10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022 

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission file number 001-40849

Mawson Infrastructure Group Inc.

(Exact name of registrant as specified in its charter)

Delaware	88-0445167
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Level 5, 97 Pacific Highway, North Sydney NSW Australia 2060

(Address of principal executive offices, including zip code)

+61 2 8624 6130

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: 

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	MIGI	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒  No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

As of May 11, 2022, the issuer had a total of 72,486,295 shares of common stock, par value $0.001 per share, outstanding.

MAWSON INFRASTRUCTURE GROUP INC.

FORM 10-Q

FOR THE QUARTER ENDED March 31, 2022

TABLE OF CONTENTS

Item		Page Number
Part I – Financial Information
1.	Financial Statements	1
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
3.	Quantitative and Qualitative Disclosures about Market Risks	28
4.	Controls and Procedures	28
Part II – Other Information
1.	Legal Proceedings	30
1A.	Risk Factors	30
2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
3.	Defaults Upon Senior Securities	30
4.	Mine Safety Disclosure	30
5.	Other Information	30
6.	Exhibits	31
	Signatures	32

i

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

	March 31,			December 31,
	2022			2021
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	5,804,858		$	5,467,273
Prepaid expenses		1,969,969			332,154
Trade and other receivables		5,044,154			5,606,780
Cryptocurrencies		-			40,800
Total current assets		12,818,981			11,447,007
Property and equipment, net		102,532,708			76,936,850
Equipment deposits		41,722,172			51,369,216
Marketable securities		336,897			326,801
Security deposits		3,836,426			1,246,236
Operating lease right-of-use asset		4,722,973			3,968,262
Total assets	$	165,970,157		$	145,294,372
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade and other payables	$	13,995,302		$	7,746,988
Current portion of operating lease liability		1,410,192			1,222,382
Current portion of finance lease liability		28,962			8,105
Borrowings		16,036,514			11,095,388
Total current liabilities		31,470,970			20,072,863
Operating lease liability, net of current portion		3,520,623			2,962,765
Finance lease liability, net of current portion		106,159			38,764
Long-term borrowings		26,943,283			7,639,391
Total liabilities		62,041,035			30,713,783
Commitments and Contingencies (note 9)		-			-
Shareholders’ equity:
Additional paid-in capital; Common stock (120,000,000 authorized, 71,585,295 issued and outstanding $0.001 par value shares). Series A preferred stock (1,000,000 authorized shares; nil issued and outstanding as at March 31, 2022)		186,724,867			186,389,568
Share subscription receivable		-			-
Accumulated other comprehensive income (loss)		62,214			(521,094	)
Accumulated deficit		(82,458,914	)		(71,123,259	)
Total stockholders’ equity		104,328,167			114,745,215
Non-controlling interest		(399,045	)		(164,626	)
Total liabilities and stockholders’ equity	$	165,970,157		$	145,294,372

See Accompanying Notes to Unaudited Condensed Interim Consolidated Financial Statements.

1

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	For the three months ended
	March 31,
	2022			2021
Revenues:
Cryptocurrency mining revenue		18,783,842			5,120,014
Hosting Co-Location revenue		548,948			-
Sale of crypto currency mining equipment		91,545			1,877,613
Total revenues		19,424,335			6,997,627
Less: Cost of revenues (excluding depreciation)		8,412,360			2,372,781
Gross profit		11,011,975			4,624,846
Selling, general and administrative		6,476,945			2,631,964
LO2A write off		-			23,963,050
Share based payments		390,609			14,795,403
Depreciation and amortization		13,803,032			1,314,899
Total operating expenses		20,670,586			42,705,316
Loss from operations		(9,658,611	)		(38,080,470	)
Non-operating income/(expense):
Gains on foreign currency transactions		(699,237	)		(661,682	)
Other income		24,447			472,741
Interest expense		(1,236,673	)		(250,662	)
Loss before income taxes		(11,570,074	)		(38,520,073	)
Income tax expense		-			-
Net Loss		(11,570,074	)		(38,520,073	)
Less: Net (loss)/profit attributable to non-controlling interests		(234,419	)		43,135
Net Loss attributed to Mawson Infrastructure Group shareholders		(11,335,655	)		(38,563,208	)
Net Loss per share, basic & diluted	$	(0.16	)	$	(0.87	)
Weighted average number of shares outstanding		71,129,676			44,266,478

See Accompanying Notes to Unaudited Condensed Interim Consolidated Financial Statements

2

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

For the Three Months Ended March 31, 2022

	Common Stock (#)		Common Stock  ($)		Additional Paid-in- Capital		Reserves			Accumulated Other Comprehensive Income/(Loss)			Accumulated Deficit			Total  Mawson Stockholders’ Equity			Non- controlling interest			Total  Equity
Balance as of December 31, 2021		70,746,508		611,504		165,600,831		20,177,233			(521,094	)		(71,123,259	)		114,745,215			(164,626	)		114,580,589
Issuance of common stock, stock based compensation		13,787		15		107,734		-			-			-			107,749			-			107,749
Issuance of warrants		-		-		-		166,833			-			-			166,833			-			166,833
Issuance of RSU's and stock options		825,000		825		1,956,116		(1,896,224	)		-			-			60,717			-			60,717
Net loss		-		-		-		-			-			(11,335,655	)		(11,335,655	)		-			(11,335,655	)
Other comprehensive income		-		-		-		-			583,308			-			583,308			-			583,308
Non-controlling interest		-		-		-		-			-			-			-			(234,419	)		(234,419	)
Balance as of March 31, 2022		71,585,295		612,344		167,664,681		18,447,842			62,214			(82,458,914	)		104,328,167			(399,045	)		103,929,122

3

For the Three Months Ended March 31, 2021

	Series A Preferred Stock (#)		Series A Preferred Stock ($)		Common Shares (#)			Common Stock (#)		Common Stock ($)		Share Subscription Receivable			Additional Paid-in- Capital			Reserves		Accumulated Other Comprehensive Income/(Loss)			Accumulated Deficit			Total Mawson Stockholders’ Equity			Non- controlling interest			Total Equity
Balance as of December 31, 2020		-		-		7,539,275			-		-		(16,690	)		34,457,051			652,949		(1,341,826	)		(26,159,539	)		7,591,945			(27,066	)		7,564,879
Exchange of stock and Reverse recapitalization of Wize Pharma Inc		178		-		(7,539,275	)		46,132,357		461,324		-			(5,436,541	)		-		-			-			(4,975,217	)		-			(4,975,217	)
Issuance of common stock, net of offer costs, PIPE transaction		-		-		-			2,500,000		25,000		-			2,975,000			-		-			-			3,000,000			-			3,000,000
Issuance of convertible notes, net of offer costs		-		-		-			-				-			20,301,427			-		-			-			20,301,427			-			20,301,427
Issuance of common stock, exercise of warrants		-		-		-			41,000		116		-			-			6,881,676		-			-			6,881,792			-			6,881,792
Fair value of IPR&D acquired, net of Business Combination transaction costs		-		-		-			-		-		-			24,765,831			-		-			-			24,765,831			-			24,765,831
Issuance of RSU's and stock options		-		-		-			-		-		-			411,137			10,000,000		-			-			10,411,137			-			10,411,137
Fair value adjustment of LO2A intellectual property revenue sharing obligation		-		-		-			-		-		-			5,440,863			-		-			-			5,440,863			-			5,440,863
Net loss		-		-		-			-		-		-			-			-		-			(38,563,208	)		(38,563,208	)		-			(38,563,208	)
Other comprehensive income		-		-		-			-		-		-			-			-		(4,615,328	)		-			(4,615,328	)		-			(4,615,328	)
Non-controlling interest		-		-		-			-		-		-			-			-		-			-			-			43,135			43,135
Balance as of March 31, 2021		178		-		-			48,673,357		486,440		(16,690	)		82,914,768			17,534,625		(5,957,154	)		(64,722,747	)		30,239,242			16,069			30,255,311

See Accompanying Notes to Unaudited Condensed Interim Consolidated Financial Statements

4

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the three months ended March 31,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(11,570,074	)	$	(38,520,073	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		13,804,492			1,314,899
LO2A write offs		-			23,963,050
Operating lease expense		367,135			-
Foreign exchange gain		-			1,690,303
Share based payments		390,609			14,795,403
Gain on disposal of fixed assets		-			127,608
Interest expense		249,861			222,463
Investment income		-			(563,771	)
Trade and other receivables		562,626			(656,732	)
Other current assets		(4,187,204	)		(796,044	)
Trade and other payables		6,248,314			294,586
Net cash provided by operating activities		5,865,759			1,871,692
CASH FLOWS FROM INVESTING ACTIVITIES
Net payment for the purchase of property and equipment		(6,030,740	)		(2,960,145	)
Investment in financial assets		-			(380,100	)
Payment of fixed asset deposits		(23,630,470	)		(18,045,720	)
Net cash used in investing activities		(29,661,210	)		(21,385,965	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common share issuances		50,628			1,298,402
Proceeds from convertible notes		-			21,487,391
Payments of capital issuance costs		-			(2,229,096	)
Proceeds from borrowings		27,055,524			1,057,383
Advances made to external companies		-			(37,076	)
Repayment of lease liabilities		(379,026	)		-
Payments of borrowings		(3,242,194	)		(291,310	)
Net cash provided by financing activities		23,484,932			21,285,694
Effect of exchange rate changes on cash and cash equivalents		648,104			501,045
Net increase in cash and cash equivalents		337,585			2,272,466
Cash and cash equivalents at beginning of period		5,467,273			1,112,811
Cash and cash equivalents at end of period	$	5,804,858		$	3,385,277

See Accompanying Notes to Unaudited Condensed Interim Consolidated Financial Statements

5

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – GENERAL

General

Mawson Infrastructure Group, Inc. (the “Company” or “Mawson” or “we”), formerly known as Wize Pharma, Inc, and before that, known as OphthaliX Inc., was incorporated in the State of Delaware on February 10, 2012.

The accompanying consolidated financial statements, including the results of the Company’s subsidiaries; Mawson Infrastructure Group Pty Ltd (“Mawson AU” previously known as Cosmos Capital Limited), Cosmos Trading Pty Ltd, Cosmos Infrastructure LLC, Cosmos Manager LLC, MIG No.1 Pty Ltd, Cosmos Asset Management Pty Ltd, Luna Squares LLC, BITTD Pty Ltd, Luna Squares Repairs LLC, Luna Squares Property LLC and Mawson Mining LLC (collectively referred to as the “Group”), have been prepared by the Company, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Wize NC Inc, Occuwize Ltd and Wize Pharma Ltd are subsidiaries of Mawson however these companies have not been consolidated into the financial statements as these are subject to contingent value rights (“CVR”), refer to note 9.

These consolidated, condensed interim financial statements should be read in conjunction with the audited consolidated financial statements of Mawson and subsidiaries as of December 31, 2021, and the notes thereto, included in the Company’s Annual Report on Form 10-K filed March 21, 2022. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The results of the interim period are not necessarily indicative of the results to be expected for the full year ended December 31, 2022. These consolidated condensed interim financial statements reflect all adjustments which, in the opinion of management, are necessary to present fairly the financial position, the results of operations and cash flows of the Company for the periods presented.

Mawson, through its subsidiary Mawson AU, is a ‘Digital Asset Infrastructure’ business, which owns and operates modular data centers (“MDCs”) based in the United States and Australia. As at March 31, 2021 Mawson AU currently owns and has ordered 39,225 Application-Specific Integrated Circuit (“ASIC”) computers known as “Miners,” specifically focused on the SHA-256 algorithm, from a variety of manufacturers, including Bitmain Technology Holding Company (“Bitmain”), Canaan Creative (HK) Holdings Limited (“Canaan”) and Shenzhen MicroBT Electronics Technology Co., Ltd (“Whatsminer”).

Going Concern

Based on internally prepared forecasted cash flows, combined with the existing cash reserves, which take into consideration what management of the Group considers reasonable scenarios given the inherent risks and uncertainties described in this Quarterly Report on Form 10-Q, management believes that the Group will have adequate cash reserves to enable the Group to meet its obligations for at least one year from the date of approval of the consolidated financial statements, and on this basis the accounts have been prepared on a going concern basis.

6

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and basis of preparation

The accompanying consolidated financial statements of the Company include the accounts of the Company and its wholly or majority owned and controlled subsidiaries. Intercompany investments, balances and transactions have been eliminated in consolidation. Non–controlling interests represents the minority equity investment in the Company’s subsidiaries, plus the minority investors’ share of the net operating results and other components of equity relating to the non–controlling interest.

Any changes in the Company’s ownership interest in a consolidated subsidiary, through additional equity issuances by the consolidated subsidiary or from the Company acquiring the shares from existing shareholders, in which the Company maintains control is recognized as an equity transaction, with appropriate adjustments to both the Company’s additional paid-in capital and the corresponding non-controlling interest.

On March 9, 2021, Mawson AU was acquired by the Company. For accounting purposes, this was accounted for as a reverse asset acquisition with Mawson AU as the accounting acquirer (refer to significant accounting policies below). The result of which is that these financial statements are taken to be a continuation of Mawson AU’s financial statements, with the Company incorporated within the acquisition and therefore the historical financial information of Mawson AU (then known as Cosmos Capital Limited) prior to March 9, 2021, became the historical financial information of Mawson AU, which have been consolidated into the financial statements of the Company. 

Use of Estimates and Assumptions

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company evaluates on an ongoing basis its assumptions. The Company’s management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made.

These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of income and expenses during the reporting periods. Actual results could differ from those estimates. The Company has considered the following to be significant estimates made by management, including but not limited to, going concern assumptions, estimating the useful lives of fixed assets, realization of long-lived assets, unrealized tax positions and the realization of digital currencies, business combinations, reverse asset acquisition, and the contingent obligation with respect to future revenues.

Critical Accounting Policies

Critical accounting policies are described in the consolidated financial statements for Mawson included in the Company’s 10-K filed March 21, 2022. There have been no changes to critical accounting policies in the three months period ended March 31, 2022, other than the reverse asset acquisition accounting policy which is no longer considered to be a critical accounting policy and has therefore been included in significant accounting policies.

Revenue Recognition – Digital asset mining revenue

The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of ASC 606 is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Five steps are required to be followed in evaluating revenue recognition: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied a performance obligation.

7

In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).

There is currently no specific definitive guidance in U.S. GAAP or alternative accounting frameworks for the accounting of managing digital currencies and management has exercised significant judgement in determining appropriate accounting treatment for the recognition of revenue for such operations.

The Company has entered into a contract with mining pools and has undertaken the performance obligation of providing computing power in exchange for non-cash consideration in the form of cryptocurrency. The provision of computing power is the only performance obligation in the Group’s contract with its pool operators. In certain pools the amount of reward for computing power depends on the pool’s success in mining blocks. In other pools, the amount of reward includes no such contingency, although the fees payable to such pools are typically higher as a result. Where the consideration received is variable (for example, due to payment only being made upon successful mining), it is recognized when it is highly probable that the variability is resolved, which is generally when the cryptocurrency is received.

The Company measures the non-cash consideration received at the fair market value of the cryptocurrency received. Management estimates fair value on a daily basis, as the quantity of cryptocurrency received multiplied by the price quoted on the crypto exchanges that the Company uses to dispose of cryptocurrency on the day it was received.

Property and equipment

Property and equipment are stated at cost, net of accumulated depreciation. The cost includes any cost of replacing part of the property and equipment with the original cost of the replaced part being derecognized. All other repair and maintenance costs are recognized in profit or loss incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. Property, plant and equipment transferred from customers is initially measured at the fair value at the date on which control is obtained.

The depreciable amount of fixed assets is depreciated on a straight-line or declining balance basis based on the asset classification, over their useful lives to the economic entity commencing from the time the assets arrive at their destination where they are ready for use. Depreciation is calculated over the following estimated useful lives:

Financial Asset class	Useful life	Depreciation Method
Fixtures and Fittings	5 years	Straight-Line
Plant and equipment	10 years	Straight-Line
Modular data center	5 years	Declining
Motor Vehicles	5 years	Straight-Line
Computer equipment	3 years	Straight-Line
Processing Machinery (Miners)	2 years	Declining
Transformers	15 years	Straight-Line

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognized.

8

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

The Company changed its policy in relation to freight costs in relation to processing machines with effect from October 1, 2021. Prior to this date these costs were expensed to the statement of operations and profit and loss, and afterwards these costs are capitalized into processing machinery. This change resulted in an increase in processing machines in the balance sheet of $2,040,387 at March 31, 2022, and an increase in the depreciation charge to the statement of operations and profit and loss of $84,735 over the prior treatment.

The Company’s long-lived assets are reviewed for impairment in accordance with Accounting Standards Codification (“ASC”) 360, “Property, Plant and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During the periods ended March 31, 2022, and 2021, no impairment losses have been identified.

Share based payments

The Company follows FASB Codification Topic ASC 718-10 Compensation-Stock Compensation. The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the estimated grant-date fair value of the awards. The Company determines the grant date fair value of the options using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. These assumptions are the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility computes stock price volatility over expected terms based on its historical common stock trading prices. Risk–free interest rates are calculated based on the implied yield available on U. S. 10-year Treasury bond.

Significant Accounting Policies

Revenue Recognition - Hosting Co-location revenue

The Company provides power for our co-location hosting customers on a variable basis which is received monthly from the customer based on the power usage at the rate outlined in each customer contract.

We recognize variable power revenue each month as the uncertainty related to the consideration is resolved, power is provided to our customers, and our customers utilize the power (the customer simultaneously receives and consumes the benefits of the Company’s performance).

The customer contracts contain performance obligations, variable consideration in such contracts to be allocated to and recognized in the period to which the consideration relates. Usually this is when it is invoiced, rather than obtaining an estimation of variable consideration at the beginning of the customer contracts.

Customers also are invoiced a fixed monthly fee for maintenance services which include, cleaning, cabling and other services to maintain the customers’ equipment.

Revenue Recognition - Sale of crypto currency mining equipment

Crypto currency mining equipment sales revenue includes revenues related to the sale of Miners. This is recognized as revenue upon delivery to the customer, which is when the control of the Miner transfers. Payments are typically received at the point control transfers or in accordance with payment terms customary to the business.

9

Revenue recognition – equipment sales

The Company earned revenues from the sale of earlier generation cryptocurrency mining units and modular data centers that have been assembled or refurbished for resale (collectively “Hardware”). Revenue from the sale of Hardware is recognized when all of the following conditions are satisfied: (i) persuasive evidence of a sales arrangement exists, (ii) the sales terms are fixed or determinable, (iii) title and risk of loss have transferred, and (iv) payment is received. At the date of sale, the net book value is expensed in cost of revenues.

Cost of revenues:

Cost of revenue consists primarily of expenses that are directly related to providing the Company’s service to its paying customers. These primarily consist of costs associated with operating our co-location facilities such as direct power costs, energy costs (including any carbon offset acquired during the year), freight costs and material costs related to cryptocurrency mining.

Research and development expenses:

Research and development expenses are charged to the statement of comprehensive loss as incurred.

Income taxes:

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance may be established to reduce the deferred tax asset to the level at which it is “more likely than not” that the tax asset or benefits will be realized. Realization of tax benefits of deductible temporary differences and operating loss carryforwards depends on having sufficient taxable income of an appropriate character within the carryback or carryforward periods.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained upon review by the taxing authority. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Functional currency:

All subsidiaries of Company have a functional currency of United States dollar (“USD”) with the exceptions of Mawson Infrastructure Group Pty Ltd, MIG No.1 Pty Ltd, Cosmos Trading Pty Ltd, BITTD Pty Ltd and Cosmos Asset Management Pty Ltd whose functional currency is the Australian Dollar (“AUD”). The financial statements of foreign businesses have been translated into USD at current exchange rates for balance sheet items and at the average rate for income statement items. Translation of all the consolidated companies’ financial records into USD is required due to the reporting currency for these consolidated financial statements presented as USD and the functional currency of the parent company being that of AUD. Translation adjustments are accumulated in other comprehensive loss. Revenue and expense accounts are converted at prevailing rates throughout the year. Gains or losses on foreign currency transactions and translation adjustments in highly inflationary economies are recorded in income in the period in which they are incurred.

10

Segment Reporting:

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision–making group in deciding how to allocate resources and in assessing performance. Our chief operating decision–making group is composed of the chief executive officer. We currently operate in one segment surrounding our cryptocurrency mining operation.

Cash and cash equivalents:

Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, cash held with digital currency exchanges, and other short-term and highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less.

Digital Currencies

Digital currencies are included in current assets in the consolidated balance sheets. Digital currencies are classified as indefinite-lived intangible assets in accordance with ASC 350, Intangibles - Goodwill and Other, and are accounted for in connection with the Company’s revenue recognition policy detailed above.

The following table presents the Company’s digital currency (Bitcoin) activities for the quarter ended March 31, 2022, and 2021: 

	Three months to March 31,
	2022			2021
Opening number of Bitcoin held as at December 31, 2021 and 2020		0.92			0.52
Number of Bitcoin added		458.68			123.22
Number of Bitcoin sold		(459.60	)		(113.45	)
Closing number of Bitcoin held as at March 31, 2022 and 2021		0.00			10.29

Digital currency is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.

The Company’s policy is to dispose of production at the earliest opportunity, the holding period is minimal, usually no more than a few days. Due to the short period which Bitcoin are held prior to sale and the consequent small numbers held, the risk of impairment is not material.

Equipment deposits:

The Company records a prepaid expense for costs paid but not yet incurred. Those expected to be incurred within one year are recognized and shown as equipment deposits. Equipment deposits result from advance payments to suppliers for goods to be received in the future. Equipment deposits are initially recognized as assets at the date the amount is paid, and are subsequently recorded as equipment as the Company takes delivery and control of the equipment from the supplier. Amounts are recognized initially at the amount of the unconditional consideration. They are subsequently measured at cost, less loss allowance.

