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What changed in Mawson Infrastructure Group Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Mawson Infrastructure Group Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+295 added−337 removedSource: 10-K (2025-03-28) vs 10-K (2024-04-01)

Top changes in Mawson Infrastructure Group Inc.'s 2024 10-K

295 paragraphs added · 337 removed · 205 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

46 edited+17 added−20 removed7 unchanged
Biggest changeFurther, because Mawson can be flexible in the way it operates its Bitcoin mining data centers and how it uses energy, Mawson can contribute to electricity grid stability by providing demand for energy producers when aggregate power demand is low, and then lowering its own usage when aggregate power demand is high.
Biggest changeFurther, because Mawson can be flexible in the way it operates its digital infrastructure and how it uses energy, Mawson can contribute to electricity grid stability by providing demand for energy producers when aggregate power demand is low, and then lowering its own usage when aggregate power demand is high. 3 The main factors affecting Mawson’s energy management profitability are (in no particular order): ● Reliability and level of sophistication of its economic analysis; ● Reliability and dependability of software used for energy management; ● Ability to acquire appropriate hedge contracts; ● Access to power providers programs; and ● Regulatory or other changes.
These ASIC Miners are designed specifically for the task of solving computing problems in support of the Bitcoin network, which maximizes the rate of hashing operations. Hash rate is a measure of the processing speed of a Miner. Mawson’s hash rate is the sum total of its Miners’ hash rates.
These ASIC Miners are designed specifically for the task of solving computing problems in support of the Bitcoin network, which maximizes the rate of hashing operations. Hash rate is a measure of the processing speed of a Miner. Mawson’s hash rate is the total sum of its Miners’ hash rates.
Regulations may substantially change in the future, and it is presently not possible to know how regulations will apply to our businesses, or when they will be effective. As the regulatory and legal environments evolve, we may become subject to new laws, further regulation by the SEC and other agencies, which may affect our mining and other activities.
Regulations may substantially change in the future, and it is presently not possible to know how regulations will apply to our businesses, or when they will be effective. As the regulatory and legal environments evolve, we may become subject to new laws and further regulation by the SEC and other agencies, which may affect our mining and other activities.
The PJM Energy Market procures electricity to meet consumers’ demands both in real time and in the near term. Mawson works with the communities in which it is involved to attract and retain the employees needed to run this business.
The PJM Energy Market procures electricity to meet consumers’ demands both in real time and in the near term. Mawson works with the communities in which it is involved to attract and retain the talent and employees needed to run this business.
Before committing to a site, Mawson considers a range of investment criteria, including factors such as climate, community acceptance of Bitcoin mining operations, secure tenure through long term leases, or the ability to acquire sites, the existence of energy demand response programs which Mawson can participate in, the ability to secure low cost, stable, low carbon or carbon-neutral sustainable power, labor and skills availability, local taxation regimes, and proximity to Mawson’s existing supply chains and operations.
Before committing to a site, Mawson considers a range of investment criteria, including factors such as climate, community acceptance of digital mining operations, secure tenure through long term leases, or the ability to acquire sites, the existence of energy demand response programs which Mawson can participate in, the ability to secure low cost, stable, low carbon or carbon-neutral sustainable power, labor and skills availability, local taxation regimes, and proximity to Mawson’s existing supply chains and operations.
Increased use of electrical power increases the cost of solving a block and, therefore, the relative cost of mining for Bitcoin. This increase in network difficulty also means that it can become harder for individual mining operations to find a block and earning any reward or transaction fees for their mining efforts.
Increased use of electrical power increases the cost of solving a block and, therefore, the relative cost of mining Bitcoin. This increase in network difficulty also means that it can become harder for individual mining operations to find a block and earn any reward or transaction fees for their mining efforts.
The original equipment used for mining Bitcoin utilized the Central Processing Unit (“CPU”) of a computer to mine various forms of cryptocurrency. Due to performance limitations and growing competition to mine Bitcoin, CPU mining was rapidly replaced by the Graphics Processing Unit (“GPU”), which was in turn replaced by Application-Specific Integrated Circuit (“ASIC”) Miners.
The original equipment used for mining Bitcoin utilized the Central Processing Unit (“CPU”) of a computer to mine various forms of digital assets. Due to performance limitations and growing competition to mine Bitcoin, CPU mining was rapidly replaced by the Graphics Processing Unit (“GPU”), which was in turn replaced by Application-Specific Integrated Circuit (“ASIC”) Miners.
Further, there could be reputational damage to our business caused by increased negative publicity surrounding cryptocurrency and the apparent effects on the environment. If power costs rise so high as to put certain industries at risk, legislators may intervene in energy markets to direct energy to certain industries.
Further, there could be reputational damage to our business caused by increased negative publicity surrounding digital assets and the apparent effects on the environment. If power costs rise so high as to put certain industries at risk, legislators may intervene in energy markets to direct energy to certain industries.
Individual Bitcoin Miners risk going for extended periods of time without earning any Bitcoin rewards. To facilitate the earning of Bitcoin rewards, most miners, including Mawson, will join a ‘mining pool’ (that is a group of other miners). A large group of miners with greater hashing power is more likely to earn a cryptocurrency reward.
Individual Bitcoin Miners risk going for extended periods of time without earning any Bitcoin rewards. 4 To facilitate the earning of Bitcoin rewards, most miners, including Mawson, will join a “mining pool” (that is a group of other miners). A large group of miners with greater hashing power is more likely to earn a digital assets reward.
Mawson works closely with the PJM power providers and other power consultants to help ensure they stay up to date with the latest power provider programs. Mawson closely monitors the power markets and pricing in order to identify ways to maintain or enhance its profitability from potential opportunities.
Mawson works closely with PJM market participants and others to help ensure they stay up to date with the latest power provider programs. Mawson closely monitors the power markets and pricing in order to identify ways to maintain or enhance its profitability from potential opportunities.
Additionally, Mawson has service agreements in place with its customers that it believes provides the terms and protections to drive the profitability of the co-location business, Mawson also has power agreements in the Pennsylvania-New Jersey-Maryland Interconnection (“PJM”) markets that provide it the competitive pricing needed for its customers.
Additionally, Mawson has service agreements in place with its customers that it believes provide the terms and protections to drive the profitability of the Digital Colocation business. Mawson also has power agreements in the Pennsylvania-New Jersey-Maryland Interconnection (“PJM”) markets that are expected to provide it the competitive pricing needed for its customers.
Available on this website, free of charge, are the reports that we file or furnish with the Securities and Exchange Commission (“SEC”), corporate governance information (including our Code of Business Conduct and Ethics) and select press releases and other relevant information. 7
Available on this website, free of charge, are the reports that we file or furnish with the SEC, corporate governance information (including our Code of Business Conduct and Ethics) and select press releases and other relevant information. 8
This kind of arrangement is known as ‘co-location’ and can be customized for each customer’s situation and their and Mawson’s strategy and allows Mawson to supplement or diversify its income streams, while adjusting its risk profile. For example, customers may agree to be charged upfront infrastructure fees, minimum fees, and maintenance fees.
This kind of arrangement is known as “colocation” and can be customized and tailored for each customer’s situation and their and Mawson’s strategy and allows us to supplement or diversify our income streams, while adjusting our risk profile. For example, customers may agree to be charged upfront digital infrastructure fees, minimum fees, and maintenance fees.
If Mawson decides to curtail its energy use, then during these periods Mawson’s Bitcoin revenue may be significantly reduced but should be supplemented by the payments provided by the Energy Markets Program revenue for curtailment activity. In addition to energy hedges and derivatives that Mawson may be able to purchase, Mawson participates in demand response programs.
If Mawson decides to curtail its energy use, then during these periods Mawson’s other revenue may be reduced but should be supplemented by the payments provided by its energy management programs revenue. In addition to energy hedges and derivatives that Mawson may be able to purchase, Mawson participates in demand response programs.
Our competitors may offer higher compensation or better opportunities than we can. We may need to hire additional qualified personnel and any failure to attract, retain or motivate key personnel could adversely affect our business and operating results. Currently we have limited personnel in our organization to meet our organizational, operating and administrative demands.
We may need to hire additional qualified personnel and any failure to attract, retain or motivate key personnel could adversely affect our business and operating results. Currently we have limited personnel in our organization to meet our organizational, operating and administrative demands.
Mawson can increase its hash rate in a number of ways, including by acquiring and operating more Miners, ensuring that as many of its Miners are online and operational at all times, and by increasing the hashing capability of its Miners (for example, by providing optimal operating conditions and maintenance).
Mawson can increase its hash rate in a number of ways, including by acquiring and operating more Miners, ensuring that as many of its Miners are online and operational at all times, and by increasing the hashing capability of its Miners (for example, by providing optimal operating conditions and maintenance).By operating more Miners, Mawson will also most likely increase the amount of power it requires to operate the Miners, thus increasing its costs.
We also enter into arrangements where we may be compensated in certain circumstances if we curtail or reduce or cease our energy usage. Typically, this will occur when energy prices spike, and the mining of Bitcoin may become unprofitable.
We hope to support the growth of further renewable or sustainable power into the grid. We also enter into arrangements where we may be compensated in certain circumstances if we curtail, reduce or cease our energ y usage. Typically, this will occur when energy prices spike, and the mining of Bitcoin may become unprofitable.
Mawson does not hold any material amount of Bitcoin on its balance sheet. Mawson’s strategy is to operate as a mining operation, rather than a cryptocurrency investment company. This means that Mawson regularly liquidates its Bitcoin holdings for traditional fiat currency. Mawson has established relationships with several digital currency exchanges through which Mawson sells Bitcoin on a regular basis.
Mawson does not hold any material amount of Bitcoin on its balance sheet. Mawson’s strategy is to operate as a mining operation, rather than a digital assets investment company. This means that Mawson regularly liquidates its Bitcoin holdings for traditional fiat currency.
The members of the mining pool then receive Bitcoin rewards on a pro rata basis based on total hashing capacity they contributed to the mining pool. This is intended to reduce the variance of our Bitcoin rewards, and therefore revenue, generation.
The members of the mining pool then receive Bitcoin rewards on a pro rata basis based on total hashing capacity they contributed to the mining pool. This is intended to reduce the variance of our Bitcoin rewards, and therefore revenue, generation. At this time, Mawson typically liquidates any mined Bitcoin within a reasonable time after receipt.
The original reward was 50 Bitcoin per block, but after the last halving the reward was reduced to its current level of 6.25 Bitcoin per block. The next halving for the Bitcoin blockchain is anticipated to occur in or around April 2024.
The original reward was 50 Bitcoin per block, but after the last halving the reward was reduced to its current level of 3.125 Bitcoin per block. The next halving for the Bitcoin blockchain is anticipated to occur in 2028.
Other products and services Mawson will from time to time opportunistically sell hardware that it has acquired, whether used or unused, which is surplus to its requirements, or in order to fund newer and better equipment.
Equipment Sales products and services Mawson will from time to time opportunistically sell hardware that it has acquired, whether used or unused, which is surplus to its requirements, or in order to fund newer and better equipment. Hardware that Mawson would typically sell includes Miners, transformers and/or modular data centers (“MDCs”).
Factors Affecting Profitability of Bitcoin Self-Mining business The main factors affecting Mawson’s self-mining profitability are (in no particular order): ● The market price of Bitcoin; ● The reward Mawson earns for its mining operations; ● Changes in the Network Hash Rate (as described above); ● Type of hardware, such as types of Miners, used and deployed; ● The cost of land, or leases or other operational costs; and ● The cost of power. 4 There is a risk that a change in any of these factors could have a detrimental effect on Mawson’s business.
The main factors affecting Mawson’s self-mining profitability are (in no particular order): ● The market price of Bitcoin; ● The reward Mawson earns for its mining operations; ● Changes in the Network Hash Rate; ● Type of hardware, such as types of Miners, used and deployed; ● The cost of land, or leases or other operational costs; and ● The cost of power.
Our contact email is info@mawsoninc.com, and our website is www.mawsoninc.com. Shares of our Common Stock, par value $0.001 per share (“Common Stock”), have been listed on The Nasdaq Capital Market since September 29, 2021. Available Information Our investor relations website is available at www.mawsoninc.com.
Shares of Mawson’s common stock, par value $0.001 per share (“Common Stock”) have been listed on The Nasdaq Capital Market since September 29, 2021. Our principal place of business is 950 Railroad Avenue, Midland, Pennsylvania 15059. Our contact email is info@mawsoninc.com, and our website is www.mawsoninc.com. Shares of our Common Stock are listed on The Nasdaq Capital Market.
Price caps could be introduced which may have long-term effects on power prices. If fossil fuel projects are not allowed to proceed, then this may have an effect on power prices if sustainable or renewable energy is insufficient or unreliable. Corporate Information Our principal place of business is 950 Railroad Avenue, Midland, Pennsylvania 15059.
Price caps could be introduced which may have long-term effects on power prices. If fossil fuel projects are not allowed to proceed, then this may have an effect on power prices if sustainable or renewable energy is insufficient or unreliable. Corporate Information We are a corporation incorporated in Delaware in 2012.
At Mawson we recognize the important role digital asset mining can play in supporting the energy grid and we seek to utilize and support renewable or sustainable energy sources. We hope to support the growth of further renewable or sustainable power into the grid.
Environment and Sustainability Digital asset mining requires a large amount of computing power, which in turn requires a large amount of electricity. At Mawson, we recognize the important role digital asset mining can play in supporting the energy grid and we seek to utilize and support renewable or sustainable energy sources.
The value of Bitcoin has historically risen after each halving event, due to the reduced supply of Bitcoin, however, there can be no guarantee that this will occur again in the future, or the timing known if such an event were to happen.
The value of Bitcoin has historically risen after each halving event, due to the reduced supply of Bitcoin, however, there can be no guarantee that this will occur again in the future, or the timing known if such an event were to happen. 5 Strategy Part of Mawson’s strategy is to identify and secure new development sites for future digital infrastructure facilities which meet our investment criteria.
This phenomenon, which is a feature of the Bitcoin protocol, is known as ‘halving’. The Bitcoin blockchain has undergone halving three times since its inception, on November 28, 2012, July 9, 2016, and May 11, 2020.
In addition, the reward for Bitcoin mining is scheduled to halve approximately every 4 years. This phenomenon, which is a feature of the Bitcoin protocol, is known as “halving.” The Bitcoin blockchain has undergone halving three times since its inception, on November 28, 2012, July 9, 2016, May 11, 2020, and April 19, 2024.
If more competitors add hash rate to the Network Hash Rate, then Mawson must also increase its own hash rate if it wants to ensure that the amount of rewards it receives over time remains the same or similar.
Similarly, the sum total of all Miners actively trying to solve a block in the Bitcoin network is known as the “Network Hash Rate.” If more competitors add hash rate to the Network Hash Rate, then Mawson must also increase its own hash rate if it wants to ensure that the amount of rewards it receives over time remains the same or similar.
