Big Digital Energy, Inc.: Form 10-Q for the period ended Sep 30, 2025

Management’s Discussion and Analysis of Financial Condition and Results of Operations analyzes the major elements of our balance sheets, statements of operations and cash flows. The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited consolidated condensed financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in the 2024 Form 10-K. All amounts are in U.S. dollars.

Throughout this report, unless otherwise designated, the terms “we,” “us,” “our,” the “Company,” and “Mawson,” refer to Mawson Infrastructure Group Inc., a Delaware corporation, Cosmos Trading Pty Ltd, Cosmos Infrastructure LLC, Cosmos Manager LLC, MIG No.1 Pty Ltd (on March 19, 2024, MIG No.1 Pty Ltd was placed into a court appointed liquidation and wind-up process), MIG No.1 LLC, Mawson AU Pty Limited (on April 23, 2024, Mawson AU Pty Ltd was placed into a court appointed liquidation and wind-up process), Mawson Services Pty Ltd (on April 29, 2024, Mawson Services Pty Ltd was placed into a court appointed liquidation and wind-up process), Mawson Bellefonte LLC, Luna Squares LLC, Luna Squares Repairs LLC, Luna Squares Property LLC, Mawson Midland LLC, Mawson Ohio LLC, Mawson Hosting LLC and Mawson Mining LLC.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements, about our expectations, beliefs or intentions regarding, among other things, our product development efforts, business, financial condition, results of operations, strategies or prospects. Forward-looking statements can be identified by the use of forward-looking words such as “believe”, “expect”, “intend”, “plan”, “may”, “should”, “could” or “anticipate” or their negatives or other variations of these words or other comparable words or by the fact that these statements do not relate strictly to historical or current matters. These forward-looking statements may be included in, but are not limited to, various filings made by us with the United States Securities and Exchange Commission (the “SEC”), press releases or oral statements made by or with the approval of one of our authorized executive officers. Forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements, including, but not limited to, the factors summarized below.

This report, our Quarterly Reports on Form 10-Q filed with the SEC on May 15, 2025 and August 14, 2025, and the 2024 Form 10-K identify important factors which could cause our actual results to differ materially from those indicated by the forward-looking statements, including those set forth under Item 1A. “Risk Factors” below.

The risk factors included in this Quarterly Report on Form 10-Q, our Quarterly Reports on Form 10-Q filed with the SEC on May 15, 2025 and August 14, 2025, and on the 2024 Form 10-K are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Given these uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The following important factors, among others, could affect future results and events, causing those results and events to differ materially from those expressed or implied in our forward-looking statements:

• continued evolution and uncertainty related to technologies and digital infrastructure;
• our ability to continue as a going concern;
• our ability to cure any continued listing deficiencies and maintain the listing of our Common Stock on the Nasdaq Capital Market;
• the availability of our “at the market offering” program and our ability or inability to secure additional funds through equity financing transactions;
• access to reliable and reasonably priced electricity sources;

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• operational, maintenance, repair, safety, and construction risks;
• the failure or breakdown of mining equipment, or internet connection failure;
• our reliance on key management personnel and employees;
• our ability to attract or retain the talent needed to sustain or grow the business;
• our ability to develop and execute on our business strategy and plans;
• counterparty risks related to our customers, agreements and/or contracts;
• 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;
• high volatility in Bitcoin and other digital assets’ prices and in value attributable to our business;
• our need to, and difficulty in, raising additional debt or equity capital and the availability of financing opportunities;
• failure to maintain required compliance to remain eligible for the most cost-effective forms of raising additional equity capital;
• the evolution of AI and HPC market and changing technologies;
• the slower than expected growth in demand for AI, HPC and other accelerated computing technologies;
• the ability to timely implement and execute on AI and HPC digital infrastructure contracts or deployment;
• the ability to timely complete the digital infrastructure build-out in order to achieve its revenue expectations for the periods mentioned;
• downturns in the digital assets industry;
• counterparty risks and risks of delayed or delinquent payments from customers and others;
• inflation, economic or political environment;
• cyber-security threats;
• our ability to obtain proper insurance;
• banks and other financial institutions ceasing to provide services to our industry;
• changes to the Bitcoin and/or other networks’ protocols and software;
• the decrease in the incentive or increased network difficulty to mine Bitcoin;
• the increase of transaction fees related to digital assets:
• the fraud or security failures of large digital asset exchanges;
• the regulation and taxation of digital assets like Bitcoin;
• our ability to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act of 2002; and
• material litigation, investigations, or enforcement actions, including by regulators and governmental authorities.

Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to, the risk factors set out in Item 1A. Risk Factors in this Quarterly Report on Form 10-Q, our Quarterly Reports on Form 10-Q filed with the SEC on May 15, 2025 and August 14, 2025, and in our 2024 Form 10-K.

All forward-looking statements attributable to us or persons acting on our behalf speak only as of the date of this report and are expressly qualified in their entirety by the cautionary statements included in this report. We undertake no obligation to update or revise forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. In evaluating forward-looking statements, you should consider these risks and uncertainties.

