UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from ________________ to ________________
Commission File No.
(Exact name of registrant as specified in its charter)
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Indicate by check mark whether the registrant
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As of August 4, 2025, the issuer had a total of
MAWSON INFRASTRUCTURE GROUP INC.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2025
TABLE OF CONTENTS
| 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 and Use of Proceeds | 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 | ||
i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MAWSON INFRASTRUCTURE GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Trade and other receivables, net | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Derivative asset | ||||||||
| Security deposits | ||||||||
| Operating lease right-of-use asset, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Trade and other payables | $ | $ | ||||||
| Current portion of operating lease liability | ||||||||
| Current portion of finance lease liability | ||||||||
| Current portion of long-term loans | ||||||||
| Total current liabilities | ||||||||
| Operating lease liability, net of current portion | ||||||||
| Finance lease liability, net of current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ deficit: | ||||||||
| Preferred stock, | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
See accompanying notes to unaudited consolidated condensed financial statements.
1
MAWSON INFRASTRUCTURE GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
| For the three-months ended June 30, | For the six-months ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenues: | ||||||||||||||||
| Digital colocation revenue | $ | $ | $ | $ | ||||||||||||
| Energy management revenue | ||||||||||||||||
| Digital assets mining revenue | ||||||||||||||||
| Equipment sales | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Less: Cost of revenues (excluding depreciation) | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Stock based compensation | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Change in fair value of derivative asset | ( | ) | ||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Non-operating income/ (expense): | ||||||||||||||||
| Loss on foreign currency transactions | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income | ||||||||||||||||
| Other expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on deconsolidation | ( | ) | ( | ) | ||||||||||||
| Total non-operating expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax benefit (expense) | ( | ) | ( | ) | ( | ) | ||||||||||
| Net Loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less: Net loss attributable to non-controlling interests | ( | ) | ||||||||||||||
| Net Loss attributed to Mawson common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net Loss per share, basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of shares outstanding | ||||||||||||||||
See accompanying notes to unaudited consolidated condensed financial statements.
2
MAWSON INFRASTRUCTURE GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
| For the three-months ended June 30, | For the six-months ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||||||||||
| Comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less: Comprehensive loss attributable to non-controlling interests | ( | ) | ||||||||||||||
| Comprehensive loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
See accompanying notes to unaudited consolidated condensed financial statements.
3
MAWSON INFRASTRUCTURE GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
For the Three-Months Ended June 30, 2025
| Common Stock (#) | Common Stock ($) | Additional Paid-in- Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Deficit | |||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Exercising of RSU’s and stock options | ( | ) | ||||||||||||||||||||||
| Stock based compensation expense for RSU’s and stock options | - | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Other comprehensive income | - | |||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
For the Three-Months Ended June 30, 2024
| Common Stock (#) | Common Stock ($) | Additional Paid-in- Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Equity | |||||||||||||||||||
| Balance as of March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Stock based compensation expense for RSU’s and stock options | ||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Other comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance as of June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
See accompanying notes to unaudited consolidated condensed financial statements.
4
MAWSON INFRASTRUCTURE GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
For the Six-Months Ended June 30, 2025
| Common Stock (#) | Common Stock ($) | Additional Paid-in- Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Deficit | |||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Exercising of RSU’s and stock options | ( | ) | ||||||||||||||||||||||
| Stock based compensation expense for RSU’s and stock options | - | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Other comprehensive income | - | |||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
For the Six-Months Ended June 30, 2024
| Common Stock (#) | Common Stock ($) | Additional Paid-in- Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Mawson Stockholders’ Equity | Non- controlling interest | Total Equity | |||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
| Stock based compensation expense for RSU’s and stock options | ||||||||||||||||||||||||||||||||
| Deconsolidation of MIG No.1 Pty Ltd | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Other comprehensive loss | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance as of June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
See accompanying notes to unaudited consolidated condensed financial statements.
5
MAWSON INFRASTRUCTURE GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of operating lease right-of-use asset | ||||||||
| Foreign exchange (gain) loss | ||||||||
| Stock based compensation | ||||||||
| Non-cash interest expense | ||||||||
| Unrealized (gain) loss on derivative asset | ( | ) | ||||||
| Loss on deconsolidation | ||||||||
| Loss on lease termination | ||||||||
| Loss on sale of property, plant and equipment | ||||||||
| Provision for doubtful accounts | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Trade and other receivables | ||||||||
| Operating lease liabilities | ( | ) | ||||||
| Other current assets | ( | ) | ||||||
| Trade and other payables | ( | ) | ||||||
| Net cash (used in) provided by operating activities | ( | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Capital expenditures | ( | ) | ( | ) | ||||
| Proceeds from sales of property, plant and equipment | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Payment of finance lease liabilities | ( | ) | ( | ) | ||||
| Payments of loans | ( | ) | ||||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Net (decrease) increase in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash received for income taxes | $ | ( | ) | $ | ||||
See accompanying notes to unaudited consolidated condensed financial statements.
6
MAWSON INFRASTRUCTURE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 – GENERAL
Nature of Operations
Mawson Infrastructure Group Inc. (“Mawson,” the “Company,” “we,” “us,” and “our”) is a technology company focused on digital infrastructure platforms, headquartered in the United States of America.
The Company develops and operates digital infrastructure platforms for enterprise customers and for its own purposes. The Company’s digital infrastructure platforms can be used to operate computing resources for a number of applications, and are offered across artificial intelligence (“AI”), high-performance computing (“HPC”), digital assets, and other computing applications. The Company also has an energy management business, which utilizes software and analysis, to generate revenue when the Company participates in energy management programs related to the real-time needs of the power grid.
The Company has a strategy to prioritize the usage of carbon-free energy sources, including nuclear energy, to power its digital infrastructure platforms and computational machines.
The Company manages and operates digital infrastructure platforms and data centers delivering a total current capacity of approximately 129 megawatts (“MW”) with its current operational sites with an additional 24 MW of future capacity that is under development, all strategically located in locations served by the PJM Energy Market in the United States. The PJM Energy Market is amongst the largest wholesale power markets in North America.
Previously, the Company also had interests in the Australian market, however for strategic and commercial reasons, the Company is currently focused on advancing its interests in North America. The Company currently operates facilities in the United States of America and does not have operating sites in Australia.
The accompanying unaudited consolidated condensed financial statements, including the results of Cosmos Trading Pty Ltd, Cosmos Infrastructure LLC (“Cosmos”), Cosmos Manager LLC, MIG No.1 Pty Ltd (“MIG No. 1”), MIG No.1 LLC, Mawson AU Pty Ltd (“Mawson AU”), Mawson Services Pty Ltd (“Mawson SPL”), Luna Squares LLC (“Luna Squares”), Mawson Bellefonte LLC, Luna Squares Repairs LLC, Luna Squares Property LLC (“Luna Property”), Mawson Midland LLC, Mawson Hosting LLC (“Mawson Hosting”), Mawson Ohio LLC and Mawson Mining LLC (collectively referred to as the “Group”), have been prepared by the Company pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and in accordance with generally accepted accounting principles in the United States of America (“GAAP”).
7
NOTE 1 – GENERAL (Cont.)
Nature of Operations (Cont.)
These unaudited consolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements of the Group as of December 31, 2024, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on March 28, 2025, as amended by Amendment No. 1 on Form 10-K/A filed with SEC on April 30, 2025 (the “2024 Form 10-K”). Accordingly, they do not include all the information and footnotes required by 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 ending December 31, 2025. These unaudited consolidated, condensed 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.
Going Concern
The accompanying unaudited consolidated condensed financial statements have been prepared assuming the Company will continue on a going concern basis and in accordance with 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 assets and discharge its liabilities and commitments in the normal course of business.
Pursuant to the requirements of the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) Topic 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year from the date these financial statements are issued. This evaluation does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented or are not within control of the Company as of the date the financial statements are 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 continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the 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 the date that the financial statements are issued.
For the six months ended June 30, 2025, the Company
incurred a net loss of ($
The Company’s revenue is dependent on a number of external factors, including commercial terms, payments from customers, payments from partners, counterparty risks, and market conditions, including those related to digital assets, AI, HPC and other markets. These factors are outside the Company’s direct control, and the Company may not be able to practically mitigate their impact. The Company cannot predict with any certainty whether these trends will reverse or persist. In addition, the Company’s equipment and infrastructure will require replacement over time as they come to the end of their useful lives to ensure that the Company can continue to operate competitively and efficiently.
The Company has ongoing litigation related to the Marshall Loan, W Capital Loan, Celsius Promissory Note and Celsius Colocation Agreement (each defined below). See Note 9 – Commitments and Contingencies.
8
NOTE 1 – GENERAL (Cont.)
Going Concern (Cont.)
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 consolidated condensed financial statements
To mitigate these conditions, the Company has explored various avenues to enhance liquidity, fund the Company’s expenditures, and meet debt servicing requirements. These strategies include, among others:
| ● | Expanding its digital infrastructure platform and increasing capacities for either digital colocation services and/or AI and HPC markets; |
| ● | Executing new customer digital colocation service agreements in either AI, HPC, and/or digital assets mining to diversify its exposure across customers and/or markets; |
| ● | Engaging in discussions with capital providers, relating to equity and/or debt; |
| ● | Considering equity issuances such as capital raises and at-the-market (“ATM”) transactions; |
| ● | Assessing and evaluating corporate and strategic transactions; |
| ● | Assessing and evaluating commercial opportunities or other business opportunities under consideration; |
| ● | Conducting assessments to identify and implement operational improvements and/or efficiencies and other actions aimed at enhancing revenue and/or optimizing expenses; and |
| ● | Evaluating, assessing and pursuing business revenue and margin expansion opportunities. |
On December 13, 2024, the Company entered into
a Sales Agreement with Roth Capital Partners, LLC (the “Lead Agent”) and A.G.P./Alliance Global Partners (collectively with
the Lead Agent, the “Agents” and individually an “Agent”), to sell shares of our common stock, $
Although the Company may have access to capital, debt, and/or 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 stockholders. The terms of any future capital raise or debt issuance and the costs of any financing are uncertain and may be unfavorable to the Company. Should the Company be unable to source sufficient funding, the Company may not be able to realize assets at their recognized values and fulfill its liabilities in the normal course of business at the amounts stated in these unaudited consolidated condensed financial statements.
The Company obtains advice from outside resources; however, it is important to note that strategic and other initiatives may not lead to any transaction or other outcome.
These unaudited consolidated condensed 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.
9
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Basis of Preparation
The accompanying unaudited consolidated condensed financial statements of the Company include the accounts of the Company and its wholly or majority owned and controlled subsidiaries. Intercompany investments, balances and transactions have been eliminated in consolidation. Non–controlling interests 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. As of June 30, 2025, the Company no longer holds non-controlling interests.
Any 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 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.
Use of Estimates and Assumptions
The preparation of the financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. 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 unaudited consolidated condensed 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, valuing the derivative asset classified under Level 3 fair value hierarchy, and the contingent obligation with respect to future revenues.
Revenue recognition
The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of ASC 606 is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Five steps are required to be followed in evaluating revenue recognition: (i) identify the contract with the customer; (ii) identify 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 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 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).
