CEO.CA Chairman's Briefing

(Block Height: 833,510) – Cathedra Bitcoin Inc. (“Cathedra” or the “Corporation”) (TSX-V: CBIT; OTCQB: CBTTF), a diversified bitcoin mining company, is pleased to announce that it has entered into a binding share exchange agreement (the “Share Exchange Agreement”) dated March 6, 2024, providing for a merger with Kungsleden, Inc. (“Kungsleden”), a developer and operator of alternative high-density compute infrastructure. Pursuant to the Share Exchange Agreement, it is expected that Cathedra will acquire all of the outstanding shares of Kungsleden from Kungsleden shareholders in exchange for Multiple Voting Shares (as defined below) of Cathedra, as more particularly set out below (the “Transaction”). The Transaction will constitute a reverse takeover of Cathedra, such that, upon closing, the former Kungsleden shareholders will own (on a non-diluted basis) approximately 77.5% of the equity of Cathedra as it exists on closing (the “Resulting Issuer”) and Kungsleden will become a wholly owned subsidiary of the Resulting Issuer, with the board of the Resulting Issuer directing the operations of Cathedra and Kungsleden. Upon completion of the Transaction, it is expected that the Resulting Issuer will be a Tier 2 Technology issuer listed on the TSX Venture Exchange (the “TSX-V”).

The Transaction is expected to establish the Resulting Issuer as a developer and operator of data center infrastructure for the digital economy, with a focus on bitcoin mining.

“We are excited to contribute to Cathedra’s business through this Transaction. Importantly, we are not merely acquiring a portfolio of data center assets in this merger; we are joining forces with the team responsible for developing these assets,” remarked Antonin Scalia, Chief Executive Officer of Cathedra Bitcoin. “Kungsleden has established a scalable, repeatable process for developing bitcoin mining data centers with impressive construction costs and time-to-market. We also see opportunity beyond the bitcoin mining end-market, with the potential to apply these infrastructure development capabilities to the traditional data center and high-performance compute markets.”

Thomas Masiero, Chief Executive Officer of Kungsleden, stated, "With our merger, Kungsleden and Cathedra are forging a path to potentially becoming a digital infrastructure leader. This strategic union combines our expertise, resources, and ambition, enabling us to set a high standard for bitcoin mining operations.”

Resulting Issuer’s Business Operations

Upon completion of the Transaction, the Resulting Issuer’s business operations are expected to include:

• 4.4 EH/s of third-party hash rate under management across 87 megawatts (“MW”) of total power capacity at Kungsleden-operated data centers in Kentucky, Tennessee, and North Dakota.³
• 0.4 EH/s of installed proprietary mining hash rate hosted at four third-party data centers in Washington, Tennessee, and Texas, and one Kungsleden data center in Tennessee.
• 45-MW portfolio of owned and operated bitcoin mining hosting data centers consisting of two 10‑MW sites in Kentucky; one 10-MW site in Tennessee; and a 25% minority interest in a 60-MW site in North Dakota (equivalent to 15 MW of owned capacity) which is under development.
• As of the date hereof, total expected pro forma annualized revenues of C$48.0 million⁴ derived from Cathedra’s installed proprietary mining operations and Kungsleden’s hosting business.
  • Expected pro forma annualized bitcoin mining revenue of approximately C$12.0 million⁴ after the 2024 Halving, assuming no other changes to market conditions at the time of this announcement.⁵
  • Expected pro forma annualized hosting revenue of approximately C$36.0 million⁴ across Kungsleden’s data centers in Kentucky, Tennessee, and North Dakota, including active locations and those currently under development.⁶
• The Resulting Issuer will carry C$5.7 million⁷ of total debt, consisting entirely of senior secured convertible debentures issued by Cathedra to a certain investor in November 2021. The convertible debentures carry interest at a rate of 3.5% per annum and do not require principal repayment until maturity in November 2025, whereupon the full principal balance is due.
• Existing balance sheet cash and bitcoin from Cathedra of C$1.2 million and C$3.0 million (33.3 bitcoin), respectively, and balance sheet cash of C$1.3 million from Kungsleden, subject to fluctuations between the time of this announcement and the closing of the Transaction.⁷

