~~UNITED STATES~~

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, ~~2022~~2023

☐ 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~~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.)

201 Clark Street, Sharon, Pennsylvania		16146
(Address of principal executive offices)		(Zip Code)

~~Level 5, 97 Pacific Highway, North Sydney NSW Australia 2060~~+1-412 -515-0896

~~(Address of principal executive offices, including zip code)~~

+~~61 2 8624 6130~~

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if ~~changes~~changed since last report)

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~~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”~~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 ~~8, 2022,~~10, 2023, the issuer had a total of ~~81,568,310~~16,644,711 shares of common stock, par value $0.001 per share, outstanding.

MAWSON INFRASTRUCTURE GROUP INC.

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, ~~2022~~2023

TABLE OF CONTENTS

Item Page
Number
Part I – Financial Information

1. Financial Statements 1
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 26
3. Quantitative and Qualitative Disclosures about Market Risks 39
4. Controls and Procedures 39

Part II – Other Information

1. Legal Proceedings 41
1A. Risk Factors 41
2. Unregistered Sales of Equity Securities and Use of Proceeds 42
3. Defaults Upon Senior Securities 42
4. Mine Safety Disclosure 42
5. Other Information 42
6. Exhibits 43
Signatures 44

Item		Page Number
Part I – Financial Information

Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risks	40
Item 4.	Controls and Procedures	40

Part II – Other Information

Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	45
Item 6.	Exhibits	46
	Signatures	47

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MAWSON INFRASTRUCTURE GROUP INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

	September 30,			December 31,			September 30,			December 31,
	2022			2021			2023			2022
ASSETS	(unaudited)						(unaudited)
Current assets:
Cash and cash equivalents	$	1,182,588		$	5,467,273		$	1,496,838		$	946,265
Prepaid expenses		2,539,530			332,154			1,547,066			3,488,868
Trade and other receivables		11,787,454			5,606,780			10,611,086			10,458,076
Assets held for sale		21,646,334			-			-			5,446,059
Cryptocurrencies		183,900			40,800
Total current assets		37,339,806			11,447,007			13,654,990			20,339,268
Property and equipment, net		112,506,552			76,936,850			66,312,235			91,016,498
Derivative asset		21,383,904			-			4,653,608			11,299,971
Equipment deposits		318,000			51,369,216
Financial assets		1,706,032			326,801
Investments, equity method								100,904			2,085,373
Marketable securities								-			3,243,957
Security deposits		4,077,293			1,246,236			424,064			2,524,065
Operating lease right-of-use asset		3,269,987			3,968,262			2,691,570			2,819,933

Total assets	$	180,601,574		$	145,294,372		$	87,837,371		$	133,329,065

LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade and other payables	$	27,529,256		$	7,746,988		$	27,054,546		$	10,572,061
Current portion of operating lease liability		2,110,863			1,222,382			1,762,488			1,300,062
Current portion of finance lease liability		30,139			8,105			32,453			30,702
Liabilities held for sale		967,490			-
Borrowings		31,392,010			11,095,388
Current portion of long-term borrowings								17,784,148			23,610,583
Total current liabilities		62,029,758			20,072,863			46,633,635			35,513,408
Trade and other payables, net of current portion		15,328,445			-
Customer deposits								-			15,328,445
Operating lease liability, net of current portion		1,279,587			2,962,765			1,092,077			1,727,975
Finance lease liability, net of current portion		91,113			38,764			58,660			83,223
Long-term borrowings		9,107,162			7,639,391
Long-term borrowings, net of current portion								-			4,509,894
Total liabilities		87,836,065			30,713,783			47,784,372			57,162,945
Commitments and Contingencies (Note 9)

Commitments and Contingencies (note 11)		-			-

Shareholders’ equity:
Additional paid-in capital; Common stock (120,000,000 authorized, 81,249,768 issued and outstanding $0.001 par value shares). Series A preferred stock (1,000,000 authorized shares; nil issued and outstanding as at September 30, 2022)		193,187,165			186,389,568
Accumulated other comprehensive income (loss)		3,897,382			(521,094	)
Stockholders’ equity:
Series A preferred stock; 1,000,000 shares authorized, no shares issued and outstanding as of September 30, 2023 and December 31, 2022								-			-
Common stock, $0.001 par value per share; 90,000,000 shares authorized, 16,518,043 and 13,625,882 shares issued and outstanding as of September 30, 2023, and December 31, 2022, respectively								16,518			13,626
Additional paid-in capital								205,920,400			194,294,559
Accumulated other comprehensive income								5,543,121			5,021,467
Accumulated deficit		(103,810,362	)		(71,123,259	)		(169,751,176	)		(122,257,628	)
Total stockholders’ equity		93,274,185			114,745,215
Total Mawson Infrastructure Group, Inc. stockholders’ equity								41,728,863			77,072,024
Non-controlling interest		(508,676	)		(164,626	)		(1,675,864	)		(905,904	)
Total liabilities and stockholders’ equity	$	180,601,574		$	145,294,372
Total stockholder’s equity								40,052,999			76,166,120
Total liabilities and stockholder’s equity							$	87,837,371		$	133,329,065

See ~~Accompanying Notes~~accompanying notes to ~~Unaudited Consolidated Condensed Financial Statements.~~unaudited consolidated condensed 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,						For the three months ended September 30,						For the nine months ended September 30,
	2022			2021			2022			2021			2023			2022			2023			2022
Revenues:
Cryptocurrency mining revenue		5,913,031			10,151,579			40,909,399			21,029,492
Hosting Co Location revenue		5,726,064			796,207			9,842,924			1,020,424
Digital currency mining revenue													$	6,898,223		$	5,913,031		$	14,550,744		$	40,909,399
Co-location revenue														2,959,074			5,726,064			11,876,379			9,842,924
Net energy benefits														1,475,333			6,301,108			2,934,066			10,479,768
Sale of equipment		10,388,223			-			10,479,768			2,157,651			-			10,388,223			193,581			6,301,108
Net energy benefits		6,301,108			-			6,301,108			-
Total revenues		28,328,426			10,947,786			67,533,199			24,207,567			11,332,630			28,328,426			29,554,770			67,533,199
Less: Cost of revenues (excluding depreciation)		18,183,524			2,499,837			40,954,957			6,218,145			7,715,920			18,183,524			19,422,380			40,954,957
Gross profit		10,144,902			8,447,949			26,578,242			17,989,422			3,616,710			10,144,902			10,132,390			26,578,242
Selling, general and administrative		5,001,553			5,147,183			20,882,237			10,256,952			3,655,444			5,001,553			14,898,118			20,882,237
LO2A write backs		-			-			-			23,963,050
Share based payments		797,830			1,425,000			2,124,674			21,779,898
Stock based compensation														3,784,316			797,830			5,475,935			2,124,674
Depreciation and amortization		16,252,106			4,129,862			46,061,673			7,977,800			11,875,618			16,252,106			28,627,896			46,061,673
Change in fair value of derivative asset														520,838			(3,669,547	)		6,646,363			(21,383,904	)
Total operating expenses		22,051,489			10,702,045			69,068,584			63,977,700			19,836,216			18,381,942			55,648,312			47,684,680
Change in fair value of derivative asset		3,669,547			-			21,383,904			-
Loss from operations		(8,237,040	)		(2,254,096	)		(21,106,438	)		(45,988,278	)		(16,219,506	)		(8,237,040	)		(45,515,922	)		(21,106,438	)
Non-operating income/(expense):
Loss on foreign currency transactions		(7,320,412	)		(360,187	)		(6,362,594	)		(1,082,649	)
Non-operating income (expense):
Losses on foreign currency transactions														(600,619	)		(7,320,412	)		(1,416,000	)		(6,362,594	)
Interest expense		(1,559,104	)		(362,900	)		(4,360,817	)		(1,077,599	)		(514,953	)		(1,559,104	)		(2,061,067	)		(4,360,817	)
Impairment of financial assets		-			-			(1,134,547	)		-			(1,837,063	)		-			(1,837,063	)		(1,134,547	)
Loss on re-classification to assets held for sale (Note 7)		(4,195,046	)		-			(4,195,046	)		-
Profit on sale of site														-			-			3,353,130			-
Gain on sale of marketable securities														-			-			1,437,230			-
Other expenses														(158,577	)		-			(226,330	)		-
Loss on re-classification to assets held for sale														-			(4,195,046	)		-			(4,195,046	)
Other income		59,819			32,431			1,931,952			502,673			-			59,819			245,694			1,931,952
Share of net loss of associates accounted for using the equity method		-			(153,123	)		-			(277,817	)
Share of net loss of equity method investments														-			-			(36,356	)		-
Total non-operating income (expense), net														(3,111,212	)		(13,014,743	)		(540,762	)		(14,121,052	)
Loss before income taxes		(21,251,783	)		(3,097,875	)		(35,227,490	)		(47,923,670	)		(19,330,718	)		(21,251,783	)		(46,056,684	)		(35,227,490	)
Income tax expense		-			-			-			-			-			-			(2,304,454	)		-
Net Loss		(21,251,783	)		(3,097,875	)		(35,227,490	)		(47,923,670	)		(19,330,718	)		(21,251,783	)		(48,361,138	)		(35,227,490	)

Less: Net loss attributable to non-controlling interests		(389,801	)		(594,389	)		(912,449	)		(660,191	)		(283,101	)		(389,801	)		(867,590	)		(912,449	)
Net Loss attributed to Mawson Infrastructure Group shareholders		(20,861,982	)		(2,503,486	)		(34,315,041	)		(47,263,479	)

Net Loss per share, basic & diluted	$	(0.27	)	$	(0.04	)	$	(0.47	)	$	(0.27	)
Net Loss attributed to Mawson Infrastructure Group stockholders													$	(19,047,617	)	$	(20,861,982	)	$	(47,493,548	)	$	(34,315,041	)
Net Loss per share, basic and diluted													$	(1.15	)	$	(1.58	)	$	(3.10	)	$	(2.77	)
Weighted average number of shares outstanding		79,366,725			72,952,466			74,353,227			174,470,310			16,500,833			13,227,788			15,336,653			12,392,205

See ~~Accompanying Notes~~accompanying notes to ~~Unaudited Consolidated Condensed Financial Statements.~~unaudited consolidated condensed financial statements.

MAWSON INFRASTRUCTURE GROUP INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF ~~STOCKHOLDERS’ EQUITY~~COMPREHENSIVE LOSS

(Unaudited)

	For the three months ended September 30,						For the nine months ended September 30,
	2023			2022			2023			2022
Net Loss	$	(19,330,718	)	$	(21,251,783	)	$	(48,361,138	)	$	(35,227,490	)
Other comprehensive (income) loss
Foreign currency translation adjustment		267,458			6,453,266			619,284			4,452,856
Comprehensive loss		(19,063,260	)		(14,798,517	)		(47,741,854	)		(30,774,634	)
Less: Comprehensive loss attributable to non-controlling interests		(283,101	)		(389,801	)		(867,590	)		(912,449	)
Comprehensive loss attributable to common stockholders	$	(18,780,159	)	$	(14,408,716	)	$	(46,874,264	)	$	(29,862,185	)

~~For the Three Months Ended September 30, 2022~~See accompanying notes to unaudited consolidated condensed financial statements.

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 June 30, 2022 72,491,295 613,250 169,026,637 17,104,426 (2,530,052 ) (82,952,860 ) 101,261,401 (140,227 ) 101,121,174
Issuance of common stock, net of offer costs 8,023,486 - 5,644,298 - - - 5,644,298 - 5,644,298
Issuance of warrants - - (10,243,200 ) 10,743,700 - - 500,500 - 500,500
Issuance and exercising of RSU’s and stock options 734,987 727 1,828,895 (1,531,568 ) - - 298,054 - 298,054
Net loss - - - - - (20,861,982 ) (20,861,982 ) (389,801 ) (21,251,783 )
Other comprehensive income - - - - 6,427,434 4,480 6,431,914 21,352 6,453,266

Balance as of September 30, 2022 81,249,768 613,977 166,256,630 26,316,558 3,897,382 (103,810,362 ) 93,274,185 (508,676 ) 92,765,509

MAWSON INFRASTRUCTURE GROUP INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

For the Three Months Ended September 30, ~~2021~~2023

	Common Stock (#)		Common Stock ($)		Additional Paid-in- Capital		Accumulated Other Comprehensive Income/ (Loss)		Accumulated Deficit			Total Mawson Stockholders’ Equity			Non- controlling interest			Total Equity
Balance as of June 30, 2023		16,454,709	$	16,455	$	202,136,148	$	5,321,282	$	(150,703,559	)	$	56,770,326		$	(1,438,382	)	$	55,331,944
Issuance of warrants		-		-		500,500		-		-			500,500			-			500,500
Exercising of RSUs and stock options		63,334		63		163,339		-		-			163,402			-			163,402
Stock based compensation expense for RSU’s and stock options		-		-		3,120,413		-		-			3,120,413			-			3,120,413
Net loss		-		-		-		-		(19,047,617	)		(19,047,617	)		(283,101	)		(19,330,718	)
Other comprehensive income		-		-		-		221,839					221,839			45,619			267,458
Balance as of September 30, 2023		16,518,043	$	16,518	$	205,920,400	$	5,543,121	$	(169,751,176	)	$	41,728,863		$	(1,675,864	)	$	40,052,999

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 June 30, 2021 178 - - 53,919,268 538,899 (16,690 ) 82,914,768 23,070,525 (6,038,270 ) (70,919,532 ) 29,549,700 (92,868 ) 29,456,832
Issuance of common stock, net of offering costs / at-the market offerings - - - 8,591,948 8,592 - 74,908,585 - - - 74,917,177 - 74,917,177
Issuance of common stock, on conversion of convertible notes - - - 6,362,690 63,627 - - - - - 63,627 - 63,627
Issuance of common stock, stock based compensation - - - 22,222 2,222 - 817,226 - - - 819,448 - 819,448
Issuance of common stock, settlement of convertible note interest s - - - 86,959 8,691 - 750,206 - - - 758,897 - 758,897
Issuance of common stock, conversion of Series A preferred stock (178 ) - - 17,800 - - - - - - - - -
Issuance of warrants - - - - - - - 2,363,870 - - 2,363,870 - 2,363,870
Issuance of stock by subsidiary to non-controlling interest - - - - - - 163,039 - - - 163,039 204,993 368,032
Other - - - 184 (12,272 ) 16,690 (17,129 ) - - - (12,711 ) - (12,711 )
Net loss - - - - - - - - - (2,503,486 ) (2,503,486 )
(594,389
) (3,097,875 )
Other comprehensive income - - - - - - - - 5,187,843 - 5,187,843 - 5,187,843 )
Balance as of September 30, 2021 - - - 69,001,071 609,759 - 159,536,695 25,434,395 (850,427 ) (73,423,018 ) 111,307,404 (482,264 ) 110,825,140

See accompanying notes to unaudited consolidated condensed financial statements.

MAWSON INFRASTRUCTURE GROUP INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

For the ~~Nine~~Three Months Ended September 30, 2022

	Common Stock (#)		Common Stock ($)		Additional Paid-in- Capital			Reserves			Accumulated Other Comprehensive Income/ (Loss)			Accumulated Deficit			Total Mawson Stockholders’ Equity			Non- controlling interest			Total Equity			Common Stock (#)		Common Stock ($)		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		165,600,832			20,177,232			(521,094	)		(71,123,259	)		114,745,215			(164,626	)		114,580,589
Issuance of common stock, stock based compensation		18,787		19		134,879			408,585			-			-			543,483			-			543,483
Balance as of June 30, 2022																											12,081,883		12,082		169,627,805			17,104,426			(2,530,052	)		(82,952,860	)		101,261,401			(140,227	)		101,121,174
Issuance of common stock, net of offer costs																											1,337,248		1,337		5,642,961			-			-			-			5,644,298			-			5,644,298
Issuance of warrants		-		-		(10,243,200	)		11,411,033			-			-			1,167,833			-			1,167,833			-		-		(10,243,200	)		10,743,700			-			-			500,500			-			500,500
Issuance of RSU’s and stock options		2,460,987		2,454		6,037,506			(5,680,292	)		-			-			359,668			-			359,668
Issuance of common stock, net of offer costs		8,023,486		-		5,644,297			-			-			-			5,644,297						5,644,297
Issuance and exercising of RSUs and stock options																											122,497		122		1,829,500			(1,531,568	)		-			-			298,054			-			298,054
Net loss		-		-		-			-			-			(34,315,041	)		(34,315,041	)		(912,449	)		(35,227,490	)		-		-		-			-			-			(20,861,982	)		(20,861,982	)		(389,801	)		(21,251,783	)
Other comprehensive income		-		-		-			-			4,418,476			-			4,418,476			34,380			4,452,856			-		-		-			-			6,427,434			4,480			6,431,914			21,352			6,453,266
Non-controlling interest		-		-		(917,684	)		-			-			1,627,938			710,254			534,019			1,244,273

Balance as of September 30, 2022		81,249,768		613,977		166,256,630			26,316,558			3,897,382			(103,810,362	)		93,274,185			(508,676	)		92,765,509			13,541,628		13,541		166,857,066			26,316,558			3,897,382			(103,810,362	)		93,274,185			(508,676	)		92,765,509

See accompanying notes to unaudited consolidated condensed financial statements.

MAWSON INFRASTRUCTURE GROUP INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

For the Nine Months Ended September 30, ~~2021~~2023

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 - - - 6,362,690 63,627 - 20,301,427 - - - 20,365,054 - 20,365,054
Issuance of common stock, exercise of warrants - - 30,613 41,000 116 - - 14,781,446 - - 14,781,562 - 14,781,562
Fair value of IPR&D acquired, net of Business Combination transaction costs - - - - - - 24,765,831 - - - 24,765,831 - 24,765,831
Issuance of RSU’s and stock options - - (30,613 ) 212,320 4,123 - 1,228,363 10,000,000 - - 11,232,486 - 11,232,486
Fair value adjustment of LO2A intellectual property revenue sharing obligation - - - - - - 5,440,863 - - - 5,440,863 - 5,440,863
Late acceptance of Exchange of common stock of Cosmos Capital Limited for common stock of Wize Pharma Inc., adjusted to reflect the Exchange Ratio - - - 5,055,813 50,558 - - - - - 50,558 50,558
Issuance of common stock, net of offering costs / at-the market offerings - - - 8,591,948 8,592 - 74,908,585 - - - 74,917,177 - 74,917,177
Issuance of common stock, settlement of convertible note interest s - - - 86,959 8,691 - 750,206 - - - 758,897 - 758,897
Issuance of common stock, conversion of Series A preferred stock (178 ) - - 17,800 - - - - - - - - -
Issuance of stock by subsidiary to non-controlling interest - - - - - - 163,039 - - - 163,039 204,993 368,032
Other - - - 184 (12,272 ) 16,690 (17,129 ) - - - (12,711 ) - (12,711 )
Net loss - - - - - - - - - (47,263,479 ) (47,263,479 ) (660,191 ) (47,923,670 )
Other comprehensive income - - - - - - - - 491,399 - 491,399 - 491,399

Balance as of September 30, 2021 - - - 69,001,071 609,759 - 159,536,695 25,434,395 (850,427 ) (73,423,018 ) 111,307,404 (482,264 ) 110,825,140

	Common Stock (#)		Common Stock ($)		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, 2022		13,625,882	$	13,626	$	194,294,559	$	5,021,467	$	(122,257,628	)	$	77,072,024		$	(905,904	)	$	76,166,120
Conversion of notes payable into common stock		104,319		104		276,855		-		-			276,959			-			276,959
Issuance of common stock in lieu of interest on borrowings		18,807		19		63,926		-		-			63,945			-			63,945
Issuance of common stock for services		93,334		93		306,976		-		-			307,069			-			307,069
Issuance of warrants		-		-		1,501,500		-		-			1,501,500			-			1,501,500
Exercising of RSUs and stock options		177,094		177		163,339		-		-			163,516			-			163,516
Stock based compensation for RSUs		-		-		3,503,849		-		-			3,503,849			-			3,503,849
Issuance of common stock, net of issuance costs		2,498,607		2,499		5,809,396		-		-			5,811,895			-			5,811,895
Net loss		-		-		-		-		(47,493,548	)		(47,493,548	)		(867,590	)		(48,361,138	)
Other comprehensive income		-		-		-		521,654		-			521,654			97,630			619,284
Balance as of September 30, 2023		16,518,043	$	16,518	$	205,920,400	$	5,543,121	$	(169,751,176	)	$	41,728,863		$	(1,675,864	)	$	40,052,999

~~See Accompanying Notes to Unaudited Consolidated Condensed Financial Statements.~~

See accompanying notes to unaudited consolidated condensed financial statements.

MAWSON INFRASTRUCTURE GROUP INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

For the Nine Months Ended September 30, 2022

	Common Stock (#)		Common Stock ($)		Additional Paid-in- Capital			Reserves			Accumulated Other Comprehensive Income/ (Loss)			Accumulated Deficit			Total Mawson Stockholders’ Equity			Non- controlling interest			Total Equity
Balance as of December 31, 2021		11,791,085		11,791		166,200,545			20,177,232			(521,094	)		(71,123,259	)		114,745,215			(164,626	)		114,580,589
Issuance of common stock, stock based compensation		3,131		3		134,895			408,585			-			-			543,483			-			543,483
Issuance of warrants		-		-		(10,243,200	)		11,411,033			-			-			1,167,833			-			1,167,833
Issuance of RSUs and stock options		410,165		410		6,039,550			(5,680,292	)		-			-			359,668			-			359,668
Issuance of common stock, net of offer costs		1,337,247		1,337		5,642,960			-			-			-			5,644,297						5,644,297
Net loss		-		-		-			-			-			(34,315,041	)		(34,315,041	)		(912,449	)		(35,227,490	)
Other comprehensive income		-		-		-			-			4,418,476			-			4,418,476			34,380			4,452,856
Non-controlling interest		-		-		(917,684	)		-			-			1,627,938			710,254			534,019			1,244,273
Balance as of September 30, 2022		13,541,628		13,541		166,857,066			26,316,558			3,897,382			(103,810,362	)		93,274,185			(508,676	)		92,765,509

See accompanying notes to unaudited consolidated condensed financial statements.

