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 ~~September 30, 2021~~March 31, 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 001-40849

Mawson Infrastructure Group Inc.

(Exact name of registrant as specified in its charter)

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

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

(Address of principal executive offices, including zip code)

+61 2 8624 6130

(Registrant’s telephone number, including area code)

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

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

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

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

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

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

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

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

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

As of ~~November 15, 2021,~~May 11, 2022, the issuer had a total of ~~69,001,071~~72,486,295 shares of common stock, par value ~~$.001~~$0.001 per share, outstanding.

MAWSON INFRASTRUCTURE GROUP INC.

FORM 10-Q

FOR THE QUARTER ENDED ~~September 30, 2021~~March 31, 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	16	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
3.	Quantitative and Qualitative Disclosures about Market Risks	25	Quantitative and Qualitative Disclosures about Market Risks	28
4.	Controls and Procedures	25	Controls and Procedures	28

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

1.	Legal Proceedings	26	Legal Proceedings	30
1A.	Risk Factors	26	Risk Factors	30
2.	Unregistered Sales of Equity Securities and Use of Proceeds	27	Unregistered Sales of Equity Securities and Use of Proceeds	30
3.	Defaults Upon Senior Securities	27	Defaults Upon Senior Securities	30
4.	Mine Safety Disclosure	27	Mine Safety Disclosure	30
5.	Other Information	27	Other Information	30
6.	Exhibits	28	Exhibits	31
	Signatures	29	Signatures	32

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

	September 30, 2021			December 31, 2020			March 31,			December 31,
	(unaudited)						2022			2021
ASSETS							(unaudited)
Current assets:
Cash and cash equivalents	$	32,383,397		$	1,112,811		$	5,804,858		$	5,467,273
Prepaid expenses		624,904			11,500			1,969,969			332,154
Trade and other receivables		19,005,043			615,145			5,044,154			5,606,780
Cryptocurrencies		75,271			15,061			-			40,800
Total current assets		52,088,615			1,754,517			12,818,981			11,447,007
Property and equipment, net		27,471,844			7,015,285			102,532,708			76,936,850
Equipment deposits		33,195,637			-			41,722,172			51,369,216
Equity accounted investments		90,457			-
Marketable securities								336,897			326,801
Security deposits		1,650,415			969,423			3,836,426			1,246,236
Operating lease right-of-use asset		3,285,199			41,703			4,722,973			3,968,262
Trademarks		-			15,813

TOTAL ASSETS	$	117,782,167		$	9,796,741
Total assets							$	165,970,157		$	145,294,372

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade and other payables	$	3,134,868		$	1,882,247		$	13,995,302		$	7,746,988
Lease liability		3,339,019			44,637
Current portion of operating lease liability								1,410,192			1,222,382
Current portion of finance lease liability								28,962			8,105
Borrowings		469,082			290,978			16,036,514			11,095,388
Total current liabilities		6,942,969			2,217,862			31,470,970			20,072,863
Paycheck protection program loan		14,058			14,000
TOTAL LIABILITIES		6,957,027			2,231,862
Operating lease liability, net of current portion								3,520,623			2,962,765
Finance lease liability, net of current portion								106,159			38,764
Long-term borrowings								26,943,283			7,639,391
Total liabilities								62,041,035			30,713,783

Common stock (120,000,000 authorized, 69,001,071 issued and outstanding $0.001 par value shares). Series A preferred stock (1,000,000 authorized shares; nil issued and outstanding at 30 September 2021)

Contingencies
Commitments and Contingencies (note 9)								-			-

Shareholders’ equity:
Additional paid-in capital		165,769,775			35,110,000
Additional paid-in capital; Common stock (120,000,000 authorized, 71,585,295 issued and outstanding $0.001 par value shares). Series A preferred stock (1,000,000 authorized shares; nil issued and outstanding as at March 31, 2022)								186,724,867			186,389,568
Share subscription receivable		-			(16,690	)		-			-
Accumulated other comprehensive income (loss)		(850,427	)		(1,341,826	)		62,214			(521,094	)
Accumulated deficit		(53,611,944	)		(26,159,539	)		(82,458,914	)		(71,123,259	)
TOTAL SHAREHOLDERS’ EQUITY		111,307,404			7,591,945
Total stockholders’ equity								104,328,167			114,745,215
Non-controlling interest		(482,264	)		(27,066	)		(399,045	)		(164,626	)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	117,782,167		$	9,796,741
Total liabilities and stockholders’ equity							$	165,970,157		$	145,294,372

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
September 30, For the nine months ended
September 30,
2021 2020 2021 2020
Revenues:
Cryptocurrency mining revenue 10,151,579 966,574 21,029,492 2,850,086
Hosting Co Location revenue 796,207 - 1,020,424 -
Sale of crypto currency mining equipment - - 2,157,651 -
Total revenues 10,947,786 966,574 24,207,567 2,850,086
Operating cost and expenses:
Cost of revenues 2,499,837 922,502 6,218,145 2,210,113
Selling, general and administrative 5,510,083 745,243 11,334,551 1,743,353
LO2A write backs - - 23,963,050 399
Share based payments 1,425,000 - 21,779,898 -
Depreciation and amortization 4,129,862 2,592,352 7,977,800 5,047,917
Total operating expenses 13,564,782 4,260,097 71,273,444 9,001,782
Loss from operations (2,616,996 ) (3,293,523 ) (47,065,877 ) (6,151,696 )
Other income (expense):
Realized gain/(losses) on foreign currency transactions (8,625 ) 754 838,230 (288 )
Unrealized gain/(losses) on foreign currency remeasurement (351,562 ) (255,471 ) (1,920,879 ) (88,502 )
Share of net profit/(loss) of associates accounted for using the equity method (153,123 ) - (277,817 ) -
Other income 32,431 - 502,673 108,895
Loss before income taxes (3,097,875 ) (3,548,240 ) (47,923,670 ) (6,131,591 )
Income tax expenses - - - -
Net Loss (3,097,875 ) (3,548,240 ) (47,923,670 ) (6,131,591 )

Loss attributable to Non-Controlling interest (594,389 ) - (660,191 ) -
Net Loss attributed to Mawson Infrastructure Group shareholders (2,503,486 ) (3,548,240 ) (47,263,479 ) (6,131,591 )

Net Loss per share, basic & diluted $ (0.042 ) $ (0.494 ) $ (0.275 ) $ (0.893 )
Weighted average number of shares outstanding 502,642,831 6,847,465 472,987,017 6,847,465

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

Net Loss attributed to Mawson Infrastructure Group shareholders		(11,335,655	)		(38,563,208	)

Net Loss per share, basic & diluted	$	(0.16	)	$	(0.87	)
Weighted average number of shares outstanding		71,129,676			44,266,478

See Accompanying Notes to Unaudited Condensed Interim Consolidated Financial Statements

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

For the Three Months Ended ~~September 30, 2021~~March 31, 2022

	Common Stock (#)		Common Stock ($)		Additional Paid-in- Capital		Reserves			Accumulated Other Comprehensive Income/(Loss)			Accumulated Deficit			Total Mawson Stockholders’ Equity			Non- controlling interest			Total Equity
Balance as of December 31, 2021		70,746,508		611,504		165,600,831		20,177,233			(521,094	)		(71,123,259	)		114,745,215			(164,626	)		114,580,589
Issuance of common stock, stock based compensation		13,787		15		107,734		-			-			-			107,749			-			107,749
Issuance of warrants		-		-		-		166,833			-			-			166,833			-			166,833
Issuance of RSU's and stock options		825,000		825		1,956,116		(1,896,224	)		-			-			60,717			-			60,717

Net loss		-		-		-		-			-			(11,335,655	)		(11,335,655	)		-			(11,335,655	)
Other comprehensive income		-		-		-		-			583,308			-			583,308			-			583,308
Non-controlling interest		-		-		-		-			-			-			-			(234,419	)		(234,419	)
Balance as of March 31, 2022		71,585,295		612,344		167,664,681		18,447,842			62,214			(82,458,914	)		104,328,167			(399,045	)		103,929,122

~~For the Three Months Ended September 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 June 31, 2020 - - 6,847,465 10,832,057 - - - - (308,605 ) (4,030,443 ) 6,493,009 - 6,493,009
Issuance of common stock (@A$8.75) - - 331,368 - - - - 1,768,250 - - 1,768,250 - 1,768,250
Comprehensive gain / (loss) - - - - - - - - 319,501 (3,548,240 ) (3,228,739 - (3,228,739 )

Balance as of September 30, 2020 - - 7,178,833 10,832,057 - - - 1,768,250 10,896 (7,578,683 ) 5,032,520 - 5,032,520

For the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 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 December 31, 2020 - - - 7,539,275 - - (16,690 ) 15,298,926 (1,341,826 ) (6,348,465 ) 15,131,220 (27,066 ) 15,104,154
Exchange of stock and Reverse recapitalisation of Wize Pharma Inc 178 - - (7,539,275 ) 51,188,168 511,882 - (5,436,541 ) - - (12,463,934 ) - (12,463,934 )
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 warrants - - - - - - - 6,881,676 - - 6,881,676 - 6,881,676
Issuance of common stock, net of offering costs / at-the market offerings - - - 30,613 8,591,948 8,592 - 74,908,585 - - 74,947,790 - 74,947,790
Fair value of IPR&D acquired, net of Business Combination transaction costs - - - - - - - 24,765,831 - - 24,765,831 - 24,765,831
Fair value adjustment of LO2A intellectual property revenue sharing obligation - - - - - - - 5,440,863 - - 5,440,863 - 5,440,863
Issuance of common stock, stock based compensation - - - (30,613 ) 212,320 5,540,023 - 197,778 - - 5,707,188 - 5,707,188
Issuance of common stock, settlement of convertible note interest - - - - 86,959 8,691 - 854,778 - - 863,469 - 863,469
Issuance of RSU's and stock options - - - - - - - 13,254,121 - - 13,254,121 - 13,254,121
Issuance of common stock, conversion of Series A preferred stock (178 ) - - - 17,800 - - - - - - - -
Issuance of common stock, on conversion of convertible notes - - - - 6,362,690 63,627 - - - - 63,627 - 63,627
Issuance of common stock, exercise of warrants - - - - 11,590 116 - - - - 116 - 116
Issuance of stock by subsidiary to non-controlling interest - - - - - - - 163,039 - - 163,039 204,993 368,032
Other - - - - 29,596 (12,272 ) 16,690 18,633 - - 23,051 - 23,051
Net loss - - - - - - - - - (47,263,479 ) (47,263,479 ) - (47,263,479 )
Other comprehensive income - - - - - - - - 491,399 - 491,399 - 491,399
Non-controlling interest - - - - - - - - - - - (660,191 ) (660,191 )
Balance as of September 30, 2021 - - - - 69,001,071 6,145,659 - 159,624,116 (850,427 ) (53,611,944 ) 111,307,404 (482,264 ) 110,825,140

~~For the Nine Months Ended September 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 1,738,508 - - - - - - 1,738,508 - 1,738,508
Issuance of common stock, net of offering costs (@A$8.75) - - 331,368 - - - - 1,768,250 - - 1,768,250 - 1,768,250
Comprehensive gain / (loss) - - - - - - - 3,401,739 227,899 (6,131,591 ) (5,903,692 ) - (5,903,692 )

Balance as of September 30, 2020 - - 7,178,833 10,832,057 - - - 1,768,250 10,896 (7,578,683 ) 5,032,520 - 5,032,520

