Big Digital Energy (BGDE) posts Q1 profit as cash burn and going concern risks loom
Big Digital Energy, Inc. reported Q1 2026 net income of $609,803, reversing a prior-year loss, but core operations remain weak. Revenue fell sharply to $4.8 million from $13.8 million, and the company posted an operating loss of $8.2 million. Results were lifted by $10.2 million in gains from legal settlements. Operating cash outflow was heavy at $17.1 million, reducing cash to $2.4 million. As of March 31, 2026, working capital was negative $22.8 million and accumulated deficit was $251.8 million, leading management to conclude that substantial doubt exists about the company’s ability to continue as a going concern. To bolster liquidity, Big Digital raised $6.4 million via its at-the-market equity program and increased stockholders’ equity to $4.3 million. The company also discloses ongoing legal matters and Nasdaq listing compliance risks while pursuing a strategy focused on AI, high-performance computing and digital infrastructure.
Positive
- None.
Negative
- Going concern risk and liquidity strain: Q1 2026 operating cash outflow of $17.1 million, cash of $2.4 million, negative working capital of $22.8 million, and substantial doubt disclosed about the ability to continue as a going concern.
Insights
Quarter shows accounting profit but deep operating and liquidity stress.
Big Digital Energy generated Q1 2026 net income of $609,803, driven mainly by $10.2 million of gains on legal settlements. Core operations lost $8.2 million at the operating line as revenue dropped to $4.8 million from $13.8 million a year earlier.
Cash flow is the key weakness. Operating activities used $17.1 million in cash, cutting cash on hand to $2.4 million. Working capital is negative $22.8 million, and long-term obligations include loans such as the Marshall Loan and Celsius Promissory Note classified as current, underscoring near-term funding pressure.
Management explicitly states that these conditions raise substantial doubt about the company’s ability to continue as a going concern. While an at-the-market program delivered $6.4 million and lifted stockholders’ equity to $4.3 million, sustainability depends on future capital access, resolution of legal exposures, and whether new digital infrastructure and AI/HPC initiatives can improve recurring operating margins.
Key Figures
Key Terms
going concern financial
at-the-market offering program financial
derivative asset financial
Rights Agreement financial
stock-based compensation financial
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from ________________ to ________________
Commission File No.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip code) |
Registrant’s telephone number, including area code:
Mawson Infrastructure Group Inc.
(Former name, former address and former fiscal year, if changed since the last report)
Securities Registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of May 7, 2026, the issuer had a total of
BIG DIGITAL ENERGY, INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2026
TABLE OF CONTENTS
| Item | Page Number | |||
| Part I – Financial Information | ||||
| Item 1. | Financial Statements | 1 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 29 | ||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risks | 40 | ||
| Item 4. | Controls and Procedures | 40 | ||
| Part II – Other Information | ||||
| Item 1. | Legal Proceedings | 41 | ||
| Item 1A. | Risk Factors | 41 | ||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 42 | ||
| Item 3. | Defaults Upon Senior Securities | 42 | ||
| Item 4. | Mine Safety Disclosures | 42 | ||
| Item 5. | Other Information | 42 | ||
| Item 6. | Exhibits | 43 | ||
| Signatures | 44 | |||
i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BIG DIGITAL ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Cryptocurrencies held for customers | - | |||||||
| Trade and other receivables, net | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Derivative asset | ||||||||
| Security deposits | ||||||||
| Operating lease right-of-use asset, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Trade and other payables | $ | $ | ||||||
| Current portion of operating lease liability | ||||||||
| Current portion of finance lease liability | ||||||||
| Current portion of long-term loans | ||||||||
| Total current liabilities | ||||||||
| Operating lease liability, net of current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ equity (deficit): | ||||||||
| Preferred stock, | - | - | ||||||
| Series C Junior Participating Preferred Stock, par value $ | - | - | ||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity (deficit) | ( | ) | ||||||
| Total liabilities and stockholders’ equity (deficit) | $ | $ | ||||||
See accompanying notes to unaudited consolidated condensed financial statements.
1
BIG DIGITAL ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
| For the three months ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenues: | ||||||||
| Digital colocation revenue | $ | $ | ||||||
| Energy management revenue | ||||||||
| Digital assets mining revenue | ||||||||
| Total revenues | ||||||||
| Less: Cost of revenues (excluding depreciation) | ||||||||
| Gross Profit | ||||||||
| Operating expenses: | ||||||||
| Selling, general and administrative | ||||||||
| Stock based compensation | ||||||||
| Depreciation and amortization | ||||||||
| Change in fair value of derivative asset | ( | ) | ( | ) | ||||
| Total operating expenses | ||||||||
| Income (loss) from operations | ( | ) | ||||||
| Non-operating income (expense): | ||||||||
| Loss on foreign currency transactions | ( | ) | ( | ) | ||||
| Gain on legal settlements | - | |||||||
| Interest expense | ( | ) | ( | ) | ||||
| Other income | ||||||||
| Other expenses | ( | ) | ( | ) | ||||
| Total non-operating income (expense), net | ( | ) | ||||||
| Income (loss) before income taxes | ( | ) | ||||||
| Income tax expense | ( | ) | ( | ) | ||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Net income (loss) per share, basic | $ | $ | ( | ) | ||||
| Net income (loss) per share, diluted | $ | $ | ( | ) | ||||
| Weighted average number of shares – basic | ||||||||
| Weighted average number of shares – diluted | ||||||||
See accompanying notes to unaudited consolidated condensed financial statements.
2
BIG DIGITAL ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
| For the three months ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Other comprehensive income: | ||||||||
| Foreign currency translation adjustment | ||||||||
| Comprehensive income (loss) | $ | $ | ( | ) | ||||
See accompanying notes to unaudited consolidated condensed financial statements.
3
BIG DIGITAL ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
For the Three Months Ended March 31, 2026
| Common Stock (#) | Common Stock ($) | Additional Paid-in- Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Equity (Deficit) | |||||||||||||||||||
| Balance as of December 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Exercise of RSUs and stock options | ( | ) | - | - | - | |||||||||||||||||||
| Stock based compensation expense for RSUs and stock options | - | - | - | - | ||||||||||||||||||||
| Issuance of common stock, net of issuance costs | - | - | ||||||||||||||||||||||
| Net income | - | - | - | - | ||||||||||||||||||||
| Other comprehensive income | - | - | - | - | ||||||||||||||||||||
| Balance as of March 31, 2026 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
See accompanying notes to unaudited consolidated condensed financial statements.
4
BIG DIGITAL ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
For the Three Months Ended March 31, 2025
| Common Stock (#) | Common Stock ($) | Additional Paid-in- Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Deficit | |||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Stock based compensation expense for RSUs and stock options | - | - | - | - | ||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Other comprehensive income | - | - | - | - | ||||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
See accompanying notes to unaudited consolidated condensed financial statements.
5
BIG DIGITAL ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the three months ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of operating lease right-of-use asset | ||||||||
| Foreign exchange (gain) loss | ||||||||
| Stock based compensation | ||||||||
| Non-cash interest expense | ||||||||
| Unrealized gain on derivative asset | ( | ) | ( | ) | ||||
| Provision for doubtful accounts | - | |||||||
| Gain on legal settlements | ( | ) | - | |||||
| Changes in operating assets and liabilities: | ||||||||
| Trade and other receivables | ( | ) | ||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Other current assets | ( | ) | ||||||
| Trade and other payables | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Capital expenditures | ( | ) | ( | ) | ||||
| Purchases of property, plant and equipment | ( | ) | - | |||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from common share issuances | - | |||||||
| Payments of finance lease liabilities | ( | ) | ( | ) | ||||
| Net cash used in financing activities | ( | ) | ||||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid (received) for income taxes – Federal | $ | $ | ( | ) | ||||
| Cash paid for income taxes – State | $ | $ | - | |||||
See accompanying notes to unaudited consolidated condensed financial statements.
6
BIG DIGITAL ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 – GENERAL
Nature of Operations
Mawson Infrastructure Group Inc. (“Mawson”), whose name was changed to Big Digital Energy, Inc. effective April 24, 2026 (“Big Digital”) (the “Company,” “we,” “us,” and “our”) is a technology company focused on digital infrastructure platforms, headquartered in the United States of America.
On April 20, 2026, Mawson filed with the Secretary of State of the State of Delaware a Certificate of Amendment (the “Certificate of Amendment”) to its Certificate of Incorporation, as amended (the “Charter”), to change its name from “Mawson Infrastructure Group Inc.” to “Big Digital Energy, Inc.” (the “Name Change”). The Certificate of Amendment became effective as of April 24, 2026, and the only change to the Company’s prior Charter was to change the Company’s name.
The Board approved the Name Change pursuant to Section 242 of the General Corporation Law of the State of Delaware (“DGCL”). In accordance with the DGCL and the provisions of the Company’s organizational documents, approval of the Company’s stockholders was not required to effectuate the Name Change, and the Name Change will not affect the rights of the Company’s security holders.
The Company designs, builds and operates next-generation digital infrastructure platforms for enterprise customers and for its own purposes. The Company provides services spanning artificial intelligence (“AI”), high-performance computing (“HPC”), digital assets including Bitcoin mining, and other intensive compute applications. The Company delivers both self-mining operations and colocation services to enterprise customers with a vertically integrated infrastructure model built for scalability and efficiency. The Company also has an energy management business, which utilizes software and analysis, to generate revenue when the Company participates in energy management programs related to the real-time needs of the power grid.
The Company has a strategy to prioritize the usage of carbon-free energy sources, including nuclear energy, to power its digital infrastructure platforms and computational machines to support the rapid growth of the digital economy in an environmentally sustainable way.
The Company manages and operates digital infrastructure platforms and data centers delivering a total current capacity of approximately 129 megawatts (“MW”) with its current operational sites and more future capacity under development, all strategically located in locations served by the Pennsylvania-New Jersey-Maryland Interconnection Energy Market (the “PJM Energy Market”) in the United States. The PJM Energy Market is among the largest wholesale power markets in North America.
The accompanying consolidated financial statements, including the results of Cosmos Infrastructure LLC (“Cosmos”), Luna Squares LLC (“Luna Squares”), Mawson Bellefonte LLC, Luna Squares Repairs LLC, Luna Squares Property LLC (“Luna Property”), Mawson Midland LLC, Mawson Hosting LLC (“Mawson Hosting”), Mawson Ohio LLC, Mawson Mining LLC and Mawson Capital LLC (collectively referred to as the “Group”), have been prepared by the Company pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and in accordance with generally accepted accounting principles in the United States (“GAAP”).
7
NOTE 1 – GENERAL (Cont.)
Nature of Operations (Cont.)
These unaudited consolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements of the Company as of December 31, 2025, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2026. The results of the interim period are not necessarily indicative of the results to be expected for the full year ending December 31, 2026. These unaudited consolidated, condensed financial statements reflect all adjustments which, in the opinion of management, are necessary to present fairly the financial position, the results of operations and cash flows of the Company for the periods presented.
Going Concern
The accompanying unaudited consolidated condensed financial statements have been prepared assuming the Company will continue on a going concern basis and in accordance with GAAP. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.
Pursuant to the requirements of the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) Topic 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year from the date these financial statements are issued. This evaluation does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented or are not within control of the Company as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.