Reverse Asset Acquisition:

On March 9, 2021, the Company acquired the shares of Cosmos Capital Limited (now known as Mawson Infrastructure Group Pty Ltd and referred to herein as Mawson AU) in a stock for stock exchange. This transaction has been accounted for as a reverse asset acquisition. This transaction reverse asset acquisition and the associated impact is referred to as the “Cosmos Transaction”.

11

Under the terms of the Cosmos Transaction Bid Implementation Agreement, the Company was required to make share based payments consisting of up to 40,000,000 shares under an Incentive Compensation Program and warrants issued to HC Wainwright as a fee related to the acquisition by Mawson of Mawson AU. In addition, Mawson AU had an outstanding obligation to W Capital Advisors Pty Ltd (“W Capital”) for options over the equity of Mawson AU which was terminated for consideration of warrants over the Company’s shares being issued to W Capital.

Fair value of financial instruments:

The Company accounts for financial instruments under FASB Accounting Standards Codification Topic (“ASC”) 820, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 — assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment.

Of the Company’s financial instruments on the Company’s balance sheet as at March 31, 2022, the only item measured and recorded at fair value is the Marketable Securities of $336,897, which are categorized as Level 1.

Concentrations of credit risk:

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, marketable securities. Cash and cash equivalents and restricted bank deposits are invested in banks in Australia and the U.S. If the counterparty completely failed to perform in accordance with the terms of the contract, is the maximum amount of loss the Company would be the balance. Management believes that the financial institutions that hold the Company’s investments are financially sound and, accordingly, minimal credit risk exists with respect to these investments. The Company has no off-balance-sheet concentration of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements.

Legal and other contingencies: 

The Company accounts for its contingent liabilities in accordance with ASC 450 “Contingencies”. A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. With respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. Legal costs incurred in connection with loss contingencies are expensed as incurred. As of March 31, 2022, the Company is not a party to any litigation that could have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.

12

Leases:

The Company accounts for its leases under ASC 842, Leases which was effective January 1, 2019. The Company determines if an arrangement is a lease at inception. Using ASC 842 leases are classified as operating or finance leases on the Balance Sheet as a right of use (“ROU”) assets and lease liabilities within current liabilities and long-term liabilities on our consolidated balance sheet. ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company’s lease does not provide an implicit rate and therefore the Company measured the ROU asset and lease obligation based upon the present value of future minimum lease payments. The Company’s incremental borrowing rate is estimated based on risk-free discount rate for the lease, determined using a period comparable with that of the lease term and in a similar economic environment. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. The Company does not record leases on the consolidated balance sheets with a term of one year or less. The Company does not separate lease and non-lease components but rather account for each separate component as a single lease component for all underlying classes of assets. Where leases contain escalation clauses, rent abatements, or concessions, such as rent holidays and landlord or tenant incentives or allowances, the Company applies them in the determination of straight-line operating lease cost over the lease term.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies and adopted by the Company as of the specified effective date. For information with respect to recent accounting pronouncements, see Note 2 to the consolidated financial statements for Mawson as of December 31, 2021, included in the Company’s Annual Report on Form 10-K filed March 21, 2022, recent accounting pronouncements since that date include:

In March 2022, the FSAB issued ASU update 2022-01—Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method. The adoption of ASU 2021-01 did not have a material impact on the Company’s financial statements or disclosures.

In March 2022, the FSAB issued ASU 2022-02—Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The adoption of ASU 2022-02 did not have a material impact on the Company’s financial statements or disclosures.

NOTE 3 – BASIC AND DILUTED NET LOSS PER SHARE

Net loss per common share is calculated in accordance with ASC Topic 260: Earnings Per Share (“ASC 260”). Basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. The computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average shares outstanding, as they would be anti-dilutive.

Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share as at March 31, 2022 and 2021 are as follows:

	As at March 31,
	2022		2021
Warrants to purchase common stock		6,994,189		871,098
Options to purchase common stock		753,459		-
Common stock due to former Cosmos shareholders to be issued pending approval of increase to authorized capital		-		5,055,811
Mandatory convertible notes to exchange common stock		-		6,362,690
Restricted Stock-Units (“RSUs”) issued under a management equity plan		1,819,287		4,000,000
		9,566,935		16,289,599

13

The following table sets forth the computation of basic and diluted loss per share:

	For the three months ended March 31,
	2022			2021
Net Loss attributable to common shareholders	$	(11,335,655	)	$	(38,563,208	)
Denominator:
Weighted average common shares - basic and diluted		71,129,676			44,266,478
Loss per common share - basic and diluted	$	(0.16	)	$	(0.87	)

Comparative weighted average common shares have been revised by the ratio of Mawson AU to the Company shares exchanged in the reverse asset acquisition in March 2021. Pursuant to that certain Certificate of Amendment to the Certificate of Incorporation of the Company dated August 11, 2021, Mawson executed a 10-for-1 reverse stock split of its outstanding common stock and reduced its authorized common stock to 120,000,000 shares, as set forth in the Company’s Current Report on Form 8-K filed August 16, 2021. 

NOTE 4 – DEPOSIT, PROPERTY AND EQUIPMENT

On February 5, 2021, Cosmos Infrastructure LLC (“Infrastructure”) entered into a Long-Term Purchase Contract with Canaan Convey Co Ltd (“Canaan”) for the purchase of 11,760 next generation Avalon A1246 ASIC Miners. The average purchase price per unit is $2,889 for a total purchase price of $33,974,640 (the “Canaan Transaction”). The final shipment for contract was received during March 2022, there was a final adjustment to the purchase price based on the actual tera hash delivered, based on the agreed price per tera hash under the terms of the contract. The purchase price adjustment resulted in a $2.2 million reduction in the purchase price, this is due to be received in cash from Canaan.

On August 9, 2021, Infrastructure entered into a second Long-Term Purchase Contract with Canaan for the purchase of 15,000 next generation Avalon A1246 ASIC Miners. The average purchase price per unit is $4,908 for a total purchase price of $73,620,000. There will be a final adjustment to the purchase price in the last delivery due in May 2022 based on the actual tera hash delivered, based on the agreed price per tera hash under the terms of the contract. As at March 31, 2022 the amount paid in relation to this contract is $54,180,000 of which 4,000 orders have been delivered during the quarter.

During the three months ended March 31, 2022, $23.63 million cash paid for equipment was recorded as a deposit on the balance sheet.

NOTE 5 – LEASES

Luna Squares LLC leases a 16.35-acre lot in Georgia from the Development Authority of Washington County. The lease term was originally for 1 acre from May 1, 2020, until April 30, 2023. An amendment to the lease and exercise of option to lease four additional acres was signed and became effective February 23, 2021. A further amendment to the lease and exercise of option to lease was signed and became effective August 24, 2021. The Lease Amendment covers an additional 11.35 acres of the property, bringing the total to 16.35 acres under the lease. It also includes 5, 3-year extension options bringing the total lease period to run until 2038.

The Company leases the headquarters of its business operations at Level 5, 97 Pacific Highway, North Sydney NSW 2060 Australia, being 1,076 square feet of office space held under a license agreement.

The Company leases 6-acres of land in Pennsylvania which began in October 2021 for thirty-six months with the option to execute four additional three-year extensions.

On March 16, 2022, Luna Squares LLC entered into a lease with respect to a property in the City of Sharon, Mercer County, Pennsylvania with Vertua Property, Inc. (A related entity – refer to note 12 for details). The term of the lease is for 5 years, and has 2 options to extend for 5 years each.

Other than the foregoing leases, the Company does not lease any material assets. The Company believes that these offices and facilities are suitable and adequate for its operations as currently conducted and as currently foreseen. In the event additional or substitute offices and facilities are required, the Company believes that it could obtain such offices and facilities at commercially reasonable rates.

14

The Company’s lease costs recognized in the Consolidated Statements of Income and Comprehensive Loss consist of the following:

	For the three months ended March 31,
	2022		2021
Operating lease charges (1)	$	367,135	$	11,223
Finance lease charges:
Amortization of right-of-use assets		4,302		-
Interest on lease obligations		1,478		-
	$	5,780	$	-

⁽¹⁾ Included in Selling, General & Administrative Expenses.

	Operating leases			Finance Leases
2023	$	1,753,012		$	38,068
2024		1,779,078			38,068
2025		1,172,787			38,068
2026		548,407			35,854
2027		419,568			7,669
Total undiscounted lease obligations		5,672,852			157,727
Less imputed interest		(742,037	)		(22,606	)
Total present value of lease liabilities		4,930,815			135,121
Less current portion of lease liabilities		(1,410,192	)		(28,962	)
Non-current lease liabilities	$	3,520,623		$	106,159

	Operating leases			Finance Leases
Operating cash flows from operating and finance leases	$	373,936		$	5,090
Weighted-average remaining lease term – operating and finance leases (years)		3.42			1.52
Weighted-average discount rate – operating and leases (%)		8.0	%		2.6	%

NOTE 6 – PROPERTY AND EQUIPMENT

Property and equipment, net, consisted of the following:

	March 31, 2022			December 31, 2021
Plant and equipment		2,743,337			1,046,866
Computer equipment		440,461			216,099
Furniture & fixtures		32,446			31,474
Processing machines (Miners)		111,687,341			81,341,098
Modular data center		14,765,469			9,819,796
Motor Vehicles		325,113			250,425
Transformers		2,102,194			1,190,609
Low-cost assets		451,004			246,154
Assets under construction		1,950,106			1,008,001
Total		134,497,471			95,150,522
Less: Accumulated depreciation		(31,964,763	)		(18,213,672	)
Property and equipment, net		102,532,708			76,936,850

15

The Company incurred depreciation and amortization expense in the amounts of $13,803,032 and $1,314,899 for the quarter ended March 31, 2022 and March 31, 2021, respectively. There were no impairment charges recognized for property and equipment for either the quarter ended March 31, 2022, or March 31, 2021. There were no disposals during the three months ended March 31, 2022.

The Company had additions of $39,400,349 during the three months ended March 31, 2022. This primarily consisted of $30,396,241 of Miners, $4,953,347 additions for MDC’s and $1,696,756 for plant and equipment.

NOTE 7 – INCOME TAXES

The Company's effective tax rates for the three months ended March 31, 2022 and 2021, were as follows:

	For the three months ended March 31,
	2022			2021
Effective Tax Rate		0	%		0	%

The Company's effective tax rate is calculated by dividing total income tax expense by the sum of income before income tax expense and the net income attributable to noncontrolling interests. The Company has maintained a full valuation allowance for federal and the majority of its state jurisdictions.

NOTE 8 – STOCKHOLDERS EQUITY

Common Stock

TraDigital Marketing Group LLC was issued 5,000 shares of common stock during January 2022 for consultancy services provided to the Company.

Under the terms of the Cosmos Transaction Bid Implementation Agreement the Company made share-based payments under an Incentive Compensation Program during September 2021 (refer to reverse acquisition accounting policy). Within the March 2022 quarter, five employees converted these into 825,000 shares of common stock of Mawson.

During February 2022, Kyle Hoffman was paid $50,000 in shares of the Company’s common stock as part of the contingent consideration for the Membership Interest Purchase Agreement to acquire shares in Luna Squares LLC.

Restricted Stock

As of March 31, 2022, there was no restricted stock.

Common Stock Warrants

A summary of the status of the Company’s outstanding stock warrants and changes during the quarter ended March 31, 2022, is as follows:  

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2021		3,524,189
Issued		3,850,000		$	7.99		1.9
Exercised		(380,000	)
Expired		-
Outstanding as of March 31, 2022		6,994,189		$	7.99		1.9
Warrants exercisable as of March 31, 2022.		6,994,189		$	7.99		1.9

On February 23, 2022, Mawson issued to Celsius Mining warrants with an expiry date of August 23, 2023, to purchase up to 3,850,000 shares of common stock, par value $0.001 per share, of Mawson at an exercise price of US$6.50 per share, in connection with the $20 million loan made by Celsius to Luna Squares LLC in connection with a Customer Equipment and Co-Location Agreement entered into by Celsius and Luna Squares LLC.

16

NOTE 9 – COMMITMENTS AND CONTINGENCIES

Agreements

1. In connection with the Cosmos Transaction, we issued one CVR to each of our securityholders for each outstanding share of common stock of Mawson, and for each share of common stock of Mawson underlying other convertible securities and warrants, held immediately before the closing of the Cosmos Transaction. Each CVR represents the right to receive a pro rata share of any consideration that we may receive in connection with any successful monetization of our LO2A business, less transaction expenses and customary deductions as detailed in the CVR agreement, including a deduction of up to $300,000 to be repaid to us for amounts we spend in the development of the LO2A Technology at the request of the representative of the holders of the CVRs. As at March 31, 2022, the Company cannot reliably measure the cost of the CVRs and it is not probable that these payments will be made and therefore this has been classified as a contingent liability.

2. On August 9, 2021, Infrastructure entered into a second Long-Term Purchase Contract with Canaan for the purchase of 15,000 next generation Avalon A1246 ASIC Miners. The purchase price per unit is $4,908 for a total purchase price of $73,620,000. As at March 31, 2022 the Company had paid $54,180,000 in relation to this contract with the remaining balance owed at the end of the quarter.

NOTE 10 – BORROWINGS

Short-term Borrowings

On October 15, 2021, the Company acquired 2,000 Whatsminers M30’s for delivery in October 2021 from Foundry Digital LLC for a total consideration of $16,481,328. The Company paid a deposit of $3,202,766 and entered into an extension of the original Foundry finance agreement with Foundry for the balance of the consideration over a 12-month term, of which $7,801,933 is outstanding at March 31, 2022.

Long-term Borrowings

Marshall loan

In December 2021 the Company entered into a Secured Loan Facility Agreement with Marshall Investments MIG Pty Ltd which was payable in three tranches. The first tranche was received during December 2021 with an amount of $7.86 million. Tranche two and three were received during January and February 2022 with a total amount of $7.11 million. The loan matures in 2024 and bears interest at a rate of 12.00% per annum, payable monthly which commenced December 2021.The Loan facility is secured by a general security agreement given by the Company. Principal repayments begin during 2023.

17

Celsius loan

On February 23, 2022, Luna Squares LLC entered into the Co-Location Agreement with Celsius Mining LLC, in connection with this agreement, Celsius Mining loaned Luna Squares LLC a principal amount of US$20,000,000, for the purpose of funding the infrastructure required to meet the obligations of the Co-Location Agreement, for which Luna Squares LLC issued a Secured Promissory Note for repayment of such amount. The Secured Promissory Note accrues interest daily at a rate of 12% per annum. Luna Squares LLC is required to amortize the loan at a rate of 15% per quarter, with principal repayments starting in the third quarter of 2022. The Secured Promissory Note has a maturity date of August 23, 2023.

NOTE 11 – RELATED PARTY TRANSACTIONS

On March 16, 2022, Luna Squares LLC entered into a lease with respect to a property in the City of Sharon, Mercer County, Pennsylvania with Vertua Property, Inc, a subsidiary entity in which Vertua Ltd has a 100% ownership interest. James Manning, CEO, a director and a significant shareholder of the Company, is also a director of Vertua Ltd and has a material interest in the Sharon lease as a large shareholder of Vertua Ltd. The lease contains market standard legal terms, and will be for a term of 5 years, and Luna Squares LLC has 2 options to extend for 5 years each. The Company’s Audit Committee has compared the rent and terms to other arms’ length leases the Company has entered into and formed the view the rent is in line with the market for similar properties. Rent is subject to annual increases equal to the amount of the Consumer Price Index for the Northeast Region, or 4%, whichever is higher. The base rental amount in the first year is $0.24 million. Depending on power energization and usage, variable additional rent may be payable, with charges ranging from $500 to $10,000 per month, depending on power energized and whether it is available. Upon the recommendation from the Audit Committee, the directors of the Company, other than James Manning, were made aware of the material facts as to Mr. Manning’s interest in the lease and authorized the Company in good faith to enter the lease after determining the lease to be fair to the Company.

NOTE 12 – SUBSEQUENT EVENTS

On May 12, 2022, Luna Squares Texas LLC (a wholly owned subsidiary of the Company) entered into an Option Agreement and Gross Profit Agreement with JAI TX, LLC and then signed or took and assignment of 4 leases for properties in Texas (all in close proximity) with the intent to develop MDC facilities for mining Bitcoin. Luna Squares Texas LLC will seek to execute relevant power agreements, however the expectation is that the four locations can provide a combined 120MW of power. Rent under the leases ranges from $1,500 to $5,227.20 per acre per annum. The lessors include a substantial listed holder of land in Texas, and family groups. Under the Option Agreement, JAI TX, LLC has the option to receive an issue of up to 20% of the membership interests in Luna Squares Texas LLC. The purchase prices will be a share of capital costs equal to the membership interest acquired by JAI TX, LLC, and an amount of Luna Squares Texas LLC’s debt financing in proportion to JAI TX, LLC’s shareholding. In return for certain services provided by JAI TX, LLC, JAI TX, LLC will be entitled to a share of all Electric Reliability Council of Texas program payments paid to Luna Squares Texas LLC (“ERCOT Payment”), as well as a share of the Bitcoin profit from the Texas locations less certain costs, including depreciation. Capital costs for Luna Squares Texas LLC are expected to exceed $4.19m.

18

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations analyzes the major elements of our balance sheets, statements of comprehensive income (loss) and cash flows. The following discussion and analysis of our financial condition and results of operations should be read together with the interim condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. All amounts are in U.S. dollars.

Throughout this report, unless otherwise designated, the terms “we,” “us,” “our,” the “Company,” “Mawson,” “our company” and the “combined company” refer to Mawson Infrastructure Group Inc., a Delaware corporation, and its direct and indirect subsidiaries, including Mawson Infrastructure Group Pty Ltd, an Australian company (“Mawson AU”), Cosmos Trading Pty Ltd, Cosmos Infrastructure LLC, Cosmos Manager LLC, Cosmos MIG No.1 Pty Ltd, Cosmos Asset Management Pty Ltd, and Luna Squares LLC, BITTD Pty Ltd, Luna Squares Repairs LLC, Luna Squares Property LLC and Mawson Mining LLC . Wize NC Inc, Occuwize Ltd and Wize Pharma Ltd are subsidiaries of Mawson however these companies have not been consolidated into the financial statements are not included when referring to we, us, our or the Company or Mawson as these are subject to contingent value rights (“CVR”), refer to note 9 of the financial statements.

Pursuant to that certain Certificate of Amendment to the Certificate of Incorporation of the Company dated August 11, 2021, Mawson executed a 10-for-1 reverse stock split of its outstanding common stock and reduced its authorized common stock to 120,000,000 shares, as set forth in the Company’s Current Report on Form 8-K filed August 16, 2021. Unless otherwise specified, all Mawson share numbers in this Quarterly Report on Form 10-Q reflect post-reverse stock split numbers.

Forward-Looking Statement Notice

This Quarterly Report on Form 10-Q contains forward-looking statements about our expectations, beliefs or intentions regarding, among other things, our product development efforts, business, financial condition, results of operations, strategies or prospects. In addition, from time to time, our representatives have made or may make forward-looking statements, orally or in writing. Forward-looking statements can be identified by the use of forward-looking words such as “believe,” “expect,” “intend,” “plan,” “may,” “should” or “anticipate” or their negatives or other variations of these words or other comparable words or by the fact that these statements do not relate strictly to historical or current matters. These forward-looking statements may be included in, but are not limited to, various filings made by us with the SEC, press releases or oral statements made by or with the approval of one of our authorized executive officers. Forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements, including, but not limited to, the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2021, and in Part II – Item 1A of this report.

This report identifies important factors which could cause our actual results to differ materially from those indicated by the forward-looking statements, particularly those set forth under Item 1A. “Risk Factors” as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021, and in Part II – Item 1A of this report.

Such risk factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

19

Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to:

● the fact that we have incurred operating losses and may continue to do so for the foreseeable future;

● that we may need to raise additional capital, to meet unexpected liabilities or accelerate growth in a competitive environment, and such capital raising may be costly or difficult to obtain and will dilute current stockholders’ ownership interests;

● that we may never become profitable;

● competition and technological challenges we may face;

● the slowing or stopping of the development or acceptance of digital asset systems;

● changes the Bitcoin network’s protocols and software;

● any decrease in the incentive for Bitcoin mining;

● growth challenges we may face;

● our ability to obtain and maintain adequate insurance;

● we may become subject to existing or future government regulations which increase the cost of doing business, or which cause us to cease some or all of our operations;

● our exposure to fluctuations in the market value of digital assets, in particular Bitcoin, and the relative attractiveness of those digital assets to investors, speculators, and users payment network services over other solutions;

● our reliance on third party manufacturers for Miners and other infrastructure and hardware;

● risks relating to the supply chain disruptions due to pandemic (e.g. COVID-19), shortages (computer chips), and geo-political tensions (e.g. China trade bans, war in Ukraine);

● climate and climate change risks, including direct risks from storms and floods, but also the implementation of policies which may lead to higher energy costs;

● political or economic crises motivating large-scale sales of digital assets;

● regulatory risks, including local and global governments regulating, or even banning, Bitcoin or Bitcoin mining;

● the impact of our business successes or failures on the value of our common stock;

● the impact of future stock sales on our stock price;

● the potential lack of liquidity, or volatility, of our common stock and warrants;

● the potential failure to maintain effective internal controls over financial reporting;

● the existence of anti-takeover provisions in our charter documents and Delaware law;

● that we do not intend to pay dividends on our common stock; and

● competitive companies and technologies within our industry, and outside it (such as central bank digital currencies and quantum computing).

20

All forward-looking statements attributable to us or persons acting on our behalf speak only as of the date of this report and are expressly qualified in their entirety by the cautionary statements included in this report. Except as required by applicable law, we undertake no obligations to update or revise forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. In evaluating forward-looking statements, you should consider these risks and uncertainties.