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

Balance as of March 31, 2021		178		-		-			48,673,357		486,440		(16,690	)		82,914,768			17,534,625		(5,957,154	)		(64,722,747	)		30,239,242			16,069			30,255,311

~~Share and earnings per share information for the year 2021 presented in the Statement of Changes in Equity reflect the 10-for-1 stock split.~~

See Accompanying Notes to Unaudited Condensed Interim Consolidated Financial Statements

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,						For the three months ended March 31,
	2021			2020			2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		(47,923,670	)		(6,131,591	)	$	(11,570,074	)	$	(38,520,073	)
Adjustments to reconcile net loss to net cash used in operating activities:		-			-
Depreciation and amortization		7,977,800			5,047,917			13,804,492			1,314,899
LO2A write offs		23,963,050			-			-			23,963,050
Operating lease expense								367,135			-
Foreign exchange gain								-			1,690,303
Share based payments								390,609			14,795,403
Gain on disposal of fixed assets								-			127,608
Interest expense								249,861			222,463
Investment income		(33,153	)		-			-			(563,771	)
Share of loss of equity accounted investments		277,817			-
Interest expense		1,077,599			1,607
Interest paid		(937,255	)		-
Share based payments		21,779,898			-
Write-off of fixed assets		307,100			-
Unrealized gain (losses) on foreign currency remeasurement		1,920,879			88,502
Change in assets and liabilities
Prepaid expenses		(613,404	)		25,530
Trade and other receivables		203,926			49,186			562,626			(656,732	)
Cryptocurrencies		(60,210	)		(219	)
Security deposits		(680,992	)		(805	)
Other current assets								(4,187,204	)		(796,044	)
Trade and other payables		1,077,892			174,418			6,248,314			294,586
Net cash provided by operating activities		8,337,277			(745,455	)		5,865,759			1,871,692
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(30,888,288	)		(2,172,595	)
Net payment for the purchase of property and equipment								(6,030,740	)		(2,960,145	)
Investment in financial assets								-			(380,100	)
Payment of fixed asset deposits		(33,195,637	)		-			(23,630,470	)		(18,045,720	)
Proceeds from sales of property and equipment		2,157,651			-
Investment in financial assets		(335,122	)		(7,118	)
Net cash used in investing activities		(62,261,396	)		(2,179,713	)		(29,661,210	)		(21,385,965	)
CASH FLOWS FROM FINANCING ACTIVITES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common share issuances		70,917,563			3,783,919			50,628			1,298,402
Unit redemptions		-			-
Proceeds from convertible notes		20,301,427			-			-			21,487,391
Payments of capital issuance costs		(5,212,209	)		-			-			(2,229,096	)
Proceeds from borrowings		1,423,088			302,881			27,055,524			1,057,383
Advances made to external companies		(42,210	)		-			-			(37,076	)
Repayment of lease liabilities								(379,026	)		-
Payments of borrowings		(1,361,233	)		(250,130	)		(3,242,194	)		(291,310	)
Net cash provided by financing activities		86,026,426			3,836,670			23,484,932			21,285,694
Effect of exchange rate changes on cash and cash equivalents		(831,720	)		23,915			648,104			501,045
Net increase in cash and cash equivalents		31,270,587			935,417			337,585			2,272,466
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		32,383,397			1,514,695		$	5,804,858		$	3,385,277

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”), formerly known as Wize Pharma, Inc, and before that, known as OphthaliX Inc., was incorporated in the State of Delaware on ~~April 2,~~February 10, 2012. ~~Prior to that, we were originally incorporated under the name Bridge Capital.com, Inc on December 10, 1999.~~

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~~ Luna Squares LLC, ~~(formerly known as Innovative~~BITTD Pty Ltd, 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 subsidiaries of Mawson however these companies have not been consolidated into the financial statements as these are subject to contingent value rights (“CVR”), refer to note 9.

These consolidated, condensed interim financial statements should be read in conjunction with the audited consolidated financial statements of Mawson and subsidiaries as of December 31, 2021, and the notes thereto, included in the Company’s Annual Report on Form 10-K filed March 21, 2022. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. 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 Company’s Quarterly Report on Form 10-Q filed on May 19, 2021, under Note 2: Reverse asset acquisition.periods presented.

Mawson, through its subsidiary Mawson AU, 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 ~~September 30,~~March 31, 2021 Mawson AU currently owns and has ordered ~~35,784 Miners~~39,225 Application-Specific Integrated Circuit (“ASIC”) computers known as “Miners,” specifically focused on the SHA-256 algorithm, from a variety of manufacturers, including Bitmain Technology Holding Company (“Bitmain”), Canaan Creative (HK) Holdings Limited (“Canaan”) and Shenzhen MicroBT Electronics Technology Co., Ltd (“Whatsminer”). ~~As at September 30, 2021, the operational Miners produce up to 400 Petahash of computing power, with a total capacity upon deployment of all ordered equipment to produce up to a 3,062 Petahash.~~

Going Concern

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and basis of preparation

~~Pursuant to that certain Certificate of Amendment to the Certificate of Incorporation~~The accompanying consolidated financial statements of the Company ~~dated August 11, 2021, Mawson executed a 10-for-1 reverse stock split~~include the accounts of the Company and its ~~outstanding common stock~~wholly or majority owned and ~~reduced its authorized common stock to 120,000,000 shares, as set forth~~controlled subsidiaries. Intercompany investments, balances and transactions have been eliminated in consolidation. Non–controlling interests represents the minority equity investment in the Company’s ~~Current Report on Form 8-K/A filed August 16, 2021. Unless otherwise specified, all Mawson~~subsidiaries, plus the minority investors’ share ~~numbers in the Financial Statements and Notes in this Quarterly Report on Form 10-Q reflect post-reverse stock split numbers.~~

These consolidated, condensed interim financial statements should be read in conjunction with the audited consolidated financial statements for Cosmos Capital Limited (now known as Mawson Infrastructure Group Pty Ltd) and subsidiaries as of December 31, 2020, and the notes thereto, included in the Company’s Current Report on Form 8-K/A filed May 13, 2021. The results 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.

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 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~~Limited) prior to March 9, 2021, became the historical financial information of Mawson ~~Infrastructure Group Pty,~~AU, which have been consolidated into the financial statements of the Company. The consolidated results 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 the consolidation.

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,~~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 Report on Form 8-K/A~~10-K filed ~~May 13, 2021.~~March 21, 2022. There have been no changes to critical accounting policies in the three months period ended ~~September 30, 2021~~March 31, 2022, other than asthe reverse asset acquisition accounting policy which is no longer considered to be a ~~result of changes to operations as described below.~~critical accounting policy and has therefore been included in significant accounting policies.

Revenue Recognition – Digital asset mining revenue

~~Reverse Asset Acquisition~~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.

On March 9, 2021, the Company acquired 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 Quarterly Report on Form 10-Q filed on May 19, 2021. This transaction reverse asset acquisition and the associated impact is referred to as the Cosmos Transaction.

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

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

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

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

Property and equipment

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

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

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

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

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

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

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

Share based payments

~~Under~~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 ~~terms~~requisite service period based on the estimated grant-date fair value of the ~~Cosmos Transaction Bid Implementation Agreement,~~awards. The Company determines the ~~Company was required to make share~~grant date fair value of the options using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. These assumptions are the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility computes stock price volatility over expected terms based ~~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~~on its historical common stock trading prices. Risk–free interest rates are calculated based on 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.implied yield available on U. S. 10-year Treasury bond.

~~Share based payments expenses for the nine months ended September 30, 2021 and 2020 were $21.78 million and $nil~~ respectively. In the nine-month period to September 30, 2021, share based payments were largely attributable to HC Wainwright of $6.18 million, W Capital Warrants of $5.56 million and an accrual of $10.00 million for amounts related 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 share-based payments expenses were recorded in the 2020 period.

~~Equity accounted investments~~

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 September 30, 2021, Mawson held 20.06% of the equity in DSS, an Australian private company operating a blockchain based decentralized storage business, based on the IPFS protocol. This investment has been equity accounted, as Mawson has assessed that it has significant influence over the operations of the investee.

Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies to those previously disclosed in the consolidated financial statements as of December 31, 2020, and the notes thereto, included in 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. Revenue Recognition - Hosting Co-location revenue

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

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

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

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

Revenue Recognition - Sale of crypto currency mining equipment

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

Revenue recognition – equipment sales

~~In Q3 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, BITTD Pty Ltd and Cosmos Asset Management Pty Ltd whose functional currency is the Australian Dollar (“AUD”). The financial statements of foreign businesses have been translated into USD at current exchange rates for balance sheet items and at the average rate for income statement items. Translation of all the consolidated companies’ financial records into USD is required due to the reporting currency for these consolidated financial statements presented as USD and the functional currency of the parent company being that of AUD. Translation adjustments are accumulated in other comprehensive loss. Revenue and expense accounts are converted at prevailing rates throughout the year. Gains or losses on foreign currency transactions and translation adjustments in highly inflationary economies are recorded in income in the period in which they are incurred.

Segment Reporting:

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

Cash and cash equivalents:

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

Digital Currencies

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

~~An intangible asset with an indefinite useful life~~The following table presents the Company’s digital currency (Bitcoin) activities for the quarter ended March 31, 2022, and 2021:

	Three months to March 31,
	2022			2021

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

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

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

Equipment deposits:

Number of BTC Held Three months to
September 30,
2021 Nine months to
September 30,
2021
Opening Digital currencies held (represented as number of Bitcoin) 0.01 0.52
Additions of digital currencies (number of Bitcoin added) 251.52 501.74
Sale of digital currencies (number of Bitcoin sold) (249.77 ) (500.50 )
Digital currencies at September 30, 2021 (represented as a number of Bitcoin) 1.76 1.76

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

Reverse Asset Acquisition:

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

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

Fair value of financial instruments:

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

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

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

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

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

Concentrations of credit risk:

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

Legal and other contingencies:

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

~~Basic~~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 ~~Diluted Net Loss per Share~~lease liabilities within current liabilities and long-term liabilities on our consolidated balance sheet. ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company’s lease does not provide an implicit rate and therefore the Company measured the ROU asset and lease obligation based upon the present value of future minimum lease payments. The Company’s incremental borrowing rate is estimated based on risk-free discount rate for the lease, determined using a period comparable with that of the lease term and in a similar economic environment. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. The Company does not record leases on the consolidated balance sheets with a term of one year or less. The Company does not separate lease and non-lease components but rather account for each separate component as a single lease component for all underlying classes of assets. Where leases contain escalation clauses, rent abatements, or concessions, such as rent holidays and landlord or tenant incentives or allowances, the Company applies them in the determination of straight-line operating lease cost over the lease term.

