What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-03-10 compared with 2021-03-16 · 242 added, 522 removed, 140 unchanged (85% of the section changed)

CONTROLS AND PROCEDURES

Management’s

Conclusions Regarding Effectiveness of Disclosure Controls and Procedures

conducted an evaluation of the effectiveness of our “disclosure controls and procedures”

(“Disclosure Controls”),

as defined by Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of December 31, 2020, the end of the period covered by this

Annual Report on Form 10-K.

The Disclosure Controls evaluation was done under the supervision and with the participation of management,

including our Chief Executive Officer and Chief Financial Officer, with the goal being that the information required to be disclosed

by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified

in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive

and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures.

even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, our disclosure controls and

procedures were effective as of December 31, 2020.

Management’s

conducted an evaluation of the effectiveness of our “disclosure controls and procedures” (“Disclosure Controls”),

as defined by Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of December 31, 2021, the end of the period covered by this Annual

Report on Form 10-K.

The Disclosure Controls evaluation was done under the supervision and with the participation of management, including

our Chief Executive Officer and Chief Financial Officer, with the goal being that the information required to be disclosed by us in reports

filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s

rules and forms and (ii) accumulated and communicated to our management, including our principal executive and principal financial officers,

or persons performing similar functions, as appropriate to allow timely decisions regarding disclosure.

There are inherent limitations

to the effectiveness of any system of disclosure controls and procedures.

Accordingly, even effective disclosure controls and procedures

can only provide reasonable assurance of achieving their control objectives.

Based upon this evaluation, our Chief Executive Officer

and Chief Financial Officer concluded that, our disclosure controls and procedures were ineffective as of December 31, 2021.

Report on Internal Control over Financial Reporting

management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules

13a-15(f) and 15d-15(f) under the Exchange Act.

Our management is also required to assess and report on the effectiveness of our

internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”).

Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability

of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted

in the United States.

Management assessed the effectiveness of our internal control over financial reporting as of December 31,

In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission

(“COSO”) in Internal Control - Integrated Framework in the 2013 COSO framework.

During our assessment of the effectiveness

of internal control over financial reporting as of December 31, 2020, management identified no material weaknesses with respect

to the financial reporting and close process, resulting from a lack of segregation of duties within accounting functions and evidence

of control review.

Accordingly, management concluded that our internal controls over financial reporting were effective as of

December 31, 2020.

material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there

is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or

detected on a timely basis.

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over

financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible

for oversight of the company’s financial reporting.

of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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 and procedures may deteriorate.

Annual Report on Form 10-K does not include an attestation report of the Company’s independent registered public accounting

firm regarding internal control over financial reporting since the Company is a smaller reporting company under the rules of the

Our management is responsible for establishing

and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

Our management is also required to assess and report on the effectiveness of our internal control over financial reporting in accordance

with Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”).

Our internal control over financial reporting is a process

designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements

for external purposes of accounting principles generally accepted in the United States.

A material weakness is a deficiency, or a combination

of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement

of our annual or interim financial statements will not be prevented or detected on a timely basis.

A significant deficiency is a deficiency,

or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important

enough to merit attention by those responsible for oversight of the company’s financial reporting.

Because of its inherent limitations, internal

control over financial reporting may not prevent or detect misstatements.

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 and procedures may deteriorate.

assessed the effectiveness of our internal control over financial reporting as of December 31, 2021.

In making this assessment, we used

the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control

- Integrated Framework in the 2013 COSO framework.

Based on this evaluation, management identified a weakness in internal control over

financial reporting related to Information Technology General Controls (ITGC).

Specifically, the

Company did not design and/or implement user access controls to ensure appropriate segregation of duties or program change management

controls for certain financially relevant systems impacting the Company’s processes around revenue recognition and digital assets

to ensure that IT program and data changes affecting the Company’s (i) financial IT applications, (ii) digital currency mining

equipment, and (iii) underlying accounting records, are identified, tested, authorized and implemented appropriately to validate that

data produced by its relevant IT system(s) were complete and accurate.

Automated process-level controls and manual controls that are

dependent upon the information derived from such financially relevant systems were also determined to be ineffective as a result of such

In addition, the Company has not effectively designed a manual key control to detect material misstatements in revenue.

material weakness described above did not result in a material misstatement to the Company’s previously issued consolidated financial

statements, nor in the consolidated financial statements included in this Annual Report on Form 10-K.

The effectiveness of our internal control over

financial reporting as of December 31, 2021, has been audited by our independent registered public accounting firm, Marcum, LLP, as stated

in their report on management’s internal control over financial reporting, which is also included in Item 8, “Financial Statements

and Supplementary Data,” of this 2021 Form 10-K.

As noted above, during

the initial audit over the internal controls over financial reporting (“ICFR”) a material

weakness was identified related to certain ITGCs over user access, segregation of duties and change management controls.

management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the

effectiveness of internal control over financial reporting, we understand the importance of developing a resolution plan aligned with

management and overseen by the Audit Committee of our Board of Directors.

Our plan includes the following:

Enhance our remediation team

by continuing to increase our headcount in 2022 in key financial reporting and information technology roles (i.e.

as we have increased

from three full time employees as of December 31, 2020 to ten full time employees as of December 31, 2021).

