WhiteFiber, Inc. (WYFI) Risk Analysis

Our directors may determine the voting rights fixed to any series of preference shares issued. While we currently have no preference shares outstanding, our directors have the discretion to issue preference shares without shareholder approval. If preference shares with voting rights are issued in the future, this may cause the voting power of ordinary shareholders to be diluted. Holders of preference shares, if any, may be able to take actions that are not in the best interests of us or our other shareholders. These corporate actions may be taken even if they are opposed by our other shareholders. This may also frustrate or prevent any attempts by our shareholders to replace or remove our current management by making it more difficult for shareholders to replace members of our board of directors, which is responsible for appointing the members of our management. In addition, this may make an acquisition of us, which may be beneficial to our shareholders, more difficult and may prevent attempts by our shareholders to replace or remove our current management and limit the market price of our Ordinary Shares. While we currently have no preference shares issued and outstanding, our directors have the discretion to issue preference shares without shareholder approval. If preference shares are issued in the future, this may cause the voting power of ordinary shareholders to be diluted and may discourage, prevent, or delay the consummation of recent change of control transactions that shareholders may consider favorable, including transactions in which shareholders might otherwise receive a premium for their shares. As a result, the market price of our Ordinary Shares and our Notes could be adversely affected if we issue preference shares.

Bit Digital owned approximately 70.5% of the voting power of our issued and outstanding Ordinary Shares as of December 31, 2025. As a result of its ownership, Bit Digital will be able to control the vote over decisions regarding mergers, consolidations and the sale of all or substantially all of our assets, the appointment of directors, and other significant corporate actions. Bit Digital's interests may be different from or conflict with our interests or the interests of our other shareholders and our noteholders, and it may take action that is not in the best interests of our other shareholders. Noteholders should know that the terms of the Notes may not afford any protection to holders of Notes in the event that Bit Digital takes those actions. In addition, following the expiration of applicable lock-up periods, although Bit Digital has stated that it will not sell any Ordinary Shares in 2026, it will be entitled to sell its Ordinary Shares in the public market only if the sale of such shares is registered with the SEC or if the sale of such shares qualifies for an exemption from registration under Rule 144 or any other applicable exemption under the Securities Act, including any volume limitations. Any sales by Bit Digital could result in significant sales of Ordinary Shares that may depress the market price of our Ordinary Shares and adversely affect the trading price of the Notes. This concentration of voting power may discourage or delay our Company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of the sale of our Company and might reduce the market price of our Ordinary Shares and Notes. These actions may be taken even if they are opposed by our other shareholders.

As of the December 31, 2025, Bit Digital, our parent company, beneficially owned an aggregate of approximately 70.5% of our issued and outstanding Ordinary Shares. As a result of its ownership, Bit Digital will be able to control the vote over decisions regarding mergers, consolidations and the sale of all or substantially all of our assets, the appointment of directors, and other significant corporate actions. Bit Digital may take actions that are not aligned with the interests of the holders of Notes. The terms of the Notes may not afford any protection to holders of Notes in the event that Bit Digital takes those actions. In addition, following the expiration of applicable lock-up periods, Bit Digital will be entitled to sell its Ordinary Shares in the public market only if the sale of such shares is registered with the SEC or if the sale of such shares qualifies for an exemption from registration under Rule 144 or any other applicable exemption under the Securities Act, including any volume limitations. Any sales by Bit Digital could result in significant sales of Ordinary Shares that may depress the market price of our Ordinary Shares and adversely affect the trading price of the Notes.

Our Ordinary Shares are listed on the Nasdaq Capital Market. Nasdaq rules require us to maintain a minimum closing bid price of $1.00 per Ordinary Share, and maintain a minimum public float and liquidity. There can be no assurance we will continue to meet the minimum bid price requirements or any other Nasdaq requirements in the future, in which case our Ordinary Shares could be delisted. In the event that our Ordinary Shares are delisted from Nasdaq and are not eligible for quotation or listing on another market or exchange, trading of our Ordinary Shares could be conducted only on the over-the-counter market or on an electronic bulletin board established for unlisted securities, such as the OTC. In such event, it could become more difficult to dispose of, or obtain accurate price quotations for, our Ordinary Shares, and there would likely also be a reduction in our coverage by securities analysts and the news media, which could cause the price of our Ordinary Shares to decline further. In addition, our ability to raise additional capital may be severely impacted if our shares are delisted from Nasdaq, which may negatively affect our business plans and the results of our operations.