Customer Co-location Services Mawson offers other businesses and customers in the digital assets industry the opportunity to have their Miners and other equipment located within our facilities. Mawson generates revenue from these customers for their use of our co-location services and facilities. The customer typically keeps all Bitcoin mined in this manner, while paying Mawson for providing co-location services.
Mawson generates revenue from these customers for their use of our digital colocation services and facilities. The customer typically keeps all digital assets such as Bitcoin mined in this manner, while paying Mawson fees for providing digital colocation services.
Publicly Listed companies operating comparable businesses include: ● Marathon Digital Holdings Inc. ● CleanSpark Inc. ● Riot Platforms, Inc. ● Bitfarms Ltd ● Cipher Mining Inc. ● Hut 8 Mining Corp. ● Core Scientific, Inc. ● Applied Digital Corp. ● Iris Energy Ltd. ● HIVE Blockchain Technologies, Inc. 6 ● TeraWulf, Inc. ● Bit Digital Inc. ● Argo Blockchain plc ● Stronghold Digital Mining, Inc. ● Greenidge Generation Holdings Inc. ● Ionic fka Celsius Human Capital Our employees are critical to our success.
Many Bitcoin mining operations are not publicly operated, and therefore data is not readily available. 6 Publicly Listed companies operating comparable businesses include: ● Marathon Digital Holdings Inc. ● Core Scientific, Inc. ● Applied Digital Corp. ● Cipher Mining Inc. ● Hut 8 Mining Corp. ● Bitfarms Ltd ● HIVE Blockchain Technologies, Inc. ● TeraWulf, Inc. ● Ionic fka Celsius Human Capital Our employees and talent are critical to our success.
The Network Hash Rate can also decline from time to time, which means that Mawson’s hash rate relative to the Network Hash Rate would increase (if Mawson continued to deploy the same amount of hash rate), increasing the chance that Mawson will be rewarded with Bitcoin. 2 As Mawson increases its hash rate it increases its chance of solving a particular problem and earning the right to place a block on the blockchain and at the same time earning a Bitcoin reward, as well as any potential transaction fee.
As Mawson increases its hash rate, it increases its chance of solving a particular problem and earning the right to place a block on the blockchain at the same time as earning a Bitcoin reward, as well as earning any potential transaction fee.
As of March 1, 2024, we had 30 plus full time employees. We also use contractors where practical and further rely on the extensive expertise of our external advisers, including legal, audit, financial, IT and compliance consultants, who may be engaged on a time basis, or on a project basis.
We also use contractors where practical and further rely on the expertise of our external contractors, including legal, audit, financial, IT and compliance consultants, who may be engaged on a time basis, or on a project basis. 7 Our future success has significant dependence on the performance and continued service of our management team and key employees.
Factors Affecting Profitability of Customer Co-location Services business The main factors affecting Mawson’s co-location profitability are (in no particular order): ● Reliance on a large, single co-location services customer; ● Provide services at a profitable rate; ● Ability to acquire competitively priced power ; and ● Hire and retain employees needed to provide services and other functions.
The main factors affecting Mawson’s digital colocation profitability are (in no particular order): ● Reliance on several large, single digital colocation services customers; ● Ability to acquire competitively priced power and provide competitive digital infrastructure platforms and services; and ● Ability to hire and retain the talent and employees needed to provide digital colocation services and other functions. 2 The Company currently has numerous colocation services customer contracts.
Hardware that Mawson would typically sell includes miners, transformers and/or MDCs. 5 Suppliers Mawson engages a range of suppliers for access to hardware and software required to mine Bitcoin, provide co-location services and for its energy markets program. This includes the manufacturers of the Miners, MDCs, and transformers.
Suppliers Mawson engages a range of suppliers for access to hardware and software required to mine Bitcoin, provide colocation services and for its energy management program. This includes the manufacturers of the Miners, MDCs, and transformers. Mawson enters into Power Purchase Agreements (“PPA”) with its power suppliers that set out the terms and duration of the supply or power.
Bitcoin miners, including Mawson, also compete with more traditional industries, for example, when obtaining the lowest cost, sustainable electricity, or access to sites with reliable sources of power. Many Bitcoin mining operations are not publicly operated, and therefore data is not readily available.
We compete with other digital asset mining companies directly for the acquisition of new Miners and raising capital. Bitcoin miners, including Mawson, also compete with more traditional industries, for example when obtaining the lowest cost, sustainable electricity or access to sites with reliable sources of power.
While Mawson takes steps to mitigate these risks, they cannot be avoided altogether. In particular, the market price of Bitcoin can be volatile, sometimes being subject to major changes in value in short time periods. In addition, the reward for Bitcoin mining is scheduled to halve approximately every 4 years.
There is a risk that a change in any of these factors could have a detrimental effect on Mawson’s business. While Mawson takes steps to mitigate these risks, they cannot be avoided altogether. In particular, the market price of Bitcoin can be volatile, sometimes being subject to major changes in value in short time periods.
The information on, or that may be accessed from, our website is not a part of this Annual Report. Investors can find a range of information about us there.
Available Information Our investor relations website and corporate information is available at www.mawsoninc.com. The information on, or that may be accessed from, our website is not a part of this Annual Report.
The Company currently has the following principal suppliers: - Energy Harbor LLC - Navitus LLC - Jewel Acquisition LLC Government Regulation Government regulation of blockchain and cryptocurrency is being actively considered by the United States of America (both at the federal and state levels) and by non-US governments, and their agencies and regulatory bodies.
Government Regulation Government regulation of AI/HPC and digital assets is being actively considered by the US government (both at the federal and state levels) and by non-US governments, and their agencies and regulatory bodies.
Such fees can provide upfront benefits, which helps decrease risk in the business, and potentially enables Mawson to have different types of revenue streams. Minimum fees can help generate revenue during periods when our Bitcoin self-mining may not be as profitable (for example, due to high energy prices, high network difficulty, and low Bitcoin prices).
Such fees can provide upfront benefits, which helps decrease risk in the business, and potentially enables Mawson to have different types of revenue streams.
Our future success has significant dependence on the performance and continued service of our management team and key employees. Our success and growth may be influenced by our ability to attract, retain and motivate qualified personnel. We compete for scarce qualified management and other personnel in a highly competitive workforce environment.
Our success and growth may be influenced by our ability to attract, retain and motivate qualified personnel. We compete for scarce qualified management and other personnel in a highly competitive industry and market. Our competitors may offer higher compensation or better opportunities than we can.
It is a public ledger that can be viewed by anyone with specialist knowledge and is typically kept by more than one entity. An example of a centralized ledger would be a ledger of bank account transactions kept by a financial institution. Miners perform computational operations to solve specific computing problems in support of the Bitcoin network.
In return for providing this security to the Bitcoin ledger, Bitcoin miners are rewarded with Bitcoin. The decentralized ledger is the key innovation of the Bitcoin protocol. It is a public ledger that can be viewed by anyone with specialist knowledge and is typically kept by more than one entity.
ITEM 1. BUSINESS. Overview General Mawson Infrastructure Group Inc. (“Mawson,” the “Company,” “we,” “us,” and “our”) is a corporation incorporated in Delaware in 2012. Shares of Mawson’s common stock, par value $0.001 per share (“Common Stock”) have been listed on The Nasdaq Capital Market since September 29, 2021.
Shares of the Company’s common stock, par value $0.001 per share (“Common Stock”) have been listed on The Nasdaq Capital Market since September 29, 2021. Mawson is a technology company focused on digital infrastructure platforms. The Company develops and operates digital infrastructure platforms for enterprise customers and for its own purposes.
Counter-party risk is a key issue when entering into co-location arrangements with customers, and Mawson employs a number of mitigation strategies to decrease the risks arising from counter-parties, including requiring deposits and charging upfront fees. 3 Energy Markets Program Mawson has developed an Energy Markets Program. To power all the miners at its facilities, Mawson uses substantial amounts of energy.
Mawson employs a number of mitigation strategies to decrease the risks arising from counter-parties depending on the customer agreement, including requiring security deposits and charging upfront fees.
This means that energy is a material input cost for Mawson’s operations. If energy prices are higher, then the cost of mining may be too high to make Bitcoin mining economical. This is especially true at times when Bitcoin prices are low, and network difficulty is high.
Energy Management Business Mawson has developed several energy management program capabilities. To power all the compute at its facilities, Mawson uses substantial amounts of energy. This means that energy is a material input cost for Mawson’s operations. If energy prices are higher, then the cost of running the compute may impact our business.
Bitcoin Self-Mining Bitcoin mining involves the use of specialized computers (“Miners”) to solve algorithmic problems in order to update the distributed or decentralized ledger of Bitcoin transactions securely. In return for providing this security to the Bitcoin ledger, Bitcoin miners are rewarded with Bitcoin. The decentralized ledger is the key innovation of the Bitcoin protocol.
Mawson tracks various stakeholders in the market to monitor changes in the market and environment that could potentially impact the energy management business. Digital Assets Mining Digital asset mining involves the use of Miners to solve algorithmic problems, for example in order to update the distributed or decentralized ledger of Bitcoin transactions securely.
The Bitcoin mining network is made up of a variety of competitors, from individual ’sub-scale’ hobbyists to large, publicly listed mining operations. We compete with the other publicly listed mining companies directly for the acquisition of new Miners and raising capital.
For additional discussion regarding the potential risks existing and future regulation pose to our business, see Item 1A “Risk Factors” herein. Competition The AI/HPC and digital assets industry and market is dynamic and global. In addition, the Bitcoin mining network is made up of a variety of competitors, from individual “sub-scale” hobbyists to large, publicly listed mining operations.
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Mawson was previously known as Wize Pharma Inc, and changed its name on March 17, 2021, after the acquisition of Mawson Infrastructure Group Pty Ltd (then known as Cosmos Capital Limited), a digital infrastructure provider.
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ITEM 1. BUSINESS. Overview General Mawson Infrastructure Group Inc. (“Mawson,” the “Company,” “we,” “us,” and “our”) is a technology company focused on digital infrastructure platforms, headquartered in the United States of America.
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Mawson is a ‘Digital Infrastructure’ Company, which operates (through its subsidiaries) data centers for the generation of Bitcoin cryptocurrency (also known as “Bitcoin mining”), in the United States. Because Mawson takes part in Bitcoin mining, it is often referred to as a Bitcoin miner.
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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 PL”) in a stock for stock exchange. This transaction has been accounted for as a reverse asset acquisition.
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The Company has 3 primary businesses – digital currency or Bitcoin self-mining, customer co-location and related services, and energy markets. As of the date of this Annual Report, we operate two data center facilities in Pennsylvania, USA, and have rights to develop other sites of various sizes in Ohio.
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The Company’s digital infrastructure platforms can be used to operate computing resources for a number of applications, and are offered across artificial intelligence (“AI”), high-performance computing (“HPC”), digital assets, and other computing applications.
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We seek to power our operations and facilities with renewable or sustainable power to further support our sustainability priorities.
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The Company also has an energy management business, which utilizes software and analysis, to generate revenue when the Company participates in energy management program related to the real-time needs of the grid. The Company also periodically transacts in digital computational machines, data center infrastructure, and related equipment, subject to business and commercial opportunities.
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We may also operate in related and adjacent businesses, including transacting in new and used crypto-currency mining and modular data centers (“MDCs”) equipment on a periodic basis, subject to prevailing market conditions and any surplus we may be experiencing. 1 Our Products and Services Mawson’s business Mawson has three main businesses through which it generates its revenue: ● Bitcoin self-mining; ● Customer co-location services; and ● Energy markets program.
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The Company has a strategy to prioritize the usage of carbon-free energy sources, including nuclear energy, to power its digital infrastructure platforms and computational machines.
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Similarly, the sum total of all Miners actively trying to solve a block in the Bitcoin network is known as the “Network Hash Rate”. If Mawson’s proportion of the Network Hash Rate grows, then Mawson’s chance of solving a block on the Bitcoin’s blockchain should increase and, therefore, Mawson’s chance of earning a Bitcoin reward should increase.
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The Company manages and operates digital infrastructure platforms and data centers delivering a total current capacity of approximately 129 megawatts (“MW”) with its current operational sites with an additional 24 MW of future capacity that is under development, all strategically located in locations served by the Pennsylvania-New Jersey-Maryland Interconnection (“PJM”) Energy Market in the United States of America (the “PJM Energy Market”).
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By operating more Miners, Mawson will also most likely increase the amount of power it requires to operate the Miners, thus increasing its costs.
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The PJM Energy Market is the largest wholesale power market in North America.
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As of the date of this Annual Report, Mawson operates its own miners in two data center facilities located in Midland and Bellefonte Pennsylvania, USA, that have been leased on long-term arrangements. The Midland site currently has 100MW of capacity available for both self-mining and co-location services and is capable of further development.
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Our Products and Services Mawson’s business Mawson has four main businesses: ● Digital Colocation ● AI and HPC Colocation ● Energy Management, and ● Digital Assets Mining 1 Digital Colocation Business Mawson offers other businesses and customers the opportunity to colocate their specialized computers used in mining digital assets (“Miners”) and other equipment within our facilities.
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The Bellefonte site currently has 8.8MW of capacity that is used entirely for self-mining and is also capable of expansion. As noted below, Mawson’s lease for property in Sharon, Pennsylvania was terminated and Mawson has moved completely out of the facility, which was a non-operating site.
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Minimum fees can help generate revenue during more challenging periods in the digital infrastructure markets or when our own digital mining may not be as profitable (for example, due to high energy prices, high network difficulty, and volatility in digital assets prices). Counter-party risk is a key issue when entering into colocation arrangements with customers.
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Part of Mawson’s strategy is to identify and secure new development sites for future data center facilities which meet our investment criteria.
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AI and HPC Colocation business Mawson offers other businesses and customers in the AI/HPC markets the opportunity to colocate their specialized computers and GPUs used for computation and processing purposes and other equipment within our facilities. Mawson expects to generate revenue from these customers for their use of our colocation services and facilities.
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We generate revenue through the mining of Bitcoin and then selling the Bitcoin that we mine. During the year ended December 31, 2023, we mined 741.33 Bitcoin and sold 741.33 Bitcoin resulting in revenues totaling $ 21.59 million. Mawson at this time typically liquidates any mined Bitcoin within a reasonable time after receipt.
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Customers expect to pay Mawson a fee for the Company providing its digital infrastructure to operate and optimize their compute processing and performance of their GPUs. Counter-party risk is a key issue when entering into digital colocation arrangements with customers.
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Mawson uses proprietary financial models, which it is constantly refining, that highlight to Mawson when participation in the Energy Markets Program should create greater value than operating is self-mining. Mawson then decides whether to mine or to curtail its energy usage, by switching off its miners.
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The main factors affecting Mawson’s AI and HPC colocation profitability are (in no particular order): ● Customer concentration amongst AI and HPC customers and markets; ● Ability to acquire competitively priced power and provide competitive AI/HPC infrastructure platforms and services; and ● Ability to hire and retain talent and employees needed to provide AI and HPC colocation services and other functions.