MAWSON INFRASTRUCTURE GROUP INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

    For the nine months ended
September 30, 
    2022  2021
CASH FLOWS FROM OPERATING ACTIVITIES            
Net loss $ (35,227,490 ) $ (47,923,670 )
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization   46,061,673 7,977,800
LO2A write offs   - 23,963,050
Non-cash lease expense 1,248,198 -
Fair value loss on investments 129,829 1,920,879
Change in fair value of derivative asset (21,383,904 ) -
Non-cash proceeds from the sale of intellectual property (1,381,460 ) -
Share based payments   2,124,674 21,779,898
Loss on re-classification to assets held for sale 4,195,046 -
Interest expense 684,166 140,344
Loss on sale of property and equipment   110,547 -
Investment income - (33,153 )
Gain on sale of investment (93,139 ) -
Write-off of fixed assets - 307,100
Share of loss of equity accounted investments - 277,817
Non-controlling interest 1,244,274 -
Trade and other receivables (6,180,674 ) -
Other current assets   (5,181,533 ) (1,150,680 )
Trade and other payables 38,791,001 1,077,892
Net cash provided by operating activities   25,141,208 8,337,277
CASH FLOWS FROM INVESTING ACTIVITIES  
Payment for the purchase of property and equipment  (37,116,302 ) (30,888,288 )
Proceeds from sale/of (investment in) financial assets 255,425 (335,122 )
Proceeds from sales of property and equipment 13,348,629 2,157,651
Deposits received in relation to sale of Georgia site 100,000 -
Payment of fixed asset deposits (32,054,326 ) (33,195,637 )
Net cash used in investing activities   (55,466,574 ) (62,261,396 )
CASH FLOWS FROM FINANCING ACTIVITIES  
Proceeds from common share issuances   6,478,866 70,917,563
Proceeds from convertible notes   - 20,301,427
Payments of capital issuance costs   (782,319 ) (5,212,209 )
Proceeds from borrowings   34,570,551 1,423,088
Advances made to external companies - (42,210 )
Repayment of lease liabilities (1,340,100 ) -
Repayments of borrowings   (12,686,662 ) (1,361,233 )
Net cash provided by financing activities     26,240,336 86,026,426
Effect of exchange rate changes on cash and cash equivalents  (199,655 ) (831,721 )
Net (decrease)/increase in cash and cash equivalents   (4,284,685 ) 31,270,586
Cash and cash equivalents at beginning of period   5,467,273 1,112,811
Cash and cash equivalents at end of period     $ 1,182,588 $ 32,383,397

	For the nine months ended September 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(48,361,138	)	$	(35,227,490	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		28,627,896			46,061,673
Amortization of operating lease right-of-use asset		1,057,500			-
Foreign exchange loss		1,303,569			-
Sale of intellectual property		-			(1,381,460	)
Stock based compensation		5,475,935			2,124,674
Non-cash interest expense		1,365,291			1,248,198
Unrealized (gain) loss on derivative asset		6,646,363			(21,383,904	)
Fair value loss on investments		-			129,829
Gain on sale of marketable securities		(1,437,230	)		(93,139	)
Share of loss from equity method investments		36,356			-
Loss on sale of property and equipment		231,266			110,547
Interest expense		-			684,166
Non-controlling interest		-			1,244,274
Loss on re-classification to assets held for sale		-			4,195,046
Profit on sale of site		(3,353,130	)		-
Impairment of equity method investment		1,837,063
Changes in assets and liabilities:
Trade and other receivables		(2,398,826	)		(6,180,674	)
Operating lease liabilities		(1,096,790	)		-
Other current assets		4,041,803			(5,181,533	)
Trade and other payables		1,205,999			38,791,001
Net cash (used in) provided by operating activities		(4,818,073	)		25,141,208
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for the purchase of property and equipment		(5,254,665	)		(37,116,302	)
Proceeds from sale/of (investment in) financial assets		-			255,425
Proceeds from sale of site		8,107,508			-
Deposits received in relation to sale of Georgia site		-			100,000
Proceeds from sales of property and equipment		730,697			13,348,629
Proceeds from sale of marketable securities		6,927,003			-
Payment of property and equipment deposits		-			(32,054,326	)
Net cash provided by (used in) investing activities		10,510,543			(55,466,574	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common share issuances		6,192,845			6,478,866
Payments of stock issuance costs		(380,950	)		(782,319	)
Proceeds from borrowings		1,930,425			34,570,551
Repayment of finance lease liabilities		(28,632	)		(1,340,100	)
Repayment of borrowings		(12,829,158	)		(12,686,662	)
Net cash (used in) provided by financing activities		(5,115,470	)		26,240,336
Effect of exchange rate changes on cash and cash equivalents		(26,427	)		(199,655	)
Net increase/(decrease) in cash and cash equivalents		550,573			(4,284,685	)
Cash and cash equivalents at beginning of period		946,265			5,467,273
Cash and cash equivalents at end of period	$	1,496,838		$	1,182,588
Supplemental disclosure of cash flow information
Non-cash transactions
Recognition of right of use operating asset and lease liability	$	929,138		$	-
Accrued interest on convertible notes settled in common stock	$	276,959		$	-

See ~~Accompanying Notes~~accompanying notes to ~~Unaudited Consolidated Condensed Financial Statements.~~unaudited consolidated condensed financial statements.

MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – GENERAL

~~General~~

Nature of Operations

Mawson Infrastructure Group, Inc. (the “Company” or “Mawson” or “we”)~~, formerly known~~ is a digital infrastructure company headquartered in the United States.

The Company has 3 primary businesses – digital currency mining, co-location and related services, and energy management.

The Company develops and operates digital infrastructure for digital currency, such as ~~Wize Pharma, Inc,~~bitcoin, mining activities on the Bitcoin blockchain network. The Company also provides digital infrastructure services for its co-location customers that use computational machines to mine bitcoin through our data centers and ~~before~~the Company charges for the use of its digital infrastructure and related services. The Company also has an energy management program through which it can receive net energy benefits in exchange for curtailing the power the Company utilizes from the grid in response to instances of high electricity demand.

The Company may also transact in digital currency mining, data center infrastructure and related equipment on a periodic basis, subject to prevailing market conditions.

The Company designs, develops, operates, and manages its digital infrastructure to responsibly support the Bitcoin network by contributing to the scale, structure, and decentralization of the Bitcoin network and optimizing energy consumption. The Company helps contribute to the ecosystem and growth of digital currencies and commodities as there continues to be a global transition to the new digital economy.

We strive to operate and invest in markets and communities that ~~known as OphthaliX Inc.,~~offer low or zero carbon renewable energy sources and participate in energy management activities. We invest in the communities in which we operate and also support our broader ecosystem. Throughout this filing, we use the term Bitcoin (with a capital “B”) to represent the overall concept of Bitcoin, including the technology, protocol, and the entire ecosystem. The term bitcoin (with a lower case “b”) refers to the digital bitcoin currency or token.

General

Mawson was incorporated in the State of Delaware on February 10, 2012. 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. Mawson was previously known as Wize Pharma Inc, and changed its name on March 17, 2021, after the acquisition of Mawson AU. Shares of Mawson’s common stock have been listed on the Nasdaq Capital Market since September 29, 2021.

The Company manages and operates data centers delivering a current capacity of approximately 110 MW across Pennsylvania with a pipeline of additional sites located across Pennsylvania and Ohio.

The accompanying consolidated financial statements, including the results of the Company’s subsidiaries: Mawson ~~Infrastructure Group Pty Ltd (“Mawson AU”, previously known as Cosmos Capital Limited),~~AU, Cosmos Trading Pty Ltd, Cosmos Infrastructure LLC, Cosmos Manager LLC, MIG No.1 Pty Ltd, MIG No.1 LLC, Mawson AU ~~Limited,~~Pty Ltd, Luna Squares LLC, ~~Luna Squares Texas~~Mawson Bellefonte LLC, Luna Squares Repairs LLC, Luna Squares Property LLC, Mawson Midland LLC, ~~(formed September 21, 2022),~~Mawson Hosting LLC, Mawson Ohio LLC ~~(formed September 21, 2022)~~ and Mawson Mining LLC (collectively referred to as the “Group”), have been prepared by the Company, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and in accordance with generally accepted accounting principles ~~generally accepted~~ in the United States (“U.S. GAAP”). ~~Wize NC Inc, Occuwize Ltd and Wize Pharma Ltd are additional subsidiaries of Mawson, these companies are subject to contingent value rights (“CVR”), further described in NOTE 11.~~

These consolidated, condensed unaudited interim financial statements should be read in conjunction with the audited consolidated financial statements of the Group as of December 31, ~~2021,~~2022, and the notes thereto, included in the Company’s Annual Report on Form 10-K filed with SEC on March ~~21, 2022.~~23, 2023. Accordingly, they do not include all the information and footnotes required by U.S GAAP for complete financial statements. The results of the interim period are not necessarily indicative of the results to be expected for the full year ~~ended~~ending December 31, ~~2022.~~2023. These consolidated, condensed interim financial statements reflect all adjustments which, in the opinion of management, are necessary to present fairly the financial position, the results of operations and cash flows of the Company for the periods presented.

~~Mawson, through~~Going Concern

The accompanying unaudited consolidated condensed financial statements have been prepared assuming the Company will continue as a going concern basis and in accordance with U.S. GAAP. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are issued and will be able to realize its ~~subsidiaries, is a ‘Digital Asset Infrastructure’ business, which owns~~assets and ~~operates modular data centers (“MDCs”) based~~discharge its liabilities and commitments in the ~~United States and Australia. As at September 30, 2022, Mawson owned 33,350 Application-Specific Integrated Circuit~~normal course of business.

Pursuant to the requirements of the Financial Accounting Standards Board’s Accounting Standards Codification (“~~ASIC”~~ASC”) ~~computers known~~Topic 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as ~~“Miners,” specifically focused on the SHA-256 algorithm, from~~ a variety of manufacturers, including Bitmain Technology Holding Company (“Bitmain”), Canaan Creative (HK) Holdings Limited (“Canaan”) and Shenzhen MicroBT Electronics Technology Co., Ltd (“Whatsminer”).

Going Concern,

~~For~~ management must evaluate whether there are conditions or events, considered in the nine-month period ending September 30, 2022, the Company incurred a loss after tax of $35.23 million, and as at September 30, 2022, had net current liabilities of $24.69 million, had total net assets of $92.77 million and had an accumulated deficit of $103.81 million. The Company’s cash position as at September 30, 2022, was $1.18 million. These conditionsaggregate, that raise substantial doubt ~~upon~~about the Company’s ability to continue as a going concern for ~~at least a~~one year from the date these financial statements are issued. This evaluation does not take into consideration the potential mitigating effect of ~~approval of these unaudited consolidated financial statements.~~

~~Management~~management’s plans that have not been fully implemented or are not within control of the Company ~~believes that there~~as of the date the financial statements are ~~reasonable grounds~~issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to ~~conclude~~continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the ~~Company~~plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after ~~consideration~~the date that the financial statements are issued.

For the nine-month period ended September 30, 2023, the Company incurred a loss after tax of ~~the following factors:~~

$48.36 million, and as at September 30, 2023, had net current liabilities of $32.98 million, had total net assets of $40.05 million and had an accumulated deficit of $169.75 million. The Company’s ~~plans include improving profitability~~cash position as at September 30, 2023, was $1.50 million.

Bitcoin prices have recovered from their lows of approximately $16,000 in late 2022 to approximately $36,000 recently, however this price is still substantially less than the previous highs of approximately $67,000 in late 2021. In addition, the difficulty of earning bitcoin is approximately 76% higher than the same time last year, and ~~generating sufficient cash flow from operations.~~

~~On September 8, 2022,~~trending higher, which means the Company ~~entered into a (i) Purchase~~typically earns less bitcoin for the same effort. In addition, the rewards that bitcoin miners earn are expected to halve (not including transaction fees) in or about April or May 2024. The Company’s miners and Sale Agreement (“Purchase Agreement”) with CleanSpark , Inc. (“CleanSpark”), and (ii) an Equipment Purchase and Sale Agreement. Pursuant of the Purchase Agreement, CleanSpark assumed from the Company a lease for approximately 16.35 acres of real property located in Sandersville, Washington County, Georgia, and all personal property situated on the property. This transaction closed on October 8, 2022, and CleanSpark paid the following considerationother mining equipment will require replacement over time to the Company pursuant to the Purchase Agreement: (i) $13.50 million in cash; (ii) 1,590,175 shares of common stock, par value $0.001 per share, of CleanSpark (valued at $4.8 million on October 7, 2022), and (iii) $6.5 million in seller financing in the form of promissory notes. Pursuant to the Equipment Purchase and Sale Agreement, CleanSpark’s subsidiary purchased from the Company, 6,468 (which number was later reduced to 6,349 by amendment) application-specific integrated circuit miners for $9.48 million in cash (which was later reduced to $9.02 million by amendment). This transaction initially closed on October 8, 2022, and was amended on October 21, 2022.

~~Management of the Company is of the opinion~~ensure that the Company can continue to ~~access adequate debt~~competitively and ~~equity funding~~efficiently produce bitcoin. These factors are outside the Company’s direct control, and the Company may not be able to ~~meet~~practically mitigate their impact. The Company cannot predict with any certainty whether these trends will reverse or persist.

The Company announced on October 19, 2023, that it had signed a new customer co-location agreement with a subsidiary of Consensus Technology Group LLC for 50MW, which will replace the Customer Equipment Co-Location Agreement the Company’s subsidiary, Luna Squares LLC, had with Celsius Mining LLC (the “Co-Location Agreement”), which expired on August 23, 2023. Celsius Mining LLC is currently in default on payments under the Co-Location Agreement to Luna Squares LLC, and the Company and Luna Squares LLC have reserved all rights.

In addition, Celsius Mining LLC and Luna Squares LLC have made certain allegations and counter-allegations against each other in respect of their performance under the Co-Location Agreement. There is a risk of a dispute or litigation arising out of these cross allegations, which also relate to the advanced deposit paid by Celsius Mining LLC to Luna Squares LLC valued at $15.33 million (the “Celsius Deposit”) and Luna Squares LLC’s and Celsius Mining LLC’s performance under the Co-Location Agreement. Luna Squares LLC claims, amongst other things, that the deposit, in full or in part, has been forfeited due to Celsius Mining LLC’s breaches and its ~~working capital requirements.~~ other actions or inactions under the Co-Location Agreement. If Celsius Mining LLC prevails in the dispute, Luna Squares LLC could be required to return all or part of the deposit to Celsius Mining LLC. While this amount is included as a current liability within trade and other payables in the consolidated condensed Balance Sheet, the outcome of the dispute is uncertain. In addition, Celsius Mining LLC has failed to pay approximately $6.95 million of unpaid co-location invoices, but due to Celsius’s Ch. 11 bankruptcy process, $1.84 million of that $6.95 million are considered pre-petition amounts, for which Luna Squares expects to be treated as a general unsecured creditor, and $5.11 of that $6.95 million are considered post-petition amounts, which is due and payable to Luna Squares.

In addition to the Celsius Deposit, in connection with the Co-Location Agreement, Celsius Mining LLC loaned $20 million to Luna Squares LLC, through a Secured Promissory Note (the “Celsius Promissory Note”), which had a maturity date of August 23, 2023, and a total outstanding balance as at September 30, 2023, of $8.24 million.

The Company has a Secured Loan Facility Agreement with Marshall Investments GCP Pty Ltd ATF for the ~~ability through it’s At~~Marshall Investments MIG Trust (“Marshall”). The loan matures in February 2024 and the ~~Market Offering~~total outstanding balance is $8.05 million as at September 30, 2023. MIG No. 1 Pty Ltd has not made a principal and interest payment since May 2023. MIG No. 1 Pty Ltd and Marshall are in ongoing discussions with respect to the payment, and the loan terms generally. Marshall and MIG No. 1 Pty Ltd have each reserved their rights.

A subsidiary of the Company in Australia, Mawson AU has a Secured Loan Facility Agreement ~~(the “ATM Agreement”)~~for working capital with ~~H.C. Wainwright & Co., LLC~~W Capital Advisors Pty Ltd with a total loan facility of AUD$8 million (USD$5.2 million) (“~~Wainwright”~~Working Capital Loan”),. As at September 30, 2023, AUD$1.51 million (USD$0.97 million) has been drawn down from this facility. The Secured Loan Facility expired in March 2023. W Capital Advisors Pty Ltd and Mawson AU each reserved their rights. On October 30, 2023, the directors of this Australian subsidiary Mawson AU appointed voluntary administrators to ~~sell shares~~Mawson AU. On November 3, 2023, W Capital Advisors appointed receivers and managers under the terms of ~~its common stock~~their security relating to their working capital facility. All of Mawson AU’s debts, other than the Secured Loan Facility will be managed as part of the voluntary administration. The Company has a Secured Convertible Promissory Note with W Capital Advisors Pty Ltd with an ~~aggregate sales price~~outstanding balance of up$0.50 million as at September 30, 2023. The Convertible Note matured in July 2023. W Capital Advisors Pty Ltd has not taken formal steps to ~~$100 million.~~ enforce its rights in connection with the Convertible Note and the Company reserves its rights.

The Company, or its subsidiaries, have not fulfilled specific payment obligations related to the Celsius Promissory Note, Marshall loan, the Working Capital Loan and Secured Convertible Promissory Note mentioned above. Consequently, the creditors associated with these debt facilities may initiate actions as allowed by relevant grace periods. This includes the possibility of opting to expedite the repayment of the principal debt, pursuing legal action against the Company for payment default, raising interest rates to the default or overdue rate, or taking appropriate measures concerning collateral (including appointing a receiver), if applicable.

The Company has evaluated the above conditions and concluded that these conditions raise substantial doubt regarding our ability to continue as a going concern for a period of at least one year from the date of issuance of these unaudited condensed consolidated financial statements.

To alleviate these conditions, the ~~extent~~Company has explored various avenues to enhance liquidity, fund the Company’s expenditures, and meet debt servicing requirements. These strategies include, among others:

	●	Executing and implementing customer co-location agreements;

	●	Engaging in discussions with new and existing lenders, including related to refinancing debt, raising additional debt, or modifying terms of existing debt;

	●	Considering equity issuances such as capital raises;

●

Assessing and evaluating corporate and strategic transactions including engaging an investment bank;

●

Assessing and evaluating monetizing specific assets, including potential sales of mining infrastructure equipment, miners, operational sites, or expansion locations under consideration; and

●

Conducting assessments to identify and implement operational efficiencies, cost-cutting measures, and other actions aimed at enhancing revenue and optimizing expenses.

Although the Company may have access to debt, equity, and other sources of funding, these may require additional time and cost, may impose operational restrictions and other covenants on the Company, may not be available on attractive terms, and may not be available at all. If the Company raises additional capital or debt, this could cause additional dilution to the Company’s current stockholders. The terms of any future capital raise or debt issuance and the costs of any financing are ~~uncertain. There are no assurances that~~uncertain and may be unfavorable to the Company ~~would be able to raise additional financing when needed or that it would be able to do so on favorable terms.~~

~~Based on internally prepared forecast cash flows which take into consideration what management considers to be reasonable scenarios given~~and the inherent risks and uncertainties, combined with existing cash balances, management believes that the Company will be able to meet its obligations as they become due for at least one year from the date of approval of these unaudited consolidated financial statements.

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

The Company has engaged Needham and Company, an investment bank, and is obtaining advice from outside legal counsel. It is important to note that strategic and other initiatives may not lead to any transaction or other outcome.

These ~~unaudited~~condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities and other commitments in the normal course of business. They do not include any adjustments relating to the recoverability and carrying amounts of assets and the amounts of liabilities should the Company be unable to continue as a going concern and meet its obligations and debts as and when they fall due.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and ~~basis~~Basis of ~~preparation~~Preparation

The accompanying consolidated financial statements of the ~~Group~~Company include the accounts of the Company and its wholly or majority owned and controlled ~~subsidiaries, other than those subsidiaries subject to the CVR described more in NOTE 11.~~subsidiaries. Intercompany investments, balances and transactions have been eliminated onin consolidation. Non–controlling interests represent the minority equity investment in the Company’s subsidiaries, plus the minority investors’ share of the net operating results and other components of equity relating to the non–controlling interest.

Pursuant to a Certificate of Amendment to the Certificate of Incorporation of the Company dated February 6, 2023, Mawson executed a reverse stock split of its outstanding common stock at a ratio of 1:6 and reduced its authorized common stock to 90,000,000 shares, as set forth in the Company’s Current Report on Form 8-K filed February 9, 2023. Unless otherwise indicated, all share and per share amounts included in this Quarterly Report reflect the effects of the reverse stock split.

Any ~~changes~~change 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,~~stockholders, in which the Company maintains control is recognized as an equity transaction, with appropriate adjustments to both the Company’s additional paid-in capital and the corresponding non-controlling interest.

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

Use of Estimates and Assumptions

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

These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of income and expenses during the reporting periods. Actual results could differ from those estimates. The Company has considered the following to be significant estimates made by management, including but not limited to, going concern assumptions, estimating the useful lives of fixed assets, realization of long-lived assets, unrealized tax positions and the realization of digital currencies, valuing the derivative asset classified under Level 3 fair value hierarchy, business combinations ~~reverse asset acquisition,~~ and the contingent obligation with respect to future revenues.

Reclassifications

Certain reclassifications of prior period amounts have been made to conform to current period presentation.

~~Critical Accounting Policies~~

Critical accounting policies are described in the consolidated financial statements for the Company included in the Company’s Annual Report on Form10-K filed with SEC on March 21, 2022. There have been some changes to critical accounting policies in the nine months period ended September 30, 2022. The reverse asset acquisition accounting policy which is no longer considered to be a critical accounting policy and has therefore been included in significant accounting policies, the fair value of financial instruments has been moved from significant accounting policies to critical accounting policies.

Significant Accounting Policies

Revenue Recognition – Digital ~~asset~~currency mining revenue

The Company recognizes revenue under ~~ASC~~Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with ~~Customers.~~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~~satisfies a performance obligation.

In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: ~~The~~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~~judgment 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.~~digital currency. The provision of computing power is the only performance obligation in the Company’s contract with its pool operators. 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~~digital currency is received.

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

Revenue recognition – Co-location revenue

Co-location customers pay for energy used in connection with the customer co-location agreement on a pass-through basis, which may be on a fixed or variable basis calculated on the ~~day~~portion of energy used by the customer on the site. The Company additionally charges co-location fees for the use of the facilities, and other related fees. Revenue is typically received monthly from the customer based on the power usage at the rates outlined in each customer contract.

