MARA Holdings, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA MARATHON DIGITAL HOLDINGS, INC. CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 Index to Consolidated Financial Statements REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS (PCAOB ID No. 688 ) 52 CONSOLIDATED BALANCE SHEETS (Restated) 54 CONSOLIDATED STATEMENTS OF OPERATIONS (Restated) 55 CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY 56 CONSOLIDATED STATEMENTS OF CASH FLOWS (Restated) 57 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 58 51 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS To the Board of Directors and Stockholders of Marathon Digital Holdings, Inc. & Subsidiaries Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Marathon Digital Holdings, Inc. & Subsidiaries (the Company) as of December 31, 2020, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the period in the year ended December 31, 2020, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the consolidated results of its operations and its cash flows for the period in the year ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (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. We conducted 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 the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters: Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements, and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ RBSM LLP We have served as the Company’s auditor since 2017. Las Vegas, NV March 16, 2021 52 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of Marathon Digital Holdings, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Marathon Digital Holdings, Inc. (the “Company”) as of December 31, 2022, and 2021, the related consolidated statements of operations, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2022, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated March [·], 2023 , expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting because of the existence of material weaknesses. Restatement of Previously Issued Financial Statements As discussed in Note 2 to the financial statements, the Company has restated its financial statements as of December 31, 2021 and for the year then ended to correct certain misstatements. Change in Accounting Principle As discussed in Note 3 to the financial statements, the Company retrospectively changed its accounting for crypto lending arrangements. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. 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. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Revenue Recognition As disclosed in Note 2 to the financial statements, the Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers . The Company provides computing power in crypto asset transaction verification services to the blockchain network. The transaction consideration received by the Company, if any, is a non-cash consideration, which the Company measures at fair value on the date received. The principal consideration for our determination that performing procedures related to revenue recognition is a critical audit matter is due to the complexities involved in auditing completeness and occurrence of the revenue recognized by the Company particularly in light of material weakness identified in the design and effectiveness of certain internal controls over the IT environment for certain financially relevant systems. Addressing this matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included, among others, (i) performing site visitations of the Company’s facility where the mining hardware is located, which included an observation of the physical and environmental controls and mining equipment inventory, (ii) independently confirming certain financial and performance data directly with the blockchain network, (iii) performing certain substantive analytical procedures using hashing power data and electricity consumption data to determine the completeness and occurrence of digital assets rewarded to the Company as consideration for services rendered, (iv) independently confirming the completeness and accuracy of digital assets rewarded to the Company as consideration of providing computing power to third-party mining pools, and (v) confirming the digital asset balances directly with the custodian of the Company’s wallets. Impairment of Property and Equipment and Advances to Vendors As disclosed in Note 4 to the financial statements, the Company impaired certain property and equipment and advances to vendors and recognized a charge of approximately $332 million during the year ended December 31, 2022. The principal consideration for our determination that auditing impairment of property and equipment and advances to vendors is a critical audit matter is due to the degree of complexity and judgment used by management in developing the fair value measurement, which led to a high degree of audit judgment and subjectivity and significant effort in performing procedures relating to fair value measurement Addressing this matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included, among others, (i) evaluating the appropriateness of the method used by management to determine the fair value of the asset group, (ii) evaluating the reasonableness of the assumptions used to estimate the fair value measurement of each asset within the asset group; and (iii) testing the completeness, accuracy and relevance of underlying data used in the impairment assessment. /s/ Marcum LLP Marcum LLP We have served as the Company’s auditor since 2021 . Costa Mesa, CA March 16, 2023 53 MARATHON DIGITAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2021 (in thousands, except share and per share data) December 31, 2022 (Restated) ASSETS Current assets: Cash and cash equivalents $ 103,705 $ 268,556 Restricted cash 8,800 — Digital assets 121,842 95,225 Digital assets held in Fund — 223,916 Other receivable 18 26,933 Deposits 2,350 34,458 Prepaid expenses and other current assets 40,833 35,148 Total current assets 277,548 684,236 Other assets: Property and equipment (net of accumulated depreciation of $ 16,622 and $ 21,313 , respectively) 273,026 276,243 Advances to vendors 488,299 466,255 Investments 37,000 3,000 Long term deposits 40,903 — Long term prepaids 8,317 13,666 Right-of-use assets 1,276 — Digital assets, restricted 68,875 — Intangible assets (net of accumulated amortization of $ 280 at December 31, 2021) — 931 Total other assets 917,696 760,095 TOTAL ASSETS $ 1,195,244 $ 1,444,331 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 1,311 $ 7,773 Accrued expenses 22,294 2,610 Legal reserve payable 1,171 — Operating lease liabilities 326 — Current portion of accrued interest 1,011 867 Total current liabilities 26,113 11,250 Long-term liabilities: Notes payable 732,289 728,406 Term loan 49,882 — Operating lease liabilities 1,017 — Deferred tax liabilities — 22,575 Total long-term liabilities 783,188 750,981 Commitments and Contingencies - - Stockholders’ Equity: Preferred stock, 0.0001 par value, 50,000,000 shares authorized, no shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively — — Common stock, 0.0001 par value, 200,000,000 shares authorized; 145,565,916 and 102,733,273 issued and outstanding at December 31, 2022 and December 31, 2021, respectively 15 10 Additional paid-in capital 1,226,267 835,694 Accumulated other comprehensive loss — — Accumulated deficit ( 840,339 ) ( 153,604 ) Total stockholders’ equity 385,943 682,100 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,195,244 $ 1,444,331 The accompanying notes are an integral part to these audited Consolidated Financial Statements. 54 MARATHON DIGITAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME (LOSS) (in thousands, except share and per share data) 2022 2021 (Restated) 2020 Year ended December 31, (in thousands, except share and per share data) 2022 2021 (Restated) 2020 Total revenues $ 117,753 $ 159,163 $ 4,357 Costs and expenses Cost of revenues Cost of revenues - energy, hosting and other ( 72,717 ) ( 27,491 ) ( 3,851 ) Cost of revenues - depreciation and amortization ( 78,709 ) ( 14,904 ) ( 3,064 ) Total cost of revenues ( 151,426 ) ( 42,395 ) ( 6,915 ) Operating expenses General and administrative expenses ( 56,739 ) ( 174,355 ) ( 6,404 ) Legal reserves ( 26,131 ) — — Impairment of deposits due to vendor bankruptcy filing ( 24,661 ) — — Impairment of digital assets ( 173,215 ) ( 30,329 ) — Impairment of patents ( 919 ) — — Impairment of mining equipment and advances to vendors ( 332,933 ) — ( 871 ) Realized and unrealized gains (losses) on digital assets loan receivable and digital assets ( 14,460 ) 557 15 Gain on sale of equipment, net of disposals 83,880 — — Realized and unrealized gains (losses) on digital assets held within Investment Fund ( 85,017 ) 74,696 — Total operating expenses ( 630,195 ) ( 129,431 ) ( 7,260 ) Operating income (loss) ( 663,868 ) ( 12,663 ) ( 9,818 ) Other non-operating income (loss) 1,283 ( 287 ) ( 607 ) Impairment of loan and investment due to vendor bankruptcy filing ( 31,013 ) — — Interest expense ( 14,980 ) ( 1,570 ) ( 21 ) Income (loss) before income taxes ( 708,578 ) ( 14,520 ) ( 10,446 ) Income tax benefit (expense) 21,838 ( 22,576 ) ( 2 ) Net income (loss) $ ( 686,740 ) $ ( 37,096 ) $ ( 10,448 ) Net loss per share, basic and diluted: $ ( 6.05 ) $ ( 0.37 ) $ ( 0.13 ) Weighted average shares outstanding, basic and diluted: 113,467,837 99,337,587 81,408,340 Other comprehensive income (loss) Foreign currency translation adjustments — ( 451 ) — Comprehensive income (loss) $ ( 686,740 ) $ ( 37,547 ) $ ( 10,448 ) The accompanying notes are an integral part to these audited Consolidated Financial Statements. 55 MARATHON DIGITAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except share and per share data) Number Amount Number Amount Capital Deficit Loss Equity Preferred Stock Common Stock Additional Paid-in Accumulated Accumulated Other Comprehensive Total Stockholders’ (in thousands, except share and per share data) Number Amount Number Amount Capital Deficit Loss Equity Balance as of December 31, 2019 — $ — 8,458,781 $ 1 $ 109,705 $ ( 105,608 ) $ ( 451 ) $ 3,647 Stock-based compensation — — 2,745,639 — 1,178 — — 1,178 Issuance of common stock, net of offering costs/At-the-market offering — — 54,301,698 5 297,654 — — 297,659 Common stock issued for purchase of mining servers — — 350,250 — 172 — — 172 Common stock issued for note conversion — — 2,023,739 — 1,579 — — 1,579 Common stock issued for long term service contract — — 6,000,000 1 11,219 — — 11,220 Issue common stock and warrant for cash — — 7,666,666 1 6,271 — — 6,272 Warrant exercised for cash — — 413,233 — 465 — — 465 Options exercised for cash — — 14,613 — — — — — Net loss — — — — — ( 10,448 ) — ( 10,448 ) Balance as of December 31, 2020 — $ — 81,974,619 $ 8 $ 428,243 $ ( 116,056 ) $ ( 451 ) $ 311,744 Stock-based compensation, net of tax withholding — — 7,671,317 1 156,072 — — 156,073 Issuance of common stock, net of offering costs/At-the-market offering — — 12,500,000 1 237,428 — — 237,429 Options exercised on cashless basis — — 23,500 — — — — — Warrant exercised for cash — — 221,946 — 1,445 — — 1,445 Common stock issued for cashless exercise of warrants — — 29,797 — 1,371 — — 1,371 Common stock issued for service and license agreements — — 312,094 — 11,135 — — 11,135 Net loss (Restated) — — — — — ( 37,547 ) 451 ( 37,096 ) Balance as of December 31, 2021 (Restated) — $ — 102,733,273 $ 10 $ 835,694 $ ( 153,603 ) $ — $ 682,101 Balance — $ — 102,733,273 $ 10 $ 835,694 $ ( 153,603 ) $ — $ 682,101 Stock-based compensation, net of tax withholding — — 490,910 — 24,514 — — 24,514 Issuance of common stock, net of offering costs/At-the-market offering — — 42,141,733 5 361,482 — — 361,487 Common stock issued for service and license agreements — — 200,000 — 4,577 — — 4,577 Net loss — — — — — ( 686,740 ) ( 686,740 ) Balance as of December 31, 2022 — $ — 145,565,916 $ 15 $ 1,226,267 $ ( 840,343 ) $ — $ 385,939 Balance — $ — 145,565,916 $ 15 $ 1,226,267 $ ( 840,343 ) $ — $ 385,939 The accompanying notes are an integral part to these audited Consolidated Financial Statements. 56 MARATHON DIGITAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS 2022 2021 (Restated) 2020 For the Years Ended December 31, (in thousands) 2022 2021 (Restated) 2020 CASH FLOWS FROM OPERATING ACTIVITIES Net loss ( 686,740 ) ( 37,098 ) ( 10,448 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 78,709 14,904 3,064 Amortization of prepaid service contract 22,781 — — Gain on sale of equipment, net of disposals ( 83,880 ) — — Deferred tax expense (benefit) ( 22,575 ) 22,575 — Realized and unrealized gains (losses) on digital assets held within Investment Fund 85,017 ( 74,696 ) — Realized and unrealized gains (losses) on digital assets loan receivable and digital assets 14,460 ( 557 ) ( 15 ) Impairment of digital assets 173,215 30,329 — Impairment of mining equipment and advances to vendors 332,933 — 871 Stock-based compensation 24,595 160,786 1,178 Amortization of debt issuance costs 3,945 — — Impairment of patents 919 — — Impairment of assets related to vendor bankruptcy filing 55,674 — — Other adjustments from operations, net 1,032 1,068 1,313 Changes in operating assets and liabilities: Digital assets ( 117,749 ) ( 150,513 ) ( 4,357 ) Deposits ( 24,469 ) — — Prepaid expenses and other assets ( 48,886 ) 987 644 Accounts payable and accrued expenses 13,223 12,382 ( 23 ) Legal reserve payable 1,171 — — Accrued interest 144 867 — Net cash used in operating activities ( 176,481 ) ( 18,966 ) ( 7,773 ) CASH FLOWS FROM INVESTING ACTIVITIES Advances to vendors ( 483,840 ) ( 435,065 ) ( 65,648 ) Loan receivable — ( 30,000 ) — Purchase of property and equipment ( 41,108 ) ( 273,851 ) ( 17,742 ) Sales of property and equipment 178,371 — — Sale of digital currencies — — 2,102 Purchase of digital assets in Investment Fund — ( 150,000 ) — Purchase of equity investments ( 44,000 ) ( 3,000 ) — Deconsolidation of Investment Fund ( 500 ) — — Sale of digital assets in Investment Fund 849 780 — Net cash used in investing activities ( 390,228 ) ( 891,136 ) ( 81,288 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of common stock, net of issuance costs 361,486 312,196 222,892 Proceeds from term loan borrowings, net of issuance costs 49,250 — — Proceeds from issuance of convertible debt, net of issuance costs — 728,406 — Proceeds received on issuance of note payable — — 63 Borrowings from revolving credit agreement 120,000 77,500 — Repayments of revolving credit agreement ( 120,000 ) ( 77,500 ) — Value of shares withheld for taxes ( 81 ) ( 4,714 ) — Proceeds received on exercise of options and warrants — 1,445 6,736 Net cash provided by financing activities 410,655 1,037,333 229,691 Net (decrease) increase in cash, cash equivalents and restricted cash ( 156,054 ) 127,231 140,630 Cash, cash equivalents and restricted cash — beginning of period 268,556 141,323 693 Cash, cash equivalents and restricted cash — end of period 112,502 268,554 141,323 Supplemental Information Cash paid during the year for: Interest 11,432 — — Supplemental schedule of non-cash investing and financing activities: Receivable due to share issuance — — 74,767 Digital assets transferred from Investment Fund 137,844 — — Common stock issued for purchase of mining servers — — 172 Reduction of share commitment for purchase of mining servers — — 409 Common stock issued for note conversion — — 1,579 Warrants exercised into common stock — 1,371 — Operating lease assets obtained in exchange for new operating lease liabilities 1,539 — — Collection of loan denominated in Bitcoin 27,784 — — Issuance of loan denominated in Bitcoin ( 27,784 ) Reclassifications from advances to vendor to property and equipment upon receipt of equipment 337,485 — — Common stock issued for service and license agreements 4,577 11,135 11,220 The accompanying notes are an integral part to these audited Consolidated Financial Statements. 57 MARATHON DIGITAL HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS Organization The Company commenced mining bitcoin in 2018 and is solely focused on the mining of bitcoin and ancillary opportunities within the Bitcoin ecosystem which is consistently evolving. The term “Bitcoin” with a capital “B” is used to denote the Bitcoin protocol which implements a highly available, public, permanent, and decentralized ledger. The term “bitcoin” with a lower case “b” is used to denote the token, bitcoin. NOTE 2 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS Restatement Background As previously disclosed in the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on February 28, 2023, certain of the Company’s previously filed interim unaudited and annual audited Consolidated Financial Statements should no longer be relied upon and a restatement is required for these previously issued Consolidated Financial Statements. The Consolidated Financial Statements for the year ended December 31, 2022 include restated Consolidated Financial Statements for the year ended December 31, 2021. In addition, we have restated our Unaudited Quarterly Financial Data for the interim periods within the years 2021 and 2022 as presented in NOTE 16 – QUARTERLY FINANCIAL DATA (UNAUDITED) . Restatement of financial information and prior periods presented was necessary to correct for the following: (i) Revenue Recognition – Principal versus Agent, (ii) Impairment of Digital Assets, (iii) NYDIG Digital Assets Fund III, LP – Consolidation Gross versus Net Presentation, (iv) NYDIG Digital Assets Fund III, LP – Financial Statement Reclassification (v) Disposal of Assets (vi) Other Adjustments, and (vii) the income tax adjustments due to the forementioned errors . Revenue Recognition – Principal versus Agent The Company corrected its previous conclusion that as the operator of Marapool (“Operator”), third-party mining pool participants (“pool participants”) are its customer. The Company previously viewed such pool participants as principal to the delivery of transaction verification services to the network and requester and therefore recognized revenue net of amount remitted to pool participants’ pro rata entitlement to block rewards and transaction fees. The Company has since corrected its revenue recognition policy and concluded that the Company’s customers are the transaction requestor and the blockchain network, and that the Company controls the transaction verification services as an Operator. This results in recognition of all transaction fees and block rewards earned from transaction verification services performed by the Company in its role as an Operator of MaraPool as revenue from contracts with customers under Topic 606, with the portion of the transaction fees and block rewards remitted to MaraPool participants as cost of revenues. 