21. COMMITMENTS AND CONTINGENCIES 

Legal Proceedings

The Company from time to time may become involved in legal proceedings in the ordinary course of the Company’s business. The Company may also pursue litigation to assert its legal rights and assets, and such litigation may be costly and divert the efforts and attention of its management and technical personnel, which could adversely affect its business. Due to the uncertainty of litigation and depending on the amount and the timing, an unfavorable resolution of some or all of such matters may materially affect the Company’s business, results of operations, financial position, or cash flows.

Although the Company cannot predict the outcome of legal or other proceedings with certainty, where there is at least a reasonable possibility that a loss may have been incurred, U.S. GAAP requires the Company to disclose an estimate of the reasonably possible loss or range of loss or make a statement that such an estimate cannot be made. The Company follows a thorough process in which it seeks to estimate the reasonably possible loss or range of loss, and only if it is unable to make such an estimate does it conclude and disclose that an estimate cannot be made. Accordingly, unless otherwise indicated below in the Company’s discussion of legal proceedings, a reasonably possible loss or range of loss associated with any individual legal proceeding cannot be estimated.

Bit Digital USA, Inc v. Blockfusion USA, Inc. – Superior Court of Delaware

On June 3, 2024, the Company filed suit in Delaware Superior Court against Blockfusion USA, Inc. (“Blockfusion”) alleging claims for breach of contract, conversion, and related claims in connection with, among other things, certain deposits and advances paid to Blockfusion, the return of which is owed to Bit Digital. Bit Digital was seeking in excess of $4.3 million. On October 2, 2024, the Company filed an amended complaint that added a claim for unpaid late development fees. On October 22, 2024, Blockfusion denied the Company’s claims and brought reciprocal breach of contract and related counterclaims. Following limited discovery, the Court granted the Company leave to file a Second Amended Complaint, which the Company filed on August 21, 2025, asserting additional tort and equitable claims, including fraud-based claims, and adding Blockfusion’s Chief Executive Officer as an individual defendant. On September 19, 2025, Blockfusion and the individual defendant moved to dismiss the fraud, unjust enrichment, and accounting claims in the Second Amended Complaint and all claims against the individual defendant. The Company filed its opposition to the motion on October 17, 2025, and the Court held a hearing on the motion on January 6, 2026. At the conclusion of the hearing, the Court granted the motion, dismissing those claims; the claims against the individual defendant were dismissed on the ground that the Court lacked personal jurisdiction. The Company’s claims against Blockfusion for breach of contract and breach of the implied covenant of good faith and fair dealing were not subject to the motion and remain pending.

On March 18, 2026, the Company moved to dismiss two of the four counterclaims that Blockfusion reasserted in its February 11, 2026 answer to the Second Amended Complaint. The Court heard argument on that motion on June 12, 2026. On August 14, 2026, the Court granted the motion in part and denied it in part, dismissing Blockfusion’s counterclaim for breach of the implied covenant of good faith and fair dealing and declining to dismiss its counterclaim for breach of an alleged post-termination agreement. Blockfusion’s counterclaims for breach of contract, breach of the alleged post-termination agreement, and declaratory judgment remain pending. On those counterclaims, Blockfusion seeks damages of not less than $158,907 and declaratory relief.

The litigation is ongoing and remains in an active pretrial phase. The parties are engaged in discovery. No trial date has been set. The Company seeks recovery of its original investment, allegedly improper invoice payments, unpaid contractual amounts, and other damages. The aggregate damages sought exceed $5.0 million.

At this time, the Company cannot reasonably estimate a possible loss, range of loss, or expected recovery associated with this litigation.

Bit Digital USA, Inc. v. Alex Martini-Lo Manto, et. al. – New York Supreme Court, New York County, Commercial Division

On March 4, 2026, the Company filed suit against Alex Martini-Lo Manto, CEO of Blockfusion; Blockfusion; Blockfusion Data Centers, Inc. (now known as Blockfusion Digital Infrastructure, Inc.), the entity that would become the publicly traded parent upon completion of the proposed business combination; and Blue Acquisition Corp., the Special Purpose Acquisition Company (“SPAC”) that is party to the proposed business combination, alleging that the defendants had designed the SPAC merger to avoid paying the Company for Blockfusion’s prejudgment liabilities. The suit asserted claims under the New York Uniform Voidable Transactions Act, fraud claims against defendant Martini-Lo Manto, and a successor-liability claim against the proposed post-combination public company.

Upon filing, the Company also moved for a preliminary injunction enjoining the SPAC transaction. On April 15, 2026, the Court denied that motion. The Company appealed that ruling, and the appeal was subsequently resolved as described below.

On April 29, 2026, Blue Acquisition Corp. and the other defendants filed separate motions to dismiss the Company’s claims. The Company filed its opposition on May 13, 2026.

On July 23, 2026, the Court issued a decision granting the motions in part and denying them in part. The Court dismissed the Company’s claims under the New York Uniform Voidable Transactions Act, which were the only claims asserted against Blockfusion and Blue Acquisition Corp., but permitted the Company’s successor-liability claim against the proposed post-combination public company to proceed. With respect to the fraud claims against Mr. Martini-Lo Manto, the Court permitted the claim based on allegedly fraudulent invoices to proceed and dismissed the remaining fraud claims. In August 2026, the Company agreed to stay its successor-liability claim pending the closing of the proposed business combination. The Company has not moved for leave to replead the dismissed claims or appealed their dismissal.

