Big Digital Energy (BGDE) Risk Analysis

The Series D Preferred Stock converts into Common Stock at a variable price equal to 95% of the lowest daily volume-weighted average price over the five consecutive trading days preceding conversion, subject to a $1.80 floor, and dividends accrue at 5% per annum (rising to 18% upon certain Triggering Events defined in the Certificate of Designations) and may be paid in kind, which can increase the number of shares outstanding over time. While the Certificate of Designations includes a 4.99% beneficial-ownership cap and a monthly conversion limit tied to trading volume or a stated-value cap, those limits do not eliminate the risk of meaningful dilution or downward pressure from resales. So long as the Series D Preferred Stock is outstanding, negative covenants restrict certain actions, including paying cash dividends on capital stock, incurring indebtedness and entering into variable-rate transactions, which may limit our financing and strategic flexibility. We are obligated to file and maintain a resale registration statement for the Conversion Shares and Warrant Shares, reserve sufficient authorized Common Stock (and, if needed, seek to increase our authorized shares), and seek stockholder approval by our next annual meeting (no later than November 14, 2026) to permit issuances otherwise restricted by Nasdaq rules.

The trading price of our Common Stock has been highly volatile and could continue to be subject to wide fluctuations in response to various factors, some of which are beyond our control. Our Common Stock has experienced fluctuations due to market dynamics and the Bitcoin downturn. The stock market in general, and the market for technology companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Our Common Stock may be traded by short sellers, which may put pressure on the supply and demand for our Common Stock, further influencing volatility in our market price. Public perception of our company or management and other factors outside of our control may additionally impact Mawson's stock price.

On February 1, 2026, in response to Endeavor's significant ownership position, our Board adopted a Rights Agreement, dated as of February 2, 2026, between the Company and Computershare Trust Company, N.A., pursuant to which stockholders of record as of the close of business on February 12, 2026 received one right (each, a "Right") for each outstanding share of Common Stock. Each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series C Junior Participating Preferred Stock, par value $1.00 per share (the "Preferred Stock"), of the Company at an exercise price of $20.60, subject to adjustment. Under the Rights Agreement, the Rights will become exercisable if a person or group acquires beneficial ownership of 20% or more of Mawson's outstanding Common Stock, or if a person or group with beneficial ownership of 20% or more at the time the adoption of the Rights Agreement is announced acquires any additional shares of Common Stock, without the prior approval of the Board. In the event that the Rights become exercisable due to such thresholds being triggered or certain other triggers, each Right will entitle its holder to purchase, at the Right's exercise price, a number of shares of common stock or equivalent securities (including the Common Stock or equivalent securities of an acquiring entity after a change of control upon certain triggers) having a market value at that time equal to twice each Right's exercise price. The Board adopted the Rights Agreement to protect the interests of Company stockholders. In general terms, subject to certain enumerated exceptions, it works by imposing significant dilution upon any person or group that acquires beneficial ownership of 20% or more of the shares of Common Stock, or if a person or group with beneficial ownership of 20% or more at the time the adoption of the Rights Agreement is announced acquires any additional shares of Common Stock, without the prior approval of the Board. In general, any person will be deemed to beneficially own any securities (a) as to which such person has any agreement, arrangement or understanding with another person for the purpose of acquiring, holding, voting or disposing of any shares of Common Stock or (b) that are the subject of a derivative transaction or constitute a derivative security. As a result, the overall effect of the Rights Agreement and the issuance of the Rights may be to render more difficult or discourage a merger, tender or exchange offer or other business combination involving the Company that is not approved by the Board. However, neither the Rights Agreement nor the Rights should interfere with any merger, tender or exchange offer or other business combination approved by the Board. The Rights Agreement is similar to agreements adopted by other public companies in comparable circumstances. It is intended to protect stockholders' interests, including by providing the Board sufficient time to make informed judgments and take actions that are in the best interests of all of the Company's stockholders and other stakeholders. Nevertheless, the Rights Agreement may be considered to have certain anti-takeover effects, including potentially discouraging a third party from attempting to obtain a substantial position in the Common Stock or seeking to obtain control of the Company and discouraging a takeover attempt that stockholders may consider favorable or that could result in a premium over the market price of the Common Stock. Even in the absence of a takeover attempt, the Rights Agreement may adversely affect the prevailing market price of the Common Stock if it is viewed as discouraging takeover attempts in the future. For additional information regarding the Rights Agreement, refer to Refer to Note 14 - Subsequent Events to the consolidated financial statements included in Item 15. "Exhibits, Financial Statement Schedules" in this Annual Report.

