MGT Capital Investments, Inc.: Form 10-Q for the period ended Sep 30, 2024

This Quarterly Report on Form 10–Q (this “Report”) contains forward–looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward–looking statements. The statements contained herein that are not purely historical are forward–looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward–looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “estimates,” “should,” “expect,” “guidance,” “project,” “intend,” “plan,” “believe” and similar expressions or variations intended to identify forward–looking statements. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward–looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward–looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in our Annual Report on Form 10–K for the fiscal year ended December 31, 2023 as filed with the Securities and Exchange Commission (“SEC”) on April 16, 2024, in addition to other public reports we filed with the SEC. The forward–looking statements set forth herein speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward–looking statements to reflect events or circumstances after the date of such statements.

Executive summary

All dollar figures set forth in this Quarterly Report on Form 10-Q are in thousands, except per-share amounts.

Current Operations

MGT conducts cryptocurrency activities at a company-owned and managed Bitcoin mining facility in LaFayette, Georgia. Located adjacent to a utility substation, the several-acre property has access to about 20 megawatts (MW) of electrical power, half of which is presently utilized by the Company. Business activities are comprised of leasing space to third parties and self-mining operations.

As of September 30, 2024 and June 27, 2025, the Company owned approximately 35 Antminer S19 Pro miners providing about 3 Ph/s in hash power for self-mining.

The entire facility, including the land and improvements, five 2500 KVA 3-phase transformers, and three mining containers, are owned by MGT. Since April 2023, a single tenant is renting our property and electrical infrastructure to use for Bitcoin mining. The tenant has provided, at its cost, the approximately 2,500 miners and 12 containers needed for its activities. In addition, the tenant pays for its electricity consumption.

These measures improve utilization of our fixed asset base and better insulate us against the volatility of self- mining Bitcoin.

Critical accounting policies and estimates

Our discussion and analysis of financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The notes to the unaudited condensed financial statements contained in this Quarterly Report describe our significant accounting policies used in the preparation of the unaudited condensed financial statements. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. We continually evaluate our critical accounting policies and estimates.

We believe the critical accounting policies listed below reflect significant judgments, estimates and assumptions used in the preparation of our unaudited condensed financial statements.

Revenue recognition

Cryptocurrency mining

The Company recognizes revenue under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, (“ASC 606”). The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:

• Step 1: Identify the contract with the customer
• Step 2: Identify the performance obligations in the contract
• Step 3: Determine the transaction price
• Step 4: Allocate the transaction price to the performance obligations in the contract
• Step 5: Recognize revenue when the Company satisfies a performance obligation

In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).

If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct.

The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following:

• Variable consideration
• Constraining estimates of variable consideration
• The existence of a significant financing component in the contract
• Noncash consideration
• Consideration payable to a customer

Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate.

The Company has entered into digital asset mining pools by agreeing to terms and conditions, as may be amended from time to time, with the mining pool operators to provide computing power to the mining pool. The contracts are terminable at any time by either party and the Company’s enforceable right to compensation only begins when the Company provides computing power to the mining pool operator. In exchange for providing computing power to the mining pool, the Company is entitled to a fractional share of the fixed cryptocurrency award the mining pool operator receives (less digital asset transaction fees to the mining pool operator which are recorded as a component of cost of revenues), for successfully adding a block to the Blockchain. The terms of the agreement provide that neither party can dispute settlement terms after 35 days following settlement. The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm.

Providing computing power to solve complex cryptographic algorithms in support of the Bitcoin Blockchain (in a process known as “solving a block”) is an output of the Company’s ordinary activities. The provision of such computing power is the only performance obligation in the Company’s agreements with mining pool operators. The transaction consideration the Company receives, if any, is noncash consideration in the form of digital assets, which the Company measures at fair value on the date received, which is not materially different than the fair value at contract inception or the time the Company has earned the award from the pools. The consideration is therefore variable. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pool operator successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. There is no significant financing component in these transactions.