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

Revenue recognition – Equipment sales

The Company had previously earned revenues from the sale of earlier generation digital currency mining units and modular data centers that have been assembled or refurbished for resale (collectively “Hardware”). Revenue from the sale of Hardware is recognized upon transfer of control of the Hardware to the customer. At the date of sale, the net book value is expensed in cost of revenues.

Revenue recognition – Net energy benefits

In exchange for powering down the Company’s digital infrastructure and curtailing power usage in response to instances of high electricity demand, the Company receives net energy benefits from the grid.

Revenue for curtailing power is recognized over the period of time that the services are being provided. The Company estimates the amount of curtailable power and the expected payment for that curtailment and recognizes revenue based on the proportion of the service that has been provided. In this arrangement, the Company is considered the principal and revenue is recognized on a gross basis.

Revenue through the Company’s power pricing arrangement is recognized over the period of time that the services are being provided. The Company estimates the amount of energy available for sale and the expected payment for that energy, and recognizes revenue based on the proportion of the service that has been provided. In this arrangement, the Company is considered the principal and revenue is recognized on a gross basis.

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~~charged to operating expenses as 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~~Property and equipment are 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. Low-cost assets are capitalized and immediately depreciated. Depreciation is calculated over the following estimated useful lives:

Asset class	Useful life	Depreciation ~~Method~~ method
Fixtures ~~and Fittings~~	5 years	Straight-Line
Plant and equipment	10 years	Straight-Line
Modular data center	5 years	Declining
Motor ~~Vehicles~~vehicles	5 years	Straight-Line
Computer equipment	3 years	Straight-Line
Computational and Processing ~~Machinery~~machinery (Miners)	2 years	~~Declining~~Straight-Line
Transformers	15 years	Straight-Line
Leasehold improvements	~~10 years~~Shorter of useful life or lease term	Straight-Line

~~An item of property, plant~~Property and equipment ~~and any significant part initially recognized is~~are 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.~~statement.

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 $3,130,638 as at September 30, 2022, and an increase in the depreciation charge to the nine months to September 30, 2022 statement of operations and profit and loss of $84,735 over the prior treatment.

The Company’s long-lived assets are reviewed for impairment ~~in accordance with Accounting Standards Codification (“ASC”) 360, “Property, Plant and Equipment”,~~ whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such an 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. ~~There were impairment charges recognized for processing machines of $4,195,046 for the nine month period ended September 30, 2022, and $nil~~ ~~for the nine month period ended September 30, 2021.~~

Fair value of ~~and recognition of revenue from~~ financial instruments:

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

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

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

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

Fair value measured at September 30, 2022

Total carrying
value as at
September 30,
2022
Quoted prices
in active
markets
(Level 1) Significant other
observable
inputs
(Level 2) Significant
unobservable
inputs
(Level 3)
Derivative asset $ 21,383,904 - - 21,383,904
Marketable securities $ 1,706,032 - - 1,706,032

Fair value measured at September 30, 2023

Total fair
value as at

September 30,
2023

Quoted prices
in active
markets
(Level 1)

Significant other
observable
inputs
(Level 2)

Significant
unobservable
inputs
(Level 3)

Derivative asset

4,653,608

	Fair value measured at December, 2021								Fair value measured at December 31, 2022
	Total carrying value at December, 2021		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total fair value as at December 31, 2022		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative asset	$	-	$	-	$	-	$	-	$	11,299,971		-		-	$	11,299,971
Marketable securities	$	326,801	$	326,801	$	-	$	-	$	3,243,957	$	3,243,957	$	-	$	-

~~Level 1 Assets:~~

The Company held 50 million shares in DXN Limited (“DXN”), an Australian Securities Exchange (“ASX”) listed company as at December 31, 2021. This was recorded at fair value with changes in fair value recognized in the accompanying unaudited condensed consolidated statements of operations. The fair value of the DXN investment is classified in Level 1 of the fair value hierarchy as it is quoted on an active market, that being the ASX. During the nine months ended September 30, 2022, the Company sold all its shares in DXN.

~~Level 3 Assets:~~

~~Power Supply Agreement~~

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

~~Tasmania Data Infrastructure Pty Ltd (“TDI”)~~

During June 2022, Mawson AU Limited entered into a License and Services Agreement with TDI in exchange for 42,562,432 fully paid issued shares in TDI. During September 2022, Mawson AU sold a MDC to TDI in exchange for a further 10 million fully paid issued shares. TDI is held at fair value of $1.71 million as at September 30, 2022, the fair value of the asset is classified in Level 3 of the fair value hierarchy due to the significant unobservable inputs utilized in the valuation. The change in fair value is recognized in the accompanying unaudited condensed consolidated statements of operations.

~~Accounting for~~ Level 3 Assets:

Power Supply ~~Contract~~Agreement

In June 2022, the Company entered into a Power Supply Agreement with Energy Harbor LLC, the energy supplier to the Company’s Midland, Pennsylvania facility, to provide the delivery of a fixed portion of the total amount of electricity for a fixed price through to December 2026. If the Midland, Pennsylvania facility uses more electricity than contracted, the cost of the excess is incurred at a new price quoted by Energy Harbor LLC.

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

The Power Supply Agreement was classified as a derivative asset beginning in the quarter ended June 30, 2022 and measured at fair value on the date of Power Supply Agreement, with changes in fair value recognized in the accompanying unaudited condensed consolidated statements of operations. The estimated fair value of ~~financial instruments policy).~~the Company’s derivative asset is classified in Level 3 of the fair value hierarchy due to the significant unobservable inputs utilized in the valuation. Specifically, the Company’s discounted cash flow estimation models contain quoted commodity exchange spot and forward prices and are adjusted for basis spreads for load zone-to-hub differentials through the term of the Power Supply Agreement, which expires in December 2026. In addition, the Company adopted a discount rate of approximately 20% above the terminal value of the observable market inputs, but also includes unobservable inputs based on qualitative judgment related to company-specific risk factors. The terms of the Power Supply Agreement require pre-payment of collateral, calculated as forward cost based on the market cost rate of electricity versus the fixed price stated in the contract.

~~Share~~Stock based ~~payments~~compensation

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

~~Significant Accounting Policies~~

~~Revenue Recognition - Hosting Co-location revenue~~

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

The Company recognizes 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 includes cleaning, cabling and other services to maintain the customers’ equipment.~~

~~Revenue recognition – equipment sales~~

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

~~Net energy benefits~~

In exchange for powering down the Company’s systems and curtailing power, in response to instances of high electricity demand, the Company receives net energy benefits from the grid. The company also has a contract with Energy Harbor LLC where it can sell back any power not used at the market rate.

~~Cost of revenues~~

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

~~Research and development expenses~~

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

~~Income taxes~~

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

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

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

~~Functional currency~~

All subsidiaries of Company have a functional currency of United States dollar (“USD”) with the exceptions of Mawson Infrastructure Group Pty Ltd, MIG No.1 Pty Ltd, Cosmos Trading Pty Ltd and Mawson AU Limited whose functional currency is the Australian Dollar (“AUD”). The financial statements of foreign businesses have been translated into USD at current exchange rates for balance sheet items and at the average rate for income statement items. Translation of all the consolidated companies’ financial records into USD is required due to the reporting currency for these consolidated financial statements presented as USD and the functional currency of the parent company being that of AUD. Translation adjustments are accumulated in other comprehensive income (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.

~~Assets held for sale (NOTE 7)~~

Assets and liabilities are classified as held-for-sale if it is highly probable they will be recovered primarily through sale rather than through continuing use. On September 8, 2022, the Company entered into an agreement with CleanSpark to sell its Sandersville, Georgia Bitcoin mining facility, along with 6,468 (which number was later reduced to 6,349) miners. This transaction closed on October 8, 2022, therefore all assets and liabilities that were included in this sale have been classified as held for sale. Such assets have been measured at the lower of carrying amount and fair value less costs to sell. The property and equipment included in this sale ceased being depreciated from September 8, 2022, depreciation which would have been charged for the period from September 9, 2022 to September 30, 2022 would have been $1.0 million.

Digital ~~Currencies~~currencies

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

The following table presents the Company’s digital currency ~~(Bitcoin)~~(bitcoin) activities for the three months and nine months ended September 30, ~~2022:~~2023:

Three
months to
September 30,
2022 Nine
months to
September 30,
2022

Opening number of Bitcoin held as at June 30, 2022 and December 31, 2021 2.21 0.92
Number of Bitcoin added 282.99 1,231.26
Number of Bitcoin sold (275.78 ) (1,222.76 )
Closing number of Bitcoin held as at September 30, 2022 9.42 9.42

	Three months to September 30, 2023			Nine months to September 30, 2023

Opening number of bitcoin held as at June 30, 2023 and December 31, 2022		0			0
Number of bitcoin received		245.65			548.38
Number of bitcoin sold		(245.65	)		(548.38	)
Closing number of bitcoin held as at September 30, 2023		0			0

Digital ~~currency is~~currencies are 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 likely that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.

The Company’s policy is to dispose of ~~production~~bitcoin received from mining operations at the earliest opportunity, therefore the holding period is minimal, usually no more than a few days. Due to the short period for which ~~Bitcoin are~~bitcoin is held prior to sale and the consequent small numbers held, the risk of impairment is not material. No impairment charges have been recorded during the nine-month periods ended September 30, 2023, and 2022.

~~Equipment deposits~~

Equity method investments

~~The Company records a prepaid expense~~

Equity investments are accounted for ~~costs paid~~under the equity method if we are able to exercise significant influence, but not yet incurred. Those costs 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, over an investee. Our share of the ~~equipment from~~earnings or losses as reported by the ~~supplier. Amounts are recognized initially at the amount of the unconditional consideration paid. 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. The reverse asset acquisition and the associated impactinvestees is ~~referred to as the “Cosmos Transaction”.~~

Under the terms of the Cosmos Transaction Bid Implementation Agreement, the Company was required to make share-based payments consisting of up to 40,000,000 shares (pre 10-for-1 reverse stock split which occurred on August 11, 2021) under an Incentive Compensation Program and warrants issued to HC Wainwright as a fee related to the acquisition of common stock by Mawson of Mawson AU. In addition, Mawson AU had an outstanding obligation to W Capital Advisors Pty Ltd (“W Capital”) for options over the equity of Mawson AU which was terminated for consideration of warrants over the Company’s shares being issued to W Capital.

~~Concentrations of credit risk~~

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents and 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, the maximum amount of loss to 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 September 30, 2022, the Company is not a party to any litigation that would reasonably be expected to have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.

~~Leases~~

~~The Company accounts for its leases under ASC 842, Leases which was effective January 1, 2019. The Company determines if an arrangement is a lease at inception. Using ASC 842, leases are~~ classified as ~~operating or finance leases on the Balance Sheet as a right of use (“ROU”) assets and lease liabilities within current liabilities and long-term liabilities~~income from equity investees on our consolidated ~~balance sheets. ROU assets~~condensed statements of operations. The investments are evaluated for impairment annually and ~~lease liabilities are~~when facts and circumstances indicate that the carrying value may not be recoverable. If a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded in our consolidated condensed statements of operations. During the quarter ending September 30, 2023, there was an impairment recognized ~~based~~on our investment in Tasmania Data Infrastructure Pty Ltd (“TDI”) of $1.84 million. The impairment was recognized on the ~~present~~basis of TDI’s updates and its strategic direction, including changing from becoming a bitcoin miner to mine copper and gold and therefore the 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.company was deemed much lower than our investment value.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ~~(FASB)~~(“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~~the Company as of December 31, ~~2021,~~2022, included in the Company’s Annual Report on Form 10-K filed with SEC on March ~~21, 2022.~~23, 2023. Recent accounting pronouncements since that date include:

On January 1, 2023, the Company adopted Accounting Standards Update No. 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires measurement and recognition of expected credit losses for financial assets. In April 2019, the FASB issued clarification to ASU 2016-13 within ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, or ASU 2016-13. The guidance is effective for the Company’s fiscal year ended December 31, 2023. The adoption of the standard had no impact on the Company’s consolidated financial statements.

In ~~March 2022,~~July 2023, the FASB issued ASU update ~~2022-01—Derivatives~~2023-03—Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and ~~Hedging~~Compensation—Stock Compensation (Topic ~~815)~~718): ~~Fair Value Hedging—Portfolio Layer Method.~~Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock. The ~~adoption of~~Company does not expect ASU ~~2021-01 did not~~2023-03 to have a material impact on the Company’s consolidated financial statements or disclosures.

In ~~March 2022,~~August 2023, the FASB issued ASU ~~2022-02—Financial Instruments—Credit Losses~~update 2023-04— Liabilities (Topic ~~326)~~405): ~~Troubled Debt Restructurings and Vintage Disclosures.~~Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 121. The ~~adoption of~~Company does not expect ASU ~~2022-02 did not~~2023-04 to have a material impact on the Company’s consolidated financial statements or disclosures.

In ~~June 2022,~~August 2023, the FASB issued ASU ~~2022-03—Fair Value Measurement (Topic 820)~~update 2023-05— Business Combinations—Joint Venture Formations (Subtopic 805-60): ~~Fair Value Measurement of Equity Securities Subject~~Recognition and Initial Measurement. The Company does not expect ASU 2023-05 to ~~Contractual Sale Restrictions. The adoption of ASU 2022-03 did not~~ have a material impact on the Company’s consolidated financial statements or disclosures.

In September 2022, the FASB issued ASU 2022-04— Liabilities—Supplier Finance Programs (Topic 405-50): Disclosure of Supplier Finance Program Obligations. The adoption of ASU 2022-04 did not have a material impact on the Company’s consolidated 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:~~ 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, ~~2022~~2023, and ~~2021~~2022 are as follows:

	As at September 30,
	2023		2022
Warrants to purchase common stock		5,546,122		2,825,278
Options to purchase common stock		1,750,417		4,910
Restricted Stock-Units (“RSUs”) issued under a management equity plan		5,660,426		420,914
		12,956,965		3,251,102

As at September 30,
2022 2021
Warrants to purchase common stock 16,951,667 4,222,910
Options to purchase common stock 29,459 -
Restricted Stock-Units (“RSUs”) issued under a management equity plan 2,525,485 4,000,000
19,506,611 8,222,910

NOTE 4 – LEASES

The Company’s lease costs recognized in the Consolidated Condensed Statements of Operations consist of the following:

	For the three months ended September 30,				For the nine months ended September 30,
	2023		2022		2023		2022
Operating lease charges ⁽¹⁾	$	448,449	$	438,444	$	1,260,440	$	1,239,614
Finance lease charges:
Amortization of right-of-use assets	$	8,143	$	8,143	$	24,430	$	20,519
Interest on lease obligations	$	1,799	$	2,351	$	5,820	$	6,290

(1)

Included in selling, general and administrative expenses.

~~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,
2022 2021 2022 2021
Net Loss attributable to common shareholders $ (21,251,783 ) $ (3,097,875 ) $ (35,227,490 ) $ (47,923,670 )

Denominator:
Weighted average common shares - basic and diluted 79,366,725 72,952,466 74,353,227 174,470,310

Loss per common share - basic and diluted $ (0.27 ) $ (0.04 ) $ (0.47 ) $ (0.27 )

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

~~NOTE 4 – DEPOSIT, PROPERTY AND EQUIPMENT~~

~~During the nine months ended September 30, 2022, $32.05 million cash was paid for equipment which was recorded as either a deposit or within property plant and equipment on the balance sheet.~~

~~NOTE 5 – LEASES~~

Luna Squares LLC leased a 16.35-acre lot in Georgia from the Development Authority of Washington County until October 8, 2022, when the lease was transferred and assigned to CleanSpark. 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 4 additional acres was signed and became effective February 23, 2021. A further amendment to the lease and exercise of option to lease was signed and became effective August 24, 2021. The Lease Amendment covers an additional 11.35 acres of the property, bringing the total to 16.35 acres under the lease. It also includes 5, 3-year extension options bringing the total lease period to run potentially until 2038.

~~The 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 exercise four additional three-year extensions.~~

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

~~During May 2022, Luna Square Texas LLC entered into four lease agreements to lease 11 acres of land in Texas for a period of five years.~~

Other than the foregoing leases, the Company does not lease any material assets. The Company believes that these offices and facilities are suitable and adequate for its operations as 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
September 30, For the nine months ended
September 30,
2022 2021 2022 2021
Operating lease charges ⁽¹⁾ $ 438,444 $ 24,557 $ 1,239,614 $ 77,004
Finance lease charges:
Amortization of right-of-use assets $ 8,143 $ - $ 20,519 $ -
Interest on lease obligations $ 2,351 $ - $ 6,290 $ -

⁽¹⁾

~~Included in Selling, General & Administrative Expenses.~~

The following is a schedule of the Company’s lease liabilities by contractual maturity as of September 30, ~~2022:~~2023:

	Operating leases ⁽²⁾			Finance Leases			Operating leases			Finance leases

2023	$	1,958,970		$	47,720
Remainder of 2023							$	499,282		$	9,544
2024		1,211,898			38,176			1,552,313			38,176
2025		267,372			38,176			599,356			38,176
2026		278,064			15,016			443,183			15,016
2027		70,190			-			72,652			-
Total undiscounted lease obligations		3,786,494			139,088			3,166,786			100,912
Less imputed interest		(396,044	)		(17,836	)		(312,221	)		(9,799	)
Total present value of lease liabilities		3,390,450			121,252			2,854,565			91,113
Less current portion of lease liabilities		2,110,863			30,139			1,762,488			32,453
Non-current lease liabilities	$	1,279,587		$	91,113		$	1,092,077		$	58,660

⁽²⁾

~~Includes $967,490 of lease liabilities which have been transferred and assigned to CleanSpark on October 8, 2022.~~

Other lease information as of September ~~30,2022:~~30, 2023:

Operating
leases Finance
Leases

Operating cash out flows from operating and finance leases $ 1,315,908 $ 24,192
Weighted-average remaining lease term – operating and finance leases (years) 2.69 3.63
Weighted-average discount rate – operating and leases (%) 7.9 % 7.5 %

	Operating leases			Finance leases

Operating cash out flows from leases	$	1,073,837		$	28,632
Weighted-average remaining lease term (years)		2.21			2.64
Weighted-average discount rate (%)		8.9	%		7.5	%

NOTE 65 – PROPERTY AND EQUIPMENT

Property and equipment, net, consisted of the following:

	September 30, 2022			December 31, 2021			September 30, 2023			December 31, 2022

Plant and equipment		7,062,259			1,046,866		$	4,712,229		$	4,263,662
Computer equipment		467,209			216,099			161,027			163,060
Furniture & fixtures		28,133			31,474
Furniture and fixtures								27,887			29,492
Processing machines (Miners)		135,620,594			81,341,098			101,269,956			103,337,719
Modular data center		22,154,243			9,819,796			25,222,949			19,713,534
Motor Vehicles		326,704			250,425
Motor vehicles								357,704			326,704
Transformers		10,822,776			1,190,609			9,892,254			4,596,892
Low-cost assets		902,421			246,154			1,151,741			995,292
Assets under construction		17,248,364			1,008,001			5,081,023			11,592,582
Leasehold improvements		487,527			-			487,528			487,527
Total		195,120,230			95,150,522			148,364,298			145,506,464
Less: Accumulated depreciation		(57,717,088	)		(18,213,672	)		(82,052,063	)		(54,489,966	)
Less: Provision for impairment		(4,195,046	)		-
Reclassification to assets held for sale (NOTE 7)		(20,701,544	)		-
Property and equipment, net		112,506,552			76,936,850		$	66,312,235		$	91,016,498

~~Depreciation~~The Company incurred depreciation and amortization ~~expense~~expenses in the amounts of $11.88 million and $16.25 million for the ~~three month~~three-month period ended September 30, 2023, and 2022, ~~and 2021 was $16,252,106 and $4,129,862,~~ respectively. ~~Depreciation~~The Company incurred depreciation and amortization ~~expense~~expenses in the amounts of $28.63 million and $46.06 million for the ~~nine month period~~nine-month periods ended September 30, ~~2022~~2023, and ~~2021 was $46,061,673 and $7,977,800,~~2022, respectively. There were no impairment charges recognized for ~~processing machines of $4,195,046~~property and equipment for ~~nine month period~~either the nine-month periods ended September 30, ~~2022,~~2023, and $~~nil~~2022. ~~for nine month period ended September 30, 2021.~~

~~The reclassification of property and equipment to assets held for sale is in relation to the sale of the Georgia Bitcoin Mining facility to CleanSpark, refer to NOTE 7 for further details.~~

~~NOTE 7 – ASSETS HELD FOR SALE~~

On September 8, 2022, the Company entered into an agreement with CleanSpark to sell its Sandersville, Georgia Bitcoin Mining facility and an agreement to sell, up to 6,468 (which number was later reduced to 6,349) application-specific integrated circuit miners.

Total consideration for the sale of the Bitcoin Mining facility was (i) $22.52 million in cash; (ii) 1,590,175 shares of common stock, par value $0.001 per share of CleanSpark, and (iii) $6.5 million in Seller financing in the form of promissory notes. Total consideration for the application-specific integrated circuit miners was $9.48 million in cash (which was later reduced to $9.02 million upon reduction in the number of miners).

The sale of the Georgia Bitcoin Mining facility was announced to the market on September 8, 2022 and therefore the corresponding assets and liabilities were classified as held for sale from this date. Depreciation on the property and equipment ceased on September 8, 2022. At September 30, 2022 the assets and liabilities included in the sale are stated at fair value less costs to sell and comprised of the following assets and liabilities.

	September 30, 2022
~~Property and equipment~~		~~20,701,544~~
~~Operating lease right-of-use asset~~		~~944,790~~
~~Assets held for sale~~		~~21,646,334~~

	September 30, 2022
~~Operating lease liability~~		~~967,490~~
~~Liabilities held for sale~~		~~967,490~~

~~These figures are shown after recognizing an impairment on processing machines (miners), which were previously included in property and equipment, of $4,195,046.~~

NOTE ~~8 – FINANCIAL ASSETS~~

During June 2022 Mawson AU Limited entered into a License and Services Agreement with Tasmania Data Infrastructure Pty Ltd (“TDI”) in exchange for 42,562,432 fully paid issued shares in TDI. During September 2022 Mawson AU sold a MDC to TDI in exchange for a further 10 million fully paid issued shares. This investment is held at fair value, $1.71 million as at September 30, 2022.