For the three months ended March 31, 2026, the Company used $
The Company’s revenue is dependent on a number of external factors, including commercial terms, payments from customers, payments from partners, counterparty risks, and market conditions, including those related to digital assets, AI, HPC and other markets. These factors are outside the Company’s direct control, and the Company may not be able to practically mitigate their impact. The Company cannot predict with any certainty whether these trends will reverse or persist.
The Company has ongoing litigation related to the Marshall Loan, W Capital Loan, Celsius Promissory Note and Celsius Colocation Agreement (each defined below). See Note 8 – Commitments and Contingencies.
8
NOTE 1 – GENERAL (Cont.)
Going Concern (Cont.)
The Company has evaluated the above conditions and concluded that these conditions raise substantial doubt regarding our ability to continue as a going concern for a period of at least one year from the date of issuance of these consolidated financial statements.
To mitigate these conditions, the Company has explored various avenues to enhance liquidity, fund the Company’s expenditures, and meet debt servicing requirements. These strategies include, among others:
| ● | Expanding its digital infrastructure platform and increasing capacities for either digital colocation services and/or AI and HPC markets; |
| ● | Executing new customer digital colocation service agreements in either AI, HPC, and/or digital assets mining to diversify its exposure across customers and/or markets; |
| ● | Engaging in discussions with capital providers, relating to equity and/or debt; |
| ● | Considering equity issuances such as capital raises and at-the-market (“ATM”) transactions; |
| ● | Assessing and evaluating corporate and strategic transactions; |
| ● | Assessing and evaluating commercial opportunities or other business opportunities under consideration; |
| ● | Conducting assessments to identify and implement operational improvements and/or efficiencies and other actions aimed at enhancing revenue and/or optimizing expenses; and |
| ● | Evaluating, assessing and pursuing business revenue and margin expansion opportunities. |
On October 16, 2025, the Company entered into an At the Market Offering Agreement (the “Sales Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”) to sell shares (the “Shares”) of our common stock, par value $
During the three months ended March 31, 2026, the Company has sold
Although the Company may have access to capital, debt, and/or other sources of funding, these may require additional time and cost, may impose operational restrictions and other covenants on the Company, may not be available on attractive terms, and may not be available at all. If the Company raises additional capital or debt, this could cause additional dilution to the Company’s stockholders. The terms of any future capital raise or debt issuance and the costs of any financing are uncertain and may be unfavorable to the Company. Should the Company be unable to source sufficient funding, the Company may not be able to realize assets at their recognized values and fulfill its liabilities in the normal course of business at the amounts stated in these consolidated financial statements.
The Company obtains advice from outside resources; however, it is important to note that strategic and other initiatives may not lead to any transaction or other outcome.
These unaudited consolidated condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities and other commitments in the normal course of business. They do not include any adjustments relating to the recoverability and carrying amounts of assets and the amounts of liabilities should the Company be unable to continue as a going concern and meet its obligations and debts as and when they fall due.
9
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Basis of Preparation
The accompanying unaudited consolidated condensed financial statements of the Company include the accounts of the Company and its wholly or majority owned and controlled subsidiaries. Intercompany investments, balances and transactions have been eliminated in consolidation.
Use of Estimates and Assumptions
The preparation of the financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the unaudited consolidated condensed financial statements, and the reported amounts of income and expenses during the reporting periods. Actual results could differ from those estimates. The Company has considered the following to be significant estimates made by management, including but not limited to, going concern assumptions, estimating the useful lives of fixed assets, realization of long-lived assets, unrealized tax positions, and valuing the derivative asset classified under Level 3 fair value hierarchy.
Revenue recognition
The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of ASC 606 is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Five steps are required to be followed in evaluating revenue recognition: (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfies a performance obligation.
In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).
Digital colocation revenue
The Company offers other businesses and customers the opportunity to colocate their specialized computers used in mining digital assets and other equipment within our facilities. The Company generates revenue from these customers for their use of our digital colocation services and facilities. This offering is known as “colocation” and can be customized and tailored for each customer’s situation and strategy as well as the Company’s strategy. For example, customers may agree to be charged upfront digital infrastructure fees, minimum fees, and maintenance fees. The Company, on the other hand, charges colocation fees for the use of its facilities, and other related fees. In addition, digital colocation customers typically pay for energy used in connection with the customer colocation services agreement on a pass-through basis, which may be on a fixed or variable basis calculated on the portion of energy used by the customer on the site. The Company satisfies the performance obligation when the customer has the ability to direct the use and obtain substantially all of the remaining benefits of the good or service. Revenue is recognized over time as customers simultaneously receive and consume the benefits because another party would not need to substantially reperform the work completed by the Company in order to fulfill the remaining performance obligation to the customer. Revenue is recognized upon confirmation of the Company’s power usage by the electricity provider and billed at the rates outlined in each customer contract on a monthly basis.
10
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Revenue recognition (Cont.)
The customer contracts contain variable consideration to be allocated to and recognized in the period to which the consideration relates. Usually this is when it is invoiced, rather than obtaining an estimation of variable consideration at the beginning of the customer contracts.
Energy management revenue
The Company has developed several energy management program capabilities and has an energy management business to generate revenue when the Company adapts its power usage to the real-time needs of the power grid. Energy management revenue consists of revenue for curtailing power and through a power pricing arrangement.
Revenue for curtailing power is recognized over the period that the services are being provided. The Company estimates the amount of curtailable power and the expected payment for that curtailment and recognizes revenue based on the proportion of the service that has been provided. In this arrangement, the Company is considered the principal and revenue is recognized on a gross basis.
Revenue through the Company’s power pricing arrangement is recognized over the period that the services are being provided. The Company estimates the amount of energy available for sale and the expected payment for that energy, and recognizes revenue based on the proportion of the service that has been provided. In this arrangement, the Company is considered the principal and revenue is recognized on a gross basis.
Digital assets mining revenue
The Company has a contract with mining pools and has undertaken the performance obligation of providing computing power in exchange for non-cash consideration in the form of digital assets. The provision of computing power is the only performance obligation in the Company’s contract with its pool operators. Where the consideration received is variable (for example, due to payment only being made upon successful mining), it is recognized when it is highly probable that the variability is resolved, which is generally when the digital asset is received.
The Company measures the non-cash consideration received at the fair market value of the digital asset received. Management estimates fair value on a daily basis, as the quantity of digital assets received multiplied by the price quoted on the exchange that the Company uses to dispose of digital assets.
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 colocation facilities such as direct power costs, energy costs, freight costs and material costs related to digital asset mining.
11
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
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
Functional currency
All subsidiaries of the Company have a functional currency of United States dollar (“USD”). Assets and liabilities denominated in Australian dollars are translated into USD at exchange rates in effect on the consolidated balance sheet dates. Revenue and expense accounts are translated using the monthly average exchange rates during the period. 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 USD. Translation adjustments are accumulated in other comprehensive income (loss). Gains or losses on foreign currency transactions and translation adjustments in highly inflationary economies are recorded as 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. The Company’s CODM group is composed of the Chief Executive Officer and Chief Financial Officer.
The Company operates as
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, cash held with digital asset 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.
12
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Concentrations of credit risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. Cash and cash equivalents are invested in banks. If the counterparty completely failed to perform in accordance with the terms of the contract, the maximum amount of loss to the Company would be the balance. Management believes that the financial institutions that hold the Company’s investments are financially sound and, accordingly, minimal credit risk exists with respect to these investments. The Company has no off-balance-sheet concentration of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements.
Property, plant and equipment
Property, plant and equipment (“PP&E”) are stated at cost, net of accumulated depreciation. All other repair and maintenance costs are charged to operating expenses as incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. PP&E transferred from customers is initially measured at the fair value at the date on which control is obtained.
PP&E are depreciated on a straight-line or declining balance basis based on the asset classification, over their useful lives to the economic entity, commencing from the time the assets arrive at their destination where they are ready for use. Low-cost assets are capitalized and immediately depreciated.
| Asset class | Useful life | Depreciation Method | ||
| Fixtures | Straight-Line | |||
| Plant and equipment | Straight-Line | |||
| Modular data center | Declining | |||
| Motor vehicles | Straight-Line | |||
| Computer equipment | Straight-Line | |||
| Computational and Processing machinery (Miners) | Straight-Line | |||
| Transformers | Straight-Line | |||
| Leasehold improvements | Shorter of useful life or lease term | Straight-Line |
PP&E are derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the consolidated statement of operations.
The residual values, useful lives, and methods of depreciation of PP&E are reviewed at each financial year end and adjusted prospectively, if appropriate.
The Company’s long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such an asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
13
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Fair value of financial instruments:
The Company accounts for financial instruments under ASC 820, Fair Value Measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in a principal or most advantageous market. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
| Level 1 — | quoted prices (unadjusted) in active markets for identical assets or liabilities; |
| Level 2 — | observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived valuations whose significant inputs and significant value drivers are observable in active markets; and |
| Level 3 — | assets and liabilities whose significant value drivers are unobservable. |
Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. 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.
| Fair value measured as of March 31, 2026 | ||||||||||||||||
| Total | Total Level 1 | Total Level 2 | Total Level 3 | |||||||||||||
| Assets: | ||||||||||||||||
| Derivative asset | $ | $ | - | $ | - | $ | ||||||||||
| Fair value measured as of December 31, 2025 | ||||||||||||||||
| Total | Total Level 1 | Total Level 2 | Total Level 3 | |||||||||||||
| Assets: | ||||||||||||||||
| Cryptocurrencies held for customers | $ | $ | $ | - | $ | - | ||||||||||
| Derivative asset | $ | $ | - | $ | - | $ | ||||||||||
| Liabilities: | ||||||||||||||||
| Cryptocurrencies due to customer | $ | $ | $ | - | $ | - | ||||||||||
Level 1 Assets and Liabilities:
In accordance with ASU 2023-08, cryptocurrency that was mined from colocation services and held in a digital asset account controlled by the Company are measured at fair value and recognized separately on the cryptocurrencies line of the balance sheet. Due to a customer dispute that was resolved during the three months ending March 31, 2026, the Company had recognized corresponding cryptocurrencies due to alleged customer liability included in trade and other payables on the balance sheet at December 31, 2025. The estimated fair value of the cryptocurrency and alleged liability was classified as Level 1 of the fair value hierarchy and was based on the quantity of cryptocurrency held in the digital asset account multiplied by the price quoted on the exchange the Company used to dispose of digital assets on December 31, 2025.
Level 3 Assets:
In June 2022, the Company entered into a power supply agreement (“PSA”) with Energy Harbor LLC (“Energy”), the energy supplier to the Company’s Midland, Pennsylvania facility, to provide the delivery of a fixed portion of the total amount of electricity for a fixed price through December 2026. If the Midland, Pennsylvania facility uses more electricity than contracted, the cost of the excess is incurred at a new price quoted by Energy.
14
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Fair value of financial instruments: (Cont.)
While the Company participates in energy management programs at its Midland, Pennsylvania facility, the Company does not consider such actions as trading activities. That is, the Company does not engage in speculation in the power market as part of its ordinary activities. Because the sale of any electricity under a curtailment program allows for net settlement, the Company has determined the PSA meets the definition of a derivative under ASC 815, Derivatives and Hedging. However, because the Company has the ability to sell the power back to the grid rather than take physical delivery, physical delivery is not probable through the entirety of the contract and therefore, the Company does not believe the normal purchases and normal sales scope exception applies to the PSA. Accordingly, the PSA (the non-hedging derivative contract) is recorded at estimated fair value each reporting period with the change in the fair value recorded in “change in fair value of derivative asset” in the consolidated statements of operations.