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Mawson has taken a number of steps to attempt to mitigate the risks inherent to the co-locations services business. The Company currently has three co-location services customers that it believes should help reduce the risk of exposure to a single customer.
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Mawson uses proprietary financial models and analysis, which it is constantly refining, that Mawson utilizes to optimize its participation in the energy management programs and how to adapt its energy usage in line with the needs of the grid.
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While none of these are guarantees, Mawson believes it has put necessary measures in place to minimize the risk associated with its co-location services business.
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An example of a centralized ledger would be a ledger of bank account transactions kept by a financial institution. As of the date of this Annual Report, Mawson operates its own digital asset miners in data center facilities located in Pennsylvania. Miners perform computational operations to solve specific computing problems in support of the Bitcoin network.
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Factors Affecting Profitability of Energy markets business The main factors affecting Mawson’s Energy management profitability are (in no particular order): ● Acquire appropriate hedge contracts; ● Access to power providers programs; and ● Regulatory or other changes.
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The Network Hash Rate can also decline from time to time, which means that Mawson’s hash rate relative to the Network Hash Rate would increase (if Mawson continued to deploy the same amount of hash rate), increasing the chance that Mawson will be rewarded with Bitcoin.
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Mawson is in contact with various local, state and federal agencies to monitor changes in the regulatory environment that could potentially impact the energy management business. Environment and Sustainability Digital asset mining requires a large amount of computing power, which in turn requires a large amount of electricity.
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Mawson has established relationships with several digital assets mining exchanges through which Mawson sells Bitcoin on a regular basis.
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Mawson enters into Power Purchase Agreements (“PPA”) with its power suppliers that set out the terms and duration of the supply or power.
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As of March 3, 2025, we had 33 full-time employees while utilizing software and technology to run and optimize our operations and digital infrastructure.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Relating to Laws, Regulatory Frameworks, and Legal Action - regulatory changes and changes in interpretations of existing regulations, including for digital assets like Bitcoin, or Bitcoin mining itself (including the imposition of taxes, limits on mining (or power usage), or new licensing regimes); - our ability to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act of 2002; - future developments regarding the treatment of digital assets for U.S. federal income and foreign tax purposes, or other taxes on Bitcoin mining; 9 - regulatory intervention by governments impacting the right to mine, acquire, own, hold, sell, exchange or use Bitcoin or other cryptocurrencies; - additional legislation or guidance may be issued by U.S. and non-U.S. governing bodies that may differ significantly from our practices or interpretation of the law, which could have unforeseen effects on our financial condition and results of operations, additional legislation or guidance may be issued by U.S. and non-U.S. governing bodies that may differ significantly from our practices or interpretation of the law, which could have unforeseen effects on our financial condition and results of operations; - legislative, regulatory and litigation threats regarding climate change and energy conservation, legislative, regulatory and litigation threats regarding climate change and energy conservation; - changes to laws regarding the operation of exchanges by third parties may make the business model unsustainable and may lead to an inability to exchange mined Bitcoin for fiat currency efficiently, changes to laws regarding the operation of exchanges by third parties may make the business model unsustainable and may lead to an inability to exchange mined Bitcoin for fiat currency efficiently; - material litigation (including with our lenders and counter-parties counterparties), investigations or enforcement actions by regulators and governmental authorities; and - because there has been limited precedent set for financial accounting of Bitcoin and other cryptocurrency assets, the determination that we have made for how to account for cryptocurrency assets transactions may be subject to change.
Biggest changeRisks Relating to Digital Assets Mining, Bitcoin Price and Technology - changes to the Bitcoin network’s protocols and software; - the manipulation of the blockchain by malicious actors; - failures of the Bitcoin network to be properly monitored and upgraded; - the decrease in the incentive to mine Bitcoin; - an increase in the network difficulty; - the increase of transaction fees related to digital assets; - the downward pressure on the price of Bitcoin created by firms selling their Bitcoin; - political or economic crisis or change; - the fraud or security failures of large digital asset exchanges; - the further development and acceptance of digital asset networks and other digital assets; - future digital asset and digital currency development; and - the development of quantum computing, and other new technologies. 10 Risks Relating to Laws, Regulatory Frameworks, and Legal Action - regulatory changes and changes in interpretations of existing regulations, including for digital assets like Bitcoin, or Bitcoin mining itself (including the imposition of taxes, limits on mining (or power usage), or new licensing regimes); - our ability to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act of 2002; - future developments regarding the treatment of digital assets for U.S. federal income and foreign tax purposes, or other taxes on Bitcoin mining; - regulatory intervention by governments impacting the right to mine, acquire, own, hold, sell, exchange or use Bitcoin or other digital assets; - additional legislation or guidance may be issued by U.S. and non-U.S. governing bodies that may differ significantly from our practices or interpretation of the law, which could have unforeseen effects on our financial condition and results of operations, additional legislation or guidance may be issued by U.S. and non-U.S. governing bodies that may differ significantly from our practices or interpretation of the law, which could have unforeseen effects on our financial condition and results of operations; - legislative, regulatory and litigation threats regarding climate change and energy conservation, legislative, regulatory and litigation threats regarding climate change and energy conservation; - changes to laws regarding the operation of exchanges by third parties may make the business model unsustainable and may lead to an inability to exchange mined Bitcoin for fiat currency efficiently, changes to laws regarding the operation of exchanges by third parties may make the business model unsustainable and may lead to an inability to exchange mined Bitcoin for fiat currency efficiently; - material litigation (including with our lenders and counter-parties counterparties), investigations or enforcement actions by regulators and governmental authorities; and - because there has been limited precedent set for financial accounting of Bitcoin and other digital assets, the determination that we have made for how to account for digital assets transactions may be subject to change. 11 Risks Relating to Our Business and Management We have incurred operating losses since inception.
Mawson’s fleet has not been materially renewed for a number of years, which means that a number of factors could render its self-mining fleet obsolete, including a significant increase in difficulty, the halving, or simply wear and tear on the machines rendering some or all of them uncommercial, or inoperable.
Mawson’s fleet has not been materially renewed for a number of years, which means that a number of factors could render its self-mining fleet obsolete, including a significant increase in difficulty, halving events, or simply wear and tear on the machines rendering some or all of them uncommercial, or inoperable.
If fees increase for recording transactions on the Bitcoin network, demand for cryptocurrencies may decrease and prevent the expansion of the network to retail merchants and commercial businesses, resulting in a reduction in the price of digital assets that could adversely affect our business, financial condition, results of operations and prospects.
If fees increase for recording transactions on the Bitcoin network, demand for digital assets may decrease and prevent the expansion of the network to retail merchants and commercial businesses, resulting in a reduction in the price of digital assets that could adversely affect our business, financial condition, results of operations and prospects.
A number of factors drive the adoption of ever more efficient Miners in the Bitcoin mining industry, including the energy prices, the fact the Bitcoin algorithm was designed so that as more computing power is added to the network, the difficulty to mine for each block increases, and the halving.
A number of factors drive the adoption of ever more efficient Miners in the Bitcoin mining industry, including energy prices, the fact the Bitcoin algorithm was designed so that as more computing power is added to the network, the difficulty to mine for each block increases, and halving events.
Cryptocurrency firms may be forced to sell their Bitcoin or cryptocurrency holdings putting downward pressure on the Bitcoin price. A professionalized mining operation may be more likely to sell a higher percentage of its newly mined digital assets rapidly if it is operating at a low profit margin.
Digital assets firms may be forced to sell their Bitcoin or digital assets holdings putting downward pressure on the Bitcoin price. A professionalized mining operation may be more likely to sell a higher percentage of its newly mined digital assets rapidly if it is operating at a low profit margin.
If the popularity and use of cryptocurrencies diminish and leads to their value decreasing, our business, financial condition, results of operations and prospects may be materially adversely affected. Future digital assets and digital currency development may lessen the usage of Bitcoin . Digital asset technology is evolving, and new digital assets can be created.
If the popularity and use of digital assets diminish and leads to their value decreasing, our business, financial condition, results of operations and prospects may be materially adversely affected. Future digital assets and digital currency development may lessen the usage of Bitcoin . Digital asset technology is evolving, and new digital assets can be created.
We promptly and frequently liquidate cryptocurrencies. This may mean that we sell digital assets at a time when the prices on the respective digital asset exchange market are low, which could adversely affect our business, financial condition, results of operations and prospects.
We promptly and frequently liquidate digital assets. This may mean that we sell digital assets at a time when the prices on the respective digital asset exchange market are low, which could adversely affect our business, financial condition, results of operations and prospects.
Our guidance is based on certain assumptions, and may vary from actual results, if our assumptions are not met or are impacted as a result of various risks and uncertainties, the market value of our Common Stock could decline significantly.
Our guidance is based on certain assumptions, and may vary from actual results, if our assumptions are not met or are impacted as a result of various risks and uncertainties, the market value of our Common Stock could decline significantly. 26
The government of the People’s Republic of China in particular exerts a high level of influence and control over its economy and businesses (private and state owned). There have been various examples of government policies, decisions, laws and intervention into particular industries.
Additionally, the government of the People’s Republic of China in particular exerts a high level of influence and control over its economy and businesses (private and state owned). There have been various examples of government policies, decisions, laws and intervention into particular industries.
More efficient hardware can mine more hashes per second, which increases the hash rate and can cause the difficulty level to rise. 19 4. Electricity costs: Mining requires a lot of electricity, and the cost of electricity can have a significant impact on mining difficulty.
More efficient hardware can mine more hashes per second, which increases the hash rate and can cause the difficulty level to rise. 4. Electricity costs: Mining requires a lot of electricity, and the cost of electricity can have a significant impact on mining difficulty.
Regulatory changes or interpretations could cause us (or any of our related entities) to register and comply with new regulations, resulting in potentially extraordinary, recurring or non-recurring expenses to continuing our digital assets business, or entering into new business ventures. 21 We may not be able to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act of 2002.
Regulatory changes or interpretations could cause us (or any of our related entities) to register and comply with new regulations, resulting in potentially extraordinary, recurring or non-recurring expenses to continuing our digital assets business, or entering into new business ventures. 22 We may not be able to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act of 2002.
These circumstances raise substantial doubt about our ability to continue as a going concern. Our financial statements as of December 31, 2023, have been prepared on the basis that we will be able to continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.
These circumstances raise substantial doubt about our ability to continue as a going concern. Our financial statements as of December 31, 2024, have been prepared on the basis that we will be able to continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.
Because there has been limited precedent set for the financial accounting for bitcoin and other cryptocurrency assets and related revenue recognition and no official guidance has yet been provided by the Financial Accounting Standards Board or the SEC, it is unclear how companies may in the future be required to account for cryptocurrency transactions and assets and related revenue recognition.
Because there has been limited precedent set for the financial accounting for Bitcoin and other digital assets and related revenue recognition and no official guidance has yet been provided by the Financial Accounting Standards Board or the SEC, it is unclear how companies may in the future be required to account for digital assets transactions and related revenue recognition.
We will need to raise substantial additional capital in the near term to continue to fund our operations, meet our debt obligations and execute our current business strategy. The amount and timing of our capital needs have and will continue to depend on many factors, as discussed further below as well as under “Item 7.
We will need to raise substantial additional capital in the near term to continue to fund our operations, meet our debt obligations and execute our current business strategy. The amount and timing of our capital needs have and will continue to depend on many factors, as discussed further below as well as under Item 7.
The slowing or stopping of the development or acceptance of digital asset systems may adversely affect us. Currently, there is relatively small use of Bitcoins and other cryptocurrencies in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect an investment in us.
The slowing or stopping of the development or acceptance of digital asset systems may adversely affect us. Currently, there is relatively small use of Bitcoins and other digital assets in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect an investment in us.
New digital assets competing with Bitcoin may increase in popularity and in turn cause a decline in the value of Bitcoin, which may in turn lead to a decline in the Bitcoin network and our ability to generate revenue from our current mining activities. This may include the development of so-called central bank digital currencies (CBCDs).
New digital assets competing with Bitcoin may increase in popularity and in turn cause a decline in the value of Bitcoin, which may in turn lead to a decline in the Bitcoin network and our ability to generate revenue from our current mining activities. This may include the development of so-called central bank digital currencies (“CBCDs”).
Any downtime of a significant number of our Miners and mining equipment will have a direct impact on us as they would not be performing their role. This could occur during an accident on site, or during transportation of a large number of Miners.
Any downtime of a significant number of our Miners and mining equipment will have a direct impact on us as they would not be performing their role. This could occur due to an accident on site, or during transportation of a large number of Miners.
Future developments regarding the treatment of digital assets for U.S. federal income and foreign tax purposes could adversely impact our business. Globally, many taxation laws, rules and guidelines have not been developed with digital assets or cryptocurrencies in focus.
Future developments regarding the treatment of digital assets for U.S. federal income and foreign tax purposes could adversely impact our business. Globally, many taxation laws, rules and guidelines have not been developed with digital assets in focus.
Management’s Discussion and Analysis of Financial Condition and Results of Operations —Liquidity and Capital Resources.” We have several notes in default which can subject collateral to seizure and otherwise impact our ability to use the collateral in our operations as well as affect our ability to raise capital.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations —Liquidity and Capital Resources.” We have several notes in default which can subject collateral to seizure and otherwise impact our ability to use the collateral in our operations as well as affect our ability to raise capital.
The trading price of our Common Stock has been highly volatile and could continue to be subject to wide fluctuations in response to various factors, some of which are beyond our control. Our Common Stock has experienced fluctuations due to market dynamics, and the Bitcoin downturn.
The trading price of our Common Stock is likely to continue to be volatile. The trading price of our Common Stock has been highly volatile and could continue to be subject to wide fluctuations in response to various factors, some of which are beyond our control. Our Common Stock has experienced fluctuations due to market dynamics and the Bitcoin downturn.
As a result of the material weaknesses in our internal control over financial reporting, the Company’s management has concluded that, as December 31, 2023, the Company’s internal control over financial reporting was not effective based on the criteria in Internal Control – Integrated Framework issued by COSO.
As a result of the material weaknesses in our internal control over financial reporting, the Company’s management has concluded that, as December 31, 2024, the Company’s internal control over financial reporting was not effective based on the criteria in Internal Control – Integrated Framework issued by COSO.
Our management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
Our management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies; certain governments have deemed them illegal, and others have allowed their use and trade without restriction, while in some jurisdictions, such as in the United States, subject the mining, ownership and exchange of cryptocurrencies to extensive, and in some cases overlapping, unclear and evolving regulatory requirements.
As digital assets have grown in both popularity and market size, governments around the world have reacted differently to digital assets; certain governments have deemed them illegal, and others have allowed their use and trade without restriction, while in some jurisdictions, such as in the United States, subject the mining, ownership and exchange of digital assets to extensive, and in some cases overlapping, unclear and evolving regulatory requirements.
