | ||||||||||||
| Interest expense - related parties | ( | ) | ( | ) | ||||||||||||
| Other (expense) income, net | ( | ) | ( | ) | ||||||||||||
| Total other (expense) income, net | ( | ) | ( | ) | ||||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax benefit (expense) | ( | ) | ( | ) | ( | ) | ||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive loss | ||||||||||||||||
| Foreign currency translation adjustment | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of ordinary share outstanding | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
| Loss per share | ||||||||||||||||
| Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
WHITEFIBER, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
For the Three and Six Months Ended June 30, 2026 and 2025
(Expressed in thousands, except for the number of shares)
| Ordinary Shares |
Par Value |
Additional Paid-in capital |
Retained Earnings/ (Accumulated Deficit) |
Accumulated
Other Comprehensive (Loss) Income |
Total Shareholders’ Equity |
|||||||||||||||||||
| Balances as of December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Net Parent Investment | - | |||||||||||||||||||||||
| Other comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Balances as of March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Net Parent Investment | - | |||||||||||||||||||||||
| Other comprehensive income | - | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balances as of June 30, 2025 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Balances, December 31, 2025 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Share-based compensation expense | - | |||||||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to employees | ||||||||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to consultants | ||||||||||||||||||||||||
| Purchase of zero-strike call option in connection with issuance of convertible notes | - | ( | ) | ( | ) | |||||||||||||||||||
| Other comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balances as of March 31, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Share-based compensation expense | - | ( | ) | ( | ) | |||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to employees | ||||||||||||||||||||||||
| Share-based compensation in connection with issuance of ordinary shares to consultants | ||||||||||||||||||||||||
| Redemption of exchangeable shares | ( | ) | ||||||||||||||||||||||
| Other comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balances as of June 30, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
WHITEFIBER, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2026 and 2025
(Expressed in thousands)
| For the Six Months Ended June 30, |
||||||||
| 2026 | 2025 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization expenses | ||||||||
| Amortization of discount on convertible note issued | ||||||||
| Amortization of discount on debt - third parties | ||||||||
| Amortization of discount on debt - related parties | ||||||||
| Share-based compensation expenses | ||||||||
| Impairment of capitalized software assets | ||||||||
| Gain from disposal of property, plant, and equipment | ( | ) | ||||||
| Current expected credit losses | ||||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Net investment in lease | ||||||||
| Other current assets | ||||||||
| Right-of-use assets | ||||||||
| Other non-current assets | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ||||||
| Income tax payable | ( | ) | ||||||
| Other payables and accrued liabilities | ||||||||
| Other long-term liabilities | ( | ) | ||||||
| Deferred revenue | ( | ) | ||||||
| Lease liabilities | ( | ) | ( | ) | ||||
| Deferred tax liabilities | ( | ) | ||||||
| Amounts due to related parties | ||||||||
| Net Cash Provided by (Used in) Operating Activities | ( | ) | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Purchases of and deposits made for property, plant, and equipment | ( | ) | ( | ) | ||||
| Proceeds from disposal of property, plant and equipment | ||||||||
| Net Cash Used in Investing Activities | ( | ) | ( | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Net transfers from parent | ||||||||
| Net proceeds from issuance of convertible debt | ||||||||
| Purchase of zero-strike call option | ( | ) | ||||||
| Net proceeds from issuance of debt - third parties | ||||||||
| Net proceeds from issuance of debt - related parties | ||||||||
| Repayment of finance lease liabilities | ( | ) | ||||||
| Net Cash Provided by Financing Activities | ||||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | ( | ) | ||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ) | ( | ) | ||||
| Cash, cash equivalents and restricted cash, beginning of period | ||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | ||||||
| Supplemental Cash Flow Information | ||||||||
| Cash paid for interest expense | $ | |||||||
| Cash paid for income taxes, net of (refunds) | $ | $ | ||||||
| Non-cash Transactions of Investing and Financing Activities | ||||||||
| Right of use assets exchanged for operating lease liabilities | $ | $ | ||||||
| Extinguishment of finance lease by acquiring underlying assets | $ | |||||||
| Reclassification of deposits to property, plant and equipment | $ | $ | ||||||
| Net investment in sales-type lease of equipment | $ | |||||||
| Construction in progress included in Other payables and accrued liabilities | $ | ( | ) | |||||
Reconciliation of cash, cash equivalents and restricted cash
| June 30,
2026 |
December 31, 2025 |
|||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
WHITEFIBER, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND PRINCIPAL ACTIVITIES
WhiteFiber, Inc. (“WhiteFiber” or “the Company”) is a leading provider of high-performance computing (“HPC”) data centers and cloud-based HPC graphics processing units (“GPU”) services, which we term cloud services, for customers such as artificial intelligence (“AI”) applications and machine learning (“ML”) developers. Our HPC Tier-3 data centers provide hosting and colocation services. Our cloud services support generative AI workstreams, especially training and inference. WhiteFiber ordinary shares, par value $
On August 8, 2025, we completed the initial public offering (“IPO” or “Offering”) of our Ordinary Shares at a public offering price of $
Prior to the consummation of the Offering, the Company entered into a contribution agreement (the “Contribution Agreement”) with Bit Digital Inc. (“Bit Digital” or “BTBT”), pursuant to which Bit Digital contributed (the “Contribution”) its HPC business through the transfer of
The accompanying unaudited condensed consolidated financial statements reflect the activities of the Company and each of the following entities:
| Name | Background | Ownership | |||
| WhiteFiber AI, Inc. (“WF AI”) | ● | ||||
| ● | Incorporated on | ||||
| ● | |||||
| WhiteFiber Iceland ehf (“WF Iceland”) | ● | ||||
| ● | Incorporated on | ||||
| ● | |||||
| WhiteFiber HPC, Inc. (“WF HPC”) | ● | ||||
| ● | Incorporated on | ||||
| ● | |||||
| Enovum Data Centers Corp (“Enovum”) | ● | ||||
| ● | Acquired on | ||||
| ● | |||||
| Enovum MTL I LP (“MTL-1”) | ● | ||||
| ● | Partnership entered into on | ||||
| ● | |||||
| Enovum MTL II LP (“MTL-2”) | ● | ||||
| ● | Partnership entered into on | ||||
| ● | |||||
| Enovum Saint-Jerome LP (“MTL-3”) | ● | ||||
| ● | Partnership entered into on | ||||
| ● | |||||
5
| WhiteFiber Canada, Inc. (“WF Canada”) | ● | ||||
| ● | Incorporated on | ||||
| ● | |||||
| Enovum NC-1 BIDCO, LLC (“Enovum NC”) | ● | ||||
| ● | Incorporated on | ||||
| ● | |||||
| WhiteFiber Japan GK (“WF Japan”) | ● | ||||
| ● | Incorporated on | ||||
| ● | |||||
| WhiteFiber Australia II Pty Ltd | ● | ||||
| ● | Incorporated on | ||||
| ● |
| WhiteFiber APAC PTE Ltd | ● | ||||
| ● | Incorporated on | ||||
| ● | |||||
| WhiteFiber Singapore I PTE Ltd | ● | ||||
| ● | Incorporated on | ||||
| ● | |||||
| WhiteFiber (BVI) I Ltd | ● | ||||
| ● | Incorporated on | ||||
| ● |
| WhiteFiber France I SAS | ● | ||||
| ● | Incorporated on | ||||
| ● |
| Enovum NC-1 Venture LLC | ● | ||||
| ● | Incorporated on | ||||
| ● |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and principles of consolidation
The Company’s accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Unless otherwise indicated, amounts are stated in thousands of U.S. dollars, except for share and per share data. The financial statements presented for periods on or after August 6, 2025, the date on which the Contribution was completed, are presented on a consolidated basis, and include the financial position, results of operations and cash flows of the Company. The financial statements for the periods prior to August 6, 2025 are presented on a combined basis, and reflect the historical combined financial position, results of operations and cash flows of WhiteFiber, as the operations were under common control of Bit Digital and reflect the historical combined financial position, results of operations and cash flows of those legal entities. Intercompany transactions and balances have been eliminated.
6
The financial information for the periods prior to August 6, 2025 represents the historical combined financial position and results of operation of WhiteFiber AI, incorporated on October 19, 2023. The results of Enovum (as defined below) are reflected following its acquisition on October 11, 2024. This information is derived from the consolidated financial statements and accompanying records of Bit Digital using the historical results of operations and historical basis of assets and liabilities of the Company. All revenues and costs as well as assets and liabilities directly associated with the business activity of the Company are included in the condensed combined financial statements. The financial statements also include expense allocations for certain functions provided by Bit Digital, including, but not limited to, certain general corporate expenses related to finance, tax, investor relations, and marketing. These general corporate expenses are included in the condensed consolidated statements of operations within general and administrative expenses. Direct usage has been used to attribute expenses that are specifically identifiable to the Company, where practicable. In certain instances, these expenses have been allocated to the Company primarily based on the percentage of revenue or other allocation methodologies that are considered to be a reasonable reflection of the utilization of the services provided relative to the benefits received. The allocations may not, however, reflect the expense the Company would have incurred as a stand-alone company for the period presented. These costs also may not be indicative of the expenses that the Company will incur in the future or would have incurred if the Company had obtained these services from a third party.
For the period beginning August 6, 2025, the condensed consolidated financial information represents the Company’s financial position and results of operation as a stand-alone public company. Following the Reorganization and IPO, the Company may perform certain functions using its own resources or purchased services. For an interim period following the Reorganization and IPO, however, some of these functions will continue to be provided by Bit Digital, under the Transition Services Agreement entered into between WhiteFiber and Bit Digital on July 30, 2025 (the “Transition Services Agreement”).
Management believes all adjustments necessary for a fair statement of balance sheet, results of operations, and cash flows have been made. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. The Company believes that the disclosures are adequate to make the information presented not misleading. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results for the full year.
Use of estimates
In preparing the condensed consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the condensed consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the valuation of current assets, useful lives of property, plant, and equipment, impairment of long-lived assets, intangible assets and goodwill, valuation of assets and liabilities acquired in business combinations, provision necessary for contingent liabilities and realization of deferred tax assets. Actual results could differ from those estimates.
Fair value of financial instruments
ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
| ● | Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| ● | Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. |
| ● | Level 3 - inputs to the valuation methodology are unobservable. |
7
Fair value of the Company’s financial instruments, including cash and cash equivalents, restricted cash, deposits, accounts receivable, other receivables, accounts payable, and other payables, approximate their fair values because of the short-term nature of these assets and liabilities. Non-financial assets, such as intangible assets, right-of-use assets, and property, plant and equipment, are adjusted to fair value when there is an indication of impairment and the carrying amount exceeds the asset’s projected undiscounted cash flows. These assets are recorded at fair value only upon recognition of an impairment charge.
Fair value of the convertible notes at each reporting period was estimated based on significant inputs that are observable in the market, which represent Level 2 measurements within the fair value hierarchy.
Cash and cash equivalents
Cash includes cash on hand and demand deposits in accounts maintained with commercial banks. The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents.
Restricted cash
Restricted cash represents cash balances that support an outstanding letter of credit to third parties related to security deposits and other purposes and are restricted from withdrawal.
Accounts receivable, net
Accounts receivable consist of amounts due from our customers. Receivables are recorded at the invoiced amount less current expected credit losses for any potentially uncollectable accounts under the current expected credit loss (“CECL”) impairment model and presents the net amount of the financial instrument expected to be collected. The CECL impairment model requires an estimate of expected credit losses, measured over the contractual life of an instrument, that considers forecasts of future economic conditions in addition to information about past events and current conditions. In accordance with ASC 326, Measurement of Credit Losses on Financial Instruments (“ASC 326”), the Company evaluates the collectability of outstanding accounts receivable balances to determine current expected credit losses that reflects its best estimate of the lifetime expected credit losses. Uncollectible accounts are written off against the current expected credit losses when collection does not appear probable.
In determining the amount of the current expected credit losses, the Company considers historical collection history based on past due status, the current aging of receivables, customer-specific credit risk factors, including their current financial condition, current market conditions, and probable future economic conditions which inform adjustments to historical loss patterns. Credit loss expense, inclusive of credit loss expense on all categories of financial assets, is recorded within General and administrative expenses in the condensed consolidated statements of operations and comprehensive income (loss).
Deposits for property, plant, and equipment
The deposits for property, plant and equipment represented advance payments for purchases of high performance computing equipment and other equipment used in our colocation services. The Company initially recognizes deposits for property, plant, and equipment when cash is advanced to our suppliers. Subsequently, the Company derecognizes and reclassifies deposits for property, plant, and equipment to property, plant, and equipment when control is transferred to and obtained by the Company.
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Below is the roll forward of the balance of deposits for property, plant and equipment for the six months ended June 30, 2026 and for the year ended December 31, 2025, respectively.
| June 30, 2026 | December 31, 2025 | |||||||
| Opening balance | $ | $ | ||||||
| Reclassification to property, plant, and equipment | ( | ) | ( | ) | ||||
| Addition of deposits for property, plant, and equipment | ||||||||
| Ending balance | $ | $ | ||||||
Property, plant, and equipment, net
Property, plant, and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets or declining-balance method. Direct costs related to developing or obtaining software for internal use are capitalized as property, plant, and equipment. Capitalized software costs are amortized over the software’s useful life when the software is placed in service.
| Estimated Useful Life | ||
| Cloud service equipment | ||
| Colocation service equipment | ||
| Building | ||
| Leasehold improvements | ||
| Purchased and internally developed software | ||
| Other property and equipment |
Land acquired by the Company has an unlimited useful life and therefore is not depreciated.
Impairment of long-lived assets
Management reviews long-lived assets, including finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination. Goodwill is not subject to amortization, and instead, assessed for impairment annually at the end of each fiscal year, or more frequently when events or changes in circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount in accordance with ASC 350 – Intangibles - Goodwill and Other.
The impairment assessment involves an option to first assess qualitative factors to determine whether events or circumstances exist that lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment is not performed, or after assessing the totality of the events or circumstances, we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative assessment for potential impairment is performed.
The quantitative goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not impaired. An impairment loss is recognized for any excess of the carrying amount of the reporting unit over its fair value up to the amount of goodwill allocated to the reporting unit.
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Finite-lived intangible assets
Intangible assets are recorded at cost less any accumulated amortization and any accumulated impairment losses. Intangible assets acquired through business combinations are measured at fair value at the acquisition date.
Intangible assets with finite lives are comprised of customer relationships and are amortized on straight-line basis over their estimated useful lives. The Company assesses the appropriateness of finite-lived classification at least annually. Additionally, the carrying value and remaining useful lives of finite lived assets are reviewed annually to identify any circumstances that may indicate potential impairment or the need for a revision to the amortization period. A finite-lived intangible asset is considered to be impaired if its carrying value exceeds the estimated future undiscounted cash flows expected to be generated from it. We apply judgment in selecting the assumptions used in the estimated future undiscounted cash flow analysis. Impairment is measured by the amount that the carrying value exceeds fair value. The useful lives of customer relationships is
Business combinations
The Company accounts for business combinations under the acquisition method of accounting in accordance with ASC 805 - Business Combinations, by recognizing the identifiable tangible and intangible assets acquired and liabilities assumed, measured at the acquisition date fair value. The determination of fair value involves assumptions, estimates, and judgments. The initial allocation of the purchase price is considered preliminary and therefore subject to change until the end of the measurement period (up to one year from the acquisition date). Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net assets acquired.
Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred.
Investment security
As of June 30, 2026 and December 31, 2025, investment security represents the Company’s investment in a privately held company via a simple agreement for future equity (“SAFE”).
SAFE investments provide the Company with the right to participate in future equity financing of preferred stock. The Company accounted for this investment under ASC 320, Investments - Debt Securities and elected the fair value option for the SAFE investment under ASC 825, Financial Instruments, which requires financial instruments to be remeasured to fair value each reporting period, with changes in fair value recorded in the condensed consolidated statements of operations. The fair value estimate includes significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy.
Leases
The Company determines whether an arrangement contains a lease at the inception of the arrangement. If a lease is determined to exist, the term of such lease is assessed based on the date on which the underlying asset is made available for the Company’s use by the lessor. The Company’s assessment of the lease term reflects the non-cancelable term of the lease, inclusive of any rent-free periods and/or periods covered by early-termination options which the Company is reasonably certain of not exercising, as well as periods covered by renewal options which the Company is reasonably certain of exercising. The Company also determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition, and the presentation reflected in the condensed consolidated statements of operations over the lease term.
For leases with a term exceeding
For the Company’s operating leases, fixed lease payments are recognized as lease expense on a straight-line basis over the lease term. For leases with a term of
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For finance leases where the Company is the lessee, the Company recognizes a right-of-use asset and a corresponding lease liability at lease commencement, measured in a manner consistent with operating leases. Subsequently, fixed lease payments are recognized as amortization of the right-of-use asset and interest expense is recognized on the outstanding lease liability using the effective interest method. Finance lease right-of-use assets are amortized into depreciation and amortization expense on a straight-line basis over the lease term or, if the lease transfers ownership of the underlying asset to the Company, the life of the leased asset.
For sales-type leases where the Company is the lessor, the Company recognizes a net investment in lease, which comprises of the present value of the future lease payments and any unguaranteed residual value. Interest income is recognized over the lease term at a constant periodic discount rate on the remaining balance of the lease net investment using the rate implicit in the lease and is included in “Revenues.” Sales-type leases result in the recognition of gain or loss at the commencement of the lease, which will be recorded in “Other income, net.”
For operating subleases where the Company is the lessor, the Company recognizes lease payments in income over the lease term on a straight-line basis and is included in “Other income, net.”
Debt
Notes and loans payable (short-term and long-term debt)
Notes and loans payable are presented as short-term and long-term debt in the consolidated balance sheet and recognized initially at the amount of proceeds received, net of related debt discount and debt issuance costs, and are subsequently measured at amortized cost using the effective interest method. Interest expense is recognized in the condensed consolidated statements of operations over the term of the related debt. Notes and loans payable are classified as current or long-term debt liabilities based on their contractual maturities, or earlier if a default, cross-default, or other contractual provision entitles the lender to accelerate repayment within twelve months of the balance sheet date. The Company has also borrowed funds from a related party that holds a majority ownership interest in the Company. Such related-party debt is accounted for on the same basis as the Company’s third-party notes and loans payable and is presented separately from third-party debt on the condensed consolidated balance sheets. See Note 17. Related Party Transactions, for further details.
Convertible note payable
The Company accounts for its convertible note under ASC 470-20, Debt with Conversion and Other Options and ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity and/or ASC 815, depending on the specific terms of the debt agreement.
For convertible notes for which the embedded conversion feature is determined not to be clearly and closely related to the debt host and does not qualify for the scope exception under ASC 815-40, the Company bifurcates the embedded conversion feature and accounts for it separately as a derivative liability. Such derivative liabilities are initially measured at fair value, with subsequent changes in fair value recognized in the condensed consolidated statements of operations. The remaining proceeds are allocated to the debt host, which is recorded as convertible notes, net of debt discount and issuance costs.
For convertible notes for which the embedded conversion feature is determined to be clearly and closely related to the debt host and does qualify for the scope exception under ASC 815-40, the Company records the entire convertible notes at face value net of debt issuance costs.
If any of the conditions to the convertibility of the convertible notes are satisfied, or the convertible notes become due within one year, then the Company may be required under applicable accounting standards to reclassify the carrying value of the convertible senior notes as a current, rather than a long-term liability.
Debt issuance costs related to the convertible notes were capitalized and recorded as a contra-liability and are presented net against the balance of the convertible notes on the condensed consolidated balance sheet. Debt issuance costs consist of underwriting, legal and other direct costs related to the issuance of the convertible notes and are amortized to interest expense over the term of the convertible notes using the effective interest method.
Zero-strike call
The Company accounts for zero-strike call options as either equity instruments or liabilities in accordance with ASC 480 and/or derivative liabilities in accordance ASC 815, depending on the specific terms of the agreement. The Company evaluates the terms of such instruments to determine whether they are indexed to the Company’s own stock and qualify for equity classification under ASC 815-40. To the extent these criteria are met, the Zero-strike call option is equity-classified, which is not remeasured each reporting period and is recorded as a reduction to additional paid-in-capital within shareholders’ equity when purchased. The transaction is accounted for separately from the convertible notes and does not impact the accounting for convertible notes.
Revenue recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The Company recognizes revenue when it transfers its services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. Refer to Note 3. Revenue from Contracts with Customers for further information.
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Contract costs
Capitalized contract costs represent the costs directly related and incremental to the origination of new contracts, including commissions that are incurred directly related to obtaining customer contracts. We amortize the deferred contract costs on a straight-line basis over the expected period of benefit. These amounts are included in the accompanying condensed consolidated balance sheets, with the capitalized costs to be amortized to commission expense over the expected period of benefit included in Other current assets and Non-current assets and commission expense payable included in Other current liabilities and Other long-term liabilities.
Deferred revenue
Deferred revenue primarily pertains to prepayments received from customers for services that have not yet commenced as of June 30, 2026. Deferred revenues are recognized as revenue when recognition criteria have been met.
Remaining performance obligation
Remaining performance obligations represent the transaction price of contracts for work that has not yet been performed. The amount represents estimated revenue expected to be recognized in the future related to the unsatisfied portion of the performance obligation.
Cost of revenue
The Company’s cost of revenue consists primarily of (i) direct production costs related to our cloud services, including cloud services operations - electricity costs, data center lease expense, GPU servers lease expense, third party customer support fee, and other relevant costs, and (ii) direct production costs related to our colocation services, including electricity costs, lease costs data center employees’ wage expenses, and other relevant costs.
Cost of revenue excludes depreciation expenses, which are separately stated in the Company’s condensed consolidated statements of operations.
Foreign currency
Accounts expressed in foreign currencies are translated into U.S. dollars. Functional currency assets and liabilities are translated into U.S. dollars generally using rates of exchange prevailing at the balance sheet date of each respective subsidiary and the related translation adjustments are recorded as a separate component of accumulated other comprehensive income, net of any related taxes, in total equity. Income statement accounts expressed in functional currencies are translated using average exchange rates during the period. Functional currencies are generally the currencies of the local operating environment. Financial statement accounts expressed in currencies other than the functional currency of a consolidated entity are remeasured into that entity’s functional currency resulting in exchange gains or losses recorded in other income (expense), net.
Operating segments
Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. Our CODM is comprised of the Chief Executive Officer and Chief Financial Officer who use segment gross profit (loss) to assess the performance of the business of our reportable operating segments. Asset information is not used by the CODM to evaluate performance or allocate resources.
Income taxes
We account for current and deferred income taxes in accordance with the authoritative guidance, which requires that the income tax impact is to be recognized in the period in which the law is enacted. Current income tax expense represents taxes paid or payable for the current period. Deferred tax assets and liabilities are recognized using enacted tax rates for the future tax impact of temporary differences between the financial statement and tax bases of recorded assets and liabilities. A valuation allowance is recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized based on historical and projected future taxable income over the periods in which the temporary differences are expected to be recovered or settled on each jurisdiction.
In accordance with the authoritative guidance on accounting for uncertainty in income taxes, we recognize liabilities for uncertain tax positions based on the two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained in audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than
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Earnings (loss) per share
Basic earnings (loss) per share is computed by dividing net income (loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares or resulted in the issuance of ordinary share participating in the earnings of the entity.
Related party transactions
The Company accounts for related party transactions in accordance with ASC 850, Related Party Disclosures. Related parties include the Company’s principal shareholders, subsidiaries, affiliates, directors, executive officers, and entities under common control or significant influence, as well as any immediate family members of such persons.
Transactions with related parties are identified and recorded based on written agreements or other substantiating documentation and are undertaken in the ordinary course of business. Management evaluates whether terms of related party transactions are consistent with those that could be obtained in arm’s-length transactions. Significant related party balances and transactions are disclosed in the financial statements when material.
The Company discloses the nature of its related-party relationships, the type and amounts of transactions, outstanding balances (including receivables and payables), and any commitments or guarantees with related parties in the notes to the financial statements. Amounts due from or to related parties are generally unsecured, non-interest-bearing, and settled in cash unless otherwise disclosed.
In preparing the financial statements, management evaluates whether any related-party transactions require elimination upon consolidation, recognition of gain or loss, or reclassification, and ensures that appropriate disclosures are made for all material transactions.
Commitments and contingencies
In the normal course of business, the Company is subject to contingencies, such as legal proceedings and claims arising out of its business, which cover a wide range of matters. Liabilities for contingencies are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
If the assessment of a contingency indicates that it is probable that a material loss is incurred and the amount of the liability can be estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.
The Company may also enter into contractual arrangements that result in commitments, including purchase obligations. In addition, the Company may be subject to contingent consideration obligations related to asset acquisitions, which involve potential future payments contingent upon the achievement of specified conditions or milestones.
Share-based compensation
The Company’s eligible employees have traditionally participated in Bit Digital’s shared-based compensation plans and continued to do so until the IPO was completed. The Company recognized compensation expenses for its employees and non-employees, in addition to an allocation portion of share-based compensation expenses associated with Bit Digital’s shared employees.
On February 6, 2025, the Board of Directors of WhiteFiber adopted the 2025 Omnibus Equity Incentive Plan (the “2025 Plan”) pursuant to which
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After the IPO, the Company’s eligible employees participate in WhiteFiber’s shared-based compensation plans. The Company accounts for share-based compensation in accordance with ASC 718, Compensation and ASC 505, Equity, which require all share-based payments to employees and members of the board of directors to be recognized as expense in the consolidated financial statements based on their grant date fair values. The Company has elected not to estimate forfeitures of its share-based compensation awards but recognizes the reversal in compensation expense in the period in which the forfeiture occurs. The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the grant-date fair value of the awards.
The Company has granted RSUs to certain employees and non-employees. Some of the RSUs contain a performance condition, and vesting is determined based on achievement of a performance metric. Compensation expense is recognized on a straight-line basis over the service period based on the expected attainment of a performance metric. At each reporting period, the Company reassesses the probability of the achievement of the performance metric, and any increase or decrease in share-based compensation expense resulting from an adjustment in the number of shares expected to vest is treated as a cumulative catch-up in the period of adjustment.
Reclassification
Certain items in the financial statements of the comparative period have been reclassified to conform to the financial statements for the current period. The reclassification has no impact on the total assets and total liabilities as of June 30, 2026 or on the statements of operations for the three and six months ended June 30, 2026.
Recent accounting pronouncements
The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its condensed consolidated financial statements and ensures that there are proper controls in place to ascertain that the Company’s condensed consolidated financial statements properly reflect the change.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”). ASU 2024-03 requires, in the notes to the financial statements, disclosures of specified information about certain costs and expenses specified in the updated guidance. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact the updated guidance will have on its disclosures.
In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity (“ASU 2025-03”), which amends the guidance for identifying the accounting acquirer in transactions involving the acquisition of a variable interest entity that meets the definition of a business. The new standard is effective for the Company for its annual periods beginning January 1, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting the standard.
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3. REVENUE FROM CONTRACTS WITH CUSTOMERS
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”).
To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.
The Company recognizes revenue when it transfers its services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange.
The Company is currently engaged in high performance computing (“HPC”) business, including cloud services and colocation services through its operation of HPC data centers.
Disaggregation of revenues
Revenue disaggregated by reportable segment is presented in Note 16. Segment Reporting.
Cloud services
The Company provides cloud services to support customers’ generative AI workstreams. We have determined that cloud services are a single continuous service comprised of a series of distinct services that are substantially the same and have the same pattern of transfer (i.e., distinct days of service).
These services are consumed as they are received, and the Company recognizes revenue over time using the variable allocation exception as it satisfies performance obligations. We apply this exception because we concluded that the nature of our obligations and the variability of the payment terms based on the number of GPUs providing HPC services are aligned and uncertainty related to the consideration is resolved on a daily basis as we satisfy our obligations. The Company recognizes revenue net of consideration payable to customers, such as service credits, and accounted for as a reduction of the transaction price in accordance with guidance in ASC 606-10-32-25.
The Company’s cloud services revenue has been generated from Iceland. Beginning in March 2026, the Company generated an immaterial amount of revenue in Canada, representing a small portion of total revenue, through services provided to a third-party customer following the deployment of the GPU server in one of its Canadian data centers.
Data center/Colocation services
Colocation services generate revenue from Canada by providing customers with physical space, power, and cooling within the data center facility.
Our revenue is primarily derived from recurring revenue streams, mainly (1) colocation, which is the leasing of cabinet space and power, and (2) connectivity services, which includes cross-connects. Additionally, the remainder of our revenue is from non-recurring revenue, which primarily includes installation services related to a customer’s initial deployment.
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Revenues from recurring revenue streams are billed monthly and recognized ratably over the term of the contract, generally one to five years for data center colocation customers. Non-recurring installation fees, although generally paid upfront upon installation, are deferred and recognized ratably over the contract term.
We guarantee certain service levels, such as uptime, as outlined in individual customer contracts. If these service levels are not achieved due to any failure of the physical infrastructure or offerings, or in the event of certain instances of damage to customer infrastructure within our data center, we would reduce revenue for any credits or cash payments given to the customer.
Contract costs
The Company capitalizes commission expenses directly related to obtaining customer contracts, which would not have been incurred if the contract had not been obtained. As of June 30, 2026, capitalized costs to obtain a contract totaled $
Contract assets
Contract assets primarily consist of revenue allocated to complimentary services provided to customers as part of contractual arrangements. As of June 30, 2026 and December 31, 2025, there were contract assets.
Contract liabilities
The Company’s contract liabilities consist of deferred revenue and customer deposits. As of June 30, 2026 and December 31, 2025, contract liabilities were $
During the three months ended June 30, 2026 and 2025, $
Remaining performance obligation
The following table presents estimated revenue expected to be recognized in the future related to the unsatisfied portion of the performance obligation as of June 30, 2026:
| 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | Total | ||||||||||||||||||||||
| Colocation Services | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Cloud Services | ||||||||||||||||||||||||||||
| Total remaining performance obligations | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
The amounts presented in the table above exclude variable consideration allocated entirely to wholly unsatisfied performance obligations. Such amounts have been excluded from the disclosure of remaining performance obligations in accordance with ASC 606, as the consideration is not fixed and determinable.
During the three months ended June 30, 2026 and 2025, $
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4. ACQUISITIONS
Real Estate Acquisition – Madison, North Carolina
On May 20, 2025, the Company acquired the building and land, together with all the related improvements owned by Unifi Manufacturing, Inc. (“Unifi Transaction”) that were located in Madison, North Carolina. The total consideration consisted of $
The acquired set of assets did not meet the definition of a business as defined in ASC 805, Business Combinations, as no substantive processes or employees were acquired. The assets acquired consisted primarily of land, building and related equipment, which are included in Property, plant, and equipment, net on the condensed consolidated balance sheets. The fair value of the tangible assets acquired was estimated to be $
In connection with the agreement, additional contingent consideration may become payable to the seller based on the timing and availability of power at the site (see Note 18. Commitments and Contingencies).
Real Estate Acquisition – Saint-Jérôme, Québec
On May 8, 2026, the Company acquired the land and building comprising its MTL-3 facility in Saint-Jérôme, Québec, for a fixed purchase price of CAD $
The acquired set of assets did not meet the definition of a business as defined in ASC 805, Business Combinations, as no substantive processes or employees were acquired. The assets acquired consisted primarily of land, building and related equipment, which are included in Property, plant, and equipment, net on the condensed consolidated balance sheets. The fair value of the tangible assets acquired was estimated to be $
5. OTHER CURRENT ASSETS, NET
Other current assets were comprised of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| Funds held in escrow | $ | $ | ||||||
| Prepaid consulting service expenses | ||||||||
| Deferred contract costs | ||||||||
| Prepayment to third parties (a) | ||||||||
| Receivable from third parties | ||||||||
| Others | ||||||||
| Total | $ | $ | ||||||
| (a) |
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6. LEASES
Lease as Lessee
The Company leases data center capacity, cloud infrastructure, and office space under non-cancelable lease arrangements. These leases, including a data center lease acquired as part of the Enovum acquisition in 2024, generally have terms ranging from approximately
On April 11, 2025, the Company entered into a
As of June 30, 2026 and December 31, 2025, right-of-use asset and lease liabilities consisted of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| Operating right-of-use assets | $ | $ | ||||||
| Finance right-of-use assets | ||||||||
| Total right-of-use-assets | $ | $ | ||||||
| Operating lease liabilities | $ | $ | ||||||
| Finance lease liabilities | $ | |||||||
| Total lease liabilities | $ | $ | ||||||
Operating right-of-use assets are recorded net of accumulated amortization of $
is recorded net of accumulated amortization of $
For the three months ended June 30, 2026 and 2025, the Company’s amortization on the operating lease right-of-use assets totaled $
For the six months ended June 30, 2026 and 2025, the Company’s amortization on the operating lease right-of-use assets totaled $
For the three months ended June 30, 2026, the Company’s interest expense and amortization on the finance lease were $
For the six months ended June 30, 2026, the Company’s interest expense and amortization on the finance lease were $
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The following table presents the components of the Company’s lease expense. GPU lease expenses and data center lease expenses related to operational data centers are included in cost of revenue; data center lease expenses incurred during construction and office lease expenses are included in general and administrative expenses:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Operating lease costs | $ | $ | $ | $ | ||||||||||||
| Finance lease costs | ||||||||||||||||
| Short-term lease costs | ||||||||||||||||
| Sublease income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total lease costs | $ | $ | $ | $ | ||||||||||||
Additional information regarding the Company’s leasing activities as a lessee is as follows:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Operating cash outflows from operating leases | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Operating cash outflows from finance lease | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Financing cash outflows from finance lease | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
| Weighted average remaining lease term – operating lease | ||||||||||||||||
| Weighted average remaining lease term – finance lease | ||||||||||||||||
| Weighted average discount rate – operating leases | % | % | % | % | ||||||||||||
| Weighted average discount rate – finance lease | ||||||||||||||||
The following table represents our future minimum operating lease payments as of June 30, 2026:
| Year | Amount | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total undiscounted lease payments | ||||
| Less: present value discount | ( | ) | ||
| Present value of operating lease liabilities | $ | |||
The Company entered into a GPU server lease agreement effective January 2024 for its cloud services designed to support generative AI workstreams. The lease payment depends on the usage of the GPU servers and the Company concludes that the lease payments are variable and will be recognized when they are incurred. For the three months ended June 30, 2026 and 2025, the GPU server lease expense amounted to $
Lease as Lessor
The Company enters into sales-type leases for data storage and cloud service equipment. These leases typically have terms ranging from approximately
The Company also enters into sublease arrangements for portions of its leased data center capacity. These subleases generally include fixed payments with automatic renewal options, unless sub-tenant provides at least 90 days’ notice of non-renewal prior to the end of the then-current term.
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Lease income from sales-type leases is primarily recognized as interest income over the lease term. The Company’s exposure to credit risk is limited to net investment in leases.
The components of lease income for the sales-type lease were as follows:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Interest income related to net investment in lease | $ | $ | $ | $ | ||||||||||||
Interest income is included in the condensed consolidated statements of operations under the caption “Revenue - Other.”
The components of net investment in sales-type leases were as follows:
| June 30, 2026 | December 31, 2025 | |||||||
| Net investment in lease - lease payment receivable | $ | $ | ||||||
In the second quarter of 2026, the Company terminated an existing sales-type lease with a customer, derecognizing $
The following table illustrates the Company’s future minimum receipts for sales-type lease as of June 30, 2026:
| Year | Sales-Type Lease | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Total future minimum receipts | ||||
| Unearned interest income | ( | ) | ||
| Less: Current expected credit losses | ( | ) | ||
| Net investment in lease, net | $ | |||
The present value of minimum sales-type receipts of $
The following table illustrates the future lease payments to be received from the Company’s sublease tenant as of June 30, 2026 were as follows:
| Year | Operating Lease | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total future receipts | $ | |||
20
7. PROPERTY, PLANT, AND EQUIPMENT, NET
Property, plant, and equipment, net was comprised of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| Cloud service equipment | $ | $ | ||||||
| Colocation service equipment | ||||||||
| Purchased and internally developed software | ||||||||
| Land | ||||||||
| Building | ||||||||
| Leasehold improvements | ||||||||
| Other property and equipment | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Construction in progress | ||||||||
| Property, plant, and equipment, net | $ | $ | ||||||
For the three months ended June 30, 2026 and 2025, depreciation and amortization expenses for property, plant and equipment were $
For the three and six months ended June 30, 2026 we had an impairment charge of $
During 2024 and 2025, the Company purchased data storage and network equipment that was subsequently derecognized from property, plant and equipment upon entering into sales-type lease arrangements, with the related assets recorded as net investments in leases, totaling approximately $
On May 8, 2026, the Company acquired the MTL-3 property following the exercise of the purchase option under the related data center lease agreement (refer to Note 6. Leases). The purchase price of CAD $
Disposals of Property, Plant and Equipment
For the six months ended June 30, 2026, the Company sold 126 H200s GPU for a total consideration of approximately $
During the six months ended June 30, 2026, the Company determined that it would discontinue further investment in, and use of, its internally-developed software platform. As a result of this decision, effective June 4, 2026, the Company recorded an impairment charge of the remaining book value of $
21
8. INVESTMENT SECURITY
As of June 30, 2026 and December 31, 2025, investment security represents the Company’s investment of $
On June 30, 2024 (the “Effective Date”), the Company entered into a SAFE agreement for an initial investment amount of $
The Company accounted for this investment under ASC 320, Investments – Debt Securities and elected the fair value option for the SAFE investment pursuant to ASC 825, Financial Instruments, which requires financial instruments to be remeasured to fair value each reporting period, with changes in fair value recorded in the condensed consolidated statements of operations. The fair value estimate includes significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The decision to elect the fair value option is determined on an instrument-by-instrument basis on the date the instrument is initially recognized, is applied to the entire instrument and is irrevocable once elected. For instruments measured at fair value, embedded conversion or other features are not required to be separated from the host instrument. Issuance costs related to convertible securities carried at fair value are not deferred and are recognized as incurred on the condensed consolidated statements of operations.
At June 30, 2026, the Company performed a qualitative assessment to identify if events or circumstances indicate that the investment is impaired or that an observable price change has occurred. We considered available information about Canopy’s operations and industry conditions. No events or circumstances were identified that would indicate the investment is impaired or that an observable price change occurred. The Company did not recognize any upward or downward adjustment to the value of the investment for the three or six months ended June 30, 2026.
The SAFE agreement was replaced and superseded, in its entirety, by that certain Simple Agreement for Future Equity instrument of Canopy dated as of June 30, 2024 (the “New SAFE”) between the Canopy and WhiteFiber HPC, Inc. Pursuant to that certain Surrender and Termination Agreement, dated as of August 10, 2026, by and among Canopy, WhiteFiber HPC, Inc. and WhiteFiber AI, Inc., the New SAFE was surrendered to Canopy and terminated on the same date.
PIPE Investment
On August 10, 2026, the Company entered into the PIPE Share Purchase Agreement with SAIHEAT Limited, an exempted company incorporated under the laws of the Cayman Islands (“SAIHEAT”). Pursuant to the PIPE Share Purchase Agreement, the Company purchased from SAIHEAT, an aggregate of
9. OTHER NON-CURRENT ASSETS, NET
Other non-current assets were comprised of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| Deposits (a) | $ | $ | ||||||
| Deferred contract costs | ||||||||
| Deferred financing costs | ||||||||
| Prepayment to third parties | ||||||||
| Others | ||||||||
| Less: Current expected credit losses | ( | ) | ||||||
| Total | $ | $ | ||||||
| (a) |
22
10. DEBT
2031 Convertible notes
On January 26, 2026, the Company issued $
The net proceeds from the 2031 Notes offering, after deducting initial purchasers’ discounts and offering expenses, were approximately $
Noteholders may convert their 2031 Notes at their option prior to the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, the Company will satisfy its conversion obligation by paying or delivering, as the case may be, cash, its ordinary shares, or a combination of cash and ordinary shares, at the Company’s election, in the manner and subject to the terms and conditions set forth in the Indenture. The conversion rate is initially
On February 6, 2029, and if the Company undergoes a “Fundamental Change” (as defined in the Indenture), then, subject to certain conditions and except as set forth in the Indenture, noteholders may require the Company to repurchase for cash all or any portion of their 2031 Notes at a repurchase price equal to
The Company may not redeem the 2031 Notes prior to February 6, 2029. The Company may redeem for cash all or any portion of the 2031 Notes, at our option, on or after February 6, 2029 and prior to the 41st scheduled trading day immediately preceding the maturity date, if the last reported sale price of our ordinary shares has been at least
The Indenture contains customary terms and covenants, including certain bankruptcy and insolvency-related events of default, the occurrence of which will result in the outstanding 2031 Notes automatically becoming due and payable, and certain non-bankruptcy and insolvency-related events of default, upon the occurrence of which either the Trustee or the holders of at least
The Company accounts for the 2031 Notes as a single instrument. As of June 30, 2026, none of the conditions permitting the holders of the 2031 Notes to convert their notes early had been met, and to require the Company to repurchase the 2031 Notes for cash. Therefore, the 2031 Notes are classified as long-term.
Zero-Strike Call Option Transaction
In connection with the issuance of the 2031 Notes, the Company entered into a zero-strike call option transaction (“Zero-Strike Call Option”) with one of the initial purchasers or its affiliate (the “Option Counterparty”). Pursuant to the Call Option Transaction, the Company paid a premium equal to approximately $
23
The following table summarizes the balances of the convertible notes:
| As of June 30, 2026 | ||||
| Convertible note | $ | |||
| Less: unamortized debt issuance costs and debt discount | ( | ) | ||
| Subtotal | ||||
| Less: current portion | ||||
| Convertible notes, net of current portion | $ | |||
| Accrued cumulative interest | $ | |||
The following table summarizes the balances of the Company’s other short-term and long-term debts:
| Principal Amount | Unamortized Debt Discount and Issuance Costs | Net Carrying Amount | ||||||||||
| Short-Term Debt: | ||||||||||||
| Delayed Draw Term Loan Facility | $ | $ | ( | ) | $ | |||||||
| B. Riley Facility | ( | ) | ||||||||||
| Iceland Facility - Current | ||||||||||||
| Long-Term Debt: | ||||||||||||
| Iceland Facility - Non-current | ( | ) | ||||||||||
| Royal Bank of Canada Facility | ( | ) | ||||||||||
| Total term debt | $ | |||||||||||
Iceland Facility
On March 25, 2026, WhiteFiber Iceland ehf. (the “Borrower”), a subsidiary of the Company, entered into a secured term loan facility agreement (the “Facility”) with Landsbankinn hf, which provides for borrowings of up to $
No separate guarantee liability is recognized in the consolidated financial statements as the guarantees provided by the Guarantors are intercompany arrangements that are eliminated upon consolidation under ASC 810-10-45-18. The guarantees are disclosed herein pursuant to the disclosure requirements of ASC 460-10-50-4.
Borrowings under the Facility bear interest at a floating rate per annum equal to the sum of (i) three month CME Term SOFR (or any successor benchmark), and (ii) an applicable margin of
The Facility is secured by first-ranking security over (i)
The Facility may be drawn in multiple tranches during an availability period, with up to two drawdowns permitted and a minimum draw amount of $
24
In connection with the entry into the Facility, the Borrower paid an arrangement fee of $
The Facility permits voluntary prepayments, subject in certain cases to prepayment fees, and includes mandatory prepayment provisions in connection with specified events, including certain asset disposals and insurance proceeds, all as set out in the facility agreement.