The PSA was classified as a derivative asset beginning in the quarter ended September 30, 2022, and measured at fair value on the date of the PSA, with changes in fair value recognized in the accompanying consolidated statements of operations. The estimated fair value of the Company’s derivative asset is classified in Level 3 of the fair value hierarchy due to the significant unobservable inputs utilized in the valuation. Specifically, the Company’s discounted cash flow estimation models contain quoted commodity exchange spot and forward prices and are adjusted for basis spreads for load zone-to-hub differentials through the term of the PSA, which expires in December 2026. In addition, the Company adopted a discount rate of approximately
Stock based compensation
The Company follows ASC 718-10, Compensation-Stock Compensation. The Company expenses stock-based compensation to directors, employees, and non-employees over the requisite service period based on the grant-date fair value of the awards. The Company determines the grant-date fair value of options using the Trinomial Lattice Method. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. These assumptions are the expected stock volatility, the risk-free interest rate, the expected life of the option, and the expected forfeiture rate. Expected volatility computes stock price volatility over expected terms based on the historical trading prices of the Common Stock. Risk–free interest rates are calculated based on the yield of a
Recent accounting pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption.
15
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Recent Accounting Pronouncements (Cont.)
In July 2025, the FASB issued ASU 2025-05, Financials Instruments-Credit Losses (Topic 326). The amendments introduce two key simplifications for estimating expected credit losses on current accounts receivable and current contract assets under ASC 606. The updates in ASU 2025-05 are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim periods within those annual periods. Early adoption is permitted. In January 2026, the Company decided to elect a practical expedient allowing the assumption that current conditions at the balance sheet date remain unchanged over the asset’s remaining life—meaning no forward-looking forecasting is required for these short-term assets. Adoption of ASU 2025-05 did not have a material impact on our financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2025, the FASB issued ASU 2025-12, “Codification Improvements.” The amendments in this update clarify, correct, and otherwise improve a wide variety of Topics in the Codification. Notably, ASU 2025-12 clarifies the calculation of diluted earnings per share when a loss from continuing operations exists and requires that such changes be applied retrospectively. Other amendments are generally applied prospectively or retrospectively at the Company’s election. ASU 2025-12 is effective for the Company for fiscal years beginning after December 15, 2026. The Company is currently evaluating the impact of these improvements, but does not expect the majority of the amendments to have a material impact on its consolidated financial statements.
NOTE 3 – BASIC AND DILUTED NET INCOME (LOSS) PER SHARE
Net income (loss) per common share is calculated in accordance with ASC 260, Earnings Per Share. Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of Common Stock outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted average number of shares of Common Stock outstanding plus the dilutive effect of unvested restricted stock units (“RSUs”), and outstanding warrants and options. For the periods presented with a net loss, 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.
The Company’s diluted earnings per share give effect to all potential common shares outstanding during a period that do not have an anti-dilutive impact to the calculation.
| As of March 31, | ||||||||
| 2026 | 2025 | |||||||
| Weighted average number of shares – basic | ||||||||
| RSUs issued under a management equity plan | - | |||||||
| Weighted average number of shares – diluted | ||||||||
Securities that could potentially dilute net income per share in the future but were excluded in the computation of net income (loss) per share, diluted loss as of March 31, 2026 and 2025, are as follows:
| As of March 31, | ||||||||
| 2026 | 2025 | |||||||
| Warrants to purchase Common Stock | ||||||||
| Options to purchase Common Stock | ||||||||
| RSUs issued under a management equity plan | - | |||||||
16
NOTE 4 – LEASES
The Company’s operating leases are for digital asset mining sites and its finance leases are primarily for related plant and equipment.
The Company’s lease costs recognized in the consolidated condensed statements of operations consist of the following:
| For the three months ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Operating lease charges (1) | $ | $ | ||||||
| Finance lease charges: | ||||||||
| Amortization of right-of-use assets | $ | $ | ||||||
| Interest on lease obligations | $ | $ | ||||||
| (1) |
The following is a schedule of the Company’s lease liabilities by contractual maturity as of March 31, 2026:
| Operating leases | Finance leases | |||||||
| 2026 | $ | $ | ||||||
| 2027 | - | |||||||
| 2028 | - | |||||||
| 2029 | - | |||||||
| 2030 | - | |||||||
| Total undiscounted lease obligations | ||||||||
| Less: imputed interest | ( | ) | ( | ) | ||||
| Total present value of lease liabilities | ||||||||
| Less: current portion of lease liabilities | ||||||||
| Non-current lease liabilities | $ | $ | - | |||||
Other lease information as of and for the period ended March 31, 2026:
| Operating leases | Finance leases | |||||||
| Operating cash out flows from leases | $ | $ | ||||||
| Weighted-average remaining lease term (years) | ||||||||
| Weighted-average discount rate (%) | % | % | ||||||
17
NOTE 5 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net, consisted of the following:
| March 31, 2026 | December 31, 2025 | |||||||
| Plant and equipment | $ | $ | ||||||
| Computer equipment | ||||||||
| Processing machines (Miners) | ||||||||
| Modular data center | ||||||||
| Motor Vehicles | ||||||||
| Transformers | ||||||||
| Low-cost assets | ||||||||
| Leasehold improvements | ||||||||
| Total | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant and equipment, net | $ | $ | ||||||
The Company incurred depreciation and amortization expense in the amounts of $
NOTE 6 – INCOME TAXES
The Company records income taxes using the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax effects attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and operating loss and tax credit carryforwards. The Company establishes a valuation allowance if management believes it is more likely than not that the deferred tax assets will not be recovered based on an evaluation of objective verifiable evidence. Management has considered the Company’s history of book and tax income and losses incurred since inception, and the other positive and negative evidence, and has concluded that it is more likely than not that the Company will not realize the benefits of the net deferred tax assets as of March 31, 2026.
The Company recorded income tax expense of approximately
| For the three months ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Effective income tax rate | % | ( | )% | |||||
As of March 31, 2026, the Company had no unrecognized tax benefits and does not anticipate any significant change to the unrecognized tax benefit balance.
18
NOTE 7 – LOANS
Marshall Loan
The Company is included as a guarantor of the Marshall Loan. The loan matured in February 2024 and bears interest at a rate of
W Capital Loan
The Company is included as a guarantor of a Secured Loan Facility Agreement (the “W Capital Loan”) for working capital by Mawson PL with W Capital Advisors Pty Ltd for the W Capital Advisors Fund (collectively, “W Capital”). As of March 31, 2026, AUD $
Celsius Promissory Note
On February 23, 2022, Luna Squares entered into a Digital Colocation Agreement (the “Digital Colocation Agreement”) with Celsius Mining LLC. In connection with this agreement, Celsius Mining LLC loaned Luna Squares a principal amount of $
Convertible Notes
On July 8, 2022, the Company issued secured convertible promissory notes (the “Secured Convertible Promissory Notes”) to investors in exchange for cash. The outstanding balance relates to the interest on the Secured Convertible Promissory Notes which has been accrued from July 2022 onwards and therefore the outstanding balance is $
19
NOTE 8 – COMMITMENTS AND CONTINGENCIES
The Company accounts for its contingent liabilities in accordance with ASC 450 Contingencies. A provision is recorded when it is both probable that a liability has been incurred, and the amount of the loss can be reasonably estimated. With respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. Legal costs incurred in connection with loss contingencies are expensed as incurred.
The Company is subject to the various legal proceedings and claims discussed below (and in Note 1) that have not been fully resolved and that have arisen in the ordinary course of business. In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss, or a material loss in excess of a recorded accrual, with respect to loss contingencies. However, the outcome of legal proceedings and claims brought against the Company is subject to significant uncertainty. Therefore, although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters are resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s consolidated financial statements for that reporting period could be materially adversely affected.
Marshall Loan and W Capital Loan
The Marshall Loan was entered into with an Australian entity MIG No.1, which was placed into a court appointed liquidation and wind-up process and was deconsolidated from the Group on March 19, 2024. On March 19, 2024, Marshall appointed receivers and managers in Australia under the terms of their security relating to their secured loan facility. The direct assets that secure this loan include 5,372 Miners and 8 modular data centers (“MDCs”). These assets are held by MIG No.1 and therefore were included in the deconsolidation. The receiver’s statutory duty includes the obligation to sell the secured assets at market value or, if market value is not known, at the best price reasonably obtainable to maximize the prospects of there being sufficient proceeds available to satisfy the balance of the outstanding secured debt. It is therefore expected that this loan balance will be offset in the future by the amount received from the sale of these Miners and MDCs. On June 25, 2024, Marshall inspected and inventoried the Miners and MDCs located at the Company’s Midland facilities. The Company is currently not utilizing these Miners or MDCs for its operations and has asked Marshall to take these assets out of the Company’s storage. Marshall has not responded to the Company’s request for these Miners and MDCs to be removed from the Company’s storage. The Company is reserving all its rights and remedies against Marshall.
The W Capital Loan was originally with Mawson Infrastructure Group Pty Ltd (“Mawson PL”), and this Australian entity was placed into Australian voluntary administration on October 30, 2023. On November 3, 2023, W Capital appointed receivers and managers in Australia under the terms of their security relating to their working capital facility. The Company has corresponded with W Capital and/or its representatives, the Company’s ongoing significant concerns about W Capital and James Manning, a former board director and Chief Executive Officer of the Company (“Manning”), being related parties. W Capital has not responded to the Company’s concerns in a manner satisfactory to the Company.
On October 3, 2024, a proceeding was filed by W Capital and Marshall against the Company before the Federal Court of Australia, New South Wales, in the matter entitled, “W Capital Advisors Pty Ltd, in its capacity as Trustee for the W Capital Advisors Fund, v. Mawson Infrastructure Group, Inc.”, No. NSD 1395/2024. In an effort to force the Company to pay the W Capital Loan and Marshall Loan, W Capital and Marshall sought to have the Company declared insolvent under Australian law on the grounds that the Company failed to pay W Capital the sums it claims the Company owed it under the aforesaid Australian judgment. On February 11, 2025, the Australian Court declared that Mawson be “wound up” under Australian law. However, Mawson has no assets, revenue or other business in Australia subject to Australian jurisdiction. It is unclear as to any adverse effect this ruling has on Mawson in the U.S. This Australian ruling completely disregarded the automatic stay in place as established by the Involuntary Petition (defined below). The Company has communicated its objections and concerns to these Australian liquidator and entities.
20
NOTE 8 – COMMITMENTS AND CONTINGENCIES (Cont.)