Our Ordinary Shares may become "thinly-traded", meaning that the number of persons interested in purchasing our Ordinary Shares at or near bid prices at any given time may be relatively small or non-existent. This situation may be attributable to a number of factors, including the fact that we may not be well-known to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that, even if we came to the attention of such persons, they tend to be risk-averse and might be reluctant to follow a relatively unknown company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. A broad or active public trading market for our Ordinary Shares may not develop or be sustained.

Our corporate affairs are governed by our A&R M&A and by the Companies Act and common law of the Cayman Islands. The rights of shareholders to take legal action against our directors and us, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law. Decisions of the Privy Council (which is the final court of appeal for British overseas territories, such as the Cayman Islands) are binding on a court in the Cayman Islands. Decisions of the English courts, and particularly the Supreme Court of the United Kingdom and the Court of Appeal are generally of persuasive authority but are not binding on the courts of the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in the United States. In particular, the Cayman Islands has a different body of securities laws as compared to the United States and provide less protection to investors. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action before the U.S. federal courts. The Cayman Islands courts are also unlikely (i) to recognize or enforce against us judgments of courts of the United States obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is currently no statutory enforcement or treaty between the United States and the Cayman Islands providing for enforcement of judgments obtained in the United States. The courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, given by a court of competent jurisdiction (the courts of the Cayman Islands will apply the rules of Cayman Islands private international law to determine whether the foreign court is a court of competent jurisdiction), and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands. Furthermore, it is uncertain that Cayman Islands courts would enforce: (1) judgments of U.S. courts obtained in actions against us or other persons that are predicated upon the civil liability provisions of the U.S. federal securities laws; or (2) original actions brought against us or other persons predicated upon the Securities Act. There is also uncertainty with regard to Cayman Islands law relating to whether a judgment obtained from the U.S. courts under civil liability provisions of the securities laws will be determined by the courts of the Cayman Islands as penal or punitive in nature. A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere. As a result of all of the above, our shareholders may have more difficulty in protecting their interests through actions against us or our officers, directors or major shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.

The trading market for our Ordinary Shares and Notes depends, in part, on the research and reports that securities or industry analysts publish about us our business. If there is no or limited research coverage of our Ordinary Shares, the trading price for our Ordinary Shares and our Notes may be negatively impacted. If we obtain research coverage for our Ordinary Shares and if one or more of the analysts downgrades its our Ordinary Shares or publishes misleading or unfavorable research about our business, trading price or trading volume of trading of our Ordinary Shares and Notes may likely decline. If one or more of the analysts ceases coverage of our Ordinary Shares or fails to publish reports on us regularly, demand for our Ordinary Shares and Notes could decrease, which could cause the trading price or trading volume of such securities to decline.

In the future, your percentage ownership in WhiteFiber may be diluted because of equity awards that the Company will be granting to its directors, officers and employees or otherwise as a result of equity issuances for acquisitions or capital market transactions. WhiteFiber anticipates that its Compensation Committee will grant additional stock-based awards to its directors, officers and employees after the distribution. Such awards will have a dilutive effect on WhiteFiber's earnings per share, which could adversely affect the market price of shares of WhiteFiber. From time to time, WhiteFiber will issue additional stock-based awards to its employees under its employee benefits plans. In addition, WhiteFiber's A&R M&A authorizes it to issue, with the approval of Bit Digital (for such period(s) of time that it is a shareholder of the Company), preference shares of par value US$0.01 in the capital of the Company, which have enhanced rights relative to Ordinary Shares, including with respect to dividends, and liquidation preferences. Accordingly, issuing preference shares could affect the value of WhiteFiber Ordinary Shares.