~~NOTE 9~~6 – INCOME TAXES

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

For the three months ended
September 30,
2022 2021

Income/(Loss) before income taxes (21,251,783 ) (3,097,875 )
Tax Expense/(Benefit) for income taxes - -
Effective income tax rate 0.00 % 0.00 %

For the nine months ended
September 30,
2022 2021

Income/(Loss) before income taxes (35,227,490 ) (47,923,670 )
Tax Expense/(Benefit) for income taxes - -
Effective income tax rate 0.00 % 0.00 %

The Company’s effective tax rate is calculated by dividing the total income tax expense by the sum of income before the 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.

	For the three months ended September 30,
	2023			2022

Effective income tax rate		0.00	%		0.00	%

	For the nine months ended September 30,
	2023			2022

Effective income tax rate		0.00	%		0.00	%

NOTE 7 – BORROWINGS

Marshall loan

In December 2021 MIG No. 1 Pty Ltd entered into a Secured Loan Facility Agreement with Marshall Investments MIG Pty Ltd. The loan matures in February 2024 and bears interest at a rate of 12% per annum (with an overdue rate provision of an additional 500bps), payable monthly with interest payments that commenced in December 2021. This loan facility is secured by direct assets of MIG No.1 Pty Ltd and a general security agreement given by the Company. Principal repayments began during November 2022. The loan matures in February 2024 and the total outstanding balance is $8.05 million as at September 30, 2023 and is classified as a current liability accordingly. MIG No. 1 Pty Ltd has not made a principal or interest payment since May 2023. MIG No. 1 Pty Ltd and Marshall are in ongoing discussions with respect to the loan and payment, and the loan terms generally. Marshall and MIG No. 1 Pty Ltd have each reserved their rights.

Celsius loan

On February 23, 2022, Luna Squares LLC entered into a Co-location Agreement with Celsius Mining LLC. In connection with this agreement, Celsius Mining LLC loaned Luna Squares LLC a principal amount of $20 million, for the purpose of funding the infrastructure required to meet the obligations of the Co-Location Agreement, for which Luna Squares LLC issued a Secured Promissory Note for repayment of such amount. The Secured Promissory Note accrues interest daily at a rate of 12% per annum (with an overdue rate provision of an additional 200bps), and Luna Squares LLC is required to amortize the loan at a rate of 15% per quarter. Repayments to the principal amount began at the end of September 2022. The Secured Promissory Note matured and became due August 23, 2023, and the total outstanding balance as of September 30, 2023 is $8.24 million, which is classified as a current liability. Celsius Mining LLC transferred the benefit of the promissory note to Celsius Network Ltd. Celsius Mining LLC and Celsius Network Ltd filed for Chapter 11 bankruptcy protection on July 13, 2022.

W Capital loan

On September 2, 2022, Mawson AU entered into a Secured Loan Facility Agreement with W Capital Advisors Pty Ltd with a total loan facility of AUD$3.00 million (USD$1.9 million). This was amended on September 29, 2022, and the loan facility was increased to AUD$8.00 million (USD$5.2 million). During the nine-month period ending September 30, 2023, the Company received AUD$3.00 million (USD$1.99 million) from this loan facility. As at September 30, 2023, AUD$1.51 million (USD$0.97 million) has been drawn down from this facility, all of which is classified as a current liability. The Secured Loan Facility accrues interest daily at a rate of 12% per annum (with an overdue rate provision of an additional 800bps) and is paid monthly. Principal repayments are paid ad hoc in line with the loan facility agreement. The Secured Loan Facility expired in March 2023. W Capital Advisors Pty Ltd and Mawson AU have each reserved their rights. On October 30, 2023, the directors of Mawson AU appointed voluntary administrators to Mawson AU, and all of Mawson AU’s debts including the Secured Loan Facility will be managed as part of the voluntary administration.

Convertible notes

On July 8, 2022, the Company issued secured convertible promissory notes to investors in the aggregate principal amount of $3.60 million (the “Secured Convertible Promissory Notes”) in exchange for an aggregate of $3.6 million in cash. On September 29, 2022, the Company entered into a letter variation relating to some of the Secured Convertible Promissory Notes, with an aggregate principal amount of $3.1 million, which gave those holders the option to elect for pre-payment (including accrued interest to maturity) subject to certain conditions. All of the investors included in this letter variation elected for the pre-payment option and therefore there were $3.1 million principal repayments made during November 2022. The final convertible noteholder (W Capital Advisors Pty Ltd) who was not a party to this variation opted to enter into an arrangement whereby it received pre-payment of interest but agreed that the principal amount of $0.50 million was not immediately required to be repaid. The convertible note matured in July 2023 and the Company is in ongoing discussions with the noteholder regarding a resolution. W Capital Advisors Pty Ltd and MIG Inc have each reserved their rights. Interest has been accrued from July onwards and therefore the outstanding balance is $0.53 million as at September 30, 2023, all of which is classified as a current liability.

NOTE 8 – STOCKHOLDERS’ EQUITY

Stock-Based Compensation:

Equity plans

Under the 2018 Equity Plan, the number of shares issuable under the Plan on the first day of each fiscal year increase by an amount equal to the lower of (i) 100,000 shares (after a later 10 ~~– STOCKHOLDERS EQUITY~~for 1 stock split) or (ii) 5% of the outstanding shares on the last day of the immediately preceding fiscal year. As of September 30, 2023, there were no shares issuable under the 2018 Equity Plan until it automatically replenishes on January 1, 2024.

At the Company’s annual meeting on May 17, 2023, the stockholders approved an amendment to the 2021 Equity Plan that, amongst other things, increased the number of the shares available under the 2021 Equity Plan to 10,000,000 shares. As of September 30, 2023, the number of shares reserved under the 2021 Equity Plan was 5,217,548.

The Company recognized stock-based compensation expense during the three and nine months ended September 30, 2023, and 2022 as follows:

	For the three months ended September 30,					For the nine months ended September 30,
	2023			2022		2023			2022
Performance-based restricted stock awards*	$	(812,901	)	$	163,865	$	(479,343	)	$	517,789
Service-based restricted stock awards		4,096,717			133,465		4,146,709			439,052
Stock issued to consultants		-			-		307,069			-
Common stock warrant expense		500,500			500,500		1,501,500			1,167,833
Total stock-based compensation	$	3,784,316		$	797,830	$	5,475,935		$	2,124,674

*	The performance-based restricted stock awards contain reversal of share-based payment expenses from 2021 onwards for forfeited awards due to staff departures.

Performance-based awards

Performance-based awards generally vest over a three-year performance period upon the successful completion of specified market and performance conditions.

The following table presents a summary of the Company’s performance-based awards restricted stock awards activity:

	Number of shares			Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2022		342,310			8.33
Issued		-
Exercised		(100,000	)
Expired/forfeited		(66,765	)
Outstanding as of September 30, 2023		175,545			8.41
Exercisable as of September 30, 2023		144,327			6.65

~~Common Stock~~

~~Under~~

As of September 30, 2023, there was approximately $0.18 million of unrecognized compensation cost related to the ~~terms~~performance-based awards, which is expected to be recognized over a remaining weighted-average vesting period of approximately one year.

Service-based restricted stock awards

Service-based awards generally vest over a one-year service period.

The following table presents a summary of the ~~Cosmos Transaction Bid Implementation Agreement the Company made share-based~~Company’s service-based awards under an Incentive Compensation Program during September 2021 (refer to reverse acquisition accounting policy). During the three-month period ending September 30, 2022, certain participants partially converted certain of these awards into 727,125 shares of common stock of Mawson.activity:

~~Restricted Stock~~

	Number of shares			Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2022		74,246			8.42
Issued		6,143,346
Exercised		(77,092	)
Expired/forfeited		(655,619	)
Outstanding as of September 30, 2023		5,484,881			2.47
Exercisable as of September 30, 2023		233,014			0.07

As of September 30, ~~2022,~~2023, there was approximately $5.56 million of unrecognized compensation cost related to the service-based restricted stock awards, which is expected to be recognized over a remaining weighted-average vesting period of approximately six months.

Stock options awards

Stock options awards vest upon the successful completion of specified market conditions.

The following table presents a summary of the Company’s Stock options awards activity:

	Number of shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2022		417	$	35.90		1.26
Issued		1,750,000		1.89
Exercised		-		-
Expired		-		-
Outstanding as of September 30, 2023		1,750,417	$	1.90		9.75
Exercisable as of September 30, 2023		417	$	35.90		1.26

The options have no ~~restricted stock.~~intrinsic value as of Sept 30, 2023 or Dec 31, 2022.

Common Stock Warrants

A summary of the status of the Company’s outstanding stock warrants and changes during the nine months ended September 30, ~~2022,~~2023, 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, 2021		3,524,189			-		-
Outstanding as of December 31, 2022									2,825,278			4.17		3.54
Issued		14,703,478		$	4.17		3.79		2,967,512			-		-
Exercised		(1,276,000	)		-		-		(246,668	)		-		-
Expired		-			-		-		-			-		-
Outstanding as of September 30, 2022		16,951,667		$	4.17		3.79
Warrants exercisable as of September 30, 2022.		16,951,667		$	4.17		3.79
Outstanding as of September 30, 2023									5,546,122		$	14.31		3.44
Warrants exercisable as of September 30, 2023									5,546,122		$	14.31		3.44

~~On February 23, 2022, Mawson~~As of September 30, 2023, there was approximately $0.33 million of unrecognized compensation cost related to the warrants issued is expected to ~~Celsius Mining LLC (“Celsius”) warrants with an expiry date~~be recognized over a remaining weighted-average vesting period of ~~August 23,~~approximately three months.

Common Stock

During the quarter ended September 30, 2023, ~~to purchase up to 3,850,000~~there were exercises of restricted stock units and common stock options into 63,334 shares of common stock of ~~Mawson at an exercise price of US$6.50 per share, in connection with~~ the ~~$20 million loan made by Celsius to Luna Squares LLC in connection with a Customer Equipment and Co-Location Agreement entered into by Celsius and Luna Squares LLC.~~

On July 17, 2022, the Company entered into a Securities Purchase Agreement with an institutional investor providing for the issuance and sale by the Company of 8,000,000 shares of the Company’s common stock, accompanied by warrants to purchase 10,000,000 shares of the Company’s common stock. The warrants issued in this offering have an exercise price of $1.01 per share of our common stock, are exercisable 6 months after issuance and will expire five and one-half years following issuance.

Under the terms of the Cosmos Transaction Bid Implementation Agreement the Company made share-based awards in the form of warrants, options and RSUs under an Incentive Compensation Program during September 2021 (refer to reverse acquisition accounting policy). During the nine months ended September 30, 2022, certain participants exercised 2,003,125 of their warrants to convert these into common stock of Mawson.Company.

NOTE 119 – COMMITMENTS AND CONTINGENCIES

~~Agreements~~

The Company is currently in the process of applying for sales tax registrations and exemptions in different states in the U.S. At this stage, the Company is unable to determine the financial impact of sales tax.

	1.	In connection with the Cosmos Transaction (On March 9, 2021, the Company acquired the shares of Mawson AU in a stock for stock exchange), Wize NC Inc, Ocuwize Ltd and Wize Pharma Ltd are subject to CVR. The company 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 September 30, 2022, the Company cannot reliably measure the cost of the CVRs and it is not probable that these payments will be made and therefore this has been classified as a contingent liability.

	2.	During June 2022 Mawson AU Limited entered into a share subscription and equipment sale with Tasmania Data Infrastructure Pty Ltd (“TDI”). TDI has a 100% renewable energy Bitcoin Mining facility at the Que River Mine Site in Tasmania, Australia. Mawson AU Limited has agreed to exchange approximately 1,975 ASIC Bitcoin Miners for 107,042,254 fully paid issued shares in TDI. This transaction is expected to finalize later this fiscal year.

The determination of tax liabilities involves significant judgement as well as the application of complex tax laws and regulations. As of the reporting date, certain income tax matters are uncertain and cannot be reliably estimated for the subsidiaries under both the U.S. and Australian tax jurisdictions for the current and prior periods. The Company has not recorded any tax liabilities or benefits pertaining to these subsidiaries for the period.

On September 8, 2022, the Company entered into a (i) Purchase and Sale Agreement with CleanSpark, and (ii) an Equipment Purchase and Sale Agreement. Pursuant of the Purchase Agreement, CleanSpark assumed from the Company a lease for approximately 16.35 acres of real property located in Sandersville, Washington County, Georgia, and all personal property situated on the Property. This transaction closed on October 8, 2022, and CleanSpark paid the following consideration to the Company pursuant to the Purchase Agreement: (i) $13.50 million in cash; (ii) 1,590,175 shares of common stock, par value $0.001 per share of CleanSpark (valued at $4.8 million on October 7, 2022), and (iii) $6.5 million in Seller financing in the form of promissory notes. Pursuant to the Equipment Purchase Agreement, CleanSpark purchased from the Company, 6,468 (which number was later reduced to 6,349) application-specific integrated circuit miners, this transaction closed on October 8, 2022 for $9.48 million in cash (which was later reduced to $9.02 million upon reduction in the number of miners). There is also additional potential consideration payable pursuant to the Purchase and Sale Agreement of; (i) up to 1,100,890 shares of CleanSpark Common Stock dependent the number of modular data centers on the Property occupied by the Company being emptied and made available for use by CleanSpark, and (ii) $2 million in a Seller-financed earn-out if CleanSpark is able to utilize at least an additional 150 MW of power on the property by the six month anniversary of the Closing Date.

Mr. James Manning who stepped down as Chief Executive Officer of the Company, effective May 22, 2023, had agreed with Mawson AU that he would be issued 1.35 million RSUs and his other RSU agreements and entitlements would be cancelled, as set forth in the Company’s Current Report on Form 8-K filed May 22, 2023. However, at the request of Mr. James Manning these RSUs were not issued as set out in the relevant agreement and have not been included in the above table. Mr. James Manning has subsequently demanded these RSUs be issued, but as at the date of this report, the Company has not done so, because the Company is not obligated to issue the RSUs. The Company’s board of directors are also considering issues and matters concerning and related to Mr. Manning and the relevant action(s) to be taken. The directors of Mawson AU have appointed administrators to Mawson AU. Voluntary administration is a process under Australian corporate law where an external administrator is appointed to take control of the relevant entity, investigate and report to creditors about the relevant entity’s business, property, affairs and financial circumstances, and report on the options available to creditors.

~~NOTE 12 – BORROWINGS~~

~~Short-term Borrowings~~

~~Whatsminers~~

On October 15, 2021, the Company acquired 2,000 Whatsminers M30S for delivery in October 2021 from Foundry Digital LLC for a total consideration of $16,481,328. The Company paid a deposit of $3,202,766 and entered into an extension of the original Foundry finance agreement with Foundry for the balance of the consideration over a 12-month term, of which $1.42 million is outstanding at September 30, 2022. The amount was paid in full on October 17, 2022.

~~Marshall loan~~

In December 2021 MIG No. 1 Pty Ltd 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. This loan facility is secured by a general security agreement given by the Company. Principal repayments begin during 2023.

~~The amount classified as a current liability is $3.89 million with the remaining balance classified as a long-term liability.~~

~~On November 11, 2022 $3.0 million of this loan was repaid, this has been disclosed in NOTE 14 Subsequent events.~~

~~Celsius loan~~

On February 23, 2022, Luna Squares LLC entered into the Co-Location Agreement with Celsius Mining LLC, in connection with this agreement, Celsius Mining LLC loaned Luna Squares LLC a principal amount of $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, principal repayments began at the end of September 2022. The Secured Promissory Note has a maturity date of August 23, 2023, the outstanding balance is $17.59 million as at September 30, 2022. Celsius Mining LLC filed for Chapter 11 bankruptcy protection on July 13, 2022. The Company does not anticipate any changes to the terms of the loan agreement due to Celsius Mining LLC’s bankruptcy filing.

~~W Capital loan~~

On September 2, 2022, Mawson Infrastructure Group Pty Ltd entered into a Secured Loan Facility Agreement with W Capital Advisors Pty Ltd with a total loan facility of AUD$3 million (USD$1.9 million). This was amended on September 29, 2022 and the loan facility was increased to AUD$8 million (USD$5.2 million). As at September 30, 2022, AUD$7.4 million (USD$4.80 million) has been drawn down from this facility. The Secured Loan Facility accrues interest daily at rate of 12% per annum and is paid monthly. Principal repayments are due in March 2023. On October 14, 2022 AUD$5 million (USD $3.2 million) of this loan was repaid.

~~Convertible notes~~

On July 8, 2022, the Company issued secured convertible promissory notes to investors in the aggregate principal amount of $3,600,000 (the “Secured Convertible Promissory Notes”) in exchange for an aggregate of $3,600,000. The Secured Convertible Promissory Notes are convertible at the option of the holder at a price of $0.85 per share of our common stock. The Secured Convertible Promissory Notes bear interest of twenty percent per annum. One-half of the interest that accrues each month on the Secured Convertible Promissory Notes must be paid monthly. All unpaid principal, together with any then unpaid and accrued interest and other amounts payable under the Secured Convertible Promissory Notes, is due and payable if not converted pursuant to the terms and conditions of the Secured Convertible Promissory Note on the earlier of (i) one year after its issuance, or (ii) following an event of default. On September 29, 2022, the Company entered into a letter variation relating to some of the Secured Convertible Promissory Notes, with an aggregate principal amount of $3.1 million, which gave those holders the option to elect for pre-payment (including accrued interest to maturity) subject to certain conditions. Payments may be made partially in common stock of the Company, at the Company’s election.

~~Long-term Borrowings~~

~~Marshall loan~~

~~The total classified as payable after more than one year under this arrangement is $9.09 million.~~

NOTE 1310 – RELATED PARTY TRANSACTIONS

Mawson executive management and the board are in the process of winding down services that are or were provided by previously related parties. During the current quarter, Mawson has ended the services described below, in relation to office costs, tax advisory services, accounting labor services, executive employment, vehicle services and freight services, and has engaged non-related third parties where required to provide those services going forward. The lease with respect to the property in the City of Sharon entered into by Luna Squares Property LLC with Vertua Property Inc, cannot be exited at this time and going forward will not be considered a related party transaction.

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

During the ~~nine month~~nine-month period toended September 30, ~~2022~~2023 and ~~the nine month period to September 30,~~ 2022, Mawson ~~Infrastructure Group Pty Ltd~~AU paid Vertua Limited ~~$168,084~~$155,230 and ~~$43,384~~$168,084 respectively, for ~~reimbursement for~~ office ~~costs.~~costs charged with a mark-up. Mr. James Manning, ~~CEO,~~ a former director and executive officer, and a significant ~~shareholder~~stockholder of the Company, is also a director of Vertua Ltd. Manning family members also own interests in Vertua Ltd.

During the nine-month period ended September 30, 2023 and 2022, Mawson AU paid First Equity Tax Pty Ltd $56,036 and $16,367 respectively, for tax advisory services. Mr. James Manning, a former director and executive officer, and a significant stockholder of the Company, has interests in and is also a partner of First Equity Tax Pty Ltd.

During the nine-month period ended September 30, 2023 and 2022, Mawson AU paid First Equity Advisory Pty Ltd $79,818 and $28,758 respectively, for accounting labor services. Mr. James Manning, a former director and executive officer, and a significant stockholder of the Company, has interests in First Equity Advisory Pty Ltd.

During the nine-month period ended September 30, 2023 and 2022, Mawson AU paid Defender Investment Management Pty Ltd $362,770 and $248,110 respectively, in lieu of paying Mr. Manning directly for his employment. These payments were disclosed in the Executive Summary Compensation table in the Company’s 2022 and 2023 Proxy Statements. Mr. James Manning, a former director and executive officer, and a significant stockholder of the Company, and is a director of Defender Investment Management Pty Ltd. Manning family members have equity interests in and control Defender Investment Management Pty Ltd.

During the nine-month period ended September 30, 2023 and 2022, Mawson AU paid Manning Motorsports Pty Ltd $35,495 and $60,570 respectively, for vehicle services. James Manning, a former director and executive officer, and a significant stockholder of the Company, has direct interests in and is a director of Manning Motorsports Pty Ltd.

During the nine-month period ended September 30, 2023 and 2022, Mawson AU paid International Cargo Solutions, a division of Flynt ICS Pty Ltd, $973,059 and $4,616,588 respectively, for freight services. Manning Capital Holdings Pty Ltd, a company associated with Mr. Manning may have had debt interests in Flynt ICS Pty Ltd. Vertua Ltd entered into an agreement to acquire International Cargo Solutions, a division of Flynt ICS Pty Ltd in October 2022. The transaction closed on September 30, 2023. Mr. James Manning, a former director and executive officer, and a significant stockholder of the Company, is also a director of Vertua Ltd. Manning family members own interests in Vertua Ltd.

There may be additional related party transactions. Mr. James Manning has not signed a declaration of related party transactions to the Company’s satisfaction at the time of this filing.

The Company’s Board Audit and Risk Committee commenced an investigation into the these and other potential related party transactions relating to Mr. James Manning, including but not limited to Mr. Manning’s failure to appropriately disclose certain transactions, late or incomplete disclosure of certain transactions, and a failure to confirm to the Company’s satisfaction that the disclosures made were complete. The Board Audit and Risk Committee makes recommendations to the board or the Company’s other committees about the findings of the investigation, and any further actions that are advisable or necessary.

NOTE 1411 – SUBSEQUENT EVENTS

On October ~~17, 2022~~12, 2023, Mawson Hosting, LLC (the “Service Provider”), and a wholly-owned subsidiary of Consensus Technology Group LLC, Consensus Colocation PA LLC (the “Customer”), executed a Service Framework Agreement for the ~~Company made~~provision of certain co-location services (the “Agreement”). In accordance with the ~~final payment~~terms of the ~~Whatsminers loan amount~~Agreement, Service Provider will provide Customer with co-location services for approximately 50MW at Service Provider’s Midland PA site. The Agreement provides for Service Provider to ~~Foundry Digital LLC, bringing~~provide co-location services to ~~an end~~Customer for 12 months and the ~~loan agreement between~~parties can extend further upon mutual agreement. Customer will provide 15,876 new bitcoin mining servers. Customer has agreed to provide a cash deposit and power prepayments based on estimated power usage. Service Provider will pass through power costs to the ~~parties.~~Customer, which will be fixed for ten (10) months of the year, and at market prices for the remainder of the year.