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.

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 the largest wholesale power market 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. The initial phase of the project is an aggressive 100-day plan to retrieve performance data, evaluate project economics, and test market fit. Comprehensive analysis throughout the pilot will be executed to ensure the security, reliability, and commercial viability of our design.

Results of Operations – Three months ended September 30, 2025 compared to the three months ended September 30, 2024

Revenues

Digital colocation revenues for the three months ended September 30, 2025 and 2024, were $7.2 million and $9.5 million, respectively. This represented a 25% decrease or a decrease of $2.4 million, compared to the same period in 2024. 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 2024 period, offset by an increase in revenues of $2.0 million due to the settlement of contracts with former customers. In 2025, the Company entered into a profit-share agreement that generated lower revenue relative to traditional colocation arrangements but yielded higher overall profitability. The Company continues to enhance its digital colocation capabilities to expand its customer base and increase the number of machines utilizing its digital colocation infrastructure services.

Energy management revenues for the three months ended September 30, 2025 and 2024, were $5.4 million and $2.0 million, respectively. This represented a 176% increase or an increase of $3.5 million, compared to the same period in 2024. The increase was primarily attributable to the Company’s enhanced energy management programs, which leverage advanced software and analytics to optimize power usage in response to real-time grid conditions and market pricing signals. Energy management programs enable the Company to generate revenue and reduce energy costs by adjusting power consumption during periods of elevated demand or pricing volatility. Higher overall energy prices and greater grid demand variability during the 2025 period contributed to increased participation in energy management programs relative to 2024.

Digital assets mining revenues from self-mining of Bitcoin for the three months ended September 30, 2025 and 2024, were $0.6 million and $0.8 million, respectively. This represented a decrease of $0.2 million compared to the same period in 2024. 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 September 30, 2025 and 2024, were $4.6 million and $8.0 million, respectively. This decrease of $3.4 million, or 42%, in cost of revenues compared to the same period in 2024 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 2025 period.

Operating Expenses

Our operating expenses include: selling, general and administrative expenses; stock-based compensation; change in fair value of derivative asset; and depreciation and amortization.

Selling, general and administrative

Our selling, general and administrative expenses consist primarily of audit, legal, and other professional fees, employee compensation, director fees, equipment repairs, marketing, freight, insurance, consultant fees, lease amortization and general expenses.

Selling, general and administrative expenses for the three months ended September 30, 2025 and 2024 were $5.9 million and $6.0 million, respectively, a decrease of $0.2 million, or 3%, from period to period.

Stock-based compensation

Stock-based compensation (benefits) expenses for the three months ended September 30, 2025 and 2024 were $(1.4) million and $5.3 million, respectively. The benefit recognized during the 2025 period was due to the reversal of previously recognized share-based compensation expense due to the forfeiture of RSUs.

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 September 30, 2025 and 2024, were $1.3 million and $3.6 million, respectively. The lower depreciation and amortization expense is the result of liquidation and an increased number of the Company’s digital asset mining hardware being fully depreciated compared to prior periods.

Change in fair value of derivative asset

During the three months ended September 30, 2025 and 2024, there was a loss on the fair value of the derivative asset of $1.2 million and $0.8 million, respectively, in relation to our power supply arrangements. Changes in energy market prices and volatility impacted the fair value of the hedge during these periods.

Non-operating income (expense)

Non-operating income (expense) consist primarily of interest expenses, gain (loss) on foreign currency transactions, and other income and expenses.

Interest expenses for each of the three months ended September 30, 2025 and 2024, were $0.9 million and $0.8 million, respectively.

During the three months ended September 30, 2025, loss on foreign currency transactions was $0.3 million. During the three months ended September 30, 2024, loss on foreign currency transactions was $0.4 million.

Income tax benefit (expense)

The Company recorded income tax benefit (expense) of approximately (22.3)% of income before income taxes and 5.0% of loss before income taxes for the three-month periods ended September 30, 2025 and 2024, respectively. The difference in the income tax benefit (expense) for the three-month period ended September 30, 2025 versus the three-month period ended September 30, 2024 relates mainly to differences in estimated interest and penalty accruals included in the current payable for each of those periods, as well as changes in estimates regarding the realizability of deferred tax balances that impact the Company’s deferred tax expense. For the 2025 period, the interest and penalties only relate to the incremental increase during the three-month period ended September 30, 2025 while the 2024 interest and penalties relate to both the three-month period ended September 30, 2024 and prior periods beginning in 2021.

Enactment of the “One Big Beautiful Bill Act” (OBBBA)

On July 4, 2025, President Donald Trump signed into law the OBBBA. The OBBBA contains several changes to corporate taxation, including the restoration of 100% bonus depreciation, the introduction of new Section 174A permitting immediate expensing of domestic research and experimental (“R&E”) expenditures, modifications of Section 163(j) interest expense limitations, updates to rules governing global intangible low-taxed income (“GILTI”) and foreign-derived intangible income (“FDII”), amendments to energy credit provisions, and the expansion of Section 162(m) aggregation requirements.

