UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, ~~2021~~2022

ORor

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

For the transition period from ________________ to ________________

Commission file number ~~000-52545~~001-40849

Mawson Infrastructure Group Inc.

(Exact name of registrant as specified in its charter)

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

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

(Address of principal executive offices, including zip code)

+61 2 8624 6130

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: ~~None~~

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

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

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

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

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

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

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

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

As of August ~~4, 2021,~~16, 2022, the issuer had a total of ~~539,192,684~~81,249,768 shares of common stock, par value ~~$.001~~$0.001 per share, outstanding.

MAWSON INFRASTRUCTURE GROUP INC.

FORM 10-Q

FOR THE QUARTER ENDED ~~June~~JUNE 30, ~~2021~~2022

TABLE OF CONTENTS

Item		Page Number		Page Number
Part I – Financial Information	Part I – Financial Information		Part I – Financial Information

1.	Financial Statements	1	Financial Statements	1
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
3.	Quantitative and Qualitative Disclosures about Market Risks	22	Quantitative and Qualitative Disclosures about Market Risks	35
4.	Controls and Procedures	23	Controls and Procedures	35

Part II – Other Information	Part II – Other Information		Part II – Other Information

1.	Legal Proceedings	24	Legal Proceedings	37
1A.	Risk Factors	24	Risk Factors	37
2.	Unregistered Sales of Equity Securities and Use of Proceeds	38	Unregistered Sales of Equity Securities and Use of Proceeds	38
3.	Defaults Upon Senior Securities	38	Defaults Upon Senior Securities	38
4.	Mine Safety Disclosure	38	Mine Safety Disclosure	38
5.	Other Information	38	Other Information	38
6.	Exhibits	38	Exhibits	39
	Signatures	39	Signatures	40

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

	June 30, 2021			December 31, 2020			June 30,			December 31,
	(unaudited)						2022			2021
ASSETS							(unaudited)
Current assets:
Cash and cash equivalents	$	3,614,435		$	1,112,811		$	2,493,826		$	5,467,273
Prepaid expenses		384,687			11,500			5,292,034			332,154
Trade and other receivables		473,436			615,145			4,211,903			5,606,780
Cryptocurrencies		2,664			15,061			43,967			40,800
Total current assets		4,475,222			1,754,517			12,041,730			11,447,007
Property and equipment, net		15,581,357			7,015,285			148,938,221			76,936,850
Derivative asset								17,714,357			-
Equipment deposits		13,018,320			-			2,788,722			51,369,216
Equity accounted investments		210,754			-
Financial assets								1,638,027			326,801
Security deposits		1,418,369			969,423			4,153,184			1,246,236
Operating lease right-of-use asset		32,753			41,703			4,570,100			3,968,262
Trademarks		-			15,813

TOTAL ASSETS	$	34,736,775		$	9,796,741
Total assets							$	191,844,341		$	145,294,372

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade and other payables	$	4,256,143		$	1,882,247		$	47,046,288		$	7,746,988
Lease liability		34,980			44,637
Current portion of operating lease liability								1,451,655			1,222,382
Current portion of finance lease liability								29,643			8,105
Borrowings		991,524			290,978			19,473,292			11,095,388
Total current liabilities		5,282,647			2,217,862			68,000,878			20,072,863
Paycheck protection program loan		14,000			14,000
TOTAL LIABILITIES		5,296,647			2,231,862
Operating lease liability, net of current portion								3,218,546			2,962,765
Finance lease liability, net of current portion								99,046			38,764
Long-term borrowings								19,404,697			7,639,391
Total liabilities								90,723,167			30,713,783

Common stock (800,000,000 authorized, 539,192,684 issued and outstanding $0.001 par value shares). Series A preferred stock (1,000,000 authorized shares; 178 issued and outstanding at 30 June 2021)

Contingencies
Commitments and Contingencies (note 10)								-			-

Shareholders’ equity:
Additional paid-in capital		86,679,724			35,110,000
Share subscription receivable		-			(16,690	)
Additional paid-in capital; Common stock (120,000,000 authorized, 72,491,295 issued and outstanding $0.001 par value shares). Series A preferred stock (1,000,000 authorized shares; nil issued and outstanding as at June 30, 2022)								186,744,313			186,389,568
Accumulated other comprehensive income (loss)		(6,038,270	)		(1,341,826	)		(2,530,052	)		(521,094	)
Accumulated deficit		(51,108,458	)		(26,159,539	)		(82,952,860	)		(71,123,259	)
TOTAL SHAREHOLDERS’ EQUITY		29,532,996			7,591,945
Total stockholders’ equity								101,261,401			114,745,215
Non-controlling interest		(92,868	)		(27,066	)		(140,227	)		(164,626	)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	34,736,775		$	9,796,741
Total liabilities and stockholders’ equity							$	191,844,341		$	145,294,372

~~The accompanying notes are an integral part of these consolidated condensed financial statements.~~See Accompanying Notes to Unaudited Condensed Interim Consolidated Financial Statements.

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	For the three months ended June 30,						For the six months ended June 30,						For the three months ended June 30,						For the six months ended June 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Revenues:
Cryptocurrency mining revenue		5,664,629			1,121,851			10,878,255			1,892,311			16,212,525			5,664,629			34,996,368			10,878,255
Hosting Co Location revenue														3,567,912			-			4,116,860			-
Sale of crypto currency mining equipment		280,038			-			2,157,651			-			-			280,038			91,545			2,157,651
Total revenues		5,944,667			1,121,851			13,035,906			1,892,311			19,780,437			5,944,667			39,204,773			13,035,906

Operating cost and expenses:
Cost of revenues		294,140			837,714			2,666,921			1,287,611
Less: Cost of revenues (excluding depreciation)														14,359,072			294,140			22,771,433			2,666,921
Gross profit														5,421,365			5,650,527			16,433,340			10,368,985
Selling, general and administrative		4,161,256			522,361			7,043,881			998,514			9,431,088			3,697,217			15,908,034			6,329,180
LO2A write backs		-			-			23,963,050			-			-			-			-			23,963,050
Share based payments		5,559,495			-			20,354,897			-			936,235			5,559,495			1,326,844			20,354,897
Depreciation and amortization		2,533,242			1,098,079			3,848,142			2,455,564			16,023,817			2,533,242			29,826,849			3,848,142
Total operating expenses		12,548,133			2,458,154			57,876,891			4,741,689			26,391,140			11,789,954			47,061,727			54,495,269
Change in fair value of derivative asset														17,714,357			-			17,714,357			-
Loss from operations		(6,603,466	)		(1,336,303	)		(44,840,985	)		(2,849,378	)		(3,255,418	)		(6,139,427	)		(12,914,030	)		(44,126,284	)
Other income (expense):
Realized gain/(losses) on foreign currency transactions		(181,768	)		(187	)		846,852			(1,039	)
Unrealized gain/(losses) on foreign currency remeasurement		121,021			(722,875	)		(1,569,277	)		166,969
Realized gain/(loss) on sale of digital currencies		-			5,508			-			(8,800	)
Non-operating income/(expense):
Gain / (loss) on foreign currency transactions														1,657,055			(60,747	)		957,818			(722,425	)
Interest expense														(1,565,040	)		(464,039	)		(2,801,713	)		(714,701	)
Impairment of financial assets														(1,107,197	)		-			(1,107,197	)		-
Other income		315,353			-			694,480			108,895			1,864,968			315,353			1,889,415			694,480
Loss before income taxes		(6,348,860	)		(2,053,857	)		(44,868,930	)		(2,583,353	)		(2,405,632	)		(6,348,860	)		(13,975,707	)		(44,868,930	)
Income tax expenses		-			-			-			-
Income tax expense														-			-			-			-
Net Loss		(6,348,860	)		(2,053,857	)		(44,868,930	)		(2,583,353	)		(2,405,632	)		(6,348,860	)		(13,975,707	)		(44,868,930	)

Loss attributable to Non-Controlling interest		(108,937	)		-			(65,802	)		-
Less: Net loss attributable to non-controlling interests														(288,229	)		(108,937	)		(522,648	)		(65,802	)
Net Loss attributed to Mawson Infrastructure Group shareholders		(6,239,923	)		(2,053,857	)		(44,803,128	)		(2,583,353	)		(2,117,403	)		(6,239,923	)		(13,453,059	)		(44,803,128	)

Net Loss per share, basic & diluted	$	(0.013	)	$	(0.300	)	$	(0.095	)	$	(0.385	)	$	(0.03	)	$	(0.12	)	$	(0.19	)	$	(0.95	)
Weighted average number of shares outstanding		502,642,831			6,847,465			472,987,017			6,847,465			71,598,552			50,264,283			71,790,772			47,298,702

~~The accompanying notes are an integral part of these consolidated condensed financial statements.~~See Accompanying Notes to Unaudited Condensed Interim Consolidated Financial Statements

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

For the Three Months Ended June 30, 2022

	Common Stock (#)		Common Stock ($)		Additional Paid-in- Capital			Reserves			Accumulated Other Comprehensive Income/ (Loss)			Accumulated Deficit			Total Mawson Stockholders’ Equity			Non- controlling interest			Total Equity
Balance as of March 31, 2022		71,585,295		612,344		167,664,681			18,447,842			62,214			(82,458,914	)		104,328,167			(399,045	)		103,929,122
Issuance of common stock, stock based compensation		5,000		5		27,145			408,584			-			-			435,734			-			435,734
Issuance of warrants		-		-		-			500,500			-			-			500,500			-			500,500
Issuance of RSU’s and stock options		901,000		901		2,252,495			(2,252,500	)		-			-			896			-			896
Net loss		-		-		-			-			-			(2,117,403	)		(2,117,403	)		(288,229	)		(2,405,632	)
Other comprehensive income		-		-		-			-			(2,592,266	)		-			(2,592,266	)		13,028			(2,579,238	)
Non-controlling interest		-		-		(917,684	)		-			-			1,623,457			705,773			534,019			1,239,792

Balance as of June 30, 2022		72,491,295		613,250		169,026,637			17,104,426			(2,530,052	)		(82,952,860	)		101,261,401			(140,227	)		101,121,174

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

For the Three Months Ended June 30, 2021

Series A Preferred Stock
(#) Series A Preferred Stock
($) Common Shares (#) Common Shares ($) Common Stock
(#) Common Stock
($) Share Subscription Receivable Additional Paid-in-Capital Accumulated Other Comprehensive Income/(Loss) Accumulated Deficit Total Mawson Stockholders’ Equity Non-controlling interest Total Equity

Balance as of March 31, 2021 178 0 - - 486,439,469 486,440 (16,690 ) 80,638,319 (5,957,154 ) (44,911,673 ) 30,239,242 16,069 30,255,311
Issuance of common stock (@A$8.75) - - - - 2,000 13,173 - - 42,502 - 55,675 - 55,675
Share based payment (@A$8.75) - - - - 3,429 22,582 - - - - 22,582 - 22,582
Share based payments W Capital - - - - 8,250,000 5,535,900 - - - - 5,535,900 - 5,535,900
Comprehensive loss - - - - - - - - (123,618 ) (6,196,785 ) (6,320,403 ) (108,937 ) (6,429,340 )

Balance as of June 30, 2021 178 0 - - 494,694,898 6,058,095 (16,690 ) 80,638,319 (6,038,270 ) (51,108,458 ) 29,532,996 (92,868 ) 29,440,128

~~For the Three Months Ended June 30, 2020~~

Series A Preferred Stock
(#) Series A Preferred Stock
($) Common Shares (#) Common Shares ($) Common Stock
(#) Common Stock
($) Share Subscription Receivable Additional Paid-in-Capital Accumulated Other Comprehensive Income/(Loss) Accumulated Deficit Total Mawson Stockholders’ Equity Non-controlling interest Total Equity

Balance as of March 31, 2020 - - 6,578,672 9,198,568 - - - - (1,185,739 ) (1,976,585 ) 6,036,244 - 6,036,244
Issuance of common stock, net of offering costs - - 268,793 - - - - 1,633,489 - - 1,633,489 - 1,633,489
Comprehensive gain / (loss) - - - - - - - - 877,134 (2,053,858 ) (1,176,724 ) - (1,176,724 )

Balance as of June 30, 2020 - - 6,847,465 9,198,568 - - - 1,633,489 (308,605 ) (4,030,443 ) 6,493,009 - 6,493,009

	Series A Preferred Stock (#)		Series A Preferred Stock ($)		Common Shares (#)			Common Stock* (#)		Common Stock ($)		Share Subscription Receivable			Additional Paid-in- Capital		Reserves		Accumulated Other Comprehensive Income/(Loss)			Accumulated Deficit			Total Mawson Stockholders’ Equity			Non- controlling interest			Total Equity

Balance as of March 31, 2021		178		-		-			48,673,357		486,440		(16,690	)		82,914,768		17,534,625		(5,957,154	)		(64,722,747	)		30,239,242			16,069			30,255,311
Late acceptance of Exchange of common stock of Cosmos Capital Limited for common stock of Wize Pharma Inc., adjusted to reflect the Exchange Ratio		-		-		-			5,055,813		50,558		-			-		-		-			-			50,558			-			50,558
Share based payments W Capital		-		-		-			-		-		-			-		5,535,900		-			-			5,535,900			-			5,535,900
Issuance of common stock at the price of $87.50		-		-		30,613			-		-		-			-		-		-			-			-			-			-
Other		-		-		-			-		-		-			-		-		-			43,138			43,138			-			43,138
Share based payment - Issuance of BIA		-		-		(30,613	)		190,098		1,901		-			-		-		-			-			1,901			-			1,901
Net loss		-		-		-			-		-		-			-		-		-			(6,239,923	)		(6,239,923	)		-			(6,239,923	)
Other comprehensive income		-		-		-			-		-		-			-		-		(81,116	)		-			(81,116	)		-			(81,116	)
Non-controlling interest		-		-		-			-		-		-			-		-		-			-			-			(108,937	)		(108,937	)
Balance as of June 30, 2021		178		-		-			53,919,268		538,899		(16,690	)		82,914,768		23,070,525		(6,038,270	)		(70,919,532	)		29,549,700			(92,868	)		29,456,832

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

For the Six Months Ended June 30, 2022

	Common Stock (#)		Common Stock ($)		Additional Paid-in- Capital			Reserves			Accumulated Other Comprehensive Income/ (Loss)			Accumulated Deficit			Total Mawson Stockholders’ Equity			Non- controlling interest			Total Equity
Balance as of December 31, 2021		70,746,508		611,504		165,600,831			20,177,233			(521,094	)		(71,123,259	)		114,745,215			(164,626	)		114,580,589
Issuance of common stock, stock based compensation		18,787		20		134,879			408,584			-			-			543,483			-			543,483
Issuance of warrants		-		-		-			667,333			-			-			667,333			-			667,333
Issuance of RSU’s and stock options		1,726,000		1,726		4,208,611			(4,148,724	)		-			-			61,613			-			61,613
Net loss		-		-		-			-			-			(13,453,059	)		(13,453,059	)		(522,648	)		(13,975,707	)
Other comprehensive income		-		-		-			-			(2,008,958	)		-			(2,008,958	)		13,028			(1,995,930	)
Non-controlling interest		-		-		(917,684	)		-			-			1,623,458			705,774			534,019			1,239,793

Balance as of June 30, 2022		72,491,295		613,250		169,026,637			17,104,426			(2,530,052	)		(82,952,860	)		101,261,401			(140,227	)		101,121,174

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

For the Six Months Ended June 30, 2021

Series A Preferred Stock
(#) Common Shares
(#) Common Stock
(#) Common Stock
($) Share Subscription Receivable Additional Paid-in-Capital Accumulated Other Comprehensive Income/(Loss) Accumulated Deficit Total Mawson Stockholders’ Equity Non-controlling interest Total Equity

Balance as of December 31, 2020 - 7,539,275 - - (16,690 ) 15,298,926 (1,341,826 ) (6,348,465 ) 7,591,945 (27,066 ) 7,564,879
Exchange of common stock of Cosmos Capital Limited for common stock of Wize Pharma Inc., adjusted to reflect the Exchange Ratio 178 (7,539,275 ) 428,270,616 428,271 - - - 428,271 - 428,271
Acquisition of Wize Pharma Inc. - - 33,052,951 33,053 - (5,436,541 ) - - (5,403,488 ) - (5,403,488 )
Issuance of Common stock of Mawson Infrastructure Group, Inc., in a PIPE transaction upon the consummation of the Business Combination - - 25,000,000 25,000 - 2,975,000 - - 3,000,000 - 3,000,000
Issuance of 28,012,364 mandatorily convertible notes by Cosmos Capital, net of $1,268,093 of offering costs - - - - - 20,441,761 - - 20,441,761 - 20,441,761
Issuance of 8,710,982 warrants over Common Stock of Mawson Infrastructure Group, Inc., at the Common Stock price of $0.79 - - - - - 6,881,676 - - 6,881,676 - 6,881,676
Exercise of 115,902 warrants for Mawson Infrastructure Group, Inc. Common Stock - - 115,902 116 - - - 116 - 116
Fair value of IPR&D acquired, net of Business Combination transaction costs - - - - - 24,765,831 - - 24,765,831 - 24,765,831
Issuance of RSUs and stock options - - - - - 10,270,803 - - 10,270,803 - 10,270,803
Fair value adjustment of LO2A intellectual property revenue sharing obligation - - - - - 5,440,863 - - 5,440,863 - 5,440,863

Issuance of common stock (@A$8.75) - - 2,000 13,173 - - 42,502 - 55,675 - 55,675
Share based payment (@A$8.75) - - 3,429 22,582 - - - - 22,582 - 22,582
Share based payments W Capital - - 8,250,000 5,535,900 - - - - 5,535,900 - 5,535,900
Comprehensive loss - - - - - - (4,738,946 ) (44,759,993 ) (49,498,939 ) (65,802 ) (49,564,741 )

Balance as of June 30, 2021 178 - 494,694,898 6,058,095 (16,690 ) 80,638,319 (6,038,270 ) (51,108,458 ) 29,532,996 (92,868 ) 29,440,128

	Series A Preferred Stock (#)		Series A Preferred Stock ($)		Common Shares (#)			Common Stock (#)		Common Stock ($)		Share Subscription Receivable			Additional Paid-in- Capital			Reserves		Accumulated Other Comprehensive Income/(Loss)			Accumulated Deficit			Total Mawson Stockholders’ Equity			Non- controlling interest			Total Equity
Balance as of December 31, 2020		-		-		7,539,275			-		-		(16,690	)		34,457,051			652,949		(1,341,826	)		(26,159,539	)		7,591,945			(27,066	)		7,564,879
Exchange of stock and Reverse recapitalization of Wize Pharma Inc		178		-		(7,539,275	)		46,132,357		461,324		-			(5,436,541	)		-		-			-			(4,975,217	)		-			(4,975,217	)
Issuance of common stock, net of offer costs, PIPE transaction		-		-		-			2,500,000		25,000		-			2,975,000			-		-			-			3,000,000			-			3,000,000
Issuance of convertible notes, net of offer costs		-		-		-			-				-			20,301,427			-		-			-			20,301,427			-			20,301,427
Issuance of common stock, exercise of warrants		-		-		30,613			41,000		116		-			-			12,417,576		-			-			12,417,692			-			12,417,692
Fair value of IPR&D acquired, net of Business Combination transaction costs		-		-		-			-		-		-			24,765,831			-		-			-			24,765,831			-			24,765,831
Issuance of RSU’s and stock options		-		-		(30,613	)		190,098		1,901		-			411,137			10,000,000		-			-			10,413,038			-			10,413,038
Fair value adjustment of LO2A intellectual property revenue sharing obligation		-		-		-			-		-		-			5,440,863			-		-			-			5,440,863			-			5,440,863
Other		-		-		-			-		-		-			-			-		-			43,135			43,135			-			43,135
Late acceptance of Exchange of common stock of Cosmos Capital Limited for common stock of Wize Pharma Inc., adjusted to reflect the Exchange Ratio		-		-		-			5,055,813		50,558		-			-			-		-			-			50,558						50,558
Net loss		-		-		-			-		-		-			-			-		-			(44,803,128	)		(44,803,128	)					(44,803,128	)
Other comprehensive income		-		-		-			-		-		-			-			-		(4,696,444	)		-			(4,696,444	)					(4,696,444	)
Non-controlling interest		-		-		-			-		-		-			-			-		-			-			-			(65,802	)		(65,802	)

Balance as of June 30, 2021		178		-		-			53,919,268		538,899		(16,690	)		82,914,768			23,070,525		(6,038,270	)		(70,919,532	)		29,549,700			(92,868	)		29,456,832

~~For the Six Months Ended June 30, 2020~~

Series A Preferred Stock
(#) Series A Preferred Stock
($) Common Shares (#) Common Shares ($) Common Stock
(#) Common Stock
($) Share Subscription Receivable Additional Paid-in-Capital
Accumulated Other Comprehensive
Income/ (Loss)
Accumulated Deficit Total Mawson Stockholders’ Equity Non-controlling interest Total Equity

Balance as of December 31, 2019 - - 6,578,672 9,093,549 - - - - (217,003 ) (1,447,092 ) 7,429,454 - 7,429,454
Issuance of common stock, net of offering costs - - 268,793 105,019 - - - 1,633,489 - - 1,738,508 - 1,738,508
Comprehensive gain / (loss) - - - - - - - - (91,602 ) (2,583,351 ) (2,674,954 ) - (2,674,954 )

Balance as of June 30, 2020 - - 6,847,465 9,198,568 - - - 1,633,489 (308,605 ) (4,030,443 ) 6,493,009 - 6,493,009

