Big Digital Energy, Inc.

The information in this Form 10-Q should be read in conjunction with the risk factors and information disclosed in the 2024 Form 10-K. Except as set forth below, there have been no material changes to the primary risks related to our business and securities as described in the 2024 Form 10-K under “Risk Factors” in Item 1A.

Risks Associated with the Chapter 11 Involuntary Petition Filed Against Us

Certain of our creditors have filed an Involuntary Petition seeking entry of an order for relief, which if entered over our expected opposition, would impose on us a Chapter 11 reorganization proceeding under the U. S. Bankruptcy Code. Such proceeding could lead to a reorganization or a liquidation which would raise substantial doubt about our ability to continue as a going concern.

On December 4, 2024, certain of our creditors filed an Involuntary Petition against us seeking an order for relief by the Delaware Bankruptcy Court placing us in Chapter 11 reorganization under the U.S. Bankruptcy Code. No such order for relief with regard to the Involuntary Petition has been entered by the Bankruptcy Court, and the Company intends to vigorously oppose any such relief. However, if such relief is eventually ordered, such an event could raise substantial doubt about our ability to continue as a going concern and could affect our assets, business, operations, earnings, properties, condition (financial and otherwise), prospects, stockholders’ equity and results of operations.

As with any judicial proceeding, there are risks with an involuntary Chapter 11 proceeding, including uncertainty, cost and unavoidable delay. Further, should the Delaware Bankruptcy Court enter an order for relief in connection with the Involuntary Petition, there would be additional associated risks operating under an involuntary Chapter 11 reorganization. Throughout the course of an involuntary Chapter 11 proceeding, the effects of an involuntary Chapter 11 proceeding, including increased legal and other professional costs, on the Company’s liquidity (including the availability of operating capital during the pendency of an involuntary Chapter 11 proceeding), results of operations or business prospects; the effects of an involuntary Chapter 11 proceeding on the interests of various constituents and financial stakeholders; the length of time that the Company could operate under Chapter 11 protection and the continued availability of operating capital during the pendency of an involuntary Chapter 11 proceeding; objections to the Company’s restructuring process, or other pleadings filed that could protract an involuntary Chapter 11 proceeding; risks associated with third-party motions in an involuntary Chapter 11 proceeding; Bankruptcy Court rulings in an involuntary Chapter 11 proceeding and the outcome of an involuntary Chapter 11 proceeding in general; the Company’s ability to comply with the restrictions imposed by the terms and conditions of a plan of reorganization; employee attrition and the Company’s ability to retain senior management and other key personnel due to the distractions and uncertainties; the Company’s ability to maintain relationships with suppliers, customers, employees and other third parties and regulatory authorities as a result of an involuntary Chapter 11 proceeding; the impact and timing of any cost-savings measures and related local law requirements in various jurisdictions; finalization of the Company’s annual and quarterly financial statements (including finalization of the Company’s impairment tests), completion of standard annual and quarterly-close processes; risks relating to the delisting of the Company’s common stock from Nasdaq and future quotation of the Company’s common stock; the effectiveness of the Company’s internal control over financial reporting and disclosure controls and procedures, and the potential for additional material weaknesses in the Company’s internal controls over financial reporting or other potential weaknesses, all pose added risks and uncertainties.

These risks and uncertainties could affect our business and operations in various ways. For example, negative events or publicity associated with an involuntary Chapter 11 proceeding could adversely affect our relationships with our suppliers, customers and employees. In particular, critical vendors, suppliers, and/or customers may determine not to do business with us due to the involuntary Chapter 11 proceeding and we may not be successful in securing alternative sources of financing. Also, transactions outside the ordinary course of business are subject to the prior approval of the Bankruptcy Court, which may limit our ability to respond timely to certain events or take advantage of opportunities that might otherwise exist outside of Chapter 11. Additionally, uncertainty with respect to intercompany transactions may negatively impact our captive insurance companies’ ability to meet insurance regulatory requirements. There may be objections from certain stakeholders, including objections from the holders of unsecured claims as well as other risks associated with any business reorganizing under Chapter 11 to our business activities or any plan of reorganization developed as part of the Chapter 11 reorganization. Because of the risks and uncertainties associated with an involuntary Chapter 11, we cannot predict or quantify the ultimate impact that events occurring during the Chapter 11 process may have on our business, financial condition and results of operations, and there is no certainty as to our ability to successfully emerge from any such proceeding as a going concern.