Digital colocation revenue
The Company offers other businesses and customers the opportunity to colocate their specialized computers used in mining digital assets and other equipment within our facilities. The Company generates revenue from these customers for their use of our digital colocation services and facilities. This offering is known as “colocation” and can be customized and tailored for each customer’s situation and strategy as well as the Company’s strategy. For example, customers may agree to be charged upfront digital infrastructure fees, minimum fees, and maintenance fees. The Company, on the other hand, charges colocation fees for the use of its facilities, and other related fees. In addition, digital colocation customers typically pay for energy used in connection with the customer colocation services agreement on a pass-through basis, which may be on a fixed or variable basis calculated on the portion of energy used by the customer on the site. The Company satisfies the performance obligation when the customer has the ability to direct the use and obtain substantially all of the remaining benefits of the good or service. Revenue is recognized over time as customers simultaneously receive and consume the benefits because another party would not need to substantially reperform the work completed by the Company in order to fulfill the remaining performance obligation to the customer. Revenue is recognized upon confirmation of the Company’s power usage by the electricity provider and billed at the rates outlined in each customer contract on a monthly basis.
10
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Revenue recognition (Cont.)
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 is invoiced, rather than obtaining an estimation of variable consideration at the beginning of the customer contracts.
Energy management revenue
The Company has developed several energy management program capabilities and has an energy management business to generate revenue when the Company adapts its power usage to the real-time needs of the power grid. Energy management revenue consists of revenue for curtailing power and through a power pricing arrangement.
Revenue for curtailing power is recognized over the period 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 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.
Digital assets mining revenue
The Company has 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 digital assets. 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 digital asset is received.
The Company measures the non-cash consideration received at the fair market value of the digital asset received. Management estimates fair value on a daily basis, as the quantity of digital assets received multiplied by the price quoted on the exchange that the Company uses to dispose of digital assets.
Equipment sales
The Company has earned revenues from the sale of equipment and/or infrastructure (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.
11
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Property, plant and equipment
Property, plant and equipment (“PP&E”) are stated at cost, net of accumulated depreciation. All other repair and maintenance costs are 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. PP&E transferred from customers is initially measured at the fair value at the date on which control is obtained.
PP&E 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.
| Asset class | Useful life | Depreciation Method | ||
| Fixtures | ||||
| Plant and equipment | ||||
| Modular data center | ||||
| Motor vehicles | ||||
| Computer equipment | ||||
| Computational and Processing machinery (Miners) | ||||
| Transformers | ||||
| Leasehold improvements |
PP&E 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 is included in the consolidated statement of operations.
The residual values, useful lives, and methods of depreciation of PP&E are reviewed at each financial year end and adjusted prospectively, if appropriate.
The Company’s long-lived assets are reviewed for impairment 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.
12
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Fair value of financial instruments:
The Company accounts for financial instruments under ASC 820, Fair Value Measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in a principal or most advantageous market. 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 valuations whose significant inputs and significant value drivers are observable in active markets; 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.
| Fair value measured as of June 30, 2025 | ||||||||||||||||
| Total | Total Level 1 | Total Level 2 | Total Level 3 | |||||||||||||
| Derivative asset | $ | $ | $ | $ | ||||||||||||
| Fair value measured as of December 31, 2024 | ||||||||||||||||
| Total | Total Level 1 | Total Level 2 | Total Level 3 | |||||||||||||
| Derivative asset | $ | $ | $ | $ | ||||||||||||
Level 3 Assets:
In June 2022, the Company entered into a power supply agreement (“PSA”) with Energy Harbor LLC (“Energy”), 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 December 2026. There were five amendments to the PSA entered into in November 2023, December 2023, January 2024, April 2024 and May 2024. All the amendments were to purchase additional electricity at a fixed price for the months of December 2023, January 2024, February 2024, April 2024, May 2024 and June 2024. If the Midland, Pennsylvania facility uses more electricity than contracted, the cost of the excess is incurred at a new price quoted by Energy.
13
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Fair value of financial instruments: (Cont.)
While the Company participates in energy management programs at its Midland, Pennsylvania facility, 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 PSA meets the definition of a derivative under ASC 815, Derivatives and Hedging. 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 PSA. Accordingly, the PSA (the non-hedging derivative contract) is recorded at estimated fair value each reporting period with the change in the fair value recorded in “change in fair value of derivative asset” in the consolidated statements of operations.
The PSA was classified as a derivative asset beginning
in the quarter ended September 30, 2022, and measured at fair value on the date of the PSA, with changes in fair value recognized in the
accompanying consolidated statements of operations. The estimated fair value of 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 PSA, which expires in December 2026. In addition, the Company adopted a discount
rate of approximately
Stock based compensation
The Company follows ASC 718-10, Compensation-Stock
Compensation. The Company expenses stock-based compensation to directors, employees, and non-employees over the requisite service
period based on the grant-date fair value of the awards. The Company determines the grant-date fair value of options using the Trinomial
Lattice Method. 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, 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 yield of a
14
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
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 (“CODM”), or decision–making group in deciding how to allocate resources and in assessing performance.
The Company operates as
Recent accounting pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption.
In December 2023, the FASB issued ASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Topic 3580-60): Accounting for and Disclosure of Crypto Assets. Under the new guidance, an entity would be required to subsequently measure certain crypto assets at fair value, with changes in fair value included in net income in each reporting period. The proposed set of rules would also require presentation of crypto assets and related fair value changes separately in the balance sheet and income statement and require various disclosures in interim and annual periods. The Company’s adoption of ASU 2023-08 did not have a material impact on its consolidated financial statements since the Company’s policy is to dispose of bitcoin received from mining operations at the earliest opportunity, therefore the holding period is minimal, usually no more than a few days. ASU 2023-08 is effective for fiscal years beginning after December 15, 2024 and interim periods within those fiscal years. The Company adopted ASU 2023-08 on January 1, 2025.
15
NOTE 3 – AUSTRALIAN SUBSIDIARIES DECONSOLIDATION
The Company currently operates facilities in the United States of America and does not have operating sites in Australia.
MIG No.1
Liquidation and Deconsolidation of an Australian entity MIG No. 1
On March 19, 2024, the Company’s subsidiary
MIG No.1, an Australian entity, was placed into an Australian court appointed liquidation due to it being deemed insolvent in Australia.
The liquidation of an insolvent company in Australia allows an independent registered Australian liquidator (the liquidator) to take control
of the Australian entity so its affairs can be wound up in an orderly and fair way and to benefit creditors. In the instance of MIG No.1,
it is an Australian court liquidation, where a liquidator is appointed by the Australian court to wind up a company following an application
(by a creditor of MIG No.1). As a result of this court appointed liquidation, the Company ceded authority for managing this Australian
entity to the Australian liquidator, and the Company could not carry on MIG No.1’s activities in the ordinary course of business.
For these reasons, it was concluded that the Company had ceded control of MIG No.1, and no longer had significant influence over this
Australian entity since the liquidator was in control of this Australian entity. Therefore, MIG No.1 loss of control was effective when
it was placed into Australian court appointed liquidation on March 19, 2024, and was deconsolidated at this date, in accordance with ASC
810-10-15. In order to deconsolidate this Australian entity, MIG No.1, the carrying values of the assets, liabilities and equity components
previously recognized in accumulated other comprehensive income of MIG No.1 were removed from the Company’s consolidated balance
sheet as of March 19, 2024, in accordance with ASC 810, Consolidation. The net impact of removing the assets and liabilities resulted
in a loss on deconsolidation of $
Investment in MIG No.1
The investment in MIG No. 1 held by the Company
was accounted for under ASC 321, Investments — Equity Securities as it was concluded the Company did not have significant
influence over MIG No. 1 from March 19, 2024. At the time of the deconsolidation, the fair value of MIG No.1 was estimated to be $
Australian entity MIG No.1 Secured Loan Facility Agreement
MIG No. 1 is party to a Secured Loan Facility
Agreement (the “Marshall Loan”) with Marshall. Investments GCP Pty Ltd ATF for the Marshall Investments MIG Trust (collectively,
“Marshall”). The Marshall Loan matured in February 2024 and the total outstanding balance is $
NOTE 4 – BASIC AND DILUTED NET LOSS PER SHARE
Net loss per common share is calculated in accordance with ASC 260, Earnings Per Share. Basic loss per share is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding during the period. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding plus the dilutive effect of unvested restricted stock units (“RSUs”), and outstanding warrants and options. 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 of June 30, 2025 and 2024, are as follows:
| As of June 30, | ||||||||
| 2025 | 2024 | |||||||
| Warrants to purchase Common Stock | ||||||||
| Options to purchase Common Stock | ||||||||
| RSUs issued under a management equity plan | ||||||||
16
NOTE 5 – LEASES
The Company’s operating leases are for digital asset mining sites and its finance leases are primarily for related plant and equipment.
The Company’s lease costs recognized in the consolidated condensed statements of operations consist of the following:
| For the three-months ended June 30, | For the six-months ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Operating lease charges (1) | $ | $ | $ | $ | ||||||||||||
| Finance lease charges: | ||||||||||||||||
| Amortization of right-of-use assets | $ | $ | $ | $ | ||||||||||||
| Interest on lease obligations | $ | $ | $ | $ | ||||||||||||
| (1) |
The following is a schedule of the Company’s lease liabilities by contractual maturity as of June 30, 2025:
| Operating leases | Finance leases | |||||||
| 2025 | $ | $ | ||||||
| 2026 | ||||||||
| 2027 | ||||||||
| Total undiscounted lease obligations | ||||||||
| Less: imputed interest | ( | ) | ( | ) | ||||
| Total present value of lease liabilities | ||||||||
| Less: current portion of lease liabilities | ||||||||
| Non-current lease liabilities | $ | $ | ||||||
Other lease information as of and for the period ended June 30, 2025:
| Operating leases | Finance leases | |||||||
| Operating cash out flows from leases | $ | $ | ||||||
| Weighted-average remaining lease term (years) | ||||||||
| Weighted-average discount rate (%) | % | % | ||||||
17
NOTE 6 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net, consisted of the following:
| June 30, 2025 | December 31, 2024 | |||||||
| Plant and equipment | $ | $ | ||||||
| Computer equipment | ||||||||
| Processing machines (Miners) | ||||||||
| Modular data center | ||||||||
| Motor Vehicles | ||||||||
| Transformers | ||||||||
| Low-cost assets | ||||||||
| Leasehold improvements | ||||||||
| Total | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant and equipment, net | $ | $ | ||||||
The Company incurred depreciation and amortization
expense in the amounts of $
NOTE 7 – INCOME TAXES
The Company records income taxes using the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax effects attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and operating loss and tax credit carryforwards. The Company establishes a valuation allowance if management believes it is more likely than not that the deferred tax assets will not be recovered based on an evaluation of objective verifiable evidence. Management has considered the Company’s history of book and tax income and losses incurred since inception, and the other positive and negative evidence, and has concluded that it is more likely than not that the Company will not realize the benefits of the net deferred tax assets as of June 30, 2025.