Share Exchange Agreement

The Share Exchange Agreement provides that all issued and outstanding common shares of Kungsleden will be exchanged for Multiple voting shares of Cathedra (the “Multiple Voting Shares”), with each common share of Kungsleden being exchanged for approximately 8.17 Multiple Voting Shares of Cathedra (the “Exchange Ratio”), such that the total consideration payable in connection with the Transaction is expected to be approximately 8,170,189 Multiple Voting Shares, which will be convertible into 817,018,900 Subordinate Voting Shares (as defined below). The Multiple Voting Shares are expected to be created pursuant to the Share Structure Alteration (as defined hereinafter), subject to approval by the shareholders of Cathedra, which approval will be sought at a shareholder meeting to be held prior to completion of the Transaction. Immediately following completion of the Transaction, it is expected that Cathedra shareholders will own approximately 22.5% of the stock of the Resulting Issuer, with Kungsleden shareholders owning approximately 77.5%. Based on the 5-day VWAP for the Cathedra shares on the TSX Venture Exchange (the “TSX-V”) as of the last trading day prior to the date of this announcement, the aggregate consideration implies a combined market capitalization of approximately C$106.2 million. Closing of the Transaction is expected occur in the second quarter of 2024.

Following completion of the Transaction, the shares of the Resulting Issuer will continue to trade on the TSX‑V under the ticker “CBIT” and on the OTCQB Venture Market under the ticker “CBTTF.”

Pursuant to the Share Exchange Agreement, Cathedra and Kungsleden have agreed that the Transaction is subject to certain conditions precedent, including, but not limited to: obtaining the required shareholder approvals (as further discussed below); Cathedra having obtained the required exemption from, or waiver of, the TSX-V sponsorship requirements; obtaining any applicable regulatory approvals; TSX-V approval and any third-party consents required for the Transaction; and other customary conditions for transactions of this nature. The Transaction constitutes an Arms-Length Transaction, within the meaning of that term in the policies of the TSX-V. Trading of Cathedra’s common shares have been halted in connection with the announcement of the Transaction and will remain halted pending the review of acceptable documentation with respect to the Transaction pursuant to the policies of the TSX-V.

Cathedra intends to make an application to the TSX-V for an exemption from the sponsorship requirements, but there can be no assurance that such an exemption will be granted.

As at the date of this press release, Cathedra has the following securities issued and outstanding: 237,199,034 common shares; 3,605,364 stock options, each exercisable to acquire one common share, at a weighted-average exercise price of $0.50 per common share; 3,342,550 restricted share units; 50,257,200 warrants, each exercisable to acquire one common share, at a weighted-average exercise price of $0.95 per common share; and 887,682 broker warrants, each exercisable to acquire one common share, at a weighted-average exercise price of $0.63 per common share. As at the date this press release, Kungsleden has 1,000,000 common shares outstanding and there are no outstanding securities of Kungsleden that are convertible, exchangeable, or redeemable into common shares of Kungsleden.

Kungsleden Business Operations

Kungsleden is a privately held developer and operator of alternative high-density compute infrastructure. Incorporated in Delaware in 2023 and headquartered in Tennessee, Kungsleden owns and operates 45 MW of bitcoin mining hosting capacity across four data centers in three US states, including a 25% minority interest and operational control in a 60-MW North Dakota hosting facility currently under development. Each of Kungsleden’s data centers is subject to existing power contracts with utilities and/or power generation facilities and hosting agreements with bitcoin mining clients. Upon closing of the Transaction, it is expected that Cathedra will assume Kungsleden’s existing hosting agreements and power contracts and deploy them for the Resulting Issuer’s combined operations.

As provided in its unaudited consolidated financial statements, Kungsleden recorded revenues of US$11.3 million and a net profit of US$1.6 million for the year ended December 31, 2023. As at December 31, 2023, Kungsleden had total assets of US$8.8 million, total liabilities of US$7.3 million, and shareholders’ equity of US$1.4 million.

Cathedra Shareholder Meeting

In connection with the Transaction, Cathedra will hold a shareholder meeting (the “Meeting”) to approve:

1. Alterations to the articles of the Corporation (the “Share Structure Alteration”) such that Cathedra shall:
   1. change the name of its common shares to “subordinate voting shares” (the “Subordinate Voting Shares”;
   2. create a new class of unlimited Multiple Voting Shares, with each Multiple Voting Share convertible into 100 Subordinate Voting Shares;
   3. add special rights and restrictions to the Subordinate Voting Shares and the Multiple Voting Shares, pursuant to which, among other things, the holders of the Multiple Voting Shares will be entitled to 117 votes per Multiple Voting Share held;
2. A consolidation of the common shares of the Corporation (the “Consolidation”) on the basis of one post-Consolidation common share for up to seventy-five (75) pre-Consolidation common shares, to be determined definitively by the directors of the Corporation at a later date; and
3. The election of the persons named below as directors of the Resulting Issuer.

In addition, Cathedra may include as an item of business the Transaction to be approved by its shareholders at the Meeting. Please see below under the heading “Filing Statement” for further details.