58 The impacts of the Revenue Recognition – Principal versus Agent correction are as follows: ERROR CORRECTION OF REVENUE RECOGNITION (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 Year ended December 31, 2022 Three months ended (unaudited) Year ended (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 December 31, 2022 Consolidated Statements of Comprehensive Income (Loss) Impact Total revenues 5 1 — — 6 Cost of revenues - energy, hosting and other ( 5 ) ( 1 ) — — ( 6 ) Net income (loss) impact — — — — — (in thousands) March 31, 2021 (Restated) June 30, 2021 (Restated) September 30, 2021 (Restated) December 31, 2021 Year ended December 31, 2021 Three months ended (unaudited) Year ended (in thousands) March 31, 2021 (Restated) June 30, 2021 (Restated) September 30, 2021 (Restated) December 31, 2021 (Restated) December 31, 2021 (Restated) Consolidated Statements of Comprehensive Income (Loss) Impact Total revenues — — 624 8,075 8,699 Cost of revenues - energy, hosting and other — — ( 624 ) ( 8,075 ) ( 8,699 ) Net income (loss) impact — — — — — Impairment of Digital Assets The Company corrected its calculation of impairment on digital assets that used the U.S. Dollar bitcoin spot rate at a standard cutoff time instead of the lowest U.S. Dollar bitcoin spot rate at any point in time during the day. The Company’s correction of this calculation results in it recognizing impairment in an amount by which the carrying value exceeds the fair value of the digital assets at any point in time during the day. The impacts of the Impairment of Digital Assets correction are as follows: ERROR CORRECTION OF DIGITAL ASSETS As of (unaudited) (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 Consolidated Balance Sheets Impact Digital assets ( 6,204 ) ( 9,344 ) ( 5,433 ) — Digital assets, restricted - Current assets — ( 3,657 ) — — Digital assets, restricted - Other assets — — ( 3,039 ) — (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 Year ended December 31, 2022 Three months ended (unaudited) Year ended (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 December 31, 2022 Consolidated Statements of Comprehensive Income (Loss) Impact Impairment of digital assets ( 3,756 ) ( 6,797 ) 4,529 — ( 6,024 ) Net income (loss) impact ( 3,756 ) ( 6,797 ) 4,529 — ( 6,024 ) As of (unaudited) (in thousands) March 31, 2021 (Restated) June 30, 2021 (Restated) September 30, 2021 (Restated) December 31, 2021 (Restated) Consolidated Balance Sheets Impact Digital assets ( 204 ) ( 2,148 ) ( 1,597 ) ( 2,448 ) (in thousands) March 31, 2021 (Restated) June 30, 2021 (Restated) September 30, 2021 (Restated) December 31, 2021 Year ended December 31, 2021 Three months ended (unaudited) Year ended (in thousands) March 31, 2021 (Restated) June 30, 2021 (Restated) September 30, 2021 (Restated) December 31, 2021 (Restated) December 31, 2021 (Restated) Consolidated Statements of Comprehensive Income (Loss) Impact Impairment of digital assets ( 204 ) ( 1,944 ) 551 ( 851 ) ( 2,448 ) Net income (loss) impact ( 204 ) ( 1,944 ) 551 ( 851 ) ( 2,448 ) 59 NYDIG Digital Assets Fund III, LP – Consolidation Gross versus Net Presentation Marathon accounted for its investment in the NYDIG Digital Assets Fund III, LP (“Fund”) at fair value with changes in fair value recognized in net income, resulting in the recognition of the Fund’s assets net of liabilities, and unrealized and realized gains net of expenses. Management subsequently determined that the Company should have consolidated the Fund under the voting interest model and therefore should have presented assets of the Fund, liabilities, gains, and expenses on a gross basis. Marathon previously revised certain period amounts included in it’s Form 10-Q for interim period ended September 30, 2022 as stated within NOTE 16 – QUARTERLY FINANCIAL DATA (UNAUDITED). However, the error has been reflected throughout this document for purposes of comparability within the restatement adjustments. NYDIG Digital Assets Fund III, LP – Financial Statement Reclassification Realized and unrealized gains (losses) on digital assets held in investment fund were incorrectly classified as other non-operating income. A reclassification was required to correctly classify realized and unrealized gains (losses) on digital assets held in investment fund as operating income for all periods presented. The impacts of the Fund errors are as follows: ERROR CORRECTION OF FUNDS (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 As of (unaudited) (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 Consolidated Balance Sheets Impact Cash and cash equivalents 31 ( 500 ) — — Digital assets held in Fund 202 — — — Accrued expenses 233 ( 500 ) — — (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 Year ended December 31, 2022 Three months ended (unaudited) Year ended (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 December 31, 2022 Consolidated Statements of Comprehensive Income (Loss) Impact General and administrative expenses ( 214 ) ( 221 ) ( 234 ) — ( 669 ) Realized and unrealized gains (losses) on digital assets held within Investment Fund ( 5,328 ) ( 79,689 ) — — ( 85,017 ) Change in fair value of digital assets held in Fund 5,542 79,910 234 — 85,686 Net income (loss) impact — — — — — (in thousands) March 31, 2021 (Restated) June 30, 2021 (Restated) September 30, 2021 (Restated) December 31, 2021 As of (unaudited) (in thousands) March 31, 2021 (Restated) June 30, 2021 (Restated) September 30, 2021 (Restated) December 31, 2021 (Restated) Consolidated Balance Sheets Impact Cash and cash equivalents — 38 — 34 Digital assets held in Fund 205 111 144 137 Accrued expenses 205 149 144 171 Three months ended (unaudited) Year ended (in thousands) March 31, 2021 (Restated) June 30, 2021 (Restated) September 30, 2021 (Restated) December 31, 2021 (Restated) December 31, 2021 (Restated) Consolidated Statements of Comprehensive Income (Loss) Impact General and administrative expenses ( 205 ) ( 203 ) ( 237 ) ( 273 ) ( 918 ) Realized and unrealized gains (losses) on digital assets held within Investment Fund 132,028 ( 114,705 ) 42,087 15,286 74,696 Change in fair value of digital assets held in Fund ( 131,823 ) 114,908 ( 41,850 ) ( 15,013 ) ( 73,778 ) Net income (loss) impact — — — — — Disposal of Assets The Company identified an error in its calculation on gain on sale of mining equipment due to exclusion of capitalized shipping and customs costs that should have been allocated to the sold mining equipment. This error if uncorrected would have resulted in an over-impairment of remaining mining equipment (not sold) when such mining equipment was subsequently impaired. The impacts of this error are as follows: ERROR CORRECTION OF DISPOSAL OF ASSETS (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 As of (unaudited) (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 Consolidated Balance Sheets Impact Property and equipment, net — ( 4,122 ) ( 6,237 ) — (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 Year ended December 31, 2022 Three months ended (unaudited) Year ended (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 December 31, 2022 Consolidated Statements of Comprehensive Income (Loss) Impact Gain on sale of equipment, net of disposals — ( 4,122 ) ( 2,115 ) — ( 6,237 ) Net income (loss) impact — ( 4,122 ) ( 2,115 ) — ( 6,237 ) 60 Other Adjustments The Company corrected other errors relating to (i) accruals for legal expenses, (ii) valuation of bifurcated derivatives related to the SAFE investments, (iii) accumulated comprehensive income and other income, and (iv) classification of prepaid expenses between short-term and long-term, as follows: ERROR CORRECTION OF OTHER ADJUSTMENTS (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 As of (unaudited) (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 Consolidated Balance Sheets Impact Prepaid expenses and other current assets ( 2,000 ) ( 1,000 ) ( 1,000 ) — Investments 20 ( 10 ) ( 10 ) — Long term prepaids 2,000 1,000 1,000 — Accrued expenses 284 284 78 — Accumulated other comprehensive loss 451 451 451 — (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 Year ended December 31, 2022 Three months ended (unaudited) Year ended (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 December 31, 2022 Consolidated Statements of Comprehensive Income (Loss) Impact General and administrative expenses — — 206 — 206 Other non-operating income (loss) 20 ( 30 ) — — ( 10 ) Net income (loss) impact 20 ( 30 ) 206 — 196 (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 As of (unaudited) (in thousands) March 31, 2021 (Restated) June 30, 2021 (Restated) September 30, 2021 (Restated) December 31, 2021 Consolidated Balance Sheets Impact Prepaid expenses and other current assets — — — ( 3,000 ) Accounts payable — — — ( 3,000 ) Accrued expenses — — — 284 Accumulated other comprehensive loss — — — 451 (in thousands) March 31, 2021 (Restated) June 30, 2021 (Restated) September 30, 2021 (Restated) December 31, 2021 Year ended December 31, 2021 Three months ended (unaudited) Year ended (in thousands) March 31, 2021 (Restated) June 30, 2021 (Restated) September 30, 2021 (Restated) December 31, 2021 (Restated) December 31, 2021 (Restated) Consolidated Statements of Comprehensive Income (Loss) Impact General and administrative expenses — — — ( 284 ) ( 284 ) Net income (loss) impact — — — ( 284 ) ( 284 ) Foreign currency translation adjustments — — — ( 451 ) ( 451 ) Comprehensive income (loss) — — — ( 735 ) ( 735 ) Income Tax Adjustments As a result of the adjustments to the restated financial statements presented, our income tax expense decreased by approximately $ 781 thousand for the year ended December 31, 2021, primarily due to changes in deferred taxes as a result of the cumulative impact of the restatement. See NOTE 7 – INCOME TAXES , for additional details regarding income taxes. ERROR CORRECTION OF INCOME TAX EFFECT (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 As of (unaudited) (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 Consolidated Balance Sheets Impact Accrued expenses — — ( 33 ) — Deferred tax liabilities ( 1,711 ) ( 1,134 ) ( 1,223 ) — (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 Year ended December 31, 2022 Three months ended (unaudited) Year ended (in thousands) March 31, 2022 (Restated) June 30, 2022 (Restated) September 30, 2022 (Restated) December 31, 2022 December 31, 2022 Consolidated Statements of Comprehensive Income (Loss) Impact Income tax benefit (expense) 930 ( 577 ) 122 — 475 Net income (loss) impact 930 ( 577 ) 122 — 475 (in thousands) March 31, 2021 (Restated) June 30, 2021 (Restated) September 30, 2021 (Restated) December 31, 2021 As of (unaudited) (in thousands) March 31, 2021 (Restated) June 30, 2021 (Restated) September 30, 2021 (Restated) December 31, 2021 Consolidated Balance Sheets Impact Deferred tax liabilities — — — ( 781 ) (in thousands) March 31, 2021 (Restated) June 30, 2021 (Restated) September 30, 2021 (Restated) December 31, 2021 Year ended December 31, 2021 Three months ended (unaudited) Year ended (in thousands) March 31, 2021 (Restated) June 30, 2021 (Restated) September 30, 2021 (Restated) December 31, 2021 (Restated) December 31, 2021 (Restated) Consolidated Statements of Comprehensive Income (Loss) Impact Income tax benefit (expense) — — — 781 781 Net income (loss) impact — — — 781 781 Accounting Policy Adjustments The Company also recorded adjustments to the Consolidated Financial Statements relating to the full retrospective adoption of crypto loan derecognition guidance issued by the SEC in December 2022, which includes considerations under ASU 2016-13, “Financial Instruments - Credit Losses (ASC 326) Measurement of Credit Losses on Financial Instruments”. See further discussion in NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES and NOTE 5 – DIGITAL ASSET LOAN RECEIVABLE, NET OF ALLOWANCE . Restated Consolidated Financial Statements For the restated year ended December 31, 2021, the following tables shows the effects, by financial statement line item, on the Company’s Consolidated Balance Sheets, Consolidated Statements of Other Comprehensive Income (Loss) and Consolidated Statements of Cash Flows of: 1) the corrections as described above, and 2) the full retrospective adoption of crypto loan derecognition guidance issued by the SEC in December 2022, which includes considerations under ASU 2016-13, “ Financial Instruments - Credit Losses (ASC 326) Measurement of Credit Losses on Financial Instruments”. 61 SCHEDULE OF RESTATEMENTS Restated Consolidated Balance Sheets (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated As of December 31, 2021 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated ASSETS Current assets: Cash and cash equivalents $ 268,522 $ 34 $ — $ 268,556 Digital assets 102,806 ( 2,448 ) ( 5,133 ) 95,225 Digital assets held in Fund 223,779 137 — 223,916 Other receivable — — 26,933 26,933 Deposits 34,458 — — 34,458 Digital assets, restricted 20,437 — ( 20,437 ) — Prepaid expenses and other current assets 38,148 ( 3,000 ) — 35,148 Total current assets 688,150 ( 5,277 ) 1,363 684,236 Other assets: Property and equipment, net 276,243 — — 276,243 Advances to vendors 466,255 — — 466,255 Investments 3,000 — — 3,000 Long term prepaids 13,666 — — 13,666 Intangible assets, net 931 — — 931 Total other assets 760,095 — — 760,095 TOTAL ASSETS $ 1,448,245 $ ( 5,277 ) $ 1,363 $ 1,444,331 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 10,773 $ ( 3,000 ) $ — $ 7,773 Accrued expenses 2,155 455 — 2,610 Current portion of accrued interest 867 — — 867 Total current liabilities 13,795 ( 2,545 ) — 11,250 Long-term liabilities: Notes payable 728,406 — — 728,406 Deferred tax liabilities 23,021 ( 781 ) 335 22,575 Total long-term liabilities 751,427 ( 781 ) 335 750,981 Commitments and Contingencies - - - - Stockholders’ Equity: Preferred stock — — — — Common stock 10 — — 10 Additional paid-in capital 835,694 — — 835,694 Accumulated other comprehensive loss ( 451 ) 451 — — Accumulated deficit ( 152,230 ) ( 2,402 ) 1,028 ( 153,604 ) Total stockholders’ equity 683,023 ( 1,951 ) 1,028 682,100 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,448,245 $ ( 5,277 ) $ 1,363 $ 1,444,331 62 Restated Consolidated Statements of Other Comprehensive Income (Loss) (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated Year ended December 31, 2021 (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated Total revenues $ 150,464 $ 8,699 $ — $ 159,163 Costs and expenses Cost of revenues Cost of revenues - energy, hosting and other ( 18,792 ) ( 8,699 ) — ( 27,491 ) Cost of revenues - depreciation and amortization ( 14,904 ) — — ( 14,904 ) Total cost of revenues ( 33,696 ) ( 8,699 ) — ( 42,395 ) Operating expenses General and administrative expenses ( 172,303 ) ( 1,202 ) ( 851 ) ( 174,356 ) Impairment of digital assets ( 29,553 ) ( 2,448 ) 1,671 ( 30,330 ) Realized and unrealized gains (losses) on digital assets loan receivable and digital assets 14 — 543 557 Realized and unrealized gains (losses) on digital assets held within Investment Fund — 74,696 — 74,696 Total operating expenses ( 201,842 ) 71,046 1,363 ( 129,433 ) Operating income (loss) Change in fair value of digital assets held in Fund 73,779 ( 73,779 ) — — Other non-operating income (loss) ( 307 ) — 19 ( 288 ) Interest expense ( 1,570 ) — — ( 1,570 ) Income (loss) before income taxes ( 13,172 ) ( 2,733 ) 1,382 ( 14,523 ) Income tax benefit (expense) ( 23,003 ) 781 ( 354 ) ( 22,576 ) Net income (loss) $ ( 36,175 ) $ ( 1,952 ) $ 1,028 $ ( 37,099 ) Net loss per share, basic and diluted: $ ( 0.36 ) $ ( 0.02 ) $ 0.01 $ ( 0.37 ) Weighted average shares outstanding, basic and diluted: 99,337,587 99,337,587 99,337,587 99,337,587 Other comprehensive income (loss) Foreign currency translation adjustments — ( 451 ) — ( 451 ) Comprehensive income (loss) ( 36,175 ) ( 2,403 ) 1,028 ( 37,550 ) 63 Restated Consolidated Statements of Cash Flows (in thousands) (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated Year ended December 31, 2021 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated CASH FLOWS FROM OPERATING ACTIVITIES Net loss ( 36,175 ) ( 1,951 ) 1,028 ( 37,098 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 14,904 — 14,904 Deferred tax expense (benefit) 23,021 ( 781 ) 335 22,575 Realized and unrealized losses (gains) on digital assets held within Investment Fund — ( 74,696 ) — ( 74,696 ) Realized and unrealized gains (losses) on digital assets loan receivable and digital assets ( 14 ) — ( 543 ) ( 557 ) Change in fair value of digital assets held in Investment Fund ( 73,779 ) 73,779 — — Impairment of digital assets 29,553 2,447 ( 1,671 ) 30,329 Stock-based compensation 160,786 — — 160,786 Other adjustments from operations, net 1,069 ( 1 ) — 1,068 Changes in operating assets and liabilities: — Digital assets ( 150,513 ) — — ( 150,513 ) Prepaid expenses and other assets 136 — 851 987 Accounts payable and accrued expenses 11,927 455 — 12,382 Accrued interest 867 — — 867 Net cash used in operating activities ( 18,218 ) ( 748 ) — ( 18,966 ) CASH FLOWS FROM INVESTING ACTIVITIES Advances to vendors ( 435,065 ) — — ( 435,065 ) Loan receivable ( 30,000 ) — — ( 30,000 ) Purchase of property and equipment ( 273,851 ) — — ( 273,851 ) Purchase of digital assets in Fund ( 150,000 ) — — ( 150,000 ) Purchase of equity investments ( 3,000 ) — — ( 3,000 ) Sale of digital assets in Fund — 780 — 780 Net cash used in investing activities ( 891,916 ) 780 — ( 891,136 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of common stock, net of issuance costs 312,196 — — 312,196 Proceeds from issuance of convertible debt, net of issuance costs 728,406 — — 728,406 Borrowings from revolving credit agreement 77,500 — — 77,500 Repayments of revolving credit agreement ( 77,500 ) — — ( 77,500 ) Value of shares withheld for taxes ( 4,714 ) — — ( 4,714 ) Proceeds received on exercise of options and warrants 1,445 — — 1,445 Net cash provided by financing activities 1,037,333 — — 1,037,333 Net (decrease) increase in cash, cash equivalents and restricted cash 127,199 32 — 127,231 Cash, cash equivalents and restricted cash — beginning of period 141,323 - - 141,323 Cash, cash equivalents and restricted cash — end of period 268,522 32 — 268,554 64 NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of the Company and its wholly owned and controlled subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. Use of Estimates and Assumptions The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications have no effect on the reported financial position, results of operations, or cash flows. Previously reported compensation and related taxes, consulting fees, and professional fees have now been reclassified within general and administrative expenses. In addition, previously reported change in fair value of warrant liability and interest income have now been reclassified as other non-operating income and realized and unrealized gains (losses) on digital assets held in investment fund has now been reclassified as operating income. Segment Information Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision–making group in deciding how to allocate resources and in assessing performance. Our chief operating decision–making group (“CODM”) is composed of the chief executive officer and chief financial officer. The Company currently operates in the Digital Currency Blockchain segment. The Company’s ASICs mining rigs are located in the United States, and the Company has employees only in the United States and views its operations as one operating segment as the CODM reviews financial information on a consolidated basis in making decisions regarding resource allocations and assessing performance. Cash and Cash Equivalents The Company considers all highly liquid debt instruments and other short-term investments with maturity of three months or less, when purchased, to be cash equivalents. The Company maintains cash and cash equivalent balances at one financial institution that is insured by the Federal Deposit Insurance Corporation (“FDIC”). For the years ended December 31, 2022 and 2021, the Company’s bank balances exceeded the FDIC limit of $ 250 thousand in amount of $ 111,505 thousand and $ 267,635 thousand, respectively. To reduce its risk associated with the failure of such financial institution, the Company evaluates at least annually the rating of the financial institution in which it holds deposits. As of December 31, 2022 and 2021, the Company had cash equivalents of $ 92,044 thousand and $ 266,635 thousand, respectively. Restricted Cash