The Company recorded income tax benefit (expense)
of approximately
| For the three months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Effective income tax rate | % | ( | )% | |||||
The Company recorded income tax benefit (expense)
of approximately (
| For the six months ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Effective income tax rate | ( | )% | ( | )% | ||||
As of June 30, 2025, the Company had no unrecognized tax benefits and does not anticipate any significant change to the unrecognized tax benefit balance.
18
NOTE 8 – LOANS
Marshall Loan
The Company is included as a guarantor of the
Marshall Loan. The loan matured in February 2024 and bears interest at a rate of
W Capital Loan
The Company is included as a guarantor of a Secured
Loan Facility Agreement (the “W Capital Loan”) for working capital by Mawson PL with W Capital Advisors Pty Ltd for the W
Capital Advisors Fund (collectively, “W Capital”). As of June 30, 2025, AUD $
Celsius Promissory Note
On February 23, 2022, Luna Squares entered into
a Digital Colocation Agreement (the “Digital Colocation Agreement”) with Celsius Mining LLC. In connection with this agreement,
Celsius Mining LLC loaned Luna Squares a principal amount of $
Convertible Notes
On July 8, 2022, the Company issued secured convertible
promissory notes (the “Secured Convertible Promissory Notes”) to investors in exchange for cash. The outstanding balance relates
to the interest on the Secured Convertible Promissory Notes which has been accrued from July 2022 onwards and therefore the outstanding
balance is $
19
NOTE 9 – COMMITMENTS AND 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.
The Company is subject to the various legal proceedings and claims discussed below (and in Note 1) that have not been fully resolved and that have arisen in the ordinary course of business. In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss, or a material loss in excess of a recorded accrual, with respect to loss contingencies. However, the outcome of legal proceedings and claims brought against the Company is subject to significant uncertainty. Therefore, although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters are resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s consolidated financial statements for that reporting period could be materially adversely affected.
Marshall Loan and W Capital Loan
The Marshall Loan was entered into with an Australian entity MIG No.1, which was placed into a court appointed liquidation and wind-up process and was deconsolidated from the Group on March 19, 2024. On March 19, 2024, Marshall appointed receivers and managers in Australia under the terms of their security relating to their secured loan facility. The direct assets that secure this loan include 5,372 miners and 8 MDCs. These assets are held by MIG No.1 and therefore were included in the deconsolidation. The receiver’s statutory duty includes the obligation to sell the secured assets at market value or, if market value is not known, at the best price reasonably obtainable to maximize the prospects of there being sufficient proceeds available to satisfy the balance of the outstanding secured debt. It is therefore expected that this loan balance will be offset in the future by the amount received from the sale of these miners and MDCs. On June 25, 2024, Marshall inspected and inventoried the miners and MDCs located at the Company’s Midland facilities. The Company had asked Marshall to take these assets out of the Company’s facilities. Marshall has not responded to the Company’s request for these miners and MDCs to be removed from the Company’s facilities. The Company is reserving all its rights and remedies against Marshall.
The W Capital Loan was originally with Mawson PL and this Australian entity was placed into Australian voluntary administration on October 30, 2023 and on November 3, 2023, W Capital appointed receivers and managers in Australia under the terms of their security relating to their working capital facility. The Company has corresponded with W Capital and/or its representatives, the Company’s ongoing significant concerns about W Capital and James Manning, a former board director and Chief Executive Officer of the Company (“Manning”), being related parties. W Capital has not responded to the Company’s concerns in a manner satisfactory to the Company.
On October 3, 2024, a proceeding was filed by W Capital and Marshall against the Company before the Federal Court of Australia, New South Wales (the “Australian Court”), in the matter entitled W Capital Advisors Pty Ltd, in its capacity as Trustee for the W Capital Advisors Fund, v. Mawson Infrastructure Group, Inc., No. NSD 1395/2024. In an effort to force the Company to pay the W Capital Loan and the Marshall Loan, W Capital and Marshall sought to have the Company declared insolvent under Australian law on the grounds that the Company failed to pay W Capital the sums it claims the Company owed it under the aforesaid Australian judgment. On February 11, 2025, the Australian Court declared that Mawson be “wound up” under Australian law. However, Mawson has no assets, revenue or other business in Australia subject to Australian jurisdiction. It is unclear as to any adverse effect this ruling has on Mawson in the US. This Australian ruling completely disregarded the automatic stay in place as established by the involuntary Chapter 11 petition. The Company has communicated its objections and concerns to these Australian liquidator and entities.
Concurrently with the above Australian litigation,
on December 4, 2024, Marshall, W Capital, and Rayra Pty Ltd, as Trustee for the Mountainview Trust (“Rayra” and together with
Marshall and W Capital, collectively, the “Original Petitioners”), all Australian entities, concurrently filed an involuntary
petition (the “Involuntary Petition”) in the matter entitled In Re Mawson Infrastructure Group, Alleged Debtor, Case
No. 1:24-bk-12726, under chapter 11 (“Chapter 11”) of title 11, 11 U.S.C. § 101 through 1330 (the “Bankruptcy Code”),
seeking a determination of the court to force the Company into a Chapter 11 proceeding. The Original Petitioners claimed in the Involuntary
Petition that they have debts aggregating AUD$
On January 10, 2025, the Company filed an answer to the Involuntary Petition, and on May 5, 2025 the Company filed with the Delaware Bankruptcy Court a motion for bond and sanctions against the Petitioning Creditors for violating the automatic stay in the involuntary proceedings. On Monday, August 11, 2025, the Honorable Mary F. Walrath, Bankruptcy Judge for the United States Bankruptcy Court for the District of Delaware heard the Company’s motion and granted relief in favor of the Company imposing sanctions on the Petitioning Creditors requiring them to pay the Company’s attorney fees and post a bond before the Petitioning Creditors would be allowed to continue the involuntary proceedings. A formal order is forthcoming to effect same.
No other order for relief has been entered by the Delaware Bankruptcy Court to date, and the Company continues to operate in the ordinary course of business as authorized under 11 U.S.C. § 303(f). Nonetheless, under applicable federal law, all collection efforts by the Company’s creditors, including all of the Petitioning Creditors, continue to be stayed pending final resolution of the Involuntary Petition. To date, no dispositive hearing has been set by the Court until all court ordered discovery has been completed.
20
NOTE 9 – COMMITMENTS AND CONTINGENCIES (Cont.)
The matter continues in discovery phase. The parties have filed pretrial motions seeking various remedies including dismissal prior to trial, sanctions and attorney fees, which are pending. A motion to compel discovery was filed by Mawson and was heard on May 9, 2025. On May 9, 2025, the Court granted Mawson’s motions for discovery from the Petitioning Creditors and paved pathway for discovery of Manning—including from Australia if needed. The Court further directed the parties to mediate and agreed to reach out to the Honorable Scott C. Clarkson, Bankruptcy Judge, United States Bankruptcy Court for the Central District of California to act as the formal judicial settlement officer. Celsius made an appearance on its motions for sanctions and requested to be part of the mediation as well, which the Court allowed. The Court denied Celsius’ previously filed motion for sanctions. The trial date has been continued indefinitely to allow for the completion of discovery and the opportunity for the parties to mediate. On Monday, August 11, 2025, Judge Walrath renewed the appointment of Judge Clarkson as the judicial settlement officer for an additional month.
As previously noted, the Company believes that the Petitioning Creditors are using these proceedings in Australia and the United States as a bad faith attempt to gain leverage in ongoing legal disputes between the parties.
The Company believes that the Petitioning Creditors are using the Involuntary Petition and the Australian insolvency proceedings against the Company in an improper attempt to gain leverage in ongoing legal disputes between the parties. The Company believes that the filing of the Involuntary Petition is an extension of the ongoing disputes, including with Manning, and a continuation of the pattern of bad faith actions, by Manning and the Petitioning Creditors, with the improper intention of harassing and intimidating the Company.
The Company’s counsel have propounded discovery requests to the Petitioning Creditors, including the depositions of the Petitioning Creditors’ principals. In addition, Manning, who the Company believes has close ties to these Australian creditors, remains the subject of an investigation by the Audit Committee of the Company’s Board of Directors, including related to his dealings with W Capital, current litigation with an entity related to Manning, Vertua Property Inc. (“Vertua”), alleged self-dealing, breach of contract, and tortious interference with a business relationship.
The Company had previously reported that it may seek to exit certain or all of its entities and holdings in Australia. The Company currently operates facilities in the United States of America and does not have any operating sites or assets in Australia.
The Company expects to vigorously pursue sanctions, attorney fees, general and punitive damages against these Australian Petitioners, as available to the full extent of the law.
The Company expects to continue to operate as usual and execute its business plan accordingly.
Celsius Promissory Note and Digital Colocation Agreement
Luna Squares has not repaid the Celsius Promissory Note as required on its stated maturity date and is claimed by Celsius Mining LLC and Celsius Network Ltd (collectively, “Celsius”) to be in default. Celsius Mining LLC transferred the benefit of the Celsius Promissory Note to Celsius Network Ltd. and Celsius Network Ltd has notified Luna Squares that the default interest is payable.
On July 18, 2024, Celsius Network, LLC filed for
arbitration of its claims against the Company with the American Arbitration Association in the matter entitled Celsius Network Ltd., Celsius
Mining LLC and Ionic Digital Mining LLC v. Mawson Infrastructure Group, Luna Squares LLC and Cosmos Infrastructure LLC - Case 01-24-0006-4462.
An arbitrator was appointed on September 30, 2024 and the parties submitted their respective positions on October 25, 2024 regarding the
scheduling of the arbitration. On January 23, 2025, the arbitrator issued a Partial Final Award (the “Partial Final Award”)
granting in part Celsius’ claim against Luna Squares on the outstanding promissory note executed by Luna Squares in favor of Celsius.
The Partial Final Award granted Celsius monetary damages in the amount of $
21
NOTE 9 – COMMITMENTS AND CONTINGENCIES (Cont.)
The Company and/or its applicable subsidiaries have not fulfilled specific payment obligations related to the Marshall Loan, the W Capital Loan and the Celsius 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 or its subsidiaries for payment default, raising interest rates to the default or overdue rate, or taking appropriate measures concerning collateral (including appointing a receiver), if applicable.
Blockware
On April 19, 2024, a civil suit entitled Blockware Solutions, LLC v. Mawson Bellefonte LLC and Mawson Infrastructure Group, Inc. was filed in the US District Court, Southern District of New York. The parties have unsuccessfully concluded the court’s Mediation Program and the matter remains ongoing before the court but is currently stayed due to the above referenced filing of the Involuntary Petition.