On August 8, 2025, we completed our IPO and began trading as a separate publicly traded company on The Nasdaq Stock Market LLC under the symbol "WYFI." The market price of our Ordinary Shares may fluctuate significantly and our financial condition, results of operations and ability to meet our targeted expectations may be impacted due to a number of factors, some of which may be beyond our control, including: - actual or anticipated fluctuations in our financial condition and operating results or those of companies perceived to be similar to us;- actual or anticipated changes in our growth rate relative to our competitors in the rapidly evolving industries in which we operate;- the capital-intensive nature of the industries in which we operate and our ability to successfully raise capital on favorable terms or at all, for example, without obtaining additional project debt financing, we will not have sufficient funds to complete the retrofit of NC-1 into a HPC data center or achieve its estimated 99 MW (gross) of total HPC data center capacity by May 2029 and other growth strategies;- the intensity of competition in the data centers operations, including for real estate, energy and customers, and our ability to compete;- the curtailment or disruption in energy supply in Iceland, Canada or the United States due to regulations and policies implemented by their respective governments or otherwise;- changes in tariffs or import restrictions;- disruptions, shortages or delays in our ability to source GPUs and other materials and price increases from suppliers have and may continue to occur;- commercial success and market acceptance of AI infrastructure services;- strategic transactions undertaken by us;- additions or departures of key personnel;- prevailing economic conditions;- disputes or issues concerning our intellectual property or other proprietary rights, including, for example, if one of our customers were to obtain exclusive rights to open source technologies that we employ across our businesses, our ability to realize significant operating efficiencies could be jeopardized;- our ability to prevent others from unauthorized use of our intellectual property, as we do not have any patents protecting our intellectual property;- sales of our Ordinary Shares by our officers, directors or significant shareholders;- other actions taken by our shareholders;- future sales or issuances of equity or debt securities by us;- business disruptions caused by earthquakes, tornadoes or other natural disasters or any other adverse impact to our data centers due to climate change;- issuance of new or changed securities analysts' reports or recommendations regarding us;- legal proceedings involving us or the industry in which we operate or both;- changes in market valuations of companies similar to us;- the prospects of the industry in which we operate;- speculation or reports by the press or investment community with respect to us or the industry in general;- the level of short interest our Ordinary Shares; and - general economic and political conditions, such as the effects of epidemics, pandemics, recessions, volatility in the markets, interest rates, local and national elections, fuel prices, international currency fluctuations, corruption, political instability, and acts of war or terrorism. In addition, the stock market has recently and in the past experienced extreme volatility that has often been unrelated to the operating performance of issuers. These broad market fluctuations may negatively impact the price or liquidity of our Ordinary Shares. When the price of a share has been volatile, holders of that share have sometimes instituted securities class action litigation against the issuer. Further, a decrease in the market price of our Ordinary Shares would likely adversely impact the trading price of our Notes. The market price of our Ordinary Shares could also be affected by possible sales of Ordinary Shares by investors who view the Notes as a more attractive means of equity participation in us and by hedging or arbitrage trading activity that we expect to develop involving our Ordinary Shares. This trading activity could, in turn, affect the trading price of the Notes.

Bit Digital, our parent company, owned approximately 70.5% of the voting power of our Ordinary Shares as of December 31, 2025. Under the Nasdaq Listing Rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a "controlled company" and is permitted to elect to rely, and may rely, on certain exemptions from corporate governance rules, including: - an exemption from the rule that a majority of our board of directors must be independent directors;- an exemption from the rule that requires a compensation committee comprised entirely of independent directors with a written charter addressing the committee's purpose and responsibilities; and - an exemption from the rule that our director nominees must be selected or recommended solely by independent directors or by a nominations committee that consists entirely of independent directors with a written charter or board resolution addressing the nominations process. Although we do not currently rely on the "controlled company" exemptions under the Nasdaq Listing Rules, we could elect to rely on one or more of these exemptions in the future. If we elect to rely on any of the "controlled company" exemptions, our investors will not have the same protections afforded to shareholders of companies that are subject to these corporate governance requirements. Our status as a controlled company could cause our Ordinary Shares to look less attractive to certain investors or otherwise harm the trading price of the Ordinary Shares.

For U.S. federal income tax purposes, each "Ten Percent Shareholder" (as defined below) in a non-U.S. corporation that is classified as a "controlled foreign corporation" (a "CFC") generally is required to include in income such Ten Percent Shareholder's pro rata share of the CFC's "Subpart F income," investment of earnings in U.S. property, and "global intangible low-taxed income," even if the CFC has made no distributions to its shareholders. Subpart F income generally includes dividends, interest, rents, royalties, gains from the sale of securities and income from certain transactions with related parties, and "global intangible low-taxed income" generally consists of net income of the CFC, other than Subpart F income and certain other types of income, in excess of certain thresholds. A non-U.S. corporation generally will be classified as a CFC if Ten Percent Shareholders own, directly, indirectly or constructively (through attribution), more than 50% of either the total combined voting power of all classes of stock entitled to vote of such corporation or of the total value of the stock of such corporation. A "Ten Percent Shareholder" is a United States person (as defined by the Code) who owns or is considered to own, directly, indirectly or constructively, 10% or more of either the total combined voting power of all classes of stock entitled to vote of such corporation or the total value of the stock of such corporation. The determination of CFC status is complex and includes certain "downward attribution" rules under Section 958(b) of the Internal Revenue Code, pursuant to which our non-U.S. subsidiaries may be treated as constructively owned by our U.S. subsidiaries and, therefore, our non-U.S. subsidiaries may be treated as CFCs. Prospective holders of Ordinary Shares that may be or become Ten Percent Shareholders should consult their tax advisors with respect to the application of the CFC rules in their particular circumstances.