All matters required to be submitted for approval to shareholders in connection with the Transaction and Share Structure Alteration will be submitted at the shareholder meeting of the Corporation which is expected to be held in April 2024.

Proposed Management and Board of Directors of the Resulting Issuer

Upon completion of the Transaction, it is anticipated that the persons identified below will serve as officers of the Resulting Issuer, subject to acceptance by the TSX-V:

Antonin Scalia is the current Chief Executive Officer of the Corporation and Thomas Armstrong is the current President and Chief Operating Officer. Both Mr. Scalia and Mr. Armstrong will continue in their current roles. Inar Kamaletdinov is expected to be onboarded as the Chief Financial Officer of the Resulting Issuer.

The board of directors of the Resulting Issuer is expected to be consist of seven members, two of whom will be designated by Cathedra, three of whom will be designated by Kungsleden, and two of whom will be designated by Kungsleden upon agreement by Cathedra. The expected board of directors for the Resulting Issuer is set out in the table below:

Antonin Scalia – Chief Executive Officer & Director

Mr. Scalia was appointed Chief Executive Officer of Cathedra and to its board of directors in September 2021. Prior to joining Cathedra, Mr. Scalia held various roles at Galaxy Digital Holdings Ltd. (“Galaxy Digital”), a diversified financial services firm dedicated to the digital assets sector, in the investment banking and principal investments divisions. He was also a founding member of Galaxy Digital’s bitcoin mining division, building its proprietary mining and mining equipment finance businesses. Mr. Scalia began his career in JPMorgan Chase & Co.’s technology investment banking group in New York and holds an undergraduate degree in Finance from the College of William & Mary.

Thomas Armstrong – President & Director

Mr. Armstrong was appointed President and Chief Operating Officer of Cathedra and to its board of directors in September 2021. Prior to joining Cathedra, Mr. Armstrong held various roles at Galaxy Digital, a diversified financial services firm dedicated to the digital assets sector, in the investment banking and principal investments divisions. He was also a founding member of Galaxy Digital’s bitcoin mining division, building its proprietary mining and mining equipment finance businesses. Mr. Armstrong began his career in the investment banking division of Barclays plc and holds undergraduate degrees in Economics and Philosophy from the University of Chicago.

Inar Kamaletdinov – Chief Financial Officer

Mr. Kamaletdinov is the Founding Partner of Imperium Consulting LLP, a boutique CPA firm providing accounting and business advisory services. Prior to founding Imperium, he obtained his professional designation with Ernst & Young (EY). Mr. Kamaletdinov also brings prior experience serving as CFO for a publicly listed junior resource company and a privately held cryptocurrency investment company.

Thomas Masiero – Co-Chairman of the Board

Mr. Masiero co-founded Kungsleden Inc.’s predecessor entities in 2022 and has been responsible for growing Kungsleden’s power capacity under management to an expected 90 megawatts as Chief Executive Officer. Prior to Kungsleden, Mr. Masiero worked as Cathedra’s Head of Business Development in 2022, deploying the Corporation’s fleet of over 4,000 latest generation Bitmain mining machines. Earlier in his career, Mr. Masiero co-founded and served as Chief Operating Officer for Great American Mining, one of the first companies to mine bitcoin off-grid using flare gas in the oilfield, which was acquired by Crusoe Energy Systems in 2022. Mr. Masiero brings decades of experience across internet and digital media, entrepreneurship, and bitcoin mining.

Jialin (Gavin) Qu – Co-Chairman of the Board

Mr. Qu was an investor in and co-founder of Kungsleden Inc.’s predecessor entities in 2022. Prior to Kungsleden, he was an investor in and operator of over 200 megawatts of bitcoin mining capacity across dozens of sites in the United States in roles at various companies. Mr. Qu began his career in Goldman Sachs’ sales and trading division in Hong Kong and holds an undergraduate degree in Economics from the University of California, Berkeley.

Matthew Kita – Director

Mr. Kita is an experienced corporate attorney having spent time in both private practice and in-house, most recently as Chief Legal Officer of Axiom, a bitcoin focused finance company. Prior to joining Axiom, Mr. Kita served as general counsel of Cathedra as well as held various positions within the legal departments of BitGo and FIS. Prior to working in-house, Mr. Kita practiced at the law firms Reed Smith and Stevens & Lee. Mr. Kita holds both an undergraduate degree in Economics and a law degree from The Pennsylvania State University and a LLM in taxation from Temple University.