On October ~~14, 2022~~30, 2023, the ~~Company made~~directors of Mawson Infrastructure Group Pty Ltd (“Mawson AU”) appointed voluntary administrators to that company. Voluntary administration is a process under Australian corporate law where an ~~early repayment of AUD$5 million (USD $3.2 million) against the W Capital loan.~~

~~On September 8, 2022, the Company entered into a (i) Purchase and Sale Agreement with CleanSpark, and (ii) an Equipment Purchase and Sale Agreement. Pursuant~~external administrator is appointed to take control of the ~~Purchase Agreement, CleanSpark assumed from~~relevant entity, investigate and report to creditors about the ~~Company a lease for approximately 16.35 acres of real~~relevant entity’s business, property, ~~located in Sandersville, Washington County, Georgia,~~affairs and ~~all personal property situated~~financial circumstances, and report on the ~~Property. This transaction closed~~options available to creditors. The voluntary administrators issued their first report to creditors on October 31, 2023, and the first meeting of creditors is scheduled to take place on November 8, ~~2022,~~2023. Only Mawson AU has been placed into voluntary administration. The only subsidiaries of Mawson AU at the time of the appointment of the voluntary administrators were Cosmos Trading Pty Ltd and ~~CleanSpark paid the following consideration~~Cosmos Manager LLC. Neither of those companies are operating or trading companies, and they do not have any material assets, other than intercompany loans. Cosmos Trading Pty Ltd, Cosmos Infrastructure LLC, Mawson Infrastructure Group Inc, and Luna Squares LLC are all creditors of Mawson AU, and are owed approximately AUD$78 million (US$50.19 million) by Mawson AU. The directors of Mawson AU, who were appointed to the Company pursuant to the Purchase Agreement: (i) $13.50 million in cash; (ii) 1,590,175 shares of common stock, par value $0.001 per share of CleanSpark (valued at $4.8 million on October 7, 2022), and (iii) $6.5 million in Seller financing in the form of promissory notes. Pursuant to the Equipment Purchase Agreement, CleanSpark purchased from the Company, 6,468 (which number was later reduced to 6,349) application-specific integrated circuit miners, this transaction closed on October 8, 2022 for $9.48 million in cash (which was later reduced to $9.02 million upon reduction in the number of miners).

~~There may be additional consideration payable to the Company from CleanSpark following the closing date~~board of the ~~Purchase and Sale Agreement as follows:~~

up to 1,100,890 shares of CleanSpark Common Stock (the “Earn-out Shares”) (which have a value of $4.5 million based upon the volume weighted average price of the CleanSpark Common Stock over the five trading days immediately preceding the signing date of the Agreements), based upon the number of modular data centers on the Property occupied by the Property Seller being emptied and made available for use by the Property Purchaser, with 100% of the Earn-Out Shares being available with respect to Co-location MDCs that are emptied on or before the 195th day after the Closing Date.

~~ii.~~

up to an additional $2.0 million in a Seller-financed earn-out payable at least 60 days post-closing if the Property Purchaser is able to utilize at least an additional 150 MW of power on the Property by the six month anniversary of the Closing Date.

~~On 7 November 2022,~~Australian entity MIG ~~No 1~~ Pty Ltd on September 4, 2023, having undertaken a ~~subsidiary~~review of the ~~Company, (the “Borrower”) signed an amendment to~~financial position of Mawson AU formed the view that a voluntary administration of MIG Pty Ltd was the most prudent course of action, and given certain likely material income and other tax exposures as well as the expired Secured Loan Facility ~~Agreement originally dated 9 December 2021. The primary commercial driver~~with W Capital, and other trade payables. On November 3, 2023, W Capital Advisors appointed receivers and managers under the terms of ~~the agreed amended terms was~~their security relating to provide the Borrower with some flexibility as to future uses of the loan collateral (certain Australia-based MDCs and miners), in return for an early repayment of USD$3m due on 14 November 2022. The new arrangement resulted in a change to amounts repayable in relation to the loan within one year from September 30, 2022 to $5.7m (from $3.4m), with a corresponding decrease in the amounts repayable after one year from September 30, 2022 to $7.3m (from $9.1m).their working capital facility.

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)~~operations and cash flows. The following discussion and analysis of our financial condition and results of operations should be read together with the interim condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022. All amounts are in U.S. dollars.

Throughout this report, unless otherwise designated, the terms “we,” “us,” “our,” the “Company,” “Mawson,” “our company” and the “combined company” refer to Mawson Infrastructure Group Inc., a Delaware corporation, and its direct and indirect subsidiaries, including Mawson Infrastructure Group Pty Ltd, an Australian company (“Mawson AU”), Cosmos Trading Pty Ltd, Cosmos Infrastructure LLC, Cosmos Manager LLC, Cosmos MIG No.1 Pty Ltd, MIG No.1 LLC, Mawson AU Limited, ~~Luna Squares~~Mawson Bellefonte LLC, Luna Squares Texas, Luna Squares Repairs LLC, Luna Squares Property LLC, Mawson Midland LLC, Mawson Ohio LLC, Mawson Hosting LLC and Mawson Mining LLC . Wize NC Inc, Ocuwize Ltd and Wize Pharma Ltd are subsidiaries of Mawson however these companies have not been consolidated into the financial statements are not included when referring to we, us, our or the Company or Mawson as these are subject to contingent value rights (“CVR”), refer to NOTE 11 of the financial statements.LLC.

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

Forward-Looking Statement Notice

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

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

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.

The following important factors, among others, could affect future results and events, causing those results and events to differ materially from those expressed or implied in our forward-looking statements:

our need to, and difficulty in, raising additional capital;

downturns in the Cryptocurrency industry;

inflation;

increased interest rates;

the inability to procure needed hardware;

the failure or breakdown of mining equipment, or internet connection failure;

access to reliable and reasonably priced electricity sources;

Cyber-security threats;

our ability to obtain proper insurance;

construction risks;

banks and other financial institutions ceasing to provide services to our industry.

changes to the Bitcoin network’s protocols and software;

the decrease in the incentive to mine bitcoin;

the increase of transaction fees related to digital assets:

the fraud or security failures of large digital asset exchanges;

future digital asset, technological and digital currency development; and

the regulation and taxation of digital assets like bitcoin;

our ability to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act of 2002;

material litigation, investigations or enforcement actions by regulators and governmental authorities, as disclosed in the legal proceedings section and elsewhere.

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:~~to, the risk factors set out in Item 1A. Risk Factors.

●

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

	●	~~our ability to raise additional capital (including by selling assets or raising equity or debt capital), under favorable terms or at all, and continue as a going concern;~~
	●	~~meet future liquidity requirements and comply with covenants in our indebtedness;~~

	●	~~attract and retain employees, officers and directors;~~
	●	~~increase brand awareness;~~
	●	~~upgrade and maintain effective business controls and information technology systems;~~
	●	~~acquire and protect intellectual property;~~
	●	~~anticipate the impact of, and respond to, new accounting standards;~~
	●	~~anticipate the impact of US federal income tax laws, including the impact on deferred tax assets~~
	●	~~that we may never become profitable;~~

	●	~~competition and technological challenges we may face;~~

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

	●	~~changes to the Bitcoin network’s protocols and software;~~

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

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

	●	~~growth challenges we may face;~~

●

~~our ability to obtain and maintain adequate insurance;~~

●

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

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

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

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

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

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

●

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

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

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

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

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

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

	●	~~the potential failure to maintain effective internal controls over financial reporting;~~
	●	~~the existence of anti-takeover provisions in our charter documents and Delaware law;~~

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

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

●

~~the potential inability to maintain compliance with Nasdaq Listing Rules~~

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 do not 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.

Company Overview

Mawson Infrastructure Group, Inc. (the “Company” or “Mawson” or “we”) is a ~~‘Digital Asset Infrastructure’ business, which owns and operates (through its subsidiaries) modular data centers (“MDCs”)~~digital infrastructure company headquartered in the United ~~States and Australia. We are also developing technology to enable us to own and better operate MDCs.~~States.

~~Our~~The Company has 3 primary ~~business is the ownership~~businesses – digital currency mining, co-location and ~~operation of Application-Specific Integrated Circuit (“ASIC”) computers known~~related services, and energy management.

The Company develops and operates digital infrastructure for digital currency, such 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~~bitcoin, mining activities on the ~~process~~Bitcoin blockchain network. The Company also provides digital infrastructure services for its co-location customers that use computational machines to mine bitcoin through our data centers and the Company charges for the use of its digital ~~mining, specifically for Bitcoin.~~

Ininfrastructure and related services. The Company also has an energy management program through which it can receive net energy benefits in exchange for ~~powering down our systems and~~ curtailing the power we ~~get~~utilize from the grid in response to instances of high electricity demand, we receive net energy benefits. We also have a contract with our energy provider where we can sell back any power not used at the market rate. We have recognized a derivative asset on our balance sheet for the contract we have with our energy provider, which has been measured at fair value with any changes in fair value recognized in our statement of operations.demand.

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

~~We also sell new and used crypto~~ currency mining, data center infrastructure and ~~MDC~~related equipment on a periodic basis, subject to prevailing market ~~conditions and our surplus production capacity.~~conditions.

~~As of September 30, 2022~~

Existing
Operations
Online Order and
Purchase
Agreements Cumulative
Fleet Fully
Deployed
Total miners online 26,360 - 26,360
Total miners in Transit - - -
Total miners on order - - -
Total miners in storage 6,990 - 6,990
Total miners 33,350 - 33,350

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

~~Prior LO2A Business~~

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

Prior to the Cosmos Transaction our main business undertaking was as a clinical-stage biopharmaceutical company focused on the treatment of ophthalmic disorders, including dry eye syndrome (our “LO2A business”). However, as part of the Cosmos Transaction, substantially all of the economic benefits of any successful monetization of our LO2A business, if any, will benefit only the holders of the CVRs. Accordingly, we assessed that the fair value of this asset at the acquisition date was $0. The asset was therefore assessed as impaired and the prior carrying amount of $23.96 million has been fully expensed in the consolidated statements of operations for the year ended December 31, 2021.

~~Recent Developments.~~

On September 8, 2022, we entered into a (i) Purchase and Sale Agreement with CleanSpark, and (ii) an Equipment Purchase and Sale Agreement. Pursuant of the Purchase Agreement, CleanSpark assumed from us a lease for approximately 16.35 acres of real property located in Sandersville, Washington County, Georgia, and all personal property situated on the Property. This transaction closed on October 8, 2022, CleanSpark paid the following consideration to the Company pursuant to the Purchase Agreement: (i) $13.50 million in cash; (ii) 1,590,175 shares of common stock, par value $0.001 per share of CleanSpark (valued at $4.8 million October 7, 2022), and (iii) $6.5 million in Seller financing in the form of promissory notes. Pursuant to the Equipment Purchase Agreement, CleanSpark purchased from the Company, 6,468 (which number was later reduced to 6,349) application-specific integrated circuit miners, this transaction closed on October 8, 2022 for $9.48 million in cash (which was later reduced to $9.02 million upon reduction in the number of miners). There is also additional potential consideration payable pursuant to the Purchase and Sale Agreement of; (i) up to 1,100,890 shares of CleanSpark Common Stock dependent the number of modular data centers on the Property occupied by the Company being emptied and made available for use by CleanSpark, and (ii) $2 million in a Seller-financed earn-out if CleanSpark is able to utilize at least an additional 150 MW of power on the property by the six month anniversary of the Closing Date.

~~COVID-19.~~

The ~~COVID-19 global pandemic has been unpredictable~~Company designs, develops, operates and ~~unprecedented~~manages its digital infrastructure to responsibly support the Bitcoin network by contributing to the scale, structure, and decentralization of the Bitcoin network and optimizing energy consumption. The Company helps contribute to the ecosystem and growth of digital currencies and commodities as there continues to ~~result~~be a global transition to the new digital economy.

We strive to operate and invest in ~~national~~markets and ~~global economic disruption,~~communities that offer low or zero carbon renewable energy sources and participate in energy management activities. We also invest in the communities in which ~~may adversely~~we operate and support our broader ecosystem.

Recent Developments

On August 22, 2023, Mr. James Edward Manning resigned as a director of Mawson Infrastructure Group Inc. (“the Company”). Mr. Manning resigned from his role as the sole director of the Company’s Australian subsidiaries effective September 4, 2023.

On September 28, 2023, the Board of Directors of the Company announced Mr. Ryan Costello, former United States Congressman from Pennsylvania, to serve as member of the Board of Directors effective October 2, 2023. Mr. Costello will serve on the Board until the Company’s 2024 annual meeting of stockholders at which time he will stand for election alongside the Company’s current directors. The Board has also appointed Mr. Costello to serve as a member of the Audit, and Nominating and Corporate Governance Committees, and chair of the Compensation Committee. Mr. Costello’s appointment was decided upon after seeking a nomination and recommendation from the Company’s Nominating and Corporate Governance Committee. The Board has determined that Mr. Costello qualifies as “independent” in accordance with the published listing requirements of NASDAQ.

On October 4, 2023, the company received written notice (“The Bid Price Letter”) from The Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company is not in compliance with the $1.00 minimum bid price requirement for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). In accordance with Nasdaq Listing Rule 5810-2(c)(3)(A), the Company has a period of 180 calendar days, or until April 1, 2024, to regain compliance with the Bid Price Rule. To regain compliance, the closing bid price of the Company’s common stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days during this 180-day period. The Bid Price Letter is a notice of deficiency, not delisting, and does not currently affect the listing or trading of shares of our ~~business.~~common stock on Nasdaq, which will continue to trade under the symbol “MIGI.” 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 continueintends to actively monitor the ~~situation~~closing bid price of shares of its common stock and may, if appropriate, consider implementing available options to regain compliance with the ~~possible effects on our financial condition, liquidity, operations, suppliers, and industry.~~Bid Price Rule. If the Company does not regain compliance within the allotted compliance periods, including any extensions that may be granted by Nasdaq, Nasdaq will provide notice that the Company’s common stock will be subject to delisting. The Company would then be entitled to appeal that determination to a Nasdaq hearings panel.

~~Regulation of Digital Assets~~Environment, Sustainability, Governance

~~Digital assets~~The Company has a strategy to source renewable or sustainable sources of energy, including carbon-neutral or low carbon emissions sources for the majority of its operations. These are key criteria when analyzing a new site for acquisition, lease or selling an existing site. The Company believes it can make a positive contribution towards lowering carbon emissions by supporting carbon neutral or low-emissions power sources.

The Company can provide, and ~~cryptocurrencies have been the source~~has provided, electricity grid stability by curtailing its power usage during times 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 regulationhigh-power demand through its Energy Markets Program, for example through its membership in the ~~digital asset industry will increase.~~PJM Market, and various demand response programs as and where they are available.

~~On August 22, 2022,~~The Company also invests and supports the ~~Australian Government announced that it planned to start consultation with stakeholders on a framework for industry~~communities in which we operate and regulators, which allowed consumers to participate in the market while also better protecting them. The first step would be “token mapping” to help identify how crypto assets and related services should be regulated.support our broader ecosystem.

On September 16, 2022 the U.S. Government released a Fact Sheet which noted that the President of the United States of America has received 9 reports from various stakeholders across government, industry, academia and civil society in response to the Executive Order issued on March 9, 2022, which together creates a framework for action on cryptocurrencies, with the intention to promote innovation, but mitigate downside risks.

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, ~~2022~~2023 compared to the three months ended September 30, ~~2021~~2022

	For the three months ended September 30,
	2023			2022
Revenues:
Digital currency mining revenue	$	6,898,223		$	5,913,031
Co-location revenue		2,959,074			5,726,064
Net energy benefits		1,475,333			6,301,108
Sale of equipment		-			10,388,223
Total revenues		11,332,630			28,328,426
Less: Cost of revenues (excluding depreciation)		7,715,920			18,183,524
Gross profit		3,616,710			10,144,902
Selling, general and administrative		3,655,444			5,001,553
Stock based compensation		3,784,316			797,830
Depreciation and amortization		11,875,618			16,252,106
Change in fair value of derivative asset		520,838			(3,669,547	)
Total operating expenses		19,836,216			18,381,942
Loss from operations		(16,219,506	)		(8,237,040	)
Non-operating income (expense):
Losses on foreign currency transactions		(600,619	)		(7,320,412	)
Interest expense		(514,953	)		(1,559,104	)
Impairment of financial assets		(1,837,063	)		-
Profit on sale of site		-			-
Gain on sale of marketable securities		-			-
Other expenses		(158,577	)		-
Loss on re-classification to assets held for sale		-			(4,195,046	)
Other income		-			59,819
Share of net loss of equity method investments		-			-
Total non-operating income (expense), net		(3,111,212	)		(13,014,743	)
Loss before income taxes		(19,330,718	)		(21,251,783	)
Income tax expense		-			-
Net Loss		(19,330,718	)		(21,251,783	)
Less: Net loss attributable to non-controlling interests		(283,101	)		(389,801	)
Net Loss attributed to Mawson Infrastructure Group stockholders	$	(19,047,617	)	$	(20,861,982	)
Net Loss per share, basic and diluted	$	(1.15	)	$	(1.58	)
Weighted average number of shares outstanding		16,500,833			13,227,788

For the three months ended
September 30,
2022 2021
Revenues:
Cryptocurrency mining revenue 5,913,031 10,151,579
Hosting Co Location revenue 5,726,064 796,207
Sale of equipment 10,388,223 -
Power curtailment revenue
6,301,108 -
Total revenues 28,328,426 10,947,786
Less: Cost of revenues (excluding depreciation)   18,183,524 2,499,837
Gross profit 10,144,902 8,447,949
Selling, general and administrative 5,001,553 5,147,183
Share based payments 797,830 1,425,000
Depreciation and amortization 16,252,106 4,129,862
Total operating expenses 22,051,489 10,702,045
Change in fair value of derivative asset 3,669,547 -
Loss from operations (8,237,040 ) (2,254,096 )
Non-operating income/(expense):
Loss on foreign currency transactions (7,320,412 ) (360,187 )
Interest expense (1,559,104 ) (362,900 )
Loss on re-classification to assets held for sale (4,195,046 ) -
Other income 59,819 32,431
Share of net loss of associates accounted for using the equity method - (153,123 )
Loss before income taxes (21,251,783 ) (3,097,875 )
Income tax expense - -
Net Loss (21,251,783 ) (3,097,875 )

Revenues

~~Cryptocurrency~~Digital currency mining revenues from production of bitcoin for the three months ended September 30, 2023 and 2022 ~~and 2021~~ were ~~$5.91~~$6.90 million and ~~$10.15~~$5.91 million respectively. This represented an increase of $0.99 million or 17%. During the 2023 period, the Company continued to increase its self-mining operations at its two Pennsylvania mining facilities, post transition from the prior Georgia facilities that were used for mining in 2022 period. The increase in mining revenue for the period was primarily attributable to the average price of bitcoin increasing. During the quarter ended September 30, 2022, the average price of bitcoin was $21,293, whereas the average price of bitcoin during the quarter ended September 30, 2023, was $28,109, a 32% increase in the average price. However, this increase was offset by the total bitcoin produced in the 2023 period versus the 2022 period. Bitcoin produced totaled 245.65 in the 2023 period compared with 282.99 in the 2022 period, a decrease of ~~$4.24 million or 42%. The decrease in mining~~13% of bitcoin produced over the respective period.

Co-location revenue for the three months ended September 30, 2023, and 2022 ~~from the three months ended September 30, 2021,~~were $2.96 million and $5.73 million respectively. The decrease in revenue was ~~primarily attributable~~due to the ~~decrease in average price~~expiration of ~~Bitcoin, in~~ the ~~2022 period~~co-location agreement with Celsius Mining LLC which occurred on August 23, 2023. Celsius Mining LLC was the average price was $21,293 whereas in the 2021 period the average price was $41,877. This decrease is offset by an increase in the Bitcoin produced, in total 282.99 were produced in 2022 compared with 251.52 in the 2021 period, or an increase of 12.5% of Bitcoin produced over the respective periods.Company’s sole co-location customer at that time.

Hosting co-location revenue for the three months ended September 30, 2022 and 2021 were $5.73 million and $0.80 million respectively. This increase is due to an increase in the number of co-location customers that we hosted during the period ended in September 2022.

~~Sales of crypto currency mining equipment for the three months ended September 30, 2022 and 2021, were $10.39 million and $0, respectively.~~

Net energy benefits for the three months ended September 30, 2023, and 2022, were $1.48 million and ~~2021, were~~ $6.30 million ~~and $0~~ respectively. This ~~increase~~represented a decrease of $4.82 million or a 77% decrease. This decrease is due to ~~there being no income from energy contracts~~the Company participating less in the ~~2021~~energy programs in the 2023 period because ~~we did not offer this service at that time.~~of lower power prices than in the 2022 period.

~~Given~~Sales of digital mining equipment for the ~~subsequent sale transaction of property~~three months ended September 30, 2023, and ~~assets located in Sandersville Georgia, future revenue~~2022, were $0 million and ~~expenses may be affected.~~$10.39 million respectively.

Operating Cost and Expenses

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

Cost of ~~revenues.~~revenue

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

Cost of ~~revenues~~revenue for the three months ended September 30, 2023, and 2022 ~~and 2021~~ were ~~$18.18~~$7.72 million and ~~$2.50~~$18.18 million, respectively. The ~~increase~~decrease in cost of revenue was primarily attributable ~~to: an increase~~to a decrease in power costs related to the energy used to operate the Company mining equipment and ~~increased deployment of cryptocurrency~~co-located mining ~~hardware. Included in~~equipment within our ~~cost of revenues is any costs associated with offsetting carbon emissions.~~ facilities.

~~Given the subsequent sale transaction of property and assets located in Sandersville Georgia, future revenue and expenses may be affected.~~

Selling, general and ~~administrative.~~ administrative

Our selling, general and administrative expenses consist primarily of professional and management fees relating to: accounting, employee compensation payroll, audit, and legal; equipment repairs; marketing; freight; insurance; consultant ~~fees~~fees; lease amortization and general office expenses.

Selling, general and administrative expenses for the three months ended September 30, 2023, and 2022 ~~and 2021~~ were ~~$5.0~~$3.66 million and ~~$5.15~~$5.00 million, ~~respectively. Selling, general and administrative~~respectively, which is a reduction of $1.34 million in the period. The decrease in these expenses ~~overall remained static, but there were a number of expenses movements which were offset with one another. Payroll expenses increased~~is primarily attributable to payroll costs decreasing by ~~$1.5~~$1.16 million due to ~~an increase~~cost reduction actions that the Company has undertaken during the quarter, and equipment repairs decreasing by $0.56 million. This was offset by a $1.15 million adjustment to accruals which occurred in employee numbers; property tax expense decrease by $1.20 million, equipment repair costs increased by $0.46 million; freight costs decreased by $0.79 million, and research and development costs decreased by $0.57 million.the 2022 period.