Restricted cash represents cash balances that support commercial letters of credit and are restricted from withdrawal. The following table provides a reconciliation of the total cash, cash equivalents and restricted cash reported on the Consolidated Balance Sheets to the corresponding amounts reported on the Consolidated Statements of Cash Flows. SCHEDULE OF RESTRICTED CASH (in thousands) 2022 2021 (Restated) As of December 31, (in thousands) 2022 2021 (Restated) Cash and cash equivalents $ 103,705 $ 268,556 Restricted cash 8,800 — Cash, cash equivalents and restricted cash $ 112,505 $ 268,556 65 Digital assets and Digital assets, restricted Digital assets are included in current and other assets in the Consolidated Balance Sheets. Digital assets are accounted for as indefinite-lived intangible assets, and are initially measured at cost, in accordance with ASC 350 – “Intangibles-Goodwill and Other” (“ASC 350”). Digital assets, restricted represent collateral for long-term loans and as such, are classified as a non-current asset. These digital assets are not amortized, but are assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived intangible asset is impaired. Whenever the exchange-traded price of digital assets declines below its carrying value, the Company has determined that an impairment exists and records impairment equal to the amount by which the carrying value exceeds the fair value. The following tables presents the activities of the digital assets and digital assets, restricted for the years ended December 31, 2022 and 2021: SCHEDULE OF ACTIVITIES OF DIGITAL ASSETS (in thousands) Digital assets and digital assets, restricted at December 31, 2020 2,272 Additions of digital assets 150,592 Impairment of digital assets ( 30,329 ) Derecognition of loaned digital assets ( 27,241 ) Disposition of digital assets ( 68 ) Digital assets and digital assets, restricted at December 31, 2021 (Restated) 95,226 Additions of digital assets 117,557 Transfer of digital assets from digital assets held in Fund 137,844 Recognition of loaned digital assets 13,324 Impairment of digital assets ( 173,214 ) Disposition of digital assets ( 20 ) Digital assets and digital assets, restricted at December 31, 2022 $ 190,717 At December 31, 2022, the Company held approximately 12,232 bitcoin with a carrying value of $ 190,717 thousand. The 7,816 bitcoin were classified on the Consolidated Balance Sheets as digital assets with a carry value of approximately $ 121,842 thousand and digital assets, restricted of 4,416 bitcoin with a carrying value of approximately $ 68,875 thousand. At December 31, 2022, the fair market value of the Company’s bitcoin holdings was approximately $ 202,409 thousand, including digital assets and digital assets, restricted. Digital assets, restricted is comprised of bitcoins held as collateral for the term loan. At December 31, 2021, the Company held approximately 2,721 bitcoin with a carrying value of $ 95,225 thousand and a fair value of $ 126,000 thousand. Digital assets held in Fund On January 25, 2021, the Company entered into a limited partnership agreement with NYDIG Digital Assets Fund III, LP (“Fund”) wherein the Fund purchased 4,813 bitcoin in an aggregate purchase price of $ 150,000 thousand. The Company owned 100 % of the limited partnership interests and consolidated the Fund under a voting interest model. The consolidated assets in the investment fund are included in current assets in the Consolidated Balance Sheets under the caption digital assets held in Fund. The Fund qualified and operated as an investment company for accounting purposes pursuant to the accounting and reporting guidance under ASC 946 – “Financial Services – Investment Companies” (“ASC 946”), which requires fair value measurement of the Fund’s investments in digital assets. The Company retains the Fund’s investment company specific accounting principles under ASC 946 upon consolidation. The digital assets held by the Fund were traded on a number of active markets globally, including the over-the-counter market and digital asset exchanges. A fair value measurement under ASC 820 - “Fair Value Measurement” (“ASC 820”) for an asset assumes that the asset is exchanged in an orderly transaction between market participants either in the principal market for the asset or, in the absence of a principal market, the most advantageous market for the asset (ASC 820-10-35-5). The fair value of the assets within the Fund were determined using the price of bitcoin provided by the OTC market, the Fund’s principal market for bitcoin as of 11:59:59 p.m. in New York for financial reporting purposes. For purposes of continuous (daily) fair value measurement, such assets within the Fund were measured using the daily price of bitcoin provided by the OTC market at 4:00 p.m. in New York. Any changes in the fair value of the assets were recorded in the Consolidated Statements of Other Comprehensive Income (Loss) under the caption realized and unrealized gains (losses) on digital assets held within investment fund. 66 On June 10, 2022, the Company redeemed 100% of its limited partnership interest in the Fund in exchange for approximately 4,769 bitcoin with a fair market value of approximately $ 137,844 thousand . This bitcoin was transferred from the Fund’s custodial wallet to the Company’s digital wallet. Upon redemption, the Company no longer had a majority voting interest in the Fund and therefore deconsolidated the Fund in accordance with ASC 810 – “Consolidation” (“ASC 810”). The Company did not record any gain or loss upon deconsolidation as the digital assets in the Fund were measured at fair value. Subsequent to the transfer, the bitcoin transferred to the Company’s digital wallet has been accounted for at cost less impairment in line with its digital assets measurement policy as described under “Digital assets and Digital assets, restricted ”. The activity in the Fund for the twelve months ended December 31, 2022 and twelve months ended December 31, 2021 was as follows: SCHEDULE OF DIGITAL CURRENCIES HELD IN FUND Digital assets held in Fund at December 31, 2020 (in thousands) - Purchase of digital assets held in Fund $ 150,000 Unrealized appreciation on digital assets held in Fund 74,516 Disposition of digital assets held in Fund ( 600 ) Digital assets held in Fund at December 31, 2021 (Restated) 223,916 Unrealized depreciation on digital assets held in Fund ( 74,723 ) Disposition of digital assets held in Fund ( 794 ) Realized loss on in-kind distribution ( 10,555 ) Digital assets transferred out of Fund ( 137,844 ) Digital assets held in Fund at December 31, 2022 $ — Deposits The Company contracts with other service providers for hosting of its mining rigs and operational support in data centers where the company’s mining rigs are deployed. These arrangements also call for advance payments to be made to vendors in conjunction with the contractual obligations associated with these services. We classify these payments as Deposits on the balance sheet. As of December 31, 2022 and December 31, 2021, such deposits totaled approximately $ 43,253 thousand and $ 34,458 thousand, respectively. Embedded Derivatives The Company evaluates its financing and service arrangements to determine whether certain arrangements contain features that qualify as embedded derivatives requiring bifurcation in accordance with ASC 815 - “Derivatives and Hedging” (“ASC 815”). Embedded derivatives that are required to be bifurcated from the host instrument or arrangements are accounted for and valued as separate financial instruments. For derivatives that are assets or liabilities, the derivative instrument is initially recorded at its fair value and is then remeasured at each reporting date with changes in the fair value reported in the statements of operations. Derivative assets or liabilities are classified in the Consolidated Balance Sheets as current or non-current based on whether settlement of the instrument could be required within 12 months of the Consolidated Balance Sheets date. Property and Equipment The Company’s property and equipment is composed of bitcoin mining rigs which are largely homogeneous and have approximately the same useful lives. Accordingly, the Company applies the group method of depreciation on a straight-line basis for its bitcoin mining rigs. The Company will assess and adjust the estimated useful lives of its mining rigs when there are indicators that the productivity of the mining assets are higher or lower than the assigned estimated useful lives. 67 Advances to Vendors The Company contracts with bitcoin mining equipment manufacturers in procuring mining rigs necessary for the operation of its bitcoin mining business. A typical agreement calls for a certain percentage of the total order to be paid in advance at specific intervals, usually within several days of execution of a specific contract and periodically thereafter with final payments due prior to each shipment date. We account for these payments as Advances to vendors on the balance sheet. Due to the decrease in the cost of bitcoin mining rigs that was driven by the drop in bitcoin prices during the fourth quarter ended December 31, 2022, the Company evaluated the need for an impairment write-down of its contracts with bitcoin mining equipment manufacturers. The Company compared the prices of the miner rigs under contract to the fair value of mining rigs as of December 31, 2022, and determined that an impairment loss should be recognized. Accordingly, the Company recognized an impairment charge of $ 208,622 thousand on its mining rigs and reduced its Advances to vendors for purchase of mining rigs by $ 124,311 on the Consolidated Balance Sheets for the year ended December 31, 2022. As of December 31, 2022 and December 31, 2021, advances to vendors was $ 488,299 thousand and $ 466,255 thousand, respectively. See also discussion regarding property and equipment impairment in NOTE 4 - PROPERTY AND EQUIPMENT. Investments Investments, which may be made from time to time for strategic reasons (and not to engage in the business of investments) are included in non-current assets in the Consolidated Balance Sheets. Investments without a readily determinable fair value are recorded at cost minus impairment, plus or minus changes from observable price changes in orderly transactions for identical or similar investments of the same issuer in accordance with the measurement alternative described in ASC 321 - “Investments – Equity Securities” (“ASC 321”). As part of the Company’s policy to maximize return on strategic investment opportunities, while preserving capital and limiting downside risk, the Company may at times enter into equity investments or Simple Agreements for Future Equity (“SAFE”) agreements. The nature and timing of the Company’s investments will depend on available capital at any particular time and the investment opportunities identified and available to the Company. On December 21, 2021 and December 31, 2021, the Company entered into two separate SAFE agreements classified on the Consolidated Balance Sheets as non-current assets. SAFE agreements are accounted for as equity securities without readily determinable fair value at cost minus impairment, as adjusted for observable price changes in orderly transactions for identical or similar investment of the same issue pursuant to ASC 321. On February 3, 2022, the Company invested approximately $ 10,000 thousand in convertible preferred stock of Compute North Holdings, Inc. The acquisition of convertible preferred stock was accounted for as investments in equity securities without readily determinable fair value at cost minus impairment, as adjusted for observable price changes in orderly transactions for identical or similar investment of the same issuer pursuant to ASC 321. This investment was subject to an impairment of $ 10,000 thousand following Compute North’s chapter 11 Bankruptcy filing in September 2022 (See NOTE 9 – COMPUTE NORTH BANKRUPTCY ). On May 3, 2022, the Company converted $ 2,000 thousand from a SAFE investment into preferred stock while purchasing an additional $ 3,500 thousand of preferred stock in Auradine, Inc. along with entering into a commitment to acquire $ 30,000 thousand of additional shares of preferred stock. This forward contract was accounted for under ASC 321 as an equity security. On September 27, 2022, the Company increased its investment in the preferred stock of Auradine, Inc. by $ 30,000 thousand, bringing its total carrying amount of investment in Auradine, Inc. preferred stock to $ 35,500 thousand. The preferred stock is accounted for as investments in equity securities without a readily determinable fair value at cost minus impairment, as adjusted for observable price changes in orderly transactions for identical or similar investments from the same issuer pursuant to ASC 321. During 2022, there were no noted impairments or other adjustments (See NOTE 15 – RELATED PARTY TRANSACTIONS ). As of December 31, 2022, the Company has one remaining SAFE investment with a carrying value of $ 1,000 thousand, with no noted impairments or other adjustments. 68 Stock-based Compensation The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the grant-date fair value of the awards and forfeiture rates. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. These assumptions are the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is calculated based on the historical volatility of the Company’s common stock over the expected term of the option. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. Impairment of Long-lived Assets Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. In the year ended December 31, 2022 , we impaired the mining patent intangible asset and recorded an impairment charge of $ 919 thousand. We also impaired certain mining rigs and recorded an impairment charge of $ 208,622 thousand (see NOTE 4 – PROPERTY AND EQUIPMENT ). Revenues From Contracts with Customers The Company recognizes revenue in accordance with ASC Topic 606 – “Revenue from Contracts with Customers” (“ASC 606”). The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle: ● Step 1: Identify the contract with the customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when the Company satisfies a performance obligation In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: ● The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct); and ● the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct. 69 The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following: ● Variable consideration ● Constraining estimates of variable consideration ● The existence of a significant financing component in the contract ● Noncash consideration ● Consideration payable to a customer Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate. Application of the five-step model to the Company’s mining operations The Company’s ongoing major or central operation is to provide computing power to collectives of third-party bitcoin miners (such collectives, “mining pools”) as a participant (“Participant”) and bitcoin transaction verification services to the bitcoin network through a Company-operated mining pool as the operator and a participant in a private pool (“Operator”) (such activity as Participant and Operator, collectively, “mining”). The Company currently mines in a self-operated pool, which was previously open to third-party pool participants from September 2021 until May 2022. The following table presents revenue of the Company disaggregated for those arrangements in which the Company is the Operator and Participant: SCHEDULE OF DISAGGREGATION OF REVENUE (in thousands) 2022 2021 (Restated) 2020 Year ended December 31, (in thousands) 2022 2021 (Restated) 2020 Revenues from contracts with customers Participant $ 4,652 $ 20,903 $ 4,357 Operator - Transaction fees 5,231 3,317 — Other revenue Operator - Block rewards 107,869 134,943 — Total revenue $ 117,753 $ 159,163 $ 4,357 Operator As Operator, the Company provides transaction verification services. Transaction verification services are an output of the Company’s ordinary activities; therefore, the Company views the transaction requestor as a customer and accounts for the transaction fees its earns as revenue from a contract with a customer under ASC 606. The bitcoin network is not an entity such that it may not meet the definition of a customer; however, the Company has concluded it is appropriate to apply ASC 606 by analogy to block rewards earned from the network. A contract exists under ASC 606 at the point the Company successfully validates a transaction to the distributed ledger. At this point, the performance obligation to validate the requested transaction has been satisfied and a contract is deemed to exist as follows: The transaction requester, the bitcoin network and the Company have approved the contract and have evidenced they are committed to the transaction at the point of successfully validating and adding the transaction to the distributed ledger. The parties’ rights, the consideration to be transferred, and the payment terms are clear. The transaction has commercial substance and collection of the block reward and transaction fees to which the Company is entitled is probable because they are transferred to the Company as part of closing a successful block. 70 By successfully mining a block, the Company satisfies its lone performance obligation of providing transaction verification services and, thus, recognizes revenue at that point in time. The amount to which the Company is entitled for successfully validating a block of transactions is fixed at the point in time the contract is deemed to exist and the performance obligation is satisfied. Thus, there is no variable consideration. The Company also, from time to time, engages unrelated third-party mining enterprises (“pool participants”) to contribute computing power, and in exchange, remits transaction fees and block rewards to pool participants on a pro rata basis according to each respective pool participant’s contributed computing power ( hash rate). The MaraPool wallet (owned by the Company as Operator) is recorded on the distributed ledger as the proof of work winner and assignee of all validations and, therefore, the transaction verifier of record. The pool participants enter into contracts with the Company as Operator; they do not directly enter into contracts with the network or the requester and are not known verifiers of the transactions assigned to the pool. As Operator, the Company delegates mining work to the pool participants utilizing software that algorithmically assigns work to each individual miner. By virtue of its selection and operation of the software, the Company as Operator controls delegation of work to the pool participants. This indicates that the Company directs the mining pool participants to contribute their hash rate to solve in areas that the Company designates. Therefore, the Company determined that it controls the service of providing transaction verification services to the network and requester. Accordingly, the Company records all of the transaction fees and block rewards earned from transactions assigned to MaraPool as revenue, and the portion of the transaction fees and block rewards remitted to MaraPool participants as cost of revenues. The Company operated a mining pool, Marapool, that engaged third-party pool participants from September 2021 until May 2022. ASC 606-10-32-21 requires entities to measure the estimated fair value of noncash consideration at contract inception, which is the same time the block reward and transaction fee is earned and the performance obligation to the requester and the network is fulfilled by successfully validating the applicable block of transactions. For reasons of operational practicality, the Company applies an accounting convention to use the daily quoted closing U.S. dollar spot rate of bitcoin each day to determine the fair value of bitcoin earned as transaction fees and block rewards in the Company’s wallet during that day. This accounting convention does not result in materially different revenue recognition from using the fair value of the bitcoin earned at contract inception (i.e., the moment a block is solved) and has been consistently applied in all periods presented. Expenses associated with providing the bitcoin transaction verification services to the Customers, such as rent, electricity cost, and transaction fees and block rewards are recorded as cost of revenues. Depreciation on digital asset mining equipment is recorded as a component of cost of revenues. Participant When the Company is a Participant in a third-party operated mining pool, the Company provides computing power (hash rate) that is an output of the Company’s ordinary activities in exchange for consideration. The Company considers the third-party mining pool operators its customer under Topic 606. These contracts are period-to-period contracts because they are terminable at any time by either party without compensation. A new contract is determined to exist each period that neither the Company, nor the pool operator, terminates the arrangement. 