A prolonged continuation of the Chapter 11 proceeding could impact the value of our assets and our business.

Furthermore, if an order for relief is entered (or ultimately consented to) and the Company is operating in Chapter 11, we could be required to incur substantial additional costs for professional fees and other expenses associated with the administration of the Chapter 11 proceedings.

Finally, we again note that notwithstanding the filing of the Involuntary Petition, we continue to operate in the ordinary course of business as authorized pursuant to 11 U.S.C. § 303(f), and no trustee, interim trustee or examiner has been appointed in connection with the pending Involuntary Petition. Pursuant to 11 U.S.C. § 303(g), at any time before the entry of an order for relief with respect to the Involuntary Petition, on request of the petitioning creditors or any other party in interest to the Delaware Bankruptcy Case, following notice to the debtor and a hearing, and if necessary to preserve the property of the debtor’s estate or to prevent loss to the debtor’s estate, the Delaware Bankruptcy Court may order the United States trustee to appoint an interim trustee to take possession of the property of the debtor’s estate and to operate the business of the debtor. The Company would have the right to oppose any such interim trustee request, and even if an interim trustee were to be appointed pending the determination on the Involuntary Petition, the debtor may regain possession of its assets or property by posting a sufficient bond as may be required by the Delaware Bankruptcy Court.

We are in the process of opposing the Involuntary Petition for Chapter 11 reorganization under the U.S. Bankruptcy Code, which may cause our common stock to decrease in value or may render our common stock worthless.

Since the Involuntary Petition under Chapter 11 of the Bankruptcy Code in the Delaware Bankruptcy Court was filed against us, the price of our common stock has been volatile and the common stock price may continue to decrease in value and/or become worthless. Accordingly, any trading in our common stock during the pendency of the determination of the Involuntary Petition is highly speculative and poses substantial risks to purchasers of our common stock. On February 6, 2025, the Company received the Bid Price Notice from the Staff of Nasdaq notifying the Company that for the last 30 consecutive business days prior to the date of the Bid Price Notice, the closing bid price of Company’s Common Stock was less than the $1.00 per share minimum bid price required for continued listing on Nasdaq, as required by the “Bid Price Rule. In the event the Company does not regain compliance with the Bid Price Rule prior to the expiration of the Bid Price Compliance Period and is not granted an additional 180-day compliance period, it will receive written notification that its securities are subject to delisting. Delisting our common stock may adversely impact our liquidity, impair our stockholders’ ability to buy and sell our common stock, impair our ability to raise capital, and the market price of our common stock could decrease.

Should the Delaware Bankruptcy Court enter an order for relief placing us in Chapter 11, recoveries for holders of common stock, if any, may depend upon our ability to negotiate and confirm a Chapter 11 plan of reorganization or liquidation, the terms of such plan, the value of our assets, the recovery of our business from any adverse effects of these proceedings or other adverse industry conditions, if any, which may arise. Although we cannot predict how our common stock will ultimately be treated if the Involuntary Petition is not dismissed by the Delaware Bankruptcy Court, we expect that common stockholders may not receive any recovery through a Chapter 11 plan (if any) unless the holders of more senior claims and interests, such as secured and unsecured indebtedness, are paid in full. Our stockholders’ equity could decrease as we use cash on hand to support our operations in bankruptcy. Consequently, should the Involuntary Petition not be dismissed, there is a significant risk that the holders of our common stock would receive no recovery and that our common stock could be worthless.