~~The accompanying notes are an integral part of these consolidated condensed financial statements.~~See Accompanying Notes to Unaudited Condensed Interim Consolidated Financial Statements

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,						For the six months ended June 30,
	2021			2020			2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		(44,868,930	)		(2,583,351	)	$	(13,975,707	)	$	(44,868,930	)
Adjustments to reconcile net loss to net cash used in operating activities:		-			-
Depreciation and amortization		3,848,141			2,455,565			29,826,849			3,848,141
LO2A write offs		23,963,050			-			-			23,963,050
Investment income		131,056			-
Lease expense								809,130			-
Foreign exchange gain								137,758			1,569,278
Change in fair value of derivative asset								(17,714,357	)
Sale of intellectual property								(1,465,829	)
Share based payments								1,326,844			20,354,898
Loss on disposal of fixed assets								-			307,100
Interest expense		714,701			-			138,293			654,004
Interest paid		(60,697	)		-
Share based payments		20,354,898			-
Write-off of fixed assets		307,100			-
Unrealized gain (losses) on foreign currency remeasurement		1,569,278			(29,894	)
Change in assets and liabilities
Prepaid expenses		(373,187	)		(63,428	)
Investment expense								-			131,056
Non-controlling interest								1,239,793			-
Trade and other receivables		141,709			612,330			1,394,878			141,709
Cryptocurrencies		12,398			(19,809	)
Security deposits		(448,946	)		(1,526	)
Other current assets								(7,869,996	)		(809,735	)
Trade and other payables		2,373,896			(310,642	)		39,299,304			2,373,896
Net cash provided by operating activities		7,664,467			59,245			33,146,960			7,664,467
CASH FLOWS FROM INVESTING ACTIVITIES
Net proceeds from sale and purchase of property and equipment		(12,705,500	)		-
Net payment for the purchase of property and equipment								(21,100,867	)		(12,705,500	)
Investment in financial assets								-			(341,810	)
Payment of fixed asset deposits		(13,018,320	)		(718,739	)		(32,054,326	)		(13,018,320	)
Investment in financial assets		(341,810	)		(6,849	)
Net cash used in investing activities		(26,065,630	)		(725,588	)		(53,155,193	)		(26,065,630	)
CASH FLOWS FROM FINANCING ACTIVITES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common share issuances		1,334,157			2,023,065			51,524			1,334,157
Unit redemptions		-			-
Proceeds from convertible notes		21,487,391			-			-			21,487,391
Payments of capital issuance costs		(2,229,096	)		-			-			(2,229,096	)
Proceeds from borrowings		1,423,064			-			26,581,467			1,423,064
Advances made to external companies		(42,210	)		-			-			(42,210	)
Payments of borrowings		(722,518	)		167,627
Repayment of lease liabilities								(937,008	)		-
Repayments of borrowings								(6,182,245	)		(722,518	)
Net cash provided by financing activities		21,250,788			2,190,692			19,513,738			21,250,788
Effect of exchange rate changes on cash and cash equivalents		(348,001	)		-			(2,478,952	)		(348,001	)
Net increase in cash and cash equivalents		2,501,624			1,524,349
Net (decrease)/increase in cash and cash equivalents								(2,973,447	)		2,501,624
Cash and cash equivalents at beginning of period		1,112,811			579,277			5,467,273			1,112,811
Cash and cash equivalents at end of period		3,614,435			2,103,626		$	2,493,826		$	3,614,435

~~The accompanying notes are an integral part of these consolidated condensed financial statements.~~See Accompanying Notes to Unaudited Condensed Interim Consolidated Financial Statements

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – GENERAL

General

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

The accompanying ~~unaudited interim condensed~~ consolidated financial statements, including the results of the Company’s ~~subsidiaries,~~subsidiaries: Mawson Infrastructure Group Pty Ltd ~~(formerly~~(“Mawson AU”, previously known as Cosmos Capital Limited) ~~(“ Mawson AU”)) and its subsidiaries:~~, Cosmos Trading Pty Ltd, Cosmos Infrastructure LLC, Cosmos Manager LLC, ~~Cosmos Grid Tech~~MIG No.1 Pty Ltd, ~~Cosmos Asset Management Pty Ltd, and~~Mawson AU Limited (incorporated June 8, 2022), Luna Squares LLC, ~~(formerly known as Innovative~~Luna Squares Texas LLC (formed January 27, 2022), Luna Squares Repairs LLC, Luna Squares Property ~~Management LLC)~~LLC and Mawson Mining LLC (collectively referred to as the “Group”), have been prepared by the Company, ~~without audit,~~ pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ~~(SEC)~~(“SEC”) and in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Wize NC Inc, Occuwize Ltd and Wize Pharma Ltd are additional subsidiaries of Mawson, however these companies have not been consolidated into the financial statements as these companies are subject to contingent value rights (“CVR”), further described in NOTE 10.

These consolidated, condensed unaudited interim financial statements should be read in conjunction with the audited consolidated financial statements of the Group as of December 31, 2021, and the notes thereto, included in the Company’s Annual Report on Form 10-K filed with SEC on March 21, 2022. Accordingly, they do not include all the information and footnotes required by ~~accounting principles generally accepted in the United States~~U.S GAAP for complete financial statements. InThe results of the interim period are not necessarily indicative of the results to be expected for the full year ended December 31, 2022. These consolidated, condensed interim financial statements reflect all adjustments which, in the opinion of management, ~~all adjustments (consisting~~are necessary to present fairly the financial position, the results of ~~normal recurring accruals) considered necessary for a fair presentation have been included.~~

Since Mawson acquired Mawson AU on March 9, 2021, it has managed most of its activity through Mawson Infrastructure Group Pty Ltd (formerly known as Cosmos Capital Limited), an Australian incorporated company,operations and its subsidiaries, Cosmos Trading Pty Ltd, Cosmos Infrastructure LLC, Cosmos Manager LLC, Cosmos Grid Tech Pty Ltd, Cosmos Asset Management Pty Ltd, and Luna Squares LLC (formerly known as Innovative Property Management LLC).

~~Since the acquisition of Mawson AU, Mawson has been treated as the acquiree, with Mawson AU being the acquirer. The result of which is that these financial statements are taken to be a continuation~~cash flows of the ~~Mawson AU financial statements, with Mawson incorporated within~~Company for the acquisition. For discussion regarding this acquisition and treatment (also referred to as either the “Mawson AU Transaction” or the “Cosmos Transaction”) please refer to the prior quarter form 10Q filed on May 19, 2021, under Note 2: Reverse asset acquisition.periods presented.

Mawson, through its ~~subsidiary Mawson AU,~~subsidiaries, is a ‘Digital Asset Infrastructure’ business, which owns and operates modular data centers ~~(MDCs)~~(“MDCs”) based in the United ~~States.~~States and Australia. As at June 30, ~~2021~~2022 Mawson ~~AU currently owns~~owned and ~~has~~had ordered ~~18,332 Miners~~35,329 Application-Specific Integrated Circuit (“ASIC”) computers known as “Miners,” specifically focused on the SHA-256 algorithm, from a variety of manufacturers, including Bitmain Technology Holding Company (“Bitmain”), Canaan Creative (HK) Holdings Limited (“Canaan”) and Shenzhen MicroBT Electronics Technology Co., Ltd (“Whatsminer”). As at June 30, 2021, the operational Miners produce up to 296 Petahash of computing power, with a total capacity upon deployment of all ordered equipment to produce up to a total capacity upon deployment of all ordered equipment to produce up to 1,483 Petahash.

Going Concern

For the six-month period ending June 30, 2022, the Company incurred a loss after tax of $13.98 million, and as at June 30, 2022 had net current liabilities of $55.96 million and had an accumulated deficit of $82.95 million. The Company’s cash position at June 30, 2022, was $2.50 million. These conditions raise substantial doubt upon the Company’s ability to continue as a going concern for at least a year from the date of approval of these unaudited consolidated financial statements.

Management of the Company believes that there are reasonable grounds to conclude that the Company will continue as a going concern after having regard for the following factors.

The Company’s plans include improving profitability and generating sufficient cash flow from operations.

Management of the Company is of the opinion that the Company can continue to access adequate debt and equity funding to meet its working capital requirements. In July 2022, the Company raised $3.60 million through an issue of secured convertible promissory notes and an aggregate of $5.62 million of net proceeds from the issuance of shares and warrants. The Company has the ability through its At the Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”), to sell shares of our common stock with an aggregate sales price of up to $100 million. To the extent the Group were to raise additional capital or debt, this could cause additional dilution to our current stockholders. The terms of any future capital raise or debt issuance and the costs of any financing are uncertain. There are no assurances that the Group would be able to raise additional financing when needed or that it would be able to do so on favourable terms.

Based on internally prepared forecast cash flows ~~combined with the existing cash reserves,~~ which take into consideration what management ~~of the Group~~ considers to be reasonable scenarios given the inherent risks and uncertainties, ~~described both in this 10Q and the Company’s Current Report on Form 8-K/A filed May 13, 2021,~~combined with existing cash balances, management believes that the ~~Group~~Company will ~~have adequate cash reserves to enable the Group~~be able to meet its obligations as they fall due for at least one year from the date of approval of ~~the~~these unaudited consolidated financial ~~statements, and on this basis~~statements.

Accordingly, management of the ~~accounts have been prepared~~Company believe that it is appropriate to prepare the Group’s financial statements on a going concern basis. However, should the Company be unable to source sufficient funding through the factors noted above, the Company may not be able to realize assets at their recognized values and extinguish its liabilities in the normal course of business at the amounts stated in these unaudited consolidated financial statements.

These unaudited consolidated financial statements do not include any adjustments relating to the recoverability and carrying amounts of assets and the amounts of liabilities should the Company be unable to continue as a going concern and meet its obligations and debts as and when they fall due.

NOTE 2 -– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and basis of preparation

~~These consolidated, condensed interim financial statements should be read in conjunction with the audited~~The accompanying consolidated financial statements ~~for Cosmos Capital Limited (now known as Mawson Infrastructure Group Pty Ltd)~~of the Company include the accounts of the Company and its wholly or majority owned and controlled subsidiaries, ~~as of December 31, 2020,~~other than those subsidiaries subject to the CVR described more in NOTE 10. Intercompany investments, balances and transactions have been eliminated in consolidation. Non–controlling interests represent the ~~notes thereto, included~~minority equity investment in the Company’s ~~Current Report on Form 8-K/A filed May 13, 2021. The results~~subsidiaries, plus the minority investors’ share of the ~~interim periods are not necessarily indicative~~net operating results and other components of equity relating to the results to be expected for the full year ended December 31, 2021. These consolidated condensed interim financial statements reflect all adjustments which, in the opinion of management, are necessary to present fairly the financial position, the results of operations and cash flows of the Company for the periods presented.non–controlling interest.

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

References in these notes to the “Company” as of a date prior to March 9, 2021, are references to Cosmos Capital Limited (now known as Mawson Infrastructure Group Pty Ltd) and its subsidiaries, not Mawson Infrastructure Group Inc. and its subsidiaries. On March 9, 2021, ~~Cosmos Capital Limited (now known as~~ Mawson ~~Infrastructure Group Pty Ltd)~~AU was acquired by the Company. For accounting purposes, this was accounted for as a reverse asset acquisition with ~~Cosmos Capital Limited (now known as~~ Mawson ~~Infrastructure Group Pty)~~AU as the accounting acquirer (refer to significant accounting policies below). The ~~consolidate results~~result of which is that these financial statements are taken to be a continuation of Mawson AU’s financial statements, with the Company incorporated within the acquisition and therefore the historical financial information of Mawson AU (then known as Cosmos Capital Limited) prior to March 9, 2021, became the historical financial information of Mawson AU, which have been consolidated into the financial statements of the ~~Company are reported in U.S. Dollars and include the operations of all its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.~~Company.

Use of Estimates and Assumptions

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

These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of ~~revenues~~income and expenses during the reporting periods.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the dates of the consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual Actual results could differ ~~significantly~~ from those estimates. The Company has considered the following to be significant estimates made by management, including but not limited to, going concern assumptions, estimating the useful lives of ~~patent assets and~~ fixed assets, realization of long-lived assets, unrealized tax positions and the realization of digital currencies, ~~Business Combinations, Reverse Asset Acquisition,~~valuing the derivative asset classified under Level 3 fair value hierarchy, business combinations, reverse asset acquisition, and the ~~Contingent~~contingent obligation with respect to future revenues.

Critical Accounting Policies

Critical accounting policies are described in the ~~footnotes to the~~ consolidated financial statements for ~~Cosmos Capital Limited (now known as~~ Mawson ~~Infrastructure Group Pty Ltd) and subsidiaries as of December 31, 2020,~~ included in the Company’s ~~Current~~Annual Report on ~~Form 8-K/A~~Form10-K filed ~~May 13, 2021.~~with SEC on March 21, 2022. There have been nosome changes to critical accounting policies in the ~~three~~six months period ended June 30, ~~2021 other than as~~2022. The reverse asset acquisition accounting policy which is no longer considered to be a ~~result~~critical accounting policy and has therefore been included in significant accounting policies and the fair value of ~~changes~~financial instruments has been moved from significant accounting policies to ~~operations as described below.~~critical accounting policies.

~~Reverse Asset Acquisition~~Revenue Recognition – Digital asset mining revenue

~~On March 9, 2021,~~The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of ASC 606 is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Five steps are required to be followed in evaluating revenue recognition: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied a performance obligation.

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

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

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

The Company measures the non-cash consideration received at the fair market value of the cryptocurrency received. Management estimates fair value on a daily basis, as the quantity of cryptocurrency received multiplied by the price quoted on the crypto exchanges that the Company ~~acquired~~uses to dispose of cryptocurrency on the shares of Cosmos Capital Limited (now known as Mawson Infrastructure Group Pty Ltd) in a scrip for scrip exchange. This transaction has been accounted for as a reverse asset acquisition. Full details of the transaction and the impact are included in the Company’s Form 10Q filed May 19, 2021. This transaction reverse asset acquisition and the associated impact is referred to as the Cosmos Transaction.day it was received.

~~Share~~Property and equipment

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

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

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

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

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

The Company changed its policy in relation to freight costs in relation to processing machines with effect from October 1, 2021. Prior to this date these costs were expensed to the statement of operations and profit and loss, and afterwards these costs are capitalized into processing machinery. This change resulted in an increase in processing machines in the balance sheet of $2,978,232 at June 30, 2022, and an increase in the depreciation charge to the six months to June 30, 2022 statement of operations and profit and loss of $84,735 over the prior treatment.

The Company’s long-lived assets are reviewed for impairment in accordance with Accounting Standards Codification (“ASC”) 360, “Property, Plant and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During the six month periods ended June 30, 2022, and 2021, no impairment losses have been identified.

Fair value of financial instruments:

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

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

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

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

	Fair value measured at June 30, 2022
	Total carrying value at June 30, 2022		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative asset	$	17,714,357	$	-	$	-	$	17,714,357
Financial assets	$	1,638,027	$	172,198	$	-	$	1,465,829

	Fair value measured at December, 2021
	Total carrying value at December, 2021		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative asset	$	-	$	-	$	-	$	-
Financial assets	$	326,801	$	326,801	$	-	$	-

Under the terms of the Cosmos Transaction Bid Implementation Agreement the Company was required to make Share based payments consisting of up to 40,000,000 shares required to be issued under an Incentive Compensation Program and warrants issued to HC Wainwright as a fee related to the acquisition by Mawson of Mawson AU. In addition, Mawson AU had an outstanding obligation to W Capital Advisors Pty Ltd (“W Capital”) for options over the equity of Mawson AU which was terminated for consideration of warrants over the Company’s shares being issued to W Capital.Level 3 Assets:

~~Share based payments expenses for~~Power Supply Agreement

During the ~~three months~~quarter ended June 30, ~~2021 were $5.56 million which~~2022, the Company recorded a derivative asset related to its Power Supply Agreement with Energy Harbor LLC, the ~~W Capital Warrants~~energy supplier to the Company’s Pennsylvania Facility. The Power Supply Agreement was classified as a derivative asset and measured at fair value ~~uplift.~~on the date of Power Supply Agreement, with changes in fair value recognized in the accompanying unaudited condensed consolidated statements of operations. The estimated fair value of the Company’s derivate asset is classified in Level 3 of the fair value hierarchy due to the significant unobservable inputs utilized in the valuation. Specifically, our discounted cash flow estimation models contain quoted commodity exchange spot and forward prices and are adjusted for basis spreads for load zone-to-hub differentials through the term of the Power Supply Agreement, which ends in December 2026. In addition, the Group adopted a further discount rate utilized of approximately 20% above the terminal value of the observable market inputs, but also includes unobservable inputs based on qualitative judgment related to company-specific risk factors. The terms of the Power Supply Agreement require pre-payment of collateral, calculated as forward cost based on the market cost rate of electricity versus the fixed price stated in the contract.

Tasmania Data Infrastructure Pty Ltd (“TDI”)

During June 2022 Mawson AU Limited entered into a License and Services Agreement with TDI in exchange for 42,562,432 fully paid issued shares in TDI, this is held at fair value of $1.47 million as at June 30, 2022 the fair value uses unobservable inputs.

Level 1 Assets:

The company holds 50 million shares in DXN Limited (“DXN”), an Australian Securities Exchange (“ASX”) listed company. This is recorded at fair value with changes in fair value recognized in the accompanying unaudited condensed consolidated statements of operations. The fair value of the DXN investment is classified in Level 1 of the fair value hierarchy as it is quoted on an active market, that being the ASX.

~~Equity accounted investments~~Accounting for Power Supply Contract

~~Mawson subscribed for 500,000 shares in Distributed Storage Solutions Pty Ltd (DSS) at AUD$1.00 per share on March 1, 2020. As at~~In June ~~30, 2021, Mawson held 20.06%~~2022, the company entered into a Power Supply Agreement with Energy Harbor LLC to provide the delivery of a fixed portion of the ~~equity~~total amount of electricity for a fixed price through to December 2026. If the Pennsylvania site uses more electricity than contracted, the cost of the excess is incurred at a new price quoted by Energy Harbor.

While the Company manages operating costs at the Pennsylvania Facility in ~~DSS, an Australian private company operating~~part by periodically selling unused or uneconomical power back to the market, we do not consider such actions trading activities. That is, the Company does not engage in speculation in the power market as part of our ordinary activities. Because the sale of any electricity under a ~~blockchain~~curtailment program allows for net settlement, we have determined the Power Supply Agreement meets the definition of a derivative under ASC 815, Derivatives and Hedging, (“ASC 815”). However, because the Company has the ability to sell the power back to the grid rather than take physical delivery, physical delivery is not probable through the entirety of the contract and therefore, we do not believe the normal purchases and normal sales scope exception applies to the Power Supply Agreement. Accordingly, the Power Supply Agreement (the non-hedging derivative contract) is recorded at estimated fair value each reporting period with the change in the fair value recorded in change in fair value of derivative asset in the consolidated statements of operations (refer to fair value of financial instruments policy).

Share based ~~decentralized storage business,~~payments

The Company follows FASB Codification Topic ASC 718-10 Compensation-Stock Compensation. The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the ~~IPFS protocol. This investment has been equity accounted, as the company has assessed that is has significant influence over the operations~~estimated grant-date fair value of the ~~investee.~~awards. The Company determines the grant date fair value of the restricted stock units (“RSUs”) and options using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. These assumptions are the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility computes stock price volatility over expected terms based on its historical common stock trading prices. Risk–free interest rates are calculated based on the implied yield available on U. S. 10-year Treasury bond.

Significant Accounting Policies

~~There have been no material changes~~Revenue Recognition - Hosting Co-location revenue

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

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

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

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

Revenue Recognition - Sale of crypto currency mining equipment

Crypto currency mining equipment sales revenue includes revenues related to the sale of Miners. This is recognized as revenue upon delivery to the customer, which is when the control of ~~December 31, 2020, and~~ the ~~notes thereto, included~~Miner transfers. Payments are typically received at the point control transfers or in accordance with payment terms customary to the ~~Company’s Current Report on Form 8-K/A filed May 13, 2021, other than as a result of changes to operations as described below.~~ business.

Revenue recognition – equipment sales

~~In Q2 2021 the~~The Company earned revenues from the sale of earlier generation cryptocurrency mining units and modular data centers that have been assembled or refurbished for resale (collectively “Hardware”). Revenue from the sale of Hardware is recognized when all of the following conditions are satisfied: (i) persuasive evidence of a sales arrangement exists, (ii) the sales terms are fixed or determinable, (iii) title and risk of loss have transferred, and (iv) payment is received. At the date of sale, the net book value is expensed in cost of revenues.

Cost of revenues:

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

Research and development expenses:

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

Income taxes:

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

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

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

Functional currency:

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

Segment Reporting:

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

Cash and cash equivalents:

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

Digital Currencies

Digital currencies are included in current assets in the consolidated balance sheets. Digital currencies are ~~recorded at cost less impairment. The Company compares~~classified as indefinite-lived intangible assets in accordance with ASC 350, Intangibles - Goodwill and Other, and are accounted for in connection with the ~~book value of digital currencies held to the prevailing market price at each reporting period.~~Company’s revenue recognition policy detailed above.