71 The provision of computing power is the only performance obligation under our arrangements with third-party mining pool operators. The transaction consideration the Company receives is non-cash (i.e., bitcoin) and entirely variable as it is unknown at each contract inception whether the Company will earn any consideration during the period, and if it does become entitled to consideration, how much consideration it will be entitled to. In accordance with FASB ASC 606-10-32-11 and 32-12, the Company constrains the variable consideration to which it is entitled and does not recognize revenue for such amounts until it receives confirmation of the amount , usually via the settlement of the fractional share of block reward and transaction fee in the Company’s digital wallet (i.e., at that point, the variability is resolved and there is no longer the reasonable possibility of significant reversal of revenue). Before settlement occurs, estimation of the variable consideration to which the Company is entitled, which depends on inputs unknowable to the Company, carries the risk of a significant revenue reversal from mis-estimation. Settlement of consideration typically occurs within 24 hours of when a block is won unless such block is won over a weekend or holiday, in which case settlement can take up to 72 hours. The Company uses its accounting convention to recognize revenue using the daily quoted closing U.S. dollar spot rate of bitcoin on the day the transaction fees and block rewards are settled in the Company’s wallet. However, this accounting convention does not result in materially different revenue recognition from using the fair value of the bitcoin earned at contract inception and has been consistently applied in all periods presented. Expenses associated with providing computing power services to third-party operated mining pools, such as rent and electricity cost are recorded as cost of revenues. Depreciation on digital asset mining equipment is also recorded as a component of cost of revenues. Income Taxes The Company accounts for income taxes under the asset and liability method, in which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is required to the extent any deferred tax assets may not be realizable. ASC 740 - “Income Taxes ” (“ASC 740”), also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Recent Accounting Pronouncements The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its Consolidated Financial Statements and assures that there are proper controls in place to ascertain that the Company’s Consolidated Financial Statements properly reflect the change. 72 In December 2022, the Securities Exchange Commission (“SEC”) provided additional guidance on accounting for loaned digital assets. The Company has therefore adopted the following accounting policy with retrospective application for arrangements where the Company loans digital assets to a borrower for a specific period of time in exchange for a fee akin to an interest rate. Upon adoption, the Company first evaluates whether to derecognize loaned crypto assets based on an evaluation of all relevant control and asset derecognition considerations. Such considerations include whether the borrower has the right to use the digital assets at its sole discretion (e.g.,to sell, pledge digital assets to a third party) and whether the lender has transferred present rights to economic benefits associated with the digital asset for a different right to receive digital assets in the future. When derecognition of the underlying loaned digital assets is appropriate, the Company will derecognize the loaned digital asset it no longer controls, and recognize a right to receive back in the future the loaned digital asset (“digital asset loan receivable”). The digital asset loan receivable is recorded at the then-current (i.e., time of transfer) fair value of the loaned crypto assets with any difference between the fair value of the loaned crypto assets and their pre-transfer carrying amount recognized as a gain in the Consolidated Statements of Other Comprehensive Income (Loss). Throughout the loan period, the digital asset loan receivable will continue to be measured at the fair value of the underlying loaned digital asset with changes recorded in operating income (loss). At loan commencement and throughout the loan period, the Company considers and accounts for credit risk of the borrower (i.e., risk the borrower will not return the loaned crypto assets), using the principles in Topic 326 to measure any credit impairment. The digital asset loan receivable is presented net of any allowance for credit losses on the Company’s Consolidated Balance Sheets. When the digital assets on loan are returned to the Company, such loaned digital assets are re-recorded on the Company’s Consolidated Balance Sheets at the carrying value of the digital asset loan receivable immediately prior to derecognition with no gain or loss realized at the end of the loan. NOTE 4 – PROPERTY AND EQUIPMENT The components of property and equipment as of December 31, 2022 and 2021 are: SCHEDULE OF COMPONENTS OF PROPERTY AND EQUIPMENT (in thousands, except useful life) Useful life (Years) December 31, 2022 December 31, 2021 (Restated) Website 7 $ 206 $ 122 Mining rigs 5 116,634 163,868 Containers 10 1,614 0 Construction in progress N/A 171,194 133,566 Gross property, equipment 289,648 297,556 Less: Accumulated depreciation ( 16,622 ) ( 21,313 ) Property and equipment, net $ 273,026 $ 276,243 73 The Company records mining rigs not yet placed into service as construction in progress. Upon energization of the mining rigs, the mining rigs are reclassified to “Mining rigs” and depreciated over the estimated useful life. The Company’s depreciation expense related to property and equipment for the years ended December 31, 2022 and December 31, 2021 was $ 78,709 thousand and $ 14,904 thousand, respectively. In late 2021, the Company entered into an agreement with DCRBN Ventures Development and Acquisition LLC (“DCRBN”) in which the Company agreed to sell certain mining rigs to DCRBN in conjunction with the development of commercial activities at the McCamey, TX facility. In conjunction with its exit from the Hardin, MT facility, the Company also sold bitcoin mining rigs to various third parties. Total cash proceeds from these sales of assets for the year ended December 31, 2022 were $ 178,371 thousand and gains resulting from the asset sales totaled $ 83,880 thousand in the current-year period. There were no such sales in 2021. In connection with the exit from the Hardin, MT facility (“Hardin”) in September 2022, the Company recorded additional depreciation expense related to approximately 1,800 bitcoin mining rigs that were previously deployed at Hardin that were no longer in operating condition based on inspections of the assets at the facility and experience with the assets formerly deployed at Hardin in the weeks following redeployment. In addition, the Company determined that the useful lives of the remaining mining rigs formerly deployed at Hardin should be reduced from 36 months to 24 months. These assets had a book value of approximately $ 12,358 thousand as of September 30, 2022. In accordance with ASC 360 - “Impairment and Disposal of Long-Lived Assets” (“ASC 360”), long-lived asset (group) that is held and used must be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the long-lived asset (group) might not be recoverable. Due to the decrease in the cost of bitcoin mining rigs that was driven by the drop in bitcoin prices during the fourth quarter ended December 31, 2022, the Company assessed the need for an impairment write-down of its bitcoin mining rigs. In accordance with ASC 360-10, the Company first determined that the carrying value of its bitcoin miners is not recoverable. As its bitcoin mining rigs further had a carrying value in excess of fair value, the Company recognized an impairment charge for its bitcoin mining rigs of approximately $ 208,622 thousand for the year ended December 31, 2022. The fair value of the bitcoin miners determined primarily using observable prices for similar assets as of December 31, 2022 was $ 265,000 thousand (Level 2). As a result of the above impairment charge for its asset group of bitcoin mining rigs, the Company re-evaluated and reduced the estimated useful life for its asset group of mining rigs from 5 to 3 years, effective January 1, 2023. As of December 31, 2022, the Company had $ 488,299 thousand, net of a $ 124,311 thousand impairment charge per below, of Advances to vendors for the purchase of mining rigs on the consolidated balance sheet. As of December 31, 2021, the Company had $ 466,255 thousand of Advances to vendors for purchase of mining rigs on the consolidated balance sheet. Due to the decrease in the cost of bitcoin mining rigs that was driven by the drop in bitcoin prices during the fourth quarter ended December 31, 2022, the Company evaluated the need for an impairment write-down of its contracts with bitcoin mining equipment manufacturers. The Company compared the prices of the miner rigs under contract to the fair value of mining rigs as of December 31, 2022, and determined that an impairment loss should be recognized. Accordingly, the Company recognized an impairment charge of $ 124,311 thousand and reduced its Advances to vendors on the consolidated balance sheet for the year ended December 31, 2022. NOTE 5 - DIGITAL ASSET LOAN RECEIVABLE, NET OF ALLOWANCE The Company’s digital asset loan receivable represents two separate digital asset loans made to NYDIG Funding, LLC (“NYDIG”) in August 2021 and December 2021 under a master securities loan agreement, which was terminated at the point of full repayment in kind for both loans in June 2022. A total of 600 bitcoin were loaned to NYDIG. No collateral was posted to Marathon under the terms of the two loans. The digital assets loan receivables were initially and subsequently measured at the fair value of the underlying bitcoin lent at the time of the transfer, approximately $ 27,241 thousand, and adjusted for expected credit losses, with changes in fair value recorded as unrealized gains and losses in the Consolidated Statements of Other Comprehensive Income (Loss). A loan fee was accrued daily, based on the daily closing price of the underlying bitcoin and a set percentage rate, and paid in cash on a monthly basis consistent with each loan’s confirmation terms. 74 Given the limited size and nature of the Company’s digital asset loan receivables, the Company utilized the probability of default (“PD”) loss given default (“LGD”) approach to estimating the allowance for credit loss (“ACL”) at origination and subsequent reporting periods. In order to apply the PD LGD approach, management considered the lifetime of the digital asset loan receivable, the reasonable and supportable forecast period, and the PD LGD. ● Life of loan: The contractual maturity of each digital asset loan receivable was one year from origination. As such, the Company used each instrument’s life of loan period for estimating current expected credit losses, unadjusted by any prepayment risk as any risk would be immaterial to either the repayment in kind or the accrued loan fee receivable that is due in cash on a monthly basis. ● Reasonable and supportable forecast period: Given the relatively short term nature of the loans, the Company set the reasonable and supportable period to the life of loan. As such, no reversion or post-reversion methodology was required. ● Credit quality information and associated probability of default of NYDIG: In order to assess the credit risk of the borrower, Marathon estimated a NYDIG synthetic credit rating as of March 31, 2022 and December 31, 2021 using an Ordinal Logistic Regression Model (“Regression Model”). The Regression Model is a widely used statistical model to classify a company into credit ratings and to estimate PD based on certain business metrics, including total assets, total debt, revenues, EBIT, and net income. Based on the Regression Model results, the Company estimated NYDIG’s synthetic credit rating of “CCC-” as of March 31, 2022 and “B” as of December 31, 2021. The associated probability of default was approximately 2.9 % and 7.4 % , respectively. ● Estimation of losses given default: Given no collateral was posted, the Company assumed a loss given default of 100.0% of the original and subsequent reporting digital asset loan receivable and the accrued loan fee. In addition, the accrued loan fee receivable is reported separately from the digital asset loan receivable and its carrying amount is de minimis at the reporting date. As a result, the reported ACL includes only the impact of any unpaid accrued loan fee receivable at the reporting date. The loans were fully repaid by NYDIG in June 2022 at which time the 600 bitcoin were reclassified into digital assets at the carrying value of the digital assets loan receivable immediately prior to its derecognition at the end of loan. The Company did not have any digital asset loan receivables outstanding as of December 31, 2022. As such, the Company recorded an allowance for loan losses as of December 31, 2021 with an initial provision expense of approximately $851 thousand. As of December 31, 2022 the company recognized a corresponding provision benefit of approximately $851 thousand for the June 2022 repayment in full, resulting in $0 remaining allowance for loan losses at the end of the year. 75 NOTE 6 - FAIR VALUE MEASUREMENT The Company measures at fair value certain of its financial and non-financial assets and liabilities by using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price, based on the highest and best use of the asset or liability. The levels of the fair value hierarchy are: Level 1: Quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date; Level 2: Inputs other than quoted prices in active markets for identical assets and liabilities included within Level 1 that are observable for the asset or liability, either directly or indirectly, and Level 3: Inputs that are generally unobservable for the asset or liability. The carrying amounts reported in the Consolidated Balance Sheets for cash and cash equivalents, restricted cash, other receivable, deposits, prepaid expenses and other current assets, property and equipment, advances to vendors, accounts payable, accrued expenses, and legal reserve payable, approximate their estimated fair market value based on the short-term maturity of these instruments. Due to the significant increase in current market interest rates for convertible notes and the high conversion price of our notes in relation to our current stock price, the carrying value of our convertible notes are significantly above the current fair value. The estimated fair value of our convertible notes as of December 31, 2022, is approximately $ 173,200 thousand compared to a carrying value less unamortized debt discount of $ 732,289 thousand. The carrying value of our term loan, operating lease liabilities and other long-term liabilities approximate fair value as the related interest rates approximate rates currently available to the Company. Financial assets and liabilities are classified in their entirety within the fair value hierarchy based on the lowest level of input that is significant to their fair value measurement. The Company measures the fair value of its marketable securities by taking into consideration valuations obtained from third-party pricing sources. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs included reported trades of and broker-dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs. The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis and the Company’s estimated level within the fair value hierarchy of those assets and liabilities as of December 31, 2022 and 2021, respectively: SCHEDULE OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON RECURRING BASIS Fair value measured at December 31, 2022 (in thousands) Total carrying value at December 31, 2022 Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Assets Money Market Accounts $ 92,044 $ 92,044 $ — $ — Investments 37,000 — — 37,000 Fair value measured at December 31, 2021 (Restated) (in thousands) Total carrying value at December 31, 2021 (Restated) Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Assets Money Market Accounts $ 266,635 $ 266,635 $ — $ — Other receivable 1 27,784 $ — 27,784 $ — Digital assets held in Fund 223,916 — 223,916 — Investments 3,000 — — 3,000 (1) Includes digital assets loan receivable that was initially and subsequently measured at fair value using quoted prices for the underlying digital assets. 