Continue to utilize an external third-party

internal audit and SOX 404 implementation firm to work to improve the Company’s

controls related to our material weaknesses, specifically relating to user access and change management surrounding the Company’s

IT systems and applications.

Continue to implement new processes and

controls and engage external resources when required in connection with remediating this material weakness, such

that these controls are designed, implemented, and operating effectively.

Continue to formalize our policies and processes over including

those over outside service providers with a specific focus on enhancing design and documentation related to (i) developing and communicating

additional policies and procedures to govern the areas of IT change management and user access processes and related control activities

and (ii) develop robust processes to validate data received from third-parties and relied upon to generate financial statements is

complete and accurate.

that the material weaknesses in our internal control over financial reporting will not be considered remediated until the remediate controls

operate for a sufficient period of time and can be tested and concluded by management to be designed and operating effectively.

our remediation efforts involve our outsource service providers, we cannot provide any assurance that these remediation efforts will

be successful or that our internal control over financial reporting will be effective as a result of these efforts.

to evaluate and work to improve our internal control over financial reporting related to the identified material weaknesses and management

may determine to take additional measures to address control deficiencies or determine to modify the remediation plan described above.

In addition, we report the progress and status of the above remediation efforts to the Audit Committee on a periodic basis.

Change in Internal Control Over Financial Reporting

Other than what is disclosed above there were no changes in the Company’s

internal control over financial reporting during the quarter ended December 31, 2021.

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

CONTROL OVER FINANCIAL REPORTING

To the Stockholders

and Board of Directors of

Digital Holdings, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Marathon

Digital Holdings, Inc.

’s (the “Company”) internal control over financial reporting as of December 31, 2021 ,

based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations

of the Treadway Commission.

In our opinion,

because of the effect of the material weakness described in the following paragraph on the achievement of the objectives of the control

criteria, the Company has not maintained effective internal control over financial reporting

as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee

of Sponsoring Organizations of the Treadway Commission.

weakness is a control deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a

reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented

or detected on a timely basis.

The following material weakness have been identified and

included in “Management’s Annual Report on Internal Control Over Financial Reporting”:

Company did not design and/or implement user access controls to ensure appropriate segregation of duties or program change management

controls for certain financially relevant systems impacting the Company’s processes

around revenue recognition and digital assets to ensure that IT program and data changes affecting the Company’s (i) financial

IT applications, (ii) digital currency mining equipment, and (iii) underlying accounting records, are identified, tested, authorized

and implemented appropriately to validate that data produced by its relevant IT system(s) were complete and accurate.

Automated process-level

controls and manual controls that are dependent upon the information derived from such financially relevant systems were also determined

to be ineffective as a result of such deficiency.

In addition, the Company has not effectively designed a manual key control to

detect material misstatements in revenue.

This material

weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the fiscal December 31, 2021

consolidated financial statements, and this report does not affect our report dated March

9, 2022 on those financial statements.

We have also audited, in accordance with the standards

of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheet of the Company

as of December 31, 2021 and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year

then ended and our report dated March 9, 2022 expressed an unqualified opinion on those financial statements.

The Company’s

management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness

of internal control over financial reporting, included in the accompanying “Management Annual Report on Internal Control Over Financial

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based

on our audit.

We are a public accounting firm

registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

our audit in accordance with the standards of the PCAOB.

Those standards require that we

plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained

in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control

over financial reporting, assessing the risk that a material weakness exists, and testing

and evaluating the design and operating effectiveness of internal control based on the assessed

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control

over Financial Reporting

internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial

reporting and the preparation of financial statements for external purposes in accordance

with generally accepted accounting principles.

A company’s internal control over financial

reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable

detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance

that transactions are recorded as necessary to permit preparation of financial statements

in accordance with generally accepted accounting principles, and that receipts and expenditures

of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable

assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition

of the company’s assets that could have a material effect on the financial statements.

of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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 degree of compliance with the policies or procedures may deteriorate.

/s/ Marcum LLP

Costa Mesa, California

March 9, 2022

OTHER INFORMATION

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

following table presents information with respect to our officers, directors and significant employees as of the date of this

First Elected

Executive Officer

Financial Officer

Operating Officer

of officers and directors

following is a brief account of the education and business experience during at least the past five years of our officers and

directors, indicating each person’s principal occupation during that period, and the name and principal business of the

organization in which such occupation and employment were carried out.

Okamoto - Chief Executive Officer

Okamoto, age 59, serves as the President at Viking Asset Management which he co-founded in 2002.

Okamoto is responsible

for research, due diligence, and structuring potential investment opportunities.

He has been instrumental in providing capital

to over 200 private and public companies.

He is also responsible for the firm’s trading operations.

Prior to Viking, Mr.

Okamoto co-founded TradePortal.com, Inc.

in 1999 and served as its President until 2001.

He was instrumental in developing the

proprietary Trade Matrix software platform offered by TradePortal Securities.

Okamoto’s negotiations were key in selling

a minority stake in TradePortal.com Inc.

to Thomson Financial.

Prior to that, he held Vice President positions with Shearson Lehman

Brothers, Prudential Securities, and Paine Webber.