CleanSpark
On July 16, 2024, the Company filed a civil lawsuit
for its claims against CleanSpark, Inc (CleanSpark”) and CSRE Properties Sandersville, LLC with the United States District Court
for the Southern District of New York in the matter entitled “Mawson Infrastructure Group, Inc. and Luna Squares, LLC v. CleanSpark,
Inc. and CSRE Properties Sandersville, LLC”, Civil Action No. 1:24-cv-5379, for at least $
Vertua
On March 16, 2022, Luna Squares entered into a
lease with respect to a property in the City of Sharon, Mercer County, Pennsylvania (the “Sharon Lease”) with Vertua Property,
a subsidiary entity in which Vertua Ltd has a
On September 6, 2024, Luna Squares filed a praecipe of lis pendens for the property leased in Sharon, Pennsylvania in the Court of Common Pleas of Mercer County, Pennsylvania in the matter entitled Luna Squares Property, LLC v. Vertua Property, Inc. Case No 2024-2332. It did so to also provide third parties such as Bitfarms Ltd. notice that the property is encumbered by a lease between Luna Property and Vertua. This property is the subject of a current civil lawsuit between the Company and Luna Property against Vertua. On October 17, 2024, the Company filed several claims in the matter captioned above against Vertua, including claims for breach of the lease agreement and wrongful termination of the lease, as well as for tortious interference with a business relationship. The Company is seeking reinstatement of the lease, compensatory damages, disgorgement of revenue, and exemplary and punitive damages, as well as reimbursement for its costs and litigation expenses. Vertua is a company related to Manning and also affiliated with Darron Wolter of W Capital. The matter has since been removed to federal court and is pending before the United States Bankruptcy Court for the Western District of Pennsylvania, under adversary proceeding number 25-01003-JCM. The matter remains ongoing.
Consensus Colocation Agreement
On October 12, 2023, the Company entered into a Service Framework Agreement with a wholly owned subsidiary of Consensus Technology Group, Consensus Colocation PA LLC, for colocation services for approximately 15,876 Bitmain Antminer S19 XP miners or approximately 50 MW at Mawson’s Midland, Pennsylvania facilities (the “Service Framework Agreement”). On March 6, 2025, a complaint was filed by Consensus Colocation PA LLC and Stone Ridge Ventures II LLC (collectively, “CTG”) with Court of Chancery of the State of Delaware, under C.A. No. 2025-0252-MTZ seeking (i) a temporary restraining order (“TRO”) to terminate Mawson’s redirection of CTG’s miners following a fee dispute and (ii) authority to remove its miners from Mawson’s facility prior to the termination of the Service Framework Agreement. The matter went to hearing on the TRO on March 13, 2025 and by joint stipulation the parties agreed to terminate the redirection of the miners but that the Service Framework Agreement remained active, and the miners could not be removed before March 20, 2025. All servers were removed by April 15, 2025 and by agreement, the TRO was dismissed. The parties reserved all other rights.
On April 25, 2025, CTG filed an arbitration demand with the American Arbitration Association for damages stemming from Mawson’s redirection of its miners following the parties’ contractual dispute Mawson has retained legal counsel, categorically denies the allegations of the demand, and intends to pursue its claims and counterclaims against CTG, including but not limited to the Company’s Right of First Refusal (ROFR) related damages claims against CTG. No further filings or hearings have been made or set at this time. Discovery is ongoing. The matter remains ongoing
and an arbitration hearing has been set for the week of April 27, 2026.
On June 27, 2025, CTG filed a Petition and Order
of Attachment in Aid of Arbitration with the Supreme Court of the State of New York, County of New York, under Docket No. 653851/2025
against Mawson Hosting, LLC. On July 27, 2025, the Court granted an order for attachment in the amount of $
22
NOTE 10 – STOCKHOLDERS’ EQUITY
Common Stock
During the six-month period ended June 30, 2025,
vested and outstanding RSUs were settled into
Common Stock Warrants
The Company’s outstanding stock warrants
have not changed during the six-month period ended June 30, 2025. The outstanding stock warrants as of June 30, 2025 are
Stock-Based Compensation:
Equity plans
At the Company’s annual meeting on May 17,
2023, the stockholders approved an amendment to the Company’s 2021 Equity Incentive Plan (the “2021 Plan”) that, amongst
other things, increased the number of shares available under the 2021 Plan to
As of June 30, 2025, the number of shares allocated
and available under the 2024 Plan were
The Company recognized stock-based compensation expense during the three and six months ended June 30, 2025 and 2024, as follows:
| For the three-months ended June 30, | For the six-months ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Performance-based restricted stock awards | $ | $ | $ | $ | ||||||||||||
| Service-based restricted stock awards | ||||||||||||||||
| Option expense* | ( | ) | ||||||||||||||
| Total stock-based compensation | $ | $ | $ | $ | ||||||||||||
| * |
Performance-based awards
Performance-based awards generally vest over a three-year performance period upon the successful completion of specified market and performance conditions.
23
NOTE 10 – STOCKHOLDERS’ EQUITY (Cont.)
Stock-Based Compensation: (Cont.)
The following table presents a summary of the Company’s performance-based restricted stock awards activity:
| Number of shares | Weighted Average Remaining Contractual Life (in years) | |||||||
| Outstanding as of December 31, 2024 | ||||||||
| Exercised | ||||||||
| Expired/forfeited | ||||||||
| Outstanding as of June 30, 2025 | ||||||||
| Exercisable as of June 30, 2025 | ||||||||
Service-based restricted stock awards
Service-based awards generally vest over a one-year service period or as otherwise defined.
The following table presents a summary of the Company’s service-based awards activity:
| Number of shares | Weighted Average Remaining Contractual Life (in years) | |||||||
| Outstanding as of December 31, 2024 | ||||||||
| Issued | ||||||||
| Exercised | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| Outstanding as of June 30, 2025 | ||||||||
| Exercisable as of June 30, 2025 | ||||||||
As of June 30, 2025, there was approximately $
Stock options awards
Stock options awards vest upon the successful completion of specified market conditions.
24
NOTE 10 – STOCKHOLDERS’ EQUITY (Cont.)
Stock-Based Compensation: (Cont.)
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) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding as of December 31, 2024 | $ | $ | ||||||||||||||
| Forfeited | ( | ) | ||||||||||||||
| Outstanding as of June 30, 2025 | $ | $ | ||||||||||||||
| Exercisable as of June 30, 2025 | $ | $ | ||||||||||||||
NOTE 11 – SUBSEQUENT EVENTS
Nasdaq
As previously disclosed, on January 24, 2025,
the Company received written notice (the “MVLS Notice”) from the Listing Qualifications Department (the “Staff”)
of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that for the 33 consecutive business days preceding the date
of the MVLS Notice, the Company’s Market Value of Listed Securities (“MVLS”) was less than the $
On February 6, 2025, the Company also received
written notice (the “Bid Price Notice”) from the Staff of Nasdaq notifying the Company that for the last 30 consecutive business
days prior to the date of the Bid Price Notice, the closing bid price of Company’s Common Stock was less than the $
On July 24, 2025, the Company received written notice (the “Delisting Notice”) from the Staff indicating that based upon the Company’s continued non-compliance with the MVLS Rule on the MVLS Compliance Date, the Company’s securities were subject to delisting unless the Company timely requests a hearing before the Nasdaq Hearings Panel (the “Panel”).
On August 6, 2025, the Company received written notice from the Staff notifying the Company that it had not regained compliance with the Bid Price Rule by the Bid Price Compliance Date (the “Bid Price Deficiency”) and that the Panel will consider the Bid Price Deficiency in rendering a determination regarding the Company’s continued listing on The Nasdaq Capital Market.
The Company timely submitted a request for a hearing before the Panel, which request stayed any further suspension or delisting action by the Staff at least pending the hearing before the Panel. At its hearing before the Panel, the Company will request an extension to regain compliance with the MVLS Rule and the Bid Price Rule.
There can be no assurance that the Company will be able to regain compliance with the MVLS Rule or the Bid Price Rule or maintain compliance with all other Nasdaq listing requirements. If the Company’s request for an extension is denied or if it fails to regain compliance with Nasdaq’s continued listing standards during any period granted by the Panel, the Company’s Common Stock will be subject to delisting from Nasdaq.
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NOTE 11 – SUBSEQUENT EVENTS (Cont.)
Management Transition
On May 30, 2025, the Company provided Rahul Mewawalla with notice that termination of his employment as Chief Executive Officer and President of the Company for “Cause” (as defined in his employment agreement with the Company, dated May 22, 2023 (as amended, the “Mewawalla Agreement”)), based on conduct specified in the notice, will be considered at a future meeting of the Company’s Board of Directors, at which meeting the Board of Directors will determine whether his conduct constitutes Cause sufficient to terminate Mr. Mewawalla in accordance with the terms of his employment agreement. Mr. Mewawalla’s employment agreement with the Company provides for a cure period, which ended on June 14, 2025.
On June 2, 2025, the Board of Directors appointed Kaliste Saloom to serve as Interim Chief Executive Officer of the Company, effective as of June 3, 2025
On July 8, 2025, the Board of Directors provided Mr. Mewawalla with notice of termination of his employment as Chief Executive Officer and President of the Company effective immediately in accordance with the terms of the Mewawalla Agreement, and that such termination was for “Cause” (as defined in the Mewawalla Agreement).
In connection with Mr. Mewawalla’s termination,
he has forfeited his outstanding equity award of
Also on July 8, 2025, the Board of Directors requested that Mr. Mewawalla resign from his role as a member of the Board of Directors in accordance with the terms of the Director Appointment Letter between the Company and Mr. Mewawalla, dated January 31, 2023 (the “Director Appointment Letter”). In accordance with the terms of the Director Appointment Letter, Mr. Mewawalla was required to resign and therefore was deemed to have resigned as a member of the Board of Directors effective immediately.
Mewawalla Action
On July 8, 2025, the Company filed a complaint in the Court of Chancery of the State of Delaware against Mr. Mewawalla captioned Mawson Infrastructure Group Inc. v. Rahul Mewawalla, No. 2025-0789-JTL (the “Mewawalla Action”). The Mewawalla Action seeks to recover damages from Mr. Mewawalla arising out of his alleged breach of fiduciary duties as a director, as well as alleged fraud. Mr. Mewawalla has not filed an answer to the Mewawalla Action.
Enactment of the “One Big Beautiful Bill Act”
On July 4, 2025, President Donald Trump signed
into law the reconciliation tax bill, commonly referred to as the “One Big Beautiful Bill Act” (the “OBBBA”),
which constitutes the enactment date under U.S. GAAP. Key corporate tax provisions of the OBBBA include the restoration of
Under U.S. GAAP, the effects of changes in tax laws are recognized in the period in which the new law is enacted. Accordingly, the impact of the OBBBA will be reflected in the Company’s financial statements for the third quarter of 2025. The Company is currently assessing the impact of the OBBBA and an estimate of financial effects is not available at this time.
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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 operations and cash flows. The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited consolidated condensed 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 the 2024 Form 10-K. All amounts are in U.S. dollars.
Throughout this report, unless otherwise designated, the terms “we,” “us,” “our,” the “Company,” and “Mawson,” refer to Mawson Infrastructure Group Inc., a Delaware corporation, Cosmos Trading Pty Ltd, Cosmos Infrastructure LLC, Cosmos Manager LLC, MIG No.1 Pty Ltd (on March 19, 2024, MIG No.1 Pty Ltd was placed into a court appointed liquidation and wind-up process), MIG No.1 LLC, Mawson AU Pty Limited (on April 23, 2024, Mawson AU Pty Ltd was placed into a court appointed liquidation and wind-up process), Mawson Services Pty Ltd (on April 29, 2024, Mawson Services Pty Ltd was placed into a court appointed liquidation and wind-up process), Mawson Bellefonte LLC, Luna Squares LLC, Luna Squares Repairs LLC, Luna Squares Property LLC, Mawson Midland LLC, Mawson Ohio LLC, Mawson Hosting LLC and Mawson Mining LLC.