Overview

Mawson is a ‘Digital Asset Infrastructure’ business, which owns and operates (through its majority-owned subsidiary Mawson AU) modular data centers (“MDCs”) in the United States and Australia. We are focused on developing the technology to enable us to own and operate MDCs that are both air-cooled and liquid immersion cooled.

Our primary business is the ownership and operation of Application-Specific Integrated Circuit (“ASIC”) computers known as Miners. We currently operate three sites, with two locations in USA, and a location in Australia, from which we operate our combined business. The Miners are predominately focused on the process of digital mining, specifically for Bitcoin.

We offer ‘hosting’ or ‘co-location’ arrangements to other businesses in the digital asset infrastructure industry the opportunity to have their Miners located within our MDCs, who pay us a fee for the use of our facilities and related services (often based on consumption).

We also sell used crypto currency mining equipment on a periodic basis, subject to prevailing market conditions for used equipment.

As of March 31, 2022

	Existing Operations Online		Order and Purchase Agreements		Cumulative Fleet Fully Deployed
Total miners online		20,697		-		20,697
Total miners in Transit		-		2,168		2,168
Total miners on order		-		11,000		11,000
Total miners in storage		5,360		-		5,360
Total miners		26,057		13,168		39,225

We continue to conduct research and development in relation to our MDCs which we are actively testing in several configurations and locations to determine the best configuration for both ASIC and alternate computing uses.

In addition, our indirect subsidiary, Cosmos Asset Management Pty Ltd (“Cosmos Asset Management”), is the investment manager of the Bitcoin Wholesale Access Fund, a wholesale, unregistered managed investment scheme Bitcoin Wholesale Access Fund invests in and holds Bitcoin for third party investors and is the manager of the Cosmos Global Digital Miners Access ETF, listed on Cboe in Australia under the code DIGA.

Prior LO2A Business

On March 9, 2021, the Company acquired the shares of Mawson AU in a stock for stock exchange (the “Cosmos Transaction”).

Prior to the Cosmos Transaction our main business undertaking was as a clinical-stage biopharmaceutical company focused on the treatment of ophthalmic disorders, including dry eye syndrome (our “LO2A business”). However, as part of the Cosmos Transaction, substantially all of the economic benefits of any successful monetization of our LO2A business, if any, will benefit only the holders of CVR and any contingent right holders. Accordingly, we assessed that the fair value of this asset at the acquisition date was $nil. The asset was therefore assessed as impaired and the prior carrying amount of $23.96 million has been fully expensed in the consolidated statements of operations for the year ended December 31, 2021.

21

Recent Developments.

On February 23, 2022, Luna Squares LLC entered into the Co-Location Agreement with Celsius Mining LLC (“Celsius Mining”), pursuant to which Luna Squares LLC will provide a hosting facility, electrical power and internet access to Celsius Mining for the purposes of installing, maintaining and operating Celsius Mining’s ASIC machines (cryptocurrency mining equipment) for a monthly services fee based on power consumption, plus an infrastructure fee, plus a market margin. In addition, Celsius Mining loaned Luna Squares LLC a principal amount of US$20,000,000 (“Principal”), for the purpose of funding the infrastructure required to meet the obligations of the Co-Location Agreement, for which Luna Squares LLC issued a Secured Promissory Note (the “Promissory Note”) in the principal amount equal to the Principal. The Promissory Note accrues interest daily at rate of 12% per annum. Luna Squares LLC is required to amortize the loan at a rate of 15% per quarter, with principal repayments starting in the third quarter following the closing. The Promissory Note has a maturity date of August 23, 2023. In the event Luna Squares LLC receives cash proceeds from certain sales of assets, Luna Squares LLC would be required to direct such cash proceeds to Celsius Mining, which will be applied to the outstanding principal and interest under the Promissory Note. The Promissory Note includes customary events of default and remedies. In connection with the transaction, Mawson issued to Celsius Mining, warrants to purchase up to 3,850,000 shares of common stock, par value $0.001 per share, of Mawson at an exercise price of US$6.50 per share. The warrant may be exercised at any time after issuance and until the later to occur of the eighteen (18) month anniversary of issuance and the date on which the Promissory Note has been completely repaid.

On March 16, 2022, Luna Squares LLC entered into a lease with respect to a property in the City of Sharon, Mercer County, Pennsylvania with Vertua Property, Inc, a subsidiary entity in which Vertua Ltd has a 100% ownership interest. James Manning, CEO, a director and a significant stockholder of the Company is also a director of Vertua Ltd and has a material interest in the Sharon lease as a large shareholder of Vertua Ltd. The lease contains market standard legal terms, and will be for a term of 5 years, and Luna Squares LLC has 2 options to extend for 5 years each. The Audit Committee of the Company has compared the rent and terms to other arms’ length leases the Company has entered into and formed the view the rent is in line with the market for similar properties. Rent is subject to annual increases equal to the CPI for the Northeast Region, or 4%, whichever is higher. The base rental amount in the first year is $0.24 million. Depending on power energization and usage, variable additional rent may be payable, with charges ranging from $500 to $10,000 per month, depending on power energized and whether it is available. Upon the recommendation from the Audit Committee, the directors of the Company, other than James Manning, were made aware of the material facts as to Mr. Manning’s interest in the lease and authorized the Company in good faith to enter the lease after determining the lease to be fair to the Company.

COVID-19.

The COVID-19 global pandemic has been unpredictable and unprecedented and is likely to continue to result in significant national and global economic disruption, which may adversely affect our business. The Company relies on equipment supplied by third parties which, like many manufacturing businesses globally, are at risk of supply chain issues. We currently do not expect any material impact on our long-term development, operations, or liquidity due to the COVID-19 pandemic. However, we are actively monitoring this situation and the possible effects on our financial condition, liquidity, operations, suppliers, and industry.

Regulation of Digital Assets

Digital assets and cryptocurrencies have been the source of much regulatory consternation, resulting in differing definitional outcomes without a single unifying statement. We do not believe our mining activities require registration to conduct such activities and accumulate digital assets. Nevertheless it is likely that regulation in the digital asset industry will increase. On March 9, 2022, President Biden issued an executive order that identified the following objectives for future regulation of digital assets in the United States: (1) protect consumers, investors, and businesses, (2) protect financial stability, (3) mitigate the illicit finance and national security risks posed by misuse of digital assets, (4) reinforce United States leadership in the global financial system and in technological and economic competitiveness, (5) promote access to safe and affordable financial services, and (6) support technological advances that promote responsible development and use of digital assets. The executive order was generally received as a positive for the digital asset industry, especially in the United States, as it appears to seek to foster an environment of innovation for digital assets within some reasonable bounds. This can be seen as similar to moves in the Australian government context, where the government has declared that it is seeking to better understand digital assets in order to craft and promulgate better designed regulation, and can be seen as contrasting to the reactions in some jurisdictions, where outright bans and other barriers have been erected against digital assets and cryptocurrencies.

22

In the past it has also been noted that the SEC, the Commodity Futures Trading Commission (“CFTC”), Nasdaq or other governmental or quasi-governmental agency or organization (including similar authorities in other jurisdictions such as Australia) may conclude that our digital asset mining activities involve the offer or sale of “securities”, or ownership of “investment securities”, and we may face regulation under the Securities Act of 1933, as amended (the “Securities Act”) or the Investment Company Act of 1940. Such regulation or the inability to meet the requirements to continue operations, would have a material adverse effect on business, financial condition, results of operations and prospects of our business. Currently in Australia, Bitcoin itself is not considered a financial product nor are digital assets regarded as money or currency for the purpose of Australian law. The effect of any future regulatory change on digital assets or an entity dealing in or holding digital assets is impossible to predict, but such change could be substantial and adverse to our financial returns.

Results of Operations – Three months Ended March 31, 2022 compared to the three months ended March 31, 2021

	For the three months ended
	March 31,
	2022			2021
Revenues:
Cryptocurrency mining revenue		18,783,842			5,120,014
Hosting Co-Location revenue		548,948			-
Sale of crypto currency mining equipment		91,545			1,877,613
Total revenues		19,424,335			6,997,627
Less: Cost of revenues (excluding depreciation)		8,412,360			2,372,781
Gross profit		11,011,975			4,624,846
Selling, general and administrative		6,476,945			2,631,964
LO2A write off		-			23,963,050
Share based payments		390,609			14,795,403
Depreciation and amortization		13,803,032			1,314,899
Total operating expenses		20,670,586			42,705,316
Loss from operations		(9,658,611	)		(38,080,470	)
Non-operating income/(expense):
Gains on foreign currency transactions		(699,237	)		(661,682	)
Other income		24,447			472,741
Interest expense		(1,236,673	)		(250,662	)
Loss before income taxes		(11,570,074	)		(38,520,073	)
Income tax expense		-			-
Net Loss		(11,570,074	)		(38,520,073	)

23

Revenues

Cryptocurrency mining revenues from production for the three months ended March 31, 2022 and 2021 were $18.78 million and $5.12 million respectively. This represented an increase of $13.66 million or 267% over the period. The increase in mining revenue for the period was primarily attributable to an increase in the total Bitcoin produced. Bitcoin produced totaled 458.68 in 2022 compared with 123.22 in the 2021 period, or an increase of 272% of Bitcoin produced over the respective period.

Hosting co-location revenue for the three months ended March 31, 2022 and 2021 were $0.55 million and $nil respectively. This increase is due to there being no co-location revenue in the prior period.

Sales of crypto currency mining equipment for the three months ended March 31, 2022, were $0.09 million and $1.88 million respectively.

Operating Cost and Expenses

Our operating costs and expenses include cost of revenues; selling, general and administrative expenses; share based payments; and depreciation and amortization.

Cost of revenues.

Our cost of revenue consists primarily of: direct power costs related to cryptocurrency mining, and cost of mining equipment sold.

Cost of revenues for the three months ended March 31, 2022 and 2021 were $8.41 million and $2.37 million, respectively. The increase in cost of revenue was primarily attributable to: an increase in power costs related to the increase in the deployment and operation of cryptocurrency mining hardware. Included in our cost of revenues is any costs associated with offsetting carbon emissions. 

Selling, general and administrative. 

Our selling, general and administrative expenses consist primarily of professional and management fees relating to: accounting, payroll, audit, and legal; research and development; and general office expenses.

Selling, general and administrative expenses for the three months ended March 31, 2022 and 2021 were $6.48 million and $2.88 million respectively. The increase in selling, general and administrative expenses were attributable to a number of factors; payroll expenses increased by $1.63 million due to an increase in employee numbers during the year; equipment repair costs increased by $0.68 million; marketing costs increased by $0.40 million; operating lease expense increased by $0.37 million due to the new lease agreements entered into since March 2021; freight expense increased by $0.3 million representing the increase in property and equipment purchases during the year. The remaining increase in expenses relates to the increase in the scale of business operations during the year.

Share based payments.

Share based payments expenses for the three months ended March 31, 2022 and 2021 were $0.39 million and $14.80 respectively. In the three months ended March 31, 2022, share based payments were largely attributable to costs recognized for warrants issued to Celsius Mining LLC amounting to $0.17 million and $0.17 million in relation to long-term incentives for the Company’s leadership team.

Depreciation and amortization.

Depreciation consists primarily of depreciation of cryptocurrency mining hardware and MDC equipment.

Depreciation and amortization for the three months ended March 31, 2022 and 2021 were $13.80 million and $1.31 million, respectively. The increase is primarily attributable to new machines and MDCs which are being procured and have come into the ownership of the Company and the application of the diminishing value method, resulting in a higher depreciation expense in the initial months of mining equipment operation.

24

Non-operating expense

Non-operating expenses consist primarily of interest expense and net realized and unrealized losses on foreign currency remeasurement.

During 2022, the realized and unrealized losses on foreign currency transactions were $0.70 million and in prior period there was a loss of $0.61.

Interest expense increased by $0.99 million attributable to the interest costs charged on the loans taken out with Foundry Digital LLC, Marshall Investments MIG Pty Ltd during the year and Celsius Mining LLC.

Net loss available to Common Shareholders

As a result of the foregoing, the Company recognized a net loss of $11.34 million for the three months ended March 31, 2022, compared to a net loss of $38.56 million for the three months ended March 31, 2021.

Non-GAAP Financial Measures

The Company utilizes a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing its overall business performance, for making operating decisions and for forecasting and planning future periods. The Company considers the use of non-GAAP financial measures helpful in assessing its current financial performance, ongoing operations and prospects for the future. While the Company uses non-GAAP financial measures as a tool to enhance its understanding of certain aspects of its financial performance, the Company does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. Consistent with this approach, the Company believes that disclosing non-GAAP financial measures to the readers of its financial information provides such readers with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of its financial and operational performance. Investors are cautioned that there are inherent limitations associated with the use non-GAAP financial measures as an analytical tool. In particular, non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and many of the adjustments to the GAAP financial measures reflect the exclusion of items that are recurring and will be reflected in the company’s financial results for the foreseeable future. In addition, other companies, including other companies in the Company’s industry, may calculate non-GAAP financial measures differently than the Company does, limiting their usefulness as a comparative tool.

The Company is providing supplemental financial measures for (i) non-GAAP adjusted earnings before interest, taxes, depreciation and amortization, or (“adjusted EBITDA”) that excludes the impact of interest, taxes, depreciation, amortization, share-based compensation expense, LO2A write-back, unrealized gains/losses on share of associates, and certain non-recurring expenses. We believe that adjusted EBITDA is useful to investors in comparing our performance across reporting periods on a consistent basis.

25

	For the three months Ended  March 31,
	2022			2021
Reconciliation of non-GAAP adjusted EBITDA:
Net loss:		(11,570,074	)		(38,520,073	)
Share of net loss of associates accounted for using the equity method		-			-
Depreciation and amortization		13,803,032			1,314,899
Share based payments		390,609			14,795,403
Unrealized and realized losses/(gain)		699,237			661,682
Other non-operating revenue		(24,447	)		(472,741	)
Other non-operating expenses		1,236,673			-
Tax		-			-
LO2A write-back		-			23,963,050
EBITDA (non-GAAP)		4,535,030			1,742,220

Liquidity and Capital Resources

General

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. For the three month period ended March 31, 2022, we financed our operations primarily through:

1.	Net cash provided by operating activities of $5.86 million;
2.	On January 27, 2021, Cosmos Infrastructure LLC (“Cosmos Infrastructure”) entered into an Equipment Purchase and Finance and Security Agreement with Foundry Digital LLC (“Foundry”) to purchase machinery that will be located at a facility hosted by Compute North LLC (“Compute North”). On February 5, 2021, the term of the agreement was further amended to have a final payment due January 27, 2022. Under the terms of the agreement, Cosmos Infrastructure purchased 500 Whatsminer M30S mining machines, paid a deposit of $264,000, and borrowed a total of $1,056,000. The Company paid in full this original loan balance in January 2022;
3.	On October 15, 2021, an expansion of the Equipment Finance and Security Agreement was entered into with Foundry to purchase an additional 2000 Whatsminers M30’s delivered in October 2021, $13,185,062 was borrowed, $7,801,933 is owed at March 31, 2022;
4.	On December 9, 2021, entering into a Secured Loan Facility Agreement with Marshall Investments MIG Pty Ltd (“Marshall”) on December 9, 2021 with a total loan facility of AUD$20 million comprising of three tranches: Tranche 1- AUD$10.5 million (received in December 2021) Tranche 2- AUD$4.8 million (received in January 2022) Tranche 3- AUD$4.8 million (received in February 2022); and
5.	On February 23, 2022, Luna Squares LLC entered into the Co-Location Agreement with Celsius Mining LLC, in connection with this agreement, Celsius Mining loaned Luna Squares LLC a principal amount of US$20,000,000, for the purpose of funding the infrastructure required to meet the obligations of the Co-Location Agreement, for which Luna Squares issued a Secured Promissory Note in the principal amount equal to the Principal. The Promissory Note accrues interest daily at rate of 12% per annum. Luna Squares LLC is required to amortize the loan at a rate of 15% per quarter, with principal repayments starting in the third quarter following the closing. The Promissory Note has a maturity date of August 23, 2023.

26

During the quarter we repaid $3.2 million of payments against the historical facilities provided by Foundry.

We believe our working capital requirements will continue to be funded through a combination of the cash we expect to generate from future operations, our existing funds, external debt facilities available to us and further issuances of shares. These are expected to be adequate to fund our operations over the next twelve months. For our business to grow it is expected we will continue investing in mining equipment, we are likely to require additional capital in either the short-term or long-term.

On August 9, 2021, Infrastructure entered into a second Long-Term Purchase Contract with Canaan for the purchase of 15,000 next generation Avalon A1246 ASIC Miners. The purchase price per unit is $4,908 for a total purchase price of $73,620,000. As at March 31, 2022 the Company had paid $54,180,000 in relation to this contract with the remaining balance owed at the end of the quarter.

Working Capital and Cash Flows

As of March 31, 2022, and December 31, 2021, we had cash and cash equivalents balance of $5.80 million and $5.47 million in cash and cash equivalents, respectively.

As of March 31, 2022, and December 31, 2021, the trade receivables balance was $5.04 million and $5.61 million respectively.

As of March 31, 2022, we had $16.04 million of outstanding short-term loans, and as of December 31, 2021, we had $11.10 million of short-term borrowings. The short-term borrowings as of March 31, 2022, relate to the acquisition of cryptocurrency mining equipment, under the Foundry agreements and to the secured Loan Facility Celsius Mining LLC and Marshall Investments MIG Pty Ltd. As of March 31, 2022, and as of December 31, 2021, we had $26.94 million and $7.64 million respectively of outstanding long-term borrowings. The long-term borrowings as of March 31, 2022, primarily relate to the secured Loan Facility Celsius Mining LLC and Marshall Investments MIG Pty Ltd.

As of March 31, 2022, we had negative working capital of $18.65 million and as at December 31, 2021, we had negative working capital of $8.63 million. The increase in working capital was primarily attributable to an increase in the Company’s short term and long-term borrowings during 2022, as compared to 2021.

The following table presents the major components of net cash flows (used in) provided by operating, investing and financing activities for the three month ending March 31, 2022 and 2021:

	Three Months Ended March 31,
	2022			2021
Net cash provided by operating activities	$	5,865,759		$	1,871,692
Net cash used in investing activities	$	(29,661,210	)	$	(21,385,965	)
Net cash provided by financing activities	$	23,484,932		$	21,285,694

For the three months ended March 31, 2022, net cash provided by operating activities was $5,865,759 and for the three months ended March 31, 2021, net cash provided by operating activities was $1,871,692. The increase in net cash provided by operating activities was primarily attributable to timing differences in trade and other receivables and trade and other payables.

27

For the three months ended March 31, 2022 and 2021, net cash used in investing activities was $29,661,210 and $21,385,965, respectively. The increase in net cash used in investing activities was primarily attributable to the increase in the acquisition of cryptocurrency mining equipment.

For the three months ended March 31, 2022 and 2021, net cash provided by financing activities was $23,484,932 and $21,285,694, respectively. The cash provided by financing activities during March 31, 2022 was primarily attributable to proceeds from borrowings.

Critical accounting estimates and estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of income and expenses during the reporting periods. Actual results could differ from those estimates. The Company has considered the following to be significant estimates made by management, including but not limited to:

Going concern assumption- Management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

Long-lived assets- Management reviews long-lived assets for impairment whenever events or changes in circumstances have occurred that may affect the recoverability or the estimated useful lives of long-lived assets. Long-lived assets include property and equipment and operating lease right-of-use assets. A long-lived asset may be impaired when the estimated future undiscounted cash flows are less than the carrying amount of the asset. If that comparison indicates that the asset’s carrying value may not be recoverable, the impairment is measured based on the difference between the carrying amount and the estimated fair value of the asset.

Stock based compensation- Management used Black-Scholes to evaluate our awards and will continue to use judgment in evaluating the assumptions related to our stock-based compensation on a prospective basis.

Item 3. Quantitative and Qualitative Disclosures about Market Risks

As a smaller reporting company, the Company has elected not to provide the disclosure required by this item.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

Our management, with the participation of our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a- 15(e)) and 15d- 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Annual Report. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of March 31, 2022, due to the material weaknesses in our internal control over financial reporting described below. Management’s assessment of the effectiveness of our disclosure controls and procedures is expressed at a level of reasonable assurance because management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. 

28

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Significant Reliance on Key Individuals. There is inadequate segregation of duties in place related to our financial reporting and other management review and oversight procedures due to the lack of sufficient accounting personnel. This is not inconsistent with similar small fast-growing organizations. This gives rise to the risk of lack of ability to react in a timely manner to operations issues and meet increased US GAAP/PCAOB/SOX/SEC registrant requirements. In addition, this poses the risk that compliance and other reporting obligations are not adequately dealt with.

Controls over the financial statement close and reporting process. Controls were not adequately designed in the financial statement close and reporting process. This includes controls related to complex and judgmental accounting transactions, account reconciliations and financial statement disclosures.

Information and Technology Controls. There are control deficiencies related to information technology (“IT”) general controls that aggregate into a material weakness. The inadequate design of these IT general and application controls prevent the system from providing complete and accurate information consistent with financial reporting objectives. Deficiencies identified include lack of controls over access to programs and data, program changes, program development, program changes and general IT controls.

Data from third parties. The Company did not properly design or implement controls to ensure that data received from third parties is complete and accurate. Such data is relied on by the Company in determining amounts pertaining to revenue and cryptocurrency assets is complete and accurate.

Notwithstanding the identified material weaknesses and management’s assessment that our internal control over financial reporting was not effective as of March 31, 2022, management believes that the consolidated financial statements included in this quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in accordance with generally accepted accounting principles. We rely on the assistance of outside advisors with expertise in these matters in preparing the financial statements. 