Fair value of the cryptocurrency award received is determined using the quoted price of the related cryptocurrency at the time of receipt. In 2023, the FASB issued ASU 2023-08, which addresses the accounting and disclosure requirements for certain crypto assets. The new guidance requires entities to subsequently measure certain crypto assets at fair value, with changes in fair value recorded in net income in each reporting period. In addition, entities are required to provide additional disclosures about the holdings of certain crypto assets. The ASU’s amendments are effective for fiscal years beginning after December 15, 2024, including interim periods within those years. There was no specific definitive guidance under GAAP or alternative accounting framework for the accounting for cryptocurrencies recognized as revenue or held, prior to the issuance of ASU 2023-08 and management has exercised significant judgment in determining the appropriate accounting treatment for the current year. The Company is currently evaluating the impact ASU 2023-08 will have on its future financial statements.

Hosting Revenues

We receive revenues from third parties renting capacity at our facility and from hosting miners owned by others. The Company recognized $15 and $164 from these sources during the three and nine months ended September 30, 2024 respectively. The Company recognized $75 and $240 from these sources during the three and nine months ended September 30, 2023 respectively. During the three and nine months ended September 30, 2024, one customer accounted for 100% and three customers accounted for 100%, respectively, of hosting revenue. During the three and nine months ended September 30, 2023, two customers accounted for 100% and 91% respectively, of hosting revenue.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight–line method on the various asset classes over their estimated useful lives, which range from one to ten years when placed in service. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. Deposits on property and equipment are initially classified as Other Assets and upon delivery, installation and full payment, the assets are classified as property and equipment on the balance sheet.

Impairment of long-lived assets

Long-lived assets are reviewed for impairment whenever facts or circumstances either internally or externally may suggest that the carrying value of an asset may not be recoverable, should there be an indication of impairment, we test for recoverability by comparing the estimated undiscounted future cash flows expected to result from the use of the asset to the carrying amount of the asset or asset group. Any excess of the carrying value of the asset or asset group over its estimated fair value is recognized as an impairment loss.

Derivative Instruments

Derivative financial instruments are recorded in the accompanying balance sheets at fair value in accordance with ASC 815. When the Company enters into a financial instrument such as a debt or equity agreement (the “host contract”), the Company assesses whether the economic characteristics of any embedded features are clearly and closely related to the primary economic characteristics of the remainder of the host contract. When it is determined that (i) an embedded feature possesses economic characteristics that are not clearly and closely related to the primary economic characteristics of the host contract, and (ii) a separate, stand-alone instrument with the same terms would meet the definition of a financial derivative instrument, then the embedded feature is bifurcated from the host contract and accounted for as a derivative instrument. The estimated fair value of the derivative feature is recorded in the accompanying balance sheets separately from the carrying value of the host contract. Subsequent changes in the estimated fair value of derivatives are recorded as a gain or loss in the Company’s statements of operations.

Recent accounting pronouncements

See Note 3 to our unaudited condensed financial statements appearing in Part I, Item 1 of this Report for Recent Accounting Pronouncements.

Results of operations

Three months ended September 30, 2024 and 2023

Revenues

Our revenues for the three months September 30, 2024 decreased by $30, or 33%, to $62, as compared to $92 for the three months ended September 30, 2023. Our revenue is partly derived from cryptocurrency mining, which totaled $47 for the three months ended September 30, 2024 and $17 during the three months ended September 30, 2023. The increase in revenues from our cryptocurrency mining activity for this period is due to a slight increase in mining revenues from the previous year.

We also receive revenues from third parties renting capacity at our facility and from hosting miners owned by others. The Company recognized $15 and $75 during the three months ended September 30, 2024 and 2023, respectively. The decrease in revenues for this period is due to slightly lower number of customers and third party miners from the previous year.

Because our revenue is dependent upon mining and related activities with respect to Bitcoin, and the price and market for Bitcoin and other cryptocurrencies remain volatile and uncertain due to numerous factors including the lack of widespread acceptance of Bitcoin, regulatory actions that have or may be implemented or considered with respect thereto, and general economic conditions including the potential for a recession in the near term, management cannot predict, estimate or advise with certainty the revenue trends that the Company may experience in its current or any future operations following the periods covered in this Report.

