Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | May 11, 2022 | |
Document Information Line Items | ||
Entity Registrant Name | Mawson Infrastructure Group Inc. | |
Trading Symbol | MIGI | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 72,486,295 | |
Amendment Flag | false | |
Entity Central Index Key | 0001218683 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Mar. 31, 2022 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-40849 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 88-0445167 | |
Entity Address, Address Line One | Level 5 | |
Entity Address, Address Line Two | 97 Pacific Highway | |
Entity Address, City or Town | North Sydney NSW | |
Entity Address, Country | AU | |
Entity Address, Postal Zip Code | 2060 | |
City Area Code | +61 2 | |
Local Phone Number | 8624 6130 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Security Exchange Name | NASDAQ | |
Entity Interactive Data Current | Yes |
Consolidated Condensed Balance
Consolidated Condensed Balance Sheets - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 5,804,858 | $ 5,467,273 |
Prepaid expenses | 1,969,969 | 332,154 |
Trade and other receivables | 5,044,154 | 5,606,780 |
Cryptocurrencies | 40,800 | |
Total current assets | 12,818,981 | 11,447,007 |
Property and equipment, net | 102,532,708 | 76,936,850 |
Equipment deposits | 41,722,172 | 51,369,216 |
Marketable securities | 336,897 | 326,801 |
Security deposits | 3,836,426 | 1,246,236 |
Operating lease right-of-use asset | 4,722,973 | 3,968,262 |
Total assets | 165,970,157 | 145,294,372 |
Current liabilities: | ||
Trade and other payables | 13,995,302 | 7,746,988 |
Current portion of operating lease liability | 1,410,192 | 1,222,382 |
Current portion of finance lease liability | 28,962 | 8,105 |
Borrowings | 16,036,514 | 11,095,388 |
Total current liabilities | 31,470,970 | 20,072,863 |
Operating lease liability, net of current portion | 3,520,623 | 2,962,765 |
Finance lease liability, net of current portion | 106,159 | 38,764 |
Long-term borrowings | 26,943,283 | 7,639,391 |
Total liabilities | 62,041,035 | 30,713,783 |
Commitments and Contingencies (note 9) | ||
Shareholders’ equity: | ||
Additional paid-in capital; Common stock (120,000,000 authorized, 71,585,295 issued and outstanding $0.001 par value shares). Series A preferred stock (1,000,000 authorized shares; nil issued and outstanding as at March 31, 2022) | 186,724,867 | 186,389,568 |
Share subscription receivable | ||
Accumulated other comprehensive income (loss) | 62,214 | (521,094) |
Accumulated deficit | (82,458,914) | (71,123,259) |
Total stockholders’ equity | 104,328,167 | 114,745,215 |
Non-controlling interest | (399,045) | (164,626) |
Total liabilities and stockholders’ equity | $ 165,970,157 | $ 145,294,372 |
Consolidated Condensed Balanc_2
Consolidated Condensed Balance Sheets (Parentheticals) - $ / shares | Mar. 31, 2022 | Dec. 31, 2021 |
Common stock, shares authorized | 120,000,000 | 120,000,000 |
Common stock, shares issued | 71,585,295 | 71,585,295 |
Common stock, shares outstanding | 71,585,295 | 71,585,295 |
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Series A Preferred Stock | ||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding |
Consolidated Condensed Statemen
Consolidated Condensed Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenues: | ||
Cryptocurrency mining revenue | $ 18,783,842 | $ 5,120,014 |
Hosting Co-Location revenue | 548,948 | |
Sale of crypto currency mining equipment | 91,545 | 1,877,613 |
Total revenues | 19,424,335 | 6,997,627 |
Less: Cost of revenues (excluding depreciation) | 8,412,360 | 2,372,781 |
Gross profit | 11,011,975 | 4,624,846 |
Selling, general and administrative | 6,476,945 | 2,631,964 |
LO2A write off | 23,963,050 | |
Share based payments | 390,609 | 14,795,403 |
Depreciation and amortization | 13,803,032 | 1,314,899 |
Total operating expenses | 20,670,586 | 42,705,316 |
Loss from operations | (9,658,611) | (38,080,470) |
Non-operating income/(expense): | ||
Gains on foreign currency transactions | (699,237) | (661,682) |
Other income | 24,447 | 472,741 |
Interest expense | (1,236,673) | (250,662) |
Loss before income taxes | (11,570,074) | (38,520,073) |
Income tax expense | ||
Net Loss | (11,570,074) | (38,520,073) |
Less: Net (loss)/profit attributable to non-controlling interests | (234,419) | 43,135 |
Net Loss attributed to Mawson Infrastructure Group shareholders | $ (11,335,655) | $ (38,563,208) |
Net Loss per share, basic & diluted (in Dollars per share) | $ (0.16) | $ (0.87) |
Weighted average number of shares outstanding (in Shares) | 71,129,676 | 44,266,478 |
Consolidated Condensed Statem_2
Consolidated Condensed Statements of Stockholders’ Equity (Unaudited) - USD ($) | Series APreferred Stock | Common Stock | Additional Paid-in- Capital | Reserves | Accumulated Other Comprehensive Income/(Loss) | Accumulated Deficit | Total Mawson Stockholders’ Equity | Non- controlling interest | Common Shares | Share Subscription Receivable | Total |
Balance at Dec. 31, 2020 | $ 34,457,051 | $ 652,949 | $ (1,341,826) | $ (26,159,539) | $ 7,591,945 | $ (27,066) | $ (16,690) | $ 7,564,879 | |||
Balance (in Shares) at Dec. 31, 2020 | 7,539,275 | ||||||||||
Exchange of stock and Reverse recapitalization of Wize Pharma Inc | $ 461,324 | (5,436,541) | (4,975,217) | (4,975,217) | |||||||
Exchange of stock and Reverse recapitalization of Wize Pharma Inc (in Shares) | 178 | 46,132,357 | (7,539,275) | ||||||||
Issuance of common stock, net of offer costs, PIPE transaction | $ 25,000 | 2,975,000 | 3,000,000 | 3,000,000 | |||||||
Issuance of common stock, net of offer costs, PIPE transaction (in Shares) | 2,500,000 | ||||||||||
Issuance of convertible notes, net of offer costs | 20,301,427 | 20,301,427 | 20,301,427 | ||||||||
Issuance of common stock, exercise of warrants | $ 116 | 6,881,676 | 6,881,792 | 6,881,792 | |||||||
Issuance of common stock, exercise of warrants (in Shares) | 41,000 | ||||||||||
Fair value of IPR&D acquired, net of Business Combination transaction costs | 24,765,831 | 24,765,831 | 24,765,831 | ||||||||
Issuance of RSU's and stock options | 411,137 | 10,000,000 | 10,411,137 | 10,411,137 | |||||||
Fair value adjustment of LO2A intellectual property revenue sharing obligation | 5,440,863 | 5,440,863 | 5,440,863 | ||||||||
Net loss | (38,563,208) | (38,563,208) | (38,563,208) | ||||||||
Other comprehensive income | (4,615,328) | (4,615,328) | (4,615,328) | ||||||||
Non-controlling interest | 43,135 | 43,135 | |||||||||
Balance at Mar. 31, 2021 | $ 486,440 | 82,914,768 | 17,534,625 | (5,957,154) | (64,722,747) | 30,239,242 | 16,069 | $ (16,690) | 30,255,311 | ||
Balance (in Shares) at Mar. 31, 2021 | 178 | 48,673,357 | |||||||||
Balance at Dec. 31, 2021 | $ 611,504 | 165,600,831 | 20,177,233 | (521,094) | (71,123,259) | 114,745,215 | (164,626) | 114,580,589 | |||
Balance (in Shares) at Dec. 31, 2021 | 70,746,508 | ||||||||||
Issuance of common stock, stock based compensation | $ 15 | 107,734 | 107,749 | 107,749 | |||||||
Issuance of common stock, stock based compensation (in Shares) | 13,787 | ||||||||||
Issuance of warrants | 166,833 | 166,833 | 166,833 | ||||||||
Issuance of RSU's and stock options | $ 825 | 1,956,116 | (1,896,224) | 60,717 | 60,717 | ||||||
Issuance of RSU's and stock options (in Shares) | 825,000 | ||||||||||
Net loss | (11,335,655) | (11,335,655) | (11,335,655) | ||||||||
Other comprehensive income | 583,308 | 583,308 | 583,308 | ||||||||
Non-controlling interest | (234,419) | (234,419) | |||||||||
Balance at Mar. 31, 2022 | $ 612,344 | $ 167,664,681 | $ 18,447,842 | $ 62,214 | $ (82,458,914) | $ 104,328,167 | $ (399,045) | $ 103,929,122 | |||
Balance (in Shares) at Mar. 31, 2022 | 71,585,295 |
Consolidated Condensed Statem_3
Consolidated Condensed Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (11,570,074) | $ (38,520,073) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 13,804,492 | 1,314,899 |
LO2A write offs | 23,963,050 | |
Operating lease expense | 367,135 | |
Foreign exchange gain | 1,690,303 | |
Share based payments | 390,609 | 14,795,403 |
Gain on disposal of fixed assets | 127,608 | |
Interest expense | 249,861 | 222,463 |
Investment income | (563,771) | |
Trade and other receivables | 562,626 | (656,732) |
Other current assets | (4,187,204) | (796,044) |
Trade and other payables | 6,248,314 | 294,586 |
Net cash provided by operating activities | 5,865,759 | 1,871,692 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Net payment for the purchase of property and equipment | (6,030,740) | (2,960,145) |
Investment in financial assets | (380,100) | |
Payment of fixed asset deposits | (23,630,470) | (18,045,720) |
Net cash used in investing activities | (29,661,210) | (21,385,965) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from common share issuances | 50,628 | 1,298,402 |
Proceeds from convertible notes | 21,487,391 | |
Payments of capital issuance costs | (2,229,096) | |
Proceeds from borrowings | 27,055,524 | 1,057,383 |
Advances made to external companies | (37,076) | |
Repayment of lease liabilities | (379,026) | |
Payments of borrowings | (3,242,194) | (291,310) |
Net cash provided by financing activities | 23,484,932 | 21,285,694 |
Effect of exchange rate changes on cash and cash equivalents | 648,104 | 501,045 |
Net increase in cash and cash equivalents | 337,585 | 2,272,466 |
Cash and cash equivalents at beginning of period | 5,467,273 | 1,112,811 |
Cash and cash equivalents at end of period | $ 5,804,858 | $ 3,385,277 |
General
General | 3 Months Ended |
Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GENERAL | NOTE 1 – GENERAL General Mawson Infrastructure Group, Inc. (the “Company” or “Mawson” or “we”), formerly known as Wize Pharma, Inc, and before that, known as OphthaliX Inc., was incorporated in the State of Delaware on February 10, 2012. The accompanying consolidated financial statements, including the results of the Company’s subsidiaries; Mawson Infrastructure Group Pty Ltd (“Mawson AU” previously known as Cosmos Capital Limited), Cosmos Trading Pty Ltd, Cosmos Infrastructure LLC, Cosmos Manager LLC, MIG No.1 Pty Ltd, Cosmos Asset Management Pty Ltd, Luna Squares LLC, BITTD Pty Ltd, Luna Squares Repairs LLC, Luna Squares Property 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 accounting principles generally accepted in the United States (“U.S. GAAP”). Wize NC Inc, Occuwize Ltd and Wize Pharma Ltd are subsidiaries of Mawson however these companies have not been consolidated into the financial statements as these are subject to contingent value rights (“CVR”), refer to note 9. These consolidated, condensed interim financial statements should be read in conjunction with the audited consolidated financial statements of Mawson and subsidiaries as of December 31, 2021, and the notes thereto, included in the Company’s Annual Report on Form 10-K filed March 21, 2022. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The results of the interim period are not necessarily indicative of the results to be expected for the full year ended December 31, 2022. These consolidated condensed interim financial statements reflect all adjustments which, in the opinion of management, are necessary to present fairly the financial position, the results of operations and cash flows of the Company for the periods presented. Mawson, through its subsidiary Mawson AU, is a ‘Digital Asset Infrastructure’ business, which owns and operates modular data centers (“MDCs”) based in the United States and Australia. As at March 31, 2021 Mawson AU currently owns and has ordered 39,225 Application-Specific Integrated Circuit (“ASIC”) computers known as “Miners,” specifically focused on the SHA-256 algorithm, from a variety of manufacturers, including Bitmain Technology Holding Company (“Bitmain”), Canaan Creative (HK) Holdings Limited (“Canaan”) and Shenzhen MicroBT Electronics Technology Co., Ltd (“Whatsminer”). Going Concern Based on internally prepared forecasted cash flows, combined with the existing cash reserves, which take into consideration what management of the Group considers reasonable scenarios given the inherent risks and uncertainties described in this Quarterly Report on Form 10-Q, management believes that the Group will have adequate cash reserves to enable the Group to meet its obligations for at least one year from the date of approval of the consolidated financial statements, and on this basis the accounts have been prepared on a going concern basis. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and basis of preparation The accompanying consolidated 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 represents 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. Any changes in the Company’s ownership interest in a consolidated subsidiary, through additional equity issuances by the consolidated subsidiary or from the Company acquiring the shares from existing shareholders, in which the Company maintains control is recognized as an equity transaction, with appropriate adjustments to both the Company’s additional paid-in capital and the corresponding non-controlling interest. On March 9, 2021, Mawson AU was acquired by the Company. For accounting purposes, this was accounted for as a reverse asset acquisition with Mawson AU as the accounting acquirer (refer to significant accounting policies below). The result of which is that these financial statements are taken to be a continuation of Mawson AU’s financial statements, with the Company incorporated within the acquisition and therefore the historical financial information of Mawson AU (then known as Cosmos Capital Limited) prior to March 9, 2021, became the historical financial information of Mawson AU, which have been consolidated into the financial statements of the Company. Use of Estimates and Assumptions The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company evaluates on an ongoing basis its assumptions. The Company’s management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of income and expenses during the reporting periods. Actual results could differ from those estimates. The Company has considered the following to be significant estimates made by management, including but not limited to, going concern assumptions, estimating the useful lives of fixed assets, realization of long-lived assets, unrealized tax positions and the realization of digital currencies, business combinations, reverse asset acquisition, and the contingent obligation with respect to future revenues. Critical Accounting Policies Critical accounting policies are described in the consolidated financial statements for Mawson included in the Company’s 10-K filed March 21, 2022. There have been no changes to critical accounting policies in the three months period ended March 31, 2022, other than the reverse asset acquisition accounting policy which is no longer considered to be a critical accounting policy and has therefore been included in significant accounting policies. Revenue Recognition – Digital asset mining revenue The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of ASC 606 is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Five steps are required to be followed in evaluating revenue recognition: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied a performance obligation. In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). There is currently no specific definitive guidance in U.S. GAAP or alternative accounting frameworks for the accounting of managing digital currencies and management has exercised significant judgement in determining appropriate accounting treatment for the recognition of revenue for such operations. The Company has entered into a contract with mining pools and has undertaken the performance obligation of providing computing power in exchange for non-cash consideration in the form of cryptocurrency. The provision of computing power is the only performance obligation in the Group’s contract with its pool operators. In certain pools the amount of reward for computing power depends on the pool’s success in mining blocks. In other pools, the amount of reward includes no such contingency, although the fees payable to such pools are typically higher as a result. Where the consideration received is variable (for example, due to payment only being made upon successful mining), it is recognized when it is highly probable that the variability is resolved, which is generally when the cryptocurrency is received. The Company measures the non-cash consideration received at the fair market value of the cryptocurrency received. Management estimates fair value on a daily basis, as the quantity of cryptocurrency received multiplied by the price quoted on the crypto exchanges that the Company uses to dispose of cryptocurrency on the day it was received. Property and equipment Property and equipment are stated at cost, net of accumulated depreciation. The cost includes any cost of replacing part of the property and equipment with the original cost of the replaced part being derecognized. All other repair and maintenance costs are recognized in profit or loss incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. Property, plant and equipment transferred from customers is initially measured at the fair value at the date on which control is obtained. The depreciable amount of fixed assets is depreciated on a straight-line or declining balance basis based on the asset classification, over their useful lives to the economic entity commencing from the time the assets arrive at their destination where they are ready for use. Depreciation is calculated over the following estimated useful lives: Financial Asset class Useful life Depreciation Method Fixtures and Fittings 5 years Straight-Line Plant and equipment 10 years Straight-Line Modular data center 5 years Declining Motor Vehicles 5 years Straight-Line Computer equipment 3 years Straight-Line Processing Machinery (Miners) 2 years Declining Transformers 15 years Straight-Line An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognized. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate. The Company changed its policy in relation to freight costs in relation to processing machines with effect from October 1, 2021. Prior to this date these costs were expensed to the statement of operations and profit and loss, and afterwards these costs are capitalized into processing machinery. This change resulted in an increase in processing machines in the balance sheet of $2,040,387 at March 31, 2022, and an increase in the depreciation charge to the statement of operations and profit and loss of $84,735 over the prior treatment. The Company’s long-lived assets are reviewed for impairment in accordance with Accounting Standards Codification (“ASC”) 360, “Property, Plant and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During the periods ended March 31, 2022, and 2021, no impairment losses have been identified. Share based payments The Company follows FASB Codification Topic ASC 718-10 Compensation-Stock Compensation. The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the estimated grant-date fair value of the awards. The Company determines the grant date fair value of the options using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. These assumptions are the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility computes stock price volatility over expected terms based on its historical common stock trading prices. Risk–free interest rates are calculated based on the implied yield available on U. S. 10-year Treasury bond. Significant Accounting Policies Revenue Recognition - Hosting Co-location revenue The Company provides power for our co-location hosting customers on a variable basis which is received monthly from the customer based on the power usage at the rate outlined in each customer contract. We recognize variable power revenue each month as the uncertainty related to the consideration is resolved, power is provided to our customers, and our customers utilize the power (the customer simultaneously receives and consumes the benefits of the Company’s performance). The customer contracts contain performance obligations, variable consideration in such contracts to be allocated to and recognized in the period to which the consideration relates. Usually this is when it is invoiced, rather than obtaining an estimation of variable consideration at the beginning of the customer contracts. Customers also are invoiced a fixed monthly fee for maintenance services which include, cleaning, cabling and other services to maintain the customers’ equipment. Revenue Recognition - Sale of crypto currency mining equipment Crypto currency mining equipment sales revenue includes revenues related to the sale of Miners. This is recognized as revenue upon delivery to the customer, which is when the control of the Miner transfers. Payments are typically received at the point control transfers or in accordance with payment terms customary to the business. Revenue recognition – equipment sales The Company earned revenues from the sale of earlier generation cryptocurrency mining units and modular data centers that have been assembled or refurbished for resale (collectively “Hardware”). Revenue from the sale of Hardware is recognized when all of the following conditions are satisfied: (i) persuasive evidence of a sales arrangement exists, (ii) the sales terms are fixed or determinable, (iii) title and risk of loss have transferred, and (iv) payment is received. At the date of sale, the net book value is expensed in cost of revenues. Cost of revenues: Cost of revenue consists primarily of expenses that are directly related to providing the Company’s service to its paying customers. These primarily consist of costs associated with operating our co-location facilities such as direct power costs, energy costs (including any carbon offset acquired during the year), freight costs and material costs related to cryptocurrency mining. Research and development expenses: Research and development expenses are charged to the statement of comprehensive loss as incurred. Income taxes: Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance may be established to reduce the deferred tax asset to the level at which it is “more likely than not” that the tax asset or benefits will be realized. Realization of tax benefits of deductible temporary differences and operating loss carryforwards depends on having sufficient taxable income of an appropriate character within the carryback or carryforward periods. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained upon review by the taxing authority. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Functional currency: All subsidiaries of Company have a functional currency of United States dollar (“USD”) with the exceptions of Mawson Infrastructure Group Pty Ltd, MIG No.1 Pty Ltd, Cosmos Trading Pty Ltd, BITTD Pty Ltd and Cosmos Asset Management Pty Ltd whose functional currency is the Australian Dollar (“AUD”). The financial statements of foreign businesses have been translated into USD at current exchange rates for balance sheet items and at the average rate for income statement items. Translation of all the consolidated companies’ financial records into USD is required due to the reporting currency for these consolidated financial statements presented as USD and the functional currency of the parent company being that of AUD. Translation adjustments are accumulated in other comprehensive loss. Revenue and expense accounts are converted at prevailing rates throughout the year. Gains or losses on foreign currency transactions and translation adjustments in highly inflationary economies are recorded in income in the period in which they are incurred. Segment Reporting: Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision–making group in deciding how to allocate resources and in assessing performance. Our chief operating decision–making group is composed of the chief executive officer. We currently operate in one segment surrounding our cryptocurrency mining operation. Cash and cash equivalents: Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, cash held with digital currency exchanges, and other short-term and highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less. Digital Currencies Digital currencies are included in current assets in the consolidated balance sheets. Digital currencies are classified as indefinite-lived intangible assets in accordance with ASC 350, Intangibles - Goodwill and Other, and are accounted for in connection with the Company’s revenue recognition policy detailed above. The following table presents the Company’s digital currency (Bitcoin) activities for the quarter ended March 31, 2022, and 2021: Three months to March 31, 2022 2021 Opening number of Bitcoin held as at December 31, 2021 and 2020 0.92 0.52 Number of Bitcoin added 458.68 123.22 Number of Bitcoin sold (459.60 ) (113.45 ) Closing number of Bitcoin held as at March 31, 2022 and 2021 0.00 10.29 Digital currency is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. The Company’s policy is to dispose of production at the earliest opportunity, the holding period is minimal, usually no more than a few days. Due to the short period which Bitcoin are held prior to sale and the consequent small numbers held, the risk of impairment is not material. Equipment deposits: The Company records a prepaid expense for costs paid but not yet incurred. Those expected to be incurred within one year are recognized and shown as equipment deposits. Equipment deposits result from advance payments to suppliers for goods to be received in the future. Equipment deposits are initially recognized as assets at the date the amount is paid, and are subsequently recorded as equipment as the Company takes delivery and control of the equipment from the supplier. Amounts are recognized initially at the amount of the unconditional consideration. They are subsequently measured at cost, less loss allowance. Reverse Asset Acquisition: On March 9, 2021, the Company acquired the shares of Cosmos Capital Limited (now known as Mawson Infrastructure Group Pty Ltd and referred to herein as Mawson AU) in a stock for stock exchange. This transaction has been accounted for as a reverse asset acquisition. This transaction reverse asset acquisition and the associated impact is referred to as the “Cosmos Transaction”. Under the terms of the Cosmos Transaction Bid Implementation Agreement, the Company was required to make share based payments consisting of up to 40,000,000 shares under an Incentive Compensation Program and warrants issued to HC Wainwright as a fee related to the acquisition by Mawson of Mawson AU. In addition, Mawson AU had an outstanding obligation to W Capital Advisors Pty Ltd (“W Capital”) for options over the equity of Mawson AU which was terminated for consideration of warrants over the Company’s shares being issued to W Capital. Fair value of financial instruments: The Company accounts for financial instruments under FASB Accounting Standards Codification Topic (“ASC”) 820, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows: Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and Level 3 — assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. Of the Company’s financial instruments on the Company’s balance sheet as at March 31, 2022, the only item measured and recorded at fair value is the Marketable Securities of $336,897, which are categorized as Level 1. Concentrations of credit risk: Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, marketable securities. Cash and cash equivalents and restricted bank deposits are invested in banks in Australia and the U.S. If the counterparty completely failed to perform in accordance with the terms of the contract, is the maximum amount of loss the Company would be the balance. Management believes that the financial institutions that hold the Company’s investments are financially sound and, accordingly, minimal credit risk exists with respect to these investments. The Company has no off-balance-sheet concentration of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements. Legal and other contingencies: The Company accounts for its contingent liabilities in accordance with ASC 450 “Contingencies”. A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. With respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. Legal costs incurred in connection with loss contingencies are expensed as incurred. As of March 31, 2022, the Company is not a party to any litigation that could have a material adverse effect on the Company’s business, financial position, results of operations or cash flows. Leases: The Company accounts for its leases under ASC 842, Leases which was effective January 1, 2019. The Company determines if an arrangement is a lease at inception. Using ASC 842 leases are classified as operating or finance leases on the Balance Sheet as a right of use (“ROU”) assets and lease liabilities within current liabilities and long-term liabilities on our consolidated balance sheet. ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company’s lease does not provide an implicit rate and therefore the Company measured the ROU asset and lease obligation based upon the present value of future minimum lease payments. The Company’s incremental borrowing rate is estimated based on risk-free discount rate for the lease, determined using a period comparable with that of the lease term and in a similar economic environment. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. The Company does not record leases on the consolidated balance sheets with a term of one year or less. The Company does not separate lease and non-lease components but rather account for each separate component as a single lease component for all underlying classes of assets. Where leases contain escalation clauses, rent abatements, or concessions, such as rent holidays and landlord or tenant incentives or allowances, the Company applies them in the determination of straight-line operating lease cost over the lease term. Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies and adopted by the Company as of the specified effective date. For information with respect to recent accounting pronouncements, see Note 2 to the consolidated financial statements for Mawson as of December 31, 2021, included in the Company’s Annual Report on Form 10-K filed March 21, 2022, recent accounting pronouncements since that date include: In March 2022, the FSAB issued ASU update 2022-01—Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method. The adoption of ASU 2021-01 did not have a material impact on the Company’s financial statements or disclosures. In March 2022, the FSAB issued ASU 2022-02—Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The adoption of ASU 2022-02 did not have a material impact on the Company’s financial statements or disclosures. |
Basic and Diluted Net Loss Per
Basic and Diluted Net Loss Per Share | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