76 At December 31, 2021, the Company had 600 bitcoin as a loan to NYDIG. This loan of bitcoin was recorded as a digital asset loan receivable within other receivable. (see NOTE 5 – DIGITAL ASSET LOAN RECEIVABLE, NET OF ALLOWANCE ). The 600 bitcoin were returned to the Company on June 10, 2022. The digital assets loaned represent the fair value of the 600 bitcoin underlying the loan as Level 2 inputs for the year ended December 31, 2021 as bitcoin prices can be determined based on several exchange prices. On June 10, 2022, the Company withdrew approximately 4,769 bitcoin from its investment in NYDIG Digital Assets Fund III, LP and transferred the bitcoin directly into the Company’s account. As a result, the Company will no longer receive “mark-to-market” accounting for the bitcoin formerly held in the Fund and the 4,769 bitcoin will now be classified as digital assets on the Consolidated Balance Sheets and subject to impairment analysis as an indefinite-lived intangible. The Company’s investments (see NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ) are classified within Level 3 of the fair value hierarchy because the fair value is determined using the Monte Carlo Simulation Model and by utilizing significant unobservable inputs including probability of financing events, subordinated recovery rate, and credit spread of the investees. The Company will update its assumptions each reporting period based on new developments and record such amounts at fair value based on the revised assumptions. At December 31, 2022, the Company had an outstanding warrant liability in the amount of $ 0 associated with warrants that were issued in January 2017 and warrants issued related to the convertible notes issued in August and September of 2017. The fair value of the warrant liabilities are marked-to-market each reporting period and changes in fair value are recorded as a non-operating gain or loss in our Consolidated Statements of Other Comprehensive Income (Loss), until they are completely exercised. The fair value is determined each reporting period using the Black-Scholes option pricing model and is affected by changes in inputs to that model including our stock price, expected stock price volatility, dividends, interest rates and expected term. The following table provides a reconciliation of the beginning and ending balances of our recurring fair value measurements, using significant unobservable inputs (Level 3). The Company did not make any transfers into or out of Level 3 of the fair value hierarchy during the years ended December 31, 2022 and 2021: SCHEDULE OF RECONCILIATION OF THE BEGINNING AND ENDING BALANCES OF OUR RECURRING FAIR VALUE MEASUREMENTS Level 3 (in thousands) Investment in Preferred Stock Investment in SAFEs Other Total Assets Warrants Total Liability Carrying value at December 31, 2020 — — — — 322 322 Additions — 3,000 — 3,000 — — Conversions — — — — ( 1,370 ) ( 1,370 ) Impairment and change in fair value — — — — 1,048 1,048 Carrying value at December 31, 2021 (Restated) — 3,000 — 3,000 — — Additions 43,500 — 500 44,000 — Conversions 2,000 ( 2,000 ) — — — — Impairment and change in fair value ( 10,000 ) — — ( 10,000 ) — — Carrying value at December 31, 2022 35,500 1,000 500 37,000 — — Non-recurring measurement of Fair Value The Company accounts for its digital assets as indefinite-lived intangible assets in accordance with ASC 350 - “Intangibles – Goodwill and Other” (“ASC 350”). The Company’s digital assets are initially recorded at fair value upon receipt (or “carrying value”). On a quarterly basis, they are measured at carrying value, net of any impairment losses incurred since receipt. Pursuant to guidance from ASC 820 , the Company is required to determine the nonrecurring fair value measurement used to determine impairment of the digital assets held on the Consolidated Balance Sheets. The Company will record impairment losses as the fair value falls below the carrying value of the digital assets. The digital assets can only be marked down when impaired and not marked up when their value increases. The resulting carrying value represents the fair value of the asset. The last impairment date for the digital assets was December 31, 2022. The Company had an outstanding carrying balance of digital assets of approximately $ 190,717 thousand, and fair value net of impairment losses incurred of $ 173,215 thousand for the year ended December 31, 2022. As of December 31, 2022, the fair value of the bitcoin held as digital assets was approximately $ 202,409 thousand (Level 2). In accordance with ASC 360 - “Impairment and Disposal of Long-Lived Asset s ” (“ASC 360”), long-lived asset (group) that is held and used must be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the long-lived asset (group) might not be recoverable. Due to the decrease in the cost of bitcoin mining rigs that was driven by the drop in bitcoin prices during the fourth quarter ended December 31, 2022, the Company assessed the need for an impairment write-down of it’s bitcoin miners. In accordance with ASC 360-10, the Company determined that its bitcoin miners had a carrying value in excess of fair value, and accordingly, the Company recognized an impairment charge for its bitcoin rigs of approximately $ 208,622 thousand for the year ended December 31, 2022. The fair value of the bitcoin rigs determined primarily using observable prices for similar assets as of December 31, 2022 was $ 202,409 thousand (Level 2). NOTE 7 - INCOME TAXES The Company accounts for income taxes under ASC 740 - “Income Taxes” (“ASC 740”), which requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry-forwards. ASC 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Income tax expense (benefit) attributable to income from continuing operations was $ 21,838 thousand and $ 22,576 thousand for the years ended December 31, 2022 and 2021, respectively, and differed from the amounts computed by applying the U.S. federal income tax rate of 21 % % to pretax income from continuing operations as a result of the following: SCHEDULE OF PRETAX INCOME FROM CONTINUING OPERATIONS 1 2 3 (in thousands, except percentage data) 2022 2021 (Restated) 2020 Federal income tax expense (benefit) at the statutory rate ( 21.0 )% $ ( 148,801 ) ( 21.0 )% $ ( 3,144 ) ( 21.0 )% $ ( 2,230 ) State income taxes, net of federal tax expense ( 1.6 )% ( 11,153 ) 49.5 % 7,531 ( 7.0 )% ( 745 ) Executive compensation deduction limitation 1.0 % 7,358 199.0 % 30,213 4.2 % 444 Excess tax benefit related to share-based compensation — % 285 ( 12.6 )% ( 1,909 ) — % — Nondeductible other expenses — % 14 1.5 % 225 — % — Change in valuation allowance 18.4 % 130,527 ( 95.3 )% ( 14,477 ) 23.9 % 2,533 Prior year true-ups — % 130 28.2 % 4,281 — % — Other, net — % ( 198 ) ( 1.0 )% ( 144 ) — % — Income tax expense (benefit) from continuing operations ( 3.2 )% $ ( 21,838 ) 148.3 % $ 22,576 0.1 % $ 2 77 The components of the provision for income taxes are as follows: SCHEDULE OF PROVISION FOR INCOME TAXES (in thousands) December 31, 2022 December 31, 2021 (Restated) December 31, 2020 Current income tax expense (benefit) Federal $ — $ — $ — State 734 2 2 Total current income tax expense 734 2 2 Deferred expense Federal ( 141,613 ) 29,523 — State ( 11,486 ) 7,528 — Total deferred tax expense (benefit) ( 153,099 ) 37,051 9,080 Change in valuation allowance 130,527 ( 14,477 ) ( 9,080 ) Net deferred tax expense after valuation allowance (benefit) ( 22,572 ) 22,574 — Income tax provision (benefit) $ ( 21,838 ) $ 22,576 $ 2 The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2022 and 2021 are presented below: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES (in thousands) December 31, 2022 December 31, 2021 (Restated) Deferred tax assets: Tax credit carryforwards $ 386 $ 163 Net operating loss carryforwards 48,703 25,603 Intangible assets 1,727 1,055 Stock compensation 2,133 447 Digital assets 50,106 7,446 Disallowed Interest 2,215 — Bad debt reserve 10,039 — Research and development costs 541 — Accruals, reserves and other 239 269 Loan reserve — 209 Impairment loss 36,397 — Total gross deferred tax assets 152,486 35,192 Less valuation allowance ( 130,527 ) — Net deferred tax assets 21,959 35,192 Deferred tax liabilities: Unrealized gains — ( 18,428 ) Prepaid service contracts — ( 4,395 ) Property and equipment ( 21,959 ) ( 34,944 ) Total gross deferred liabilities ( 21,959 ) ( 57,767 ) Net deferred tax liability $ — $ ( 22,575 ) The valuation allowance for deferred tax assets as of December 31, 2022 and 2021 was $ 130,527 thousand and nil , respectively. The net change in the total valuation allowance was an increase of $ 130,527 thousand in the year ended December 31, 2022. At year ended December 31, 2022, the Company concluded, based upon all available evidence, it was more likely than not that it would not have sufficient future taxable income to realize the Company’s federal and state deferred tax assets. As a result, the Company established a valuation allowance against deferred tax assets that are not supported by reversing deferred tax liabilities. At December 31, 2022, the Company has net operating loss carryforwards for federal income tax purposes of $ 217,503 thousand, which are available to offset future taxable income. The Company has net operating loss carryforwards for state income tax purposes of $ 46,983 thousand which are available to offset future state taxable income. The Company has interest carryforward in the amount of $ 10,076 thousand which has no expiration. 78 Section 382 and Section 383 of the Internal Revenue Code limit the utilization of U.S. tax attribute carryforwards following a change of control. Based on the Company’s analysis under Section 382, approximately $ 86,000 thousand of tax attributes is limited by Section 382/383 as of December 31, 2022. The Section 382/383 limitation in conjunction with the twenty-year carryforward limitation caused $ 33,500 thousand of attributes to be deemed worthless, which resulted in a write-off of the related deferred tax assets in 2021. In addition, the Company has the following attributes and credit carryforwards: SCHEDULE OF ATTRIBUTES AND CREDIT CARRYFORWARDS (in thousands) Gross Amount Expiring Federal net operating loss carryforwards $ 3,314 2034 - 2035 Federal net operating loss carryforwards - indefinite life $ 214,189 Indefinite State net operating loss carryforwards $ 46,983 Various Interest carryforwards $ 10,076 Indefinite A reconciliation of the beginning and ending amount of total unrecognized tax benefits for the tax years ended December 31, 2022, and 2021 is as follows: SCHEDULE OF UNRECOGNIZED TAX BENEFITS ROLL FORWARD (in thousands) December 31, 2022 December 31, 2021 (Restated) December 31, 2020 Balance, beginning of year $ 44 $ — $ — Increase related to prior year tax positions 21 25 — Increase related to current year tax positions 5,187 19 — Balance, end of year $ 5,252 $ 44 $ — The Company has established a reserve against its federal R&D tax credits generated in 2022 and previous years. The Company has also established a reserve related to its executive compensation deduction limitation in 2022. In addition, the Company has the following attributes and credit carryforwards: SCHEDULE OF NET OPERATING LOSS CARRYFORWARDS (in thousands) Gross Amount Expiring Federal net operating loss carryforwards $ 345,336 2040 - 2042 Federal net operating loss carryforwards - indefinite life $ 40,457 As of December 31, 2022, the total amount of unrecognized tax benefits was $ 5,252 thousand, all of which was offset against deferred tax assets. If the unrecognized tax benefits were recognized as of December 31, 2022, there would be a $ 5,252 thousand favorable impact that would affect the effective rate on income from continuing operations. The Company also accrues for interest and penalties on its uncertain tax positions and includes such charges in its income tax provision in the Consolidated Statements of Other Comprehensive Income (Loss). Interest and penalty expense amounted to nil and nil, respectively, in 2022 and 2021. Total accrued interest and penalties were nil and nil, respectively, in 2022. The Company does not currently expect any of its remaining unrecognized tax benefits to be recognized in the next twelve months. The Company files federal and state income tax returns. The 2018-2021 tax years generally remain subject to examination by the IRS and various state taxing authorities, although the Company is not currently under examination in any jurisdiction. NOTE 8 - NET LOSS PER SHARE Net loss per common share is calculated in accordance with ASC 260 - “Earnings Per Share” (“ASC 260”). Basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. The computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average shares outstanding, as they would be anti-dilutive. 79 Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at December 31, 2022 and 2021 are as follows: SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE 2022 2021 (Restated) For the year ended December 31, 2022 2021 (Restated) Warrants to purchase common stock 324,375 326,779 Restricted stock units 1,255,648 642,094 Convertible notes to exchange common stock 9,812,955 9,812,955 Total dilutive shares 11,392,978 10,781,828 The following table sets forth the computation of basic and diluted loss per share: SCHEDULE OF COMPUTATION OF BASIC AND DILUTED LOSS PER SHARE 2022 2021 (Restated) 2020 For the year ended December 31, 2022 2021 (Restated) 2020 Net loss attributable to common shareholders $ ( 686,740 ) $ ( 37,096 ) $ ( 10,448 ) Denominator: Weighted average common shares - basic and diluted 113,467,837 99,337,587 81,408,340 Loss per common share - basic and diluted $ ( 6.05 ) $ ( 0.37 ) $ ( 0.13 ) NOTE 9 – COMPUTE NORTH BANKRUPTCY On September 22, 2022, Compute North Holdings, Inc. (along with its affiliated debtors, collectively, “Compute North”), filed for chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Texas under chapter 11 of the U.S. Bankruptcy Code (11 U.S. Code section 101 et seq .). The Company’s financial exposure to Compute North at the time of the bankruptcy filing included: ● Approximately $ 10,000 thousand in Convertible Preferred Stock of Compute North Holdings, Inc. ● Approximately $ 21,000 thousand related to an unsecured Senior Promissory note with Compute North LLC. ● Approximately $ 50,000 thousand in operating deposits with Compute North primarily related to the King Mountain and Wolf Hollow hosting facilities. The Company’s financial exposure to Compute North on the date of the Bankruptcy was approximately $ 81,000 thousand . During the third quarter t he Company assessed the impairment of these assets given the bankruptcy proceedings and estimated that the preferred stock, the unsecured loan, and approximately $ 8,000 thousand in deposits were fully impaired. As a result, the company recorded an impairment charge of $ 39,000 thousand during the third quarter of 2022. During the fourth quarter of 2022, the company estimated that an additional $ 16,674 thousand in deposits had likely been impaired and as such recorded an additional impairment charge . On February 16, 2023, the Bankruptcy Court approved the Debtors Plan of Reorganization, pursuant to which Marathon’s claim has been fixed at $ 40,000 thousand as an unsecured claim to be paid out according to the timing and percentages within the approved Debtor’s plan. NOTE 10 - STOCKHOLDERS’ EQUITY Common Stock Shelf Registration Statements on Form S-3 and At-The-Market Offering Agreements On February 11, 2022, the Company entered into an At-The-Market Offering Agreement, or sales agreement, with H.C. Wainwright & Co., LLC (“Wainwright”) relating to shares of its common stock. In accordance with the terms of the sales agreement, the Company may offer and sell shares of our common stock having an aggregate offering price of up to $ 750,000 thousand from time to time through Wainwright acting as its sales agent. As of December 31, 2022, the Company had sold 42,142 thousand shares of common stock for an aggregate purchase price of $ 361,482 thousand, net of offering costs pursuant to this At-The-Market Offering Agreement. 80 Common Stock Warrants A summary of the Company’s issued and outstanding stock warrants and changes during the year ended December 31, 2022 and 2021 is as follows: SUMMARY OF OUTSTANDING STOCK WARRANTS Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Outstanding as of December 31, 2020 287,656 $ 12.64 2.7 Issued 375,000 25.00 4.3 Expired ( 19,792 ) 27.20 — Exercised ( 316,085 ) 14.42 — Outstanding as of December 31, 2021 (Restated) 326,779 $ 25.54 3.5 Issued — — — Expired ( 2,404 ) 52.00 — Exercised — — — Outstanding as of December 31, 2022 324,375 25.00 2.5 Warrants exercisable as of December 31, 2022 324,375 $ 25.00 2.5 The aggregate intrinsic value of warrants outstanding and exercisable at December 31, 2022 and 2021 was $ 0 and $ 2,500 thousand, respectively. Restricted Stock A summary of the restricted stock award activity (represented by restricted stock units (RSUs) for the year ended December 31, 2022 and 2021, as follows: Restricted Stock Units A summary of the RSUs as of December 31, 2022 and 2021, respectively and changes during the period are presented below: SUMMARY OF RESTRICTED STOCK AWARD ACTIVITY Number of Units Weighted Average Grant Date Fair Value Nonvested at December 31, 2020 566,279 $ 0.43 Granted 8,313,410 20.89 Vested ( 8,237,595 ) 18.31 Nonvested at December 31, 2021 (Restated) 642,094 $ 35.93 Granted 1,167,339 19.35 Retired ( 60,000 ) 42.19 Vested ( 493,785 ) 29.87 Nonvested at December 31, 2022 1,255,648 $ 22.60 As of December 31, 2022, unrecognized stock-based compensation expense of approximately $ 15,000 thousand remains to be recognized over the weighted average period of approximately 2.3 years. 81 NOTE 11 – ACCRUED EXPENSES As of December 31, 2022 and 2021, the Company’s accrued expenses consisted of the following: SCHEDULE OF ACCRUED LIABILITIES (in thousands) 2022 2021 (Restated) Interest $ 1,011 $ 867 Non-income taxes 14,509 — Other 6,774 1,743 Total accrued expenses $ 22,294 $ 2,610 NOTE 12 – DEBT Debt consists of the following: SCHEDULE OF DEBT (in thousands, except for interest rate data) Maturity Date Interest Rate December 31, 2022 December 31, 2021 (Restated) Convertible note December 1, 2026 1 % $ 747,500 $ 747,500 Less: unamortized debt discount ( 15,211 ) ( 19,094 ) Total convertible notes, net of discount $ 732,289 $ 728,406 Revolving credit line August 5, 2024 * Variable — — Term loan August 5, 2024 * Variable 50,000 — Less: unamortized deferred fees ( 118 ) — Total loans and debt $ 49,882 $ — Total 782,171 728,406 Less: current portion — — Long term portion $ 782,171 $ 728,406 * During the year ended December 31, 2022 and 2021, there was amortization of debt issuance costs of $ 3,945 thousand and $ 0 thousand, respectively. Interest expense was $ 14,980 thousand and $ 1,570 thousand for the years ended December 31, 2022 and 2021, respectively. The following summarizes the Company’s repayments due on the Term loan and Convertible Note in each of the next 5 years, and thereafter (in thousands): SCHEDULE OF REPAYMENTS DUE ON THE TERM LOAN AND CONVERTIBLE NOTE Year Repayment Amount 2023 $ — 2024 50,000 2025 — 2026 747,500 2027 — Thereafter — 82 RLOC and Term Loan facilities On October 1, 2021, the Company entered into a Revolving Credit and Security Agreement with Silvergate Bank pursuant to which Silvergate agreed to loan the Company up to $ 100,000 thousand on a revolving basis. On July 28, 2022, the Company entered into a new Revolving Credit and Security Agreement (the “Agreement” or “RLOC”) with Silvergate Bank (the “Bank”) pursuant to which Silvergate agreed to loan the Company up to $ 100 ,000 thousand on a revolving basis pursuant to the terms of the Agreement. This facility refinanced and replaced an existing $ 100 ,000 thousand facility the Company had in place with the Bank. On the same date the Company also entered into a $ 100,000 thousand principal term loan facility (the “Term Loan”). The terms of the facilities set forth in the RLOC and the Term Loan are as follows: Initial Term: Termination is on August 5, 2024 . Availability of the facilities: The RLOC shall be made available from time to time to the Company for periodic draws (provided no event of default then exists) from its closing date up to and including the termination date of the Agreement. The Company may borrow up to $ 100.0 million on the term loan, with $ 50.0 million to be made as of the Closing Date (the “Initial Draw”), and $ 50.0 million to be made, at Borrower’s request, on or before April 25, 2023 (the “Delayed Draw”), and subject to satisfaction of the conditions set forth in the Term Loan Agreement. Origination Fees for the facilities: RLOC: 0.35 % of the Loan Commitment to the Bank (or $ 350 thousand); due at RLOC closing (and on each anniversary if the RLOC continues for more than one year). Term Loan: An origination fee of $ 150 thousand and a contingent draw fee in the amount of $ 250 thousand (the, “Contingent Draw Fee”) upon the execution of the Term Loan Agreement. This Contingent Draw Fee will be refunded to the Company if it borrows the Delayed Draw by no later than November 25, 2022. Unused Commitment Fee on the RLOC: 0.25 % per annum of the portion of the unused Loan Commitment, payable monthly in arrears. Renewal of the RLOC: The RLOC may be renewed annually by agreement between the Bank and the Company, subject to (without limitation): (i) Company makes a request for renewal, in writing, no less than sixty (60) days prior to the then current maturity date, (ii) no event of default then exists, (iii) Company provides all necessary documentation to extend the RLOC, (iv) Company has paid all applicable fees related to the loan renewal, and (v) the Bank has approved such extension request according to its internal credit policies as determined by the Bank in its sole and absolute discretion. Interest Rate and Payments for the facilities: RLOC: Interest only to be paid monthly, with principal all due at maturity. The interest rate is defined as the higher of (i) the Floor Rate and (ii) Prime Rate plus the Applicable Margin. “Floor Rate” shall mean, as of any date of determination: (a) 5.25% for any days during an Interest Period the Loan to Value (“LTV”) Ratio is less than 40%, (b) six percent (6.00%) for any days during an Interest Period the LTV Ratio is greater than or equal to 40% and less than 55%, and (c) 6.75% for any day the LTV Ratio is greater than or equal to 55%. The Applicable Margin means at any time: (a) 1.25% for any days during an Interest Period the LTV Ratio is less than 40%, (b2.00% for any days during an Interest Period the LTV Ratio is greater than or equal to40% and less than 55%, and (c) 2.75% for any days during an Interest Period the LTV Ratio is greater than or equal to 55%. Term Loan: Interest, which shall be due on the principal amount of the loan, at the higher of 5.75 % and the Prime Rate plus 1.75 %, only to be paid monthly, with principal all due at maturity. 