Cautionary Note Regarding Forward-Looking Statements
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. Forward-looking statements can be identified by the use of forward-looking words such as “believe”, “expect”, “intend”, “plan”, “may”, “should”, “could” 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 United States Securities and Exchange Commission (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 factors summarized below.
This report, our Quarterly Report on Form 10-Q filed with the SEC on May 15, 2025, and the 2024 Form 10-K identify important factors which could cause our actual results to differ materially from those indicated by the forward-looking statements, including those set forth under Item 1A. “Risk Factors” below.
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The risk factors included in this Quarterly Report on Form 10-Q, our Quarterly Report on Form 10-Q filed with the SEC on May 15, 2025, and on the 2024 Form 10-K 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, you 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:
| - | continued evolution and uncertainty related to technologies and digital infrastructure; |
| - | our ability to continue as a going concern; | |
| - | our ability to cure any continued listing deficiencies and maintain the listing of our Common Stock on the Nasdaq Capital Market; | |
| - | the availability of our ATM Program and our ability or inability to secure additional funds through equity financing transactions; | |
| - | access to reliable and reasonably priced electricity sources; |
| - | operational, maintenance, repair, safety, and construction risks; |
| - | the failure or breakdown of mining equipment, or internet connection failure; |
| - | our reliance on key management personnel and employees; | |
| - | our ability to attract or retain the talent needed to sustain or grow the business; |
| - | our ability to develop and execute on our business strategy and plans; |
| - | counterparty risks related to our customers, agreements and/or contracts; |
| - | adverse actions by creditors, debt providers, or other parties; |
| - | continued evolution and uncertainty related to growth in blockchain and Bitcoin and other digital assets’ usage; |
| - | high volatility in Bitcoin and other digital assets’ prices and in value attributable to our business; |
| - | our need to, and difficulty in, raising additional debt or equity capital and the availability of financing opportunities; |
| - | failure to maintain required compliance to remain eligible for the most cost-effective forms of raising additional equity capital; |
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| - | the evolution of AI and HPC market and changing technologies; |
| - | the slower than expected growth in demand for AI, HPC and other accelerated computing technologies; |
| - | the ability to timely implement and execute on AI and HPC digital infrastructure contracts or deployment; |
| - | the ability to timely complete the digital infrastructure build-out in order to achieve its revenue expectations for the periods mentioned; |
| - | downturns in the digital assets industry; |
| - | counterparty risks and risks of delayed or delinquent payments from customers and others; |
| - | inflation, economic or political environment; |
| - | cyber-security threats; |
| - | our ability to obtain proper insurance; |
| - | banks and other financial institutions ceasing to provide services to our industry; |
| - | changes to the Bitcoin and/or other networks’ protocols and software; |
| - | the decrease in the incentive or increased network difficulty to mine Bitcoin; |
| - | the increase of transaction fees related to digital assets: |
| - | the fraud or security failures of large digital asset exchanges; |
| - | 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; and |
| - | material litigation, investigations, or enforcement actions, including by regulators and governmental authorities. |
Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to, the risk factors set out in Item 1A. Risk Factors in this Quarterly Report on Form 10-Q, our Quarterly Report on Form 10-Q filed with the SEC on May 15, 2025 and in our 2024 Form 10-K.
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. We undertake no obligation 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.
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Company Overview
We are a technology company focused on digital infrastructure platforms.
The Company develops and operates digital infrastructure platforms for enterprise customers and for its own purposes. The Company’s digital infrastructure platforms can be used to operate computing resources for a number of applications, and are offered across AI, HPC, digital assets, and other computing applications. The Company also has an energy management business, which utilizes software and analysis, to generate revenue when the Company participates in energy management programs related to the real-time needs of the power grid.
The Company has a strategy to prioritize the usage of carbon-free energy sources, including nuclear energy, to power its digital infrastructure platforms and computational machines.
The Company manages and operates digital infrastructure platforms and data centers delivering a total current capacity of approximately 129 megawatts (“MW”) with its current operational sites with an additional 24 MW of future capacity that is under development, all strategically located in locations served by the PJM Energy Market in the United States. The PJM Energy Market is the largest wholesale power market in North America.
Results of Operations – Three months ended June 30, 2025 compared to the three months ended June 30, 2024
| For the three months ended | ||||||||
| June 30, | ||||||||
| 2025 | 2024 | |||||||
| Revenues: | ||||||||
| Digital colocation revenue | $ | 3,660,298 | $ | 8,131,439 | ||||
| Energy management revenue | 5,130,712 | 1,732,596 | ||||||
| Digital assets mining revenue | 742,173 | 3,248,084 | ||||||
| Total revenues | 9,533,183 | 13,112,119 | ||||||
| Less: Cost of revenues (excluding depreciation) | 5,599,553 | 8,794,642 | ||||||
| Gross profit | 3,933,630 | 4,317,477 | ||||||
| Operating expenses: | ||||||||
| Selling, general and administrative | 5,925,308 | 3,642,157 | ||||||
| Stock based compensation | 978,261 | 1,053,248 | ||||||
| Depreciation and amortization | 1,466,119 | 4,604,334 | ||||||
| Change in fair value of derivative asset | 2,137,052 | 1,775,103 | ||||||
| Total operating expenses | 10,506,740 | 11,074,842 | ||||||
| Loss from operations | (6,573,110 | ) | (6,757,365 | ) | ||||
| Non-operating income (expense): | ||||||||
| Loss on foreign currency transactions | (689,952 | ) | (285,530 | ) | ||||
| Interest expense | (827,336 | ) | (752,945 | ) | ||||
| Other income | 60,646 | 24,523 | ||||||
| Other expenses | (9,614 | ) | (9,913 | ) | ||||
| Loss on deconsolidation | - | (84,744 | ) | |||||
| Total non-operating expense, net | (1,466,256 | ) | (1,108,609 | ) | ||||
| Loss before income taxes | (8,039,366 | ) | (7,865,974 | ) | ||||
| Income tax benefit (expense) | 17,933 | (1,752,719 | ) | |||||
| Net Loss | $ | (8,021,433 | ) | $ | (9,618,693 | ) | ||
| Net Loss per share, basic & diluted | $ | (0.40 | ) | $ | (0.55 | ) | ||
| Weighted average number of shares outstanding | 20,232,508 | 17,412,862 | ||||||
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Revenues
Digital colocation revenues for the three months ended June 30, 2025 and 2024, were $3.7 million and $8.1 million, respectively. This represented a 55% revenue decrease or a decrease of $4.4 million, compared to the same period in 2024. The decrease in revenue was due to a decline in both the number of customers and the size of those contracts with customers as compared to the 2024 period. The Company continues to enhance its digital colocation capabilities in order to grow the number of digital colocation customers, and increase the number of machines using our digital colocation infrastructure services.
Energy management revenues for the three months ended June 30, 2025 and 2024, were $5.1 million and $1.7 million, respectively. This represented a 196% revenue increase or an increase of $3.4 million, compared to the same period in 2024. This increase is due to the Company’s enhanced energy management programs, which utilizes software and analysis, to generate revenue when the Company adapts its power usage to the real-time needs of the grid. Higher energy prices and demand drove higher participation in energy programs in the 2025 period than in the 2024 period.
Digital assets mining revenues from self-mining of bitcoin for the three months ended June 30, 2025 and 2024, were $0.7 million and $3.2 million, respectively. This represented a decrease of $2.5 million compared to the same period in 2024. This decrease was due to a number of factors, including the impact of the April 2024 halving industry event, and a higher global network difficulty rate, which led to lower bitcoin production from self-mining.
Cost of revenue
Our cost of revenue consists primarily of direct power costs related to digital asset mining and colocation services and cost of mining equipment sold.
Cost of revenue for the three months ended June 30, 2025 and 2024, were $5.6 million and $8.8 million, respectively. The decrease in cost of revenue was attributable to a decrease in power costs due to lower colocation and self mining revenues. The decrease in power costs related to the energy used to operate the Company’s mining equipment and co-located mining equipment within our facilities was partially offset by an increase in the cost of energy in the 2025 period compared to the 2024 period.
Operating Expenses
Our operating expenses include: selling, general and administrative expenses; stock-based compensation; change in fair value of derivative asset; and depreciation and amortization.
Selling, general and administrative
Our selling, general and administrative expenses consist primarily of audit, legal, and other professional fees, employee compensation, director fees, equipment repairs, marketing, freight, insurance, consultant fees, lease amortization and general expenses.
Selling, general and administrative expenses for the three months ended June 30, 2025 and 2024 were $5.9 million and $3.6 million, respectively, an increase of $2.3 million from period to period, primarily due to increased legal and litigation related expenses and employee compensation.
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Depreciation and amortization
Depreciation consists primarily of depreciation of digital asset mining hardware and modular data center (“MDC”) equipment.
Depreciation and amortization for the three months ended June 30, 2025 and 2024, were $1.5 million and $4.6 million, respectively. The lower depreciation and amortization expense is the result of liquidation and an increased number of the Company’s digital asset mining hardware being fully depreciated in prior periods.
Change in fair value of derivative asset
During the three months ended June 30, 2025 and 2024, there was a loss on the fair value of the derivative asset of $2.1 million and $1.8 million, respectively, in relation to our power supply arrangements. Due to milder weather during the second quarter of 2025, energy prices dropped and lowered the value of energy hedges compared to the first quarter. The change in fair value between June 30, 2025 and 2024 was due to higher overall volatility in future prices derived from first quarter 2025 energy prices compared to 2024.
Non-operating income (expense)
Non-operating income (expense) consist primarily of interest expenses, gain (loss) on foreign currency transactions, and other income and expenses.
Interest expenses for each of the three months ended June 30, 2025 and 2024, were $0.8 million.
During the three months ended June 30, 2025, loss on foreign currency transactions was $0.7 million. During the three months ended June 30, 2024, loss on foreign currency transactions was $0.3 million. This difference was due to higher Australian Dollar denominated liabilities in the 2025 period compared with the 2024 period and movement in the foreign exchange rate.
During the three-months ended June 30, 2024, the Company recognized a deconsolidation loss of $0.08 million. This loss was as a result of two Australian entities and subsidiaries, Mawson AU and Mawson SPL proceeding into Australian court appointed liquidation and accordingly these subsidiaries were deconsolidated. The deconsolidation loss recorded was due to the removal of the net assets and certain liabilities of this subsidiary from the consolidated condensed financial statements.
Income tax benefit (expense)
The Company recorded income tax benefit (expense) of approximately 0.2% and (22.3)% of loss before income tax (benefit) expense for the three-month periods ended June 30, 2025 and 2024, respectively. The difference in the income tax (benefit) expense for the three-month period ended June 30, 2025 versus the three-month period ended June 30, 2024 relates mainly to differences in estimated interest and penalty accruals included in the current payable for each of those periods, as well as changes in estimates regarding the realizability of deferred tax balances that impact the Company’s deferred tax expense. For the 2025 period, the interest and penalties only relate to the incremental increase during the three-month period ended June 30, 2025 while the 2024 interest and penalties relate to both the three-month period ended June 30, 2024 and prior periods beginning in 2021.
