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Subsidiary Deconsolidation

12 Months Ended

Dec. 31, 2023

Subsidary Deconsolidation [Abstract]

NOTE 3:- SUBSIDIARY DECONSOLIDATION

Voluntary administration and Deconsolidation

On October 30, 2023, the directors of Mawson AU appointed voluntary administrators to Mawson AU. Voluntary administration is a process under Australian corporate law where an external administrator (the “Administrators”) is appointed to take control of the relevant entity, investigate and report to creditors about the relevant entity’s business, property, affairs and financial circumstances, and report on the options available to creditors. Once the directors pass the resolution appointing the Administrators, the powers of all officers of Mawson AU including the directors, are suspended. Although powers are suspended, officers remain in office. While the Company is under administration, the officers of the Company cannot perform or exercise a function or power as an officer of the Company, except with the Administrators’ written approval.

The Administrators are given the following powers:

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control of the Company’s business, property and affairs;

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power to carry on the business and manage the property and affairs;

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power to terminate or dispose of all or part of the business and any of the property; and

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power to perform any function, and exercise any power, that the Company or any of its officers could perform or exercise if the Company were not under administration.

As a result of Mawson AU appointing Administrators to the Company, the Company ceded authority for managing the business to the Administrators, and the Company could not carry on Mawson AU’s activities in the ordinary course of business without the Administrators’ approval. For these reasons, it was concluded that the Company had lost control of Mawson AU, and no longer had significant influence over Mawson AU while the Administrators were in control of the Company. Therefore, Mawson AU loss of control was effective with the appointment of the Administrators on October 30, 2023, and was deconsolidated at this date, in accordance with ASC 810-10-15.

Deconsolidation of Mawson AU

In order to deconsolidate Mawson AU, the carrying values of the assets, liabilities and equity components previously recognized in accumulated other comprehensive income of Mawson AU were removed from the Company’s consolidated balance sheet as of October 30, 2023, in accordance with ASC 810, Consolidation. The net impact with removing the assets and liabilities resulted in a gain on deconsolidation being credited to the consolidated statement of operations of $3.80 million, which includes the effects of foreign exchange.

Investment in Mawson AU

The investment in Mawson AU held by the Company was accounted for under ASC 321, Investments — Equity Securities as it was concluded the Company did not have significant influence over Mawson AU from October 30, 2023. The fair value of Mawson AU was estimated to be $0, as at the time of the deconsolidation, Mawson AU had negative equity and its directors have no intention to carry out business in the future.

Treatment of intercompany balances and secured creditor

The Company had total receivables owed from Mawson AU of A$78.26 million and had total liabilities owed to Mawson AU amounting to A$55.95 million. The Company has utilized its right to offset to write off the receivables and payables with Mawson AU. The net impact of derecognizing these intragroup receivables and payables in Mawson AU would net off against the write off of the Company’s receivables and payables with Mawson AU, eliminating on consolidation and therefore the impact of this resulted in a foreign exchange gain of $5.68 million.

Summary of the impact on consolidated statement of operations

	October 30, 2023
Deconsolidation gain of Mawson AU	$	3,797,784
Foreign exchange gain on write off of intergroup balances		5,675,192
Total gain on deconsolidation	$	9,472,976