BASIC AND DILUTED NET LOSS PER SHARE | NOTE 3 – BASIC AND DILUTED NET LOSS PER SHARE Net loss per common share is calculated in accordance with ASC Topic 260: Earnings Per Share (“ASC 260”). Basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. The computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average shares outstanding, as they would be anti-dilutive. Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share as at March 31, 2022 and 2021 are as follows: As at March 31, 2022 2021 Warrants to purchase common stock 6,994,189 871,098 Options to purchase common stock 753,459 - Common stock due to former Cosmos shareholders to be issued pending approval of increase to authorized capital - 5,055,811 Mandatory convertible notes to exchange common stock - 6,362,690 Restricted Stock-Units (“RSUs”) issued under a management equity plan 1,819,287 4,000,000 9,566,935 16,289,599 The following table sets forth the computation of basic and diluted loss per share: For the three months ended 2022 2021 Net Loss attributable to common shareholders $ (11,335,655 ) $ (38,563,208 ) Denominator: Weighted average common shares - basic and diluted 71,129,676 44,266,478 Loss per common share - basic and diluted $ (0.16 ) $ (0.87 ) Comparative weighted average common shares have been revised by the ratio of Mawson AU to the Company shares exchanged in the reverse asset acquisition in March 2021. Pursuant to that certain Certificate of Amendment to the Certificate of Incorporation of the Company dated August 11, 2021, Mawson executed a 10-for-1 reverse stock split of its outstanding common stock and reduced its authorized common stock to 120,000,000 shares, as set forth in the Company’s Current Report on Form 8-K filed August 16, 2021. |
Deposit, Property and Equipment
Deposit, Property and Equipment | 3 Months Ended |
Mar. 31, 2022 | |
Deposit, Property and Equipment [Abstract] | |
DEPOSIT, PROPERTY AND EQUIPMENT | NOTE 4 – DEPOSIT, PROPERTY AND EQUIPMENT On February 5, 2021, Cosmos Infrastructure LLC (“Infrastructure”) entered into a Long-Term Purchase Contract with Canaan Convey Co Ltd (“Canaan”) for the purchase of 11,760 next generation Avalon A1246 ASIC Miners. The average purchase price per unit is $2,889 for a total purchase price of $33,974,640 (the “Canaan Transaction”). The final shipment for contract was received during March 2022, there was a final adjustment to the purchase price based on the actual tera hash delivered, based on the agreed price per tera hash under the terms of the contract. The purchase price adjustment resulted in a $2.2 million reduction in the purchase price, this is due to be received in cash from Canaan. On August 9, 2021, Infrastructure entered into a second Long-Term Purchase Contract with Canaan for the purchase of 15,000 next generation Avalon A1246 ASIC Miners. The average purchase price per unit is $4,908 for a total purchase price of $73,620,000. There will be a final adjustment to the purchase price in the last delivery due in May 2022 based on the actual tera hash delivered, based on the agreed price per tera hash under the terms of the contract. As at March 31, 2022 the amount paid in relation to this contract is $54,180,000 of which 4,000 orders have been delivered during the quarter. During the three months ended March 31, 2022, $23.63 million cash paid for equipment was recorded as a deposit on the balance sheet. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2022 | |
Disclosure Text Block [Abstract] | |
LEASES | NOTE 5 – LEASES Luna Squares LLC leases a 16.35-acre lot in Georgia from the Development Authority of Washington County. The lease term was originally for 1 acre from May 1, 2020, until April 30, 2023. An amendment to the lease and exercise of option to lease four additional acres was signed and became effective February 23, 2021. A further amendment to the lease and exercise of option to lease was signed and became effective August 24, 2021. The Lease Amendment covers an additional 11.35 acres of the property, bringing the total to 16.35 acres under the lease. It also includes 5, 3-year extension options bringing the total lease period to run until 2038. The Company leases the headquarters of its business operations at Level 5, 97 Pacific Highway, North Sydney NSW 2060 Australia, being 1,076 square feet of office space held under a license agreement. The Company leases 6-acres of land in Pennsylvania which began in October 2021 for thirty-six months with the option to execute four additional three-year extensions. On March 16, 2022, Luna Squares LLC entered into a lease with respect to a property in the City of Sharon, Mercer County, Pennsylvania with Vertua Property, Inc. (A related entity – refer to note 12 for details). The term of the lease is for 5 years, and has 2 options to extend for 5 years each. Other than the foregoing leases, the Company does not lease any material assets. The Company believes that these offices and facilities are suitable and adequate for its operations as currently conducted and as currently foreseen. In the event additional or substitute offices and facilities are required, the Company believes that it could obtain such offices and facilities at commercially reasonable rates. The Company’s lease costs recognized in the Consolidated Statements of Income and Comprehensive Loss consist of the following: For the three months ended 2022 2021 Operating lease charges (1) $ 367,135 $ 11,223 Finance lease charges: Amortization of right-of-use assets 4,302 - Interest on lease obligations 1,478 - $ 5,780 $ - (1) Included in Selling, General & Administrative Expenses. Operating Finance 2023 $ 1,753,012 $ 38,068 2024 1,779,078 38,068 2025 1,172,787 38,068 2026 548,407 35,854 2027 419,568 7,669 Total undiscounted lease obligations 5,672,852 157,727 Less imputed interest (742,037 ) (22,606 ) Total present value of lease liabilities 4,930,815 135,121 Less current portion of lease liabilities (1,410,192 ) (28,962 ) Non-current lease liabilities $ 3,520,623 $ 106,159 Operating Finance Operating cash flows from operating and finance leases $ 373,936 $ 5,090 Weighted-average remaining lease term – operating and finance leases (years) 3.42 1.52 Weighted-average discount rate – operating and leases (%) 8.0 % 2.6 % |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 6 – PROPERTY AND EQUIPMENT Property and equipment, net, consisted of the following: March 31, December 31, 2021 Plant and equipment 2,743,337 1,046,866 Computer equipment 440,461 216,099 Furniture & fixtures 32,446 31,474 Processing machines (Miners) 111,687,341 81,341,098 Modular data center 14,765,469 9,819,796 Motor Vehicles 325,113 250,425 Transformers 2,102,194 1,190,609 Low-cost assets 451,004 246,154 Assets under construction 1,950,106 1,008,001 Total 134,497,471 95,150,522 Less: Accumulated depreciation (31,964,763 ) (18,213,672 ) Property and equipment, net 102,532,708 76,936,850 The Company incurred depreciation and amortization expense in the amounts of $13,803,032 and $1,314,899 for the quarter ended March 31, 2022 and March 31, 2021, respectively. There were no impairment charges recognized for property and equipment for either the quarter ended March 31, 2022, or March 31, 2021. There were no disposals during the three months ended March 31, 2022. The Company had additions of $39,400,349 during the three months ended March 31, 2022. This primarily consisted of $30,396,241 of Miners, $4,953,347 additions for MDC’s and $1,696,756 for plant and equipment. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 7 – INCOME TAXES The Company's effective tax rates for the three months ended March 31, 2022 and 2021, were as follows: For the three months ended 2022 2021 Effective Tax Rate 0 % 0 % The Company's effective tax rate is calculated by dividing total income tax expense by the sum of income before income tax expense and the net income attributable to noncontrolling interests. The Company has maintained a full valuation allowance for federal and the majority of its state jurisdictions. |
Stockholders Equity
Stockholders Equity | 3 Months Ended |
Mar. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS EQUITY | NOTE 8 – STOCKHOLDERS EQUITY Common Stock TraDigital Marketing Group LLC was issued 5,000 shares of common stock during January 2022 for consultancy services provided to the Company. Under the terms of the Cosmos Transaction Bid Implementation Agreement the Company made share-based payments under an Incentive Compensation Program during September 2021 (refer to reverse acquisition accounting policy). Within the March 2022 quarter, five employees converted these into 825,000 shares of common stock of Mawson. During February 2022, Kyle Hoffman was paid $50,000 in shares of the Company’s common stock as part of the contingent consideration for the Membership Interest Purchase Agreement to acquire shares in Luna Squares LLC. Restricted Stock As of March 31, 2022, there was no restricted stock. Common Stock Warrants A summary of the status of the Company’s outstanding stock warrants and changes during the quarter ended March 31, 2022, is as follows: Number of Weighted Weighted Outstanding as of December 31, 2021 3,524,189 Issued 3,850,000 $ 7.99 1.9 Exercised (380,000 ) Expired - Outstanding as of March 31, 2022 6,994,189 $ 7.99 1.9 Warrants exercisable as of March 31, 2022. 6,994,189 $ 7.99 1.9 On February 23, 2022, Mawson issued to Celsius Mining warrants with an expiry date of August 23, 2023, to purchase up to 3,850,000 shares of common stock, par value $0.001 per share, of Mawson at an exercise price of US$6.50 per share, in connection with the $20 million loan made by Celsius to Luna Squares LLC in connection with a Customer Equipment and Co-Location Agreement entered into by Celsius and Luna Squares LLC. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 9 – COMMITMENTS AND CONTINGENCIES Agreements 1. In connection with the Cosmos Transaction, we issued one CVR to each of our securityholders for each outstanding share of common stock of Mawson, and for each share of common stock of Mawson underlying other convertible securities and warrants, held immediately before the closing of the Cosmos Transaction. Each CVR represents the right to receive a pro rata share of any consideration that we may receive in connection with any successful monetization of our LO2A business, less transaction expenses and customary deductions as detailed in the CVR agreement, including a deduction of up to $300,000 to be repaid to us for amounts we spend in the development of the LO2A Technology at the request of the representative of the holders of the CVRs. As at March 31, 2022, the Company cannot reliably measure the cost of the CVRs and it is not probable that these payments will be made and therefore this has been classified as a contingent liability. 2. On August 9, 2021, Infrastructure entered into a second Long-Term Purchase Contract with Canaan for the purchase of 15,000 next generation Avalon A1246 ASIC Miners. The purchase price per unit is $4,908 for a total purchase price of $73,620,000. As at March 31, 2022 the Company had paid $54,180,000 in relation to this contract with the remaining balance owed at the end of the quarter. |