The cryptocurrency mining industry is highly competitive, especially for Bitcoin, and there are several competitors who are considerably larger than Mawson, and who have operated for longer in the industry. With this size and operating history likely comes greater resources (financial, human, and technical), greater brand recognition and reputation, stronger business relationships, and economies of scale.
The digital assets mining industry is highly competitive, especially for Bitcoin, and there are several competitors who are considerably larger than Mawson, and who have operated for longer in the industry. With this size and operating history likely comes greater resources (financial, human, and technical), greater brand recognition and reputation, stronger business relationships, and economies of scale.
Because there has been limited precedent set for financial accounting for bitcoin and other cryptocurrency assets, the determinations that we have made for how to account for cryptocurrency assets transactions may be subject to change.
Because there has been limited precedent set for financial accounting for Bitcoin and other digital assets, the determinations that we have made for how to account for digital assets transactions may be subject to change.
If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, operating results and financial condition could be adversely affected. Global climate change and related environmental regulations may have an adverse effect on our business operations and financial position.
If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, operating results and financial condition could be adversely affected. Global climate change may have an adverse effect on our business operations and financial position.
The price of Bitcoin can fluctuate due to investment and trading sentiment amongst users, speculators, and investors for a range of reasons, including changes in interest rate settings, or negative or positive publicity (for example due to legal proceedings or losses to Bitcoin investors due to fraud or cyber-attacks a cryptocurrency exchange or online wallet).
The price of Bitcoin can fluctuate due to investment and trading sentiment amongst users, speculators, and investors for a range of reasons, including changes in interest rate settings, or negative or positive publicity (for example due to legal proceedings or losses to Bitcoin investors due to fraud or cyber-attacks a digital assets exchange or online wallet).
Governments have and may take regulatory actions to restrict the right to acquire, own, hold, sell, exchange or use Bitcoin or other cryptocurrencies. For example, it may be, or may become, illegal to accept payment in Bitcoin for consumer transactions and banking institutions could be barred from accepting deposits of cryptocurrencies.
Governments have and may take regulatory actions to restrict the right to acquire, own, hold, sell, exchange or use Bitcoin or other digital assets. For example, it may be, or may become, illegal to accept payment in Bitcoin for consumer transactions and banking institutions could be barred from accepting deposits of digital assets.
Additional capital may not be available to us, or even if it is, the cost of such capital may be high or even uncommercial. We may be forced to obtain additional capital when our stock price or trading volume or both are low, or when the general market for cryptocurrency companies is weak.
Additional capital may not be available to us, or even if it is, the cost of such capital may be high or even uncommercial. We may be forced to obtain additional capital when our stock price or trading volume or both are low, or when the general market for digital assets companies is weak.
In addition, regulatory actions, as well as any other political developments in the regions with active cryptocurrency trading or mining, may increase our domestic competition as some of those cryptocurrency miners or new entrants in this market may move their cryptocurrency mining operations or establishing new operations in the United States.
In addition, regulatory actions, as well as any other political developments in the regions with active digital assets trading or mining, may increase our domestic competition as some of those digital assets miners or new entrants in this market may move their digital assets mining operations or establishing new operations in the United States.
In addition, there continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty for our business because the cryptocurrency mining industry, with its high energy demand, may become a target for future environmental and energy regulation.
In addition, there continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty for our business because the digital assets mining industry, with its high energy demand, may become a target for future environmental and energy regulation.
Further, although Bitcoin and Bitcoin mining, as well as cryptocurrencies generally, are largely unregulated in most countries (including the United States), regulators could undertake new or intensify regulatory actions that could severely restrict the right to mine, acquire, own, hold, sell, or use cryptocurrency or to exchange it for traditional fiat currency such as the United States Dollar.
Further, although Bitcoin and Bitcoin mining, as well as digital assets generally, are largely unregulated in most countries (including the United States), regulators could undertake new or intensify regulatory actions that could severely restrict the right to mine, acquire, own, hold, sell, or use digital assets or to exchange it for traditional fiat currency such as the United States Dollar.
Our business relies on cryptocurrency-specific hardware such as the Miners, and containers in which to operate the Miners, and also more general plant and equipment such transformers, breakers, power boards exhaust fans, deflectors, monitoring equipment and many other parts.
Our business relies on digital assets-specific hardware such as the Miners, and containers in which to operate the Miners, and also more general plant and equipment such transformers, breakers, power boards exhaust fans, deflectors, monitoring equipment and many other parts.
Cryptocurrencies are a relatively new concept and asset class, so there is still some degree of uncertainty and skepticism about their use. Whether their popularity will gain further traction is difficult to predict.
Digital assets are a relatively new concept and asset class, so there is still some degree of uncertainty and skepticism about their use. Whether their popularity will gain further traction is difficult to predict.
If we do not achieve our operational objectives, and if we do not generate sufficient cash flow and income, our financial performance and long-term viability may be materially and adversely affected. Our inability to achieve and then maintain profitability would negatively affect our business, financial condition, results of operations and cash flows.
If we do not achieve our operational objectives, and if we do not generate sufficient cash flow and income, our financial performance and long-term viability may be materially and adversely affected. Our inability to achieve and then maintain profitability would negatively affect our business, financial condition, res u lts of operations and cash flows.
The reward has decreased over the years and, the current block reward is 6.25 Bitcoins per block. Halving events will continue until the block reward reaches zero. The process will end with a predetermined total of 21 million Bitcoins being issued, estimated to be around the year 2140.
The reward has decreased over the years and, the current block reward is 3.125 Bitcoins per block. Halving events will continue until the block reward reaches zero. The process will end with a predetermined total of 21 million Bitcoins being issued, estimated to be around the year 2140.
We have a history of losses from operations, we expect negative cash flows from our operations to continue for the foreseeable future, and we expect that our net losses will continue for the foreseeable future as we seek to increase the efficiency of our operations, find new co-location customers, and grow the size of our self-mining operations.
We have a history of losses from operations, we expect potential negative cash flows from our operations to continue for the foreseeable future, and we expect that our net losses will continue for the foreseeable future as we seek to increase the efficiency of our operations, find new colocation customers, and grow the size of our self-mining operations.
Furthermore, government scrutiny related to restrictions on cryptocurrency mining facilities and their energy consumption has increased over the past few years as cryptocurrency mining has become more widespread.
Furthermore, government scrutiny related to restrictions on digital assets mining facilities and their energy consumption has increased over the past few years as digital assets mining has become more widespread.
U.S. holders may wish to consult their tax advisors about the potential application of the PFIC rules to an investment in our ordinary shares. 22 Regulatory intervention by governments could affect the right to acquire, own, hold, sell, exchange or use Bitcoin or other cryptocurrencies.
U.S. holders may wish to consult their tax advisors about the potential application of the PFIC rules to an investment in our ordinary shares. 23 Regulatory intervention by governments could affect the right to acquire, own, hold, sell, exchange or use Bitcoin or other digital assets.
We are unable to predict the nature or extent of new and proposed legislation and regulation affecting the cryptocurrency industry, or the potential impact of the use of cryptocurrencies, which could have material adverse effects on our business and our industry more broadly.
We are unable to predict the nature or extent of new and proposed legislation and regulation affecting the digital assets industry, or the potential impact of the use of digital assets, which could have material adverse effects on our business and our industry more broadly.
Such restrictions may adversely affect us as the large-scale use of cryptocurrencies as a means of exchange is presently confined to certain regions globally.
Such restrictions may adversely affect us as the large-scale use of digital assets as a means of exchange is presently confined to certain regions globally.
Additionally, our operations could be materially adversely affected by prolonged power outages. Therefore, we may have to reduce or cease our operations in the event of an extended power outage, or as a result of the unavailability or increased cost of electrical power. If this were to occur, our business and results of operations could be materially and adversely affected.
We may have to reduce or cease our operations in the event of an extended power outage, or as a result of the unavailability or increased cost of electrical power. If this were to occur, our business and results of operations could be materially and adversely affected.
Corporate collapses of important companies in the Bitcoin ecosystem, such as exchanges, funds, lenders, wallet providers and so on, or other cryptocurrencies can also have an impact on confidence and the Bitcoin price. We are also exposed to the effect a falling price can have on our counterparties, including the exchanges we use and our co-location customers.
Corporate collapses of important companies in the Bitcoin ecosystem, such as exchanges, funds, lenders, wallet providers and so on, or other digital assets can also have an impact on confidence and the Bitcoin price. We are also exposed to the effect a falling price can have on our counterparties, including the exchanges we use and our colocation customers.
It is possible that state or federal regulators may seek to impose harsh restrictions or total bans on cryptocurrency mining which may make it impossible for us to do business without relocating our co-location and self-mining operations, which could be very costly and time consuming.
It is possible that state or federal regulators may seek to impose harsh restrictions or total bans on digital assets mining which may make it impossible for us to do business without relocating our colocation and self-mining operations, which could be very costly and time consuming.
This may force us to consider other business options, such as to expand our co-location business, however, even if successful, these alternative business options may not generate the same level of profit or income as self-mining. Cryptocurrency mining is a highly competitive industry.
This may force us to consider other business options, such as to expand our colocation business, however, even if successful, these alternative business options may not generate the same level of profit or income as self-mining. Digital assets mining is a highly competitive industry.
If Mawson is unable to successfully defend itself against such claims, then it may become liable to make substantial payments to satisfy judgments, fines or penalties, or alter, delay, limit or cease some or all its business practices. Mawson may suffer damage to our brand and reputation.
If Mawson is unable to successfully defend itself against such claims, then it may become liable to make substantial payments to satisfy judgments, fines or penalties, or alter, delay, limit or cease some or all its business practices. Mawson may also suffer damage to our brand and reputation as a result of such adverse judgment.
Such circumstances could have a material adverse effect on us, which could have a material adverse effect on our business, prospects, or operations and potentially the value of any Bitcoin or other cryptocurrencies we or our co-location customers mine, or otherwise acquire or hold, and thus harm investors.
Such circumstances could have a material adverse effect on us, which could have a material adverse effect on our business, prospects, or operations and potentially the value of any Bitcoin or other digital assets we or our colocation customers mine, or otherwise acquire or hold, and thus harm investors.
This would likely have a material adverse effect on our business, financial condition, results of operations and prospects. Such supply chain disruptions have the potential to cause material impacts to our operating performance and financial position if the delivery of equipment for our facilities is delayed. Mining equipment is prone to breakdown, fail or become obsolete.
This would likely have a material adverse effect on our business, financial condition, results of operations and prospects. Such supply chain disruptions have the potential to cause material impacts to our operating performance and financial position if the delivery of equipment for our facilities is delayed.
Legal Proceedings section) and may be subject in the future to claims, legal proceedings, government investigations or enforcement actions, including in the ordinary course of business. Agreements entered into by Mawson sometimes include indemnification provisions which can subject Mawson to costs and damages in the event of a claim against an indemnified third party.
“Legal Proceedings” for more information about ongoing litigation) and may be subject in the future to claims, legal proceedings, government investigations or enforcement actions, including in the ordinary course of business. Agreements entered into by Mawson sometimes include indemnification provisions which can subject Mawson to costs and damages in the event of a claim against an indemnified third party.
The higher the network difficulty, the more challenging it is to mine new Bitcoins. As a result, mining profitability is directly impacted by changes in difficulty levels. There are several other factors that can influence network difficulty, such as: 1. Network difficulty adjustments: The Bitcoin network adjusts difficulty every 2016 blocks or approximately every two weeks.
As a result, mining profitability is directly impacted by changes in difficulty levels. There are several other factors that can influence network difficulty, such as: 1. Network difficulty adjustments: The Bitcoin network adjusts difficulty every 2016 blocks or approximately every two weeks.
Banks and other financial institutions can and have made legal and risk-based decisions to not accept customers such as digital assets investors or businesses that engage in Bitcoin-related activities or that accept Bitcoin as payment.
Banks and financial institutions may cease to provide financial services to persons involved in digital assets transactions. Banks and other financial institutions can and have made legal and risk-based decisions to not accept customers such as digital assets investors or businesses that engage in Bitcoin-related activities or that accept Bitcoin as payment.
The potential physical effects of climate change on our operations, if any, are highly uncertain. 16 Extreme weather events may: ● cause damage to one or more of our modular data centers (that house our Miners) and therefore reduce our ability to maximize the performance of or operate the Miners; ● affect the delivery times of equipment ordered from our manufacturers and therefore impact our financial forecasts which were scheduled for a certain period of time; or ● cause power disruptions or cuts to our Miners, reducing operating times and the performance of the Miners.
Extreme weather events may: ● cause damage to one or more of our modular data centers (that house our Miners) and therefore reduce our ability to maximize the performance of or operate the Miners; ● affect the delivery times of equipment ordered from our manufacturers and therefore impact our financial forecasts which were scheduled for a certain period of time; or ● cause power disruptions or cuts to our Miners, reducing operating times and the performance of the Miners.
These individuals can propose refinements or improvements to the Bitcoin network’s source code through one or more software upgrades that alter the protocols and software that govern the Bitcoin network and the properties of Bitcoin, including the irreversibility of transactions and limitations on the mining of new Bitcoin. Proposals for upgrades and discussions relating thereto take place on online forums.
These individuals can propose refinements or improvements to the Bitcoin network’s source code through one or more software upgrades that alter the protocols and software that govern the Bitcoin network and the properties of Bitcoin, including the irreversibility of transactions and limitations on the mining of new Bitcoin.
Although we may take measures to mitigate the impact of this inflation, if these measures are not effective, our business, financial condition, results of operations, and liquidity could be materially adversely affected.
As a result of inflation, we have experienced and may continue to experience, cost increases. Although we may take measures to mitigate the impact of this inflation, if these measures are not effective, our business, financial condition, results of operations, and liquidity could be materially adversely affected.
Changes in climate and its effect on the environment such as changes in heat, humidity, snow, rainfall, weather patterns, water supplies and shortages, sea level and changing temperatures could have an adverse effect on our operations and financial performance.
Changes in climate and its effect on the environment such as changes in heat, humidity, snow, rainfall, weather patterns, water supplies and shortages, sea level and changing temperatures could have an adverse effect on our operations and financial performance. The potential physical effects of climate change on our operations, if any, are highly uncertain.
The Halving: Bitcoin undergoes a halving event roughly every four years, where the reward for mining a new block is cut in half. This means that miners need to mine twice as many blocks to earn the same amount of bitcoin.
Halving: Bitcoin undergoes a halving event roughly every four years, where the reward for mining a new block is cut in half. This means that miners need to mine twice as many blocks to earn the same amount of Bitcoin. This can lead to a drop in hashrate, as some miners may find it less profitable to continue mining.
In addition, the Celsius deposit of $15.33 million is the subject of an ongoing legal dispute. Advancing our future plans will require substantial additional investment. Based on our current operating plan estimates, we do not have sufficient cash to satisfy our working capital needs and other liquidity requirements over the next 12 months from the date of this report.