83 Collateral for the facilities: The RLOC and term loan facilities are secured by a pledge of a sufficient amount of Company’s right, title and interest in and to bitcoin stored in a custody account for the benefit of the Bank (the “Collateral Account”). The Bank will establish a Collateral Account with a regulated custodial entity (the “Custodian”) that has been approved by the Bank. The Bank and Custodian will have a custodial agreement to perfect the security interest in the pledged Collateral Account which, among other things, allows for 1) the Bank to monitor the balance of the Collateral Account and 2) allows the Bank to have exclusive control over the Collateral Account including liquidation of the collateral in the event of Company’s default under the terms of the RLOC. The Bank may also file a UCC financing statement on the pledged collateral. The Company bears the risk of loss from market value declines of its collateral pursuant to its obligation to pledge additional bitcoin if its market value declines such that outstanding borrowings under the RLOC are undercollateralized. The Company may also withdraw its collateral from the Collateral Account if market value of bitcoin increases and outstanding borrowings under the RLOC are overcollateralized or if such borrowings are repaid in whole or in part. Minimum Advance Rates for the facilities: At origination, the Company must ensure the Collateral Account balance has sufficient bitcoin to cause the LTV ratio to equal 65 % (or less) (“Minimum Advance Rate”) on the unpaid principal balance of the facilities. If at any time the LTV ratio exceeds 75 %, the Company must bring the rate of advance to the Minimum Advance Rate. Covenants for the facilities: The Company must maintain a minimum adjusted net worth of $ 350.0 million. The Company must maintain a minimum unrestricted and unencumbered cash of $ 25.0 million. Convertible Note On November 18, 2021, the Company issued $ 650,000 thousand principal of its 1.0 % Convertible Senior Notes due 2026 (the “ Notes ”). The Notes were issued pursuant to, and are governed by, an indenture (the “ Indenture ”), dated as of November 18, 2021, between the Company and U.S. Bank National Association, as trustee (the “ Trustee ”). Pursuant to the purchase agreement between the Company and the initial purchasers of the Notes, the Company also granted the initial purchasers an option, for settlement within a period of 13 days from, and including, November 18, 2021 to purchase up to an additional $ 97,500 thousand principal of Notes, which additional Notes were purchased on November 23, 2021, for an aggregate principal amount of Notes purchased of $ 747,500 thousand. All references in this disclosure to “Notes” includes the Notes issued on both November 18, 2021 and November 23, 2021. The Notes are the Company’s senior, unsecured obligations and are (i) equal in right of payment with the Company’s existing and future senior, unsecured indebtedness; (ii) senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated to the Notes; (iii) effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries. 84 The Notes accrue interest at a rate of 1.00 % per annum, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on June 1, 2022. The Notes will mature on December 1, 2026, unless earlier repurchased, redeemed or converted. Before the close of business on the business day immediately before September 1, 2026, noteholders will have the right to convert their Notes only upon the occurrence of certain events . From and after September 1, 2026, noteholders may convert their Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election. The initial conversion rate is 13.1277 shares of common stock per $ 1 thousand principal amount of Notes, which represents an initial conversion price of approximately $ 76.17 per share of common stock. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. The Notes will be redeemable, in whole or in part (subject to certain limitations described below), at the Company’s option at any time, and from time to time, on or after December 6, 2024 and on or before the 21st scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (2) the trading day immediately before the date the Company sends such notice . However, the Company may not redeem less than all of the outstanding Notes unless at least $ 100,000 thousand aggregate principal amount of Notes are outstanding and not called for redemption as of the time the Company sends the related redemption notice. In addition, calling any Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted during the related redemption conversion period. If certain corporate events that constitute a “Fundamental Change” (as defined in the Indenture) occur, then, subject to a limited exception for certain cash mergers, noteholders may require the Company to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s common stock. The Notes have customary provisions relating to the occurrence of “Events of Default” (as defined in the Indenture), which include the following: (i) certain payment defaults on the Notes (which, in the case of a default in the payment of interest on the Notes, are subject to a 30-day cure period); (ii) the Company’s failure to send certain notices under the Indenture within specified periods of time; (iii) the Company’s failure to comply with certain covenants in the Indenture relating to the Company’s ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to another person; (iv) a default by the Company in its other obligations or agreements under the Indenture or the Notes if such default is not cured or waived within 60 days after notice is given in accordance with the Indenture; (v) certain defaults by the Company or any of its subsidiaries with respect to indebtedness for borrowed money of at least $ 50,000 thousand; and (vi) certain events of bankruptcy, insolvency and reorganization involving the Company or any of its significant subsidiaries. If an Event of Default involving bankruptcy, insolvency or reorganization events with respect to the Company (and not solely with respect to a significant subsidiary of the Company) occurs, then the principal amount of, and all accrued and unpaid interest on, all of the Notes then outstanding will immediately become due and payable without any further action or notice by any person. If any other Event of Default occurs and is continuing, then, the Trustee, by notice to the Company, or noteholders of at least 25% of the aggregate principal amount of Notes then outstanding, by notice to the Company and the Trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the Notes then outstanding to become due and payable immediately. However, notwithstanding the foregoing, the Company may elect, at its option, that the sole remedy for an Event of Default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture consists exclusively of the right of the noteholders to receive special interest on the Notes for up to 270 days at a specified rate per annum not exceeding 0.50% on the principal amount of the Notes. 85 NOTE 13 – LEASES In February 2016, the FASB issued ASU No. 2016-02 - “Leases” (“ASC 842”), and has since issued amendments thereto, related to the accounting for leases. ASC 842 establishes a right-of-use, or ROU model that requires a lessee to record a ROU asset and a lease liability on the Consolidated Balance Sheets for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the expense recognition in the Consolidated Statements of Other Comprehensive Income (Loss). Effective January 1, 2019, the Company adopted ASC 842. The Company determines if an arrangement contains a lease at inception based on whether or not the Company has the right to control the asset during the contract period and other facts and circumstances. The Company leases office space in the United States under operating lease agreements. Office space is the Company’s only material underlying asset class under operating lease agreements. The Company has no material finance leases. Aren’t required to give exact addresses – up to us Effective June 1, 2018, the Company rented its corporate office at 1180 North Town Center Drive, Suite 100, Las Vegas, Nevada 89144, on a month-to-month basis. Effective February 14, 2022, the Company rented an office located at Tower 101, 101 NE Third Avenue, Fort Lauderdale, Florida, 33301, for a term of 63 months. Effective March 1, 2022, the Company rented an office located at 300 Spectrum Center Drive, Irvine CA, 92618, for a term of 24 months. Effective May 1, 2022, the Company rented warehouse space located at 3306 5 th Street SE, East Wenatchee, Washington, 98802, for a term of 24 months. Effective September 21, 2022, the Company rented warehouse space located at 512 N. Douglas Ave., Oklahoma City, OK, 73106, for a term of 36 months. As of December 31, 2022, the Company’s right-of-use (“ROU”) assets and total lease liabilities were $ 1,276 thousand and $ 1,343 thousand, respectively for leases in the United States. As of December 31, 2021, the Company’s ROU assets and total lease liabilities were nil. The Company has amortized the right-of-use assets totaling $ 110 thousand for the year ended December 31, 2022. Operation lease costs are recorded on a straight-line basis within operating expenses. The Company’s total lease expense is comprised of the following: SCHEDULE OF COMPONENTS OF LEASE COST For the year ended December 31, (in thousands) 2022 2021 (Restated) Operating leases Operating lease cost $ 327 $ — Operating lease expense 327 — Short-term lease rent expense 29 31 Total rent expense $ 356 $ 31 86 Additional information regarding the Company’s leasing activities as a lessee is as follows: SUMMARY OF MINIMUM LEASE PAYMENTS For the year ended December 31, (in thousands, except term and discount rate data) 2022 2021 (Restated) Operating cash flows from operating leases $ 67 $ — Weighted-average remaining lease term – operating leases 3.9 — Weighted-average discount rate – operating leases 5 % — % SCHEDULE OF LEASE LIABILITY MATURITY Year Amount (in thousands) 2023 459 2024 362 2025 312 2026 241 2027 102 Thereafter — Total 1,476 Less: Imputed interest ( 133 ) Present value of lease liability 1,343 The Company entered into an arrangement with Applied Blockchain for the use of an energized cryptocurrency mining facility under which the Company pays for electricity per megawatt based on usage. The Company has determined that it has a lease of one of the facilities governed by this arrangement (Ellendale) as the Company has contracted to take substantially all of the output of such facility. This lease is expected to commence in the first quarter of 2023. NOTE 14 - LEGAL PROCEEDINGS Ho Matter On January 14, 2021, Plaintiff Michael Ho (“Plaintiff” or “Ho”) filed a Civil Complaint for Damages and Restitution (“Complaint”) against the Company and 10 Doe Defendants. The Complaint alleges six causes of action against the Company, (1) Breach of Written Contract; (2) Breach of Implied Contract; (3) Quasi-Contract; (4) Services Rendered; (5) Intentional Interference with Prospective Economic Relations; and (6) Negligent Interference with Prospective Economic Relations, which is the one plead against “all Defendants” and is most likely to involve later named defendants. The claims arise from the same set of facts, Ho alleges that the Company profited from commercially sensitive information he shared with the Company and then it refused to compensate him for his role in securing the acquisition of a supplier of energy for the Company. On February 22, 2021, the Company responded to Mr. Ho’s Complaint with a general denial and the assertion of applicable affirmative defenses. Then, on February 25, 2021, the Company removed the action to the United States District Court in the Central District of California, where the action remains pending. The Company filed a motion for summary judgment/adjudication of all causes of action. On February 11, 2022, the Court granted the motion and dismissed Ho’s 2nd, 5th and 6th causes of action. Discovery is substantially closed. The Court held a pre-trial conference on February 24, 2022, where it vacated the March 3, 2022 trial date and ordered the parties to meet and confer on a new trial date. The Court discussed the various theories of damages maintained by the parties. In its ruling on the summary judgment motion and at the pre-trial conference on February 24, 2022, the Court noted that a jury is more likely to accept $ 150,000 thousand as an appropriate damages amount if liability is found, as opposed to the various theories espoused by Ho that result in multi-million-dollar recoveries. Due to outstanding issues of fact and law, it is impossible to predict the outcome at this time; however, after consulting legal counsel, the Company is confident that it will prevail in this litigation, since it did not have a contract with Mr. Ho and he did not disclose any commercially sensitive information under any mutual nondisclosure agreement that was used to structure any joint venture with energy providers. Trial is scheduled for May 2023. 87 Information Subpoena On October 6, 2020, the Company entered into a series of agreements with multiple parties to design and build a data center for up to 100-megawatts in Hardin, MT. In conjunction therewith, the Company filed a Current Report on Form 8-K on October 13, 2020. The 8-K disclosed that, pursuant to a Data Facility Services Agreement, the Company issued 6,000,000 shares of restricted common stock, in transactions exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. During the quarter ended September 30, 2021, the Company and certain of its executives received a subpoena to produce documents and communications concerning the Hardin, Montana data center facility described in our Form 8-K dated October 13, 2020. We understand that the SEC may be investigating whether or not there may have been any violations of the federal securities law. We are cooperating with the SEC. Putative Class Action Complaint On December 17, 2021, a putative class action complaint was filed in the United States District Court for the District of Nevada, against the Company and present and former senior management. The complaint alleges securities fraud related to the disclosure of an SEC investigation previously made by the Company on November 15, 2021. Plaintiff Tad Schlatre served the complaint on the Company on March 1, 2022. On September 12, 2022, the court appointed Carlos Marina as lead plaintiff. On October 21, 2022, lead plaintiff voluntarily dismissed the complaint without prejudice. Derivative Complaints On February 18, 2022, a shareholder derivative complaint was filed in the United States District Court for the District of Nevada, against current and former members of the Company’s board of directors and senior management. The complaint is based on allegations substantially similar to the allegations in the December 2021 putative class action complaint, related to the Company’s disclosure of an SEC investigation previously made by the Company on November 15, 2021. On March 4, 2022, the complaint was served on the Company. On April 4, 2022, the defendants moved to dismiss the complaint. On May 5, 2022, a second shareholder derivative complaint was filed in the United States District Court for the District of Nevada, against current and former members of the Company’s board of directors and senior management. The second shareholder derivative complaint is based on allegations substantially similar to the allegations in the February 18, 2022 derivative complaint. On May 11, 2022, the defendants moved to dismiss the second shareholder derivative complaint. On June 1, 2022, the Court entered an order consolidating the two derivative actions. A June 13, 2022 scheduling order provided for plaintiffs to file a consolidated complaint and for renewed motions to dismiss the consolidated shareholder derivative complaint. On November 22, 2022, before a consolidated complaint was due, plaintiffs voluntarily dismissed both actions without prejudice. On November 23, 2022, both actions were closed. Legal Reserves During the year ended December 31, 2022, the Company recorded a $ 26,000 thousand legal reserve charge related to the fair value of certain stock grants used for personal income tax reporting purposes during 2021. The majority of this reserve was related to a claim made by the Company’s former Chairman and CEO. In working on this initial claim, the Company discovered that seven other individuals were also impacted by the same issue, including one current board member and the current Chairman and CEO. The total amount of this portion of the reserve amounted to approximately $ 2,000 thousand. Legal settlements that were accrued but remained unpaid as of December 31, 2022 of $ 1,171 thousand were classified as “legal reserve payable”. Compute North Bankruptcy On September 22, 2022, Compute North filed for chapter 11 bankruptcy protection. Compute North provides operating services to the Company and hosts our mining rigs in multiple facilities. We delivered miners to Compute North, which then installed the mining rigs in several facilities, operated and maintained the mining rigs, and provides energy to keep the miners operating. In chapter 11, Compute North is currently seeking to sell substantially all of its assets, including its direct and indirect ownership interests in the facilities that house the Company’s miners. Compute North may also seek to assume and assign the Compute North agreements to which the Company is party to one or more third-party purchasers of Compute North’s assets or it may seek to reject such agreements. Accordingly, Compute North’s chapter 11 cases could cause a disruption in services provided by Compute North to us and, therefore, could have an adverse effect on our operations in the facilities managed by Compute North. At this stage of Compute North’s chapter 11 cases, it is difficult to predict whether Marathon will receive any meaningful recovery on account of its claims. NOTE 15 - RELATED PARTY TRANSACTIONS Parties are considered related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. On September 23, 2022, the Company made an incremental 30,000 thousand investment in Auradine, Inc., bringing its total holdings in Auradine to $ 35,500 thousand based upon a previously issued and disclosed SAFE instrument. Said Ouissal, a director of the Company, owns approximately 10 % of the issued and outstanding shares of Auradine, and Fred Thiel, the Company’s Chairman and CEO, sits on Auradine’s Board of Directors. On November 3, 2022, the Company’s Board met and determined that Said Ouissal is no longer deemed to be an independent director of the Company. As a result, Mr. Ouissal stepped down from the Audit and Compensation Committees. NOTE 16 – QUARTERLY FINANCIAL DATA (UNAUDITED) The following tables present the impacts of the restatement adjustments, as described in NOTE 2 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENT . Restated Consolidated Statements of Stockholders’ Equity are not presented as all impacted items on those statements, net income (loss), accumulated deficit, and total stockholders’ equity, are presented within the following tables. This quarterly information has been prepared on the same basis as the Consolidated Financial Statements and includes all adjustments necessary to state fairly the information for the interim periods presented, which management considers necessary for a fair presentation when read in conjunction with the Consolidated Financial Statements and notes. We believe these comparisons of consolidated quarterly selected financial data are not necessarily indicative of future performance. 