As a result of the filing of an Involuntary Petition by petitioning creditors, we are subject to the risks and uncertainties associated with reorganization under an involuntary Chapter 11 and operating under Chapter 11 may restrict our ability to pursue strategic and operational initiatives.

If we are unsuccessful in dismissing the Involuntary Petition filed against us, for the duration of the Chapter 11, our operations and our ability to execute our business strategy could be subject to the risks and uncertainties associated with bankruptcy. These risks include:

We may not be able to raise additional capital to meet our liquidity needs, which could have a material adverse impact on the Company.

Outside of revenue generated by our ongoing operations, the Company’s primary sources of capital to fund ongoing operations and other capital needs includes corporate financing as well as the sale of equity through such mechanisms as the “at the market offering” under this prospectus supplement. The ability to engage in these activities may be limited, if available at all, in light of the Involuntary Petition and related court process in connection therewith.

In the event that cash on hand, cash flow from operations are not sufficient to meet these liquidity needs, the Company may be required to seek additional financing or sale of equity or debt financing, and can provide no assurance that additional financing or equity sales or debt financing may be available or, if available, offered on acceptable terms.

Defense of and responding to the pending Involuntary Petition has consumed and may continue to consume a substantial portion of the time and attention of our management, which may have an adverse effect on our business and results of operations, and we may face increased levels of employee attrition.

While the determination as to whether the Involuntary Petition satisfies the requirements of the Bankruptcy Code for entry of an order for relief continues, our management may be required to spend a significant amount of time and effort focusing on this Involuntary Bankruptcy Case. This diversion of attention may materially adversely affect the conduct of our business, and, as a result, our financial condition and results of operations, particularly if our opposition to the entry of any order for relief with regard to the Involuntary Petition is protracted. During these proceedings (and any related Chapter 11 or Chapter 7 bankruptcy proceeding), our employees may face considerable distraction and uncertainty, and we may experience increased levels of employee attrition. A loss of key personnel or material erosion of employee morale could have a materially adverse effect on our ability to meet customer expectations, thereby adversely affecting our business and results of operations. The failure to retain or attract members of our management team and other key personnel could impair our ability to execute our strategy and implement operational initiatives, thereby having a material adverse effect on our financial condition and results of operations.

If an order for relief is entered with regard to the Involuntary Petition and we are forced to operate in Chapter 11 and are unable to negotiate and confirm a Chapter 11 plan of reorganization, we could be required to liquidate under Chapter 7 (“Chapter 7”) of the Bankruptcy Code in which case our common stock could be worthless.

We are not yet ordered into Chapter 11 by the Bankruptcy Court in response to the Involuntary Petition, but if an order for relief is entered and we are so ordered, we may need or attempt to develop a plan of reorganization. If we are unable to negotiate a plan of reorganization that results in our remaining a going concern, upon a showing of cause, the Bankruptcy Court may dismiss or convert the Chapter 11 proceedings to proceedings under Chapter 7 of the Bankruptcy Code. In the event of conversion of the proceedings to Chapter 7, a Chapter 7 trustee could be appointed or elected to liquidate our assets for distribution to creditors in accordance with the priorities established by the Bankruptcy Code. Holders of our common stock would most likely lose their entire investment in a Chapter 7 bankruptcy, as most Chapter 7 bankruptcy proceedings render shares of a debtor’s common stock worthless.

If we are unsuccessful in dismissing the Involuntary Petition filed against us and we are ordered into an involuntary Chapter 11, we may be subject to claims that may not be discharged in the involuntary Chapter 11, which could have a material adverse effect on our financial condition and results of operations.

The Bankruptcy Code provides that the confirmation of a Chapter 11 plan of reorganization discharges a debtor from substantially all debts arising prior to confirmation. With few exceptions, all claims that arose prior to confirmation of the plan of reorganization (i) may be subject to compromise and/or treatment under the plan of reorganization and (ii) may be discharged in accordance with the Bankruptcy Code and the terms of the plan of reorganization. Any claims not ultimately discharged through a Chapter 11 plan of reorganization could be asserted against us and may have an adverse effect on our financial condition and results of operations on a post-reorganization basis.