Advancing our future plans will require substantial additional investment. Based on our current operating plan estimates, we do not have sufficient cash to satisfy our working capital needs and other liquidity requirements over the next 12 months from the date of this report.
In particular, in July of 2022, Celsius Networks, LLC and Celsius Mining LLC, filed for Chapter 11 bankruptcy. A subsidiary of Mawson remains an unsecured creditor of Celsius Mining LLC, with two unpaid pre-petition invoices totaling in excess of $1.8 million. Subsequent disputes have led to litigation between Celsius entities and Mawson entities, refer to Part 3.
In particular, in July 2022, Celsius Networks, LLC and Celsius Mining LLC, filed for Chapter 11 bankruptcy. A subsidiary of Mawson remains an unsecured creditor of Celsius Mining LLC, with two unpaid pre-petition invoices totaling in excess of $1.8 million.
To the extent that such malicious actor or botnet does not yield its majority control of the processing power, or the digital asset community does not reject the fraudulent blocks as malicious, reversing any changes made to the blockchain may not be possible.
To the extent that such malicious actor or botnet does not yield its majority control of the processing power, or the digital asset community does not reject the fraudulent blocks as malicious, reversing any changes made to the blockchain may not be possible. Such changes could materially adversely affect our business, financial condition, results of operations and prospects.
We are required to comply with certain provisions of Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”). Section 404 requires that our management maintain a system of internal control over financial reporting that provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Section 404 requires that our management maintain a system of internal control over financial reporting that provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Given the difficulty of predicting the outcomes of ongoing and future regulatory actions and legislative developments, it is possible that they could have a material adverse effect on our business, prospects or operations. Legislative, regulatory, and litigation threats regarding climate change and energy conservation. Changing environmental regulation and public energy policy may expose our business to new risks.
Given the difficulty of predicting the outcomes of ongoing and future regulatory actions and legislative developments, it is possible that they could have a material adverse effect on our business, prospects or operations. Legislative, regulatory, and litigation threats regarding climate change and energy conservation could add significant burden, costs and reputational damage to our business.
You should consider carefully the following information about these risks, together with the other information contained in this Annual Report, including the matters addressed in the section entitled “CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS” beginning on page iii of this Annual Report, before making an investment decision.
You should consider carefully the following information about these risks, together with the other information contained in this Annual Report, including the matters addressed in the sections entitled “CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, before making an investment decision.
As new and more powerful miners are deployed, the global network hash rate will continue to increase, meaning a miner’s chance of earning bitcoin rewards will decline unless it deploys additional hash rate at pace with the industry.
As new and more powerful miners are deployed, the global network hash rate will continue to increase, meaning a miner’s chance of earning Bitcoin rewards will decline unless it deploys additional hash rate at pace with the industry. 16 Accordingly, to maintain our chances of earning new Bitcoin rewards and remaining competitive in our industry, we must seek to continually add new miners to grow our hash rate at pace with the growth in the Bitcoin global network hash rate.
As a result, the marketplace may lose confidence in, or may experience problems relating to, digital asset exchanges / custodians, including prominent exchanges / custodians handling a significant portion of the volume of digital asset trading. 20 A lack of stability in the digital asset exchange market and the closure or temporary shutdown of digital asset exchanges due to fraud, business failure, hackers or malware, or government-mandated regulation may reduce confidence in the digital asset networks and result in greater volatility in digital asset values.
A lack of stability in the digital asset exchange market and the closure or temporary shutdown of digital asset exchanges due to fraud, business failure, hackers or malware, or government-mandated regulation may reduce confidence in the digital asset networks and result in greater volatility in digital asset values.
Miners and related mining equipment used to mine digital assets are sophisticated machines and may be operated over two years or longer. They are thus prone to breakdown and may not function at any given time.
This could affect consumer adoption and AI companies’ images and reputations. 14 Mining equipment is prone to breakdown, fail or become obsolete. Miners and related mining equipment used to mine digital assets are sophisticated machines and may be operated over two years or longer. They are thus prone to breakdown and may not function at any given time.
Our Bitcoin co-location services and mining operations require a substantial amount of power and can only be successful, and ultimately profitable, if the costs we incur, including for electricity, are lower than the revenue we generate from our operations.
Changing environmental regulation and public energy policy may expose our business to new risks. Our Bitcoin colocation services and mining operations require a substantial amount of power and can only be successful, and ultimately profitable, if the costs we incur, including for electricity, are lower than the revenue we generate from our operations.
We rely on a small number of key people, the loss of which could have a significant impact on us. The responsibility of the direction and operation of our business relies heavily on a small number of key people, including our CEO and CFO.
The responsibility of the direction and operation of our business relies heavily on a small number of key people, including our CEO and CFO.
As an open-source project, Bitcoin is not represented by an official organization or authority. As the Bitcoin network protocol is not sold and its use does not generate revenues for contributors, contributors are generally not compensated for maintaining and updating the Bitcoin network protocol.
As the Bitcoin network protocol is not sold and its use does not generate revenues for contributors, contributors are generally not compensated for maintaining and updating the Bitcoin network protocol.
Any of the foregoing could result in a material adverse effect on our business and financial condition. 23 Changes to laws regarding the operation of Bitcoin mining and Bitcoin and cryptocurrency exchanges by third parties may make the business model unsustainable and may lead to an inability to exchange mined Bitcoin for fiat currency efficiently, or may be made illegal in certain jurisdictions, including the ones we operate in, which could adversely affect our business prospects and operations.
Any of the foregoing could result in a material adverse effect on our business and financial condition. 24 Changes to laws regarding the operation of Bitcoin mining and Bitcoin and digital assets exchanges by third parties may make the business model unsustainable and may lead to an inability to exchange mined Bitcoin for fiat currency efficiently.
For example, there is an ongoing debate regarding altering the blockchain by increasing the size of blocks to accommodate a larger volume of transactions. Although some proponents support an increase, other market participants oppose an increase to the block size as it may deter miners from confirming transactions and concentrate power into a smaller group of miners.
Although some proponents support an increase, other market participants oppose an increase to the block size as it may deter miners from confirming transactions and concentrate power into a smaller group of miners.
To the extent that the digital asset exchanges / custodians representing a substantial portion of the volume in digital asset trading are involved in fraud or experience security failures or other operational issues, such digital asset exchanges / custodians’ failures may result in a reduction in the price of some or all digital assets and can adversely affect us.
The network effect of reduced profit margins resulting in greater sales of newly mined digital assets could result in a reduction in the price of digital assets that could adversely impact our business, financial condition, results of operations and prospects. 20 To the extent that the digital asset exchanges / custodians representing a substantial portion of the volume in digital asset trading are involved in fraud or experience security failures or other operational issues, such digital asset exchanges / custodians’ failures may result in a reduction in the price of some or all digital assets and can adversely affect us.
These risks are discussed more fully below and include, but are not limited to, risks related to: Risks Relating to Our Business and Management - our history of incurring losses; - our need to, and difficulty in, raising additional capital and repossession of collateral securing current loans in default; - the potential of being delisted from NASDAQ; - downturns in the cryptocurrency industry; - inflation; - increased interest rates; - the inability to procure needed hardware; - the failure or breakdown of mining equipment; - outages and limitations of internet connectivity; - access to reliable and reasonably priced electricity sources; - cyber-security threats; - our ability to obtain proper insurance; - the prices of digital assets; - our reliance on a small number of key employees; - our failure to effectively manage our growth including not growing or improving our current hashrate; - the competitiveness of the cryptocurrency industry; - global climate change and related environmental regulations; - the potential cancellation or withdrawal of required operating and other permits and licenses; and - banks and other financial institutions ceasing to provide services to people in our industry, whether through choice or due to their own insolvency or failure. 8 Risks Relating to Cryptocurrency Mining, Bitcoin Price and Technology - changes to the Bitcoin network’s protocols and software; - the manipulation of the blockchain by malicious actors; - failures of the Bitcoin network to be properly monitored and upgraded; - the decrease in the incentive to mine Bitcoin; - an increase in the network difficulty; - the increase of transaction fees related to digital assets; - the downward pressure on the price of Bitcoin created by firms selling their Bitcoin; - political or economic crises or change; - the fraud or security failures of large digital asset exchanges; - the further development and acceptance of digital asset networks and other digital assets; - future digital asset and digital currency development; and - the development of quantum computing, and other new technologies.
These risks are discussed more fully below and include, but are not limited to, risks related to: Risks Relating to Our Business and Management - our history of incurring losses; - our need to, and difficulty in, raising additional capital and repossession of collateral securing current loans in default; - the potential of being delisted from Nasdaq; - downturns in the digital assets industry; - inflation; - increased interest rates; - the inability to procure needed hardware; - risks associated with our expansion into the Artificial Intelligence (“AI”) and High-Performance Computing (“HPC”) markets; - the failure or breakdown of mining equipment; - outages and limitations of internet connectivity; - access to reliable and reasonably priced electricity sources; - cyber-security threats; - our ability to obtain proper insurance; 9 - the prices of digital assets; - our reliance on a small number of key employees; - our failure to effectively manage our growth including not growing or improving our current hashrate; - the competitiveness of the digital assets industry; - global climate change and related environmental regulations; - the potential cancellation or withdrawal of required operating and other permits and licenses; and - banks and other financial institutions ceasing to provide services to people in our industry, whether through choice or due to their own insolvency or failure.
In addition to the possible imposition of fines in the case of any such violations, we may be required to undertake significant capital investments and obtain additional operating permits or licenses, which could have a material adverse effect on us. Banks and financial institutions may cease to provide financial services to persons involved in cryptocurrency transactions.
In addition to the possible imposition of fines in the case of any such violations, we may be required to undertake significant capital investments and obtain additional operating permits or licenses, which could have a material adverse effect on us. Digital assets such as Bitcoin are likely to be more highly regulated.
We cannot be certain of future regulatory developments or interpretations, and it is difficult to list or describe all the risks that Mawson may be subject to in this space.
Digital assets have been subject to ongoing scrutiny by regulators and government. It is possible that regulation in the digital asset industry will increase. We cannot be certain of future regulatory developments or interpretations, and it is difficult to list or describe all the risks that Mawson may be subject to in this space.
This is known as a “hard fork.” In such a case, the “hard fork” in the blockchain could materially and adversely affect the perceived value of digital assets as reflected on one or both incompatible blockchains, which may materially adversely affect our business, financial condition, results of operations and prospects.
This is known as a “hard fork.” In such a case, the “hard fork” in the blockchain could materially and adversely affect the perceived value of digital assets as reflected on one or both incompatible blockchains, which may materially adversely affect our business, financial condition, results of operations and prospects. 18 If a malicious actor or botnet obtains control in excess of 50% of the processing power active on any digital asset network, including the Bitcoin network, it is possible that such actor or botnet could manipulate the blockchain in a manner that adversely affects us.
If we are unable to acquire rights to use such land or lose the rights to the land we currently lease or occupy, this would likely mean that we would lose access to the relevant supply of electricity. A lack of access to electricity would significantly impact the profitability and viability of our business.
Our data infrastructure requires developed land, preferably close to sustainable and reasonably priced electricity sources. If we are unable to acquire rights to use such land or lose the rights to the land we currently lease or occupy, this would likely mean that we would lose access to the relevant supply of electricity.
We promptly and frequently liquidate cryptocurrencies that we mine and keep a minimum number of cryptocurrencies in our possession so as to minimize our risks against theft, loss, destruction or other issues relating to hackers and technological attack.
A resulting perception that our measures do not adequately protect our assets could adversely affect our business, financial condition, results of operations and prospects. 15 We promptly and frequently liquidate digital assets that we mine and keep a minimum number of digital assets in our possession so as to minimize our risks against theft, loss, destruction or other issues relating to hackers and technological attack.
In addition, as a smaller reporting company and non-accelerated filer, we are not subject to the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. However, as we grow, we may become subject to the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act.
In addition, while Mawson continues to work on these deficiencies and improve the overall control environment over financial reporting, as a smaller reporting company and non-accelerated filer, we are not subject to the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act.
If any of our key employees or service providers cease their involvement in our business or, in the unfortunate situation one or more of them are seriously injured or dies, this loss would have a significant and likely adverse impact on us. 15 If we fail to grow our hash rate and to effectively manage the renewal of our Miner fleet and other plant and equipment, we may be unable to compete, and our results of operations could suffer.
If any of our key employees cease their involvement in our business or, in the unfortunate situation one or more of them are seriously injured or dies, this loss would have a significant and likely adverse impact on us.
Legal Proceedings section for further discussion. 12 Inflation in the global economy could negatively impact our business and results of operations. General inflation in the United States and around the world has risen to levels not experienced in recent decades.
Inflation in the global economy could negatively impact our business and results of operations. Inflation in the United States and around the world has risen to levels not experienced in recent decades. Inflation, including rising prices for energy, metals, components, and other inputs as well as rising wages negatively impact our business by increasing our operating costs.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changePursuant to our risk management policy, responsibility for the implementation of our risk management policy resides with the Chief Financial Officer. The Audit Committee receives an update on the Company’s risk management process, risk trends and any incidents at least annually from the management team.
Biggest changeThe Audit Committee receives an update on the Company’s risk management process, risk trends and any incidents at least annually from the management team. In the event of any incident, the Company expects to notify the Audit Committee immediately, or as soon as possible. For additional information regarding cybersecurity risks, see Item 1A “Risk Factors.” 27
We are equally subject to various cybersecurity risks that could adversely affect our business, financial condition, and results of operations, including intellectual property theft; fraud; extortion; harm to employees or customers; interruption of business activities and activities of our customers, violation of privacy laws and other litigation and legal risk; and reputational risk.
We are equally subject to various cybersecurity risks that could adversely affect our business, financial condition, and results of operations, including: intellectual property theft; fraud; extortion; harm to employees or customers; interruption of business activities and activities of our customers; violation of privacy laws; litigation and legal risk; and reputational risk.
ITEM 1C. CYBERSECURITY. We recognize the importance of assessing, identifying, and managing risks associated with cybersecurity threats. Accordingly, we address these risks by implementing and maintaining processes, and technologies designed to prevent, detect, and mitigate incidents that could pose cybersecurity risk.
ITEM 1C. CYBERSECURITY. Risk Management and Strategy We recognize the importance of assessing, identifying, and managing risks associated with cybersecurity threats. Accordingly, we address these risks by implementing and maintaining processes, and technologies designed to prevent, detect, and mitigate incidents that could pose cybersecurity risk.
We utilize managed detection and response systems, endpoint protection, content filtering aimed at blocking malware and software to eliminate phishing, ransomware, and fraud. We also utilize multi-factor authentication on all sensitive applications and information entry-points, review access to data regularly, and have failover-protected business disaster recovery and backup storage systems. The Company conducts cybersecurity training and testing programs regularly. 25
We also utilize multi-factor authentication on all sensitive applications and information entry-points, review access to data regularly, and have failover-protected business disaster recovery and backup storage systems. The Company conducts cybersecurity training and testing programs regularly. Governance Pursuant to our risk management policy, responsibility for the implementation of our risk management policy resides with the Chief Financial Officer.