Certain conflicts of interest may exist, or be perceived to exist, between us and our directors or certain executive officers, who are also officers and/or directors of Bit Digital, our parent company, which owned approximately 70.5% of our share capital as of December 31, 2025. Each person must devote time, resources and attention to the affairs of Bit Digital. This may conflict with such officer's or director's interest in us, including conflicting with interests in allocating resources, time and attention to our business and impacting decisions made on our behalf with respect to Bit Digital. For example, it is expected that, until August 2027, Sam Tabar and Erke Huang will continue to serve as (i) Chief Executive Officer and (ii) Director and Chief Financial Officer, respectively, of Bit Digital. Messrs. Tabar and Huang are expected to provide certain services, representing not more than approximately 30% of their working time, in respect of Bit Digital operations and have committed to provide the requisite time and effort to fulfill their responsibilities as a full-time officer of WhiteFiber, supervising a full staff. Actual or potential conflicts of interest could arise, for example, over matters such as the desirability of changes in our business and operations, funding and capital matters, regulatory matters, agreements with Bit Digital relating to the Reorganization or otherwise, employee retention or recruiting or our dividend policy. We have put specific procedures in place with respect to potential conflicts of interest, however, in determining with whom our officers or directors may have relationships and considering the risks and risk mitigation factors. As an example, we require that transactions with Bit Digital involving our executive officers and directors be approved or ratified by our Audit Committee, and recognizing that Ms. Ichi Shih is also the Chair of the Bit Digital Audit Committee. While we have a majority of independent directors on our Board in order to ensure that there are limitations on the risks of conflicts of interest impacting Board level decisions, since WhiteFiber is not operating a digital asset business, the effects of any such risks of conflicts of interest involving our separate business operations are limited in scope. We expect that as we add officers and independent directors, the risks of conflicts of interest will become more limited over time. We cannot, however, guarantee that the conflicts of interest described above, or other future conflicts of interest, will not manifest in advice or decisions that negatively impact our financial results and our operations.

In connection with the pricing of the Notes, we entered into a zero-strike call option transaction with the option counterparty, having an expiration date that is scheduled to occur shortly after the maturity date of the Notes. Pursuant to the zero-strike call option transaction, we will pay a premium for the right to have the option counterparty deliver to us, without further payment, 5,905,511 Ordinary Shares (subject to customary adjustment), with delivery thereof by the option counterparty at expiry, subject to early settlement of the zero-strike call option transaction in whole or in part at the option counterparty's discretion. In the case of settlement at expiration or upon any early settlement, the option counterparty will deliver to us the number of Ordinary Shares underlying the zero-strike call option transaction or the portion thereof being settled early. The zero-strike call option transaction is intended to facilitate privately negotiated derivative transactions with respect to our Ordinary Shares between the option counterparty (or its affiliate) and certain investors in the Notes by which those investors will be able to hedge their investment in the Notes. Those activities, which are expected to occur concurrently with or shortly after the pricing of the Notes, could increase (or reduce the size of any decrease in) the market price of our Ordinary Shares and/or the Notes at that time. The option counterparty (or its affiliate) may modify its hedge positions by entering into or unwinding derivative transactions with respect to the Ordinary Shares and/or purchasing or selling Ordinary Shares or other securities of ours in secondary market transactions at any time following the pricing of the Notes and shortly before or after the expiry or early settlement of the zero-strike call option transaction, and, we have been advised that the option counterparty may unwind its derivative transactions and/or purchase or sell our Ordinary Shares in connection with the expiry of the zero-strike call option transaction or any early settlement of the zero-strike call option transaction at the option counterparty's discretion, including any early settlement relating to any conversion, repurchase or redemption of the Notes. Those activities could also increase (or reduce the size of any decrease in) or decrease (or reduce the size of any increase in) the market price of our Ordinary Shares and/or the Notes. If the zero-strike call option transaction fails to become effective, the option counterparty may unwind its hedge positions with respect to our Ordinary Shares, which could adversely affect the market price of our Ordinary Shares and, if the Notes have been issued, the market price of the Notes. The zero-strike call option transaction is a separate transaction entered into between us and the option counterparty, is not part of the terms of the Notes and will not affect the holders' rights under the Notes, and the holders will not have any rights with respect to the zero-strike call option transaction. We do not make any representation or prediction as to the direction or magnitude of any potential effect that the transactions described above may have on the price of our Ordinary Shares or the Notes nor how investors in the Notes may use, manage or unwind any privately negotiated derivative transactions with the option counterparty. In addition, we do not make any representation that the option counterparty (or its affiliate) will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