Under U.S. GAAP, the effects of changes in tax laws are recognized in the period in which the new law is enacted. The Company analyzed the impact of the OBBBA for this Quarterly Report and determined the impact to be immaterial, primarily due to the Company’s full valuation allowance.

Results of Operations – Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024

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Revenues

Digital colocation revenues for nine months ended September 30, 2025 and 2024, were $21.3 million and $25.9 million, respectively. This represented an 18% decrease or a decrease of $4.6 million, compared to the same period in 2024. 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 2024 period, offset by an increase in revenues of $2.0 million due to the settlement of contracts with former customers. In 2025, the Company entered into a profit-share agreement that generated lower revenue relative to traditional colocation arrangements but yielded higher overall profitability. The Company continues to enhance its digital colocation capabilities to expand its customer base and increase the number of machines utilizing its digital colocation infrastructure services.

Energy management revenues for the nine months ended September 30, 2025 and 2024, were $13.6 million and $6.2 million, respectively. This represented a 121% increase or an increase of $7.5 million, compared to the same period in 2024. The increase was primarily attributable to the Company’s enhanced energy management programs, which leverage advanced software and analytics to optimize power usage in response to real-time grid conditions and market pricing signals. Energy management programs enable the Company to generate revenue and reduce energy costs by adjusting power consumption during periods of elevated demand or pricing volatility. Higher overall energy prices and greater grid demand variability during the 2025 period contributed to increased participation in energy management programs relative to 2024.

Digital assets mining revenues from self-mining of Bitcoin for the nine months ended September 30, 2025 and 2024, were $1.6 million and $11.6 million, respectively. This represented a decrease of $9.9 million compared to the same period in 2024. The decline in self-mining revenues was primarily driven by industry-wide conditions, including higher overall energy costs and increased network difficulty, which contributed to reduced Bitcoin production. In addition, the Company’s revenue mix continued to evolve during 2025, reflecting a strategic shift away from self-mining activities toward digital asset colocation services. This transition has resulted in a greater proportion of revenue being generated from colocation operations.

Cost of revenue

Our cost of revenue consists primarily of direct power costs related to digital asset mining and colocation services and cost of mining equipment sold.

Cost of revenue for the nine months ended September 30, 2025 and 2024, were $18.1 million and $28.6 million, respectively. This decrease of $10.5 million, or 37%, in cost of revenue compared to the same period in 2024 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 2025 period.

Operating Expenses

Our operating expenses include: selling, general and administrative expenses; stock-based compensation; change in fair value of derivative asset; and depreciation and amortization.

Selling, general and administrative

Our selling, general and administrative expenses consist primarily of audit, legal, and other professional fees, employee compensation, director fees, equipment repairs, marketing, freight, insurance, consultant fees, lease amortization and general expenses.

Selling, general and administrative expenses for the nine months ended September 30, 2025 and 2024 were $17.5 million and $13.1 million, respectively, an increase of $4.4 million, or 34%. The increase was primarily driven by higher external legal and litigation related expenses, employee compensation and the write-off of uncollectible customer accounts.

Stock-based compensation

Stock-based compensation expenses for the nine months ended September 30, 2025 and 2024 were $1.7 million and $11.3 million, respectively. The benefit recognized during the 2025 period was due to the reversal of previously recognized share-based compensation expense due to the forfeiture of RSUs.

Depreciation and amortization

Depreciation consists primarily of depreciation of digital asset mining hardware and MDC equipment.

Depreciation and amortization for the nine months ended September 30, 2025 and 2024, were $4.3 million and $16.2 million, respectively. The lower depreciation and amortization expense is the result of liquidation and deconsolidation of MIG No. 1 and an increased number of the Company’s digital asset mining hardware being fully depreciated compared to prior periods.

Change in fair value of derivative asset

During the nine months ended September 30, 2025 and 2024, there was a gain on the fair value of the derivative asset of $0.7 million and a loss on the fair value of the derivative asset of $0.9 million, respectively, in relation to our power supply arrangements. The increase in the fair value of the derivative asset during 2025 was primarily driven by higher volatility and elevated forward energy prices, which increased the expected value of the Company’s hedge position. In contrast, the decrease in 2024 reflected a more stable energy price environment with limited forward price movement.

Non-operating income (expense)

Non-operating income (expense) consists primarily of interest expenses, gain (loss) on foreign currency transactions, loss on deconsolidation and other income and expenses.

Interest expenses for the nine months ended September 30, 2025 and 2024, were $2.5 million and $2.3 million, respectively.

During the nine months ended September 30, 2025, loss on foreign currency transactions was $1.1 million. During the nine months ended September 30, 2024, loss on foreign currency transactions was $0.5 million. This difference was due to higher Australian Dollar denominated liabilities in 2025 compared with 2024 and movement in the foreign exchange rate.

During the nine months ended September 30, 2024, the Company recognized a deconsolidation loss of $12.4 million. This loss was as a result of three Australian entities and subsidiaries, MIG No.1, Mawson AU and Mawson SPL, proceeding into Australian court appointed liquidation and accordingly these subsidiaries were deconsolidated. The deconsolidation loss recorded was due to the removal of the net assets and certain liabilities of this subsidiary from the condensed consolidated financial statements. See Note 3 – Australian Subsidiaries Deconsolidation to the Consolidated Condensed Financial Statements (Unaudited) in Item 1. Financial Statements, for further discussion of MIG No. 1.