Operating Expenses

Operating expenses for the three months ended September 30, 2024 decreased by $29 or 8%, to $355, as compared to $384 for the three months ended September 30, 2023. The decrease in operating expenses was primarily due to a decrease in cost of revenue of $25 and a decrease in general and administrative expenses of $4.

The decrease in cost of revenue of $25 or 20% to $103 for the three months ended September 30, 2024, as compared to $128 for the three months ended September 30, 2023 was primarily due to decreased electricity costs and depreciation. The decrease in general and administrative expenses of $4 or 2%, to $252 for the three months ended September 30, 2024, as compared to $256 for the three months ended September 30, 2023, was primarily due to a decrease in legal and professional fees of $11, decrease in payroll fees of $21, offset by an increase in consulting fees of $25.

Other Income and Expense

For the three months ended September 30, 2024, non–operating income of $697 consisted primarily of gain on the change in fair value of warrant derivative liabilities of $516, gain on the change in fair value of derivative liability of $249, other income of $1 offset by accretion of debt discount of $37, and interest expense of $32. For the three months ended September 30, 2023, non–operating income of $993 consisted primarily of a gain in fair value of warrants derivative liability of $250, a gain in change in fair value of derivative liability of $1,080, a gain on settlement of derivative of $47, a gain on settlement of debt of $10, and interest income of $2 partially offset by accretion of debt of $373 and interest expense of $23.

Nine months ended September 30, 2024 and 2023

Revenues

Our revenues for the nine months September 30, 2024 decreased by $45, or 15%, to $252, as compared to $297 for the nine months ended September 30, 2023. Our revenue is partly derived from cryptocurrency mining, which totaled $88 for the nine months ended September 30, 2024 and $57 during the nine months ended September 30, 2023. The increase in revenues from our cryptocurrency mining activity for this period is due to a slight increase in mining revenues from the previous year.

We also receive revenues from third parties renting capacity at our facility and from hosting miners owned by others. The Company recognized $164 and $240 during the months ended September 30, 2024 and 2023, respectively. The decrease in revenues for this period is due to lower number of hosting customers from the previous year.

Because our revenue is dependent upon mining and related activities with respect to Bitcoin, and the price and market for Bitcoin and other cryptocurrencies remain volatile and uncertain due to numerous factors including the lack of widespread acceptance of Bitcoin, regulatory actions that have or may be implemented or considered with respect thereto, and general economic conditions including the potential for a recession in the near term, management cannot predict, estimate or advise with certainty the revenue trends that the Company may experience in its current or any future operations following the periods covered in this Report.

Operating Expenses

Operating expenses for the nine months ended September 30, 2024 decreased by $259 or 19%, to $1,107, as compared to $1,366 for the nine months ended September 30, 2023. The decrease in operating expenses was primarily due to a decrease in cost of revenue of $53 and a decrease in general and administrative expenses of $206.

The decrease in cost of revenue of $53 or 15% to $302 for the nine months ended September 30, 2024, as compared to $355 for the nine months ended September 30, 2023 was primarily due to decreased electricity and depreciation costs. The decrease in general and administrative expenses of $206 or 20%, to $805 for the nine months ended September 30, 2024, as compared to $1,011 for the nine months ended September 30, 2023, was primarily due to a decrease in legal and professional fees of $203, decrease in payroll fees of $42, offset by an increase in consulting services of $10, and a decrease in audit fees of $50.

Other Income and Expense

For the nine months ended September 30, 2024, non–operating income of $6,827, consisted primarily of gain on the change in fair value of warrant derivative liabilities of $4,042, gain on the change in fair value of derivative liability of $2,914, gain on settlement of debt of $147, other income of $6, offset by accretion of debt discount of $199, and interest expense of $83. For the nine months ended September 30, 2023, non–operating income of $390 consisted primarily of a gain in change in fair value of derivative liability of $1,324, a gain in fair value of warrants derivative liability of $166, a gain on exchange of property and equipment of $70, a gain on settlement of debt of $10 and interest income of $2 partially offset by accretion of debt of $715, a loss on settlement of derivative of $215, lease incentive loss of $184, and interest expense of $68.