Remediation

Our Board of Directors and management take internal control over financial reporting and the integrity of our financial statements seriously. Our management continues to work to improve its controls related to our material weaknesses. Since March 9, 2021, with the oversight of senior management and our audit committee, we have begun taking steps and plan to take additional measures to remediate the underlying causes of the identified material weaknesses, primarily through the performance of a risk assessment process; the development and implementation of formal, documented policies and procedures, improved processes and control activities (including an assessment of the segregation of duties); as well as the hiring of additional finance personnel for specific roles such as financial reporting. During the fourth quarter of 2021, we made the following changes to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting:

● We have developed entity level and process level controls with respect to the preparation and review of our consolidated financial statements as well as transactional level controls over all business processes and IT controls. We have developed process level controls relating to the review of manually prepared analyses and supporting information used to prepare our consolidated financial statements. We are in the process of implementing and validating these controls. At this time, we cannot state whether these controls will prove to be effective.

However, the material weaknesses in our internal control over financial reporting will not be considered remediated until other information technology general controls and process-level controls operate for a sufficient period of time and can be tested and concluded by management to be designed and operating effectively. We cannot provide any assurance that these remediation efforts will be successful or that our internal control over financial reporting will be effective as a result of these efforts. In addition, we continue to evaluate and work to improve our internal control over financial reporting related to the identified material weaknesses, management may determine to take additional measures to address control deficiencies or determine to modify the remediation plan described above.

Changes in internal control over financial reporting

Except for the remedial measures described above, there have been no other changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

29

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are currently not, and have not been in the recent past, a party to any legal proceedings which may have or have had in the recent past significant effects on our financial position or profitability. However, we have been in the past, and may be from time to time in the future, named as a defendant in certain routine litigation incidental to our business.

Item 1A. Risk Factors

There are no material changes to the Company’s risk factors disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three month period ended March 31, 2022, in addition to those sales previously disclosed in our filings with the SEC, we have issued and sold the following securities without registration under the Securities Act: 

During January of 2022, we issued 5,000 shares of our common stock with a fair market value of $57,500 to TraDigital Marketing Group LLC for consultancy services provided to us.

During February of 2022, we issued 8,787 shares of our common stock with a fair market value of $50,000 to Kyle Hoffman as part of the contingent consideration for the Membership Interest Purchase Agreement we entered with him to acquire his membership interests in Luna Squares LLC.

On February 23, 2022, we issued to Celsius Mining, warrants to purchase up to 3,850,000 shares of our common stock, at an exercise price of US$6.50 per share, in connection with the $20 million loan made by Celsius to Luna Squares LLC in connection with a Customer Equipment and Co-Location Agreement entered into by Celsius and Luna Squares LLC.

We believe that all of the foregoing sales qualified for exemption under Section 4(a)(2) of the Securities Act and/or Regulation D, as promulgated under the Securities Act, since the issuance of the securities by us did not involve a public offering. The offerings were not “public offerings” as defined in Section 4(a)(2) due to the type of investors, the insubstantial number of investors involved in the offering, the size of the offering, the manner of the offering and number of securities offered. In addition, these security holders represented as to the necessary investment intent as required by Section 4(a)(2) and/or Regulation D. We did not employ an underwriter in connection with the issuance of the securities described above.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None

30

Item 6. Exhibits

2.1	Bid Implementation Agreement between Wize Pharma, Inc. and Cosmos Capital Limited, dated December 30, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 5, 2021)
2.2	Deed of Amendment, dated January 18, 2021, of the Bid Implementation Agreement between Wize Pharma, Inc. and Cosmos Capital Limited, dated December 30, 2020 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on January 19, 2021)
2.3	Membership Interest Purchase Agreement dated July 5, 2021 between Mawson Infrastructure Group Inc. and Kyle Hoffman (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on July 9, 2021)
3.1	Certificate of Incorporation (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on April 5, 2012)
3.2	Certificate of Amendment to Certificate of Incorporation (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on July 18, 2013)
3.3	Certificate of Amendment to Certificate of Incorporation dated November 15, 2017 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on November 21, 2017)
3.4	Certificate of Amendment to Certificate of Incorporation dated March 1, 2018 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on March 5, 2018)
3.5	Certificate of Amendment to Certificate of Incorporation dated March 17, 2021 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on March 23, 2021)
3.6	Certificate of Amendment to Certificate of Incorporation dated June 9, 2021 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on June 14, 2021)
3.7	Certificate of Amendment to Certificate of Incorporation dated August 11, 2021 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on August 16, 2021)
3.8	Certificate of Registration of a Company of Cosmos Capital Limited ACN 636 458 912 (Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No. 333-256947) filed with the SEC on June 9, 2021)
3.9	Constitution of Cosmos Capital Limited (Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No. 333-256947) filed with the SEC on June 9, 2021)
3.10	Bylaws (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on May 10, 2013)
4.1	Warrant Agreement between the Company and Celsius Mining LLC dated February 23, 2022 (Incorporated by reference to the Company’s Current Report on Form 8-K filed March 1, 2022)
31.1*	Certification of Principal Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
32**	Certifications of Principal Executive Officer and Principal Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
99.1*	Press Release
99.2*	Investor Presentation
101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021, (ii) Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021, (iii) Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021, and (iv) Notes to Consolidated Financial Statements
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

** Furnished herewith.

31

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Mawson Infrastructure Group Inc.
Date: May 16, 2022	By:	/s/ James Manning
		James Manning, Chief Executive Officer
		(Principal Executive Officer)
Date: May 16, 2022	By:	/s/ Hetal Majithia
		Hetal Majithia, Chief Financial Officer
		(Principal Financial and Accounting Officer)

32

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, James Manning, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Mawson Infrastructure Group Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the unaudited condensed consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	MAWSON INFRASTRUCTURE GROUP INC.
Date: May 16, 2022	By:	/s/ James Manning
		James Manning
		Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Hetal Majithia, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Mawson Infrastructure Group Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the unaudited condensed consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	MAWSON INFRASTRUCTURE GROUP INC.
Date: May 16, 2022	By:	/s/ Hetal Majithia
		Hetal Majithia
		Chief Financial Officer
		(Principal Financial Officer)

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Mawson Infrastructure Group Inc. (the “Company”) for the period ended March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, James Manning, Chief Executive Officer of the Company, and Hetal Majithia, Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	MAWSON INFRASTRUCTURE GROUP INC.
Date: May 16, 2022	By:	/s/ James Manning
		James Manning
		Chief Executive Officer
		(Principal Executive Officer)
	MAWSON INFRASTRUCTURE GROUP INC.
Date: May 16, 2022	By:	/s/ Hetal Majithia
		Hetal Majithia
		Chief Financial
		(Principal Financial Officer)

EX-99.1

Exhibit 99.1

 

Mawson Infrastructure Group Announces Financial Results for First Quarter 2022

Q1 2022 revenue of $19.4 Million, up 178% vs Q1 2021

Q1 2022 gross profit of $11.0 Million, up 138% v Q1 2021

Q1 2022 non-GAAP EBITDA of $4.5 Million, up 160% v Q1 2021

459 Self-mined Bitcoin produced in Q1 2022, up 272% v Q1 2021

Mawson Self-Mining Exahash targets upgraded in March to 4.0 Exahash online by Q3, 2022, and 5.5 Exahash online by early Q1, 2023

Mawson signed 112-megawatts of hosting co-location customers (Celsius Mining LLC & Foundry Digital LLC) in Q1 2022

Sydney, Australia and New York City, USA — May 16th, 2022 — Mawson Infrastructure Group Inc. (NASDAQ:MIGI) (“Mawson”), a digital infrastructure provider, is pleased to announce business highlights and financial results for the first quarter of 2022.

Q1 2022 Financial and Business Highlights

● Q1 2022 revenue of $19.4 Million, up 178% vs Q1 2021

● Q1 2022 gross profit of $11.0 Million, up 138% v Q1 2021

● Q1 2022 non-GAAP EBITDA of $4.5 Million, up 160% v Q1 2021

● 459 Self-mined Bitcoin produced in Q1 2022, up 272% v Q1 2021

● Mawson Self-Mining Exahash targets upgraded in March to 4.0 Exahash online by Q3, 2022, and 5.5 Exahash online by early Q1, 2023

● New 100-megawatt hosting co-location customer Celsius Mining LLC signed and first mining hardware online

● New 12-megawatt hosting co-location customer Foundry Digital LLC signed and first mining hardware online

● 230-megawatt expansion at Georgia, USA facility approved, capable of accommodating up to 7.5 Exahash

● Mawson’s substantial secured infrastructure pipeline (energy capacity available for Bitcoin Mining, Modular Data Centre’s, transformers, switch gear) continues to be deployed at pace, a significant competitive advantage in the current climate

Subsequent to Quarter End

● New 120 megawatt Bitcoin Mining facility to be developed in Texas, capable of accommodating up to 4.0 Exahash, with mining hardware expected to be online in Q4, 2022

2022 Strategic Focus

● Expand existing Bitcoin self-mining operations from the expected end of May hash rate of 1.8 Exahash, to our target of 4.0 Exahash by Q3, 2022 and to our target of 5.5 Exahash by early Q1 2023.

● Expand Mawson’s hosting co-location business from the expected 52 megawatts online by the end of May, to 116 megawatts now contracted, and beyond.

● Continue the ongoing expansion of the company’s Georgia, Pennsylvania, Texas and Australian Bitcoin Mining facilities.

● Continue to assess, and where appropriate, add more Bitcoin mining facilities to the global portfolio.

● Continue to assess, and where appropriate, add more Bitcoin miners to global operations.

● Evaluate opportunities to decrease the overall costs of Bitcoin production.

● Continue with our strong ESG focus across our business.

 

Aerial views of Sandersville, Georgia facility – 80-megawatts / 38 Modular Data Centers (April 2022)

2

 

Aerial view of Midland, Pennsylvania facility expansion (May 2022)

 

View of Modular Data Centre (MDC) fabrication facility (April 2022)

3

Hash Rate Growth (EH) – to 5.5 Exahash early Q1 2023

 

  MIGI Actual Hash Rate (EH)   MIGI Target Hash Rate (EH)

James Manning, CEO and Founder of Mawson Infrastructure, said, "Q1 2021 was a solid operational quarter for our business. We significantly increased our Bitcoin self-mining operational footprint, producing 459 Bitcoin in Q1, delivered Q1 revenue of $19.4 million, up 178% vs Q1 2021, delivered Q1 gross profit of $11.0 million, up 138% vs Q1 2021, and posted Q1 non-GAAP EBITDA of $4.5 million, up 160% vs Q1 2021. Our hosting co-location business accelerated in Q1 - we signed new 100-megawatt hosting co-location customer Celsius Mining LLC, as well as new 12-megawatt hosting co-location customer Foundry Digital LLC. In very exciting news, we gained approval to expand our Georgia Bitcoin Mining facility to 230-megawatts, which is capable of accommodating up to 7.5 Exahash. The pipeline of strong demand for our hosting co-location business – which adds an additional revenue stream for the group – continues to expand, and we look forward to updating stockholders on this front in due course.”

###

4

About Mawson Infrastructure

Mawson Infrastructure Group (NASDAQ: MIGI) is a digital infrastructure provider, with multiple operations throughout the USA and Australia. Mawson’s vertically integrated model is based on a long-term strategy to promote the global transition to the new digital economy. Mawson matches sustainable energy infrastructure with next-generation mobile data centre (MDC) solutions, enabling low-cost Bitcoin production and on-demand deployment of infrastructure assets. With a strong focus on shareholder returns and an aligned board and management, Mawson Infrastructure Group is emerging as a global leader in ESG focused Bitcoin mining and digital infrastructure.

For more information, visit: www.mawsoninc.com

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Mawson cautions that statements in this press release that are not a description of historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words referencing future events or circumstances such as “expect,” “intend,” “plan,” “anticipate,” “believe,” and “will,” among others. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements are based upon Mawson’s current expectations and involve assumptions that may never materialize or may prove to be incorrect. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of various risks and uncertainties, which include, without limitation, the possibility that Mawson’s need and ability to raise additional capital, the development and acceptance of digital asset networks and digital assets and their protocols and software, the reduction in incentives to mine digital assets over time, the costs associated with digital asset mining, the volatility in the value and prices of cryptocurrencies and further or new regulation of digital assets. More detailed information about the risks and uncertainties affecting Mawson is contained under the heading “Risk Factors” included in Mawson’s Annual Report on Form 10-K filed with the SEC on March 21, 2022 and Mawson’s Quarterly Report on Form 10-Q filed with the SEC on May 16, 2022, and in other filings Mawson has made and may make with the SEC in the future. One should not place undue reliance on these forward-looking statements, which speak only as of the date on which they were made. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Mawson undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made, except as may be required by law.

Investor Contact:
Brett Maas
646-536-7331
brett@haydenir.com
www.haydenir.com

5

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS

	March 31, 2022			December 31, 2021
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	5,804,858		$	5,467,273
Prepaid expenses		1,969,969			332,154
Trade and other receivables		5,044,154			5,606,780
Cryptocurrencies		-			40,800
Total current assets		12,818,981			11,447,007
Property and equipment, net		102,532,708			76,936,850
Equipment deposits		41,722,172			51,369,216
Marketable securities		336,897			326,801
Security deposits		3,836,426			1,246,236
Operating lease right-of-use asset		4,722,973			3,968,262
Total assets	$	165,970,157		$	145,294,372
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade and other payables	$	13,995,302		$	7,746,988
Current portion of operating lease liability		1,410,192			1,222,382
Current portion of finance lease liability		28,962			8,105
Borrowings		16,036,514			11,095,388
Total current liabilities		31,470,970			20,072,863
Operating lease liability, net of current portion		3,520,623			2,962,765
Finance lease liability, net of current portion		106,159			38,764
Long-term borrowings		26,943,283			7,639,391
Total liabilities		62,041,035			30,713,783
Commitments and Contingencies (note 9)		-			-
Shareholders’ equity:
Additional paid-in capital; Common stock (120,000,000 authorized, 71,585,295 issued and outstanding $0.001 par value shares). Series A preferred stock (1,000,000 authorized shares; nil issued and outstanding as at March 31, 2022)		186,724,867			186,389,568
Share subscription receivable		-			-
Accumulated other comprehensive income (loss)		62,214			(521,094	)
Accumulated deficit		(82,458,914	)		(71,123,259	)
Total stockholders’ equity		104,328,167			114,745,215
Non-controlling interest		(399,045	)		(164,626	)
Total liabilities and stockholders’ equity	$	165,970,157		$	145,294,372

6

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	For the three months ended March 31,
	2022			2021
Revenues:
Cryptocurrency mining revenue		18,783,842			5,120,014
Hosting Co-Location revenue		548,948			-
Sale of crypto currency mining equipment		91,545			1,877,613
Total revenues		19,424,335			6,997,627
Less: Cost of revenues (excluding depreciation)		8,412,360			2,372,781
Gross profit		11,011,975			4,624,846
Selling, general and administrative		6,476,945			2,631,964
LO2A write off		-			23,963,050
Share based payments		390,609			14,795,403
Depreciation and amortization		13,803,032			1,314,899
Total operating expenses		20,670,586			42,705,316
Loss from operations		(9,658,611	)		(38,080,470	)
Non-operating income/(expense):
Gains on foreign currency transactions		(699,237	)		(661,682	)
Other income		24,447			472,741
Interest expense		(1,236,673	)		(250,662	)
Loss before income taxes		(11,570,074	)		(38,520,073	)
Income tax expense		-			-
Net Loss		(11,570,074	)		(38,520,073	)
Less: Net (loss)/profit attributable to non-controlling interests		(234,419	)		43,135
Net Loss attributed to Mawson Infrastructure Group shareholders		(11,335,655	)		(38,563,208	)
Net Loss per share, basic & diluted	$	(0.16	)	$	(0.87	)
Weighted average number of shares outstanding		71,129,676			44,266,478

7

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the three months ended March 31,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(11,570,074	)	$	(38,520,073	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		13,804,492			1,314,899
LO2A write offs		-			23,963,050
Operating lease expense		367,135			-
Foreign exchange gain		-			1,690,303
Share based payments		390,609			14,795,403
Gain on disposal of fixed assets		-			127,608
Interest expense		249,861			222,463
Investment income		-			(563,771	)
Trade and other receivables		562,626			(656,732	)
Other current assets		(4,187,204	)		(796,044	)
Trade and other payables		6,248,314			294,586
Net cash provided by operating activities		5,865,759			1,871,692
CASH FLOWS FROM INVESTING ACTIVITIES
Net payment for the purchase of property and equipment		(6,030,740	)		(2,960,145	)
Investment in financial assets		-			(380,100	)
Payment of fixed asset deposits		(23,630,470	)		(18,045,720	)
Net cash used in investing activities		(29,661,210	)		(21,385,965	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common share issuances		50,628			1,298,402
Proceeds from convertible notes		-			21,487,391
Payments of capital issuance costs		-			(2,229,096	)
Proceeds from borrowings		27,055,524			1,057,383
Advances made to external companies		-			(37,076	)
Repayment of lease liabilities		(379,026	)		-
Payments of borrowings		(3,242,194	)		(291,310	)
Net cash provided by financing activities		23,484,932			21,285,694
Effect of exchange rate changes on cash and cash equivalents		648,104			501,045
Net increase in cash and cash equivalents		337,585			2,272,466
Cash and cash equivalents at beginning of period		5,467,273			1,112,811
Cash and cash equivalents at end of period	$	5,804,858		$	3,385,277

8

EX-99.2

Exhibit 99.2

Q1 2022 Investor Presentation T H E D I G I T A L A S S E T C O M P A N Y Q1 FY2022 Investor Presentation N A S D A Q : M I G I May 2022

Q1 2022 Investor Presentation 2 LEGAL DISCLAIMER Information contained herein is derived from various internal and external sources which are deemed reliable, but no representations or warranties are made by Company, or any of its affiliates, employees or representatives as to the accuracy or completeness of such information. The Company has not independently verified any of the information set forth in this Presentation. No representation is made as to the reasonableness of the assumptions within or the accuracy or completeness of any projections or modelling or any other information contained herein. Any data on past performance or modelling contained herein is not an indication as to future performance. The Company assumes no obligation to update the information in this Presentation. The information contained in this Presentation does not purport to contain all of the information that a prospective investor may desire. In all cases, interested parties should conduct their own investigation and analysis of Company and the information contained herein. Except as otherwise expressly indicated, this Presentation speaks as of the date hereof. The Company, does not undertake to update the information contained herein, correct any inaccuracies that may become apparent or provide the recipient with access to any additional evaluation material. The delivery of this Presentation does not imply that there has been no change in Company’s affairs after the date hereof. This Presentation is not a prospectus, disclosure document or offering document, and does not constitute an offer or invitation to apply for securities under any. In particular, this Presentation shall not form the basis of or be relied on in connection with any contract or commitment whatsoever. FORWARD LOOKING STATEMENTS/USE OF PROJECTIONS Statements made in this presentation include forward - looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward - looking statements can be identified by the use of words as “may,” “will,” “plan,” “should,” “expect,” “anticipate,” “estimate,” “continue,” target,” or comparable terminology. All financial forecasts are forward - looking statements, are for illustrative purposes only and should not be relied upon as being necessarily indicative of future results. All forward - looking statements are inherently subject to certain risks, trends and uncertainties, many of which the Company cannot predict with accuracy and some of which the Company might not even anticipate and involve factors that may cause actual results to differ materially from those projected or suggested. Readers are cautioned not to place undue reliance on these forward - looking statements and are advised to consider the factors listed above together with the additional factors under the heading “Risk Factors” in the Company's Annual Report on Form 10 - K filed with the SEC on March 21 2022, as may be supplemented or amended by future filings of the Company. The Company assumes no obligation to update or supplement forward - looking statements that become untrue because of subsequent events, new information or otherwise. More specifically, it is impossible to forecast what the price of bitcoin or the hash rate difficulty will be on any specific date, or when all the Company's miners are expected to be deployed. This presentation is for illustrative purposes only to provide the reader with an estimate of the Company's potential gross revenue, mining power and hosting costs, which might be attained if all miners were deployed as of a specific date and with certain parameters used, as set forth below. The parameters used were hash rates of 1.8 EH, 4.00 EH and 5.50 EH, Bitcoin price assumption of $40,000 and blended historical average power costs. NO OFFER OR SOLICITATION This presentation shall not constitute a solicitation of a proxy, consent or authorization with respect to any securities. This presentation shall also not constitute an offer to sell or the solicitation of an offer to buy any securities. No offer, sale or solicitation of any securities shall be made in any jurisdiction in which such offer, sale or solicitation would be prohibited. NEITHER THE SECURITIES AND EXCHANGE COMMISSION (“SEC”) NOR ANY STATE HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR DETERMINED IF THIS PRESENTATION IS TRUTHFUL OR COMPLETE. INVESTOR NOTICES Investing in our securities involves a high degree of risk. Before making an investment decision, you should carefully consider the risks, uncertainties and forward - looking statements described under “Risk Factors” in our most recent SEC filings including our Annual Report on Form 10 - K filed with the SEC on March 21 2022. If any of these risks were to occur, our business, financial condition or results of operations would likely suffer. In that event, the value of our securities could decline, and you could lose part or all of your investment. The risks and uncertainties we describe are not the only ones facing us. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. In addition, our past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results in the future. Lastly, with the current worldwide situation caused by COVID - 19, there can be no assurances as to when we may see any long - term sustained recovery in the bitcoin market, and if so, whether any recovery might be significant. NON - GAAP FINANCIAL MEASURES T he Company utilizes a number of different financial measures, both GAAP and non - GAAP, in analyzing and assessing its overall business performance, for making operating decisions and for forecasting and planning future periods. The Company considers the use of non - GAAP financial measures helpful in assessing its current financial performance, ongoing operations and prospects for the future. While the Company uses non - GAAP financial measures as a tool to enhance its understanding of certain aspects of its financial performance, the Company does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. Consistent with this approach, the Company believes that disclosing non - GAAP financial measures to the readers of its financial information provides such readers with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of its financial and operational performance. Investors are cautioned that there are inherent limitations associated with the use non - GAAP financial measures as an analytical tool. In particular, non - GAAP financial measures are not based on a comprehensive set of accounting rules or principles and many of the adjustments to the GAAP financial measures reflect the exclusion of items that are recurring and will be reflected in the Company’s financial results for the foreseeable future. In addition, other companies, including other companies in the Company’s industry, may calculate non - GAAP financial measures differently than the Company does, limiting their usefulness as a comparative tool.