Recent Accounting Pronouncements

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

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

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

NOTE 3 – BASIC AND DILUTED NET LOSS PER SHARE

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

Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share as at ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ are as follows:

	As at September 30,				As at March 31,
	2021		2020		2022		2021
Warrants to purchase common stock		4,222,910		-		6,994,189		871,098
Options to purchase common stock						753,459		-
Common stock due to former Cosmos shareholders to be issued pending approval of increase to authorized capital						-		5,055,811
Mandatory convertible notes to exchange common stock						-		6,362,690
Restricted Stock-Units (“RSUs”) issued under a management equity plan		4,000,000		-		1,819,287		4,000,000
		8,222,910		-		9,566,935		16,289,599

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

For the three months ended
September 30, For the nine months ended
September 30,
2021 2020 2021 2020
Net Loss attributable to common shareholders $ (3,097,875 ) $ (3,548,240 ) $ (47,923,670 ) $ (6,131,591 )

Denominator:
Weighted average common shares - basic and diluted 72,952,466 7,178,833 174,470,310 6,868,323

Loss per common share - basic and diluted $ (0.042 ) $ (0.494 ) $ (0.275 ) $ (0.893 )
For the three months ended
March 31,
2022 2021
Net Loss attributable to common shareholders $ (11,335,655 ) $ (38,563,208 )

Denominator:
Weighted average common shares - basic and diluted 71,129,676 44,266,478

Loss per common share - basic and diluted $ (0.16 ) $ (0.87 )

Comparative weighted average common shares have been revised by the ratio of Mawson AU to the Company shares exchanged in the reverse asset acquisition in March 2021. Pursuant to that certain Certificate of Amendment to the Certificate of Incorporation of the Company dated August 11, 2021, Mawson executed a 10-for-1 reverse stock split of its outstanding common stock and reduced its authorized common stock to 120,000,000 shares, as set forth in the Company’s Current Report on Form ~~8-K/A~~8-K filed August 16, 2021.
~~Recently Issued Accounting Pronouncements~~
For information with respect to recent accounting pronouncements, see Note 2 to the consolidated financial statements for Cosmos Capital Limited (now knows as Mawson Infrastructure Group Pty Ltd) and subsidiaries as of December 31, 2020, and the notes thereto, included in the Company’s Current Report on Form 8-K/A filed May 13, 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, 2021, ~~the~~ Cosmos Infrastructure LLC (“Infrastructure”) entered into a Long-Term Purchase Contract with Canaan Convey Co Ltd (“Canaan”) for the purchase of 11,760 next generation Avalon A1246 ASIC ~~Miners (Avalon).~~Miners. The average purchase price per unit is $2,889 for a total purchase price of $33,974,640 (the “Canaan Transaction”). ~~There will be~~The final shipment for contract was received during March 2022, there was a final adjustment to the purchase price ~~in the last delivery due in March 2022~~ based on the actual tera hash delivered, based on the agreed price per tera hash under the terms of the contract.
The ~~details of the Canaan Transaction were set out~~purchase price adjustment resulted in ~~our Quarterly Report on Form 10-Q filed on May 19, 2021. During the third quarter, the Company paid:~~
a) ~~$1,799,280 during July 2021 for 1,176 miners~~
b) ~~$1,693,440 during August 2021 for 1,176 miners~~
c) ~~$1,587,600 during September 2021 for 1,176 miners~~
As a ~~result of payments pursuant to the Canaan Transaction, Canaan delivered 2,944 Miners~~$2.2 million reduction in the 3 months ended September 30, 2021. The Company recognized these delivered assets as Property and Equipment on the consolidated balance sheet when the transfer of risk and title occurs for each shipment (i.e., the Miners have been delivered by Canaanpurchase price, this is due to ~~the agreed-upon port of loading~~be received in ~~China).~~cash from Canaan.

On August 9, 2021, Infrastructure entered into a second Long-Term Purchase Contract with Canaan for the purchase of 15,000 next generation Avalon A1246 ASIC ~~Miners (Avalon).~~Miners. The average purchase price per unit is $4,908 for a total purchase price of ~~$73,620,000 (the “2ND Canaan Transaction”).~~$73,620,000. There will be a final adjustment to the purchase price in the last delivery due in May 2022 based on the actual tera hash delivered, based on the agreed price per tera hash under the terms of the contract. As at March 31, 2022 the amount paid in relation to this contract is $54,180,000 of which 4,000 orders have been delivered during the quarter.

~~The details of the 2ND Canaan Transaction were set out in our Quarterly Report on Form 8-K filed August 9, 2021.~~ During the ~~third quarter the Company paid $14,724,000 as a deposit against the order.~~
~~As of September 30, 2021, approximately $34.63~~three months ended March 31, 2022, $23.63 million cash paid for ~~Miners~~equipment was recorded as a deposit on the balance sheet.

The Company’s depreciation and amortization expense for the three months ended September 30, 2021 and 2020 were $4.13m and $2.59m respectively. The Company’s depreciation and amortization expense for the nine months ended September 30, 2021 and 2020 were $7.98 million and $5.05 million respectively.NOTE 5 – LEASES

Luna Squares LLC leases a 16.35-acre lot in Georgia from the Development Authority of Washington County. The lease term was originally for 1 acre from May 1, 2020, until April 30, 2023. An amendment to the lease and exercise of option to lease four additional acres was signed and became effective February 23, 2021. A further amendment to the lease and exercise of option to lease was signed and became effective August 24, 2021. The Lease Amendment covers an additional 11.35 acres of the property, bringing the total to 16.35 acres under the lease. It also includes 5, 3-year extension options bringing the total lease period to run until 2038.
The Company leases the headquarters of its business operations at Level 5, 97 Pacific Highway, North Sydney NSW 2060 Australia, being 1,076 square feet of office space held under a license agreement.
The Company leases 6-acres of land in Pennsylvania which began in October 2021 for thirty-six months with the option to execute four additional three-year extensions.
On March 16, 2022, Luna Squares LLC entered into a lease with respect to a property in the City of Sharon, Mercer County, Pennsylvania with Vertua Property, Inc. (A related entity – refer to note 12 for details). The term of the lease is for 5 years, and has 2 options to extend for 5 years each.
Other than the foregoing leases, the Company does not lease any material assets. The Company believes that these offices and facilities are suitable and adequate for its operations as currently conducted and as currently foreseen. In the event additional or substitute offices and facilities are required, the Company believes that it could obtain such offices and facilities at commercially reasonable rates.

The Company’s lease costs recognized in the Consolidated Statements of Income and Comprehensive Loss consist of the following:
For the three months ended
March 31,
2022 2021

Operating lease charges ⁽¹⁾ $ 367,135 $ 11,223
Finance lease charges:
Amortization of right-of-use assets 4,302 -
Interest on lease obligations 1,478 -
$ 5,780 $ -
⁽¹⁾ Included in Selling, General & Administrative Expenses.
Operating
leases Finance
Leases

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

Operating cash flows from operating and finance leases $ 373,936 $ 5,090
Weighted-average remaining lease term – operating and finance leases (years) 3.42 1.52
Weighted-average discount rate – operating and leases (%) 8.0 % 2.6 %
NOTE 6 – PROPERTY AND EQUIPMENT
Property and equipment, net, consisted of the following:
March 31,
2022 December 31, 2021

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

The Company incurred depreciation and amortization expense in the amounts of $13,803,032 and $1,314,899 for the quarter ended March 31, 2022 and March 31, 2021, respectively. There were no impairment charges recognized for property and equipment for either the quarter ended March 31, 2022, or March 31, 2021. There were no disposals during the three months ended March 31, 2022.
The Company had additions of $39,400,349 during the three months ended March 31, 2022. This primarily consisted of $30,396,241 of Miners, $4,953,347 additions for MDC’s and $1,696,756 for plant and equipment.
NOTE 7 – INCOME TAXES
The Company's effective tax rates for the three months ended March 31, 2022 and 2021, were as follows:
For the three months ended
March 31,
2022 2021

Effective Tax Rate 0 % 0 %

The Company's effective tax rate is calculated by dividing total income tax expense by the sum of income before income tax expense and the net income attributable to noncontrolling interests. The Company has maintained a full valuation allowance for federal and the majority of its state jurisdictions.
NOTE 48 – STOCKHOLDERS EQUITY

Common Stock
~~On March 9, 2021, as a part~~TraDigital Marketing Group LLC was issued 5,000 shares of ~~closing~~common stock during January 2022 for consultancy services provided to the Cosmos Transaction, Mawson issued a total of 428,270,616 shares 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 ~~Company issued 3,475,970 shares to a combination~~terms of ~~Mawson AU shareholders, and service providers to Mawson AU, who were eligible for shares on 31 December 2021.~~
~~On June 15, 2021, the final 48,983,148 shares under~~ the Cosmos Transaction ~~were issued to Mawson AU shareholders.~~
~~On August 6, 2021,~~Bid Implementation Agreement the Company ~~finalized Securities Purchase Agreements (the “PIPE Agreements”) with certain accredited investors (the “PIPE Investors”)~~made share-based payments under an Incentive Compensation Program during September 2021 (refer to reverse acquisition accounting policy). ~~Pursuant to~~Within the PIPE Agreements, the Company agreed to sell to the PIPE Investors, and the PIPE Investors agreed to purchase from the Company, in a private placement, an aggregate of 46,164,019 shares of common stock for a purchase price of $0.80 per share giving rise to gross proceeds of $36,931,215.
On August 13, 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 and the notes thereto, pursuant to that certain Certificate of Amendment to the Certificate of Incorporation of the Company, dated August 11, 2021, included in the Company’s Current Report on Form 8-K/A filed August 11, 2021.
~~On August 18, 2021, Mawson performed a share conversion of the outstanding 178 shares of Series A Preferred Stock 17,800~~March 2022 quarter, five employees converted these into 825,000 shares of common stock of Mawson.

On August 30, 2021, Mawson issued an additional 62,500 (625,000 pre reverse stock split) shares of common stock for a purchase price of $8.00 per share ($0.80 per share pre reverse stock split) under the PIPE Agreements of August 6, 2021, resulting in an additional $500,000 of gross proceeds under the PIPE Agreements, taking the total raised to $37,431,215.
On September 28, 2021, Mawson Infrastructure Group Inc. (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) with H.C. Wainwright & Co., LLC, as representative (the “Representative”), of the sole underwriter (the “Underwriter”),During February 2022, Kyle Hoffman was paid $50,000 in ~~connection with the Company’s previously announced public offering (the “Offering”) of 3,913,044~~ shares ~~(the “Firm Shares”)~~ of the Company’s common stock $0.001 par value per share (the “Common Stock”) and accompanying 3-year warrants to purchase up to 1,956,522 shares of Common Stock with an exercise price of $13.80 (the “Firm Warrants”), at a public offering price of $11.50 per share. Under the terms of the Underwriting Agreement, the Company granted the Underwriter an option, exercisable for 30 days, to purchase up to an additional 586,956 shares of Common Stock at the public offering price, less the underwriting discount and commissions (the “Option Shares,” and together with the Firm Shares, the “Shares”) and 293,478 accompanying warrants (the “Option Warrants,” and together with the Firm Warrants, the “Warrants”). On September 28, 2021, the Representative gave us notice of its exercise of its option to purchase 293,478 Option Warrants for approximately an additional $5,870. The closing of the Offering occurred on October 1, 2021. The net proceeds to the Company from the Offering (including the sale of additional Option Warrants), excluding any exercise by the Underwriters of their option to purchase any of the Option Shares, were approximately $41,234,050, after deducting underwriter fees and estimated offering expenses payable by us. The Company intends to use the net proceeds from the Offering for working capital and general corporate purposes.

~~Restricted Stock~~
~~As of September 30, 2021, 17,628,737 of the 48,072,974 shares of common stock issued~~ as part of the ~~compensation of Cosmos Transaction are restricted~~contingent consideration for the Membership Interest Purchase Agreement to acquire shares in ~~trading under the Restricted Stock Agreement with each shareholder until December 31, 2021.~~Luna Squares LLC.

