Big Digital Energy, Inc.: Form 10-Q for the period ended Mar 31, 2026

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;

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• 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;
• 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.

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

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.

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.

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.

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.

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:

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.

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.

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.

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.

(unaudited)

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.

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.

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.

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.