Under the Notes, a converting holder will be exposed to fluctuations in the value of our Ordinary Shares during the period from the date such holder surrenders Notes for conversion until the date we settle our conversion obligation. Upon conversion of the Notes, we have the option to pay or deliver, as the case may be, cash, Ordinary Shares, or a combination of cash and Ordinary Shares. If we elect to satisfy our conversion obligation in cash or a combination of cash and Ordinary Shares, the amount of consideration that you will receive upon conversion of your Notes will be determined by reference to the volume-weighted average price of our Ordinary Shares for each trading day in a 40-trading-day observation period. Accordingly, if the price of our Ordinary Shares decreases during this period, the amount and/or value of consideration you receive will be adversely affected. In addition, if the market price of our Ordinary Shares at the end of such period is below the average volume-weighted average price of our Ordinary Shares during such period, the value of any Ordinary Shares that you will receive in satisfaction of our conversion obligation will be less than the value used to determine the number of Ordinary Shares that you will receive. If we elect to satisfy our conversion obligation solely in Ordinary Shares upon conversion of the Notes, we will be required to deliver Ordinary Shares, together with cash for any fractional share. Accordingly, if the price of the Ordinary Shares decreases prior to our delivery of Ordinary Shares to you, the value of our Ordinary Shares that you receive will be adversely affected and would be less than the conversion value of the Notes on the conversion date.

Holders of the Notes will not be entitled to any rights with respect to our Ordinary Shares (including, without limitation, voting rights and rights to receive any dividends or other distributions on Ordinary Shares) prior to the conversion date relating to such Notes (if we elect to settle the relevant conversion by delivering solely Ordinary Shares (other than paying cash in lieu of delivering any fractional share)) or the last trading day of the relevant observation period (if we elect to pay and deliver, as the case may be, a combination of cash and Ordinary Shares in respect of the relevant conversion), but holders of the Notes will be subject to all changes affecting our Ordinary Shares. For example, if an amendment is proposed to our amended and restated memorandum and articles of association requiring shareholder approval and the record date for determining the shareholders of record entitled to vote on the amendment occurs prior to the conversion date related to a holder's conversion of its Notes (if we elect to settle the relevant conversion by delivering solely Ordinary Shares (other than paying cash in lieu of delivering any fractional share)) or the last trading day of the relevant observation period (if we elect to pay and deliver, as the case may be, a combination of cash and Ordinary Shares in respect of the relevant conversion), such holder will not be entitled to vote any shares underlying the Notes held by such holder on the amendment, although such holder will nevertheless be subject to any changes affecting our Ordinary Shares.

The Notes and the Ordinary Shares issuable upon conversion of the Notes, if any, have not been, and are not required to be, registered under the Securities Act or any state securities laws. Unless the Notes and the Ordinary Shares issuable upon conversion of the Notes, if any, have been registered, the Notes and such Ordinary Shares may not be transferred or resold except in a transaction exempt from or not subject to the registration requirements of the Securities Act and applicable state securities laws. We do not intend to file a shelf registration statement for the resale of the Notes and the Ordinary Shares, if any, into which the Notes are convertible.

Certain provisions in the Indenture governing the Notes may make it more difficult or expensive for a third party to acquire us. For example, the Indenture governing the Notes will require us, except as described therein, to repurchase the Notes for cash upon the occurrence of a fundamental change and, in certain circumstances, to increase the conversion rate for a holder that converts its Notes in connection with a make-whole fundamental change. A takeover of us may trigger the requirement that we repurchase the Notes and/or increase the conversion rate, which could make it more costly for a potential acquirer to engage in such takeover. Such additional costs may have the effect of delaying or preventing a takeover of us that would otherwise be beneficial to investors.

Upon the occurrence of a fundamental change, you have the right to require us to repurchase your Notes. However, the fundamental change provisions will not afford protection to holders of Notes in the event of other transactions that could adversely affect the Notes. For example, transactions such as leveraged recapitalizations, refinancings, restructurings, or acquisitions initiated by us may not constitute a fundamental change requiring us to offer to repurchase the Notes. In the event of any such transaction, the holders would not have the right to require us to repurchase the Notes, even though each of these transactions could increase the amount of our indebtedness, or otherwise adversely affect our capital structure or any credit ratings, thereby adversely affecting the holders of Notes. Furthermore, holders would not have the right to require us to repurchase the Notes in circumstances involving solely a significant change in the composition of our board.