Income tax expense

The Company recorded income tax expense of approximately 2.4% and 2.6% of loss before income tax expense for the nine-month periods ended September 30, 2025 and 2024, respectively. The difference in the income tax expense for the nine-month period ended September 30, 2025 versus the nine-month period ended September 30, 2024 relates mainly to differences in estimated interest and penalty accruals included in the current payable for each of those periods, as well as changes in estimates regarding the realizability of deferred tax balances which impact the Company’s deferred tax expense. For 2025, the interest and penalties only relate to the incremental increase during the nine-month period ended September 30, 2025 while the 2024 interest and penalties relate to both the nine-month period ended September 30, 2024 and prior periods beginning in 2021.

Enactment of the “One Big Beautiful Bill Act”

On July 4, 2025, President Donald Trump signed into law the reconciliation tax bill, commonly referred to as the OBBBA. The OBBBA contains several changes to corporate taxation, including the restoration of 100% bonus depreciation, the introduction of new Section 174A permitting immediate expensing of R&E expenditures, modifications of Section 163(j) interest expense limitations, updates to rules governing GILTI and FDII, amendments to energy credit provisions, and the expansion of Section 162(m) aggregation requirements.

Under U.S. GAAP, the effects of changes in tax laws are recognized in the period in which the new law is enacted. The Company analyzed the impact of the OBBBA for this Quarterly Report and determined the impact to be immaterial, primarily due to the Company’s full valuation allowance.

Liquidity and Capital Resources

General

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. For the nine months ended September 30, 2025, we financed our operations primarily through cash flow provided by operating activities and other cash reserves.

On October 13, 2025, the Company voluntarily terminated its Prior Sales Agreement with Roth Capital Partners, LLC and A.G.P./Alliance Global Partners. Under the terms of the Prior Sales Agreement, the Company had the right to sell shares of its Common Stock having an aggregate sales price of up to $12 million, from time to time, through an “at the market offering” program. No sales of shares of Common Stock were made under the Prior Sales Agreement. Pursuant to its terms, the Company had the right to terminate the Prior Sales Agreement. In connection with the Prior Sales Agreement termination, no early termination penalties were incurred by the Company.

On October 16, 2025, we entered into the Sales Agreement with Wainwright to sell 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 under which Wainwright will act as sales agent. The sales, if any, of Shares made under the Sales Agreement will be made by any method that is deemed an “at the market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended.

We will pay Wainwright a commission in an amount equal to 3.0% of the gross proceeds from the sale of the Shares and have agreed to provide Wainwright with customary indemnification and contribution rights. In addition, we have agreed to reimburse Wainwright for fees and disbursements related to its legal counsel in an amount not to exceed $50,000. Additionally, pursuant to the terms of the Sales Agreement, we agreed to reimburse Wainwright for the documented fees and costs of its legal counsel reasonably incurred in connection with Wainwright’s ongoing due diligence from time to time arising from the transactions contemplated by the Sales Agreement in an amount not to exceed $2,500 in the aggregate per due diligence update. The Sales Agreement contains customary representations and warranties and conditions to the sale of the Shares pursuant thereto.

We are not obligated to sell any of the Shares under the Sales Agreement and may at any time suspend solicitation and offers thereunder. The offering of Shares pursuant to the Sales Agreement will terminate on the earlier of (1) the sale, pursuant to the Sales Agreement, of Shares having an aggregate offering price of $9.6 million and (2) the termination of the Sales Agreement by either us or Wainwright, as permitted therein.

As of November 12, 2025, we have sold 1,355,215 shares of Common Stock under the Sales Agreement at an average price of $1.28 per share, which has resulted in net proceeds to us of $1.7 million.

We believe our near-term working capital requirements will continue to be funded through a combination of the cash we expect to generate from future operations, our existing funds, external debt facilities that may be available to use, future issuances of shares, and other potential sources of capital, monetization, or funds. We believe a combination of these opportunities are expected to be adequate to fund our operations over the next twelve months. For our business growth, it is expected we may continue investing in expanding and/or upgrading our infrastructure and/or other equipment and will require additional working capital in the short-term and long-term. As of September 30, 2025, we had an aggregate of $24.2 million of debt, all of which is overdue for repayment unless we refinance, renegotiate the terms, or prevail in our disputes and/or related claims and/or counterclaims. In addition, the Celsius deposit of $15.3 million is the subject of an ongoing legal dispute in arbitration with Mawson and Celsius having claims and counterclaims. See Note 9 – Commitments and Contingencies, Celsius Promissory Note and Digital Colocation Agreement to the unaudited consolidated condensed financial statements included in Item 1. “Financial Statements” of this Quarterly Report.