Enactment of the “One Big Beautiful Bill Act” (OBBBA)
On July 4, 2025, President Donald Trump signed into law the reconciliation tax bill, commonly referred to as the “One Big Beautiful Bill Act” (the “OBBBA”). The OBBBA contains several changes to corporate taxation that could impact the Company, including but not limited to modifications to the capitalization of research and development expenses, limitations on deductions for interest expense and accelerated fixed asset depreciation. The Company is currently assessing the impact of the OBBBA and an estimate of its financial effects is not available at this time. For information, refer to Note 11 — Subsequent Events to the unaudited consolidated condensed financial statements included in Item 1. “Financial Statements” of this Quarterly Report.
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Results of Operations – Six months ended June 30, 2025 compared to the six months ended June 30, 2024
| For the six months ended | ||||||||
| June 30, | ||||||||
| 2025 | 2024 | |||||||
| Revenues: | ||||||||
| Digital colocation revenue | $ | 14,089,171 | $ | 16,365,480 | ||||
| Energy management revenue | 8,195,587 | 4,205,101 | ||||||
| Digital assets mining revenue | 1,062,798 | 10,762,847 | ||||||
| Equipment sales | - | 550,000 | ||||||
| Total revenues | 23,347,556 | 31,883,428 | ||||||
| Less: Cost of revenues (excluding depreciation) | 13,489,996 | 20,580,810 | ||||||
| Gross profit | 9,857,560 | 11,302,618 | ||||||
| Operating expenses: | ||||||||
| Selling, general and administrative | 11,703,716 | 7,105,757 | ||||||
| Stock based compensation | 3,078,765 | 5,954,731 | ||||||
| Depreciation and amortization | 2,994,032 | 12,595,980 | ||||||
| Change in fair value of derivative asset | (1,922,521 | ) | 88,950 | |||||
| Total operating expenses | 15,853,992 | 25,745,418 | ||||||
| Loss from operations | (5,996,432 | ) | (14,442,800 | ) | ||||
| Non-operating income (expense): | ||||||||
| Loss on foreign currency transactions | (777,290 | ) | (124,588 | ) | ||||
| Interest expense | (1,612,201 | ) | (1,486,703 | ) | ||||
| Other income | 164,758 | 189,784 | ||||||
| Other expenses | (18,955 | ) | (19,687 | ) | ||||
| Loss on deconsolidation | - | (12,010,652 | ) | |||||
| Total non-operating expense, net | (2,243,688 | ) | (13,451,846 | ) | ||||
| Loss before income taxes | (8,240,120 | ) | (27,894,646 | ) | ||||
| Income tax expense | (92,176 | ) | (1,693,332 | ) | ||||
| Net Loss | (8,332,296 | ) | (29,587,978 | ) | ||||
| Less: Net loss attributable to non-controlling interests | - | (205,086 | ) | |||||
| Net Loss attributed to Mawson common stockholders | $ | (8,332,296 | ) | $ | (29,382,892 | ) | ||
| Net Loss per share, basic & diluted | $ | (0.43 | ) | $ | (1.73 | ) | ||
| Weighted average number of shares outstanding | 19,516,412 | 17,028,786 | ||||||
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Revenues
Digital colocation revenues for six months ended June 30, 2025 and 2024, were $14.1 million and $16.4 million, respectively. This represented a 14% revenue decrease or a decrease of $2.3 million, compared to the same period in 2024. The decrease in revenue was due to a decline in both the number of customers and the size of those contracts with customers as compared to the 2024 period. The Company continues to enhance its digital colocation capabilities in order to grow the number of digital colocation customers, and increase the number of machines using our digital colocation infrastructure services.
Energy management revenues for the six months ended June 30, 2025 and 2024, were $8.2 million and $4.2 million, respectively. This represented a 95% revenue increase or an increase of $4.0 million, compared to the same period in 2024. This increase is due to the Company’s enhanced energy management programs, which utilizes software and analysis, to generate revenue when the Company adapts its power usage to the real-time needs of the grid. Higher energy prices and demand drove higher participation in energy programs in the 2025 period than in the 2024 period.
Digital assets mining revenues from self-mining of bitcoin for the six months ended June 30, 2025 and 2024, were $1.1 million and $10.8 million, respectively. This represented a decrease of $9.7 million compared to the same period in 2024. This decrease was due to a number of factors, including the impact of the April 2024 halving industry event, and a higher global network difficulty rate, which led to lower bitcoin production from self-mining.
Cost of revenue
Our cost of revenue consists primarily of direct power costs related to digital asset mining and colocation services and cost of mining equipment sold.
Cost of revenue for the six months ended June 30, 2025 and 2024, were $13.5 million and $20.6 million, respectively. The decrease in cost of revenue was attributable to a decrease in power costs due to lower colocation and self mining revenues. The decrease in power costs related to the energy used to operate the Company’s mining equipment and co-located mining equipment within our facilities was partially offset by an increase in the cost of energy in the 2025 period compared to the 2024 period.
Operating Expenses
Our operating expenses include: selling, general and administrative expenses; stock-based compensation; change in fair value of derivative asset; and depreciation and amortization.
Selling, general and administrative
Our selling, general and administrative expenses consist primarily of audit, legal, and other professional fees, employee compensation, director fees, equipment repairs, marketing, freight, insurance, consultant fees, lease amortization and general expenses.
Selling, general and administrative expenses for the six months ended June 30, 2025 and 2024 were $11.7 million and $7.1 million, respectively, an increase of $4.6 million from period to period, primarily due to increased legal and litigation related expenses, employee compensation and the write-off of uncollectable customer accounts.
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Stock based compensation
Stock based compensation expenses for the six months ended June 30, 2025 and 2024 were $3.1 million and $6.0 million, respectively. The decrease was primarily due to lower fair values of new issuances of long-term incentives for the Company’s directors, management, and employees during the first six-months ended June 30, 2025 compared with the same period in 2024
Depreciation and amortization
Depreciation consists primarily of depreciation of digital asset mining hardware and MDC equipment.
Depreciation and amortization for the six months ended June 30, 2025 and 2024, were $3.0 million and $12.6 million, respectively. The lower depreciation and amortization expense is the result of liquidation and deconsolidation of MIG No. 1 and an increased number of the Company’s digital asset mining hardware being fully depreciated in prior periods.
Change in fair value of derivative asset
During the six months ended June 30, 2025 and 2024, there was a gain on the fair value of the derivative asset of $1.9 million and a loss on the fair value of the derivative asset of $0.09 million, respectively, in relation to our power supply arrangements. Energy prices continued to sustain higher future prices due to upward energy volatility during 2025 compared to more stable seasonal pricing during 2024, which was closer in line with 2024 hedges. The change in fair value between June 30, 2025 and 2024 was primarily due to higher overall volatility in future prices in 2025 compared to 2024.
Non-operating income (expense)
Non-operating income (expense) consist primarily of interest expenses, gain (loss) on foreign currency transactions, loss on deconsolidation and other income and expenses.
Interest expenses for the six months ended June 30, 2025 and 2024, were $1.6 million and $1.5 million, respectively.
During the six months ended June 30, 2025, loss on foreign currency transactions was $0.7 million. During the six months ended June 30, 2024, loss on foreign currency transactions was $0.1 million. This difference was due to higher Australian Dollar denominated liabilities in 2025 compared with 2024 and movement in the foreign exchange rate.
During the six-months ended June 30, 2024, the Company recognized a deconsolidation loss of $12.0 million. This loss was as a result of three Australian entities and subsidiaries, MIG No.1, Mawson AU and Mawson SPL, proceeding into Australian court appointed liquidation and accordingly these subsidiaries were deconsolidated. The deconsolidation loss recorded was due to the removal of the net assets and certain liabilities of this subsidiary from the condensed consolidated financial statements. See Note 3 – Australian Subsidiaries Deconsolidation to the Consolidated Condensed Financial Statements (Unaudited) in Item 1. Financial Statements, for further discussion of MIG No. 1.
Income tax (expense) benefit
The Company recorded income tax expense of approximately 1.1% and 6.1% of loss before income tax expense for the six-month periods ended June 30, 2025 and 2024, respectively. The difference in the income tax expense for the six-month period ended June 30, 2025 versus the six-month period ended June 30, 2024 relates mainly to differences in estimated interest and penalty accruals included in the current payable for each of those periods, as well as changes in estimates regarding the realizability of deferred tax balances which impact the Company’s deferred tax expense. For 2025, the interest and penalties only relate to the incremental increase during the six-month period ended June 30, 2025 while the 2024 interest and penalties relate to both the six-month period ended June 30, 2026 and prior periods beginning in 2021.
Enactment of the “One Big Beautiful Bill Act”
On July 4, 2025, President Donald Trump signed into law the reconciliation tax bill, commonly referred to as the “One Big Beautiful Bill Act” (the “OBBBA”). The OBBBA contains several changes to corporate taxation that could impact the Company, including but not limited to modifications to the capitalization of research and development expenses, limitations on deductions for interest expense and accelerated fixed asset depreciation. The Company is currently assessing the impact of the OBBBA and an estimate of its financial effects is not available at this time. For information, refer to Note 11 — Subsequent Events to the unaudited consolidated condensed financial statements included in Item 1. “Financial Statements” of this Quarterly Report.
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Liquidity and Capital Resources
General
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. For the six months ended June 30, 2025, we financed our operations primarily through cash flow provided by operating activities and other cash reserves.
On December 13, 2024, the Company entered into a Sales Agreement with Roth Capital Partners, LLC (the “Lead Agent”) and A.G.P./Alliance Global Partners (collectively with the Lead Agent, the “Agents” and individually an “Agent”), to sell shares of our Common Stock (the “Shares”), having an aggregate sales price of up to $12 million, from time to time, through an “at-the-market” program (the “ATM Program”) under which the Agents will act as sales agent. The ATM Program is currently unavailable because the Company does not have an effective registration statement on Form S-3 on file with the SEC. The Company intends to file a registration statement on Form S-3 with the SEC and re-commence the ATM Program in 2025.
We believe our near-term working capital requirements will continue to be funded through a combination of the cash we expect to generate from future operations, our existing funds, external debt facilities that may be available to use, future issuances of shares, and other potential sources of capital, monetization, or funds. We believe a combination of these opportunities are expected to be adequate to fund our operations over the next twelve months. For our business growth, it is expected we may continue investing in expanding and/or upgrading our infrastructure and/or other equipment and will require additional working capital in the short-term and long-term. As of June 30, 2025, we had an aggregate of $23.1 million of debt, all of which is overdue for repayment unless we refinance, renegotiate the terms, or prevail in our disputes and/or related claims and/or counterclaims. In addition, the Celsius deposit of $15.3 million is the subject of an ongoing legal dispute in arbitration with Mawson and Celsius having claims and counterclaims. See Note 9 – Commitments and Contingencies, Celsius Promissory Note and Digital Colocation Agreement to the unaudited consolidated condensed financial statements included in Item 1. “Financial Statements” of this Quarterly Report.
