Acquisition

6 Months Ended

Jun. 30, 2026

Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]

Acquisition

Acquisition

On June 1, 2026, the Company acquired Cathedra’s digital infrastructure platform and bitcoin mining operations, which are expected to complement Sphere’s existing bitcoin mining operations and expand its power portfolio. As described in Note 1, the Combination was effected by way of the Company’s wholly-owned subsidiary, S3D Acquisition Corp., which acquired all of the issued and outstanding shares of Cathedra in a share-for-share transaction, and Cathedra became a wholly-owned subsidiary of the Company. Immediately following the June 1, 2026 closing, former Cathedra security holders held approximately 33% of the voting rights in the combined company.

The total purchase consideration for the acquisition consisted of 2,405,300 common shares and 1,387,117 Series I preferred shares with a fair value as follows (in thousands):

Common shares	$	4,570
Preferred shares	2,677
Issuance of replacement awards and warrants	96
Total purchase consideration	$	7,343

As a result of the Combination, the Company has expanded beyond proprietary Bitcoin mining into a vertically integrated data center infrastructure platform, combining the Company’s mining fleet and capital markets access with Cathedra’s energy and power infrastructure assets and data center development capabilities.

The acquisition was accounted for as a business combination under ASC 805 using the acquisition method of accounting. The results of Cathedra’s operations have been included in the Company’s condensed consolidated statements of operations from the acquisition date, and reflect revenue of $0.4 million and an operating loss of $0.6 million. The transaction was considered a stock-deal for tax purposes and as such a deferred tax liability was recorded to recognize the tax impact for the differences in the book and tax basis of the assets acquired

The following table summarizes the preliminary purchase price allocation based on the estimated fair values of assets acquired and liabilities assumed as of June 1, 2026 (in thousands):

Cash and cash equivalents	$	450
Bitcoin	7
Accounts receivable	400
Property and equipment	5,046
Operating lease right-of-use asset	1,342
Identifiable intangible assets - customer related	525
Other assets	3,223
Total identifiable assets acquired	10,993
Accounts payable and accrued liabilities	2,532
Deferred tax liabilities	760
Operating lease liabilities	1,333
Other liabilities	2,307
Total identifiable liabilities assumed	6,932
Net identifiable assets acquired	4,061
Goodwill	3,282
Total purchase consideration	$	7,343

Goodwill is calculated as the excess of the purchase price over the net assets acquired. The Company expects the goodwill balance not to be deductible for tax purposes. Goodwill is primarily attributed to growth opportunities as well as expected synergies from combining the operations of Cathedra, including its digital infrastructure platform, data center operations, and proprietary Bitcoin mining activities.

The Series I preferred shares are not publicly traded and do not have a quoted price in an active market. Accordingly, the fair value of the Series I preferred shares at June 1, 2026 was determined using an option pricing method to allocate the total equity value of the Company, estimated using a market approach, the guideline public company method, and then applying a discount for lack of marketability, resulting in a fair value of $1.93 per Series I preferred share on a non-marketable, minority-interest basis. These inputs, including volatility and a risk-free rate, used in this valuation are Level 3 inputs.

The fair value of property and equipment was estimated by applying the cost approach, which estimates fair value using replacement or reproduction cost of an asset of comparable utility, adjusted for loss in value due to depreciation and economic obsolescence, which are considered Level 3 inputs. The fair value of the customer relationships intangible asset was determined using a discounted cash flow model that incorporates the excess earnings method, which are considered Level 3 inputs, and will be amortized on a straight-line basis over the projected pattern of economic benefits of five years.

Transaction costs of $3.0 million were incurred in connection with the Combination including consulting fees, legal and professional fees for brokering and due diligence services and were recognized in general and administrative expense in the condensed consolidated statement of operations.

Pro Forma Financial Information

The following unaudited pro forma financial information reflects the acquisition as if it had occurred on January 1, 2025, and includes pro forma adjustments to the Company’s historical financial statements for the indicated periods (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Revenue	$	3,591	$	6,727	$	7,250	$	14,041
Net (loss) income from continuing operations	$	(12,540)	$	545	$	(17,548)	$	(12,245)

The unaudited pro forma financial information is not meant to show what the Company's actual results would have been if the acquisition had happened on the date assumed, and it should not be taken as a prediction of the Company's future financial position or operating results.