POWERCOMPUTE, INC.

We believe our existing facilities and equipment are in good operating condition and are suitable for the conduct of our business. Please refer to the discussion contained in our Item 1- “Business” for additional information.

• We rely heavily on our management team, whose continued service and performance is critical to our future success. Any failure by management to properly manage growth, including hiring and retaining competent and skilled management and other personnel, could have a material adverse effect on our business, operating results, and financial condition.
• In the future, we may require additional financing to sustain and expand our operations, and we may not be able to obtain financing on acceptable terms, or at all, which would have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
• We maintain our cash at financial institutions, which at times, exceed federally insured limits.
• Risks Relating to Our Bitcoin Treasury Strategy
• Our operating results are dependent on the price of Bitcoin. If prices decline, our business, operating results, and financial condition would be adversely affected.
• Competition from the emergence or growth of other crypto assets or the development of other methods of investing in crypto assets could have a negative impact on the price of Bitcoin and negatively affect the price of our common stock.
• The trading prices of many digital assets, including Bitcoin, have experienced extreme volatility in recent periods and may continue to do so. Extreme volatility in the future, including further declines in the trading prices of Bitcoin, could have a material adverse effect on the value of our common stock and our common stock could lose all or substantially all of their value.
• Our custodially-held crypto may become part of the custodian’s insolvency estate if one or more of our custodians enters bankruptcy, receivership or similar insolvency proceedings.
• We face risks relating to the custody of our Bitcoin, including the loss or destruction of private keys required to access our Bitcoin and cyberattacks or other data loss relating to our Bitcoin.
• We are not subject to legal and regulatory obligations that apply to investment companies such as mutual funds, or to obligations applicable to investment advisers or other regulated entities.
• If crypto assets held by the Company are determined to be securities under U.S. federal or state law, the Company would become subject to significant regulatory burdens, which may materially and adversely affect its business, operations, and financial condition.
• Our Bitcoin treasury strategy subjects us to enhanced regulatory oversight.
• Our limited operating history in the Bitcoin mining business makes evaluating our business and future prospects difficult and increases the risk of an investment in our securities.
• Our operating results may fluctuate due to the highly volatile nature of Bitcoin.
• The impact of geopolitical and economic events on the demand for Bitcoin is uncertain.
• The value of Bitcoin has historically been subject to wide swings. Because we do not currently hedge our investment in Bitcoin and do not intend to for the foreseeable future, we are directly exposed to Bitcoin’s price volatility and surrounding risks.
• The sale of our Bitcoins to pay for expenses at a time of low Bitcoin prices could adversely affect an investment in us.
• We will be exposed to risks related to disruptions or other failures in the supply chain for Bitcoin hardware and difficulties in obtaining new hardware.
• Mining machines rely on components and raw materials that may be subject to price fluctuations or shortages, including ASIC chips that have been subject to a significant shortage.
• If we are unable to successfully maintain our power and hosting arrangements or secure the sites for our data centers, on acceptable terms or at all, or if we must otherwise relocate to replacement sites, our operations may be disrupted, and our business results may suffer.
• Because our miners are designed specifically to mine Bitcoin and may not be readily adaptable to mining other cryptocurrencies, a sustained decline in Bitcoin’s value could adversely affect our business and results of operations.
• We may not be able to realize the benefits of forks.
• Bitcoin is subject to halving; the reward for successfully solving a block will halve several times in the future and its value may not adjust to compensate us for the reduction in the rewards we receive from our mining efforts.
• If we fail to grow our hash rate, we may be unable to compete, and our results of operations could suffer.
• Transaction fees may decrease demand for Bitcoin and prevent expansion.
• Our reliance on a third-party mining pool service provider for our mining revenue payouts may adversely affect an investment in us.
• The open-source structure of the Bitcoin network protocol means that the contributors to the protocol are generally not directly compensated for their contributions in maintaining and developing the protocol. A failure to properly monitor and upgrade the protocol could damage the Bitcoin network and an investment in us.
• We may not have adequate sources of recovery if our digital assets are lost, stolen or destroyed.
• Bitcoins held by us are not subject to FDIC or SIPC protections.
• Bitcoins we mine or hold for our own account may be subject to loss, theft or restriction on access.
• The digital asset exchanges on which cryptocurrencies, including Bitcoin, trade are relatively new and largely unregulated, and thus may be exposed to fraud and failure. Such failures may result in a reduction in the price of Bitcoin and other cryptocurrencies and can adversely affect an investment in us.
• Incorrect or fraudulent Bitcoin transactions may be irreversible.
