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Subsequent Events
6 Months Ended
Jun. 30, 2025
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 11 – SUBSEQUENT EVENTS

 

Nasdaq

 

As previously disclosed, on January 24, 2025, the Company received written notice (the “MVLS Notice”) from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that for the 33 consecutive business days preceding the date of the MVLS Notice, the Company’s Market Value of Listed Securities (“MVLS”) was less than the $35.0 million minimum required for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(2) (the “MVLS Rule”). In accordance with Nasdaq Listing Rule 5810(c)(3)(C), the Staff provided the Company with 180 calendar days, or until July 23, 2025 (the “MVLS Compliance Date”), to regain compliance with the MVLS Rule.

 

On February 6, 2025, the Company also received written notice (the “Bid Price Notice”) from the Staff of Nasdaq notifying the Company that for the last 30 consecutive business days prior to the date of the Bid Price Notice, the closing bid price of Company’s Common Stock was less than the $1.00 per share minimum bid price required for continued listing on The Nasdaq Capital Market, as required by Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Staff has provided the Company with 180 calendar days, or until August 5, 2025 (the “Bid Price Compliance Date”), to regain compliance with the Bid Price Rule.

 

On July 24, 2025, the Company received written notice (the “Delisting Notice”) from the Staff indicating that based upon the Company’s continued non-compliance with the MVLS Rule on the MVLS Compliance Date, the Company’s securities were subject to delisting unless the Company timely requests a hearing before the Nasdaq Hearings Panel (the “Panel”).

 

On August 6, 2025, the Company received written notice from the Staff notifying the Company that it had not regained compliance with the Bid Price Rule by the Bid Price Compliance Date (the “Bid Price Deficiency”) and that the Panel will consider the Bid Price Deficiency in rendering a determination regarding the Company’s continued listing on The Nasdaq Capital Market.

 

The Company timely submitted a request for a hearing before the Panel, which request stayed any further suspension or delisting action by the Staff at least pending the hearing before the Panel. At its hearing before the Panel, the Company will request an extension to regain compliance with the MVLS Rule and the Bid Price Rule.

 

There can be no assurance that the Company will be able to regain compliance with the MVLS Rule or the Bid Price Rule or maintain compliance with all other Nasdaq listing requirements. If the Company’s request for an extension is denied or if it fails to regain compliance with Nasdaq’s continued listing standards during any period granted by the Panel, the Company’s Common Stock will be subject to delisting from Nasdaq.

Management Transition

 

On May 30, 2025, the Company provided Rahul Mewawalla with notice that termination of his employment as Chief Executive Officer and President of the Company for “Cause” (as defined in his employment agreement with the Company, dated May 22, 2023 (as amended, the “Mewawalla Agreement”)), based on conduct specified in the notice, will be considered at a future meeting of the Company’s Board of Directors, at which meeting the Board of Directors will determine whether his conduct constitutes Cause sufficient to terminate Mr. Mewawalla in accordance with the terms of his employment agreement. Mr. Mewawalla’s employment agreement with the Company provides for a cure period, which ended on June 14, 2025.

 

On June 2, 2025, the Board of Directors appointed Kaliste Saloom to serve as Interim Chief Executive Officer of the Company, effective as of June 3, 2025

 

On July 8, 2025, the Board of Directors provided Mr. Mewawalla with notice of termination of his employment as Chief Executive Officer and President of the Company effective immediately in accordance with the terms of the Mewawalla Agreement, and that such termination was for “Cause” (as defined in the Mewawalla Agreement).

 

In connection with Mr. Mewawalla’s termination, he has forfeited his outstanding equity award of 4,548,512 unvested RSUs.

 

Also on July 8, 2025, the Board of Directors requested that Mr. Mewawalla resign from his role as a member of the Board of Directors in accordance with the terms of the Director Appointment Letter between the Company and Mr. Mewawalla, dated January 31, 2023 (the “Director Appointment Letter”). In accordance with the terms of the Director Appointment Letter, Mr. Mewawalla was required to resign and therefore was deemed to have resigned as a member of the Board of Directors effective immediately.

 

Mewawalla Action

 

On July 8, 2025, the Company filed a complaint in the Court of Chancery of the State of Delaware against Mr. Mewawalla captioned Mawson Infrastructure Group Inc. v. Rahul Mewawalla, No. 2025-0789-JTL (the “Mewawalla Action”). The Mewawalla Action seeks to recover damages from Mr. Mewawalla arising out of his alleged breach of fiduciary duties as a director, as well as alleged fraud. Mr. Mewawalla has not filed an answer to the Mewawalla Action.

 

Enactment of the “One Big Beautiful Bill Act”

 

On July 4, 2025, President Donald Trump signed into law the reconciliation tax bill, commonly referred to as the “One Big Beautiful Bill Act” (the “OBBBA”), which constitutes the enactment date under U.S. GAAP. Key corporate tax provisions of the OBBBA include the restoration of 100% bonus depreciation, the introduction of new Section 174A permitting immediate expensing of domestic research and experimental (R&E) expenditures, modifications to Section 163(j) interest expense limitations, updates to the rules governing global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII), amendments to energy credit provisions, and the expansion of Section 162(m) aggregation requirements.

 

Under U.S. GAAP, the effects of changes in tax laws are recognized in the period in which the new law is enacted. Accordingly, the impact of the OBBBA will be reflected in the Company’s financial statements for the third quarter of 2025. The Company is currently assessing the impact of the OBBBA and an estimate of financial effects is not available at this time.