In the event of any incident, the Company expects to notify the Audit Committee immediately, or as soon as possible. Our cybersecurity policies, standards, processes, and practices are regularly assessed. These assessments incorporate various activities including information security assessments and independent reviews of our information security control environment and operating effectiveness.
Our cybersecurity policies, standards, processes, and practices are regularly assessed and these assessments incorporate various activities including information security assessments and independent reviews of our information security control environment and operating effectiveness. We utilize managed detection and response systems, endpoint protection, content filtering aimed at blocking malware and software to eliminate phishing, ransomware, and fraud.
Added
Management performs a periodic assessment (at least annual) of compliance, financial, IT, and fraud risks. Responses are consolidated and reviewed with management and the Audit Committee. The result of the risk assessment effort is leveraged to formalize management’s operating effectiveness testing plan for the next year.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOn February 2, 2024 the Sharon lease was terminated and as of March 2024 the Company has moved completely out of the facility. Effective May 1, 2023, Mawson Ohio LLC took an assignment of a lease agreement for approximately 64,600 square feet for an undeveloped site in Corning, Ohio.
Biggest changeEffective May 1, 2023, Mawson Ohio LLC took an assignment of a lease agreement for approximately 64,600 square feet for an undeveloped site in Corning, Ohio. The term of the lease is five years, with an option to extend for five years. We do not own or lease any other land or buildings.
However, Mawson is growing and, should we require additional or alternative facilities, we believe that such facilities can be obtained in reasonable time frames at commercial rates.
We believe that our existing facilities are suitable and adequate to meet our current business requirements. However, Mawson is growing and, should we require additional or alternative facilities, we believe that such facilities can be obtained in reasonable time frames at acceptable commercial rates.
On March 16, 2022, Luna Squares Property LLC entered into a lease with respect to a property in the City of Sharon, Mercer County, Pennsylvania with Vertua Property, Inc. The term of the lease was for 5 years, with 2 options to extend for 5 years each.
On March 16, 2022, Luna Squares Property LLC entered into a lease with respect to a property in the City of Sharon, Mercer County, Pennsylvania with Vertua Property, Inc. On February 2, 2024, the lease was terminated by the landlord, which is currently in a legal dispute, and is currently in litigation.
ITEM 2. PROPERTIES. Our principal place of business is located at 950 Railroad Avenue, Midland, Pennsylvania 15059. We have the following leases: The Company leases 6-acres of land in Midland, Pennsylvania, which began in October 2021 for thirty-six months with the option to exercise four additional three-year extensions.
ITEM 2. PROPERTIES. Our principal place of business is located at 950 Railroad Avenue, Midland, Pennsylvania 15059. The Company leases 8 acres of land in Midland, Pennsylvania, where one of our data center facilities is located.
Removed
The term of the lease is for four years, with an option to extend for five years. We do not own or lease any other land or buildings. We believe that our existing facilities are suitable and adequate to meet our current business requirements.
Added
On September 9, 2024, the Company entered into a lease amendment that extended the term of the lease from September 14, 2024 to September 14, 2027. The lease provides the option to exercise three additional three-year extensions for an aggregate of 12 more years from date of the lease amendment.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Removed
ITEM 3. LEGAL PROCEEDINGS. We have been made a defendant to certain legal proceedings which may have or have had in the recent past significant effects on our financial position or profitability.
Added
ITEM 3. LEGAL PROCEEDINGS. As disclosed in Note 10 – Commitments and Contingencies to the consolidated financial statements included in Item 15. “Exhibits, Financial Statement Schedules” in this Annual Report, we are engaged in certain legal matters, and the disclosure set forth in Note 10 relating to such legal matters is incorporated herein by reference.
Removed
On July 13, 2022, Celsius Mining LLC and Celsius Network LLC and other related entities (collectively, “Celsius”), filed for bankruptcy relief under Chapter 11 in the United States Bankruptcy Court for the Southern District of New York (the “Court”), Case No. 22-10964.
Removed
In that matter, on November 23, 2023, Celsius Mining LLC filed an adversary proceeding against Mawson, its subsidiaries Luna Squares LLC and Cosmos Infrastructure LLC, asserting various claims related to the alleged breach of a Co-Location Agreement and Secured Promissory Note. Adv.
Removed
Case No. 23-01202, claiming it is owed approximately $8 million under the promissory note and claiming entitlement to return of $15.33 million paid as deposit. Mawson denies that Celsius Mining LLC is entitled to the relief it seeks in the adversary proceeding and is actively defending the matter.
Removed
Mawson sought to have the matter removed from the adversary proceeding to arbitration based on the arbitration clause contained in one of the transaction’s agreements. Celsius opposed the removal and the matter was heard before the Court.
Removed
On February 27, 2024, the Court ruled in part that the claims regarding the co-location agreement could be arbitrated, but the claims for the promissory note would stay before the Court. The Court appointed a litigation administrator to handle the claims arising out of the promissory note. Mawson is appealing this decision.
Removed
Many of the related claims and disputes between Celsius and Mawson have been disclosed in more detail in Mawson’s previous filings with the SEC. 26 On October 16, 2023, Mr.
Removed
Ariel Sivikofsky, who was previously engaged to provide CFO-related services to the Company, filed a claim against an Australian subsidiary Mawson Infrastructure Group Pty Ltd (MIG), and against Michael Hughes, Director of the Company, and Tom Hughes, General Counsel of the Company, in the Australian Federal Circuit and Family Court of Australia in relation to certain employment related claims.
Removed
The applicant’s total claim is for up to AUD$216,980. MIG and the individual defendants dispute the claims, and denies Mr. Sivikofsky was an employee. On November 1, 2023, the proceedings against MIG were stayed pursuant to section 440D of the Corporations Act 2001 (Cth) (Corporations Act) on the grounds that MIG had been placed into voluntary administration.
Removed
The proceedings against Michael Hughes and Tom Hughes have been settled.
Removed
On December 22, 2023, Mawson Infrastructure Group Inc. and Luna Squares LLC made formal demand on CleanSpark Inc. and CSRE Properties Sandersville, LLC for $2,000,000 for breach of contract for failing to pay for an energy earnout provision contained in the Purchase and Sale Agreement dated September 8, 2022, between the parties.
Removed
Subsequently, on January 12, 2024, Mawson and Luna filed notice of its claim for formal arbitration before the American Arbitration Association. The arbitration is proceeding.
Removed
On March 28, 2024, the Company was made a defendant in a civil suit before the Supreme Court of NSW, Sydney Australia, in the matter entitled “W Capital Advisors Pty Ltd in its capacity as trustee for the W Capital Advisors Fund v.
Removed
Mawson Infrastructure Group, Inc.”, Docket No. 2024/00117331, alleging a claim to seek US$166,218.60 as unpaid interest under a convertible note after the Company paid in full the principal of $500,000, and AUD$298,926.30 under a loan deed, plus interest and costs for sums due claiming corporate guarantee by the Company for a “Variation Deed to Loan Deed” dated September 29, 2022, executed by its Australian subsidiary, Mawson Infrastructure Group Pty Ltd.
Removed
The company denies that the claimant is entitled to the relief it seeks and will actively defend its interests in the matter in due course.
Removed
As noted previously in an 8-K filed on March 29, 2024, The Company, pursuant to Australian law, on March 28, 2024, sent a preliminary discovery notice to W Capital to obtain documents and to investigate if W Capital is a related party to Mr.
Removed
James Manning, the Company’s former director and executive, and to investigate and ascertain if transactions between W Capital Advisors Pty Ltd and the Company were related party transactions. The Company and some of its subsidiaries are currently in disputes, as outlined below. These disputes may lead to litigation.
Removed
On January 8, 2024, a commercial demand was made Flynt ICS Pty Ltd to a Mawson Australian subsidiary, MIG No. 1 Pty Ltd (on March 19, 2024, MIG No.1 Pty Ltd was placed into a court appointed liquidation and wind-up process, as disclosed in note 15 subsequent events), for $129,930, for sums due under a service agreement.
Removed
On February 1, 2024, a former independent contractor, Noam Danenberg, through his professional company, N. Danenberg Holding (2000) Ltd, apparently filed a civil suit in Tel Aviv Israel against Mawson Infrastructure Group, Inc. for $90,000 in wages and other benefits. Mawson has never been formally served nor has it submitted to jurisdiction in Israel.
Removed
On October 30, 2023, the directors of the Australian subsidiary, Mawson Infrastructure Group Pty Ltd (“Mawson AU”) appointed voluntary administrators to Mawson AU.
Removed
Voluntary administration is a process under Australian corporate law where an external administrator is appointed to take control of the relevant entity, investigate and report to creditors about the relevant entity’s business, property, affairs and financial circumstances, and report on the options available to creditors. It is not a court process.
Removed
On November 3, 2023, W Capital Advisors appointed receivers and managers under the terms of their security relating to their working capital facility. Neither of these processes are governed by the courts.
Removed
On January 3, 2024, W Capital put Mawson on notice of its intent to collect what it asserts are past due amounts for the following claims as of December 31, 2023: (a) principal and interest payable on the Loan Amount advanced to Mawson under a variation deed, amounting to $1.30 million (AU $1.90 million); (b) the principal amount advanced under the Convertible Note, amounting to $0.50 million; and (c) interest payable on the principal amount advanced under a convertible note, amounting to $0.07 million.
Removed
W Capital is also demanding issuance of the 1,500,000 registered shares by MIGI. The Company actively denies these claims but has agreed and did pay to W Capital $0.50 million on March 6, 2024, reserving its rights as they pertain to W Capital’s claims for the additional AU$1.30 million and 1,500,000 in registered stock.
Removed
Other than as described above, we are currently not, and have not been in the recent past, a party to any litigation which may have or have had in the recent past significant effects on our financial position or profitability.
Removed
However, we have been in the past, and from time to time in the future, may be involved in certain litigation related to our businesses. For example, the Company and its subsidiaries receive letters of demand for payments from time to time which could lead to legal proceedings.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAny future determination to pay cash dividends will be at the discretion of our Board of Directors (“Board”) and will be dependent upon our financial condition, results of operations, capital requirements and such other factors as our Board deems relevant. Our ability to pay cash dividends is subject to limitations imposed by state law.
Biggest changeAny future determination to pay cash dividends will be at the discretion of our Board of Directors (“Board”) and will be dependent upon our financial condition, results of operations, capital requirements, limitations imposed by state laws and such other factors as our Board deems relevant.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our Common Stock, par value $0.001, trades on The Nasdaq Stock Market LLC under the symbol “MIGI”. Holders As of March 26, 2024, there were approximately 118 stockholders on record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our Common Stock trades on The Nasdaq Stock Market LLC under the symbol “MIGI.” Holders As of March 3, 2025, there were approximately 81 stockholders on record of our Common Stock.
Removed
Unregistered Sales of Equity Securities and Use of Proceeds During the year ended December 31, 2023, there were no other unregistered sales of our securities that were not reported in a Current Report on Form 8-K or our Quarterly Reports on Form 10-Q.
Added
Unregistered Sales of Equity Securities and Use of Proceeds On September 11, 2024, the Company entered into a Marketing Services Agreement (the “MSA”) with Outside The Box Capital Inc.
Added
(“Box Capital”) pursuant to which Box Capital will provide certain marketing and distribution services to the Company for a six month term in consideration for the payment of a fee of $100,000 worth of restricted shares of the Company’s Common Stock, as approved by our Board.
Added
In accordance with the MSA, the Company issued 84,746 restricted shares of Common Stock to Box Capital on December 17, 2024.
Added
Such issuance was exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated thereunder because, among other things, the transaction did not involve a public offering, Box Capital is an accredited investor, Box Capital is taking the securities for investment and not resale, and we took appropriate measures to restrict the transfer of the securities.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

51 edited+38 added−65 removed5 unchanged
Biggest changeWe believe that adjusted EBITDA is useful to investors in comparing our performance across reporting periods on a consistent basis where one-time, or non-recurring gains or losses or expenses unrelated to operating activities would otherwise mask the Company’s operating performance. 32 For the Years Ended December 31, 2023 2022 Reconciliation of non-GAAP adjusted EBITDA: Net loss: $ (58,545,093 ) $ (54,035,559 ) Impairment of financial assets 1,837,063 3,375,230 Share of net loss of equity method investments 36,356 1,254,025 Depreciation and amortization 38,080,506 63,200,178 Stock based compensation 10,834,838 3,012,480 Losses on foreign currency transactions 1,738,845 6,673,124 Other non-operating income (517,918 ) (2,401,555 ) Other non-operating expenses 3,445,461 7,624,435 Change in fair value of derivative asset 7,241,883 (11,299,971 ) Fair value loss on investments - 1,694,388 Income tax 5,948,619 - Gain on deconsolidation (9,472,976 ) - EBITDA (non-GAAP) $ 627,584 $ 19,096,775 For the Quarters Ended December 31, 2023 2022 Revenue $ 14,020,930 $ 16,852,208 Cost of revenues (excluding depreciation) (9,136,465 ) (6,759,938 ) Gross Profit 4,884,465 10,092,270 Reconciliation of non-GAAP adjusted EBITDA: Net Profit/(loss): (10,179,181 ) (18,808,069 ) Impairment of financial assets - 2,240,682 Share of net loss of associates accounted for using the equity method - 1,254,025 Depreciation and amortization 9,454,968 17,138,505 Stock based compensation 5,358,903 887,806 Unrealized and realized (gain)/losses 322,909 310,530 Other non-operating income (272,223 ) (469,603 ) Other non-operating expenses 1,156,224 3,263,618 Fair value loss on investments - 1,694,388 Change in fair value of derivative asset 595,520 10,083,933 Income tax 3,644,165 - Gain on deconsolidation (9,472,976 ) - EBITDA (non-GAAP) $ 608,309 $ 17,595,815 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.
Biggest changeFor the Years Ended December 31, 2024 2023 (unaudited) Net loss: $ (46,336,787 ) $ (58,545,093 ) Impairment of financial assets - 1,837,063 Share of net loss of equity method investments - 36,356 Depreciation and amortization 17,877,770 38,080,506 Stock based compensation 14,064,883 10,834,838 (Gain) loss on foreign currency transactions (1,009,223 ) 1,738,845 Other non-operating income (364,382 ) (517,918 ) Other non-operating expenses 3,137,278 3,445,461 Change in fair value of derivative asset 1,173,104 7,241,883 Income tax 976,570 5,948,619 Loss (gain) on deconsolidation 12,444,097 (9,472,976 ) Adjusted EBITDA (non-GAAP) $ 1,963,310 $ 627,584 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.
We require additional capital to respond to near-term debt repayment obligations, competitive pressure, market dynamics, new technologies, customer demands, business opportunities, challenges, potential acquisitions or unforeseen circumstances, and we will likely need to determine to engage in equity or debt financings in the short term.