Q1 2022 Investor Presentation 3 TARGET SELF - MINING HASH RATE 4.00 EH Expected online Q3 2022 ~ 18 BTC produced per day 1 Focused on Bitcoin Self - Mining and Hosting Co - location services, Mawson’s integrated model is based on a long term strategy to assist in the global transition to a digital and decarbonised society. 5 SITES 4 USA + 1 AUS 1. Assumes all equipment deployed and 100% online, plus the construction of all contracted sites on time, actual results are likely to vary in a negative manner. Construction delays are common and it is rare for all equipment to be deployed and 100% online, however accurate historical downtime averages are difficult to calculate and also may not provide an accurate picture due to differences moving forward. Investors should consider all risk factors related to uptime when considering these figures, which are a best case scenario. Annualised revenue is based on BTC USD$40k and difficulty as at 10 May 2022. Please see Coinwarz Bitcoin Mining Calculator at https://www.coinwarz.com/mining/bitcoin/calculator . The above information is for general information purposes only, and are forward looking statements which should not be relied upon as being necessarily indicative of future results. Mawson takes no responsibility for the accuracy of third party information, including websites. Online calculator excludes overheads and fees (except pool fees). The above information should be read in conjunction with the disclaimer on page. Please see our Risk Factors in our Annual Report on Form 10 - K filed March 21, 2022, under the Sub - Heading Risks Relating to Our Business and Management for important risks related to our Self - Mining. 2. Approximately 116 megawatts (MW) is currently allocated to Mawson’s Hosting Co - location customers, see slide 7 for further details. Contracted energy capacity delivery is not guaranteed and is subject to decreases in various circumstances such as times of high energy use. 3. 2020 carbon offset with carbon credits, 2021 carbon footprint assessment and offset underway. Bitcoin mining & hosting 3 Net Zero Carbon TARGET SELF - MINING HASH RATE 5.50 EH Expected online early Q1 2023 ~ 24.5 BTC produced per day 1 ONLINE SELF - MINING HASH RATE 1.8 EH Expected as at end May 2022 ~ 8 BTC produced per day 1 47 0 M W 2 Energy infrastructure capacity available for Bitcoin Mining across all Bitcoin mining facilities Mawson at a glance

Q1 2022 Investor Presentation 4 Financial Highlights Operational Highlights Strategic Highlights Headline Results Q1 FY2022 5.5 EH Upgrade to Self - Mining Exahash Target by early Q1, 2023 $20 M Debt facility secured with Celsius Network LLC 120 MW New Bitcoin Mining Facility Signed in Texas, USA (subsequent to quarter end) Δ (Q1 FY2021) Revenue $19.4 M +178% Gross Profit $11.0 M +138% EBITDA (Non - GAAP) $4.5 M +160% Bitcoin produced from Self - Mining 459 +272% 80 - Megawatt Sandersville, GA facility expansion approved to 230MW 230 MW (~7.5EH) 100MW Hosting Co - location Agreement signed with Celsius Mining LLC 100 MW 12MW Hosting Co - location Agreement signed with Foundry Digital LLC 12 MW

Q1 2022 Investor Presentation 5 Q1 - 22 ($M) Q4 - 21 ($M) Δ ($M) ASSETS Cash and cash equivalents $5.8 $5.5 $0.3 Property and equipment, net $102.5 $76.9 $25.6 Equipment deposits $41.7 $51.4 ($9.7) Other Assets $16.0 $11.5 $4.5 Total Assets $166.0 $145.3 $20.7 Trade and other payables $14.0 $7.7 $6.3 Borrowings $43.0 $18.7 $24.3 Other Liabilities $5.1 $4.3 $0.8 Total Liabilities $62.1 $30.7 $31.4 Net Assets $103.9 $114.6 ($10.7) March 31, 2022 Balance Sheet 1 Q1 FY2022 Summary 1. Balance sheet presented in a non - GAAP basis. Please see slide 18 for reconciliation to statutory GAAP accounts per 10K. 4.6 5.6 8.4 15.8 11.0 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Gross Profit ($M) 1.7 1.6 2.9 10.0 4.5 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Non - GAAP EBITDA 7.0 5.9 10.9 19.5 19.4 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Revenues ($M)

Q1 2022 Investor Presentation 6 1. Assumes all equipment deployed and 100% online, plus the construction of all contracted sites on time, actual results are likely to vary in a negative manner. Construction delays are common and it is rare for all equipment to be deployed and 100% online, however accurate historical downtime averages are difficult to calculate and also may not provide an accurate picture due to differences moving forward. Investors should consider all risk factors related to uptime when considering these figures, which are a best case scenario. Annualised revenue is based on BTC USD$40k and network difficulty as at 10 May 2022. Please see Coinwarz Bitcoin Mining Calculator at https://www.coinwarz.com/mining/bitcoin/calculator . The above information is for general information purposes only, and are forward looking statements which should not be relied upon as being necessarily indicative of future results. Mawson takes no responsibility for the accuracy of third party information, including websites. Online calculator excludes overheads and fees (except pool fees). The above information should be read in conjunction with the disclaimer on page. Please see our Risk Factors in our Annual Report on Form 10 - K filed March 21, 2022, under the Sub - Heading Risks Relating to Our Business and Management for important risks related to our Self - Mining. 2. Approximately 116 megawatts (MW) is currently allocated to Mawson’s Hosting Co - location customers, see slide 7 for further details. Mawson Self - Mining May 2022 Q3 2022 Target 1 Δ Q1 2023 Target 2 Δ Capacity (MW) 2 470 MW 590 MW +120 MW 1,000 MW +410 MW Total Exahash (EH) Online 1.8 EH 4.0 EH +2.2 EH 5.50 EH +1.5 EH BTC Mining Production / day 8.0 BTC /day 1 18.0 BTC /day 1 +10.0 BTC 24.5 BTC /day +6.5 BTC Annualised Revenue 1 $116.8M ~$262.8M +$146.0M ~$357.7M +$94.9M Mining = Mawson Hashrate x Block reward x 52,560 Blocks x Bitcoin price Revenue Network Hashrate 6.25 BTC + TXN fees per year Operating = Costs ASIC Miner + Datacentre power consumption power usage x Power price + Other operating costs

Q1 2022 Investor Presentation 7 Mawson Hosting Co - location May 2021 Target Q4 2022 1 Δ Target 2023 1 Δ Contracted Hosting Customers (MW) 116 MW 140 MW +24MW 220 MW +80MW Exahash (EH) Capacity 3.8 EH 4.6 EH +0.8EH 7.3 EH +2.7EH 1. Exahash capacity assumes installation of current generation ASIC Bitcoin Mining hardware including but not limited to Bitmain S19J Pro, MicroBT M30/1, Avalon A1246 assuming approximately 30 megawatt per 1 Exahash. Mawson leverages its surplus infrastructure capacity to generate an additional revenue stream, comprising hosting co - location services. Aerial view of Midland, Pennsylvania Bitcoin Mining Facility Expansion.

Q1 2022 Investor Presentation 8 Deployment Timeline (EH) Infrastructure First approach Focus on large scale power infrastructure and long term security Rapidly Increasing Self - Mining Hash Rate 1.10 EH January 2022 4.00 EH Target Q3 2022 +263% vs Jan 2022 5.50 EH Target early Q1 2023 1 +400% vs Jan 2022 Hash Rate Growth (EH) MIGI Actual Hash Rate (EH) MIGI Target Hash Rate (EH) 1. Please see our Risk Factors in our Annual Report on Form 10 - K filed March 21, 2022, under the Sub - Heading Risks Relating to Our Business and Management for important risks related to our Self - Mining Hash Rate. 6 5 4 3 2 1 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 21 21 21 21 21 21 21 21 21 21 21 21 22 22 22 22 22 22 22 22 22 22 22 22 23

Q1 2022 Investor Presentation 9 Capacity TBC Sandersville, GA USA Midland, PA USA New South Wales AUS Secure Energy Pipeline Energy Infrastructure underpins future growth We focus on identifying stranded and distressed energy Over 1GW pipeline of energy projects Energy infrastructure capacity available for Bitcoin Mining currently 470MW Proven history of efficient modular site development Future development pipeline Expansion of existing facilities, plus new site acquisitions Pipeline Sites 1 +1000 MW Texas USA Lease term 120MW 15 Years 230MW 26 Years 100MW + 200MW 15 Years 20 MW 7 Years 1. Pipeline sites refer to real estate sites with access to stranded and distressed energy that we have identified and are in various stages of commercial negotiations for purchase or lease. Sharon, PA USA 15 Years Existing Capacity Target Expansion

Q1 2022 Investor Presentation 10 Secured Infrastructure Capacity Modular Data Center Units 1 2.5 MW / Unit 250+ Units 625 MW Transformer Units 1 2,500 kVa 160+ Units 400 MW Total capacity (Approx. 20 EH) Total capacity (Approx. 13 EH) 1. 2. As at 10 th May 2022. Please see our Risk Factors in our Annual Report on Form 10 - K filed March 21, 2022, under the Sub - Heading Risks Relating to Our Business and Management for important risks related to our Self - Mining Hash Rate. ASIC Bitcoin Mining Units 1 Latest generation bitcoin mining hardware 45,000+ Units contracted Target 4.00 EH Q3 2022 2 Target 5.50 EH Early Q1 2023 2

Q1 2022 Investor Presentation 11 Current Exahash Capacity Current MW capacity Future potential MW capacity Future potential Exahash Capacity Current Modular Data Centre Capacity Lease Term Tenancy Type Energy Mix Sharon, PA USA TBC TBC TBC TBC TBC 15 Years Long - term lease TBC Sandersville, GA USA 7.5 EH 230 MW TBC TBC 115 26 Years Long - term lease with option to buy ~75% carbon - free (carbon credits for balance) Texas USA 4.0 EH 120 MW TBC TBC 60 15 Years Long - term lease ~50% carbon - free (carbon credits for balance) Midland, PA USA 3.3 EH 100 MW +200 MW +6.6 EH 50 15 Years Long - term lease 100% carbon - free New South Wales AUS 0.4 EH 20 MW - - 10 7 Years Long - term lease 100% renewable Current Total 15.2 EH 1 470 MW - 21.8 EH 235 - - - Compelling Bitcoin Mining Facility Metrics 1. Exahash capacity assumes installation of current generation ASIC Bitcoin Mining hardware including but not limited to Bitmain S19J Pro, MicroBT M30/1, Avalon A1246 assuming approximately 30 megawatt per 1 Exahash.

Q1 2022 Investor Presentation 1 2 1 2 Mawson’s Infrastructure First Approach 1 Strict ROIC assessment of sites 2 Modular Data Centre (MDC) IP 3 Long - term agreements 4 ESG & Social Impact focus • High quality, stable and supportive jurisdictions • Selection of sites with stranded/under - utilised energy especially in regional areas • Target low cost of energy across global portfolio • Design allows for rapid deployment in most climates • One of the lowest costs of deployment in the industry • Flexibility to rapidly re - deploy equipment across facilities • Secured long - term agreements for key sites Sharon, PA USA 15 Years Georgia, USA 26 Years Midland, PA USA 15 Years New South Wales, AUS 7 Years Texas, USA 15 Years • Target sites that satisfy a Net Zero Carbon 2030 strategy • Site criteria includes targeting non - carbon emitting energy mix greater than 75% • Deep community engagement to win local support / social licence to operate • Dedicated carbon offset program: demonstrated contribution to major projects Q1 2022 Investor Presentation 12

Q1 2022 Investor Presentation 13 ESG Focus ~75% Sustainable / non - carbon emitting energy mix • Platinum sponsor of School Athletics Programs • Mawson Group Academic Scholarship • Mawson and Brentwood School Career Pathways Program • Christmas Tree giveaway • Washington County Regional Medical Centre Pennsylvania, USA • Mawson supporter of Buhl Park (community park) • Community College Beaver County Scholarship Program • Lincoln Park Performing Arts Centre Supporter • Beaver Falls Park sponsorship • Heritage Valley Health System Supporter • Independent Board of Directors • Code of Ethics and Business Conduct • Audit & Remuneration Committee Net Zero Carbon 22,277 Tonnes of C0 2 Offsets purchased in 2020, 2021 carbon footprint being assessed/offset Socially Engaged Georgia, USA Governance Framework A responsible, accountable and ethical approach to corporate governance underpins the way we do business. 100,000 Trees Planted by the end of 2022 New South Wales, AUS • Major sponsor of Far North Coast Men's/Women's/Junior Rugby Union

Q1 2022 Investor Presentation 14 Highly experienced Management & Board Greg Martin Independent Non - Executive Chair 25 years with AGL Energy (AGL.ASX), Australia’s largest energy generator/retailer, 5 years as CEO and Managing Director James Manning Founder & CEO 15 years management experience across technology, accounting, logistics, property development Michael Hughes Independent Non - Exec Director 30 years experience across financial services. Previous Commercial Director of Sealink Travel Group (SLK.ASX) Yossi Keret Independent Non - Exec Director 25 years experience in public markets, having served as CFO of numerous public and private companies on the NASDAQ and ASX Board Hetal Majithia Chief Financial Officer 10 years’ experience as a chartered accountant, having worked previously at PwC and KPMG in Australia and the UK Liam Wilson Chief Operating Officer 16 years experience in senior operational management roles across multiple industries Nick Hughes - Jones Chief Commercial Officer 15 years experience in financial markets and funds management Craig Hibbard Chief Development Officer 15 years’ experience in business leadership and delivery of major projects Key employees Tom Hughes General Counsel 15 years’ legal experience across technology, banking and asset management, formerly with Macquarie Bank, ANZ Bank and HUB24 Heath Donald Chief Marketing Officer 20 years’ experience across technology, communications and marketing, primarily in the telecommunications and IT industries

Q1 2022 Investor Presentation 15 The Cosmos Global Digital Miners Access ETF ‘DIGA’ The Cosmos Global Digital Miners Access ETF launched in Australia in October 2021. Strategic Partnership with Purpose Investments Inc Cosmos Asset Management has partnered with ~ $ 14 BN in AUM global asset manager, Purpose Investments Inc . The Cosmos - Purpose Bitcoin Access ETF ‘CBTC’ The Cosmos - Purpose Bitcoin Access ETF launched in Australia in May 2022. Mawson Innovation Bitcoin & HPC hosting co - location services Mawson’s subsidiary, Luna Squares LLC, provides hosting co - location services at our Georgia and Pennsylvania facilities. Luna Squares currently serves customers with ~116MW of hosting co - location agreements in place, plus a healthy pipeline of potential new customers. Q1 2022 Investor Presentation 15

Q1 2022 Investor Presentation 16 Ticker NASDAQ:MIGI Share price $3.37 Shares outstanding 71,585,295 $241M Market capitalisation Mawson Register 76% 24% Based on share price as at 10 May, 2022 Board and Management 24% External Investors 76% High Insider ownership

Q1 2022 Investor Presentation 17 Mawson Infrastructure Group A strong platform for sustainable growth 1. 2020 carbon offset with carbon credits, 2021 carbon footprint currently being assessed/offset. 2. https://www.prnewswire.com/news - releases/bitcoin - miners - revenue - rose - 206 - in - 2021 - 301482452 . htm l. 3. Please see our Risk Factors in our Annual Report on Form 10 - K filed March 21, 2022, under the Sub - Heading Risks Relating to Our Business and Managemen t for important risks related to our Self - Mining Hash Rate. Rapid Growth and Scale +400% targeted operational growth from Jan 2022 to early Q1 2023 1.10 EH in Jan 2022 4.00 EH Q3 2022 5.50 EH in early Q1 2023 3 Infrastructure First Approach Owner/Operator of Bitcoin Self - Mining, Hosting Co - location Facilities, and Modular Data Centres (MDC) 5 Secured Locations 4 USA sites 1 AUS site Sustainable Bitcoin Mining Net Zero Carbon Bitcoin Mining/Hosting 1 Strategic Relationships Quinbrook Infrastructure Partners Purpose Investments, Inc Celsius Mining LLC Canaan Inc Foundry Digital LLC Lowest quartile operator - Large revenue opportunity Low costs of deployment per megawatt and costs of production ~$15BN bitcoin mining revenue in 2021 2 High insider ownership ~24% owned by directors and senior management

Q1 2022 Investor Presentation 18 Reconciliation of Non - GAAP Metrics Q1 Balance Sheet Net loss (GAAP) ($11.6) Net other expenses 1 $1.9 Depreciation & amortisation 2 $13.8 Share Based Payments 3 $0.4 EBITDA (Non - GAAP) $4.5 1. Adjustments for – realised and unrealized gains and losses, non - operating income/(expense), share of associates accounted for using the equity method and tax. 2. Reverses out accelerated depreciation effect 3. Reverses out share - based payments 4. Rounding to millions Q1 EBITDA + Gross Profit Slide 4 identifies some non - GAAP financial metrics, which require reconciliation to the statutory GAAP numbers. We set them out as follows: Slide 5 identifies some non - GAAP financial metrics, which require reconciliation to the statutory GAAP numbers. We set them out as follows: Revenue $19.4 Less Cost of Revenues ($8.4) GROSS PROFIT (GP) $11.0 Assets Cash and cash equivalents Cash $5.8M Property and equipment, net $102.5M Equipment deposits $41.7M Other Assets Trade and other receivables $11.0M Right of use assets $4.7M Marketable securities $0.3M Total Assets $166.0M Liabilities Trade and other payables $14.0M Borrowings $43.0M Other Liabilities Lease liability $5.1M Total Liabilities $62.1M

Q1 2022 Investor Presentation Investor Relations Brett Mass Hayden IR mawson@haydenir.com Head Office Level 5, 97 Pacific Highway North Sydney, NSW Australia info@mawsoninc.com

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2022	May 11, 2022
Document Information Line Items
Entity Registrant Name	Mawson Infrastructure Group Inc.
Trading Symbol	MIGI
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		72,486,295
Amendment Flag	false
Entity Central Index Key	0001218683
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Document Period End Date	Mar. 31, 2022
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-40849
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	88-0445167
Entity Address, Address Line One	Level 5
Entity Address, Address Line Two	97 Pacific Highway
Entity Address, City or Town	North Sydney NSW
Entity Address, Country	AU
Entity Address, Postal Zip Code	2060
City Area Code	+61 2
Local Phone Number	8624 6130
Title of 12(b) Security	Common Stock, par value $0.001 per share
Security Exchange Name	NASDAQ
Entity Interactive Data Current	Yes

XML

Consolidated Condensed Balance Sheets - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 5,804,858	$ 5,467,273
Prepaid expenses	1,969,969	332,154
Trade and other receivables	5,044,154	5,606,780
Cryptocurrencies		40,800
Total current assets	12,818,981	11,447,007
Property and equipment, net	102,532,708	76,936,850
Equipment deposits	41,722,172	51,369,216
Marketable securities	336,897	326,801
Security deposits	3,836,426	1,246,236
Operating lease right-of-use asset	4,722,973	3,968,262
Total assets	165,970,157	145,294,372
Current liabilities:
Trade and other payables	13,995,302	7,746,988
Current portion of operating lease liability	1,410,192	1,222,382
Current portion of finance lease liability	28,962	8,105
Borrowings	16,036,514	11,095,388
Total current liabilities	31,470,970	20,072,863
Operating lease liability, net of current portion	3,520,623	2,962,765
Finance lease liability, net of current portion	106,159	38,764
Long-term borrowings	26,943,283	7,639,391
Total liabilities	62,041,035	30,713,783
Commitments and Contingencies (note 9)
Shareholders’ equity:
Additional paid-in capital; Common stock (120,000,000 authorized, 71,585,295 issued and outstanding $0.001 par value shares). Series A preferred stock (1,000,000 authorized shares; nil issued and outstanding as at March 31, 2022)	186,724,867	186,389,568
Share subscription receivable
Accumulated other comprehensive income (loss)	62,214	(521,094)
Accumulated deficit	(82,458,914)	(71,123,259)
Total stockholders’ equity	104,328,167	114,745,215
Non-controlling interest	(399,045)	(164,626)
Total liabilities and stockholders’ equity	$ 165,970,157	$ 145,294,372

XML

Consolidated Condensed Balance Sheets (Parentheticals) - $ / shares	Mar. 31, 2022	Dec. 31, 2021
Common stock, shares authorized	120,000,000	120,000,000
Common stock, shares issued	71,585,295	71,585,295
Common stock, shares outstanding	71,585,295	71,585,295
Common stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Series A Preferred Stock
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding

XML

Consolidated Condensed Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Revenues:
Cryptocurrency mining revenue	$ 18,783,842	$ 5,120,014
Hosting Co-Location revenue	548,948
Sale of crypto currency mining equipment	91,545	1,877,613
Total revenues	19,424,335	6,997,627
Less: Cost of revenues (excluding depreciation)	8,412,360	2,372,781
Gross profit	11,011,975	4,624,846
Selling, general and administrative	6,476,945	2,631,964
LO2A write off		23,963,050
Share based payments	390,609	14,795,403
Depreciation and amortization	13,803,032	1,314,899
Total operating expenses	20,670,586	42,705,316
Loss from operations	(9,658,611)	(38,080,470)
Non-operating income/(expense):
Gains on foreign currency transactions	(699,237)	(661,682)
Other income	24,447	472,741
Interest expense	(1,236,673)	(250,662)
Loss before income taxes	(11,570,074)	(38,520,073)
Income tax expense
Net Loss	(11,570,074)	(38,520,073)
Less: Net (loss)/profit attributable to non-controlling interests	(234,419)	43,135
Net Loss attributed to Mawson Infrastructure Group shareholders	$ (11,335,655)	$ (38,563,208)
Net Loss per share, basic & diluted (in Dollars per share)	$ (0.16)	$ (0.87)
Weighted average number of shares outstanding (in Shares)	71,129,676	44,266,478