Liquidity and capital resources

Sources of Liquidity

We have historically financed our business through the sale of debt and equity interests.

In September 2023, we raised $1,335 from the sale of a $1,500 Original Issue Discount Secured Convertible Promissory Note (the “Note”). The Note: (i) is convertible into 30% of the Company’s outstanding shares of the Company’s common stock on the conversion date of the Note on a post-conversion basis, (ii) matures December 31, 2024 and (iii) bears an interest rate of 6% per annum. In addition, the Company issued to the investor three series of warrants of which each of the warrants is exercisable into 60% of the Conversion Shares. In August 2023, the Company also issued to one investor 22,800,000 shares of common stock and 22,800,000 warrants to purchase common stock for consideration of $228. The Note provides for customary events of default, the occurrence of which would result in 110% the principal and other accrued amounts outstanding under the September 2023 Note to become immediately due and payable, with the interest rate increasing to 12%.

On March 16, 2023 the Company entered into a partnership agreement (the “Partnership Agreement”) and a property lease agreement (the “Lease Agreement, and together with the Partnership Agreement, collectively, the “Agreement”) with another cryptocurrency mining company (“Tenant”) pursuant to which the Company agreed to lease to Tenant portions of the Company’s six acre mining facility in Lafayette, GA in increments of up to 10 spaces that are 40 feet in length and eight feet in height each (“Spaces”), together with related utilities access including electricity of up to one megawatt (“MW”) per Space, for deploying mining equipment, in exchange for rental payments of $5 per Space per month (provided the Spaces are powered) and payment of the electricity costs and deposit requirements arising from the Spaces. In connection with the Lease Agreement, Tenant agreed to make an initial deposit of $229 for the initial electricity deployment for five MW. Further, pursuant to the Partnership Agreement, the Company provided Tenant with the option (the “Option”) to lend MGT up to $1 million. The Partnership Agreement has a term of 24 months.

We have incurred significant operating losses since inception and continue to generate losses from operations and as of September 30, 2024 have an accumulated deficit of $426,067. At September 30, 2024, our cash and cash equivalents were $0, and our working capital deficit was $2,944.

The Company will need to raise additional capital to pay the outstanding convertible note, fund operating losses, and maintain and grow its operations as intended over the next 12 months. There can be no assurance however that the Company will be able to raise additional capital when needed, or at terms deemed acceptable, if at all. The Company’s ability to raise additional capital will also be impacted by the volatility of Bitcoin, regulatory developments with respect to cryptocurrencies generally, inflation, high internet rates, the banking crisis, the war in Ukraine, and the possibility of recession, all of which are highly uncertain, cannot be predicted and could have an adverse effect on the Company’s business and financial condition and its ability to raise capital. The issuance of any additional shares of common stock, preferred stock or convertible securities could be substantially dilutive to our shareholders. Such factors raise substantial doubt about the Company’s ability to sustain operations for at least one year from the issuance of these unaudited condensed financial statements. The accompanying unaudited condensed financial statements do not include any adjustments related to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The price of Bitcoin is volatile, and fluctuations are expected. Declines in the price of Bitcoin have had a negative impact in our operating results and liquidity and could harm the price of our common stock. Movements may be influenced by various factors, including, but not limited to, government regulation, security breaches experienced by service providers, as well as political and economic uncertainties around the world. Since we record revenues partly based on the price of earned Bitcoin and we may retain such Bitcoin as an asset or as payment for future expenses, the relative value of such revenues may fluctuate, as will the value of any Bitcoin we retain.

The high and low exchange rate per Bitcoin for the quarter ending September 30, 2024 were approximately $73 and $39 respectively. The high and low exchange rate per Bitcoin for the year ending December 31, 2023 were approximately $44 and $17 respectively.

Impact of Inflation

Beginning in 2023, there has been a sharp rise in inflation in the U.S. and globally. Given our Bitcoin mining operations, the most significant impact has been on electricity and mining equipment costs. Further, Federal Reserve interest rate increases and bank failures could result in a recession, which may have an adverse impact on our operations, be it directly and/or through third parties on which our operations and revenue depends.