Concurrently with the above Australian litigation, on December 4, 2024, Marshall, W Capital, and Rayra Pty Ltd, as Trustee for the Mountainview Trust (“Rayra” and together with Marshall and W Capital, collectively, the “Original Petitioners”), all Australian entities, filed an involuntary petition (the “Involuntary Petition”) in the matter entitled In Re Mawson Infrastructure Group, Alleged Debtor, Case No. 1:24-bk-12726, under chapter 11 (“Chapter 11”) of title 11, 11 U.S.C. § 101 through 1330 (the “Bankruptcy Code”), seeking a determination of the court to force the Company into a Chapter 11 proceeding. The Original Petitioners claimed in the Involuntary Petition that they have debts aggregating AUD$
On January 10, 2025, the Company filed an answer to the Involuntary Petition, and on May 5, 2025, the Company filed with the United States Bankruptcy Court for the District of Delaware a motion for bond and sanctions against the Petitioning Creditors for violating the automatic stay in the involuntary proceedings. On August 11, 2025, the Honorable Mary F. Walrath, Bankruptcy Judge for the United States Bankruptcy Court for the District of Delaware heard the Company’s motion and granted relief in favor of the Company imposing sanctions on the Petitioning Creditors requiring them to pay the Company’s attorneys’ fees and post a bond before the Petitioning Creditors would be allowed to continue the involuntary proceedings.
During the course of this matter, the Company continued to operate in the ordinary course of business as authorized under 11 U.S.C. § 303(f). Nonetheless, under applicable federal law, all collection efforts by the Company’s creditors, including all of the Petitioning Creditors, continued to be stayed pending final resolution of the Involuntary Petition.
The parties filed pretrial motions seeking various remedies, including dismissal prior to trial, sanctions and attorneys’ fees. On May 9, 2025, the Court granted Mawson’s motions for discovery from the Petitioning Creditors and paved a pathway for discovery of Manning—including from Australia if needed. Celsius filed a motion for sanctions which was denied by the Bankruptcy Court. The trial date was delayed indefinitely to allow for the completion of discovery and the opportunity for the parties to mediate.
As stated above, on May 5, 2025, Mawson filed a motion for sanctions against the Petitioning Creditors seeking, among other things, compelling discovery against the Petitioning Creditors, sanctions for bad faith, and payment of Mawson’s legal fees. The motions were heard by the United States Bankruptcy Court for the District of Delaware on August 11, 2025, wherein the Court ruled from the bench to sanction the Petitioning Creditors, required them to pay Mawson’s attorney’s fees incurred to date and further ordered the Petitioning Creditors to post a cash bond of $
On December 29, 2025, the Company filed an adversary proceeding in the United States Bankruptcy Court for the District of Delaware against the Petitioning Creditors, seeking general and punitive damages, sanctions attorneys’ fees and costs against the Petitioning Creditors.
21
NOTE 8 – COMMITMENTS AND CONTINGENCIES (Cont.)
Mawson learned that on or about October 20, 2025, one of the Australian Petitioning Creditors, W Capital, filed for commencement of Australian Insolvency Proceedings placing W Capital under receivership and ultimate liquidation in Australia. Mawson is one of W Capital’s largest creditors. Mawson expects to avail itself of all legal rights and remedies to which it may be entitled to recover from W Capital under applicable Australian and US laws.
As previously noted, the Company believes that W Capital and Marshall used these proceedings in Australia and the United States as a bad faith attempt to gain leverage in ongoing legal disputes between the parties.
The Company believes that W Capital and Marshall were using the Involuntary Petition and the Australian insolvency proceedings against the Company in an improper attempt to gain leverage in ongoing legal disputes between the parties. The Company believes that the filing of the Involuntary Petition was an extension of the ongoing disputes, including with Manning, and a continuation of the pattern of bad faith actions by Manning and the Petitioning Creditors, with the improper intention of harassing and intimidating the Company.
The matter was dismissed by the Court with prejudice on November 4, 2025. On December 29, 2025, Mawson filed an adversary proceeding in the matter against the Petitioning Creditors seeking bad faith damages, attorneys’ fees, costs, and interest.
As previously reported, the Company has divested itself of any holdings in Australia and does not have any operating sites or assets in Australia. The Company currently operates facilities only in the United States.
Celsius Promissory Note and Celsius Colocation Agreement
Luna Squares has not repaid the Celsius Promissory Note as required on its stated maturity date and is claimed by Celsius to be in default. Celsius Mining LLC transferred the benefit of the Celsius Promissory Note to Celsius Network Ltd. and Celsius Network Ltd has notified Luna Squares that the default interest is payable.
On July 18, 2024, Celsius Network, LLC filed for arbitration of its claims against the Company with the American Arbitration Association in the matter entitled Celsius Network Ltd., Celsius Mining LLC and Ionic Digital Mining LLC (“Ionic”) v. Mawson Infrastructure Group, Luna Squares LLC and Cosmos Infrastructure LLC - Case 01-24-0006-4462. On January 23, 2025, the arbitrator issued a Partial Final Award (the “Partial Final Award”) granting in part Celsius’ claim against Luna Squares on the outstanding promissory note executed by Luna Squares in favor of Celsius. The Partial Final Award granted Celsius monetary damages in the amount of $
Celsius filed a motion seeking a partial award from the arbitrator against Mawson based on its corporate guarantee. The arbitrator granted this partial award in favor of Celsius.
On October 7, 2025, Celsius filed a petition with the Court to confirm its partial arbitration award against Mawson. Following this, on November 6, 2025, both parties agreed to jointly file a consent judgment and execute a forbearance agreement, which provided additional time for the parties to continue their discussions toward an amicable settlement of all outstanding matters. The Court signed the consent judgment on November 10, 2025.
On February 5, 2026, Celsius took formal steps to domesticate the judgment outside of New York. Currently, the parties are engaged in negotiations to resolve the ongoing litigation. On or about March 6, 2026, Celsius announced that it would voluntarily dismiss its arbitration claims against the Company. Nevertheless, the Company’s claims and counterclaims for damages against Celsius remain active in the litigation process, and the Company is continuing to pursue these counterclaims and damages expeditiously. On March 30, 2026, Celsius filed a Rule 34 dispositive motion to dismiss Mawson’s claims and counterclaims in the arbitration. The matter has been briefed by the parties and is awaiting the arbitrator’s decision.
Ionic and Other Settlements
During the three months ended March 31, 2026, we reached a confidential settlement with Ionic to resolve all claims Ionic brought against us and two of our subsidiaries related to the Celsius Colocation Agreement, all settlement amounts have already been paid. The Celsius and Ionic claims were derived separately from disputes arising out of the Colocation Agreement. Celsius’s mining business—and the economic rights and obligations tied to it—were transferred out of the Celsius bankruptcy estate to Ionic under court-approved conveyance documents, while legacy creditor claims, litigation posture, and bankruptcy estate obligations remained with Celsius. As a result, Ionic inherited the deposit-based hosting economics, while the Company’s unpaid receivable claim remains against Celsius and Celsius’s promissory note claim remains against the Company. Both entities filed separate claims against the Company in the arbitration. On January 29, 2026, the $
22
NOTE 8 – COMMITMENTS AND CONTINGENCIES (Cont.)
The Company and/or its applicable subsidiaries have not fulfilled specific payment obligations related to the Marshall Loan, the W Capital Loan and the Celsius Promissory Note mentioned above. Consequently, the creditors associated with these debt facilities may initiate actions as allowed by relevant grace periods. This includes the possibility of opting to expedite the repayment of the principal debt, pursuing legal action against the Company or its subsidiaries for payment default, raising interest rates to the default or overdue rate, or taking appropriate measures concerning collateral (including appointing a receiver), if applicable.
Blockware
On April 19, 2024, a civil suit entitled Blockware Solutions, LLC v. Mawson Bellefonte LLC and Mawson Infrastructure Group, Inc. was filed in the United States District Court, Southern District of New York. The matter remains ongoing. However, the parties are actively pursuing informal settlement discussions.
CleanSpark
On July 16, 2024, the Company filed a civil lawsuit for its claims against CleanSpark, Inc. and CSRE Properties Sandersville, LLC with the United States District Court for the Southern District of New York in the matter entitled “Mawson Infrastructure Group, Inc. and Luna Squares, LLC v. CleanSpark, Inc. and CSRE Properties Sandersville, LLC”, Civil Action No. 1:24-cv-5379, for at least $
Vertua
On March 16, 2022, Luna Squares entered into a lease with respect to a property in the City of Sharon, Mercer County, Pennsylvania (the “Sharon Lease”) with Vertua, a subsidiary entity in which Vertua Ltd has a
On October 17, 2024, the Company filed several claims in the matter captioned “Luna Squares Property, LLC v. Vertua Property, Inc.”, Court of Common Pleas of Mercer County, Pennsylvania, Case No. 2024-2332 against Vertua, including claims for breach of the lease agreement and wrongful termination of the lease, as well as for tortious interference with a business relationship. The Company is seeking reinstatement of the lease, compensatory damages, disgorgement of revenue, and exemplary and punitive damages, as well as reimbursement for its costs and litigation expenses. Vertua is a company related to Manning and also affiliated with Darron Wolter of W Capital. The matter remains ongoing.
Mewawalla Action
On July 8, 2025, the Company filed a complaint in the Court of Chancery of the State of Delaware against the Company’s former CEO and President, Rahul Mewawalla captioned Mawson Infrastructure Group Inc. v. Rahul Mewawalla, No. 2025-0789-JTL (the “Mewawalla Action”). The Mewawalla Action seeks to recover damages from Mr. Mewawalla arising out of his alleged breach of fiduciary duties as a director, as well as alleged fraud. Mr. Mewawalla has not filed an answer to the Mewawalla Action, but after an amended complaint was filed by the Company, Mr. Mewawalla filed a motion to dismiss on November 6, 2025. After hearing on the motion, the Delaware action against Rahul Mewawalla was dismissed without prejudice on February 13, 2025.
23
NOTE 8 – COMMITMENTS AND CONTINGENCIES (Cont.)
Mewawalla Action (Cont.)
On December 8, 2025, Mr. Mewawalla filed a complaint in King County Superior Court in Washington State against the Company, the Company’s former Chairman of the Board of Directors (the “Board”), Mr. Ryan Costello, former Board Member Steven Soles and Human Resources Director, Jonathan Sites (the “Washington State Action”). In the Washington State Action, Mr. Mewawalla is seeking damages for alleged retaliation, breach of contract, wage violations, discrimination related retaliation, whistleblower retaliation, and other statutory claims arising out of his employment and the termination of his employment with the Company. The Company categorically denies the allegations under the Washington State Action and is defending against the claims.
Endeavor Blockchain, LLC Investor Group
On January 20, 2026, the Company filed a Complaint for Violation of Securities Laws, as well as a Motion for Expedited Injunctive Relief, in the United States District Court for the District of Delaware against Endeavor Blockchain, LLC (“Endeavor”), Joshua Kilgore, PM Squared, LLC, Cody Smith, and Phillip Stanley (collectively, the “Defendants”) asserting violation of Sections 13(d) and 10(b) of the Securities Exchange Act of 1934 and Rules 13d-1 and 10b-5 of the Securities and Exchange Commission. On March 2, 2026, the Complaint, as amended, was dismissed, as was the Motion for Expedited Injunctive Relief and Temporary Restraining Order, as amended, and the case was subsequently closed. Subsequently, on April 6, 2026, the parties settled their disputes entering into a Cooperation Agreement that implemented an immediate change in board control and governance at the Company, immediately removing the prior board members, Ryan Costello, Kathryn Schelllenger, and Steven Soles, replacing them with a new board. Simultaneously, the Company appointed: Three independent directors: Kyle B. Danges, Rodger Davis, and Lisa R. Hough, two Endeavor-affiliated directors: Cody Smith and Phillip Stanley, resulting in a five-member board. Subsequently, Josh Kilgore and Daniel J. Morrison were added to the board resulting in a seven-member board.
