Company: ABTC
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001213900-25-076632
Chunk: 35

Company: American Bitcoin Corp.
Filing Date: 2025-08-14
Form: 10-Q
Item: Item 8
Chunk 35
---
 made by Sphere 3D in the Sphere 3D Litigation
(the “Sphere 3D MSA Termination”). On October 11, 2023, the Company filed an answer to Sphere 3D’s second amended complaint,
in which, among other things, the Company alleged that Sphere 3D’s attempted termination of the Sphere MSA was wrongful and ineffective,
because it violated the terms of the Sphere MSA, and thus that Sphere 3D continues to owe the Company all amounts to which it would otherwise
be entitled under the Sphere MSA through that contract’s term ending in August 2026.

21

On March 7, 2025, The Company and Sphere 3D entered
into a settlement and release agreement on mutually acceptable terms. The Settlement Agreement fully resolved all pending litigation between
the Company and Sphere, and each party fully released the other party from any known or unknown and unsuspected claims. As of March 7,
2025, the Company had a liability of due to Sphere 3D of approximately $449,000, which was written off and recorded as a gain on settlement
of accounts payable in the accompanying unaudited condensed consolidated statement of operations.

Contingencies

The Company is subject at
times to various claims, lawsuits, and governmental proceedings relating to the Company’s business and transactions arising in the
ordinary course of business. The Company cannot predict the final outcome of such proceedings. Where appropriate, the Company vigorously
defends such claims, lawsuits, and proceedings. Some of these claims, lawsuits and proceedings seek damages, including, consequential,
exemplary, or punitive damages, in amounts that could, if awarded, be significant. Certain of the claims, lawsuits, and proceedings arising
in the ordinary course of business are covered by the Company’s insurance program. The Company maintains the property and various
types of liability insurance in an effort to protect the Company from such claims. In terms of any matters where there is no insurance
coverage available to the Company, or where coverage is available and the Company maintains a retention or deductible associated with
such insurance, the Company may establish an accrual for such loss, retention, or deductible based on currently available information.
In accordance with accounting guidance, if it is probable that an asset has been impaired or a liability has been incurred as of the date
of the financial statements, and the amount of loss is reasonably estimable, then an accrual for the cost to resolve or settle these claims
is recorded by the