~~Series A Preferred~~Restricted Stock
As of ~~September 30, 2021,~~March 31, 2022, there ~~are~~was no ~~shares of Series A Preferred Stock outstanding.~~restricted stock.
Common Stock Warrants

A summary of the status of the Company’s outstanding stock warrants and changes during the ~~nine months~~quarter ended ~~September 30, 2021,~~March 31, 2022, is as follows:
Number of
Warrants Weighted
Average
Exercise
Price Weighted
Average
Remaining
Contractual
Life
(in years) Number of
Warrants Weighted
Average
Exercise
Price Weighted
Average
Remaining
Contractual
Life
(in years)
Outstanding as of December 31, 2020 14,219
Outstanding as of December 31, 2021 3,524,189
Issued 4,220,281 $ 0.001 3.0 3,850,000 $ 7.99 1.9
Exercised (11,590 ) (380,000 )
Expired 0 -
Outstanding as of September 30, 2021 4,222,910 $ 0.001 3.0
Warrants exercisable as of September 30, 2021 4,222,910 $ 0.001 3.0
Outstanding as of March 31, 2022 6,994,189 $ 7.99 1.9
Warrants exercisable as of March 31, 2022. 6,994,189 $ 7.99 1.9

On ~~September 30, 2021 the Company entered into~~February 23, 2022, Mawson issued to Celsius Mining warrants with an ~~underwritten capital raise with the Representative, which resulted in the issuance~~expiry date of ~~2,250,270 warrants~~August 23, 2023, to ~~investors~~purchase up to 3,850,000 shares of common stock, par value $0.001 per share, of Mawson at an exercise price of $13.80 and with an expiry of 30 September 2024. In addition, and as part of the underwriting agreement, the Representative and its designees were issued 273,913 warrants with an exercise price of $14.375 and an expiry of 30 September 2021.
~~NOTE 5 – DEBT, COMMITMENTS AND CONTINGENCIES~~
~~Convertible Note~~
On February 12, 2021, Mawson AU issued 28,012,364 unsecured convertible promissory notes (the “Mawson AU Notes”), which each 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 Common Stock of Mawson the earlier of 6 months from February 12, 2021 or upon the occurrence of certain events at an issue price of $0.339US$6.50 per share, ~~of Common Stock and will convert into 63,626,903 shares Common Stock~~ in ~~total. Given~~connection with the ~~mandatory and fixed conversion features, the Mawson Notes have been accounted for as equity.~~
On August 13, 2021, all 28,012,364 outstanding “Mawson Notes” were mandatorily converted into 63,626,903 shares of Common Stock at a conversion price of $0.339 per share. The Company also issued 869,061 shares of Common Stock as payment for interest accrued on the convertible notes$20 million loan made by Celsius to Luna Squares LLC in connection with a ~~share price of $0.98 per share.~~
Customer Equipment and Co-Location Agreement entered into by Celsius and Luna Squares LLC.

NOTE 9 – COMMITMENTS AND CONTINGENCIES
Agreements

1. In connection with the Cosmos Transaction, we issued one CVR to each of our securityholders for each outstanding share of common stock of Mawson, and for each share of common stock of Mawson underlying other convertible securities and warrants, held immediately before the closing of the Cosmos Transaction. Each CVR represents the right to receive a pro rata share of any consideration that we may receive in connection with any successful monetization of our LO2A business, less transaction expenses and customary deductions as detailed in the CVR agreement, including a deduction of up to $300,000 to be repaid to us for amounts we spend in the development of the LO2A Technology at the request of the representative of the holders of the CVRs. As at March 31, 2022, the Company cannot reliably measure the cost of the CVRs and it is not probable that these payments will be made and therefore this has been classified as a contingent liability.
2. On August 9, 2021, Infrastructure entered into a second Long-Term Purchase Contract with Canaan for the purchase of 15,000 next generation Avalon A1246 ASIC Miners. The purchase price per unit is $4,908 for a total purchase price of $73,620,000. As at March 31, 2022 the Company had paid $54,180,000 in relation to this contract with the remaining balance owed at the end of the quarter.
~~Debt~~
NOTE 10 – BORROWINGS
Short-term Borrowings

On ~~June 1,~~October 15, 2021, the Company ~~entered into a working capital facility with Georgina Manning Pty Ltd~~acquired 2,000 Whatsminers M30’s for ~~up to AUD$1,000,000. As of September 30,~~delivery in October 2021 ~~the Company had closed this facility and no longer has any liabilities with Georgina Manning Pty Ltd.~~
~~On January 27, 2021, Cosmos Infrastructure LLC (“Cosmos Infrastructure”) entered into an Equipment Purchase and Finance and Security Agreement with~~from Foundry Digital LLC ~~(“Foundry”) to purchase machinery that will be located at~~for a ~~facility hosted by Compute North LLC (“Compute North”). On February 5, 2021, the term~~total consideration of ~~the agreement was further amended to have a final payment due January 27, 2022. Under the terms of the agreement, Cosmos Infrastructure purchased 500 Whatsminer M30S mining machines,~~$16,481,328. The Company paid a deposit of ~~$264,000,~~$3,202,766 and ~~borrowed a total of $1,056,000. The Company plans to repay the facility in full by the last payment date, November 1, 2022.~~
~~Leases~~
As of September 30, 2021, the Company owns 95% of the equity of Luna Squares, LLC. Luna Squares LLC leases a 16.35 acre lot in the State of Georgia referred to as “Luna Squares” from the Development Authority of Washington County. The initial lease held by Luna Squares LLC, 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. Luna Squares LLC entered into a second amendment to the lease and exercised its option for additional 11.35 acres of land, which was signed and came into effect from August 24, 2021, and extends the ultimate expiry of the ~~lease until July~~original Foundry finance agreement with Foundry for the balance of the consideration over a 12-month term, of which $7,801,933 is outstanding at March 31, ~~2047 (“Second Lease Amendment”).~~2022.
~~The Company leases the headquarters of its business operations at Level 5, 97 Pacific Highway, North Sydney NSW 2060 Australia, being 1,076 square feet of office space held under a license agreement.~~
On September 20, 2021, the Company signed a new lease for 6-acres of land in Pennsylvania for thirty-six months with the option to execute four additional three year extensions as set out in our Current Report on Form 8-K filed September 20, 2021.
Other than the foregoing leases, the Company does not lease any material assets. The Company believes that these offices and facilities are suitable and adequate for its operations as currently conducted and as currently foreseen. In the event additional or substitute offices and facilities are required, the Company believes that it could obtain such offices and facilities at commercially reasonable rates.

~~NOTE 6 – DEFERRED TAX~~Long-term Borrowings

We compute our quarterly income tax expense/(benefit) by using a forecasted annual effective tax rate 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. Marshall loan

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

The tax effects of temporary differences and tax loss and other credit carry forwards that give rise to significant portions of deferred tax assets and liabilities at September 30, 2021, and December 31, 2020 are comprised of the following:Celsius loan

~~Significant components~~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 ~~our deferred tax assets and deferred tax liabilities are as follows:~~US$20,000,000, for the purpose of funding the infrastructure required to meet the obligations of the Co-Location Agreement, for which Luna Squares LLC issued a Secured Promissory Note for repayment of such amount. The Secured Promissory Note accrues interest daily at a rate of 12% per annum. Luna Squares LLC is required to amortize the loan at a rate of 15% per quarter, with principal repayments starting in the third quarter of 2022. The Secured Promissory Note has a maturity date of August 23, 2023.
September 30, December 31,
2021 2020
Deferred income tax liabilities:
Depreciation $ (3,574,492 ) $ (1,116,350 )
Transaction gains and losses (351,562 ) (129,483 )
Other deferred tax liability - (775 )
Net deferred tax liability (3,926,054 ) (1,246,608 )
Deferred income tax assets:
Net operating loss carryforwards 4,984,048 2,782,861
Transaction gains and losses 8,654 93,874
Transaction costs - 3,688
Total deferred tax assets 4,992,702 2,880,423
Valuation allowance 1,066,648 (1,633,815 )
Net deferred tax assets $ - $ -
~~For the nine-month period ended September 30, 2021 the Company recognized $nil income tax expense (September, 30 2020: $nil).~~
As of September 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.NOTE 11 – RELATED PARTY TRANSACTIONS

~~Utilization~~On March 16, 2022, Luna Squares LLC entered into a lease with respect to a property in the City of ~~net operating loss~~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 ~~tax credit carryforwards~~a significant shareholder of the Company, is also a director of Vertua Ltd and has a material interest in the Sharon lease as a large shareholder of Vertua Ltd. The lease contains market standard legal terms, and will be for a term of 5 years, and Luna Squares LLC has 2 options to extend for 5 years each. The Company’s Audit Committee has compared the rent and terms to other arms’ length leases the Company has entered into and formed the view the rent is in line with the market for similar properties. Rent is subject to annual increases equal to the amount of the Consumer Price Index for the Northeast Region, or 4%, whichever is higher. The base rental amount in the first year is $0.24 million. Depending on power energization and usage, variable additional rent may be ~~subject~~payable, with charges ranging from $500 to ~~a substantial annual limitation due~~$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 ~~ownership change limitations provided by~~Mr. Manning’s interest in the ~~Internal Revenue Code~~lease and ~~similar state provisions. Annual limitations may result~~authorized the Company 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~~good faith to ~~United States federal income tax, foreign income and withholding tax and income taxes from state jurisdictions. All tax years are open and subject~~enter the lease after determining the lease to ~~inspection by taxing authorities.~~be fair to the Company.
NOTE 712 – SUBSEQUENT EVENTS

On October 11, 2021, the Company acquired 2,000 Canaan A1246 for delivery in October 2021 from Canaan for a total consideration of $10,800,000. The Company paid in full for the units and took delivery during the month of October 2021.
~~On October 15, 2021, the Company acquired 2,000 Whatminers M30’s for delivery in October 2021 from Foundry Digital~~May 12, 2022, Luna Squares Texas LLC ~~for a total consideration of $16,481,328. The Company paid a deposit of $3,202,766 and entered into a finance agreement with Foundry for the balance~~(a wholly owned subsidiary of the ~~consideration over a 12-month term.~~
~~On October 22, 2021, MIG No. 1 Pty Ltd (“MIG”), an Australian subsidiary of Mawson Infrastructure Group Inc. (the “Company”),~~Company) entered into an ~~electricity supply~~Option Agreement and ~~sale agreement~~Gross Profit Agreement with JAI TX, LLC and then signed or took and assignment of 4 leases for properties in Texas (all in close proximity) with the intent to develop MDC facilities for mining Bitcoin. Luna Squares Texas LLC will seek to execute relevant power agreements, however the expectation is that the four locations can provide a combined 120MW of power. Rent under the leases ranges from $1,500 to $5,227.20 per acre per annum. The lessors include a substantial listed holder of land in Texas, and family groups. Under the Option Agreement, JAI TX, LLC has the option to receive an issue of up to 20% of the membership interests in Luna Squares Texas LLC. The purchase prices will be a share of capital costs equal to the membership interest acquired by JAI TX, LLC, and an amount of Luna Squares Texas LLC’s debt financing in proportion to JAI TX, LLC’s shareholding. In return for certain services provided by JAI TX, LLC, JAI TX, LLC will be entitled to a share of all Electric Reliability Council of Texas program payments paid to Luna Squares Texas LLC (“~~Electricity Supply Agreement”~~ERCOT Payment”) ~~with Cape Byron Management Pty Ltd (“CBM”)~~, 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 enable the Company to operate its first Australian bitcoin mining site (“Australian Site”). CBM is a subsidiary of Quinbrook Infrastructure Partners Pty Ltd. This Electricity Supply Agreement was filed in the Company’s Current Report on Form 8-K on October 22, 2021.exceed $4.19m.