We will need to raise substantial additional capital to continue our operations, execute our business strategy and meet our debt service obligations. We may not be able to raise adequate capital on a timely basis, on favorable terms, or at all. Our inability to raise sufficient capital would have a material adverse effect on our financial condition and business.
Working Capital and Cash Flows
As of June 30, 2025 and December 31, 2024, we had a cash and cash equivalent balance of $3.2 million and $6.1 million, respectively. As of June 30, 2025 and December 31, 2024, the trade receivables balance was $11.9 million and $15.2 million, respectively. As of June 30, 2025, we had $23.1 million of outstanding short-term loans, and as of December 31, 2024, we had $20.9 million of short-term loans. The short-term loans as of June 30, 2025, relate to the Celsius Promissory Note, W Capital Loan, Secured Convertible Promissory Notes and Marshall Loan (each of which is currently in default). Refer to “Material Cash Requirements” below for more information. As of June 30, 2025 and December 31, 2024, we had negative working capital of $40.3 million and $35.9 million, respectively.
The following table presents the major components of net cash flows (used in) provided by operating, investing and financing activities for the six months ended June 30, 2025 and 2024:
| Six Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Net cash (used in) provided by operating activities | $ | (2,588,984 | ) | $ | 4,344,563 | |||
| Net cash used in investing activities | $ | (54,633 | ) | $ | (1,415,281 | ) | ||
| Net cash used in financing activities | $ | (206,588 | ) | $ | (623,478 | ) | ||
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For the six months ended June 30, 2025, net cash used in operating activities was $2.6 million and for the six months ended June 30, 2024, net cash provided by operating activities was $4.3 million. We had a net loss of $8.3 million for the six months ended June 30, 2025, which included $1.9 million of gain on derivative asset, $3.1 million of stock based compensation, $3.0 million of depreciation and amortization expense, $1.0 million of provision for doubtful accounts and $1.6 million of non-cash interest expense. We had a net loss of $29.6 million for the six months ended June 30, 2024, which included $12.0 million loss on deconsolidation, $12.6 million of depreciation and amortization expense, $3.1 million of stock based compensation expense, and $0.09 million of loss on derivative asset.
For the six months ended June 30, 2025, net cash used in investing activities was $0.05 and for the six months ended June 30, 2024, net cash used in investing activities was $1.4million. The net cash used in investing activities during the six months ended June 30, 2024, was primarily attributable to capital expenditures partially offset by proceeds from sale of certain non-utilized equipment.
For the six months ended June 30, 2025 and 2024, net cash used in financing activities was $0.2 million and $0.6 million, respectively. The cash used in financing activities during the six months ended June 30, 2025 and June 30, 2024, was primarily attributable to lease payments and loan payments, respectively.
Material Cash Requirements
The following discussion summarizes our material cash requirements from contractual and other obligations. For more information on these matters, please see Note 9 – Commitments and Contingencies to the unaudited consolidated condensed financial statements included in Item 1. “Financial Statements” of this Quarterly Report.
The Company is included as a guarantor of the Marshall Loan. The loan matured in February 2024 and bears interest at a rate of 12% per annum (with an overdue rate provision of an additional 500bps), payable monthly with interest payments that commenced in December 2021. This loan facility is secured by direct assets of MIG No.1 and a general security agreement given by the Company. Principal repayments began during November 2022. There has been no principal and interest payments made since May 2023. The outstanding balance including interest is $11.3 million as of June 30, 2025, all of which is currently classified as a current liability.
The Company is included as a guarantor of the W Capital Loan. As of June 30, 2025, the balance was AUD $2.3 million (USD $1.5 million) representing outstanding interest, all of which is currently classified as a current liability. The W Capital Loan accrues interest daily at a rate of 12% per annum (with an overdue rate provision of an additional 800bps). The W Capital Loan expired in March 2023.
On February 23, 2022, Luna Squares entered into the Digital Colocation Agreement with Celsius Mining LLC. In connection with this agreement, Celsius Mining LLC loaned Luna Squares a principal amount of $20.0 million, for the purpose of funding the infrastructure required to meet the obligations of the Digital Colocation Agreement, for which Luna Squares issued the Celsius Promissory Note for repayment of such amount. The Celsius Promissory Note accrues interest daily at a rate of 12% per annum (with an overdue rate provision of an additional 200bps). Luna Squares is required to amortize the loan at a rate of 15% per quarter, principal repayments began at the end of September 2022. The Celsius Promissory Note had a maturity date of August 23, 2023. The outstanding balance including interest is $10.2 million as of June 30, 2025, all of which is currently classified as a current liability.
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On July 8, 2022, the Company issued 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 who was not a party to this variation opted to enter into an arrangement whereby it received pre-payment of interest but agreed that repayment of the principal was not required therefore the remaining $0.50 million had been classified as a current liability. The convertible note matured in July 2023. Interest has been accrued from July 2023 onwards and therefore the outstanding balance is $0.1 million as of June 30, 2025, all of which is classified as a current liability. During 2024 the principal amount outstanding of $0.50 million was repaid to the investor.
Financial condition
As of June 30, 2025, and December 31, 2024, we had current liabilities of $59.3 million and $61.9 million, respectively. As of June 30, 2025, and December 31, 2024, we had negative net assets of $8.3 million and $3.2 million, respectively. As of June 30, 2025, we had an accumulated deficit of $237.1 million compared to $228.8 million as of December 31, 2024. Our cash position of June 30, 2025, was $3.2 million in comparison to $6.1 million as of December 31, 2024.
For the six- month period ended June 30, 2025 and 2024, the Company incurred a net loss attributed to Mawson common stockholders of 8.3 million and $29.4 million, respectively, a decrease in financial loss of $21.1 million.
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, general costs 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.
We require additional capital to respond to near-term debt repayment obligations, competitive pressure, market dynamics, new technologies, customer demands, business opportunities, and challenges, potential acquisitions or unforeseen circumstances, and we will likely need to engage in equity or debt financings 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, our business, financial condition and results of operations could be adversely affected, and this may result in bankruptcy or our ceasing operations.
The Company continues to take steps to preserve cash by optimizing costs and negotiating with its suppliers to improve or extend their terms of trade. The Company has been improving its revenue generation by improving the efficiency of its operations and adding multiple, institutional colocation services customers. The Company will continue to seek to optimize its cashflows through these and other initiatives.
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Non-GAAP Financial Measures
The Company reports all financial information required in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The Company believes, however, that evaluating its ongoing operating results will be enhanced if it also discloses certain non-GAAP information. Adjusted EBITDA, which is a non-GAAP financial measure, is defined by the Company as net loss plus income tax, depreciation and amortization, further adjusted by stock based compensation, gain/loss on foreign currency, other non-operating income and expenses, change in fair value of derivative asset, provision for doubtful accounts, net of recoveries and loss on deconsolidation.
Adjusted EBITDA should not be considered an alternative to net income, operating income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA may have material limitations as a performance measure because it excludes items that are necessary elements of our costs and operations. In addition, Adjusted EBITDA presented by other companies may not be comparable to our presentation, since each company may define these terms differently.
| For the three-months ended | For the six-months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Reconciliation of non-GAAP adjusted EBITDA: | ||||||||||||||||
| Net loss: | $ | (8,021,433 | ) | $ | (9,618,693 | ) | $ | (8,332,296 | ) | $ | (29,587,978 | ) | ||||
| Depreciation and amortization | 1,466,119 | 4,604,334 | 2,994,032 | 12,595,980 | ||||||||||||
| Stock based compensation | 978,261 | 1,053,248 | 3,078,765 | 5,954,731 | ||||||||||||
| Losses on foreign currency transactions | 689,952 | 285,530 | 777,290 | 124,588 | ||||||||||||
| Other non-operating income | (60,646 | ) | (24,523 | ) | (164,758 | ) | (189,784 | ) | ||||||||
| Other non-operating expenses | 836,950 | 762,858 | 1,631,156 | 1,506,390 | ||||||||||||
| Change in fair value of derivative asset | 2,137,052 | 1,775,103 | (1,922,521 | ) | 88,950 | |||||||||||
| Income tax | (17,933 | ) | 1,752,719 | 92,176 | 1,693,332 | |||||||||||
| Provision for doubtful accounts | - | - | 977,755 | - | ||||||||||||
| Loss on deconsolidation | - | 84,744 | - | 12,010,652 | ||||||||||||
| EBITDA (non-GAAP) | $ | (1,991,678 | ) | $ | 675,320 | $ | (868,401 | ) | $ | 4,196,861 | ||||||
Critical accounting estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. 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. There have been no material changes to our critical accounting policies and estimates as set forth in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in the 2024 Form 10-K.
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Item 3. Quantitative and Qualitative Disclosures About Market 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, the Committee(s) thereof and our management team, including our Interim Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), have 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 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 Interim Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of June 30, 2025, 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.
Segregation of Duties and Staff Turnover. There is inadequate segregation of duties in place related to our financial reporting and other review and oversight procedures due to the lack of sufficient accounting and other personnel. This is not inconsistent with similar sized and small organizations. This gives rise to the risk of lack of ability to react in a timely manner to operations issues and to fully meet the requirements of the SEC, 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 constitute a material weakness. Deficiencies identified include lack of controls over access to programs and data, program changes, program development and general IT controls.
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Data from third parties. The Company does not have the resources and personnel to fully execute its designed controls to ensure that data received from third parties is validated, complete and accurate. Such data is relied on by the Company in determining amounts pertaining to mining and colocation revenue, net energy benefits, and digital currency assets.
Fixed asset verification. The Company does not have the resources and personnel to fully execute its designed controls around physical asset verification. Together with system limitations, restricting tracking of fixed asset movements, there is a risk around the existence of fixed assets.
Notwithstanding the identified material weaknesses and management’s assessment that our disclosure controls and procedures were not effective as of June 30, 2025, management believes that the consolidated condensed financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in accordance with generally accepted accounting principles. We rely on the assistance of outside advisors with expertise in these matters in preparing the financial statements.
Remediation
Our Board of Directors and management take internal control over financial reporting and the integrity of our financial statements seriously. Our management continues to work to find ways to improve its controls related to our material weaknesses. With the oversight of the Board of Directors, the Board Committee(s) and management, the Company plans to continue to progress the remediation of the underlying causes of the identified material weaknesses, primarily through the performance of a risk assessment process; the development and implementation of formal, documented policies and procedures, improved processes and control activities (including an assessment of the segregation of duties); as well as the hiring of additional finance and other personnel for specific roles including financial reporting.
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 controls have operated for a sufficient period of time and have been tested for and concluded on for effectiveness. As operating effectiveness testing has not been concluded as of the date of this report, we continue to disclose the material weaknesses.
Remediation efforts for upcoming quarters will be focused on progressing the implementation of the remainder of controls, refining existing controls and validating the effectiveness of implemented controls using criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control. We cannot provide any assurance that 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 decide to take additional measures to address material weaknesses or modify or update 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, the 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 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 the Board of Directors and management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company and certain of its subsidiaries are currently in disputes, which may be in or may lead to litigation. The results of these matters cannot be predicted with certainty and an unfavorable resolution of one or more of these or other matters could have a material adverse effect on our business, results of operations, financial condition and/or cash flows. For information on these matters, refer to Note 9 — Commitments and Contingencies to the unaudited consolidated condensed financial statements included in Item 1. “Financial Statements” of this Quarterly Report. The disclosure set forth in Note 9 relating to such legal matters is incorporated herein by reference.