Salzman - Chief Financial Officer

Simeon Salzman, age 40, has served as the Chief Financial Officer and Senior Vice President of the Las Vegas Monorail Company,

a private non-profit 501c(4) entity, since July 2018.

The Las Vegas Monorail Company operates a driverless monorail transit system

that carries approximately 4,600,000 passengers annually over a 3.9 mile elevated track.

Salzman was responsible for

overseeing all financial functions including audit, treasury and corporate finance.

In addition, he was responsible for internal

control compliance and management strategy.

to the Las Vegas Monorail Company and from May 2015 to July 2018, Mr.

Salzman served as the Chief Financial Officer for Wendoh

Media and Corner Bar Management for over three years.

Wendoh Media operated a weekly publication, a video editing entity, and

a digital advertising entity.

Corner Bar Management operates four different bars and restaurants in Downtown Las Vegas.

his previous experience as the Corporate Controller for various managed nightlife, lounges and restaurants at the most prestigious

Resort & Casinos on the Las Vegas Strip, Mr.

Salzman was able to parlay his skill set revitalizing the various food and beverage

establishments operated by Corner Bar Management in Downtown Las Vegas.

Through enhanced analytical reviews, budgeting, internal

control implementation and reducing overhead, Mr.

Salzman was able to save over $1.4 million in aggregate costs and generate EBITDA

of over 25% for eight consecutive quarters.

Salzman previously served as the Vice President of Programs and Secretary on the Board of Director’s for Financial Executives

International (FEI).

Financial Executives International connects senior-level financial executives by defining the profession,

exchanging ideas about best practices, educating members and others while working with the government to improve the general economy.

He also currently serves as the Treasurer on the Board of Directors of his local neighborhood HOA.

Salzman holds a Bachelor

of Science in Accounting and a Bachelor of Arts in Criminal Justice & Criminology from the University of Maryland, College

He is a Certified Public Accountant.

Crawford - Chief Operating Officer

Crawford, age 45, was a founding member of Kino Interactive, LLC, and of AudioEye, Inc.

Crawford’s experience as an

entrepreneur spans the entire life cycle of companies from start-up capital to compliance officer and director of reporting public

Prior to his involvement as Chief Operating Officer of the Company, Mr.

Crawford served as a director and officer of

Augme Technologies, Inc.

beginning March 2006, and assisted the company in maneuvering through the initial challenges of acquisitions

executed by the company through 2011 that established the company as a leading mobile marketing company in the United States.

Crawford is experienced in public company finance and compliance functions.

He has extensive experience in the area of intellectual

property creation, management and licensing.

Crawford also served on the board of directors Modavox and Augme Technologies,

and as founder and managing member of Kino Digital, Kino Communications, and Kino Interactive.

Thiel - Director

Thiel, age 59, has been the Chairman of SPROCKET, INC.

since June 2017, a Blockchain/Cryptocurrency technology and financial services

company whose mission is to reduce the risk and friction of cryptocurrency trading across marketplaces, regions and exchanges

by establishing a federation of exchanges that together create a single aggregated global trading market place with large scale

liquidity, rapid execution, minimal counter-party risk, and price transparency.

From January 2013 until November 2015, Mr.

served as a director of Local Corporation, which was a NASDAQ listed entity which was a leader in on-line local search and digital

media, mobile search monetization and programmatic retargeting markets.

He served as Chairman of the Board of LOCAL from January

2014 to November 2015 and as its Chief Executive Officer from May 2014 to November 2015.

Thiel has been the principal of Thiel

Advisors Inc.

Thiel Advisors is a boutique advisory firm providing PE and VC firms, as well as public and private

company boards of director, with deep technology industry operating expertise and strategic advisory services.

Benz - Director

Benz, 60, is currently the Chief Executive Officer of Viking Asset Management, LLC, an asset and investment management company

which he founded in 2001.

From March 2015 until January 2019, Mr.

Benz served as a director of Fluent, Inc, a leading performance

marketing company.

Since March 26, 2018, Mr.

Benz has served as a director of Red Violet, a data analytics company.

2016 to May 2018, Mr.

Benz served as a director of Lilis Energy Inc., an onshore oil and natural gas exploration and production

From January 2012 until its merger with Lilis Energy Inc.

in June 2016, Mr.

Benz served as a director of Brushy Resources,

(formerly known as Starboard Resources, Inc.), an onshore oil and natural gas exploration and production company, and became

its Chairman on November 24, 2015.

From October 2014 to January 2018, Mr.

Benz served as a director of Usell.com, a technology

based online market place, and Mr.

Benz served as a director and Chairman of the Board of Optex Systems, Inc., a manufacturer

of optical systems for the defense industry from November 2014 to August 2018.

Benz earned a Bachelor of Business Administration

from the University of Notre Dame.

The Board of Directors believes Peter Benz is suited to be a director due to his longstanding

experience with public companies.

Berg - Director

Berg, age 70, has been a practicing Certified Public Accountant for over 30 years and currently serves as an advisor to several

small public companies.

From September of 1977 until June of 1985, he was an audit manager for Coopers & Lybrand (now PWC)

in San Francisco and in January 2008, co-founded and served as the West Coast PIC of PMB Helin Donovan, a 100+ person CPA firm.