XML

Consolidated Condensed Statements of Stockholders’ Equity (Unaudited) - USD ($)	Series A Preferred Stock	Common Stock	Additional Paid-in- Capital	Reserves	Accumulated Other Comprehensive Income/(Loss)	Accumulated Deficit	Total Mawson Stockholders’ Equity	Non- controlling interest	Common Shares	Share Subscription Receivable	Total
Balance at Dec. 31, 2020			$ 34,457,051	$ 652,949	$ (1,341,826)	$ (26,159,539)	$ 7,591,945	$ (27,066)		$ (16,690)	$ 7,564,879
Balance (in Shares) at Dec. 31, 2020									7,539,275
Exchange of stock and Reverse recapitalization of Wize Pharma Inc		$ 461,324	(5,436,541)				(4,975,217)				(4,975,217)
Exchange of stock and Reverse recapitalization of Wize Pharma Inc (in Shares)	178	46,132,357							(7,539,275)
Issuance of common stock, net of offer costs, PIPE transaction		$ 25,000	2,975,000				3,000,000				3,000,000
Issuance of common stock, net of offer costs, PIPE transaction (in Shares)		2,500,000
Issuance of convertible notes, net of offer costs			20,301,427				20,301,427				20,301,427
Issuance of common stock, exercise of warrants		$ 116		6,881,676			6,881,792				6,881,792
Issuance of common stock, exercise of warrants (in Shares)		41,000
Fair value of IPR&D acquired, net of Business Combination transaction costs			24,765,831				24,765,831				24,765,831
Issuance of RSU's and stock options			411,137	10,000,000			10,411,137				10,411,137
Fair value adjustment of LO2A intellectual property revenue sharing obligation			5,440,863				5,440,863				5,440,863
Net loss						(38,563,208)	(38,563,208)				(38,563,208)
Other comprehensive income					(4,615,328)		(4,615,328)				(4,615,328)
Non-controlling interest								43,135			43,135
Balance at Mar. 31, 2021		$ 486,440	82,914,768	17,534,625	(5,957,154)	(64,722,747)	30,239,242	16,069		$ (16,690)	30,255,311
Balance (in Shares) at Mar. 31, 2021	178	48,673,357
Balance at Dec. 31, 2021		$ 611,504	165,600,831	20,177,233	(521,094)	(71,123,259)	114,745,215	(164,626)			114,580,589
Balance (in Shares) at Dec. 31, 2021		70,746,508
Issuance of common stock, stock based compensation		$ 15	107,734				107,749				107,749
Issuance of common stock, stock based compensation (in Shares)		13,787
Issuance of warrants				166,833			166,833				166,833
Issuance of RSU's and stock options		$ 825	1,956,116	(1,896,224)			60,717				60,717
Issuance of RSU's and stock options (in Shares)		825,000
Net loss						(11,335,655)	(11,335,655)				(11,335,655)
Other comprehensive income					583,308		583,308				583,308
Non-controlling interest								(234,419)			(234,419)
Balance at Mar. 31, 2022		$ 612,344	$ 167,664,681	$ 18,447,842	$ 62,214	$ (82,458,914)	$ 104,328,167	$ (399,045)			$ 103,929,122
Balance (in Shares) at Mar. 31, 2022		71,585,295

XML

Consolidated Condensed Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (11,570,074)	$ (38,520,073)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	13,804,492	1,314,899
LO2A write offs		23,963,050
Operating lease expense	367,135
Foreign exchange gain		1,690,303
Share based payments	390,609	14,795,403
Gain on disposal of fixed assets		127,608
Interest expense	249,861	222,463
Investment income		(563,771)
Trade and other receivables	562,626	(656,732)
Other current assets	(4,187,204)	(796,044)
Trade and other payables	6,248,314	294,586
Net cash provided by operating activities	5,865,759	1,871,692
CASH FLOWS FROM INVESTING ACTIVITIES
Net payment for the purchase of property and equipment	(6,030,740)	(2,960,145)
Investment in financial assets		(380,100)
Payment of fixed asset deposits	(23,630,470)	(18,045,720)
Net cash used in investing activities	(29,661,210)	(21,385,965)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common share issuances	50,628	1,298,402
Proceeds from convertible notes		21,487,391
Payments of capital issuance costs		(2,229,096)
Proceeds from borrowings	27,055,524	1,057,383
Advances made to external companies		(37,076)
Repayment of lease liabilities	(379,026)
Payments of borrowings	(3,242,194)	(291,310)
Net cash provided by financing activities	23,484,932	21,285,694
Effect of exchange rate changes on cash and cash equivalents	648,104	501,045
Net increase in cash and cash equivalents	337,585	2,272,466
Cash and cash equivalents at beginning of period	5,467,273	1,112,811
Cash and cash equivalents at end of period	$ 5,804,858	$ 3,385,277

XML

General

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

GENERAL

NOTE 1 – GENERAL

General

Mawson Infrastructure Group, Inc. (the “Company” or “Mawson” or “we”), formerly known as Wize Pharma, Inc, and before that, known as OphthaliX Inc., was incorporated in the State of Delaware on February 10, 2012.

The accompanying consolidated financial statements, including the results of the Company’s subsidiaries; Mawson Infrastructure Group Pty Ltd (“Mawson AU” previously known as Cosmos Capital Limited), Cosmos Trading Pty Ltd, Cosmos Infrastructure LLC, Cosmos Manager LLC, MIG No.1 Pty Ltd, Cosmos Asset Management Pty Ltd, Luna Squares LLC, BITTD Pty Ltd, Luna Squares Repairs LLC, Luna Squares Property LLC and Mawson Mining LLC (collectively referred to as the “Group”), have been prepared by the Company, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Wize NC Inc, Occuwize Ltd and Wize Pharma Ltd are subsidiaries of Mawson however these companies have not been consolidated into the financial statements as these are subject to contingent value rights (“CVR”), refer to note 9.

These consolidated, condensed interim financial statements should be read in conjunction with the audited consolidated financial statements of Mawson and subsidiaries as of December 31, 2021, and the notes thereto, included in the Company’s Annual Report on Form 10-K filed March 21, 2022. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The results of the interim period are not necessarily indicative of the results to be expected for the full year ended December 31, 2022. These consolidated condensed interim financial statements reflect all adjustments which, in the opinion of management, are necessary to present fairly the financial position, the results of operations and cash flows of the Company for the periods presented.

Mawson, through its subsidiary Mawson AU, is a ‘Digital Asset Infrastructure’ business, which owns and operates modular data centers (“MDCs”) based in the United States and Australia. As at March 31, 2021 Mawson AU currently owns and has ordered 39,225 Application-Specific Integrated Circuit (“ASIC”) computers known as “Miners,” specifically focused on the SHA-256 algorithm, from a variety of manufacturers, including Bitmain Technology Holding Company (“Bitmain”), Canaan Creative (HK) Holdings Limited (“Canaan”) and Shenzhen MicroBT Electronics Technology Co., Ltd (“Whatsminer”).

Going Concern

Based on internally prepared forecasted cash flows, combined with the existing cash reserves, which take into consideration what management of the Group considers reasonable scenarios given the inherent risks and uncertainties described in this Quarterly Report on Form 10-Q, management believes that the Group will have adequate cash reserves to enable the Group to meet its obligations for at least one year from the date of approval of the consolidated financial statements, and on this basis the accounts have been prepared on a going concern basis.

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and basis of preparation

The accompanying consolidated financial statements of the Company include the accounts of the Company and its wholly or majority owned and controlled subsidiaries. Intercompany investments, balances and transactions have been eliminated in consolidation. Non–controlling interests represents the minority equity investment in the Company’s subsidiaries, plus the minority investors’ share of the net operating results and other components of equity relating to the non–controlling interest.

Any changes in the Company’s ownership interest in a consolidated subsidiary, through additional equity issuances by the consolidated subsidiary or from the Company acquiring the shares from existing shareholders, in which the Company maintains control is recognized as an equity transaction, with appropriate adjustments to both the Company’s additional paid-in capital and the corresponding non-controlling interest.

On March 9, 2021, Mawson AU was acquired by the Company. For accounting purposes, this was accounted for as a reverse asset acquisition with Mawson AU as the accounting acquirer (refer to significant accounting policies below). The result of which is that these financial statements are taken to be a continuation of Mawson AU’s financial statements, with the Company incorporated within the acquisition and therefore the historical financial information of Mawson AU (then known as Cosmos Capital Limited) prior to March 9, 2021, became the historical financial information of Mawson AU, which have been consolidated into the financial statements of the Company. 

Use of Estimates and Assumptions

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company evaluates on an ongoing basis its assumptions. The Company’s management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made.

These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of income and expenses during the reporting periods. Actual results could differ from those estimates. The Company has considered the following to be significant estimates made by management, including but not limited to, going concern assumptions, estimating the useful lives of fixed assets, realization of long-lived assets, unrealized tax positions and the realization of digital currencies, business combinations, reverse asset acquisition, and the contingent obligation with respect to future revenues.

Critical Accounting Policies

Critical accounting policies are described in the consolidated financial statements for Mawson included in the Company’s 10-K filed March 21, 2022. There have been no changes to critical accounting policies in the three months period ended March 31, 2022, other than the reverse asset acquisition accounting policy which is no longer considered to be a critical accounting policy and has therefore been included in significant accounting policies.

Revenue Recognition – Digital asset mining revenue

The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of ASC 606 is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Five steps are required to be followed in evaluating revenue recognition: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied a performance obligation.

In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).

There is currently no specific definitive guidance in U.S. GAAP or alternative accounting frameworks for the accounting of managing digital currencies and management has exercised significant judgement in determining appropriate accounting treatment for the recognition of revenue for such operations.

The Company has entered into a contract with mining pools and has undertaken the performance obligation of providing computing power in exchange for non-cash consideration in the form of cryptocurrency. The provision of computing power is the only performance obligation in the Group’s contract with its pool operators. In certain pools the amount of reward for computing power depends on the pool’s success in mining blocks. In other pools, the amount of reward includes no such contingency, although the fees payable to such pools are typically higher as a result. Where the consideration received is variable (for example, due to payment only being made upon successful mining), it is recognized when it is highly probable that the variability is resolved, which is generally when the cryptocurrency is received.

The Company measures the non-cash consideration received at the fair market value of the cryptocurrency received. Management estimates fair value on a daily basis, as the quantity of cryptocurrency received multiplied by the price quoted on the crypto exchanges that the Company uses to dispose of cryptocurrency on the day it was received.

Property and equipment

Property and equipment are stated at cost, net of accumulated depreciation. The cost includes any cost of replacing part of the property and equipment with the original cost of the replaced part being derecognized. All other repair and maintenance costs are recognized in profit or loss incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. Property, plant and equipment transferred from customers is initially measured at the fair value at the date on which control is obtained.

The depreciable amount of fixed assets is depreciated on a straight-line or declining balance basis based on the asset classification, over their useful lives to the economic entity commencing from the time the assets arrive at their destination where they are ready for use. Depreciation is calculated over the following estimated useful lives:

Financial Asset class	Useful life	Depreciation Method
Fixtures and Fittings	5 years	Straight-Line
Plant and equipment	10 years	Straight-Line
Modular data center	5 years	Declining
Motor Vehicles	5 years	Straight-Line
Computer equipment	3 years	Straight-Line
Processing Machinery (Miners)	2 years	Declining
Transformers	15 years	Straight-Line

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognized.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

The Company changed its policy in relation to freight costs in relation to processing machines with effect from October 1, 2021. Prior to this date these costs were expensed to the statement of operations and profit and loss, and afterwards these costs are capitalized into processing machinery. This change resulted in an increase in processing machines in the balance sheet of $2,040,387 at March 31, 2022, and an increase in the depreciation charge to the statement of operations and profit and loss of $84,735 over the prior treatment.

The Company’s long-lived assets are reviewed for impairment in accordance with Accounting Standards Codification (“ASC”) 360, “Property, Plant and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During the periods ended March 31, 2022, and 2021, no impairment losses have been identified.

Share based payments

The Company follows FASB Codification Topic ASC 718-10 Compensation-Stock Compensation. The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the estimated grant-date fair value of the awards. The Company determines the grant date fair value of the options using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. These assumptions are the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility computes stock price volatility over expected terms based on its historical common stock trading prices. Risk–free interest rates are calculated based on the implied yield available on U. S. 10-year Treasury bond.

Significant Accounting Policies

Revenue Recognition - Hosting Co-location revenue

The Company provides power for our co-location hosting customers on a variable basis which is received monthly from the customer based on the power usage at the rate outlined in each customer contract.

We recognize variable power revenue each month as the uncertainty related to the consideration is resolved, power is provided to our customers, and our customers utilize the power (the customer simultaneously receives and consumes the benefits of the Company’s performance).

The customer contracts contain performance obligations, variable consideration in such contracts to be allocated to and recognized in the period to which the consideration relates. Usually this is when it is invoiced, rather than obtaining an estimation of variable consideration at the beginning of the customer contracts.

Customers also are invoiced a fixed monthly fee for maintenance services which include, cleaning, cabling and other services to maintain the customers’ equipment.

Revenue Recognition - Sale of crypto currency mining equipment

Crypto currency mining equipment sales revenue includes revenues related to the sale of Miners. This is recognized as revenue upon delivery to the customer, which is when the control of the Miner transfers. Payments are typically received at the point control transfers or in accordance with payment terms customary to the business.

Revenue recognition – equipment sales

The Company earned revenues from the sale of earlier generation cryptocurrency mining units and modular data centers that have been assembled or refurbished for resale (collectively “Hardware”). Revenue from the sale of Hardware is recognized when all of the following conditions are satisfied: (i) persuasive evidence of a sales arrangement exists, (ii) the sales terms are fixed or determinable, (iii) title and risk of loss have transferred, and (iv) payment is received. At the date of sale, the net book value is expensed in cost of revenues.

Cost of revenues:

Cost of revenue consists primarily of expenses that are directly related to providing the Company’s service to its paying customers. These primarily consist of costs associated with operating our co-location facilities such as direct power costs, energy costs (including any carbon offset acquired during the year), freight costs and material costs related to cryptocurrency mining.

Research and development expenses:

Research and development expenses are charged to the statement of comprehensive loss as incurred.

Income taxes:

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance may be established to reduce the deferred tax asset to the level at which it is “more likely than not” that the tax asset or benefits will be realized. Realization of tax benefits of deductible temporary differences and operating loss carryforwards depends on having sufficient taxable income of an appropriate character within the carryback or carryforward periods.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained upon review by the taxing authority. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Functional currency:

All subsidiaries of Company have a functional currency of United States dollar (“USD”) with the exceptions of Mawson Infrastructure Group Pty Ltd, MIG No.1 Pty Ltd, Cosmos Trading Pty Ltd, BITTD Pty Ltd and Cosmos Asset Management Pty Ltd whose functional currency is the Australian Dollar (“AUD”). The financial statements of foreign businesses have been translated into USD at current exchange rates for balance sheet items and at the average rate for income statement items. Translation of all the consolidated companies’ financial records into USD is required due to the reporting currency for these consolidated financial statements presented as USD and the functional currency of the parent company being that of AUD. Translation adjustments are accumulated in other comprehensive loss. Revenue and expense accounts are converted at prevailing rates throughout the year. Gains or losses on foreign currency transactions and translation adjustments in highly inflationary economies are recorded in income in the period in which they are incurred.

Segment Reporting:

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision–making group in deciding how to allocate resources and in assessing performance. Our chief operating decision–making group is composed of the chief executive officer. We currently operate in one segment surrounding our cryptocurrency mining operation.

Cash and cash equivalents:

Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, cash held with digital currency exchanges, and other short-term and highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less.

Digital Currencies

Digital currencies are included in current assets in the consolidated balance sheets. Digital currencies are classified as indefinite-lived intangible assets in accordance with ASC 350, Intangibles - Goodwill and Other, and are accounted for in connection with the Company’s revenue recognition policy detailed above.

The following table presents the Company’s digital currency (Bitcoin) activities for the quarter ended March 31, 2022, and 2021: 

	Three months to March 31,
	2022			2021
Opening number of Bitcoin held as at December 31, 2021 and 2020		0.92			0.52
Number of Bitcoin added		458.68			123.22
Number of Bitcoin sold		(459.60	)		(113.45	)
Closing number of Bitcoin held as at March 31, 2022 and 2021		0.00			10.29

Digital currency is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.

The Company’s policy is to dispose of production at the earliest opportunity, the holding period is minimal, usually no more than a few days. Due to the short period which Bitcoin are held prior to sale and the consequent small numbers held, the risk of impairment is not material.

Equipment deposits:

The Company records a prepaid expense for costs paid but not yet incurred. Those expected to be incurred within one year are recognized and shown as equipment deposits. Equipment deposits result from advance payments to suppliers for goods to be received in the future. Equipment deposits are initially recognized as assets at the date the amount is paid, and are subsequently recorded as equipment as the Company takes delivery and control of the equipment from the supplier. Amounts are recognized initially at the amount of the unconditional consideration. They are subsequently measured at cost, less loss allowance.

Reverse Asset Acquisition:

On March 9, 2021, the Company acquired the shares of Cosmos Capital Limited (now known as Mawson Infrastructure Group Pty Ltd and referred to herein as Mawson AU) in a stock for stock exchange. This transaction has been accounted for as a reverse asset acquisition. This transaction reverse asset acquisition and the associated impact is referred to as the “Cosmos Transaction”.

Under the terms of the Cosmos Transaction Bid Implementation Agreement, the Company was required to make share based payments consisting of up to 40,000,000 shares under an Incentive Compensation Program and warrants issued to HC Wainwright as a fee related to the acquisition by Mawson of Mawson AU. In addition, Mawson AU had an outstanding obligation to W Capital Advisors Pty Ltd (“W Capital”) for options over the equity of Mawson AU which was terminated for consideration of warrants over the Company’s shares being issued to W Capital.

Fair value of financial instruments:

The Company accounts for financial instruments under FASB Accounting Standards Codification Topic (“ASC”) 820, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 — assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment.

Of the Company’s financial instruments on the Company’s balance sheet as at March 31, 2022, the only item measured and recorded at fair value is the Marketable Securities of $336,897, which are categorized as Level 1.

Concentrations of credit risk:

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, marketable securities. Cash and cash equivalents and restricted bank deposits are invested in banks in Australia and the U.S. If the counterparty completely failed to perform in accordance with the terms of the contract, is the maximum amount of loss the Company would be the balance. Management believes that the financial institutions that hold the Company’s investments are financially sound and, accordingly, minimal credit risk exists with respect to these investments. The Company has no off-balance-sheet concentration of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements.

Legal and other contingencies: 

The Company accounts for its contingent liabilities in accordance with ASC 450 “Contingencies”. A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. With respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. Legal costs incurred in connection with loss contingencies are expensed as incurred. As of March 31, 2022, the Company is not a party to any litigation that could have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.

Leases:

The Company accounts for its leases under ASC 842, Leases which was effective January 1, 2019. The Company determines if an arrangement is a lease at inception. Using ASC 842 leases are classified as operating or finance leases on the Balance Sheet as a right of use (“ROU”) assets and lease liabilities within current liabilities and long-term liabilities on our consolidated balance sheet. ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company’s lease does not provide an implicit rate and therefore the Company measured the ROU asset and lease obligation based upon the present value of future minimum lease payments. The Company’s incremental borrowing rate is estimated based on risk-free discount rate for the lease, determined using a period comparable with that of the lease term and in a similar economic environment. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. The Company does not record leases on the consolidated balance sheets with a term of one year or less. The Company does not separate lease and non-lease components but rather account for each separate component as a single lease component for all underlying classes of assets. Where leases contain escalation clauses, rent abatements, or concessions, such as rent holidays and landlord or tenant incentives or allowances, the Company applies them in the determination of straight-line operating lease cost over the lease term.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies and adopted by the Company as of the specified effective date. For information with respect to recent accounting pronouncements, see Note 2 to the consolidated financial statements for Mawson as of December 31, 2021, included in the Company’s Annual Report on Form 10-K filed March 21, 2022, recent accounting pronouncements since that date include:

In March 2022, the FSAB issued ASU update 2022-01—Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method. The adoption of ASU 2021-01 did not have a material impact on the Company’s financial statements or disclosures.

In March 2022, the FSAB issued ASU 2022-02—Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The adoption of ASU 2022-02 did not have a material impact on the Company’s financial statements or disclosures.

XML

Basic and Diluted Net Loss Per Share

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

BASIC AND DILUTED NET LOSS PER SHARE

NOTE 3 – BASIC AND DILUTED NET LOSS PER SHARE

Net loss per common share is calculated in accordance with ASC Topic 260: Earnings Per Share (“ASC 260”). Basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. The computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average shares outstanding, as they would be anti-dilutive.

Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share as at March 31, 2022 and 2021 are as follows:

	As at March 31,
	2022		2021
Warrants to purchase common stock		6,994,189		871,098
Options to purchase common stock		753,459		-
Common stock due to former Cosmos shareholders to be issued pending approval of increase to authorized capital		-		5,055,811
Mandatory convertible notes to exchange common stock		-		6,362,690
Restricted Stock-Units (“RSUs”) issued under a management equity plan		1,819,287		4,000,000
		9,566,935		16,289,599

The following table sets forth the computation of basic and diluted loss per share:

	For the three months ended March 31,
	2022			2021
Net Loss attributable to common shareholders	$	(11,335,655	)	$	(38,563,208	)
Denominator:
Weighted average common shares - basic and diluted		71,129,676			44,266,478
Loss per common share - basic and diluted	$	(0.16	)	$	(0.87	)

Comparative weighted average common shares have been revised by the ratio of Mawson AU to the Company shares exchanged in the reverse asset acquisition in March 2021. Pursuant to that certain Certificate of Amendment to the Certificate of Incorporation of the Company dated August 11, 2021, Mawson executed a 10-for-1 reverse stock split of its outstanding common stock and reduced its authorized common stock to 120,000,000 shares, as set forth in the Company’s Current Report on Form 8-K filed August 16, 2021. 

XML

Deposit, Property and Equipment

3 Months Ended

Mar. 31, 2022

Deposit, Property and Equipment [Abstract]

DEPOSIT, PROPERTY AND EQUIPMENT

NOTE 4 – DEPOSIT, PROPERTY AND EQUIPMENT

On February 5, 2021, Cosmos Infrastructure LLC (“Infrastructure”) entered into a Long-Term Purchase Contract with Canaan Convey Co Ltd (“Canaan”) for the purchase of 11,760 next generation Avalon A1246 ASIC Miners. The average purchase price per unit is $2,889 for a total purchase price of $33,974,640 (the “Canaan Transaction”). The final shipment for contract was received during March 2022, there was a final adjustment to the purchase price based on the actual tera hash delivered, based on the agreed price per tera hash under the terms of the contract. The purchase price adjustment resulted in a $2.2 million reduction in the purchase price, this is due to be received in cash from Canaan.

On August 9, 2021, Infrastructure entered into a second Long-Term Purchase Contract with Canaan for the purchase of 15,000 next generation Avalon A1246 ASIC Miners. The average purchase price per unit is $4,908 for a total purchase price of $73,620,000. There will be a final adjustment to the purchase price in the last delivery due in May 2022 based on the actual tera hash delivered, based on the agreed price per tera hash under the terms of the contract. As at March 31, 2022 the amount paid in relation to this contract is $54,180,000 of which 4,000 orders have been delivered during the quarter.

During the three months ended March 31, 2022, $23.63 million cash paid for equipment was recorded as a deposit on the balance sheet.

XML

Leases

3 Months Ended

Mar. 31, 2022

Disclosure Text Block [Abstract]

LEASES

NOTE 5 – LEASES

Luna Squares LLC leases a 16.35-acre lot in Georgia from the Development Authority of Washington County. The lease term was originally for 1 acre from May 1, 2020, until April 30, 2023. An amendment to the lease and exercise of option to lease four additional acres was signed and became effective February 23, 2021. A further amendment to the lease and exercise of option to lease was signed and became effective August 24, 2021. The Lease Amendment covers an additional 11.35 acres of the property, bringing the total to 16.35 acres under the lease. It also includes 5, 3-year extension options bringing the total lease period to run until 2038.

The Company leases the headquarters of its business operations at Level 5, 97 Pacific Highway, North Sydney NSW 2060 Australia, being 1,076 square feet of office space held under a license agreement.

The Company leases 6-acres of land in Pennsylvania which began in October 2021 for thirty-six months with the option to execute four additional three-year extensions.

On March 16, 2022, Luna Squares LLC entered into a lease with respect to a property in the City of Sharon, Mercer County, Pennsylvania with Vertua Property, Inc. (A related entity – refer to note 12 for details). The term of the lease is for 5 years, and has 2 options to extend for 5 years each.

Other than the foregoing leases, the Company does not lease any material assets. The Company believes that these offices and facilities are suitable and adequate for its operations as currently conducted and as currently foreseen. In the event additional or substitute offices and facilities are required, the Company believes that it could obtain such offices and facilities at commercially reasonable rates.

The Company’s lease costs recognized in the Consolidated Statements of Income and Comprehensive Loss consist of the following:

	For the three months ended March 31,
	2022		2021
Operating lease charges (1)	$	367,135	$	11,223
Finance lease charges:
Amortization of right-of-use assets		4,302		-
Interest on lease obligations		1,478		-
	$	5,780	$	-

⁽¹⁾ Included in Selling, General & Administrative Expenses.

	Operating leases			Finance Leases
2023	$	1,753,012		$	38,068
2024		1,779,078			38,068
2025		1,172,787			38,068
2026		548,407			35,854
2027		419,568			7,669
Total undiscounted lease obligations		5,672,852			157,727
Less imputed interest		(742,037	)		(22,606	)
Total present value of lease liabilities		4,930,815			135,121
Less current portion of lease liabilities		(1,410,192	)		(28,962	)
Non-current lease liabilities	$	3,520,623		$	106,159

	Operating leases			Finance Leases
Operating cash flows from operating and finance leases	$	373,936		$	5,090
Weighted-average remaining lease term – operating and finance leases (years)		3.42			1.52
Weighted-average discount rate – operating and leases (%)		8.0	%		2.6	%

XML

Property and Equipment

3 Months Ended

Mar. 31, 2022

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 6 – PROPERTY AND EQUIPMENT

Property and equipment, net, consisted of the following:

	March 31, 2022			December 31, 2021
Plant and equipment		2,743,337			1,046,866
Computer equipment		440,461			216,099
Furniture & fixtures		32,446			31,474
Processing machines (Miners)		111,687,341			81,341,098
Modular data center		14,765,469			9,819,796
Motor Vehicles		325,113			250,425
Transformers		2,102,194			1,190,609
Low-cost assets		451,004			246,154
Assets under construction		1,950,106			1,008,001
Total		134,497,471			95,150,522
Less: Accumulated depreciation		(31,964,763	)		(18,213,672	)
Property and equipment, net		102,532,708			76,936,850

The Company incurred depreciation and amortization expense in the amounts of $13,803,032 and $1,314,899 for the quarter ended March 31, 2022 and March 31, 2021, respectively. There were no impairment charges recognized for property and equipment for either the quarter ended March 31, 2022, or March 31, 2021. There were no disposals during the three months ended March 31, 2022.

The Company had additions of $39,400,349 during the three months ended March 31, 2022. This primarily consisted of $30,396,241 of Miners, $4,953,347 additions for MDC’s and $1,696,756 for plant and equipment.

XML

Income Taxes

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 7 – INCOME TAXES

The Company's effective tax rates for the three months ended March 31, 2022 and 2021, were as follows:

	For the three months ended March 31,
	2022			2021
Effective Tax Rate		0	%		0	%

The Company's effective tax rate is calculated by dividing total income tax expense by the sum of income before income tax expense and the net income attributable to noncontrolling interests. The Company has maintained a full valuation allowance for federal and the majority of its state jurisdictions.

XML

Stockholders Equity

3 Months Ended

Mar. 31, 2022

Stockholders' Equity Note [Abstract]

STOCKHOLDERS EQUITY

NOTE 8 – STOCKHOLDERS EQUITY

Common Stock

TraDigital Marketing Group LLC was issued 5,000 shares of common stock during January 2022 for consultancy services provided to the Company.

Under the terms of the Cosmos Transaction Bid Implementation Agreement the Company made share-based payments under an Incentive Compensation Program during September 2021 (refer to reverse acquisition accounting policy). Within the March 2022 quarter, five employees converted these into 825,000 shares of common stock of Mawson.

During February 2022, Kyle Hoffman was paid $50,000 in shares of the Company’s common stock as part of the contingent consideration for the Membership Interest Purchase Agreement to acquire shares in Luna Squares LLC.

Restricted Stock

As of March 31, 2022, there was no restricted stock.

Common Stock Warrants

A summary of the status of the Company’s outstanding stock warrants and changes during the quarter ended March 31, 2022, is as follows:  

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2021		3,524,189
Issued		3,850,000		$	7.99		1.9
Exercised		(380,000	)
Expired		-
Outstanding as of March 31, 2022		6,994,189		$	7.99		1.9
Warrants exercisable as of March 31, 2022.		6,994,189		$	7.99		1.9

On February 23, 2022, Mawson issued to Celsius Mining warrants with an expiry date of August 23, 2023, to purchase up to 3,850,000 shares of common stock, par value $0.001 per share, of Mawson at an exercise price of US$6.50 per share, in connection with the $20 million loan made by Celsius to Luna Squares LLC in connection with a Customer Equipment and Co-Location Agreement entered into by Celsius and Luna Squares LLC.

XML

Commitments and Contingencies

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 9 – COMMITMENTS AND CONTINGENCIES

Agreements

1. In connection with the Cosmos Transaction, we issued one CVR to each of our securityholders for each outstanding share of common stock of Mawson, and for each share of common stock of Mawson underlying other convertible securities and warrants, held immediately before the closing of the Cosmos Transaction. Each CVR represents the right to receive a pro rata share of any consideration that we may receive in connection with any successful monetization of our LO2A business, less transaction expenses and customary deductions as detailed in the CVR agreement, including a deduction of up to $300,000 to be repaid to us for amounts we spend in the development of the LO2A Technology at the request of the representative of the holders of the CVRs. As at March 31, 2022, the Company cannot reliably measure the cost of the CVRs and it is not probable that these payments will be made and therefore this has been classified as a contingent liability.

2. On August 9, 2021, Infrastructure entered into a second Long-Term Purchase Contract with Canaan for the purchase of 15,000 next generation Avalon A1246 ASIC Miners. The purchase price per unit is $4,908 for a total purchase price of $73,620,000. As at March 31, 2022 the Company had paid $54,180,000 in relation to this contract with the remaining balance owed at the end of the quarter.

XML

Borrowings

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

BORROWINGS

NOTE 10 – BORROWINGS

Short-term Borrowings

On October 15, 2021, the Company acquired 2,000 Whatsminers M30’s for delivery in October 2021 from Foundry Digital LLC for a total consideration of $16,481,328. The Company paid a deposit of $3,202,766 and entered into an extension of the original Foundry finance agreement with Foundry for the balance of the consideration over a 12-month term, of which $7,801,933 is outstanding at March 31, 2022.

Long-term Borrowings

Marshall loan

In December 2021 the Company entered into a Secured Loan Facility Agreement with Marshall Investments MIG Pty Ltd which was payable in three tranches. The first tranche was received during December 2021 with an amount of $7.86 million. Tranche two and three were received during January and February 2022 with a total amount of $7.11 million. The loan matures in 2024 and bears interest at a rate of 12.00% per annum, payable monthly which commenced December 2021.The Loan facility is secured by a general security agreement given by the Company. Principal repayments begin during 2023.

Celsius loan

On February 23, 2022, Luna Squares LLC entered into the Co-Location Agreement with Celsius Mining LLC, in connection with this agreement, Celsius Mining loaned Luna Squares LLC a principal amount of US$20,000,000, for the purpose of funding the infrastructure required to meet the obligations of the Co-Location Agreement, for which Luna Squares LLC issued a Secured Promissory Note for repayment of such amount. The Secured Promissory Note accrues interest daily at a rate of 12% per annum. Luna Squares LLC is required to amortize the loan at a rate of 15% per quarter, with principal repayments starting in the third quarter of 2022. The Secured Promissory Note has a maturity date of August 23, 2023.

XML

Related Party Transactions

3 Months Ended

Mar. 31, 2022

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 11 – RELATED PARTY TRANSACTIONS

On March 16, 2022, Luna Squares LLC entered into a lease with respect to a property in the City of Sharon, Mercer County, Pennsylvania with Vertua Property, Inc, a subsidiary entity in which Vertua Ltd has a 100% ownership interest. James Manning, CEO, a director and a significant shareholder of the Company, is also a director of Vertua Ltd and has a material interest in the Sharon lease as a large shareholder of Vertua Ltd. The lease contains market standard legal terms, and will be for a term of 5 years, and Luna Squares LLC has 2 options to extend for 5 years each. The Company’s Audit Committee has compared the rent and terms to other arms’ length leases the Company has entered into and formed the view the rent is in line with the market for similar properties. Rent is subject to annual increases equal to the amount of the Consumer Price Index for the Northeast Region, or 4%, whichever is higher. The base rental amount in the first year is $0.24 million. Depending on power energization and usage, variable additional rent may be payable, with charges ranging from $500 to $10,000 per month, depending on power energized and whether it is available. Upon the recommendation from the Audit Committee, the directors of the Company, other than James Manning, were made aware of the material facts as to Mr. Manning’s interest in the lease and authorized the Company in good faith to enter the lease after determining the lease to be fair to the Company.

XML

Subsequent Events

3 Months Ended

Mar. 31, 2022

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 12 – SUBSEQUENT EVENTS

On May 12, 2022, Luna Squares Texas LLC (a wholly owned subsidiary of the Company) entered into an Option Agreement and Gross Profit Agreement with JAI TX, LLC and then signed or took and assignment of 4 leases for properties in Texas (all in close proximity) with the intent to develop MDC facilities for mining Bitcoin. Luna Squares Texas LLC will seek to execute relevant power agreements, however the expectation is that the four locations can provide a combined 120MW of power. Rent under the leases ranges from $1,500 to $5,227.20 per acre per annum. The lessors include a substantial listed holder of land in Texas, and family groups. Under the Option Agreement, JAI TX, LLC has the option to receive an issue of up to 20% of the membership interests in Luna Squares Texas LLC. The purchase prices will be a share of capital costs equal to the membership interest acquired by JAI TX, LLC, and an amount of Luna Squares Texas LLC’s debt financing in proportion to JAI TX, LLC’s shareholding. In return for certain services provided by JAI TX, LLC, JAI TX, LLC will be entitled to a share of all Electric Reliability Council of Texas program payments paid to Luna Squares Texas LLC (“ERCOT Payment”), as well as a share of the Bitcoin profit from the Texas locations less certain costs, including depreciation. Capital costs for Luna Squares Texas LLC are expected to exceed $4.19m.

XML

Accounting Policies, by Policy (Policies)

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Principles of Consolidation and basis of preparation

Principles of Consolidation and basis of preparation

The accompanying consolidated financial statements of the Company include the accounts of the Company and its wholly or majority owned and controlled subsidiaries. Intercompany investments, balances and transactions have been eliminated in consolidation. Non–controlling interests represents the minority equity investment in the Company’s subsidiaries, plus the minority investors’ share of the net operating results and other components of equity relating to the non–controlling interest.

Any changes in the Company’s ownership interest in a consolidated subsidiary, through additional equity issuances by the consolidated subsidiary or from the Company acquiring the shares from existing shareholders, in which the Company maintains control is recognized as an equity transaction, with appropriate adjustments to both the Company’s additional paid-in capital and the corresponding non-controlling interest.

On March 9, 2021, Mawson AU was acquired by the Company. For accounting purposes, this was accounted for as a reverse asset acquisition with Mawson AU as the accounting acquirer (refer to significant accounting policies below). The result of which is that these financial statements are taken to be a continuation of Mawson AU’s financial statements, with the Company incorporated within the acquisition and therefore the historical financial information of Mawson AU (then known as Cosmos Capital Limited) prior to March 9, 2021, became the historical financial information of Mawson AU, which have been consolidated into the financial statements of the Company. 

Use of Estimates and Assumptions

Use of Estimates and Assumptions

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company evaluates on an ongoing basis its assumptions. The Company’s management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made.

These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of income and expenses during the reporting periods. Actual results could differ from those estimates. The Company has considered the following to be significant estimates made by management, including but not limited to, going concern assumptions, estimating the useful lives of fixed assets, realization of long-lived assets, unrealized tax positions and the realization of digital currencies, business combinations, reverse asset acquisition, and the contingent obligation with respect to future revenues.

Critical Accounting Policies

Critical Accounting Policies

Critical accounting policies are described in the consolidated financial statements for Mawson included in the Company’s 10-K filed March 21, 2022. There have been no changes to critical accounting policies in the three months period ended March 31, 2022, other than the reverse asset acquisition accounting policy which is no longer considered to be a critical accounting policy and has therefore been included in significant accounting policies.

Revenue Recognition – Digital asset mining revenue

The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of ASC 606 is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Five steps are required to be followed in evaluating revenue recognition: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied a performance obligation.

In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).

There is currently no specific definitive guidance in U.S. GAAP or alternative accounting frameworks for the accounting of managing digital currencies and management has exercised significant judgement in determining appropriate accounting treatment for the recognition of revenue for such operations.

The Company has entered into a contract with mining pools and has undertaken the performance obligation of providing computing power in exchange for non-cash consideration in the form of cryptocurrency. The provision of computing power is the only performance obligation in the Group’s contract with its pool operators. In certain pools the amount of reward for computing power depends on the pool’s success in mining blocks. In other pools, the amount of reward includes no such contingency, although the fees payable to such pools are typically higher as a result. Where the consideration received is variable (for example, due to payment only being made upon successful mining), it is recognized when it is highly probable that the variability is resolved, which is generally when the cryptocurrency is received.

The Company measures the non-cash consideration received at the fair market value of the cryptocurrency received. Management estimates fair value on a daily basis, as the quantity of cryptocurrency received multiplied by the price quoted on the crypto exchanges that the Company uses to dispose of cryptocurrency on the day it was received.

Property and equipment

Property and equipment are stated at cost, net of accumulated depreciation. The cost includes any cost of replacing part of the property and equipment with the original cost of the replaced part being derecognized. All other repair and maintenance costs are recognized in profit or loss incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. Property, plant and equipment transferred from customers is initially measured at the fair value at the date on which control is obtained.

The depreciable amount of fixed assets is depreciated on a straight-line or declining balance basis based on the asset classification, over their useful lives to the economic entity commencing from the time the assets arrive at their destination where they are ready for use. Depreciation is calculated over the following estimated useful lives:

Financial Asset class	Useful life	Depreciation Method
Fixtures and Fittings	5 years	Straight-Line
Plant and equipment	10 years	Straight-Line
Modular data center	5 years	Declining
Motor Vehicles	5 years	Straight-Line
Computer equipment	3 years	Straight-Line
Processing Machinery (Miners)	2 years	Declining
Transformers	15 years	Straight-Line

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognized.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

The Company changed its policy in relation to freight costs in relation to processing machines with effect from October 1, 2021. Prior to this date these costs were expensed to the statement of operations and profit and loss, and afterwards these costs are capitalized into processing machinery. This change resulted in an increase in processing machines in the balance sheet of $2,040,387 at March 31, 2022, and an increase in the depreciation charge to the statement of operations and profit and loss of $84,735 over the prior treatment.

The Company’s long-lived assets are reviewed for impairment in accordance with Accounting Standards Codification (“ASC”) 360, “Property, Plant and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During the periods ended March 31, 2022, and 2021, no impairment losses have been identified.

Share based payments

The Company follows FASB Codification Topic ASC 718-10 Compensation-Stock Compensation. The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the estimated grant-date fair value of the awards. The Company determines the grant date fair value of the options using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. These assumptions are the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility computes stock price volatility over expected terms based on its historical common stock trading prices. Risk–free interest rates are calculated based on the implied yield available on U. S. 10-year Treasury bond.

Significant Accounting Policies

Significant Accounting Policies

Revenue Recognition - Hosting Co-location revenue

The Company provides power for our co-location hosting customers on a variable basis which is received monthly from the customer based on the power usage at the rate outlined in each customer contract.

We recognize variable power revenue each month as the uncertainty related to the consideration is resolved, power is provided to our customers, and our customers utilize the power (the customer simultaneously receives and consumes the benefits of the Company’s performance).

The customer contracts contain performance obligations, variable consideration in such contracts to be allocated to and recognized in the period to which the consideration relates. Usually this is when it is invoiced, rather than obtaining an estimation of variable consideration at the beginning of the customer contracts.

Customers also are invoiced a fixed monthly fee for maintenance services which include, cleaning, cabling and other services to maintain the customers’ equipment.

Revenue Recognition - Sale of crypto currency mining equipment

Crypto currency mining equipment sales revenue includes revenues related to the sale of Miners. This is recognized as revenue upon delivery to the customer, which is when the control of the Miner transfers. Payments are typically received at the point control transfers or in accordance with payment terms customary to the business.

Revenue recognition – equipment sales

The Company earned revenues from the sale of earlier generation cryptocurrency mining units and modular data centers that have been assembled or refurbished for resale (collectively “Hardware”). Revenue from the sale of Hardware is recognized when all of the following conditions are satisfied: (i) persuasive evidence of a sales arrangement exists, (ii) the sales terms are fixed or determinable, (iii) title and risk of loss have transferred, and (iv) payment is received. At the date of sale, the net book value is expensed in cost of revenues.

Cost of revenues:

Cost of revenue consists primarily of expenses that are directly related to providing the Company’s service to its paying customers. These primarily consist of costs associated with operating our co-location facilities such as direct power costs, energy costs (including any carbon offset acquired during the year), freight costs and material costs related to cryptocurrency mining.

Research and development expenses:

Research and development expenses are charged to the statement of comprehensive loss as incurred.

Income taxes:

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance may be established to reduce the deferred tax asset to the level at which it is “more likely than not” that the tax asset or benefits will be realized. Realization of tax benefits of deductible temporary differences and operating loss carryforwards depends on having sufficient taxable income of an appropriate character within the carryback or carryforward periods.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained upon review by the taxing authority. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Functional currency:

All subsidiaries of Company have a functional currency of United States dollar (“USD”) with the exceptions of Mawson Infrastructure Group Pty Ltd, MIG No.1 Pty Ltd, Cosmos Trading Pty Ltd, BITTD Pty Ltd and Cosmos Asset Management Pty Ltd whose functional currency is the Australian Dollar (“AUD”). The financial statements of foreign businesses have been translated into USD at current exchange rates for balance sheet items and at the average rate for income statement items. Translation of all the consolidated companies’ financial records into USD is required due to the reporting currency for these consolidated financial statements presented as USD and the functional currency of the parent company being that of AUD. Translation adjustments are accumulated in other comprehensive loss. Revenue and expense accounts are converted at prevailing rates throughout the year. Gains or losses on foreign currency transactions and translation adjustments in highly inflationary economies are recorded in income in the period in which they are incurred.