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 Luna Squares LLC, ~~(formerly known~~BITTD Pty Ltd, Luna Squares Repairs LLC, Luna Squares Property LLC and Mawson Mining LLC . Wize NC Inc, Occuwize Ltd and Wize Pharma Ltd are subsidiaries of Mawson however these companies have not been consolidated into the financial statements are not included when referring to we, us, our or the Company or Mawson as ~~Innovative Property Management LLC).~~these are subject to contingent value rights (“CVR”), refer to note 9 of the financial statements.

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

Forward-Looking Statement Notice
This Quarterly Report on Form 10-Q contains forward-looking statements about our expectations, beliefs or intentions regarding, among other things, our product development efforts, business, financial condition, results of operations, strategies or prospects. In addition, from time to time, our representatives have made or may make forward-looking statements, orally or in writing. Forward-looking statements can be identified by the use of forward-looking words such as “believe,” “expect,” “intend,” “plan,” “may,” “should” or “anticipate” or their negatives or other variations of these words or other comparable words or by the fact that these statements do not relate strictly to historical or current matters. These forward-looking statements may be included in, but are not limited to, various filings made by us with the SEC, press releases or oral statements made by or with the approval of one of our authorized executive officers. Forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements, including, but not limited to, the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2020, in Part II, Item 1A in our Quarterly Reports on Form 10-Q for the period subsequent to our most recent fiscal year end,~~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, in Part II, Item 1A in our Quarterly Reports on Form 10-Q for the period subsequent to our most recent fiscal year end,~~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:
● Wethe fact that we have incurred operating losses and may ~~be unable~~continue to do so for the foreseeable future;
● that we may need to raise additional capital, ~~needed~~ to ~~grow our business.~~meet unexpected liabilities or accelerate growth in a competitive environment, and such capital raising may be costly or difficult to obtain and will dilute current stockholders’ ownership interests;
● ~~The~~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 to any digital asset~~changes the Bitcoin network’s protocols and ~~software.~~software;
● ~~Any~~any decrease in the incentive for Bitcoin ~~mining.~~mining;
● 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.growth challenges we may face;
● ~~Global climate changes~~our ability to obtain and ~~related environmental regulations, or pandemic or similar items and events.~~maintain adequate insurance;
● ~~Political~~we may become subject to existing or future government regulations which increase the cost of doing business, or which cause us to cease some or all of our operations;
● our exposure to fluctuations in the market value of digital assets, in particular Bitcoin, and the relative attractiveness of those digital assets to investors, speculators, and users payment network services over other solutions;
● our reliance on third party manufacturers for Miners and other infrastructure and hardware;
● risks relating to the supply chain disruptions due to pandemic (e.g. COVID-19), shortages (computer chips), and geo-political tensions (e.g. China trade bans, war in Ukraine);
● climate and climate change risks, including direct risks from storms and floods, but also the implementation of policies which may lead to higher energy costs;
● political or economic crises motivating large-scale sales of digital ~~assets.~~assets;
● ~~Electricity costs.~~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).

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 its majority-owned subsidiary Mawson AU) 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 currently operate three sites, with two locations in USA, and a location in Australia, from which we operate our combined business. The Miners are predominately focused on the process of digital mining, specifically for Bitcoin.
We offer ‘hosting’ or ‘co-location’ arrangements to other businesses in the digital asset infrastructure industry the opportunity to have their Miners located within our MDCs, who pay us a fee for the use of our facilities and related services (often based on consumption).
We also sell used crypto currency mining equipment on a periodic basis, subject to prevailing market conditions for used equipment.
As of ~~September 30, 2021~~March 31, 2022
Existing
Operations
Online Order and Purchase
Agreements Cumulative
Fleet Fully
Deployed Existing
Operations
Online Order and Purchase
Agreements Cumulative
Fleet Fully
Deployed
Total miners online 5,600 - 5,600 20,697 - 20,697
Total miners in Transit - 2,352 2,352 - 2,168 2,168
Total miners on order - 24,408 24,408 - 11,000 11,000
Total miners in storage 4,400
-
4,400 5,360 - 5,360
Total miners 10,000 26,760 36,760 26,057 13,168 39,225
Total theoretical production hashrate 750 PH/s 2,312 PH/s 3,062 PH/s
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 ~~Application Specific Integrated Circuits (“ASIC”)~~ASIC and alternate computing ~~uses, including both for use in Graphics Processing Units (GPU) systems and traditional CPU based computing systems.~~uses.
In addition, our indirect subsidiary, Cosmos Asset Management Pty Ltd (“Cosmos Asset Management”), is the investment manager of the Bitcoin Wholesale Access Fund, a wholesale, unregistered managed investment scheme ~~which currently~~Bitcoin Wholesale Access Fund invests in and holds Bitcoin for third party investors and is the manager of the Cosmos Global Digital Miners Access ETF, listed on ~~Chi-X~~Cboe in Australia under the code DIGA.
~~Our Products and Services.~~ Prior LO2A Business~~Our digital asset infrastructure business can be divided into three main activities:~~
~~Digital Processing and Hosting Solutions (Mining)~~On March 9, 2021, the Company acquired the shares of Mawson AU in a stock for stock exchange (the “Cosmos Transaction”).
~~The business of digital processing and mining requires the purchase and ownership of computing hardware and servers specific~~Prior to the ~~computing problem that a person is seeking to solve, referred to~~Cosmos Transaction our main business undertaking was as a ~~“Miner”~~clinical-stage biopharmaceutical company focused on the treatment of ophthalmic disorders, including dry eye syndrome (our “LO2A business”). ~~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 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 managerHowever, as part of the Cosmos ~~Global Digital Miners Access ETF, listed on Chi-X in Australia under~~Transaction, substantially all of the code DIGA 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 infrastructureeconomic benefits of any successful monetization of our ~~digital~~LO2A business, if any, will benefit only the holders of CVR and any contingent right holders. Accordingly, we assessed that the fair value of this asset ~~business to provide its investors exposure to various investment opportunities.~~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.

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 September 30, 2021, the funds under management of the asset management business are approximately USD$4.00 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 are 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).
We have partnered with leading design firms in both Australia and 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.
Recent Developments.
~~Mawson listed its common stock~~On February 23, 2022, Luna Squares LLC entered into the Co-Location Agreement with Celsius Mining LLC (“Celsius Mining”), pursuant to which Luna Squares LLC will provide a hosting facility, electrical power and internet access to Celsius Mining for the purposes of installing, maintaining and operating Celsius Mining’s ASIC machines (cryptocurrency mining equipment) for a monthly services fee based on ~~The Nasdaq Stock Market LLC (“Nasdaq”) on September 29, 2021.~~
~~On July 5, 2021, the Company consummated the acquisition (“the Acquisition) of all of the outstanding membership interests of~~power consumption, plus an infrastructure fee, plus a market margin. In addition, Celsius Mining loaned Luna Squares LLC a ~~Delaware limited liability company (f/k/~~principal amount of US$20,000,000 (“Principal”), for the purpose of funding the infrastructure required to meet the obligations of the Co-Location Agreement, for which Luna Squares LLC issued a ~~Innovative Property Management, LLC) (“Luna”~~Secured Promissory Note (the “Promissory Note”) ~~pursuant~~in the principal amount equal to the ~~terms~~Principal. The Promissory Note accrues interest daily at rate of 12% per annum. Luna Squares LLC is required to amortize the loan at a ~~(i) Membership Interest Purchase Agreement~~rate of 15% per quarter, with ~~Kyle Hoffman (the “Hoffman MIPA”) and (ii) Membership Interest Purchase Agreement with TRS Ventures~~principal repayments starting in the third quarter following the closing. The Promissory Note has a maturity date of August 23, 2023. In the event Luna Squares LLC ~~(the “TRS MIPA”). This transaction~~receives cash proceeds from certain sales of assets, Luna Squares LLC would be required to direct such cash proceeds to Celsius Mining, which will be ~~referred to as “the Luna Squares Transaction”. Further information on the Luna Squares Transaction can be found on the Company’s Current Report on Form 8-K filed on July 9, 2021.~~
~~Pursuant~~applied to the ~~Hoffman MIPA, on July 7, 2021,~~outstanding principal and interest under the ~~Company paid US $50,000~~Promissory Note. The Promissory Note includes customary events of default and remedies. In connection with the transaction, Mawson issued to ~~Mr. Hoffman and on August 2, 2021, the Company issued 5,556~~Celsius Mining, warrants to purchase up to 3,850,000 shares ~~of its common stock to Mr. Hoffman (calculated as US $50,000 worth~~ of common stock, par value $0.001 per share, of Mawson at ~~a stock~~an exercise price of ~~US $9.00~~US$6.50 per ~~share). This relates~~share. The warrant may be exercised at any time after issuance and until the later to occur of the eighteen (18) month anniversary of issuance and the date on which the Promissory Note has been completely repaid.
On March 16, 2022, Luna Squares LLC entered into a lease with respect to a property in the City of Sharon, Mercer County, Pennsylvania with Vertua Property, Inc, a subsidiary entity in which Vertua Ltd has a 100% ownership interest. James Manning, CEO, a director and a significant stockholder of the Company is also a director of Vertua Ltd and has a material interest in the Sharon lease as a large shareholder of Vertua Ltd. The lease contains market standard legal terms, and will be for a term of 5 years, and Luna Squares LLC has 2 options to extend for 5 years each. The Audit Committee of the Company has compared the rent and terms to other arms’ length leases the Company has entered into and formed the view the rent is in line with the market for similar properties. Rent is subject to annual increases equal to the CPI for the Northeast Region, or 4%, whichever is higher. The base rental amount in the first year is $0.24 million. Depending on power energization and usage, variable additional rent may be payable, with charges ranging from $500 to $10,000 per month, depending on power energized and whether it is available. Upon the recommendation from the Audit Committee, the directors of the Company, other than James Manning, were made aware of the material facts as to Mr. ~~Hoffman’s equity~~Manning’s interest ~~of 25%~~ in ~~Luna.~~the lease and authorized the Company in good faith to enter the lease after determining the lease to be fair to the Company.
Pursuant to the TRS MIPA, on July 7, 2021, the Company paid US $50,000 to TRS Ventures LLC and on August 2, 2021, the Company issued 11,111 shares of its common stock to TRS Ventures LLC (calculated as US $100,000 worth of common stock at a stock price of US $9.00 per share). This relates to TRS Ventures LLC’s equity interest of 15% in Luna.
Pursuant to the TRS MIPA, on August 12, 2021, the Company paid US $25,000 to TRS Ventures LLC and on August 27, 2021, the Company issued 5,556 shares of its common stock to TRS Ventures LLC (calculated as US $50,000 worth of common stock at a stock price of US $9.00 per share). This relates to TRS Ventures LLC’s equity interest of 5% in Luna.
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 ~~September 30, 2021~~March 31, 2022 compared to the three months ended ~~September 30, 2020~~March 31, 2021
    For the three months ended
March 31,
  2022 2021
Revenues:  
Cryptocurrency mining revenue   18,783,842 5,120,014
Hosting Co-Location revenue 548,948 -
Sale of crypto currency mining equipment 91,545 1,877,613
Total revenues   19,424,335 6,997,627
Less: Cost of revenues (excluding depreciation)   8,412,360 2,372,781
Gross profit 11,011,975 4,624,846
Selling, general and administrative 6,476,945 2,631,964
LO2A write off   - 23,963,050
Share based payments   390,609 14,795,403
Depreciation and amortization   13,803,032 1,314,899
Total operating expenses   20,670,586 42,705,316
Loss from operations (9,658,611 ) (38,080,470 )
Non-operating income/(expense):
Gains on foreign currency transactions (699,237 ) (661,682 )
Other income 24,447 472,741
Interest expense (1,236,673 ) (250,662 )
Loss before income taxes   (11,570,074 ) (38,520,073 )
Income tax expense - -
Net Loss   (11,570,074 ) (38,520,073 )
For the three months ended
September 30,
2021 2020
Revenues:
Cryptocurrency mining revenue 10,151,579 966,574
Hosting Co-Location revenue 796,207 -
Total revenues 10,947,786 966,574

