Mawson Infrastructure (MIGI) - 2022 Q4 - Annual Report

PART I Business Mawson Infrastructure Group operates as a digital asset infrastructure business focused on Bitcoin mining in the United States - Mawson's core business is Bitcoin mining, supplemented by hosting services and participation in energy markets to optimize profitability[22][24][25] Miner Fleet Status as of December 31, 2022 | Category | Count | | :--- | :--- | | Total miners online | 8,792 | | Total miners on order | 0 | | Total miners in storage | 15,010 | | Total miners | 23,802 | - The company operates a 100MW facility in Midland, PA, and is developing a 120MW facility in Sharon, PA, scheduled to come online through 2023/24[36] FY 2022 Bitcoin Mining Performance | Metric | Value | | :--- | :--- | | Bitcoin Mined | 1,342.59 | | Revenue from Mining | $43.11 million | - Mawson's strategy is to liquidate mined Bitcoin regularly rather than holding it, positioning itself as a mining operator[39] Risk Factors The company faces significant risks related to operations, cryptocurrency volatility, regulatory changes, and stock ownership - The company has a history of net losses and its ability to raise additional capital is crucial for continuing operations[72][73] - The business is highly sensitive to the volatile price of Bitcoin, which fell from over $65,000 to below $17,000, directly impacting revenue[79][80] - The company's major hosting customer, Celsius Mining LLC, filed for Chapter 11 bankruptcy, resulting in over $1.8 million in unpaid invoices[82] - Regulatory uncertainty poses a major threat, as future changes in laws could impose significant costs or restrictions on the business[142][145] Unresolved Staff Comments This section is not applicable to the company - The company reports no unresolved staff comments[168] Properties The company's principal U.S. mining facilities are located on long-term leased properties in Pennsylvania - The company's two U.S. mining facilities are located on long-term leased properties in Midland and Sharon, Pennsylvania[170] Legal Proceedings The company is not currently a party to any significant legal proceedings - The company reports no significant ongoing legal proceedings[172] Mine Safety Disclosures This section is not applicable to the company - The company reports that mine safety disclosures are not applicable[173] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on Nasdaq under 'MIGI', and it does not anticipate paying cash dividends - Common Stock is listed on The Nasdaq Stock Market LLC under the symbol "MIGI"[176] - The company has a policy of not paying cash dividends and intends to retain future earnings to fund operations[178] Management's Discussion and Analysis of Financial Condition and Results of Operations Revenues increased in 2022 due to higher Bitcoin production and new services, but the company's net loss widened Revenue Breakdown (FY 2022 vs FY 2021) | Revenue Source | 2022 (USD Million) | 2021 (USD Million) | Change (%) | | :--- | :--- | :--- | :--- | | Cryptocurrency mining | 43.11 | 38.45 | +12% | | Hosting Co-Location | 13.34 | 0.85 | +1469% | | Sale of equipment | 14.24 | 2.16 | +559% | | Net energy benefits | 13.70 | 0 | N/A | Key Operating Expenses (FY 2022 vs FY 2021) | Expense Category | 2022 (USD Million) | 2021 (USD Million) | | :--- | :--- | :--- | | Cost of revenues | 47.72 | 9.90 | | SG&A | 25.85 | 16.06 | | Depreciation & amortization | 63.20 | 14.11 | Net Loss (FY 2022 vs FY 2021) | Metric | 2022 (USD Million) | 2021 (USD Million) | | :--- | :--- | :--- | | Net Loss | (52.76) | (44.96) | - On September 8, 2022, the company sold its Georgia property to CleanSpark, resulting in a profit on sale of $8.28 million[197][225] - Cash and cash equivalents decreased from $5.47 million to $0.95 million in 2022, while short-term borrowings increased[235][237] Quantitative and Qualitative Disclosures About Market Risk The company has elected not to provide this disclosure as a smaller reporting company - Disclosure is not provided due to the company's status as a smaller reporting company[264] Financial Statements and Supplementary Data This section incorporates by reference the full consolidated financial statements located in Item 15 - All required financial statements and data are located in Item 15 of the report[265] Changes In and Disagreements With Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants - There were no disagreements with accountants reported[266] Controls and Procedures Management concluded that disclosure controls were not effective due to several material weaknesses in internal control - Management concluded that disclosure controls and procedures were not effective as of December 31, 2022, due to material weaknesses[267] - Identified material weaknesses include inadequate segregation of duties, poor financial closing controls, and deficient IT controls[274][275][276] - Remediation efforts are underway, including expanding the finance team and implementing new controls[280][281] Other Information There is no other information to report under this item - The company reports no other information[285] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This section is not applicable to the company - The company reports this disclosure is not applicable[286] PART III Directors, Executive Officers and Corporate Governance Required information is incorporated by reference from the company's 2023 annual stockholder meeting proxy statement - Information regarding directors, executive officers, and corporate governance will be provided in the forthcoming 2023 proxy statement[289] Executive Compensation Required information is incorporated by reference from the company's 2023 annual stockholder meeting proxy statement - Information regarding executive compensation will be provided in the forthcoming 2023 proxy statement[290] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Required information is incorporated by reference from the company's 2023 annual stockholder meeting proxy statement - Information regarding security ownership will be provided in the forthcoming 2023 proxy statement[291] Certain Relationships and Related Transactions, Director Independence Required information is incorporated by reference from the company's 2023 annual stockholder meeting proxy statement - Information regarding related transactions and director independence will be provided in the forthcoming 2023 proxy statement[292] Principal Accountant Fees and Services Required information is incorporated by reference from the company's 2023 annual stockholder meeting proxy statement - Information regarding accountant fees and services will be provided in the forthcoming 2023 proxy statement[293] PART IV Exhibits, Financial Statement Schedules This section indexes the consolidated financial statements and lists all exhibits filed with the Annual Report Financial Statements The company's 2022 net loss was $54.0 million on total assets of $133.3 million, with bitcoin revenue recognition noted as a critical audit matter Consolidated Balance Sheet Summary (as of Dec 31) | Metric (USD Million) | 2022 | 2021 | | :--- | :--- | :--- | | Total Current Assets | 20.3 | 11.4 | | Total Assets | 133.3 | 145.3 | | Total Current Liabilities | 35.5 | 20.1 | | Total Liabilities | 57.2 | 30.7 | | Total Stockholders' Equity | 77.1 | 114.7 | Consolidated Statement of Operations Summary (Year Ended Dec 31) | Metric (USD Million) | 2022 | 2021 | | :--- | :--- | :--- | | Total Revenues | 84.4 | 43.9 | | Gross Profit | 36.7 | 34.0 | | Loss from Operations | (44.1) | (42.7) | | Net Loss | (54.0) | (45.5) | | Net Loss per Share | $(4.16) | $(4.79) | Consolidated Statement of Cash Flows Summary (Year Ended Dec 31) | Metric (USD Million) | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | 14.3 | 23.0 | | Net cash used in investing activities | (32.5) | (128.2) | | Net cash provided by financing activities | 14.0 | 109.9 | - The independent auditor's report highlights the recognition and measurement of bitcoin mining revenue as a critical audit matter[308][310] Form 10-K Summary No summary is provided under this item - The company reports no Form 10-K summary[491]