88 Unaudited Interim Consolidated Balance Sheets The following Unaudited Interim Consolidated Balance Sheets tables present the impacts of the restatement adjustments as of the periods ended March 31, 2021 and 2022, June 30, 2021 and 2022, and September 30, 2021 and 2022. For the impacts of the restatement adjustments for the Consolidated Balance Sheets as of December 31, 2021 refer to NOTE 2 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENT . The period ended December 31, 2022 was not subject to restatement and is presented in Part I of ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. SCHEDULE OF UNAUDITED INTERIM BALANCE SHEET (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated As of March 31, 2021 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated ASSETS Current assets: Cash and cash equivalents $ 211,934 $ — $ — $ 211,934 Restricted cash Digital assets 10,746 ( 204 ) — 10,542 Digital assets held in Fund 281,823 205 — 282,028 Other receivable Deposits 128,869 — — 128,869 Loan receivable Digital assets, restricted Prepaid expenses and other current assets 2,514 — — 2,514 Total current assets 635,886 1 — 635,887 Other assets: Property and equipment, net 41,961 — — 41,961 Assets held for sale Advances to vendors Investments Digital assets, restricted Long term deposits Long term prepaids 7,854 — — 7,854 Right-of-use assets Intangible assets, net 985 — — 985 Total other assets 50,800 — — 50,800 TOTAL ASSETS $ 686,686 $ 1 $ — $ 686,687 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 344 $ — $ — $ 344 Accrued expenses 643 205 — 848 Legal reserve payable Warrant liability 1,914 — — 1,914 Short term borrowings - revolving credit line Operating lease liabilities Current portion of accrued bond interest Total current liabilities 2,901 205 — 3,106 Long-term liabilities: Notes payable Operating lease liabilities Deferred tax liabilities SBA PPP loan payable 63 — — 63 Total long-term liabilities 63 — — 63 Commitments and Contingencies - - - - Stockholders’ Equity: Preferred stock — — — — Common stock 10 — — 10 Additional paid-in capital 716,862 — — 716,862 Accumulated other comprehensive loss ( 451 ) — — ( 451 ) Accumulated deficit ( 32,699 ) ( 204 ) — ( 32,903 ) Total stockholders’ equity 683,722 ( 204 ) — 683,518 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 686,686 $ 1 $ — $ 686,687 89 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated As of June 30, 2021 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated ASSETS Current assets: Cash and cash equivalents $ 170,616 $ 38 $ — $ 170,654 Digital assets 28,966 ( 2,148 ) — 26,818 Digital assets held in Fund 166,915 111 — 167,026 Deposits 121,583 — — 121,583 Prepaid expenses and other current assets 3,571 — — 3,571 Total current assets 491,651 ( 1,999 ) — 489,652 Other assets: Property and equipment, net 80,151 — — 80,151 Long term prepaids 11,095 — — 11,095 Intangible assets, net 967 — — 967 Total other assets 92,213 — — 92,213 TOTAL ASSETS $ 583,864 $ ( 1,999 ) $ — $ 581,865 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 437 $ — $ — $ 437 Accrued expenses 2,190 149 — 2,339 Warrant liability 718 — — 718 Total current liabilities 3,345 149 — 3,494 Commitments and Contingencies Stockholders’ Equity: Preferred stock — — — — Common stock 10 — — 10 Additional paid-in capital 722,543 — — 722,543 Accumulated other comprehensive loss ( 451 ) — — ( 451 ) Accumulated deficit ( 141,583 ) ( 2,148 ) — ( 143,731 ) Total stockholders’ equity 580,519 ( 2,148 ) — 578,371 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 583,864 $ ( 1,999 ) $ — $ 581,865 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated As of September 30, 2021 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated ASSETS Current assets: Cash and cash equivalents $ 32,854 $ — $ — $ 32,854 Digital assets 64,358 ( 1,597 ) ( 2,363 ) 60,398 Digital assets held in Fund 208,765 144 — 208,909 Other receivable — — 12,710 12,710 Deposits 203,258 — — 203,258 Digital assets, restricted 9,574 — ( 9,574 ) — Prepaid expenses and other current assets 35,751 — — 35,751 Total current assets 554,560 ( 1,453 ) 773 553,880 Other assets: Property and equipment, net 93,932 — — 93,932 Long term prepaids 14,900 — — 14,900 Intangible assets, net 949 — — 949 Total other assets 109,781 — — 109,781 TOTAL ASSETS $ 664,341 $ ( 1,453 ) $ 773 $ 663,661 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 2,814 $ — $ — $ 2,814 Accrued expenses 561 144 — 705 Warrant liability 550 — — 550 Total current liabilities 3,925 144 — 4,069 Commitments and Contingencies Stockholders’ Equity: Preferred stock — — — — Common stock 10 — — 10 Additional paid-in capital 824,613 — — 824,613 Accumulated other comprehensive loss ( 451 ) — — ( 451 ) Accumulated deficit ( 163,756 ) ( 1,597 ) 773 ( 164,580 ) Total stockholders’ equity 660,416 ( 1,597 ) 773 659,592 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 664,341 $ ( 1,453 ) $ 773 $ 663,661 90 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated As of March 31, 2022 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated ASSETS Current assets: Cash and cash equivalents $ 117,911 $ 31 $ — $ 117,942 Restricted cash 600 — — 600 Digital assets 135,124 ( 6,204 ) 527 129,447 Digital assets held in Fund 218,237 202 — 218,439 Other receivable 4,720 — 25,150 29,870 Deposits 40,792 — — 40,792 Digital assets, restricted 20,437 — ( 20,437 ) — Prepaid expenses and other current assets 54,765 ( 2,000 ) — 52,765 Total current assets 592,586 ( 7,971 ) 5,240 589,855 Other assets: Property and equipment, net 333,317 — — 333,317 Advances to vendors 594,240 — — 594,240 Investments 13,500 20 — 13,520 Long term prepaids 3,131 2,000 — 5,131 Right-of-use assets 1,326 — — 1,326 Total other assets 945,514 2,020 — 947,534 TOTAL ASSETS $ 1,538,100 $ ( 5,951 ) $ 5,240 $ 1,537,389 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 7,715 $ — $ — $ 7,715 Accrued expenses 4,125 517 — 4,642 Operating lease liabilities 264 — — 264 Current portion of accrued interest 2,710 — — 2,710 Total current liabilities 14,814 517 — 15,331 Long-term liabilities: Notes payable 729,377 — — 729,377 Operating lease liabilities 1,071 — — 1,071 Deferred tax liabilities 18,724 ( 1,711 ) 1,300 18,313 Total long-term liabilities 749,172 ( 1,711 ) 1,300 748,761 Commitments and Contingencies Stockholders’ Equity: Preferred stock — — — — Common stock 11 — — 11 Additional paid-in capital 939,742 — — 939,742 Accumulated other comprehensive loss ( 451 ) 451 — — Accumulated deficit ( 165,188 ) ( 5,208 ) 3,940 ( 166,456 ) Total stockholders’ equity 774,114 ( 4,757 ) 3,940 773,297 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,538,100 $ ( 5,951 ) $ 5,240 $ 1,537,389 91 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated As of June 30, 2022 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated ASSETS Current assets: Cash and cash equivalents $ 86,461 $ ( 500 ) $ — $ 85,961 Restricted cash 3,200 — — 3,200 Digital assets 136,836 ( 9,344 ) — 127,492 Deposits 40,006 — — 40,006 Digital assets, restricted 53,559 ( 3,657 ) — 49,902 Prepaid expenses and other current assets 42,130 ( 1,000 ) — 41,130 Total current assets 362,192 ( 14,501 ) — 347,691 Other assets: Property and equipment, net 314,257 ( 4,122 ) — 310,135 Assets held for sale 14,758 — — 14,758 Advances to vendors 800,205 — — 800,205 Investments 17,000 ( 10 ) — 16,990 Long term prepaids — 1,000 — 1,000 Right-of-use assets 1,166 — — 1,166 Total other assets 1,147,386 ( 3,132 ) — 1,144,254 TOTAL ASSETS $ 1,509,578 $ ( 17,633 ) $ — $ 1,491,945 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 48,577 $ — $ — $ 48,577 Accrued expenses 5,783 ( 216 ) — 5,567 Short term borrowings - revolving credit line 35,000 — — 35,000 Operating lease liabilities 162 — — 162 Current portion of accrued interest 623 — — 623 Total current liabilities 90,145 ( 216 ) — 89,929 Long-term liabilities: Notes payable 730,348 — — 730,348 Operating lease liabilities 1,067 — — 1,067 Deferred tax liabilities 28,571 ( 1,134 ) 1,353 28,790 Total long-term liabilities 759,986 ( 1,134 ) 1,353 760,205 Commitments and Contingencies Stockholders’ Equity: Preferred stock — — — — Common stock 11 — — 11 Additional paid-in capital 1,016,722 — — 1,016,722 Accumulated other comprehensive loss ( 451 ) 451 — — Accumulated deficit ( 356,835 ) ( 16,734 ) ( 1,353 ) ( 374,922 ) Total stockholders’ equity 659,447 ( 16,283 ) ( 1,353 ) 641,811 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,509,578 $ ( 17,633 ) $ — $ 1,491,945 92 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated As of September 30, 2022 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated ASSETS Current assets: Cash and cash equivalents $ 55,339 $ — $ — $ 55,339 Restricted cash 8,800 — — 8,800 Digital assets 126,418 ( 5,433 ) — 120,985 Other receivable 1,000 — — 1,000 Deposits 22,534 — — 22,534 Prepaid expenses and other current assets 26,016 ( 1,000 ) — 25,016 Total current assets 240,107 ( 6,433 ) — 233,674 Other assets: Property and equipment, net 403,523 ( 6,237 ) — 397,286 Advances to vendors 687,777 — — 687,777 Investments 37,000 ( 10 ) — 36,990 Long term deposits 26,554 — — 26,554 Long term prepaids 8,704 1,000 — 9,704 Right-of-use assets 1,370 — — 1,370 Digital assets, restricted 70,743 ( 3,039 ) — 67,704 Total other assets 1,235,671 ( 8,286 ) — 1,227,385 TOTAL ASSETS $ 1,475,778 $ ( 14,719 ) $ — $ 1,461,059 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 19,051 $ — $ — $ 19,051 Accrued expenses 2,141 45 — 2,186 Legal reserve payable 21,200 — — 21,200 Operating lease liabilities 306 — — 306 Current portion of accrued interest 2,844 — — 2,844 Total current liabilities 45,542 45 — 45,587 Long-term liabilities: Notes payable 731,319 — — 731,319 Term loan 49,863 — — 49,863 Operating lease liabilities 1,132 — — 1,132 Deferred tax liabilities 22,820 ( 1,223 ) 1,367 22,964 Total long-term liabilities 805,134 ( 1,223 ) 1,367 805,278 Commitments and Contingencies - - - - Stockholders’ Equity: Preferred stock — — — — Common stock 12 — — 12 Additional paid-in capital 1,057,798 — — 1,057,798 Accumulated other comprehensive loss ( 451 ) 451 — — Accumulated deficit ( 432,257 ) ( 13,992 ) ( 1,367 ) ( 447,616 ) Total stockholders’ equity 625,102 ( 13,541 ) ( 1,367 ) 610,194 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,475,778 $ ( 14,719 ) $ — $ 1,461,059 93 Unaudited Consolidated Interim Statements of Other Comprehensive Income (Loss) The following Unaudited Interim Statements of Other Comprehensive Income (Loss) tables present the impacts of the restatement adjustments for the periods ended March 31, 2021 and 2022, June 30, 2021 and 2022, and September 30, 2021 and 2022. For the impacts of the restatement adjustments for the Statements of Other Comprehensive Income (Loss) for the period ended December 31, 2021 refer to NOTE 2 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENT . The Statements of Other Comprehensive Income (Loss) for the period ended December 31, 2022 was not subject to restatement and is presented in Part I of ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. SCHEDULE OF UNAUDITED INTERIM STATEMENT OF OPERATIONS (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated For the three months ended March 31, 2021 (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated Total revenues $ 9,153 $ — $ — $ 9,153 Costs and expenses Cost of revenues Cost of revenues - energy, hosting and other ( 1,668 ) — — ( 1,668 ) Cost of revenues - depreciation and amortization ( 738 ) — — ( 738 ) Total cost of revenues ( 2,406 ) — — ( 2,406 ) Operating expenses General and administrative expenses ( 53,140 ) ( 205 ) — ( 53,345 ) Legal reserves Impairment of deposits due to vendor bankruptcy filing Impairment of digital assets ( 662 ) ( 204 ) — ( 866 ) Impairment of patents Impairment of mining equipment and advances to vendors Realized and unrealized gains (losses) on digital assets Realized and unrealized gains (losses) on digital assets held within Investment Fund — 132,028 — 132,028 Gain on sale of equipment, net of disposals Total operating expenses ( 53,802 ) 131,619 — 77,817 Operating loss ( 47,055 ) 131,619 — 84,564 Impairment of loan and investment due to vendor bankruptcy filing Change in fair value of digital assets held in Fund 131,823 ( 131,823 ) — — Other non-operating income (loss) ( 1,408 ) — — ( 1,408 ) Interest expense ( 1 ) — — ( 1 ) Income before income taxes 83,359 ( 204 ) — 83,155 Income tax benefit (expense) ( 1 ) — — ( 1 ) Net income (loss) $ 83,358 $ ( 204 ) $ — $ 83,154 Net income (loss) per share, basic: $ 0.88 $ — $ — $ 0.88 Net income (loss) per share, diluted: $ 0.87 $ — $ — $ 0.86 Weighted average shares outstanding, basic: 94,350,216 94,350,216 94,350,216 94,350,216 Weighted average shares outstanding, diluted: 96,251,240 96,251,240 96,251,240 96,251,240 Other comprehensive income (loss) Foreign currency translation adjustments — — — — Comprehensive income (loss) $ 83,358 $ ( 204 ) $ — $ 83,154 (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated For the three months ended June 30, 2021 (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated Total revenues $ 29,322 $ — $ — $ 29,322 Costs and expenses Cost of revenues Cost of revenues - energy, hosting and other ( 4,056 ) — — ( 4,056 ) Cost of revenues - depreciation and amortization ( 2,938 ) — — ( 2,938 ) Total cost of revenues ( 6,994 ) — — ( 6,994 ) Operating expenses General and administrative expenses ( 6,628 ) ( 203 ) — ( 6,831 ) Impairment of digital assets ( 11,079 ) ( 1,944 ) — ( 13,023 ) Realized and unrealized gains (losses) on digital assets loan receivable and digital assets 1 — — 1 Realized and unrealized gains (losses) on digital assets held within Investment Fund — ( 114,705 ) — ( 114,705 ) Total operating expenses ( 17,706 ) ( 116,852 ) — ( 134,558 ) Operating income (loss) 4,622 ( 116,852 ) — ( 112,230 ) Change in fair value of digital assets held in Fund ( 114,908 ) 114,908 — — Other non-operating income (loss) 1,400 — — 1,400 Interest expense ( 1 ) — — ( 1 ) Income (loss) before income taxes ( 108,887 ) ( 1,944 ) — ( 110,831 ) Income tax benefit (expense) 2 — — 2 Net income (loss) $ ( 108,885 ) $ ( 1,944 ) $ — $ ( 110,829 ) Net loss per share, basic and diluted: $ ( 1.09 ) $ ( 0.02 ) $ — $ ( 1.11 ) Weighted average shares outstanding, basic and diluted: 99,466,946 99,466,946 99,466,946 99,466,946 Other comprehensive income (loss) Foreign currency translation adjustments — — — — Comprehensive income (loss) $ ( 108,885 ) $ ( 1,944 ) $ — $ ( 110,829 ) 94 (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated For the six months ended June 30, 2021 (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated Total revenues $ 38,475 $ — $ — $ 38,475 Costs and expenses Cost of revenues Cost of revenues - energy, hosting and other ( 5,724 ) — — ( 5,724 ) Cost of revenues - depreciation and amortization ( 3,676 ) — — ( 3,676 ) Total cost of revenues ( 9,400 ) — — ( 9,400 ) Operating expenses General and administrative expenses ( 59,768 ) ( 408 ) — ( 60,176 ) Impairment of digital assets ( 11,741 ) ( 2,148 ) — ( 13,889 ) Realized and unrealized gains (losses) on digital assets loan receivable and digital assets 1 — — 1 Realized and unrealized gains (losses) on digital assets held within Investment Fund — 17,323 — 17,323 Total operating expenses ( 71,508 ) 14,767 — ( 56,741 ) Operating income (loss) ( 42,433 ) 14,767 — ( 27,666 ) Change in fair value of digital assets held in Fund 16,915 ( 16,915 ) — — Other non-operating income (loss) ( 8 ) — — ( 8 ) Interest expense ( 2 ) — — ( 2 ) Income (loss) before income taxes ( 25,528 ) ( 2,148 ) — ( 27,676 ) Income tax benefit (expense) 1 — — 1 Net income (loss) $ ( 25,527 ) $ ( 2,148 ) $ — $ ( 27,675 ) Net loss per share, basic and diluted: $ ( 0.26 ) $ ( 0.02 ) $ — $ ( 0.29 ) Weighted average shares outstanding, basic and diluted: 96,922,964 96,922,964 96,922,964 96,922,964 Other comprehensive income (loss) Foreign currency translation adjustments — — — — Comprehensive income (loss) ( 25,527 ) ( 2,148 ) — ( 27,675 ) (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated For the three months ended September 30, 2021 (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated Total revenues $ 51,707 $ 624 $ — $ 52,331 Costs and expenses Cost of revenues Cost of revenues - energy, hosting and other ( 5,923 ) ( 624 ) — ( 6,547 ) Cost of revenues - depreciation and amortization ( 4,340 ) — — ( 4,340 ) Total cost of revenues ( 10,263 ) ( 624 ) — ( 10,887 ) Operating expenses General and administrative expenses ( 98,999 ) ( 237 ) ( 428 ) ( 99,664 ) Impairment of digital assets ( 6,732 ) 551 1,593 ( 4,588 ) Realized and unrealized gains (losses) on digital assets loan receivable and digital assets 8 — ( 392 ) ( 384 ) Realized and unrealized gains (losses) on digital assets held within Investment Fund — 42,087 — 42,087 Total operating expenses ( 105,723 ) 42,401 773 ( 62,549 ) Operating income (loss) ( 64,279 ) 42,401 773 ( 21,105 ) Change in fair value of digital assets held in Fund 41,850 ( 41,850 ) — — Other non-operating income (loss) 253 — — 253 Income (loss) before income taxes ( 22,176 ) 551 773 ( 20,852 ) Income tax benefit (expense) 3 — — 3 Net income (loss) $ ( 22,173 ) $ 551 $ 773 $ ( 20,849 ) Net loss per share, basic and diluted: $ ( 0.22 ) $ 0.01 $ 0.01 $ ( 0.21 ) Weighted average shares outstanding, basic and diluted: 100,803,809 100,803,809 100,803,809 100,803,809 Other comprehensive income (loss) Foreign currency translation adjustments — — — — Comprehensive income (loss) ( 22,173 ) 551 773 ( 20,849 ) 95 (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated For the nine months ended September 30, 2021 (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated Total revenues 90,182 624 — 