Marcus Dent – Director

Mr. Dent is the founder of TFTC.io, a media company focused on Bitcoin and freedom in the digital age. He is also a Venture Partner at Ten31, a bitcoin-focused venture capital firm. Previously, Mr. Dent served as Director of Business Development at Great American Mining. He holds an undergraduate degree in Economics from DePaul University.

David Jaques – Director

Mr. Jaques has held senior financial positions in banking, corporate finance and venture capital. In his early career, he held various positions with Barclays Bank in London and provided advisory services in currency and interest rate risk management to the bank’s corporate clients. He held a similar role at Barclays Bank in New York from 1988 to 1993. He was Senior Vice President and Treasurer of Silicon Valley Bank between 1994 and 1999; founding CFO for PayPal from 1999 to 2001 and CFO of BlueRun Ventures from 2001 to 2008. Since 2008 he has provided CFO consulting services through Greenough Consulting Group and has held board positions at Katipult Technology Corp. (TSXV: FUND), UBL Interactive, Inc., Mobivity Holdings, Inc., Bluedot Innovation, Inc., Digitzs Solutions, Inc. and Wedo Ventures Limited. He holds a Higher National Diploma in Business Administration from Polytechnic of the South Bank, London and is a UK Chartered Certified Accountant (inactive).

Upon completion of the Transaction, it is expected Togetsu Trust and Thy Kingdom Trust will beneficially own, directly or indirectly, approximately 40.1% and 38.3% of the voting shares of Cathedra, respectively. The trustees of the Togetsu Trust are Jialin (Gavin) Qu and Adam Brink, both of whom are resident in the United States. The trustees of the Thy Kingdom Trust are Thomas Masiero and Adam Brink, both of whom are resident in the United States.

Filing Statement

Cathedra expects to seek the approval of its shareholders for the Transaction pursuant to obtaining written consents from Cathedra shareholders holding at least 50% of the issued and outstanding common shares of the Corporation (the “Written Approval”), in which case, in connection with the Transaction and pursuant to the requirements of the TSX-V, Cathedra will file a filing statement on its issuer profile on SEDAR+ (www.sedarplus.ca), which will contain details regarding the Transaction, Cathedra, Kungsleden, and the Resulting Issuer.

In the event Cathedra does not obtain the Written Approval, the Transaction will be proposed as an item of business at the Meeting, in which case, a management information circular will be filed on its issuer profile on SEDAR+ (www.sedarplus.ca) in lieu of a filing statement, and such management information circular will contain details regarding the Transaction, Cathedra, Kungsleden, and the Resulting Issuer.

Additional details about the Transaction can be found in a joint investor presentation, which will be available at www.cathedra.com.

Amendment to Convertible Debentures

Cathedra also announces that, in connection with the closing of the Transaction, it intends to amend the conversion price (the “Repricing”) of 3.5% senior secured convertible debentures of the Corporation due November 11, 2025 (the “Maturity Date”) originally issued to the debenture holder on November 11, 2021 (the “Debentures”), from C$0.78 to C$0.15. The aggregate principal amount outstanding of the Debentures as of the date hereof is C$5,733,728.38. The Repricing is conditional on Cathedra entering into a definitive agreement with the holders of the Debentures in respect of the Repricing and completion of the Transaction.

Cathedra expects that the proposed Repricing will optimize its capital structure and prepare the Resulting Issuer to refocus on profitable growth. The board of directors of the Cathedra has reviewed the Repricing and believes it is in the best interests of shareholders. The remaining outstanding principal amount of the Debentures following the Repricing will continue to bear interest at a rate of 3.5% per annum, payable quarterly in arrears on the last day of March, June, September and December of each year until the Maturity Date.

The Repricing is subject to the receipt of regulatory approvals, including the approval of the TSX-V.

About Cathedra Bitcoin Inc.

Cathedra Bitcoin Inc. (TSX-V: CBIT; OTCQB: CBTTF) is a Bitcoin company that believes sound money and abundant energy are the keys to human flourishing. Cathedra has diversified Bitcoin mining operations which produce approximately 403 PH/s across three states and five locations in the United States. The Corporation is focused on managing and expanding its portfolio of hash rate through a diversified approach to site selection and operations, utilizing multiple energy sources across various jurisdictions.

For more information about Cathedra, visit cathedra.com or follow Corporation news on X at @CathedraBitcoin or on Telegram at @CathedraBitcoin.

On Behalf of Cathedra Bitcoin Inc.
“Antonin Scalia”
Chief Executive Officer

About Kungsleden Inc.