~~Given the subsequent sale transaction of property and assets located in Sandersville Georgia, future revenue and expenses may be affected.~~

~~Share~~Stock based ~~payments.~~compensation

~~Share~~Stock based ~~payments~~compensation expenses for the three months ended September 30, 2023, and 2022 ~~and 2021~~ were ~~$0.80~~$3.78 million and ~~$1.43~~$0.80 million, respectively. In the three months ended September 30, ~~2022, share~~2023, stock based ~~payments were~~compensation was largely attributable to costs recognized in relation to long-term incentives for the Company’s management of $3.28 million and warrants issued to Celsius Mining LLC amounting to $0.50 ~~million and $0.3 million in relation to long-term incentives for the Company’s leadership team.~~million.

Depreciation and ~~amortization.~~amortization

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

Depreciation and amortization for the three months ended September 30, 2023, and 2022 ~~and 2021~~ were ~~$16.25~~$11.88 million and ~~$4.13~~$16.25 million, respectively. The ~~increase~~decrease is primarily attributable to ~~new machines~~the Company owning less miners in the quarter ended September 30, 2023, due to the sale of its Georgia facility and ~~MDCs which were procured~~the miners and ~~have come into the ownership~~other equipment associated with it in November of 2022. The Company has continued to increase operations at its two Pennsylvania facilities where, as of September 30, 2023, it had approximately 16,730 miners online and hashing. We also revised our estimate of the ~~Company and~~useful life of miners with effect from December 1, 2022, to better reflect the ~~application~~pattern of consumption. The change was affected by updating the ~~diminishing value~~ method ~~resulting in a higher~~of depreciation ~~expense in~~from reducing balance to the ~~initial months of mining equipment operation.~~straight-line method from that date.

~~Given the subsequent sale transaction of property and assets located in Sandersville Georgia, future depreciation and amortization expenses may be affected.~~

Change in fair value of derivative asset

During the three months ended September 30, 2023, and 2022, there was a ~~change in~~loss on the fair value of the derivative asset by $0.52 million and gain of $3.67 million, respectively, in relation to our ~~Power Supply Agreement with Energy Harbor LLC.~~power supply arrangements. The loss on the derivative asset was due to the fall in the price of energy costs and due to less time left on the power supply agreement.

Non-operating ~~expense~~expenses

Non-operating expenses consist primarily of interest ~~expense, loss on classification of assets held for sale and~~expenses, losses on foreign currency ~~transactions.~~transactions, impairment of equity accounted investment and other expenses.

Interest ~~expense~~expenses for the three months ended September 30, 2023 and 2022 ~~and 2021~~ were ~~$1.56~~$0.51 million and ~~$0.36~~$1.56 million, respectively. This ~~was an increase~~decrease of ~~$1.2~~$1.05 million ~~which~~ was attributable to the ~~interest costs charged on the loans taken out with Celsius Mining LLC, W Capital Advisors Pty Ltd~~paydown of debt during 2022 and the ~~Secured Convertible Promissory Notes issued~~nine months ended September 30, 2023, resulting in ~~July of 2022.~~lower interest expense.

During the three months ended September 30, ~~2022,~~2023, the company recognized an impairment of $1.84 million on its equity accounted investment Tasmania Data Infrastructure Pty Ltd.

During the three months ended September 30, 2023, the realized and unrealized loss on foreign currency transactions was ~~$7.32~~$0.60 million, ~~and for~~in contrast to the three months ended September 30, ~~2021~~2022, where there was a loss of ~~$0.36 million.~~$7.32 million due to the movement in foreign exchange rates.

~~There was a loss on re-classification to assets held for sale of $4.20 million recognized in relation to the sale of the miners to CleanSpark in the three month period ending September 30, 2022.~~

Net loss ~~available~~attributable to ~~Common Shareholders~~Mawson Infrastructure Group, Inc. stockholders

As a result of the foregoing, the Company recognized a net loss of ~~$21.86~~$19.05 million for the three months ended September 30, ~~2022,~~2023, compared to a net loss of ~~$2.50~~$20.86 million for the three months ended September 30, ~~2021.~~2022.

Results of Operations – Nine months Ended September 30, 2023, compared to the nine months ended September 30, 2022

	For the nine months ended September 30,
	2023			2022
Revenues:
Digital currency mining revenue	$	14,550,744		$	40,909,399
Co-location revenue		11,876,379			9,842,924
Net energy benefits		2,934,066			10,479,768
Sale of equipment		193,581			6,301,108
Total revenues		29,554,770			67,533,199
Less: Cost of revenues (excluding depreciation)		19,422,380			40,954,957
Gross profit		10,132,390			26,578,242
Selling, general and administrative		14,898,118			20,882,237
Stock based compensation		5,475,935			2,124,674
Depreciation and amortization		28,627,896			46,061,673
Change in fair value of derivative asset		6,646,363			(21,383,904	)
Total operating expenses		55,648,312			47,684,680
Loss from operations		(45,515,922	)		(21,106,438	)
Non-operating income (expense):
Losses on foreign currency transactions		(1,416,000	)		(6,362,594	)
Interest expense		(2,061,067	)		(4,360,817	)
Impairment of financial assets		(1,837,063	)		(1,134,547	)
Profit on sale of site		3,353,130			-
Gain on sale of marketable securities		1,437,230			-
Other expenses		(226,330	)		-
Loss on re-classification to assets held for sale		-			(4,195,046	)
Other income		245,694			1,931,952
Share of net loss of equity method investments		(36,356	)		-
Total non-operating income (expense), net		(540,762	)		(14,121,052	)
Loss before income taxes		(46,056,684	)		(35,227,490	)
Income tax expense		(2,304,454	)		-
Net Loss		(48,361,138	)		(35,227,490	)
Less: Net loss attributable to non-controlling interests		(867,590	)		(912,449	)
Net Loss attributed to Mawson Infrastructure Group stockholders	$	(47,493,548	)	$	(34,315,041	)
Net Loss per share, basic and diluted	$	(3.10	)	$	(2.77	)
Weighted average number of shares outstanding		15,336,653			12,392,205

~~Results of Operations – Nine months Ended September 30, 2022 compared to the nine months ended September 30, 2021~~

For the nine months ended
September 30,
2022 2021
Revenues:
Cryptocurrency mining revenue 40,909,399 21,029,492
Hosting Co Location revenue 9,842,924 1,020,424
Sale of equipment 10,479,768 2,157,651
Net energy benefits
6,301,108 -
Total revenues 67,533,199 24,207,567
Less: Cost of revenues (excluding depreciation)   40,954,957 6,218,145
Gross profit 26,578,242 17,989,422
Selling, general and administrative 20,882,237 10,256,952
LO2A write backs - 23,963,050
Share based payments 2,124,674 21,779,898
Depreciation and amortization 46,061,673 7,977,800
Total operating expenses 69,068,584 63,977,700
Change in fair value of derivative asset 21,383,904 -
Loss from operations (21,106,438 ) (45,988,278 )
Non-operating income/(expense):
Gain / (loss) on foreign currency transactions (6,362,594 ) (1,082,649 )
Interest expense (4,360,817 ) (1,077,599 )
Impairment of financial assets (1,134,547 ) -
Loss on re-classification to assets held for sale (4,195,046 ) -
Other income 1,931,952 502,673
Share of net loss of associates accounted for using the equity method - (277,817 )
Loss before income taxes (35,227,490 ) (47,923,670 )
Income tax expense - -
Net Loss (35,227,490 ) (47,923,670 )

Revenues

~~Cryptocurrency~~Digital currency mining revenues from production for the nine months ended September 30, 2023, and 2022 ~~and 2021~~ were ~~$40.91~~$14.55 million and ~~$21.02~~$40.91 million respectively. This represented ~~an increase~~a decrease of ~~$19.88~~$26.36 million or ~~95%~~64%. The decrease in mining revenue for the period was primarily attributable to a decrease in the total bitcoin produced. bitcoin produced totaled 548.38 in 2023 compared with 1,231.26 in the 2022 period, a decrease of 55% of bitcoin produced over the respective period due to less miners being deployed during the current period. During the current period, the Company continued to increase its self-mining operations across its Pennsylvania facilities, whereas the prior period included the operations of the Georgia facility, which was sold in October 2022. In addition to this, the difficulty to mine bitcoin was also higher during the current nine month period. Another reason for the decrease in digital currency mining revenue is due to the average price of bitcoin being less for the nine months ended September 30, ~~2022, over~~2023, than during the nine months ended September 30, ~~2021. The increase in mining revenue was primarily attributable to an increase in the total Bitcoin produced. Bitcoin produced totaled 1,231.26 in~~2022. During the nine ~~months~~month period ended September 30, 2023, the average price of bitcoin was $26,338 whereas the average price of bitcoin during the nine month period ended September 30, 2022 ~~compared with 501.74 in the nine months ended September 30, 2021, or an increase of 145% of Bitcoin produced over the respective periods. This increase~~ was ~~offset by the~~$31,620, a 17% decrease in the average ~~price of Bitcoin. During the 2022 period the average Bitcoin price was $31,620 whereas during the 2021 period the average price was $45,521.~~price.

~~Hosting co-location~~Co-location revenue for the nine months ended September 30, 2023, and 2022 were $11.88 million and ~~2021 were~~ $9.84 million ~~and $1.02~~ respectively. This increase is due to an increase in the number of ~~co-location customers that~~miners we ~~hosted~~co-located during the ~~period ended in September 2022.~~2023 period.

~~Sales of equipment for the nine months ended September 30, 2022, were $10.48 million and $2.16 million respectively.~~

Net energy benefits for the nine months ended September 30, 2023, and 2022, were ~~$6.30~~$2.93 million and ~~$0,~~$10.48 respectively. This ~~increase~~represented a decrease of $7.55 million or a 72% decrease. This decrease is due to ~~there being no income from energy contracts~~the Company participating less in the ~~prior~~energy programs and selling less energy in the 2023 period because ~~we did not offer this service at that time.~~the price of power was much lower than in the 2022 period.

~~Given~~Sales of digital mining equipment for the ~~subsequent sale transaction of property~~nine months ended September 30, 2023, and ~~assets located in Sandersville Georgia, future revenue~~2022, were $0.19 million and ~~expenses may be affected.~~$6.30 million, respectively.

Operating Cost and Expenses

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

Cost of revenues.

Our operating costs and expenses include cost of ~~revenue consists primarily of: direct power costs related to cryptocurrency mining,~~revenues; selling, general and ~~cost of mining equipment sold.~~administrative expenses; stock based compensation; and depreciation and amortization.

Cost of revenues for the nine months ended September 30, 2023, and 2022 ~~and 2021~~ were ~~$40.95~~$19.42 million and ~~$6.22~~$40.95 million, respectively. The ~~increase~~decrease in cost of revenue was primarily attributable ~~to: an increase~~to a decrease in power costs ~~increase~~related to energy to operate our mining equipment and co-location facilities. This decrease is attributable to less miners being used in operations during the ~~deployed operations~~current nine-month period due to the sale of ~~cryptocurrency mining hardware. Included in our cost of revenues is any costs associated with offsetting carbon emissions.~~ the Georgia site.

~~Given the subsequent sale transaction of property and assets located in Sandersville Georgia, future revenue and expenses may be affected.~~

Selling, general and ~~administrative~~administrative.

Our selling, general and administrative expenses consist primarily of professional and management fees relating to: accounting, ~~payroll,~~employee compensation, audit, and legal; equipment repairs; marketing; freight; insurance; consultant ~~fees~~fees; lease amortization and general office expenses.

Selling, general and administrative expenses for the nine months ended September 30, 2023, and 2022 were $14.90 million and ~~2021 were~~ $20.88 million, ~~and $10.26 million~~ respectively. ~~The increase in~~Total selling, general and administrative expenses were ~~attributable~~reduced by $5.98 million in the period. Some of the main factors impacting the decrease the expenses were due to payroll costs decreasing by $0.90 million; marketing costs decreased by $0.76 million; contact labor costs decreased by $1.1 million; recruitment costs decreased by $0.37 million and equipment repairs decreased by $2.0 million, as a ~~number~~result of ~~factors; payroll expenses increased~~the cost reduction actions that the Company has undertaken during the period. This reduction was offset by ~~$5.40 million due to~~ an increase in employee numbers during the period; equipment repair costs increased by $2.36 million; marketing costs increased by $1.06 million and operating lease expense increased by $1.24 million due to the new lease agreements entered into during the period.freight of $0.66 million.

Stock based compensation

~~Given the subsequent sale transaction of property and assets located in Sandersville Georgia, future revenue and expenses may be affected.~~

~~Share~~Stock based ~~payments~~

~~Share based payments~~compensation expenses for the nine months ended September 30, 2023, and 2022 ~~and 2021~~ were ~~$2.12~~$5.48 million and ~~$21.78~~$2.12 million, respectively. In the nine months ended September 30, ~~2022, share~~2023, stock based ~~payments were~~compensation was largely attributable to costs recognized for warrants issued to Celsius Mining LLC amounting to ~~$1.17~~$1.50 million, shares issued to W Capital Advisors Pty Ltd amounting to $0.31 million for consultancy and ~~$0.87~~advisory work and $3.66 million in relation to ~~long-term incentives for the~~ Company’s leadership team. The prior period contained a $5.53 million fair value modification to warrants issued, another $6.18 million warrants were issued, and $8.58 million share-based payments were made under an Incentive Compensation Program in relation to the Bid Implementation Agreement.employees’ long term incentive plans.

Depreciation and amortization

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

Depreciation and amortization for the nine months ended September 30, 2023, and 2022 ~~and 2021~~ were ~~$46.06~~$28.63 million and ~~$7.98~~$46.06 million, respectively. The ~~increase~~decrease is primarily attributable to ~~new machines~~the Company owning less miners following the sale of its Georgia facilities in October 2022, and ~~MDCs which were procured and have come into~~ the ~~ownership~~increase self-mining operations at its two Pennsylvania facilities in the nine month period ended September 30, 2023. There was also a revised estimate of the ~~Company and~~useful life of miners with effect from December 1, 2022 to better reflect the ~~application~~pattern of consumption the ~~diminishing value~~change being effected by changing the method ~~resulting in a higher~~of depreciation ~~expense in~~from reducing balance to the ~~initial months of mining equipment operation.~~straight line method from that date.

~~Given the subsequent sale transaction of property and assets located in Sandersville Georgia, future depreciation and amortization expenses may be affected.~~

Change in fair value of derivative asset

During the nine months ended September 30, 2023, and 2022, there was loss on the fair value of the derivative asset by $6.65 million and a gain of $21.38 million, respectively, in relation to our power supply arrangements. The loss on the derivative asset is due to the fall in the price of energy costs combined with less time left on the power supply agreement.

Non-operating expense

Non-operating expenses consist primarily of interest expense, losses on foreign currency transactions, share of net loss of associates accounted for using the equity method and other expenses.

Interest expense for the nine months ended September 30, 2023 and 2022 were $2.06 million and $4.36 million, respectively. This was a decrease of $2.30 million which was attributable to the paydown of debt during 2022 and the current nine month period resulting in a lower interest expense.

During the nine months ended September 30, 2023, the company recognized an impairment of $1.84 million on its equity accounted investment Tasmania Data Infrastructure Pty Ltd.

During the nine months ended September 30, 2023, the realized and unrealized loss on foreign currency transactions was $1.42 million, and for the nine months ended September 30, 2022, there was a ~~change~~loss of $6.36 million due to the movement in ~~the fair value of the derivative asset of $21.38 million recognized in relation to our Power Supply Agreement with Energy Harbor LLC.~~foreign exchange rates.

Non-operating ~~expense~~income

Non-operating ~~expenses consist~~income consists primarily of ~~interest expense, impairment~~profit on sale of ~~financial~~site assets, ~~loss~~gain on ~~classification~~sales of ~~assets held for sale~~marketable securities and ~~losses on foreign currency transactions.~~other income.

~~Interest expense~~The profit on sale of site assets for the nine months ended September 30, 2023, and 2022 ~~and 2021~~ were ~~$4.36~~$3.35 million and ~~$1.08 million,~~$0, respectively. This was an increase of $3.28 million which was attributable to the interest costs charged on the loans taken out with Celsius Mining LLC, W Capital Advisors Pty Ltd and the Secured Convertible Promissory Notes issued in July of 2022.

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

~~There was a loss on re-classification to assets held for sale of $4.20 million recognized in relation~~The 2023 amounts mainly relate to the sale of the ~~miners to CleanSpark in the nine month period ending September 30, 2022.~~Luna Squares Texas LLC and 59 transformers.

~~During the nine months ended September 30, 2022, the realized and unrealized loss~~

The gain on ~~foreign currency transactions was $6.36 million, and~~sales of marketable securities for the nine months ended September 30, ~~2021 there was a loss of $1.08 million.~~

~~Non-operating income~~

~~During~~2023, and 2022 were $1.44 million and $0, respectively. The gain during the ~~nine months~~nine-month period ended September 30, ~~2022, there~~2023 was ~~other income recognized which mainly consisted of~~in relation to the sale of ~~our intellectual property of $1.12 million and $0.59 million for curtailment income.~~CleanSpark, Inc shares.

Net loss ~~available~~attributable to ~~Common Shareholders~~Mawson Infrastructure Group, Inc. stockholders

As a result of the foregoing, the Company recognized a net loss of $47.49 million for the nine months ended September 30, 2023, compared to a net loss of $34.32 million for the nine months ended September 30, ~~2022, compared to a net loss of $47.26 million for the nine months ended September 30, 2021.~~2022.

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 month~~nine-month period ended September 30, ~~2022,~~2023, we financed our operations primarily through:

	1.	Net cash ~~provided~~used by operating activities of ~~$25.14~~$4.82 million;

	2.	On October 15, 2021, an expansion of the Equipment Finance and Security Agreement was entered into with Foundry Digital LLC (“Foundry”) to purchase an additional 2000 Whatsminers M30’s delivered in October 2021. In total $13,185,062 was borrowed from Foundry, of which $1.42 is owed at September 30, 2022. The amount was paid in full on October 17 2022;

	3.	On December 9, 2021, MIG No.1 Pty Ltd entered into a Secured Loan Facility Agreement with Marshall Investments MIG Pty Ltd (“Marshall”) with a total loan facility of AUD$20 million (USD$12.98 million). Principal repayments will begin in January 2023. On November 11, 2022 $3 million of this loan was repaid, this has been disclosed in NOTE 14 Subsequent events.

	4.	On February 23, 2022, Luna Squares LLC entered into the Co-Location Agreement with Celsius Mining LLC, in connection with this agreement, Celsius Mining loaned Luna Squares LLC a principal amount of US$20,000,000, for the purpose of funding the infrastructure required to meet part of the obligations of the Co-Location Agreement. The Secured Promissory Note evidencing this loan accrues interest daily at rate of 12% per annum. Luna Squares LLC is required to amortize the loan at a rate of 15% per quarter, with principal repayments starting in the third quarter following the closing. This Secured Promissory Note has a maturity date of August 23, 2023. The outstanding balance as at September 30, 2022 is $17.59 million.

	5.	On July 8, 2022, the Company issued secured convertible promissory notes to investors in the aggregate principal amount of $3,600,000 in exchange for an aggregate of $3,600,000. The Secured Convertible Promissory Notes are convertible at the option of the holder at a price of $0.85 per share of our common stock. The Secured Convertible Promissory Notes bear interest of twenty percent (20%) per annum. One-half of the interest that accrues each month on the Secured Convertible Promissory Notes must be paid monthly. All unpaid principal, together with any then unpaid and accrued interest and other amounts payable under the Secured Convertible Promissory Notes, is due and payable if not converted pursuant to the terms and conditions of the Secured Convertible Promissory Note on the earlier of (i) one year after its issuance, or (ii) following an event of default.

	6.	On September 2, 2022, Mawson ~~Infrastructure Group Pty Ltd~~AU entered into a Secured Loan Facility Agreement with W Capital Advisors Pty Ltd with a total loan facility of AUD$~~3 million (USD$1.9 million). This was amended on September 29, 2022 and the loan facility was increased to AUD$~~8 million (USD$5.2 million). During the nine-month period ending September 30, 2023, the Company received AUD$3 million (USD$1.99 million) from this loan facility. As at September 30, ~~2022,~~2023, AUD$~~7.4~~1.51 million (USD$~~4.80~~0.97 million) has been drawn down from this facility. The Secured Loan Facility ~~accrues interest daily~~expired in March 2023 and the Company and W Capital Advisors Pty Ltd are in ongoing discussions regarding the terms and extension of the loan. W Capital Advisors Pty Ltd and Mawson AU have each reserved their rights.
	3.	The Company has the ability through its ATM Agreement to sell shares of its common stock. Effective May 4, 2023, the Company filed a prospectus supplement to amend, supplement and supersede certain information contained in the earlier prospectus and prospectus supplement, which reduced the number of shares of common stock the Company may offer and sell under the ATM Agreement to an aggregate offering price of up to $9,000,000 from time to time. During the nine months ended September 30, 2023, 415,271 shares were issued as part of the ATM Agreement for cash proceeds of $1.19 million, net of issuance costs. The Company had been contractually restricted from issuing any stock under its ATM Agreement until November 7, 2023. but the Company may now seek to utilize its ATM Agreement to sell shares of its common stock when and as permitted by the offering limits set forth in General Instruction I.B.6 of Form S-3, which is referred to as the “baby shelf” rules.
	4.	On May 3, 2023, the Company entered into a definitive agreement with institutional investors for the issuance and sale of 2,083,336 shares of its common stock (or pre-funded warrants in lieu thereof) at ~~rate~~a purchase price of ~~12%~~$2.40 per ~~annum~~share of common stock in a registered direct offering. In addition, in a concurrent private placement, the Company issued to the institutional investors unregistered warrants to purchase up to 2,604,170 shares of its common stock with an exercise price of $3.23 per share, which are exercisable nine months following issuance for a period of five and ~~is paid monthly. Principal repayments due March~~one-half years following issuance. The shares of common stock and pre-funded warrants described above were offered and sold by the Company pursuant to a “shelf” registration statement on Form S-3 (File No. 333-264062). The warrants to purchase common stock described above were offered and sold by the Company pursuant to Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder. This offering closed on May 8, 2022. The net amount raised was $4.60 million. As a condition of the offering the Company was precluded from issuing new shares until 60 days after the offering closed, or new shares under the ATM until November 7, 2023. ~~On October 14, 2022 AUD$5 million (USD $3.2 million) of this loan was repaid.~~

During the nine months ending September 30, ~~2022~~2023, we repaid ~~$12.69~~$12.83 million of principal payments against the historical facilities provided by ~~Foundry~~Celsius, Marshall and ~~Celsius.~~W Capital Advisors Pty Ltd.