As of March 13, 2026, we believe that Endeavor and certain of its affiliates held 30% of our Common Stock. As a result, Endeavor will have significant influence over future actions requiring stockholder approval, including the actions that may be presented to stockholders in connection with the Consent Solicitation and the election of director nominees (including if the Consent Solicitation is successful), for so long as it continues to own a significant portion of our Common Stock. Accordingly, for such period of time, Endeavor will have significant influence with respect to our management, business plans, and policies, including decisions on whether to raise future capital and decisions on whether to amend our certificate of incorporation and bylaws, which govern the rights attached to our Common Stock. Endeavor may be able to initiate or delay, deter or prevent a change of control and could preclude any unsolicited acquisition of the Company. The concentration of ownership could negatively impact your investment. Circumstances may occur in which the interests of Endeavor may conflict with the interests of Mawson or those of its other stockholders, and these stockholders may cause us to take actions that align with their interests. Should conflicts of interest arise, we can provide no assurance that these stockholders would act in the best interests of our other stockholders or that any conflicts of interest would be resolved in a manner favorable to our other stockholders.

Publicly traded companies are increasingly subject to campaigns by activist stockholders advocating corporate actions such as operational, governance, management or social changes, financial restructurings, increased borrowings, special dividends, stock repurchases, or sales of assets or entire companies to third parties or to the activist stockholders themselves. The Company has been and may continue to be subject to actions from activist stockholders or others that may not align with its business strategies or may not be in the best interests of all of its stockholders. Actions taken by the Board and management in seeking to maintain constructive engagement with certain stockholders may not be successful to prevent the occurrence of stockholder activist campaigns or changes that adversely affect the strategic direction or business results of the Company. Mawson has recently been subject to a campaign to take over the Company by Endeavor Blockchain, LLC, Joshua Kilgore, Cody Smith and PM Squared, LLC (collectively, "Endeavor"). Endeavor issued a letter to stockholders of Mawson on January 22, 2026, calling for a change in the Company's current leadership, strategy and equity capitalization, and announcing its intention to potentially file a preliminary proxy statement to solicit votes for one or more director nominees at the Company's 2026 annual meeting of stockholders. On March 16, 2026, Endeavor filed a preliminary consent statement with the SEC to solicit consents from stockholders of the Company to, among other things, remove without cause all members of the Board (the "Consent Solicitation"). If the Consent Solicitation is successful, all members of the Board will be removed from office. In addition, responding to actions by activist stockholders, including the Consent Solicitation, has been, and may continue to be, costly and time-consuming and diverts the attention of the Board, management team, and employees from the management of the Company's operations and the pursuit of its business strategies. Further, actions of activist stockholders like the Consent Solicitation may cause fluctuations in the Company's stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of its business. Activist stockholder initiatives and perceived uncertainties as to the Company's future direction, strategy, or leadership created as a consequence of such initiatives may be exploited by the Company's competitors or result in the loss of potential business opportunities and make it more difficult to attract and retain investors, customers, employees, qualified directors and officers, and business partners. Changes to the Company's business as a result of or in response to stockholder activism may not produce the anticipated economic benefits and may harm its reputation with customers, employees, and others, with related adverse economic consequences. Also, the Company has incurred, and may continue to incur, significant expenses related to activist stockholder matters (including, without limitation, legal fees, fees for financial advisors, fees for public relation advisors, and proxy solicitation expenses). If individuals with a specific agenda are elected or appointed to the Board, it may adversely affect the Company's ability to effectively and timely implement its strategic plan to maximize value for stockholders. Furthermore, if individuals are elected or appointed to the Board who do not agree with the Company's strategic plan, the ability of the Board to function effectively could be adversely affected. As a result, activist stockholder campaigns could adversely affect the Company's business, results of operations, financial condition, and share price. In connection with any activist campaign, the Company may choose to initiate, or may become subject to, litigation, which could serve as a further distraction to the Board, management, and employees and require the Company to incur significant additional costs. For example, on January 20, 2026, the Company filed a Complaint for Violation of Securities Laws, as well as a Motion for Expedited Injunctive Relief, in the United States District Court for the District of Delaware against Endeavor asserting their violation of certain securities laws as described in more in detail in Part I, Item 3. "Legal Proceedings." Further, in response to Endeavor's actions, on February 1, 2026, the Board adopted a stockholder rights plan (the "Rights Plan") and declared a dividend of one right in respect of each of the Company's issued and outstanding shares of Common Stock, which will cause substantial dilution to any person or group acquiring 20% or more of the Company's outstanding Common Stock, or if a person or group with beneficial ownership of 20% or more at the time the adoption of the Rights Agreement is announced acquires any additional shares of Common Stock, without the prior approval of the Board. The Rights Plan is designed to deter the acquisition of actual, de facto, or negative control of the Company by any person or group without appropriately compensating Company stockholders for that control. The Rights Plan may discourage, delay, or prevent a change of control or acquisition of the Company, even if such action may be considered beneficial by some stockholders, and could limit the price that investors would be willing to pay in the future for the Company's Common Stock. The Company cannot predict, and no assurances can be given as to, the outcome or timing of any matters relating to the foregoing actions by activist stockholders and its responses thereto or the ultimate effects on its business, liquidity, financial condition, or results of operations.