Operating in bankruptcy for a long period of time may harm our business.

If we are unsuccessful in dismissing the Involuntary Petition filed against us and are ordered into an involuntary Chapter 11, we may be subject to a long period of operations in the Chapter 11 which may have a material adverse effect on our business, financial condition, results of operations, and liquidity. So long as the Chapter 11 continues, senior management may be required to spend a significant amount of time and effort dealing with the reorganization instead of focusing exclusively on business operations. A prolonged period of operating under Bankruptcy Court protection also may make it more difficult to retain management and other key personnel necessary to the success of our business. In addition, the longer the Chapter 11 continues, the more likely it is that customers and suppliers may lose confidence in our ability to reorganize our business successfully and may seek to establish alternative commercial relationships.

So long as the Chapter 11 case continues, we may be required to incur substantial costs for professional fees and other expenses associated with the administration of the Chapter 11, including potentially the cost of litigation. In general, litigation can be expensive and time consuming to bring or defend against. Such litigation may result in settlements or damages that may significantly affect our financial results. It is also possible that certain parties may commence litigation with respect to the treatment of their claims under a plan. It is not possible to predict the potential litigation that we may become a party to, nor the final resolution of such litigation. The impact of any such litigation on our business and financial stability, however, may be material.

Should the Chapter 11, assuming an order for relief is entered, be protracted, we may also need to seek new financing to fund operations. If we are unable to obtain such financing on favorable terms or at all, the chances of confirming a Chapter 11 plan may be seriously jeopardized and the likelihood that we may instead be required to liquidate our assets could increase.

The price of our common stock has and may continue to fluctuate significantly, which could negatively affect us and holders of our common stock.

The market price of our common stock has and may continue to fluctuate significantly as a result of many factors, including the pending Involuntary Petition. Our results may also fluctuate due to factors such as the following:

The Delaware Bankruptcy Court could enter an order imposing trading restrictions with respect to our common stock.

If the Delaware Bankruptcy Court enters an order for relief with regard to the Involuntary Petition, the debtor may seek entry of an order that, among other things, imposes trading restrictions on some or all of our holders of our common stock. Restrictions such as these are often entered in order to preserve the value of certain assets, including things like tax attributes, including net operating losses and carryforwards.

The filing of the Involuntary Petition may adversely impact our U.S. subsidiary businesses and affiliates, which may themselves become subject to Chapter 11 or other insolvency proceedings.

We have significant subsidiary businesses and affiliates. The filing of the Involuntary Petition and the possibility that, despite our anticipated objections to the entry of any order for relief, such petition leads to us being placed into Chapter 11, may result in negative consequences to our subsidiaries’ and affiliates’ business operations and possibly force them into the Chapter 11 proceedings or other insolvency proceedings.

An impairment of our goodwill and other indefinite-lived intangible assets could have a material impact to our results of operations.

As a result of the stigma to our reputation and material effect on our business operations and vendor and customer relations, our goodwill and indefinite-lived intangible assets may become impaired leading to a loss of value to our stock price as well as a significant decline in revenues and cash flow.

The filing of the Involuntary Petition potentially places us in material breach of certain contracts and debt obligations of the Company.

The filing of the Involuntary Petition may constitute defaults, termination events and/or amortization events with respect to certain of the Company’s existing leases, contracts, and debt obligations.

The Company may need to seek waivers or other remedies under law related to the filing of the Involuntary Petition under its leases and contracts which may automatically deem such petition filed against the Company a default upon the filing of such bankruptcy petition, but it may not be successful in doing so. Such an inability to obtain waivers could cause such leases and contracts to terminate, imposing material and adverse effect on our operations, financial condition, business, and reputation.