~~An intangible asset with an indefinite useful life~~The following table presents the Company’s digital currency (Bitcoin) activities for the three months and six months ended June 30, 2022:

	Three months to June 30, 2022			Six months to June 30, 2022

Opening number of Bitcoin held as at March 31, 2022 and December 31, 2021		0.00			0.92
Number of Bitcoin added		489.60			948.27
Number of Bitcoin sold		(487.39	)		(946.98	)
Closing number of Bitcoin held as at June 30, 2022		2.21			2.21

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

The ~~following table presents~~Company’s policy is to dispose of production at the ~~activities~~earliest opportunity, therefore the holding period is minimal, usually no more than a few days. Due to the short period which Bitcoin are held prior to sale and the consequent small numbers held, the risk of ~~the digital currencies of the three months and six months ended June 30, 2021;~~impairment is not material.

BTC Held Three months to
June 30,
2021 Six months to
June 30,
2021
Opening Digital currencies 10.29 0.52
Additions of digital currencies 127.00 250.22
Sale of digital currencies (137.28 ) (250.74 )
Digital currencies at June 30, 2021 0.01 0.01

~~Basic~~Equipment deposits:

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

Reverse Asset Acquisition:

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

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

Concentrations of credit risk:

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

Legal and other contingencies:

The Company accounts for its contingent liabilities in accordance with ASC 450 “Contingencies”. A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. With respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. Legal costs incurred in connection with loss contingencies are expensed as incurred. As of June 30, 2022, the Company is not a party to any litigation that would reasonably be expected to have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.

Leases:

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

Recent Accounting Pronouncements

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

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

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

In June 2022, the FSAB issued ASU 2022-03—Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The adoption of ASU 2022-03 did not have a material impact on the Company’s financial statements or disclosures.

NOTE 3 – BASIC AND DILUTED NET LOSS PER SHARE

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

Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share as at June 30, ~~2021~~2022 and ~~2020~~2021 are as follows:

As at June 30,
2021 2020
Warrants to purchase common stock 16,987,269 -
Restricted Stock-Units (“RSU”) issued under a management equity plan 40,000,000 -
Mandatorily convertible notes which exchange into common stock 63,626,903 -
120,614,172 -

	As at June 30,
	2022		2021
Warrants to purchase common stock		6,391,667		1,698,727
Options to purchase common stock		29,459		-
Mandatory convertible notes to exchange common stock		-		6,362,690
Restricted Stock-Units (“RSUs”) issued under a management equity plan		2,449,725		4,000,000
		8,870,851		12,061,417

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

	For the three months ended June 30,						For the six months ended June 30,						For the three months ended June 30,						For the six months ended June 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Net Loss attributable to common shareholders	$	(6,348,860	)	$	(2,053,857	)	$	(44,868,930	)	$	(2,583,353	)	$	(2,117,403	)	$	(6,239,923	)	$	(13,453,059	)	$	(44,803,128	)

Denominator:
Weighted average common shares - basic and diluted		502,642,831			6,847,465			472,987,017			6,713,069			71,598,552			50,264,283			71,790,772			47,298,702

Loss per common share - basic and diluted	$	(0.013	)	$	(0.300	)	$	(0.095	)	$	(0.385	)	$	(0.03	)	$	(0.12	)	$	(0.19	)	$	(0.95	)

Comparative weighted average common shares have been revised by the ratio of Mawson AU to the Company shares exchanged in the reverse asset acquisition in March 2021.

~~Recently Issued Accounting Pronouncements~~

~~For information with respect~~ Pursuant to ~~recent accounting pronouncements, see Note 2~~that certain Certificate of Amendment to the ~~consolidated financial statements for Cosmos Capital Limited (now knows~~Certificate of Incorporation of the Company dated August 11, 2021, Mawson executed a 10-for-1 reverse stock split of its outstanding common stock and reduced its authorized common stock to 120,000,000 shares, as ~~Mawson Infrastructure Group Pty Ltd) and subsidiaries as of December 31, 2020, and the notes thereto, included~~set forth in the Company’s Current Report on Form ~~8-K/A~~8-K filed ~~May 13,~~August 16, 2021. ~~Recent accounting pronouncements include.~~

~~Accounting Standards Update (“ASU”) No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”)~~

Standard/Description– Issuance date: December 2019. This guidance simplifies various aspects of income tax accounting by removing certain exceptions to the general principle of the guidance and also clarifies and amends existing guidance to improve consistency in application.

Effective Date and Adoption Considerations– The guidance was effective January 1, 2021 and early adoption was permitted. The company adopted the guidance on a prospective basis as of the effective date.

~~Effect on Financial Statements or Other Significant Matters– The guidance did not have a material impact in the consolidated financial results.~~

~~Other new pronouncements not applicable to the Company:~~

~~Reference Rate Reform (“ASU 2021-01”) issued March 2020, with amendments in 2021; effective March 12, 2020 through December 31, 2022~~

~~Simplifying the Test for Goodwill Impairment (“ASU 2017-04”) issued January 2017 effective January 1, 2020;~~

~~Financial Instruments - Credit Losses (“ASU 2016-13 / 2018-19 / 2019-04 / 2019-05 / 2019-10 / 2019-11”) issued June 2016 with amendments in 2018, 2019 and 2020; effective January 1, 2020~~

NOTE 34 – DEPOSIT, PROPERTY AND EQUIPMENT ~~AND INTANGIBLE ASSETS~~

On ~~February 5,~~August 9, 2021, ~~the Company~~Cosmos Infrastructure LLC entered into a second Long-Term Purchase Contract with Canaan ~~Convey Co Ltd (“Canaan”)~~ for the purchase of ~~11,760~~15,000 next generation Avalon A1246 ASIC ~~Miners (Avalon).~~Miners. The average purchase price per unit is ~~$2,889~~$4,908 for a total purchase price of ~~$33,974,640 (the “Canaan Transaction”). There will be~~$73,620,000. The final shipment for contract was received during May 2022, in total there were 11,000 Miners delivered, there was a final adjustment to the purchase price ~~in the last delivery due in March 2022~~ based on the actual tera hash and number of Miners delivered based on the agreed price per tera hash under the terms of the contract. The purchase price adjustment resulted in a $0.3 million reduction in the purchase price, this is due to be received in cash from Canaan.

During the six months ended June 30, 2022, $32,054,326 cash was paid for equipment which was recorded as a either deposit or within property plant and equipment on the balance sheet.

NOTE 5 – LEASES

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

The ~~details~~Company leases the headquarters of ~~the Canaan Transaction were set out in our Form 10Q filed on May 19, 2021. During the period, the Company paid:~~its business operations at Level 5, 97 Pacific Highway, North Sydney NSW 2060 Australia, being 1,076 square feet of office space held under a license agreement.

~~$1,058,000 during March, 2021 for 588 miners~~

~~$1,058,000 during April, 2021 for 588 miners~~

~~$1,905,120 during June, 2021 for 1,176 miners~~

~~As a result of payments pursuant to the transaction, Canaan delivered 1,764 Miners in the 3 months ended June 30, 2021.~~ The Company ~~recognized these delivered assets as Property and Equipment on~~leases 6-acres of land in Pennsylvania which began in October 2021 for thirty-six months with the ~~consolidated balance sheet when the transfer of risk and title occurs for each shipment (i.e., the Miners have been delivered by Canaan~~option to ~~the agreed-upon port of loading in China).~~execute four additional three-year extensions.

On March ~~26, 2021,~~16, 2022, Luna Squares LLC entered into a lease with respect to a property in the ~~Company acquired 1,000 Canaan A1166, and resold 200 units, as set out in our Form 10Q filed on May 19, 2021.~~City of Sharon, Mercer County, Pennsylvania with Vertua Property, Inc. (a related entity – refer to note 12 for details). The ~~Company recognized these 800 delivered assets as Property and Equipment on~~term of the ~~consolidated balance sheet during May 2021.~~lease is for 5 years, with 2 options to extend for 5 years each.

During May 2022, Luna Square Texas LLC entered into four lease agreements to lease 11 acres of ~~June 30, 2021, approximately $13.02 million cash paid~~land in Texas for ~~Miners was recorded~~a period of five years.

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

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

	For the three months ended June 30,				For the six months ended June 30,
	2022		2021		2022		2021
Operating lease charges ⁽¹⁾	$	434,977	$	24,557	$	802,112	$	35,780
Finance lease charges:
Amortization of right-of-use assets		8,094		-		12,396		-
Interest on lease obligations	$	2,468	$	-	$	3,946	$	-

⁽¹⁾

Included in Selling, General & Administrative Expenses.

The following is a schedule of the Company’s lease liabilities by contractual maturity as of June 30, 2022:

	Operating leases			Finance Leases

2023	$	1,823,308		$	38,248
2024		1,799,315			38,248
2025		862,083			38,248
2026		553,715			29,352
2027		281,105			4,818
Total undiscounted lease obligations		5,319,526			148,914
Less imputed interest		(649,325	)		(20,225	)
Total present value of lease liabilities		4,670,201			128,689
Less current portion of lease liabilities		1,451,655			29,643
Non-current lease liabilities	$	3,218,546		$	99,046

Other lease information as of June 30,2022:

	Operating leases			Finance Leases

Operating cash flows from operating and finance leases	$	922,332		$	14,676
Weighted-average remaining lease term – operating and finance leases (years)		3.21			3.88
Weighted-average discount rate – operating and leases (%)		8.0	%		7.5	%

NOTE 6 – PROPERTY AND EQUIPMENT

Property and equipment, net, consisted of the following:

	June 30, 2022			December 31, 2021

Plant and equipment		6,583,193			1,046,866
Computer equipment		469,966			216,099
Furniture & fixtures		29,851			31,474
Processing machines (Miners)		144,010,826			81,341,098
Modular data center		21,678,051			9,819,796
Motor Vehicles		327,053			250,425
Transformers		6,978,071			1,190,609
Low-cost assets		872,612			246,154
Assets under construction		13,630,192			1,008,001
Leasehold improvements		360,000			-
Total		194,939,815			95,150,522
Less: Accumulated depreciation		(46,001,594	)		(18,213,672	)
Property and equipment, net		148,938,221			76,936,850

Depreciation and amortization expense for the three ~~months~~month period ended June 30, ~~June~~2022 and 2021 was $16,023,817 and ~~2020 were $2.53m and $1.10m~~$2,533,242, respectively. ~~The Company’s depreciation~~Depreciation and amortization expense for the six ~~months~~month period ended June 30, 2022 and 2021 was $29,826,849 and ~~2020~~$3,848,142, respectively. There were ~~$3.85 million~~no impairment charges recognized for property and ~~$2.46 million respectively.~~equipment for six month period ended June 30, 2022, or June 30, 2021.

NOTE 7 – FINANCIAL ASSETS

NOTE 8 – INCOME TAXES

The following table summarizes our effective tax rate based on the tax expense/(benefit) for income taxes attributable to pretax income:

	For the three months ended June 30,
	2022			2021

Income/(Loss) before income taxes		(2,405,632	)		(6,348,860	)
Tax Expense/(Benefit) for income taxes		12,128			-
Effective income tax rate		(0.50	)%		0.00	%

	For the six months ended June 30,
	2022			2021

Income/(Loss) before income taxes		(13,975,707	)		(44,868,930	)
Tax Expense/(Benefit) for income taxes		12,128			-
Effective income tax rate		(0.09	)%		0.00	%

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

NOTE 49 – STOCKHOLDERS EQUITY

Common Stock

~~On March 9, 2021, as a part~~TraDigital Marketing Group LLC was issued 5,000 shares of ~~closing~~ the ~~Cosmos Transaction, Mawson issued a total of 428,270,616 shares~~Company’s common stock during May 2022 for consultancy services provided to ~~Mawson AU shareholders. There remained 50,558,133 shares that are to be issued once~~ the ~~approval of increase in authorized capital has been finalized. On May 20, 2021, the Authorized Capital increased from 500,000,000 to 800,000,000 shares.~~Company.

~~On June 2, 2021,~~Under the terms of the Cosmos Transaction Bid Implementation Agreement the Company ~~issued 3,475,970~~made share-based awards under an Incentive Compensation Program during September 2021 (refer to reverse acquisition accounting policy). During the three-month period ending June 30, 2022, two employees converted certain of these awards into 901,000 shares ~~to a combination~~ of ~~Mawson AU shareholders, and service providers to Mawson AU, who were eligible for shares on 31 December 2021.~~common stock of Mawson.

~~On June 15, 2021, the final 48,983,148 shares under the Cosmos Transaction were issued to Mawson AU shareholders.~~

Restricted ~~Stock~~

As at July 31 2021, making up the total 480,729,734 in shares issued as a part of the compensation of the Cosmos Transaction, 175,661,839 are restricted in trading under the Restricted Stock Agreement with each shareholder until December 31 2021.

~~Series A Preferred~~ Stock

As of June 30, ~~2021,~~2022, there ~~are 178 shares of Series A Preferred Stock Outstanding.~~was no restricted stock.

Common Stock Warrants

A summary of the status of the Company’s outstanding stock warrants and changes during the six months ended June 30, ~~2021~~2022, is as follows:

Number of
Warrants Weighted
Average
Exercise
Price Weighted
Average
Remaining
Contractual
Life
(in years)
Outstanding as of December 31, 2020 142,189
Issued 16,960,982 $ 0.001 3.3
Exercised (115,902 )
Expired 0
Outstanding as of June 30, 2021 16,987,269 $ 0.001 3.3
Warrants exercisable as of June 30, 2021 16,987,269 $ 0.001 3.3

As of March 16, 2021, the Company received a notice from OTC Markets Group (“OTC”) that the Company failed to have a public float greater than 10% of the total shares outstanding, pursuant to Section 1.1.1(C) of OTCQB Standards, which, if not rectified within 30 days, may result in the Company ceasing to trade on the OTCQB marketplace. On July 29, 2021 our Form S-1 registration statement (“S-1”) was declared effective, resulting in our contention that our public float is greater than 10% of the total shares outstanding and thereby we believe we are compliant with the OTCQB Standards. We are in the process of filing the requisite form with OTC Markets to confirm our public float compliance under OTCQB Standards.

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2021		3,524,189
Issued		4,143,478		$	8.57		1.5
Exercised		(1,276,000	)
Expired		-
Outstanding as of June 30, 2022		6,391,667		$	8.57		1.5
Warrants exercisable as of June 30, 2022.		6,391,667		$	8.57		1.5

On ~~June 2, 2021, the Company~~February 23, 2022, Mawson issued ~~8,250,000~~to Celsius Mining warrants with an expiry date of August 23, 2023, to ~~W Capital~~purchase up to 3,850,000 shares of common stock, of Mawson at an exercise price of ~~$0.001~~US$6.50 per share, in connection with the $20 million loan made by Celsius to ~~satisfy~~Luna Squares LLC in connection with a Customer Equipment and Co-Location Agreement entered into by Celsius and Luna Squares LLC.

Under the ~~outstanding obligation to W Capital for options over~~terms of the ~~equity of Mawson AU which was terminated for consideration~~Cosmos Transaction Bid Implementation Agreement the Company made share-based awards in the form of warrants, ~~over~~options and RSUs under an Incentive Compensation Program during September 2021 (refer to reverse acquisition accounting policy). During the ~~Company’s shares being issued~~six months ended June 30, 2022, four employees exercised 1,276,000 of their warrants to ~~W Capital.~~convert these into common stock of Mawson.

NOTE 510 – ~~DEBT,~~ COMMITMENTS AND CONTINGENCIES

~~Convertible Note~~Agreements

On February 12, 2021, Mawson AU issued 28,012,364 unsecured convertible promissory notes (the “Mawson AU Notes”), which mandatorily convert into 0.0424 shares in Mawson AU at the earlier of 6 months from February 12, 2021 or upon the occurrence of certain events. The notes accrue interest at the rate of 8% per annum which may be settled in stock or cash at the option of the company. The Mawson AU Notes raised net proceeds of $20,275,349 comprising gross proceeds of $21,569,520 less transaction costs.

The Mawson AU Notes automatically converted into convertible notes of Mawson (“Mawson Notes”) upon close of the Cosmos Transaction on March 9, 2021. The Mawson Notes have substantially the same terms as the Mawson AU notes and mandatorily convert into shares of Mawson the earlier of 6 months from February 12, 2021 or upon the occurrence of certain events at an issue price of $0.339 per Mawson share and will create 63,626,903 shares in total. Given the mandatory and fixed conversion the notes have been accounted for as equity.

In connection with the Cosmos Transaction, we issued one CVR to each of our securityholders for each outstanding share of common stock of Mawson, and for each share of common stock of Mawson underlying other convertible securities and warrants, held immediately before the closing of the Cosmos Transaction. Each CVR represents the right to receive a pro rata share of any consideration that we may receive in connection with any successful monetization of our LO2A business, less transaction expenses and customary deductions as detailed in the CVR agreement, including a deduction of up to $300,000 to be repaid to us for amounts we spend in the development of the LO2A Technology at the request of the representative of the holders of the CVRs. As at June 30, 2022, the Company cannot reliably measure the cost of the CVRs and it is not probable that these payments will be made and therefore this has been classified as a contingent liability.

During June 2022 Mawson AU Limited entered into a share subscription and equipment sale with Tasmania Data Infrastructure Pty Ltd (“TDI”). TDI has a 100% renewable energy Bitcoin Mining facility at the Que River Mine Site in Tasmania, Australia. Mawson AU Limited has agreed to exchange approximately 1975 ASIC Bitcoin Miners for 107,042,254 fully paid issued shares in TDI. This transaction is expected to finalize later this fiscal year.

~~Debt~~

NOTE 11 – BORROWINGS

Short-term Borrowings

Whatsminers

On ~~January 25,~~October 15, 2021, the Company acquired 2,000 Whatsminers M30’s for delivery in October 2021 from Foundry Digital LLC for a total consideration of $16,481,328. The Company paid a deposit of $3,202,766 and entered into an extension of the original Foundry finance agreement with Foundry for the balance of the consideration over a 12-month term, of which $4,914,329 is outstanding at June 30, 2022.

Marshall loan

In December 2021 MIG No. 1 Pty Ltd entered into a ~~Leveraged Account~~Secured Loan Facility Agreement with ~~Independent Reserve.~~Marshall Investments MIG Pty Ltd which was payable in three tranches. The first tranche was received during December 2021 with an amount of $7.86 million. Tranche two and three were received during January and February 2022 with a total amount of $7.11 million. The loan matures in 2024 and bears interest at a rate of 12.00% per annum, payable monthly which commenced December 2021. This loan facility is ~~denominated in Bitcoin (BTC) and enables~~secured by a general security agreement given by the ~~Company to borrow up to 10 BTC subject to certain margin requirements. As at June 30, 2021~~Company. Principal repayments begin during 2023.

The amount classified as a current liability is $2.54 million with the ~~Company had closed this facility and no longer has any liabilities to Independent Reserve. To replace the liquidity provided by Independent Reserve Mawson AU entered into~~remaining balance classified as a ~~working capital facility with Georgina Manning Pty Ltd for up to AUD$1,000,000.~~long-term liability.

Celsius loan

On ~~January 27, 2021, Cosmos Infrastructure~~February 23, 2022, Luna Squares LLC ~~(“Cosmos Infrastructure”)~~ entered into ~~an Equipment Purchase and Finance and Security~~the Co-Location Agreement with ~~Foundry Digital~~Celsius Mining LLC, ~~(“Foundry”)~~in connection with this agreement, Celsius Mining loaned Luna Squares LLC a principal amount of US$20,000,000, for the purpose of funding the infrastructure required to ~~purchase machinery that will be located~~meet the obligations of the Co-Location Agreement, for which Luna Squares LLC issued a Secured Promissory Note for repayment of such amount. The Secured Promissory Note accrues interest daily at a ~~facility hosted by Compute North~~rate of 12% per annum. Luna Squares LLC ~~(“Compute North”). On February 5, 2021,~~is required to amortize the ~~term~~loan at a rate of 15% per quarter, with principal repayments starting in the ~~agreement was further amended~~third quarter of 2022. The Secured Promissory Note has a maturity date of August 23, 2023. Celsius Mining LLC filed for Chapter 11 bankruptcy protection on July 13, 2022. The Company does not anticipate any changes to ~~have a final payment due January 27, 2022. Under~~ the terms of the loan agreement ~~Cosmos Infrastructure purchased 500 Whatsminer M30S mining machines, paid a deposit of $264,000, and borrowed a total of $1,056,000. The facility will be repaid in full on the last payment date.~~

~~Leases~~

~~As at June 30, 2021, the Company owns 50% of the equity in Luna Squares, LLC. Luna Squares LLC leases a five-acre lot in the State of Georgia referred~~due to as “Luna Squares” from the Development Authority of Washington County. The initial lease held by Luna Squares, is from May 1, 2020 until April 30, 2023. Luna Squares entered into an amendment to the lease and exercised its option for additional land, which was signed and came into effect from February 23, 2021 (“Lease Amendment”). In addition to the extra land occupied, the amendment also includes five, 3-year extension options bringing a total optional lease period until 2038.Celsius Mining LLC’s bankruptcy filing.

The ~~Company leases~~amount classified as a current liability is $12.02 million with the ~~headquarters of its business operations at Level 5, 97 Pacific Highway, North Sydney NSW 2060 Australia, being 1,076 square feet of office space held under~~remaining balance considered a ~~license agreement.~~long term liability.

~~Other~~Long-term Borrowings

Marshall loan

The total classified as payable after more than ~~these leases, the Company does not lease any material assets.~~ one year under this arrangement is $11.24 million.

Celsius loan

The ~~Company believes that these offices and facilities are suitable and adequate for its operations~~total classified as currently conducted and as currently foreseen. In the event additional or substitute offices and facilities are required, the Company believes that it could obtain such offices and facilities at commercially reasonable rates.payable after more than one year under this arrangement is $7.98 million.