NOTE 9 – STOCKHOLDERS’ EQUITY
Common Stock
During the three months ended March 31, 2026, vested and outstanding RSUs were settled into
Common Stock Warrants
The Company’s outstanding stock warrants have not changed during the three months ended March 31, 2026. The outstanding stock warrants as of March 31, 2026 are
Equity plans
On April 9, 2024, the Board approved the 2024 Omnibus Equity Plan (the “2024 Plan”) which will provide an initial
As of March 31, 2026, the number of shares allocated and available under the 2024 Plan were
24
NOTE 9 – STOCKHOLDERS’ EQUITY (Cont.)
Common Stock (Cont.)
Adoption of Rights Agreement
On February 1, 2026, the Board of the Company authorized and declared a dividend distribution of one right (each, a “Right”) for each outstanding share of Common Stock to stockholders of record as of the close of business on February 12, 2026 (the “Record Date”). Each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series C Junior Participating Preferred Stock, par value $
The Board adopted the Rights Agreement to protect the interests of Company stockholders. In general terms, subject to certain enumerated exceptions, it works by imposing significant dilution upon any person or group that acquires beneficial ownership of
Stock-Based Compensation:
The Company recognized stock-based compensation expense during the three months ended March 31, 2026 and 2025, as follows:
| For the three months ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Service-based restricted stock awards | $ | $ | ||||||
| Total stock-based compensation | $ | $ | ||||||
Performance-based awards
Performance-based awards generally vest over a three-year performance period upon the successful completion of specified market and performance conditions.
The Company granted
In accordance with ASC 718, compensation cost related to these RSUs is recognized only when the performance condition is achieved. As of March 31, 2026, no Change in Control has occurred. Accordingly, no stock-based compensation expense has been recognized related to these awards.
Upon the occurrence of a Change in Control, the Company will recognize stock-based compensation expense based on the grant-date fair value of the RSUs that become vested.
25
NOTE 9 – STOCKHOLDERS’ EQUITY (Cont.)
Stock-Based Compensation: (Cont.)
The following table presents a summary of the Company’s performance-based restricted stock awards activity:
| Number of shares | Weighted Average Remaining Contractual Life (in years) | |||||||
| Outstanding as of December 31, 2025 | ||||||||
| Exercised | - | - | ||||||
| Expired/forfeited | - | - | ||||||
| Outstanding as of March 31, 2026 | ||||||||
| Exercisable as of March 31, 2026 | ||||||||
Service-based restricted stock awards
Service-based awards generally vest over a one-year service period or as otherwise defined.
The following table presents a summary of the Company’s service-based awards activity:
| Number of shares | Weighted Average Remaining Contractual Life (in years) | |||||||
| Outstanding as of December 31, 2025 | ||||||||
| Exercised | ( | ) | - | |||||
| Outstanding as of March 31, 2026 | ||||||||
| Exercisable as of March 31, 2026 | - | |||||||
As of March 31, 2026, there was approximately $
Stock options awards
Stock options awards vest upon the successful completion of specified market conditions.
The following table presents a summary of the Company’s Stock options awards activity:
| Number of shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (in years) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding as of December 31, 2025 | $ | $ | - | |||||||||||||
| Issued | - | - | - | - | ||||||||||||
| Outstanding as of March 31, 2026 | $ | $ | - | |||||||||||||
| Exercisable as of March 31, 2026 | $ | $ | - | |||||||||||||
26
NOTE 10 – SUBSEQUENT EVENTS
Litigation
For updates subsequent to March 31, 2026, regarding the Marshall Loan, W Capital Loan, Celsius Promissory Note and Celsius Colocation Agreement, see Note 8 – Commitments and Contingencies.
New Board
On April 4, 2026, the Company entered into a Cooperation Agreement (the “Cooperation Agreement”) by and among Endeavor, an Arkansas limited liability company, Big Digital Energy LLC, a Texas limited liability company, PM Squared, LLC (DBA PM Squared Financial), a Texas limited liability company, Joshua Kilgore, Cody Smith and Phillip Stanley (each, an “Endeavor Party,” and together, the “Endeavor Parties”).
Pursuant to the Cooperation Agreement, the Company has agreed to, among other things, appoint Kyle B. Danges, K. Rodger Davis, Lisa R. Hough, Cody Smith and Phillip Stanley to the Board, effective as of April 6, 2026 (the “Effective Date”). As of the date of the Cooperation Agreement, each of Messrs. Davis and Danges and Ms. Hough are “Qualified Directors” and are not “Affiliates” of any of the Endeavor Parties (in each case, as defined in the Cooperation Agreement).
The Cooperation Agreement, among other things, includes certain litigation-related provisions, including agreements by the Company and each of the Endeavor Parties not to initiate or pursue any legal proceedings against each other and to release each other from any claims except for those arising out of the Cooperation Agreement, as well as certain non-disparagement provisions that in each case remain in place until April 4, 2029.
On April 6, 2026, Ryan Costello, Steven Soles, and Kathryn Yingling Schellenger each submitted his or her resignation from the Board and from any and all committees of the Board, effective as of the Effective Date. None of the departures from the Board described herein are due to any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
Also on April 6, 2026, pursuant to the Cooperation Agreement, the Board appointed Kyle B. Danges, K. Rodger Davis, Lisa Hough, Cody Smith and Phillip Stanley to the Board, effective contemporaneously with the aforementioned resignations on the Effective Date.
The Board has determined that each of Messrs. Danges and Davis and Ms. Hough is independent pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) and the Nasdaq Stock Market LLC.
On April 6, 2026, the Board elected Joshua Kilgore, as Executive Chairman, and Daniel J. Morrison to the Board, effective immediately and approved the following committee structure and chairs. Lisa R. Hough and K. Rodger Davis will serve on the Nominating and Corporate Governance Committee, with Ms. Hough serving as Chair. K. Rodger Davis, Kyle B. Danges, and Daniel Morrison will serve on the Audit Committee, with Mr. Davis serving as Chair. Lisa R. Hough, Kyle B. Danges, K. Rodger Davis, and Daniel Morrison will serve on the Compensation Committee, with Ms. Hough serving as Chair.
The Board has determined that Mr. Morrison is independent pursuant to the rules and regulations of the SEC and the Nasdaq Stock Market LLC.
New Executive Officers
On April 6, 2026, the Board appointed Joshua Kilgore as Executive Chairman, Phillip Stanley as Chief Executive Officer, and Cody Smith as Chief Operating Officer, effective immediately. Kaliste Saloom remains with the Company as General Counsel and Bill Regan as Chief Financial Officer.
27
NOTE 10 – SUBSEQUENT EVENTS (Cont.)
Nasdaq
On April 17, 2026, Mawson Infrastructure Group Inc. (the “Company”) received written notice from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) that, based on the Company’s reported stockholders’ equity as of December 31, 2025, the Company no longer satisfied Nasdaq Listing Rule 5550(b) (the “Rule”), which requires either $
Previously, on December 22, 2025, the Company received formal notice from Nasdaq that the Company had evidenced compliance with the MVLS Standard (although the Company had in fact evidenced compliance with the Equity Standard and, therefore, compliance with the Rule). The Staff determined that the Company remained subject to a Mandatory Panel Monitor for a period of one year from the date of the compliance determination, or December 22, 2026. Based upon the foregoing, and the Company’s non-compliance with the Equity Standard as of December 31, 2025, the Staff issued a delist determination. On May 1, 2026, the Company requested a hearing before the Nasdaq Hearings Panel (the “Panel”) to present its plan to evidence compliance with the Rule, which will stay any further action by the Staff at least until the hearing concludes and any exception period that may be granted by the Panel following the hearing expires.
As of May 7, 2026, the Company’s MVLS exceeds the minimum $
Strategic Colocation Agreement
On April 27, 2026, the Company entered into a Joint Mining Agreement with Big Digital Energy, LLC (BDE”), (the “Colocation Agreement” or “Agreement”). Through the Agreement, Management desires to bring real revenue into the Company in the short term while pursuing its goal to move its operations away from Bitcoin mining towards selectively monetizing excess capacity where economically prudent and aligned with shareholder value creation. The Company’s core strategy is to optimize the utilization of each megawatt by deploying it toward the highest-value applications, with current priority given to future expansion into AI and high-performance computing (“HPC”) data center developments. BDE is deemed an affiliate of the Company because it is owned and/or controlled by Josh Kilgore, Phil Stanley, and Cody Smith, who also serve as members of the Company’s Board of Directors. Entities affiliated with Mr. Kilgore, Mr. Smith, and Mr. Stanley hold
Under the terms of the Colocation Agreement, BDE will purchase and deliver approximately 25,000 s19xp mining computers, and Big Digital will provide BDE with approximately 75MW of computing capacity at its facility in Midland, PA. Ownership of the miners will transfer to the Company after BDE reaches its stated return on investment as set forth in the Colocation Agreement. The Parties will operate under a
The total amount of cash the Company will receive from the Colocation Agreement will be largely dependent on the economics of mining during the term of the Agreement. The Agreement has a twelve-month term and may be terminated upon 30 days’ notice, subject to its conditional terms. Cash or other consideration equal to the monthly cash net proceeds will be paid in lieu of the securities, to the extent that (i) stockholder approval would otherwise be required for their issuance or the substitution is otherwise necessary to comply with Nasdaq listing standards or (ii) the substitution is approved by a majority of the independent members of the Company’s Board of Directors.
28
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations analyzes the major elements of our balance sheets, statements of operations and cash flows. The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited consolidated condensed financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in the 2025 Form 10-K. All amounts are in U.S. dollars.
Throughout this report, unless otherwise designated, the terms “we,” “us,” “our,” the “Company,” and “Big Digital,” refer to Big Digital Energy, Inc., a Delaware corporation, Cosmos Infrastructure LLC, Luna Squares LLC, , Mawson Bellefonte LLC, Luna Squares Repairs LLC, Luna Squares Property LLC, Mawson Midland LLC, Mawson Ohio LLC, Mawson Hosting LLC, Mawson Mining LLC and Mawson Capital LLC.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements about our expectations, beliefs or intentions regarding, among other things, our product development efforts, business, financial condition, results of operations, strategies or prospects. Forward-looking statements can be identified by the use of forward-looking words such as “believe”, “expect”, “intend”, “plan”, “may”, “should”, “could” or “anticipate” or their negatives or other variations of these words or other comparable words or by the fact that these statements do not relate strictly to historical or current matters. These forward-looking statements may be included in, but are not limited to, various filings made by us with the United States Securities and Exchange Commission (the “SEC”), press releases or oral statements made by or with the approval of one of our authorized executive officers. Forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements, including, but not limited to, the factors summarized below.
This report, and the 2025 Form 10-K identify important factors which could cause our actual results to differ materially from those indicated by the forward-looking statements, including those set forth under Item 1A. “Risk Factors” below.
The risk factors included in this Quarterly Report on Form 10-Q, and in the 2025 Form 10-K are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Given these uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The following important factors, among others, could affect future results and events, causing those results and events to differ materially from those expressed or implied in our forward-looking statements:
| - | continued evolution and uncertainty related to technologies and digital infrastructure; |
| - | our ability to continue as a going concern; | |
| - | our ability to maintain the listing of our common stock on Nasdaq; | |
| - | our need to, and difficulty in, raising additional debt or equity capital and the availability of financing opportunities, including through our “at the market” offering program; | |
| - | access to reliable and reasonably priced electricity sources; | |
| - | operational, maintenance, repair, safety, and construction risks; |
29
| - | the failure or breakdown of mining equipment, or internet connection failure; |
| - | our reliance on key management personnel and employees; | |
| - | our ability to attract or retain the talent needed to sustain or grow the business; |
| - | our ability to develop and execute on our business strategy and plans; |
| - | counterparty risks related to our customers, agreements and/or contracts; | |
| - | the loss of a significant digital colocation customer; |
| - | adverse actions by creditors, debt providers, or other parties; |
| - | continued evolution and uncertainty related to growth in blockchain and Bitcoin and other digital assets’ usage; |
| - | the evolution of AI and HPC markets and changing technologies; | |
| - | high volatility in Bitcoin and other digital assets’ prices and in value attributable to our business; | |
| - | the slower than expected growth in demand for AI, HPC and other accelerated computing technologies; | |
| - | the ability to timely implement and execute on AI and HPC digital infrastructure contracts or deployment; |
| - | our need to, and difficulty in, raising additional debt or equity capital and the availability of financing opportunities; |
| - | failure to maintain required compliance to remain eligible for the most cost-effective forms of raising additional equity capital; |
| - | the ability to timely complete the digital infrastructure build-out in order to achieve our revenue expectations for the periods mentioned; |
| - | downturns in the digital assets industry; |
30
| - | counterparty risks and risks of delayed or delinquent payments from customers and others; |
| - | inflation, economic or political environment; |
| - | cyber-security threats; |
| - | our ability to obtain proper insurance; |
| - | banks and other financial institutions ceasing to provide services to our industry; |
| - | changes to the Bitcoin and/or other networks’ protocols and software; |
| - | the decrease in the incentive or increased network difficulty to mine Bitcoin; |
| - | the increase in transaction fees related to digital assets; |
| - | the fraud or security failures of large digital asset exchanges; |
| - | the regulation and taxation of digital assets like Bitcoin; |
| - | our ability to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act of 2002; and |
| - | material litigation, investigations, or enforcement actions, including by regulators and governmental authorities. |
Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to, the risk factors set out in Item 1A. Risk Factors in this Quarterly Report on Form 10-Q, and in our 2025 Form 10-K.
All forward-looking statements attributable to us or persons acting on our behalf speak only as of the date of this report and are expressly qualified in their entirety by the cautionary statements included in this report. We undertake no obligation to update or revise forward-looking statements to reflect events or circumstances that arise after the date they are made or to reflect the occurrence of unanticipated events. In evaluating forward-looking statements, you should consider these risks and uncertainties.
Company Overview
We are a technology company focused on digital infrastructure platforms.
The Company designs, builds and operates next-generation digital infrastructure platforms for enterprise customers and for its own purposes. The Company provides services spanning AI, HPC, digital assets including Bitcoin mining, and other intensive computer applications. The Company delivers both self-mining operations and colocation services to enterprise customers with a vertically integrated infrastructure model built for scalability and efficiency. The Company also has an energy management business, which utilizes software and analysis, to generate revenue when the Company participates in energy management programs related to the real-time needs of the power grid.
The Company has a strategy to prioritize the usage of carbon-free energy sources, including nuclear energy, to power its digital infrastructure platforms and computational machines to support the rapid growth of the digital economy in an environmentally sustainable way.
31
The Company manages and operates digital infrastructure platforms and data centers delivering a total current capacity of approximately 129 MW with its current operational sites, with additional future capacity under development, all strategically located in locations served by the PJM Energy Market in the United States. The PJM Energy Market is among the largest wholesale power markets in North America.
In October 2025, we announced the launch of a graphics processing unit (“GPU”) pilot program on a major, leading decentralized AI network. Our GPU pilot’s overarching objective is to build a repeatable, scalable framework that proves a path for us to expand our role as an AI cloud or infrastructure provider across its U.S. sites. Since launch, the GPU pilot has outperformed competing marketplace offerings on GPU performance benchmarks for deep-learning tasks, while maintaining competitive bandwidth metrics at a limited scale. Analysis of runtime optimization, pricing dynamics and network placement has contributed to our growing internal technical expertise and stress-tested infrastructure assumptions for future GPU deployments. We continue to refine our listing strategy, expand certification coverage, and collect data in order to accelerate deployment speed and scale in subsequent GPU rollouts. Due to supply chain delays, the pilot program remains ongoing.
Results of Operations – Three months ended March 31, 2026 compared to the three months ended March 31, 2025
| For the three months ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenues: | ||||||||
| Digital colocation revenue | $ | 3,511,029 | $ | 10,428,873 | ||||
| Energy management revenue | 1,189,854 | 3,064,875 | ||||||
| Digital assets mining revenue | 119,420 | 320,625 | ||||||
| Total revenues | 4,820,303 | 13,814,373 | ||||||
| Less: Cost of revenues (excluding depreciation) | 3,813,809 | 7,890,443 | ||||||
| Gross profit | 1,006,494 | 5,923,930 | ||||||
| Operating expenses: | ||||||||
| Selling, general and administrative | 7,618,138 | 5,778,408 | ||||||
| Stock-based compensation | 426,362 | 2,100,504 | ||||||
| Depreciation and amortization | 1,194,264 | 1,527,913 | ||||||
| Change in fair value of derivative asset | (81,028 | ) | (4,059,573 | ) | ||||
| Total operating expenses | 9,157,736 | 5,347,252 | ||||||
| Income (loss) from operations | (8,151,242 | ) | 576,678 | |||||
| Non-operating income (expense): | ||||||||
| Loss on foreign currency transactions | (364,431 | ) | (87,338 | ) | ||||
| Gain on legal settlements | 10,157,593 | - | ||||||
| Interest expense | (945,630 | ) | (784,865 | ) | ||||
| Other income | 56,448 | 104,112 | ||||||
| Other expenses | (10,468 | ) | (9,341 | ) | ||||
| Total non-operating expense, net | 8,893,512 | (777,432 | ) | |||||
| Income (loss) before income taxes | 742,270 | (200,754 | ) | |||||
| Income tax expense | (132,467 | ) | (110,109 | ) | ||||
| Net Income (loss) | $ | 609,803 | $ | (310,863 | ) | |||
Revenues
Digital colocation revenues for the three months ended March 31, 2026 and 2025, were $3.5 million and $10.4 million, respectively. This represented a 66% decrease or a decrease of $6.9 million, compared to the same period in 2025. The decrease in revenue was primarily attributable to a reduction in both the number of customers and the average contract size as compared to the 2025 period. One customer, Consensus Technology Group LLC, accounted for $7.0 million of the decrease.
32
Energy management revenues for the three months ended March 31, 2026 and 2025, were $1.2 million and $3.1 million, respectively. This represented a 61% decrease or a decrease of $1.9 million, compared to the same period in 2025. The decrease was primarily attributable to changes to miner specification requirements for curtailment program participation beginning in 2026, in which the Company’s mining fleet did not achieve the target life expectancy.
Digital assets mining revenues from self-mining of Bitcoin for the three months ended March 31, 2026 and 2025, were $0.1 million and $0.3 million, respectively. This represented a decrease of $0.2 million compared to the same period in 2025. The decline was primarily driven by industry-wide conditions, including higher overall energy costs and an increase in global network difficulty, both of which contributed to lower Bitcoin production from self-mining activities.
Cost of revenues
Our cost of revenues consists primarily of direct power costs related to digital asset mining and colocation services and cost of mining equipment sold.
Cost of revenues for the three months ended March 31, 2026 and 2025, were $3.8 million and $7.9 million, respectively. This decrease of $4.1 million, or 52%, in cost of revenues compared to the same period in 2025 was attributable to lower energy consumption from reduced digital colocation services and digital asset mining from self-mining, partially offset by higher average energy prices during the 2026 period.
Operating Expenses
Our operating expenses include: selling, general and administrative expenses; stock-based compensation; depreciation and amortization; and change in fair value of derivative asset.
Selling, general and administrative
Our selling, general and administrative expenses consist primarily of audit, legal, and other professional fees, employee compensation, director fees, equipment repairs, marketing, freight, insurance, consultant fees, lease amortization and general expenses.
Selling, general and administrative expenses for the three months ended March 31, 2026 and 2025 were $7.6 million and $5.8 million, respectively, an increase of $1.8 million, or 32%, from period to period. The increase was primarily due to higher legal and professional fees, offset by lower payroll tax expenses caused by lower share-based payment vesting activities in March 31, 2026 as compared to 2025.
Stock-based compensation
Stock-based compensation expenses for the three months ended March 31, 2026 and 2025 were $0.4 million and $2.1 million, respectively. The decrease was primarily due to a reduction in new award issuances and the completion of service-based vesting conditions from awards issued over the prior two years.
33
Depreciation and amortization
Depreciation consists primarily of depreciation of digital asset mining hardware and modular data center (“MDC”) equipment.
Depreciation and amortization for the three months ended March 31, 2026 and 2025, were $1.2 million and $1.5 million, respectively. The lower depreciation and amortization expense is the result of an increased number of the Company’s digital asset mining hardware being fully depreciated compared to prior periods.
Change in fair value of derivative asset
During the three months ended March 31, 2026 and 2025, there was a gain on the fair value of the derivative asset of $0.1 million and $4.1 million, respectively. The change in fair value is primarily due to decreasing volatility in fair value due to the shorter remaining term of the power supply agreements.
Non-operating income (expense)
Non-operating income (expense) consists primarily of interest expenses, gain (loss) on foreign currency transactions, gain on legal settlements, and other income and expenses.
During the three months ended March 31, 2026, loss on foreign currency transactions was $0.4 million. During the three months ended March 31, 2025, loss on foreign currency transactions was $0.1 million. The difference is due to the impact of changes in the US Dollar and Australian Dollar exchange rate on intercompany transactions.
During the three months ended March 31, 2026, we reached a confidential settlement with Ionic Digital Mining LLC (“Ionic”) to resolve all claims Ionic brought against us and two of our subsidiaries related to the Celsius Colocation Agreement, all settlement amounts have already been paid. In addition, the Company entered a separate, unrelated settlement to resolve a customer dispute over a hosting arrangement. These two settlements resulted in the Company recognizing gains on legal settlements of $10.2 million.
Income tax expense
The Company recorded income tax expense of approximately 17.8% of income before income taxes and (54.8)% of loss before income taxes for the three months ended March 31, 2026 and 2025, respectively. The difference in the income tax expense for the three months ended March 31, 2026 versus the three months ended March 31, 2025 relates mainly to differences in estimated interest and penalty accruals included in the current payable for each of those periods, as well as changes in estimates regarding the realizability of deferred tax balances that impact the Company’s deferred tax expense.
34
Liquidity and Capital Resources
General
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. For the three months ended March 31, 2026, we financed our operations primarily through cash from operations, proceeds from our ATM Program and other cash reserves.
On October 16, 2025, the Company entered into an At the Market Offering Agreement (the “Sales Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”) to sell shares (the “Shares”) of our Common Stock having an aggregate sales price of up to $9.6 million, from time to time, through an “at-the-market” offering program (the “ATM Program”) under which Wainwright will act as sales agent. On December 11, 2025, the Company filed a prospectus supplement (the “Prospectus Supplement”) with the SEC to increase the capacity of the ATM Program by $40 million.
During the three months ended March 31, 2026, the Company has sold 1,586,774 shares of Common Stock under the Sales Agreement at an average price of approximately $4.18 per share, which has resulted in cash proceeds to the Company of $6.4 million, net of issuance costs.
On April 27, 2026, the Company entered into a Joint Mining Agreement with Big Digital Energy, LLC (BDE”), (the “Colocation Agreement” or “Agreement”). Through the Agreement, Management desires to bring real revenue into the Company in the short term while pursuing its goal to move its operations away from Bitcoin mining towards selectively monetizing excess capacity where economically prudent and aligned with shareholder value creation. The Company’s core strategy is to optimize the utilization of each megawatt by deploying it toward the highest-value applications, with current priority given to future expansion into AI and high-performance computing (“HPC”) data center developments. BDE is deemed an affiliate of the Company because it is owned and/or controlled by Josh Kilgore, Phillip Stanley, and Cody Smith, who also serve as members of the Company’s Board of Directors. Entities affiliated with Mr. Kilgore, Mr. Smith, and Mr. Stanley hold 60%, 20%, and 20% ownership interests, respectively, in BDE.
Under the terms of the Colocation Agreement, BDE will purchase and deliver approximately 25,000 s19xp mining computers, and Big Digital will provide BDE with approximately 75MW of computing capacity at its facility in Midland, PA. Ownership of the miners will transfer to the Company after BDE reaches its stated return on investment as set forth in the Colocation Agreement. The Parties will operate under a 50%/50% profit-sharing structure, pursuant to which Big Digital will receive all cash net proceeds from the mining operations. The cash revenue will be used for general corporate purposes and asset purchases to ensure the Company’s use of all available power across its facility locations. As its share of the profit-sharing structure, BDE will receive monthly grants consisting of a combination of (i) shares of the Company’s common stock, where the number of shares will equal 20% of its share of the monthly cash net proceeds divided by 30-day volume weighted average price of the Company’s common stock (“VWAP”) on the grant date, and (ii) warrants to purchase the Company’s common stock, where the number of underlying shares will equal 80% of its share of the monthly cash net proceeds divided by $20. The warrants will allow BDE to purchase the Company’s common stock at an exercise price of $20 per share and will have a five-year term.
The total amount of cash the Company will receive from the Colocation Agreement will be largely dependent on the economics of mining during the term of the Agreement. The Agreement has a twelve-month term and may be terminated upon 30 days’ notice, subject to its conditional terms. Cash or other consideration equal to the monthly cash net proceeds will be paid in lieu of the securities, to the extent that (i) stockholder approval would otherwise be required for their issuance or the substitution is otherwise necessary to comply with Nasdaq listing standards or (ii) the substitution is approved by a majority of the independent members of the Company’s Board of Directors.
35
We believe our near-term working capital requirements will continue to be funded through a combination of the cash we expect to generate from future operations, our existing funds, external debt facilities that may be available to use, future issuances of shares, and other potential sources of capital, monetization, or funds. We believe a combination of these opportunities is expected to be adequate to fund our operations over the next twelve months. For our business growth, it is expected we may continue to invest in expanding and/or upgrading our infrastructure and/or other equipment and will require additional working capital in the short-term and long-term. As of March 31, 2026, we had an aggregate of $26.5 million of debt, all of which is overdue for repayment unless we refinance, renegotiate the terms, or prevail in our disputes and/or related claims and/or counterclaims.
We will need to raise substantial additional capital to continue our operations, execute our business strategy and meet our debt service obligations. We expect to continue to consider and evaluate potential strategic options and capital-raising transactions including, among other things, dispositions of certain businesses and assets and significant equity investments in us by third parties. Any capital-raising through equity or convertible debt could result in significant dilution to existing stockholders. In addition, newly issued securities may have rights, preferences, or privileges senior to those of our common shares. We may not be able to raise adequate capital on a timely basis, on favorable terms, or at all. Our inability to raise sufficient capital would have a material adverse effect on our financial condition and business.
The process of reviewing potential strategic opportunities may be time consuming, distracting and disruptive to our business operations. Our management may devote significant time, and we may incur substantial costs in pursuing, evaluating and negotiating potential strategic options or capital-raising transactions and those efforts may not prove successful on a timely basis, or at all.
Any potential transaction may be dependent on a number of factors that may be beyond our control, for example, market conditions, industry trends or acceptable terms. We may ultimately determine that no transaction is in the best interest of our stockholders and there can be no assurance that we will pursue or enter into any transaction at all. There can be no assurance of the impact to the value of our Common Stock after the announcement or consummation of any strategic transaction. In addition, any perceived uncertainty regarding our future operations may limit our ability to retain or hire qualified personnel.
Working Capital and Cash Flows
As of March 31, 2026 and December 31, 2025, we had a cash and cash equivalent balance of $2.4 million and $13.3 million, respectively. As of March 31, 2026 and December 31, 2025, the trade receivables balance was $10.5 million and $9.6 million, respectively. As of March 31, 2026, we had $26.5 million of outstanding short-term loans, and as of December 31, 2025, we had $25.2 million of short-term loans. The short-term loans as of March 31, 2026, relate to the Celsius Promissory Note, W Capital Loan, Secured Convertible Promissory Notes and Marshall Loan (each of which is currently in default). Refer to “Material Cash Requirements” below for more information. As of March 31, 2026 and December 31, 2025, we had negative working capital of $22.8 million and $31.3 million, respectively.
The following table presents the major components of net cash flows (used in) provided by operating, investing and financing activities for the three months ended March 31, 2026 and 2025:
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Net cash used in operating activities | $ | (17,132,375 | ) | $ | (510,385 | ) | ||
| Net cash used in investing activities | $ | (41,531 | ) | $ | (6,496 | ) | ||
| Net cash provided by (used in) financing activities | $ | 6,342,355 | $ | (103,295 | ) | |||
For the three months ended March 31, 2026, net cash used in operating activities was $17.1 million. We had a net gain of $0.6 million for the three months ended March 31, 2026, which included $10.2 million of gain on legal settlements, $0.1 million gain on other income, $0.4 million non-cash stock-based compensation, $1.2 million of depreciation and amortization expense and $0.9 million of interest expense. For the three months ended March 31, 2025, net cash used in operating activities was $0.5 million. We had a net loss of $0.3 million for the three months ended March 31, 2025, which included $1.5 million of depreciation and amortization expense, $2.1 million of stock-based compensation expense, and $4.1 million of gain on derivative asset.
36
For the three months ended March 31, 2026, net cash used in investing activities was $0.04 million. The net cash used in investing activities during the three months ended March 31, 2026, was primarily attributable to capital expenditures partially offset by proceeds from sale of certain non-utilized equipment.
For the three months ended March 31, 2026, net cash provided by financing activities was $6.3 million and for the three months ended March 31, 2025, net cash used was $0.1 million. The cash provided by financing activities during the three months ended March 31, 2026, was primarily attributable to cash proceeds of $6.4 million from the issuance of our Common Stock under the ATM Program.
Material Cash Requirements
The following discussion summarizes our material cash requirements from contractual and other obligations. For more information on these matters, please see Note 8 – Commitments and Contingencies to the unaudited consolidated condensed financial statements included in Item 1. “Financial Statements” of this Quarterly Report.
The Company is included as a guarantor of the Marshall Loan. The loan matured in February 2024 and bears interest at a rate of 12% per annum (with an overdue rate provision of an additional 500bps), payable monthly with interest payments that commenced in December 2021. This loan facility is secured by direct assets of MIG No.1 and a general security agreement given by the Company. Principal repayments began during November 2022. There has been no principal and interest payments made since May 2023. The outstanding balance including interest is $13.5 million as of March 31, 2026, all of which is currently classified as a current liability.
The Company is included as a guarantor of the W Capital Loan. As of March 31, 2026, the balance was AUD $2.6 million (USD $1.8 million) representing outstanding interest, all of which is currently classified as a current liability. The W Capital Loan accrues interest daily at a rate of 12% per annum (with an overdue rate provision of an additional 800bps). The W Capital Loan expired in March 2023.
On February 23, 2022, Luna Squares entered into the Digital Colocation Agreement with Celsius Mining LLC. In connection with this agreement, Celsius Mining LLC loaned Luna Squares a principal amount of $20.0 million, for the purpose of funding the infrastructure required to meet the obligations of the Digital Colocation Agreement, for which Luna Squares issued the Celsius Promissory Note for repayment of such amount. The Celsius Promissory Note accrues interest daily at a rate of 12% per annum (with an overdue rate provision of an additional 200bps). Luna Squares is required to amortize the loan at a rate of 15% per quarter, principal repayments began at the end of September 2022. The Celsius Promissory Note had a maturity date of August 23, 2023. The outstanding balance including interest is $11.1 million as of March 31, 2026, all of which is currently classified as a current liability.
37
On July 8, 2022, the Company issued the Secured Convertible Promissory Notes in exchange for an aggregate of $3.6 million in cash. On September 29, 2022, the Company entered into a letter variation relating to some of the Secured Convertible Promissory Notes, with an aggregate principal amount of $3.1 million, which gave those holders the option to elect for pre-payment (including accrued interest to maturity) subject to certain conditions. All of the investors included in this letter variation elected for the pre-payment option and therefore there were $3.1 million principal repayments made during November 2022. The final convertible noteholder who was not a party to this variation opted to enter into an arrangement whereby it received pre-payment of interest but agreed that repayment of the principal was not required therefore the remaining $0.50 million had been classified as a current liability. The convertible note matured in July 2023. Interest has been accrued from July 2023 onwards and therefore the outstanding balance is $0.2 million as of March 31, 2026, all of which is classified as a current liability. During 2024 the principal amount outstanding of $0.50 million was repaid to the investor.
Financial condition
As of March 31, 2026, and December 31, 2025, we had current liabilities of $42.7 million and $58.8 million, respectively. As of March 31, 2026, and December 31, 2025, we had net assets of $4.3 million and negative net assets $3.1 million, respectively. As of March 31, 2026, we had an accumulated deficit of $251.8 million compared to $252.5 million as of December 31, 2025. Our cash position of March 31, 2026, was $2.4 million in comparison to $13.3 million as of December 31, 2025.
For the three- month period ended March 31, 2026 and 2025, the Company generated net income of $0.6 million and net loss of $0.3 million, respectively.
Our primary requirements for liquidity and capital are working capital, capital expenditures, public company costs and general corporate needs. In particular, we have large power usage costs, and other significant costs include our legal, lease, operational, and employee costs. We expect these capital and liquidity needs to continue as we further develop and grow our business. Our principal sources of liquidity have been and are expected to be our cash and cash equivalents, and further issuances of shares.
We require additional capital to respond to near-term debt repayment obligations, competitive pressure, market dynamics, new technologies, customer demands, business opportunities and challenges, potential acquisitions or unforeseen circumstances, and we will likely need to engage in equity or debt financings in the short term. If we are unable to obtain adequate financing on terms satisfactory to us when we require it, our ability to continue to fund, grow or support our business model and to respond to business challenges could be significantly limited, our business, financial condition and results of operations could be adversely affected, and this may result in bankruptcy or our ceasing operations.
The Company is taking steps to preserve cash by optimizing operations, reducing costs and pursuing efficiencies. The Company has been improving its revenue generation by enhancing its operations, driving growth in business lines, adding digital colocation services customers and diversifying its businesses. The Company will continue to seek to optimize its cash flows through these and other initiatives.
38
Non-GAAP Financial Measures
The Company reports all financial information required in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The Company believes, however, that evaluating its ongoing operating results will be enhanced if it also discloses certain non-GAAP information. Adjusted EBITDA, which is a non-GAAP financial measure, is defined by the Company as net income (loss) plus income tax, depreciation and amortization, further adjusted by stock-based compensation, gain/loss on foreign currency, other non-operating income and expenses, change in fair value of derivative assets, gain on legal settlements, and bad debt expense.
Adjusted EBITDA should not be considered an alternative to net income, operating income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA may have material limitations as a performance measure because it excludes items that are necessary elements of our costs and operations. In addition, Adjusted EBITDA presented by other companies may not be comparable to our presentation, since each company may define these terms differently.
| For Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| (unaudited) | ||||||||
| Net income (loss): | $ | 609,803 | $ | (310,863 | ) | |||
| Depreciation and amortization | 1,194,264 | 1,527,913 | ||||||
| Stock based compensation | 426,362 | 2,100,504 | ||||||
| Loss on foreign currency transactions | 364,431 | 87,338 | ||||||
| Gain on legal settlements | (10,157,593 | ) | - | |||||
| Other non-operating income | (56,448 | ) | (104,112 | ) | ||||
| Other non-operating expenses | 956,098 | 794,206 | ||||||
| Change in fair value of derivative asset | (81,028 | ) | (4,059,573 | ) | ||||
| Income tax | 132,467 | 110,109 | ||||||
| Bad debt expense | - | 977,755 | ||||||
| Adjusted EBITDA (non-GAAP) | $ | (6,611,644 | ) | $ | 1,123,277 | |||
Critical accounting estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of income and expenses during the reporting periods. Actual results could differ from those estimates. There have been no material changes to our critical accounting policies and estimates as set forth in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in the 2025 Form 10-K.
39
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, the Company has elected not to provide the disclosure required by this item.
Item 4. Controls and Procedures
Evaluation of disclosure controls and procedures
As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2026, our disclosure controls and procedures were effective to ensure the information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods prescribed by the Securities and Exchange Commission, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in internal control over financial reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
40
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company and certain of its subsidiaries are currently in disputes, which may be in or may lead to litigation. The results of these matters cannot be predicted with certainty and an unfavorable resolution of one or more of these or other matters could have a material adverse effect on our business, results of operations, financial condition and/or cash flows. For information on these matters, refer to Note 8 — Commitments and Contingencies to the unaudited consolidated condensed financial statements included in Item 1. “Financial Statements” of this Quarterly Report. The disclosure set forth in Note 8 relating to such legal matters is incorporated herein by reference.
The Company and its subsidiaries from time to time in the future may be involved in certain litigation related to our businesses. For example, the Company and its subsidiaries receive letters of demand for payments or other correspondence from time to time which could lead to legal proceedings.
Item 1A. Risk Factors
The information in this Form 10-Q should be read in conjunction with the risk factors and information disclosed in the 2025 Form 10-K. Except as set forth below, there have been no material changes to the primary risks related to our business and securities as described in the 2025 Form 10-K under “Risk Factors” in Item 1A.
If we fail to comply with the continued listing standards of The Nasdaq Capital Market, we may be delisted and the price of our Common Stock, our ability to access the capital markets and our financial condition could be negatively impacted.
Although our Common Stock is currently listed on The Nasdaq Capital Market, we may not be able to continue to meet the minimum listing requirements of the Nasdaq Stock Market LLC (“Nasdaq”).
On April 17, 2026, we received written notice from Nasdaq that, based on our reported stockholders’ equity as of December 31, 2025, we no longer satisfied Nasdaq Listing Rule 5550(b), and the Staff issued a delisting determination. On May 1, 2026, the Company requested a hearing before the Panel to present its plan to evidence compliance with the Rule, which will stay any further action by the Staff at least until the hearing concludes and any exception period that may be granted by the Panel following the hearing expires.
If we fail to comply with the continued listing standards of The Nasdaq Capital Market, we may be delisted and the price of our Common Stock, our ability to access the capital markets and our financial condition could be negatively impacted.
41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
Celsius Mining LLC loaned $20.0 million to Luna Squares through the Celsius Promissory Note, which had a maturity date of August 23, 2023, and a total outstanding balance as of March 31, 2026 of $11.1 million. Luna Squares has not repaid the loan as required on the maturity date and is claimed by Celsius to be in default. Celsius Mining LLC transferred the benefit of the Celsius Promissory Note to Celsius Network Ltd. Celsius Network Ltd has notified Luna Squares that default interest is payable. On November 23, 2023, Celsius filed an arbitration proceeding against Mawson, its subsidiaries Luna Squares and Cosmos, asserting various claims related to the alleged breach of the Celsius Colocation Agreement. The Company is pursuing counter claims against Celsius. See Note 8 – Commitments and Contingencies, Celsius Promissory Note and Digital Colocation Agreement to the unaudited consolidated condensed financial statements included in Item 1. “Financial Statements” of this Quarterly Report.
The Marshall Loan matured in February 2024 and the total outstanding balance is $13.5 million as of March 31, 2026. MIG No. 1, an Australian entity, has not made a payment on principal and interest since May 2023, despite such payments falling due, and is therefore alleged by Marshall to be in default under the Marshall Loan. MIG No. 1 is also in default of a number of other covenants under the terms of the loan. On March 19, 2024, MIG No.1 was placed into an Australian court appointed liquidation and wind-up process and was deconsolidated for the group from this date.
On March 19, 2024, Marshall appointed receivers and managers in Australia under the terms of their security relating to the Marshall Loan. The direct assets that secure this loan include 5,372 miners and 8 MDCs. These assets are held by MIG No.1 and therefore were included in the deconsolidation. The receiver’s statutory duty includes the obligation to sell the secured assets at market value or, if market value is not known, at the best price reasonably obtainable to maximize the prospects of there being sufficient proceeds available to satisfy the balance of the outstanding secured debt. It is therefore expected that this loan balance will be offset in the future by the amount received from the sale of these miners and MDCs. On June 25, 2024, Marshall inspected and inventoried the miners and MDCs located at the Company’s Midland facilities. The Company is currently not utilizing these miners or MDCs for its operations and has asked Marshall to take these assets out of the Company’s storage. Marshall has not responded to the Company’s request for these miners and MDCs to be removed from the Company’s storage. The Company also reserves and retains all rights against Marshall.
The Company is the guarantor of the W Capital Loan. As of March 31, 2026, AUD $2.6 million (USD $1.8 million) has been drawn down from this facility. The W Capital Loan expired in March 2023 and the Company did not extend the maturity date and has not repaid the loan amount. The Company is therefore considered by W Capital to be in default. This W Capital Loan was originally with Mawson SPL, an Australian entity which was placed into voluntary administration under Australian law on October 30, 2023, and on November 3, 2023, W Capital Advisors appointed receivers and managers in Australia under the terms of their security relating to their working capital facility.
The Company has a Secured Convertible Promissory Note (the “Convertible Note”) with W Capital Advisors Pty Ltd with an outstanding balance of $0.2 million as of March 31, 2026. The Convertible Note matured in July 2023. W Capital Advisors did not convert the note, and the Company has repaid the principal balance of the Convertible Note.
For more information on the above matters, refer to Note 8 - Commitments and Contingencies to the unaudited consolidated condensed financial statements included in Item 1. “Financial Statements” of this Quarterly Report. The disclosure set forth in Note 8 is incorporated herein by reference.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Insider Trading Arrangements
During the fiscal quarter ended March 31, 2026, no director or officer (as defined in Rule 16a-1(f) promulgated under the Exchange Act) of the Company
42
Item 6. Exhibits
| 3.1 | Certificate of Incorporation (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on April 5, 2012) | |
| 3.2 | Certificate of Amendment to Certificate of Incorporation (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on July 18, 2013) | |
| 3.3 | Certificate of Amendment to Certificate of Incorporation dated November 15, 2017 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on November 21, 2017) | |
| 3.4 | Certificate of Amendment to Certificate of Incorporation dated March 1, 2018 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on March 5, 2018) | |
| 3.5 | Certificate of Amendment to Certificate of Incorporation dated March 17, 2021 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on March 23, 2021) | |
| 3.6 | Certificate of Amendment to Certificate of Incorporation dated June 9, 2021 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on June 14, 2021) | |
| 3.7 | Certificate of Amendment to Certificate of Incorporation dated August 11, 2021 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on August 16, 2021) | |
| 3.8 | Certificate of Amendment to Certificate of Incorporation dated February 6, 2023 (Incorporated by reference to Company’s Quarterly Report on Form 10-Q filed with the SEC on May 15, 2024) | |
| 3.9 | Certificate of Amendment to Certificate of Incorporation dated February 6, 2023 (Incorporated by reference to Company’s Quarterly Report on Form 10-Q filed with the SEC on August 19, 2024) | |
| 3.10 | Certificate of Amendment to Certificate of Incorporation of Mawson Infrastructure Group Inc., as amended, filed with the Secretary of State of the State of Delaware on April 20, 2026 and effective on April 24, 2026 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on April 23, 2026). | |
| 3.11 | Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock of Wize Pharma, Inc. (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on October 23, 2018). | |
| 3.12 | Certificate of Designation of Rights, Preferences and Privileges of Series C Junior Participating Preferred Stock of MAWSON INFRASTRUCTURE GROUP Inc. (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on February 2, 2026). | |
| 3.13 | Bylaws (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on May 10, 2013) | |
| 10.1 | Rights Agreement, dated as of February 2, 2026, by and between MAWSON INFRASTRUCTURE GROUP Inc. and Computershare Trust Company, N.A., as rights agent (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on February 2, 2026). | |
| 10.2 | Cooperation Agreement, dated as of April 4, 2026, by and among the Company and Endeavor Blockchain, LLC, Big Digital Energy LLC, PM Squared, LLC (DBA PM Squared Financial), Joshua Kilgore, Cody Smith and Phillip Stanley (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on April 6, 2026). | |
| 31.1* | Certification of Principal Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2* | Certification of Principal Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1** | Certification of Chief Executive Officer pursuant to 18 U.S.C. SECTION 1350 | |
| 32.2** | Certification of Chief Financial Officer pursuant to 18 U.S.C. SECTION 1350 | |
| 101* | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, formatted in Inline XBRL (eXtensible Business Reporting Language) includes: (i) Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025, (ii) Consolidated Statements of Operations for the three months ended March 31, 2026 and 2025, (iii) Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2026 and 2025, (iv) Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025, (v) Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2026 and 2025, and (vi) Notes to Consolidated Financial Statements | |
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
| * | Filed herewith. |
| ** | Furnished herewith. |
| + | Management compensatory plan. |
| † | Certain information has been omitted pursuant to Item 601(a)(6) of Regulation S-K. |
43
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Big Digital Energy, Inc. | ||
| Date: May 14, 2026 | By: | /s/ Phillip Stanley |
| Phillip Stanley | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: May 14, 2026 | By: | /s/ William Regan |
| William Regan | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |
44