The filing of the Involuntary Petition seeking relief under Chapter 11 of the U. S. Bankruptcy code could adversely affect our business and relationships.

It is possible that the filing of the Involuntary Petition or ultimately being placed in Chapter 11 could adversely affect our business and relationships with vendors, suppliers, service providers, customers, employees and other third parties. Due to uncertainties, many risks exist, including the following:

The occurrence of one or more of these events could have a material and adverse effect on our results of operations, financial condition, business and reputation. We cannot assure you that being the subject of an Involuntary Petition for relief may not adversely affect our future operations, financial condition, and business.

The filing of the Involuntary Petition for relief under Chapter 11 of the U. S. Bankruptcy code could materially and adversely affect our public stockholders.

Holders of our secured debt would have priority over unsecured creditors, and unsecured creditors would have priority over holders of our common stock, in the event of any bankruptcy, liquidation or any similar proceeding under the Bankruptcy Code.

If the Involuntary Petition filed against us is not dismissed, the claims of creditors in such a bankruptcy proceeding may have priority over the claims of our stockholders and the per-share amount that may otherwise be received by our stockholders in connection with bankruptcy, liquidation or any similar proceeding may be reduced or eliminated. For the avoidance of doubt, there is a risk that the holders of our common stock will receive no recovery under any Chapter 11 cases, and that our common stock will be worthless.

Risk Factors Involving Winding Up Proceedings Under Australian Law

One of our Australian creditors has obtained an order to wind up the Company under Australian law before the Federal Court in New South Wales, Australia, which raises substantial doubt about our ability to continue as a going concern.

On or about October 3, 2024, certain of our Australian creditors filed an application for winding up order against us in the matter entitled “In re Mawson Infrastructure Group, Inc.” Action No. NSD1395/2024, in the Federal Court of new South Wales in Sydney, Australia, seeking a determination of insolvency and order of liquidation against us under Australian law before the Federal Court in New South Wales, Australia. The applicants who filed this Australian application are the same parties who filed the above referenced involuntary Chapter 11 proceedings against the Company for the same remedy and for the same alleged debts. We have responded to the application, opposing any such determination. We have not been ordered to wind up by the Australian Court as there must be a trial before such a determination, but regardless of our efforts, on February 11, 2025, the Australian Court issued an order to wind up the Company under Australian law because the Company no longer is carrying on business in Australia, which is grounds under Australian law for winding it up. The Australian Court allowed the petitioning creditors to appoint an Australian liquidator. This order raises substantial concern about our ability to continue as a going concern, including uncertainty, cost, and unavoidable delay, if such an order were enforceable in the United States.

These risks and uncertainties could affect our business and operations in various ways. For example, negative events or publicity associated with Australian winding up application proceedings could adversely affect our relationships with our suppliers, customers and employees. In particular, critical vendors, suppliers, and/or customers may determine not to do business with us due to Australian winding up application proceedings and we may not be successful in securing alternative sources. Because of the risks and uncertainties associated with this Australian winding up application, we cannot predict or quantify the ultimate impact that events occurring during the Australian winding up application process may have on our business, financial condition and results of operations, and there is no certainty as to our ability to continue as a going concern.

A prolonged continuation of the Australian winding up application proceedings could impact the value of our assets and our business. Furthermore, so long as the Australian winding up application proceedings continue, we could be required to incur substantial costs for professional fees and other expenses associated with the administration of the Australian winding up application proceedings.