From September 1988 until December 2000, Mr.

Berg served as the Chief Financial Officer of a public real estate company and a

high tech manufacturer and a research and development company.

He has established several independent companies including EXIS

in January 1992, which sold and installed a proprietary software product which he helped develop for distributed general ledgers

Most recently, in January 2014, he formed the Registry of Accredited Investors that provides services to investors and

companies in Reg D offerings.

His industry experience ranges from finance and distribution to high tech, pharma, real estate and

construction.

Berg has worked extensively with public companies and has participated in many public offerings in national

From January 1989 until October 1996, he was the President of the Board of Directors of the Names Project and formed

a not-for-profit called the Permanent Display aimed at creating a San Francisco landmark for the AIDs Quilt.

In March 2005, Mr.

Berg also helped found Welcome, a 501C (3) that provides homeless outreach in the Upper Polk Street area of San Francisco.

Berg attended San Francisco State University, where he received his B.A.

in Accounting, and is a licensed CFF and CPA in the States

of California.

DeNuccio –

DeNuccio, age 61 is the Founder and General Partner of Wild West Capital LLC since 2012 where he focused on angel investments,

primarily in SAAS software start-ups.

brings to Marathon more than 25 years of experience as a chief executive, global sales leader, public and private board member,

and more than a dozen angel investments, managing and growing leading technology businesses.

He served in senior executive positions

with Verizon, Cisco Systems, Ericsson, Redback Networks, Wang Laboratories and Unisys Corporation.

of Business Conduct and Ethics

have adopted a Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer,

principal accounting officer or controller or persons performing similar functions and also to other employees.

Our Code of Business

Conduct and Ethics can be found on the Company’s website at www.marathonpg.com.

Relationships

are no family relationships between any of our directors, executive officers or directors.

in Certain Legal Proceedings

the past ten years, none of our officers, directors, promoters or control persons have been involved in any legal proceedings

as described in Item 401(f) of Regulation S-K.

Board of Directors is comprised of five directors, of which all five seats are currently occupied, and is divided among three

classes, Class I, Class II and Class III.

Class I directors will serve until the 2021 annual meeting of stockholders and until

their respective successors have been duly elected and qualified, or until such director’s earlier resignation, removal

Class III directors will serve until the 2023 annual meeting of stockholders and until their respective successors have

been duly elected and qualified, or until such director’s earlier resignation, removal or death.

Class II directors, elected

at the Company’s annual shareholder meeting held on September 28, 2016, will serve until the 2022 annual meeting of stockholders

and until their respective successors have been duly elected and qualified, or until such director’s earlier resignation,

removal or death.

All officers serve at the pleasure of the Board.

Fred Thiel, Mr.

Michael Berg, Mr.

Peter Benz and Mr.

Kevin DeNuccio are “independent”

directors based on the definition

of independence in the listing standards of the NASDAQ Stock Market LLC (“NASDAQ”).

of the Board of Directors

Board has established three standing committees:

an audit committee, a nominating and corporate governance committee and a compensation

committee, which are described below.

Members of these committees are elected annually at the regular board meeting held in conjunction

with the annual stockholders’

The charter of each committee is available on our website at www.marathonpg.com.

Audit Committee members are currently Mr.

Fred Thiel, Mr.

Michael Berg and Mr.

Peter Benz, with Mr.

Michael Berg as Chairman.

The Audit Committee has authority to review our financial records, deal with our independent auditors, recommend to the Board

policies with respect to financial reporting, and investigate all aspects of our business.

All of the members of the Audit Committee

currently satisfy the independence requirements and other established criteria of NASDAQ.

Audit Committee Charter is available on the Company’s website at http://www.marathonpg.com/.

The Audit Committee has sole

authority for the appointment, compensation and oversight of the work of our independent registered public accounting firm, and

responsibility for reviewing and discussing with management and our independent registered public accounting firm our audited

consolidated financial statements included in our Annual Report on Form 10-K, our interim financial statements and our earnings

press releases.

The Audit Committee also reviews the independence and quality control procedures of our independent registered

public accounting firm, reviews management’s assessment of the effectiveness of internal controls, discusses with management

the Company’s policies with respect to risk assessment and risk management and will review the adequacy of the Audit Committee

charter on an annual basis.

and Governance Committee

Nominating and Corporate Governance Committee members are currently Mr.

Kevin DeNuccio, Mr.

Michael Berg and Mr.

Peter Benz, with

DeNuccio as Chairman.

The Nominating and Corporate Governance Committee has the following responsibilities:

(a) setting qualification

standards for director nominees;

(b) identifying, considering and nominating candidates for membership on the Board;

recommending and evaluating corporate governance standards and a code of business conduct and ethics applicable to the Company;

(d) implementing and overseeing a process for evaluating the Board, Board committees (including the Committee) and overseeing

the Board’s evaluation of the Chairman and Chief Executive Officer of the Company;

(e) making recommendations regarding

the structure and composition of the Board and Board committees;

(f) advising the Board on corporate governance matters and any

related matters required by the federal securities laws;

and (g) assisting the Board in identifying individuals qualified to become

Board members;

recommending to the Board the director nominees for the next annual meeting of shareholders;

and recommending to

the Board director nominees to fill vacancies on the Board.

