Risk Factors Update Summary

• The company is involved in ongoing litigation, including a class action lawsuit, which could materially adversely affect our financial position and results of operations.
• We incurred net losses of $149.3 million and $44.6 million for the fiscal years ended May 31, 2024 and 2023, respectively. This trend may continue, impacting investor confidence.
• Political or economic crises may lead to large-scale acquisitions or sales of cryptoassets, impacting our business. This change might result in significant operational challenges.
• Governmental restrictions on data center development could increase operational costs and hinder expansion. This may result in higher costs due to energy efficiency requirements and land use restrictions.
• We may be required to make payments of $9.0 million plus a 5% premium upon an Amortization Event, potentially causing financial hardship.
• The company is investing significantly in AI, including providing computing capacity to support AI. This change might result in increased operational costs and potential revenue growth.
• The maximum aggregate purchase price of shares to be sold to YA Fund is $250 million. This change might result in increased capital for the company.
• The market capitalization for cryptoassets as a medium of exchange may remain low, affecting our business prospects. This could lead to decreased investor confidence.
• The revenue from North Dakota data centers accounted for the majority of our revenue in 2023. Any operational issues could severely impact our financial results.
• Increased scrutiny regarding ESG practices may result in additional costs or risks, impacting our operations and financial condition.
• We may be required to pay more under power purchase agreements than market prices, adversely affecting our results of operations.
• The holders of Series E Preferred Stock are entitled to a liquidation preference of $25 per share. This could impact the distribution of assets upon liquidation.
• Our HPC Hosting Business is expected to have significant customer concentration, with seven customers accounting for approximately 83% of our revenue in fiscal year 2024.
• The aggregate principal amount outstanding under the YA Notes is $28.1 million, convertible into shares of our common stock. This could lead to significant dilution for existing shareholders.
• The potential transition from set rewards to transaction fees for miners could decrease demand for Bitcoin. This may adversely impact our customers' profitability and our business operations.
• As of the report date, the company sold approximately 301,673 shares of Series E Preferred Stock for net proceeds of approximately $6.9 million. This indicates strong investor interest and funding.
• We are constructing the HPC Ellendale Facility, requiring significant capital expenditures, which may delay revenue generation if financing is not secured.
• The company faces risks from power outages, which could materially adversely affect our business, financial condition, and operating results.
• We may issue up to $250 million of our common stock under the SEPA, potentially diluting current stockholders' ownership. This could impact market confidence and stock price.
• We may not be able to maintain our Nasdaq listing, which could harm our ability to raise capital. If delisted, trading could shift to less liquid OTC markets.
• The collapse of Silicon Valley Bank and Signature Bank in March 2023 may limit our access to banking services. This could adversely affect our operations and public perception of cryptocurrencies.
• We may not be able to maintain our Nasdaq listing, adversely affecting stockholder flexibility to resell securities in the secondary market.
• Increased competition for Bitcoin mining sites in North Dakota may hinder our operational growth. This could lead to higher costs and delays in establishing new data centers.