We require additional capital to respond to near-term debt repayment obligations, competitive pressure, market dynamics, new technologies, customer demands, business opportunities, challenges, potential acquisitions or unforeseen circumstances, and we will likely need to engage in equity or debt financings in the short term.
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, valuing the derivative asset classified under Level 3 fair value hierarchy, and the contingent obligation with respect to future revenues. 37
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, the realization of digital currencies, valuing the derivative asset classified under Level 3 fair value hierarchy, and the contingent obligation with respect to future revenues. 36
The loan matured in February 2024 and bears interest at a rate of 12% per annum (with an overdue rate provision of an additional 500bps), payable monthly with interest payments that commenced in December 2021. This loan facility is secured by direct assets of MIG No.1 Pty Ltd and a general security agreement given by the Company.
The loan matured in February 2024 and bears interest at a rate of 12% per annum (with an overdue rate provision of an additional 500bps), payable monthly with interest payments that commenced in December 2021. This loan facility is secured by direct assets of MIG No.1 and a general security agreement given by the Company.
The short-term borrowings as of December 31, 2023, relate to Celsius Mining LLC, W Capital Advisors Pty Ltd, the secured convertible promissory notes issued to investors and Marshall Investments MIG Pty Ltd (these loans are currently in default, refer to Material Cash Requirements section below for more information ) .
The short-term borrowings as of December 31, 2024, relate to Celsius Mining LLC, W Capital Advisors Pty Ltd, the secured convertible promissory notes issued to investors and Marshall Investments MIG Pty Ltd (these loans are currently in default, refer to Material Cash Requirements section below for more information ) .
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion of our financial condition and results of operations for the years ended December 31, 2023 and 2022, should be read in conjunction with our consolidated financial statements and the notes to those statements that are included elsewhere in this Annual Report on Form 10-K.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion of our financial condition and results of operations for the years ended December 31, 2024 and 2023 should be read in conjunction with our consolidated financial statements and the notes to those statements that are included elsewhere in this Annual Report on Form 10-K.
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 that may be available to us, further issuances of shares, and other potential sources of capital, monetization or funds.
We believe our near-term 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 that may be available to us, future issuances of shares, and other potential sources of capital, monetization, or funds.
The final convertible noteholder who was not a party to this variation opted to enter into an arrangement whereby it received pre-payment of interest but agreed that repayment of the principal was not required therefore the remaining $0.50 million has been classified as a current liability.
The final convertible noteholder who was not a party to this variation opted to enter into an arrangement whereby it received pre-payment of interest but agreed that repayment of the principal was not required therefore the remaining $0.50 million had been classified as a current liability. The convertible note matured in July 2023.
Our principal sources of liquidity have been and are expected to be our cash and cash equivalents, external debt facilities available to us and further issuances of shares.
Our principal sources of liquidity have been and are expected to be our cash and cash equivalents, which are available to us, and further issuances of shares.
For the years ended December 31, 2023 and 2022 the Company incurred a loss after tax of $60.42 million and a loss after tax of $52.76 million, respectively. Included in trade and other receivables is a $2 million payment being the final payment due from CleanSpark, Inc for the sale of the Georgia facility. CleanSpark, Inc has disputed this payment.
For the years ended December 31, 2024 and 2023, the Company incurred a loss after tax of $46.1 million and $60.4 million, respectively. Included in trade and other receivables is a $2.0 million payment being the final payment due from CleanSpark, Inc. for the sale of the Georgia facility. CleanSpark, Inc. has disputed this payment.
In connection with this agreement, Celsius Mining LLC loaned Luna Squares LLC a principal amount of $20 million, 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.
In connection with this agreement, Celsius Mining LLC loaned Luna a principal amount of $20.0 million, for the purpose of funding the infrastructure required to meet the obligations of the Digital Colocation Agreement, for which Luna issued a Secured Promissory Note (the “Celsius Loan”) for repayment of such amount.
This discussion and analysis contain forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under “Risk Factors” and elsewhere in this Annual Report. All amounts are in U.S. dollar unless otherwise stated.
This discussion and analysis contain forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under Item 1A “Risk Factors” and elsewhere in this Annual Report.
The net cash provided by investing activities during the year ended December 31, 2023, was primarily attributable to the proceeds from sale the subsidiary Luna Squares Texas LLC and the 59 transformers, as well as the proceeds from the sale of shares in CleanSpark, Inc.
Net cash provided by investing activities during the year ended December 31, 2023, was primarily attributable to the proceeds from the sale of Luna Squares Texas LLC and the 59 transformers of $9.2 million, as well as the proceeds from the sale of shares in CleanSpark, Inc of $6.9 million, partially offset by capital expenditures of $5.4 million.
On February 23, 2022, Luna Squares LLC entered into a Co-Location Agreement with Celsius Mining LLC.
On February 23, 2022, Luna Squares LLC (“Luna”) entered into a Digital Colocation Agreement with Celsius Mining LLC.
These are expected to be adequate to fund our operations over the next twelve months. For our business to grow it is expected, we may continue investing in mining equipment and infrastructure and will require additional working capital in the short-term and long-term.
We believe a combination of these opportunities are expected to be adequate to fund our long-term operations needed over the next twelve months. For our business growth, it is expected we may continue investing in expanding our infrastructure, expanding and/or upgrading our infrastructure and/or other equipment and will require additional working capital in the short-term and long-term.
The Secured Promissory Note accrues interest daily at a rate of 12% per annum (with an overdue rate provision of an additional 200bps). Luna Squares LLC is required to amortize the loan at a rate of 15% per quarter, principal repayments began at the end of September 2022.
The Celsius Loan accrues interest daily at a rate of 12% per annum (with an overdue rate provision of an additional 200bps). Luna is required to amortize the loan at a rate of 15% per quarter, principal repayments began at the end of September 2022. The Celsius Loan had a maturity date of August 23, 2023.
Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. For the year ended December 31, 2023, we financed our operations primarily through: 1. Net cash used in operating activities of $2.55 million; 33 2.
Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. For the year ended December 31, 2024, we financed our operations primarily through net positive cash flow provided by operating activities and other cash reserves.
Recently Issued Accounting Pronouncements For information with respect to recent accounting pronouncements, see Note 2 to our Consolidated Financial Statements included in this Annual Report on Form 10-K for the year ended December 31, 2023. Critical Accounting Estimates The preparation of the financial statements in conformity with U.S.
Recently Issued Accounting Pronouncements For information with respect to recent accounting pronouncements, see Note 2 to our Consolidated Financial Statements included in this Annual Report for the year ended December 31, 2024.
Stock based compensation Stock based compensation expenses for the years ended December 31, 2023 and 2022, were $10.83 million and $3.01 million, respectively.
Stock based compensation Stock based compensation expenses for the years ended December 31, 2024 and 2023, were $14.1 million and $10.8 million, respectively.
On December 22, 2023, the Company made formal demand on CleanSpark Inc. and CSRE Properties Sandersville, LLC for $2,000,000 for breach of contract on the debtors’ obligation to pay for an energy earnout provision contained in a Bill of Sale dated October 1, 2022 between the parties.
On December 22, 2023, the Company made formal demand on CleanSpark Inc. and CSRE Properties Sandersville, LLC for at least $2.0 million for breach of contract of a Bill of Sale dated October 1, 2022 between the parties.
Wainwright & Co., LLC (“Wainwright”), and filed a prospectus supplement, to sell shares of our Common Stock through an “at the market offering” program as defined in Rule 415 promulgated under the Securities Act of 1933, as amended.
On May 27, 2022, the Company entered into an At the Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”), and filed a prospectus supplement, to sell shares of our Common Stock through an “at the market offering” program as defined in Rule 415 promulgated under the Securities Act.
The convertible note matured in July 2023 and the Company has not repaid the principal amount as of December 31, 2023. Interest has been accrued from July onwards and therefore the outstanding balance is $0.57 million as of December 31, 2023, all of which is classified as a current liability.
Interest has been accrued from July onwards and therefore the outstanding balance is $0.1 million as of December 31, 2024, all of which is classified as a current liability. During 2024 the principal amount outstanding of $0.50 million was repaid to the investor.
The following table presents the major components of net cash flows (used in) provided by operating, investing and financing activities for the years ending December 31, 2023 and 2022: Year Ended December 31, 2023 2022 Net cash (used in) provided by operating activities $ (2,545,664 ) $ 14,256,294 Net cash provided by (used in) investing activities $ 10,741,617 $ (32,540,422 ) Net cash (used in) provided by financing activities $ (4,647,279 ) $ 13,986,496 For the year ended December 31, 2023, net cash used by operating activities was $2.55 million and for the year ended December 31, 2022, net cash provided in operating activities was $14.26 million.
The following table presents the major components of net cash flows (used in) provided by operating, investing and financing activities for the years ending December 31, 2024 and 2023: Years Ended December 31, 2024 2023 Net cash provided by (used in) operating activities $ 3,562,603 $ (2,545,664 ) Net cash (used in) provided by investing activities $ (1,119,038 ) $ 10,741,617 Net cash used in financing activities $ (830,067 ) $ (4,647,279 ) For the year ended December 31, 2024, net cash provided by operating activities was $3.6 million and for the year ended December 31, 2023, net cash used in operating activities was $2.5 million.
During the year ended December 31, 2023, 415,271 shares were issued as part of the ATM Agreement for cash proceeds of $1.19 million, net of issuance costs.
During the year ended December 31, 2023, 415,271 shares were issued in accordance with the ATM Agreement for cash proceeds of $1.2 million, net of issuance costs. Effective September 6, 2024, the Company terminated the ATM Agreement with Wainwright.
As of December 31, 2023, we had an accumulated deficit of $182.67 million compared to $122.26 million as of December 31, 2022. Our cash position of December 31, 2023, was $4.48 million in comparison to $0.95 million as of December 31, 2022.
As of December 31, 2024, we had an accumulated deficit of $228.8 million compared to $182.7 million as of December 31, 2023. Our cash position of December 31, 2024, was $6.1 million in comparison to $4.5 million as of December 31, 2023.
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.
Critical Accounting Estimates The preparation of the financial statements in conformity with 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.
Cost of revenues Our cost of revenue consists primarily of direct power costs related to digital currency mining and co-location services and cost of mining equipment sold. Cost of revenue for the years ended December 31, 2023 and 2022, were $28.56 million and $47.7 million, respectively.
This represented an increase of $15.7 million or a 36% year-over-year revenue increase. Cost of revenues Our cost of revenues consists primarily of direct power costs related to digital asset mining and colocation services and cost of mining equipment sold. Cost of revenues for the years ended December 31, 2024 and 2023, were $39.0 million and $28.6 million, respectively.
On July 8, 2022, the Company issued secured convertible promissory notes to investors in the aggregate principal amount of $3.60 million (the “Secured Convertible Promissory Notes”) in exchange for an aggregate of $3.60 million in cash.
The outstanding balance including interest is $9.7 million as of December 31, 2024, all of which is currently classified as a current liability. On July 8, 2022, the Company issued secured convertible promissory notes to investors in the aggregate principal amount of $3.6 million (the “Secured Convertible Promissory Notes”) in exchange for an aggregate of $3.6 million in cash.
During the year ended December 31, 2023 the Company recognized an impairment of $1.84 million for the equity accounted investment in Tasmania Data Infrastructure Pty Ltd (“TDI”).
During the year ended December 31, 2023, we recorded gain on sale of marketable securities of $1.4 million, which is related to the sale of CleanSpark, Inc shares. During the year ended December 31, 2023, the Company recognized an impairment of $1.8 million for the equity accounted method investment in Tasmania Data Infrastructure Pty Ltd.
The Company expects to continue to focus on improving its cash flows through a number of various activities that should better position our future cash position. As of December 31, 2023 and 2022, the trade receivables balance was $12.11 million and $10.46 million, respectively.
The Company expects to continue to focus on improving its cash flows through a number of various activities. As of December 31, 2024 and 2023, the trade receivables balance was $15.2 million and $12.1 million, respectively. As of December 31, 2024 and 2023, we had $20.9 million and $19.4 million, respectively, of outstanding short-term borrowings.
Principal repayments began during November 2022. The outstanding balance is $9.10 million as of December 31, 2023, all of which is classified as a current liability. MIG No. 1 Pty Ltd has not made a principal and interest payment since May 2023. MIG No. 1 is in receivership under Australian law. All relevant parties have reserved their respective rights.
Principal repayments began during November 2022. There has been no principal and interest payments made since May 2023. The outstanding balance including interest is $9.9 million as of December 31, 2024, all of which is currently classified as a current liability.
The decrease in net cash provided by operating activities was primarily attributable to timing differences in trade and other receivables and trade and other payables. For the year ended December 31, 2023, net cash provided by investing activities was $10.74 million and for the year ended December 31, 2022, net cash used in investing activities was $32.54 million.
For the year ended December 31, 2024, net cash used in investing activities was $1.1 million and for the year ended December 31, 2023, net cash provided by investing activities was $10.7 million.
Change in fair value of derivative asset During the years ended December 31, 2023 and 2022, there was a loss on the fair value of the derivative asset by $7.24 million and a gain of $11.30 million, respectively, in relation to our power supply arrangements.
The lower depreciation and amortization expense is the result of an increased number of the Company’s digital asset mining hardware being fully depreciated during 2023 and 2024, and a lower number of digital asset miners being acquired during the year ended December 31, 2024. 31 Change in fair value of derivative asset During the years ended December 31, 2024 and 2023, there was an unrealized loss on the fair value of the derivative asset of $1.2 million and $7.2 million, respectively, in relation to our power supply arrangements.
As of December 31, 2023, we had an aggregate of $19.35 million of debt of which $16.87 million is overdue for repayment and the remaining is all required to be repaid within two months of December 31, 2023 unless we refinance or renegotiate the terms.
As of December 31, 2024, we had an aggregate of $20.9 million of debt, all of which is overdue for repayment unless we refinance, renegotiate the terms, or prevail in our disputes and/or related claims and/or counterclaims.
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, income tax, depreciation, amortization, stock based compensation expense, change in fair value of derivative asset, impairment of financial assets, unrealized gains/losses, share of net loss of equity method investments, gain on deconsolidation and certain non-recurring expenses.
Adjusted EBITDA, which is a non-GAAP financial measure, is defined by the Company as net loss plus income tax, depreciation and amortization, further adjusted by impairment of financial assets, net loss of equity method investments, stock based compensation, loss on foreign currency, other non-operating income and expenses, change in fair value of derivative asset, fair value loss on investments, and gain on deconsolidation.
As of December 31, 2023 and 2022, we had $0 and $4.51 million, respectively, of outstanding long-term borrowings. As of December 31, 2023 and 2022, we had negative working capital of $33.18 million and $15.17 million, respectively.
As of December 31, 2024 and 2023, we had negative working capital of $35.9 million and $33.2 million, respectively.