We believe our working capital requirements will continue to be funded through a combination of the cash we expect to generate from future operations, our existing funds, external debt facilities that may be available to us, ~~and~~ further issuances of ~~shares.~~shares, and other potential sources of capital, monetization or funds. These are expected to be adequate to fund our operations over the next twelve months. ~~In addition, the Company has access to equity financing through the ATM offering facility entered in May 2022.~~ For our business to grow it is expected, we ~~will~~may continue investing in mining equipment ~~but we are likely to~~and infrastructure and will require additional working capital in ~~either~~ the short-term and long-term. As at September 30, 2023 we had an aggregate of $17.78 million of debt that is required to be repaid within five months unless we refinance, unless we refinance or ~~long-term.~~renegotiate the terms. In addition, the Celsius deposit of $15.33 million is the subject of a dispute.

Please see our Risk Factor entitled “We may need to raise additional capital to continue our operations and execute our business strategy” in our Annual Report on Form 10-K for the year ended December 31, 2022.

Working Capital and Cash Flows

As of September 30, ~~2022,~~2023 and December 31, ~~2021,~~2022, we had cash and cash equivalents balance of ~~$1.18~~$1.50 million and ~~$5.47~~$0.95 million, respectively.

As of September 30, ~~2022,~~2023 and December 31, ~~2021,~~2022, our trade receivables balance was ~~$11.79~~$10.61 million and ~~$5.61~~$10.46 million, respectively.

As of September 30, ~~2022,~~2023, we had ~~$31.39~~$17.78 million of outstanding short-term borrowings, and as of December 31, ~~2021,~~2022, we had ~~$11.10~~$23.61 million of short-term borrowings. The short-term borrowings as of September 30, ~~2022,~~2023, relate to the ~~acquisition of cryptocurrency mining equipment under the Foundry agreements, and also~~ to the secured loan facilities with Celsius Mining LLC, W Capital Advisors Pty Ltd, and Marshall Investments MIG Pty Ltd, and the secured convertible promissory notes issued to ~~investors and Marshall Investments MIG~~W Capital Advisors Pty Ltd. As of September 30, ~~2022,~~2023, and as of December 31, ~~2021,~~2022, we had ~~$9.11 million~~$0 and ~~$7.64~~$4.51 million, respectively, of outstanding long-term borrowings. ~~The long-term borrowings as~~

As of September 30, ~~2022, relate to the secured loan facility with Marshall Investments MIG Pty Ltd.~~

As2023, we had negative working capital of ~~September 30,~~$32.98 million and as at December 31, 2022, we had negative working capital of ~~$24.69 million and as at December 31, 2021, we had negative working capital of $8.63~~$15.17 million. ~~The decrease in working capital was primarily attributable to an increase in the Company’s short term and long-term borrowings during 2022, as compared to 2021.~~

The following table presents the major components of net cash flows (used in) provided by operating, investing and financing activities for the ~~nine~~three months ending September 30, ~~2022~~2023, and ~~2021:~~2022:

Nine Months Ended
September 30,
2022 2021

Net cash provided by operating activities $ 25,141,208 $ 8,337,277
Net cash used in investing activities $ (55,466,574 ) $ (62,261,396 )
Net cash provided by financing activities $ 26,240,336 $ 86,026,426

	Nine Months Ended September 30,
	2023			2022

Net cash (used in)/provided by operating activities	$	(4,818,073	)	$	25,141,208
Net cash provided by/(used in) investing activities	$	10,510,543		$	(55,466,574	)
Net cash (used in)/provided by financing activities	$	(5,115,470	)	$	26,240,336

For the nine months ended September 30, 2023, net cash used by operating activities was $4,818,073 and for the nine months ended September 30, 2022, net cash provided by operating activities was ~~$25,141,208 and for the nine months ended September 30, 2021, net cash provided by operating activities was $8,337,277.~~$25,141,208. The ~~increase~~decrease in net cash provided by operating activities was primarily attributable to timing differences in trade and other receivables and trade and other payables.

For the nine months ended September 30, ~~2022~~2023, net cash provided by investing activities was $10,510,543 and ~~2021,~~for the nine months ended September 30, 2022, net cash used in investing activities was ~~$55,466,574 and $62,261,396, respectively.~~$55,466,574. The net cash ~~used in~~provided by investing activities during September 30, ~~2022~~2023, was primarily attributable to the ~~acquisition~~proceeds from sale of ~~cryptocurrency mining equipment.~~investment shares in CleanSpark, Inc.

For the nine months ended September 30, ~~2022 and 2021,~~2023, net cash used in financing activities was $5,115,470 and for the nine months ended September 30, 2022, net provided by financing activities was ~~$26,240,336 and $86,026,426, respectively.~~$26,240,336. The cash ~~provided by~~used in financing activities during September 30, ~~2022~~2023, was primarily attributable to ~~proceeds from~~the repayment of borrowings.

Material Cash Requirements

The following discussion summarizes our material cash requirements from contractual and other obligations.

In December 2021 MIG No. 1 Pty Ltd entered into a Secured Loan Facility Agreement with Marshall Investments MIG Pty Ltd. The loan matures in February 2024 and bears interest at a rate of 12% per annum (with an overdue rate provision of an additional 500bps), payable monthly with interest payments commencing that commenced in December 2021. This loan facility is secured by direct assets of MIG No.1 Pty Ltd and a general security agreement given by the Company. Principal repayments began during November 2022. The outstanding balance is $8.05 million as at September 30, 2023, all of which is classified as a current liability. MIG No. 1 Pty Ltd has not made a principal and interest payment since May 2023. MIG No. 1 Pty Ltd and Marshall are in ongoing discussions with respect to the payment, and the loan terms generally. Marshall and MIG No. 1 Pty Ltd have each reserved their rights.

On February 23, 2022, Luna Squares LLC entered into a Co-Location Agreement with Celsius Mining LLC. In connection with this agreement, Celsius Mining LLC loaned Luna Squares LLC a principal amount of $20 million, for the purpose of funding the infrastructure required to meet the obligations of the Co-Location Agreement, for which Luna Squares LLC issued a Secured Promissory Note for repayment of such amount. The Secured Promissory Note accrues interest daily at a rate of 12% per annum (with an overdue rate provision of an additional 200bps). Luna Squares LLC is required to amortize the loan at a rate of 15% per quarter, principal repayments began at the end of September 2022. The Secured Promissory Note has a maturity date of August 23, 2023, the outstanding balance is $8.24 million as of September 30, 2023, all of which is classified as a current liability. Celsius Mining LLC transferred the benefit of the promissory note to Celsius Network Ltd. Celsius Mining LLC and Celsius Network Ltd filed for Chapter 11 bankruptcy protection on July 13, 2022. Under the Co-location Agreement, Celsius Mining LLC advanced $15.33 million to Luna Squares LLC that were held as a deposit. Whether that amount has been forfeited or must be returned to Celsius Mining LLC is the subject of a commercial dispute between the parties.

On September 2, 2022, Mawson Infrastructure Group Pty Ltd entered into a Secured Loan Facility Agreement with W Capital Advisors Pty Ltd with a total loan facility of AUD$3.00 million (USD$1.9 million). This was amended on September 29, 2022, and the loan facility was increased to AUD$8.00 million (USD$5.2 million). As at September 30, 2023, AUD$1.51 million (USD$0.97 million) has been drawn down from this facility, all of which is classified as a current liability. The Secured Loan Facility accrues interest daily at a rate of 12% per annum and is paid monthly. Principal repayments are paid ad hoc in line with the loan facility agreement. The Secured Loan Facility expired in March 2023 and Mawson Infrastructure Group Pty Ltd and W Capital Advisors Pty Ltd are in ongoing discussions in respect of the facility. On October 30, 2023, Mawson AU appointed voluntary administrators, and the facility will be managed as part of the voluntary administration.

On July 8, 2022, the Company issued secured convertible promissory notes to investors in the aggregate principal amount of $3.60 million (the “Secured Convertible Promissory Notes”) in exchange for an aggregate of $3.60 million in cash. On September 29, 2022, the Company entered into a letter variation relating to some of the Secured Convertible Promissory Notes, with an aggregate principal amount of $3.1 million, which gave those holders the option to elect for pre-payment (including accrued interest to maturity) subject to certain conditions. All of the investors included in this letter variation elected for the pre-payment option and therefore there were $3.1 million principal repayments made during November 2022. The final convertible noteholder who was not a party to this variation opted to enter into an arrangement whereby it received pre-payment of interest but agreed that repayment of the principal was not required therefore the remaining $0.50 million has been classified as a current liability. The convertible note matured in July 2023 and the Company has not repaid the principal amount. Interest has been accrued from July onwards and therefore the outstanding balance is $0.53 million as at September 30, 2023, all of which is classified as a current liability.

Financial condition

As at September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we had net current liabilities of ~~$24.69~~$32.98 million and ~~$8.63~~$15.17 million respectively. As at September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we had net assets of ~~$92.77~~$40.05 million and ~~$176.01~~$76.17 million respectively. As at September 30, ~~2022~~2023, we had an accumulated deficit of ~~$103.81~~$169.75 million compared to ~~$71.12~~$122.26 million as at December 31, ~~2021.~~2022. Our cash position at September 30, ~~2022,~~2023, was ~~$1.18~~$1.50 million in comparison to ~~$5.47~~$0.95 million at December 31, 2022. For the ~~nine month~~nine-month period ending September 30, ~~2022~~2023 and September 30, ~~2021~~2022 the Company incurred a loss after tax of ~~$34.32~~$47.49 million and a loss after tax of ~~$47.26~~$34.32 million respectively. Included in trade and other receivables is a $2 million payment being the final payment due from CleanSpark, Inc for the sale of the Georgia facility. CleanSpark, Inc has disputed this payment and there is uncertainty as to whether the Company can recover this amount in part or full.

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

~~In the event that we~~We require additional capital to respond to near-term debt repayment obligations, competitive pressure, market dynamics, new technologies, customer demands, business opportunities, challenges, potential acquisitions or unforeseen circumstances, ~~in either the short-term or long-term,~~and we ~~may~~will likely need to determine to engage in equity or debt financings ~~or enter into credit facilities for other reasons.~~in the short term. If we are unable to obtain adequate financing on terms satisfactory to us when we require it, our ability to continue to fund, grow or support our business model and to respond to business challenges could be significantly limited. In particular, the widespread COVID-19 pandemic, including rising inflation and interest rates, and the conflict between Russia and Ukraine have resulted in, and may continue to result in, significant disruption and volatility in the global financial markets, reducing our ability to access capital. If we are unable to raise additional funds when or on the terms desired,limited, our business, financial condition and results of operations could be adversely ~~affected.~~affected, and this may result in bankruptcy or our ceasing operations.

~~In relation~~The Company is taking steps to preserve cash by optimizing costs and negotiating with suppliers to improve their terms of trade. The Company has been improving its revenue generation by improving the ~~Purchase and Sale Agreement and the Equipment Purchase and Sale Agreement with CleanSpark, the~~efficiency of its operations. The Company ~~received in total $22.52 million in cash and 1,590,175 shares of common stock, par value $0.001 per share of CleanSpark during October 2022, and is due~~will continue to ~~receive $6.5 million in Seller financing in the form of promissory notes during December 2022, improving our overall working capital, liquidity and net asset position.~~seek to optimize its cashflows.

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 of 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,~~change in fair value of derivative asset, impairment of financial assets, 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
September 30, For the nine months ended
September 30,
2022 2021 2022 2021
Reconciliation of non-GAAP adjusted EBITDA:
Net loss: (21,251,783 ) (3,097,875 ) (35,227,490 ) (47,923,670 )
Impairment of financial assets - - 1,134,547 -
Depreciation and amortization 16,252,106 4,129,862 46,061,673 7,977,800
Share based payments 797,830 1,425,000 2,124,674 21,779,898
Unrealized and realized losses/(gain) 7,320,412 360,187 6,362,594 1,082,649
Other non-operating revenue (59,819 ) (32,431 ) (1,931,952 ) (502,673 )
Other non-operating expenses 1,559,104 362,900 4,360,817 1,355,416
LO2A write-back - - - 23,963,050
Tax - - - -
Loss on classification of assets held for sale 4,195,046 - 4,195,046 -
EBITDA (non-GAAP) 8,812,896 3,147,643 27,079,909 7,732,470

	For the three months ended September 30,						For the nine months ended September 30,
	2023			2022			2023			2022
Reconciliation of non-GAAP adjusted EBITDA:
Net loss:	$	(19,330,718	)	$	(21,251,783	)	$	(48,361,138	)	$	(35,227,490	)
Impairment of financial assets		1,837,063			-			1,837,063			1,134,547
Share of net loss of equity method investments		-			-			36,356			-
Depreciation and amortization		11,875,618			16,252,106			28,627,896			46,061,673
Stock based compensation		3,784,316			797,830			5,475,935			2,124,674
Unrealized and realized losses/(gain)		600,619			7,320,412			1,416,000			6,362,594
Other non-operating income		-			(59,819	)		(245,694	)		(1,931,952	)
Other non-operating expenses		673,530			1,559,104			2,287,397			4,360,817
Loss on classification of assets held for sale		-			4,195,046			-			4,195,046
Change in fair value of derivative asset		520,838			(3,669,547	)		6,646,363			(21,383,904	)
Income tax		-			-			2,304,454			-
EBITDA (non-GAAP)	$	(38,734	)	$	5,143,349		$	(24,632	)	$	5,696,005

Critical accounting estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of income and expenses during the reporting periods. Actual results could differ from those estimates. ~~The Company has considered the following~~There have been no material changes to ~~be significant~~our critical accounting policies and estimates ~~made by management, including but not limited to:~~

~~Going concern assumption- Management assumes that the Company will continue~~ as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. Please see NOTE 1-GENERAL to the consolidated condensed financial statementsset forth in Item 17, Management’s Discussion and Analysis of ~~PART I~~Financial Condition and Results of ~~this Quarterly~~Operations, included in our Annual Report on Form ~~10-Q~~10-K for ~~more information about this assumption.~~the year ended December 31, 2022.

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

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

Item 3. Quantitative and Qualitative Disclosures ~~about~~About Market ~~Risks~~Risk

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

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

Our Board of Directors and management, with the participation of our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a- 15(e)) and 15d- 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this ~~Annual~~Quarterly Report. Our Board of Directors and management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of September 30, ~~2022, due to~~2023, including the material weaknesses in our internal control over financial reporting described below. Management’s assessment of the effectiveness of our disclosure controls and procedures is expressed at a level of reasonable assurance because management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives.

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

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

Whilst remediation actions are ongoing and controls have been implemented across all business processes, the material weaknesses in our internal control over financial reporting and information technology will not be considered remediated, until controls have operated for a sufficient period of time and have been tested for and concluded to be operating effectively. As operating effectiveness testing is ongoing as of the date of this report, we continue to disclose the following material weaknesses.

Significant Reliance on ~~Key~~Certain Individuals. There is inadequate segregation of duties in place related to our financial reporting and other ~~management~~ review and oversight procedures due to the lack of sufficient accounting personnel. This is not inconsistent with similar small ~~fast-growing~~ organizations. This gives rise to the risk of lack of ability to react in a timely manner to operations issues and to meet ~~increased US GAAP/PCAOB/SOX/~~the requirements of the SEC, ~~registrant requirements.~~U.S. GAAP and the Sarbanes-Oxley Act of 2002. In addition, this poses the risk that compliance and other reporting obligations are not dealt with in an adequate manner.

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

Information and Technology Controls. There are control deficiencies related to information technology (“IT”) general controls that in the aggregate ~~into~~constitute 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~~execute its designed controls to ensure that data received from third parties iswas complete and accurate. Such data is relied on by the Company in determining amounts pertaining to mining and ~~hosting~~co-location revenue, net energy benefits, and ~~cryptocurrency~~digital currency assets.

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

Notwithstanding the identified material weaknesses and management’s assessment that our ~~internal control over financial reporting was~~disclosure controls and procedures were not effective as of September 30, ~~2022,~~2023, management believes that the consolidated condensed financial statements included in this ~~quarterly~~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.~~ With the oversight of ~~senior management~~the Board and our audit committee, we continue to remediate the underlying causes of the identified material weaknesses, ~~primarily through~~such that the ~~performance of~~controls are designed, implemented and operate better.

Our remediation efforts commenced in fiscal year 2022, when we performed a risk assessment, ~~process;~~designed controls, and gradually implemented controls for all business processes. In the ~~development and~~current financial year, management updated the initial risk assessment, refined control designs, continued the implementation of ~~formal, documented policies~~controls and ~~procedures, improved processes~~performed ongoing remediation efforts to uplift the quality and ~~control activities (including an assessment~~effectiveness of existing controls. Remediation efforts further included the ~~segregation~~implementation of ~~duties); as well as~~new IT systems and applications with robust controls, segregating duties through implementing system workflows and the hiring of ~~additional finance~~qualified personnel ~~for specific roles such as financial reporting. During the nine months to September 30, 2022, we made the following changes to our internal control over~~in financial reporting ~~that have materially affected, or are reasonably likely~~and IT. A small number of controls remain to ~~materially affect, our internal control over financial reporting:~~ be implemented in the upcoming quarter.

●

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

~~The~~Whilst controls have been implemented across all business processes and are operating, the material weaknesses in our internal control over financial reporting and information technology will not be considered remediated until ~~other information technology general~~ controls ~~and process-level controls operate~~have operated for a sufficient period of time and ~~can be~~have been tested for and concluded on for effectiveness. Further testing of the effectiveness of controls is planned in the subsequent quarter.

Remediation efforts for upcoming quarters will be focused on implementing the remainder of controls, refining existing controls and validating the effectiveness of implemented controls using criteria set forth by ~~management to be designed and operating effectively.~~the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control. We cannot provide any assurance that ~~these~~our remediation efforts will be successful or that our internal control over financial reporting and other business processes will be effective as a result of these efforts. In addition, as 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.

Limitations on Effectiveness of Controls and Procedures and Internal Control over Financial Reporting

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On October 16, 2023, Mr. Ariel Sivikofsky, who was previously engaged to provide CFO-related services to the Company, filed a claim against an Australian subsidiary Mawson AU in the Australian Federal Circuit and Family Court of Australia in relation to certain employment related claims. The applicant’s total claim is for up to AUD$216,979.64. Mawson AU disputes the claim, and denies Mr. Sivikofsky was an employee. Voluntary administrators were appointed to Mawson AU on October 30, 2023, and therefore consent orders were made staying those proceedings, and the hearing date was vacated.

WeThe Company and some of its subsidiaries are currently in commercial disputes, including with Celsius Mining LLC, whereby Celsius Mining LLC, the Company and/or its subsidiaries and affiliates have made certain allegations and claims against each other. The Company is also in a commercial dispute with CleanSpark, Inc. related to payments due by CleanSpark, Inc. to the Company. If the Company and those subsidiaries are unable to resolve these issues with Celsius Mining LLC and/or CleanSpark, Inc, these disputes may lead to litigation.

Other than as described above, we are currently not, and have not been in the recent past, a party to any ~~legal proceedings~~litigation which may have or have had in the recent past significant effects on our financial position or profitability. However, we have been in the past, and may be from time to time in the future, ~~named as a defendant~~be involved in certain ~~routine~~ litigation ~~incidental~~related to our ~~business.~~businesses. For example, the Company and its subsidiaries receive letters of demand for payments from time to time which could lead to legal proceedings.

On October 30, 2023, the directors of the Australian subsidiary Mawson AU appointed voluntary administrators to Mawson AU. Voluntary administration is a process under Australian corporate law where an external administrator is appointed to take control of the relevant entity, investigate and report to creditors about the relevant entity’s business, property, affairs and financial circumstances, and report on the options available to creditors. It is not a court process. On November 3, 2023, W Capital Advisors appointed receivers and managers under the terms of their security relating to their working capital facility. Neither of these processes are governed by the courts.

Item 1A. Risk Factors

The Company’s risk factors were disclosed in (i) Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022, which was filed on March 23, 2023 and (ii) Part II, Item 1A of our Quarterly Report on form 10-Q for the quarter ended March 31, 2023. In addition, the Company ~~wishes~~includes the additional risk factors and updates to ~~disclose the following~~existing risk ~~factors.~~factors below:

Listing on The Nasdaq Capital Market (“Nasdaq”)

~~Although our common stock is currently listed on Nasdaq, we may not be able to continue to meet Nasdaq’s minimum listing requirements or those of any other national exchange.~~ On ~~August 31, 2022 we~~October 4, 2023, the company received written notice (“The Bid Price Letter”) from The Nasdaq Stock Market LLC (“Nasdaq”) indicating that ~~we were~~the Company is not in compliance with the $1.00 minimum bid price ~~requirements~~requirement for continued ~~listing.~~listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing ~~Rules allow~~Rule 5550(a)(2) (the “Bid Price Rule”). In accordance with Nasdaq Listing Rule 5810-2(c)(3)(A), the Company has a period of 180 calendar days, or until ~~February 27, 2023~~April 1, 2024, to regain ~~compliance. We are actively monitoring~~compliance with the Bid Price Rule. To regain compliance, the closing bid price of the Company’s common stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days during this 180-day period. The Bid Price Letter is a notice of deficiency, not delisting, and does not currently affect the listing or trading of shares of our common stock on Nasdaq, which will continue to trade under the symbol “MIGI.” The Company intends to actively monitor the closing bid price of shares of its common stock and ~~are considering~~may, if appropriate, consider implementing available options to regain compliance with the ~~minimum bid price requirements. On October 24, 2022 we received written notice from Nasdaq that we were~~Bid Price Rule. If the Company does not ~~in compliance with Nasdaq’s audit committee requirements for continued listing due to the resignation of one of our directors. The Nasdaq Listing Rules provide a cure period in order to~~ regain compliance ~~as follows: (a) until~~within the ~~earlier of our next annual stockholders’ meeting or September 13, 2023; or (b) if our next annual stockholders’ meeting is held before March 13, 2023,~~allotted compliance periods, including any extensions that may be granted by Nasdaq, Nasdaq will provide notice that the Company’s common stock will be subject to delisting. The Company would then ~~until March 13, 2023. We have begun the recruitment process~~be entitled to ~~fill the vacancy on the audit committee~~appeal that determination to ~~regain compliance with the audit committee requirements.~~a Nasdaq hearings panel.