We will need to raise substantial additional capital to continue our operations, execute our business strategy and meet our debt service obligations. We may not be able to raise adequate capital on a timely basis, on favorable terms, or at all. Our inability to raise sufficient capital would have a material adverse effect on our financial condition and business.

Working Capital and Cash Flows

As of September 30, 2025 and December 31, 2024, we had a cash and cash equivalent balance of $2.3 million and $6.1 million, respectively. As of September 30, 2025 and December 31, 2024, the trade receivables balance was $13.8 million and $15.2 million, respectively. As of September 30, 2025, we had $24.2 million of outstanding short-term loans, and as of December 31, 2024, we had $20.9 million of short-term loans. The short-term loans as of September 30, 2025, relate to the Celsius Promissory Note, W Capital Loan, Secured Convertible Promissory Notes and Marshall Loan (each of which is currently in default). Refer to “Material Cash Requirements” below for more information. As of September 30, 2025 and December 31, 2024, we had negative working capital of $38.7 million and $35.9 million, respectively.

The following table presents the major components of net cash flows (used in) provided by operating, investing and financing activities for the nine months ended September 30, 2025 and 2024:

For the nine months ended September 30, 2025, net cash used in operating activities was $3.4 million and for the nine months ended September 30, 2024, net cash provided by operating activities was $3.1 million. We had a net loss of $5.9 million for the nine months ended September 30, 2025, which included $0.7 million of gain on derivative asset, $0.4 million benefit from stock-based compensation, $4.3 million of depreciation and amortization expense, $1.0 million of provision for doubtful accounts and $2.5 million of non-cash interest expense. We had a net loss of $41.8 million for the nine months ended September 30, 2024, which included $13.0 million loss on deconsolidation, $16.2 million of depreciation and amortization expense, $11.3 million of stock-based compensation expense, and $0.9 million of loss on derivative asset.

For the nine months ended September 30, 2025, net cash used in investing activities was $0.1 million and for the nine months ended September 30, 2024, net cash used in investing activities was $1.1 million. The net cash used in investing activities during the nine months ended September 30, 2024, was primarily attributable to capital expenditures partially offset by proceeds from sale of certain non-utilized equipment.

For the nine months ended September 30, 2025 and 2024, net cash used in financing activities was $0.3 million and $0.7 million, respectively. The cash used in financing activities during the nine months ended September 30, 2025 and September 30, 2024, was primarily attributable to lease payments and loan payments.

Material Cash Requirements

The following discussion summarizes our material cash requirements from contractual and other obligations. For more information on these matters, please see Note 9 – Commitments and Contingencies to the unaudited consolidated condensed financial statements included in Item 1. “Financial Statements” of this Quarterly Report.

The Company is included as a guarantor of the Marshall Loan. The loan matured in February 2024 and bears interest at a rate of 12% per annum (with an overdue rate provision of an additional 500bps), payable monthly with interest payments that commenced in December 2021. This loan facility is secured by direct assets of MIG No.1 and a general security agreement given by the Company. Principal repayments began during November 2022. There has been no principal and interest payments made since May 2023. The outstanding balance including interest is $11.9 million as of September 30, 2025, all of which is currently classified as a current liability.

The Company is included as a guarantor of the W Capital Loan. As of September 30, 2025, the balance was AUD $2.4 million (USD $1.6 million) representing outstanding interest, all of which is currently classified as a current liability. The W Capital Loan accrues interest daily at a rate of 12% per annum (with an overdue rate provision of an additional 800bps). The W Capital Loan expired in March 2023.

On February 23, 2022, Luna Squares entered into the Digital Colocation Agreement with Celsius Mining LLC. In connection with this agreement, Celsius Mining LLC loaned Luna Squares a principal amount of $20.0 million, for the purpose of funding the infrastructure required to meet the obligations of the Digital Colocation Agreement, for which Luna Squares issued the Celsius Promissory Note for repayment of such amount. The Celsius Promissory Note accrues interest daily at a rate of 12% per annum (with an overdue rate provision of an additional 200bps). Luna Squares is required to amortize the loan at a rate of 15% per quarter, principal repayments began at the end of September 2022. The Celsius Promissory Note had a maturity date of August 23, 2023. The outstanding balance including interest is $10.5 million as of September 30, 2025, all of which is currently classified as a current liability.

On July 8, 2022, the Company issued the Secured Convertible Promissory Notes in exchange for an aggregate of $3.6 million in cash. On September 29, 2022, the Company entered into a letter variation relating to some of the Secured Convertible Promissory Notes, with an aggregate principal amount of $3.1 million, which gave those holders the option to elect for pre-payment (including accrued interest to maturity) subject to certain conditions. All of the investors included in this letter variation elected for the pre-payment option and therefore there were $3.1 million principal repayments made during November 2022. The final convertible noteholder who was not a party to this variation opted to enter into an arrangement whereby it received pre-payment of interest but agreed that repayment of the principal was not required therefore the remaining $0.50 million had been classified as a current liability. The convertible note matured in July 2023. Interest has been accrued from July 2023 onwards and therefore the outstanding balance is $0.1 million as of September 30, 2025, all of which is classified as a current liability. During 2024 the principal amount outstanding of $0.50 million was repaid to the investor.