NOTE 612 – ~~DEFERRED TAX~~RELATED PARTY TRANSACTIONS

~~We compute our quarterly income tax expense/(benefit) by using~~On March 16, 2022, Luna Squares LLC entered into a ~~forecasted annual effective tax rate~~lease with respect to a property in the City of Sharon, Mercer County, Pennsylvania with Vertua Property, Inc, a subsidiary entity in which Vertua Ltd has a 100% ownership interest. James Manning, CEO, a director and adjust for any discrete items arising during the interim period. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and carryforward losses.

~~The tax effects of temporary differences and tax loss and other credit carry forwards that give rise to~~a significant ~~portions of deferred tax assets and liabilities at June 30, 2021, and December 31, 2020 are comprised~~shareholder of the ~~following:~~Company, is also a director of Vertua Ltd and has a material interest in the Sharon lease as a large shareholder of Vertua Ltd. The lease contains market standard legal terms, and will be for a term of 5 years, and Luna Squares LLC has 2 options to extend for 5 years each. The Company’s Audit Committee has compared the rent and terms to other arms’ length leases the Company has entered into and formed the view the rent is in line with the market for similar properties. Rent is subject to annual increases equal to the amount of the Consumer Price Index for the Northeast Region, or 4%, whichever is higher. The base rental amount in the first year is $0.24 million. Depending on power energization and usage, variable additional rent may be payable, with charges ranging from $500 to $10,000 per month, depending on power energized and whether it is available. Upon the recommendation from the Audit Committee, the directors of the Company, other than James Manning, were made aware of the material facts as to Mr. Manning’s interest in the lease and authorized the Company in good faith to enter the lease after determining the lease to be fair to the Company.

~~Significant components of our deferred tax assets and deferred tax liabilities are as follows:~~

June 30, December 31,
2021 2020
Deferred income tax liabilities:
Depreciation $ (2,613,910 ) $ (1,116,350 )
Transaction gains and losses (91,639 ) (129,483 )
Other deferred tax liability - (775 )
Net deferred tax liability (2,705,549 ) (1,246,608 )
Deferred income tax assets:
Net operating loss carryforwards 4,984,048 2,782,861
Transaction gains and losses 38,171 93,874
Transaction costs - 3,688
Total deferred tax assets 5,022,219 2,880,423
Valuation allowance (2,316,670 ) (1,633,815 )
Net deferred tax assets $ - $ -

~~For the six month period ended June 30, 2021 the Company recognized $nil income tax expense (June, 30 2020: $nil).~~

As of June 30, 2021, we had federal and foreign net operating loss carryforwards of approximately $4.98 million and $5.36 million respectively, of which the ability to be carried forward indefinitely is subject to continued and ongoing review.

Utilization of net operating loss and tax credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations provided by the Internal Revenue Code and similar state provisions. Annual limitations may result in expiration of net operating loss and tax credit carryforwards before some or all of such amounts have been utilized.

The Company and its subsidiaries are subject to United States federal income tax, foreign income and withholding tax and income taxes from state jurisdictions. All tax years are open and subject to inspection by taxing authorities.

NOTE 713 – SUBSEQUENT EVENTS

On July 8, 2022, the Company issued secured convertible promissory notes to investors in the aggregate principal amount of $3,600,000 (the “Secured Convertible Promissory Notes”) in exchange for an aggregate of $3,600,000. In connection with each Secured Convertible Promissory Note, the Company and its subsidiaries, Luna Squares LLC and Cosmos Infrastructure LLC, entered into a Guarantee and Security Agreement (the “Security Agreements”) with each investor, securing such investor’s Secured Convertible Promissory Note by specific, and separate application-specific integrated circuit (ASIC) mining hardware of Cosmos Infrastructure LLC. Each Security Agreement contains customary covenants and customary events of default, the occurrence of which could result in an acceleration of the Secured Convertible Promissory Notes. The ~~Company has evaluated subsequent events through~~Secured Convertible Promissory Notes are convertible at the ~~date~~option of the ~~consolidated financial statements were available~~holder at a price of $0.85 per share of our common stock, except in the case of an event of default, during which the Secured Convertible Promissory Notes are convertible at the option of the holder into shares of the Company’s common stock, at a price of $0.80 per share. The Secured Convertible Promissory Notes bear interest of twenty percent (20%) per annum, except in the case of an event of default, during which they will bear interest of twenty-five percent (25%) per annum. One-half of the interest that accrues each month on the Secured Convertible Promissory Notes must be paid monthly. All unpaid principal, together with any then unpaid and accrued interest and other amounts payable under the Secured Convertible Promissory Notes, is due and payable if not converted pursuant to ~~be issued~~the terms and ~~has concluded that no such events~~conditions of the Secured Convertible Promissory Note on the earlier of (i) one year after its issuance, or ~~transactions took place that would require disclosure herein except as stated directly below.~~(ii) following an event of default.

On July ~~5, 2021,~~17, 2022, the Company ~~consummated the acquisition (“the Acquisition) of all of the outstanding membership interests of Luna Squares LLC,~~entered into a ~~Delaware limited liability company (f/k/a Innovative Property Management, LLC) (“Luna”) pursuant to the terms of a (i) Membership Interest~~Securities Purchase Agreement with ~~Kyle Hoffman (the “Hoffman MIPA”)~~an institutional investor providing for the issuance and (ii) Membership Interest Purchase Agreement with TRS Ventures LLC (the “TRS MIPA”). This transaction will be referred to as “the Luna Squares Transaction”. Further information on the Luna Squares Transaction can be found on the Company’s form 8K filed on July, 9, 2021.

~~Pursuant to the Hoffman MIPA, on July 7, 2021,~~sale by the Company ~~paid USD50,000 to Mr Hoffman and on August 02, 2021,~~of 8,000,000 shares of the ~~Company issued 55,555 of its common stock to Mr Hoffman (calculated as USD50,000 worth of~~Company’s common stock, at a ~~stock~~ price of ~~USD0.90)~~$0.80 per share, accompanied by warrants to purchase 10,000,000 shares of the Company’s common stock in a registered direct offering pursuant to a “shelf” registration statement on Form S-3 (File No. 333-264062). The warrants issued in this offering have an exercise price of $1.01 per share of our common stock, are exercisable 6 months after issuance and will expire five and one-half years following issuance. The exercise price of the warrants issued in this offering is subject to adjustment for stock splits, reverse splits, and similar capital transactions as described in the warrants. This ~~relates to Mr Hoffman’s equity interest of 25% in Luna.~~

~~Pursuant to the TRS MIPA,~~offering closed on July 7, 2021, the Company paid USD50,000 to TRS Ventures LLC and on August 02, 2021, the Company issued 111,111 of its common stock to TRS Ventures LLC (calculated as USD100,000 worth of common stock at a stock price of USD0.90). This relates to TRS Ventures LLC’s equity interest of 15% in Luna.20, 2022. The net amount raised was $5.62 million.

On August 10, 2021, the Company issued 46,139,019 shares of its common stock at a purchase price of $0.80 per shares for aggregate gross proceeds of $36,911,215 in a private placement to certain accredited investors pursuant to12, 2022, Mawson AU entered into ~~Securities Purchase Agreements dated August 6, 2021.~~a non-binding Memorandum of Understanding to, amongst other things, discuss the possibility of selling certain assets to its supplier, Faith Technologies Inc. (“FTI”) in return for FTI reducing amounts outstanding to FTI by Mawson AU by $4,598,800.

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations analyzes the major elements of our balance sheets, statements of comprehensive income (loss) and cash flows. ~~This section~~The following discussion and analysis of our financial condition and results of operations should be read together with the interim condensed consolidated financial statements and related notes included elsewhere in ~~conjunction with~~this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (“2020 Form 10-K”) filed with the United States Securities and Exchange Commission(the “SEC”), The Annual consolidated financial statements of Mawson AU included in included in the Company’s Current Report on Form 8-K/A filed May 13, 2021 and our unaudited interim consolidated financial statements and accompanying notes to these Financial Statements included in this quarterly report on Form 10-Q. For accounting and financial purposes, Mawson is treated as the “acquired” company by Mawson AU, and historical financial information provided is that of Mawson AU, not Mawson.2021. All amounts are in U.S. dollars.

Throughout this report, unless otherwise designated, the terms “we,” “us,” “our,” the “Company,” “Mawson,” “our company” and the “combined company” refer to Mawson Infrastructure Group Inc. ~~(formerly known as Wize Pharma, Inc.)~~, a Delaware corporation, and its direct and indirect subsidiaries, including Mawson Infrastructure Group Pty Ltd, ~~(formerly known as Cosmos Capital Limited),~~ an Australian company (“Mawson AU”), Cosmos Trading Pty Ltd, Cosmos Infrastructure LLC, Cosmos Manager LLC, Cosmos ~~Grid Tech~~MIG No.1 Pty Ltd, ~~Cosmos Asset Management Pty Ltd, and~~Mawson AU Limited, Luna Squares LLC, ~~(formerly known~~Luna Squares Texas, Luna Squares Repairs LLC, Luna Squares Property LLC and Mawson Mining LLC . Wize NC Inc, Occuwize Ltd and Wize Pharma Ltd are subsidiaries of Mawson however these companies have not been consolidated into the financial statements are not included when referring to we, us, our or the Company or Mawson as ~~Innovative Property Management LLC).~~these are subject to contingent value rights (“CVR”), refer to NOT 10 of the financial statements.

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

Forward-Looking Statement Notice

This Quarterly Report on Form 10-Q contains forward-looking statements about our expectations, beliefs or intentions regarding, among other things, our product development efforts, business, financial condition, results of operations, strategies or prospects. In addition, from time to time, our representatives have made or may make forward-looking statements, orally or in writing. Forward-looking statements can be identified by the use of forward-looking words such as “believe,” “expect,” “intend,” “plan,” “may,” “should” or “anticipate” or their negatives or other variations of these words or other comparable words or by the fact that these statements do not relate strictly to historical or current matters. These forward-looking statements may be included in, but are not limited to, various filings made by us with the SEC, press releases or oral statements made by or with the approval of one of our authorized executive officers. Forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements, including, but not limited to, the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, and in Part II – Item 1A of this report.

This report identifies important factors which could cause our actual results to differ materially from those indicated by the forward-looking statements, particularly those set forth under Item 1A. “Risk Factors” as disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, and in Part II – Item 1A of this report.

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

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

●

Wethat we have incurred operating losses and may ~~be unable~~continue to ~~raise additional capital needed to grow our business.~~do so for the foreseeable future;

	●	~~The~~our ability to raise additional capital, under favorable terms or at all, and continue as a going concern;

	●	that we may never become profitable;

	●	competition and technological challenges we may face;

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

	●	changes the Bitcoin network’s protocols and software;

	●	any decrease in the incentive for Bitcoin mining;

	●	increases in Bitcoin network difficulty (which typically leads to lower Bitcoin rewards for the same effort);

	●	growth challenges we may face;

●

~~Changes~~our ability to ~~any digital asset network’s protocols~~obtain and ~~software.~~maintain adequate insurance;

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

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

	●	our reliance on third party manufacturers for ~~Bitcoin mining.~~Miners and other infrastructure and hardware and the anticipated delivery dates of new miners;

	●	counter-party and customer default risks due to cryptocurrency market fluctuations and disruptions;

	●	increased input costs, such as increased energy prices or hardware and infrastructure costs;

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

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

●

Further or new regulation of digital assets such as Bitcoin as securities or investment securities or of our activities that would require further registration or compliance with additional regulations and laws.

●

~~Global climate changes and related environmental regulations, or pandemic or similar items and events.~~

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

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

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

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

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

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

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

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

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

●

~~Electricity costs.~~

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

Overview

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

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

As of June 30, 2021
Existing
Operations
online Order and Purchase
Agreements Cumulative
Fleet Fully
Deployed
Total miners online 4,649 - 4,649
Total miners in Transit - 1,426 1,426
Total miners on order - 9,508 9,508
Total miners in storage 2,749 2,749
Total miners 7,398 10,934 18,332
Total theoretical production hashrate 476 PH/s 984 PH/s 1460 PH/s

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

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

As of June 30, 2022

	Existing Operations Online		Order and Purchase Agreements		Cumulative Fleet Fully Deployed
Total miners online		24,419		-		24,419
Total miners in Transit		1,008		-		1,008
Total miners on order		-		-		-
Total miners in storage		9,902		-		9,902
Total miners		35,329		-		35,329

We continue to conduct research and development ~~into~~in relation to our ~~Modular Data Centre (MDC)~~MDCs which we are actively testing in several configurations and locations to determine the best configuration for both ASIC and alternate computing ~~uses, including both for use in Graphics Processing Units (GPU) systems and traditional CPU based computing systems.~~

In addition, our indirect subsidiary, Cosmos Asset Management Pty Ltd (“Cosmos Asset Management”), is the investment manager of the Bitcoin Wholesale Access Fund, a wholesale, unregistered managed investment scheme which currently invests in and holds Bitcoin for third party investors.uses.

~~Our Products and Services.~~ ~~Our digital asset infrastructure business can be divided into three main activities:~~

~~Digital Processing and Hosting Solutions (Mining)~~Prior LO2A Business

The business of digital processing and mining requires the purchase and ownership of computing hardware and servers specific to the computing problem that a person is seeking to solve, referred to as a “Miner”. Each Miner or component thereof can be specifically specialized to perform a function better than other hardware for the purpose of maximizing the return from any specific processing task.

Mining hardware performs computational operations in support of the blockchain measured in “hash rate” or “hashes per second.” A “hash” is the computation run by mining hardware in support of the blockchain; therefore, a miner’s “hash rate” refers to the rate at which it is capable of solving such computations. 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, CPU mining was rapidly replaced by the Graphics Processing Unit (GPU), which offers significant performance advantages over CPUs. General purpose chipsets like CPUs and GPUs have since been replaced in the mining industry by Application Specific Integrated Circuits (“ASIC”) chips. These ASIC chips are designed specifically to maximize the rate of hashing operations.

~~Asset Management~~

We have a dedicated asset management business, which is operated through Cosmos Asset Management, which is involved in the ownership and management of digital assets and infrastructure, and which is the investment manager of the Bitcoin Access Wholesale Fund, a wholesale, unregistered managed investment scheme which invests in and holds Bitcoin for third party investors. This business leverages the existing knowledge and infrastructure of our digital asset business to provide its investors exposure to various investment opportunities.

Through a strategic partnership with Independent Reserve Pty Limited, one of Australia’s leading digital exchanges, Cosmos Asset Management has custody agreements and security procedures in place to manage the various risks with investing in digital assets. In addition, Cosmos Asset Management manages a dedicated business in distributed storage infrastructure.

~~As of June 30,~~On March 9, 2021, the ~~funds under management~~Company acquired the shares of ~~the asset management business are approximately USD$4.10 million.~~

~~Research and Development~~

Our research and development, or R&D, program is focused on researching and exploring opportunities to improve the efficiency of hardware and software and MDC’s, including the development of technology to enable us to own and operate MDCs that are both air cooled and liquid immersion cooled. We have also begun research into the software element of computing and areMawson AU in ~~the initial stages of researching~~ a ~~range of programs to improve efficiency through this avenue as well.~~

We are conducting research in both Australia and the United States. By conducting research in different countries, we are able to research improvements in efficiencies across varying climates. The climate in Nebraska (extremely warm dry summers, extremely cold, windy winters), varies greatly to Georgia (hot, humid summers, cool, still winters) which varies greatly to Sydney (warm, humid summers, mild, windy winters)stock for stock exchange (the “Cosmos Transaction”).

~~We have partnered with leading design firms in both Australia and~~Prior to the United States to ensure the finished products can be deployed in different climates. By using global designers and vendors, it provides us the opportunity to seek to enhance the design to ensure success of the technology in all jurisdictions, climates and scenarios.

~~LO2A Business.~~

~~Through~~Cosmos Transaction our ~~holdings in the Wize Subsidiaries, we also have in-licensed certain rights to purchase, market, sell and distribute~~main business undertaking was as a ~~formula known as LO2A, a drug developed for~~clinical-stage biopharmaceutical company focused on the treatment of ophthalmic disorders, including dry eye syndrome ~~(“DES”), and other ophthalmological illnesses, including Conjunctivochalasis (“CCH”) and Sjögren’s syndrome (“Sjögren’s”~~(our “LO2A business”). However, as part of the Cosmos Transaction, substantially all of the economic benefits of any successful monetization of our LO2A business, if any, will benefit only the holders of ~~the Contingent Valued Rights (“CVRs”)~~CVR and any contingent right holders. Accordingly, we assessed that the fair value of this asset at the acquisition date was $nil. The asset was therefore assessed as impaired and the prior carrying amount of $23.96 million has been fully expensed in the consolidated statements of operations for the year ended December 31, 2021.

Recent Developments.

Mawson has filed an application with The Nasdaq Stock Market LLC (“Nasdaq”) to list shares of Mawson’s common stock on The Nasdaq Capital Market. The application is under consideration by Nasdaq, and the outcome of Nasdaq’s review and consideration is uncertain and dependent on Mawson completing certain actions required to meet Nasdaq’s listing requirements. Should Mawson be successful in meeting the listing requirements and the application be accepted by Nasdaq, Mawson intends to submit the decision of whether to list its common stock on the The Nasdaq Capital Market to Mawson’s board of directors for final consideration and approval.

InOn May ~~2021, the Company, through its subsidiary~~12, 2022, Luna Squares Texas LLC ~~had its first hosting contracts at its~~(our wholly owned subsidiary) entered into an Option Agreement and Gross Profit Agreement with JAI TX, LLC and then signed or took and assignment of 4 leases for properties in Texas (all in close proximity) with the intent to develop MDC facilities for mining Bitcoin. Luna Squares Texas LLC will seek to execute relevant power agreements, however the expectation is that the four locations can provide a combined 120MW of power. Rent under the leases ranges from $1,500 to $5,227.20 per acre per annum. The lessors include a substantial listed holder of land in ~~Georgia.~~Texas, and family groups. Under the Option Agreement, JAI TX, LLC has the option to receive an issue of up to 20% of the membership interests in Luna Squares Texas LLC. The ~~hosting contracts were~~purchase prices will be a share of capital costs equal to the membership interest acquired by JAI TX, LLC, and an amount of Luna Squares Texas LLC’s debt financing in proportion to JAI TX, LLC’s shareholding. In return for ~~an initial single MDC and represents approximately $1.01 million in annualized revenue~~certain services provided by JAI TX, LLC, JAI TX, LLC will be entitled to a share of all Electric Reliability Council of Texas program payments paid to Luna Squares Texas LLC (“ERCOT Payment”), as well as a share of the Bitcoin profit from the Texas locations less certain costs, including depreciation. Capital costs for Luna Squares Texas LLC are expected to exceed $4.19m .

On ~~August 10, 2021, we issued 46,139,019~~May 27, 2022, Mawson entered into an ATM Agreement with H.C. Wainwright & Co., LLC (“Wainwright”), to sell shares of our common stock, ~~at a purchase~~par value $0.001 per share, (the “Shares”) having an aggregate sales price of ~~$0.80 per shares for~~up to $100 million, from time to time, through an “at the market offering” program under which Wainwright will act as sales agent. We will pay Wainwright a commission rate equal to 3.0% of the aggregate gross proceeds from each sale of ~~$36,911,215~~Shares and have agreed to provide Wainwright with customary indemnification and contribution rights. We will also reimburse Wainwright for certain specified expenses in ~~a private placement~~connection with entering into the ATM Agreement. The ATM Agreement contains customary representations and warranties and conditions to ~~certain accredited investors~~the sale of the Shares pursuant tothereto.

During June 2022 Mawson AU Limited entered into ~~Securities Purchase Agreements dated August 6, 2021~~a share subscription and equipment sale deed with Tasmania Data Infrastructure Pty Ltd (“TDI”). TDI has a 100% renewable energy Bitcoin Mining facility at the Que River Mine Site in Tasmania, Australia. Mawson AU Limited has agreed to exchange approximately 1975 ASIC Bitcoin Miners for 107,042,254 fully paid issued shares in TDI. This transaction is expected to finalize later this year.

COVID-19.