Segment Reporting:

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision–making group in deciding how to allocate resources and in assessing performance. Our chief operating decision–making group is composed of the chief executive officer. We currently operate in one segment surrounding our cryptocurrency mining operation.

Cash and cash equivalents:

Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, cash held with digital currency exchanges, and other short-term and highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less.

Digital Currencies

Digital currencies are included in current assets in the consolidated balance sheets. Digital currencies are classified as indefinite-lived intangible assets in accordance with ASC 350, Intangibles - Goodwill and Other, and are accounted for in connection with the Company’s revenue recognition policy detailed above.

The following table presents the Company’s digital currency (Bitcoin) activities for the quarter ended March 31, 2022, and 2021: 

	Three months to March 31,
	2022			2021
Opening number of Bitcoin held as at December 31, 2021 and 2020		0.92			0.52
Number of Bitcoin added		458.68			123.22
Number of Bitcoin sold		(459.60	)		(113.45	)
Closing number of Bitcoin held as at March 31, 2022 and 2021		0.00			10.29

Digital currency is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.

The Company’s policy is to dispose of production at the earliest opportunity, the holding period is minimal, usually no more than a few days. Due to the short period which Bitcoin are held prior to sale and the consequent small numbers held, the risk of impairment is not material.

Equipment deposits:

The Company records a prepaid expense for costs paid but not yet incurred. Those expected to be incurred within one year are recognized and shown as equipment deposits. Equipment deposits result from advance payments to suppliers for goods to be received in the future. Equipment deposits are initially recognized as assets at the date the amount is paid, and are subsequently recorded as equipment as the Company takes delivery and control of the equipment from the supplier. Amounts are recognized initially at the amount of the unconditional consideration. They are subsequently measured at cost, less loss allowance.

Reverse Asset Acquisition:

On March 9, 2021, the Company acquired the shares of Cosmos Capital Limited (now known as Mawson Infrastructure Group Pty Ltd and referred to herein as Mawson AU) in a stock for stock exchange. This transaction has been accounted for as a reverse asset acquisition. This transaction reverse asset acquisition and the associated impact is referred to as the “Cosmos Transaction”.

Under the terms of the Cosmos Transaction Bid Implementation Agreement, the Company was required to make share based payments consisting of up to 40,000,000 shares under an Incentive Compensation Program and warrants issued to HC Wainwright as a fee related to the acquisition by Mawson of Mawson AU. In addition, Mawson AU had an outstanding obligation to W Capital Advisors Pty Ltd (“W Capital”) for options over the equity of Mawson AU which was terminated for consideration of warrants over the Company’s shares being issued to W Capital.

Fair value of financial instruments:

The Company accounts for financial instruments under FASB Accounting Standards Codification Topic (“ASC”) 820, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 — assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment.

Of the Company’s financial instruments on the Company’s balance sheet as at March 31, 2022, the only item measured and recorded at fair value is the Marketable Securities of $336,897, which are categorized as Level 1.

Concentrations of credit risk:

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, marketable securities. Cash and cash equivalents and restricted bank deposits are invested in banks in Australia and the U.S. If the counterparty completely failed to perform in accordance with the terms of the contract, is the maximum amount of loss the Company would be the balance. Management believes that the financial institutions that hold the Company’s investments are financially sound and, accordingly, minimal credit risk exists with respect to these investments. The Company has no off-balance-sheet concentration of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements.

Legal and other contingencies: 

The Company accounts for its contingent liabilities in accordance with ASC 450 “Contingencies”. A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. With respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. Legal costs incurred in connection with loss contingencies are expensed as incurred. As of March 31, 2022, the Company is not a party to any litigation that could have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.

Leases:

The Company accounts for its leases under ASC 842, Leases which was effective January 1, 2019. The Company determines if an arrangement is a lease at inception. Using ASC 842 leases are classified as operating or finance leases on the Balance Sheet as a right of use (“ROU”) assets and lease liabilities within current liabilities and long-term liabilities on our consolidated balance sheet. ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company’s lease does not provide an implicit rate and therefore the Company measured the ROU asset and lease obligation based upon the present value of future minimum lease payments. The Company’s incremental borrowing rate is estimated based on risk-free discount rate for the lease, determined using a period comparable with that of the lease term and in a similar economic environment. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. The Company does not record leases on the consolidated balance sheets with a term of one year or less. The Company does not separate lease and non-lease components but rather account for each separate component as a single lease component for all underlying classes of assets. Where leases contain escalation clauses, rent abatements, or concessions, such as rent holidays and landlord or tenant incentives or allowances, the Company applies them in the determination of straight-line operating lease cost over the lease term.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies and adopted by the Company as of the specified effective date. For information with respect to recent accounting pronouncements, see Note 2 to the consolidated financial statements for Mawson as of December 31, 2021, included in the Company’s Annual Report on Form 10-K filed March 21, 2022, recent accounting pronouncements since that date include:

In March 2022, the FSAB issued ASU update 2022-01—Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method. The adoption of ASU 2021-01 did not have a material impact on the Company’s financial statements or disclosures.

In March 2022, the FSAB issued ASU 2022-02—Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The adoption of ASU 2022-02 did not have a material impact on the Company’s financial statements or disclosures.

XML

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Schedule of estimated useful lives of the assets

Financial Asset class	Useful life	Depreciation Method
Fixtures and Fittings	5 years	Straight-Line
Plant and equipment	10 years	Straight-Line
Modular data center	5 years	Declining
Motor Vehicles	5 years	Straight-Line
Computer equipment	3 years	Straight-Line
Processing Machinery (Miners)	2 years	Declining
Transformers	15 years	Straight-Line

Schedule of digital currencies

	Three months to March 31,
	2022			2021
Opening number of Bitcoin held as at December 31, 2021 and 2020		0.92			0.52
Number of Bitcoin added		458.68			123.22
Number of Bitcoin sold		(459.60	)		(113.45	)
Closing number of Bitcoin held as at March 31, 2022 and 2021		0.00			10.29

XML

Basic and Diluted Net Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

Schedule of computation of diluted loss per share

	As at March 31,
	2022		2021
Warrants to purchase common stock		6,994,189		871,098
Options to purchase common stock		753,459		-
Common stock due to former Cosmos shareholders to be issued pending approval of increase to authorized capital		-		5,055,811
Mandatory convertible notes to exchange common stock		-		6,362,690
Restricted Stock-Units (“RSUs”) issued under a management equity plan		1,819,287		4,000,000
		9,566,935		16,289,599

Schedule of computation of basic and diluted loss per share

	For the three months ended March 31,
	2022			2021
Net Loss attributable to common shareholders	$	(11,335,655	)	$	(38,563,208	)
Denominator:
Weighted average common shares - basic and diluted		71,129,676			44,266,478
Loss per common share - basic and diluted	$	(0.16	)	$	(0.87	)

XML

Leases (Tables)

3 Months Ended

Mar. 31, 2022

Disclosure Text Block [Abstract]

Schedule of income and comprehensive loss

	For the three months ended March 31,
	2022		2021
Operating lease charges (1)	$	367,135	$	11,223
Finance lease charges:
Amortization of right-of-use assets		4,302		-
Interest on lease obligations		1,478		-
	$	5,780	$	-

Schedule of selling, general & administrative expenses

	Operating leases			Finance Leases
2023	$	1,753,012		$	38,068
2024		1,779,078			38,068
2025		1,172,787			38,068
2026		548,407			35,854
2027		419,568			7,669
Total undiscounted lease obligations		5,672,852			157,727
Less imputed interest		(742,037	)		(22,606	)
Total present value of lease liabilities		4,930,815			135,121
Less current portion of lease liabilities		(1,410,192	)		(28,962	)
Non-current lease liabilities	$	3,520,623		$	106,159

	Operating leases			Finance Leases
Operating cash flows from operating and finance leases	$	373,936		$	5,090
Weighted-average remaining lease term – operating and finance leases (years)		3.42			1.52
Weighted-average discount rate – operating and leases (%)		8.0	%		2.6	%

XML

Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2022

Property, Plant and Equipment [Abstract]

Schedule of property and equipment, net

	March 31, 2022			December 31, 2021
Plant and equipment		2,743,337			1,046,866
Computer equipment		440,461			216,099
Furniture & fixtures		32,446			31,474
Processing machines (Miners)		111,687,341			81,341,098
Modular data center		14,765,469			9,819,796
Motor Vehicles		325,113			250,425
Transformers		2,102,194			1,190,609
Low-cost assets		451,004			246,154
Assets under construction		1,950,106			1,008,001
Total		134,497,471			95,150,522
Less: Accumulated depreciation		(31,964,763	)		(18,213,672	)
Property and equipment, net		102,532,708			76,936,850

XML

Income Taxes (Tables)

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

Schedule of effective tax rates

	For the three months ended March 31,
	2022			2021
Effective Tax Rate		0	%		0	%

XML

Stockholders Equity (Tables)

3 Months Ended

Mar. 31, 2022

Stockholders' Equity Note [Abstract]

Schedule of outstanding stock warrants

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2021		3,524,189
Issued		3,850,000		$	7.99		1.9
Exercised		(380,000	)
Expired		-
Outstanding as of March 31, 2022		6,994,189		$	7.99		1.9
Warrants exercisable as of March 31, 2022.		6,994,189		$	7.99		1.9

XML

General (Details)	3 Months Ended
	Mar. 31, 2022 shares
General (Details) [Line Items]
Cash reserves maturities	1 year
Mawson AU [Member]
General (Details) [Line Items]
Ordered shares	39,225

XML

Summary of Significant Accounting Policies (Details)	3 Months Ended
	Mar. 31, 2022 USD ($) shares
Accounting Policies [Abstract]
Increase in processing machine	$ 2,040,387
Depreciation charge	$ 84,735
Tax benefit percentage	50.00%
Warrant issued (in Shares) | shares	40,000,000
Marketable security	$ 336,897

XML

Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets	3 Months Ended
	Mar. 31, 2022
Fixtures and Fittings [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items]
Financial asset useful life	5 years
Financial asset depreciation method	Straight-Line
Plant and Equipment [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items]
Financial asset useful life	10 years
Financial asset depreciation method	Straight-Line
Modular Data Center [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items]
Financial asset useful life	5 years
Financial asset depreciation method	Declining
Motor Vehicles [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items]
Financial asset useful life	5 years
Financial asset depreciation method	Straight-Line
Computer Equipment [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items]
Financial asset useful life	3 years
Financial asset depreciation method	Straight-Line
Processing Machinery [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items]
Financial asset useful life	2 years
Financial asset depreciation method	Declining
Transformers [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items]
Financial asset useful life	15 years
Financial asset depreciation method	Straight-Line

XML

Summary of Significant Accounting Policies (Details) - Schedule of digital currencies - $ / shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Schedule of digital currencies [Abstract]
Opening number of Bitcoin held	$ 0.92	$ 0.52
Number of Bitcoin added	458.68	123.22
Number of Bitcoin sold	(459.6)	(113.45)
Closing number of Bitcoin held	$ 0	$ 10.29

XML

Basic and Diluted Net Loss Per Share (Details)	Aug. 16, 2021 shares
Earnings Per Share [Abstract]
Common stock authorized	120,000,000

XML

Basic and Diluted Net Loss Per Share (Details) - Schedule of computation of diluted loss per share - shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Schedule of computation of diluted loss per share [Abstract]
Warrants to purchase common stock	6,994,189	871,098
Options to purchase common stock	753,459
Common stock due to former Cosmos shareholders to be issued pending approval of increase to authorized capital		5,055,811
Mandatory convertible notes to exchange common stock		6,362,690
Restricted Stock-Units (“RSUs”) issued under a management equity plan	1,819,287	4,000,000
Total	9,566,935	16,289,599

XML

Basic and Diluted Net Loss Per Share (Details) - Schedule of computation of basic and diluted loss per share - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Schedule of computation of basic and diluted loss per share [Abstract]
Net Loss attributable to common shareholders	$ (11,335,655)	$ (38,563,208)
Denominator:
Weighted average common shares - basic and diluted	71,129,676	44,266,478
Loss per common share - basic and diluted	$ (0.16)	$ (0.87)

XML

Deposit, Property and Equipment (Details) - USD ($) $ in Thousands	Aug. 09, 2021	Feb. 05, 2021	Mar. 31, 2022
Deposit, Property and Equipment [Abstract]
Purchase price, description	Infrastructure entered into a second Long-Term Purchase Contract with Canaan for the purchase of 15,000 next generation Avalon A1246 ASIC Miners. The average purchase price per unit is $4,908 for a total purchase price of $73,620,000. There will be a final adjustment to the purchase price in the last delivery due in May 2022 based on the actual tera hash delivered, based on the agreed price per tera hash under the terms of the contract. As at March 31, 2022 the amount paid in relation to this contract is $54,180,000 of which 4,000 orders have been delivered during the quarter.	Cosmos Infrastructure LLC (“Infrastructure”) entered into a Long-Term Purchase Contract with Canaan Convey Co Ltd (“Canaan”) for the purchase of 11,760 next generation Avalon A1246 ASIC Miners. The average purchase price per unit is $2,889 for a total purchase price of $33,974,640 (the “Canaan Transaction”). The final shipment for contract was received during March 2022, there was a final adjustment to the purchase price based on the actual tera hash delivered, based on the agreed price per tera hash under the terms of the contract. The purchase price adjustment resulted in a $2.2 million reduction in the purchase price, this is due to be received in cash from Canaan.
Cash paid			$ 23,630

XML

Leases (Details)	1 Months Ended	3 Months Ended
	Mar. 16, 2022	Mar. 31, 2022 ft² a
Disclosure Text Block [Abstract]
Lease description		Luna Squares LLC leases a 16.35-acre lot in Georgia from the Development Authority of Washington County. The lease term was originally for 1 acre from May 1, 2020, until April 30, 2023. An amendment to the lease and exercise of option to lease four additional acres was signed and became effective February 23, 2021. A further amendment to the lease and exercise of option to lease was signed and became effective August 24, 2021. The Lease Amendment covers an additional 11.35 acres of the property, bringing the total to 16.35 acres under the lease. It also includes 5, 3-year extension options bringing the total lease period to run until 2038.
Office space | ft²		1,076
New lease of land | a		6
Lease description	The term of the lease is for 5 years, and has 2 options to extend for 5 years each.

XML

Leases (Details) - Schedule of income and comprehensive loss - USD ($)		Mar. 31, 2022	Mar. 31, 2021
Schedule of income and comprehensive loss [Abstract]
Operating lease charges	[1]	$ 367,135	$ 11,223
Amortization of right-of-use assets		4,302
Interest on lease obligations		1,478
Total		$ 5,780

[1] Included in Selling, General & Administrative Expenses.

XML

Leases (Details) - Schedule of selling, general & administrative expenses	Mar. 31, 2022 USD ($)
Operating leases [Member]
Leases (Details) - Schedule of selling, general & administrative expenses [Line Items]
2023	$ 1,753,012
2024	1,779,078
2025	1,172,787
2026	548,407
2027	419,568
Total undiscounted lease obligations	5,672,852
Less imputed interest	(742,037)
Total present value of lease liabilities	4,930,815
Less current portion of lease liabilities	(1,410,192)
Non-current lease liabilities	3,520,623
Operating cash flows from operating and finance leases	$ 373,936
Weighted-average remaining lease term – operating and finance leases (years)	3 years 5 months 1 day
Weighted-average discount rate – operating and leases (%)	8.00%
Finance Leases [Member]
Leases (Details) - Schedule of selling, general & administrative expenses [Line Items]
2023	$ 38,068
2024	38,068
2025	38,068
2026	35,854
2027	7,669
Total undiscounted lease obligations	157,727
Less imputed interest	(22,606)
Total present value of lease liabilities	135,121
Less current portion of lease liabilities	(28,962)
Non-current lease liabilities	106,159
Operating cash flows from operating and finance leases	$ 5,090
Weighted-average remaining lease term – operating and finance leases (years)	1 year 6 months 7 days
Weighted-average discount rate – operating and leases (%)	2.60%

XML

Property and Equipment (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Property and Equipment (Details) [Line Items]
Depreciation and amortization expense	$ 13,803,032	$ 1,314,899
Additions	39,400,349
Miners	30,396,241
Additions for MDC's	4,953,347
Plant and equipment	102,532,708		$ 76,936,850
Property, Plant and Equipment [Member]
Property and Equipment (Details) [Line Items]
Plant and equipment	$ 1,696,756

XML

Property and Equipment (Details) - Schedule of property and equipment, net - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 134,497,471	$ 95,150,522
Less: Accumulated depreciation	(31,964,763)	(18,213,672)
Property and equipment, net	102,532,708	76,936,850
Plant and equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	2,743,337	1,046,866
Computer equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	440,461	216,099
Furniture & fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	32,446	31,474
Processing machines (Miners) [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	111,687,341	81,341,098
Modular data center [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	14,765,469	9,819,796
Motor Vehicles [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	325,113	250,425
Transformers [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	2,102,194	1,190,609
Low-cost assets [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	451,004	246,154
Assets under construction [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,950,106	$ 1,008,001

XML

Income Taxes (Details) - Schedule of effective tax rates	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Schedule of effective tax rates [Abstract]
Effective Tax Rate	0.00%	0.00%

XML

Stockholders Equity (Details) - USD ($)	1 Months Ended	3 Months Ended
	Feb. 23, 2022	Mar. 31, 2022	Feb. 28, 2022	Jan. 31, 2022
Stockholders Equity (Details) [Line Items]
Shares of common stock		825,000
Paid amount (in Dollars)			$ 50,000
Warrants expiry date	Aug. 23, 2023
Purchase to shares	3,850,000
Par value per share (in Dollars per share)	$ 0.001
Exercise price per share (in Dollars per share)	$ 6.5
Loan amount (in Dollars)	$ 20,000,000
TraDigital Marketing Group LLC [Member]
Stockholders Equity (Details) [Line Items]
Shares issued				5,000

XML

Stockholders Equity (Details) - Schedule of outstanding stock warrants	3 Months Ended
	Mar. 31, 2022 $ / shares shares
Schedule of outstanding stock warrants [Abstract]
Number of Warrants, Outstanding beginning	3,524,189
Number of Warrants, Outstanding ending	6,994,189
Weighted Average Exercise Price, Outstanding ending (in Dollars per share) | $ / shares	$ 7.99
Weighted Average Remaining Contractual Life (in years), Outstanding ending	1 year 10 months 24 days
Number of Warrants exercisable	6,994,189
Weighted Average Exercise Price, Warrants exercisable (in Dollars per share) | $ / shares	$ 7.99
Weighted Average Remaining Contractual Life (in years), Warrants exercisable	1 year 10 months 24 days
Number of Warrants, Issued	3,850,000
Weighted Average Exercise Price, Issued (in Dollars per share) | $ / shares	$ 7.99
Weighted Average Remaining Contractual Life (in years), Issued	1 year 10 months 24 days
Number of Warrants, Exercised	(380,000)
Number of Warrants, Expired

XML

Commitments and Contingencies (Details) - USD ($)		3 Months Ended
	Aug. 09, 2021	Mar. 31, 2022
Commitments and Contingencies (Details) [Line Items]
Development amount		$ 300,000
Long term purchase price (in Shares)	15,000
Purchase price per unit	$ 4,908
Total purchase price	$ 73,620,000
Second Long-Term Purchase Contract [Member]
Commitments and Contingencies (Details) [Line Items]
Amount paid		$ 54,180,000

XML

Borrowings (Details) - USD ($)			12 Months Ended
	Feb. 23, 2022	Oct. 15, 2021	Dec. 31, 2021
Debt Disclosure [Abstract]
Short term borrowings description		the Company acquired 2,000 Whatsminers M30’s for delivery in October 2021 from Foundry Digital LLC for a total consideration of $16,481,328. The Company paid a deposit of $3,202,766 and entered into an extension of the original Foundry finance agreement with Foundry for the balance of the consideration over a 12-month term, of which $7,801,933 is outstanding at March 31, 2022.
Long-term borrowings description			the Company entered into a Secured Loan Facility Agreement with Marshall Investments MIG Pty Ltd which was payable in three tranches. The first tranche was received during December 2021 with an amount of $7.86 million. Tranche two and three were received during January and February 2022 with a total amount of $7.11 million. The loan matures in 2024 and bears interest at a rate of 12.00% per annum, payable monthly which commenced December 2021.The Loan facility is secured by a general security agreement given by the Company. Principal repayments begin during 2023.
Celsius mining loan	$ 20,000,000
Interest rate	12.00%
Amortize loan	15.00%
Maturity date	Aug. 23, 2023

XML

Related Party Transactions (Details)	Mar. 16, 2022 USD ($)
Related Party Transactions (Details) [Line Items]
Ownership interest	100.00%
Lease term	5 years
Lease extend term	5 years
Rent expenses percentage	4.00%
Rental amount	$ 240,000
Minimum [Member]
Related Party Transactions (Details) [Line Items]
Additional rent payable	500
Maximum [Member]
Related Party Transactions (Details) [Line Items]
Additional rent payable	$ 10,000

XML

Subsequent Events (Details)	May 12, 2022 USD ($)
Maximum [Member]
Subsequent Events (Details) [Line Items]
Lease rent	$ 1,500
Minimum [Member]
Subsequent Events (Details) [Line Items]
Lease rent	$ 5,227.2
Forecast [Member]
Subsequent Events (Details) [Line Items]
Membership interests percentage	20.00%
Capital costs description	In return for certain services provided by JAI TX, LLC, JAI TX, LLC will be entitled to a share of all Electric Reliability Council of Texas program payments paid to Luna Squares Texas LLC (“ERCOT Payment”), as well as a share of the Bitcoin profit from the Texas locations less certain costs, including depreciation. Capital costs for Luna Squares Texas LLC are expected to exceed $4.19m.