On July 8, 2025, the Company filed a complaint in the Court of Chancery of the State of Delaware against Mr. Mewawalla captioned Mawson Infrastructure Group Inc. v. Rahul Mewawalla, No. 2025-0789-JTL (the “Mewawalla Action”). The Mewawalla Action seeks to recover damages from Mr. Mewawalla arising out of his alleged breach of fiduciary duties as a director, as well as alleged fraud. Mr. Mewawalla has not filed an answer to the Mewawalla Action.
The Company and its subsidiaries from time to time in the future may be involved in certain litigation related to our businesses. For example, the Company and its subsidiaries receive letters of demand for payments or other correspondence from time to time which could lead to legal proceedings.
Item 1A. Risk Factors
The information in this Form 10-Q should be read in conjunction with the risk factors and information disclosed in the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 15, 2025 and the 2024 Form 10-K. Except as set forth below, there have been no material changes to the primary risks related to our business and securities as described in the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 15, 2025 and the 2024 Form 10-K under “Risk Factors” in Item 1A.
Risks Related to Our Business
We have experienced management turnover, including turnover of our top executives, which creates uncertainties and could have an adverse effect on our business.
The responsibility of the direction and operation of our business relies heavily on a small number of key people, including our Interim Chief Executive Officer, General Counsel and Corporate Secretary and our Chief Financial Officer. If any of our key employees cease their involvement in our business or, in the unfortunate situation one or more of them are seriously injured or dies, this loss would have a significant and likely adverse impact on us.
Recently, we experienced changes to our executive leadership, including the appointment of Kaliste Saloom as our Interim Chief Executive Officer in June 2025 and departure of Rahul Mewawalla as our Chief Executive Officer and President in July 2025.
Although we have endeavored to implement these management transitions in a non-disruptive manner, such transitions can be inherently difficult to manage and may hamper our ability to meet our financial and operational goals. Such changes may also give rise to uncertainty among our customers, investors, suppliers, employees and others concerning our future direction and performance. Any of the foregoing could result in significant disruptions to our operations and may adversely affect our financial condition, results of operations, cash flows and ability to execute on our business plans.
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Risks Related to our Capital Stock
We are not currently in compliance with the continued listing requirements for The Nasdaq Capital Market. If we do not regain compliance and continue to meet the continued listing requirements, our Common Stock may be delisted and the price of our Common Stock, our ability to access the capital markets and our financial condition could be negatively impacted.
As previously disclosed, on January 24, 2025, the Company received written notice (the “MVLS Notice”) from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that for the 33 consecutive business days preceding the date of the MVLS Notice, the Company’s Market Value of Listed Securities (“MVLS”) was less than the $35.0 million minimum required for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(2) (the “MVLS Rule”). In accordance with Nasdaq Listing Rule 5810(c)(3)(C), the Staff provided the Company with 180 calendar days, or until July 23, 2025 (the “MVLS Compliance Date”), to regain compliance with the MVLS Rule.
On February 6, 2025, the Company also received written notice (the “Bid Price Notice”) from the Staff of Nasdaq notifying the Company that for the last 30 consecutive business days prior to the date of the Bid Price Notice, the closing bid price of Company’s Common Stock was less than the $1.00 per share minimum bid price required for continued listing on The Nasdaq Capital Market, as required by Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Staff has provided the Company with 180 calendar days, or until August 5, 2025 (the “Bid Price Compliance Date”), to regain compliance with the Bid Price Rule.
On July 24, 2025, the Company received written notice (the “Delisting Notice”) from the Staff indicating that based upon the Company’s continued non-compliance with the MVLS Rule on the MVLS Compliance Date, the Company’s securities were subject to delisting unless the Company timely requests a hearing before the Nasdaq Hearings Panel (the “Panel”).
On August 6, 2025, the Company received written notice from the Staff notifying the Company that it had not regained compliance with the Bid Price Rule by the Bid Price Compliance Date (the “Bid Price Deficiency”) and that the Panel will consider the Bid Price Deficiency in rendering a determination regarding the Company’s continued listing on The Nasdaq Capital Market.
The Company timely submitted a request for a hearing before the Panel, which request stayed any further suspension or delisting action by the Staff at least pending the hearing before the Panel. At its hearing before the Panel, the Company will request an extension to regain compliance with the MVLS Rule and the Bid Price Rule.
There can be no assurance that the Company will be able to regain compliance with the MVLS Rule or the Bid Price Rule or maintain compliance with all other Nasdaq listing requirements. If the Company’s request for an extension is denied or if it fails to regain compliance with Nasdaq’s continued listing standards during any period granted by the Panel, the Company’s Common Stock will be subject to delisting from Nasdaq.
If we are unable to regain compliance and maintain listing on Nasdaq and Nasdaq delists our securities from trading on its exchange, we and our stockholders could face significant negative consequences including: reducing the liquidity and market price of our Common Stock; reducing the number of investors willing to hold or acquire our Common Stock, which could negatively impact our ability to raise equity financing; decreasing the amount of news coverage of the Company; and limiting our ability to issue additional securities or obtain additional financing in the future.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
Celsius Mining LLC loaned $20.00 million to Luna Squares through the Celsius Promissory Note, which had a maturity date of August 23, 2023, and a total outstanding balance as of June 30, 2025 of $10.2 million. Luna Squares has not repaid the loan as required on the maturity date and is claimed by Celsius to be in default. Celsius Mining LLC transferred to benefit of the Celsius Promissory Note to Celsius Network Ltd. Celsius Network Ltd has notified Luna Squares the default interest is payable. On November 23, 2023, Celsius filed an arbitration proceeding against Mawson, its subsidiaries Luna Squares and Cosmos, asserting various claims related to the alleged breach of the Celsius Colocation Agreement. The Company is pursuing counter claims against Celsius. See Note 9 – Commitments and Contingencies, Celsius Promissory Note and Digital Colocation Agreement to the unaudited consolidated condensed financial statements included in Item 1. “Financial Statements” of this Quarterly Report.
The Marshall Loan matured in February 2024 and the total outstanding balance is $11.3 million as of June 30, 2025. MIG No. 1, an Australian entity, has not made a payment on principal and interest since May 2023, despite such payments falling due, and is therefore alleged by Marshall to be in default under the Marshall Loan. MIG No. 1 is also in default of a number of other covenants under the terms of the loan. On March 19, 2024, Mig No.1 was placed into an Australian court appointed liquidation and wind-up process and was deconsolidated for the group from this date.
On March 19, 2024, Marshall appointed receivers and managers in Australia under the terms of their security relating to the Marshall Loan. The direct assets that secure this loan include 5,372 miners and 8 MDCs. These assets are held by MIG No.1 and therefore were included in the deconsolidation. The receiver’s statutory duty includes the obligation to sell the secured assets at market value or, if market value is not known, at the best price reasonably obtainable to maximize the prospects of there being sufficient proceeds available to satisfy the balance of the outstanding secured debt. It is therefore expected that this loan balance will be offset in the future by the amount received from the sale of these miners and MDCs. On June 25, 2024, Marshall inspected and inventoried the miners and MDCs located at the Company’s Midland facilities. The Company is currently not utilizing these miners or MDCs for its operations and has asked Marshall to take these assets out of the Company’s storage. Marshall has not responded to the Company’s request for these miners and MDCs to be removed from the Company’s storage. The Company also reserves and retains all rights against Marshall.
The Company is the guarantor of the W Capital Loan. As of June 30, 2025, AUD $2.3 million (USD $1.5 million) has been drawn down from this facility. The W Capital Loan expired in March 2023 and the Company did not extend the maturity date and has not repaid the loan amount. The Company is therefore considered by W Capital to be in default. This W Capital Loan was originally with Mawson PL, an Australian entity which was placed into voluntary administration under Australian law on October 30, 2023, and on November 3, 2023, W Capital Advisors appointed receivers and managers in Australia under the terms of their security relating to their working capital facility.
The Company has a Secured Convertible Promissory Note (the “Convertible Note”) with W Capital Advisors Pty Ltd with an outstanding balance of $0.1 million as of June 30, 2025. The Convertible Note matured in July 2023. W Capital Advisors did not convert the note, and the Company has repaid the principal balance of the Convertible Note.
For more information on the above matters, refer to Note 9 - Commitments and Contingencies to the unaudited consolidated condensed financial statements included in Item 1. “Financial Statements” of this Quarterly Report. The disclosure set forth in Note 9 is incorporated herein by reference.
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Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Insider Trading Arrangements
During the fiscal quarter ended June 30, 2025,
no director or officer (as defined in Rule 16a-1(f) promulgated under the Exchange Act) of the Company
2025 Annual Meeting of Stockholders
As previously disclosed, the Company plans to hold its 2025 Annual Meeting of Stockholders (the “Annual Meeting”) on October 15, 2025. The exact time and location of the Annual Meeting will be as set forth in the Company’s definitive proxy statement for the Annual Meeting to be filed with the SEC. The Board of Directors of the Company has established August 21, 2025 as the record date for the determination of stockholders of the Company entitled to receive notice of and vote at the Annual Meeting or any adjournment or postponement thereof.
Because the meeting date for the Annual Meeting will be more than thirty (30) days after the anniversary of the Company’s 2024 Annual Meeting of Stockholders, the Company has set a new deadline for the receipt of stockholder proposals submitted pursuant to Rule 14a-8 under the Exchange Act for inclusion in the Company’s proxy materials for the Annual Meeting. In order to be considered timely, such proposals must be received by the Company’s Corporate Secretary at 950 Railroad Ave., Midland, PA 15059 or [email protected] by August 25, 2025, which the Company has determined to be a reasonable time before it expects to begin to print and send its proxy materials related to the Annual Meeting. Any proposal submitted after the above deadline will not be considered timely and will be excluded from the Company’s proxy materials.
In accordance with the advance notice provisions set forth in the Company’s Bylaws, stockholder proposals submitted outside of the stockholder proposal rules promulgated pursuant to Rule 14a-8 under the Exchange Act, including nominations of director candidates, must have been received by the Company’s Corporate Secretary no later than the close of business on August 4, 2025 in order to be considered timely. In addition to satisfying the requirements under the Company’s Bylaws, stockholders who intend to solicit proxies in support of director nominees, other than the Company’s nominees, at the Annual Meeting must also comply with all applicable requirements of Rule 14a-19 of the Exchange Act.
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Item 6. Exhibits
| * | Filed herewith. |
| ** | Furnished herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Mawson Infrastructure Group Inc. | ||
| Date: August 14, 2025 | By: | /s/ Kaliste Saloom |
| Kaliste Saloom | ||
| Interim Chief Executive Officer, General Counsel and Corporate Secretary | ||
| (Principal Executive Officer) | ||
| Date: August 14, 2025 | By: | /s/ William Regan |
| William Regan | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |
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