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

Regulation of Digital Assets

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

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

Results of Operations – Three months Ended June 30, ~~2021~~2022 compared to the three months ended June 30, ~~2020~~2021

	For the three months ended June 30,						For the three months ended June 30,
	2021			2020			2022			2021
Revenues:
Cryptocurrency mining revenue		5,664,629			1,121,851			16,212,525			5,664,629
Hosting Co Location revenue								3,567,912			-
Sale of crypto currency mining equipment		280,038			-			-			280,038
Total revenues		5,944,667			1,121,851			19,780,437			5,944,667

Operating cost and expenses:
Cost of revenues		294,140			837,714
Less: Cost of revenues (excluding depreciation)								14,359,072			294,140
Gross profit								5,421,365			5,650,527
Selling, general and administrative		4,161,256			522,361			9,431,088			3,697,217
LO2A write backs		-			-
Share based payments		5,559,495			-			936,235			5,559,495
Depreciation and amortization		2,533,242			1,098,079			16,023,817			2,533,242
Total operating expenses		12,548,133			2,458,154			26,391,140			11,789,954
Change in fair value of derivative								17,714,357			-
Loss from operations		(6,603,466	)		(1,336,303	)		(3,255,418	)		(6,139,427	)
Other income (expense):
Realized gain/(losses) on foreign currency transactions		(181,768	)		(187	)
Unrealized gain/(losses) on foreign currency remeasurement		121,021			(722,875	)
Realized gain/(loss) on sale of digital currencies		-			5,508
Non-operating income/(expense):
Gains / (losses) on foreign currency transactions								1,657,055			(60,747	)
Interest expense								(1,565,040	)		(464,039	)
Impairment of financial assets								(1,107,197	)		-
Other income		315,353			-			1,864,968			315,353
Loss before income taxes		(6,348,860	)		(2,053,857	)		(2,405,632	)		(6,348,860	)
Income tax expenses		-			-
Income tax expense								-			-
Net Loss		(6,348,860	)		(2,053,857	)		(2,405,632	)		(6,348,860	)

Revenues

Cryptocurrency mining revenues from production for the three months ended June 30, 2022 and 2021 ~~and 2020~~ were ~~$5.66~~$16.21 million and ~~$1.12~~$5.66 million respectively. This represented an increase of ~~$4.54~~$10.55 million or ~~405%~~186% over the ~~same three-month period in 2020.~~period. The increase in mining revenue for the ~~three-month~~ period was primarily attributable to ~~higher bitcoin values~~an increase in the total Bitcoin produced. Bitcoin produced totaled 489.60 in 2022 compared with 127.0 in the 2021 period, ~~averaging $45,864 per coin as compared to $8,427 per coin in~~or an increase of 286% of Bitcoin produced over the ~~2020 period. Bitcoins produced totaled 121 and we sold a total of 137.28 in 2021 as compared to 135.06 sold in the 2020~~respective period.

~~For~~Hosting co-location revenue for the three months ended June 30, 2022 and 2021 ~~sales~~were $3.57 million and $nil respectively. This increase is due to there being no co-location revenue in the prior period because this service was not offered at that time.

Sales of crypto currency mining equipment ~~were $0.28 million and no sales were recorded in 2020. The market~~ for ~~second hard equipment was softer in~~ the three months ended June 30, ~~2021 resulting in no sales during this period.~~2022, were $nil million and $0.28 million respectively.

Operating Cost and Expenses

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

Cost of revenues.

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

~~For~~Cost of revenues for the three months ended June 30, 2022 and 2021 ~~and 2020, cost of revenue~~ were ~~$0.29~~$14.36 million and ~~$0.84~~$0.29 million, respectively. The ~~decrease~~increase in cost of revenue was primarily ~~attributed~~attributable to: ~~the release~~an increase in power costs, and increased deployment of ~~accruals from the prior quarter, the actual~~cryptocurrency mining hardware. Included in our cost of revenues ~~for this period was $0.55 million, rectifying an over accrual of expenses.~~is any costs associated with offsetting carbon emissions.

Selling, general and administrative.

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

Selling, general and administrative expenses for the three months ended June 30, 2022 and 2021 ~~and 2020~~ were ~~$4.16~~$9.43 million and ~~$0.52~~$3.70 million respectively. The increase in selling, general and administrative expenses were ~~primarily~~ attributable ~~to: one-off professional fees related~~to a number of factors; payroll expenses increased by $3.34 million due to an increase in employee numbers during the year; property tax increase of $1.29 million, equipment repair costs increased by $0.80 million; marketing costs increased by $0.50 million and operating lease expense increased by $0.43 million due to the ~~Cosmos Transaction; and increases in expenses related to~~new lease agreements entered into during the ~~increase in the scale of business operations.~~period.

Share based payments.

Share based payments consist of: the value of shares required to be issued to Incentive Compensation Program participants under the Cosmos Transaction Bid Implementation Agreement; and the value of warrants issued to HC Wainwright and W Capital as a fee related to the acquisition by Mawson of Mawson AU. The initial expense was recognized in the financial statements for Mawson AU for the period ended December 31, 2021, however as a result of the conversion from options to warrants as part of the Cosmos Transaction, the Company was required to recognize the incremental expense of the W Capital warrants.

~~Share based payments~~ expenses for the three months ended June 30, 2022 and 2021 were $0.94 million and ~~2020 were~~ $5.56 million respectively. In the three months ended June 30, 2022, share based payments were largely attributable to costs recognized for warrants issued to Celsius Mining LLC amounting to $0.50 million and ~~$nil respectively.~~$0.4 million in relation to long-term incentives for the Company’s leadership team. The ~~expense in the~~prior period ~~relates~~contained a $5.53 million fair value modification to ~~W Capital Warrants of $5.56 million.~~warrants issued.

Depreciation and amortization.

Depreciation consists primarily of depreciation of cryptocurrency mining hardware and ~~modular data center (MDC)~~MDC equipment.

Depreciation and amortization for the three months ended June 30, 2022 and 2021 ~~and 2020~~ were ~~$2.53~~$16.02 million and ~~$1.10~~$2.53 million, respectively. The increase is primarily attributable to new machines and MDCs which are being procured and have come into the ownership of the Company and the application of the diminishing value method, resulting in a higher depreciation expense in the initial months of mining equipment ~~operation;~~operation.

Change in fair value of derivative

During the three months ended June 30, 2022, a derivative asset of $17.71 million was recorded for our Power Supply Agreement with Energy Harbor LLC, this is measured at fair value.

Non-operating expense

Non-operating expenses consist primarily of interest expense and impairment of equity accounted investment.

Interest expense increased by $1.10 million attributable to the ~~procurement~~interest costs charged on the loans taken out with Foundry Digital LLC, and Marshall Investments MIG Pty Ltd during the year ended December 2021 and Celsius Mining LLC during the 6 month period ending June 30, 2022.

There was an impairment of ~~new machines that have come~~financial assets in relation to the ~~ownership~~equity accounted investment Cosmos Asset Management Pty Ltd of $1.11 million during the ~~Company.~~three months ended June 30, 2022.

~~Other~~Non-operating income ~~(expenses)~~

Non-operating income consists primarily of changes in fair value of derivative assets, unrealized losses on foreign currency remeasurement and other income.

~~Our other income (expenses) consists of: net~~During the three months ended June 30, 2022, the realized ~~gains (losses)~~and unrealized gain on foreign currency ~~transactions; net unrealized gains (losses) on foreign currency remeasurement; realized gains (losses) on~~transactions was $1.66 million, and for the three months ended June 30, 2021 there was a loss of $0.06 million.

During the three months ended June 30, 2022, there was other income recognized which mainly consisted of the license of our intellectual property of $1.15 million and $0.53 million for curtailment income. The license of our intellectual property relates to the future sale of ~~digital currencies;~~equipment to TDI, combined with consulting and ~~other income. Other income consists of sales for hosting clients, investment management fees, unrealized fair value on investments and other minor income events.~~advisory services to enable TDI to build a facility in Tasmania, Australia.

Net loss available to Common Shareholders

As a result of the foregoing, the Company recognized a net loss of ~~$6.35~~$2.12 million for the three months ended June 30, ~~2021~~2022, compared to a net loss of ~~$2.05~~$6.24 million for the three months ended June 30, ~~2020.~~2021.

Results of Operations – Six months ~~ended~~Ended June 30, ~~2021~~2022 compared to the six months ended June 30, ~~2020~~2021

	For the six months ended June 30,						For the six months ended June 30,
	2021			2020			2022			2021
Revenues:
Cryptocurrency mining revenue		10,878,255			1,892,311			34,996,368			10,878,255
Hosting Co Location revenue								4,116,860			-
Sale of crypto currency mining equipment		2,157,651			-			91,545			2,157,651
Total revenues		13,035,906			1,892,311			39,204,773			13,035,906

Operating cost and expenses:
Cost of revenues		2,666,921			1,287,611
Less: Cost of revenues (excluding depreciation)								22,771,433			2,666,921
Gross profit								16,433,340			10,368,985
Selling, general and administrative		7,043,881			998,514			15,908,034			6,329,180
LO2A write backs		23,963,050			-			-			23,963,050
Share based payments		20,354,897			-			1,326,844			20,354,897
Depreciation and amortization		3,848,142			2,455,564			29,826,849			3,848,142
Total operating expenses		57,876,891			4,741,689			47,061,727			54,495,269
Change in fair value of derivative								17,714,357			-
Loss from operations		(44,840,985	)		(2,849,378	)		(12,914,030	)		(44,126,284	)
Other income (expense):
Realized gain/(losses) on foreign currency transactions		846,852			(1,039	)
Unrealized gain/(losses) on foreign currency remeasurement		(1,569,278	)		166,969
Realized gain/(loss) on sale of digital currencies		-			(8,800	)
Non-operating income/(expense):
Gains on foreign currency transactions								957,818			(722,425	)
Interest expense								(2,801,713	)		(714,701	)
Impairment of financial assets								(1,107,197	)		-
Other income		694,480			108,895			1,889,415			694,480
Loss before income taxes		(44,868,930	)		(2,583,353	)		(13,975,707	)		(44,868,930	)
Income tax expenses		-			-
Income tax expense								-			-
Net Loss		(44,868,930	)		(2,583,353	)		(13,975,707	)		(44,868,930	)

Revenues

Cryptocurrency mining revenues from production for the six months ended June 30, 2022 and 2021 ~~and 2020~~ were ~~approximately $10.88~~$35.0 million and ~~$1.89~~$10.88 million respectively. This represented an increase of ~~$8.99~~$24.12 million or ~~475%~~222% over the ~~same six-month period in 2020.~~period. The increase in mining revenue for the ~~six-month~~ period was primarily attributable to ~~higher bitcoin values~~an increase in the ~~2021 period, averaging $45,864 per coin as compared to $8,427 per coin~~total Bitcoin produced. Bitcoin produced totaled 948.27 in the ~~2020 period. Bitcoins produced and sold totaled 250.74 in 2021 as~~six months ended June 30, 2022 compared ~~to 232.07~~with 250.22 in the ~~2020~~six months ended June 30, 2021, or an increase of 279% of Bitcoin produced over the respective period.

~~Sales of hardware~~Hosting co-location revenue for the six months ended June 30, 2022 and 2021 were ~~approximately $2.16~~$4.12 million and $nil respectively. This increase is due to there being no ~~sales were recorded~~co-location revenue in ~~2020.~~the prior period because this service was not offered at that time.

Sales of crypto currency mining equipment for the six months ended June 30, 2022, were $0.09 million and $2.16 million respectively.

Operating Cost and Expenses

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

Cost of revenues.

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

Cost of revenues for the six months ended June 30, 2022 and 2021 ~~and 2020~~ were ~~approximately $2.67~~$22.77 million and ~~$1.29~~$2.67 million, respectively. The increase in cost of revenue was primarily attributable to: ~~cost of cryptocurrency mining hardware sold of $1.42 million in the 2021 period; and~~ an increase in power costs, ~~related to the~~ increase in the ~~deployment and operation~~deployed operations of cryptocurrency mining hardware. Included in our cost of revenues is any costs associated with offsetting carbon emissions.

Selling, general and administrative.

Selling, general and administrative expenses for the six months ended June 30, 2022 and 2021 ~~and 2020~~ were ~~approximately $7.04~~$15.91 million and ~~$1.00~~$6.33 million respectively. The increase in selling, general and administrative expenses were ~~primarily~~ attributable ~~to: one-off professional fees related~~to a number of factors; payroll expenses increased by $5.12 million due to an increase in employee numbers during the year; equipment repair costs increased by $1.90 million; property tax increased by $1.33 million; consultant costs increased by $0.50 million; marketing costs increased by $0.91 million and operating lease expense increased by $0.80 million due to the ~~Cosmos Transaction; and increases in expenses related to~~new lease agreements entered into during the ~~increase in the scale of business operations.~~period.

Share based payments.

Share based payments consist of: the value of shares required to be issued to Incentive Compensation Program participants under the Cosmos Transaction Bid Implementation Agreement; and the value of warrants issued to HC Wainwright and W Capital as a fee related to the acquisition by Mawson of Mawson AU. The initial expense was recognized in the financial statements for Mawson AU for the period ended December 31, 2021, however as a result of the conversion from options to warrants as part of the Cosmos Transaction, the Company was required to recognized of the incremental expense of the W Capital warrants.

~~Share based payments~~ expenses for the six months ended June 30, 2022 and 2021 ~~and 2020~~ were ~~$20.35~~$1.32 million and ~~$0,~~$20.35 respectively. In the six ~~month period to~~months ended June 30, ~~2021,~~2022, share based payments were ~~split between HC Wainwright~~largely attributable to costs recognized for warrants issued to Celsius Mining LLC amounting to $0.67 million and $0.57 million in relation to long-term incentives for the Company’s leadership team. The prior period contained a $5.53 million fair value modification to warrants issued, another $6.18 million ~~W Capital Warrants of $5.56 million~~warrants were issued, and ~~an accrual of~~ $8.58 million ~~for amounts related~~share-based payments were made under an Incentive Compensation Program in relation to ~~the obligation of Mawson to issue RSU’s pursuant to the terms of~~ the Bid Implementation ~~Agreement for the Cosmos Transaction, included in the Company’s Current Report on Form 8-K/A filed May 13, 2021. No expenses were recorded in the 2020 period.~~Agreement.

Depreciation and amortization.

Depreciation consists primarily of depreciation of cryptocurrency mining hardware and ~~modular data center (MDC)~~MDC equipment.

Depreciation and amortization for the six months ended June 30, 2022 and 2021 ~~and 2020~~ were ~~approximately $3.85~~$29.83 million and ~~$2.46~~$3.85 million, respectively. The increase is primarily attributable to new machines and MDCs which are being procured and have come into the ownership of the Company and the application of the diminishing value method, resulting in a higher depreciation expense in the initial months of mining equipment ~~operation, and that new machines which are being procured have come into the ownership of the Company.~~operation.

~~Other income (expenses)~~Change in fair value of derivative

During the six months ended June 30, 2022, a derivative asset of $17.71 million was recorded for our Power Supply Agreement with Energy Harbor LLC, this is measured at fair value.

Non-operating expense

~~Our other~~Non-operating expenses consist primarily of interest expense and impairment of equity accounted investment.

Interest expense increased by $2.09 million attributable to the interest costs charged on the loans taken out with Foundry Digital LLC, Marshall Investments MIG Pty Ltd during the year ended December 2021, and Celsius Mining LLC during the 6 month period ending June 30, 2022.

There was an impairment of financial assets in relation to the equity accounted investment Cosmos Asset Management Pty Ltd of $1.11 million during the six months to June 30, 2022.

Non-operating income ~~(expenses) consists of: net realized gains (losses)~~

Non-operating income consist primarily of unrealized losses on foreign currency ~~transactions; net~~remeasurement and other income.

During the six months ended June 30, 2022, the realized and unrealized ~~gains (losses)~~gain on foreign currency ~~remeasurement; realized gains (losses) on~~transactions were $0.96 million, and for the six months ended June 30, 2021 there was a loss of $0.72 million.

During the three months ended June 30, 2022, there was other income recognized which mainly consisted of the sale of ~~digital currencies;~~our intellectual property of $1.15 million and ~~other~~$0.53 million for curtailment income. ~~Other income consists of sales for hosting clients, investment management fees, unrealized fair value on investments and other minor income events.~~

Net loss available to Common Shareholders

As a result of the foregoing, the Company recognized a net loss of $13.45 million for the six months ended June 30, ~~2021 and 2020~~2022, compared to a net loss of ~~approximately $44.87~~$44.80 million ~~and $2.58 million, respectively.~~for the six months ended June 30, 2021.

Liquidity and Capital Resources

General

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. For the six ~~months~~month period ended June 30, ~~2021,~~2022, we financed our operations primarily through:

entering into Securities Purchase Agreements (the “PIPE Agreements”) on December 31,2020, with certain accredited investors (the “PIPE Investors”), whereby we agreed to sell to the PIPE Investors, in a private placement, an aggregate of 25 millions shares of common stock for aggregate gross proceeds of $3.0 million;

~~the issuance on March 9, 2021 of convertible notes with an aggregate principal amount of $21,442,694; and~~

3.	~~net~~1.	Net cash provided by operating activities of ~~$7.66 million~~$33.15 million;

2.	On October 15, 2021, an expansion of the Equipment Finance and Security Agreement was entered into with Foundry Digital LLC (“Foundry”) to purchase an additional 2000 Whatsminers M30’s delivered in October 2021. In total $13,185,062 was borrowed from Foundry, of which $4,914,329 is owed at June 30, 2022;

3.	On December 9, 2021, MIG No.1 Pty Ltd entered into a Secured Loan Facility Agreement with Marshall Investments MIG Pty Ltd (“Marshall”) with a total loan facility of AUD$20 million. Principal repayments will begin in January 2023.

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

~~Net cash from the proceeds of the sale of shares in Bonus Bio Group of $1.022 million~~

During the six months ending June 30, 2022 we repaid $6.2 million of payments against the historical facilities provided by Foundry.

We believe our working capital requirements will continue to be funded through a combination of the cash we expect to generate from future operations, our existing funds, external debt facilities available to us and further issuances of shares. These are expected to be adequate to fund our operations over the next twelve months. In addition, the Company has access to equity financing through the ATM offering facility entered in May 2022. For our business to grow it is expected we will continue investing in mining equipment, we are likely to require additional capital in either the short-term or long-term.

Working Capital and Cash Flows

As of June 30, ~~2021~~2022, and December 31, ~~2020,~~2021, we had ~~$3.61~~cash and cash equivalents balance of $2.49 million and ~~$1.11~~$5.47 million in cash and cash equivalents, respectively.

As of June 30, ~~2021, we had $991,524 of outstanding short-term loans,~~2022, and ~~as of~~ December 31, ~~2020, we had $290,978 of short-term loans. As of June 30,~~ 2021, our trade receivables balance was $4.21 million and at December 31, 2020, we had $14,000 of outstanding long term loans. The loans as of June 30, 2021, relate primarily to: the acquisition of cryptocurrency mining equipment, payable in full by February, 2022 under the Foundry agreement. The repayment of a Leveraged Account Agreement which Mawson borrowed 10 Bitcoin and entered into another short-term loan to replace the Leverage Account Agreement (see Note 5 in Item 1 of Part 1 of this Quarterly Report), combined with an working capital advance.$5.61 million respectively.

As of June 30, ~~2021,~~2022, we had $19.47 million of outstanding short-term borrowings, and as of December 31, ~~2020,~~2021, we had $11.10 million of short-term borrowings. The short-term borrowings as of June 30, 2022, relate to the acquisition of cryptocurrency mining equipment under the Foundry agreements, and also to the secured loan facilities with Celsius Mining LLC and Marshall Investments MIG Pty Ltd. As of June 30, 2022, and as of December 31, 2021, we had $19.40 million and $7.64 million respectively of outstanding long-term borrowings. The long-term borrowings as of June 30, 2022, primarily relate to the secured loan facilities with Celsius Mining LLC and Marshall Investments MIG Pty Ltd.

As of June 30, 2022, we had negative working capital of ~~$807,425~~$55.96 million and as at December 31, 2021, we had negative working capital of ~~$463,345, respectively.~~$8.63 million. The decrease in working capital was primarily attributable ~~to:~~to an increase in the ~~trade payables and~~Company’s short term ~~borrowings.~~and long-term borrowings during 2022, as compared to 2021.

The following table presents the major components of net cash flows (used in) provided by operating, investing and financing activities for the six ~~month~~months ending June 30, ~~2021~~2022 and ~~2020:~~2021:

	Six Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2022			2021

Net cash provided by operating activities	$	7,664,467		$	59,245		$	33,146,960		$	7,664,467
Net cash used in investing activities	$	(26,065,630	)	$	(725,588	)	$	(53,155,193	)	$	(26,065,630	)
Net cash provided by financing activities	$	21,250,788		$	2,190,692		$	19,513,738		$	(21,250,788	)

For the six months ended June 30, ~~2021 and 2020,~~2022, net cash provided by operating activities was ~~$7,664,467~~$33,146,960 and ~~$59,245 respectively.~~for the six months ended June 30, 2021, net cash provided by operating activities was $7,664,467. The increase in net cash provided by operating activities was primarily attributable to timing differences in ~~accounts payables~~trade and ~~accounts receivables.~~other receivables and trade and other payables.

For the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, net cash used in investing activities was ~~$26,065,630~~$53,155,193 and ~~$725,588,~~$26,065,630, respectively. The increase in net cash used in investing activities was primarily attributable to the increase in the acquisition of cryptocurrency mining equipment.

For the six months ended June 30, ~~2021~~2022 and ~~2020, net cash provided by and used in financing activities was $21,250,788 and $2,190,692, respectively. The increase in~~2021, net cash provided by financing activities was $19,513,738 and $21,250,788, respectively. The cash provided by financing activities during June 30, 2022 was primarily attributable to proceeds from ~~convertible notes.~~borrowings.

~~Outlook~~Financial condition

~~According to management estimates, liquidity resources as of~~As at June 30, ~~2021~~2022 had net current liabilities of $55.96 million and had an accumulated deficit of $82.95 million. The Company’s cash position at June 30, 2022, was $2.49 million. For the six month period ending June 30, 2022, the Company incurred a loss after tax of $13.98 million.

Our primary requirements for liquidity and capital are working capital, capital expenditures, public company costs and general corporate needs. We expect these needs to continue as we further develop and grow our business. Our principal sources of liquidity have been and are expected ~~tobe sufficient~~ to ~~maintain~~be our ~~planned level~~cash and cash equivalents, external debt facilities available to us and further issuances of shares. In addition, Mawson has an active At The Market (ATM) available for sale of shares of Common Stock having an aggregate offering price of up to $100.0 million. These are expected to be adequate to fund our operations ~~for~~over the next 12twelve months. ~~However,~~

In the event that we require additional capital to respond to competitive pressure, market dynamics, new technologies, customer demands, business opportunities, challenges, acquisitions or unforeseen circumstances in either the short-term or long-term, we may ~~need~~determine to engage in equity or debt financings or enter into credit facilities for other reasons. If we are unable to obtain adequate financing on terms satisfactory to us when we require it, our ability to continue to grow or support our business model and to respond to business challenges could be significantly limited. In particular, the widespread COVID-19 pandemic, including rising inflation and interest rates, and the conflict between Russia and Ukraine have resulted in, and may continue to result in, significant disruption and volatility in the global financial markets, reducing our ability to access capital. If we are unable to raise additional ~~funding~~funds when or ~~capital raising in order to purchase more equipment or expand operations. Additional financing may not~~on the terms desired, our business, financial condition and results of operations could be available on acceptable terms, if at all. Our future capital requirements as well as the ability to obtain financing will depend on many factors, including those listed under Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020.adversely affected.

~~Off-Balance Sheet Arrangements~~Non-GAAP Financial Measures

~~In connection~~The Company utilizes a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing its overall business performance, for making operating decisions and for forecasting and planning future periods. The Company considers the use of non-GAAP financial measures helpful in assessing its current financial performance, ongoing operations and prospects for the future. While the Company uses non-GAAP financial measures as a tool to enhance its understanding of certain aspects of its financial performance, the Company does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. Consistent with this approach, the Company believes that disclosing non-GAAP financial measures to the readers of its financial information provides such readers with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of its financial and operational performance. Investors are cautioned that there are inherent limitations associated with the ~~Cosmos Transaction, we issued one CVR to each~~use non-GAAP financial measures as an analytical tool. In particular, non-GAAP financial measures are not based on a comprehensive set of ~~our securityholders for each outstanding share of common stock of Mawson,~~accounting rules or principles and ~~for each share of common stock of Mawson underlying other convertible securities and warrants, held immediately before the closing~~many of the ~~Cosmos Transaction. Each CVR represents~~adjustments to the ~~right to receive a pro rata share~~GAAP financial measures reflect the exclusion of ~~any consideration~~items that ~~we may receive in connection with any successful monetization of our LO2A business, less transaction expenses~~are recurring and ~~customary deductions as detailed~~will be reflected in the ~~CVR agreement,~~company’s financial results for the foreseeable future. In addition, other companies, including ~~a deduction of up to $300,000 to be repaid to us for amounts we spend~~other companies in the ~~development of~~Company’s industry, may calculate non-GAAP financial measures differently than the ~~LO2A Technology at the request of the Holders’ Representative.~~ Company does, limiting their usefulness as a comparative tool.

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

	For the three months ended June 30,						For the six months ended June 30,
	2022			2021			2022			2021
Reconciliation of non-GAAP adjusted EBITDA:
Net loss:		(2,405,632	)		(6,348,860	)		(13,975,707	)		(44,868,930	)
Impairment of financial assets		1,107,197			-			1,107,197			-
Depreciation and amortization		16,023,817			2,533,242			29,826,849			3,848,142
Share based payments		936,235			5,559,495			1,326,844			20,354,897
Unrealized and realized losses/(gain)		(1,657,055	)		60,747			(957,818	)		722,425
Other non-operating revenue		(1,864,968	)		(315,353	)		(1,889,415	)		(694,480	)
Other non-operating expenses		1,565,040			464,039			2,801,713			714,701
LO2A write-back		-			-			-			23,963,050
EBITDA (non-GAAP)		13,704,634			1,953,310			18,239,663			4,039,805

Critical accounting estimates

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

Going concern assumption- Management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. Please see NOTE 1-GENERAL to the consolidated condensed financial statements in Item 1 of PART I of this Quarterly Report on Form 10-Q for more information about this assumption.

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

Stock based compensation- Management used Black-Scholes to evaluate our awards and will continue to use judgment in ~~relation~~evaluating the assumptions related to ~~LO2A, as of June 30, 2021, the Company did not have any other off-balance sheet arrangements, as such term is defined under Item 303 of Regulation S-K, that have or are reasonably likely to have~~our stock-based compensation on a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.prospective basis.

Item 3. Quantitative and Qualitative Disclosures about Market Risks

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

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

~~Management,~~Our management, with the participation of our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), has evaluated the effectiveness of ~~the~~our disclosure controls and procedures (as defined in Rules 13a- 15(e)) and 15d- 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this ~~Quarterly~~Annual Report. ~~The Company’s~~Our management ~~conducted an~~recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of June 30, 2022, due to the material weaknesses in our internal control over financial reporting described below. Management’s assessment of the effectiveness of ~~the Company’s~~our disclosure controls and procedures is expressed at a level of reasonable assurance because management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives.

Because of its inherent limitations, internal control over financial reporting asmay not prevent or detect misstatements. Also, projections of ~~June 30, 2021, based on criteria established~~any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in ~~Internal Control – Integrated Framework~~ ~~issued by~~conditions, or that the ~~Committee~~degree of ~~Sponsoring Organizations of~~compliance with the ~~Treadway Commission (“COSO”). As a result of this assessment, management identified a material weakness in internal control over financial reporting.~~policies or procedures may deteriorate.

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

~~The material weakness identified is described below.~~

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

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

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

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

Fixed asset verification. The Company did not properly execute its designed controls around physical asset verification at US mining sites. Together with system limitations, restricting tracking of fixed asset movements, there is a risk around the existence of fixed assets. The root cause is the lack of sufficient capable personnel to perform physical asset inspections, combined with system limitations.

Notwithstanding the identified material weaknesses and management’s assessment that ~~as June 30, 2021, the Company’s~~our internal control over financial reporting was not effective ~~based on~~as of June 30, 2022, management believes that the ~~criteria in Internal Control – Integrated Framework issued by COSO.~~

~~Changes in internal control over financial reporting~~

The Company is 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 ofconsolidated financial statements included in this quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows as of and for ~~external purposes~~the periods presented in accordance with generally accepted accounting principles. ~~It also requires that our~~We rely on the assistance of outside advisors with expertise in these matters in preparing the financial statements.

Remediation

Our Board of Directors and management ~~annually evaluate whether our~~take internal control over financial reporting ~~is effective at providing reasonable assurance and to disclose its assessment to investors.~~

Although the Company acquired and became the parent company of Mawson AU in the Cosmos Transaction, with limited exceptions, the management team of Mawson AU became the management team and became responsible for internal control over financial reporting upon completion of the Cosmos Transaction. Mawson AU was an Australian registered Unlisted Public Company with limited accounting personnel and other resources with which to address our internal controls and procedures, and was not previously subject to the same requirements. The Company’s new management may not be able to effectively and timely implement controls and procedures that adequately respond to the regulatory compliance and reporting requirements that are applicable to us. If our new management is not able to implement the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or with adequate compliance, we may not be able to assess whether our internal control over financial reporting are effective, which may subject us to adverse regulatory consequences and could harm investor confidence and the ~~market price~~integrity of our ~~stock.~~

~~In addition, as a smaller reporting company and non-accelerated filer, the Company is not subject~~financial statements seriously. Our management continues to ~~the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. However, as the Company grows, it may become subject~~work to ~~the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act.~~

~~If the Company fails~~improve its controls related to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, the accuracy and timeliness of the filing of annual and quarterly reports may be materially adversely affected and could cause investors to lose confidence in reported financial information, which could have a negative effect on the trading price of common stock. In addition, aour material weakness in the effectiveness of internal control over financial reporting could result in an increased chance of fraud and the loss of customers, reduce our ability to obtain financing and require additional expenditures to comply with these requirements, each of which could have a material adverse effect on our business, results of operations and financial condition.

~~Since March 9, 2021, with~~weaknesses. With the oversight of senior management and our audit committee, we have begun taking steps ~~and plan to take additional measures~~ to remediate the underlying causes of the identified material weaknesses, primarily through the performance of a risk assessment process; the development and implementation of formal, documented policies and procedures, improved processes and control activities (including an assessment of the segregation of duties); as well as the hiring of additional finance personnel for specific roles such as financial reporting. During the ~~period covered by this Quarterly Report on Form 10-Q,~~first and second quarter of 2022, we made the following changes to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting:

●

We have ~~developed~~performed a risk assessment and designed controls for all significant business processes. We have continued implementation of entity level and process level controls with respect to the preparation and review of our consolidated financial ~~statements.~~statements as well as transactional level controls over all significant business processes and IT. We have developed process level controls relating to the review of manually prepared analyses and supporting information used to prepare our consolidated financial statements. We are in the process of ~~testing~~implementing and validating these controls. At this time, we cannot state whether these controls will prove to be effective. Using criteria set forth by Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control, we have developed a plan to assess the effectiveness of the internal control structure and procedures as at the end of the fiscal year.

●

We are currently working to write policies and procedures to ensure the effective design and operation of general IT controls over our financial reporting systems We have not yet completed our development, implementation and testing of these controls. At this time, we cannot state whether these controls will prove to be effective.

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

Changes in internal control over financial reporting

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

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We ~~may,~~are currently not, and have not been in the ~~ordinary course of business, become~~recent past, a party to ~~litigation involving collection matters, contract claims and other~~any legal proceedings ~~relating~~which may have or have had in the recent past significant effects on our financial position or profitability. However, we have been in the past, and may be from time to time in the ~~conduct of~~future, named as a defendant in certain routine litigation incidental to our business. ~~However, as of June 30, 2021, we are unaware of any material pending legal proceedings.~~

Item 1A. Risk Factors

~~In light of recent developments related to the , the Company is supplementing the~~The Company’s risk factors were disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021. In addition, the Company wishes to ~~include~~disclose the following risk factors.

~~Summary of Risk Factors~~

Listing on The ~~following constitutes a summary of the material risks relevant to an investment in our company:~~

~~Risks Relating to our Digital Asset Infrastructure Business through Mawson AU~~

~~Both we (collectively) and Mawson AU (individually) have incurred operating losses since inception and anticipates continuing to incur substantial operating losses in the near future.~~

We have historically incurred net losses, including net losses of approximately $10.42 million and $3.45 million for the years ended December 31, 2020 and 2019, respectively. As at December 31, 2020, we had an accumulated deficit of approximately $39.22 million. Similarly, and not included in the forgoing, Mawson AU has incurred net and operating losses since its inception in May 2019, including net losses of approximately $5.06 million and operating losses of approximately $4.93 million for the year ended December 31, 2020. Even with the change of our primary business away from our historical LO2A Business to the digital asset infrastructure business of Mawson AU, we do not know whether or when we will become profitable and we expect to continue to incur losses for the near future, and these losses will likely increase as we pursue our growth strategy. No certainty exists that we will become profitable and, even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our inability to achieve and then maintain profitability would negatively affect our business, financial condition, results of operations and cash flows.

~~We have a limited operating history and a history of operating losses, and expect to incur significant additional operating losses.~~Nasdaq Capital Market (“Nasdaq”)

~~We have a limited operating history. Therefore, there is limited historical financial information upon which to base an evaluation of~~Although our performance. Our prospects must be considered in light of the uncertainties, risks, expenses, and difficulties frequently encountered by companies in their early stages of operations. We have generated net losses of $5.03 million and $1.3 million for the years ended December 31, 2020 and 2019, respectively. We expect to incur additional net losses over the next several years as we seek to expand operations. The amount of future losses and when, if ever, we will achieve profitability are uncertain. If we are unsuccessful at executing on our business plan, our business, prospects, and results of operations may be materially adversely affected.

We will need to raise additional capital to meet our business requirements in the future, and such capital raising may be costly or difficult to obtain and will dilute current stockholders’ ownership interests.

The sources of financing at our disposal are estimated by our management to be currently insufficient to conduct our ongoing business for the next 12 months. No certainty exists that we will be able to secure the additional sources of finance we need to perform the advanced and necessary stages of receiving regulatory approvals for marketing and distributing our products, including the costs derived from performing clinical trials and the requirements of the regulatory authorities.

The lack of satisfactory means of financing may causes us to suspend or cease operations. As of June 30, 2021, we had cash and cash equivalents of approximately $3.6 million. We have expended and believe that we will continue to expend substantial resources for the foreseeable future especially in relation to the purchase of Miners and related equipment.

In addition, other unanticipated costs may arise. As a result of these and other factors currently unknown to us, we will require additional funds, through public or private equity or debt financings or other sources, such as strategic partnerships and alliances and licensing arrangements. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.

Additional funds may not be available when we need them, on terms that are acceptable to us, or at all. If adequate funds are not available to us on a timely basis, we may be required to delay, limit, reduce or terminate our proposed expansion plans or results of operations.

The further development and acceptance of digital asset networks and other digital assets, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The slowing or stopping of the development or acceptance of digital asset systems may adversely affect an investment in us.

~~There~~common stock is currently relatively small use of Bitcoin and other cryptocurrencies in the retail and commercial marketplaces compared to relatively large use by speculators, thus contributing to price volatility that could adversely affect an investment in us.

Cryptocurrencies are a relatively new concept and asset class, so there is still some degree of uncertainty and pessimism about their use and whether their popularity will gain further traction is difficult to predict. In May 2021, Tesla, Inc. (“Tesla”), which was accepting cryptocurrency as payment for its electric cars, announced that it would halt sale of cars for cryptocurrency due to environmental concerns with cryptocurrency mining. Decisions and announcements such as this can have a material and adverse effectlisted on ~~the values of cryptocurrencies.~~

If the popularity and use of cryptocurrencies diminish their value decreases. Our existing and potential further interest in cryptocurrencies would be detrimentally affected, and our business, financial condition, results of operations and prospects may be materially adversely affected.

The digital asset exchanges on which digital assets trade are relatively new and, in many cases, unregulated, and may therefore be more exposed to fraud and failure than established, regulated exchanges for other products. To the extent that the digital asset exchanges representing a substantial portion of the volume in digital asset trading are involved in fraud or experience security failures or other operational issues, such failures may result in a reduction in the price of some or all digital assets which could adversely affect our business, financial condition, results of operations and prospects.

The digital asset exchanges on which digital assets trade are new and, in many cases, largely unregulated. Furthermore, many digital asset exchanges (including several of the most prominent USD denominated digital asset exchanges) do not provide the public with significant information regarding their ownership structure, management teams, corporate practices or regulatory compliance. As a result, the marketplace may lose confidence in, or may experience problems relating to, digital asset exchanges, including prominent exchanges handling a significant portion of the volume of digital asset trading.

A lack or perceived 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. These potential consequences of a digital asset exchange’s failure could materially adversely affect our business, financial condition, results of operations and prospects.

Significant contributors to all or any digital asset network could propose amendments to the respective network’s protocols and software that, if accepted and authorized by such network, could adversely affect us. For example, with respect to Bitcoins networks, a small group of individuals contribute to the Bitcoin Core project on GitHub.com. This group of contributors is currently headed by Wladimir J. van der Laan, the current lead maintainer.

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. 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.

To the extent that a significant majority of the users and miners on the Bitcoin network install such software upgrade(s), the Bitcoin network would be subject to new protocols and software that could materially adversely affect our business, financial condition, results of operations and prospects. In the event a developer or group of developers proposes a modification to the Bitcoin network that is not accepted by a majority of miners and users, but that is nonetheless accepted by a substantial plurality of miners and users, two or more competing and incompatible blockchain implementations could result. 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.

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 a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains a majority of the processing power dedicated to mining on any digital asset network, including the Bitcoin network, it may be able to alter the blockchain by constructing alternate blocks if it is able to solve for such blocks faster than the remainder of the miners on the blockchain can add valid blocks. In such alternate blocks, the malicious actor or botnet could control, exclude or modify the ordering of transactions, though it could not generate new digital assets or transactions using such control. Using alternate blocks, the malicious actor could “double-spend” its own digital assets (i.e., spend the same digital assets in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintains control. 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.

~~A failure to properly monitor and upgrade the Bitcoin network protocol could damage the Bitcoin network and adversely affect us.~~

The open-source structure of the cryptocurrencies network protocols means that the contributors to any such protocol are generally not directly compensated for their contributions in maintaining and developing the protocol. The Bitcoin network, for example, operates based on an open-source protocol maintained by contributors, largely on the Bitcoin Core project on GitHub. 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. Although the MIT Media Lab’s Digital Currency Initiative funds the current maintainer Wladimir J. van der Laan, among others, this type of financial incentive is not typical. The lack of guaranteed financial incentive for contributors to maintain or develop the Bitcoin network and the lack of guaranteed resources to adequately address emerging issues with the Bitcoin network may reduce incentives to address the issues adequately or in a timely manner. Changes to a digital asset network which we are mining could materially adversely affect our business, financial condition, results of operations and prospects.

~~Governments introducing new laws about the legality to operate Bitcoin mining businesses in their jurisdictions~~

Certain Governments around the world are beginning to halt the ability of companies to operate Bitcoin mining businesses in their jurisdiction. By way of example, in June 2021, China has intensified its crackdown on cryptocurrency mining in China. It is estimated that more than 90% of China’s bitcoin mining capacity has ceased. The implication of such action is that the price of Bitcoin has depreciated. If other Governments take similar action resulting in the continued depreciation in the price of Bitcoin, this could materially adversely affect our business, financial condition, results of operations and prospects.

~~The incentive for Bitcoin mining may decrease over time as the reward decreases.~~

A Bitcoin halving occurs when block rewards, or the number of Bitcoins entering circulation whenever a block is produced (approximately every 10 minutes), is reduced by half. This means a new Bitcoin will be subsequently issued half as fast as before. This occurs on a schedule built into Bitcoin’s programming and happens every 210,000 blocks with the purpose being to issue the total supply into the market less frequently over time. This supply effect increases Bitcoin’s scarcity, which has, historically, increased its price. When Bitcoin first started, 50 Bitcoins were rewarded to miners per block produced. The reward was decreased over the years and, to date, following the last halving event in May 2020, the 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, estimated to be around the year 2140. Although, at each prior halving event, the short-term subsequent effect on the Bitcoin price has been an increase in price, this trend may not continue in the future and may have a reverse effect on the Bitcoin price, in which case, our business, financial condition, results of operations and prospects may be materially adversely affected.

If the award of digital assets for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners, miners may cease expending hashrate to solve blocks and confirmations of transactions on the blockchain could be slowed temporarily.

Bitcoin miners record transactions when they solve for and add blocks of information to the blockchain. When a miner solves for a block, it creates that block, which includes data relating to (i) the solution to the block, (ii) a reference to the prior block in the blockchain to which the new block is being added and (iii) all transactions that have occurred but have not yet been added to the blockchain. The miner becomes aware of outstanding, unrecorded transactions through the data packet transmission and propagation discussed above. Typically, Bitcoin transactions will be recorded in the next chronological block if the spending party has an internet connection and at least one minute has passed between the transaction’s data packet transmission and the solution of the next block. If a transaction is not recorded in the next chronological block, it is usually recorded in the next block thereafter.

As the award of new digital assets for solving blocks declines, and if transaction fees are not sufficiently high, miners may not have an adequate incentive to continue mining and may cease their mining operations. For example, the current fixed reward on the Bitcoin network for solving a new block is six and a quarter (6.25) Bitcoins per block (the reward decreased from twelve and a half (12.5) Bitcoin in May 2020). It is estimated that it will halve again in about 4 years from 2020. This reduction may result in a reduction in the aggregate hashrate of the Bitcoin network as the incentive for miners will decrease. Moreover, miners ceasing operations would reduce the aggregate hashrate on the Bitcoin network, which would adversely affect the confirmation process for transactions (i.e., temporarily decreasing the speed at which blocks are added to the blockchain until the next scheduled adjustment in difficulty for block solutions) and make the Bitcoin network more vulnerable to a malicious actor obtaining control in excess of fifty percent (50%) of the aggregate hashrate on the Bitcoin network. Periodically, the Bitcoin network has adjusted the difficulty for block solutions so that solution speeds remain in the vicinity of the expected ten (10) minute confirmation time targeted by the Bitcoin network protocol.

More significant reductions in aggregate hashrate on digital asset networks could result in material, though temporary, delays in block solution confirmation time. Any reduction in confidence in the confirmation process or aggregate hashrate of any digital asset network may negatively impact the value of digital assets, which will adversely impact our business, financial condition, results of operations and prospects.

~~An increase in transaction fees could reduce the price or digital assets.~~

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.

To the extent that the profit margins of digital asset mining operations are not high, operators of digital asset mining operations are more likely to immediately sell their digital assets earned by mining in the digital asset exchange market, resulting in a reduction in the price of digital assets that could adversely impact our business, financial condition, results of operations and prospects.

Over the past two years, digital asset mining operations have evolved from individual users mining with computer processors, graphics processing units and first-generation servers. Currently, new processing power brought onto the digital asset networks is predominantly added by incorporated and unincorporated “professionalized” mining operations. Professionalized mining operations may use proprietary hardware or sophisticated machines. They require the investment of significant capital for the acquisition of this hardware, the leasing of operating space (often in data centers or warehousing facilities), incurring of electricity costs and the employment of technicians to operate the mining farms. As a result, professionalized mining operations are of a greater scale than prior miners and have more defined, regular expenses and liabilities. These regular expenses and liabilities require professionalized mining operations to more immediately sell digital assets earned from mining operations on the digital asset exchange market, whereas it is believed that individual miners in past years were more likely to hold newly mined digital assets for more extended periods. The immediate selling of newly mined digital assets greatly increases the supply of digital assets on the digital asset exchange market, creating potential downward pressure on the price of each digital asset.

The extent to which the value of digital assets mined by a professionalized mining operation exceeds the allocable capital and operating costs determines the profit margin of such operation. 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—and it may partially or completely cease operations if its profit margin is negative. In a low profit margin environment, a higher percentage could be sold into the digital asset exchange market more rapidly, thereby potentially reducing digital asset prices. Lower digital asset prices could result in further tightening of profit margins, particularly for professionalized mining operations with higher costs and more limited capital reserves, creating a network effect that may further reduce the price of digital assets until mining operations with higher operating costs become unprofitable and remove mining power from the respective digital asset network. 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.

~~Digital assets such as Bitcoin are likely to be regulated as securities or investment securities.~~

Currently in Australia, Bitcoin in and of itself is not a financial product nor are digital assets regarded as money or currency for the purpose of Australian corporate law. The effect of any future regulatory change on digital assets or an entity dealing in or holding digital assets is impossible to predict, but such change could be substantial and adverse to the returns we seek.

~~Regulatory changes or actions may alter the nature of an investment or restrict the use of digital assets in a manner that could adversely affect an investment in us~~

~~While Bitcoin is presently legal in Australia and the U.S., it may be illegal now, or in the future, to acquire, own, hold, sell or use Bitcoins in one or more other countries.~~

In May 2021, China banned financial and payment institutions from providing cryptocurrency services and warned against using digital coins as payment, which causes a significant decrease in the value of most of the major cryptocurrencies.

Regulatory changes or interpretations, such as those enacted by China, could cause us (or any of our subsidiaries) to be required to register and comply with new regulations, resulting in potentially extraordinary, recurring or non-recurring expenses to those holding digital assets, or could decrease the valuations of cryptocurrencies.

~~Treating Bitcoin and other cryptocurrencies as “securities” may cause us to be an “investment company” and affect our ability to continue as a going concern.~~

Neither the SEC nor its staff has provided clear guidance on whether cryptocurrencies, including Bitcoin, should be treated as “securities” for purposes of the Investment Company Act. Although the SEC staff has stated that it would regard Bitcoin as a non-security for purposes of the Securities Act, the staff has not taken a clear position on treatment of Bitcoin and other cryptocurrencies for purposes of the Investment Company Act. In the absence of clear guidance and on the basis of positions taken by the staff under the Securities Act, we have concluded that Bitcoin that we hold for our own account may be treated as non-securities for purposes of the Investment Company Act.

If the SEC were to take a different view from that expressed above, we may have to significantly limit our holding of Bitcoin for our own account in order to avoid being an “investment company,” as that term is defined in the Investment Company Act. Otherwise, we may be required to register as an “investment company” and operate as such under the requirements of the Investment Company Act. Registration as an investment company will significantly affect our ability to operate or continue to operate in the manner intended, as described in the prospectus. We will have to amend our capital structure to conform to the much more limited capital structure required of registered investment companies. We will have to change our Board of Directors in order to satisfy the Board independence requirements applicable to registered investment companies. Transactions with persons who may be considered to be first- or second-tier affiliates of us will be significantly restricted and could not be conducted without first obtaining an order of the SEC granting relief to engage in the transaction. We will be required to value our assets at all times in accordance with requirements applicable to registered investment companies. The obligations that will apply to us in operating as a registered investment company will significantly affect our ability to continue to operate as a company that is engaged in the digital infrastructure and cryptocurrency mining business.

~~Global climate change and related environmental regulations may have an adverse effect on our business operations and financial position.~~

The constant discussion surrounding climate change and its effect on the environment such as changes in rainfall, weather patterns, water supplies and shortages, sea level and changing temperatures could have an adverse effect on our operations and financial performance.

~~Extreme weather events may:~~

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~~cause damage to one or more of our modular data centres (that houses our Miners) and therefore reduce our ability to maximize the performance of the Miners;~~

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~~affect the delivery times of equipment ordered from our manufacturers and therefore impacting our financial forecasts which were scheduled for a certain period of time.~~

In addition, there has been recent commentary about cryptocurrency mining and its impact on the environment and it currently seems that Governments and related government bodies around the world are introducing or contemplating legislative and regulatory changes in response to initiatives by various climate change interest groups. Non-government actors, such as businesses, like Tesla, may also decide to halt acceptance of cryptocurrency as payment due to environmental concerns with cryptocurrency mining, which are likely to have an adverse effect on the values of cryptocurrencies.

Any legislative changes regarding climate change in general, and those relating to crypto mining in particular, could add significant burden and costs to our business, including costs related to making our energy consumption more efficient and lower impact on the environment environmental monitoring and reporting, and other costs to comply with such changes. Further, there could be reputational damage to our business caused by increased negative publicity surrounding cryptocurrency and the apparent effects on the environment.

If regulatory changes or interpretations of our activities require us or any of our affiliates to register as a money services business (“MSB”) under the regulations promulgated by FinCEN under the authority of the U.S. Bank Secrecy Act, we may be required to register and comply with such regulations. If regulatory changes or interpretations of our activities require the licensing or other registration as a money transmitter (or equivalent designation) under state law in any state in which we operate, we may be required to seek license or otherwise register and comply with such state law. In the event of any such requirement, to the extent we decide to continue, the required registrations, licenses and regulatory compliance steps may result in extraordinary, non-recurring expenses to us and even in a decision to cease our digital asset infrastructure operations.

To the extent that our activities cause us to be deemed an MSB under the regulations promulgated by the Financial Crimes Enforcement Network (“FinCEN”), a unit of the U.S. Treasury Department focused on money laundering under the authority of the U.S. Bank Secrecy Act, we may be required to comply with FinCEN regulations, including those that would mandate we implement anti-money laundering programs, make certain reports to FinCEN and maintain certain records. In addition, to the extent that our activities cause us to be deemed a “money transmitter” (“MT”) or equivalent designation, under state law in any state in which we operate, we may be required to seek a license or otherwise register with a state regulator and comply with state regulations that may include the implementation of anti-money laundering programs, maintenance of certain records and other operational requirements. Currently, the New York State Department of Financial Services has finalized its “BitLicense” framework for businesses that conduct “virtual currency business activity,” the Conference of State Bank Supervisors has proposed a model form of state level “virtual currency” regulation and additional state regulators including those from California, Idaho, Virginia, Kansas, Texas, South Dakota and Washington have made public statements indicating that virtual currency businesses may be required to seek licenses as money transmitters. In July 2016, North Carolina updated the law to define “virtual currency” and the activities that trigger licensure in a business-friendly approach that encourages companies to use virtual currency and blockchain technology. Specifically, the North Carolina law does not require miners or software providers to obtain a license for multi-signature software, smart contract platforms, smart property, colored coins and non-hosted, non-custodial wallets. Starting January 1, 2016, New Hampshire requires anyone exchanges a digital currency for another currency must become a licensed and bonded money transmitter. In numerous other states, including Connecticut and New Jersey, legislation is being proposed or has been introduced regarding the treatment of Bitcoin and other digital assets.. Mawson AU will continue to monitor for developments in such legislation, guidance or regulations.

Such additional federal or state regulatory obligations may cause us to incur extraordinary expenses, possibly adversely affecting our business, financial condition, results of operations and prospects. Furthermore, we and our service providers may not be capable of complying with certain federal or state regulatory obligations applicable to MSBs and MTs. If we are deemed to be subject to and determine not to comply with such additional regulatory and registration requirements, we may act to dissolve and liquidate our business. Any such action may materially adversely impact our business, financial condition, results of operations and prospects.

Current interpretations require the regulation of Bitcoins under the Commodity Exchange Act (“CEA”) by the CFTC, we may be required to register and comply with such regulations. To the extent that we decide to continue operations, the required registrations and regulatory compliance steps may result in extraordinary, non-recurring expenses to us. We may also decide to cease certain operations. Any disruption of our operations in response to the changed regulatory circumstances may be at a time that is disadvantageous to investors.

Current and future legislation, CFTC and other regulatory developments, including interpretations released by a regulatory authority, may impact the manner in which Bitcoin is treated for classification and clearing purposes. In particular, Bitcoin derivatives are not excluded from the definition of “commodity future” by the CFTC. We cannot be certain as to how future regulatory developments will impact the treatment of Bitcoins under the law.

Bitcoins has been deemed a “commodity” by the CFTC and we may in the future be required to register and comply with additional regulation under the CEA, including additional periodic report and disclosure standards and requirements. Moreover, we may be required to register as a commodity pool operator and to register as a commodity pool with the CFTC through the National Futures Association. Such additional registrations may result in extraordinary, non-recurring expenses, thereby materially and adversely impacting our business, financial condition, results of operations and prospects. If we determine not to comply with such additional regulatory and registration requirements, we may seek to cease certain of our operations. Any such action may adversely affect our business, financial condition, results of operations and prospects.

If regulatory changes or interpretations require the regulation of Bitcoins under the Securities Act and Investment Company Act by the SEC, we may be required to register and comply with such regulations. To the extent that we decide to continue operations, the required registrations and regulatory compliance steps may result in extraordinary, non-recurring expenses to us and we may also decide to cease certain operations. Any disruption of our operations in response to the changed regulatory circumstances may be at a time that is disadvantageous to investors. This would likely have a material adverse effect on us.

Current and future legislation and the SEC rulemaking and other regulatory developments, including interpretations released by a regulatory authority, may impact the manner in which Bitcoin is treated for classification and clearing purposes. The SEC’s July 25, 2017 Report expressed its view that digital assets may be securities depending on the facts and circumstances. As of the date of this report/information statement, we are not aware of any rules that have been proposed to regulate Bitcoin as securities. We cannot be certain as to how future regulatory developments will impact the treatment of Bitcoin under the law. Such additional registrations may result in extraordinary, non-recurring expenses, thereby materially and adversely impacting our business, financial condition, results of operations and prospects. If we determine not to comply with such additional regulatory and registration requirements, we may seek to cease certain of our operations. Any such action may adversely affect our business, financial condition, results of operations and prospects.

To the extent that digital assets, including Bitcoin and other digital assets we may own, are deemed by the SEC to fall within the definition of a security, we may be required to register and comply with additional regulation under the Investment Company Act, including additional periodic reporting and disclosure standards and requirements and the registration of the combined company as an investment company. Additionally, one or more states may conclude Bitcoin and other digital assets we may own as a security under state securities laws which would require registration under state laws including merit review laws which would adversely impact us since we would likely not be able to ~~comply. Such additional registrations may result in extraordinary, non-recurring expenses, thereby materially and adversely impacting our business, financial condition, results~~continue to meet Nasdaq’s minimum listing requirements or those of ~~operations and prospects.~~any other national exchange. If we ~~determine~~are unable to maintain listing on Nasdaq or if a liquid market for our common stock does not develop or is not sustained, our common stock may remain thinly traded. The Listing Rules of Nasdaq require listing issuers to comply with ~~such additional regulatory~~certain standards in order to remain listed on its exchange. If, for any reason, we should fail to maintain compliance with these listing standards and ~~registration requirements, we may seek to cease all or certain parts of~~Nasdaq should delist our securities from trading on its ~~operations. Any such action would likely adversely affect our business, financial condition, results of operations and prospects and investors may suffer a complete loss of their investment.~~

~~Stockholders do not and will not have the protections associated with ownership of shares in an investment company registered under the Investment Company Act or commodity pools under the CEA.~~

The Investment Company Act establishes a comprehensive federal regulatory framework for investment companies. Regulation of investment companies under the Investment Company Act is designed to, among other things: prevent insiders from managing the companies to their benefit and to the detriment of public investors; prevent the inequitable or discriminate issuance of investment company securities and prevent the use of unsound or misleading methods of computing asset values. We are not registered as an investment company under the Investment Company Act, and we believe that we are not permitted or required to register under such act. We will not hold or trade in commodity interests regulated by the CEA, as administered by the CFTC. Furthermore, we believe that we are not a commodity pool for purposes of the CEA,exchange and we are ~~not subject~~unable to regulation by the CFTC as a commodity pool operator or a commodity trading advisor in connection with the operation of our investment management segment. Consequently, stockholders will not have the regulatory protections provided to investors in CEA-regulated instruments or commodity pools.

~~Political or economic crises may motivate large-scale sales of digital assets, which could result in~~obtain listing on another national securities exchange, a reduction in some or all ~~digital assets’ values and adversely affect us.~~

As an alternative to fiat currencies that are backed by central governments, digital assets such as Bitcoins, which are relatively new, are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical events. Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of digital assets either globally or locally. Large-scale sales of digital assets would result in a reduction in their value and could adversely affect our business, financial condition, results of operations and prospects.

~~Mining equipment is likely to breakdown or fail.~~

~~It is likely that the miners and related mining equipment used to mine digital assets will breakdown and may not function at any given time. Any downtime~~ of the ~~miners and mining equipment will have a direct impact on us as they would not be performing their role, that is, solving hashes and receiving a block reward. This would therefore decrease our revenue.~~

~~The market for mining hardware is new and subject to numerous issues.~~

~~There are currently a number of issues facing the mining hardware market, including but not limited to:~~

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Computing Chip Shortage – There are a limited number of computing chips being produced at any given time, and the demand for computing chips is at an all-time high. This affects not only Bitcoin Mining, but computing worldwide as the costs related to purchasing any computing hardware may increase and the delay in receipt of any such computing hardware may be extended.

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COVID 19 – In December 2019, the novel coronavirus (“COVID-19) surfaced globally. The effect of the pandemic is being seen firsthand in all industries. It has affected mining activities due to, among other things, factory closings in China and elsewhere, and increased tariffs on worldwide trade having the most profound effect.

●

International Freight – Due to movement restrictions of both people and freight attributed to the COVID-19 pandemic, international freight is experiencing increased wait times and increased costs due to a large backlog of orders, and unprecedented demand for international freight.

~~Electricity costs often determine the profitability of our digital asset infrastructure business.~~

Electricity (or “consumption”) costs are a major factor which will determine whether our digital mining activities are profitable and viable. Digital mining consumes a significant amount of electricity. The financial modelling of our digital asset infrastructure business is based on certain assumptions, one of those being that its electricity costs per kilowatt (in the US) remains within a certain price range because its miners are located in the U.S. Electricity prices are subject to change, and any changes in U.S. electricity prices, due to regulatory changes, commercial events, or otherwise, are beyond our control. Any such changes which increase the costs of electricity to a point that we are unwilling to pay or unable to maintain based on our financial modelling, would significantly impact the profitability and viability of our business.

~~Commentators in the cryptocurrency industry influencing the price of Bitcoin~~

~~The price movements of Bitcoin~~ following the publishing of information by certain commentators such as Elon Musk indicates the sensitivities of Bitcoin price to such information. By way of illustration, in May 2021, Mr Musk tweeted that Tesla Inc. (to which Mr Musk is its CEO) would no longer accept Bitcoin as payment for its products due to its environmental concerns relating to Bitcoins heavy energy consumption. As a result of that tweet, the price of Bitcoin dropped by approximately 15%.

~~Depending on the appreciation or depreciation in the price of Bitcoin, following the publishing of information certain commentators, it could impact the profitability and viability of our business.~~

~~Our ability to adopt technology in response to changing security needs or trends poses a challenge to the safekeeping of our digital assets.~~

The history of digital asset exchanges has shown that exchanges and large holders of digital assets must adapt to technological change in order to secure and safeguard their digital assets. We frequently liquidate cryptocurrencies held 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. We believe that we may become a more appealing target of security threats as the size of our Bitcoin holdings grow. To the extent that we are unable to identify and mitigate or stop new security threats, our digital assets may be subject to theft, loss, destruction or other attack, which could adversely affect our business, financial condition, results of operations and prospects.

~~Security threats could result in a loss of digital assets, or damage to our reputation and brand, each of which could adversely affect us.~~

Security breaches, computer malware and computer hacking attacks have been a prevalent concern in the digital asset exchange markets. Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses, could harm our business operations or result in loss of our digital assets. Any breach of our infrastructure could result in damage to our reputation which could adversely affect our business, financial condition, results of operations and prospects. Furthermore, we believe that, as our assets grow, we may become a more appealing target for security threats such as hackers and malware.

We frequently liquidate cryptocurrencies held and keep a minimum number of cryptocurrencies in our possession so as to minimize our risks and safeguard our digital assets from theft, loss, destruction or other issues relating to hackers and technological attack. Nevertheless, this security system may not be impenetrable and may not be free from defect or immune to acts of God, and any loss due to a security breach, software defect or act of God will be borne by us.

The security system and operational infrastructure may be breached due to the actions of outside parties, error or malfeasance of an employee, or otherwise, and, as a result, an unauthorized party may obtain access to our private keys, data or Bitcoins. Additionally, outside parties may attempt to fraudulently induce employees of ours to disclose sensitive information in order to gain access to our infrastructure. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of our security system occurs, the market perception of the effectiveness of its security system could be harmed, which could adversely affect our business, financial condition, results of operations and prospects. In the event of a security breach, we may also be forced to cease operations, or suffer a reduction in assets, the occurrence of each of which could adversely affect us.

~~A loss of confidence in our security system, or a breach of our security system, may adversely affect our business.~~

We will take measures to protect our self and our digital assets from unauthorized access, damage or theft; however, it is possible that the security system may not prevent the improper access to, or damage or theft of its digital assets. A security breach could harm our reputation or result in the loss of some or all of our digital assets. A resulting perception that our measures do not adequately protect our digital assets could adversely affect our business, financial condition, results of operations and prospects.

Digital asset transactions are irrevocable and stolen or incorrectly transferred digital assets may be irretrievable. As a result, any incorrectly executed digital asset transactions could adversely affect our business.

Digital asset transactions are not, from an administrative perspective, reversible without the consent and active participation of the recipient of the transaction or, in theory, control or consent of a majority of the processing power on the respective digital asset network. Once a transaction has been verified and recorded in a block that is added to the blockchain, an incorrect transfer of digital assets or a theft of digital assets generally will not be reversible, and we may not be capable of seeking compensation for any such transfer or theft. Although our transfers of digital assets will regularly be made to or from vendors, consultants, services providers, etc. it is possible that, through computer or human error, or through theft or criminal action, our digital assets could be transferred from us in incorrect amounts or to unauthorized third parties.

To the extent that we are unable to seek a corrective transaction with such third party or are incapable of identifying the third party which has received its digital assets through error or theft, we will be unable to revert or otherwise recover incorrectly transferred digital assets. To the extent that we are unable to seek redress for such error or theft, such loss could adversely affect our business, financial condition, results of operations and prospects.

~~The limited rights of legal recourse against us, and our lack of insurance protection expose us to the risk of loss of our digital assets for which no person is liable.~~

The digital assets we hold are not insured. Therefore, a loss may be suffered with respect to our digital assets which is not covered by insurance and for which no person is liable in damages which could adversely affect our business, financial condition, results of operations and prospects.

~~Digital assets we hold are not subject to FDIC or SIPC protections.~~

We do not hold its digital assets with a banking institution or a member of the Federal Deposit Insurance Corporation (“FDIC”) or the Securities Investor Protection Corporation (“SIPC”) and, therefore, our digital assets are not subject to the protections enjoyed by depositors with FDIC or SIPC member institutions.

~~We may not have adequate sources of recovery if our digital assets are lost, stolen or destroyed.~~

If our digital assets are lost, stolen or destroyed under circumstances rendering a party liable to us, the responsible party may not have the financial resources sufficient to satisfy its claim. For example, as to a particular event of loss, the only source of recovery we have might be limited, to the extent identifiable, other responsible third parties (e.g., a thief or terrorist), any of which may not have the financial resources (including liability insurance coverage) to satisfy a valid claim by us.

~~The sale of our digital assets to pay expenses at a time of low digital asset prices could adversely affect our business.~~

We may sell digital assets to pay expenses on an as-needed basis, irrespective of then-current prices. Consequently, our digital assets may be sold 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 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 CEO James Manning and COO, Liam Wilson. If any of our key employees or service providers cease their involvement in our business or, in the unfortunate situations one or more of them are seriously injured or dies, this loss would have a significant and likely adverse impact on us.

~~Our results of operations may be negatively impacted by the coronavirus outbreak~~.

In December 2019, the novel coronavirus, or COVID-19, surfaced globally. The World Health Organization declared a global emergency on January 30, 2020, with respect to the outbreak. The impacts of the outbreak are unknown and rapidly evolving. Many countries around the world have imposed quarantines and restrictions on travel and mass gatherings to slow the spread of the virus. In Australia, federal, state and local governments have enacted restrictions on travel, gatherings, and workplaces, with exceptions made for essential workers and businesses. As of the date of this report/information statement, our digital asset infrastructure business has not been declared an essential business. As a result, we may be required to substantially reduce or cease operations in response to governmental action or decree as a result of COVID-19.

~~Failure to effectively manage our growth could place strains on its managerial, operational and financial resources and could adversely affect our business and operating results.~~

~~As our digital asset infrastructure operations grow, the administrative demands upon us will grow, and our success will depend upon our ability to meet those demands.~~

We are organized as a holding company, with numerous subsidiaries. Both the parent company and each of our subsidiaries require certain financial, managerial and other resources, which could create challenges to our ability to successfully manage our subsidiaries and operations and impact our ability to assure compliance with our policies, practices and procedures. These demands include, but are not limited to, increased executive, accounting, management, legal services, staff support and general office services. We may need to hire additional qualified personnel to meet these demands, the cost and quality of which is dependent in part upon market factors outside of our control. Further, we will need to effectively manage the training and growth of our staff to maintain an efficient and effective workforce, and our failure to do so could adversely affect our business and operating results.

~~We have potential risks in connection with growth and acquisitions.~~

Our future growth may depend in part on our ability to acquire patented technologies or potential target companies that have synergies with our business activities. Such acquisitions are subject to numerous risks, including, but not limited to the following:

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~~our inability to enter into a definitive agreement with respect to any potential acquisition, or if we are able to enter into such agreement, our inability to consummate the potential acquisition;~~

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~~difficulty integrating the operations, technology and personnel of the acquired entity including achieving anticipated synergies;~~

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~~our inability to achieve the anticipated financial and other benefits of the specific acquisition;~~

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~~difficulty in maintaining controls, procedures and policies during the transition and monetization process;~~

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~~diversion of our management’s attention from other business concerns; and~~

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~~failure of our due diligence process to identify significant issues, including issues with respect to patented technologies and other legal and financial contingencies.~~

~~If we are unable to manage these risks effectively as part of any acquisition, our business could be adversely affected.~~

~~We may not be able to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act of 2002.~~

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. It also requires that our management annually evaluate whether our internal control over financial reporting is effective at providing reasonable assurance and to disclose its assessment to investors. Our management conducted an assessment of the effectiveness of our internal control over financial reporting as of March 31, 2021, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). As a result of this assessment, management identified a material weakness in internal control over financial reporting. As a result of the material weakness in internal control over financial reporting described above, our management has concluded that, as June 30, 2021, the Company’s internal control over financial reporting was not effective based on the criteria in Internal Control – Integrated Framework issued by COSO.

Although we acquired and became the parent company of Mawson AU in the Mawson AU Transaction, with limited exceptions, the management team of Mawson AU became our management team and became responsible for our internal control over financial reporting upon completion of the Mawson AU Transaction. Mawson AU had limited accounting personnel and other resources with which to address our internal controls and procedures and was not previously subject to the same requirements. Our new management may not be able to effectively and timely implement controls and procedures that adequately respond to the regulatory compliance and reporting requirements that are applicable to us.

If our new management is not able to implement the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or with adequate compliance, we may not be able to assess whether our internal control over financial reporting are effective, which may subject us to adverse regulatory consequences and could harm investor confidence and the market price of our stock.

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.

If we fail to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, the accuracy and timeliness of the filing of our annual and quarterly reports may be materially adversely affected and could cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock. In addition, we identified a material weakness in the effectiveness of our internal control over financial reporting which could result in an increased chance of fraud and the loss of customers, reduce our ability to obtain financing and require additional expenditures to comply with these requirements,occur, each of which could have a material adverse effect on our ~~business, results of operations and financial condition.~~shareholders:

	●	The liquidity of our common stock;

	●	The market price of our common stock;

	●	Our ability to obtain financing for the continuation of our operations;

	●	The number of investors that will consider investing in our common stock;

	●	The number of market makers in our common stock;

	●	The availability of information concerning the trading prices and volume of our common stock; and

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The number of broker-dealers willing to execute trades in our common stock.

~~A large number of shares are issuable upon conversion or exercise of our outstanding Notes, Warrants or other convertible securities.~~ The ~~conversion or exercise of these securities could result in the substantial dilution of your investment in terms of your percentage ownership in our company. The sale of~~Cryptocurrency Industry has recently experienced a large amount of Common Stock received upon conversion or exercise of these securities on the public market, or the perception that such sales could occur, could substantially depress the prevailing market prices for our shares.downturn

As of June 30, 2022, the price of Bitcoin was down by over 50% from the beginning of the year and many businesses in this industry have been impacted by this downturn. The fall in the Bitcoin price directly affects our ability to generate revenue. Further, volatility in energy prices has meant that the major input cost to generate Bitcoin has increased. In July ~~14, 2021 there were outstanding presently convertible or exercisable (i) Notes entitling the holders thereof to convert into 63,626,903 shares~~of 2022, Celsius Networks, LLC and Celsius Mining LLC, filed for Chapter 11 bankruptcy. Celsius Mining LLC is one of our ~~common stock, (ii) warrants entitling the holders thereof~~significant hosting customers and its failure to ~~purchase 16,960,982 shares of Common Stock at an exercise price of $0.001 per share, (iii) 178 Shares of~~pay (or pay timely) amounts it owes to us when due could have a material adverse effect on our Series A Preferred Stock, which are convertible into 178,000 share of Common Stock, and (iv) an obligation to issue 40,000,000 shares in Mawson in the form of performance-based restricted share units in accordance with the BIA. In the event of the exercise or conversion of these securities, you could suffer substantial dilution of your investment in terms of your percentage ownership in our company. In addition, the holders of such securities may sell shares in tandem with their exercise of those securities to finance that exercise, which could further depress the market price of the Common Stock.financial situation.

~~The concentration~~Inflation in the global economy could negatively impact our business and results of operations.

General inflation in the ~~capital stock ownership with~~United States and around the world has risen to levels not experienced in recent decades. General inflation, including rising prices for energy, metals, components, and other inputs as well as rising wages negatively impact our ~~insiders will likely limit~~business by increasing our operating costs. As a result of inflation, we have experienced and may continue to experience, cost increases. Although we may take measures to mitigate the ~~ability~~impact of this inflation, if these measures are not effective, our ~~stockholders to influence corporate matters.~~business, financial condition, results of operations, and liquidity could be materially adversely affected. Even if such measures are effective, there could be a difference between the timing of when these beneficial actions impact our results of operations and when the cost of inflation is incurred.

Our business could be harmed by prolonged power and internet outages, shortages, or capacity constraints.

AsOur operations require a significant amount of ~~July 14, 2021,~~electrical power and access to high-speed internet to be successful. If we are unable to secure sufficient electrical power, or if we lose internet access for a prolonged period, we may be required to reduce our ~~executive officers, directors, five percent~~operations or ~~greater stockholders,~~cease them altogether. If this occurs, our business and ~~their respective affiliated entities in the aggregate beneficially own approximately 17%~~results of our Common Stock. As a result of such ownership, despite the fact that each one of them, to our knowledge, will continue to operate independently from the other with respect to their respective shareholding of the Company’s shares, these stockholders, if acting together, will have control over matters that require approval by our stockholders, including the election of directorsoperations may be materially and approval of significant corporate transactions. Corporate actions might be taken even if other stockholders oppose them. This concentration of ownership might also have the effect of delaying or preventing a corporate transaction that other stockholders may view as beneficial, including preventing changes in control or in management.adversely affected.

~~The public trading market~~We are subject to risks associated with our need for ~~our Common Stock is volatile and may result in higher spreads in stock prices, which may limit the ability of our investors to sell their shares at a profit, if at all.~~significant electrical power.

Our ~~Common Stock trades~~operations have required significant amounts of electrical power, and, as we continue to expand our mining fleet, we anticipate our demand for electrical power will continue to grow. If we are unable to continue to obtain sufficient electrical power on a cost-effective basis, we may not realize the anticipated benefits of our significant capital investments.

Additionally, our operations could be materially adversely affected by prolonged power outages. Therefore, we may have to reduce or cease our operations in the ~~over-the-counter market~~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 is quoted on the OTCQB. The over-the-counter market for securities has historically experienced extreme price and volume fluctuations during certain periods. These broad market fluctuations may adversely affect the market priceresults of our Common Stock and result in substantial losses to its investors. In addition, the spreads on stock traded through the over-the-counter market are generally unregulated and higher than on stock exchanges, which mean that the difference between the price at which sharesoperations could be ~~purchased by investors in the over-the-counter market compared to the price at which they could be subsequently sold would be greater than on these exchanges. Significant spreads between the bid~~materially and asked prices of the stock could continue during any period in which a sufficient volume of trading is unavailable or if the stock is quoted by an insignificant number of market makers. Historically our trading volume has been insufficient to significantly reduce this spread and has had a limited number of market makers sufficient to affect this spread. These higher spreads could adversely affect investors who purchase the shares at the higher price at which the shares are sold, but subsequently sell the shares at the lower bid prices quoted by the brokers. Unless the bid price for the stock exceeds the price paid for the shares by the investor, plus brokerage commissions or charges, the investor could lose money on the sale. For higher spreads such as those on over-the-counter stocks, this is likely a much greater percentage of the price of the stock than for exchange listed stocks. There is no assurance that at the time an investor in our Common Stock wishes to sell the shares, the bid price will have sufficiently increased to create a profit on the sale.affected.

~~An active market for~~We may need to raise additional capital to continue our ~~Common Stock may not develop.~~operations and execute our business strategy.

~~Although our Common Stock trades on the OTCQB,~~We expect that we ~~do not have an active trading market and an active trading market~~ may ~~not develop. If an active trading market does not develop, or is not sustained, it may be difficult for investors to sell their shares without depressing the market price~~incur net losses for the ~~shares or at all. Further, an inactive market may also impair~~foreseeable future. Accordingly, our ability to continue as a going concern and execute our business strategy depends on our ability to raise additional capital ~~by selling shares~~through equity, debt or structured financings, collaborations and strategic alliances or other similar types of ~~our Common Stock and may impair our ability to enter into strategic partnerships or acquire companies or products by using our shares of Common Stock as consideration.~~

~~Our Common Stock is thinly traded, so you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.~~arrangements.

Our ~~Common Stock has historically been sporadically traded~~capital needs have depended on, and will continue to depend on, many factors that are highly variable and difficult to predict, including:

	●	the rate of growth we choose to pursue;

	●	the cost of energy;

	●	the cost of key supplies, materials and equipment; and

●

the price of Bitcoin;

At June 30, 2022, our cash and cash equivalents were approximately $2.50 million and our accumulated deficit was approximately $82.95 million. We incurred a net loss of approximately $13.98 million for the ~~OTCQB, meaning that the number of persons interested in purchasing our shares at or near ask prices at any given time~~six-month period ended June 30, 2022. We may be relatively small or non-existent. This situation is attributable to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchasenever become profitable. Based on some of our ~~shares until such time as~~current operating plan estimates, we ~~became more seasoned~~have sufficient cash to satisfy our working capital needs and ~~viable. As~~other liquidity requirements over the next 12 months from the date of issuance of the accompanying consolidated financial statements. We may need to raise additional capital or significantly curtail our planned operations to remain a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our Common Stock will develop or be sustained, or that current trading levels will be sustained.going concern.

~~Risks Relating~~Additional capital may not be available to us, or even if it is, the ~~LO2A Business~~

~~With respect~~cost of such capital may be high. We may be forced to ~~risks relating~~obtain additional capital when our stock price or trading volume or both are low, or when the general market for cryptocurrency companies is weak. Raising capital under any of these or similar scenarios, if we can raise any at all, may lead to significant dilution to our LO2A Business, please see the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, which is incorporated by reference into this information statement. See “Where You Can Find More Information.” However, since the is completed, many of these risks will be (i) primarily related to the likelihood of our ability to successfully enter into any LO2A Transaction and, if we do, the terms thereof, which will mostly affect the holders of CVRs, and (ii) immaterial to the operation of the post-closing combined company.existing stockholders.

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

On June 5, 2021, the Company issued 8,250,000 warrants to W Capital Advisors Pty Ltd to satisfy an outstanding obligation of Mawson AU, under the terms of the Cosmos Transaction Bid Implementation Agreement. These warrants were issued with a $0.0001 exercise price.

During the three month period ended June 30, 2022, in addition to those sales previously disclosed in our filings with the SEC, we have issued and sold the following securities without registration under the Securities Act:

On June 2, 2021, the Company issued 3,475,970 shares to a combination of Mawson AU shareholders, and service providers to Mawson AU, who were eligible for shares on December 31, 2021. The shares were issued under the exemption provided by Regulation S. We did not receive any proceeds from these issuances

On May 3, 2022, the Company issued 5,000 shares of its common stock to a service provider in exchange for $27,150 of services. The issuance of the common stock 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, the investor was an accredited investor, the investor took the securities for investment and not resale and the Company took appropriate measures to restrict the transfer of the securities.

On June 15, 2021, the final 48,983,148 shares under our Bid Implementation Agreement with Cosmos Capital Limited (now known as Mawson Infrastructure Group Pty Ltd) were issued to Cosmos Capital Limited (now known as Mawson Infrastructure Group Ptd Ltd) shareholders. The shares were issued under the exemption provided by Regulation S. We did not receive any proceeds from this issuance.

On August 2, 2021, we issued 55,555 of our common stock to Kyle Hoffman (calculated as USD50,000 worth of common stock at a stock price of USD0.90) pursuant to our Membership Interest Purchase Agreement with Mr. Hoffman as partial consideration for our purchase of Mr. Hoffman’s equity interest of 25% in Luna Squares LLC. The shares were issued under the exemption provided by Rule 4(a)(2) of the Securities Act of 1933, as amended. We did not receive any proceeds from the issuance of these shares.

On August 2, 2021, we issued 111,111 of our common stock to TRS Ventures LLC (calculated as USD 100,000 worth of common stock at a stock price of USD 0.90) pursuant to our Membership Interest Purchase Agreement with TRS Ventures LLC as partial consideration for our purchase of TRS Ventures LLC’s equity interest of 15% in Luna Squares LLC The shares were issued under the exemption provided by Rule 4(a)(2) of the Securities Act of 1933, as amended. We did not receive any proceeds from the issuance of these shares.

On August 10, 2021, we issued 46,139,019 shares of our common stock at a purchase price of $0.80 per shares for aggregate gross proceeds of $36,911,215 in a private placement to certain accredited investors pursuant to Securities Purchase Agreements dated August 6, 2021. The shares were issued under the exemption provided by Rule 506 of Regulation D of the Securities Act of 1933, as amended and the proceeds will be used to expand Mawson’s installed petahash (PH), via the acquisition of additional ASIC bitcoin mining hardware, CAPEX for our facilities and additional power infrastructure.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None

Item 6. Exhibits

10.1*2.1		Bid Implementation Agreement between Wize Pharma, Inc. and Cosmos Capital Limited, dated December 30, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 5, 2021)
2.2		Deed of Amendment, dated January 18, 2021, of the Bid Implementation Agreement between Wize Pharma, Inc. and Cosmos Capital Limited, dated December 30, 2020 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on January 19, 2021)
3.1		Certificate of Incorporation (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on April 5, 2012)
3.2		Certificate of Amendment to Certificate of Incorporation (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on July 18, 2013)
3.3		Certificate of Amendment to Certificate of Incorporation dated November 15, 2017 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on November 21, 2017)
3.4		Certificate of Amendment to Certificate of Incorporation dated March 1, 2018 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on March 5, 2018)
3.5		Certificate of Amendment to Certificate of Incorporation dated March 17, 2021 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on March 23, 2021)
3.6		Certificate of Amendment to Certificate of Incorporation dated June 9, 2021 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on June 14, 2021)
3.7		Certificate of Amendment to Certificate of Incorporation dated August 11, 2021 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on August 16, 2021)
3.8		Certificate of Registration of a Company of Cosmos Capital Limited ACN 636 458 912 (Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No. 333-256947) filed with the SEC on June 9, 2021)
3.9		Constitution of Cosmos Capital Limited (Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No. 333-256947) filed with the SEC on June 9, 2021)
3.10		Bylaws (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on May 10, 2013)
4.1		Form of ~~Securities Purchase Agreement dated August 6, 2021~~Indenture filed as Exhibit 4.1 to the Company’s Registration Statement on Form S-3 filed April 1, 2022
~~31.1~~31.1		Certification of Principal Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
32**		Certifications of Principal Executive Officer and Principal Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
99.1*		Press Release
99.2*		Investor Presentation
101		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2021,~~2022, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, (ii) Consolidated Statements of Operations for the three and six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, (iii) Consolidated Statements of Cash Flows for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, and (iv) Notes to Consolidated Financial Statements
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*	Filed herewith.

**	Furnished herewith.

SIGNATURES

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

	Mawson Infrastructure Group Inc.

Date: August ~~10, 2021~~22, 2022	By:	/~~s /~~s/ James Manning
		James Manning, Chief Executive Officer
		(Principal Executive Officer)

Date: August ~~10, 2021~~22, 2022	By:	/s/ ~~Or Eisenberg~~Ariel Sivikofsky
		~~Or Eisenberg,~~ Chief Financial Officer
		(Principal Financial and Accounting Officer)

3940

iso4217:USD xbrli:shares

	Series A Preferred Stock (#)		Series A Preferred Stock ($)		Common Shares (#)		Common Shares ($)		Common Stock (#)		Common Stock ($)		Share Subscription Receivable			Additional Paid-in-Capital		Accumulated Other Comprehensive Income/(Loss)			Accumulated Deficit			Total Mawson Stockholders’ Equity			Non-controlling interest			Total Equity

Balance as of March 31, 2021		178		0		-		-		486,439,469		486,440		(16,690	)		80,638,319		(5,957,154	)		(44,911,673	)		30,239,242			16,069			30,255,311
Issuance of common stock (@A$8.75)		-		-		-		-		2,000		13,173		-			-		42,502			-			55,675			-			55,675
Share based payment (@A$8.75)		-		-		-		-		3,429		22,582		-			-		-			-			22,582			-			22,582
Share based payments W Capital		-		-		-		-		8,250,000		5,535,900		-			-		-			-			5,535,900			-			5,535,900
Comprehensive loss		-		-		-		-		-		-		-			-		(123,618	)		(6,196,785	)		(6,320,403	)		(108,937	)		(6,429,340	)

Balance as of June 30, 2021		178		0		-		-		494,694,898		6,058,095		(16,690	)		80,638,319		(6,038,270	)		(51,108,458	)		29,532,996			(92,868	)		29,440,128

	Series A Preferred Stock (#)		Common Shares (#)			Common Stock (#)		Common Stock ($)		Share Subscription Receivable			Additional Paid-in-Capital			Accumulated Other Comprehensive Income/(Loss)			Accumulated Deficit			Total Mawson Stockholders’ Equity			Non-controlling interest			Total Equity

Balance as of December 31, 2020		-		7,539,275			-		-		(16,690	)		15,298,926			(1,341,826	)		(6,348,465	)		7,591,945			(27,066	)		7,564,879
Exchange of common stock of Cosmos Capital Limited for common stock of Wize Pharma Inc., adjusted to reflect the Exchange Ratio		178		(7,539,275	)		428,270,616		428,271		-						-			-			428,271			-			428,271
Acquisition of Wize Pharma Inc.		-		-			33,052,951		33,053		-			(5,436,541	)		-			-			(5,403,488	)		-			(5,403,488	)
Issuance of Common stock of Mawson Infrastructure Group, Inc., in a PIPE transaction upon the consummation of the Business Combination		-		-			25,000,000		25,000		-			2,975,000			-			-			3,000,000			-			3,000,000
Issuance of 28,012,364 mandatorily convertible notes by Cosmos Capital, net of $1,268,093 of offering costs		-		-			-		-		-			20,441,761			-			-			20,441,761			-			20,441,761
Issuance of 8,710,982 warrants over Common Stock of Mawson Infrastructure Group, Inc., at the Common Stock price of $0.79		-		-			-		-		-			6,881,676			-			-			6,881,676			-			6,881,676
Exercise of 115,902 warrants for Mawson Infrastructure Group, Inc. Common Stock		-		-			115,902		116		-						-			-			116			-			116
Fair value of IPR&D acquired, net of Business Combination transaction costs		-		-			-		-		-			24,765,831			-			-			24,765,831			-			24,765,831
Issuance of RSUs and stock options		-		-			-		-		-			10,270,803			-			-			10,270,803			-			10,270,803
Fair value adjustment of LO2A intellectual property revenue sharing obligation		-		-			-		-		-			5,440,863			-			-			5,440,863			-			5,440,863

Issuance of common stock (@A$8.75)		-		-			2,000		13,173		-			-			42,502			-			55,675			-			55,675
Share based payment (@A$8.75)		-		-			3,429		22,582		-			-			-			-			22,582			-			22,582
Share based payments W Capital		-		-			8,250,000		5,535,900		-			-			-			-			5,535,900			-			5,535,900
Comprehensive loss		-		-			-		-		-			-			(4,738,946	)		(44,759,993	)		(49,498,939	)		(65,802	)		(49,564,741	)

Balance as of June 30, 2021		178		-			494,694,898		6,058,095		(16,690	)		80,638,319			(6,038,270	)		(51,108,458	)		29,532,996			(92,868	)		29,440,128

BTC Held	Three months to June 30, 2021			Six months to June 30, 2021
Opening Digital currencies		10.29			0.52
Additions of digital currencies		127.00			250.22
Sale of digital currencies		(137.28	)		(250.74	)
Digital currencies at June 30, 2021		0.01			0.01

	June 30,			December 31,
	2021			2020
Deferred income tax liabilities:
Depreciation	$	(2,613,910	)	$	(1,116,350	)
Transaction gains and losses		(91,639	)		(129,483	)
Other deferred tax liability		-			(775	)
Net deferred tax liability		(2,705,549	)		(1,246,608	)
Deferred income tax assets:
Net operating loss carryforwards		4,984,048			2,782,861
Transaction gains and losses		38,171			93,874
Transaction costs		-			3,688
Total deferred tax assets		5,022,219			2,880,423
Valuation allowance		(2,316,670	)		(1,633,815	)
Net deferred tax assets	$	-		$	-

As of June 30, 2021
	Existing Operations online		Order and Purchase Agreements		Cumulative Fleet Fully Deployed
Total miners online	4,649		-		4,649
Total miners in Transit		-		1,426		1,426
Total miners on order		-		9,508		9,508
Total miners in storage		2,749				2,749
Total miners		7,398		10,934		18,332
Total theoretical production hashrate		476 PH/s		984 PH/s		1460 PH/s