Borrowings
Borrowings | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
BORROWINGS | NOTE 10 – BORROWINGS Short-term Borrowings On October 15, 2021, the Company acquired 2,000 Whatsminers M30’s for delivery in October 2021 from Foundry Digital LLC for a total consideration of $16,481,328. The Company paid a deposit of $3,202,766 and entered into an extension of the original Foundry finance agreement with Foundry for the balance of the consideration over a 12-month term, of which $7,801,933 is outstanding at March 31, 2022. Long-term Borrowings Marshall loan In December 2021 the Company entered into a Secured Loan Facility Agreement with Marshall Investments MIG Pty Ltd which was payable in three tranches. The first tranche was received during December 2021 with an amount of $7.86 million. Tranche two and three were received during January and February 2022 with a total amount of $7.11 million. The loan matures in 2024 and bears interest at a rate of 12.00% per annum, payable monthly which commenced December 2021.The Loan facility is secured by a general security agreement given by the Company. Principal repayments begin during 2023. Celsius loan On February 23, 2022, Luna Squares LLC entered into the Co-Location Agreement with Celsius Mining LLC, in connection with this agreement, Celsius Mining loaned Luna Squares LLC a principal amount of US$20,000,000, for the purpose of funding the infrastructure required to meet the obligations of the Co-Location Agreement, for which Luna Squares LLC issued a Secured Promissory Note for repayment of such amount. The Secured Promissory Note accrues interest daily at a rate of 12% per annum. Luna Squares LLC is required to amortize the loan at a rate of 15% per quarter, with principal repayments starting in the third quarter of 2022. The Secured Promissory Note has a maturity date of August 23, 2023. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 11 – RELATED PARTY TRANSACTIONS On March 16, 2022, Luna Squares LLC entered into a lease with respect to a property in the City of Sharon, Mercer County, Pennsylvania with Vertua Property, Inc, a subsidiary entity in which Vertua Ltd has a 100% ownership interest. James Manning, CEO, a director and a significant shareholder of the Company, is also a director of Vertua Ltd and has a material interest in the Sharon lease as a large shareholder of Vertua Ltd. The lease contains market standard legal terms, and will be for a term of 5 years, and Luna Squares LLC has 2 options to extend for 5 years each. The Company’s Audit Committee has compared the rent and terms to other arms’ length leases the Company has entered into and formed the view the rent is in line with the market for similar properties. Rent is subject to annual increases equal to the amount of the Consumer Price Index for the Northeast Region, or 4%, whichever is higher. The base rental amount in the first year is $0.24 million. Depending on power energization and usage, variable additional rent may be payable, with charges ranging from $500 to $10,000 per month, depending on power energized and whether it is available. Upon the recommendation from the Audit Committee, the directors of the Company, other than James Manning, were made aware of the material facts as to Mr. Manning’s interest in the lease and authorized the Company in good faith to enter the lease after determining the lease to be fair to the Company. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12 – SUBSEQUENT EVENTS On May 12, 2022, Luna Squares Texas LLC (a wholly owned subsidiary of the Company) entered into an Option Agreement and Gross Profit Agreement with JAI TX, LLC and then signed or took and assignment of 4 leases for properties in Texas (all in close proximity) with the intent to develop MDC facilities for mining Bitcoin. Luna Squares Texas LLC will seek to execute relevant power agreements, however the expectation is that the four locations can provide a combined 120MW of power. Rent under the leases ranges from $1,500 to $5,227.20 per acre per annum. The lessors include a substantial listed holder of land in Texas, and family groups. Under the Option Agreement, JAI TX, LLC has the option to receive an issue of up to 20% of the membership interests in Luna Squares Texas LLC. The purchase prices will be a share of capital costs equal to the membership interest acquired by JAI TX, LLC, and an amount of Luna Squares Texas LLC’s debt financing in proportion to JAI TX, LLC’s shareholding. In return for certain services provided by JAI TX, LLC, JAI TX, LLC will be entitled to a share of all Electric Reliability Council of Texas program payments paid to Luna Squares Texas LLC (“ERCOT Payment”), as well as a share of the Bitcoin profit from the Texas locations less certain costs, including depreciation. Capital costs for Luna Squares Texas LLC are expected to exceed $4.19m. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Principles of Consolidation and basis of preparation | Principles of Consolidation and basis of preparation The accompanying consolidated 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 represents 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. Any changes in the Company’s ownership interest in a consolidated subsidiary, through additional equity issuances by the consolidated subsidiary or from the Company acquiring the shares from existing shareholders, in which the Company maintains control is recognized as an equity transaction, with appropriate adjustments to both the Company’s additional paid-in capital and the corresponding non-controlling interest. On March 9, 2021, Mawson AU was acquired by the Company. For accounting purposes, this was accounted for as a reverse asset acquisition with Mawson AU as the accounting acquirer (refer to significant accounting policies below). The result of which is that these financial statements are taken to be a continuation of Mawson AU’s financial statements, with the Company incorporated within the acquisition and therefore the historical financial information of Mawson AU (then known as Cosmos Capital Limited) prior to March 9, 2021, became the historical financial information of Mawson AU, which have been consolidated into the financial statements of the Company. |
Use of Estimates and Assumptions | Use of Estimates and Assumptions The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company evaluates on an ongoing basis its assumptions. The Company’s management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of income and expenses during the reporting periods. Actual results could differ from those estimates. The Company has considered the following to be significant estimates made by management, including but not limited to, going concern assumptions, estimating the useful lives of fixed assets, realization of long-lived assets, unrealized tax positions and the realization of digital currencies, business combinations, reverse asset acquisition, and the contingent obligation with respect to future revenues. |
Critical Accounting Policies | Critical Accounting Policies Critical accounting policies are described in the consolidated financial statements for Mawson included in the Company’s 10-K filed March 21, 2022. There have been no changes to critical accounting policies in the three months period ended March 31, 2022, other than the reverse asset acquisition accounting policy which is no longer considered to be a critical accounting policy and has therefore been included in significant accounting policies. Revenue Recognition – Digital asset mining revenue The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of ASC 606 is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Five steps are required to be followed in evaluating revenue recognition: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied a performance obligation. In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). There is currently no specific definitive guidance in U.S. GAAP or alternative accounting frameworks for the accounting of managing digital currencies and management has exercised significant judgement in determining appropriate accounting treatment for the recognition of revenue for such operations. The Company has entered into a contract with mining pools and has undertaken the performance obligation of providing computing power in exchange for non-cash consideration in the form of cryptocurrency. The provision of computing power is the only performance obligation in the Group’s contract with its pool operators. In certain pools the amount of reward for computing power depends on the pool’s success in mining blocks. In other pools, the amount of reward includes no such contingency, although the fees payable to such pools are typically higher as a result. Where the consideration received is variable (for example, due to payment only being made upon successful mining), it is recognized when it is highly probable that the variability is resolved, which is generally when the cryptocurrency is received. The Company measures the non-cash consideration received at the fair market value of the cryptocurrency received. Management estimates fair value on a daily basis, as the quantity of cryptocurrency received multiplied by the price quoted on the crypto exchanges that the Company uses to dispose of cryptocurrency on the day it was received. Property and equipment Property and equipment are stated at cost, net of accumulated depreciation. The cost includes any cost of replacing part of the property and equipment with the original cost of the replaced part being derecognized. All other repair and maintenance costs are recognized in profit or loss incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. Property, plant and equipment transferred from customers is initially measured at the fair value at the date on which control is obtained. The depreciable amount of fixed assets is depreciated on a straight-line or declining balance basis based on the asset classification, over their useful lives to the economic entity commencing from the time the assets arrive at their destination where they are ready for use. Depreciation is calculated over the following estimated useful lives: Financial Asset class Useful life Depreciation Method Fixtures and Fittings 5 years Straight-Line Plant and equipment 10 years Straight-Line Modular data center 5 years Declining Motor Vehicles 5 years Straight-Line Computer equipment 3 years Straight-Line Processing Machinery (Miners) 2 years Declining Transformers 15 years Straight-Line An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognized. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate. The Company changed its policy in relation to freight costs in relation to processing machines with effect from October 1, 2021. Prior to this date these costs were expensed to the statement of operations and profit and loss, and afterwards these costs are capitalized into processing machinery. This change resulted in an increase in processing machines in the balance sheet of $2,040,387 at March 31, 2022, and an increase in the depreciation charge to the statement of operations and profit and loss of $84,735 over the prior treatment. The Company’s long-lived assets are reviewed for impairment in accordance with Accounting Standards Codification (“ASC”) 360, “Property, Plant and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During the periods ended March 31, 2022, and 2021, no impairment losses have been identified. Share based payments The Company follows FASB Codification Topic ASC 718-10 Compensation-Stock Compensation. The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the estimated grant-date fair value of the awards. The Company determines the grant date fair value of the options using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. These assumptions are the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility computes stock price volatility over expected terms based on its historical common stock trading prices. Risk–free interest rates are calculated based on the implied yield available on U. S. 10-year Treasury bond. |
Significant Accounting Policies | Significant Accounting Policies Revenue Recognition - Hosting Co-location revenue The Company provides power for our co-location hosting customers on a variable basis which is received monthly from the customer based on the power usage at the rate outlined in each customer contract. We recognize variable power revenue each month as the uncertainty related to the consideration is resolved, power is provided to our customers, and our customers utilize the power (the customer simultaneously receives and consumes the benefits of the Company’s performance). The customer contracts contain performance obligations, variable consideration in such contracts to be allocated to and recognized in the period to which the consideration relates. Usually this is when it is invoiced, rather than obtaining an estimation of variable consideration at the beginning of the customer contracts. Customers also are invoiced a fixed monthly fee for maintenance services which include, cleaning, cabling and other services to maintain the customers’ equipment. Revenue Recognition - Sale of crypto currency mining equipment Crypto currency mining equipment sales revenue includes revenues related to the sale of Miners. This is recognized as revenue upon delivery to the customer, which is when the control of the Miner transfers. Payments are typically received at the point control transfers or in accordance with payment terms customary to the business. Revenue recognition – equipment sales The Company earned revenues from the sale of earlier generation cryptocurrency mining units and modular data centers that have been assembled or refurbished for resale (collectively “Hardware”). Revenue from the sale of Hardware is recognized when all of the following conditions are satisfied: (i) persuasive evidence of a sales arrangement exists, (ii) the sales terms are fixed or determinable, (iii) title and risk of loss have transferred, and (iv) payment is received. At the date of sale, the net book value is expensed in cost of revenues. Cost of revenues: Cost of revenue consists primarily of expenses that are directly related to providing the Company’s service to its paying customers. These primarily consist of costs associated with operating our co-location facilities such as direct power costs, energy costs (including any carbon offset acquired during the year), freight costs and material costs related to cryptocurrency mining. Research and development expenses: Research and development expenses are charged to the statement of comprehensive loss as incurred. Income taxes: Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance may be established to reduce the deferred tax asset to the level at which it is “more likely than not” that the tax asset or benefits will be realized. Realization of tax benefits of deductible temporary differences and operating loss carryforwards depends on having sufficient taxable income of an appropriate character within the carryback or carryforward periods. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained upon review by the taxing authority. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Functional currency: All subsidiaries of Company have a functional currency of United States dollar (“USD”) with the exceptions of Mawson Infrastructure Group Pty Ltd, MIG No.1 Pty Ltd, Cosmos Trading Pty Ltd, BITTD Pty Ltd and Cosmos Asset Management Pty Ltd whose functional currency is the Australian Dollar (“AUD”). The financial statements of foreign businesses have been translated into USD at current exchange rates for balance sheet items and at the average rate for income statement items. Translation of all the consolidated companies’ financial records into USD is required due to the reporting currency for these consolidated financial statements presented as USD and the functional currency of the parent company being that of AUD. Translation adjustments are accumulated in other comprehensive loss. Revenue and expense accounts are converted at prevailing rates throughout the year. Gains or losses on foreign currency transactions and translation adjustments in highly inflationary economies are recorded in income in the period in which they are incurred. Segment Reporting: Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision–making group in deciding how to allocate resources and in assessing performance. Our chief operating decision–making group is composed of the chief executive officer. We currently operate in one segment surrounding our cryptocurrency mining operation. Cash and cash equivalents: Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, cash held with digital currency exchanges, and other short-term and highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less. Digital Currencies Digital currencies are included in current assets in the consolidated balance sheets. Digital currencies are classified as indefinite-lived intangible assets in accordance with ASC 350, Intangibles - Goodwill and Other, and are accounted for in connection with the Company’s revenue recognition policy detailed above. The following table presents the Company’s digital currency (Bitcoin) activities for the quarter ended March 31, 2022, and 2021: Three months to March 31, 2022 2021 Opening number of Bitcoin held as at December 31, 2021 and 2020 0.92 0.52 Number of Bitcoin added 458.68 123.22 Number of Bitcoin sold (459.60 ) (113.45 ) Closing number of Bitcoin held as at March 31, 2022 and 2021 0.00 10.29 Digital currency is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. The Company’s policy is to dispose of production at the earliest opportunity, the holding period is minimal, usually no more than a few days. Due to the short period which Bitcoin are held prior to sale and the consequent small numbers held, the risk of impairment is not material. Equipment deposits: The Company records a prepaid expense for costs paid but not yet incurred. Those expected to be incurred within one year are recognized and shown as equipment deposits. Equipment deposits result from advance payments to suppliers for goods to be received in the future. Equipment deposits are initially recognized as assets at the date the amount is paid, and are subsequently recorded as equipment as the Company takes delivery and control of the equipment from the supplier. Amounts are recognized initially at the amount of the unconditional consideration. They are subsequently measured at cost, less loss allowance. Reverse Asset Acquisition: On March 9, 2021, the Company acquired the shares of Cosmos Capital Limited (now known as Mawson Infrastructure Group Pty Ltd and referred to herein as Mawson AU) in a stock for stock exchange. This transaction has been accounted for as a reverse asset acquisition. This transaction reverse asset acquisition and the associated impact is referred to as the “Cosmos Transaction”. Under the terms of the Cosmos Transaction Bid Implementation Agreement, the Company was required to make share based payments consisting of up to 40,000,000 shares under an Incentive Compensation Program and warrants issued to HC Wainwright as a fee related to the acquisition by Mawson of Mawson AU. In addition, Mawson AU had an outstanding obligation to W Capital Advisors Pty Ltd (“W Capital”) for options over the equity of Mawson AU which was terminated for consideration of warrants over the Company’s shares being issued to W Capital. Fair value of financial instruments: The Company accounts for financial instruments under FASB Accounting Standards Codification Topic (“ASC”) 820, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows: Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and Level 3 — assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. Of the Company’s financial instruments on the Company’s balance sheet as at March 31, 2022, the only item measured and recorded at fair value is the Marketable Securities of $336,897, which are categorized as Level 1. Concentrations of credit risk: Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, marketable securities. Cash and cash equivalents and restricted bank deposits are invested in banks in Australia and the U.S. If the counterparty completely failed to perform in accordance with the terms of the contract, is the maximum amount of loss the Company would be the balance. Management believes that the financial institutions that hold the Company’s investments are financially sound and, accordingly, minimal credit risk exists with respect to these investments. The Company has no off-balance-sheet concentration of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements. Legal and other contingencies: The Company accounts for its contingent liabilities in accordance with ASC 450 “Contingencies”. A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. With respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. Legal costs incurred in connection with loss contingencies are expensed as incurred. As of March 31, 2022, the Company is not a party to any litigation that could have a material adverse effect on the Company’s business, financial position, results of operations or cash flows. Leases: The Company accounts for its leases under ASC 842, Leases which was effective January 1, 2019. The Company determines if an arrangement is a lease at inception. Using ASC 842 leases are classified as operating or finance leases on the Balance Sheet as a right of use (“ROU”) assets and lease liabilities within current liabilities and long-term liabilities on our consolidated balance sheet. ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company’s lease does not provide an implicit rate and therefore the Company measured the ROU asset and lease obligation based upon the present value of future minimum lease payments. The Company’s incremental borrowing rate is estimated based on risk-free discount rate for the lease, determined using a period comparable with that of the lease term and in a similar economic environment. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. The Company does not record leases on the consolidated balance sheets with a term of one year or less. The Company does not separate lease and non-lease components but rather account for each separate component as a single lease component for all underlying classes of assets. Where leases contain escalation clauses, rent abatements, or concessions, such as rent holidays and landlord or tenant incentives or allowances, the Company applies them in the determination of straight-line operating lease cost over the lease term. Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies and adopted by the Company as of the specified effective date. For information with respect to recent accounting pronouncements, see Note 2 to the consolidated financial statements for Mawson as of December 31, 2021, included in the Company’s Annual Report on Form 10-K filed March 21, 2022, recent accounting pronouncements since that date include: In March 2022, the FSAB issued ASU update 2022-01—Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method. The adoption of ASU 2021-01 did not have a material impact on the Company’s financial statements or disclosures. In March 2022, the FSAB issued ASU 2022-02—Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The adoption of ASU 2022-02 did not have a material impact on the Company’s financial statements or disclosures. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of estimated useful lives of the assets | Financial Asset class Useful life Depreciation Method Fixtures and Fittings 5 years Straight-Line Plant and equipment 10 years Straight-Line Modular data center 5 years Declining Motor Vehicles 5 years Straight-Line Computer equipment 3 years Straight-Line Processing Machinery (Miners) 2 years Declining Transformers 15 years Straight-Line |
Schedule of digital currencies | Three months to March 31, 2022 2021 Opening number of Bitcoin held as at December 31, 2021 and 2020 0.92 0.52 Number of Bitcoin added 458.68 123.22 Number of Bitcoin sold (459.60 ) (113.45 ) Closing number of Bitcoin held as at March 31, 2022 and 2021 0.00 10.29 |
Basic and Diluted Net Loss Pe_2
Basic and Diluted Net Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of computation of diluted loss per share | As at March 31, 2022 2021 Warrants to purchase common stock 6,994,189 871,098 Options to purchase common stock 753,459 - Common stock due to former Cosmos shareholders to be issued pending approval of increase to authorized capital - 5,055,811 Mandatory convertible notes to exchange common stock - 6,362,690 Restricted Stock-Units (“RSUs”) issued under a management equity plan 1,819,287 4,000,000 9,566,935 16,289,599 |
Schedule of computation of basic and diluted loss per share | For the three months ended 2022 2021 Net Loss attributable to common shareholders $ (11,335,655 ) $ (38,563,208 ) Denominator: Weighted average common shares - basic and diluted 71,129,676 44,266,478 Loss per common share - basic and diluted $ (0.16 ) $ (0.87 ) |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Disclosure Text Block [Abstract] | |
Schedule of income and comprehensive loss | For the three months ended 2022 2021 Operating lease charges (1) $ 367,135 $ 11,223 Finance lease charges: Amortization of right-of-use assets 4,302 - Interest on lease obligations 1,478 - $ 5,780 $ - |
Schedule of selling, general & administrative expenses | Operating Finance 2023 $ 1,753,012 $ 38,068 2024 1,779,078 38,068 2025 1,172,787 38,068 2026 548,407 35,854 2027 419,568 7,669 Total undiscounted lease obligations 5,672,852 157,727 Less imputed interest (742,037 ) (22,606 ) Total present value of lease liabilities 4,930,815 135,121 Less current portion of lease liabilities (1,410,192 ) (28,962 ) Non-current lease liabilities $ 3,520,623 $ 106,159 Operating Finance Operating cash flows from operating and finance leases $ 373,936 $ 5,090 Weighted-average remaining lease term – operating and finance leases (years) 3.42 1.52 Weighted-average discount rate – operating and leases (%) 8.0 % 2.6 % |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | March 31, December 31, 2021 Plant and equipment 2,743,337 1,046,866 Computer equipment 440,461 216,099 Furniture & fixtures 32,446 31,474 Processing machines (Miners) 111,687,341 81,341,098 Modular data center 14,765,469 9,819,796 Motor Vehicles 325,113 250,425 Transformers 2,102,194 1,190,609 Low-cost assets 451,004 246,154 Assets under construction 1,950,106 1,008,001 Total 134,497,471 95,150,522 Less: Accumulated depreciation (31,964,763 ) (18,213,672 ) Property and equipment, net 102,532,708 76,936,850 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of effective tax rates | For the three months ended 2022 2021 Effective Tax Rate 0 % 0 % |
Stockholders Equity (Tables)
Stockholders Equity (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Schedule of outstanding stock warrants | Number of Weighted Weighted Outstanding as of December 31, 2021 3,524,189 Issued 3,850,000 $ 7.99 1.9 Exercised (380,000 ) Expired - Outstanding as of March 31, 2022 6,994,189 $ 7.99 1.9 Warrants exercisable as of March 31, 2022. 6,994,189 $ 7.99 1.9 |
General (Details)
General (Details) | 3 Months Ended |
Mar. 31, 2022shares | |
General (Details) [Line Items] | |
Cash reserves maturities | 1 year |
Mawson AU [Member] | |
General (Details) [Line Items] | |
Ordered shares | 39,225 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) | 3 Months Ended |
Mar. 31, 2022USD ($)shares | |
Accounting Policies [Abstract] | |
Increase in processing machine | $ 2,040,387 |
Depreciation charge | $ 84,735 |
Tax benefit percentage | 50.00% |
Warrant issued (in Shares) | shares | 40,000,000 |
Marketable security | $ 336,897 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets | 3 Months Ended |
Mar. 31, 2022 | |
Fixtures and Fittings [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items] | |
Financial asset useful life | 5 years |
Financial asset depreciation method | Straight-Line |
Plant and Equipment [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items] | |
Financial asset useful life | 10 years |
Financial asset depreciation method | Straight-Line |
Modular Data Center [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items] | |
Financial asset useful life | 5 years |
Financial asset depreciation method | Declining |
Motor Vehicles [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items] | |
Financial asset useful life | 5 years |
Financial asset depreciation method | Straight-Line |
Computer Equipment [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items] | |
Financial asset useful life | 3 years |
Financial asset depreciation method | Straight-Line |
Processing Machinery [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items] | |
Financial asset useful life | 2 years |
Financial asset depreciation method | Declining |
Transformers [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of the assets [Line Items] | |
Financial asset useful life | 15 years |
Financial asset depreciation method | Straight-Line |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details) - Schedule of digital currencies - $ / shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Schedule of digital currencies [Abstract] | ||
Opening number of Bitcoin held | $ 0.92 | $ 0.52 |
Number of Bitcoin added | 458.68 | 123.22 |
Number of Bitcoin sold | (459.6) | (113.45) |
Closing number of Bitcoin held | $ 0 | $ 10.29 |
Basic and Diluted Net Loss Pe_3
Basic and Diluted Net Loss Per Share (Details) | Aug. 16, 2021shares |
Earnings Per Share [Abstract] | |
Common stock authorized | 120,000,000 |
Basic and Diluted Net Loss Pe_4
Basic and Diluted Net Loss Per Share (Details) - Schedule of computation of diluted loss per share - shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Schedule of computation of diluted loss per share [Abstract] | ||
Warrants to purchase common stock | 6,994,189 | 871,098 |
Options to purchase common stock | 753,459 | |
Common stock due to former Cosmos shareholders to be issued pending approval of increase to authorized capital | 5,055,811 | |
Mandatory convertible notes to exchange common stock | 6,362,690 | |
Restricted Stock-Units (“RSUs”) issued under a management equity plan | 1,819,287 | 4,000,000 |
Total | 9,566,935 | 16,289,599 |
Basic and Diluted Net Loss Pe_5
Basic and Diluted Net Loss Per Share (Details) - Schedule of computation of basic and diluted loss per share - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Schedule of computation of basic and diluted loss per share [Abstract] | ||
Net Loss attributable to common shareholders | $ (11,335,655) | $ (38,563,208) |
Denominator: | ||
Weighted average common shares - basic and diluted | 71,129,676 | 44,266,478 |
Loss per common share - basic and diluted | $ (0.16) | $ (0.87) |
Deposit, Property and Equipme_2
Deposit, Property and Equipment (Details) - USD ($) $ in Thousands | Aug. 09, 2021 | Feb. 05, 2021 | Mar. 31, 2022 |
Deposit, Property and Equipment [Abstract] | |||