Nominating and Governance Committee Charter is available on the Company’s website at http://www.marathonpg.com/.

The Nominating

and Governance Committee determines the qualifications, qualities, skills, and other expertise required to be a director and to

develop, and recommend to the Board for its approval, criteria to be considered in selecting nominees for director (the “Director

Criteria”);

identifies and screens individuals qualified to become members of the Board, consistent with the Director Criteria.

The Nominating and Governance Committee considers any director candidates recommended by the Company’s shareholders pursuant

to the procedures described in the Company’s proxy statement, and any nominations of director candidates validly made by

shareholders in accordance with applicable laws, rules and regulations and the provisions of the Company’s charter documents.

The Nominating and Governance Committee makes recommendations to the Board regarding the selection and approval of the nominees

for director to be submitted to a shareholder vote at the Annual Meeting of shareholders, subject to approval by the Board.

Compensation Committee oversees our executive compensation and recommends various incentives for key employees to encourage and

reward increased corporate financial performance, productivity and innovation.

Its members are currently Mr.

Fred Thiel, Mr.

Kevin DeNuccio with Mr.

Fred Thiel as Chairman.

All of the members of the Compensation Committee currently satisfy

the independence requirements and other established criteria of NASDAQ.

Compensation Committee Charter is available on the Company’s website at http://www.marathonpg.com/.

The Compensation Committee

is responsible for:

(a) assisting our Board in fulfilling its fiduciary duties with respect to the oversight of the Company’s

compensation plans, policies and programs, including assessing our overall compensation structure, reviewing all executive compensation

programs, incentive compensation plans and equity-based plans, and determining executive compensation;

and (b) reviewing the adequacy

of the Compensation Committee charter on an annual basis.

The Compensation Committee, among other things, reviews and approves

the Company’s goals and objectives relevant to the compensation of the Chief Executive Officer, evaluate the Chief Executive

Officer’s performance with respect to such goals, and set the Chief Executive Officer’s compensation level based on

such evaluation.

The Compensation Committee also considers the Chief Executive Officer’s recommendations with respect to

other executive officers and evaluates the Company’s performance both in terms of current achievements and significant initiatives

with long-term implications.

It assesses the contributions of individual executives and recommend to the Board levels of salary

and incentive compensation payable to executive officers of the Company;

compares compensation levels with those of other leading

companies in similar or related industries;

reviews financial, human resources and succession planning within the Company;

to the Board the establishment and administration of incentive compensation plans and programs and employee benefit plans and

recommends to the Board the payment of additional year-end contributions by the Company under certain of its retirement

grants stock incentives to key employees of the Company and administer the Company’s stock incentive plans;

and recommends for Board approval compensation packages for new corporate officers and termination packages for corporate officers

as requested by management.

in Nominating Procedures

Leadership Structure and Role in Risk Oversight

we have not adopted a formal policy on whether the Chairman and Chief Executive Officer positions should be separate or combined,

we have traditionally determined that it is in the best interests of the Company and its shareholders to partially combine these

Due to the small size of the Company, we believe it is currently most effective to have the Chairman and Chief Executive

Officer positions partially combined.

Board is primarily responsible for overseeing our risk management processes.

The Board receives and reviews periodic reports from

management, auditors, legal counsel, and others, as considered appropriate regarding the Company’s assessment of risks.

The Board focuses on the most significant risks facing the Company and our general risk management strategy, and also ensures

that risks undertaken by us are consistent with the Board’s risk parameters.

While the Board oversees the Company, our management

is responsible for day-to-day risk management processes.

We believe this division of responsibilities is the most effective approach

for addressing the risks facing the Company and that our board leadership structure supports this approach.

with Section 16(a) of the Exchange Act

16(a) of Exchange Act requires our executive officers and directors and persons who beneficially own more than 10% of a registered

class of our equity securities to file with the Commission initial statements of beneficial ownership, statements of changes in

beneficial ownership and annual statement of changes in beneficial ownership with respect to their ownership of the Company’s

securities, on Form 3, 4 and 5 respectively.

Executive officers, directors and greater than 10% shareholders are required by the

Securities and Exchange Commission regulations to furnish our Company with copies of all Section 16(a) reports they file.

Company does not report on compliance with Section 16(a).

information required by this Item is incorporated herein by reference to the information provided under the headings “Executive

Officers of the Company,” “Election of Directors – Nominees,” and “Corporate Governance and the Board of

Directors and its Committees” in our definitive proxy statement to be filed with the SEC not later than 120 days after the fiscal

year ended December 31, 2021 (the “2022 Proxy Statement”).

EXECUTIVE COMPENSATION

following summary compensation table sets forth information concerning compensation for services rendered in all capacities during

2020 and 2019 awarded to, earned by or paid to our executive officers or most highly paid individuals.

The value attributable

to any option awards and stock awards reflects the grant date fair values of stock awards calculated in accordance with FASB Accounting

Standards Codification Topic 718.

As described further in “Note 5 —

Stockholders’

Equity - Common Stock Options”

in our Notes to Consolidated Financial Statements, the assumptions made in the valuation of these option awards and stock awards

is set forth therein.

