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Acquisitions
 12 Months Ended
Dec. 31, 2021
Business Combinations [Abstract]  
ACQUISITIONS
NOTE 4:- ACQUISITIONS

 

  a. Mawson subscribed for 500,000 shares in Distributed Storage Solutions Pty Ltd (“DSS”) at AUD$1.00 per share on March 1, 2020. As at December 31, 2021, Mawson held 20.06% of the equity in DSS, an Australian private company operating a blockchain based decentralized storage business, based on the IPFS protocol. This investment has been equity accounted, as Mawson has assessed that it has significant influence over the operations of the investee.

 

b.On March 9, 2021, the Company acquired the shares of Mawson Infrastructure Group Pty Ltd (“ Mawson AU”) in a scrip for scrip exchange. This transaction has been accounted for as a reverse asset acquisition. Under the guidance in ASC 805, Cosmos Capital Limited was determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

 

●The Mawson AU shareholders have the largest voting interest in the post-combination company;

 

●Mawson AU management holds executive management roles for the post-combination company and is responsible for the day-to-day operations;

 

●Mawson AU was significantly larger than the Company by assets, revenue, and employees; and

 

●The purpose and intent of combining the groups was to create an operating public company through the Company, with management continuing to use Cosmos Capital’s assets to grow the business;

 

The application of the initial screen test in ASC 805 determined that the LO2A IPR&D in Mawson International was a single asset and represented substantially all of the fair value of the gross assets acquired. As such, the acquisition is treated as a reverse asset acquisition.

 

Acquired assets and liabilities of the legal parent entity are therefore measured and recognized at their relative fair values as of the date of the transaction.

 

After a reverse asset acquisition, despite that the legal acquirer (the legal parent entity) survives as the legal parent entity and continues to issue financial statements, the financial statements reflect the accounting from the perspective of the accounting acquirer (the legal subsidiary) in that the consolidated entity reflects the accounting acquirer as the accounting parent entity, and the financial statements represent a continuation of those of the accounting acquirer, except for the legal capital, which is retroactively adjusted to reflect the capital of the legal acquirer (legal parent entity) in accordance with ASC 805-40-45-1.

 

The fair value of the consideration given for the acquisition is as follows.

 

Number of shares issued   33,052,951 
Multiplied by the fair value per share of Mawson common stock (1)   0.79 
Total  $26,111,831 

  

(1)Based on the closing share price of Mawson common stock on the day immediately prior to the close of the transaction.

 

The fair values of the net tangible assets acquired at the date of acquisition are as follows:

 

Cash and cash equivalents   1,102,943 
Marketable securities   1,096,675 
Accounts Payable   (50,836)
   $2,148,782 

  

The difference between the consideration given and the fair values of the net tangible assets acquired of $23,963,050 arises as a result of the intangible asset in relation to in process research and development relating to LO2A. Due to the stage of development of this asset significant risks exist in the absence of successful clinical results and regulatory approval for the asset and that there are no reasonably likely expected alternative future uses associated with the asset and combined with the effect of the CVR instrument at the date of acquisition, management has assessed that the fair value of this asset at the acquisition date was $zero. The asset was therefore assessed as impaired and has been fully expensed as such in the consolidated statements of operations for the year ended December 31, 2021.

 

  c. On July 5, 2021, the Company consummated the acquisition of all the outstanding membership interests of Luna pursuant to the terms of a (i) Membership Interest Purchase Agreement with Kyle Hoffman and (ii) Membership Interest Purchase Agreement with TRS Ventures LLC. Under the terms of the Hoffman MIPA, the Company purchased Mr. Hoffman’s membership interests in Luna, which represented 25% of total membership interest in Luna, for a total purchase price of $200,000 paid over two tranches made up of:

 

(A) $100,000 which was paid in cash; and

 

(B) $100,000 which was paid in shares of the Company’s common stock.

 

Under the terms of the TRS MIPA, the Company purchased TRS’s membership interests the Luna, which represented 25% of the outstanding membership interests in Luna, for a purchase price $300,000 paid over three tranches made up of:

 

(A) $100,000 which was paid in cash; and

 

(B) $200,000 which was paid in shares of the Company’s common stock.