Cryptocurrency Market Developments

Cryptocurrencies and related activities are characterized by numerous risks and uncertainties, including the possibility for adverse developments such as regulatory actions, bans or restrictions, declines in the price of, demand for or public perception of cryptocurrencies, theft, fraud, hacking, manipulation or malicious coding, price volatility, the potential for one cryptocurrency to branch into two, variations among and the potential for adverse changes to blockchain algorithms, and other external forces beyond our control. The cryptocurrency industry is characterized by a high level of volatility, and the collapse in the prices of most popular cryptocurrencies such as Bitcoin and Ethereum has cast doubt on the future of cryptocurrency-focused businesses such as ours. This trend was further impacted by the recent controversy and failure surrounding FTX, a cryptocurrency exchange that collapsed after its Chief Executive Officer was accused of fraud and misappropriation of corporate funds. Since then, certain other cryptocurrency-focused companies have filed for bankruptcy, and three major U.S. banks with involvement in cryptocurrencies collapsed.

Cash Flows

Operating activities

Net cash used in operating activities was $472 for the nine months ended September 30, 2024 as compared to net cash used in operating activities of $304 for the nine months ended September 30, 2023. Cash used in operating activities for the nine months ended September 30, 2024, primarily consisted of a net income of $5,972 offset by non-cash net gain of $6,751 which includes depreciation of $153, gain on the change in fair value of derivative liability of $2,914, gain on the change in fair value of warrant derivative liability of $4,042, gain on settlement of debt of $147, amortization of note discount of $199 and cash provided by working capital of $307.

Net cash used in operating activities was $304 for the nine months ended September 30, 2023 as compared to net cash used in operating activities of $1,436 for the nine months ended September 30, 2022. Cash used in operating activities for the nine months ended September 30, 2023 primarily consisted of net loss of $679 adjusted by non-cash activities of $264 which includes gain on the change in fair value of derivative liability of $1,324, gain in fair value of warrant derivative liability of $166, gain on sale of property and equipment of $70 and gain on settlement of debt of $10, partially offset by accretion of debt discount of $715, loss on settlement of derivative of $215, depreciation of $192 and loss on lease incentive of $184, and cash provided by working capital of $639.

Investing activities

Net cash used in investing activities was $0 and $0 for the nine months ended September 30, 2024 and 2023 respectively.

Financing activities

During the nine months ended September 30, 2024, net cash provided by financing activities was $464 which consisted of proceeds from issuance of stock under lease agreement and proceeds from loans payable.

During the nine months ended September 30, 2023, net cash provided by financing activities was $40 which consisted of cash proceeds for the issuance of common shares under the lease agreement of $220 and proceeds from notes payable, related party of $20 offset by the repayment of a bank loan of $200.

Off–balance sheet arrangements

As of September 30, 2024, we had no obligations, assets or liabilities which would be considered off–balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off–balance sheet arrangements.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified under the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to our management, including our Interim Principal Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. As required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act, our Interim Principal Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2024. Based on this evaluation, our Interim Principal Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in paragraph (e) of Rules 13a-15 and 15d-15 under the Exchange Act) were not effective as of September 30, 2024 due to the following material weakness in our internal control over financial reporting: Our small number of employees does not allow for sufficient segregation of duties and independent review of duties performed.

Limitations on Internal Control over Financial Reporting

An internal control system over financial reporting has inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. 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. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

Management’s Quarterly Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process used to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles in the United States. Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted accounting principles in the United States, and that our receipts and expenditures are being made only in accordance with the authorization of our board of directors and management; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Under the supervision and with the participation of our management, including our Interim Principal Executive Officer and Chief Financial Officer, we performed a complete documentation of the Company’s significant processes and key controls, and conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of September 30, 2024.

Changes in Internal Control over Financial Reporting

During the quarter ended September 30, 2024, there were no changes to internal control over financial reporting.

There are no additional risk factors other than those discussed in our Annual Report on Form 10–K, as filed with the SEC on April 16, 2024.