If we are unable to maintain listing on Nasdaq or if a liquid market for our common stock does not develop or is not sustained, our common stock may remain thinly traded. If, for any reason, Nasdaq should delist our securities from trading on its exchange and we are unable to obtain listing on another national securities exchange, a reduction in some or all of the following may occur, each of which could have a material adverse effect on our ~~shareholders:~~stockholders:

●

The liquidity of our common stock;

●

The market price of our common stock;

●

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

●

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

●

The number of market makers in our common ~~stock;~~stock:

●

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

●

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

~~The Cryptocurrency Industry has recently experienced a downturn~~

As of September 30, 2022, the price of Bitcoin was down by over 50% from the beginning of the year and many businesses in this industry have been impacted by this downturn. The fall in the Bitcoin price directly affects our ability to generate revenue. Further, volatility in energy prices has meant that the major input cost to generate Bitcoin has increased. In July of 2022, Celsius Networks, LLC and Celsius Mining LLC, filed for Chapter 11 bankruptcy. Celsius Mining LLC is one of our significant hosting customers and its failure to pay (or pay timely) amounts it owes to us when due could have a material adverse effect on our financial situation.

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

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

~~Our business could be harmed by prolonged internet outages.~~

Our operations require a significant amount of electrical power and access to high-speed internet to be successful. If we are unable to secure sufficient electrical power, or if we lose, internet access for a prolonged period, we may be required to reduce our operations or cease them altogether. If this occurs, our business and results of operations may be materially and adversely affected.

~~Increased Interest Rates~~

Central banks around the world (including the US Federal Reserves, and the Reserve Bank of Australia) have been increasing their interest rates. While our current borrowings are at fixed rates of interest, any future borrowings or refinancing may be at higher interest rates than the rates that we have obtained in the past.

~~Network difficulty~~

The Bitcoin network hash rate and the network difficulty have in recent times both been at all-time highs. An increase in the network difficulty means that for the same amount of effort, a Bitcoin miner will receive less reward. If the network difficulty continues to increase, the amount of Bitcoin we can produce with the equipment that we have at any given point in time, will decrease.

We ~~are subject to risks associated with our need for significant electrical power.~~

~~Our operations have required significant amounts of electrical power, and, as we continue to expand our mining fleet, we anticipate our demand for electrical power~~ will continue to grow. If we are unable to continue to obtain sufficient electrical power on a cost-effective basis, we may not realize the anticipated benefits of our significant capital investments. If power prices increase or decrease materially this will likely materially impact whether we can generate Bitcoin profitably, and how much net energy benefits we will be entitled to.

Additionally, our operations could be materially adversely affected by prolonged power outages. Therefore, we may have to reduce or cease our operations in the event of an extended power outage, or as a result of the unavailability or increased cost of electrical power. If this were to occur, our business and results of operations could be materially and adversely affected.

~~We may~~ need to raise substantial additional capital to continue our operations and execute our business ~~strategy.~~strategy, and we may not be able to raise adequate capital on a timely basis, on favorable terms, or at all.

We have a history of losses from operations, we expect ~~that we may incur net losses~~negative cash flows from our operations to continue for the foreseeable ~~future. Accordingly,~~future, and we expect that our net losses will continue for the foreseeable future as we seek to increase the efficiency of our operations, find new co-location customers, and grow the size of our self-mining operations. These circumstances raise substantial doubt about our ability to continue as a going concern. Our financial statements as of September 30, 2023, have been prepared on the basis that we will be able to continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty. At September 30, 2023, our accumulated deficit was $169.75 million, our cash and cash equivalents were $1.50 million, and we had negative working capital of $32.98 million. Advancing our future plans will require substantial additional investment. Based on our current operating plan estimates, we do not have sufficient cash to satisfy our working capital needs and other liquidity requirements over the next 12 months from the date of this report. We will need to raise substantial additional capital in the near term to continue to fund our operations and execute our current business ~~strategy depends~~strategy. The amount and timing of our capital needs have and will continue to depend on ~~our ability to raise additional capital through equity, debt or structured financings, collaborations~~many factors, as discussed further below as well as under “Item 2. Management’s Discussion and ~~strategic alliances or other similar types~~Analysis of ~~arrangements.~~Financial Condition and Results of Operations —Liquidity and Capital Resources.”

Our capital needs have depended on, and will continue to depend on, many factors that are highly variable and difficult to predict, including:

●

~~the rate of growth we choose to pursue;~~working capital,

●

~~the cost of energy;~~capital expenditures,

●

~~the cost of key supplies, materials and equipment;~~public company costs and

●

~~the price of Bitcoin;~~general corporate needs.

AtWe are seeking to raise additional capital through a variety of means, including equity, equity-linked or debt securities offerings, or other types of arrangements or sources of capital, monetization or funds. Our past success in raising capital through equity offerings should not be viewed as an indication we will be successful in raising capital through those or any other means in the future. We expect that our ability to raise additional capital and the amount of capital available to us will depend not only on our operations, assets and progress effecting our business plan, but also on several factors outside of our control, such as macroeconomic and financial market (including cryptocurrency market) conditions.

Unstable and unfavorable market and economic conditions may harm our ability to raise additional capital. An economic downturn, recession or recessionary concerns, delay or failure of the U.S. government to raise the federal debt ceiling, increased inflation, rising interest rates, adverse developments affecting financial institutions or the financial services industry, or the occurrence or continued occurrence of events similar to those in recent years, such as a fall in the price of bitcoin, the COVID-19 pandemic or other public health emergencies, geopolitical conflict (such as the war in Ukraine and Gaza), natural/environmental disasters, supply-chain disruptions, terrorist attacks, strained relations between the U.S. and a number of other countries, social and political discord and unrest in the U.S. and other countries, and government shutdowns, among others, increase market volatility and have long-term adverse effects on the U.S. and global economies and financial markets. Volatility and deterioration in the financial markets and liquidity constraints or other adverse developments affecting financial institutions may make equity or debt financings more difficult, more costly or more dilutive and may increase competition for, or limit the availability of, funding from other third-party sources, such as from strategic collaborations and government and other grants.

Our management may devote significant time and we may incur substantial costs in pursuing, evaluating and negotiating potential strategic options or capital-raising transactions and those efforts may not prove successful on a timely basis, or at all. If we cannot raise adequate additional capital when needed, we may be forced to reorganize or merge with another entity, sell or monetize assets, file for bankruptcy, or cease operations. If we become unable to continue as a going concern, we may have to liquidate our assets, and might realize significantly less than the values at which they are carried on our financial statements, and our stockholders may lose all or part of their investment in our common stock.

We will need to raise capital to meet our debt service obligations, and to fund our working capital needs. Our inability to raise sufficient capital would have a material adverse effect on our financial condition and business.

As of September 30, ~~2022, our~~2023, we had cash and cash equivalents ~~were approximately $1.18 million and our accumulated deficit was approximately $103. 81 million. We incurred a net loss~~ of approximately ~~$35.23 million for the nine month period ended~~$1.50 million. As at September 30, ~~2022. We may never become profitable. Based on some~~2023 we had an aggregate of ~~our current operating plan estimates,~~$17.78 million of debt that is required to be repaid within five months unless we ~~have sufficient cash~~refinance, unless we refinance or renegotiate the terms. In addition, the Celsius deposit of $15.33 million is the subject of a dispute. Mawson has a need to ~~satisfy~~raise capital to meet those debt service obligations and to fund our working capital ~~needs~~needs. We currently have no arrangements for such capital and ~~other liquidity requirements over the next 12 months from the date of issuance of the accompanying consolidated financial statements. We may~~no assurances can be given that we will be able to raise such capital when needed, on acceptable terms, or at all. If we are unable to raise or source sufficient capital, we will need to ~~raise~~implement additional measures to reduce operating expenses and to preserve capital, any of which may further adversely affect our operations. If we fail to comply with our debt service obligations, our lenders could declare a default, which could lead to all or ~~significantly curtail~~a number of payment obligations becoming immediately due and payable and have a material adverse effect on our ~~planned operations to remain a going concern.~~

~~Additional capital~~financial condition and business. The Company may not be ~~available~~able to us, or even if it is, the cost of such capital may be high. We may be forced to obtain additional capital when our stock price or trading volume or both are low, or when the general market for cryptocurrency companies is weak. Raising capital under any of these or similar scenarios, if we can raise anymake all those payments at ~~all, may lead to significant dilution to our existing stockholders.~~once.

The Company requires capital to invest in new hardware. Bitcoin mining hardware becomes obsolete over time, and the difficulty to mine for bitcoin increases as the total hashrate of the Bitcoin network increases. This means that if competitors continue to increase their hashing power relative to the Company, the Company will tend to earn less bitcoin if its hashing power does not increase in a similar manner.

The Company has only one co-location customer, and therefore a significant part of its business is exposed to that counterparty risk, for example if that counterparty fails to meet its contractual obligations, including delivering hardware on time, or failing to make payments on time, or at all. The Company has sought to mitigate such risks through its contractual arrangements, and may seek to further mitigate this risk in other ways, such as executing further co-location agreements with other counterparties.

Item 2. ~~Unregistered Sales~~Use of Proceeds, and Issuer Purchases of Equity Securities ~~and Use of Proceeds~~

None

Item 3. Defaults Upon Senior Securities

~~None~~Celsius Mining LLC loaned $20 million to Luna Squares LLC, through a Secured Promissory Note (the “Celsius Promissory Note”), which had a maturity date of August 23, 2023, and a total outstanding balance as at September 30, 2023, of $8.24 million. Luna Squares LLC has not repaid the loan as required on the maturity date, and is therefore in default. Celsius Mining LLC transferred to benefit of the Celsius Promissory Note to Celsius Network Ltd. Celsius Network Ltd has so far not taken any formal steps to enforce its rights against Luna Squares LLC or the collateral, but has notified Luna Squares the default interest is payable.

The Company has a Secured Loan Facility Agreement with Marshall Investments GCP Pty Ltd ATF for the Marshall Investments MIG Trust (“Marshall”). The loan matures in February 2024 and the total outstanding balance is $8.05 million as at September 30, 2023. MIG No. 1 Pty Ltd has not made a principal and interest payment since May 2023, despite such payments falling due, and is therefore in default. MIG No. 1 Pty Ltd is also in default of a number of other covenants under the terms of the loan. MIG No. 1 Pty Ltd and Marshall are in ongoing discussions with respect to the payment, and the loan terms generally. Marshall and MIG No. 1 Pty Ltd have each reserved their rights.

A subsidiary of the Company in Australia, Mawson AU has a Secured Loan Facility Agreement for working capital with W Capital Advisors Pty Ltd with a total loan facility of AUD$8 million (USD$5.2 million) (“Working Capital Loan”). As at September 30, 2023, AUD$1.51 million (USD$0.97 million) has been drawn down from this facility. The Secured Loan Facility expired in March 2023, and Mawson AU did not extend the maturity date, and has not repaid the loan amount, and is therefore in default. W Capital Advisors Pty Ltd and Mawson AU each reserved their rights.

The Company has a Secured Convertible Promissory Note with W Capital Advisors Pty Ltd with an outstanding balance of $0.50 million as at September 30, 2023. The Convertible Note matured in July 2023. W Capital Advisors did not convert the note, and the Company has not repaid the face value of the, and is therefore in default. W Capital Advisors Pty Ltd has not taken formal steps to enforce its rights in connection with the Convertible Note (including against the relevant collateral) and the Company reserves its rights.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

On November14, 2022 and with effect from November 18, 2022, the Company and Mr Nicholas Hughes-Jones entered into a departure deed. As a result of the departure deed, and due to the evolving needs of the Company and its business, the role of Chief Commercial Officer, a senior executive role with the Company, was eliminated or made redundant. The various ongoing responsibilities of that role will be shared amongst several other roles within the Company, and in some cases may be outsourced. Mr Nicholas Hughes-Jones has performed that role since joining the Company in October 2021. At the same time as the departure deed, an entity controlled by Mr Hughes-Jones has entered into a Transition Services Agreement under which Mr Hughes-Jones will provide market updates and strategic industry insights to the Board and the senior executive group of the Company, as well as assist with the handover of his current responsibilities. The Compensation Committee has determined that Mr Hughes-Jones is a ‘Good Leaver’ for the purposes of all the unvested restricted stock units that he holds (“RSUs”), and as such he will not forfeit any RSUs. As previously announced in October 2021, Mr Hughes-Jones is entitled to a termination payment valued at 3 months’ salary, being AUD162,500. The Transition Services Agreement is valued at AUD240,000 and for a term of at least 6 months, and the terms of this agreement are standard for agreements of this kind. Mr Hughes-Jones will not be eligible for a short-term incentive payment in 2022, despite him having properly performed his duties for the Company for most of the testing period (being calendar year 2022). In consideration of the various benefits being paid to Mr Hughes-Jones, he has provided a broad release to the Company.None.

~~The CEO and the Board is very grateful to Mr Hughes-Jones for his efforts and expertise during his tenure at the Company and wishes him all the best in his future endeavors.~~

Item 6. Exhibits

~~2.1~~2.1†		Bid Implementation Agreement between Wize Pharma, Inc. and Cosmos Capital Limited, dated December 30, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 5, 2021)
~~2.2~~2.2†		Deed of Amendment, dated January 18, 2021, of the Bid Implementation Agreement between Wize Pharma, Inc. and Cosmos Capital Limited, dated December 30, 2020 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on January 19, 2021)
3.1		Certificate of Incorporation (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on April 5, 2012)
3.2		Certificate of Amendment to Certificate of Incorporation (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on July 18, 2013)
3.3		Certificate of Amendment to Certificate of Incorporation dated November 15, 2017 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on November 21, 2017)
3.4		Certificate of Amendment to Certificate of Incorporation dated March 1, 2018 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on March 5, 2018)
3.5		Certificate of Amendment to Certificate of Incorporation dated March 17, 2021 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on March 23, 2021)
3.6		Certificate of Amendment to Certificate of Incorporation dated June 9, 2021 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on June 14, 2021)
3.7		Certificate of Amendment to Certificate of Incorporation dated August 11, 2021 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on August 16, 2021)
~~3.8~~3.8*		Certificate of Amendment to Certificate of Incorporation dated February 6, 2023
3.9		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~~3.10		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~~3.11		Bylaws (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on May 10, 2013)
~~4.2~~4.1		Form of ~~Secured Convertible Promissory Note(Incorporated~~Common Warrant (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 8, 2023)
4.2		Form of Pre-Funded Warrant (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 8, 2023)
4.3		Form of Placement Agent Warrant (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 8, 2023)
4.4		Form of Warrant Amendment Agreement dated May 3, 2023 (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 8, 2023)

10.1		Chief Financial Officer Offer Letter and Exhibit A (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on July 14, ~~2022)~~2023)
~~4.3~~10.2		~~Form of Warrant~~Addendum dated July 19, 2023 to Employment Agreement between Mawson Infrastructure Group, Inc. and Rahul Mewawalla (Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on July ~~19, 2022)~~21, 2023)
~~4.4~~10.3		~~Form of Placement Agent Warrant~~Director Appointment Letter between the Company and Ryan Costello dated September 25, 2023 (Incorporated by reference to ~~Company’s Current Report on Form 8-K filed with~~ the ~~SEC on July 19, 2022)~~
~~10.1~~		~~Form of Securities Purchase Agreement (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on July 19, 2022)~~
~~10.2~~		Purchase and Sale Agreement, dated as of September 8, 2022, by and among CSRE Properties Sandersville, LLC, Luna Squares LLC, Mawson Infrastructure Group, Inc. and CleanSpark, Inc. (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on September ~~9, 2022)~~28, 2023)
~~10.3~~		Equipment Purchase and Sale Agreement, dated as of September 8, 2022, by and among CleanSpark GLP, LLC, Cosmos Infrastructure, LLC and Mawson Infrastructure Group, Inc. (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on September 9, 2022)
31.1*		Certification of Principal Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
32**		Certifications of Principal Executive Officer and Principal Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
99.1*		~~Press Release~~
99.2*		~~Investor Presentation~~
101		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2022,~~2023, formatted in Inline XBRL (eXtensible Business Reporting Language): includes: (i) Consolidated Balance Sheets as of ~~Septmeber~~September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, (ii) Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022, (iii) Consolidated Statements of Comprehensive Loss for the three and ~~2021, (iii)~~nine months ended September 30, 2023, and 2022, (iv) Consolidated Statements of Cash Flows for the nine months ended ~~Septmeber~~September 30, 2023 and 2022, (v) Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022, and ~~2021, and (iv)~~(vi) Notes to Consolidated Financial Statements
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*	Filed herewith.

**	Furnished herewith.

†	Exhibits and schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. We will furnish the omitted exhibits and schedules to the Securities and Exchange Commission upon request by the Securities and Exchange Commission.

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 ~~14, 2022~~13, 2023	By:	/s/ ~~James Manning~~Rahul Mewawalla
			~~James Manning,~~ Rahul Mewawalla Chief Executive Officer and President
		(Principal Executive Officer)

Date: November ~~14, 2022~~13, 2023

By:

/s/ ~~Ariel Sivikofsky~~William Harrison

~~Principal~~William Harrison

Chief Financial Officer

(Principal Financial and Accounting Officer)

4447

iso4217:USD xbrli:shares

	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 June 30, 2021		178			-		-		53,919,268		538,899			(16,690	)		82,914,768			23,070,525		(6,038,270	)		(70,919,532	)		29,549,700			(92,868	)		29,456,832
Issuance of common stock, net of offering costs / at-the market offerings		-			-		-		8,591,948		8,592			-			74,908,585			-		-			-			74,917,177			-			74,917,177
Issuance of common stock, on conversion of convertible notes		-			-		-		6,362,690		63,627			-			-			-		-			-			63,627			-			63,627
Issuance of common stock, stock based compensation		-			-		-		22,222		2,222			-			817,226			-		-			-			819,448			-			819,448
Issuance of common stock, settlement of convertible note interest s		-			-		-		86,959		8,691			-			750,206			-		-			-			758,897			-			758,897
Issuance of common stock, conversion of Series A preferred stock		(178	)		-		-		17,800		-			-			-			-		-			-			-			-			-
Issuance of warrants		-			-		-		-		-			-			-			2,363,870		-			-			2,363,870			-			2,363,870
Issuance of stock by subsidiary to non-controlling interest		-			-		-		-		-			-			163,039			-		-			-			163,039			204,993			368,032
Other		-			-		-		184		(12,272	)		16,690			(17,129	)		-		-			-			(12,711	)		-			(12,711	)
Net loss		-			-		-		-		-			-			-			-		-			(2,503,486	)		(2,503,486	)		(594,389	)		(3,097,875	)
Other comprehensive income		-			-		-		-		-			-			-			-		5,187,843			-			5,187,843			-			5,187,843	)
Balance as of September 30, 2021		-			-		-		69,001,071		609,759			-			159,536,695			25,434,395		(850,427	)		(73,423,018	)		111,307,404			(482,264	)		110,825,140

	For the nine months ended September 30,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(35,227,490	)	$	(47,923,670	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		46,061,673			7,977,800
LO2A write offs		-			23,963,050
Non-cash lease expense		1,248,198			-
Fair value loss on investments		129,829			1,920,879
Change in fair value of derivative asset		(21,383,904	)		-
Non-cash proceeds from the sale of intellectual property		(1,381,460	)		-
Share based payments		2,124,674			21,779,898
Loss on re-classification to assets held for sale		4,195,046			-
Interest expense		684,166			140,344
Loss on sale of property and equipment		110,547			-
Investment income		-			(33,153	)
Gain on sale of investment		(93,139	)		-
Write-off of fixed assets		-			307,100
Share of loss of equity accounted investments		-			277,817
Non-controlling interest		1,244,274			-
Trade and other receivables		(6,180,674	)		-
Other current assets		(5,181,533	)		(1,150,680	)
Trade and other payables		38,791,001			1,077,892
Net cash provided by operating activities		25,141,208			8,337,277
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for the purchase of property and equipment		(37,116,302	)		(30,888,288	)
Proceeds from sale/of (investment in) financial assets		255,425			(335,122	)
Proceeds from sales of property and equipment		13,348,629			2,157,651
Deposits received in relation to sale of Georgia site		100,000			-
Payment of fixed asset deposits		(32,054,326	)		(33,195,637	)
Net cash used in investing activities		(55,466,574	)		(62,261,396	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common share issuances		6,478,866			70,917,563
Proceeds from convertible notes		-			20,301,427
Payments of capital issuance costs		(782,319	)		(5,212,209	)
Proceeds from borrowings		34,570,551			1,423,088
Advances made to external companies		-			(42,210	)
Repayment of lease liabilities		(1,340,100	)		-
Repayments of borrowings		(12,686,662	)		(1,361,233	)
Net cash provided by financing activities		26,240,336			86,026,426
Effect of exchange rate changes on cash and cash equivalents		(199,655	)		(831,721	)
Net (decrease)/increase in cash and cash equivalents		(4,284,685	)		31,270,586
Cash and cash equivalents at beginning of period		5,467,273			1,112,811
Cash and cash equivalents at end of period	$	1,182,588		$	32,383,397

	Fair value measured at September 30, 2022
	Total carrying value as at September 30, 2022		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative asset	$	21,383,904		-		-		21,383,904
Marketable securities	$	1,706,032		-		-		1,706,032

	Three months to September 30, 2022			Nine months to September 30, 2022

Opening number of Bitcoin held as at June 30, 2022 and December 31, 2021		2.21			0.92
Number of Bitcoin added		282.99			1,231.26
Number of Bitcoin sold		(275.78	)		(1,222.76	)
Closing number of Bitcoin held as at September 30, 2022		9.42			9.42

	Operating leases			Finance Leases

Operating cash out flows from operating and finance leases	$	1,315,908		$	24,192
Weighted-average remaining lease term – operating and finance leases (years)		2.69			3.63
Weighted-average discount rate – operating and leases (%)		7.9	%		7.5	%

	Existing Operations Online		Order and Purchase Agreements		Cumulative Fleet Fully Deployed
Total miners online		26,360		-		26,360
Total miners in Transit		-		-		-
Total miners on order		-		-		-
Total miners in storage		6,990		-		6,990
Total miners		33,350		-		33,350