Purchase price, description | Infrastructure entered into a second Long-Term Purchase Contract with Canaan for the purchase of 15,000 next generation Avalon A1246 ASIC Miners. The average purchase price per unit is $4,908 for a total purchase price of $73,620,000. There will be a final adjustment to the purchase price in the last delivery due in May 2022 based on the actual tera hash delivered, based on the agreed price per tera hash under the terms of the contract. As at March 31, 2022 the amount paid in relation to this contract is $54,180,000 of which 4,000 orders have been delivered during the quarter. | Cosmos Infrastructure LLC (“Infrastructure”) entered into a Long-Term Purchase Contract with Canaan Convey Co Ltd (“Canaan”) for the purchase of 11,760 next generation Avalon A1246 ASIC Miners. The average purchase price per unit is $2,889 for a total purchase price of $33,974,640 (the “Canaan Transaction”). The final shipment for contract was received during March 2022, there was a final adjustment to the purchase price based on the actual tera hash delivered, based on the agreed price per tera hash under the terms of the contract. The purchase price adjustment resulted in a $2.2 million reduction in the purchase price, this is due to be received in cash from Canaan. | |
Cash paid | $ 23,630 |
Leases (Details)
Leases (Details) | 1 Months Ended | 3 Months Ended |
Mar. 16, 2022 | Mar. 31, 2022ft²a | |
Disclosure Text Block [Abstract] | ||
Lease description | Luna Squares LLC leases a 16.35-acre lot in Georgia from the Development Authority of Washington County. The lease term was originally for 1 acre from May 1, 2020, until April 30, 2023. An amendment to the lease and exercise of option to lease four additional acres was signed and became effective February 23, 2021. A further amendment to the lease and exercise of option to lease was signed and became effective August 24, 2021. The Lease Amendment covers an additional 11.35 acres of the property, bringing the total to 16.35 acres under the lease. It also includes 5, 3-year extension options bringing the total lease period to run until 2038. | |
Office space | ft² | 1,076 | |
New lease of land | a | 6 | |
Lease description | The term of the lease is for 5 years, and has 2 options to extend for 5 years each. |
Leases (Details) - Schedule of
Leases (Details) - Schedule of income and comprehensive loss - USD ($) | Mar. 31, 2022 | Mar. 31, 2021 | |
Schedule of income and comprehensive loss [Abstract] | |||
Operating lease charges | [1] | $ 367,135 | $ 11,223 |
Amortization of right-of-use assets | 4,302 | ||
Interest on lease obligations | 1,478 | ||
Total | $ 5,780 | ||
[1] | Included in Selling, General & Administrative Expenses. |
Leases (Details) - Schedule o_2
Leases (Details) - Schedule of selling, general & administrative expenses | Mar. 31, 2022USD ($) |
Operating leases [Member] | |
Leases (Details) - Schedule of selling, general & administrative expenses [Line Items] | |
2023 | $ 1,753,012 |
2024 | 1,779,078 |
2025 | 1,172,787 |
2026 | 548,407 |
2027 | 419,568 |
Total undiscounted lease obligations | 5,672,852 |
Less imputed interest | (742,037) |
Total present value of lease liabilities | 4,930,815 |
Less current portion of lease liabilities | (1,410,192) |
Non-current lease liabilities | 3,520,623 |
Operating cash flows from operating and finance leases | $ 373,936 |
Weighted-average remaining lease term – operating and finance leases (years) | 3 years 5 months 1 day |
Weighted-average discount rate – operating and leases (%) | 8.00% |
Finance Leases [Member] | |
Leases (Details) - Schedule of selling, general & administrative expenses [Line Items] | |
2023 | $ 38,068 |
2024 | 38,068 |
2025 | 38,068 |
2026 | 35,854 |
2027 | 7,669 |
Total undiscounted lease obligations | 157,727 |
Less imputed interest | (22,606) |
Total present value of lease liabilities | 135,121 |
Less current portion of lease liabilities | (28,962) |
Non-current lease liabilities | 106,159 |
Operating cash flows from operating and finance leases | $ 5,090 |
Weighted-average remaining lease term – operating and finance leases (years) | 1 year 6 months 7 days |
Weighted-average discount rate – operating and leases (%) | 2.60% |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Property and Equipment (Details) [Line Items] | |||
Depreciation and amortization expense | $ 13,803,032 | $ 1,314,899 | |
Additions | 39,400,349 | ||
Miners | 30,396,241 | ||
Additions for MDC's | 4,953,347 | ||
Plant and equipment | 102,532,708 | $ 76,936,850 | |
Property, Plant and Equipment [Member] | |||
Property and Equipment (Details) [Line Items] | |||
Plant and equipment | $ 1,696,756 |
Property and Equipment (Detai_2
Property and Equipment (Details) - Schedule of property and equipment, net - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 134,497,471 | $ 95,150,522 |
Less: Accumulated depreciation | (31,964,763) | (18,213,672) |
Property and equipment, net | 102,532,708 | 76,936,850 |
Plant and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 2,743,337 | 1,046,866 |
Computer equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 440,461 | 216,099 |
Furniture & fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 32,446 | 31,474 |
Processing machines (Miners) [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 111,687,341 | 81,341,098 |
Modular data center [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 14,765,469 | 9,819,796 |
Motor Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 325,113 | 250,425 |
Transformers [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 2,102,194 | 1,190,609 |
Low-cost assets [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 451,004 | 246,154 |
Assets under construction [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1,950,106 | $ 1,008,001 |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of effective tax rates | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Schedule of effective tax rates [Abstract] | ||
Effective Tax Rate | 0.00% | 0.00% |
Stockholders Equity (Details)
Stockholders Equity (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Feb. 23, 2022 | Mar. 31, 2022 | Feb. 28, 2022 | Jan. 31, 2022 | |
Stockholders Equity (Details) [Line Items] | ||||
Shares of common stock | 825,000 | |||
Paid amount (in Dollars) | $ 50,000 | |||
Warrants expiry date | Aug. 23, 2023 | |||
Purchase to shares | 3,850,000 | |||
Par value per share (in Dollars per share) | $ 0.001 | |||
Exercise price per share (in Dollars per share) | $ 6.5 | |||
Loan amount (in Dollars) | $ 20,000,000 | |||
TraDigital Marketing Group LLC [Member] | ||||
Stockholders Equity (Details) [Line Items] | ||||
Shares issued | 5,000 |
Stockholders Equity (Details) -
Stockholders Equity (Details) - Schedule of outstanding stock warrants | 3 Months Ended |
Mar. 31, 2022$ / sharesshares | |
Schedule of outstanding stock warrants [Abstract] | |
Number of Warrants, Outstanding beginning | 3,524,189 |
Number of Warrants, Outstanding ending | 6,994,189 |
Weighted Average Exercise Price, Outstanding ending (in Dollars per share) | $ / shares | $ 7.99 |
Weighted Average Remaining Contractual Life (in years), Outstanding ending | 1 year 10 months 24 days |
Number of Warrants exercisable | 6,994,189 |
Weighted Average Exercise Price, Warrants exercisable (in Dollars per share) | $ / shares | $ 7.99 |
Weighted Average Remaining Contractual Life (in years), Warrants exercisable | 1 year 10 months 24 days |
Number of Warrants, Issued | 3,850,000 |
Weighted Average Exercise Price, Issued (in Dollars per share) | $ / shares | $ 7.99 |
Weighted Average Remaining Contractual Life (in years), Issued | 1 year 10 months 24 days |
Number of Warrants, Exercised | (380,000) |
Number of Warrants, Expired |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Aug. 09, 2021 | Mar. 31, 2022 |
Commitments and Contingencies (Details) [Line Items] | ||
Development amount | $ 300,000 | |
Long term purchase price (in Shares) | 15,000 | |
Purchase price per unit | $ 4,908 | |
Total purchase price | $ 73,620,000 | |
Second Long-Term Purchase Contract [Member] | ||
Commitments and Contingencies (Details) [Line Items] | ||
Amount paid | $ 54,180,000 |
Borrowings (Details)
Borrowings (Details) - USD ($) | Feb. 23, 2022 | Oct. 15, 2021 | Dec. 31, 2021 |
Debt Disclosure [Abstract] | |||
Short term borrowings description | the Company acquired 2,000 Whatsminers M30’s for delivery in October 2021 from Foundry Digital LLC for a total consideration of $16,481,328. The Company paid a deposit of $3,202,766 and entered into an extension of the original Foundry finance agreement with Foundry for the balance of the consideration over a 12-month term, of which $7,801,933 is outstanding at March 31, 2022. | ||
Long-term borrowings description | the Company entered into a Secured Loan Facility Agreement with Marshall Investments MIG Pty Ltd which was payable in three tranches. The first tranche was received during December 2021 with an amount of $7.86 million. Tranche two and three were received during January and February 2022 with a total amount of $7.11 million. The loan matures in 2024 and bears interest at a rate of 12.00% per annum, payable monthly which commenced December 2021.The Loan facility is secured by a general security agreement given by the Company. Principal repayments begin during 2023. | ||
Celsius mining loan | $ 20,000,000 | ||
Interest rate | 12.00% | ||
Amortize loan | 15.00% | ||
Maturity date | Aug. 23, 2023 |
Related Party Transactions (Det
Related Party Transactions (Details) | Mar. 16, 2022USD ($) |
Related Party Transactions (Details) [Line Items] | |
Ownership interest | 100.00% |
Lease term | 5 years |
Lease extend term | 5 years |
Rent expenses percentage | 4.00% |
Rental amount | $ 240,000 |
Minimum [Member] | |
Related Party Transactions (Details) [Line Items] | |
Additional rent payable | 500 |
Maximum [Member] | |
Related Party Transactions (Details) [Line Items] | |
Additional rent payable | $ 10,000 |
Subsequent Events (Details)
Subsequent Events (Details) | May 12, 2022USD ($) |
Maximum [Member] | |
Subsequent Events (Details) [Line Items] | |
Lease rent | $ 1,500 |
Minimum [Member] | |
Subsequent Events (Details) [Line Items] | |
Lease rent | $ 5,227.2 |
Forecast [Member] | |
Subsequent Events (Details) [Line Items] | |
Membership interests percentage | 20.00% |
Capital costs description | In return for certain services provided by JAI TX, LLC, JAI TX, LLC will be entitled to a share of all Electric Reliability Council of Texas program payments paid to Luna Squares Texas LLC (“ERCOT Payment”), as well as a share of the Bitcoin profit from the Texas locations less certain costs, including depreciation. Capital costs for Luna Squares Texas LLC are expected to exceed $4.19m. |