The litigation is ongoing and remains in an active pretrial phase. The parties are engaged in discovery. Under the Court’s scheduling orders, document production is to be substantially completed by January 8, 2027, fact depositions are to be completed by February 17, 2027, and the note of issue is to be filed by March 10, 2027. The remaining fraud claim seeks damages of not less than $576,250.50, plus consequential and punitive damages and interest, and the stayed successor-liability claim seeks a judgment declaring the post-combination public company liable, as successor to Blockfusion, for Blockfusion’s obligations to the Company.

At this time, the Company cannot reasonably estimate a possible loss, range of loss, or expected recovery associated with this litigation.

Bit Digital USA, Inc. v. Alex Martini-Lo Manto, et. al. – New York Supreme Court, Appellate Division, First Department

On April 21, 2026, the Company filed a notice of appeal from the Commercial Division’s denial of the preliminary injunction. The Company also filed a request for interim appellate injunctive relief. On May 22, 2026, the Appellate Division issued an interim order, pending determination of the application by a full panel, directing the defendants to escrow $5.4 million on or before June 1, 2026 and directing the Company to post a $100,000 undertaking. The escrow was not funded. Instead, on June 5, 2026, Blockfusion Data Centers, Inc. (now known as Blockfusion Digital Infrastructure, Inc.), the entity that would become the publicly traded parent upon completion of the proposed business combination, executed a limited guarantee in favor of the Company. Subject to its terms, the guarantee covers payment of the net amount, if any, that Blockfusion is finally determined to owe the Company in the Delaware or New York actions under a final, non-appealable judgment (or a settlement to which the guarantor consents in writing), after giving effect to defenses, counterclaims, and rights of setoff to the extent adjudicated, resolved, or otherwise reflected in that judgment or settlement, and is capped at that amount. The guarantee also provides that, within ten business days after the entry of a trial-court judgment against Blockfusion in either action, or the execution by Blockfusion of a written settlement agreement, in each case whether or not then final, the guarantor will deposit the net amount awarded or agreed to be paid into a mutually agreed escrow account, to be held pending final disposition of the litigation. By its terms, the guarantee will not become effective unless and until the proposed business combination closes, and it will be null and void if the transaction is not consummated. In connection with the guarantee, the Company withdrew its appeal on June 6, 2026, and the interim order is no longer in effect. The proposed business combination has not yet closed.

According to Current Reports on Form 8-K filed by Blue Acquisition Corp., the parties to the business combination agreement amended it on September 2, 2026 to provide that either Blue Acquisition Corp. or Blockfusion may, subject to certain exceptions, terminate the agreement if the conditions to closing have not been satisfied or waived by November 30, 2026, and amended it further on September 21, 2026 without changing that date.

At this time, the Company cannot reasonably estimate a possible loss, range of loss, or expected recovery associated with this litigation.

Contingent Consideration Liabilities

Unifi Transaction

As part of the Unifi Transaction (See Note 4. Acquisition), WhiteFiber may be required to make additional contingent payments to the seller based on the timing and availability of electric service to the property, as follows:

As of September 30, 2026, WhiteFiber has not received an Electric Service Agreement of at least or more than 99 MW. Thus, no contingent payment is payable as of the reporting date.

Electric Service Agreement with Duke Energy

An existing Electric Service Agreement (“ESA”) with Duke Energy Carolinas, LLC (“Duke Energy”) for the provision of electric power to the facility located at 805 Island Drive, Madison, North Carolina was assigned to WhiteFiber’s wholly owned subsidiary, Enovum NC-1 Bidco LLC, from Unifi as of August 4, 2025.

The ESA establishes a minimum monthly bill for electric service, based on Duke Energy’s Rate of $8,754, irrespective of actual usage levels. In addition to standard service, Duke Energy has installed and maintains “Extra Facilities” (including overhead lines, substations, transformers, breakers, and metering equipment). The cost of these Extra Facilities totals approximately $1,137,975, for which WhiteFiber pays a monthly facilities charge of $11,405.

The ESA represents a continuing commitment to purchase power at or above the established minimum levels throughout the contract term. As such, WhiteFiber is obligated to pay the minimum monthly charges regardless of operational activity.

Under the termination clause, either party may cancel the ESA with at least 60 days’ written notice. In the event of early termination, WhiteFiber remains liable for all amounts due under the ESA through the termination date and may incur additional charges associated with the Extra Facilities if service is discontinued prior to the expiration of the facilities term.

On July 15, 2026, the Company obtained a $3 million surety bond from Great American Insurance Company in favor of Duke Energy Carolinas, LLC. The surety bond serves as security for the Company’s payment obligations and may be drawn upon if the Company fails to remit payment to Duke Energy within 30 days after receiving a demand for payment.

As of September 30, 2026, management has no present intention to reduce operations at Madison or terminate the ESA. Accordingly, no liability has been recognized in the financial statements in connection with the ESA.