Name and Principal Position

Option Awards

Non-Equity Plan Compensation

Nonqualified Deferred Earnings

All Other Compensation

Merrick Okamoto (1)

David Lieberman (2)

Former CFO & Director

James Crawford (3)

Simeon Salzman (6)

Okamoto entered into a new employment agreement on January 1, 2021 which replaced his prior employment agreement.

Lieberman retired on October 19, 2020 terminating his employment with the Company.

Crawford entered into a new employment agreement on January 1, 2021 which replaced his prior employment agreement.

Salzman entered into an employment agreement on October 19, 2020 as the Chief Financial Officer.

October 11, 2018, we entered into a 2-year Employment Agreement, subject to successive one year extensions, with Merrick Okamoto,

pursuant to which Mr.

Okamoto will serve as the Executive Chairman and Chief Executive Officer of the Company.

Pursuant to the

terms of the Agreement, Mr.

Okamoto shall receive a base salary at an annual base salary of $350,000 (subject to annual 3% cost

of living increase) and an annual bonus up to 100% of base salary as determined by the Compensation Committee or the Board.

further consideration for Mr.

Okamoto’s services, we agreed to issue Mr.

Okamoto 10-year stock options to purchase 1,250,000

shares of Common Stock, with a strike price of $2.32 per share, vesting 50 % on the date of grant and 25% on each 6 months anniversary

of the date of grant.

October 19, 2020, the Company entered into an Executive Employment Agreement with Mr.

Salzman (the “Agreement”).

Agreement has a term of two years and automatically renews for successive one year terms unless either party provides notice of

nonrenewal at least 90 days prior to the end of the initial term or any renewal term.

Salzman’s annual base salary is

$200,000 with bonuses at the discretion of the Company’s Board of Directors.

Salzman may also receive a grant of restricted

stock units, and any such grant shall vest in four equal amounts on the date of grant and the three successive three month anniversaries

In the event of a change in control, all RSUs vest immediately.

Salzman received a signing bonus of $25,000 in lieu

of a base pay increase during the second year of the Agreement.

Salzman is entitled to 30 paid vacation days per year and

is entitled to participate in all Company benefit plans per standard Company policy.

any termination of the Agreement, Mr.

Salzman is entitled to compensation and reimbursement of expenses through the date of termination

as well as payment for any accrued and unpaid vacation days.

If the termination is other than for cause, Mr.

Salzman’s outstanding

RSUs shall immediately vest.

Upon a termination not for cause by the Company or by Mr.

Salzman with good reason or within 180

days of a change in control, he shall receive the greater of his remaining base salary for the remaining term of the Agreement

and 12 months base salary plus benefits.

The Agreement contains customary and usual definitions of termination for cause and good

Annual Bonus, and any and all stock based compensation (such as options and equity awards) (collectively, the “Clawback

Benefits”) shall be subject to “Clawback Rights”

during the period that the Executive is employed

by the Company and upon the termination of the Executive’s employment and for a period of three (3) years thereafter, if

there is a restatement of any financial results from which any metrics were determined to be achieved which were the basis of

the granting and calculation of such Clawback Benefits to the Executive, the Executive agrees to repay any amounts which were

determined by reference to any Company financial results which were later restated (as defined below), to the extent the Clawback

Benefits amounts paid exceed the Clawback Benefits amounts that would have been paid, based on the restatement of the Company’s

financial information.

Directors’

following summary compensation table sets forth information concerning compensation for services rendered in all capacities during

2020 and 2019 awarded to, earned by or paid to our directors.

The value attributable to any warrant awards reflects the grant

date fair values of stock awards calculated in accordance with FASB Accounting Standards Codification Topic 718.

further in “Note 5 —

Stockholders’

Equity (Deficit) —

Common Stock Warrants”

in our Consolidated

Financial Statements, a discussion of the assumptions made in the valuation of these warrant awards.

Fees Earned or paid in cash

Option awards

plan compensation

Non-qualified

compensation earnings

David Lieberman

Michael Rudolph (1)

Rudolph resigned from all positions with the Company as a board member on December 13, 2020.

Grants of Plan Based Awards and Outstanding Equity Awards at Fiscal Year-End

August 1, 2012, our Board and stockholders adopted the 2012 Equity Incentive Plan, pursuant to which 96,154 shares of our common

stock are reserved for issuance as awards to employees, directors, consultants, advisors and other service providers, after giving

effect to the Reverse Split.

September 16, 2014, our Board adopted the 2014 Equity Incentive Plan (the “2014 Plan”), and only July 31, 2015, the

shareholders approved the 2014 Plan at the Company’s annual meeting.

The 2014 Plan authorizes the Company to grant stock

options, restricted stock, preferred stock, other stock-based awards, and performance awards to purchase up to 125,000 shares

of common stock.

Awards may be granted to the Company’s directors, officers, consultants, advisors and employees.

earlier terminated by the Board, the 2014 Plan will terminate, and no further awards may be granted, after September 16, 2024.

September 6, 2017, our Board adopted the 2017 Equity Incentive Plan, subsequently approved by the shareholders on September 29,

2017, pursuant to which up to 625,000 shares of our common stock, stock options, restricted stock, preferred stock, stock-based

awards and other awards are reserved for issuance as awards to employees, directors, consultants, advisors and other service providers.