Kungsleden is a fast-growing developer and operator of alternative high-density compute infrastructure. Incorporated in Delaware in 2023 and headquartered in Tennessee, Kungsleden owns and operates 45 MW of bitcoin mining hosting capacity across four data centers in three U.S. states, including a 25% minority interest and operational control in a 60 MW North Dakota hosting facility currently under development.

Forward-Looking Statements Disclaimer

This news release contains certain “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian securities laws that are based on expectations, estimates and projections as at the date of this news release. The information in this release about future plans and objectives of the Corporation and Kungsleden, are forward-looking information. Other forward-looking information includes but is not limited to information concerning: the intentions and future actions of senior management, the intentions, plans and future actions of the Corporation and Kungsleden, as well as their ability to successfully mine digital currency; the timing and anticipated completion of the Transaction, and shareholder approvals for same; the Corporation’s expectation to hold a shareholder meeting to approve various items related to the Transaction; revenue and capacity projections of the Resulting Issuer; the expected composition of the board of directors and management of the Resulting Issuer; the Corporation’s intention to complete the Repricing of its debentures and the expected impact of such transaction; the expected financial results of the Transaction and the Resulting Issuer; timing of regulatory approvals for the Transaction; the expected benefits from the Transaction; the combination of Cathedra’s business and Kungsleden’s business; the impact that the Transaction is expected to have on the business operations of the Resulting Issuer including without limitation, the expected growth and capabilities of the Resulting Issuer; the expectation that Kungsleden’s revenue will complement Cathedra’s bitcoin mining revenue and provide defensibility as the 2024 Halving approaches; the construction and operation of expanded blockchain infrastructure as currently planned; and the regulatory environment of cryptocurrency in applicable jurisdictions. Any statements that involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking information and are intended to identify forward-looking information.

This forward-looking information is based on reasonable assumptions and estimates of management of the Corporation at the time it was made, including, without limitation, assumptions that the parties will be able to obtain the requisite regulatory, shareholder and third party approvals and satisfy the other conditions to the consummation of the Transaction on the proposed schedule and terms and conditions set out in the Share Exchange Agreement; that the Share Exchange Agreement will not be terminated prior to the closing the Transaction; that the Transaction will be completed in accordance with the terms and conditions of the Share Exchange Agreement and within the timeframe expected; that no unanticipated events will occur that will delay or prevent the completion of the Transaction; and that the parties will have access to the financial and other resources required to carry out their business plans as currently anticipated. The Corporation has also assumed that no significant events occur outside of its normal course of business.

Additionally, these forward-looking statements may be affected by risks and uncertainties in the business of Cathedra and Kungsleden and general market conditions. Investors are cautioned that forward-looking statements are not based on historical facts but instead reflect Cathedra and Kungsleden’s respective management's expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although Cathedra and Kungsleden believe that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed thereon, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Resulting Issuer. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are the following: the ability to consummate the Transaction; the ability to obtain requisite regulatory and third party approvals and the satisfaction of other conditions to the consummation of the Transaction on the proposed schedule and on the terms and conditions set out in the Share Exchange Agreement; the potential impact of the announcement or consummation of the Transaction on relationships, including with regulatory bodies, employees, customers and competitors; changes in general economic, business and political conditions, including changes in the financial markets; changes in applicable laws and regulations both locally and in foreign jurisdictions; compliance with extensive government regulation and the costs associated with compliance; unanticipated costs; the risks and uncertainties associated with foreign markets; and the diversion of management time on the Transaction. Additionally, the forward-looking statements contained herein may be affected by risks and uncertainties in the business of Cathedra and Kungsleden and general market conditions.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although Cathedra and Kungsleden have attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended and such changes could be material. Readers should not place undue reliance on forward-looking information.

FINANCIAL INFORMATION

This news release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about prospective results of operations, future net revenue, share capital, cash flows, and components thereof, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth in the above paragraphs. FOFI contained in this news release was made as of the date of this news release and was provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that the forward looking statements and FOFI contained in this document should not be used for purposes other than for which it is disclosed herein. The forward-looking statements and FOFI contained in this news release are expressly qualified by this cautionary statement. Certain information contained herein is based on, or derived from, information provided by independent third-party sources. Cathedra and Kungsleden believes that such information is accurate and that the sources from which it has been obtained are reliable. Cathedra and Kungsleden cannot guarantee the accuracy of such information, however, and has not independently verified the assumptions on which such information is based. Cathedra and Kungsleden do not assume any responsibility for the accuracy or completeness of such information. Cathedra and Kungsleden do not intend, and do not assume any obligation, to update the forward-looking statements or FOFI contained in this news release except as otherwise required by applicable law.

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable, disinterested shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of the Corporation should be considered highly speculative. The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this news release.

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

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