Financial condition

As of September 30, 2025, and December 31, 2024, we had current liabilities of $59.9 million and $61.9 million, respectively. As of September 30, 2025, and December 31, 2024, we had negative net assets of $9.4 million and $3.2 million, respectively. As of September 30, 2025, we had an accumulated deficit of $234.7 million compared to $228.8 million as of December 31, 2024. Our cash position of September 30, 2025, was $2.3 million in comparison to $6.1 million as of December 31, 2024.

For the nine- month period ended September 30, 2025 and 2024, the Company incurred a net loss attributed to Mawson common stockholders of $5.9 million and $41.6 million, respectively, a decrease in financial loss of $35.7 million.

Our primary requirements for liquidity and capital are working capital, capital expenditures, public company costs and general corporate needs. In particular, we have large power usage costs, and other significant costs include our lease, operational, general costs and employee costs. We expect these capital and liquidity needs to continue as we further develop and grow our business. Our principal sources of liquidity have been and are expected to be our cash and cash equivalents, external debt facilities available to us and further issuances of shares.

We require additional capital to respond to near-term debt repayment obligations, competitive pressure, market dynamics, new technologies, customer demands, business opportunities and challenges, potential acquisitions or unforeseen circumstances, and we will likely need to engage in equity or debt financings in the short term. If we are unable to obtain adequate financing on terms satisfactory to us when we require it, our ability to continue to fund, grow or support our business model and to respond to business challenges could be significantly limited, our business, financial condition and results of operations could be adversely affected, and this may result in bankruptcy or our ceasing operations.

The Company continues to take steps to preserve cash by optimizing costs and negotiating with its suppliers to improve or extend their terms of trade. The Company has been improving its revenue generation by improving the efficiency of its operations and adding multiple, institutional colocation services customers. The Company will continue to seek to optimize its cashflows through these and other initiatives.

Non-GAAP Financial Measures

The Company reports all financial information required in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The Company believes, however, that evaluating its ongoing operating results will be enhanced if it also discloses certain non-GAAP information. Adjusted EBITDA, which is a non-GAAP financial measure, is defined by the Company as net loss plus income tax, depreciation and amortization, further adjusted by stock-based compensation, gain/loss on foreign currency, other non-operating income and expenses, change in fair value of derivative assets, provision for doubtful accounts, net of recoveries and loss on deconsolidation.

Adjusted EBITDA should not be considered an alternative to net income, operating income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA may have material limitations as a performance measure because it excludes items that are necessary elements of our costs and operations. In addition, Adjusted EBITDA presented by other companies may not be comparable to our presentation, since each company may define these terms differently.

Critical accounting estimates

The preparation of the financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of income and expenses during the reporting periods. Actual results could differ from those estimates. There have been no material changes to our critical accounting policies and estimates as set forth in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in the 2024 Form 10-K.

Celsius Mining LLC loaned $20.00 million to Luna Squares through the Celsius Promissory Note, which had a maturity date of August 23, 2023, and a total outstanding balance as of September 30, 2025 of $10.5 million. Luna Squares has not repaid the loan as required on the maturity date and is claimed by Celsius to be in default. Celsius Mining LLC transferred to benefit of the Celsius Promissory Note to Celsius Network Ltd. Celsius Network Ltd has notified Luna Squares the default interest is payable. On November 23, 2023, Celsius filed an arbitration proceeding against Mawson, its subsidiaries Luna Squares and Cosmos, asserting various claims related to the alleged breach of the Celsius Colocation Agreement. The Company is pursuing counter claims against Celsius. See Note 9 – Commitments and Contingencies, Celsius Promissory Note and Digital Colocation Agreement to the unaudited consolidated condensed financial statements included in Item 1. “Financial Statements” of this Quarterly Report.

The Marshall Loan matured in February 2024 and the total outstanding balance is $11.9 million as of September 30, 2025. MIG No. 1, an Australian entity, has not made a payment on principal and interest since May 2023, despite such payments falling due, and is therefore alleged by Marshall to be in default under the Marshall Loan. MIG No. 1 is also in default of a number of other covenants under the terms of the loan. On March 19, 2024, Mig No.1 was placed into an Australian court appointed liquidation and wind-up process and was deconsolidated for the group from this date.

On March 19, 2024, Marshall appointed receivers and managers in Australia under the terms of their security relating to the Marshall Loan. The direct assets that secure this loan include 5,372 miners and 8 MDCs. These assets are held by MIG No.1 and therefore were included in the deconsolidation. The receiver’s statutory duty includes the obligation to sell the secured assets at market value or, if market value is not known, at the best price reasonably obtainable to maximize the prospects of there being sufficient proceeds available to satisfy the balance of the outstanding secured debt. It is therefore expected that this loan balance will be offset in the future by the amount received from the sale of these miners and MDCs. On June 25, 2024, Marshall inspected and inventoried the miners and MDCs located at the Company’s Midland facilities. The Company is currently not utilizing these miners or MDCs for its operations and has asked Marshall to take these assets out of the Company’s storage. Marshall has not responded to the Company’s request for these miners and MDCs to be removed from the Company’s storage. The Company also reserves and retains all rights against Marshall.