January 1, 2018, our Board adopted the 2018 Equity Incentive Plan, subsequently approved by the shareholders on March 7, 2018,

pursuant to which up to 2,500,000 shares of our common stock, stock options, restricted stock, preferred stock, stock-based awards

and other awards are reserved for issuance as awards to employees, directors, consultants, advisors and other service providers.

On January 15, 2021, the number of shares available under the Plan was increased by 5,000,000.

of December 31, 2020, and within sixty (60) days thereafter, the following sets forth the option and stock awards to officers

of the Company:

Option Awards

of securities

(#) exercisable

(#) unexercisable

Merrick Okamoto

James Crawford

Simeon Salzman

Committee Interlocks and Insider Participation

of our executive officers serves as a member of the Board or Compensation Committee of any other entity that has one or more of

its executive officers serving as a member of our Board.

information required by this Item is incorporated herein by reference to the information provided under the headings “Executive

Officers of the Company,” “Election of Directors – Nominees,” and “Corporate Governance and the Board of

Directors and its Committees” in our definitive proxy statement to be filed with the SEC not later than 120 days after the fiscal

year ended December 31, 2021 (the “2022 Proxy Statement”).

SECURITY OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

following table sets forth certain information regarding beneficial ownership of our Common Stock as of March __, 2021:

each of our directors, (ii) by each of the named executive officers, (iii) by all of our executive officers and directors as a

group, and (iv) by each person or entity known by us to beneficially own more than five percent (5%) of any class of our outstanding

As of March -, 2021, there were 98,803,068 shares of our common stock outstanding.

Amount and Nature of Beneficial Ownership as of March __, 2021

Name of Beneficial Owner

Percentage of Common Stock (%)

Officers and Directors

Merrick Okamoto (1)

Simeon Salzman

James Crawford (Chief Operating Officer)

Michael Berg)

Kevin DeNuccio

All Directors and Executive Officers (seven persons)

Represents RSUs that have vested pursuant to Mr.

Okamoto’s compensation agreement.

information required by this Item is incorporated herein by reference to the information provided under the headings “Executive

Officers of the Company,” “Election of Directors – Nominees,” and “Corporate Governance and the Board of

Directors and its Committees” in our definitive proxy statement to be filed with the SEC not later than 120 days after the fiscal

year ended December 31, 2021 (the “2022 Proxy Statement”).

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

than disclosed herein, there were no transactions during the year ended December 31, 2020 and 2019 or any currently proposed transactions,

in which the Company was or is to be a participant and the amount involved exceeds $120,000, and in which any related person had

or will have a direct or indirect material interest.

information required by this Item is incorporated herein by reference to the information provided under the headings “Executive

Officers of the Company,” “Election of Directors – Nominees,” and “Corporate Governance and the Board of

Directors and its Committees” in our definitive proxy statement to be filed with the SEC not later than 120 days after the fiscal

year ended December 31, 2021 (the “2022 Proxy Statement”).

PRINCIPAL ACCOUNTING FEES AND SERVICES

the years ended December 31, 2020 and 2019, we engaged RBSM LLP, as our independent auditor.

For the years ended December 31,

2020 and 2019, we incurred fees for our current auditor, RBSM as set forth below:

Fiscal Year Ended

December 31, 2020

December 31, 2019

All other fees

fees consist of fees related to professional services rendered in connection with the annual audit of our annual financial statements,

review of our quarterly financial statements and review of the Company’s registration statements and other filings.

fees consist of fees billed for professional services related to the preparation of our U.S.

federal and state income tax returns

and tax advice.

other fees consist of fees for other miscellaneous items, including fees related to registrations statements.

services provided by the Company’s independent auditor were approved by the Company’s Audit Commitee.

policy is to pre-approve all audit and permissible non-audit services performed by the independent accountants.

These services

may include audit services, audit-related services, tax services and other services.

Under our Audit Committee’s policy,

pre-approval is generally provided for particular services or categories of services, including planned services, project-based

services and routine consultations.

In addition, the Audit Committee may also pre-approve particular services on a case-by-case

Our Audit Committee approved all services that our independent accountants provided to us in the past two fiscal years.

information required by this Item is incorporated herein by reference to the information provided under the headings “Executive

Officers of the Company,” “Election of Directors – Nominees,” and “Corporate Governance and the Board of

Directors and its Committees” in our definitive proxy statement to be filed with the SEC not later than 120 days after the fiscal

year ended December 31, 2021 (the “2022 Proxy Statement”).

EXHIBITS [to be updated]

10 unchanged sentences

Form of proposed Certificate of Designation of Preferences, Rights and Limitations of 0% Series E-1 Convertible Preferred Stock.

Form of Underwriter’s Warrant (51)

Form of Underwriter’s Warrant (59)

Form of Underwriter’s Warrant (51)

Indenture, dated as of November 18, 2021, between Marathon Digital Holdings, Inc.

Bank National Association, as trustee and Form of Certificate with Respect Thereto(66)

Form of At The Market Offering Agreement (70)

Form of Unit Purchase Agreement dated as of August 14, 2017.