As of June 30, 2026, the Facility had an effective interest rate of
Royal Bank of Canada Facility
On June 18, 2025, the Company entered into a non-recourse credit facility (“Credit Facility”) with the Royal Bank of Canada (“RBC”). The Credit Facility provides for an aggregate of up to approximately CAD
The agreement is non-recourse and comprised of three separate facilities:
| ● | Non-revolving three-year lease facility in the amount of $ | |
| ● | Non-revolving term loan facility in the amount of $ | |
| ● | Revolver by way of letters of credit and letters of guaranty with fees to be determined on a transaction-by-transaction basis. This facility was available for the 36-month term subject to the issuance of the EDC (Export and Development Canada) Performance Security Guaranty in the amount of $ |
The company agreed to certain financial covenants included maintaining on a combined basis between MTL-1 and MTL-2: fixed charge coverage of not less than
On April 27, 2026, the Company entered into an amended credit agreement (“Amended Credit Agreement”) with RBC. This agreement replaces the original Credit Agreement dated June 18, 2025, as subsequently amended on July 4, 2025. The Amended Credit Agreement provides for an authorized credit facility of CAD $
Borrowings under the facility bore interest, at the Company’s option, at either (i) Daily Simple CORRA plus
Additionally, RBC provided a CAD $
The Company has agreed to certain financial covenants, including a minimum debt service coverage ratio and a maximum Net funded debt to EBITDA ratio. As of June 30, 2026, the Company was in compliance with all financial covenants under the credit facility.
On July 15, 2026, the Amended Credit agreement was repaid in full and refinanced through the Syndicated RBC Credit Facility agreement. The revolving facility from the Amended credit agreement in the form of Letters of Credit and Letters of Guarantee remains in place.
25
Syndicated RBC Credit Facility Agreement
On July 6, 2026, the Company’s wholly-owned subsidiary, Enovum Data Center Corp. entered into a syndicated credit agreement (“Syndicated RBC Credit Facility Agreement”). The Syndicated Credit Facility Agreement provides for an aggregate of up to approximately CAD $
Borrowings under the Syndicated Credit Facility Agreement bear interest, at the Company’s option, at either (i) CORRA-based benchmark rate for such interest period plus
The Syndicated Credit Facility is secured by first-ranking security interests over substantially all present and future personal property and assets of the borrower and the guarantors, together with first-ranking mortgages on certain owned real estate, including the Company's MTL-2 and MTL-3 properties and related improvements and equipment
The Company has agreed to certain financial covenants, including a minimum debt service coverage ratio and a maximum Net funded debt to EBITDA ratio.
On July 15, 2026, the Company drew a CORRA loan amount of CAD $
Delayed Draw Term Loan Facility
On May 20, 2026, Enovum NC-1 Venture, LLC (the “Borrower”), a subsidiary of the Company, entered into a Delayed Draw Term Loan Facility and Security Agreement (the “Delayed Draw Term Loan Facility”) with Bit Digital Capital, Inc. (the “Lender”), a subsidiary of Bit Digital, providing up to $
The available borrowing may be increased to $
The Delayed Draw Term Loan Facility bears interest at an initial rate of
The Delayed Draw Term Loan Facility is secured by first-ranking security over
In connection with the entry into the Delayed Draw Term Loan Facility, the Borrower is required to pay a commitment fee to the lender.
The Delayed Draw Term Loan Facility permits voluntary prepayments and includes mandatory prepayment provisions in connection with specified events, all as set out in the facility agreement.
On May 26, 2026 the Company executed two draw downs, for $
As of June 30, 2026, the Delayed Draw Term Loan Facility had an effective interest rate of
On July 27, 2026, an additional $
26
B. Riley Facility
As discussed above, on May 26, 2026, Bit Digital assigned to B. Riley a $
As of June 30, 2026, the B. Riley Facility had an effective interest rate of
11. SHARE-BASED COMPENSATION
Certain employees of the Company have historically participated in Bit Digital’s 2023 Omnibus Equity Incentive Plan and 2025 Omnibus Equity Incentive Plan (collectively, the “Bit Digital Plan”) which provide long-term incentive compensation to employees, consultants, officers and directors. Until the IPO was completed, certain employees of the Company continued to participate in the share-based compensation plans authorized and managed by Bit Digital.
On February 6, 2025, the Board of Directors of WhiteFiber adopted the 2025 Omnibus Equity Incentive Plan (the “2025 Plan”) which provides for share-based compensation such as restricted stock units (“RSUs”), incentive and non-statutory stock options, restricted shares, share appreciation rights and share payments may be granted to any directors, employees and consultants of the Company or affiliated companies and up to
From time to time, the Company grants equity awards under its 2025 Plan to employees of Bit Digital as consideration for services rendered to the Company. These awards are settled in shares of the Company’s ordinary shares and are accounted for as share-based compensation to non-employee consultants and included within general and administrative expenses.
All awards granted under 2025 plan will settle in WhiteFiber’s ordinary shares and are approved by WhiteFiber’s Compensation Committee of the Board of Directors.
Restricted Stock Units
As of December 31, 2025, the Company had
In May 2025, the Company entered into a director agreement with Ms. Ichi Shih, Chair of the Audit Committee. Pursuant to the terms of the agreement, as amended on August 6, 2025, Ms. Shih was allocated
In August 2025, in connection with WhiteFiber’s initial public offering,
In 2025, the Company granted
In 2025, the Company granted
In 2024, Bit Digital entered into equity award agreements with certain Enovum employees, pursuant to which such employees have the opportunity to earn additional compensation in the form of Bit Digital’s performance RSUs (“PSU”) tied to Enovum’s achievement of Growth EBITDA associated with new data center sites. Following WhiteFiber’s IPO, the agreements were amended such that any earned PSUs are issued pursuant to the WhiteFiber, Inc. 2025 Omnibus Incentive Plan and settled in WhiteFiber RSUs. PSUs vest upon cumulative Growth EBITDA reaching CAD $
27
During the six months ended June 30, 2026, the Company granted
During the six months ended June 30, 2026, the Company granted
During the six months ended June 30, 2026, the Company granted
During the six months ended June 30, 2026, the Company granted
For the three months ended June 30, 2026 and 2025, the Company recognized share-based compensation expenses of $
As of June 30, 2026, the Company had
Other share-based compensation
For the three months ended June 30, 2026 and 2025, the Company recognized share-based compensation expenses of $ and $, respectively and for the six months ended June 30, 2026 and 2025, the Company recognized share-based compensation expenses of $
For the three months ended March 31, 2026, the Company granted
In May 2026, the Company granted
For the three months ended June 30, 2026 and 2025, the Company recognized total share-based compensation expenses of $
28
12. SHARE CAPITAL
Ordinary shares
On August 8, 2025, WhiteFiber completed its initial public offering (the “Offering”) of
As of December 31, 2025, there were
During the six months ended June 30, 2026,
In May 2026,
As of June 30, 2026, there were
13. GOODWILL AND INTANGIBLE ASSETS
Goodwill
The components of goodwill as of June 30, 2026 are as follows:
| As of June 30, 2026 | ||||
| Enovum Data Centers Corp. | $ | |||
| Total goodwill | $ | |||
Finite-lived intangible assets
Finite-lived intangible assets consist of customer relationships. Intangible assets with definite lives are amortized over their estimated useful lives.
The following table presents the Company’s finite-lived intangible assets as of June 30, 2026:
| As of June 30, 2026 | ||||||||||||
| Cost | Accumulated amortization | Net | ||||||||||
| Customer relationships | $ | $ | ( | ) | $ | |||||||
| Total | $ | $ | ( | ) | $ | |||||||
29
The following table presents the Company’s finite-lived intangible assets as of December 31, 2025:
| As of December 31, 2025 | ||||||||||||
| Cost | Accumulated amortization | Net | ||||||||||
| Customer relationships | $ | $ | ( | ) | $ | |||||||
| Total | $ | $ | ( | ) | $ | |||||||
The following table presents the Company’s estimated future amortization of finite-lived intangible assets as of June 30, 2026:
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | $ |
Amortization expense for finite-lived intangible assets for the three months ended June 30, 2026 and June 30, 2025 was $
14. INCOME TAXES
The following table provides details of income taxes:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Loss before income taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| (Benefit from) provision for income taxes | $ | ( | ) | $ | $ | $ | ||||||||||
| Effective tax rate | % | ( | )% | ( | )% | ( | )% | |||||||||
The effective tax rate was
30
15. EARNINGS (LOSS) PER SHARE
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of ordinary share outstanding | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
| Loss per share | ||||||||||||||||
| Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Basic earnings (loss) per share is computed by dividing net income (loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. The computation of diluted net loss per share does not include dilutive ordinary share equivalents in the weighted average shares outstanding, as they would be anti-dilutive.
For the three months ended June 30, 2026,
For the six months ended June 30, 2026,
For the three and six months ended June 30, 2025, the Company had potentially dilutive ordinary share equivalents outstanding, as all outstanding shares were held by its parent and no equity awards or other convertible instruments were issued.
16. SEGMENT REPORTING
The Company has
The cloud services segment generates revenue from providing high performance computing services to support generative AI workstreams. Cost of revenue consists of direct production costs, including electricity costs, data center lease expense, GPU servers lease expense, third-party customer support fees, and other relevant costs, but excluding depreciation and amortization.
Colocation services generate revenue by providing customers with physical space, power and cooling within the data center facility. Cost of revenue consists of direct production costs related to our HPC data center services, including electricity costs, lease costs, data center employees’ wage expenses, and other relevant costs but excluding depreciation and amortization.
The CODM analyzes the performance of the segments based on reportable segment revenue and reportable segment cost of revenue. operating segments have been aggregated to form the reportable segments.
Other than the $
31
All Other revenue is generated from equipment leases with external customers.
All revenue and cost of revenue from intersegment transactions have been eliminated in the condensed consolidated statements of operations and comprehensive (loss) income.
The following tables present segment revenue and segment gross profit reviewed by the CODM:
Three Months Ended June 30, 2026
| Cloud services | Colocation services | Total | ||||||||||
| Revenue from external customers | $ | $ | $ | |||||||||
| Intersegment revenue | ||||||||||||
| Segment revenue | ||||||||||||
| Reconciliation of revenue | ||||||||||||
| Other revenue (a) | ||||||||||||
| Elimination of intersegment revenue | ( | ) | ||||||||||
| Total consolidated revenue | ||||||||||||
| Less: | ||||||||||||
| Electricity costs | ||||||||||||
| Datacenter lease expense | ||||||||||||
| GPU lease expense | ||||||||||||
| Wage expense | ||||||||||||
| Third-party customer support fees | ||||||||||||
| Other segment items (b) | ||||||||||||
| Intersegment cost of revenue | ||||||||||||
| Segment cost of revenue | ||||||||||||
Reconciliation of cost of revenue | ||||||||||||
| Elimination of intersegment cost of revenue | ( | ) | ||||||||||
| Total consolidated cost of revenue | ||||||||||||
| Segment gross profit | $ | $ | $ | |||||||||
| (a) |
| (b) |
32
Three Months Ended June 30, 2025
| Cloud services | Colocation services | Total | ||||||||||
| Revenue from external customers | $ | $ | $ | |||||||||
| Reconciliation of revenue | ||||||||||||
| Other revenue (a) | ||||||||||||
| Total consolidated revenue | ||||||||||||
| Less: | ||||||||||||
| Electricity costs | ||||||||||||
| Datacenter lease expense | ||||||||||||
| GPU lease expense | ||||||||||||
| Wage expense | ||||||||||||
| Other segment items (b) | ||||||||||||
| Segment cost of revenue | ||||||||||||
| Segment gross profit | $ | $ | $ | |||||||||
| (a) |
| (b) | All amounts included within Other segment items are individually insignificant. |
The following tables present segment revenue and segment gross profit reviewed by the CODM:
Six Months Ended June 30, 2026
| Cloud services | Colocation services | Total | ||||||||||
| Revenue from external customers | $ | $ | $ | |||||||||
| Intersegment revenue | ||||||||||||
| Segment revenue | ||||||||||||
| Reconciliation of revenue | ||||||||||||
| Other revenue (a) | ||||||||||||
| Elimination of intersegment revenue | ( | ) | ||||||||||
| Total consolidated revenue | ||||||||||||
| Less: | ||||||||||||
| Electricity costs | ||||||||||||
| Datacenter lease expense | ||||||||||||
| GPU lease expense | ||||||||||||
| Wage expense | ||||||||||||
| Third-party customer support fees | ||||||||||||
| Other segment items (b) | ||||||||||||
| Intersegment cost of revenue | ||||||||||||
| Segment cost of revenue | ||||||||||||
Reconciliation of cost of revenue | ||||||||||||
| Elimination of intersegment cost of revenue | ( | ) | ||||||||||
| Total consolidated cost of revenue | ||||||||||||
| Segment gross profit | $ | $ | $ | |||||||||
| (a) | Other revenue is primarily attributable to equipment leasing revenue and is therefore not included in the total for segment gross profit. |
| (b) | All amounts included within Other segment items are individually insignificant. |
33
Six Months Ended June 30, 2025
| Cloud services | Colocation services | Total | ||||||||||
| Revenue from external customers | $ | $ | $ | |||||||||
| Reconciliation of revenue | ||||||||||||
| Other revenue (a) | ||||||||||||
| Total consolidated revenue | ||||||||||||
| Less: | ||||||||||||
| Electricity costs | ||||||||||||
| Datacenter lease expense | ||||||||||||
| GPU lease expense | ||||||||||||
| Wage expense | ||||||||||||
| Other segment items (b) | ||||||||||||
| Segment cost of revenue | ||||||||||||
| Segment gross profit | $ | $ | $ | |||||||||
| (a) | Other revenue is primarily attributable to equipment leasing and is therefore not included in the total for segment gross profit. |
| (b) | All amounts included within Other segment items are individually insignificant. |
The following table presents the reconciliation of segment gross profit to net income before taxes:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Segment gross profit | $ | $ | $ | $ | ||||||||||||
| Reconciling Items: | ||||||||||||||||
| Other revenue (a) | ||||||||||||||||
| Depreciation and amortization expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Impairment of capitalized software assets | ( | ) | ( | ) | ||||||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net gain from disposal of property and equipment | ||||||||||||||||
| Other (expense) income, net | ( | ) | ( | ) | ||||||||||||
| Interest expense - third parties | ( | ) | ( | ) | ||||||||||||
| Interest expense - related parties | ( | ) | ( | ) | ||||||||||||
| Net loss before taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| (a) |
34
17. RELATED PARTIES
Related-party transactions
WhiteFiber AI’s subsidiary, WhiteFiber Iceland ehf, appointed Daniel Jonsson as its part-time Chief Executive Officer starting November 7, 2023, for a six-month term with a three-month probation. After the initial period, the employment shall be automatically renewed for successive period(s) of 6 months each, unless agreed otherwise in writing or unless terminated earlier in accordance with the terms of the employment agreement. His compensation includes a monthly salary of $
Bit Digital made a payment of $
In August 2025, the Company entered into a Professional Services Agreement (“PSA”) with Pruitt Hall, a member of the Company’s Board of Directors, pursuant to which he provides consulting services in connection with the construction of the NC-1 facility. Under the PSA, the Company pays consulting fees ranging from $
Corporate Restructuring and Capital Contributions
Prior to the consummation of the Offering, the Company entered into a Contribution Agreement with Bit Digital, pursuant to which Bit Digital contributed its HPC business through the transfer of
On August 8, 2025, WhiteFiber completed its initial public offering (the “Offering”) of
Transition Services Agreement post-IPO
In addition, prior to the consummation of the Offering, Bit Digital entered into the Transition Services Agreement with WhiteFiber, pursuant to which Bit Digital will provide certain services to WhiteFiber, on a transitional basis which will generally be up to 24 months following the effective date of the Registration Statement. The Transition Services Agreement provides for the performance of certain services by Bit Digital for the benefit of WhiteFiber, or in some cases certain services provided by WhiteFiber for the benefit of Bit Digital, for a limited period of time after the Offering, including certain services provided by Sam Tabar, our Chief Executive Officer, and Erke Huang, our Chief Financial Officer and a Director. During such transition period, Messrs. Tabar and Huang will continue to hold the same position with Bit Digital as well as WhiteFiber. Messrs. Tabar and Huang have committed to provide the requisite time and effort to fulfill their responsibilities as a full-time officer of WhiteFiber, supervising a full staff and are expected to provide certain services, representing not more than approximately
35
Allocation of pre-IPO corporate expenses
Prior to the IPO, Bit Digital provided certain corporate support services to WhiteFiber, including finance, tax, investor relations, and marketing, but did not historically charge the WhiteFiber entities for those services. Bit Digital allocated a portion of Bit Digital’s general corporate expenses to WhiteFiber to reflect the costs of services that benefited WhiteFiber during the periods presented in the financial statements up to the date of the IPO. For the six months ended June, 30, 2025, the Company was allocated $
Following the IPO, WhiteFiber became a separate public company, and certain services continued to be provided by Bit Digital only on a temporary basis under the Transition Services Agreement. Accordingly, the post-IPO treatment should reflect the actual services provided under that agreement. For further details, refer to “Transition Services Agreement post-IPO”.
Guarantees
Bit Digital previously issued a guarantee to a third party on behalf of WhiteFiber Iceland ehf, making Bit Digital jointly and severally liable for WhiteFiber Iceland’s payment obligations related to hosting Services fees and electrical costs pursuant to a colocation agreement.
On September 25, 2025, the guarantee was assumed by WhiteFiber which became directly responsible for such obligations. Following the assumption, Bit Digital is no longer a guarantor under the agreement.
On March 25, 2026, WhiteFiber Iceland ehf. (the “Borrower”), a subsidiary of the Company, entered into a secured term loan facility agreement (the “Facility”) with Landsbankinn hf, which provides for borrowings of up to $
On May 20, 2026, Enovum NC-1 Venture, LLC (the “Borrower”), a subsidiary of the Company, entered into a Delayed Draw Term Loan Facility and Security Agreement (the “Delayed Draw Term Loan Facility”) with Bit Digital Capital, Inc. (the “Lender”), a subsidiary of Bit Digital, providing up to $
On July 15, 2026 Enovum NC-Bidco, LLC (the “Principal”), a subsidiary of the Company, entered into a $
Delayed Draw Term Loan Facility and Security Agreement
On May 20, 2026, the Company, entered into a Delayed Draw Term Loan Facility and Security Agreement (the “Delayed Draw Term Loan Facility”) with Bit Digital Capital, Inc., a subsidiary of Bit Digital, providing up to $
18. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
From time to time, the Company may be a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.
Contingent Consideration Liabilities
Unifi Transaction
As part of the Unifi Transaction (See Note 4. Acquisition), the Company may be required to make additional contingent payments to the seller based on the timing and availability of electric service to the property, as follows:
| ● | A contingent payment of $ |
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| ● | If an Electric Service Agreement for at least 99 MW is provided, or the property receives 99 MW of power within three years, the Company may instead be required to make a contingent payment of $ |
| ● | If an Electric Service Agreement is provided, or the property receives more than 99 MW of power within four years, the Company may be required to make an additional payment of $ |
As of June 30, 2026 the Company has not received an Electric Service Agreement of more than 99 MW. Thus, no contingent payment is payable as of the reporting date.
Electric Service Agreement with Duke Energy
An existing Electric Service Agreement (“ESA”) with Duke Energy Carolinas, LLC (“Duke Energy”) for the provision of electric power to the facility located at 805 Island Drive, Madison, North Carolina was assigned to the Company’s wholly owned subsidiary, Enovum NC-1 Bidco LLC, from Unifi as of August 4, 2025.
The ESA establishes a minimum monthly bill for electric service, based on Duke Energy’s Rate of $
The ESA represents a continuing commitment to purchase power at or above the established minimum levels throughout the contract term. As such, the Company is obligated to pay the minimum monthly charges regardless of operational activity.
Under the termination clause, either party may cancel the ESA with at least 60 days’ written notice. In the event of early termination, the Company remains liable for all amounts due under the ESA through the termination date and may incur additional charges associated with the Extra Facilities if service is discontinued prior to the expiration of the facilities term.
On July 15, 2026, the Company obtained a $
As of June 30, 2026 management has no present intention to reduce operations at Madison or terminate the ESA. Accordingly, no liability has been recognized in the financial statements in connection with the ESA.
19. SUBSEQUENT EVENTS
Syndicated RBC Credit Facility Agreement
On July 6, 2026, the Company’s wholly-owned subsidiary, Enovum Data Center Corp. entered into a syndicated credit agreement (“Syndicated RBC Credit Facility Agreement”). See Note 10. Debt for additional information.
Delayed Draw Term Loan Facility and Security Agreement
On July 27, 2026, the Company drew down an additional $
Data center lease in Sydney
On July 30, 2026, WhiteFiber Australia II Pty Ltd (f/k/a Aurix Digital Pty Ltd), a subsidiary of the Company, entered into a lease of data center space in Sydney, Australia to expand our cloud services offering. The lease, which is guaranteed by WhiteFiber, Inc., is scheduled to commence in the fourth quarter of 2026, has a term of 59 months, and carries a monthly rent of AUD
Investment Security
On August 10, 2026, the Company entered into the PIPE Share Purchase Agreement with SAIHEAT Limited for aggregate proceeds of approximately $
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following information should be read in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q for the period ended June 30, 2026 as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2025 (Annual Report). Except for the statements of historical fact, this Form 10-Q contains “forward-looking information” and “forward-looking statements reflecting our current expectations that involve risks and uncertainties (collectively, “forward-looking information”) that is based on expectations, estimates and projections as at the date of this Form 10-Q. All statements, other than statements of historical fact, included herein are “forward-looking statements.” These forward-looking statements are often identified by the use of forward-looking terminology such as “believes,” “intends,” “expects,” or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investing in our securities involves a high degree of risk. The following discussion may contain forward-looking statements that reflect WhiteFiber, Inc.’s plans, estimates and beliefs. WhiteFiber, Inc.’s actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those factors discussed below, in the Annual Report and in Part II, Item 1.A of this Form 10-Q, particularly in the sections entitled “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors.” Before making an investment decision, you should carefully consider these risks, uncertainties and forward-looking statements.
The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company’s periodic reports that are filed with the SEC and available on its website at http://www.sec.gov. If any material risk was to occur, our business, financial condition or results of operations would likely suffer. In that event, the value of our securities could decline and you could lose part or all of your investment. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. In addition, our past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results in the future. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
References to “WhiteFiber” or the “Company” refer to WhiteFiber, Inc. and its subsidiaries, giving effect to the Reorganization which occurred on August 6, 2025.
Overview
We believe we are a leading provider of artificial intelligence (“AI”) infrastructure solutions. We own high-performance computing (“HPC”) data centers and provide cloud-based HPC graphics processing units (“GPU”) services, which we term cloud services, for customers such as AI application and machine learning (“ML”) developers (the “HPC Business”). Our Tier-3 data centers provide hosting and colocation services. Our cloud services support generative AI workstreams, especially training and inference.
Our business model integrates our data center infrastructure and cloud services to provide scalable, high-performance computing solutions for enterprises, research institutions, and AI and ML driven businesses. Our integrated approach aligns specialized data center operations with GPU-focused cloud services, addressing the unique requirements of AI and ML workloads. These workloads demand greater power density, advanced cooling solutions, and robust bandwidth to handle large-scale data transfers. By operating our data centers, we are able to provide the power to support our cloud services and we believe we can better meet the needs of AI and ML workloads and reduce the complexity associated with procuring power and connectivity from external vendors. We can also design our facilities to accommodate the higher heat loads generated by modern GPUs, potentially shortening deployment timelines for customers who require rapid expansion of their computing infrastructure. From a financial standpoint, our vertically integrated solution allows us to capture additional margin for both our data center and cloud services businesses, avoiding expenses that would otherwise be due to third-party providers.
Colocation/Data center services
We design, develop, and operate data centers, through which we offer our hosting and colocation services. Our operational data centers meet the requirements of the Tier-3 standard, including N+1 redundancy architecture, concurrent maintainability, uninterruptible power supply, advanced and highly reliable cooling systems, strict monitoring and management systems, 99.982% uptime and no more than 1.6 hours of downtime annually, service organization control, SOC 2 Type 2, differentiated software supporting AI workloads, high density and robust bandwidth, and infrastructure to support AI workloads.
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Based on their collective industry experience, our data center team is adept at bringing new sites online on an accelerated timeline. We are aggressively pursuing our development pipeline and intend to achieve an estimated 70 MW (gross) of total data center capacity by the end of the fourth quarter of 2026, a target that is underpinned by assets including our MTL-2, MTL-3, and NC-1 facilities. As of June 30, 2026, our pipeline of potential data center projects represents approximately 1,500 MW (gross) under management review. We follow a disciplined process prioritizing projects that are backed by customer lease commitments. In select cases, we may pursue early-stage acquisitions based on strong customer demand signals and defined commercialization pathways. Accordingly, the foregoing timelines and capacities are subject to change based on many factors, many of which are outside of our control.
We use a well-defined set of criteria to select our data center sites. We typically target sites with proximity to metro areas and partial infrastructure in place, where we are retrofitting rather than developing greenfield projects. Metropolitan areas are positioned for low-latency to address long-term, specialized AI computer inference needs, and smaller sites reduce risks. A retrofit entails sourcing and acquiring an existing industrial building with underutilized, in-place power connectivity. The period of time from when a site is purchased until construction can begin varies from location to location depending upon, among other things, obtaining required permits and the availability of construction supplies and contractors. Average build time for retrofits is intended to be approximately six months from commencement of construction, which we believe is approximately one-third to one-half of the industry average development timeline for greenfield projects. This average building time is based upon senior management’s experience at Enovum prior to its acquisition by the Company, as well as their experience prior to Enovum. We also prioritize sites offering opportunities to increase site power over time, enabling our data centers to grow with customer demand. In addition, we selectively target certain larger opportunities with 50 MW (gross) of power or more, subject to customer demand, to drive AI-driven compute super-clusters. Finally, we prioritize sites powered by sustainable, green energy sources and locked-in power when available. Additionally, to enhance sustainability of certain of our data center projects, we are undertaking heat repurposing projects in connection with sustainability and commercial and residential projects.
We acquired Enovum on October 11, 2024. The transaction included the lease of MTL-1, our 4 MW (gross) Tier-3 high-performance computing (“HPC”) data center in Montreal, Canada, which was fully operational and fully leased to customers at the time of acquisition.
On December 27, 2024, we acquired the real estate and building for a build-to-suit 5 MW (gross) Tier-3 data center expansion project near Montreal, Canada which we refer to as MTL-2. MTL-2, a 160,000 square foot site that was previously used as an encapsulation manufacturing facility, is located in Pointe-Claire, Quebec. We initially funded the purchase of CAD 33.5 million (approximately $23.3 million) with cash on hand. We expected to invest approximately $23.6 million to develop the site to Tier-3 standards with an initial load of 5 MW (gross). However, we have prioritized other builds and preserved capital for more time sensitive projects.
On April 11, 2025, we entered into a lease for a new data center site in Saint-Jerome, Quebec, a suburb of Montreal, MTL-3. The MTL-3 facility spans approximately 202,000 square feet on 7.7 acres and is being developed into a 7 MW (gross) Tier-3 data center. It will support current contracted capacity, with Cerebras (5 MW IT Load), with future expansion potential subject to utility approvals. The transaction was executed under a lease-to-own structure, which includes a fixed-price purchase option of CAD 24.2 million (approximately $17.3 million) exercisable by December 2025. The lease term is 20 years, with two 5-year extensions at the Company’s option. In December 2025, we became reasonably certain to exercise the purchase option and notified the lessor of our intent to exercise the purchase option. We had 90 days to complete the purchase, after which the purchase option would expire. The option was exercised on January 14, 2026 and the purchase of MTL-3 closed on May 8, 2026. The facility has been retrofitted to Tier-3 standards and was completed and operational in November 2025. The site has commenced billing Cerebras as of November 1, 2025, in the amount of CAD 1.4 million (approximately 979 thousand USD) monthly for the duration of the five-year contract.
On May 20, 2025, we completed the purchase of a former industrial/manufacturing building from UMI. Pursuant to the Purchase Agreement we agreed to purchase from UMI, an industrial/manufacturing building together with the underlying land located in Madison, North Carolina, which we refer to as “NC-1”, as well as certain machinery and equipment located thereon for a cash purchase price of $45 million. The purchase price will increase by (i) $8 million, if Duke Energy actually provides, or provides an Electric Services Agreement providing for, at least 99 MW (gross) within two years of May 20, 2025, or (ii) $5 million, if Duke Energy actually provides, or provides an Electric Services Agreement providing for, at least 99 MW (gross) more than two years but less than three years after May 20, 2025. Additionally, the purchase price will increase by an additional $200 thousand per MW over 99 MW (gross) up to a maximum of $5 million if at least 99 MW (gross) are actually delivered, or Duke Energy provides an Electric Services Agreement for the provision of at least 99 MW (gross), within four years of May 20, 2025. Separately, the Company entered into a Capacity Agreement with Duke Energy pursuant to which Duke Energy agreed to use commercially reasonable efforts to achieve 24 MW (gross) of service to NC-1 by September 1, 2025, 40 MW (gross) by April 1, 2026, and 99 MW (gross) within four years of May 16, 2025. Management believes based upon its review of the site and a Duke Energy preliminary transmission study, that NC-1 may receive and support up to 200 MW (gross) of total electrical supply over an extended period of time, subject to infrastructure upgrades, such as developing new substations and other conditions. On August 4, 2025, Enovum NC-1 Bidco LLC, a subsidiary of the Company, entered into an Assignment and Assumption Agreement with Unifi Manufacturing and Duke Energy Carolinas, LLC, pursuant to which Enovum assumed Unifi’s rights and obligations under certain electric service agreements for facilities located in North Carolina. Duke Energy consented to the assignment. Refer to Note 18. Commitments and contingencies to our condensed consolidated financial statements for further detail.
As the business grows, the Company’s ability to fund its operating needs will depend on the ongoing ability to generate positive cash flow from our operations and raise capital in the capital markets. Accordingly, the Company has entered into certain credit facilities to finance these areas of growth, including the RBC Facility Agreement discussed here. Refer to Liquidity and capital resources for further discussion on this Facility and other credit facilities of the Company.
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RBC Credit Facility
On June 18, 2025, we entered into a non-recourse credit agreement with RBC (as subsequently amended on July 4, 2025, the “original credit agreement”) providing for an aggregate of up to approximately CAD 60 million (approximately $43.8 million) of financing intended primarily to refinance the buildout of MTL-2 and to provide $5.8 million of revolving term financing. The facilities had not been authorized for use by the lender, as certain conditions precedent had not yet been satisfied, and accordingly no amounts were drawn and no borrowings were available under the original credit agreement.
On April 27, 2026, the Company entered into an amended credit agreement with RBC, replacing the original credit agreement dated June 18, 2025, as amended on July 4, 2025. The amended credit agreement provided for an authorized credit facility of CAD $28 million (approximately $20 million), the proceeds of which were used to finance the acquisition of the MTL-3 facility. The amended credit agreement also included a CAD $8 million (approximately $5.8 million) revolving facility in the form of Letters of Credit and Letters of Guarantee, available for a 12-month term. On July 15, 2026, the amended credit agreement was repaid in full and refinanced through the Syndicated RBC Credit Facility Agreement described below; the revolving Letters of Credit and Letters of Guarantee facility remains in place.
Syndicated RBC Credit Facility Agreement executed on July 6, 2026
On July 6, 2026, the Company’s wholly-owned subsidiary, Enovum Data Center Corp. entered into a syndicated credit agreement (“Syndicated RBC Credit Facility Agreement”), The Syndicated Credit Facility Agreement provides for an aggregate of up to approximately CAD $115 million (approximately $80.8 million) to refinance the Amended Credit Agreement and finance its data centers business. The agreement also includes an accordion feature that permits the Company to increase by up to an additional CAD $25 million (approximately $17.7 million) to refinance the Amended Credit Agreement, subject to the satisfaction of specified conditions. The Syndicated Credit Facility Agreement is a non-revolving facility, and amounts repaid or prepaid may not be reborrowed.
Borrowings under the Syndicated Credit Facility Agreement bear interest, at the Company’s option, at either (i) CORRA-based benchmark rate for such interest period plus 2.45% per annum plus the credit spread adjustment for the applicable interest period (29.547 basis points for one month interest period, 32.138 basis points for a three month interest period and 0 for a daily interest period), or (ii) RBC Prime rate plus 1.00% per annum. The facility has a three-year term from the date of the initial drawdown and requires interest-only payments until the first full quarter after the date of the initial drawdown. The loan will be amortized through quarterly principal repayments based on a 15-year amortization schedule, with the outstanding principal due in full at maturity. The specific borrowing terms are established at the time of each drawdown pursuant to a borrowing request submitted by the Company and accepted by the lender.
The Syndicated Credit Facility is secured by first-ranking security interests over substantially all present and future personal property and assets of the borrower and the guarantors, together with first-ranking mortgages on certain owned real estate, including the Company's MTL-2 and MTL-3 properties and related improvements and equipment
The Company has agreed to certain financial covenants, including a minimum debt service coverage ratio and a maximum Net funded debt to EBITDA ratio.
On July 15, 2026, the Company drew a CORRA loan amount of CAD $36.8 million (approximately $26.2 million) under the Syndicated Credit Facility Agreement.
Nscale Services Agreement
In November 2025, our wholly owned subsidiary, Enovum NC-1 Bidco, LLC, entered into the Services Agreement with Nscale Services US Inc. and Nscale Global Holdings Limited (collectively, “Nscale”) for the provision of colocation and related services at our NC-1 facility. The agreement represents a significant commercial milestone for our high-density data center platform and provides long-term contracted revenue visibility. The initial Service Order pursuant to the Services Agreement represents approximately $865 million in total contracted revenue over a 10-year term, inclusive of contractual annual rate escalators and non-recurring installation services (“NRCs”). Electricity and certain other operating costs are structured as pass-through charges to Nscale. Billing is expected to commence during the third quarter, subject to completion of construction and commissioning. As a result, we expect full revenue contribution from this agreement to begin during the third quarter of 2026 as the facility reaches its contractual capacity.
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Cloud Services
We provide specialized cloud services to support generative AI workstreams, especially training and inference, emphasizing cost-effective utility and tailor-made solutions for each client. We are an authorized NVIDIA Preferred Partner through the NVIDIA Partner Network (“NPN”), an authorized partner with SuperMicro Computer Inc.®, an authorized Communications Service Provider (“CSP”) with Dell (through Dell’s exclusive distributor in Iceland, Advania), an official partnership with Hewlett Packard Enterprise and a commercial relationship with Quanta Computer Inc. (“QCT”). Based on management’s knowledge of the industry, we are proud to be among the first service providers to offer H200, B200, and GB200 servers. We provide a high-standard service lease with an Uptime percentage> 99.5%.
We are also developing a capital-light managed services offering through which customers would fund the underlying hardware while we deploy and operate it on their behalf. This offering has not yet generated material revenue.
Global Data Center Infrastructure and Partnerships
We expect to leverage a global network of data centers for hosting capacity for our GPU business, in many instances, by negotiating with third-party providers to seamlessly integrate our cloud services at strategically located data centers. Our initial data center partnership through which we lease capacity is at Blönduós Campus, Iceland, offering a world-class operations team with certified technicians and reliable engineers. The facility has a 45 kW rack density and 6 MW (gross) total capacity. We have executed contracts for 5.5 MW IT load at the data center. The center’s energy source is 100% renewable energy, mainly from Blanda Hydro PowerStation, the winner of an IHA Blue Planet Award in 2017. In addition, we have leased additional capacity to install our data center in Atlanta, Georgia, USA to expand our cloud services offering. The capacity leases commenced in February 2026. We also intend to lease additional capacity to expand our cloud services offering. In July 2026, we entered into a lease for 2.5 MW IT load Tier 3 design data center space in Sydney, Australia to expand our cloud services offering. The lease is scheduled to commence in the fourth quarter of 2026.
In April 2025, we received our first shipment of NVIDIA GB200 NVL72 system powered NVIDIA GB200 Grace Blackwell Superchips, from Quanta Cloud Technology, a leading provider of data center solutions. We believe that support with proof of concept (POC) access from Quanta will enable us to meet and exceed expectations around delivery and timeline, performance and reliability.
Customer Base and Concentration
As of the date of this Form 10-Q, we have seven existing customers. Our largest customer accounted for approximately 63% of our revenue during the six months ended June 30, 2026. During the period we had discontinuation of three customer orders. The discontinued orders resulted in approximately $5.1M impact to revenue during the six months ended June 30, 2026. However, there were new customer orders contracted in the six months ended June 30, 2026 and through the date of this Form 10-Q for total contracted revenue of $635.8M over a six months to three-year period.
Discontinued customer agreements during the six months ended June 30, 2026 and through the date of this Form 10-Q include: (i) the Company’s Initial Customer, following execution of the Termination Agreement described below; (ii) a customer whose Master Services Agreement and related purchase order, as previously amended, was terminated in January 2026; and (iii) a customer whose service order, entered into in January 2026, was terminated during the period.
New customer agreements signed during the six months ended June 30, 2026 and through the date of this Form 10-Q include new service orders entered into with existing customers for additional GPU and CPU/storage capacity, as well as new service orders entered into with new customers, in each case as further described below.
Selected Customer Agreements
The following summaries reflect selected GPU cloud service agreements that were entered into or discontinued during the period, or that that we otherwise consider to be material or representative. We have entered into additional agreements that are not individually material and are not included below.
On October 23, 2023, Bit Digital announced that it had commenced AI operations by signing a binding term sheet with a customer (the “Initial Customer”) to support the customer’s GPU workloads. On December 12, 2023, we finalized a Master Services and Lease Agreement (“MSA”), as amended, with our Initial Customer for the provision of cloud services from a total of 2,048 GPUs over a three-year period. To finance this operation, we entered into a sale-leaseback agreement with a third party, selling 96 AI servers (equivalent to 768 GPUs) and leasing them back for three years. The total contract value with the Initial Customer for the aggregated 2,048 GPUs was estimated to be worth more than $50 million of annualized revenue. On January 22, 2024, approximately 192 servers (equivalent to 1,536 GPUs) were deployed at a specialized data center and began generating revenue, and subsequently on February 2, 2024, approximately an additional 64 servers (equivalent to 512 GPUs) also started to generate revenue.
In the second quarter of 2024, we finalized an agreement to supply our Initial Customer with an additional 2,048 GPUs over a three-year period. To finance this operation, we entered into a sale-leaseback agreement with a third party, agreeing to sell 128 AI servers (equivalent to 1,024 GPUs) and leasing them back for three years. In late July, at the customer’s request, we agreed with the customer to temporarily delay the purchase order so the customer could evaluate an upgrade to newer generation Nvidia GPUs. Consequently, the Company and manufacturer postponed the purchase order. In early August, the customer made a non-refundable prepayment of $30.0 million for the services to be rendered under this agreement.
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In January 2025, the Company entered into an agreement to supply its Initial Customer with an additional 464 GPUs for a period of 18 months. This new agreement replaces the prior agreement whereby the Company was to provide the customer with an incremental 2,048 H100 GPUs. The contract represents approximately $15 million of annualized revenue and features a two-month prepayment from the customer. Deployment commenced on August 20, 2025, using the Company’s inventory of B200 GPUs.
In October 2025, the Company’s existing parent guaranty arrangement with the Initial Customer was scheduled to expire. Beginning in November 2025, the customer will provide a service deposit to the Company in lieu of the parent guaranty. The deposit will be funded through fifteen consecutive monthly payments of approximately $0.24 million each, totaling $3.6 million, payable from November 2025 through January 2027. The deposit will serve as security for the customer’s performance obligations under the amended service agreements. Each monthly payment is expected to be invoiced on the first day of the month and paid within thirty days. The Company will be required to return the deposit in cash upon termination or expiration of the service agreements, provided that all obligations have been fully satisfied and no payment defaults or material breaches exist.
In the second quarter of 2026, the Company executed a termination agreement (the “Termination Agreement”) with the Initial Customer. The Termination Agreement preserved $12.5 million of previously invoiced, unpaid trade receivables. This preserved balance was fully collected as of June 30, 2026. Prepayment and service deposit balances were applied against other outstanding receivables and the Company recognized a bad debt expense of approximately $2.2 million for the unpreserved remaining receivable balance outstanding. Additionally, under the Termination Agreement the Initial Customer is obligated to pay the Company a fixed termination fee of $12.3 million that was recognized as revenue during the second quarter of 2026. Subsequently, after quarter-end, the termination fee was amended to $15.7 million. The amended amount of $15.7 million remains outstanding as of the date of this Form 10-Q. Following the service pause and termination of the agreement, the Company redeployed the GPUs previously allocated to the Initial Customer to other customers.
In November 2025, we terminated the MSA and all related purchase orders with DNA Fund in accordance with the terms of the contract. At the time of termination, we had approximately $7.3 million in outstanding accounts receivable. Pursuant to the termination agreement, the customer agreed to repay the outstanding balance. As of the date of this Form 10-Q, we have collected $2.2 million of the outstanding amount.
On November 6, 2024, we entered into a Master Services Agreement (“MSA”) with a minimum purchase commitment of 16 GPUs, along with an associated purchase order, from a new customer. The purchase order provides for services utilizing a total of 16 H200 GPUs over a minimum of a six-month period, representing total contracted value of approximately $0.16 million for the term. The deployment commenced on November 7, 2024, using the Company’s existing inventory of H200 GPUs. The service under the purchase order concluded in May 2025. Between May 2025 and September 2025, the Company signed six additional agreements on a month-to-month basis for a total of 88 H200 GPUs, which were terminated in January 2026.
In February 2026, we entered into another service order with the customer to provide services utilizing a total of 10 H200 GPU servers. The service order has an initial term of 14 months beginning on the services commencement date. The service order represents an aggregate revenue opportunity of approximately $1.3 million. The deployment and revenue generation began in March 2026.
In March 2026, we entered into another service order with the customer to provide services utilizing a total of 256 H100 GPU servers. The service order has an initial term of 24 months beginning on the services commencement date, with an option to renew for an additional twelve months. The service order represents an aggregate revenue opportunity of approximately $50.2 million. The deployment and revenue generation began in the second quarter of 2026.
In April 2026, the Company entered into another service order with the customer to provide CPU and storage server services. The service order has an initial term of 24 months beginning on the services commencement date. The service order represents an aggregate revenue opportunity of approximately $0.8 million. The deployment and revenue generation began in the second quarter of 2026.
On January 30, 2025, we entered into a Master Services Agreement (“MSA”) with a minimum purchase commitment of 40 GPUs, along with an associated purchase order, from a new customer. The purchase orders provide for services utilizing a total of 40 H200 GPUs over a minimum of 12 month period, representing total revenue of approximately $0.8 million for the term. In October 2025, the purchase order was amended to reduce the number of H200 GPUs from 40 to 8 and to extend the term of service through May 2027. This contract was terminated in January 2026.
In October 2025, we entered into a two-week service order with a new customer to provide services utilizing a total of 72 B200 GPUs. In January 2026, we entered into an additional two-week service order with this customer for 72 B200 GPUs. These contracts were terminated as of February 2026. In January 2026, we entered into a further service order with this customer to provide services utilizing a total of 384 B200 GPUs. This service order has an initial term of 24 months commencing on the service commencement date, after which it will automatically renew for successive one-month periods unless terminated by either party. The service order represents an aggregate revenue opportunity of approximately $18.1 million. Deployment and revenue generation commenced in January 2026.
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In February 2026, we entered into a service order with a new customer to provide services utilizing a total of 256 GPUs. The service order has an initial term of 12 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. The deployment and revenue generation began on February 1, 2026 which is expected to generate total revenues of $3.6 million.
In March 2026, we entered into a service order with a new customer, Prime Intellect, to provide services utilizing a total of 72 GB200 GPUs. The service order has an initial term of 6 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. The deployment and revenue generation began on March 7, 2026 and will generate a total revenue of up to $1.0 million. Additionally, in April 2026, we entered into a service order with this customer to provide services utilizing a total of 216 GB200 GPUs. The service order has an initial term of 12 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. The deployment and revenue generation is scheduled to begin in July 2026 generating total revenues of up to $6.8 million.
New Business Developments
In May 2026, we entered into a five-year agreement to provide AI compute infrastructure for an investment-grade technology customer in the Paris region utilizing advanced NVIDIA GPU systems, with total contract value in excess of $160 million. Service under this agreement, which was previously expected to commence in July 2026, is now expected to commence in September 2026, subject to final equipment delivery and acceptance milestones. We have secured third-party data center capacity in France to support the deployment and have entered into a binding term sheet for project-level financing with respect to this deployment (the “France Project Financing”). We are currently in the process of negotiating definitive documentation for the France Project Financing; however, certain material terms remain subject to ongoing negotiation between the parties. While we expect to finalize the France Project Financing in the near term, no definitive agreements have been entered into as of the date of this Quarterly Report, and no assurance can be given that we will enter into such financing on the timeline currently anticipated, on the terms contemplated by the binding term sheet, on other terms satisfactory to us, or at all. If consummated, the France Project Financing is expected to be incurred at a project-level subsidiary and would not be guaranteed by WhiteFiber, Inc. The project is expected to be supported by customer prepayments, including 12 months of advance service fees, and project-level financing, with limited long-term reliance on our corporate balance sheet and existing cash resources.
Also in May 2026, we entered into a two-year cloud services agreement with Hyperbolic Labs, Inc., with Modal Labs as the end customer and reference partner, to deploy H200 GPUs from our existing owned fleet, with total contract value of approximately $17 million. Revenue under this agreement commenced in June 2026. No incremental GPU capital expenditures were required for this deployment.
In July 2026, we entered into a service order with a new customer to provide services utilizing a total of 128 B300 GPUs. The service order has an initial term of 36 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. The service order represents an aggregate revenue opportunity of approximately $16.0 million.
In August 2026, we entered into a new service order with Prime Intellect to provide services utilizing a total of 576 VR200 (Vera Rubin) GPUs in Canada, representing our first Vera Rubin deployment. This is in addition to the orders placed by this customer of 72 GB200 GPUs in March 2026 and 216 GB200 GPUs in April 2026, discussed above. The service order has an initial term of 36 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. The service order represents an aggregate revenue opportunity of approximately $108.2 million, with service targeted to commence in the second quarter of 2027. The total revenue contract value with this customer in relation to these three orders is expected to be up to $116.0 million.
In August 2026, we entered into a service order with a new customer, BaseTen Labs, Inc., to provide services utilizing a total of 1,392 B300 GPUs. The service order has an initial term of 36 months beginning on the services commencement date, after which it automatically renews for successive one-month periods unless terminated by either party. The service order represents an aggregate revenue opportunity of approximately $165.2 million. The deployment and revenue generation is scheduled to begin in November 2026.
In August 2026, we entered into a new five-year service order with an existing customer to provide services utilizing a total of 576 Nvidia B300s GPUs in Iceland. The service order represents an aggregate revenue opportunity of approximately $87.5 million over its initial term, with additional potential upside through revenue sharing. Service under this agreement is targeted to commence in December 2026.
Reorganization, Initial Public Offering, and Relationship with Bit Digital
We were incorporated by Bit Digital as a Cayman Islands exempted company on August 15, 2024 under the name Celer, Inc., as a holding company for the HPC Business. We changed our name to WhiteFiber, Inc. on October 17, 2024.
On August 6, 2025, we issued 27,043,749 ordinary shares, par value $0.01 per share (our “Ordinary Shares”, and such shares, the “Contribution Shares”), to Bit Digital pursuant to the terms of a Section 351 Contribution Agreement (the “Contribution Agreement”) entered into with Bit Digital on July 30, 2025. Pursuant to the Contribution Agreement, Bit Digital contributed its HPC Business through the transfer of 100% of the capital shares of its cloud services subsidiary, WhiteFiber AI, Inc. and its wholly-owned subsidiaries WhiteFiber HPC, Inc., WhiteFiber Canada, Inc., WhiteFiber Japan G.K. and WhiteFiber Iceland, ehf, to us, upon the effectiveness of the registration statement filed in connection with our IPO and prior to the consummation of the IPO, in exchange for the Contribution Shares. We refer to this transaction as the “Reorganization”. WhiteFiber AI became a wholly-owned subsidiary of WhiteFiber, Inc. and Bit Digital became the direct shareholder of WhiteFiber after the Reorganization.
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On August 8, 2025, we completed our initial public offering (“IPO”) of 9,375,000 Ordinary Shares, at a public offering price of $17.00 per share. The gross proceeds to the Company from the IPO were approximately $159.4 million, before deducting underwriting discounts and commissions and offering expenses of $12.0 million. On September 2, 2025, B. Riley Securities, Inc. and Needham & Company, LLC, as representatives of the several Underwriters of the IPO, fully exercised their option to purchase an additional 1,406,250 Ordinary Shares at the public offering price of $17.00 per share, resulting in additional gross proceeds to the Company of approximately $23.9 million.
After giving effect to the IPO and the full exercise by the Underwriters of their over-allotment option, Bit Digital held approximately 71.5% of our issued and outstanding Ordinary Shares. As of the date of this Form 10-Q, Bit Digital owns approximately 69.6% of WhiteFiber.
Following our IPO, certain of our directors, executive officers and other members of senior management continue to serve as directors, officers and employees of Bit Digital. We have added additional executive officers and senior management to our senior executive team apart from those serving as officers and employees of Bit Digital. We have assembled a senior operating team with approximately 15 years of experience on average for each individual in the data center and cloud services industries. We also appointed additional independent directors upon the commencement of trading of our Ordinary Shares on Nasdaq.
Key Factors that May Affect Future Results of Operations
We believe that the growth of our business and our future success are dependent upon many factors including those described under “Risk Factors” included elsewhere in our Annual Report. While these factors present significant opportunities for us, they also pose challenges that we must successfully address in order to sustain the growth of our business and enhance our results of operations.
Timely Completion of, and Expansion of Capabilities at, our Existing Data Center Projects.
Our future revenue growth is, in part, dependent on our ability to leverage our development capabilities at our data center sites.
We substantially completed construction of our MTL-3 facility by the end of October 2025. The site has commenced billing its customer, Cerebras, as of November 1, 2025, in the amount of CAD 1.4 million (approximately $979 thousand USD) monthly for the duration of the five-year contract.
Management expects to begin delivering capacity to Nscale during the third quarter and for NC-1 to start generating revenues 30 days after completion. Additionally, during the third quarter we will begin the initial phases of construction for MTL-2 with an expected delivery near the end of the fiscal year. We expect to increase revenue from our existing sites by securing additional allocations of utility power, subject to our receipt of funding and required permits through ongoing engagement with the utility and relevant authorities. In addition, at certain new and existing sites, we intend to deploy natural gas fuel cell generation technology to increase available power and revenue potential. Our ability to secure the required funding and permits in accordance with our implementation plans may cause variability in our revenue growth in future quarters.
Development of Data Center Pipeline.
We intend to rapidly develop additional sites from our expansion pipeline in targeted locations to secure a strategic presence across North America. By developing a robust HPC data center platform across North America, we expect to enhance redundancy, mitigate geo-location risks, and ensure our services are available where clients need them most. We expect our strategically placed WhiteFiber data centers in smaller urban areas will deliver carrier hotel-level connectivity, while our larger deployments will power AI-driven computing super-clusters, driving innovation and efficiency.
Expansion of Cloud Services.
We have made investments in research and development of our cloud service technology and services. Cloud services are highly competitive, rapidly evolving, and require significant investment, including development and operational costs, to meet the changing needs and expectations of our existing users and attract new users. Our ability to deploy certain cloud service technologies critical for our products and services and for our business strategy may depend on the availability and pricing of third-party equipment and technical infrastructure. In the future, we are looking to generate significant revenues from our cloud services, but such revenue growth depends upon certain third-party providers which may be beyond our control and creates uncertainty that we will be able to generate consistent revenue.
On July 9, 2026, the Company announced initial research and development results for a proprietary cross-data-center networking architecture designed to link geographically separated data centers into a single logical GPU supercluster. Testing demonstrated 111.2 Tbps of bandwidth across 83 kilometers of dark fiber with a guaranteed round-trip latency of 0.9 milliseconds, and the Company has submitted related patent applications. The Company is targeting commercial launch of this solution in the third quarter of 2026, subject to completion of additional full-spectrum fiber testing; there can be no assurance that commercialization will occur on this timeline or at all.
Availability of Additional Financing.
Our ability to fund the continued construction and buildout of our data center facilities and to refinance near-term debt maturities depends on successfully obtaining additional financing on acceptable terms, or at all. If we are unable to do so, our business, operating results, and financial condition could be adversely affected.
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In addition to the key factors described above, we may also generate revenue through the monetization of excess or unused power capacity, resale or leasing of high-performance computing (HPC) hardware, licensing of software or infrastructure designs, and strategic partnerships that expand our service offerings. However, these potential revenue streams are at an early stage and are not expected to materially contribute to our near-term results.
Results of operations for the three months ended June 30, 2026 and 2025
The following discussion summarizes the results of operations for the three months ended June 30, 2026 and 2025. This information should be read together with our condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q.
| For The Three Months Ended June 30, | Variance in | |||||||||||
| 2026 | 2025 | Amount | ||||||||||
| Revenue | $ | 28,839 | $ | 18,662 | $ | 10,177 | ||||||
| Operating costs and expenses | ||||||||||||
| Cost of revenue (exclusive of depreciation shown below) | (11,710 | ) | (7,201 | ) | (4,509 | ) | ||||||
| Depreciation and amortization expenses | (6,567 | ) | (5,140 | ) | (1,427 | ) | ||||||
| Impairment of capitalized software assets | (5,006 | ) | - | (5,006 | ) | |||||||
| General and administrative expenses | (14,811 | ) | (15,477 | ) | 666 | |||||||
| Total operating expenses | (38,094 | ) | (27,818 | ) | (10,276 | ) | ||||||
| Loss from operations | (9,255 | ) | (9,156 | ) | (99 | ) | ||||||
| Interest expense - third parties | (4,578 | ) | - | (4,578 | ) | |||||||
| Interest expense - related parties | (1,438 | ) | - | (1,438 | ) | |||||||
| Other (expense) income, net | (454 | ) | 769 | (1,223 | ) | |||||||
| Total other (expense) income, net | (6,470 | ) | 769 | (7,239 | ) | |||||||
| Loss before income taxes | (15,725 | ) | (8,387 | ) | (7,338 | ) | ||||||
| Income tax benefit (expense) | 749 | (446 | ) | 1,195 | ||||||||
| Net loss | $ | (14,976 | ) | $ | (8,833 | ) | $ | (6,143 | ) | |||
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Revenue
We generate revenues primarily from providing cloud services and colocation services. Refer to Note 3. Revenue from Contracts with Customers for further information.
Cloud services revenue is derived from providing customers with access to high-performance computing (“HPC”) infrastructure, including GPU clusters optimized for AI workloads. Our contracts are structured as usage-based or committed-capacity agreements, typically with pricing based on the type and quantity of GPUs deployed, duration of use, and associated infrastructure. Key factors that impact cloud services revenue include the number and performance class of GPUs deployed, hardware utilization, power availability at hosting sites, and the timing of new customer onboarding.
Colocation services revenue is generated from leasing data center space, power, and related infrastructure to customers who operate their own hardware. These contracts are generally multi-year agreements with fixed monthly fees based on committed power capacity (typically measured in kilowatts). Factors that affect colocation revenue include timing of site development and energization, contracted power levels, and customer expansion activity.
Revenue from cloud services
In the fourth quarter of 2023, we established our cloud-based HPC graphics processing units services, which we term cloud services, a new business line to provide services to support generative AI workstreams. The Company commenced offering cloud services to customers in January 2024.
Our revenue from cloud services increased by $7.2 million, or 43.5%, to $23.8 million for the three months ended June 30, 2026 from $16.6 million for the three months ended June 30, 2025. The increase was primarily due to an increase in deployed GPU servers to new and existing customers in the second quarter of 2026. The decrease in our monthly GPU service revenue from the termination of our agreement with our Initial Customer was substantially offset by $12.3 million of termination fee revenue recorded, and therefore was not a significant driver of the change in revenue.
Revenue from colocation services
In the fourth quarter of 2024, we acquired Enovum which holds our data center business that provides customers with physical space, power, and cooling within data center facilities.
Our revenue from colocation services was $4.7 million and $1.7 million for the three months ended June 30, 2026 and 2025, respectively. The increase was primarily due to the MTL-3 site becoming fully operational and generating revenues beginning November 2025.
Cost of revenue
We incur cost of revenue from cloud services and colocation services.
The Company’s cost of revenue consists primarily of direct production costs associated with its core operations, excluding depreciation and amortization, which are separately stated in the Company’s condensed consolidated statements of operations. Specifically, these costs consist of: (i) cloud services operations — electricity costs, datacenter lease expense, GPU servers lease expense, third-party customer support fees and other relevant costs and (ii) colocation services — electricity costs, lease costs, data center employees’ wage expenses, and other relevant costs.
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Cost of revenue — cloud services
For the three months ended June 30, 2026 and 2025, the cost of revenue from cloud services was comprised of the following:
| For The Three Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Electricity costs | $ | 739 | $ | 599 | ||||
| Datacenter lease expenses | 1,578 | 1,366 | ||||||
| GPU servers lease expenses | 5,601 | 3,749 | ||||||
| Third-party customer support fees | 1,250 | - | ||||||
| Other costs | 795 | 799 | ||||||
| Total | $ | 9,963 | $ | 6,513 | ||||
Electricity costs. These expenses were incurred by the data centers for the HPC equipment and were closely correlated with the number of deployed GPU servers.
For the three months ended June 30, 2026, electricity costs increased by $0.1 million, or 23%, compared to the electricity costs incurred for the three months ended June 30, 2025. The increase primarily resulted from an increase in the number of GPU servers deployed.
Datacenter lease expenses. We entered into data center lease agreements for fixed monthly recurring costs.
For the three months ended June 30, 2026, data center lease expenses increased $0.2 million, or 16%, compared to the three months ended June 30, 2025, primarily due to four new leases that commenced in the first quarter of 2026, as well as an additional lease entered into during the second quarter of 2026.
GPU servers lease expenses. We entered into a GPU servers lease agreement to support our cloud services. The lease payment depends on the usage of the GPU servers.
For the three months ended June 30, 2026, GPU server lease expenses increased by $1.9 million, or 49%, compared to the GPU servers lease expenses incurred for the three months ended June 30, 2025. The increase primarily resulted from a one-time amount due upon finalizing a termination agreement with a GPU servers leasing partner, partially offset by a lower GPU server leasing rate on the newly onboarded customers.
Third-party customer support fees. We engaged a third party to provide customer support services.
For the three months ended June 30, 2026, third-party customer support fees were $1.3 million.
Cost of revenue — Colocation Services
In the fourth quarter of 2024, we acquired Enovum which provides colocation services. For the three months ended June 30, 2026 and 2025, the cost of revenue from colocation services was comprised of the following:
| For The Three Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Electricity costs | $ | 758 | $ | 270 | ||||
| Lease expenses | 70 | 156 | ||||||
| Wage expenses | 253 | 170 | ||||||
| Other costs | 666 | 92 | ||||||
| Total | $ | 1,747 | $ | 688 | ||||
Electricity costs. These expenses were closely correlated with the number of deployed servers hosted by the data center.
For the three months ended June 30, 2026, electricity costs increased by $0.5 million, or 181%, compared to the electricity costs incurred for the three months ended June 30, 2025. Since March 31, 2025, the Company has expanded its data center footprint, including the MTL-3 facility. The increase in electricity costs is primarily attributable to the MTL-3 facility, which was operational during the period ended June 30, 2026 but not operational during the period ended June 30, 2025.
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Lease expenses. These expenses were incurred by the data center for lease agreement for a fixed monthly recurring cost.
For the three months ended June 30, 2026, datacenter lease expenses decreased by $0.1 million, or 55%, compared to the datacenter lease expenses incurred for the three months ended June 30, 2025. The decrease primarily resulted from conclusion of the MTL-3 lease in the second quarter of 2026.
Wage expenses. These expenses represent the salaries and benefits of data center employees involved in the operation of our facilities.
For the three months ended June 30, 2026, wage expenses increased slightly compared to the three months ended June 30, 2025 due to additional employees hired following the IPO.
Depreciation and amortization expenses
For the three months ended June 30, 2026 and 2025, depreciation and amortization expenses were $6.6 million and $5.1 million, respectively, based on an estimated useful life of property, plant, and equipment and intangible assets. The increase in depreciation and amortization expenses is attributable to additional assets placed in service since June 30, 2025, specifically cloud equipment, resulting in higher expense being recognized.
Impairment of capitalized software assets
For the three months ended June 30, 2026 and 2025, impairment of capitalized software assets were $5.0 million and $nil, respectively, the Company determined that it would discontinue further investment in, and use of, its internally-developed software platform. As a result of this decision, effective June 4, 2026, the Company recorded an impairment charge of the remaining book value of $5.0 million during the three months ended June 30, 2026.
General and administrative expenses
For the three months ended June 30, 2026, our general and administrative expenses, totaling $14.8 million, were primarily comprised of share-based compensation expenses for employees of $3.4 million, salary and bonus expenses of $3.1 million, professional and consulting expenses of $3.8 million (including $0.3 million of share-based compensation), marketing expenses of $0.6 million, travel expenses of $0.2 million and other expenses of $3.4 million.
For the three months ended June 30, 2025, our general and administrative expenses, totaling $15.5 million, were primarily comprised of shared-based compensation expenses of $6.5 million, salary and bonus expenses of $1.3 million, professional and consulting expenses of $5.7 million, marketing expenses of $0.5 million, travel expenses of $0.2 million and other expenses of $1.3 million.
General and administrative expenses for the three months ended June 30, 2026 were slightly lower than those for the three months ended June 30, 2025, primarily due to lower share-based compensation and lower professional and consulting fees, mainly as a result of reduced consulting fees related to the TSA during the current period. These decreases were partially offset by higher salaries and bonus expense resulting from additional employees hired following the IPO, as well as higher bad debt expense related to the write-off of a portion of the outstanding accounts receivable associated with the termination agreement with a cloud services customer during the current period.
Income tax expenses
Provision for income taxes consists of federal, state and foreign income taxes. Our income tax provision for the six months ended June 30, 2026 is primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, and the valuation allowance applied to the Company’s deferred tax assets in Canada and Japan. We continue to maintain a valuation allowance against the deferred tax assets in Canada and Japan as the Company does not expect those deferred tax assets are “more likely than not” to be realized in the near future, particularly due to the uncertainty on macroeconomy, politics and profitability of the business.
Our future effective income tax rate depends on various factors, such as tax legislation, the geographic composition of our pre-tax income, the amount of our pre-tax income as business activities fluctuate, non-deductible expenses, non-taxable capital gain in certain jurisdiction, change of valuation allowance and the effectiveness of our tax planning strategies. The Organisation for Economic Co-operation and Development (“OECD”) has introduced a global minimum tax framework (“Pillar Two”) that generally applies to multinational enterprise groups with consolidated annual revenues of €750 million or more and is intended to ensure a minimum effective tax rate of 15% in each jurisdiction in which such groups operate. Certain jurisdictions have enacted, or are considering enacting, legislation implementing these rules. Based on the Company’s current consolidated revenue, for the six months ended June 30, 2026, the Company is not within the scope of the Pillar Two rules. However, the Company continues to monitor developments related to the implementation of these rules, and future growth or changes in the Company’s operations could result in the Company becoming subject to Pillar Two in future periods.
For more details on the Company’s tax profile, see Note 14. Income Taxes to our condensed consolidated financial statements.
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Results of operations for the six months ended June 30, 2026 and 2025
The following discussion summarizes the results of operations for the six months ended June 30, 2026 and 2025.. This information should be read together with our condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q.
| For The Six Months Ended June 30, | Variance in | |||||||||||
| 2026 | 2025 | Amount | ||||||||||
| Revenue | $ | 50,762 | $ | 35,424 | $ | 15,338 | ||||||
| Operating costs and expenses | ||||||||||||
| Cost of revenue (exclusive of depreciation shown below) | (20,441 | ) | (13,819 | ) | (6,622 | ) | ||||||
| Depreciation and amortization expenses | (13,008 | ) | (8,970 | ) | (4,038 | ) | ||||||
| Impairment of capitalized software assets | (5,006 | ) | - | (5,006 | ) | |||||||
| General and administrative expenses | (32,582 | ) | (19,754 | ) | (12,828 | ) | ||||||
| Total operating expenses | (71,037 | ) | (42,543 | ) | (28,494 | ) | ||||||
| Loss from operations | (20,275 | ) | (7,119 | ) | (13,156 | ) | ||||||
| Net gain from disposal of property and equipment | 1,822 | - | 1,822 | |||||||||
| Interest expense - third parties | (6,573 | ) | - | (6,573 | ) | |||||||
| Interest expense - related parties | (1,438 | ) | - | (1,438 | ) | |||||||
| Other (expense) income, net | (220 | ) | 754 | (974 | ) | |||||||
| Total other (expense) income, net | (6,409 | ) | 754 | (7,163 | ) | |||||||
| Loss before income taxes | (26,684 | ) | (6,365 | ) | (20,319 | ) | ||||||
| Income tax expense | (334 | ) | (1,041 | ) | 707 | |||||||
| Net loss | $ | (27,018 | ) | $ | (7,406 | ) | $ | (19,612 | ) | |||
Revenue
We generate revenues primarily from providing cloud services and colocation services. Refer to Note 3. Revenue from Contracts with Customers for further information.
Cloud services revenue is derived from providing customers with access to high-performance computing infrastructure, including GPU clusters optimized for AI workloads. Our contracts are structured as usage-based or committed-capacity agreements, typically with pricing based on the type and quantity of GPUs deployed, duration of use, and associated infrastructure. Key factors that impact cloud services revenue include the number and performance class of GPUs deployed, hardware utilization, power availability at hosting sites, and the timing of new customer onboarding.
Colocation services revenue is generated from leasing data center space, power, and related infrastructure to customers who operate their own hardware. These contracts are generally multi-year agreements with fixed monthly or annual fees based on committed power capacity (typically measured in kilowatts). Factors that affect colocation revenue include timing of site development and energization, contracted power levels, and customer expansion activity.
Revenue from cloud services
In the fourth quarter of 2023, we established our cloud-based HPC graphics processing units services, which we term cloud services, a new business line to provide cloud services to support generative AI workstreams. The Company commenced offering cloud services to customers in January 2024.
Our revenue from cloud services increased by $9.1 million, or 29.1%, to $40.6 million for the six months ended June 30, 2026 from $31.4 million for the six months ended June 30, 2025. The increase was primarily due to an increase in deployed GPU servers to existing customers in the first and second quarter of 2026. The decrease in our monthly GPU service revenue from the termination of our agreement with our Initial Customer was substantially offset by $12.3 million of termination fee revenue recorded, and therefore was not a significant driver of the change in revenue.
Revenue from colocation services
In the fourth quarter of 2024, we acquired Enovum which provides customers with physical space, power, and cooling within data center facilities.
Our revenue from colocation services was $9.5 million and $3.4 million for the six months ended June 30, 2026 and 2025, respectively. The increase was primarily due to the MTL-3 site becoming fully operational and generating revenues beginning November 2025.
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Cost of revenue
We incur cost of revenue from cloud services and colocation services.
The Company’s cost of revenue consists primarily of direct production costs associated with its core operations, excluding depreciation and amortization, which are separately stated in the Company’s consolidated statements of operations. Specifically, these costs consist of: (i) cloud services operations — electricity costs, datacenter lease expense, GPU servers lease expense, third-party customer support fees and other relevant costs and (ii) colocation services — electricity costs, lease costs, data center employees’ wage expenses, and other relevant costs.
Cost of revenue — cloud services
For the six months ended June 30, 2026 and 2025, the cost of revenue from cloud services was comprised of the following:
| For The Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Electricity costs | $ | 1,644 | $ | 1,189 | ||||
| Datacenter lease expenses | 2,974 | 2,640 | ||||||
| GPU servers lease expenses | 9,316 | 7,497 | ||||||
| Third-party customer support fees | 1,398 | - | ||||||
| Other costs | 1,410 | 1,293 | ||||||
| Total | $ | 16,742 | $ | 12,619 | ||||
Electricity costs. These expenses were incurred by the data centers for the HPC equipment and were closely correlated with the number of deployed GPU servers.
For the six months ended June 30, 2026, electricity costs increased by $0.5 million, or 38%, compared to the electricity costs incurred for the six months ended June 30, 2025. The increase primarily resulted from an increase in the number of deployed GPU servers.
Datacenter lease expenses. We entered into data center lease agreements for fixed monthly recurring costs.
For the six months ended June 30, 2026, data center lease expenses increased $0.3 million, or 13%, compared to the six months ended June 30, 2025, primarily due to four new leases that commenced in the first quarter of 2026, as well as an additional lease entered into during the second quarter of 2026.
GPU servers lease expenses. We entered into a GPU servers lease agreement to support our cloud services. The lease payment depends on the usage of the GPU servers.
For the six months ended June 30, 2026, GPU server lease expenses increased $1.8 million, or 24%, compared to the GPU server lease expenses incurred for the six months ended June 30, 2025. The increase primarily resulted from a one time amount due upon finalizing a termination agreement with a customer, partially offset by a lower GPU server leasing rate on the newly onboarded customers.
Third-party customer support fees. We engaged a third party to provide customer support services.
For the six months ended June 30, 2026, third-party customer support fees were $1.4 million.
Cost of revenue — Colocation Services
In the fourth quarter of 2024, we acquired Enovum which provides colocation services. For the six months ended June 30, 2026 and 2025, the cost of revenue from colocation services was comprised of the following:
| For The Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Electricity costs | $ | 1,589 | $ | 493 | ||||
| Lease expenses | 537 | 307 | ||||||
| Wage expenses | 458 | 170 | ||||||
| Other costs | 1,115 | 230 | ||||||
| Total | $ | 3,699 | $ | 1,200 | ||||
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Electricity costs. These expenses were closely correlated with the number of deployed servers hosted by the data center.
For the six months ended June 30, 2026, electricity costs increased by $1.1 million, or 222%, compared to the electricity costs incurred for the six months ended June 30, 2025. Since March 31, 2025, the Company has expanded its data center footprint, including the MTL-3 facility. The increase in electricity costs is primarily attributable to the MTL-3 facility, which was operational during the period ended June 30, 2026 but not operational during the period ended June 30, 2025.
Lease expenses. These expenses were incurred by the data center for lease agreement for a fixed monthly recurring cost.
For the six months ended June 30, 2026, datacenter lease expenses increased by $0.2 million, or 75%, compared to the datacenter lease expenses incurred for the six months ended June 30, 2025. The increase primarily resulted from the new MTL-3 lease entered in the second quarter of 2025.
Wage expenses. These expenses represent the salaries and benefits of data center employees involved in the operation of our facilities.
For the six months ended June 30, 2026, wage expenses increased by $0.3 million, or 169%, compared to the six months ended June 30, 2025. The increase was primarily attributable to the operations of MTL-3 site.
Depreciation and amortization expenses
For the six months ended June 30, 2026 and 2025, depreciation and amortization expenses were $13.0 million and $9.0 million, respectively, based on an estimated useful life of property, plant, and equipment and intangible assets. The increase in depreciation and amortization expenses is attributable to additional assets placed in service, resulting in higher expense being recognized.
Impairment of capitalized software assets
For the six months ended June 30, 2026 and 2025, impairment of capitalized software assets were $5.0 million and $nil, respectively. In the second quarter of 2026, the Company determined that it would discontinue further investment in, and use of, its internally-developed software platform. As a result of this decision, effective June 4, 2026, the Company recorded an impairment charge of the remaining book value of $5.0 million during the six months ended June 30, 2026.
General and administrative expenses
For the six months ended June 30, 2026, our general and administrative expenses, totaling $32.6 million, were primarily comprised of share-based compensation expenses of $8.5 million, salary and bonus expenses of $5.3 million, professional and consulting expenses of $9.9 million (including share-based compensation expenses of $2.4 million), marketing expenses of $1.1 million, commission expenses of $0.1 million, travel expenses of $0.2 million and other expenses of $6.4 million.
For the six months ended June 30, 2025, our general and administrative expenses, totaling $19.8 million, were primarily comprised of share-based compensation expenses of $6.7 million, salary and bonus expenses of $2.5 million, professional and consulting expenses of $7.4 million, marketing expenses of $0.8 million, travel expenses of $0.3 million and other expenses of $2.1 million.
The General and administrative expenses during the six months ended June 30, 2026 were higher compared to the six months ended June 30, 2025 primarily attributable to higher share-based compensation. In addition, salary and bonus expenses increased due to additional employees hired following the IPO. Professional and consulting fees were also higher, reflecting RSUs granted to consultants and consulting costs charged by Bit Digital to WhiteFiber per the TSA agreement. The increase further included start-up costs that do not meet the criteria for capitalization. These increases reflect the Company’s expanded operations and personnel base following the IPO and continued investment in infrastructure and technology development.
Income tax expenses
Provision for income taxes consists of federal, state and foreign income taxes. Our income tax provision for the six months ended June 30, 2026 is primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, and the valuation allowance applied to the Company’s deferred tax assets in Canada and Japan. We continue to maintain a valuation allowance against the deferred tax assets in Canada and Japan as the Company does not expect those deferred tax assets are “more likely than not” to be realized in the near future, particularly due to the uncertainty on macroeconomy, politics and profitability of the business.
Our future effective income tax rate depends on various factors, such as tax legislation, the geographic composition of our pre-tax income, the amount of our pre-tax income as business activities fluctuate, non-deductible expenses, non-taxable capital gain in certain jurisdiction, change of valuation allowance and the effectiveness of our tax planning strategies. The Organization for Economic Co-operation and Development (“OECD”) has introduced a global minimum tax framework (“Pillar Two”) that generally applies to multinational enterprise groups with consolidated annual revenues of €750 million or more and is intended to ensure a minimum effective tax rate of 15% in each jurisdiction in which such groups operate. Certain jurisdictions have enacted, or are considering enacting, legislation implementing these rules. Based on the Company’s current consolidated revenue, for the three months ended June 30, 2026, the Company is not within the scope of the Pillar Two rules. However, the Company continues to monitor developments related to the implementation of these rules, and future growth or changes in the Company’s operations could result in the Company becoming subject to Pillar Two in future periods.
For more details on the Company’s tax profile, see Note 14. Income Taxes to our condensed consolidated financial statements.
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Discussion of Certain Balance Sheet Items as of June 30, 2026 and December 31, 2025
The following table sets forth selected information from our condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025. This information should be read together with our condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q.
| June 30, 2026 | December 31, 2025 | Variance in Amount | ||||||||||
| ASSETS | ||||||||||||
| Current Assets | ||||||||||||
| Cash and cash equivalents | $ | 56,056 | $ | 114,441 | $ | (58,385 | ) | |||||
| Restricted cash | 4,313 | 3,857 | 456 | |||||||||
| Accounts receivable, net | 23,243 | 23,922 | (679 | ) | ||||||||
| Net investment in lease - current, net | 2,573 | 4,261 | (1,688 | ) | ||||||||
| Other current assets, net | 21,184 | 21,269 | (85 | ) | ||||||||
| Total Current Assets | 107,369 | 167,750 | (60,381 | ) | ||||||||
| Non-current assets | ||||||||||||
| Deposits for property, plant, and equipment | 33,400 | 52,738 | (19,338 | ) | ||||||||
| Property, plant, and equipment, net | 651,085 | 336,639 | 314,446 | |||||||||
| Goodwill | 19,402 | 20,146 | (744 | ) | ||||||||
| Intangible assets, net | 12,001 | 12,821 | (820 | ) | ||||||||
| Operating lease right of use assets, net | 16,614 | 11,574 | 5,040 | |||||||||
| Finance lease right of use assets, net | - | 12,602 | (12,602 | ) | ||||||||
| Net investment in lease - non-current, net | 8,375 | 9,687 | (1,312 | ) | ||||||||
| Investment security | 1,000 | 1,000 | - | |||||||||
| Deferred tax assets | 7,523 | 2,594 | 4,929 | |||||||||
| Other non-current assets, net | 24,123 | 23,801 | 322 | |||||||||
| Total Non-Current Assets | 773,523 | 483,602 | 289,921 | |||||||||
| Total Assets | $ | 880,892 | $ | 651,352 | $ | 229,540 | ||||||
| LIABILITIES | ||||||||||||
| Current Liabilities | ||||||||||||
| Accounts payable | $ | 13,347 | $ | 8,101 | $ | 5,246 | ||||||
| Current portion of deferred revenue | 17,909 | 7,997 | 9,912 | |||||||||
| Current portion of operating lease liabilities | 5,158 | 5,208 | (50 | ) | ||||||||
| Current portion of finance lease liabilities | - | 12,911 | (12,911 | ) | ||||||||
| Short-term debt and current portion of long-term debt - third parties, net | 28,436 | - | 28,436 | |||||||||
| Short-term debt - related parties, net | 29,306 | - | 29,306 | |||||||||
| Income tax payable | 289 | - | 289 | |||||||||
| Other payables and accrued liabilities | 41,555 | 48,308 | (6,753 | ) | ||||||||
| Total Current Liabilities | 136,000 | 82,525 | 53,475 | |||||||||
| Non-current portion of deferred revenue | 125,201 | 71,554 | 53,647 | |||||||||
| Non-current portion of operating lease liabilities | 10,218 | 5,277 | 4,941 | |||||||||
| Convertible note payable, net | 222,594 | - | 222,594 | |||||||||
| Long-term debt - third parties, net | 25,464 | - | 25,464 | |||||||||
| Deferred tax liabilities | 9,808 | 5,699 | 4,109 | |||||||||
| Other long-term liabilities | 6,279 | - | 6,279 | |||||||||
| Amounts due to related parties | 7,942 | 3,833 | 4,109 | |||||||||
| Total non-current liabilities | 407,506 | 86,363 | 321,143 | |||||||||
| Total Liabilities | $ | 543,506 | $ | 168,888 | $ | 374,618 | ||||||
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Cash and cash equivalents
Cash and cash equivalents primarily consist of funds deposited with banks, which are highly liquid and are unrestricted to withdrawal or use. The total balance of cash and cash equivalents were $56.1 million and $114.4 million as of June 30, 2026 and December 31, 2025, respectively. The decrease was primarily attributable to $318.6 million of net cash used in investing activities, partially offset by $89.1 million of net cash provided by operating activities and $171.9 million of net cash provided by financing activities, coupled with a $0.3 million unfavorable effect of foreign currency translation.
Restricted cash
Restricted cash represents cash balances that support an outstanding letter of credit to third parties related to security deposits and are restricted from withdrawal. As of June 30, 2026 and December 31, 2025, the fixed maximum amount guaranteed under the letter of credit was $4.3 million and $3.9 million, respectively.
Accounts receivable, net
Accounts receivable, net consists of amounts due from our customers. The total balance of accounts receivable, net was $23.2 million and $23.9 million as of June 30, 2026 and December 31, 2025, respectively. The decrease in the balance of accounts receivable is attributable primarily to the timing of collections and write-offs relating to one of our discontinued customers.
Net investment in lease, net
Net investment in lease, net represents the present value of the lease payments not yet received from lessees. The current and non-current balance of net investment in lease was $2.6 million and $8.4 million, respectively as of June 30, 2026 due to sales-type lease agreements as a lessor for its cloud service equipment. The current and non-current balance of net investment in lease was $4.3 million and $9.7 million, respectively as of December 31, 2025. The decrease in the balance of net investment in lease was a result of the termination of a sales-type lease totaling $1.4 million and $2.3 million of lease payments collected from equipment leasing customers, partially offset by $0.7 million in interest income earned.
Other current assets, net
Other current assets, net were $21.2 million and $21.3 million as of June 30, 2026 and December 31, 2025, respectively. The decrease in the balance of other current assets was mainly attributable to a decrease in prepaid consulting services of $0.9 million, and prepayment to third parties of $0.8 million, partially offset by $1.2 million in receivable from third parties, $0.4 million in funds held in escrow, and $0.2 million in deferred contract costs.
Deposits for property, plant, and equipment
The deposits for property, plant, and equipment consists of advance payments for property, plant and equipment. The balance is derecognized once the control of the property, plant, and equipment is transferred to and obtained by us.
Compared with December 31, 2025, the balance as of June 30, 2026 decreased by $19.3 million, mainly due to the reclassification of property and equipment of $57.8 million offset by prepayment of $38.4 million for property and equipment.
Property, plant, and equipment, net
Property, plant, and equipment primarily consist of service equipment used in our Cloud services and Colocation businesses, internally developed software used in our Cloud services business, and construction in progress (“CIP”) representing assets received but not yet put into service in our Cloud services and Colocation businesses.
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As of June 30, 2026, the Cloud service equipment had a net book value, including CIP, of $95.8 million. As of December 31, 2025, the Cloud service equipment and internally developed software had a net book value, including CIP, of $124.0 million. Compared with December 31, 2025, the balance as of June 30, 2026 decreased by $28.2 million, mainly due to the sale of H200 servers with carrying value of $24.3 million as well as the one-time write-off due to the discontinuation of the internally developed software operations in the amount of $5.0 million.
As of June 30, 2026, the Colocation service equipment had a net book value, including CIP, of $556.3 million. As of December 31, 2025, the Colocation service equipment had a net book value, including CIP, of $212.6 million. Compared with December 31, 2025, the balance as of June 30, 2026 increased by $343.7 million, mainly due to $322.5 million of development costs for the construction of NC-1 facility, $18.2 million for the acquisition of the MTL-3 property as well as infrastructure, CIP and building improvement costs incurred of $4.7 million for MTL-3 in Saint-Jerome and of $1.9 million for MTL-1 in Montreal, in part, by an increase in accumulated depreciation of $2.1 million as well as a foreign-exchange impact of $3.5 million.
Operating and finance lease right-of-use assets and lease liabilities
As of June 30, 2026, our operating and finance right-of-use assets and lease liabilities were $16.6 million and $15.4 million, respectively. As of December 31, 2025, the Company’s operating and finance right-of-use assets and lease liabilities were $24.2 million and $23.4 million, respectively.
The decrease in right-of-use assets of $7.6 million was due to the amortization of the right-of-use assets totaling $3.1 million for the six months ended June 30, 2026 and the reduction of $12.6M resulting from the Company’s acquisition of the underlying leased assets under its existing finance lease, which was reclassified to property and equipment, net, partially offset by the addition of $8.3 million for eight operating leases.
The decrease in lease liabilities of $8.0 million was primarily due to the lease payments totaling $16.6 million for the six months ended June 30, 2026, partially offset by the addition of $8.3 million for eight operating leases.
Other non-current assets, net
Other non-current assets, net were $24.1 million as of June 30, 2026, compared to $23.8 million as of December 31, 2025, an increase of $0.3 million. The increase was primarily due to a $0.3 million increase in deferred financing costs, $0.2 million increase in deposits, and $0.8 million increase in prepaid warranty, partially offset by a $1.2 million decrease in deferred contract costs which was reclassified to current.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in relation to the Enovum acquisition. As of June 30, 2026 and December 31, 2025, the Company recorded goodwill in the amount of $19.4 million and $20.1 million, respectively, with the change attributable to foreign currency translation adjustments.
Intangible assets, net
Intangible assets pertain to customer relationships acquired in connection with the acquisition of Enovum. Refer to Note 13. Goodwill and Intangible Assets for further information. As of June 30, 2026 and December 31, 2025, the total balance of intangible assets was $12.0 million and $12.8 million, respectively relating to amortization during the period.
Accounts payable
Accounts payable primarily consists of amounts due for costs related to HPC services. Compared with December 31, 2025, the balance of accounts payable increased by $5.2 million in the six months ended June 30, 2026, largely due to a one-time amount due upon finalizing a termination agreement with a GPU servers leasing partner in the quarter, and timing of unpaid bills for our cloud services in the six months ended June 30, 2026.
Deferred revenue
As of June 30, 2026, the Company’s current and non-current portion of deferred revenue was $17.9 million and $125.2 million, respectively, compared to $8.0 million and $71.6 million, respectively, as of December 31, 2025. The increase in deferred revenue of $63.6 million reflects $72.6 million prepayments from customers for cloud services and data center services to be rendered in the future, partially offset by the recognition of $1.4 million in revenue related to the successful fulfillment of performance obligations from our cloud services and data center services as well as a decrease due to net settlement of receivables and liabilities with a customer upon contract termination.
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Other payables and accrued liabilities
Other payables and accrued liabilities were $41.6 million as of June 30, 2026, compared to $48.3 million as of December 31, 2025, a decrease of $6.8 million. The decrease was primarily due to the decrease in payables of $19.4 million which primarily related to the NC-1 facility while the remaining related from unpaid invoices to our vendors in HPC due to the timing of invoicing and cash payments. In addition, there was a decrease relating to bonus payable of $0.9 million. These decreases were partially offset by an increase in deferred share-based compensation liability of $4.7 million, fixed asset payables of $5.1 million, interest payable of $5.6 million, short-term customer deposits of $0.6 million and a write-off in the amount of $1.4 million in commissions payable relating to the termination agreement of one of our customers.
Short-term and long-term debt, net
Short-term and long-term debt, net consists of amounts borrowed under several credit facilities entered into by the Company and its subsidiaries during the six months ended June 30, 2026, including term loan facilities and a Delayed Draw Term Loan Facility (including the related B. Riley Facility) used to finance the Company’s operations.
As of June 30, 2026 and December 31, 2025, the total balance of our short-term and long-term debt, net was $83.2 million and $nil, respectively, with the change attributable to proceeds drawn under the new facilities during the period, net of related debt issuance costs and discounts. Refer to Note 10. Debt, for more information.
Convertible note payable, net
The convertible notes payable relates to the purchase agreement entered into by the Company in connection with the issuance of its 2031 Notes. In January 2026, the Company issued $230.0 million aggregate principal amount of 4.50% convertible senior notes due 2031.
As of June 30, 2026 and December 31, 2025, the carrying amount of the Company’s convertible note payable was $222.6 million and $nil, respectively. Refer to Note 10. Debt, for more information.
Other long-term liabilities
As of June 30, 2026 and December 31, 2025, the Company’s other long-term liabilities were $6.3 million and $nil, respectively. The increase of $6.3 million was primarily attributable to the long-term customer deposits.
Non-GAAP Financial Measures
In addition to consolidated U.S. GAAP financial measures, we consistently evaluate our use of and calculation of the non-GAAP financial measures, such as EBITDA and Adjusted EBITDA. These non-GAAP financial measures have not been calculated in accordance with GAAP and should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results. In addition, EBITDA and Adjusted EBITDA should not be construed as indicators of our operating performance, liquidity or cash flows generated by operating, investing and financing activities, as there may be significant factors or trends that they fail to address. We caution investors that non-GAAP financial information, by its nature, departs from traditional accounting conventions. Therefore, its use can make it difficult to compare our current results with our results from other reporting periods and with the results of other companies.
EBITDA is computed as net income before interest, taxes, depreciation, and amortization. Adjusted EBITDA is a financial measure defined as our EBITDA adjusted to eliminate the effects of certain non-cash and/or non-recurring items that do not reflect our ongoing strategic business operations, which management believes results in a performance measurement that represents a key indicator of the Company’s core business operations. The adjustments currently include non-cash expenses such as share-based compensation expenses.
We believe Adjusted EBITDA can be an important financial measure because it allows management, investors, and our board of directors to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period-to-period by making such adjustments.
Adjusted EBITDA is provided in addition to and should not be considered to be a substitute for, or superior to net income, the comparable measures under U.S. GAAP. Further, Adjusted EBITDA should not be considered as an alternative to revenue growth, net income, diluted earnings per share or any other performance measure derived in accordance with U.S. GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. Adjusted EBITDA has limitations as an analytical tool, and you should not consider such measures either in isolation or as substitutes for analyzing our results as reported under U.S. GAAP.
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Reconciliations of Adjusted EBITDA to the most comparable U.S. GAAP financial metric for the three months ended and six months ended June 30, 2026 and 2025 are presented in the table below:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Reconciliation of non-GAAP (loss) income from operations: | ||||||||||||||||
| Net loss | $ | (14,976 | ) | $ | (8,833 | ) | $ | (27,018 | ) | $ | (7,406 | ) | ||||
| Depreciation and amortization expenses | 6,567 | 5,140 | 13,008 | 8,970 | ||||||||||||
| Interest expense - third parties | 4,578 | - | 6,573 | - | ||||||||||||
| Interest expense - related parties | 1,438 | - | 1,438 | - | ||||||||||||
| Income tax (benefit) expense | (749 | ) | 446 | 334 | 1,041 | |||||||||||
| EBITDA | (3,142 | ) | (3,247 | ) | (5,665 | ) | 2,605 | |||||||||
| Adjustments: | ||||||||||||||||
| Impairment of capitalized software assets | 5,006 | - | 5,006 | - | ||||||||||||
| Net gain from disposal of property, plant and equipment | - | - | (1,822 | ) | - | |||||||||||
| Share-based compensation expenses | 3,671 | 6,529 | 11,017 | 6,667 | ||||||||||||
| Adjusted EBITDA | $ | 5,535 | $ | 3,282 | $ | 8,536 | $ | 9,272 | ||||||||
Liquidity and capital resources
As of June 30, 2026, our principal sources of liquidity were cash and cash equivalents of $56.1 million, and accounts receivable, net of $23.2 million.
Working capital is the difference between the Company’s current assets and current liabilities. As of June 30, 2026, we had working capital deficit of $28.6 million as compared with working capital of $85.2 million as of December 31, 2025. However, included in current liabilities is $17.9 million of current deferred revenue and $29.3 million of related party short-term debt from Bit Digital.
The working capital deficit was primarily driven by the classification of certain indebtedness as current liabilities due to their contractual maturities within the next twelve months, including amounts outstanding under the indebtedness described below. We intend to repay, extend, or refinance these obligations with longer-term or permanent financing. Furthermore, in assessing our liquidity position, we considered our recent operating performance and cash generation. The Company generated positive adjusted EBITDA of $5.5 million and $8.5 million for the three and six months ended June 30, 2026, respectively. See Non-GAAP Financial Measures for further details. In addition, we generated positive cash flows from operating activities of $89.1 million for the six months ended June 30, 2026. These results demonstrate our ability to generate positive operating cash flows from our existing operations and represent additional factors considered in our assessment of our ability to meet our liquidity needs.
Prior to the Reorganization, as part of Bit Digital, the Company relied on Bit Digital to meet its working capital and financing requirements prior to generating revenue. We had primarily funded our operations through operating cash flows and equity financing provided by Bit Digital via public and private securities offerings of Bit Digital’s ordinary shares.
Following the Reorganization, our capital structure and sources of liquidity changed from our historical capital structure because we are no longer participating in Bit Digital’s cash management process. The Company’s ability to fund its operating needs in the future will depend on the ongoing ability to generate positive cash flow from our operations and raise capital in the capital markets on our own. Based upon our history of generating strong cash flows and our demonstrated ability to secure financing when needed, we believe that we will be able to meet our short-term liquidity needs.
Convertible note
In January 2026, we issued $230.0 million aggregate principal amount of 4.50% convertible senior notes due 2031, resulting in net proceeds of approximately $102.1 million after deducting the Zero Strike Call Option premium, initial purchasers’ discounts and offering expenses. The issuance enhances our liquidity and provides additional capital to fund upcoming development projects, including construction activities and other strategic growth initiatives.
The 2031 Notes bear interest at 4.500% per annum, payable semiannually in arrears on February 1 and August 1 of each year, beginning August 1, 2026, and mature on February 1, 2031, unless earlier converted, redeemed, or repurchased. The Notes increase our long-term indebtedness and will require annual cash interest payments of approximately $10.4 million.
Iceland facility agreement
WhiteFiber Iceland ehf., a subsidiary of the Company, entered into a secured term loan facility with Landsbankinn hf. in March 2026, providing up to $20 million of available borrowings. The Facility bears interest at a floating rate per annum equal to the sum of (i) three month CME Term SOFR (or any successor benchmark), and (ii) an applicable margin of 4.25% per annum and has an initial two-year term, extendable up to four years. The loan is guaranteed by WhiteFiber, Inc. and WhiteFiber AI, Inc.
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The Facility allows for up to two drawdowns (minimum $5 million each), with quarterly principal repayments beginning three months after initial borrowing. On April 24, 2026, the Company drew down $18 million under the Facility. As of June 30, 2026, $18 million was outstanding under the Facility, with an effective interest rate of 10.64%, which includes the stated interest rate of 7.92%. The Facility is secured by first-ranking security over (i) 100% of the Company’s shareholding in WhiteFiber Iceland ehf., (ii) designated assets (including GPU servers, CPU servers, IB switches and equipment accessories) at the date of the agreement, and (iii) material assets acquired thereafter (to be secured within 60 days), in each case until all obligations are fully satisfied.
Royal Bank of Canada credit facility
On July 6, 2026, the Company entered into a syndicated credit agreement. The Syndicated Credit Facility Agreement provides for an aggregate of up to approximately CAD $115 million (approximately $80.8 million) to refinance the Amended Credit Agreement and finance its data centers business. The agreement also includes an accordion feature that permits the Company to increase by up to an additional CAD $25 million (approximately $17.7 million) to refinance the Amended Credit Agreement, subject to the satisfaction of specified conditions. The Syndicated Credit Facility Agreement is a non-revolving facility, and amounts repaid or prepaid may not be reborrowed.
On July 15, 2026 the Company drew a CORRA loan amount of CAD $36.8 million (approximately $26.2 million) under the Syndicated Credit Facility Agreement.
Delayed Draw Term Loan Facility
On May 20, 2026, Enovum NC-1 Venture, LLC, a subsidiary of the Company, entered into a Delayed Draw Term Loan Facility and Security Agreement with Bit Digital Capital, Inc., a subsidiary of Bit Digital, providing up to $100 million of available borrowings (which may be increased to $150 million), to support near-term growth initiatives in both its data centers and cloud services businesses. The facility is guaranteed by WhiteFiber Operating Partnership, LP and is secured by a first-ranking security interest over 100% of the Company’s shareholding in Enovum NC-1 Topco, Inc., subject to a collateral step-down upon the Borrower obtaining permanent financing for NC-1.
The Delayed Draw Term Loan Facility bears interest at an initial rate of 9.5% per annum, subject to a step-down upon completion of certain development and leasing milestones at the NC-1 facility, and includes a MOIC Amount payable at maturity. On May 26, 2026, the Company drew down $50.0 million in two tranches ($20.0 million and $30.0 million) at an original issue discount of 3%, with each tranche maturing in 90 days (extendable by 30 days by mutual agreement). Concurrent with funding, the $20.0 million tranche was assigned by Bit Digital to B. Riley Securities, Inc. (see “B. Riley Facility” below), leaving $30.0 million outstanding under the Delayed Draw Term Loan Facility. As of June 30, 2026, the Delayed Draw Term Loan Facility had a net carrying value of $29.3 million and an effective interest rate of 50.6%, which exceeded the contractual rate due to the inclusion of the MOIC payment and the facility’s short-term nature. Subsequent to quarter end, on July 27, 2026 and July 31, 2026, the Company drew down an additional $20.0 million and $10.0 million, respectively, each with a 180-day maturity, extendable by mutual agreement of the parties. The Delayed Draw Term Loan Facility provides the Company with near-term capital while it pursues longer-term permanent financing.
B. Riley Facility
On May 26, 2026, Bit Digital assigned to B. Riley Securities, Inc. a $20.0 million note originally issued to Enovum NC-1 Venture, LLC under the Delayed Draw Term Loan Facility described above. As of June 30, 2026, the B. Riley Facility had a net carrying value of $19.4 million and an effective interest rate of 50.6%, which, consistent with the Delayed Draw Term Loan Facility, exceeded the contractual rate due to the MOIC payment and the facility’s short-term nature. Together, the Delayed Draw Term Loan Facility and B. Riley Facility provide the Company with additional short-term capital to support ongoing development activities.
NC-1 Project Financing Update
The Company has entered into exclusivity with a consortium of lenders in connection with a proposed secured financing for its NC-1 project. The parties have commenced diligence and are negotiating definitive documentation, and are working toward closing, subject to customary approvals and conditions. There can be no assurance that the financing will be completed on favorable terms or at all. If completed, we expect the financing would return a significant portion of our invested capital to the balance sheet for redeployment into future development.
Our development pipeline is capital intensive, and depending on construction costs, leasing pace, and financing market conditions, our existing capital resources may not be sufficient to fund both this pipeline and our near-term debt maturities without accessing additional capital, whether through indebtedness, equity or equity-linked securities, project-level financing, or otherwise. Our future capital requirements will depend on many factors, including our ability to refinance or extend near-term debt maturities described above, the revenue growth rate, the success of future product development and capital investment required, and the timing and extent of spending to support further sales and marketing and research and development efforts. In addition, we expect to incur additional costs as a result of operating as a public company. In the event that additional financing is required from outside sources, we cannot be sure that any additional financing will be available to us on acceptable terms if at all. If we are unable to raise additional capital when desired, our business, operating results, and financial condition could be adversely affected.
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Cash flows
| For The Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Net Cash Provided by (Used in) Operating Activities | $ | 89,105 | $ | (6,833 | ) | |||
| Net Cash Used in Investing Activity | (318,630 | ) | (130,961 | ) | ||||
| Net Cash Provided by Financing Activity | 171,927 | 142,723 | ||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | (57,598 | ) | 4,929 | |||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (331 | ) | (203 | ) | ||||
| Cash, cash equivalents and restricted cash, beginning of period | 118,298 | 15,405 | ||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 60,369 | $ | 20,131 | ||||
Operating Activity
Net cash provided by operating activities was $89.1 million for the six months ended June 30, 2026, derived mainly from (i) a net loss of $27.0 million for the six months ended June 30, 2026 adjusted for depreciation and amortization expenses of property and equipment of $13.0 million, amortization of discount on convertible note issued of $0.5 million, amortization of discount on our third party and related party debt of $0.8 million, share-based compensation of $11.0 million, impairment of capitalized software assets of $5.0 million, gain from disposal of property, plant, and equipment of $1.8 million, and current expected credit losses of $2.2 million and a (ii) net changes in our operating assets and liabilities, principally comprising of an increase to other assets of $0.3 million, a decrease in right-of-use assets of $2.8 million, an increase in deferred revenue of $63.6 million, a decrease in lease liabilities of $3.1 million, an increase in accounts receivable of $1.6 million, a decrease in net investment in lease of $2.0 million, an increase in accounts payable of $5.3 million, an increase of income tax payable of $0.3 million, an increase in other payables and accrued liabilities of $6.3 million, an increase of other long-term liabilities of $6.3 million, a decrease in deferred tax liabilities of $0.7 million, and an increase in amounts due to related parties of $4.6 million.
Net cash used in operating activities was $6.8 million for the six months ended June 30, 2025, derived mainly from (i) a net loss of $7.4 million for the six months ended June 30, 2025 adjusted for depreciation expenses of property and equipment of $9.0 million and (ii) net changes in our operating assets and liabilities, principally comprising of a decrease in deferred revenue of $19.0 million, a decrease in other current assets of $3.3 million, an increase in accounts receivable of $1.2 million, a decrease in accounts payable of $1.1 million, a decrease in other long-term liabilities of $0.4 million, an increase in other payables and accrued liabilities of $8.5 million, a decrease in net investment in lease of $1.3 million, a decrease in lease liability of $2.2 million, and an increase in deferred tax liability of $1.0 million.
Investing Activity
Net cash used in investing activity was $318.6 million for the six months ended June 30, 2026, attributable to purchases of and deposits made for property, plant, and equipment of $344.7 million, partially offset by proceeds from disposal of property, plant and equipment of $26.1 million.
Net cash used in investing activity was $131.0 million for the six months ended June 30, 2025, attributable to purchases of and deposits made for property, plant, and equipment of $131.0 million.
Financing Activity
Net cash provided by financing activity was $171.9 million for the six months ended June 30, 2026, attributable to net proceeds from issuance of convertible debt of $222.1 million, net proceeds from issuance of debt – third parties of $53.3 million, net proceeds from issuance of debt – related parties of $29.1 million, partially offset by purchase of zero-strike call option of $120.0 million, and repayment of finance lease liabilities of $12.6 million.
Net cash provided by financing activity was $142.7 million for the six months ended June 30, 2025, attributable to net transfers from parent of $142.7 million.
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Off-Balance Sheet Arrangements
During the periods presented, we did not have any off-balance sheet arrangements.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements. These financial statements are prepared in accordance with U.S. GAAP, which requires the Company to make estimates and assumptions that affect the reported amounts of our assets, liabilities, revenues, and expenses, to disclose contingent assets and liabilities on the dates of the condensed consolidated financial statements, and to disclose the reported amounts of revenues and expenses incurred during the financial reporting periods. The most significant estimates and assumptions include, but are not limited to, the valuation of current assets, useful lives of property, plant, and equipment, impairment of long-lived assets, intangible assets and goodwill, valuation of assets and liabilities acquired in business combinations, provision necessary for contingent liabilities and realization of deferred tax assets. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates as a result of changes in our estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe critical accounting policies as disclosed in this release reflect the more significant judgments and estimates used in preparation of our condensed consolidated financial statements. For a summary of significant accounting policies, refer to Note 2. Summary of Significant Accounting Policies in our Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere herein.
Recently Issued Accounting Pronouncements
There have been no recently issued accounting pronouncements that have had, or are expected to have, a material impact on our results of operations, financial position and/or cash flows.
Emerging Growth Company Status
We are an “emerging growth company,” as defined in the JOBS Act, enacted in April 2012. We intend to take advantage of certain exemptions under the JOBS Act from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. In addition, an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this provision of the JOBS Act. As a result, we will not be subject to new or revised accounting standards at the same time as other public companies that are not emerging growth companies. Therefore, our consolidated financial statements may not be comparable to those of companies that comply with new or revised accounting pronouncements as of public company effective dates.
We will remain an emerging growth company and may take advantage of these exemptions until the earliest of: (i) the last day of the fiscal year following the fifth anniversary of the consummation of our IPO; (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion; (iii) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) which would occur if the market value of our Ordinary Shares held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year; or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable. A smaller reporting company is not required to provide the information required by this Item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Principal Executive Officer and our Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosures.
Based on this evaluation, our management, with the participation of our Principal Executive Officer and our Principal Financial Officer, concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this Form 10-Q.
Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in conducting a cost-benefit analysis of possible controls and procedures.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting during the six months ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may become involved in various disputes and litigation matters that arise in the ordinary course of business. We are not presently a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or taken together have a material adverse effect on our business, results of operations, cash flows or financial condition. For more information, refer to Note 18. Commitments and Contingencies in our Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere herein.
Item 1A. Risk Factors
In addition to the information set forth in this Quarterly Report on Form 10-Q, including the information set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in our condensed consolidated financial statements and the related notes, you should carefully consider the risk factors disclosed in the section entitled “Risk Factors” in our Annual Report and the other reports that we have filed with the SEC. Any of the risks discussed in such reports, as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial, could materially and adversely affect our results of operations, financial condition or prospects. During the period covered by this Quarterly Report on Form 10-Q, there have been no material changes in our risk factors as previously disclosed:
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Recent Sales of Unregistered Securities
On January 26, 2026, we completed a private offering of $230.0 million aggregate principal amount of 4.500% Convertible Senior Notes due 2031 (the “2031 Notes”), including the exercise in full of the initial purchasers’ option to purchase an additional $20.0 million aggregate principal amount of 2031 Notes. The 2031 Notes are general senior unsecured obligations of the Company. The 2031 Notes were issued pursuant to an Indenture, dated January 26, 2026 (the “Indenture”), between the Company and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). The 2031 Notes will mature on February 1, 2031 (the “Maturity Date”), unless earlier converted, redeemed or repurchased. The 2031 Notes will bear interest at a rate of 4.500% per year, payable semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2026. Holders may convert their 2031 Notes at their option prior to the close of business on the second scheduled trading day immediately preceding the Maturity Date. Upon conversion, the Company will satisfy its conversion obligation by paying or delivering, as the case may be, cash, its Ordinary Shares, or a combination of cash and Ordinary Shares, at the Company’s election, in the manner and subject to the terms and conditions set forth in the Indenture. The conversion rate is initially 38.5981 ordinary shares per $1 thousand principal amount of the 2031 Notes (equivalent to an initial conversion price of approximately $25.91 per ordinary share), which represents an approximately 27.5% conversion premium over the last reported sale price of $20.32 per ordinary share on the Nasdaq Capital Market on January 21, 2026. The conversion rate is subject to customary adjustments upon the occurrence of certain events, as described in the Indenture.
On February 6, 2029, and if the Company undergoes a “Fundamental Change” (as defined in the Indenture), then, subject to certain conditions and except as set forth in the Indenture, noteholders may require the Company to repurchase for cash all or any portion of their 2031 Notes at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the relevant repurchase date.
The Company may not redeem the 2031 Notes prior to February 6, 2029. The Company may redeem for cash all or any portion of the 2031 Notes, at our option, on or after February 6, 2029 and prior to the 41st scheduled trading day immediately preceding the maturity date, if the last reported sale price of our ordinary shares has been at least 130% of the conversion price for the 2031 Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of optional redemption. However, the Company may not redeem less than all of the outstanding 2031 Notes at its option unless at least $75.0 million aggregate principal amount of 2031 Notes are outstanding and not called for optional redemption as of the time it sends the related notice of optional redemption (and after giving effect to the delivery of such notice of optional redemption). The Company may also redeem for cash, in whole but not in part, the 2031 Notes, subject to certain conditions, upon the occurrence of certain changes to the laws, rules or regulations of a relevant taxing jurisdiction (as defined in the Indenture). The redemption price is equal to 100% of the principal amount of the 2031 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
In connection with the issuance of the 2031 Notes, the Company entered into a privately negotiated zero-strike call option transaction with Barclays Bank PLC, through its agent Barclays Capital Inc. (the “Option Counterparty” and, such transaction, the “Call Option Transaction”), with an expiration date that is scheduled to occur shortly after the Maturity Date. Pursuant to the Call Option Transaction, the Company paid a premium equal to approximately $120.0 million for the right to receive, without further payment, 5,905,511 Ordinary Shares (subject to customary adjustment), with delivery thereof by the Option Counterparty at expiry, subject to early settlement of the Call Option Transaction in whole or in part at the Option Counterparty’s discretion.
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The net proceeds from the sale of the 2031 Notes were approximately $222.1 million, after deducting the initial purchasers’ discounts and offering expenses payable by the Company. The Company used approximately $120.0 million of the net proceeds from the 2031 Notes to pay the cost of the Call Option Transaction. The remaining net proceeds are expected to be used primarily for data center expansion, including to partially fund the lease or purchase of additional property or properties on which to build additional WhiteFiber data centers, to construct those facilities, to enter into additional energy service agreements for each additional site, to purchase related equipment, and for potential acquisitions, partnerships and joint ventures related thereto, and for working capital and general corporate purposes.
The Company offered and sold the Notes to the initial purchasers in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and the Notes were initially resold by the initial purchasers to persons whom the initial purchasers reasonably believed to be qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A under the Securities Act. The Company relied on these exemptions from registration based in part on representations made by the initial purchasers in purchase agreement, dated January 21, 2026, by and among the Company and the representatives of the initial purchasers named therein. The Notes and the Ordinary Shares issuable upon conversion of the Notes, if any, have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. To the extent that any Ordinary Shares are issued upon conversion of the Notes, they will be issued in transactions anticipated to be exempt from registration under the Securities Act by virtue of Section 3(a)(9) thereof, because no commission or other remuneration is expected to be paid in connection with conversion of the Notes, and any resulting issuance of Ordinary Shares. Initially, a maximum of 11,318,898 Ordinary Shares may be issued upon conversion of the Notes based on the initial maximum conversion rate of 49.2126 Ordinary Shares per $1,000 principal amount of the Notes, which is subject to customary anti-dilution adjustment provisions.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
10b5-1 Trading Arrangements
During the six months ended June 30, 2026, no director or officer of the Company
Syndicated RBC Credit Facility Agreement executed on July 6, 2026
On July 6, 2026, the Company’s wholly-owned subsidiary, Enovum Data Center Corp. entered into a syndicated credit agreement (“Syndicated RBC Credit Facility Agreement”). The Syndicated Credit Facility Agreement provides for an aggregate of up to approximately CAD $115 million (approximately $80.8 million) to refinance the Amended Credit Agreement and finance its data centers business. The agreement also includes an accordion feature that permits the Company to increase by up to an additional CAD $25 million (approximately $17.7 million) to refinance the Amended Credit Agreement, subject to the satisfaction of specified conditions. The Syndicated Credit Facility Agreement is a non-revolving facility, and amounts repaid or prepaid may not be reborrowed.
Borrowings under the Syndicated Credit Facility Agreement bear interest, at the Company’s option, at either (i) CORRA-based benchmark rate for such interest period plus 2.45% per annum plus the credit spread adjustment for the applicable interest period (29.547 basis points for one month interest period, 32.138 basis points for a three month interest period and 0 for a daily interest period), or (ii) RBC Prime rate plus 1.00% per annum. The facility has a three-year term from the date of the initial drawdown and requires interest-only payments until the first full quarter after the date of the initial drawdown. The loan will be amortized through quarterly principal repayments based on a 15-year amortization schedule, with the outstanding principal due in full at maturity. The specific borrowing terms are established at the time of each drawdown pursuant to a borrowing request submitted by the Company and accepted by the lender.
The Syndicated Credit Facility is secured by first-ranking security interests over substantially all present and future personal property and assets of the borrower and the guarantors, together with first-ranking mortgages on certain owned real estate, including the Company's MTL-2 and MTL-3 properties and related improvements and equipment
The Company has agreed to certain financial covenants, including a minimum debt service coverage ratio and a maximum Net funded debt to EBITDA ratio.
On July 15, 2026, the Company drew a CORRA loan amount of CAD $36.8 million (approximately $26.2 million) under the Syndicated Credit Facility Agreement.
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Item 6. Exhibits.
(a) Exhibits.
| † | Certain identified information has been excluded from this exhibit, because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed. |
| * | Filed herewith (unless otherwise noted as being furnished herewith). |
| ** | XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| WhiteFiber, Inc. | ||
| Date: August 12, 2026 | By: | /s/ Sam Tabar |
| Sam Tabar | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: August 12, 2026 | By: | /s/ Justin Zhu |
| Justin Zhu | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) |
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Exhibit 4.3
DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
As of August 12, 2026, WhiteFiber Inc. (“WhiteFiber”, or the “Company”) has one class of securities, our Ordinary Shares (as defined below), registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Description of Ordinary Shares
The following description of our Ordinary Shares is a summary and does not purport to be a complete statement of the relevant provisions of our Amended and Restated Memorandum and Articles of Association (the “A&R M&A”) or of Cayman Islands law. It is subject to and qualified in its entirety by reference to the A&R M&A, the Companies Act (as revised) of the Cayman Islands (the “Companies Act”), and the common law of the Cayman Islands. The A&R M&A is incorporated by reference as Exhibit 3.2 to the Annual Report on Form 10-K. We encourage you to read our A&R M&A and the applicable provisions of the Companies Act for more information.
Authorized Capital Shares
Our authorized share capital is $3,500,000 divided into 340,000,000 ordinary shares, par value $0.01 per share (the “Ordinary Shares”), and 10,000,000 preference shares, par value $0.01 per share (“Preference Shares”, together the “Shares”). As of June 30, 2026, WhiteFiber has 38,841,201 Ordinary Shares issued and outstanding, and as of August 12, 2026, 69.6% of WhiteFiber’s Ordinary Shares are held by Bit Digital, Inc.
Voting Rights
Holders of our Ordinary Shares are entitled to one vote per share, including for the appointment of directors. Voting at any meeting of shareholders present, in person or by proxy, is by show of hands unless a poll is demanded. On a show of hands, every holder of Ordinary Shares present, in person or by proxy, shall have one vote. On a poll, every holder of Ordinary Shares entitled to vote (in person or by proxy) shall have one vote for each share for which they are the holder. A poll may be demanded by the chairman, at least two shareholders having the right to vote on the resolutions, or one or more shareholders present, in person or by proxy, holding not less than ten percent of the paid-up capital of the Company entitled to vote. Our A&R M&A does not provide for cumulative voting.
Ordinary resolutions are passed by an affirmative vote of the simple majority of votes cast by the shareholders (being entitled to do so), in person or by proxy, in a general meeting. Under Cayman Islands law, some matters, such as amending the A&R M&A, changing the name, or resolving to be registered by way of continuation in a jurisdiction outside the Cayman Islands, require approval of shareholders by a special resolution. A special resolution requires the affirmative vote of no less than two thirds of the votes cast by shareholders (being entitled to do so), in person or by proxy.
A quorum for a meeting of shareholders consists of one or more shareholders who hold at least one-third of the votes that may be cast by holders of issued and outstanding shares entitled to vote at the meeting present, in person or by proxy.
Dividend Rights
We do not expect to pay dividends on our Ordinary Shares. However, subject to the provisions of the Companies Act and any rights of holders of Ordinary Shares or Preference Shares, if any, the directors may declare dividends or distributions out of our funds which are lawfully available for that purpose. Shareholders may, by ordinary resolution, declare dividends, provided they do not exceed the amount recommended by the directors.
Subject to the requirements of the Companies Act regarding the application of a company’s share premium account and with the sanction of an ordinary resolution, dividends may also be declared and paid out of any share premium account. The directors, when paying dividends to shareholders, may make such payment in either cash or in specie.
Unless provided by the rights attached to a share, no dividend shall bear interest.
Liquidation Rights
If WhiteFiber is wound up, the shareholders may, subject to the A&R M&A and requirements of the Companies Act, pass a special resolution allowing the liquidator to:
| (a) | Divide in specie among the shareholders the whole or any part of the assets of WhiteFiber and, for that purpose, to value any assets and to determine how the division shall be carried out as between the shareholders or different classes of shareholder, in accordance with any rights attaching to the Shares; or |
| (b) | Vest the whole or any part of the assets in trustees for the benefit of shareholders and those liable to contribute to the winding up. |
Other Rights and Preferences
| (1) | Preemptive Rights |
Holders of Ordinary Shares do not have preemptive or preferential rights to purchase securities of WhiteFiber.
| (2) | Redemption |
Subject to the provisions of the Companies Act and any rights conferred on holders of a class of shares, the Company may, by action of its directors:
| (i) | Issue shares that are to be redeemed or liable to be redeemed, at the Company’s or the shareholder’s option, on such terms and in such manner as the directors determine before the issue of those shares; |
| (ii) | By special resolution of the shareholders holding shares of a particular class, vary the rights attaching to that class so as to provide that those shares are redeemable at the Company’s option on the terms and in the manner which the directors determine at the time of such variation; and |
| (iii) | Purchase all or any of its own shares of any class, including any redeemable shares, on such terms and in such manner as the directors determine at the time of such purchase. |
The Company may make payment in respect of any redemption or purchase of its own shares in any manner authorized by the Companies Act, including out of any combination of capital, our profits, and the proceeds of a fresh issue of shares.
When making a payment in respect of the redemption or purchase of shares, the directors may make the payment in cash or in specie (or partly in one and partly in the other) if so authorized by the terms of the allotment of those shares or by the terms applying to those shares in accordance with the A&R M&A or otherwise by agreement with the shareholder holding those shares.
| (3) | Calls on Shares |
Subject to the terms of allotment, the directors may make calls on shareholders in respect of any monies unpaid on their shares, including any premium. Each shareholder shall (subject to receiving at least 14 clear days’ notice specifying when and where payment is to be made), pay the amount called.
If a call remains unpaid after it has become due and payable, the person from whom it is due shall pay interest on the amount unpaid from the day it became due and payable until it is paid at the rate fixed by the terms of allotment or in the notice of the call; or, if no rate is fixed, at 10% per annum. Directors may waive payment of interest wholly or in part.
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| (4) | Variation of Rights |
Whenever the capital of the Company is divided into different classes of shares, the rights attached to any such class (unless otherwise provided by the terms of issue of the shares of that class) may only be varied either:
| (a) | With the written consent of the holders of not less than two-thirds of the issued shares of that class; or |
| (b) | With the sanction of a special resolution passed at a separate general meeting of the holders of shares of that class. |
Unless the terms on which a class of shares was issued state otherwise, the rights conferred on the holders of shares of any class shall not be deemed to be varied by the creation or issue of further shares ranking pari passu with the existing shares of that class, or by the issue of any Preference Shares which, for the avoidance of doubt, may have such rights as the directors may determine.
| (5) | Shareholder Action by Written Consent |
Cayman Islands law and our A&R M&A provide that shareholders may approve corporate matters by way of a unanimous written resolution signed by or on behalf of each shareholder who would have been entitled to vote on such matter at a general meeting without a meeting being held.
Cayman Islands law does not provide shareholders any right to put proposals before a meeting in a general meeting. However, our A&R M&A allows our shareholders holding not less than ten percent (10%) of all voting power of our share capital in issue to requisition a shareholder’s meeting. Other than this right, our current A&R M&A does not provide our shareholders other right to put proposals before a meeting. As a Cayman Islands exempted company, we are not obliged by law to call shareholders’ annual general meetings.
| (6) | Anti-Takeover Provisions |
Certain provisions of our A&R M&A may discourage, delay, or prevent a change of control of our company or management that shareholders may consider favorable, including, among other things:
| (a) | Provisions that give the directors discretion (subject to the consent of Bit Digital for such period as Bit Digital remains a shareholder) to issue Preference Shares without further vote or action by shareholders; and |
| (b) | Provisions that restrict the ability of shareholders to call meetings and to propose special matters for consideration at shareholder meetings. |
However, our directors may only exercise the rights and powers granted to them under our A&R M&A for a proper purpose and for what they believe in good faith to be in the best interests of our company.
3
| (7) | Exempted Company Status |
WhiteFiber is an exempted company with limited liability under the Companies Act, which distinguishes between ordinary resident companies and exempted companies.
Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company.
The requirements for an exempted company are essentially the same as for an ordinary company except that an exempted company:
| ● | Does not have to file an annual return of its shareholders with the Registrar of Companies; |
| ● | Is not required to open its register of members for inspection; |
| ● | Does not have to hold an annual general meeting; |
| ● | May issue shares with no par value; |
| ● | May obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 30 years in the first instance); |
| ● | May register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; |
| ● | May register as a limited duration company; and |
| ● | May register as a segregated portfolio company. |
“Limited liability” means the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the company, except in exceptional circumstances including:
| a) | Fraud; |
| b) | The establishment of an agency relationship; |
| c) | An illegal or improper purpose; or |
| d) | Any other circumstance in which a court may be prepared to pierce or lift the corporate veil. |
Limitations Applicable to Foreign Holders
There are no limitations on non-residents or foreign shareholders in the A&R M&A to hold or exercise voting rights on the Ordinary Shares imposed by foreign law or by the A&R M&A or other constituent document of our company. However, no person will be entitled to vote at any general meeting or at any separate meeting of the holders of the Ordinary Shares unless the person is registered as of the record date for such meeting and unless all calls or other sums presently payable by the person in respect of Ordinary Shares in the Company have been paid.
There are no exchange control or currency regulations in the Cayman Islands. The Cayman Islands currently levies no taxes in the nature of inheritance tax or estate duty.
Payments of dividends and capital in respect of our Ordinary Shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our Ordinary Shares, as the case may be, nor will gains derived from the disposal of our Ordinary Shares be subject to Cayman Islands income or corporation tax.
No other taxes are likely to be material to us levied by the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or, after execution, brought within its jurisdiction. No stamp duty is payable on the issue of shares by, or any transfer of shares of, Cayman Islands companies (except those which hold interest in land in the Cayman Islands).
There is no income tax treaty between the United States and the Cayman Islands.
Listing
Ordinary Shares are listed on the Nasdaq Capital Market under the symbol “WYFI.”
4
Description of Preference Shares
WhiteFiber is authorized to issue up to 10,000,000 Preference Shares. While no Preference Shares are currently issued and outstanding, the directors have the discretion, with the consent of Bit Digital for such period as Bit Digital remains a shareholder, to issue Preference Shares without further shareholder approval.
Before any series of Preference Shares is issued, the directors shall fix, by resolution or resolutions, the terms of such series, including:
| (a) | The designation of the series and the number of Preference Shares constituting it; |
| (b) | Whether the shares of such series shall have voting rights in addition to any voting rights provided by the Companies Act, and if so, the terms of such voting rights; |
| (c) | The dividends, if any, payable on such series, whether any such dividends shall be cumulative and, if so, from what dates, the conditions and dates upon which dividends shall be payable, and the preference or relation of such dividends to the dividends payable on any other class of shares or series of Preference Shares; |
| (d) | Whether the Preference Shares of such series shall be subject to redemption by the Company and, if so, the times, prices, and other conditions of such redemption; |
| (e) | The amount or amounts payable upon Preference Shares of such series upon, and the rights of the holders of such series in, a voluntary or involuntary liquidation, dissolution, or winding up, or upon any distribution of the assets of the Company; |
| (f) | Whether the Preference Shares of such series shall be subject to the operation of a retirement or sinking fund and, if so, the extent to and manner in which such fund shall be applied to the purchase or redemption of the Preference Shares of such series; |
| (g) | Whether the Preference Shares of such series shall be convertible into or exchangeable for shares of any other class or series or any other securities and, if so, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and conditions of conversion or exchange; |
| (h) | Any limitations and restrictions upon the payment of dividends or the making of other distributions on, and upon the purchase, redemption, or other acquisition of, the existing shares or shares of any other class or series; |
| (i) | Any conditions or restrictions upon the creation of indebtedness of the Company or upon the issue of any additional shares, including additional shares of such series or of any other class or series; and |
| (j) | Any other powers, preferences and relative, participating, optional, and other special rights, and any qualifications, limitations, and restrictions thereof. |
5
Exhibit 10.2
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
CREDIT AGREEMENT
BETWEEN
ENOVUM DATA CENTERS CORP.
as Borrower
AND
ENOVUM MTL I GP INC., EDC MTL I LIMITED PARTNERSHIP, ENOVUM MTL II GP INC., EDC MTL II LIMITED PARTNERSHIP, ENOVUM SAINT-JEROME GP INC., EDC SAINT-JÉRÔME LIMITED PARTNERSHIP and 1504950 B.C. UNLIMITED LIABILITY COMPANY
as Guarantors
AND
THE FINANCIAL INSTITUTIONS from time to time party to this Agreement and designated as Lenders on the signature pages hereto
as Lenders
AND
ROYAL BANK OF CANADA
as Administrative Agent
AND
ROYAL BANK OF CANADA
as Sole Lead Arranger and Sole Bookrunner
MADE AS OF
JULY 6, 2026
TABLE OF CONTENTS
| ARTICLE 1 - INTERPRETATION | 1 | ||
| 1.01 | Definitions | 1 | |
| 1.02 | Extended Meanings | 17 | |
| 1.03 | Accounting Principles | 17 | |
| 1.04 | Interest Calculations and Payments | 18 | |
| 1.05 | Permitted Encumbrances | 18 | |
| 1.06 | Currency | 18 | |
| 1.07 | Entire Agreement and Conflicts | 18 | |
| 1.08 | Nature of Obligors’ Liability | 18 | |
| 1.09 | Schedules | 19 | |
| ARTICLE 2 - THE CREDIT FACILITIES 19 | 19 | ||
| 2.01 | Term Loan Facility | 19 | |
| 2.02 | Increase under the Term Loan Facility | 19 | |
| 2.03 | Purpose of Term Loan Facility | 21 | |
| 2.04 | Manner of Borrowing | 21 | |
| 2.05 | Drawdowns, Conversions and Rollovers | 21 | |
| 2.06 | Administrative Agent’s Obligations with Respect to Loans | 22 | |
| 2.07 | Lenders’ and Administrative Agent’s Obligations with Respect to Loans | 22 | |
| 2.08 | Voluntary Cancellation or Reduction | 22 | |
| 2.09 | Irrevocability | 22 | |
| 2.10 | Account of Record | 22 | |
| 2.11 | Authority to Debit | 22 | |
| 2.12 | Interest on Excess Loans, Unpaid Costs and Expenses | 22 | |
| ARTICLE 3 - CLOSING AND DISBURSEMENT CONDITIONS | 23 | ||
| 3.01 | Conditions Precedent to Initial Drawdown under the Term Loan Facility | 23 | |
| 3.02 | Conditions Precedent to Subsequent Drawdowns under the Term Loan Facility | 25 | |
| 3.03 | Waiver | 27 | |
| ARTICLE 4 - PAYMENTS OF INTEREST AND COMMITMENT FEES | 27 | ||
| 4.01 | Interest on Prime Rate Loans | 27 | |
| 4.02 | Standby Fee | 27 | |
| 4.03 | Maximum Rate of Interest | 27 | |
| ARTICLE 5 - CORRA LOANS | 27 | ||
| 5.01 | General Mechanics | 27 | |
| 5.02 | Conversions | 28 | |
| 5.03 | Maturity of Interest Periods | 28 | |
| 5.04 | General | 28 | |
| 5.05 | Inability to Determine Rates, Canadian Benchmark Replacement Setting, Etc. | 29 | |
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| ARTICLE 6 - REPAYMENT | 30 | ||
| 6.01 | Mandatory Repayment and Amortization | 30 | |
| 6.02 | Voluntary Prepayments and Reductions | 31 | |
| 6.03 | Repayment Compensation | 32 | |
| ARTICLE 7 - PLACE AND APPLICATION OF PAYMENTS | 32 | ||
| 7.01 | Place of Payment of Principal, Interest and Fees | 32 | |
| 7.02 | Netting of Payments | 32 | |
| ARTICLE 8 - REPRESENTATIONS AND WARRANTIES | 32 | ||
| 8.01 | Representations and Warranties of the Borrower | 32 | |
| 8.02 | Representations and Warranties of the Guarantors | 38 | |
| 8.03 | Survival and Repetition of Representations and Warranties | 40 | |
| ARTICLE 9 - COVENANTS | 40 | ||
| 9.01 | Positive Covenants | 40 | |
| 9.02 | Reporting Requirements | 46 | |
| 9.03 | Negative Covenants | 48 | |
| 9.04 | Financial Covenants | 50 | |
| ARTICLE 10 - SECURITY | 51 | ||
| 10.01 | Security | 51 | |
| 10.02 | Cross-Collateralization | 52 | |
| 10.03 | After-Acquired Property and Further Assurances | 52 | |
| 10.04 | Form of Security | 52 | |
| ARTICLE 11 - DEFAULT | 52 | ||
| 11.01 | Events of Default | 52 | |
| 11.02 | Acceleration and Enforcement | 55 | |
| 11.03 | Remedies Cumulative | 56 | |
| 11.04 | Perform Obligations | 56 | |
| 11.05 | Third Parties | 56 | |
| 11.06 | Application of Payments | 56 | |
| ARTICLE 12 - THE ADMINISTRATIVE AGENT AND THE LENDERS | 57 | ||
| 12.01 | Payments by the Borrower | 57 | |
| 12.02 | Payments by Administrative Agent | 57 | |
| 12.03 | Erroneous Payments | 58 | |
| 12.04 | Administration of the Credits | 59 | |
| 12.05 | Rights of Administrative Agent | 61 | |
| 12.06 | Representations, Acknowledgements and Covenants of Lenders | 62 | |
| 12.07 | Provisions Operative Between Lenders and Administrative Agent Only | 62 | |
| 12.08 | Maintenance of Security | 62 | |
| 12.09 | Québec Hypothecary Representative | 63 | |
| 12.10 | Application of Proceeds of Realization | 63 | |
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| 12.11 | No Partnership | 63 | |
| 12.12 | Sharing of Information | 63 | |
| 12.13 | Defaulting Lenders | 64 | |
| ARTICLE 13 - GENERAL | 65 | ||
| 13.01 | Addresses, Etc. for Notices | 65 | |
| 13.02 | Governing Law and Submission to Jurisdiction | 65 | |
| 13.03 | Effect of Assignments; Register; Participations | 65 | |
| 13.04 | Specific Environmental Indemnification | 67 | |
| 13.05 | Survival | 67 | |
| 13.06 | Severability | 68 | |
| 13.07 | Further Assurances | 68 | |
| 13.08 | Amendments and Waivers | 68 | |
| 13.09 | Time of the Essence | 68 | |
| 13.10 | Confidentiality | 68 | |
| 13.11 | Counterparts and Electronic Execution | 69 | |
| 13.12 | Reliance on Electronic Communications | 69 | |
| 13.13 | Electronic Imaging | 69 | |
| 13.14 | Set-Off | 69 | |
| 13.15 | Consent to Disclosure of Potential Prior-Ranking Claims Information | 70 | |
| 13.16 | Language | 70 | |
| 13.17 | Solidarity | 70 | |
| 13.18 | Default by Lapse of Time | 70 | |
| 13.19 | Non-Merger | 70 | |
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CREDIT AGREEMENT
THIS AGREEMENT is made as of July 6, 2026.
BETWEEN
ENOVUM DATA CENTERS CORP.
(hereinafter referred to as the “Borrower”),
- and –
ENOVUM MTL I GP INC., EDC MTL I LIMITED PARTNERSHIP, ENOVUM MTL II GP INC., EDC MTL II LIMITED PARTNERSHIP, ENOVUM SAINT-JEROME GP INC., EDC SAINT-JÉRÔME LIMITED PARTNERSHIP and 1504950 B.C. UNLIMITED LIABILITY COMPANY
(hereinafter referred to collectively as the “Guarantors”)
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THE FINANCIAL INSTITUTIONS from time to time party to this Agreement and designated as Lenders on the signature pages hereto (each, a “Lender” and collectively, the “Lenders”)
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ROYAL BANK OF CANADA
(hereinafter referred to as the “Administrative Agent”)
WHEREAS the Borrower has requested that the Lenders make available to it a committed delayed draw term loan facility to refinance the Bilateral Bridge Loan, fund permitted Capital Expenditures and finance permitted Distributions, and the Lenders have agreed to provide such facility to the Borrower on the terms and conditions set out in this Agreement;
AND WHEREAS it is a condition of the provision of the Term Loan Facility that each of the Guarantors guarantee the Obligations of the Borrower under the Loan Documents and grant the Security required by this Agreement;
AND WHEREAS the Lenders wish the Administrative Agent to act on their behalf with regard to certain matters associated with the Credit Facilities on the terms and conditions herein set forth.
NOW THEREFORE, in consideration of the covenants and agreements herein contained, the parties agree as follows:
ARTICLE 1 - INTERPRETATION
| 1.01 | Definitions |
In this Agreement, unless something in the subject matter or context is inconsistent therewith:
“Accordion Increase” means an increase to the Term Loan Facility Commitment made pursuant to Section 2.02.
“Accordion Increase Conditions” has the meaning ascribed in Section 2.02.
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“Additional Lender” has the meaning ascribed in Section 2.02.
“Administrative Agent” means Royal Bank of Canada as the initial administrative agent hereunder and its successors and assigns hereunder.
“Advance” means an advance of funds made hereunder to the Borrower by the Lender, by way of a Loan.
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly Controls, is Controlled by, or is under common Control with, such Person.
“Agent’s Office” means the office of the Administrative Agent located at 155 Wellington Street West, 8th Floor, Toronto, Ontario, M5V 3K7, or such other office as the Administrative Agent may designate from time to time.
“Agreement” means this credit agreement, including its recitals and schedules.
“Applicable Laws” means, at any time, in respect of any Person, property, transaction, event or other matter, as applicable, all then current laws, rules, statutes, regulations, treaties, orders, judgments and decrees and all official directives, rules, guidelines, orders, policies, decisions and other requirements of any Governmental Authority, in each case to the extent having the force of law (collectively, the “Law”) relating or applicable to such Person, property, transaction, event or other matters and shall also include any interpretation of the Law or any part of the Law by any Person having jurisdiction over it or charged with its administration or interpretation.
“Applicable Margin” means the applicable percentage rate per annum as indicated in the table below:
| CORRA Margin | Prime Rate Margin | Standby Fee Rate | ||||||||||
| Term Loan Facility | 2.45 | % | 1.00 | % | 0.49 | % | ||||||
“Applicable Percentage” means, with respect to any Lender at any time, the percentage of the aggregate Commitments represented by such Lender’s Commitment at such time, subject to adjustment in accordance with this Agreement.
“Appraisal” means an appraisal report, in form and substance satisfactory to the Administrative Agent, prepared by an appraiser acceptable to the Administrative Agent.
“Appraised Value” means the appraised value of the applicable secured assets as set forth in the most recent Appraisal received by the Administrative Agent.
“Appraiser” means an accredited appraiser acceptable to the Administrative Agent, acting reasonably.
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“Approved Fund” means, with respect to any Lender, any Person (other than a natural person) that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities and that is administered, advised or managed by (a) such Lender, (b) an Affiliate of such Lender or (c) an entity or an Affiliate of an entity that administers, advises or manages such Lender.
“Arm’s Length” has the meaning ascribed to such term as set out in Section 251 of the Income Tax Act (Canada).
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any Person whose consent is required by Section 13.03), and accepted by the Administrative Agent, in substantially the form approved by the Administrative Agent from time to time or in such other form as may be satisfactory to the Administrative Agent.
“Available Tenor” means, as of any date of determination and with respect to the then-current Canadian Benchmark, as applicable, any tenor for such Canadian Benchmark or payment period for interest calculated with reference to such Canadian Benchmark that is or may be used for determining the length of an Interest Period pursuant to this Agreement as of such date.
“Bilateral Bridge Loan” means the real estate acquisition bridge loan facility made available to the Borrower by Royal Bank of Canada pursuant to the existing bilateral credit agreement entered into on April 27, 2026, to be refinanced from the initial Drawdown under this Agreement.
“Banking Day” means a day, other than Saturday, Sunday or a statutory holiday, on which banks are open for business in the Provinces of Québec and Ontario.
“basis point” means one one-hundredth of one percent (0.01%).
“Borrower” means Enovum Data Centers Corp., its successors and permitted assigns.
“Borrower’s Counsel” means Davies Ward Phillips & Vineberg LLP or such other firm of legal counsel as the Borrower may from time to time designate and that is acceptable to the Administrative Agent.
“Borrower’s Account” means the account, if any, maintained by the Borrower at the Agent’s Office and designated by the Borrower from time to time as the Borrower’s Account hereunder.
“Canadian Benchmark” means, initially, CORRA; provided that if a Canadian Benchmark Transition Event and the related Canadian Benchmark Replacement Date have occurred with respect to CORRA or the then-current Canadian Benchmark, then “Canadian Benchmark” means the applicable Canadian Benchmark Replacement to the extent that such Canadian Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 5.05.
“Canadian Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent as of the applicable Canadian Benchmark Replacement Date: (a) the sum of Daily Compounded CORRA and the applicable Canadian Benchmark Replacement Adjustment; (b) the sum of an alternate benchmark rate that has been selected by the Administrative Agent and the Borrower giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Canadian Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Canadian Benchmark for syndicated credit facilities denominated in Canadian Dollars at such time, and the applicable Canadian Benchmark Replacement Adjustment; and (c) the sum of such other rate as is consented to by the Required Lenders, the Administrative Agent and the Borrower, and the applicable Canadian Benchmark Replacement Adjustment; provided that, in the case of clause (a), such rate shall be subject to any Canadian Conforming Changes.
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“Canadian Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Canadian Benchmark with an Unadjusted Canadian Benchmark Replacement for any applicable Interest Period and Available Tenor, the spread adjustment, or method for calculating or determining such spread adjustment, that has been selected by the Administrative Agent and the Borrower giving due consideration to (a) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Canadian Benchmark with the applicable Unadjusted Canadian Benchmark Replacement by the Relevant Canadian Governmental Body or (b) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Canadian Benchmark with the applicable Unadjusted Canadian Benchmark Replacement for syndicated credit facilities denominated in Canadian Dollars at such time.
“Canadian Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Canadian Benchmark: (a) in the case of clause (a) or (b) of the definition of “Canadian Benchmark Transition Event”, the later of (i) the date of the public statement or publication of information referenced therein and (ii) the date on which the administrator of such Canadian Benchmark or the regulatory supervisor for the administrator of such Canadian Benchmark permanently or indefinitely ceases to provide such Canadian Benchmark; or (b) in the case of clause (c) of the definition of “Canadian Benchmark Transition Event”, the first date on which such Canadian Benchmark has been determined and announced by the Administrative Agent to be no longer representative; provided that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (c) and even if any Available Tenor of such Canadian Benchmark continues to be provided on such date.
“Canadian Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Canadian Benchmark: (a) a public statement or publication of information by or on behalf of the administrator of such Canadian Benchmark announcing that such administrator has ceased or will cease to provide all Available Tenors of such Canadian Benchmark, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Canadian Benchmark; (b) a public statement or publication of information by the regulatory supervisor for the administrator of such Canadian Benchmark, the Bank of Canada, the Office of the Superintendent of Financial Institutions (Canada), a resolution authority with jurisdiction over the administrator for such Canadian Benchmark, or a court or an entity with similar insolvency or resolution authority over the administrator for such Canadian Benchmark, which states that the administrator of such Canadian Benchmark has ceased or will cease to provide all Available Tenors of such Canadian Benchmark permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Canadian Benchmark; or (c) a public statement or publication of information by the regulatory supervisor for the administrator of such Canadian Benchmark announcing that all Available Tenors of such Canadian Benchmark are no longer, or as of a specified future date will no longer be, representative.
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“Canadian Benchmark Unavailability Period” means, if a Canadian Benchmark Transition Event and its related Canadian Benchmark Replacement Date have occurred with respect to the then-current Canadian Benchmark and solely to the extent that no Canadian Benchmark Replacement has replaced such then-current Canadian Benchmark pursuant to Section 5.05, the period (a) beginning at the time that such Canadian Benchmark Replacement Date has occurred if, at such time, no Canadian Benchmark Replacement has replaced such then-current Canadian Benchmark for all purposes hereunder in accordance with Section 5.05 and (b) ending at the time that a Canadian Benchmark Replacement has replaced such then-current Canadian Benchmark for all purposes hereunder pursuant to Section 5.05.
“Canadian Conforming Changes” means, with respect to either the use or administration of Daily Compounded CORRA or the use, administration, adoption or implementation of any Canadian Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Banking Day”, the definition of “Interest Period”, timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such rate and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such rate exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement).
“Canadian Dollars” and “Cdn. $” mean the lawful money of Canada.
“Capital Expenditures” means, for any fiscal period, any expenditures that are capitalized in accordance with GAAP, including any amounts accrued or paid in respect of the purchase, acquisition, construction, development, expansion, redevelopment, replacement or improvement of capital assets.
“Capital Lease Obligation” of any Person means the obligation of such Person, as lessee, to pay rent or other payment amounts under a lease of (or other agreement conveying the right to use) real or personal property, which is required to be classified and accounted for as a capital lease or a liability on a consolidated balance sheet of such Person in accordance with GAAP.
“Cash Management Agreements” means all agreements or arrangements (including guarantees) from time to time entered into or made by the Borrower in connection with:
| (a) | cash consolidation, cash management and credit card agreements and electronic fund transfer arrangements, which are so entered into or made with any Lender or any of its Affiliates; |
| (b) | overdraft arrangements related to such cash management arrangements, which are so entered into or made with any Lender or any of its Affiliates, including those involving pooled accounts and netting arrangements; |
| (c) | other similar transactions not made under this Agreement, which are so entered into or made with any Lender or any of its Affiliates if it is agreed pursuant to a written agreement signed by the Borrower and the Agent that such debts, liabilities and obligations shall be secured by the Security; and |
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| (d) | letters of credit, letters of guarantee and other documentary or standby credit instruments issued or caused to be issued by any Lender or any of its Affiliates from time to time for the account of the Borrower. |
provided that all such agreements and arrangements entered into or made by the Borrower with or in favour of any Lender at the time that such Lender was the “Agent” or a “Lender” hereunder shall cease to be a Cash Management Agreement if such Lender ceases to be the Agent or a Lender hereunder.
“Cash Management Obligations” means, at any time, the amount equal to the sum of (without duplication) (i) all debts and liabilities, whether absolute or contingent, of the Borrower to any Lender or any of its Affiliates pursuant to any Cash Management Agreements, (ii) all accrued and unpaid interest thereon and all interest on accrued and unpaid interest, (iii) all accrued and unpaid fees, expenses, costs, indemnities and other amounts payable by a Borrower to any Lender or any of its Affiliates pursuant to any Cash Management Agreements, and (iv) all reimbursement, indemnity and fee obligations of the Borrower in respect of letters of credit and letters of guarantee issued pursuant to any Cash Management Agreement.
“Closing Date” means the date on which all conditions precedent to the initial Drawdown under the Term Loan Facility have been satisfied or waived in accordance with this Agreement and the initial Drawdown is made.
“Commitment” means, in respect of each Lender, the amount specified with respect to such Lender in Schedule A, being the maximum aggregate principal amount of Loans that such Lender is obliged to make available under the Term Loan Facility, as such amount may be reduced from time to time in accordance with this Agreement.
“Compliance Certificate” means the certificate required pursuant to this Agreement, substantially in the form attached as Schedule 1.01(A), signed by a senior officer of the Borrower.
“Control” (including any correlative term) means the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a Person (whether through ownership of securities or partnership or trust interests, by contract or otherwise); without limiting the generality of the foregoing (i) a Person is deemed to Control a corporation if such Person (or such Person and its Affiliates) holds outstanding shares or other rights carrying more than 50% of the voting power in the election of the board of directors of the corporation, (ii) a Person is deemed to Control a partnership if such Person (or such Person and its Affiliates) holds more than 50% in value of the equity of the partnership, (iii) a Person is deemed to Control a trust if such Person (or such Person and its Affiliates) holds more than 50% in value of the beneficial interests in the trust, and (iv) a Person that controls another Person is deemed to Control any Person controlled by that other Person.
“Conversion” means a conversion of one type of Loan into another type of Loan pursuant to Section 2.05.
“Conversion Date” means the Banking Day specified by the Borrower in a Conversion Notice as being the date on which the Borrower has elected to convert one type of Loan into another type of Loan.
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“Conversion Notice” means a notice, substantially in the form set out in Schedule 1.01(B), to be given to the Administrative Agent by the Borrower pursuant to Section 2.05.
“CORRA” means, as applicable for any CORRA Loan and the relevant Interest Period, (a) in the case of a daily Interest Period, the Canadian Overnight Repo Rate Average administered and published by the Bank of Canada for the applicable day, and (b) in the case of a one month or three month Interest Period, the applicable CORRA-based benchmark rate for such Interest Period determined by the Administrative Agent in accordance with this Agreement and its customary practice for syndicated Canadian dollar credit facilities, in each case, or, if the Bank of Canada ceases to administer and publish the Canadian Overnight Repo Rate Average, any successor administrator therefor or any successor benchmark rate selected or determined in accordance with this Agreement, including pursuant to Section 5.05.
“Credit Facilities” means the Term Loan Facility, including any Accordion Increase established pursuant to Section 2.02.
“Daily Compounded CORRA” means, for any day, CORRA rate applicable to the Banking Day that is five (5) Banking Days prior to such day, compounded with the frequency and using the methodology determined by the Administrative Agent in accordance with this Agreement and Canadian Conforming Changes.
“Debt Service Requirements” means, for any period, scheduled principal repayments and interest expense in respect of Funded Debt for such period, calculated in accordance with GAAP and this Agreement.
“Default” means an event or condition, the occurrence of which would, with the lapse of time or the giving of notice, or both, become an Event of Default.
“Defaulting Lender” means any Lender that (a) fails to make available to the Administrative Agent its Applicable Percentage of any Loan required to be made by it hereunder within two (2) Banking Days after the date such funding is required hereunder, unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of a bona fide dispute as to whether the applicable conditions precedent to such funding have been satisfied; (b) notifies the Administrative Agent or the Borrower in writing that it does not intend to comply with any of its funding obligations under this Agreement or otherwise indicates that it does not intend to comply with such obligations; or (c) becomes, or has a parent company that becomes, the subject of any bankruptcy, insolvency, liquidation, winding-up, arrangement, reorganization or similar proceeding, or has a receiver, trustee, monitor, conservator, sequestrator or similar official appointed in respect of it or its assets; and, in each case, remains so designated by the Administrative Agent until the Administrative Agent is satisfied, acting reasonably, that the circumstances giving rise to such designation no longer exist.
“Disposition” means, with respect to a Person, any sale, assignment, transfer, conveyance, lease, licence or other disposition of any nature or kind whatsoever of any Property or of any right, title or interest in or to any Property that is out of the ordinary course of business of such Person, and the verb “Dispose” has a corresponding meaning.
“Distribution” means any payment, declaration of dividend or other distribution, whether in cash or property, to any holder of Equity Interests of any Obligor, any repurchase, redemption or other retirement of Equity Interests of any Obligor, or any payment on account of subordinated debt, management fees, consulting fees or similar payments to Affiliates, in each case except as expressly permitted by this Agreement.
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“Drawdown” means the obtaining of an Advance of a Prime Rate Loan or a CORRA Loan.
“Drawdown Date” means the date on which a Drawdown is made by the Borrower pursuant to the provisions hereof, which shall be a Banking Day.
“Drawdown Notice” means a notice, substantially in the form set out in Schedule 1.01(C), to be given to the Administrative Agent by the Borrower pursuant to Section 2.04.
“DSCR” means, as of any date of determination, the ratio of (EBITDA less cash taxes) to Debt Service Requirements, in each case for the applicable test period determined on a consolidated basis in accordance with GAAP and this Agreement.
“EBITDA” means, for any period, the consolidated net income (excluding extraordinary gains or losses) of the Borrower and its Subsidiaries for such period determined in accordance with GAAP, adjusted by adding back, to the extent deducted in determining consolidated net income, interest expense, income taxes, depreciation and amortization and other non-cash charges, and by making such further adjustments as may be expressly provided in this Agreement, including annualization based on contracted service offerings in the first year and trailing twelve month testing from June 30, 2027.
“Effective Date” means the date of the first Drawdown.
“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 13.03, other than (a) a natural person, (b) the Borrower or any of its Affiliates or Subsidiaries, or (c) any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute a Defaulting Lender.
“Encumbrance” means, with respect to any Person, any mortgage, debenture, pledge, hypothec, lien, charge, assignment by way of security, hypothecation or security interest granted or permitted by such Person or arising by operation of law, in respect of any of such Person’s Property, or any consignment by way of security or Capital Lease Obligation of Property by such Person as consignee or lessee, as the case may be, or any other security agreement, trust or arrangement having the effect of security for the payment of any debt, liability or other obligation, and “Encumbrances”, “Encumbrancer”, “Encumber” and “Encumbered” have corresponding meanings.
“Environmental Laws” means all Applicable Laws relating in whole or in part to the protection of the environment and occupational health and safety matters, and includes, without limitation, those Applicable Laws relating to the storage, generation, use, handling, transportation, treatment, Release and disposal of Hazardous Substances.
“Equity Interests” means, with respect to any Person, shares of capital stock of (or other ownership or profit interests in) such Person, warrants, options or other rights for the purchase or other acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or other acquisition from such Person of such shares (or such other interests), and other ownership or profit interests in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are authorized on any date of determination.
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“Erroneous Payment” has the meaning set out in Section 12.03.
“Erroneous Payment Return Deficiency” means, with respect to any Erroneous Payment, the amount, if any, by which the amount returned or repaid to the Administrative Agent by the applicable Payment Recipient is less than the amount of such Erroneous Payment.
“Event of Default” has the meaning set out in Section 11.01.
“Facility Management Agreement” means any material facility management, operation, maintenance or similar agreement relating to the business or assets of the Borrower or any Guarantor, as amended, restated, supplemented or replaced from time to time in accordance with this Agreement.
“Facility Manager” means any Person acting as facility manager, operator or service provider under a Facility Management Agreement.
“Fiscal Quarter” means the three-month period commencing on the first day of each Fiscal Year and each such successive three-month period thereafter during such Fiscal Year.
“Fiscal Year” means the fiscal year of the Obligors, which, in the case of each Obligor currently ends on December 31.
“Force Majeure” means any event beyond the reasonable control of the applicable Person that materially impairs the operation of the business or assets of the Obligors, excluding lack of funds and adverse market conditions.
“Funded Debt” means, at any time, without duplication, all Indebtedness for borrowed money and other interest-bearing debt obligations of the Borrower and its Subsidiaries that are included in the calculation of the financial covenants under this Agreement.
“GAAP” means those accounting principles which are in effect from time to time in Canada and as provided for in Section 1.03(1) hereof.
“Growth Capital Expenditures” means, for any fiscal period, Capital Expenditures incurred in connection with: (a) the acquisition of new sites, properties, assets or facilities; (b) the construction or development of new sites, properties or facilities; or (c) the expansion, redevelopment or material improvement of existing sites, properties or facilities.
“Guarantors” means Enovum MTL I GP Inc., EDC MTL I Limited Partnership, Enovum MTL II GP Inc., EDC MTL II Limited Partnership, Enovum Saint-Jerome GP Inc., EDC Saint-Jérôme Limited Partnership and 1504950 B.C. Unlimited Liability Company, and each is a “Guarantor”.
“Governmental Authority” means any government, parliament, legislature, or any regulatory authority, agency, commission or board of any government, parliament or legislature, or any political subdivision thereof, or any court or, without limitation, any other law, regulation or rule-making entity (including, without limitation, any central bank, fiscal or monetary authority or authority regulating banks), having jurisdiction in the relevant circumstances, or any person acting under the authority of any of the foregoing (including, without limitation, any arbitrator with the authority to bind the parties at law) or any other authority charged with the administration or enforcement of applicable laws.
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“GST” means the goods and services tax imposed under the Excise Tax Act (Canada).
“Guarantors’ Counsel” means Davies Ward Phillips & Vineberg LLP or such other firm of legal counsel as the Guarantors may from time to time designate and that is acceptable to the Administrative Agent.
“Hazardous Substance” means any substance or material that is prohibited, controlled or regulated by any Governmental Authority pursuant to Environmental Laws, including, but not limited to, any contaminants, pollutants, petroleum and other hydrocarbons and their derivatives and by-products, dangerous substances or goods, including asbestos, gaseous, solid and liquid wastes, special wastes, toxic substances, hazardous or toxic chemicals, hazardous wastes, hazardous materials or hazardous substances as defined in, or pursuant to, any Environmental Laws.
“Hedging Agreement” means any interest rate swap, rate cap, rate floor, rate collar, currency exchange transaction, forward rate agreement or other derivative, exchange, hedging or rate protection transaction, or any combination thereof, entered into for the purpose of hedging exposure to fluctuations in interest rates, currency exchange rates or other financial variables.
“Indebtedness” of any Person means (without duplication) (i) any obligation of such Person for borrowed money (including, for greater certainty, the full principal amount of convertible debt, notwithstanding its presentation under GAAP), (ii) any obligation of such Person incurred in connection with the acquisition of property, assets or businesses, (iii) any obligation of such Person issued or assumed as the deferred purchase price of property, (iv) any Capital Lease Obligation of such Person and (v) any obligations of the type referred to in clauses (i) through (iv) of another Person, the payment of which such Person has guaranteed or for which such Person is responsible or liable; provided that, for the purpose of clauses (i) through (v) (except in respect of convertible debt, as described above), an obligation will constitute Indebtedness only to the extent that it would appear as a liability on the consolidated balance sheet of such Person in accordance with GAAP. Obligations referred to in clauses (i) through (iii) exclude trade accounts payable, dividends payable to shareholders, accrued liabilities arising in the ordinary course of business which are not overdue or which are being contested in good faith, deferred revenues, intangible liabilities, future income taxes and indebtedness with respect to the unpaid balance of instalment receipts, where such indebtedness has a term not in excess of 12 months, all of which will be deemed not to be Indebtedness for the purpose of this definition.
“Interbank Reference Rate” means the interest rate expressed as a percentage per annum that is customarily used by the Administrative Agent when calculating interest due by it or owing to it arising from the correction of errors and other adjustments between the Administrative Agent and other Canadian chartered banks.
“Interest Expense” means, for any particular period, the aggregate interest expense of the applicable Obligor determined on a consolidated basis in accordance with GAAP including, without duplication, interest charges attributable to the Term Loan Facility and other Funded Debt and other borrowing costs.
“Interest Payment Date” means, with respect to each Prime Rate Loan, the first Banking Day of each calendar month.
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“Interest Period” means:
| (a) | with respect to each Prime Rate Loan, the period commencing on the applicable Drawdown Date or Conversion Date, as the case may be, and terminating on the date selected by the Borrower hereunder for the Conversion of such Loan into another type of Loan or for the repayment of such Loan; and |
| (b) | with respect to each CORRA Loan, the period selected by the Borrower in accordance with this Agreement and being a daily, one month or three month period, as applicable, provided that if any one month or three month period would otherwise end on a day that is not numerically corresponding to the first day of such Interest Period in the calendar month in which such period is to end, such Interest Period shall end on the last Banking Day of such calendar month; |
provided that in any case (i) the last day of each Interest Period shall not be included in such Interest Period but shall be the first day of the next Interest Period, (ii) if the last day of any Interest Period is not a Banking Day, such Interest Period shall end on the next Banking Day unless, in the case of a one month or three month Interest Period, such next Banking Day falls in the next calendar month, in which case such Interest Period shall end on the immediately preceding Banking Day, and (iii) no Interest Period shall extend beyond the Maturity Date.
“Lease” means any lease, sublease, agreement to lease, offer to lease, licence or right of occupation granted from time to time by or on behalf of one or more Obligors entitling the lessee, sublessee or grantee thereunder to use or occupy all or any part of a Project, and “Leases” means, collectively, all of them.
“Lenders” means the Persons from time to time party to this Agreement and identified as a Lender in Schedule A, and “Lender” means any one of them.
“Lenders’ Counsel” means the firm of McCarthy Tétrault LLP or such other firm of legal counsel as the Lenders may from time to time designate.
“Lending Office” means, with respect to a particular Lender, the branch or office specified in Schedule A from which such Lender makes advances and to which the Administrative Agent disburses payments received for the benefit of such Lender.
“Lien” means, in any jurisdiction other than Québec, a mortgage, security interest, pledge, lien, tax lien, statutory lien, construction lien or other encumbrance of any kind and, in Québec, includes a hypothec, movable hypothec, immovable hypothec, prior claim or other encumbrance of a similar nature.
“Loan” means a Prime Rate Loan or a CORRA Loan.
“Loan Documents” means this Agreement, the Security, the Hedging Agreements, the Cash Management Agreements and all certificates and other documents delivered or to be delivered to the Lenders pursuant hereto or thereto, in each case as amended, supplemented, extended, renewed, restated, replaced or superseded from time to time and, when used in relation to any Person, the term “Loan Documents” shall mean the Loan Documents executed and delivered by such Person and “Loan Document” means any one of the Loan Documents.
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“Maintenance Capital Expenditures” means, for any fiscal period, Capital Expenditures incurred in the ordinary course of business to maintain, repair, restore or replace existing assets, properties or equipment of the Borrower and its Subsidiaries in their current operating condition, but excluding any Growth Capital Expenditures.
“Material Adverse Effect” means any event or circumstance that has or would reasonably be expected to have a material adverse effect on (i) the business, assets, liabilities, operations or financial condition of the Obligors, taken as a whole, (ii) the ability of any Obligor to perform its obligations under the Loan Documents, or (iii) the validity, enforceability or priority of the Security.
“Material Licences” means all licences, permits or approvals issued by any Governmental Authority to any Obligor that are necessary or material to the business and operations of the Obligors, the breach or default of which would result in a Material Adverse Effect.
“Material Project Agreements” means all leases, contracts, licences, agreements and other arrangements that are material to the business, operations, properties or assets of the Obligors, considered on a combined basis and, in each case, having regard to its purpose, including, without limitation, material tenant arrangements, service offers and other occupancy or commercial arrangements, and in respect of which the Administrative Agent could reasonably expect that any breach, termination, non-performance or non-renewal would result in a breach of the financial covenants under this Agreement, including, without limitation, the contracts with, and “Material Project Agreement” means any one of them.
“Material Tenant” means any tenant, counterparty or group of affiliated tenants or counterparties under one or more leases, service offers or other occupancy or commercial arrangements whose contractual obligations represent 10% or more of the aggregate contracted recurring revenues of the applicable Obligors on a consolidated basis.
“Maturity Date” means the date that is three (3) years after the Closing Date; provided that if such date is not a Banking Day, the Maturity Date shall be the first Banking Day preceding such date.
“MTL I Spin-Off” means the spin-off of the Borrower’s assets related to the operation of MTL I to EDC MTL I Limited Partnership;
“Obligations” means all obligations of the Obligors or any of them to the Administrative Agent, the Lenders, or any of them, under or in connection with this Agreement or the other Loan Documents, including all debts and liabilities, present or future, direct or indirect, absolute or contingent, matured or not, at any time owing by the Obligors or any of them to the Administrative Agent or the Lenders, or any of them, in any currency, whether arising from dealings between the Administrative Agent or the Lenders, or any of them, and the Obligors, or any of them, or from any other dealings or proceedings by which the Administrative Agent or the Lenders, or any of them, may be or become in any manner whatsoever a creditor or obligee of the Obligors or any of them pursuant to this Agreement or the other Loan Documents, and wherever incurred, and whether incurred by any Obligor alone or with another or others and whether as principal or surety, and all interest, fees, legal and other costs, charges and expenses relating thereto, including without limitation, the Cash Management Obligations, any obligations under the Hedging Agreements.
“Obligors” means, collectively, the Borrower and the Guarantors, and “Obligor” means any one of them, as applicable.
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“Officer’s Certificate” means a certificate in writing signed by an officer of each Obligor, in his or her capacity as an officer and not in his or her personal capacity.
“Organizational Documents” means, with respect to any Person, such Person’s articles, memorandum or other charter documents, partnership agreement, joint venture agreement, declaration of trust, trust agreement, by-laws, unanimous shareholder agreement, or any and all other similar agreements, documents and instruments pursuant to which such Person is constituted, organized or governed.
“Participant” has the meaning set out in Section 13.03.
“Payment Notice” means a notice from the Administrative Agent to a Payment Recipient advising such Payment Recipient of the amount of any payment to be made by the Administrative Agent to such Payment Recipient, the date on which such payment is to be made and such other details as the Administrative Agent may specify.
“Payment Recipient” means (a) any Lender, (b) any Person that has received a payment from the Administrative Agent for the account of a Lender, or (c) any other Person that receives, or is entitled to receive, a payment from the Administrative Agent in connection with this Agreement.
“Permitted Encumbrances” means, with respect to any Person, the following:
(1) liens, hypothecs, prior claims or other encumbrances for Taxes, rates, assessments or other governmental charges or levies not yet due, or for which instalments have been paid based on reasonable estimates pending final assessments, or if due, the validity of which is being contested diligently and in good faith by appropriate proceedings by that Person, provided that, if the aggregate amount being contested is in excess of $2,000,000, the Borrower shall have deposited with the Administrative Agent collateral satisfactory to the Administrative Agent to secure the payment of such Taxes and assessments;
(2) unregistered, undetermined or inchoate liens, hypothecs, prior claims, rights of distress and charges incidental to maintenance or current operations that have not at such time been filed or exercised and of which none of the Lenders has been given notice, or that relate to obligations not due or payable, or if due, the validity of which is being contested diligently and in good faith by appropriate proceedings by that Person;
(3) reservations, limitations, provisos and conditions expressed in any original grant from the Crown or other grants of real or immovable property, or interests therein, that do not materially affect the use of the affected land for the purpose for which it is used by that Person;
(4) permits, reservations, covenants, servitudes, rights of access or user licences, easements, rights of way and rights in the nature of easements that do not materially impair the use of the affected land for the purpose for which it is used by that Person;
(5) title defects, irregularities or other matters relating to title that are of a minor nature and that in the aggregate do not materially impair the use of the affected property for the purpose for which it is used by that Person;
(6) the right reserved to or vested in any Governmental Authority by the terms of any lease, licence, franchise, grant or permit acquired by that Person or by any statutory provision to terminate any such lease, licence, franchise, grant or permit, or to require annual or other payments as a condition to the continuance thereof;
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(7) the Encumbrance resulting from the deposit of cash or securities in connection with contracts, tenders or expropriation proceedings, or to secure workers’ compensation, employment insurance, surety or appeal bonds, costs of litigation when required by law, warehousemen’s, carriers’ and other similar liens, hypothecs, prior claims or other like obligations incurred in the ordinary course of business;
(8) security given to a public utility or any Governmental Authority when required by such utility or authority in connection with the operations of that Person in the ordinary course of its business;
(9) the Encumbrance created by a judgment of a court of competent jurisdiction, or claim filed, against that Person as long as the judgment or claim is being contested diligently and in good faith by appropriate proceedings by that Person, provided that if such judgment or claim is, in the aggregate, greater than $2,000,000, the Borrower shall have either deposited with the Administrative Agent collateral satisfactory to the Administrative Agent to secure the payment of such judgment or claim or otherwise stayed enforcement thereof;
(10) the Security;
(11) encroachments by the Project or structures thereon over neighbouring lands (including public streets) and minor encroachments by neighbouring lands or structures thereon over the Project Lands, so long as, in the former case, there are written agreements permitting such encroachments;
(12) subdivision, development, servicing and site plan agreements, undertakings and agreements made pursuant to applicable planning and development legislation, entered into with or made in favour of any Governmental Authority, or public or private utility relating to the Project Lands;
(13) leases, service offers and similar occupancy or service arrangements that have been approved by the Administrative Agent or entered into in accordance with this Agreement and notices of them;
(14) liens securing purchase money indebtedness or Capital Lease Obligations incurred to finance the acquisition or lease of fixed or capital assets, provided that (i) such Liens are limited to the assets so acquired or leased and (ii) the aggregate principal amount of all such indebtedness at any time outstanding does not exceed $2,000,000;
(15) all municipal by-laws and regulations and other municipal land use instruments, including, without limitation, official plans, zoning and building by-laws, restrictive covenants and other land use limitations, public or private, and other restrictions as to the use of the Project Lands;
(16) any Encumbrance described in Schedule 1.01(E);
(17) any rights of expropriation or access or any other similar rights conferred or reserved by or in any statutes of Canada or of the Province of Québec or any Applicable Laws; and
(18) such other Encumbrances as are agreed to in writing by the Required Lenders.
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“Permits” means all permits, consents, waivers, licences, certificates, approvals, authorizations, registrations, franchises, rights, privileges and exemptions or any item with a similar effect as the foregoing issued or granted by any Governmental Authority or by any other third party, including, without limitation, environmental permits.
“Person” means an individual, company, partnership, trust, unincorporated association, government authority or agency or any other entity.
“Potential Prior-Ranking Claims” means all amounts owing or required to be paid, where the failure to pay any such amount could give rise to a claim pursuant to any Applicable Law or otherwise, which ranks or is capable of ranking in priority to the Security or otherwise in priority to any claim by the Administrative Agent and/or the Lenders for repayment of any amounts owing under this Agreement.
“Prime Rate” means the variable annual rate of reference announced by Royal Bank of Canada from time to time as its reference rate for commercial loans in Canadian dollars in Canada, provided that such rate shall never be less than zero percent per annum.
“Prime Rate Loan” means a Loan in or a Conversion into Canadian Dollars made by the Lenders to the Borrower with respect to which the Borrower has specified that interest is to be calculated by reference to the Prime Rate.
“Prime Rate Margin” means, for any period, the applicable percentage rate per annum applicable to that period as set out below the heading “Prime Rate Margin” in the definition of “Applicable Margin”.
“Principal Repayments” means, for any accounting period, all regularly scheduled principal payments made or required to be made, other than any balloon payment or similar principal payment which repays Indebtedness in full, for such accounting period.
“Project” means, as applicable, any one of the MTL I, MTL II and MTL III projects, facilities, lands, leasehold interests, improvements and related assets of the Obligors.
“Project Lands” means the lands and premises of MTL II and MTL III and any related leasehold interests including the MTL I leasehold interest, in each case more particularly described in the applicable Security Documents or Schedule B.
“Property” means, with respect to any Person, all or any portion of that Person’s undertaking and property, both real and personal.
“QST” means the Québec sales tax imposed under the Act respecting the Québec sales tax
(Québec).
“Release” means a releasing, adding, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, migrating, dispersing, dispensing, disposing, depositing, spraying, inoculating, abandoning, throwing, placing, exhausting or dumping and “Released” has a comparable meaning.
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“Relevant Canadian Governmental Body” means the Bank of Canada or a committee officially endorsed or convened by the Bank of Canada, or any successor thereto.
“Relevant Jurisdiction” means, from time to time, with respect to a Person that is granting Security hereunder, any province or territory of Canada, any state of the United States or any other country or political subdivision thereof in which such Person has its chief executive office or chief place of business or has Property that is subject to the Security and, for greater certainty, includes the jurisdictions set out in Schedule 1.01(F).
“Repayment Notice” means the notice substantially in the form set out in Schedule 1.01(G).
“Required Lenders” means Lenders whose Commitments represent at least 66⅔% of the dollar amount of the Commitments at such time, excluding the Commitments of any Defaulting Lender for purposes of such calculation; provided that the Commitment of any Defaulting Lender shall be included to the extent that such Defaulting Lender’s consent is required as a matter of applicable law with respect to a matter that specifically and adversely affects such Defaulting Lender, and in circumstances where there are three or fewer Lenders, the unanimous consent of the Lenders is required, determined in a manner consistent with the foregoing.
“Requirements of Law” means, with respect to any Person, the Organizational Documents of such Person and any Applicable Law or any determination of a Governmental Authority having the force of law, in each case applicable to or binding upon such Person or any of its business or Property or to which such Person or any of its business or Property is subject.
“Rollover” means a rollover of a Loan of one type into a Loan of the same type.
“Rollover Date” means the last day of the then current Interest Period applicable to a CORRA Loan, being the date of commencement of the new Interest Period applicable to the CORRA Loan being rolled over.
“Rollover Notice” means the notice, substantially in the form set out in Schedule 1.01(H), to be given to the Administrative Agent by the Borrower in connection with the Rollover of a CORRA Loan.
“Sanctions” means any economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the Government of Canada, including under the Special Economic Measures Act (Canada), the United Nations Act (Canada), the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) (Canada) and the Criminal Code (Canada), (b) the United Nations Security Council, (c) the United States government, including the Office of Foreign Assets Control of the United States Department of the Treasury or the United States Department of State, (d) His Majesty’s Treasury of the United Kingdom, or (e) the European Union or any member state thereof.
“Sanctions Laws” means the laws, regulations, rules and orders relating to Sanctions.
“Security” means the security described in Article 10, together with any other security provided at any time for the Loans made hereunder.
“Sole and Absolute Discretion” means in the sole and absolute discretion of the relevant Person, which discretion may be exercised unreasonably.
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“Specified Loan Amount” means, in respect of each Lender, the amount specified with respect to such Lender in Schedule A, being the maximum aggregate amount of Loans that such Lender is willing to make.
“Subsidiary” or “subsidiary” means, in respect of any Person, (i) any corporation or company of which at least a majority of the outstanding Equity Interests having by the terms thereof ordinary voting power to elect a majority of the board of directors of such corporation or company is at the time directly, indirectly or beneficially owned or controlled by the Person, or one or more of its subsidiaries, or the Person and one or more of its subsidiaries; (ii) any partnership of which, at the time, the Person, or one or more of its subsidiaries, or the Person and one or more of its subsidiaries directly, indirectly or beneficially own or control at least a majority of the voting interests (however designated) thereof, or otherwise control such partnership; and (iii) any other Person of which at least a majority of the voting interests (however designated) are at the time directly, indirectly or beneficially owned or controlled by the Person, or one or more of its subsidiaries, or the Person and one or more of its subsidiaries.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Term Loan Facility” means the committed delayed draw term loan facility in a maximum aggregate principal amount of Cdn. $115,000,000 to be made available hereunder to the Borrower by the Lenders in accordance with the provisions hereof by way of Loans, together with any Accordion Increase established pursuant to Section 2.02.
“Term Loan Facility Commitment” means Cdn. $115,000,000, as such amount may be increased from time to time by an Accordion Increase pursuant to Section 2.02.
“Unadjusted Canadian Benchmark Replacement” means the Canadian Benchmark Replacement excluding the Canadian Benchmark Replacement Adjustment.
| 1.02 | Extended Meanings |
In this Agreement words importing the singular number include the plural and vice versa, and words importing any gender include all genders. The term “including” means “including without limiting the generality of the foregoing” and the term “third party” means any Person other than a Person who is a party to this Agreement.
| 1.03 | Accounting Principles |
(1) Wherever in this Agreement reference is made to GAAP, such reference shall be deemed to be to the generally accepted accounting principles (including, without limitation, International Financial Reporting Standards (known as “IFRS”) or generally accepted accounting principles in the United States of America, consistently applied and applicable on a consolidated basis as at the date on which such calculation is made or required to be made in accordance with generally accepted accounting principles. Where the character or amount of any asset or liability or item of revenue or expense is required to be determined, or any consolidation or other accounting computation is required to be made for the purpose of this Agreement or any Loan Document, such determination or calculation shall, to the extent applicable and except as otherwise specified herein or as otherwise agreed in writing by the parties, be made in accordance with GAAP applied on a consistent basis.
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(2) All calculations for the purposes of determining compliance with the financial ratios and financial covenants contained in this Agreement will be made on a basis consistent with GAAP as it exists on the date of this Agreement and used in the preparation of the financial statements of the Borrower for its Fiscal Year most recently ended. In the event of a change in such GAAP, the Borrower and the Administrative Agent (with the approval of the Lenders) will negotiate in good faith to revise, if appropriate, such ratios and covenants to reflect GAAP as then in effect.
| 1.04 | Interest Calculations and Payments |
Unless otherwise stated, wherever in this Agreement reference is made to a rate of interest “per annum” or a similar expression is used, such interest will be calculated on the basis of a calendar year of 365 days and using the nominal rate method of calculation and not the effective rate method of calculation or on any other basis that gives effect to the principle of deemed reinvestment of interest. Interest will continue to accrue after maturity and default and/or judgment, if any, until payment thereof, and interest will accrue and be compounded monthly on overdue interest, if any.
| 1.05 | Permitted Encumbrances |
The inclusion of reference to Permitted Encumbrances in any Loan Document is not intended to subordinate and will not subordinate, any Encumbrance created by any of the Security to any Permitted Encumbrance.
| 1.06 | Currency |
Unless otherwise specified in this Agreement, all references to currency (without further description) are to lawful money of Canada.
| 1.07 | Entire Agreement and Conflicts |
This Agreement and the other Loan Documents or separate agreement with respect to fees payable by the Borrower to the Administrative Agent constitute the whole and entire agreement between the Obligors and the Administrative Agent and cancels and supersedes any prior agreements, undertakings, declarations, commitments, representations, written or oral, in respect thereof. In the event of a conflict, ambiguity or inconsistency between the provisions of this Agreement and the provisions of any other Loan Document, then unless such Loan Document or an acknowledgement from the Borrower and the Administrative Agent relative to such Loan Document expressly states that this Section 1.07 is not applicable to such Loan Document, notwithstanding anything else contained in such other Loan Document, the provisions of this Agreement will prevail and the provisions of such other Loan Document will be deemed to be amended to the extent necessary to eliminate such conflict, ambiguity or inconsistency.
| 1.08 | Nature of Obligors’ Liability |
(1) Nothing in any of the Loan Documents shall mean, nor be construed to mean, that the recourse of the Lender against the Obligors is anything other than full recourse with regard to its obligations hereunder, the manner and order of realization or the exercise of remedies hereunder or under the Security.
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(2) The obligations of each Lender and the Administrative Agent under this Agreement are joint and not solidary. The failure of any Lender to carry out its obligations hereunder shall not relieve the other Lenders, the Administrative Agent or the Borrower of any of their respective obligations hereunder.
(3) Neither the Administrative Agent nor any Lender shall be responsible for the obligations of any other Lender hereunder.
| 1.09 | Schedules |
The following are the Schedules attached hereto and incorporated by reference and deemed to be part hereof:
| Schedule “A” | - | Lenders and Commitments |
| Schedule “B” | - | Legal Description of Secured Lands |
| Schedule “C” | - | Applicable Terms |
| Schedule 1.01(A) | - | Compliance Certificate |
| Schedule 1.01(B) | - | Conversion Notice |
| Schedule 1.01(C) | - | Drawdown Notice |
| Schedule 1.01(D) | - |
Material Licences and Material Project Agreements |
| Schedule 1.01(E) | - | Additional Permitted Encumbrances |
| Schedule 1.01(F) | - | Relevant Jurisdictions |
| Schedule 1.01(G) | - | Repayment Notice |
| Schedule 1.01(H) | - | Rollover Notice |
| Schedule 8.01(14) | - | Ownership Structure – Borrower |
| Schedule 13.03(6) | - | Form of Assignment and Assumption Agreement |
ARTICLE 2 - THE CREDIT FACILITIES
| 2.01 | Term Loan Facility |
Subject to the terms and conditions of this Agreement, the Lenders establish in favour of the Borrower a single committed delayed draw term loan facility in the maximum aggregate principal amount of Cdn. $115,000,000, which may be increased pursuant to Section 2.02 by up to an additional Cdn. $25,000,000, to be used by the Borrower in accordance with Section 2.03 and to remain available for Drawdowns during the period commencing on the Closing Date and ending on the date falling 24 months thereafter. The Term Loan Facility is a non-revolving facility, and amounts repaid or prepaid may not be reborrowed.
| 2.02 | Increase under the Term Loan Facility |
The Term Loan Facility Commitment may be increased from time to time by an aggregate additional amount of up to Cdn. $25,000,000 (each such increase, an “Accordion Increase”), provided that each Accordion Increase shall be in a minimum amount of Cdn. $5,000,000, upon the satisfaction of the following conditions (the “Accordion Increase Conditions”):
(1) the Borrower shall have delivered a written request for an Accordion Increase specifying the proposed increase;
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(2) the Administrative Agent and the Lenders shall have received Appraisals, including any refreshed appraisals if a change has occurred to the secured assets that has, or is reasonably likely to cause, a Material Adverse Effect and the previous appraisal was delivered more than twelve (12) months prior, satisfactory to them confirming that the aggregate loan-to-value ratio does not exceed 60%;
(3) the Administrative Agent and the Lenders shall have received such updated financial information, financial model, service offers, compliance certificates and other due diligence as they may reasonably require;
(4) additional commitments in respect of such Accordion Increase shall have been agreed to by one or more existing Lenders and/or one or more Additional Lenders;
(5) the Administrative Agent shall have received an updated Compliance Certificate from the Borrower setting forth the required calculations to establish, on a pro forma basis as at the last day of the most recent Fiscal Quarter, compliance with the financial covenants set forth in this Agreement;
(6) no Default or Event of Default shall have occurred and be continuing;
(7) no event having a Material Adverse Effect shall have occurred and remain uncured; and
(8) the representations and warranties set out in this Agreement shall be true and correct in all material respects as of the date of the Accordion Increase and shall be restated, reiterated and confirmed as of the date of such Accordion Increase.
Any Accordion Increase may be effected by (i) increasing the Commitment of any Lender willing to participate, on a pro rata basis or otherwise, and/or (ii) the addition of one or more financial institutions as lenders (each, an “Additional Lender”), in each case on a best efforts basis.
No Lender shall be obligated to participate in any Accordion Increase. Any Additional Lender shall be reasonably acceptable to the Administrative Agent and shall otherwise be an Eligible Assignee. No Additional Lender shall receive pricing or economics that are more favourable that those offered to the existing Lenders in connection with the Accordion Increase unless such more favourable terms are made available to all existing Lenders participating in such Accordion Increase. Any Additional Lender shall become a party to this Agreement pursuant to customary joinder documentation and shall have the same rights and obligations as a Lender hereunder.
Any increases in Commitments pursuant to an Accordion Increase shall be offered first offer by Administrative Agent to the existing Lenders on a pro rata basis which existing Lenders shall have ten (10) Banking Days to accept or decline to participate in such increases. An existing Lender will be deemed to have declined to participate in the foregoing offer if the Administrative Agent has not received a confirmation of acceptance from such existing Lender withing the applicable delay for responding thereto. If sufficient commitments are not obtained from existing Lenders, Additional Lenders may be added to provide such commitments.
Notwithstanding anything to the contrary herein, no Lender shall be obligated to increase its Commitment in connection with any Accordion Increase, and the consent of only those Lenders participating in such Accordion Increase shall be required. Any such increase shall form part of, and not constitute a separate facility from, the Term Loan Facility for all purposes of this Agreement.
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| 2.03 | Purpose of Term Loan Facility |
Loans made under the Term Loan Facility will only be used to refinance the Bilateral Bridge Loan, fund permitted Capital Expenditures, finance permitted Distributions and support the business and operations of the Borrower to the extent contemplated by this Agreement.
| 2.04 | Manner of Borrowing |
(1) The Borrower may, in Canadian Dollars, make Drawdowns of Prime Rate Loans and CORRA Loans, and may make Conversions and Rollovers of Loans, under the Term Loan Facility in accordance with this Agreement.
| 2.05 | Drawdowns, Conversions and Rollovers |
(1) Subject to the provisions of this Agreement, the Borrower may (a) make Drawdowns hereunder, (b) convert the whole or any part of any type of Loan into any other type of Loan, and (c) roll over any CORRA Loan on the last day of the applicable Interest Period therefor, by giving the Administrative Agent a Drawdown Notice, Conversion Notice or Rollover Notice, as the case may be.
(2) The Borrower must give the Administrative Agent a Drawdown Notice at least three Banking Days prior to the proposed Drawdown Date in the case of a CORRA Loan and at least one Banking Day prior to the proposed Drawdown Date in the case of a Prime Rate Loan, and a Conversion Notice or Rollover Notice at least three Banking Days prior to the proposed Conversion Date or Rollover Date, as the case may be, for any CORRA Loan; provided that, in each case relating to a CORRA Loan, such notice must specify the requested Interest Period and, if such notice is not given within the required time, the applicable Loan shall be made as, converted into or continued as a Prime Rate Loan. A Drawdown Date, Conversion Date and Rollover Date must be a Banking Day.
(3) Each Drawdown Notice, Conversion Notice or Rollover Notice, as the case may be, must be delivered to the Administrative Agent by the Borrower on or prior to 11:00 a.m. (Montreal time) on a Banking Day.
(4) Each Drawdown, Conversion or Rollover must:
| (a) | in the case of Prime Rate Loans, be in a minimum principal amount of Cdn. $1,000,000; and |
| (b) | in the case of CORRA Loans, be in an aggregate minimum principal amount of Cdn. $1,000,000 and increments of Cdn. $100,000. |
(5) Unless otherwise agreed to by the Administrative Agent and the Required Lenders, the Borrower will not be entitled to make Drawdowns more than once each calendar month.
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| 2.06 | Administrative Agent’s Obligations with Respect to Loans |
Upon receipt of a Drawdown Notice, Conversion Notice or Rollover Notice, as the case may be, the Administrative Agent will forthwith notify the Lenders of the proposed Drawdown Date, Conversion Date or Rollover Date, as the case may be, of each Lender’s Applicable Percentage of such Loan and, if applicable, the account of the Administrative Agent to which each Lender’s Applicable Percentage is to be credited.
| 2.07 | Lenders’ and Administrative Agent’s Obligations with Respect to Loans |
Each Lender will, prior to 2:00 p.m. (Montreal time) on the Drawdown Date, Conversion Date or Rollover Date, as the case may be, specified by the Borrower in a Drawdown Notice, Conversion Notice or Rollover Notice, as the case may be, credit the Administrative Agent’s account specified in the Administrative Agent’s notice given under Section 2.06 with such Lender’s Applicable Percentage of any Loan to be advanced thereunder and by 2:00 p.m. (Montreal time) on the same date the Administrative Agent will advance to the Borrower the full amount of the amounts so credited.
| 2.08 | Voluntary Cancellation or Reduction |
The Borrower may, at any time, upon giving at least three (3) Banking Days prior notice to the Administrative Agent, cancel in full or, from time to time, reduce in part the Commitments under the Term Loan Facility by delivering a Cancellation Notice; provided that any such reduction shall be in a minimum aggregate amount of Cdn. $1,000,000 and increments of Cdn. $100,000. Upon such cancellation, there shall be a pro rata reduction of each Lender’s Commitment.
| 2.09 | Irrevocability |
Each Drawdown Notice, Conversion Notice and Rollover Notice given by the Borrower hereunder is irrevocable and will oblige the Borrower to take the action contemplated on the date specified therein.
| 2.10 | Account of Record |
The Administrative Agent will open and maintain books of account evidencing all Loans and all other amounts owing by the Borrower to the Lenders hereunder. The Administrative Agent will enter in the foregoing accounts details of all amounts from time to time owing, paid or repaid by the Borrower hereunder.
| 2.11 | Authority to Debit |
The Borrower hereby authorizes the Administrative Agent to debit any account maintained by the Borrower with the Administrative Agent to satisfy its obligations to the Administrative Agent and the Lenders in connection with the payment of interest, fees, expenses and other amounts due hereunder, in each case in accordance with the terms of this Agreement.
| 2.12 | Interest on Excess Loans, Unpaid Costs and Expenses |
Unless the payment of interest is otherwise specifically provided for herein, where the Borrower fails to pay any amount required to be paid by them hereunder when due having received notice that such amount is due, the Borrower shall pay interest on such unpaid amount from the time such amount is due until paid at an annual rate equal to the Prime Rate plus 2.0% per annum.
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ARTICLE 3 - CLOSING AND DISBURSEMENT CONDITIONS
| 3.01 | Conditions Precedent to Initial Drawdown under the Term Loan Facility |
The obligation of each Lender to make the first Drawdown hereunder is subject to and conditional upon the prior satisfaction of the following conditions precedent on the Closing Date:
| (a) | a duly executed copy of this Agreement and the other Loan Documents (including the Security Documents) will have been delivered to the Administrative Agent and the Lenders; |
| (b) | the Administrative Agent will have received a Drawdown Notice by the time required under Section 2.04; |
| (c) | currently dated opinions of counsel to the Obligors as to such matters and in such form as Lenders’ Counsel deems appropriate, acting reasonably, addressed to the Administrative Agent and the Lenders; |
| (d) | the Administrative Agent will have received certified copies of title opinions, title insurance, property searches and confirmations in respect of the secured immovable property and leasehold interests as it may reasonably require; |
| (e) | the Administrative Agent will have received certified copies of the Organizational Documents of each Obligor, including resolutions authorizing the execution and delivery of, and performance of each Obligor’s obligations under, the Loan Documents, together with incumbency certificates and such other corporate or organizational documents as the Administrative Agent may reasonably require; |
| (f) | the representations and warranties in Section 8.02 and in the other Loan Documents will be true and correct in all material respects as if made on and as of the Closing Date; |
| (g) | the Lenders shall have completed their due diligence with respect to the Obligors and the secured assets and shall have received the following financial, corporate and other information: |
| (i) | satisfactory Appraisals confirming that aggregate loan-to-value does not exceed 60% and in respect of which the Administrative Agent is either an addressee or has received a reliance letter; |
| (ii) | Phase I and, if applicable, Phase II Environmental Site Assessments for MTL II and MTL III, together with reliance letters in favour of the Administrative Agent; |
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| (iii) | a satisfactory financial model showing projected financial performance and covenant compliance; |
| (iv) | signed Material Project Agreements (including leases, service offers and other material occupancy or commercial arrangements), together with current rent rolls and copies thereof for the secured properties, in each case generating sufficient contracted cash flow for term and covenant support; |
| (v) | evidence confirming that the secured properties and business are in compliance in all material respects with Applicable Laws, except to the extent satisfactory remedial steps are being taken; |
| (vi) | evidence confirming that the insurance coverage to be maintained by the Obligors hereunder is in place and complies with the provisions hereof; |
| (vii) | the financial statements of the Obligors (except 1504950 B.C. Unlimited Liability Company) for the Fiscal Quarter ending March 31, 2026 and the financial statements of the Obligors (except 1504950 B.C. Unlimited Liability Company) for the month of May 2026; |
| (viii) | all know your client information requested by any Lender or the Administrative Agent; |
| (ix) | evidence satisfactory to the Administrative Agent that property Taxes and material utilities relating to the secured properties are current, subject to contestations in good faith and in respect of which non-payment would not individually or in the aggregate have, or be reasonably likely to cause, a Material Adverse Effect; |
| (x) | a pro forma Compliance Certificate showing compliance with the financial covenants after giving effect to the initial Drawdown, with calculations based on the period ending May 31, 2026; |
| (xi) | evidence of landlord consent for the MTL I lease, including step-in rights in favour of the Administrative Agent, or evidence satisfactory to the Administrative Agent as to the timing for delivery thereof if agreed by the Administrative Agent; and |
| (xii) | such other information as the Administration Agent or the Lenders may reasonably request respecting the business or financial condition of the Obligors; |
| (h) | no Default or Event of Default will have occurred and be continuing on the Closing Date, or would result from the entering into of this Agreement or the initial Drawdown, the whole calculated as of the last day of the most recent Fiscal Quarter; |
| (i) | no Material Adverse Effect shall have occurred and be existing; |
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| (j) | except as otherwise agreed by the Administrative Agent, certificates of status or comparable certificates for all Relevant Jurisdictions of each Obligor will have been delivered to the Administrative Agent; |
| (k) | all registrations and filings shall have been made which the Administrative Agent determines to be necessary or advisable to preserve and protect the Security; |
| (l) | releases, discharges and postponements that are required in the discretion of the Administrative Agent (in registrable form where necessary) with respect to all Encumbrances affecting the collateral Encumbered by the Security that are not Permitted Encumbrances, if any, will have been delivered to the Administrative Agent; |
| (m) | the Administrative Agent shall have received a sub-search from Lenders’ Counsel confirming that no Encumbrances that are not Permitted Encumbrances have been registered on title to the Project Lands as of the date of the initial Drawdown; |
| (n) | the Administrative Agent will have received on its own behalf or on behalf of the Lenders payment of all fees and expenses payable to the Administrative Agent or the Lenders that are due and payable at such time, including legal fees and disbursements; |
| (o) | the Lenders shall be satisfied that, after giving effect to the Drawdown: |
| (i) | the aggregate principal amount of all Loans outstanding under the Term Loan Facility shall not exceed the Commitments; |
| (ii) | the Administrative Agent shall have received satisfactory directions of payment to repay the Bilateral Bridge Loan; |
| (iii) | the Administrative Agent shall have received all other reports and deliveries required hereunder for the period prior to such Drawdown Date; and |
| (p) | such other documents and instruments as the Lenders require, which are usual and customary for transactions of this nature. |
| 3.02 | Conditions Precedent to Subsequent Drawdowns under the Term Loan Facility |
The obligation of each Lender to make any subsequent Drawdown hereunder by way of a Loan under the Term Loan Facility is subject to and conditional upon the prior satisfaction of the following additional conditions precedent:
| (a) | the Administrative Agent will have received a Drawdown Notice as required under Section 2.05; |
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| (b) | the representations and warranties deemed to be repeated pursuant to Section 8.02 and in any Loan Document will continue to be true and correct in all material respects as if made on and as of the Drawdown Date; |
| (c) | no Default or Event of Default will have occurred and be continuing on the Drawdown Date, or would result from making the requested Advance; |
| (d) | no Material Adverse Effect shall have occurred and be existing; |
| (e) | the Borrower must have delivered to the Administrative Agent all reporting required by Section 9.02; |
| (f) | all registrations and filings required to preserve and protect the Security shall have been made and the Administrative Agent shall be satisfied that no Encumbrances affecting the secured property exist other than Permitted Encumbrances; |
| (g) | if any new Material Project Agreements, leases, service offers or other material occupancy or commercial arrangements have been entered into since the date of any previous Drawdown, notice and a copy of such agreement shall have been provided to the Administrative Agent for its review; |
| (h) | the Lenders will have received signed leases, service offers and other Material Project Agreements with sufficient contracted cash flow for term and covenant support, in form and substance satisfactory to the Administrative Agent, together with a pro forma Compliance Certificate showing compliance with the financial covenants after giving effect to the requested Drawdown; |
| (i) | the Administrative Agent will have received payment of all fees and expenses payable to the Administrative Agent or the Lenders that are due and payable at such time; |
| (j) | the Lenders shall be satisfied that, after giving effect to the Drawdown: |
| (i) | the aggregate principal amount of all Loans outstanding under the Term Loan Facility shall not exceed the Term Loan Facility Commitment (as the same may be increased pursuant to Section 2.02; and |
| (ii) | the Administrative Agent shall have received all other reports and deliveries required hereunder for the period prior to such Drawdown Date; |
| (k) | all other terms and conditions of this Agreement upon which the Borrower may obtain a Loan that have not been waived will have been fulfilled or waived. |
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| 3.03 | Waiver |
The conditions set forth in Sections 3.01 and 3.02 are inserted for the sole benefit of the Lenders and may be waived by the Administrative Agent on behalf of the Lenders with the consent of the Required Lenders, in whole or in part, in respect of any Drawdown without prejudicing the right of the Lenders at any time to assert such conditions in respect of any subsequent Drawdown.
ARTICLE 4 - Payments of Interest and Commitment Fees
| 4.01 | Interest on Prime Rate Loans |
The Borrower will pay interest on each Prime Rate Loan during each Interest Period applicable thereto in Canadian Dollars at a rate per annum equal to the sum of (a) the Prime Rate in effect from time to time during such Interest Period plus (b) the Prime Rate Margin. Such interest will be payable in arrears on each Interest Payment Date for such Loan and will be calculated on the principal amount of the Prime Rate Loan outstanding during such period and on the basis of the actual number of days elapsed in a year of 365 days.
| 4.02 | Standby Fee |
The Borrower will pay to the Administrative Agent, for the account of the Lenders, a standby fee in Canadian Dollars at the rate of 49 basis points on the daily undrawn portion of the Term Loan Facility. The Standby Fee will be determined daily beginning on the Closing Date and will be calculated on the basis of a calendar year of 365 days and will be payable by the Borrower quarterly in arrears on the first Banking Day of each Fiscal Quarter.
All fees payable to the Administrative Agent, the Sole Lead Arranger, the Sole Bookrunner and the Lenders in connection with this Agreement, other than fees expressly set out in this Agreement, shall be governed by one or more separate fee letters.
| 4.03 | Maximum Rate of Interest |
Notwithstanding anything contained herein to the contrary, the Borrower will not be obliged to make any payment of interest or other amounts payable to the Lenders hereunder in excess of the amount or rate that would be permitted by Applicable Law or would result in the receipt by the Lenders of interest at a criminal rate (as such terms are construed under the Criminal Code (Canada)). If the making of any payment by the Borrower would result in a payment being made that is in excess of such amount or rate, the particular Lender will determine the payment or payments that are to be reduced or refunded, as the case may be, so that such result does not occur.
ARTICLE 5 - CORRA LOANS
All CORRA Loans hereunder shall be made in accordance with the provisions of this Article 5.
| 5.01 | General Mechanics |
(1) Upon receipt of a Drawdown Notice, Conversion Notice or Rollover Notice with respect to a CORRA Loan, the Administrative Agent shall forthwith notify each Lender of the proposed Drawdown Date, Conversion Date or Rollover Date, as applicable, the applicable Interest Period and each Lender’s Applicable Percentage of the proposed CORRA Loan.
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(2) At no time will there be more than such number of different Interest Periods for CORRA Loans as the Administrative Agent may reasonably permit having regard to its administrative and operational requirements.
(3) The term of a CORRA Loan shall be selected by the Borrower and may be a daily, one month or three month Interest Period, subject to availability and the provisions of this Agreement, provided that no Interest Period shall extend beyond the Maturity Date.
| 5.02 | Conversions |
In the case of a Conversion into a CORRA Loan, the Administrative Agent shall record the obligation of the Borrower to the Lenders as a CORRA Loan for the applicable Interest Period, and such CORRA Loan shall accrue interest from and including the applicable Conversion Date to but excluding the last day of such Interest Period, with the applicable CORRA, any applicable credit spread adjustment and the CORRA Margin determined in accordance with this Article 5.
| 5.03 | Maturity of Interest Periods |
(1) Prior to the end of an Interest Period for a CORRA Loan, the Borrower shall deliver to the Administrative Agent a Rollover Notice, a Conversion Notice or a Repayment Notice in accordance with this Agreement and, if the Borrower fails to do so within the time required by this Agreement, the applicable CORRA Loan shall, on the last day of the applicable Interest Period, be automatically converted into a Prime Rate Loan.
(2) In the case of a Conversion of a CORRA Loan into another type of Loan, the Administrative Agent shall record the obligation of the Borrower to the Lenders as a Loan of the type into which the obligation has been converted.
| 5.04 | General |
(1) Each CORRA Loan shall bear interest during each Interest Period at a rate per annum equal to the sum of (i) the applicable CORRA for such Interest Period, determined in accordance with Section 5.04(2), (ii) the applicable credit spread adjustment for such Interest Period, being 29.547 basis points for a one month Interest Period, 32.138 basis points for a three month Interest Period and, for a daily Interest Period, no credit spread adjustment unless otherwise expressly agreed in writing by the Borrower, the Administrative Agent and the Lenders, and (iii) the CORRA Margin.
(2) For purposes of this Article 5, the applicable CORRA for any CORRA Loan shall be determined by the Administrative Agent in a manner consistent with the Interest Period selected by the Borrower and its customary practice for syndicated Canadian dollar credit facilities. For a daily Interest Period, CORRA shall be determined on a daily basis for the applicable day. For a one month or three month Interest Period, CORRA shall be the applicable one month or three month CORRA-based benchmark rate, as applicable, for that Interest Period. The Administrative Agent may make such operational and conforming changes to the administration of CORRA Loans as it may reasonably determine are appropriate to give effect to the foregoing and to reflect then current market practice, and will notify the Borrower and the Lenders of any such changes.
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(3) Each Lender shall maintain a record with respect to CORRA Loans made by it hereunder and, absent manifest error, the records of the Administrative Agent with respect thereto shall be prima facie evidence of the amounts owing hereunder.
(4) Interest on each CORRA Loan shall be payable in arrears on the last day of the applicable Interest Period and on the Maturity Date and shall be calculated on the principal amount of such CORRA Loan outstanding during such Interest Period on the basis of the actual number of days elapsed in a year of 365 days.
| 5.05 | Inability to Determine Rates, Canadian Benchmark Replacement Setting, Etc. |
(1) Notwithstanding anything to the contrary in this Agreement or any other Loan Document, upon the occurrence of a Canadian Benchmark Transition Event and its related Canadian Benchmark Replacement Date, the Administrative Agent and the Borrower may amend this Agreement to replace the then-current Canadian Benchmark with a Canadian Benchmark Replacement and to make Canadian Conforming Changes, and any such amendment shall become effective at 5:00 p.m. (Montreal time) on the fifth Banking Day after the Administrative Agent has posted such proposed amendment to all Lenders and the Borrower so long as the Administrative Agent has not received, by such time, written notice of objection to such amendment from Lenders comprising the Required Lenders.
(2) No replacement of the then-current Canadian Benchmark with a Canadian Benchmark Replacement pursuant to this Section 5.05 shall occur prior to the applicable Canadian Benchmark Replacement Date.
(3) In connection with the implementation of a Canadian Benchmark Replacement, the Administrative Agent shall have the right to make Canadian Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Canadian Conforming Changes shall become effective without any further action or consent of any other party to this Agreement.
(4) The Administrative Agent will promptly notify the Borrower and the Lenders of (a) the occurrence of a Canadian Benchmark Transition Event, (b) the implementation of any Canadian Benchmark Replacement, (c) the effectiveness of any Canadian Conforming Changes, (d) the commencement or the end of any Canadian Benchmark Unavailability Period and (e) any change in the length or availability of any Interest Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, the Borrower, pursuant to this Section 5.05, including any determination with respect to a tenor, rate or adjustment or the occurrence or non-occurrence of an event, circumstance or date, will be conclusive and binding absent manifest error and may be made in the sole discretion of the Administrative Agent, acting reasonably, or, if expressly provided herein, in the discretion of the Administrative Agent and the Borrower.
(5) Notwithstanding anything to the contrary in this Agreement or any other Loan Document, at any time (including in connection with the implementation of a Canadian Benchmark Replacement), if the then-current Canadian Benchmark is a term rate and either (a) any tenor for such benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (b) the regulatory supervisor for the administrator of such benchmark has announced that any tenor for such benchmark is or will be no longer representative, then the Administrative Agent may modify the definition of “Interest Period” or any related definition or provision to remove such unavailable or non-representative tenor and any such amendment will become effective without any further action or consent of any other party to this Agreement.
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(6) Upon the commencement of a Canadian Benchmark Unavailability Period, the Borrower may revoke any pending request for a Drawdown of, Conversion to or Rollover of a CORRA Loan to be made, converted or continued during any Canadian Benchmark Unavailability Period and, failing that, such request shall be deemed to be a request for a Prime Rate Loan. During any Canadian Benchmark Unavailability Period, the component of Prime Rate based upon the then-current Canadian Benchmark or any term rate derived therefrom, if any, shall not be used in any determination of Prime Rate.
(7) For greater certainty, this Section 5.05 is intended to complete the benchmark replacement mechanics applicable to CORRA Loans and shall apply notwithstanding anything inconsistent in Section 5.04.
(8) If, in connection with any requested CORRA Loan or any outstanding CORRA Loan, the Administrative Agent determines that (i) the applicable CORRA for the relevant Interest Period cannot be determined in accordance with the terms of this Agreement, (ii) adequate and reasonable means do not exist for ascertaining the applicable CORRA for the relevant Interest Period, or (iii) the adoption of any operational or conforming change reasonably required to administer CORRA Loans has not been completed or cannot practicably be implemented, then the Administrative Agent shall promptly notify the Borrower and the Lenders, and the right of the Borrower to request, convert into or roll over into CORRA Loans of the affected Interest Period or Interest Periods shall be suspended until the Administrative Agent determines that the circumstances giving rise to such suspension no longer exist.
(9) During any period of suspension referred to in this Section, any affected CORRA Loan then outstanding shall continue to the end of its then current Interest Period and shall thereafter be automatically converted into a Prime Rate Loan unless the Administrative Agent has notified the Borrower that the relevant circumstances have ceased to exist prior to the end of such Interest Period, and any requested Drawdown or Conversion into a CORRA Loan for the affected Interest Period or Interest Periods shall instead be made as or converted into a Prime Rate Loan.
ARTICLE 6 - REPAYMENT
| 6.01 | Mandatory Repayment and Amortization |
(1) The Borrower will repay the outstanding principal amount of all Loans and all other Obligations under the Term Loan Facility on or before the Maturity Date.
(2) The Borrower shall also repay the Term Loan Facility by way of quarterly principal repayments commencing at the end of the first full Fiscal Quarter after the Closing Date and calculated on the basis of a 15-year amortization schedule (6.67% per year), with the remaining balance due on the Maturity Date.
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(3) The Borrower shall, as a mandatory repayment in respect of Loans outstanding under the Term Loan Facility, pay to the Administrative Agent for application against the Loans the amounts set forth below upon the occurrence of the following events:
| (a) | 100% of the net proceeds of any Disposition by any Obligor of any Property outside the ordinary course of business, unless such net proceeds are applied within 180 days after receipt thereof to acquire, repair, restore, replace, rebuild or reinvest in assets used or useful in the business of the Obligors; provided that if the Borrower or the applicable Obligor has entered into a binding commitment, in form and substance acceptable to the Administrative Agent, within such 180-day period to make such acquisition, repair, restoration, replacement, rebuilding or reinvestment, such period shall be extended for up to an additional 180 days to permit completion thereof, and any such net proceeds not so applied within the applicable period shall be promptly applied as a mandatory repayment of the Loans. For clarity, the Lenders acknowledge the MTL I Spin-Off contemplated by the Borrower, subject to entering into satisfactory assumption and security documents as required by the Lenders, acting reasonably; |
| (b) | 100% of the net proceeds of property insurance in respect of any secured asset, except to the extent such net proceeds are applied within 180 days after receipt thereof toward the repair, restoration, replacement or rebuilding of such asset; provided that if the Borrower or the applicable Obligor has entered into a binding commitment, in form and substance acceptable to the Administrative Agent, within such 180-day period to complete such repair, restoration, replacement or rebuilding, such period shall be extended for up to an additional 180 days to permit completion thereof, and any such net proceeds not so applied within the applicable period shall be promptly applied as a mandatory repayment of the Loans; and |
| (c) | 100% of the net proceeds of any future debt incurred by any Obligor other than Indebtedness expressly permitted hereunder. |
(4) All such mandatory repayments shall be applied to the Term Loan Facility in inverse order of maturity, until fully repaid.
| 6.02 | Voluntary Prepayments and Reductions |
If the Administrative Agent has received a Repayment Notice from the Borrower not less than five (5) Banking Days prior to the proposed prepayment date, the Borrower may from time to time prepay Loans outstanding under the Term Loan Facility provided that accrued interest and fees relating thereto have been paid in full. Any voluntary prepayment hereunder shall be in the minimum amount equal to $1,000,000 and in increments of $100,000 thereafter. Upon such prepayment, the applicable Commitment shall be correspondingly reduced by the amount of such prepayment and no re-borrowing of such prepaid amount shall be permitted. For certainty, an voluntary prepayment shall be applied to the Term Loan Facility in inverse order of maturity.
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| 6.03 | Repayment Compensation |
The Borrower may repay all amounts hereunder at any time without penalty or bonus, subject to the payment of customary breakage, funding loss or similar compensation, if any, applicable to any CORRA Loan having a one month or three month Interest Period under this Agreement.
ARTICLE 7 - Place and Application of Payments
| 7.01 | Place of Payment of Principal, Interest and Fees |
All payments of principal, interest, fees and other amounts to be made by the Borrower to the Administrative Agent and the Lenders pursuant to this Agreement will be made in Canadian Dollars for value on the day such amount is due or, if such day is not a Banking Day, on the Banking Day next following with interest, by deposit or transfer thereof to the account of the Administrative Agent maintained at the Agent’s Office or at such other place as the Borrower and the Administrative Agent may from time to time agree.
| 7.02 | Netting of Payments |
If, on any date, amounts would be due and payable under this Agreement in the same currency by the Borrower to any Lender, and by such Lender to the Borrower, then, on such date, upon notice from the Administrative Agent or such Lender stating that netting is to apply to such payments, the obligations of each such party to make payment of any such amount will be automatically satisfied and discharged if the amounts payable are the same. If the aggregate amount that would otherwise have been payable by the Borrower to such Lender exceeds the aggregate amount that would otherwise have been payable by such Lender to the Borrower or vice versa, such obligations will be replaced by an obligation upon whichever of the Borrower or such Lender would have had to pay the larger aggregate amount, to pay to the other the excess of the larger aggregate amount over the smaller aggregate amount. For greater certainty, prior to acceleration of repayment pursuant to Section 11.02, this Section 7.02 will not permit any Lender to exercise a right of set-off, combination or similar right against any amount which the Borrower may have on deposit with such Lender in respect of any amount to which netting is to apply pursuant to this Section 7.02, but will apply only to determine the net amount to be payable by the Lenders to the Borrower, or by the Borrower to the Lenders.
ARTICLE 8 - Representations and Warranties
| 8.01 | Representations and Warranties of the Borrower |
The Borrower (as to itself only and not with respect to any other Obligor) represents and warrants to the Administrative Agent and to each of the Lenders as follows, and acknowledges and confirms that the Administrative Agent and each of the Lenders is relying upon such representations and warranties:
(1) Existence and Qualification. It has been duly incorporated, amalgamated or continued, as the case may be, and is validly subsisting under the laws of its jurisdiction of incorporation, amalgamation or continuance, and is duly qualified to carry on business in the applicable jurisdictions where failure to do so would have a Material Adverse Effect.
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(2) Power and Authority. It has the power, authority and right to enter into and deliver, and to exercise its rights and perform its obligations under, the Loan Documents to which it is a party and to own its Property and carry on its business as currently conducted.
(3) Execution, Delivery and Performance of Loan Documents. The execution and delivery of each of the Loan Documents to which it is a party, and every other instrument or agreement delivered by it pursuant to any Loan Document, and the performance of its obligations thereunder: (i) has been duly authorized by all actions, if any, required on its part and by its shareholders and directors (or where applicable partners, members or managers), and (ii) each of such documents has been duly executed and delivered.
(4) Loan Documents Comply with Applicable Laws, Organizational Documents and Contractual Obligations. Neither the entering into nor the delivery of, and neither the consummation of the transactions contemplated in nor compliance with the terms, conditions and provisions of, the Loan Documents by it conflicts with or will conflict with, or results or will result in any breach of, or constitutes a default under or contravention of, any Requirements of Law applicable to it, its Organizational Documents, or results or will result in the creation or imposition of any Encumbrance other than Permitted Encumbrances except in favour of the Lenders or the Administrative Agent upon any of its Property, including the Project, and in each case that would result in a Material Adverse Effect.
(5) Consents Respecting Loan Documents. It has obtained, made or taken all consents, approvals, authorizations, declarations, registrations, filings, notices and other actions whatsoever required as to the date hereof in connection with the execution and delivery by it of each of the Loan Documents to which it is a party and the consummation of the transactions contemplated in the Loan Documents except where failure would not have a Material Adverse Effect.
(6) Taxes. It has paid or made adequate provision for the payment of all Taxes that are due and payable and other Potential Prior-Ranking Claims levied on it or on its Property (including, in the case of the Borrower, the Project) or income that are due and payable, including interest and penalties, or has accrued such amounts in its financial statements for the payment of such Taxes or other Potential Prior-Ranking Claims, except Taxes or other Potential Prior-Ranking Claims that are not material in amount or that are not delinquent (or if delinquent are being contested in good faith, and in respect of which non-payment would not individually or in the aggregate constitute, or be reasonably likely to cause, a Material Adverse Effect, and, if the aggregate amount of same is in excess of $2,000,000, in respect of which the Borrower has deposited with the Administrative Agent or the appropriate Governmental Authority collateral satisfactory to the Administrative Agent or such Governmental Authority, as the case may be, to secure the payment of such Taxes or other Potential Prior-Ranking Claims and so long as the Administrative Agent is satisfied that its Security is not in jeopardy), and there is no material action, suit, proceeding, investigation, audit or claim now pending, or to its knowledge threatened, by any Governmental Authority regarding any Taxes or other Potential Prior-Ranking Claims that is reasonably likely to cause a Material Adverse Effect nor has it agreed to waive or extend any statute of limitations with respect to the payment or collection of Taxes or other Potential Prior-Ranking Claims.
(7) Judgments, Etc. It is not subject to any judgment, order, writ, injunction, decree or award that has not been stayed or of which enforcement has not been suspended and that individually or in the aggregate constitutes, or is reasonably likely to cause, a Material Adverse Effect.
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(8) Absence of Litigation. There are no actions, suits or proceedings pending or, to the best of its knowledge, threatened against or affecting it that are reasonably likely to cause, either separately or in the aggregate, a Material Adverse Effect. It is not in default with respect to any Applicable Law in a manner or to an extent that would reasonably be expected to cause a Material Adverse Effect.
(9) Labour Relations. It is not engaged in any unfair labour practice that would reasonably be expected to cause a Material Adverse Effect; and there is no unfair labour practice complaint pending against it or, to the best of its knowledge, threatened against the Borrower, before any Governmental Authority that if adversely determined would reasonably be expected to cause a Material Adverse Effect.
(10) Title to Project Lands. The applicable Obligors have such ownership, leasehold or other rights in the Project Lands and other material Property as are necessary for the conduct of their business, subject only to Permitted Encumbrances.
(11) Compliance with Laws. It is not in default under any Applicable Law where such default would reasonably be expected to cause a Material Adverse Effect. To the best of the knowledge of the Borrower, except as disclosed in the environmental reports delivered to the Lenders, the Project is in compliance in all material respects with all Applicable Law, including, without limitation, all Environmental Laws.
(12) No Pending or Proposed Changes in Applicable Law. To the best of its knowledge, there are no pending or proposed changes to Applicable Law which would render illegal or materially restrict the operation of the business or assets of the Obligors in a manner that would reasonably be expected to cause a Material Adverse Effect.
(13) No Default Under Agreements, etc. It is not in default under any Loan Document or any other agreement, guarantee, indenture or instrument to which it is a party or by which it is bound, where such default constitutes a Material Adverse Effect.
(14) Ownership Structure. The ownership structure of the Borrower as of the date hereof is as set out in Schedule 8.01(14).
(15) Leases and Service Offers. The material leases and service offers are in full force and effect, unamended except as disclosed to the Administrative Agent, and, to the knowledge of the Borrower and except as disclosed in writing to the Administrative Agent, no party thereto is in material default.
(16) Condition of Properties. All material Properties and improvements of the Borrower are in good working order and condition, ordinary wear and tear excepted, except where any failure would not reasonably be expected to cause a Material Adverse Effect.
(17) Relevant Jurisdictions. The Relevant Jurisdictions for the Borrower are set forth on Schedule 1.01(F).
(18) Material Project Agreements and Material Licences
| (a) | The Material Project Agreements and Material Licences existing as of the date of this Agreement are those listed in Schedule 1.01(D), and true copies of such Material Project Agreements and Material Licences have been delivered to the Administrative Agent or otherwise disclosed to it. |
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| (b) | No event has occurred and is continuing that would constitute a material breach of or a material default under any Material Project Agreement or Material Licence and each Material Project Agreement to which the Borrower is a party is binding upon it and, to the best of its knowledge, is a binding agreement of each other party thereto. |
(19) Financial Statements. All of the financial statements that have been furnished to the Lenders by the Borrower in connection with this Agreement are complete in all material respects and such financial statements fairly present the financial position of the Borrower, as of the dates referred to therein and have been prepared in accordance with GAAP. The Borrower does not have any liabilities (contingent or other) or other obligations of the type required to be disclosed in accordance with GAAP that are not fully disclosed on the financial statements of such entity provided to the Lenders.
(20) No Material Adverse Effect. Since the date of the most recent annual financial statements of the Borrower provided to the Administrative Agent, there has been no condition (financial or otherwise), event or change in the business, liabilities, operations, results of operations, assets or prospects of the Borrower which constitutes, or would reasonably be expected to constitute, or cause, a Material Adverse Effect.
(21) Environmental Matters
| (a) | Except as disclosed in reports delivered to the Administrative Agent, the Project is in compliance in all material respects with all Environmental Laws; the Borrower is not aware of, nor has it received notice of, any past, present or future condition, event, activity, practice or incident that may interfere with or prevent the compliance or continued compliance of the Project or the Borrower in all material respects with all Environmental Laws; and as at the time of the relevant Drawdown the Borrower has obtained or will obtain as part of its development of the Project all licences, permits and approvals in connection with the Project that are currently required under all Environmental Laws and is in full compliance with the provisions of all existing licences, permits and approvals, in each case except to the extent that the non-compliance would not reasonably be expected to cause a Material Adverse Effect. |
| (b) | Other than as disclosed in the environmental report(s) delivered to the Lenders pursuant to Section 3.01(g)(ii), the Borrower is not aware that any Hazardous Substances exist on, about or within or have been used, generated, stored, transported, disposed of on, or Released from the Project other than in material accordance and compliance with all Environmental Laws, except to the extent that the non-compliance would not reasonably be expected to cause a Material Adverse Effect. |
| (c) | The use which the Borrower has made and intends to make of the Project will not result in the use, generation, storage, transportation, accumulation, disposal, or Release of any Hazardous Substances on, in or from the Project except in accordance and compliance with all Environmental Laws, except to the extent that the non-compliance would not reasonably be expected to cause a Material Adverse Effect. |
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| (d) | There is no action, suit or proceeding, or, to its knowledge, any investigation or inquiry, before any Governmental Authority pending or, to its knowledge, threatened against the Borrower relating in any way to any Environmental Laws that would reasonably be expected to cause a Material Adverse Effect. |
| (e) | The Borrower has not (i) with respect to the Project, incurred any current and outstanding liability for any clean-up or remedial action under any Environmental Laws with respect to current or past operations, events, activities, practices or incidents relating thereto, (ii) received any outstanding written request for information (other than information to be provided in the normal course in connection with applications for licences, permits or approvals) by any Person under any Environmental Laws with respect to the condition, use or operation of the Project, (iii) received any outstanding written notice or claim under any Environmental Laws with respect to any material violation of or liability under any Environmental Laws or relating to the presence of Hazardous Substance on or originating from the Project, that, in any such case, would reasonably be expected to cause a Material Adverse Effect, or (iv) ever been convicted of an offence or subjected to any judgment, injunction or other proceeding for non-compliance with any Environmental Laws with respect to the Project or been fined or otherwise sentenced or settled such prosecution or other proceeding short of conviction for non-compliance with any Environmental Laws with respect to the Project. |
| (f) | Copies of all material analysis and monitoring data for soil, ground water, surface water and the like and reports pertaining to any environmental assessments or audits, including without limitation any inspections, investigations and tests, relating to the Project that were obtained, are in the possession or control of, or were carried out on behalf of, the Obligors have been delivered to the Administrative Agent. |
| (g) | Since the date of acquisition of its interest in the Project, the Borrower has maintained all environmental and operating documents and records relating to the Project substantially in the manner and for the time periods required by Environmental Laws. |
| (h) | The Borrower has not defaulted in reporting in any material respect to any applicable Governmental Authority in relation to the Project on the happening of an occurrence which it is or was required by any Environmental Laws to report. |
(22) Material Licences. All Material Licences from third parties and Governmental Authorities that are required as of the date hereof for the operation of the business and assets of the Obligors have been obtained, except where failure to obtain same would not reasonably be expected to have a Material Adverse Effect.
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(23) Zoning, Uses and Expropriation
| (a) | The Project is zoned or otherwise authorized to permit the current and intended use thereof in all material respects. |
| (b) | The existing uses of the Project comply in all material respects with all Applicable Law. |
| (c) | It has not received notice of any proposed rezoning of all or any part of the Project that would be reasonably likely to cause a Material Adverse Effect. |
| (d) | It has not received notice of any expropriation of all or any part of the Project. |
(24) Undisclosed Liabilities. There are no liabilities (including contingent liabilities) that, in the aggregate, are material in respect of the Project or the Borrower, or their respective businesses, which have not been previously disclosed in writing to the Lenders.
(25) Insolvency. The Borrower (i) has not committed any act of bankruptcy, (ii) is not insolvent and has not proposed, nor given notice of its intention to propose, a compromise or arrangement to its creditors generally, (iii) has not had any petition for a receiving order in bankruptcy filed against it, made a voluntary assignment in bankruptcy, taken any proceeding with respect to any compromise or arrangement, taken any proceeding to have itself declared bankrupt or wound up-, taken any proceeding to have a receiver appointed of any part of its assets, or had any Encumbrancer take possession of any material portion of its property, or (iv) has not had an execution or distress become enforceable or become levied on any material portion of its assets and property.
(26) Intellectual Property. To the best of the knowledge of the Borrower after due inquiry, the operation of the business and assets of the Obligors does not infringe any material intellectual property rights of any other Person in a manner that would be reasonably likely to cause a Material Adverse Effect.
(27) Full Disclosure. All information provided or to be provided to the Administrative Agent and the Lenders in connection with the Term Loan Facility is, to the Borrower’s knowledge, true and correct in all material respects and none of the documentation furnished to the Administrative Agent and the Lenders by or on behalf of it, to its knowledge, omits or will omit as of such time, a material fact necessary to make the statements contained therein not misleading in any material way, and all expressions of expectation, intention, belief and opinion contained therein were honestly made on reasonable grounds after due and careful inquiry by it (and any other Person who furnished such material on behalf of it).
(28) Residency. The Borrower is not a non-resident for the purposes of Section 116 of the Income Tax Act (Canada).
(29) Insurance. The Borrower is in compliance in all material respects with all terms and conditions of all insurance policies issued in respect of the Project.
(30) Non-Default. No Default or Event of Default has occurred and is continuing.
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(31) Sanctions. Neither the Borrower nor, to the knowledge of the Borrower, any of its Affiliates or any of their respective directors, officers, employees or agents acting or benefiting in any capacity in connection with this Agreement or the transactions contemplated hereby, is a Person that is the subject of Sanctions or is located, organized or resident in a country or territory that is itself the subject of comprehensive Sanctions, except to the extent not prohibited by applicable Sanctions Laws. The Borrower has not knowingly engaged in, and is not knowingly engaged in, any dealings or transactions prohibited by applicable Sanctions Laws. The Borrower is in compliance in all material respects with applicable Sanctions Laws and no part of the proceeds of any Loan will be used, directly or indirectly, in any manner that would result in a violation of applicable Sanctions Laws by any Lender, the Administrative Agent or any Obligor.
| 8.02 | Representations and Warranties of the Guarantors |
The Guarantors (each of them as to itself only and not with respect to any other Obligor or the Property) represent and warrant to the Administrative Agent and to each of the Lenders as follows, and acknowledge and confirm that the Administrative Agent and each of the Lenders is relying upon such representations and warranties:
(1) Existence and Qualification. It has been duly incorporated, amalgamated, continued, formed or established, as the case may be, and validly exists under the laws of its jurisdiction of organization and is duly qualified to carry on business where failure to do so would have a Material Adverse Effect.
(2) Power and Authority. It has the power, authority and right (a) to enter into and deliver, and to exercise its rights and perform its obligations under, the Loan Documents to which it is a party and all other instruments and agreements delivered by it pursuant to any of the Loan Documents, and (b) to own its Property and carry on its business as currently conducted and as currently proposed to be conducted by it.
(3) Execution, Delivery and Performance of Loan Documents. The execution and delivery of each of the Loan Documents to which it is a party, and every other instrument or agreement delivered by it pursuant to any Loan Document and the performance of its obligations thereunder: (i) has been duly authorized by all actions, if any, required on its part and by its shareholders and directors (or where applicable partners, members or managers), and (ii) each of such documents has been duly executed and delivered.
(4) Loan Documents Comply with Applicable Laws, Organizational Documents and Contractual Obligations. Neither the entering into nor the delivery of, and neither the consummation of the transactions contemplated in nor compliance with the terms, conditions and provisions of, the Loan Documents by it conflicts with or will conflict with, or results or will result in any breach of, or constitutes a default under or contravention of, any Requirements of Law applicable to it, or if applicable, its general partner’s, Organizational Documents, or results or will result in the creation or imposition of any Encumbrance other than Permitted Encumbrances except in favour of the Lenders or the Administrative Agent upon any of its Property that would result in Material Adverse Effect.
(5) Consents Respecting Loan Documents. It has obtained, made or taken all consents, approvals, authorizations, declarations, registrations, filings, notices and other actions whatsoever required as to the date hereof in connection with the execution and delivery by it of each of the Loan Documents to which it is a party and the consummation of the transactions contemplated in the Loan Documents except where failure would not have a Material Adverse Effect.
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(6) Judgments, Etc. It is not subject to any judgment, order, writ, injunction, decree or award that has not been stayed or of which enforcement has not been suspended and that individually or in the aggregate constitutes, or is reasonably likely to cause, a Material Adverse Effect.
(7) Absence of Litigation. There are no actions, suits or proceedings pending or, to the best of its knowledge, threatened against or affecting it that are reasonably likely to cause, either separately or in the aggregate, a Material Adverse Effect. It is not in default with respect to any Applicable Law in a manner or to an extent that would reasonably be expected to cause a Material Adverse Effect.
(8) Compliance with Laws. It is not in default under any Applicable Law where such default would reasonably be expected to cause a Material Adverse Effect.
(9) No Default Under Agreements, etc. It is not in default, nor is it aware of any default by the Borrower, under any Loan Document or any other agreement, guarantee, indenture or instrument to which it is a party or by which it is bound, where such default constitutes a Material Adverse Effect.
(10) Financial Statements. All of the financial statements that have been furnished to the Lenders by it in connection with this Agreement are complete in all material respects and such financial statements fairly present the financial position of it, as of the dates referred to therein and have been prepared in accordance with GAAP. It does not have any liabilities (contingent or other) or other obligations of the type required to be disclosed in accordance with GAAP that are not fully disclosed on the financial statements provided to the Lenders by it.
(11) No Material Adverse Effect. Since the date of the most recent annual financial statements provided by it to the Administrative Agent, there has been no condition (financial or otherwise), event or change in its business, liabilities, operations, results of operations, assets or prospects which constitutes, or would reasonably be expected to constitute, or cause, a Material Adverse Effect.
(12) Insolvency. It, (i) has not committed any act of bankruptcy, (ii) is not insolvent, nor has it proposed, or given notice of its intention to propose, a compromise or arrangement to its creditors generally, (iii) has not made any petition for a receiving order in bankruptcy filed against it, made a voluntary assignment in bankruptcy, taken any proceeding with respect to any compromise or arrangement, taken any proceeding to have itself declared bankrupt or wound-up, taken any proceeding to have a receiver appointed of any part of its assets, nor had any Encumbrancer take possession of any material portion, of its property, or (iv) has not had an execution or distress become enforceable or become levied on any material portion, of its assets and property.
(13) Full Disclosure. All information provided or to be provided to the Administrative Agent and the Lenders by it in connection with the Term Loan Facility is, to its knowledge, true and correct in all material respects and none of the documentation furnished to the Administrative Agent and the Lenders by or on behalf of it, to its knowledge, omits or will omit as of such time, a material fact necessary to make the statements contained therein not misleading in any material way, and all expressions of expectation, intention, belief and opinion contained therein were honestly made on reasonable grounds after due and careful inquiry by it (and any other Person who furnished such material on behalf of it).
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(14) Residency. It is not a non-resident for the purposes of Section 116 of the Income Tax Act (Canada).
(15) Non-Default. To the best of its knowledge, after due inquiry, no Default or Event of Default has occurred and is continuing.
(16) Sanctions. Neither such Guarantor nor, to the knowledge of such Guarantor, any of its Affiliates or any of their respective directors, officers, employees or agents acting or benefiting in any capacity in connection with this Agreement or the transactions contemplated hereby, is a Person that is the subject of Sanctions or is located, organized or resident in a country or territory that is itself the subject of comprehensive Sanctions, except to the extent not prohibited by applicable Sanctions Laws. Such Guarantor has not knowingly engaged in, and is not knowingly engaged in, any dealings or transactions prohibited by applicable Sanctions Laws. Such Guarantor is in compliance in all material respects with applicable Sanctions Laws.
| 8.03 | Survival and Repetition of Representations and Warranties |
The representations and warranties set out in Sections 8.01 and 8.02 survive the execution and delivery of this Agreement and all other Loan Documents and will be deemed to be repeated by the Obligors as of each Drawdown Date, except to the extent that on or prior to such date an Obligor has advised the Administrative Agent in writing of a variation in any such representation or warranty, and if such variation would have a Material Adverse Effect, the Lenders have approved such variation.
ARTICLE 9 - Covenants
| 9.01 | Positive Covenants |
So long as this Agreement is in force and except as otherwise permitted by the prior written consent of the Required Lenders, the Borrower and each other Obligor, as applicable, will:
(1) Timely payment. Make due and timely payment of the Obligations required to be paid by it hereunder and under any other Loan Documents to which it is a party.
(2) Conduct of Business, Maintenance of Existence, Compliance with Laws. Engage in business of the same general type as now conducted by it; carry on and conduct its business and operations in a proper, efficient and businesslike manner, in accordance with good business practice; preserve, renew and keep in full force and effect its existence, as applicable; and take all reasonable action to maintain all rights, privileges and franchises necessary in the normal conduct of its business and to comply in all material respects with all Material Project Agreements, Material Licences and Requirements of Law.
(3) Further Assurances. Use commercially reasonable efforts to provide the Administrative Agent and the Lenders with such documents, instruments, opinions, consents, acknowledgments, agreements and other assurances as are reasonably necessary to give effect to this Agreement and the other Loan Documents to which it is a party, from time to time.
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(4) Access to Information. Promptly provide the Administrative Agent and the Lenders with all information reasonably requested by any of them from time to time in connection with this Agreement concerning its financial condition, the Projects, leases, service offers, Material Project Agreements and all financial and other reporting obligations required hereunder or under the Loan Documents.
(5) Obligations and Taxes. Pay or discharge, or cause to be paid or discharged, before the same will become delinquent (i) all Taxes or other Potential Prior-Ranking Claims imposed upon it or upon its income or profits or in respect of its business or Property (including the Project) and file all tax returns in respect thereof, (ii) all lawful claims for labour, materials and supplies, (iii) all required payments under any of its Indebtedness (except where a failure to make such payments will not have a Material Adverse Effect), and (iv) all other obligations (except where a failure to make such payments will not have a Material Adverse Effect); provided, however that it will not be required to pay or discharge or to cause to be paid or discharged any such amount so long as the validity or amount thereof is being contested in good faith by appropriate proceedings and an appropriate financial reserve in accordance with GAAP and satisfactory to the Administrative Agent has been established, and, if the aggregate amount being contested is in excess of $2,000,000, the Borrower will have deposited with the Administrative Agent or the appropriate Governmental Authority collateral satisfactory to the Administrative Agent or such Governmental Authority, as the case may be, to secure the payment of such Taxes, other Potential Prior-Ranking Claims or other amounts.
(6) Use of Term Loan Facility. Use the proceeds of the Term Loan Facility only for the purposes specified in Section 2.03.
(7) Operating Insurance. Maintain insurance with responsible insurers and in amounts and on terms customary for similar properties and businesses and otherwise satisfactory to the Administrative Agent, including property insurance, business interruption insurance, liability insurance and such other insurance as the Administrative Agent may reasonably require. The Borrower will provide certificates of insurance for all policies required hereunder in form acceptable to the Administrative Agent, acting reasonably, showing the Administrative Agent as first mortgagee and as loss payee as its interest may appear.
(8) Proceeds of Insurance. Net proceeds of all property insurance in respect of any secured asset and third party liability insurance shall be payable to the Administrative Agent or otherwise under the control of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, shall be released by the Administrative Agent to the Borrower for restoration, repair, rebuilding or replacement of the affected property upon receipt of evidence satisfactory to the Administrative Agent that such proceeds, together with any other funds available to the Borrower, are sufficient for such purpose and that no Default or Event of Default exists or would result therefrom; failing such release, such proceeds shall be held as collateral or applied to the Obligations as provided in this Agreement.
| (i) | Proceeds of any business interruption insurance shall be payable to the Administrative Agent or otherwise under its control and, so long as no Event of Default has occurred and is continuing, may be released by the Administrative Agent to the Borrower to be applied on account of operating costs, debt service and other obligations of the Borrower as the same fall due from time to time, in each case in accordance with this Agreement. |
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| (ii) | All insurance proceeds held by or under the control of the Administrative Agent shall, unless and until applied or released to the Borrower as provided in this Agreement, constitute continuing collateral security for the Obligations. |
(b) If an Event of Default has occurred and is continuing:
| (i) | If an Event of Default has occurred and is continuing, the proceeds of all insurance other than workers’ compensation insurance, errors and omissions insurance and third party liability insurance shall be payable to or otherwise under the control of the Administrative Agent and may be held as additional collateral or applied by the Administrative Agent in reduction of the Obligations, provided that the Administrative Agent may, with the consent of the Required Lenders or as otherwise permitted by this Agreement, release such proceeds to the Borrower for restoration, repair, rebuilding or replacement upon receipt of evidence satisfactory to the Administrative Agent. |
| (ii) | The proceeds of any business interruption insurance shall be payable to or otherwise under the control of the Administrative Agent to be held by the Administrative Agent as additional security for the payment of all amounts payable hereunder and may be applied by the Administrative Agent on account of operating costs, debt service and other Obligations as the same fall due from time to time or, after application thereof, in reduction of the Loans. |
| (iii) | All insurance proceeds held by or under the control of the Administrative Agent shall, unless and until applied or released to the Borrower as aforesaid, constitute continuing collateral security for the Borrower’s obligations and liabilities in respect of amounts outstanding hereunder. |
(9) Notice of Non-Compliance. Promptly notify the Administrative Agent of any material non-compliance by it with the terms and conditions of this Agreement of which it becomes aware including any Default or Event of Default.
(10) Notice of Material Adverse Effect. Promptly notify the Administrative Agent of any Material Adverse Effect or any matter that is likely to have a Material Adverse Effect that would apply to it of which it becomes aware.
(11) Notice of Litigation. Promptly notify the Administrative Agent on becoming aware of the occurrence of any litigation, dispute, arbitration or other proceeding the result of which, if determined adversely, would be a judgment or award against it that would result in a Material Adverse Effect to it, and from time to time provide the Administrative Agent with all reasonable information requested by the Administrative Agent concerning the status of any such proceeding.
(12) Other Notices. Promptly give written notice to the Administrative Agent upon becoming aware:
| (a) | of any change in Control of an Obligor; |
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| (b) | of any labour controversy which could have a Material Adverse Effect on the business or operations of the Obligors; |
| (c) | of the occurrence of an event of Force Majeure describing in reasonable detail the effects of such event on the operations of the Obligors and the action which the Borrower intends to take to remedy such event; |
| (d) | of the cessation of any event of Force Majeure; |
| (e) | of any other matter which has resulted in or is reasonably likely to result in a Material Adverse Effect on an Obligor or the Project or the business, properties, assets, obligations, operations or prospects of an Obligor; |
| (f) | of any circumstance of which the Borrower has notice or is aware which will likely result in a material breach of or material default or material non-performance by any party under any Material Project Agreement or Material Licence; |
| (g) | of any damage to or destruction of any material property which might give rise to an insurance claim, if the cost of repairs or replacement of such property exceeds $2,000,000; |
| (h) | of any threatened expropriation or notice of expropriation with respect to all or part of the Project Lands; |
| (i) | of any default with respect to the payment of any Indebtedness when same is due in excess of $2,000,000; |
| (j) | of such other information respecting the business, properties, condition or operation of the Borrower as the Administrative Agent may from time to time reasonably request in order to determine compliance by the Borrower with or otherwise in connection with the administration or enforcement of this Agreement or any Loan Document; and |
| (k) | of any non-compliance in any material respect with Environmental Laws relating to the Project, and of any notice, investigation, non-routine inspection or material inquiry by any Governmental Authority in connection with any Environmental Laws relating to the Project. |
(13) Environmental Compliance
| (a) | Operate the Project in a manner such that commercially reasonable efforts are taken so that, other than those obligations existing at the date of this Agreement, if any, no material obligation, including material clean-up or remedial obligation, will arise under any Environmental Laws, which obligations individually or in the aggregate would have, or would be reasonably likely to cause, a Material Adverse Effect; provided, however, that if any such claim is made or any such obligation arises, it will satisfy or contest such claim or obligation at its own cost and expense, and promptly notify the Administrative Agent upon learning of (a) the existence of Hazardous Substances located on, above or below the surface of the Project Lands or contained in the soil or water constituting such land, except those being stored, used, contained or otherwise handled in substantial compliance with Environmental Laws, (b) the occurrence of any reportable Release of Hazardous Substances into the air, land, surface water or ground water that has occurred on or from such land that would be reasonably likely to result in a Material Adverse Effect, or (c) any other event or occurrence relating to the Project which, in the opinion of the Borrower, acting reasonably, is likely to give rise to a notice of non-compliance in any material respect with any Environmental Laws. |
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| (b) | Comply in all material respects, and cause any other party that is acting under its authority to comply in all material respects, with all Environmental Laws (including, but not limited to, obtaining any Material Licences or similar authorizations) relating to the Project. |
| (c) | Not cause or permit a Release of any Hazardous Substance at, on, under or near the Project, other than in compliance with Environmental Laws. |
| (d) | Provide the Administrative Agent with an environmental site assessment or audit report of the Project, or an update of such assessment or audit report: (i) upon the written request of the Administrative Agent if in its reasonable opinion there is a concern about the Borrower’s compliance, as it relates to the Project, or the Project’s compliance in all material respects with Environmental Laws, all in scope, form and content satisfactory to the Administrative Agent; (ii) if such assessment or audit report has been prepared at the request of or on behalf of any Governmental Authority; or (iii) where the Borrower is not in material compliance with its obligations hereunder relating to an environmental matter, and the Administrative Agent has made a written request to the Borrower for such an assessment or audit report or update, within thirty (30) Banking Days after such request, and all such assessments, audits, reports or updates thereof shall be at the Borrower’s expense and risk; an environmental site assessment or audit may include, for purposes of this Section, any inspection, investigation, test, sampling, analysis or monitoring pertaining to air, land and water relating to the Project reasonably required under the circumstances giving rise to the request for the assessment or audit report , in each case in the presence of a representative of the Borrower, during normal business hours and upon at least 48-hour prior notice. |
| (e) | Not use the Project, or permit it to be used, to generate, manufacture, refine, treat, transport, store, handle, dispose, transfer, produce or process Hazardous Substances except in compliance in all material respects with all Environmental Laws. |
| (f) | Maintain in all material respects all environmental and operating documents and records, including, without limitation, Material Licences and orders, relating to the Project in the manner and for the time periods required by Environmental Laws. |
(14) Security. Provide the Administrative Agent with the Security required from time to time pursuant to Article 10 in accordance with the provisions of such Article, accompanied by supporting resolutions, certificates and opinions in form and substance satisfactory to the Administrative Agent, acting reasonably, and do all such further acts and execute and deliver all such documents and instruments as may from time to time be requested by the Administrative Agent, acting reasonably, to ensure that the Security constitutes at all times valid, enforceable, and perfected first priority Encumbrances (subject only to Permitted Encumbrances).
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(15) Maintenance of Property. Keep all Property necessary for its business in good working order and condition, normal wear and tear excepted, except to the extent that the failure to do so would not individually or in the aggregate be reasonably likely to cause a Material Adverse Effect.
(16) Adequate Books. Maintain adequate books, accounts and records in accordance with GAAP consistently applied.
(17) Material Project Agreements. At all times be and remain in full compliance in all material respects with all of its covenants, agreements and obligations in and diligently enforce all its material rights under all Material Project Agreements if non-compliance would have a Material Adverse Effect. The Borrower shall not alter, amend or waive, in any material respect, any of its rights under or permit any termination or surrender of any Material Project Agreement, without the prior written consent of the Administrative Agent, except where such action is in the ordinary course of business and would not reasonably be expected to have a Material Adverse Effect.
(18) Access. Permit the Administrative Agent and the Lenders, through their agents, officers or employees, for the purposes of monitoring compliance with the covenants and obligations of the Borrower hereunder, to visit and inspect the Project and the books and records of the Borrower, in each case in the presence of a representative of the Borrower, during normal business hours and upon at least 48-hour prior notice.
(19) Remedy of Force Majeure. If the Borrower has given notice to the Administrative Agent of an event of Force Majeure, it shall use reasonable commercial efforts to remedy or cause to be remedied the same or causes thereof.
(20) Management and Control of Project. The Borrower shall manage and operate the Project in accordance in all material respects with prudent industry practice, the Material Project Agreements, applicable budgets and operating plans and all Applicable Laws.
(21) QST, GST and other applicable sales tax refunds. File all returns and other documents necessary to obtain refunds of QST, GST or other applicable sales taxes in respect of the Project and apply the amount of any such refund in accordance with the terms of this Agreement and the applicable operating requirements of the business.
(22) Non-Disturbance Agreements. In respect of the MTL I lease, obtain and maintain in favour of the Administrative Agent a landlord consent, estoppel and recognition agreement, or other tripartite agreement or subordination, non-disturbance and attornment agreement, in each case in form and substance satisfactory to the Administrative Agent, acting reasonably, providing for such acknowledgements, notices, cure rights, step-in rights, continued access and non-disturbance protections as the Administrative Agent may reasonably require, and in respect of any other Lease where the Administrative Agent reasonably requests, obtain an attornment and non-disturbance agreement in a form acceptable to the Administrative Agent.
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(23) Location of Accounts. Maintain the Borrower’s primary operating account and such other accounts as the Administrative Agent may reasonably require with the Administrative Agent or as otherwise agreed by the Administrative Agent.
(24) Québec Presence and Operations. So long as Investissement Québec is a Lender under the Credit Facilities, the Borrower shall maintain in the Province of Québec (i) its head office, (ii) its principal place of business, (iii) the location where strategic decisions are made, and (iv) the ultimate ownership of the intellectual property rights it owns and uses in connection with its activities in Québec, and shall not move a material portion of its assets outside Québec, in each case without the prior written consent of Investissement Québec.
(25) Undesirable Persons. Notwithstanding anything else in this Agreement, so long as Investissement Québec is a Lender under the Credit Facilities, the Borrower shall not permit any shares of its share capital or any securities convertible into shares of its share capital to be held, directly or indirectly, by any Person (excluding, for greater certainty, as a result of any sale of securities in the public markets of WhiteFiber, Inc.) if, in the reasonable opinion of Investissement Québec, such Person or any of its shareholders, directors or officers is likely to damage the reputation of Investissement Québec or the Government of Québec.
(26) Title. Warrant and defend the Borrower’s title to the Project Lands and every part thereof against the claims of all Persons whomsoever and do, observe and perform all obligations and all things necessary or expedient to be done, observed or performed by virtue of any Applicable Law for the purpose of creating, maintaining and keeping maintained the Security constituted by the Loan Documents as valid and effective security with the priority required hereunder.
(27) Sanctions. Comply, and cause each other Obligor to comply, in all material respects with applicable Sanctions Laws. None of the Obligors shall use, directly or indirectly, the proceeds of any Loan or otherwise make available such proceeds to any Person, for any purpose or in any manner, that would result in a violation of applicable Sanctions Laws by any Obligor, the Administrative Agent or any Lender.
| 9.02 | Reporting Requirements |
So long as this Agreement is in force and except as otherwise permitted by the prior written consent of the Required Lenders, the Borrower will deliver to the Administrative Agent, all in form and content acceptable to the Administrative Agent acting reasonably:
(1) Annual Financials. As soon as available and, in any event, within one hundred and twenty (120) days after the end of each Fiscal Year, copies of annual audited financial statements of the Borrower and the Guarantors (except 1504950 B.C. Unlimited Liability Company), on a consolidated basis, together with a Compliance Certificate, which financial statements shall be audited by Deloitte LLP, KPMG LLP, Ernst & Young LLP, PricewaterhouseCoopers LLP, or another nationally recognized accounting firm acceptable to the Administrative Agent acting reasonably. Notwithstanding the foregoing, the Administrative Agent acknowledges and agrees that Audit Alliance LLC shall be an acceptable auditor for the annual audited financial statements of the Borrower and the Guarantors for Fiscal Years ending on or before December 31, 2026.
(2) Quarterly Financials. As soon as available and, in any event, within sixty (60) days after the end of each of the first, second and third Fiscal Quarters, copies of unaudited quarterly internal financial statements of the Borrower and Guarantors (except 1504950 B.C. Unlimited Liability Company), prepared on a basis consistent with the annual financial statements referred to in Section 9.02(1), together with a Compliance Certificate containing reasonably detailed calculations demonstrating compliance with the financial covenants and such supporting materials as the Administrative Agent may reasonably request.
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(3) Property and Other Information
| (i) | Within sixty (60) days after the end of each Fiscal Quarter or the date of a change relating thereto that has, or is reasonably likely to cause, a Material Adverse Effect: |
| (A) | executed copies of all new material leases, service offers and other Material Project Agreements entered into during such Fiscal Quarter, together with any material amendments thereto; |
| (B) | details of any material changes affecting contracted recurring revenues, cash flow, occupancy, covenant compliance or the operation of the Projects; and |
(4) Within sixty (60) days after the end of each Fiscal Year or the date of a change relating thereto that has, or is reasonably likely to cause a Material Adverse Effect, a rent roll and weighted-average lease table for MTL I, MTL II and MTL III.
(5) Within sixty (60) days after the end of each Fiscal Year, the annual budget and operating plan for the Projects, including capital expenditure projections and lease or service offer summaries.
(6) Evidence satisfactory to the Administrative Agent of the payment of material property Taxes and, where reasonably requested by the Administrative Agent, material utilities relating to the Projects, within thirty (30) days of the due date of same or earlier if requested by the Administrative Agent, except where such payment is being contested in good faith.
(7) Insurance Reporting. Concurrently with the renewal or placement of any insurance required to be maintained by Section 9.01(7), delivery to the Administrative Agent of certificates of insurance relating to such insurance; and
(8) Other Information. Such other information as the Administrative Agent may reasonably request respecting the business, operations or financial condition of the Borrower, the Guarantors or the Projects.
(9) KYC Documentation and Anti-Money Laundering. The Obligors acknowledge that the Lenders have certain anti-money laundering and anti-terrorism responsibilities under various laws and regulations and that from time to time the Administrative Agent and the Lenders, including any prospective assignee or participant, may request information in order to comply with Applicable Laws and internal requirements, including any applicable know your customer or know your client requirements, and the Obligors covenant and agree, upon request, to promptly provide the Administrative Agent such additional information as may be reasonably requested. Each Obligor shall also provide the Administrative Agent with prompt written notice of any change in beneficial ownership, key officers or directors after the date of this Agreement. The Borrower covenants and agrees that the proceeds of any Drawdown under the Term Loan Facility shall not be used or invested in order to support domestic or international terrorism and shall not be directly or indirectly derived from activities that contravenes Applicable Laws in any material respect, including anti-money laundering laws and regulations.
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| 9.03 | Negative Covenants |
So long as this Agreement is in force and except as otherwise permitted by the prior written consent of the Required Lenders, the Obligors will not:
(1) Dispositions. Dispose of the Project, the Project Lands or any material part thereof or interest therein, or of any Property or any interest therein, whether by sale, transfer, lease, licence, assignment or otherwise, except (a) dispositions of inventory, obsolete, worn-out, surplus or no longer useful assets and other dispositions in the ordinary course of business, (b) dispositions expressly permitted by this Agreement, and (c) other dispositions consented to in writing by the Administrative Agent acting on the instructions of the Required Lenders; provided that any Disposition of secured assets or assets outside the security package or security ring-fence contemplated by this Agreement outside the ordinary course of business shall be subject to Section 6.01(3).
(2) No Change of Control. Permit any Disposition of any direct or indirect ownership interest in any Obligor by WhiteFiber, Inc. or otherwise permit any change of Control of any Obligor by WhiteFiber, Inc., in each case without the prior written consent of the Required Lenders.
(3) No Consolidation, Amalgamation, etc. Consolidate, amalgamate or merge with any other Person, liquidate, wind up or dissolve itself, or enter into any other reorganization or transaction that results in a change in its legal structure or identity, except with the prior written consent of the Required Lenders.
(4) No Change of Name. Change its name or move the location of its chief executive office without providing the Administrative Agent with thirty (30) days’ prior written notice thereof.
(5) No Distributions. Make any Distribution (and, for greater certainty, no Distribution shall be permitted during the construction period of any Project) unless (i) commercial operations have commenced for the applicable Project or Projects, (ii) no Default or Event of Default has occurred and is continuing or would result therefrom, and (iii) pro forma compliance with the financial covenants under this Agreement can be demonstrated before and after giving effect to such Distribution. Notwithstanding the foregoing, Distributions funded from the Term Loan Facility will be limited to a maximum amount of $41,239,373 in the aggregate.
(6) No Encumbrances. Create, incur, assume or permit to exist any Encumbrance upon any material Property except Permitted Encumbrances.
(7) No Change to Year End. Make any change to its Fiscal Year end.
(8) No Continuance. Continue into any other jurisdiction.
(9) Amendments to Organizational Documents. Amend any of its Organizational Documents in a manner that would be materially prejudicial to the interests of any of the Lenders under the Loan Documents.
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(10) Amendments to Material Project Agreements. Amend, vary or alter in any material way, consent to any assignment or transfer of, or waive or surrender any of its material rights or material entitlements under, any Material Project Agreement if such action would reasonably be expected to have a Material Adverse Effect. For greater certainty and without limiting the generality of the foregoing, the amendment of Material Project Agreements shall be permitted when such amendment does not or could not reasonably be expected to result in a breach of the covenants of this Agreement.
(11) Indebtedness, Liens, Capital Expenditures and Hedging. The Obligors shall not, directly or indirectly:
| (a) | Indebtedness. incur or permit to exist any Indebtedness, except: |
| (i) | Indebtedness permitted under the Loan Documents; |
| (ii) | obligations arising under Hedging Agreements; |
| (iii) | cash management obligations owing to the Administrative Agent; and |
| (iv) | Capital Lease Obligations, provided that the aggregate amount thereof does not exceed $2,000,000; |
| (b) | Liens. create, incur, assume or permit to exist any Liens or hypothecs on any of their Property, except for Permitted Encumbrances; |
| (c) | Capital Expenditures. incur any Capital Expenditures, except: |
| (i) | Maintenance Capital Expenditures, provided that (A) such expenditures do not exceed 120% of the budgeted Maintenance Capital Expenditures for such year, or (B) the prior written consent of the Administrative Agent is obtained, or (C) such expenditures are funded solely with equity or a quasi-equity instrument (including deeply subordinated debt) within ninety (90) days of the incurrence of such expenditures; |
| (ii) | Growth Capital Expenditures, provided that (A) the prior written consent of the Administrative Agent is obtained, or (B) such expenditures are funded solely with equity or a quasi-equity instrument (including deeply subordinated debt) within ninety (90) days of the incurrence of such expenditures; |
| (d) | Hedging Agreements. enter into any Hedging Agreement other than Hedging Agreements entered into in the ordinary course of business for bona fide hedging (and not speculative) purposes. |
Notwithstanding the foregoing:
| (i) | any Hedging Agreements entered into with a Lender (or an Affiliate thereof) shall be secured on a pari passu basis with the Obligations; and |
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| (ii) | any Hedging Agreements entered into with a Person that is not a Lender (or an Affiliate thereof) shall be unsecured. |
(12) Leasing and Service Offers. Enter into, amend, renew, terminate, forfeit or cancel any material Lease or service offer in respect of the secured property other than in the ordinary course of business and on arm’s length terms, except where the prior written consent of the Administrative Agent is required under this Agreement.
(13) Concerning Leases and Service Offers Generally. Accept or require payment of rent, fees or other moneys payable under any Lease or service offer that would result in more than one month of such rent, fees or other moneys being prepaid thereunder, other than bona fide deposits, security deposits and ordinary course prepayments.
| (a) | amounts representing a bona fide precalculation of any amount that is required to be paid under such Lease in addition to basic rental, including amounts payable with respect to taxes and maintenance of the Project and overage and percentage rentals; or |
| (b) | lease surrender payments and security deposits made by the tenant under such Lease. |
(14) Residency. Become a non-resident of Canada within the meaning of Section 116 of the Income Tax Act (Canada).
(15) Cryptocurrency Mining Activity. Permit any cryptocurrency mining activities at any of the MTL I, MTL II and MTL III sites.
| 9.04 | Financial Covenants |
(1) Financial Covenants
So long as any amount payable hereunder is outstanding or the Term Loan Facility is available hereunder, the Borrower shall comply with the following financial covenants, tested quarterly on a consolidated basis in accordance with this Agreement:
| (a) | DSCR. Maintain a DSCR of not less than 1.50:1.00. For purposes of this calculation, EBITDA shall mean EBITDA less cash taxes for the applicable test period. |
| (b) | Funded Debt to EBITDA. Maintain a ratio of Funded Debt to EBITDA of not greater than 4.50:1.00, stepping down to 4.25:1.00 on December 31, 2027 and 3.75:1.00 on December 31, 2028 and thereafter. |
For purposes of this Section: For the first year after closing, EBITDA shall be annualized based on contracted service offerings. Commencing as of June 30, 2027, EBITDA shall be calculated based on trailing twelve (12) months, being the most recent twelve-month period of actual results.
(2) Annual Financials. No separate annual financial statements of any Guarantor shall be required except to the extent expressly requested by the Administrative Agent acting reasonably where consolidated financial statements delivered pursuant to this Agreement are insufficient.
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(3) Quarterly Financials. No separate quarterly financial statements of any Guarantor shall be required except to the extent expressly requested by the Administrative Agent acting reasonably where consolidated financial statements delivered pursuant to this Agreement are insufficient.
(4) Compliance Certificate. The Borrower shall deliver a Compliance Certificate concurrently with the delivery of the financial statements referred to in this Agreement, signed by a senior officer of the Borrower and containing reasonably detailed calculations of the Borrower’s financial covenants.
ARTICLE 10 - Security
| 10.01 | Security |
(1) As general and continuing security for the payment and performance of the Obligations, the security described below will be granted to the Administrative Agent on behalf of the Lenders:
| (a) | a deed of movable hypothec (all present and future obligations under this Agreement and the Loan Documents) in the amount of $175,000,000 signed by each of the Borrower and the Guarantors constituting a first ranking hypothec on the universality of all present and future movable property and assets, corporeal and incorporeal, of each of the Borrower and the Guarantors; |
| (b) | a deed of immovable hypothec (all present and future obligations under this Agreement and the Loan Documents) in the amount of $175,000,000 signed by the applicable Obligors constituting a first ranking hypothec on the lands and improvements (present and future) of MTL II and MTL III, including leases, rents, and insurance proceeds related to MTL II and MTL III; |
| (c) | cross-default and cross-collateralization provisions; |
| (d) | a solidary suretyship and subordination of claims, signed by the Guarantors except 1504950 B.C. Unlimited Liability Company; |
| (e) | a limited recourse guarantee from 1504950 B.C. Unlimited Liability Company covering the Term Loan Facility Commitment including any Accordion Increase; |
| (f) | a solidary indemnity agreement covering environmental matters and other acts or omissions constituting misconduct, signed by the Borrower and the Guarantors; and |
| (g) | a landlord consent, estoppel and recognition agreement, or other tripartite agreement or subordination, non-disturbance and attornment agreement, in respect of the MTL I lease, in each case in form and substance satisfactory to the Administrative Agent, acting reasonably, providing the Administrative Agent with notices of default, cure rights, step-in rights, continued access and non-disturbance protections. |
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(2) For greater certainty and without limiting the generality of the foregoing, with respect to collateral situated in Québec, the Security shall include movable hypothecs on all present and future movable property of the applicable Obligor, immovable hypothecs on the Québec immovable property of the applicable Obligor, and any collateral mortgage bonds or other titles of indebtedness issued, delivered or used in connection with any Québec security document, all in favour of or held for the benefit of the Administrative Agent in its capacity as hypothecary representative (fondé de pouvoir) for the present and future Secured Parties.
| 10.02 | Cross-Collateralization |
All security, hypothecs, pledges, mortgages, assignments and other collateral granted by the Borrower or any Guarantor in favour of the Administrative Agent on behalf of the Lenders or any affiliate of the Lenders, whether now existing or granted in the future, shall secure any Indebtedness in excess of Cdn. $2,000,000 of the Borrower and each Guarantor to any of the Lenders and its respective affiliates, whether under this Agreement or under any cash management or hedging agreement.
For greater certainty, the repayment or satisfaction of any particular facility or obligation shall not result in the release of any collateral unless all obligations secured thereby have been indefeasibly paid and satisfied in full and the Lenders have agreed in writing to such release.
| 10.03 | After-Acquired Property and Further Assurances |
The Borrower will, from time to time and no later than thirty (30) days following the date of acquisition of any Property acquired by the Borrower after the date hereof, execute and deliver all such further assignments, hypothecs, pledges and other security documents in connection with all Property acquired by the Borrower after the date hereof or as may be required to validly create, publish, perfect or maintain the Security in, on or against any Property subject to the Security.
Any further Affiliate or Subsidiary of the Borrower formed, incorporated, organized or acquired after the date of this Agreement shall become a party to this Agreement as an Obligor by executing and delivering customary joinder documentation, in form and substance satisfactory to the Lenders, within thirty (30) days following its formation, incorporation, organization or acquisition.
| 10.04 | Form of Security |
The Security will be in form satisfactory to the Lenders, acting reasonably.
ARTICLE 11 - DEFAULT
| 11.01 | Events of Default |
The occurrence of any one or more of the following events will constitute an Event of Default under this Agreement:
| (a) | if the Borrower defaults in payment of any principal payable hereunder when the same is due and payable, including on the Maturity Date, or if the Borrower defaults in payment of any interest, fee or other amount payable hereunder when the same is due and payable and in each case fails to remedy such default within three (3) Banking Days; |
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| (b) | if any Obligor breaches any covenant in Sections 9.03(1), 9.03(2), 9.03(3) or 9.03(4); |
| (c) | if the Borrower breaches any of the financial covenants in Section 9.04(1), for which no grace or cure period shall be applicable unless, within sixty (60) days of such default, the Borrower provides the Administrative Agent with a signed and binding copy of a Material Project Agreement in replacement of any lost revenue causing such default; |
| (d) | if any Obligor neglects to observe or perform, in any material respect, any covenant or obligation contained in this Agreement or any other Loan Document on its part to be observed or performed (other than a covenant or condition whose breach or default in performance is specifically dealt with elsewhere in this Section 11.01 or such Loan Document) and such Obligor fails to remedy such default within thirty (30) days from the earlier of (i) the date such Obligor becomes aware of such default, and (ii) the date the Administrative Agent delivers written notice of the default to such Obligor; |
| (e) | if any representation or warranty made by or deemed to be made by any Obligor in this Agreement or in any certificate or other Loan Document at any time delivered hereunder to the Administrative Agent shall prove to have been incorrect or misleading in any material adverse respect on and as of the date thereof; |
| (f) | if any Obligor ceases to carry on business generally or admits its inability or fails to pay its Indebtedness generally; |
| (g) | if a decree or order of a court of competent jurisdiction is entered adjudging an Obligor a bankrupt or insolvent or approving as properly filed a petition seeking the winding up of an Obligor under the Companies’ Creditors Arrangement Act (Canada), the Bankruptcy and Insolvency Act (Canada), the United States Bankruptcy Code or the Winding-up and Restructuring Act (Canada) or any other bankruptcy, insolvency or analogous laws or issuing sequestration or a writ, attachment, seizure or process of execution against an Obligor or its respective assets or ordering the winding up or liquidation of its affairs, and any such decree or order continues unstayed and in effect for a period of thirty (30) days; |
| (h) | if any Obligor becomes insolvent, makes any assignment in bankruptcy or makes any other assignment for the benefit of creditors, makes any proposal under the Bankruptcy and Insolvency Act (Canada) or any comparable law, seeks relief under the Companies’ Creditors Arrangement Act (Canada), the United States Bankruptcy Code, the Winding-up and Restructuring Act (Canada) or any other bankruptcy, insolvency or analogous law, is adjudged bankrupt, files a petition or proposal to take advantage of any act of insolvency, consents to or acquiesces in the appointment of a trustee, receiver, receiver and manager, interim receiver, custodian, sequestrator or other Person with similar powers of itself or of all or any substantial portion of its assets, or files a petition or otherwise commences any proceeding seeking any reorganization, arrangement, composition or readjustment under any applicable bankruptcy, insolvency, moratorium, reorganization or other similar law affecting creditors’ rights or consents to, or acquiesces in, the filing of such a petition; |
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| (i) | if an Encumbrancer takes possession, by appointment of a receiver, receiver and manager or otherwise, of: (i) all or any part of the Project Lands, or (ii) all or any part of the Project; |
| (j) | if proceedings are commenced for the dissolution, liquidation or voluntary winding up of any Obligor, or for the suspension of the operations of any Obligor, unless such proceedings are being actively and diligently contested in good faith, in which case up to thirty (30) days grace shall be permitted; |
| (k) | if a final judgment or decree for the payment of money due has been obtained or entered against an Obligor in an amount in excess of $2,000,000, and such judgment or decree has not been and remained vacated, discharged or stayed pending appeal within the lesser of thirty (30) days and the applicable appeal period; |
| (l) | if the Borrower or any other Obligor fails to make any payment when due in relation to any Indebtedness other than the Obligations in excess of Cdn. $2,000,000, after the expiry of any applicable grace period, or defaults in the observance or performance of any other agreement or condition in relation to any such Indebtedness and the effect thereof is to cause or permit such Indebtedness to become due prior to its stated maturity date; |
| (m) | if any Governmental Authority shall take any action with respect to any Obligor or the Project which would materially and adversely affect the Project or the relevant Obligor’s ability to perform their respective obligations hereunder or under the Loan Documents, unless (i) such action is being contested in good faith by appropriate proceedings, and (ii) the Administrative Agent is satisfied, acting reasonably, that neither the position of the Lenders nor the position of the Loan Documents is being materially adversely affected; |
| (n) | if any Security ceases to constitute a valid and perfected first priority security interest (subject only to Permitted Encumbrances) and, provided the Administrative Agent and the Lenders are satisfied that their position will not be prejudiced, the Borrower has failed to commence or undertake actions to remedy such default within five Banking Days of becoming aware of such fact; |
| (o) | if any Material Project Agreement is terminated, cancelled, expires without renewal where renewal or replacement is required for the continued operation of the applicable business, or is the subject of a material breach or default, and such event has resulted in or would reasonably be expected to result in a Material Adverse Effect; |
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| (p) | if WhiteFiber Inc. ceases to directly or indirectly Control the Borrower or any Guarantor; |
| (q) | if any Material Tenant is lost, or any Material Project Agreement, service offer or other material occupancy or commercial arrangement is terminated, cancelled, not renewed, materially reduced or otherwise ceases to be in full force and effect, and a letter of intent with terms and conditions of at least equal strength and value satisfactory to the Administrative Agent for the replacement of same, or other remedy, is not provided within 90 days or such longer cure or replacement period permitted by the Administrative Agent acting reasonably, and such event has resulted in or would reasonably be expected to result in a breach of the Borrower's financial covenants hereunder; |
| (r) | if any circumstance exists, or event occurs with respect to any Obligor or the Projects, which results in a Material Adverse Effect. |
| 11.02 | Acceleration and Enforcement |
(1) If any Event of Default occurs:
| (a) | the Lenders will have no further obligation to make Loans hereunder, and the outstanding principal amount of all Loans and all other Obligations will, at the option of the Administrative Agent or upon the request of the Required Lenders, become immediately due and payable with interest thereon, all without further notice, presentment, protest, demand, notice of dishonour or any other demand or notice whatsoever, all of which are hereby expressly waived by the Borrower; provided, if any Event of Default described in Section 11.01(g) or (h) with respect to any Obligor occurs, the Commitments will automatically terminate and the outstanding principal amount of all Loans and all other Obligations will automatically be and become immediately due and payable; and |
| (b) | the Lenders, or the Administrative Agent on their behalf, may, in their discretion, exercise any right or recourse and proceed by any action, suit, remedy or proceeding against any Obligor authorized or permitted by law for the recovery of all the Obligations to the Lenders and, whether or not the Lenders or the Administrative Agent have exercised any of their respective rights under the foregoing clause (a) proceed to exercise any and all rights hereunder and, subject to Section 11.02(3), under the Security. |
(2) The Administrative Agent and the Lenders are not under any obligation to the Obligors or any other Person to realize upon any collateral or enforce the Security or any part thereof or to allow any of the collateral to be dealt with or Disposed of. Neither the Administrative Agent nor the Lenders are responsible or liable to the Obligors or any other Person for any loss or damage arising from such realization or enforcement or the failure to do so or for any act or omission on their respective parts or on the part of any director, officer, employee, agent or adviser of any of them in connection with any of the foregoing.