The Company is the guarantor of the W Capital Loan. As of September 30, 2025, AUD $2.3 million (USD $1.6 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 $0.1 million as of September 30, 2025. The Convertible Note matured in July 2023. W Capital Advisors did not convert the note, and the Company has repaid the principal balance of the Convertible Note.

For more information on the above matters, refer to Note 9 - Commitments and Contingencies to the unaudited consolidated condensed financial statements included in Item 1. “Financial Statements” of this Quarterly Report. The disclosure set forth in Note 9 is incorporated herein by reference.

Evaluation of disclosure controls and procedures

Our Board of Directors, the Committee(s) thereof and our management team, including our Interim Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a- 15(e)) and 15d- 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Quarterly Report. Our Board of Directors and management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on this evaluation, our Interim Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of September 30, 2025, including the material weaknesses in our internal control over financial reporting described below. Management’s assessment of the effectiveness of our disclosure controls and procedures is expressed at a level of reasonable assurance because management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives.

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

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

Segregation of Duties and Staff Turnover. In prior quarters, we identified an inadequate segregation of duties in place related to our financial reporting and other review and oversight procedures due to the lack of sufficient accounting and other personnel, giving rise to the risk of lack of ability to react in a timely manner to operations issues and to fully meet the requirements of the SEC, GAAP, and the Sarbanes-Oxley Act of 2002 (“SOX”).

During the nine-month period ending September 30, 2025, we have implemented several corrective measures, including the hiring of additional accounting and finance personnel, which has strengthened our overall control environment. These new resources have allowed us to establish sufficient segregation of duties across financial reporting, journal entry preparation and review, account reconciliations and oversight procedures. We believe our actions will help us remediate this material weakness in future periods. We will continue to monitor and test the operating effectiveness of these enhanced controls to confirm their sustainability.

Controls over the financial statement close and reporting process. In prior quarters, we identified material weaknesses in the design or implementation of controls in the financial statement close and reporting process, including controls related to complex or judgmental accounting transactions, manual journal entries, account reconciliations and financial statement policies and disclosures.

During the nine-month period ended September 30, 2025, we implemented a remediation plan that included hiring and training additional qualified accounting personnel, formalizing monthly and quarterly closing calendars with documented review procedures for reconciliations and manual journal entries, including independent approvals through system workflows, enhancing documentation of key accounting policies, estimates, and disclosure controls, and the implementation of ongoing monitoring and quality-control reviews. We believe our actions and testing will help us sufficiently remediate this material weakness in future periods. We will continue to evaluate and refine these measures and report on our progress.

Information and Technology Controls. In prior quarters, we identified material weaknesses in our information technology (“IT”) general controls, including deficiencies in access to programs and data, program changes, program development, and related IT governance.

During the nine-month period ending September 30, 2025, we have implemented and documented additional IT General Computer Controls (“ITGCs”) including enhanced access controls over programs and data, strengthened change-management and program development procedures, improved segregation of duties and monitoring activities, and formalized ongoing review and documentation processes.

These remediation measures were subjected to management’s review and testing for both design and operating effectiveness, in accordance with SOX requirements. We believe our actions and testing will help us sufficiently remediate this material weakness in future periods. We will continue to evaluate and refine these measures and report on our progress.

Data from third parties. In prior quarters, we identified that the Company had insufficient resources and personnel to fully execute its designed controls to ensure that data received from third parties is validated, complete and accurate. Such data is relied on by the Company in determining amounts pertaining to mining and colocation revenue, net energy benefits, and digital currency assets. During the nine-month ending September 30, 2025, we have implemented additional ITGCs in the areas of access, change management, monitoring, and data backup processes to strengthen validation of third-party data relied upon in financial reporting. We believe our actions and testing will help us sufficiently remediate this material weakness in future periods. We will continue to evaluate and refine these measures and report on our progress.

Fixed asset verification. In prior quarters, we identified a material weakness in fixed asset verification due to limited resources and systems constraints that restricted our ability to fully execute designed controls and track assets, creating a risk around the existence of fixed assets.

During the nine-month period ending September 30, 2025, we addressed these limitations by dedicating additional resources, implementing structured monthly cycle counts and annual wall-to-wall verifications of fixed assets, enhanced reconciliation procedures and strengthen systems application for calculating and recording depreciation expense and to track assets. We believe our actions and testing will sufficiently remediate this material weakness in future periods. We will continue to evaluate and refine these measures and report on our progress.

Management believes that the consolidated condensed financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in accordance with generally accepted accounting principles. We rely on the assistance of outside advisors with expertise in these matters in preparing the financial statements.

Remediation

Our Board of Directors and management take internal control over financial reporting and the integrity of our financial statements seriously. Our management continues to work to find ways to improve its controls related to our material weaknesses. With the oversight of the Board of Directors, the Board Committee(s) and management, the Company plans to continue to progress the remediation of the underlying causes of the identified material weaknesses, primarily through the performance of a risk assessment process; the development and implementation of formal, documented policies and procedures, improved processes and control activities (including an assessment of the segregation of duties); as well as the hiring of additional finance and other personnel for specific roles including financial reporting.