43 unchanged sentences

Asset Purchase Agreement with SelectGreen, Ltd., dated August 2019 (50)

of Lockup Agreement (51)

of At the Market Agreement (52)

Form of Lockup Agreement (51)

Form of At the Market Agreement (52)

Sales and Purchase Agreement between the Company and Bitmain (53)

Employment Agreement between the Company and Simeon Salzman (54)

and Purchase Agreement between the Company and Bitmain (55)

and Purchase Agreement between the Company and Bitmain (56)

of At the Market Agreement (57)

and Purchase Agreement between the Company and Bitmain (58)

of Business Conduct and Ethics (43)

Executive Employment Agreement between the Company and Simeon Salzman (54)

Sales and Purchase Agreement between the Company and Bitmain (55)

Sales and Purchase Agreement between the Company and Bitmain (56)

Form of At the Market Agreement (57)

Sales and Purchase Agreement between the Company and Bitmain (58)

Employment Agreement with Fred Thiel (60)

Intentionally omitted

Binding Letter of Intent with Compute North, LLC (62)

Purchase Agreement dated July 30, 2021 (63)

Master Securities Loan Agreement between the Company and NYDIG Funding, LLC, dated August 27, 202 (64).

Compute North Agreements (65)

Line of Credit with Silvergate Bank (65)

Amended Hosting Agreement between the Company and Compute North dated as of November 30, 2021 (67)

Agreement, dated November 30, 2021 of Marathon Compute North 1 LLC(67)

Hosting Agreement between the Company and the LLC dated as of November 30, 2021 (67)

Bitmain Agreement (68)

Employment Agreement (69)

Code of Business Conduct and Ethics (43)

SingerLewak LLP letter to the Securities and Exchange Commission.

Letter from BDO USA, LLP dated November 30, 2017.

Auditor consents

Consent of Marcum, LLP

Consent of RBSM, LLP

Certification of Chief Executive Officer pursuant to Section302 of the Sarbanes-Oxley Act 2002*

59 unchanged sentences

filed as Exhibit 10.1 to Current report on Form 8-K filed on August 29, 2019 and incorporated herein by reference.

Previously filed as Exhibit 4.1 to S-1/A

filed on July 23, 2020

Previously filed as Exhibit 10.1 to S-3 filed

on August 6, 2020

Previously filed as Exhibit 10.1 to 8-K filed

on August 18, 2020

Previously filed as Exhibit 10.1 to 8-K filed

on October 24, 2020

Previously filed as Exhibit 10.1 to 8-K filed

October 29, 2020

Previously filed as Exhibit 10.1 to 8-K filed

on December 11, 2020

Previously filed as Exhibit 10.1 to S-3 filed

on December 11, 2020

Previously filed as Exhibit 10.1 to 8-K filed

on December 28, 2020

Previously filed as Exhibit 4.1 to 8-K filed

on January 15, 2021

filed as Exhibit 4.1 to S-1/A filed on July 23, 2020

filed as Exhibit 10.1 to S-3 filed on August 6, 2020

filed as Exhibit 10.1 to 8-K filed on August 18, 2020

filed as Exhibit 10.1 to 8-K filed on October 24, 2020

filed as Exhibit 10.1 to 8-K filed October 29, 2020

filed as Exhibit 10.1 to 8-K filed on December 11, 2020

filed as Exhibit 10.1 to S-3 filed on December 11, 2020

filed as Exhibit 10.1 to 8-K filed on December 28, 2020

filed as Exhibit 4.1 to 8-K filed on January 15, 2021

filed as Exhibit 99.1 to 8-K filed on April 30, 2021

Intentionally omitted

filed as Exhibit 10.1 to 8-K filed on May 27, 2021

filed as Exhibit 10.1 to 8-K dated August 4, 2021

filed as Exhibit 10.1 to 8-K dated September 2, 2021

filed as Exhibits 10.1 and 10.2 to 10-Q dated November 15, 2021

filed as Exhibits 4.1 and 4.2, respectively, to 8-K dated November 18, 2021 and 8-K dated

November 24, 2021

filed as Exhibits 10.1, 10.2 and 10.3, respectively, to 8-K dated December 6, 2021

filed as Exhibit 10.1 to 8-K dated December 28, 2021

filed as Exhibit 10.1 to Form 8-K dated January 3, 2022

filed as Exhibit 4.12 to Registration Statement filed on Form S-3ASR dated February 11, 2022

FORM 10-K SUMMARY

to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf

by the undersigned thereunto duly authorized.

to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by

the undersigned thereunto duly authorized.

March 9, 2022

DIGITAL HOLDINGS, INC.

Merrick Okamoto

Executive Officer and Executive Chairman

3 unchanged sentences

Financial and Accounting Officer)

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf

of the registrant and in the capacities and on the dates indicated.

Merrick Okamoto

Executive Officer and Executive Chairman (Principal Executive Officer)

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the

registrant and in the capacities and on the dates indicated.

Executive Officer and Chairman

March 9, 2022

(Principal Executive Officer)

Simeon Salzman

Financial Officer (Principal Financial and Accounting Officer)

Financial Officer

(Principal Financial and Accounting Officer)

Georges Antoun

Kevin DeNuccio

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures