v3.26.1
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
 9 Months Ended
Jun. 30, 2026
Accounting Policies [Abstract]  
Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. The unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s most recent Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed with the SEC on November 25, 2025 (the “Form 10-K”).

In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented in this Quarterly Report on Form 10-Q have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full fiscal year.

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of the Company, and the Company’s wholly owned subsidiaries. All intercompany transactions have been eliminated upon consolidation of these entities. The Company has a sole reportable segment which is the bitcoin mining segment.

There were no changes to the Company’s most significant estimates and assumptions, significant accounting policies, or recent accounting pronouncements that were disclosed in Note 2 - Summary of Significant Accounting Policies included in the Form 10-K other than as discussed below.
Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Improvements to Income Tax Disclosures, which enhances existing income tax disclosure requirements, including requiring greater disaggregation of information in the effective tax rate reconciliation and income taxes paid. The guidance is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of ASU 2023-09 on its Condensed Consolidated Financial Statements and expects to adopt the guidance in its annual report for the current fiscal year ending September 30, 2026.
Segment reporting

Segment reporting

The Company operates as a single operating and reportable segment focused on bitcoin mining. The Company’s Chief Executive Officer serves as the chief operating decision maker (“CODM”) and uses consolidated net (loss) income as the measure of segment (loss) income. The CODM uses consolidated net (loss) income, as presented on the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income, to evaluate the Company’s overall profitability and performance, to determine the volume and timing of bitcoin mining to be performed, to allocate and reallocate resources, including miner purchases and expansion projects, and to focus investment where long-term profitability appears most viable.

The CODM is regularly provided with information on certain significant segment expenses, including Cost of revenues (exclusive of depreciation and amortization), Professional fees, Payroll expenses, General and administrative expenses, Depreciation and amortization, and Loss (gain) on fair value of bitcoin, net. These significant segment expenses are consistent with those presented on the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income, and depreciation expense attributable to miners is disclosed in Note 7 - Property and Equipment. The measure of the Company’s segment assets is reported on the Condensed Consolidated Balance Sheets as total assets. Stock-based compensation is consistent with the amounts presented on the Condensed Consolidated Statements of Cash Flows. All of the Company’s long-lived assets are in the United States. Information about the Company’s revenue and vendor concentrations is included in Note 14 - Revenue and Vendor Concentrations.
Accrued liabilities

Accrued liabilities

The Company records accruals for expenses that have been incurred but not yet invoiced or paid as of each balance sheet date. These accruals are included within current liabilities and represent estimates of obligations for which the timing or amount of payment is uncertain. Accrued liabilities primarily consist of indirect tax exposures, payroll and related benefits, operating expenses, and other miscellaneous accruals arising in the ordinary course of business.

The following table summarizes the composition of the Company’s accrued liabilities on the Condensed Consolidated Balance Sheets indicated:

 ($ in thousands)

 

June 30,
2026

 

 

September 30,
2025

 

Indirect tax contingencies

 

$

67,500

 

 

$

64,481

 

Accrued operating expenses

 

 

25,637

 

 

 

30,562

 

Accrued payroll expenses

 

 

11,740

 

 

 

15,530

 

Indirect tax accruals

 

 

8,332

 

 

 

6,017

 

Deferred consideration

 

 

9,365

 

 

 

—

 

Accrued capital expenses

 

 

3,608

 

 

 

699

 

Other accrued liabilities

 

 

5,160

 

 

 

255

 

Accrued liabilities

 

$

131,342

 

 

$

117,544

 
(Loss) income per share

(Loss) income per share

The Company reports (loss) income per share in accordance with FASB ASC 260-10, Earnings Per Share, which provides for calculation of “basic” and “diluted” earnings per share.

Basic earnings per share includes no dilution and is computed by dividing net (loss) income available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings of an entity. The calculation of diluted net (loss) income per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is anti-dilutive.

Common stock issuable upon the exercise of outstanding stock options, vesting of restricted stock, and warrants are computed using the treasury stock method. Potential shares of common stock issuable upon conversion of the convertible notes and Series A preferred stock are computed using the if-converted method.

Provided below is the (loss) income per share calculation for the three and nine months ended June 30, 2026 and 2025:

 

For the three months ended June 30,

 

 

For the nine months ended June 30,

 

 ($ in thousands, except share and per share amounts)

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Numerator

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income attributable to common shareholders - Basic

 

$

(239,842

)

 

$

251,787

 

 

$

(1,026,896

)

 

$

354,645

 

Non-cash interest expense on convertible notes

 

 

—

 

 

 

693

 

 

 

—

 

 

 

1,506

 

Net (loss) income attributable to common shareholders - Dilutive

 

 

(239,842

)

 

 

252,480

 

 

 

(1,026,896

)

 

 

356,151

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding - Basic

 

 

268,426,611

 

 

 

280,997,649

 

 

 

272,626,480

 

 

 

282,147,349

 

Dilutive impact of stock options and other share-based awards

 

 

—

 

 

 

666,010

 

 

 

—

 

 

 

625,839

 

Dilutive impact of convertible notes

 

 

—

 

 

 

43,930,792

 

 

 

—

 

 

 

31,379,137

 

Weighted-average common shares outstanding - Dilutive

 

 

268,426,611

 

 

 

325,594,451

 

 

 

272,626,480

 

 

 

314,152,325

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income per common share attributable to common shareholders

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.89

)

 

$

0.90

 

 

$

(3.77

)

 

$

1.26

 

Diluted

 

$

(0.89

)

 

$

0.78

 

 

$

(3.77

)

 

$

1.13

 

Convertible senior notes are reflected in diluted earnings per share using the if-converted method when doing so is dilutive, meaning the additional shares and related interest add-back reduce earnings per share; otherwise, they are excluded as antidilutive. The un-weighted number of shares excluded from diluted earnings per share for the three and nine months ended June 30, 2026 and 2025 are noted in the table below. Such shares were excluded as their assumed conversion would have been antidilutive or, for preferred stock, because the change-in-control conversion contingency was not satisfied.

 

For the three months ended June 30,

 

 

For the nine months ended June 30,

 

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Convertible notes

 

103,941,450

 

 

-

 

 

103,941,450

 

 

—

 

Series A preferred stock conversion

 

5,250,000

 

 

5,250,000

 

 

5,250,000

 

 

5,250,000

 

Anti-dilutive warrants

 

1,604,559

 

 

1,586,999

 

 

1,604,559

 

 

1,586,999

 

Anti-dilutive stock options

 

1,931,334

 

 

1,806,985

 

 

1,931,334

 

 

1,586,999

 

Anti-dilutive restricted stock awards

 

25,910,723

 

 

142,694

 

 

25,910,723

 

 

142,694

 

Total anti-dilutive securities

 

 

138,638,066

 

 

 

8,786,678

 

 

 

138,638,066

 

 

 

8,566,692

 
Fair value measurement of financial instruments, derivative assets and contingent consideration

Fair value measurement of financial instruments, derivative assets and contingent consideration

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company utilizes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable.

Level 1

Quoted prices for identical assets or liabilities in active markets. These are typically obtained from real-time quotes in active exchange markets involving identical assets or liabilities.

Level 2

Quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. These are typically obtained from readily available pricing sources for comparable assets or liabilities.

Level 3

Unobservable inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity’s own beliefs about the assumptions that market participants would use in pricing the asset or liability, based on the best information available in the circumstances. Due to the use of significant unobservable inputs, a change in those inputs to a different amount might result in a significantly higher or lower fair value measurement.

The carrying value of cash, accounts payable, accrued expenses and short-term portion of loan payable are Level 1 and approximate their fair values because of the short-term nature of the instruments. The carrying amount of the Company’s long-term interest-bearing portion of loan payable is also stated at fair value since the stated rate of interest approximates market rates available to the Company for a similar duration. The fair values of warrant liabilities were determined based on Black-Scholes option-pricing model using Level 2 inputs. The fair values of the DAM derivative assets, derivative liabilities and bitcoin derivative - Bitmain contracts outstanding as of June 30, 2026, as defined in Note 6 - Investments and Derivatives, were also determined using a Black-Scholes option-pricing model and implied volatility derived from observable quotes for similar bitcoin options in the Deribit market. Given that the significant inputs were observable, directly or indirectly, for substantially the full contractual terms of the instruments and no significant unobservable adjustment was applied, these fair value measurements were classified within Level 2 of the fair value hierarchy.

The following table presents the Company’s assets and liabilities that are measured and recorded at fair value on the Company’s Condensed Consolidated Balance Sheets on a recurring basis and their level within the fair value hierarchy as of June 30, 2026 and September 30, 2025:

June 30, 2026

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

Amount

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents(1)

 

$

9

 

 

$

9

 

 

$

—

 

 

$

—

 

Receivable from bitcoin collateral(2)

 

 

100,607

 

 

 

—

 

 

 

100,607

 

 

 

—

 

Bitcoin

 

 

714,293

 

 

 

714,293

 

 

 

—

 

 

 

—

 

Bitcoin derivative - Bitmain contracts

 

 

116

 

 

 

—

 

 

 

116

 

 

 

—

 

DAM derivative assets

 

 

780

 

 

 

—

 

 

 

780

 

 

 

—

 

Interest rate swap derivative

 

 

26

 

 

 

—

 

 

 

26

 

 

 

—

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

DAM derivative liabilities

 

 

3,040

 

 

 

—

 

 

 

3,040

 

 

 

—

 

Warrant liabilities

 

 

3

 

 

 

—

 

 

 

3

 

 

 

—

 

 

September 30, 2025

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

Amount

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents(1)

 

$

32,992

 

 

$

32,992

 

 

$

—

 

 

$

—

 

Receivable from bitcoin collateral(2)

 

 

294,648

 

 

 

—

 

 

 

294,648

 

 

 

—

 

Bitcoin

 

 

1,189,443

 

 

 

1,189,443

 

 

 

—

 

 

 

—

 

Bitcoin derivative - Bitmain contracts

 

 

233

 

 

 

—

 

 

 

—

 

 

 

233

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap derivative

 

 

93

 

 

 

—

 

 

 

93

 

 

 

—

 

Warrant liabilities

 

 

115

 

 

 

—

 

 

 

115

 

 

 

—

 

(1) Represents money market funds.

(2) See Note 5 - Receivable from Bitcoin Collateral for more information.

The bitcoin derivative - Bitmain contracts outstanding as of September 30, 2025, which were classified within Level 3 of the fair value hierarchy, expired during the nine months ended June 30, 2026. The DAM derivative instruments outstanding as of March 31, 2026, which were classified within Level 3 of the fair value hierarchy, were settled or expired during the three months ended June 30, 2026. The bitcoin derivative - Bitmain contracts and DAM derivative instruments outstanding as of June 30, 2026 were separate from the respective Level 3 instruments described above and are classified within Level 2 based on the observability of the significant inputs used in their current period valuation. Accordingly, the different hierarchy classifications presented at the two presented balance sheet dates did not represent transfers of instruments between levels of the fair value hierarchy.

The activities of the financial instruments that were measured and recorded at fair value on the Company’s Condensed Consolidated Balance Sheets on a recurring basis during the nine months ended June 30, 2026 and year ended September 30, 2025 are described in Note 6 - Investments and Derivatives.