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

Remediation efforts for upcoming quarters will be focused on progressing the implementation of the remainder of controls, refining existing controls and validating the effectiveness of implemented controls using criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control. We cannot provide any assurance that our remediation efforts will be successful or that our internal control over financial reporting and other business processes will be effective as a result of these efforts. In addition, as we continue to evaluate and work to improve our internal control over financial reporting related to the identified material weaknesses, management may decide to take additional measures to address material weaknesses or modify or update the remediation plan described above.

Changes in internal control over financial reporting

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

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

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

The information in this Form 10-Q should be read in conjunction with the risk factors and information disclosed in the Company’s Quarterly Reports on Form 10-Q filed with the SEC on May 15, 2025 and August 14, 2025 and the 2024 Form 10-K. Except as set forth below, there have been no material changes to the primary risks related to our business and securities as described in the Company’s Quarterly Reports on Form 10-Q filed with the SEC on May 15, 2025 and August 14, 2025, and the 2024 Form 10-K under “Risk Factors” in Item 1A.

Risks Related to Our Business

We receive a significant portion of our digital colocation revenues from a limited number of customers. The loss of a major customer could adversely affect our business.

We have in the past and expect to continue to derive a significant portion of our digital colocation revenues from a relatively limited number of customers. The loss of any one or more of these customers, a significant change in their business model, or in their ability to make payments when due, could materially and adversely affect our sales, financial condition and liquidity. These factors are largely beyond our control and the resulting loss in revenues may be difficult or impossible to replace. Recently, we experienced the loss of one of our former most significant colocation customers due to its acquisition by one of our competitors. If we are unsuccessful in offsetting the decline in colocation revenue from this customer with revenue from new colocation customers or other existing customers, our revenues and results of operations could be materially adversely affected.

Risks Related to our Capital Stock

We are not currently in compliance with the continued listing requirements for Nasdaq. If we do not regain compliance and continue to meet the continued listing requirements, our Common Stock may be delisted and the price of our Common Stock, our ability to access the capital markets and our financial condition could be negatively impacted.

As previously disclosed, on September 12, 2025, the Company was notified that the Panel had determined to grant the Company’s request for continued listing on Nasdaq, subject to the Company timely satisfying certain conditions.

On January 24, 2025, the Company was notified by the Staff of Nasdaq that for the 33 consecutive business days preceding the date of the notice, the Company’s MVLS was less than the $35.0 million minimum required for continued listing under the MVLS Rule and the Company was granted a 180-calendar day period to regain compliance.

On February 6, 2025, the Company was notified that it had reported a closing bid price of less than $1.00 per share for the previous 30 consecutive business days in contravention of the Bid Price Rule and the Company was granted a 180-calendar day period to regain compliance.

As the Company was unable to regain compliance with the MVLS Rule or the Bid Price Rule within the grace periods provided by Nasdaq, the Company was notified that its securities were subject to delisting unless the Company timely requested a hearing before the Panel. The Company timely requested a hearing, at which it presented its compliance plan and requested an extension to demonstrate compliance with the MVLS Rule and the Bid Price Rule.

Following the hearing, on September 12, 2025, the Company received the Panel’s decision, which granted the Company’s request for continued listing on Nasdaq subject to the Company demonstrating compliance with (i) the MVLS Rule by no later than October 15, 2025, and (ii) the Bid Price Rule by no later than November 7, 2025. The Panel’s decision also served to notify the Company that it must provide Nasdaq with prompt notification of any significant events that occur during the Exception Period that may affect the Company’s compliance with Nasdaq’s listing requirements and that the Panel reserved the right to reconsider the terms of the exception based on any event, condition, or circumstance that exists or develops that would, in the opinion of the Panel, make the continued listing of the Company’s securities on Nasdaq inadvisable or unwarranted.

On October 23, 2025, the Company requested (i) an extension of the November 7, 2025 deadline to evidence compliance with the Bid Price Rule through December 4, 2025 and (ii) an extension of the October 15, 2025 deadline to evidence compliance with the MVLS Rule through December 19, 2025. On October 31, 2025, the Company received written notice that the Panel had granted the Company’s request.

There can be no assurance that the Company will be able to regain compliance with either the MVLS Rule or the Bid Price Rule or otherwise maintain compliance with all other applicable criteria for continued listing on Nasdaq. In such case, the Company’s securities would be subject to delisting.

If we are unable to regain compliance and maintain listing on Nasdaq and Nasdaq delists our securities from trading on its exchange, we and our stockholders could face significant negative consequences including: reducing the liquidity and market price of our common stock; reducing the number of investors willing to hold or acquire our common stock, which could negatively impact our ability to raise equity financing; decreasing the amount of news coverage of the Company; and limiting our ability to issue additional securities or obtain additional financing in the future. Additionally, the market price of our common stock may decline further, and shareholders may lose some or all of their investment.