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(3) Each of the Lenders acknowledges that the Administrative Agent holds the Security to secure all of the Obligations and, upon the occurrence of an Event of Default, the Administrative Agent will act on the written instructions of the Required Lenders as provided in this Agreement and will distribute the Net Sale Proceeds of realization of the Security to the Lenders in accordance with their Applicable Percentages of the Obligations and in accordance with Section 11.06.
| 11.03 | Remedies Cumulative |
For greater certainty, it is expressly understood that the respective rights and remedies of the Lenders and the Administrative Agent hereunder or under any other Loan Document or instrument executed pursuant to this Agreement are cumulative and are in addition to and not in substitution for any rights or remedies provided by law or by equity; and any single or partial exercise by the Lenders or by the Administrative Agent of any right or remedy for a default or breach of any term, covenant, condition or agreement contained in this Agreement or any other Loan Document will not be deemed to be a waiver of or to alter, affect or prejudice any other right or remedy or other rights or remedies to which any one or more of the Lenders and the Administrative Agent may be lawfully entitled in connection with such default or breach.
| 11.04 | Perform Obligations |
If a demand for repayment has been made hereunder and the Loans and other Obligations have not been immediately repaid by the Borrower or if any Obligor has failed to perform any of its covenants or agreements in the Loan Documents, the Required Lenders may, but will be under no obligation to, instruct the Administrative Agent on behalf of the Lenders to perform any such covenants or agreements in any manner deemed fit by the Required Lenders without thereby waiving any rights to enforce the Loan Documents. The reasonable expenses (including any legal costs) paid by the Administrative Agent and the Lenders in respect of the foregoing will be an Obligation and will be secured by the Security.
| 11.05 | Third Parties |
It is not necessary for any Person dealing with the Lenders, the Administrative Agent or any other agent of the Lenders to inquire whether the Security has become enforceable, or whether the powers that the Lenders or the Administrative Agent are purporting to exercise may be exercised, or whether any Obligations remain outstanding upon the security thereof, or as to the necessity or expediency of the stipulations and conditions subject to which any sale is to be made, or otherwise as to the propriety or regularity of any Disposition or any other dealing with the collateral charged by such Security or any part thereof.
| 11.06 | Application of Payments |
From and after the occurrence of an Event of Default which is continuing, all payments made by the Obligors hereunder or received from proceeds of realization of any Security will be applied to amounts due under the Obligations, all as determined by the Administrative Agent and based on Applicable Percentages of the Obligations.
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ARTICLE 12 - The Administrative Agent and the Lenders
| 12.01 | Payments by the Borrower |
(1) Prior to a demand made under Section 11.02, all payments made by or on behalf of the Borrower pursuant to this Agreement will be made to and received by the Administrative Agent on behalf of the Lenders and will be distributed by the Administrative Agent to the Lenders as soon as possible upon receipt by the Administrative Agent. Subject to Sections 6.01, 6.02, 7.02 and 12.02, the Administrative Agent will distribute to the Lenders in accordance with each Lender’s Applicable Percentage:
| (a) | costs and expenses; |
| (b) | payments of interest; |
| (c) | repayments of principal; |
| (d) | prepayments of principal; |
| (e) | amounts received by the exercise of any right of set-off, consolidation of accounts or by counterclaim or cross-action; and |
| (f) | all other payments received by the Administrative Agent. |
(2) Subject to Section 12.02, if the Administrative Agent does not distribute a Lender’s Applicable Percentage of a payment made by the Borrower to or for the benefit of a Lender for value on the day that payment is made to the Administrative Agent, provided that such payment is received by the Administrative Agent no later than 1:00 p.m. (Montreal time) on such day, the Administrative Agent will pay to such Lender on demand an amount equal to the product of (a) the Interbank Reference Rate per annum and (b) the amount received by the Administrative Agent from the Borrower and not so distributed to such Lender, with the result thereof multiplied by (c) a fraction, the numerator of which is the number of days that have elapsed from and including the date of receipt of the payment by the Administrative Agent to but excluding the date on which the payment is made by the Administrative Agent to such Lender, and the denominator of which is 365.
| 12.02 | Payments by Administrative Agent |
(1) For greater certainty, the following provisions will apply to all payments made by the Administrative Agent to the Lenders hereunder:
| (a) | the Administrative Agent will be under no obligation to make any payment (whether in respect of principal, interest, fees or otherwise) to any Lender until an amount in respect of such payment has been received by the Administrative Agent from the Borrower; |
| (b) | if the Administrative Agent receives less than the full amount of any payment of principal, interest, fees or other amount owing by the Borrower under this Agreement, then, subject to Section 7.02, the Administrative Agent will have no obligation to remit to each Lender any amount other than such Lender’s Applicable Percentage of the amount actually received by the Administrative Agent; |
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| (c) | if any Lender advances more or less than its Applicable Percentage of the Loan, such Lender’s entitlement to such payment will be increased or reduced, as the case may be, in proportion to the amount actually advanced by such Lender; |
| (d) | the Administrative Agent acting reasonably and in good faith will, after consultation with the Lenders, in the case of any dispute, determine in all cases the amount of all payments to which each Lender is entitled and such determination will, in the absence of manifest error, be binding and conclusive; |
| (e) | upon request, the Administrative Agent will deliver a statement detailing any of the payments to the Lenders referred to herein; and |
| (f) | all payments by the Administrative Agent to a Lender hereunder will be made to such Lender at its address set forth on the signature pages of this Agreement or on the applicable Assignment and Assumption unless notice to the contrary is received by the Administrative Agent from such Lender. |
(2) Unless the Administrative Agent has received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of any Lender hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute the amount due to the Lenders. If the payment by the Borrower is in fact not received by the Administrative Agent on the required date and the Administrative Agent has made available corresponding amounts to the Lenders, the Borrower will, without limiting its other obligations under this Agreement, indemnify the Administrative Agent against any and all liabilities, obligations, losses (other than loss of profit), damages, penalties, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on or incurred by the Administrative Agent as a result. A certificate of the Administrative Agent with respect to any amount owing by the Borrower under this Section 12.02 will be prima facie evidence of the amount owing in the absence of manifest error.
| 12.03 | Erroneous Payments |
(1) If the Administrative Agent notifies a Payment Recipient, or a Payment Recipient otherwise becomes aware, that the Administrative Agent has determined in its sole discretion that any funds received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Payment Recipient) (any such funds, an “Erroneous Payment”), then such Payment Recipient shall promptly, and in any event within one Banking Day following its receipt of such notice from the Administrative Agent or its becoming aware thereof, return to the Administrative Agent the full amount of such Erroneous Payment in same day funds, together with interest thereon in respect of each day from and including the date such Erroneous Payment was received by such Payment Recipient to but excluding the date such amount is repaid to the Administrative Agent at the Interbank Reference Rate.
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(2) Without limiting any other rights or remedies of the Administrative Agent, each Payment Recipient hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Payment Recipient under any Loan Document, or otherwise payable or distributable by the Administrative Agent to such Payment Recipient from any source, against any amount due to the Administrative Agent under this Section 12.03.
(3) In the event that a Payment Recipient receives a payment from the Administrative Agent (a) that is in a different amount than, or on a different date from, that specified in a Payment Notice, if any, given by the Administrative Agent to such Payment Recipient, or (b) for which no Payment Notice was given, such Payment Recipient shall promptly notify the Administrative Agent of such circumstances.
(4) The Obligors shall not be considered to have paid any amount to the extent of any Erroneous Payment, and no Erroneous Payment shall reduce the Obligations, except, in each case, to the extent that such Erroneous Payment was funded with monies received by the Administrative Agent from the Borrower for the purpose of making such payment and was not otherwise recovered from the applicable Payment Recipient.
(5) To the extent permitted by Applicable Law, the Administrative Agent shall be subrogated to all the rights of any Payment Recipient with respect to any Erroneous Payment that is not returned to the Administrative Agent, and each Payment Recipient irrevocably assigns, transfers and conveys to the Administrative Agent all such rights and claims in respect thereof to the extent necessary to give effect to the foregoing.
(6) Each party’s obligations, agreements and waivers under this Section 12.03 shall survive the resignation or replacement of the Administrative Agent, the termination of the Commitments, the repayment, satisfaction or discharge of all Obligations and the termination of this Agreement.
| 12.04 | Administration of the Credits |
(1) Unless otherwise specified herein, the Administrative Agent will perform the following duties under this Agreement:
| (a) | prior to an advance to the Borrower hereunder, ensure that the Lenders are satisfied that all conditions precedent have been fulfilled in accordance with the terms of this Agreement; |
| (b) | take delivery of each Lender’s Applicable Percentage of a Loan and make all Loans hereunder in accordance with the provisions set forth herein; |
| (c) | use reasonable efforts to collect promptly all sums due and payable by the Borrower pursuant to this Agreement; |
| (d) | make all payments to the Lenders in accordance with the provisions hereof; |
| (e) | hold all legal documents (including legal opinions) relating to the Term Loan Facility, maintain complete and accurate records showing all Loans made by the Lenders, all remittances and payments made by the Obligors to the Administrative Agent, all remittances and payments made by the Administrative Agent to the Lenders and all fees or any other sums received by the Administrative Agent and allow each Lender and their respective advisors to examine such accounts, records and documents at their own expense, and provide any Lender, upon reasonable notice, with such copies thereof as such Lender may reasonably require from time to time at its expense; |
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| (f) | except as otherwise specifically provided for in this Agreement, promptly advise each Lender upon receipt of each notice and deliver to each Lender, promptly upon receipt, all other written communications furnished by the Obligors to the Administrative Agent pursuant to this Agreement, including copies of financial reports and certificates which are to be furnished to the Administrative Agent; |
| (g) | forward to each of the Lenders, one copy each of this Agreement and other Loan Documents; |
| (h) | upon request, the Administrative Agent will deliver a statement detailing any of the payments to the Lenders referred to herein; |
| (i) | upon learning of same, promptly advise each Lender in writing of the occurrence of a Default or the occurrence of any event, condition or circumstance which would result in a Material Adverse Effect to any Obligor or of any material adverse information relative to any Obligor or of the occurrence of any change which would result in a Material Adverse Effect. |
(2) The Administrative Agent may take the following actions only with the prior consent of the Required Lenders, unless otherwise specified in this Agreement:
| (a) | subject to Section 12.04(3), exercise any and all rights of approval conferred upon the Lenders by this Agreement; |
| (b) | (b) amend, modify or waive any of the terms of this Agreement, including waiver of a Default or an Event of Default, if such amendment, modification or waiver would not have a material adverse effect on the rights of the Lenders thereunder and if such action is not otherwise provided for in Section 12.04(3); |
| (c) | engage professionals, experts and agents as permitted by Section 12.05(1); and |
| (d) | declare an Event of Default, take action to enforce performance of the Obligations and realize on collateral subject to the Security and pursue any other legal remedy necessary or advisable to protect the interests of the Lenders hereunder. |
(3) The Administrative Agent may take the following actions only with the prior unanimous consent of the Lenders, unless otherwise specified herein:
| (a) | amend, modify, discharge, terminate or waive any of the terms of this Agreement if such amendment, modification, discharge, termination or waiver would increase any Lender's Commitment without the consent of such Lender, reduce the principal amount of or rate of interest on any Loan or any fees payable hereunder without the consent of each affected Lender, postpone any date fixed for any payment of principal of or interest on any Loan or any fees payable hereunder without the consent of each affected Lender, change the pro rata sharing of payments under this Agreement without the consent of each affected Lender, or release all or substantially all of the Security or all or substantially all of the value of the Guaranties except as expressly permitted by the Loan Documents, in which case the consent of all Lenders shall be required; |
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| (b) | amend, modify, discharge, terminate or waive any provision of Article 11 or the Security enforcement and application provisions in a manner materially adverse to the Lenders, except as otherwise expressly permitted by this Agreement; |
| (c) | amend this Section 12.04(3); |
| (d) | amend any provision of Article 6; |
| (e) | amend Section 9.01(1), 9.03(1) or (3); |
| (f) | amend Section 11.06 or 12.01; |
| (g) | amend the definition of “Required Lenders”. |
(4) As between the Obligors, on the one hand, and the Administrative Agent and the Lenders, on the other hand:
| (a) | all statements, certificates, consents and other documents which the Administrative Agent purports to deliver on behalf of the Lenders or the Required Lenders will be binding on each of the Lenders, and the Obligors will not be required to ascertain or confirm the authority of the Administrative Agent in delivering such documents; |
| (b) | all certificates, statements, notices and other documents which are delivered by the Obligors to the Administrative Agent in accordance with this Agreement will be deemed to have been delivered to each of the Lenders; and |
| (c) | all payments which are made by the Obligors to the Administrative Agent in accordance with this Agreement will be deemed to have been duly made to each of the Lenders. |
| 12.05 | Rights of Administrative Agent |
(1) In administering the Term Loan Facility, the Administrative Agent may retain, at the expense of the Lenders if such expenses are not recoverable from the Obligors, such counsel, auditors and other experts as the Administrative Agent may select, acting reasonably, and is entitled to rely upon the advice of such counsel, auditors and other experts in the performance of its duties hereunder.
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(2) Except in its own right as a Lender, the Administrative Agent will not be required to advance its own funds for any purpose hereunder.
| 12.06 | Representations, Acknowledgements and Covenants of Lenders |
(1) Each Lender represents and warrants to the Borrower and the Administrative Agent that it has the legal capacity, power and authority to enter into this Agreement and has not contravened its constating documents or any Applicable Law by so doing.
(2) Each Lender acknowledges that if the Administrative Agent does not receive payment in accordance with this Agreement, it will not be the obligation of the Administrative Agent to maintain the Term Loan Facility in good standing nor will any Lender have recourse to the Administrative Agent in respect of any amounts owing to such Lender under this Agreement.
(3) Each Lender acknowledges that its decision to advance its Applicable Percentage of Loans in accordance with the terms of this Agreement is independent and in no way related to the decision of any other Lender hereunder.
(4) Each Lender hereby acknowledges receipt of a copy of this Agreement and the Loan Documents and acknowledges that it is satisfied with the form and content of such documents.
(5) Each Lender will respond promptly to each request by the Administrative Agent for the consent of such Lender required hereunder.
| 12.07 | Provisions Operative Between Lenders and Administrative Agent Only |
Except for the provisions of Sections 12.04(2), (3) and (4), Sections 12.06(1), (3) and (5) and the first sentence of Section 12.01(1), the provisions of this Article 12 relating to the rights and obligations of the Lenders and the Administrative Agent inter se will be operative as between the Lenders and the Administrative Agent only, and the Obligors will not have any rights or obligations under or be entitled to rely for any purpose upon such provisions.
| 12.08 | Maintenance of Security |
(1) The Security shall be granted in favour of and held by the Administrative Agent for and on behalf of the Lenders in accordance with the provisions of this Agreement. The Administrative Agent shall, in accordance with its usual practices in effect from time to time, take all steps required to perfect and maintain the Security, including filing renewals and change notices in respect of such Security and ensuring that the name of the Administrative Agent is noted on all applicable property insurance policies covering the secured property to the extent required herein.
(2) If the Borrower has provided security in favour of any Lender directly, such Lender agrees to pay to the Agent all amounts received by it in connection with the enforcement of such security, and all such amounts shall be deemed to constitute Proceeds of Realization and shall be dealt with as provided in Section 12.10.
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| 12.09 | Québec Hypothecary Representative |
(1) For the purposes of holding any security granted under the laws of the Province of Québec to secure the Obligations, including any deed of hypothec, any collateral mortgage bond or other title of indebtedness, the Administrative Agent is hereby appointed as hypothecary representative (fondé de pouvoir) within the meaning of article 2692 of the Civil Code of Québec for the benefit of the present and future Secured Parties, and each present and future Lender and other Secured Party shall be deemed to have irrevocably ratified and confirmed such appointment. In such capacity, the Administrative Agent may take, hold, register, publish, possess and enforce any such security and may be designated as creditor, hypothecary representative, mandatary, holder, beneficiary or depositary, as the case may be, in any deed of hypothec, collateral mortgage bond, title of indebtedness or other Québec security document.
(2) Without limiting the foregoing, the Administrative Agent may act as a Lender while also acting as hypothecary representative notwithstanding section 32 of An Act respecting the special powers of legal persons (Québec), may act as holder or depositary of any collateral mortgage bond or other title of indebtedness, and any execution by the Administrative Agent prior to the date hereof of any Québec law security document in such capacity is hereby ratified and confirmed. The rights, powers, authorities, immunities, indemnities, exculpations and protections granted to the Administrative Agent under this Agreement shall apply, mutatis mutandis, to the Administrative Agent in its capacity as hypothecary representative, including with respect to resignation, replacement and succession in such capacity.
| 12.10 | Application of Proceeds of Realization |
Notwithstanding any other provision of this Agreement, Proceeds of Realization or any portion thereof shall be distributed in the following order: (1) firstly, in payment of all costs and expenses incurred by the Administrative Agent and the Lenders in connection with such realization, including reasonable legal, accounting and receivers’ fees and disbursements; (2) secondly, against the outstanding Obligations, each Lender being entitled to receive its pro rata share thereof; and (3) thirdly, if all Obligations have been paid and satisfied in full, then, subject to Applicable Law, any surplus Proceeds of Realization shall be paid to the Borrower.
| 12.11 | No Partnership |
The obligations of each Lender under this Agreement are joint and not solidary. The failure of any Lender to carry out its obligations hereunder shall not relieve the other Lenders of any of their respective obligations hereunder. No Lender shall be responsible for the obligations, acts or omissions of any other Lender hereunder. Neither the entering into of this Agreement nor the completion of any transactions contemplated herein shall constitute the Lenders a partnership. Each Lender may lend money to and have business dealings with the Borrower and its Affiliates outside the scope of this Agreement, provided that any such security held by such Lender in respect of the assets of the Borrower shall be held by such Lender in trust for the Administrative Agent and any proceeds from the realization of such security shall constitute Proceeds of Realization as provided herein.
| 12.12 | Sharing of Information |
The Administrative Agent and the Lenders may share among themselves, or amongst any prospective assignee or participant hereunder, any information they may have from time to time concerning the Obligors whether or not such information is confidential, but shall have no obligation to do so except as otherwise provided in this Agreement. The Administrative Agent, the Sole Lead Arranger and the Sole Bookrunner may publicize the Term Loan Facility and their respective roles in connection therewith, including by customary tombstones and by reporting to Bloomberg, Loan Pricing Corporation and similar service providers and industry publications, in each case subject to customary limitations on disclosure of non-public financial and other confidential information.
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The Borrower further consents to the Administrative Agent, the Sole Lead Arranger, the Sole Bookrunner and each Lender publicly disclosing, from time to time, the existence of the Credit Facilities and the key parameters of the financing, including the name of the Borrower and the other Obligors, the nature and amount of the Credit Facilities, the Borrower's business, its principal place of business and its number of employees, and to customary tombstone, league table, market data, Bloomberg, Loan Pricing Corporation and similar disclosures, in each case subject to customary limitations on disclosure of non-public financial information and any other information that is confidential by its nature, and subject to the approval by WhiteFiber, Inc. of the terms of any such disclosure. Notwithstanding the foregoing, the approval of WhiteFiber, Inc. shall not be required in respect of disclosures consented to by the Borrower in favour of Export Development Canada pursuant to Export Development Canada’s disclosure consent form signed by the Borrower.
| 12.13 | Defaulting Lenders |
(1) If any Lender becomes a Defaulting Lender, the Administrative Agent may, upon notice to the Borrower and the Lenders, designate such Lender as a Defaulting Lender for the purposes of this Agreement.
(2) Notwithstanding anything herein to the contrary, a Defaulting Lender shall not be entitled to vote or consent with respect to any matter requiring the consent of the Lenders or the Required Lenders, except with respect to any amendment, waiver or modification that (a) increases such Defaulting Lender’s Commitment, (b) reduces the principal amount of, or rate of interest or fees payable on, any Loan owing to such Defaulting Lender, (c) postpones any date fixed for any payment of principal, interest or fees owing to such Defaulting Lender, (d) releases all or substantially all of the Loan Documents, or (e) amends the definition of “Required Lenders” or this Section 12.13 in a manner that disproportionately and adversely affects such Defaulting Lender; provided that nothing herein shall deprive any Defaulting Lender of any consent right that cannot be excluded as a matter of applicable law with respect to any matter that specifically and adversely affects such Defaulting Lender.
(3) The failure of any Defaulting Lender to fund its Applicable Percentage of any Loan shall not increase the Commitment of any other Lender or require any other Lender to advance more than its Applicable Percentage of the applicable Loan, unless such other Lender expressly agrees in writing to do so.
(4) Any amount owing by a Defaulting Lender to the Administrative Agent or any other Lender arising from such Defaulting Lender’s failure to fund when required shall bear interest at the Interbank Reference Rate from the date such amount was required to be funded to the date of payment.
(5) The rights and remedies of the Administrative Agent, the non-defaulting Lenders and the Borrower against a Defaulting Lender under this Agreement are cumulative and in addition to any other rights and remedies available at law or in equity.
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ARTICLE 13 - GENERAL
| 13.01 | Addresses, Etc. for Notices |
The mailing addresses and addresses for electronic communications for the purposes of notices and other communications to the Obligors, the Lenders and the Administrative Agent are set out on the signature pages of this Agreement.
| 13.02 | Governing Law and Submission to Jurisdiction |
This Agreement shall be governed by and construed in accordance with the laws of the Province of Québec and the federal laws of Canada applicable therein.
Each of the parties hereto irrevocably submits to the non-exclusive jurisdiction of the courts of the Province of Québec and acknowledges the competence of such courts.
| 13.03 | Effect of Assignments; Register; Participations |
(1) This Agreement shall be binding upon and enure to the benefit of the parties hereto and their respective successors and permitted assigns. The Borrower may not assign, transfer or otherwise dispose of any of its rights or obligations under this Agreement or any other Loan Document without the prior written consent of the Administrative Agent and each of the Lenders.
(2) Subject to the conditions set out in this Section 13.03, any Lender may at any time assign to one or more Eligible Assignees all or any portion of its rights and obligations under this Agreement. Any assignment by a Lender to another Lender, an Affiliate of such Lender or an Approved Fund shall not require the consent of the Borrower. Any assignment by a Lender to any other Eligible Assignee shall require the consent of the Borrower, such consent not to be unreasonably withheld, delayed or conditioned; provided that no consent of the Borrower shall be required if an Event of Default has occurred and is continuing. Notwithstanding the foregoing or anything to the contrary in this Agreement, upon the occurrence and during the continuance of an Event of Default, (i) no consent of the Borrower shall be required for any assignment, and (ii) any restrictions on assignments set out in this Section (other than the requirement for consent of the Administrative Agent and any prohibitions on assignments to natural persons, the Borrower or its Affiliates or Defaulting Lenders) shall not apply. Notwithstanding anything in this Agreement to the contrary, so long as Investissement Québec is a Lender, Investissement Québec may, without the consent of the Borrower or any other Person other than the Administrative Agent to the extent required for administrative processing, assign all or any portion of its Loans and its rights under this Agreement to the Government of Québec, any crown corporation of Québec, any agent or mandatary of the Government of Québec, any direct or indirect subsidiary of Investissement Québec, any successor entity resulting from the reorganization or merger of Investissement Québec, any Person a majority of whose members or directors are appointed by the Government of Québec or one of its ministers acting in that capacity, and any Person directly or indirectly controlled by the Government of Québec, one of its ministers acting in that capacity, or any of the foregoing Persons.
(3) Any assignment shall require the consent of the Administrative Agent, such consent not to be unreasonably withheld, delayed or conditioned.
(4) Except in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and Loans, the amount of the Commitment and Loans of the assigning Lender subject to each such assignment shall not be less than C$10,000,000, unless otherwise agreed by the Borrower and the Administrative Agent; provided that no such minimum amount shall apply to assignments to an existing Lender, an Affiliate of a Lender or an Approved Fund. For greater certainty, no minimum hold amount shall be required in connection with any assignment permitted hereunder.
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(5) Assignments may be made on a non-pro rata basis among tranches, facilities, types of Loans or other components of the Commitments and Loans, to the extent applicable under this Agreement, and nothing in this Agreement shall be construed to require any assignment to be made pro rata among any such tranches, facilities, types of Loans or other components.
(6) Each assignment shall be effected by an Assignment and Assumption substantially in the form set out in Schedule 13.03(6) (Form of Assignment and Assumption Agreement) executed by the assigning Lender, the Eligible Assignee and, to the extent required, the Administrative Agent and acknowledged by the Borrower if its consent is required. Upon the execution, delivery and acceptance of such Assignment and Assumption, from and after the effective date specified therein, (a) the Eligible Assignee shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, shall have the rights and obligations of a Lender under this Agreement, and (b) the assigning Lender shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement.
(7) The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at the Agent’s Office a register for the recordation of the names and addresses of the Lenders and the Commitments of, and principal amounts of the Loans owing to, each Lender from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender at any reasonable time and from time to time upon reasonable prior notice.
(8) Any Lender may at any time sell participations to one or more banks or other Persons in all or a portion of such Lender’s rights and obligations under this Agreement; provided that (a) such Lender’s obligations under this Agreement shall remain unchanged, (b) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (c) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement, and (d) no Participant shall have any rights under this Agreement except as against the participating Lender in accordance with the agreement between such Lender and such Participant.
(9) A Lender may, in connection with any assignment, participation or proposed assignment or participation, disclose to the assignee, Participant or proposed assignee or Participant, as applicable, any information in its possession relating to the Borrower, the other Obligors and this Agreement, subject to any confidentiality obligations binding on such Lender and the proposed recipient.
(10) Any Lender may at any time create a security interest in, or pledge or assign as security, all or any portion of its rights under this Agreement, including to secure obligations of such Lender or its Affiliates; provided that no such pledge or assignment as security shall release such Lender from any of its obligations hereunder or substitute any such pledgee or secured party for such Lender as a party hereto.
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(11) If any Lender becomes a Defaulting Lender, the Borrower may, at its sole expense and effort, upon not less than five (5) Banking Days’ prior written notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (other than for its own gross negligence or wilful misconduct), all of its interests, rights and obligations under this Agreement and the other Loan Documents to one or more Eligible Assignees reasonably acceptable to the Administrative Agent; provided that (a) such assignment shall comply with the requirements of this Section 13.03, (b) the assigning Lender shall receive payment in full of an amount equal to the outstanding principal amount of its Loans, accrued and unpaid interest thereon, accrued and unpaid fees and all other amounts owing to it hereunder and under the other Loan Documents up to the effective date of such assignment, (c) the Borrower shall pay the Administrative Agent’s standard processing and recordation fee in connection with such assignment, and (d) no such assignment shall be required if, prior to the effective date thereof, the circumstances giving rise to such Lender’s status as a Defaulting Lender cease to exist to the reasonable satisfaction of the Administrative Agent. Upon the effectiveness of any such assignment, the replacement Lender shall become a Lender hereunder and the replaced Lender shall cease to be a Lender hereunder to the extent of such assignment.
| 13.04 | Specific Environmental Indemnification |
The Borrower shall indemnify the Administrative Agent and each Lender and hold the Administrative Agent and each Lender harmless at all times from and against any and all losses, damages and costs (including reasonable counsel fees and out-of-pocket expenses) resulting from any legal action commenced or claim made by a third party against the Administrative Agent or any Lender related to or as a result of actions or omissions on the part of the Borrower related to or as a consequence of environmental matters or any requirements of Environmental Laws concerning the Project. The Borrower shall have the sole right, at its expense, to control any such legal action or claim and to settle on terms and conditions approved by the Borrower and approved by the party named in such legal action or claim, acting reasonably, provided that if, in the opinion of the Administrative Agent or the Lenders, as the case may be, the interests of the Administrative Agent or the Lenders are different from those of the Borrower in connection with such legal action or claim, the Administrative Agent and the Lenders shall have the sole right, at the Borrower’s expense, to defend their own interests provided that any settlement of such legal action or claim shall be on terms and conditions approved by the Borrower, acting reasonably. If the Administrative Agent or the Lenders elect to defend such legal action or claim, they shall promptly notify the Borrower of same and shall consult with the Borrower on an ongoing basis in connection with such matter. If the Borrower does not defend the legal action or claim, the Administrative Agent and the Lenders shall have the right to do so on their own behalf and on behalf of the Borrower at the expense of the Borrower.
| 13.05 | Survival |
The provisions of this Agreement that by their nature survive, including indemnities, expense reimbursement obligations, confidentiality obligations and payment obligations in respect of amounts accrued prior to termination, will survive the repayment of all Loans and the termination of this Agreement, unless specifically released by the Administrative Agent on behalf of the Lenders.
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| 13.06 | Severability |
If any provision of this Agreement is determined by any court of competent jurisdiction to be illegal or unenforceable, that provision will be severed from this Agreement and the remaining provisions will continue in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any of the parties.
| 13.07 | Further Assurances |
Each Obligor, each Lender and the Administrative Agent will promptly cure any default by it in the execution and delivery of this Agreement, the Loan Documents or of any of the agreements provided for hereunder to which it is a party. Each Obligor, at its expense, will promptly execute and deliver to the Administrative Agent, upon request by the Administrative Agent, all such other and further documents, agreements, opinions, certificates and instruments in compliance with, or for the accomplishment of the covenants and agreements of such Obligor hereunder or to make any recording, file any notice or obtain any consent, all as may be reasonably necessary or appropriate in connection therewith.
| 13.08 | Amendments and Waivers |
No amendment to this Agreement will be valid or binding unless set forth in writing and duly executed by the Obligors and the Administrative Agent for and on behalf of the Lenders or the Required Lenders, as the case may be. No waiver of any breach of any provision of this Agreement and no consent required hereunder will be effective or binding unless made in writing and signed by the party purporting to give the same. Unless otherwise provided, any waiver or consent given hereunder will be limited to the specific breach waived or matter consented to, as the case may be, and may be subject to such conditions as the party giving such waiver or consent considers appropriate. Notwithstanding anything in this Agreement to the contrary, so long as Investissement Québec is a Lender, no amendment, waiver or consent that would adversely affect any right or protection expressly granted to Investissement Québec under this Agreement in its capacity as Investissement Québec may be effected without the prior written consent of Investissement Québec.
Notwithstanding the foregoing or anything in Article 12 to the contrary, the Administrative Agent and the Borrower may, without the consent of any Lender other than as expressly contemplated by Section 5.05, enter into amendments to this Agreement and the other Loan Documents as the Administrative Agent reasonably determines to be necessary or appropriate to implement any Canadian Benchmark Replacement, any Canadian Benchmark Replacement Adjustment or any Canadian Conforming Changes, and any such amendment shall be effective in accordance with Section 5.05.
| 13.09 | Time of the Essence |
Time is of the essence of this Agreement.
| 13.10 | Confidentiality |
This Agreement and its terms are confidential information. Each Obligor shall keep such confidential information confidential and shall not disclose it to any Person except to its directors, officers, employees, agents, advisors, contractors, consultants and other representatives who need to know such information for the purposes of this Agreement and who are informed of its confidential nature or are otherwise bound to keep it confidential, and except as required by Applicable Law or by the requirements of any stock exchange or any applicable securities regulatory authority, including the United States Securities and Exchange Commission. Nothing in this Section limits the rights of the Administrative Agent and the Lenders to share or disclose information as otherwise permitted under this Agreement, including under Section 12.12 and in connection with assignments, participations, funding, risk management, administration and enforcement of this Agreement.
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| 13.11 | Counterparts and Electronic Execution |
This Agreement and each other Loan Document may be executed in any number of counterparts and by different parties on separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same instrument. Delivery of an executed counterpart of this Agreement or any other Loan Document by facsimile, electronic mail in portable document format (PDF) or other electronic transmission shall be as effective as delivery of an originally executed counterpart, and any such delivery shall be deemed to constitute due delivery for all purposes of this Agreement. To the extent permitted by Applicable Law, including the Personal Information Protection and Electronic Documents Act (Canada), the Act to establish a legal framework for information technology (Québec), the Electronic Commerce Act, 2000 (Ontario), the Electronic Transactions Act (British Columbia) and the Electronic Transactions Act (Alberta), electronic signatures, including any electronic sound, symbol or process attached to or logically associated with a contract or other record and adopted by a party with the intention to sign such contract or record, shall be valid and effective and legally binding on the parties as if affixed by handwritten signature.
| 13.12 | Reliance on Electronic Communications |
Subject to any express verification requirements set out in this Agreement, the Administrative Agent and each Lender may rely upon any agreement, document, notice, instruction or instrument provided by any Obligor by electronic mail, facsimile or other similar electronic transmission as though it were an original and may assume that such communication is genuine, reliable and authorized by the applicable Obligor.
| 13.13 | Electronic Imaging |
The Administrative Agent and each Lender may, in accordance with its usual business practices, convert any paper records relating to this Agreement or any other Loan Document into electronic images. Any such electronic image shall be considered an authoritative copy of the original record and shall be admissible in evidence to the same extent as the original paper record.
| 13.14 | Set-Off |
To the extent permitted by Applicable Law and subject to the rights of the Administrative Agent as agent for the Lenders under this Agreement and the other Loan Documents, after the occurrence and during the continuance of an Event of Default, the Administrative Agent and each Lender may set off and apply any deposits or other sums at any time held by it for the account of any Obligor against any and all Obligations owing to the Administrative Agent and the Lenders under this Agreement, whether or not then due, provided that any amount so applied shall be promptly accounted for through the Administrative Agent and shared among the Lenders in accordance with this Agreement.
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| 13.15 | Consent to Disclosure of Potential Prior-Ranking Claims Information |
Each Obligor hereby authorizes any Person having information relating to Potential Prior-Ranking Claims to release such information to the Administrative Agent or any Lender upon the written request of the Administrative Agent or such Lender, for the purpose of evaluating the financial condition of the Obligors or the priority of the Security.
| 13.16 | Language |
Each party acknowledges that it has been represented by counsel and has had the opportunity to negotiate this Agreement with counsel, and further acknowledges that at least one of the parties is located outside Québec. The parties have expressly requested that this Agreement and all documents related hereto, including all notices, be drawn up in the English language only. Les parties reconnaissent avoir été représentées par un conseiller juridique et avoir eu l'opportunité de négocier la présente convention avec un conseiller juridique, et reconnaissent en outre qu'au moins l'une d'elles est située à l'extérieur du Québec. Les parties ont expressément demandé que la présente convention ainsi que tous les documents qui s'y rattachent, y compris tous les avis, soient rédigés en anglais seulement.
| 13.17 | Solidarity |
Where more than one Person is liable as Borrower or Guarantor for any obligation under this Agreement or any other Loan Document, the liability of each such Person for such obligation shall be solidary with each other such Person, and each such Person waives the benefits of discussion and division.
| 13.18 | Default by Lapse of Time |
The mere lapse of time fixed for the performance of an obligation under this Agreement shall have the effect of putting the relevant Obligor in default thereof, without the necessity of any notice, demand or putting in default, except to the extent otherwise expressly provided in this Agreement.
| 13.19 | Non-Merger |
The provisions of this Agreement do not merge with any Security or any other Loan Document and shall continue in full force and effect.
[Signature pages follow]
- 70 -
IN WITNESS WHEREOF the parties have executed this Agreement.
| BORROWER: | ENOVUM DATA CENTERS CORP., as Borrower | |||
| 3195 chemin de Bedford | ||||
| Montreal, Quebec, H3S 1G3 | By: | /s/ Samir Tabar | ||
| Name: | Samir Tabar | |||
| Attention: [***] | Title: | President | ||
| Email: [***] | ||||
| By: | /s/ Erke Huang | |||
| With a copy to: [***] | Name: | Erke Huang | ||
| Title: | Vice-President and Secretary | |||
| Attention: [***] | ||||
| Email: [***] | We have the authority to bind the above. | |||
| Attention: [***] | ||||
| Email : [***] | ||||
| GUARANTORS: | ENOVUM MTL I GP INC., as a Guarantor | |||
| 3195 chemin de Bedford | By: | /s/ Samir Tabar | ||
| Montreal, Quebec, H3S 1G3 | Name: | Samir Tabar | ||
| Attention: [***] | Title: | President | ||
| Email: [***] | ||||
| By: | /s/ Erke Huang | |||
| With a copy to: [***] | Name: | Erke Huang | ||
| Title: | Vice-President and Secretary | |||
| Attention: [***] | ||||
| Email: [***] | We have the authority to bind the above. | |||
|
Attention: [***] |
EDC MTL I LIMITED PARTNERSHIP, by its | |||
| Email: [***] | general partner Enovum MTL I GP Inc., as a Guarantor | |||
| By: | /s/ Samir Tabar | |||
| Name: | Samir Tabar | |||
| Title: | President | |||
| By: | /s/ Erke Huang | |||
| Name: | Erke Huang | |||
| Title: | Vice-President and Secretary | |||
| We have the authority to bind the above. | ||||
| ENOVUM MTL II GP INC., as a Guarantor | ||||
| By: | /s/ Samir Tabar | |||
| Name: | Samir Tabar | |||
| Title: | President | |||
| By: | /s/ Erke Huang | |||
| Name: | Erke Huang | |||
| Title: | Vice-President and Secretary | |||
| We have the authority to bind the above. | ||||
| EDC MTL II LIMITED PARTNERSHIP, by its general partner Enovum MTL II GP Inc., as a Guarantor | ||||
| By: | /s/ Samir Tabar | |||
| Name: | Samir Tabar | |||
| Title: | President | |||
| By: | /s/ Erke Huang | |||
| Name: | Erke Huang | |||
| Title: | Vice-President and Secretary | |||
| We have the authority to bind the above. | ||||
| ENOVUM SAINT-JEROME GP INC., as a Guarantor | ||||
| By: | /s/ Samir Tabar | |||
| Name: | Samir Tabar | |||
| Title: | President | |||
| By: | /s/ Erke Huang | |||
| Name: | Erke Huang | |||
| Title: | Vice-President and Secretary | |||
| We have the authority to bind the above. | ||||
| EDC SAINT-JEROME LIMITED PARTNERSHIP, by its general partner Enovum Saint-Jerome GP Inc., as a Guarantor | ||||
| By: | ||||
| Name: | Samir Tabar | |||
| Title: | President | |||
| By: | ||||
| Name: | Erke Huang | |||
| Title: | Vice-President and Secretary | |||
| We have the authority to bind the above. | ||||
1504950 B.C. UNLIMITED LIABILITY COMPANY.,
| ||||
| By: | ||||
| Name: | Samir Tabar | |||
| Title: | Director and Chief Executive Officer | |||
| By: | ||||
| Name: | Erke Huang | |||
| Title: | Chief Financial Officer and Secretary | |||
| We have the authority to bind the above. | ||||
| ADMINISTRATIVE AGENT: | ROYAL BANK OF CANADA, as Administrative Agent | |||
ROYAL BANK OF CANADA |
||||
| 155 Wellington Street West, 8th Floor. | By: | |||
| Toronto, ON | Name: | [***] | ||
| M5V 3K7 | Title: | [***] | ||
| Attention: [***] | By: | |||
| Email: [***] | Name: | |||
| Title: | ||||
| LENDERS: | ROYAL BANK OF CANADA, as a Lender | |||
ROYAL BANK OF CANADA |
||||
1 Place Ville Marie, 6th Floor North Wing |
By: | /s/ Leonardo Vargas | ||
| Montreal, Quebec, H3B 1Z5 | Name: | Leonardo Vargas | ||
| Title: | [***] | |||
| Attention: [***] | By: | |||
| Email: [***] | Name: | |||
| Title: | ||||
| FÉDÉRATION DES CAISSES DESJARDINS DU QUÉBEC |
FÉDÉRATION DES CAISSES DESJARDINS DU QUÉBEC | |||
| 1170 Peel Street | as a Lender | |||
| Suite 300 | ||||
| Montréal (Québec) | By: | |||
| H3B 0A9 | Name: | [***] [***] | ||
| Title: | Head of Infrastructure and Energy Transition | |||
| Attention: [***] | ||||
| Email: [***] | By: | |||
| Name: | [***] [***] | |||
| Title: | ||||
|
[***] |
EXPORT DEVELOPMENT CANADA | |||
| Attention: [***] | as a Lender | |||
| Email: [***] | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
|
[***] |
INVESTISSEMENT QUÉBEC | |||
| Attention: [***] | as a Lender | |||
| Email: [***] | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| FÉDÉRATION DES CAISSES DESJARDINS DU QUÉBEC | FÉDÉRATION DES CAISSES DESJARDINS DU QUÉBEC | |||
| 1170 Peel Street | as a Lender | |||
| Suite 300 | ||||
| Montréal (Québec) | By: | |||
| H3B 0A9 | Name: | |||
| Title: | ||||
| Attention: [***] | ||||
| Email: [***] | By: | |||
| Name: | ||||
| Title: | ||||
|
[***] |
EXPORT DEVELOPMENT CANADA | |||
| as a Lender | ||||
| Attention: [***] | By: |  | ||
| Email: [***] | Name: | [***] | ||
| Title: | [***] | |||
| By: |  | |||
| Name: | [***] [***] | |||
| Title: | ||||
|
[***] |
INVESTISSEMENT QUÉBEC | |||
| Attention: [***] | as a Lender | |||
| Email: [***] | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| [***] | FÉDÉRATION DES CAISSES DESJARDINS DU QUÉBEC | |||
| Attention: [***] | as a Lender | |||
| Email: [***] | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
|
[***] |
EXPORT DEVELOPMENT CANADA | |||
| Attention: [***] | as a Lender | |||
| Email: [***] | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
|
[***] |
INVESTISSEMENT QUÉBEC | |||
| [***] | as a Lender | |||
| Email: [***] | ||||
| By: | [***] | |||
| Name: | [***] | |||
| Title: | [***] | |||
| By: | [***] | |||
| Name: | [***] | |||
| Title: | [***] | |||
Schedule “A”
| [***] |
Schedule “B”
| [***] |
Schedule “C”
| [***] |
Schedule 1.01(A)
| [***] |
Schedule 1.01(B)
| [***] |
Schedule 1.01(C)
| [***] |
Schedule 1.01(D)
| [***] |
Schedule 1.01(E)
| [***] |
Schedule 1.01(F)
| [***] |
Schedule 8.01(14)
| [***] |
Schedule 13.03(6)
| [***] |
EXHIBIT A
ASSIGNMENT AND ASSUMPTION
| [***] |
1.
Exhibit 31.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
| I, | Sam Tabar, the Chief Executive Officer of WhiteFiber, Inc., certify that: |
| 1. | I have reviewed this report on Form 10-Q of WhiteFiber, Inc. for the quarter ended June 30, 2026; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| WhiteFiber, Inc. | ||
| Date: August 12, 2026 | By: | /s/ Sam Tabar |
| Sam Tabar, Chief Executive Officer | ||
| (Principal Executive Officer) | ||
Exhibit 31.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
| I, | Justin Zhu, the Chief Financial Officer of WhiteFiber, Inc., certify that: |
| 1. | I have reviewed this report on Form 10-Q of WhiteFiber, Inc. for the quarter ended June 30, 2026; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| WhiteFiber, Inc. | ||
| Date: August 12, 2026 | By: | /s/ Justin Zhu |
| Justin Zhu, Chief Financial Officer | ||
| (Principal Financial Officer) | ||
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned hereby certifies that the Quarterly Report on Form 10-Q for the period ended June 30, 2026 of WhiteFiber, Inc. (the “Company”) fully complies with the requirements of Section 13 (a) or Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| WhiteFiber, Inc. | ||
| Date: August 12, 2026 | By: | /s/ Sam Tabar |
| Sam Tabar, Chief Executive Officer | ||
| (Principal Executive Officer) | ||
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to WhiteFiber, Inc. and will be retained by WhiteFiber, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned hereby certifies that the Quarterly Report on Form 10-Q for the period ended June 30, 2026 of WhiteFiber, Inc. (the “Company”) fully complies with the requirements of Section 13 (a) or Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| WhiteFiber, Inc. | ||
| Date: August 12, 2026 | By: | /s/ Justin Zhu |
| Justin Zhu, Chief Financial Officer | ||
| (Principal Financial Officer) | ||
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to WhiteFiber, Inc. and will be retained by WhiteFiber, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.