• Demand for Bitcoin is driven, in part, by its status as a prominent and secure cryptocurrency. It is possible that a cryptocurrency other than Bitcoin could have features that make it more desirable to a material portion of the digital asset user base, resulting in a reduction in demand for Bitcoins.
• We will likely need to raise additional capital to fund our Bitcoin mining business and purchase related equipment, and such capital may not be available on terms acceptable to us, or at all.
• Bitcoin mining activities are energy-intensive, which may restrict the geographic locations of miners and have a negative environmental impact. Government regulators may potentially restrict the ability of electricity suppliers to provide electricity to mining operations, such as ours, or even fully or partially ban mining operations.
• We may be affected by price fluctuations in the wholesale and retail power markets.
• We will be vulnerable to severe weather conditions and natural disasters, including severe heat, earthquakes, fires, floods, hurricanes, as well as power outages and other industrial incidents, which could severely disrupt the normal operation of our business and adversely affect our results of operations.
• The properties in our mining network may experience damages, including damages that are not covered by insurance.
• Adoption of a different method of validating transactions in Bitcoin could materially impair the business of mining firms, and could even make them obsolete.
• If regulatory changes or interpretations of our activities require our registration as a money services business (an “MSB”) under the regulations promulgated by the Financial Crimes Enforcement Network (“FinCEN”) under the authority of the U.S. Bank Secrecy Act (the “BSA”), or otherwise under state laws, we may incur significant compliance costs, which could be substantial or cost-prohibitive. If we become subject to these regulations, our costs in complying with them may have a material adverse effect on our business and the results of our operations.
• Changing environmental regulation and public energy policy may expose our business to new risks.
• If we fail to qualify for certain state government tax incentives or to comply with local tax regulations, we may suffer financial losses.
• Future developments regarding the treatment of digital assets for U.S. federal income and applicable state, local and non-U.S. tax purposes could adversely impact our business.
• We may not be able to purchase Accounts at favorable prices, or on sufficiently favorable terms, or at all.
• We may not be able to recover sufficient amounts on our Accounts to recover charges to the Accounts for interest and late fees necessary to fund our operations.
• We are subject to intense competition seeking to provide a collection solution to Associations for delinquent Accounts.
• We are dependent upon third-party law firms to service our Accounts.
• Government regulations may limit our ability to recover and enforce the collection of our Accounts.
• We may become regulated under the Consumer Financial Protection Bureau, or CFPB, and have not developed compliance standards for such oversight.
• Current and new laws may adversely affect our ability to collect our Accounts, which could adversely affect our revenues and earnings.
• Class action suits and other litigation could divert our management’s attention from operating our business, increase our expenses, and otherwise harm our business.
• If our technology and software systems are not operational or are subject to cybersecurity incidents, our operations could be disrupted and our ability to successfully acquire and collect Accounts could be adversely affected.
• Insolvency of BLGAL could have a material adverse effect on our financial condition, results of operations and cash flows.
• Associations do not make any guarantee with respect to the validity, enforceability or collectability of the Accounts acquired by us.
• All of our Accounts are located in Florida, and any adverse conditions affecting Florida could have a material adverse effect on our financial condition and results of operations.
• Foreclosure on an Association’s lien may not result in our company recouping the amount that we invested in the related Account.
• If Account debtors or their agents make payments on the Accounts to or negotiate reductions in the Accounts with an Association, it could adversely affect our financial condition, results of operations and cash flows.
• Account debtors are subject to a variety of factors that may adversely affect their payment ability.
• Defaults on the Accounts could harm our financial condition, results of operations and cash flows.
• The liens securing the Accounts we own may not be superior to all liens on the related units and homes.
• We may not choose to pursue a foreclosure action against condominium and home owners who are delinquent in paying off the Accounts relating to their units or homes.
• The holding period for our Accounts from purchase to payoff is indeterminate.
• Our business model and related accounting treatment may result in acceleration of expense recognition before the corresponding revenues can be recognized.
• Our common shares could be delisted from the Nasdaq Capital Market.
• Future sales of our common stock by our affiliates or other stockholders may depress our stock price.
• The market price and trading volume of our shares of common stock may be volatile and you may not be able to resell your shares of common stock (as the case may be) at or above the price you paid for them.
• Securities analysts may not initiate coverage of our securities or may issue negative reports, which may adversely affect the trading price of our securities.
• We have the right to designate and issue additional shares of preferred stock. If we were to designate and/or issue additional preferred stock, it is likely to have rights, preferences and privileges that may adversely affect the common stock.