However, the order of winding up in Australia does not pose immediate risk to the Company as the Company has no assets in Australia, nor does it have employees, revenue, or even ongoing business in Australia. Further, the Australian order is contrary to and in violation of the automatic stay protecting the Company as it continues to oppose the Chapter 11 involuntary petition filed by the same Australian creditors. Thus, to make any Australian order of winding up enforceable against the assets of the Company, the Australian liquidator must file appropriate legal proceedings in the U.S. to have such a determination recognized and enforced. The liquidator has joined the Petitioning Creditors in the involuntary Chapter 11 proceedings filed in Delaware. The effect of such recognition is unclear as the U.S. courts do not have to accept the determination of insolvency of the Company by a foreign court. Any proceeding brought in the US affords the Company the opportunity to raise affirmative defenses against such a foreign determination under US law which were not available to the Company in the Australian Court system. These defenses include a more robust procedural and evidentiary system, including US discovery and due process which was not available to the Company in Australia to develop its defenses. Further, the Company has raised affirmative defenses to the insolvency claims of the petitioner including rights of offset, counterclaims for damages, lack of due process, fraud, bad faith, and proof that the Company, as a US company, is not insolvent under applicable U.S. law.

We are opposing the Australian winding up order in the involuntary Chapter 11 petition proceedings filed in Delaware; however, if we are unsuccessful in defending the Company in the involuntary Chapter 11 petition proceedings, and are ordered to file a plan of reorganization, our common stock could be materially devalued or even made worthless.

The Australian appointed liquidators have joined as Petitioning Creditors the involuntary Chapter 11 petition filed in Delaware under U.S. law against the Company. The risk factors associated with a Chapter 11 are as set forth above. Holders of our common stock could lose their entire investment if a plan of reorganization would not be successfully adopted and/or the matter be converted to a Chapter 7 bankruptcy.

If the Australian winding up order filed against us was made enforceable in the U.S. against the Company and its assets, our operations and our ability to execute our business strategy could be subject to the risks and uncertainties as would be associated with proceedings of a U.S. Chapter 11 or 7 bankruptcy. In such event, the imposition of a Chapter 11 proceeding would entail the same risks as set forth above. If forced into a Chapter 7, a Chapter 7 trustee would be appointed or elected to liquidate our assets for distribution in accordance with the priorities established by the Bankruptcy Code, or otherwise disposed of in a distressed fashion over a short period of time rather than in a controlled manner and as a going concern as with a Chapter 11.

Defending against the Australian winding up proceedings has consumed and may continue to consume a substantial portion of the time and attention of our management, which may have an adverse effect on our business and results of operations, and we may face increased levels of employee attrition.

With the determination of the Australian winding up order made, and its pursuit by the Australian Creditors continues, our management may be required to spend a significant amount of time and effort focusing on the case. This diversion of attention may materially adversely affect the conduct of our business, and, as a result, our financial condition and results of operations, particularly if the Australian winding up application proceeding is protracted. During these proceedings, our employees may face considerable distraction and uncertainty, and we may experience increased levels of employee attrition. A loss of key personnel or material erosion of employee morale could have a materially adverse effect on our ability to meet customer expectations, thereby adversely affecting our business and results of operations. The failure to retain or attract members of our management team and other key personnel could impair our ability to execute our strategy and implement operational initiatives, thereby having a material adverse effect on our financial condition and results of operations.

Additional risk factors associated with these proceedings are similar to those outlined above regarding the Involuntary Petition.

Additional risk factors associated with these proceedings are similar to those outlined above regarding the Involuntary Petition, including but not limited to:

Other Risks

Changes in our business strategy or restructuring of our businesses may increase our costs or otherwise affect our businesses.

We continually review our operations with a view toward reducing our cost structure, including, but not limited to, reducing our labor cost-to-revenue ratio, improving process and system efficiencies and increasing our revenues and operating margins. Despite these efforts, we have needed and may continue to need to adjust our business strategies to meet these changes, or we may otherwise find it necessary to restructure our operations or particular businesses or assets. When these changes or events occur, we may incur costs to change our business strategy and may need to write down the value of assets or sell certain assets. Additionally, any of these events could result in disruptions or adversely impact our relationships with our workforce, suppliers and customers. In any of these events our costs may increase, and we may have significant charges or losses associated with the write-down or divestiture of assets and our business may be materially and adversely affected.