The Company is taking steps to preserve cash by optimizing costs and negotiating with suppliers to improve their terms of trade. The Company has been improving its revenue generation by improving the efficiency of its operations and adding co-location services customers. The Company will continue to seek to optimize its cashflows.
The Company is taking steps to preserve cash by optimizing operations, reducing costs and pursuing efficiencies. The Company has been improving its revenue generation by enhancing its operations, driving growth in business lines, adding multiple digital colocation services customers and diversifying its businesses . The Company will continue to seek to optimize its cashflows through these and other initiatives.
For the year ended December 31, 2023, net cash used in financing activities was $4.65 million and for the year ended December 31, 2022, net cash provided by financing activities was $13.99 million. The cash used in financing activities during the year ended December 31, 2023, was primarily attributable to the repayment of borrowings.
For the years ended December 31, 2024 and 2023, net cash used in financing activities was $0.8 million and $4.6 million., respectively. Net cash used in financing activities for the year ended December 31, 2024, was due to loan payments of $0.5 million and lease payments of $0.3 million.
The decrease in cost of revenue was primarily attributable to a decrease in power costs related to energy used to operate our self-mining equipment and co-location services.
The increase in cost of revenues was primarily attributable to an increase in power costs related to an increase in energy used to operate the colocated equipment for our enterprise digital colocation customers within our facilities.
As of December 31, 2023, AUD $1.68 million (USD $1.15 million) has been drawn down from this facility, all of which is classified as a current liability. The Secured Loan Facility accrues interest daily at a rate of 12% per annum and is paid monthly. Principal repayments are paid ad hoc in line with the loan facility agreement.
As of December 31, 2024, the balance was AUD $2.1 million (USD $1.3 million) representing outstanding interest, all of which is currently classified as a current liability. The W Capital Loan accrues interest daily at a rate of 12% per annum (with an overdue rate provision of an additional 800bps). The W Capital Loan expired in March 2023.
Selling, general and administrative Our selling, general and administrative expenses consist primarily of professional and management fees relating to: employee compensation, audit; legal; equipment repairs; marketing; freight; insurance; consultant fees; lease amortization and general expenses. 30 Selling, general and administrative expenses for the years ended December 31, 2023 and 2022, were $19.18 million and $25.85 million, respectively.
Operating expenses Our operating expenses include: selling, general and administrative expenses; stock based compensation; change in fair value of derivative asset; and depreciation and amortization. Selling, general and administrative Our selling, general and administrative expenses consist primarily of audit, legal, and other professional fees, employee compensation, director fees, equipment repairs; marketing; freight; insurance; consultant fees; lease amortization and general expenses.
Subsequently, on January 12, 2024, Mawson and Luna filed notice of its claim for formal arbitration before the American Arbitration Association. The arbitration is proceeding. 36 Our primary requirements for liquidity and capital are working capital, capital expenditures, public company costs and general corporate needs.
Subsequently, on January 12, 2024, Mawson and Luna filed notice of its claim for formal arbitration before the American Arbitration Association which was dismissed on May 1, 2024, as it was determined that the arbitration was not the proper forum.
This gain was as a result of Mawson Infrastructure Group Pty Ltd going into voluntary administration and accordingly the subsidiary was deconsolidated. The deconsolidation gain recorded was as a result of removing the net assets and certain liabilities of this subsidiary from the consolidated financial statements. See Note 3 Subsidiary Deconsolidation for further discussion.
The deconsolidation gain and loss recorded were the result of removing the net assets and certain liabilities of the various subsidiaries from the consolidated financial statements.
Total selling, general and administrative expenses were lower by $6.67 million in 2023.
Selling, general and administrative expenses for the years ended December 31, 2024 and 2023, were $18.3 million and $19.2 million, respectively. Total selling, general and administrative expenses decreased by $0.9 million in 2024.
During March 2024 the principal amount outstanding of $0.50 million was repaid to the investor. Financial condition As of December 31, 2023, and 2022, we had net current liabilities of $33.18 million and $15.17 million, respectively. As of December 31, 2023 and 2022, we had net assets of $30.38 million and $76.17 million, respectively.
Financial condition As of December 31, 2024, and 2023, we had negative working capital of $35.9 million and $33.2 million, respectively. As of December 31, 2024 and 2023, we had net assets of ($3.2) million and $30.4 million, respectively.
Manning’s May 2023 Separation Agreement should not be issued by the Company. 29 Results of Operations Revenues Digital currency revenues from self-mining of bitcoin for the year ended December 31, 2023 and 2022, were $21.59 million and $43.11 million respectively. This represented a decrease of $21.52 million or 50% over the prior year period.
Sales of digital mining equipment for the years ended December 31, 2024 and 2023, were $0.6 million and $0.3 million, respectively. This represented an increase of 50% over the prior year period. Our overall revenue for the years ended December 31, 2024 and 2023, were $59.3 million and $43.6 million, respectively.
This movement was due to the movement in foreign exchange rates. 31 Non-operating income Non-operating income consists primarily of profit on sale of site assets, gain on sales of marketable securities, gain on deconsolidation and other income. The profit on sale of site for the years ended December 31, 2023 and 2022, were $3.35 million and $8.28 million, respectively.
The income for 2023 was primarily attributed to the gain on deconsolidation of $9.5 million, profit from the sale of site of $3.4 million, and gain on sale of marketable securities of $1.4 million, partially offset by interest expense of $3.0 million, impairment of financial assets of $1.8 million, and loss on foreign currency transactions of $1.7 million.
The gain on sales of marketable securities for the years ended December 31, 2023 and 2022, were $1.44 million and $0, respectively. The gain during the year ended December 31, 2023 was in relation to the sale of CleanSpark, Inc shares. During the year ended December 31, 2023, the Company recognized a deconsolidation gain of $9.47 million.
During the year ended December 31, 2024, we recorded a gain on foreign currency transactions of $1.0 million, compared to a loss on foreign currency transactions of $1.7 million for the year ended December 31, 2023. The change was due to the change in foreign exchange rates.
Sales of digital mining equipment for the years ended December 31, 2023 and 2022, were $0.26 million and $14.24 million, respectively. Operating costs and expenses Our operating costs and expenses include cost of revenues; selling, general and administrative expenses; stock based compensation; change in fair value of derivative asset; and depreciation and amortization.
Depreciation and amortization Depreciation consists primarily of depreciation of digital asset mining hardware and MDC equipment. Depreciation and amortization for the years ended December 31, 2024 and 2023, were $17.9 million and $38.1 million, respectively.
In addition, the Celsius deposit of $15.33 million is the subject of an ongoing legal dispute. 34 Working Capital and Cash Flows As of December 31, 2023 and 2022, we had a cash and cash equivalent balance of $4.48 million and $0.95 million, respectively.
Our inability to raise sufficient capital would have a material adverse effect on our financial condition and business. 33 Working Capital and Cash Flows As of December 31, 2024 and 2023, we had a cash and cash equivalent balance of $6.1 million and $4.5 million, respectively.
Co-location services revenue for the years ended December 31, 2023 and 2022, were $16.36 million and $13.34 million, respectively. This 23% year over year increase was due to an increase in the number of miners we co-located during 2023.
The increase in revenue was due to the Company expanding its number of digital colocation customers, increasing the number of machines using our digital colocation infrastructure services, and growing its digital colocation business. 30 Energy management revenue for the years ended December 31, 2024 and 2023, were $7.6 million and $5.4 million, respectively.
Removed
Pursuant to that certain Certificate of Amendment to the Certificate of Incorporation of the Company dated February 6, 2023 Mawson executed at a ratio of 1-6 reverse stock split of its outstanding Common Stock and reduced its authorized common stock to 90,000,000 shares, as set forth in the Company’s Current Report on Form 8-K filed February 9, 2023.
Added
Business overview We are a technology company focused on digital infrastructure platforms. The Company develops and operates digital infrastructure platforms for enterprise customers and for its own purposes. The Company’s digital infrastructure platforms can be used to operate computing resources for a number of applications, and are offered across AI, HPC, digital asseets, and other computing applications.
Removed
Business overview Mawson Infrastructure Group Inc. (the “Company” or “Mawson” or “we”) is a digital infrastructure company headquartered in the United States. The Company has 3 primary businesses – digital currency mining, co-location and related services, and energy markets. The Company develops and operates digital infrastructure for digital currency, such as bitcoin, mining activities on the Bitcoin blockchain network.
Added
The Company also has an energy management business, which utilizes software and analysis, to generate revenue when the Company adapts its operations to the real-time needs of the power grid.
Removed
The Company also provides digital infrastructure services for its co-location services customers that use computational machines to mine bitcoin through our data centers and the Company charges for the use of its digital infrastructure and related services.
Added
The Company also periodically transacts in digital computational machines, data center infrastructure, and related equipment, subject to business and commercial opportunities. 29 The Company has a strategy to prioritize the usage of carbon-free energy sources, including nuclear energy, to power its digital infrastructure platforms and computational machines.
Removed
The Company also has an energy markets program through which it can receive net energy benefits in exchange for curtailing the power we utilize from the grid in response to instances of high electricity demand. As of the date of this Annual Report, we operate two data center facilities in Pennsylvania, USA.
Added
The Company manages and operates two data center facilities in Pennsylvania delivering a total current capacity of approximately 129 megawatts (MW) and has an additional 24 MW of future capacity in Ohio that is under development, all strategically located in locations served by the PJM Energy Market in the United States.
Removed
The Company may also transact in digital currency mining, data center infrastructure and related equipment on a periodic basis, subject to prevailing market conditions. 28 The Company designs, develops, operates and manages its digital infrastructure to responsibly support the Bitcoin network by contributing to the scale, structure, and decentralization of the Bitcoin network and optimizing energy consumption.
Added
The PJM Energy Market is the largest wholesale power market in North America. The Company previously had interests in the Australian market, however for strategic and commercial reasons, the Company is currently focused on advancing its interests in North America. The Company currently operates facilities in the United States of America and does not have operating sites in Australia.
Removed
The Company helps contribute to the ecosystem and growth of digital currencies and commodities as there continues to be a global transition to the new digital economy. We strive to operate and invest in markets and communities that offer low or zero-carbon renewable energy sources and participate in energy management activities.
Added
Results of Operations For the Years Ended December 31, 2024 2023 Revenues: Digital colocation revenue $ 38,546,912 $ 16,364,767 Energy management revenue 7,576,553 5,354,272 Digital assets mining revenue 12,591,660 21,590,523 Equipment sales 550,000 262,158 Total revenues 59,265,125 43,571,720 Less: Cost of revenues (excluding depreciation) 38,987,911 28,557,004 Gross profit 20,277,214 15,014,716 Operating expenses: Selling, general and administrative 18,313,904 19,177,492 Stock based compensation 14,064,883 10,834,838 Depreciation and amortization 17,877,770 38,080,506 Change in fair value of derivative asset 1,173,104 7,241,883 Total operating expenses 51,429,661 75,334,719 Loss from operations (31,152,447 ) (60,320,003 ) Non-operating income (expense): Total non-operating income (expense), net (14,207,770 ) 7,723,529 Loss before income taxes (45,360,217 ) (52,596,474 ) Revenues Digital colocation revenue for the years ended December 31, 2024 and 2023, were $38.5 million and $16.4 million, respectively.
Removed
We also invest in the communities in which we operate to support our broader ecosystem. Bitcoin mining and co-location power capacity Towards the close of 2023, Mawson’s two Pennsylvania sites, Midland and Bellefonte had approximately 109 MW of total power capacity capable of supporting 35,650 miners for either self-mining or co-location services.
Added
This represented an increase of $22.1 million or a 136% year-over-year revenue increase.
Removed
The Midland facility had approximately 100 MW of total power and the capacity to support a total of approximately 32,930 miners for self-mining and/or co-location services. As of December 31, 2023, the Bellefonte facility was operating at approximately 8.8 MW of capacity and continues to be used entirely for self-mining purposes. Recent Developments.
Added
This represented an increase of $2.2 million or a 42% year-over-year revenue increase. This increase is due to the Company’s enhanced energy management programs, which utilizes software and analysis, to generate revenue when the Company adapts its power usage to the real-time needs of the grid.
Removed
On October 4, 2023, the Company received written notice from The Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company was not in compliance with the $1.00 minimum bid price requirement for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”).
Added
The revenue opportunity from energy management is expected to be impacted by seasonal patterns and other weather-related events as well as the dynamic nature of global power prices. Digital assets mining revenue from self-mining of bitcoin for the years ended December 31, 2024 and 2023, were $12.6 million and $21.6 million, respectively.
Removed
In accordance with Nasdaq Listing Rule 5810-2(c)(3)(A), the Company had a period of 180 calendar days, or until April 1, 2024, to regain compliance with the Bid Price Rule. To regain compliance, the closing bid price of the Company’s Common Stock had meet or exceed $1.00 per share for a minimum of ten consecutive business days during this 180-day period.
Added
This represented a decrease of $9.0 million or 42% over the prior year period.
Removed
On December 19, 2023, the Company received formal written notice from Nasdaq indicating that the Company had regained compliance with the Bid Price Rule.
Added
The decrease for the year ended December 31, 2024, was due to a number of factors, including the impact of the April 2024 halving event, and a higher global network difficulty rate in the year ended December 31, 2024, compared to the same period in 2023, which led to lower bitcoin production from self-mining.
Removed
On October 12, 2023, the Company entered into a new Service Framework Agreement with a wholly owned subsidiary of Consensus Technology Group, Consensus Colocation PA LLC, for co-location services for approximately 15,876 Bitmain Antminer S19 XP miners or approximately 50 MW at Mawson’s Midland, Pennsylvania facilities (the “Service Framework Agreement”).
Added
In the year ended December 31, 2024, the Company also significantly expanded and grew its digital colocation services business across multiple customers reallocating some of its digital asset mining capacities.
Removed
The Service Framework Agreement has the Company providing co-location services to the customer for 12 months and the parties can extend further upon mutual agreement. On December 26, 2023, the Company entered into an additional Addendum to the Employment Agreement between the Company and Rahul Mewawalla, the Company’s Chief Executive Officer and President, dated May 22, 2023 (the “Addendum B”).
Added
The Company believes its digital asset mining revenue may continue to fluctuate with bitcoin pricing and market conditions as the bitcoin industry works through the expected volatility inherently associated with bitcoin including the impact post the April 2024 halving event.
Removed
The Addendum B is intended to reflect that the Company did not make certain equity grants and compensation per the terms and timelines it was obligated to Mr. Mewawalla and provides benefits to Mr. Mewawalla to compensate Mr. Mewawalla . The Addendum B provides for Mr.
Added
The decrease was primarily due decreases in rent and equipment rental of $0.9 million each, marketing of $0.4 million, and property costs of $0.3 million, partially offset by an increase in overall employee and personnel compensation of $2.0 million.
Removed
Mewawalla receiving fully vested restricted stock unit awards and compensation in calendar year 2024, but no later than October 31, 2024, as per the Addendum B. The Addendum B also updates certain provisions of the Employment Agreement as per the Addendum B.

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