Operating cost and expenses:
Cost of revenues 2,499,837 922,502
Selling, general and administrative 5,510,083 745,243
LO2A write backs - -
Share based payments 1,425,000 -
Depreciation and amortization 4,129,862 2,592,352
Total operating expenses 13,564,782 4,260,097
Loss from operations (2,616,996 ) (3,293,523 )
Other income (expense):
Realized gain/(losses) on foreign currency transactions (8,625 ) 754
Unrealized gain/(losses) on foreign currency remeasurement (351,562 ) (255,471 )
Share of net profit (loss) of associates accounted for using the equity method (153,123 ) -
Other income 32,431 -
Loss before income taxes (3,097,875 ) (3,548,240 )
Income tax expenses - -
Net Loss (3,097,875 ) (3,548,240 )

Revenues
Cryptocurrency mining revenues from production for the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ were ~~$10.15~~$18.78 million and ~~$0.97~~$5.12 million respectively. This represented an increase of ~~$9.18~~$13.66 million or ~~946%~~267% over the ~~same three-month period in 2020.~~period. The increase in mining revenue for the ~~three-month~~ period was primarily attributable to an increase in ~~bitcoin mined and higher bitcoin values~~the total Bitcoin produced. Bitcoin produced totaled 458.68 in 2022 compared with 123.22 in the 2021 period, ~~averaging $41,877 per coin as compared to $10,621 per coin in~~or an increase of 272% of Bitcoin produced over the ~~2020~~respective period. ~~Bitcoins produced totaled 251.52 and we sold a total of 249.76 in three months to September 30, 2021 as compared to 93.06 sold in the same period in 2020.~~
Hosting ~~Co-location~~co-location revenue for the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ were ~~$0.80~~$0.55 million and $nil respectively. This increase is due to there being no co-location revenue in the prior ~~year.~~period.
Sales of crypto currency mining equipment for the three months ended March 31, 2022, were $0.09 million and $1.88 million respectively.
Operating Cost and Expenses

Our operating ~~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 the three months ended September 30, 2021 and 2020, cost~~Cost of revenue were $2.50 million and $0.92 million respectively. The increase in cost of revenue was primarily attributed to the increase in power costs, and the reallocation of power costs from the period ended September 30, 2021.

~~Selling, general and administrative.~~
~~Our selling, general and administrative expenses consist primarily of: professional and management fees relating to accounting, audit, and legal; research and development; and general office expenses.~~
~~Selling, general and administrative expenses~~revenues for the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ were ~~$5.51~~$8.41 million and $0.75 million, respectively. The increase in selling, general and administrative expenses were primarily attributable to: increases in expenses related to the increase in the scale of business operations.
~~Share based payments.~~
Share based payments consist of: an accrual of $1.43 million for amounts related 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 share based payment expenses were recorded in the 2020 period.
~~Depreciation and amortization.~~
~~Depreciation consists primarily of depreciation of cryptocurrency mining hardware and modular data center (MDC) equipment.~~
Depreciation and amortization for the three months ended September 30, 2021 and 2020 were $4.13 million and $2.59 million, respectively. The increase is primarily attributable to the application of the diminishing value method, resulting in a higher depreciation expense in the initial months of mining equipment operation; and the procurement of new machines that have come into the ownership of the Company.
~~Other income (expenses)~~
Our other income (expenses) consists of: net realized gains (losses) on foreign currency transactions; net unrealized gains (losses) on foreign currency remeasurement; realized gains (losses) on sale of digital currencies; and other 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 $3.10 million for the three months ended September 30, 2021 compared to a net loss of $3.55 million for the three months ended September 30, 2020.

~~Results of Operations – Nine months ended September 30, 2021 compared to nine months ended September 30, 2020~~
For the nine months ended
September 30,
2021 2020
Revenues:
Cryptocurrency mining revenue 21,029,492 2,850,086
Hosting Co-Location revenue 1,020,424 -
Sale of crypto currency mining equipment 2,157,651 -
Total Revenues 24,207,567 2,850,086
Operating cost and expenses:
Cost of revenues 6,218,145 2,210,113
Selling, general and administrative 11,334,551 1,743,353
LO2A write backs 23,963,050 399
Share based payments 21,779,898 -
Depreciation and amortization 7,977,800 5,047,917
Total operating expenses 71,273,444 9,001,782
Loss from operations (47,065,877 ) (6,151,696 )
Other income (expense):
Realized gain/(losses) on foreign currency transactions 838,230 (288 )
Unrealized gain/(losses) on foreign currency remeasurement (1,920,879 ) (88,502 )
Share of net profit/(loss) of associates accounted for using the equity method (277,817 ) -
Other income 502,673 108,895
Loss before income taxes (47,923,670 ) (6,131,591 )
Income tax expenses - -
Net Loss (47,923,670 ) (6,131,591 )
~~Revenues~~
Cryptocurrency mining revenues for the nine months ended September 30, 2021 and 2020 were $21.03 million and $2.85 million respectively. This represented an increase of $18.18 million or 638% over the same nine-month period in 2020. The increase in mining revenue for the nine-month period was primarily attributable to higher bitcoin values in the 2021 period, averaging $44,521 per coin as compared to $9,167 per coin in the 2020 period. Bitcoins produced totaled 501.74 and sold totaled 500.50 in 2021 as compared to 324.97 and 325.13 in the 2020 period respectively. Hosting Co-location revenue for the nine months ended September 30, 2021 and 2020 were $1.02 million and $nil respectively. This increase is due there being no co-location revenue in the prior year.
~~Sales of hardware for the nine months ended September 30, 2021 were $2.16 million and no sales were recorded in 2020.~~
~~Operating Cost and Expenses~~
~~Our operating cost and expenses include cost of revenues; selling, general and administrative expenses; 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.~~
~~Cost of revenues for the nine months ended September 30, 2021 and 2020 were $6.22 million and $2.20~~$2.37 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 of cryptocurrency mining hardware. Included in our cost of revenues is any costs associated with offsetting carbon emissions.
Selling, general and administrative.
Our selling, general and administrative expenses consist primarily ~~of:~~of professional and management fees relating to: accounting, payroll, audit, and legal; research and development; and general office expenses.
Selling, general and administrative expenses for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ were ~~$11.33~~$6.48 million and ~~$1.74~~$2.88 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 $1.63 million due to an increase in employee numbers during the year; equipment repair costs increased by $0.68 million; marketing costs increased by $0.40 million; operating lease expense increased by $0.37 million due to the ~~Cosmos Transaction;~~new lease agreements entered into since March 2021; freight expense increased by $0.3 million representing the increase in property and ~~increases~~equipment purchases during the year. The remaining increase in expenses ~~related~~relates to the increase in the scale of business ~~operations.~~operations during the year.

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 ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ were ~~$21.78~~$0.39 million and ~~$nil~~$14.80 respectively. In the ~~nine month period to September 30, 2021,~~three months ended March 31, 2022, share based payments were largely attributable to ~~HC Wainwright $6.18 million, W Capital Warrants of $5.56~~costs recognized for warrants issued to Celsius Mining LLC amounting to $0.17 million and ~~an accrual of $10.00~~$0.17 million ~~for amounts related~~in relation to ~~the obligation of Mawson to issue RSU’s pursuant to the terms of the Bid Implementation Agreement~~long-term incentives 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.~~leadership team.
Depreciation and amortization.
Depreciation consists primarily of depreciation of cryptocurrency mining hardware and ~~modular data center (MDC)~~MDC equipment.
Depreciation and amortization for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ were ~~$7.98~~$13.80 million and ~~$5.05~~$1.31 million, respectively. The increase is primarily attributable to new machines and MDCs which are being procured and have come into the ownership of the Company and the application of the diminishing value method, resulting in a higher depreciation expense in the initial months of mining equipment operation.

~~Other income (expenses)~~
Non-operating expense
~~Our other income (expenses) consists of:~~
Non-operating expenses consist primarily of interest expense and net realized ~~gains (losses)~~and unrealized losses on foreign currency ~~transactions; net~~remeasurement.
During 2022, the realized and unrealized ~~gains (losses)~~losses on foreign currency ~~remeasurement; realized gains (losses) on sale~~transactions were $0.70 million and in prior period there was a loss of ~~digital currencies; and other income. Other income consists of sales for hosting clients, investment management fees, unrealized fair value on investments and other minor income events.~~$0.61.
Interest expense increased by $0.99 million attributable to the interest costs charged on the loans taken out with Foundry Digital LLC, Marshall Investments MIG Pty Ltd during the year and Celsius Mining LLC.
Net loss available to Common Shareholders
As a result of the foregoing, the Company recognized a net loss of $11.34 million for the ~~nine~~three months ended ~~September 30, 2021 and 2020~~March 31, 2022, compared to a net loss of ~~$47.92~~$38.56 million ~~and $6.13 million, respectively.~~for the three months ended March 31, 2021.
Non-GAAP Financial Measures
The Company utilizes a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing its overall business performance, for making operating decisions and for forecasting and planning future periods. The Company considers the use of non-GAAP financial measures helpful in assessing its current financial performance, ongoing operations and prospects for the future. While the Company uses non-GAAP financial measures as a tool to enhance its understanding of certain aspects of its financial performance, the Company does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial measures. Consistent with this approach, the Company believes that disclosing non-GAAP financial measures to the readers of its financial information provides such readers with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of its financial and operational performance. Investors are cautioned that there are inherent limitations associated with the use non-GAAP financial measures as an analytical tool. In particular, non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and many of the adjustments to the GAAP financial measures reflect the exclusion of items that are recurring and will be reflected in the company’s financial results for the foreseeable future. In addition, other companies, including other companies in the Company’s industry, may calculate non-GAAP financial measures differently than the Company does, limiting their usefulness as a comparative tool.
The Company is providing supplemental financial measures for (i) non-GAAP adjusted earnings before interest, taxes, depreciation and amortization, or (“adjusted EBITDA”) that excludes the impact of interest, taxes, depreciation, amortization, share-based compensation expense, LO2A write-back, unrealized gains/losses on share of associates, and certain non-recurring expenses. We believe that adjusted EBITDA is useful to investors in comparing our performance across reporting periods on a consistent basis.

   For the three months Ended
March 31,  
    2022   2021  
Reconciliation of non-GAAP adjusted EBITDA:          
Net loss: (11,570,074 ) (38,520,073 )
Share of net loss of associates accounted for using the equity method - -
Depreciation and amortization 13,803,032 1,314,899
Share based payments 390,609 14,795,403
Unrealized and realized losses/(gain) 699,237 661,682
Other non-operating revenue (24,447 ) (472,741 )
Other non-operating expenses 1,236,673 -
Tax - -
LO2A write-back - 23,963,050
EBITDA (non-GAAP) 4,535,030 1,742,220
Liquidity and Capital Resources
General
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. For the ~~nine months~~three month period ended ~~September 30, 2021,~~March 31, 2022, we financed our operations primarily through:
1. 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 million shares of common stock for aggregate gross proceeds of $3.0 million;
2. ~~the issuance on March 9, 2021, of convertible notes with an aggregate principal amount of $21.56 million;~~
3. ~~net~~Net cash provided by operating activities of ~~$10.93~~$5.86 million;
4.
~~Net cash from the proceeds of the sale of shares in Bonus Bio Group of $1.022 million;~~
5 entering into Securities Purchase Agreements (the “PIPE Agreements”) on August 5, 2021, with certain accredited investors (the “PIPE Investors”). Pursuant to the PIPE Agreements, the Company agreed to sell to the PIPE Investors, and the PIPE Investors agreed to purchase from the Company, in a private placement, an aggregate of 46,789,019 shares of common stock for a purchase price of $0.80 per share giving rise to gross proceeds of $37.43 million; and

6.2. ~~entering~~On January 27, 2021, Cosmos Infrastructure LLC (“Cosmos Infrastructure”) entered into an ~~underwriting agreement~~Equipment Purchase and Finance and Security Agreement with ~~H.C. Wainwright & Co.~~Foundry Digital LLC ~~as representative (the “Representative”~~(“Foundry”), to purchase machinery that will be located at a facility hosted by Compute North LLC (“Compute North”). On February 5, 2021, the term of the several underwriters (the “Underwriters”), in connection with the Company’s previously announced public offering (the “Offering”) of 3,913,044 shares (the “Firm Shares”) of the Company’s common stock, $0.001 par value per share (the “Common Stock”) and accompanying 3-year warrantsagreement was further amended to ~~purchase up to 1,956,522 shares of Common Stock with an exercise price of $13.80 (the “Firm Warrants”), at~~have a public offering price of $11.50 per share. The net proceeds to the Company from the Offering (including the sale of additional Option Warrants), excluding any exercise by the Underwriters of their option to purchase any of the Option Shares, were approximately $41.23 million, after deducting underwriter fees and estimated offering expenses payable by us. The Company intends to use the net proceeds from the Offering for working capital and general corporate purposes.final payment due January 27, 2022. Under the terms of the ~~Underwriting~~agreement, Cosmos Infrastructure purchased 500 Whatsminer M30S mining machines, paid a deposit of $264,000, and borrowed a total of $1,056,000. The Company paid in full this original loan balance in January 2022;
3. On October 15, 2021, an expansion of the Equipment Finance and Security Agreement ~~the Company granted the Underwriters an option, exercisable for 30 days,~~was entered into with Foundry to purchase ~~up to~~ an additional ~~586,956 shares~~2000 Whatsminers M30’s delivered in October 2021, $13,185,062 was borrowed, $7,801,933 is owed at March 31, 2022;
4.
On December 9, 2021, entering into a Secured Loan Facility Agreement with Marshall Investments MIG Pty Ltd (“Marshall”) on December 9, 2021 with a total loan facility of ~~Common Stock at~~AUD$20 million comprising of three tranches:
Tranche 1- AUD$10.5 million (received in December 2021)
Tranche 2- AUD$4.8 million (received in January 2022)
Tranche 3- AUD$4.8 million (received in February 2022); and
5.
On February 23, 2022, Luna Squares LLC entered into the ~~public offering price, less~~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 ~~underwriting discount and commissions (the “Option Shares,” and together with~~purpose of funding the ~~Firm Shares,~~infrastructure required to meet the “Shares”) and 293,478 accompanying warrants (the “Option Warrants,” and together with the Firm Warrants, the “Warrants”). On September 28, 2021, the Representative gave us notice of its exercise of its option to purchase 293,478 Option Warrants for approximately an additional $5,870. The closingobligations of the ~~Offering occurred on October 1, 2021.~~Co-Location Agreement, for which Luna Squares issued a Secured Promissory Note in the principal amount equal to the Principal. The Promissory Note accrues interest daily at rate of 12% per annum. Luna Squares LLC is required to amortize the loan at a rate of 15% per quarter, with principal repayments starting in the third quarter following the closing. The Promissory Note has a maturity date of August 23, 2023.

During the quarter we repaid $3.2 million of payments against the historical facilities provided by Foundry.
We believe our working capital requirements will continue to be funded through a combination of the cash we expect to generate from future operations, our existing funds, external debt facilities available to us and further issuances of shares. These are expected to be adequate to fund our operations over the next twelve months. For our business to grow it is expected we will continue investing in mining equipment, we are likely to require additional capital in either the short-term or long-term.
On August 9, 2021, Infrastructure entered into a second Long-Term Purchase Contract with Canaan for the purchase of 15,000 next generation Avalon A1246 ASIC Miners. The purchase price per unit is $4,908 for a total purchase price of $73,620,000. As at March 31, 2022 the Company had paid $54,180,000 in relation to this contract with the remaining balance owed at the end of the quarter.
Working Capital and Cash Flows

As of ~~September 30, 2021~~March 31, 2022, and December 31, ~~2020,~~2021, we had ~~$32.4~~cash and cash equivalents balance of $5.80 million and ~~$1.11~~$5.47 million in cash and cash equivalents, respectively.

As of ~~September 30, 2021~~March 31, 2022, and December 31, ~~2020,~~2021, the trade receivables balance was ~~$19.0~~$5.04 million and ~~$0.6~~$5.61 million respectively. ~~The balance as of September 30, 2021 predominantly represents the proceeds of the Offering with the cash being received on October, 1, 2021.~~

As of ~~September 30, 2021,~~March 31, 2022, we had ~~$469,082~~$16.04 million of outstanding short-term loans, and as of December 31, ~~2020,~~2021, we had ~~$290,978~~$11.10 million of short-term ~~loans. As of September 30, 2021, and at December 31, 2020, we had $14,058 and $14,000 respectively of outstanding long term loans.~~borrowings. The ~~loans~~short-term borrowings as of ~~September 30, 2021,~~March 31, 2022, relate ~~primarily to:~~to the acquisition of cryptocurrency mining equipment, ~~payable in full by February 2022~~ under the Foundry ~~agreement.~~agreements and to the secured Loan Facility Celsius Mining LLC and Marshall Investments MIG Pty Ltd. As of March 31, 2022, and as of December 31, 2021, we had $26.94 million and $7.64 million respectively of outstanding long-term borrowings. The long-term borrowings as of March 31, 2022, primarily relate to the secured Loan Facility Celsius Mining LLC and Marshall Investments MIG Pty Ltd.

As of ~~September 30, 2021, we had positive working capital of $45,145,646 and as at December~~March 31, ~~2020,~~2022, we had negative working capital of ~~$463,345.~~$18.65 million and as at December 31, 2021, we had negative working capital of $8.63 million. The increase in working capital was primarily attributable to an increase in the Company’s ~~capital raise transactions~~short term and long-term borrowings during ~~2021,~~2022, as compared to ~~2020.~~2021.

The following table presents the major components of net cash flows (used in) provided by operating, investing and financing activities for the ~~nine~~three month ending ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:
Nine Months Ended
September 30, Three Months Ended
March 31,
2021 2020 2022 2021

Net cash provided by/(used in) operating activities $ 8,337,277 $ (745,545 )
Net cash provided by operating activities $ 5,865,759 $ 1,871,692
Net cash used in investing activities $ (62,261,396 ) $ (2,179,714 ) $ (29,661,210 ) $ (21,385,965 )
Net cash provided by financing activities $ 86,026,426 $ 3,836,670 $ 23,484,932 $ 21,285,694
For the ~~nine~~three months ended ~~September 30,~~March 31, 2022, net cash provided by operating activities was $5,865,759 and for the three months ended March 31, 2021, net cash provided by operating activities was ~~$8,337,277 and for the nine months ended September 30, 2020, net cash used in operating activities was $745,545.~~$1,871,692. The increase in net cash provided by operating activities was primarily attributable to timing differences in trade and other receivables and trade and other payables.

For the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ net cash used in investing activities was ~~$62,261,396~~$29,661,210 and ~~$2,179,714,~~$21,385,965, respectively. The increase in net cash used in investing activities was primarily attributable to the increase in the acquisition of cryptocurrency mining equipment.
For the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ net cash provided by financing activities was ~~$86,026,426~~$23,484,932 and ~~$3,836,670,~~$21,285,694, respectively. The ~~increase in net~~ cash provided by financing activities during March 31, 2022 was primarily attributable to proceeds from borrowings.
Critical accounting estimates and estimates
The preparation of the ~~capital raises which occurred~~financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the ~~period.~~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:
~~Outlook~~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.
~~According to management estimates, liquidity resources as~~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 ~~September 30, 2021 will~~long-lived assets. Long-lived assets include property and equipment and operating lease right-of-use assets. A long-lived asset may be ~~sufficient to maintain our planned level~~impaired when the estimated future undiscounted cash flows are less than the carrying amount of ~~operations for~~ the ~~next 12 months. However, we may need to raise additional funding or capital raising in order to purchase more equipment or expand operations. Additional financing~~asset. If that comparison indicates that the asset’s carrying value may not be ~~available~~recoverable, the impairment is measured based 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”~~difference between the carrying amount and the estimated fair value of ~~our Annual Report on Form 10-K for~~ the ~~year ended December 31, 2020.~~asset.
~~Off-Balance Sheet Arrangements~~Stock based compensation- Management used Black-Scholes to evaluate our awards and will continue to use judgment in evaluating the assumptions related to our stock-based compensation on a prospective basis.
In connection with the Cosmos Transaction, we issued one contingent value right (“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 Holders’ Representative.
Other than the CVRs and the Contingent obligation in relation to LO2A, as of September 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 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.
~~LO2A Business.~~
Through our holdings in the entities, WizePharma, Inc. and Occuwize Inc., which form the prior Company Wize Pharma, Inc., we also have in-licensed certain rights to purchase, market, sell and distribute a formula known as LO2A, a drug developed for the treatment of dry eye syndrome (“DES”), and other ophthalmological illnesses, including Conjunctivochalasis (“CCH”) and Sjögren’s syndrome (“Sjögren’s”). 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 CVRs and any contingent right holders.

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. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on this evaluation, ~~the Company’s principal executive officer~~our Chief Executive Officer and ~~principal financial officer~~Chief Financial Officer have concluded that ~~due to the Company’s material weakness in internal control over financial reporting, the Company’s~~our disclosure controls and procedures were not effective at the reasonable assurance level as of ~~September 30, 2021.~~
~~As previously disclosed,~~March 31, 2022, due to the ~~Company’s management identified a~~ material ~~weakness~~weaknesses in our internal control over financial ~~reporting.~~ reporting described below. Management’s assessment of the effectiveness of our disclosure controls and procedures is expressed at a level of reasonable assurance because management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of ~~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 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. ~~Management is~~
Controls over the financial statement close and reporting process. Controls were not adequately designed in the ~~process of remedying this~~financial statement close and ~~is seeking~~reporting process. This includes controls related to ~~hire additional resources to reduce its reliance on key individuals~~complex and judgmental accounting transactions, account reconciliations and financial statement disclosures.
~~Changes~~Information and Technology Controls. There are control deficiencies related to information technology (“IT”) general controls that aggregate into a material weakness. The inadequate design of these IT general and application controls prevent the system from providing complete and accurate information consistent with financial reporting objectives. Deficiencies identified include lack of controls over access to programs and data, program changes, program development, program changes and general IT controls.
Data from third parties. The Company did not properly design or implement controls to ensure that data received from third parties is complete and accurate. Such data is relied on by the Company in determining amounts pertaining to revenue and cryptocurrency assets is complete and accurate.

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

Remediation

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

●

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

●

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.

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

Changes in internal control over financial reporting

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

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 September 30, 2021, we are unaware of any material pending legal proceedings.~~

Item 1A. Risk Factors

~~Other than as set forth below, there~~There are no material changes to the Company’s risk factors disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2020 and the supplemental risk factors in Part II, Item 1A in our Quarterly Reports on Form 10-Q for the period subsequent to our most recent fiscal year end.~~2021.

~~The public trading market 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.~~

Our Common Stock traded in the over-the-counter market and was quoted on the OTCQB until September 28, 2021, when our Common Stock began to trade on the Nasdaq Capital Market. The over-the-counter market for securities has historically experienced extreme price and volume fluctuations during certain periods. These broad market fluctuations may have adversely affected the market price of our Common Stock in the past. 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 shares 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. 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. It has yet to be determined whether the listing of our stock on the Nasdaq Capital Market will result in less extreme price and volume fluctuations, lower spreads and/or higher trading volumes.

~~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.~~

Our Common Stock has historically been thinly traded. 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 were traded on the OTCQB, 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 purchase of our shares until such time as we became more seasoned and viable. As 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.

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

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

1.	On August 2, 2021, we issued 5,556 shares of our common stock to Kyle Hoffman (calculated as USD50,000 worth of common stock at a stock price of USD9.00) 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 Section 4(a)(2) and Rule 506 of the Securities Act of 1933, as amended.

2.	On August 2, 2021, we issued 11,111 shares of our common stock to TRS Ventures LLC (calculated as USD 100,000 worth of common stock at a stock price of USD 9.00) 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 Section 4(a)(2) and Rule 506 of the Securities Act of 1933, as amended.

3.	On August 27, 2021, we issued 5,556 shares of its common stock to TRS Ventures LLC (calculated as USD 50,000 worth of common stock at a stock price of US $9.00 per share) 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 5% in Luna Squares LLC. The shares were issued under the exemption provided by Section 4(a)(2) and Rule 506 of the Securities Act of 1933, as amended.

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

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

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

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

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None

Item 6. Exhibits

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

Date: ~~November 15, 2021~~May 16, 2022	By:	/s/ Hetal Majithia
		Hetal Majithia, Chief Financial Officer
		(Principal Financial and Accounting Officer)

2932

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	For the three months ended September 30,						For the nine months ended September 30,
	2021			2020			2021			2020
Revenues:
Cryptocurrency mining revenue		10,151,579			966,574			21,029,492			2,850,086
Hosting Co Location revenue		796,207			-			1,020,424			-
Sale of crypto currency mining equipment		-			-			2,157,651			-
Total revenues		10,947,786			966,574			24,207,567			2,850,086
Operating cost and expenses:
Cost of revenues		2,499,837			922,502			6,218,145			2,210,113
Selling, general and administrative		5,510,083			745,243			11,334,551			1,743,353
LO2A write backs		-			-			23,963,050			399
Share based payments		1,425,000			-			21,779,898			-
Depreciation and amortization		4,129,862			2,592,352			7,977,800			5,047,917
Total operating expenses		13,564,782			4,260,097			71,273,444			9,001,782
Loss from operations		(2,616,996	)		(3,293,523	)		(47,065,877	)		(6,151,696	)
Other income (expense):
Realized gain/(losses) on foreign currency transactions		(8,625	)		754			838,230			(288	)
Unrealized gain/(losses) on foreign currency remeasurement		(351,562	)		(255,471	)		(1,920,879	)		(88,502	)
Share of net profit/(loss) of associates accounted for using the equity method		(153,123	)		-			(277,817	)		-
Other income		32,431			-			502,673			108,895
Loss before income taxes		(3,097,875	)		(3,548,240	)		(47,923,670	)		(6,131,591	)
Income tax expenses		-			-			-			-
Net Loss		(3,097,875	)		(3,548,240	)		(47,923,670	)		(6,131,591	)

Loss attributable to Non-Controlling interest		(594,389	)		-			(660,191	)		-
Net Loss attributed to Mawson Infrastructure Group shareholders		(2,503,486	)		(3,548,240	)		(47,263,479	)		(6,131,591	)

Net Loss per share, basic & diluted	$	(0.042	)	$	(0.494	)	$	(0.275	)	$	(0.893	)
Weighted average number of shares outstanding		502,642,831			6,847,465			472,987,017			6,847,465

Number of BTC Held	Three months to September 30, 2021			Nine months to September 30, 2021
Opening Digital currencies held (represented as number of Bitcoin)		0.01			0.52
Additions of digital currencies (number of Bitcoin added)		251.52			501.74
Sale of digital currencies (number of Bitcoin sold)		(249.77	)		(500.50	)
Digital currencies at September 30, 2021 (represented as a number of Bitcoin)		1.76			1.76

	For the three months ended March 31,
	2022			2021
Net Loss attributable to common shareholders	$	(11,335,655	)	$	(38,563,208	)

Denominator:
Weighted average common shares - basic and diluted		71,129,676			44,266,478

Loss per common share - basic and diluted	$	(0.16	)	$	(0.87	)

	Operating leases			Finance Leases

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

	Operating leases			Finance Leases

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

	March 31, 2022			December 31, 2021

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

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2020		14,219
Outstanding as of December 31, 2021									3,524,189
Issued		4,220,281		$	0.001		3.0		3,850,000		$	7.99		1.9
Exercised		(11,590	)						(380,000	)
Expired		0							-
Outstanding as of September 30, 2021		4,222,910		$	0.001		3.0
Warrants exercisable as of September 30, 2021		4,222,910		$	0.001		3.0
Outstanding as of March 31, 2022									6,994,189		$	7.99		1.9
Warrants exercisable as of March 31, 2022.									6,994,189		$	7.99		1.9

	September 30,			December 31,
	2021			2020
Deferred income tax liabilities:
Depreciation	$	(3,574,492	)	$	(1,116,350	)
Transaction gains and losses		(351,562	)		(129,483	)
Other deferred tax liability		-			(775	)
Net deferred tax liability		(3,926,054	)		(1,246,608	)
Deferred income tax assets:
Net operating loss carryforwards		4,984,048			2,782,861
Transaction gains and losses		8,654			93,874
Transaction costs		-			3,688
Total deferred tax assets		4,992,702			2,880,423
Valuation allowance		1,066,648			(1,633,815	)
Net deferred tax assets	$	-		$	-


	●	~~The~~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 to any digital asset~~changes the Bitcoin network’s protocols and ~~software.~~software;


	●	~~Any~~any decrease in the incentive for Bitcoin ~~mining.~~mining;


	●	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.growth challenges we may face;

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

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

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

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

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


	●	~~Electricity costs.~~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).

	Existing Operations Online		Order and Purchase Agreements		Cumulative Fleet Fully Deployed		Existing Operations Online		Order and Purchase Agreements		Cumulative Fleet Fully Deployed
Total miners online		5,600		-		5,600		20,697		-		20,697
Total miners in Transit		-		2,352		2,352		-		2,168		2,168
Total miners on order		-		24,408		24,408		-		11,000		11,000
Total miners in storage		4,400		-		4,400		5,360		-		5,360
Total miners		10,000		26,760		36,760		26,057		13,168		39,225
Total theoretical production hashrate		750 PH/s		2,312 PH/s		3,062 PH/s

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

	4.	~~Net cash from the proceeds of the sale of shares in Bonus Bio Group of $1.022 million;~~
	5	entering into Securities Purchase Agreements (the “PIPE Agreements”) on August 5, 2021, with certain accredited investors (the “PIPE Investors”). Pursuant to the PIPE Agreements, the Company agreed to sell to the PIPE Investors, and the PIPE Investors agreed to purchase from the Company, in a private placement, an aggregate of 46,789,019 shares of common stock for a purchase price of $0.80 per share giving rise to gross proceeds of $37.43 million; and

	6.2.	~~entering~~On January 27, 2021, Cosmos Infrastructure LLC (“Cosmos Infrastructure”) entered into an ~~underwriting agreement~~Equipment Purchase and Finance and Security Agreement with ~~H.C. Wainwright & Co.~~Foundry Digital LLC ~~as representative (the “Representative”~~(“Foundry”), to purchase machinery that will be located at a facility hosted by Compute North LLC (“Compute North”). On February 5, 2021, the term of the several underwriters (the “Underwriters”), in connection with the Company’s previously announced public offering (the “Offering”) of 3,913,044 shares (the “Firm Shares”) of the Company’s common stock, $0.001 par value per share (the “Common Stock”) and accompanying 3-year warrantsagreement was further amended to ~~purchase up to 1,956,522 shares of Common Stock with an exercise price of $13.80 (the “Firm Warrants”), at~~have a public offering price of $11.50 per share. The net proceeds to the Company from the Offering (including the sale of additional Option Warrants), excluding any exercise by the Underwriters of their option to purchase any of the Option Shares, were approximately $41.23 million, after deducting underwriter fees and estimated offering expenses payable by us. The Company intends to use the net proceeds from the Offering for working capital and general corporate purposes.final payment due January 27, 2022. Under the terms of the ~~Underwriting~~agreement, Cosmos Infrastructure purchased 500 Whatsminer M30S mining machines, paid a deposit of $264,000, and borrowed a total of $1,056,000. The Company paid in full this original loan balance in January 2022;

	3.	On October 15, 2021, an expansion of the Equipment Finance and Security Agreement ~~the Company granted the Underwriters an option, exercisable for 30 days,~~was entered into with Foundry to purchase ~~up to~~ an additional ~~586,956 shares~~2000 Whatsminers M30’s delivered in October 2021, $13,185,062 was borrowed, $7,801,933 is owed at March 31, 2022;

	4.	On December 9, 2021, entering into a Secured Loan Facility Agreement with Marshall Investments MIG Pty Ltd (“Marshall”) on December 9, 2021 with a total loan facility of ~~Common Stock at~~AUD$20 million comprising of three tranches: Tranche 1- AUD$10.5 million (received in December 2021) Tranche 2- AUD$4.8 million (received in January 2022) Tranche 3- AUD$4.8 million (received in February 2022); and

	5.	On February 23, 2022, Luna Squares LLC entered into the ~~public offering price, less~~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 ~~underwriting discount and commissions (the “Option Shares,” and together with~~purpose of funding the ~~Firm Shares,~~infrastructure required to meet the “Shares”) and 293,478 accompanying warrants (the “Option Warrants,” and together with the Firm Warrants, the “Warrants”). On September 28, 2021, the Representative gave us notice of its exercise of its option to purchase 293,478 Option Warrants for approximately an additional $5,870. The closingobligations of the ~~Offering occurred on October 1, 2021.~~Co-Location Agreement, for which Luna Squares issued a Secured Promissory Note in the principal amount equal to the Principal. The Promissory Note accrues interest daily at rate of 12% per annum. Luna Squares LLC is required to amortize the loan at a rate of 15% per quarter, with principal repayments starting in the third quarter following the closing. The Promissory Note has a maturity date of August 23, 2023.

	Nine Months Ended September 30,						Three Months Ended March 31,
	2021			2020			2022			2021

Net cash provided by/(used in) operating activities	$	8,337,277		$	(745,545	)
Net cash provided by operating activities							$	5,865,759		$	1,871,692
Net cash used in investing activities	$	(62,261,396	)	$	(2,179,714	)	$	(29,661,210	)	$	(21,385,965	)
Net cash provided by financing activities	$	86,026,426		$	3,836,670		$	23,484,932		$	21,285,694