90,806 Costs and expenses Cost of revenues Cost of revenues - energy, hosting and other ( 11,647 ) ( 624 ) — ( 12,271 ) Cost of revenues - depreciation and amortization ( 8,016 ) — — ( 8,016 ) Total cost of revenues ( 19,663 ) ( 624 ) — ( 20,287 ) Operating expenses General and administrative expenses ( 158,767 ) — ( 428 ) ( 159,840 ) Impairment of digital assets ( 18,473 ) ( 1,597 ) 1,593 ( 18,477 ) Realized and unrealized gains (losses) on digital assets loan receivable and digital assets 9 — ( 392 ) ( 383 ) Realized and unrealized gains (losses) on digital assets held within Investment Fund — 59,410 — 59,410 Total operating expenses ( 177,231 ) 57,168 773 ( 119,290 ) Operating income (loss) ( 106,712 ) 57,168 773 ( 48,771 ) Change in fair value of digital assets held in Fund 58,765 ( 58,765 ) — — Other non-operating income (loss) 245 — — 245 Interest expense ( 2 ) — — ( 2 ) Income (loss) before income taxes ( 47,704 ) ( 1,597 ) 773 ( 48,528 ) Income tax benefit (expense) 4 — — 4 Net income (loss) ( 47,700 ) ( 1,597 ) 773 ( 48,524 ) Net loss per share, basic and diluted: $ ( 0.49 ) $ ( 0.02 ) $ 0.01 $ ( 0.49 ) Weighted average shares outstanding, basic and diluted: 98,230,795 98,230,795 98,230,795 98,230,795 Other comprehensive income (loss) Foreign currency translation adjustments — — — — Comprehensive income (loss) ( 47,700 ) ( 1,597 ) 773 ( 48,524 ) (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated For the three months ended December 31, 2021 (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated Total Revenues $ 60,282 $ 8,075 $ — $ 68,357 Costs and expenses Cost of revenues Cost of revenues - energy, hosting and other ( 7,145 ) ( 8,075 ) — ( 15,220 ) Cost of revenues - depreciation and amortization ( 6,888 ) — — ( 6,888 ) Total cost of revenues ( 14,033 ) ( 8,075 ) — ( 22,108 ) Operating expenses General and administrative expenses ( 13,536 ) ( 557 ) ( 423 ) ( 14,516 ) Impairment of digital assets ( 11,080 ) ( 851 ) 78 ( 11,853 ) Realized and unrealized gains (losses) on digital assets loan receivable and digital assets 5 — 935 940 Realized and unrealized gains (losses) on digital assets held within Investment Fund — 15,286 — 15,286 Total operating expenses ( 24,611 ) 13,878 590 ( 10,143 ) Operating income (loss) 21,638 13,878 590 36,106 Change in fair value of digital assets held in Fund 15,013 ( 15,013 ) — — Other non-operating income (loss) ( 552 ) — 19 ( 533 ) Interest expense ( 1,567 ) — — ( 1,567 ) Income (loss) before income taxes 34,532 ( 1,135 ) 609 34,006 Income tax benefit (expense) ( 23,006 ) 781 ( 354 ) ( 22,579 ) Net income (loss) $ 11,526 $ ( 354 ) $ 255 $ 11,427 Net income per share, basic: $ 0.11 $ — $ — $ 0.11 Net income per share, diluted: $ 0.10 $ — $ — $ 0.10 Weighted average shares outstanding, basic: 102,620,749 102,620,749 102,620,749 102,620,749 Weighted average shares outstanding, diluted: 113,402,577 113,402,577 113,402,577 113,402,577 Other comprehensive income (loss) Foreign currency translation adjustments — ( 451 ) — ( 451 ) Comprehensive income (loss) 11,526 ( 805 ) 255 10,976 96 (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated For the three months ended March 31, 2022 (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated Total revenues $ 51,718 $ 5 $ — $ 51,723 Costs and expenses Cost of revenues Cost of revenues - energy, hosting and other ( 12,517 ) ( 5 ) — ( 12,522 ) Cost of revenues - depreciation and amortization ( 13,877 ) — — ( 13,877 ) Total cost of revenues ( 26,394 ) ( 5 ) — ( 26,399 ) Operating expenses General and administrative expenses ( 13,980 ) ( 214 ) ( 1,322 ) ( 15,516 ) Impairment of digital assets ( 19,551 ) ( 3,756 ) 5,660 ( 17,647 ) Impairment of patents ( 919 ) — — ( 919 ) Realized and unrealized gains (losses) on digital assets loan receivable and digital assets — — ( 461 ) ( 461 ) Realized and unrealized gains (losses) on digital assets held within Investment Fund — ( 5,328 ) — ( 5,328 ) Total operating expenses ( 34,450 ) ( 9,298 ) 3,877 ( 39,871 ) Operating income ( loss) ( 9,126 ) ( 9,298 ) 3,877 ( 14,547 ) Change in fair value of digital assets held in Fund ( 5,542 ) 5,542 — — Other non-operating income (loss) 227 20 — 247 Interest expense ( 2,814 ) — — ( 2,814 ) Income (loss) before income taxes ( 17,255 ) ( 3,736 ) 3,877 ( 17,114 ) Income tax benefit (expense) 4,296 930 ( 965 ) 4,261 Net income (loss) $ ( 12,959 ) $ ( 2,806 ) $ 2,912 $ ( 12,853 ) Net loss per share, basic and diluted: $ ( 0.13 ) $ ( 0.03 ) $ 0.03 $ ( 0.12 ) Weighted average shares outstanding, basic and diluted: 103,102,596 103,102,596 103,102,596 103,102,596 Other comprehensive income (loss) Foreign currency translation adjustments — — — — Comprehensive income (loss) ( 12,959 ) ( 2,806 ) 2,912 ( 12,853 ) (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated For the three months ended June 30, 2022 (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated Total revenues $ 24,922 $ 1 $ — $ 24,923 Costs and expenses Cost of revenues Cost of revenues - energy, hosting and other ( 16,685 ) ( 1 ) — ( 16,686 ) Cost of revenues - depreciation and amortization ( 24,710 ) — — ( 24,710 ) Total cost of revenues ( 41,395 ) ( 1 ) — ( 41,396 ) Operating expenses General and administrative expenses ( 12,420 ) ( 221 ) 2,173 ( 10,468 ) Impairment of digital assets ( 127,590 ) ( 6,797 ) 6,586 ( 127,801 ) Realized and unrealized gains (losses) on digital assets loan receivable and digital assets — — ( 13,999 ) ( 13,999 ) Gain on sale of equipment, net of disposals 58,182 ( 4,122 ) — 54,060 Realized and unrealized gains (losses) on digital assets held within Investment Fund — ( 79,689 ) — ( 79,689 ) Total operating expenses ( 81,828 ) ( 90,829 ) ( 5,240 ) ( 177,897 ) Operating income (loss) ( 98,301 ) ( 90,829 ) ( 5,240 ) ( 194,370 ) Change in fair value of digital assets held in Fund ( 79,910 ) 79,910 — — Other non-operating income (loss) 165 ( 30 ) — 135 Interest expense ( 3,748 ) — — ( 3,748 ) Income (loss) before income taxes ( 181,794 ) ( 10,949 ) ( 5,240 ) ( 197,983 ) Income tax benefit (expense) ( 9,852 ) ( 577 ) ( 54 ) ( 10,483 ) Net income (loss) $ ( 191,646 ) $ ( 11,526 ) $ ( 5,294 ) $ ( 208,466 ) Net loss per share, basic and diluted: $ ( 1.75 ) $ ( 0.11 ) $ ( 0.05 ) $ ( 1.90 ) Weighted average shares outstanding, basic and diluted: 109,437,293 109,437,293 109,437,293 109,437,293 Other comprehensive income (loss) Foreign currency translation adjustments — — — — Comprehensive income (loss) ( 191,646 ) ( 11,526 ) ( 5,294 ) ( 208,466 ) 97 (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated For the six months ended June 30, 2022 (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated Total revenues $ 76,640 $ 6 $ — $ 76,646 Costs and expenses Cost of revenues Cost of revenues - energy, hosting and other ( 29,202 ) ( 6 ) — ( 29,208 ) Cost of revenues - depreciation and amortization ( 38,587 ) — — ( 38,587 ) Total cost of revenues ( 67,789 ) ( 6 ) — ( 67,795 ) Operating expenses General and administrative expenses ( 26,400 ) ( 435 ) 851 ( 25,984 ) Impairment of digital assets ( 147,141 ) ( 10,553 ) 12,246 ( 145,448 ) Impairment of patents ( 919 ) — — ( 919 ) Realized and unrealized gains (losses) on digital assets loan receivable and digital assets — — ( 14,460 ) ( 14,460 ) Gain on sale of equipment, net of disposals 58,182 ( 4,122 ) — 54,060 Realized and unrealized gains (losses) on digital assets held within Investment Fund — ( 85,017 ) — ( 85,017 ) Total operating expenses ( 116,278 ) ( 100,127 ) ( 1,363 ) ( 217,768 ) Operating income (loss) ( 107,427 ) ( 100,127 ) ( 1,363 ) ( 208,917 ) Change in fair value of digital assets held in Fund ( 85,452 ) 85,452 — — Other non-operating income (loss) 392 ( 10 ) — 382 Interest expense ( 6,562 ) — — ( 6,562 ) Income (loss) before income taxes ( 199,049 ) ( 14,685 ) ( 1,363 ) ( 215,097 ) Income tax benefit (expense) ( 5,556 ) 353 ( 1,019 ) ( 6,222 ) Net income (loss) $ ( 204,605 ) $ ( 14,332 ) $ ( 2,382 ) $ ( 221,319 ) Net loss per share, basic and diluted: $ ( 1.93 ) $ ( 0.14 ) $ ( 0.02 ) $ ( 2.09 ) Weighted average shares outstanding, basic and diluted: 106,101,762 106,101,762 106,101,762 106,101,762 Other comprehensive income (loss) Foreign currency translation adjustments — — — — Comprehensive income (loss) ( 204,605 ) ( 14,332 ) ( 2,382 ) ( 221,319 ) (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated For the three months ended September 30, 2022 (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated Total revenues $ 12,690 $ — $ — $ 12,690 Costs and expenses Cost of revenues Cost of revenues - energy, hosting and other ( 13,773 ) — — ( 13,773 ) Cost of revenues - depreciation and amortization ( 26,295 ) — — ( 26,295 ) Total cost of revenues ( 40,068 ) — — ( 40,068 ) Operating expenses General and administrative expenses ( 12,118 ) ( 28 ) — ( 12,146 ) Legal reserves ( 24,960 ) — — ( 24,960 ) Impairment of deposits due to vendor bankruptcy filing ( 7,987 ) — — ( 7,987 ) Impairment of digital assets ( 5,904 ) 4,529 — ( 1,375 ) Gain on sale of equipment, net of disposals 31,935 ( 2,115 ) — 29,820 Total operating expenses ( 19,034 ) 2,386 — ( 16,648 ) Operating income (loss) ( 46,412 ) 2,386 — ( 44,026 ) Impairment of loan and investment due to vendor bankruptcy filing ( 31,013 ) — — ( 31,013 ) Change in fair value of digital assets held in Fund ( 234 ) 234 — — Other non-operating income (loss) 238 — — 238 Interest expense ( 3,752 ) — — ( 3,752 ) Income (loss) before income taxes ( 81,173 ) 2,620 — ( 78,553 ) Income tax benefit (expense) 5,750 122 ( 14 ) 5,858 Net income (loss) $ ( 75,423 ) $ 2,742 $ ( 14 ) $ ( 72,695 ) Net loss per share, basic and diluted: $ ( 0.65 ) $ 0.02 $ — $ ( 0.62 ) Weighted average shares outstanding, basic and diluted: 116,533,816 116,533,816 116,533,816 116,533,816 Other comprehensive income (loss) Foreign currency translation adjustments — — — — Comprehensive income (loss) ( 75,423 ) 2,742 ( 14 ) ( 72,695 ) 98 (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated For the nine months ended September 30, 2022 (in thousands, except share and per share data) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated Total revenues $ 89,330 $ 6 $ — $ 89,336 Costs and expenses Cost of revenues Cost of revenues - energy, hosting and other ( 42,975 ) ( 6 ) — ( 42,981 ) Cost of revenues - depreciation and amortization ( 64,882 ) — — ( 64,882 ) Total cost of revenues ( 107,857 ) ( 6 ) — ( 107,863 ) Operating expenses General and administrative expenses ( 38,518 ) ( 463 ) 851 ( 38,130 ) Legal reserves ( 24,960 ) — — ( 24,960 ) Impairment of deposits due to vendor bankruptcy filing ( 7,987 ) — — ( 7,987 ) Impairment of digital assets ( 153,045 ) ( 6,024 ) 12,246 ( 146,823 ) Impairment of patents ( 919 ) — — ( 919 ) Realized and unrealized gains (losses) on digital assets loan receivable and digital assets — — ( 14,460 ) ( 14,460 ) Gain on sale of equipment, net of disposals 90,117 ( 6,237 ) — 83,880 Realized and unrealized gains (losses) on digital assets held within Investment Fund — ( 85,017 ) — ( 85,017 ) Total operating expenses ( 135,312 ) ( 97,741 ) ( 1,363 ) ( 234,416 ) Operating income (loss) ( 153,839 ) ( 97,741 ) ( 1,363 ) ( 252,943 ) Change in fair value of digital assets held in Fund ( 85,686 ) 85,686 — — Other non-operating income (loss) 630 ( 10 ) — 620 Impairment of loan and investment due to vendor bankruptcy filing ( 31,013 ) — — ( 31,013 ) Interest expense ( 10,314 ) — — ( 10,314 ) Income (loss) before income taxes ( 280,222 ) ( 12,065 ) ( 1,363 ) ( 293,650 ) Income tax benefit (expense) 194 475 ( 1,033 ) ( 364 ) Net income (loss) $ ( 280,028 ) $ ( 11,590 ) $ ( 2,396 ) $ ( 294,014 ) Net loss per share, basic and diluted: $ ( 2.56 ) $ ( 0.11 ) $ ( 0.02 ) $ ( 2.69 ) Weighted average shares outstanding, basic and diluted: 109,492,865 109,492,865 109,492,865 109,492,865 Other comprehensive income (loss) Foreign currency translation adjustments — — — — Comprehensive income (loss) ( 280,028 ) ( 11,590 ) ( 2,396 ) ( 294,014 ) For the three months ended (in thousands, except share and per share data) December 31, 2022 Total revenues $ 28,417 Costs and expenses Cost of revenues Cost of revenues - energy, hosting and other ( 29,736 ) Cost of revenues - depreciation and amortization ( 13,827 ) Total cost of revenues ( 43,563 ) Operating expenses General and administrative expenses ( 18,609 ) Legal reserves ( 1,171 ) Impairment of deposits due to vendor bankruptcy filing ( 16,674 ) Impairment of digital assets ( 26,392 ) Impairment of mining equipment and advances to vendors ( 332,933 ) Total operating expenses ( 395,779 ) Operating income (loss) ( 410,925 ) Other non-operating income (loss) 663 Interest expense ( 4,666 ) Income (loss) before income taxes ( 414,928 ) Income tax benefit (expense) 22,202 Net loss $ ( 392,726 ) Net income (loss) per share, basic and diluted: $ ( 3.14 ) Net loss per share, basic: $ ( 3.14 ) Weighted average shares outstanding, basic and diluted: 125,263,133 Weighted average shares outstanding, basic: 125,263,133 99 Unaudited Interim Consolidated Statements of Cash Flows The following Unaudited Interim Consolidated Statement of Cash Flow tables present the impacts of the restatement adjustments for the periods ended March 31, 2021 and 2022, June 30, 2021 and 2022, and September 30, 2021 and 2022. For the impacts of the restatement adjustments for the Consolidated Statement of Cash Flows for the period ended December 31, 2021 refer to NOTE 2 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENT . The Consolidated Statements of Cash Flows for the period ended December 31, 2022 was not subject to restatement and is presented in Part I of ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. SCHEDULE OF UNAUDITED INTERIM STATEMENT OF CASH FLOWS (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated For the three months ended March 31, 2021 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated Cash flows from operating activities Net income 83,358 ( 204 ) — 83,154 Adjustments to reconcile net less to net cash used in operating activities: Realized and unrealized losses (gains) on digital assets held within Investment Fund — ( 131,823 ) — ( 131,823 ) Change in fair value of digital assets held in Investment Fund ( 131,823 ) 131,823 — — Impairment of digital assets 662 204 — 866 Other adjustment from operations, net — ( 205 ) — ( 205 ) Proceeds from sale of digital currencies in fund Realized and unrealized gains (losses) on digital assets loan receivable and digital assets Other adjustment from operations, net — ( 205 ) — ( 205 ) Realized gain (loss) on sale of digital currencies Deferred tax expense Impairment of digital currencies Gain on Sale of Asset, net of disposals Realized and unrealized losses (gains) on digital currencies held in fund Changes in operating assets and liabilities: Prepaid expenses and other assets Accounts payable and accrued expenses ( 14 ) 205 — 191 All other adjustments to reconcile net loss to net cash used in operating activities 44,733 — — 44,733 Net cash used in operating activities ( 3,084 ) — — ( 3,084 ) Cash flows from investing activities Deconsolidation of Fund All other adjustments to reconcile net loss to net cash used in investing activities ( 238,662 ) — — ( 238,662 ) Net cash used in investing activities ( 238,662 ) — — ( 238,662 ) Cash flows from financing activities All other adjustments to reconcile net loss to net cash used in financing activities 312,357 — — 312,357 Net cash used in financing activities 312,357 — — 312,357 Net (decrease) increase in cash, cash equivalents, and restricted cash 70,611 — — 70,611 Cash, cash equivalents, and restricted cash — beginning of period 141,323 — — 141,323 Cash, cash equivalents, and restricted cash — end of period 211,934 — — 211,934 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated For the six months ended June 30, 2021 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated Cash flows from operating activities Net loss ( 25,527 ) ( 2,148 ) — ( 27,675 ) Adjustments to reconcile net less to net cash used in operating activities: Realized and unrealized losses (gains) on digital assets held within Investment Fund — ( 17,323 ) — ( 17,323 ) Change in fair value of digital assets held in Investment Fund ( 16,915 ) 16,915 — — Impairment of digital assets 11,741 2,148 — 13,889 Other adjustment from operations, net 859 296 — 1,155 Changes in operating assets and liabilities: Accounts payable and accrued expenses 1,627 150 — 1,777 All other adjustments to reconcile net loss to net cash used in operating activities 21,423 — — 21,423 Net cash used in operating activities ( 6,792 ) 38 — ( 6,754 ) Cash flows from investing activities All other adjustments to reconcile net loss to net cash used in investing activities ( 272,462 ) — — ( 272,462 ) Net cash used in investing activities ( 272,462 ) — — ( 272,462 ) Cash flows from financing activities All other adjustments to reconcile net loss to net cash used in financing activities 308,547 — — 308,547 Net cash used in financing activities 308,547 — — 308,547 Net (decrease) increase in cash, cash equivalents, and restricted cash 29,293 38 — 29,331 Cash, cash equivalents, and restricted cash — beginning of period 141,323 — — 141,323 Cash, cash equivalents, and restricted cash — end of period 170,616 38 — 170,654 100 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated For the nine months ended September 30, 2021 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated Cash flows from operating activities Net loss ( 47,700 ) ( 1,597 ) 773 ( 48,524 ) Adjustments to reconcile net less to net cash used in operating activities: Realized and unrealized losses (gains) on digital assets held within Investment Fund — ( 59,410 ) — ( 59,410 ) Realized and unrealized gains (losses) on digital assets loan receivable and digital assets ( 9 ) — 392 383 Change in fair value of digital assets held in Investment Fund ( 58,765 ) 58,765 — — Impairment of digital assets 18,473 1,596 ( 1,593 ) 18,476 Other adjustment from operations, net — 502 — 502 Changes in operating assets and liabilities: — Prepaid expenses and other assets ( 28,700 ) — 428 ( 28,272 ) Accounts payable and accrued expenses 2,375 144 — 2,519 All other adjustments to reconcile net loss to net cash used in operating activities 70,411 — — 70,411 Net cash used in operating activities ( 43,915 ) — — ( 43,915 ) Cash flows from investing activities All other adjustments to reconcile net loss to net cash used in investing activities ( 372,223 ) — — ( 372,223 ) Net cash used in investing activities ( 372,223 ) — — ( 372,223 ) Cash flows from financing activities All other adjustments to reconcile net loss to net cash used in financing activities 307,669 — — 307,669 Net cash used in financing activities 307,669 — — 307,669 Net (decrease) increase in cash, cash equivalents, and restricted cash ( 108,469 ) — — ( 108,469 ) Cash, cash equivalents, and restricted cash — beginning of period 141,323 — — 141,323 Cash, cash equivalents, and restricted cash — end of period 32,854 — — 32,854 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated For the three months ended March 31, 2022 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated Cash flows from operating activities Net loss ( 12,959 ) ( 2,806 ) 2,912 ( 12,853 ) Adjustments to reconcile net less to net cash used in operating activities: Deferred tax benefit ( 4,296 ) ( 930 ) 965 ( 4,261 ) Realized and unrealized losses (gains) on digital assets held within Investment Fund — 5,328 — 5,328 Realized and unrealized gains (losses) on digital assets loan receivable and digital assets — — 461 461 Change in fair value of digital assets held in Investment Fund 5,542 ( 5,542 ) — — Impairment of digital assets 19,551 3,756 ( 5,660 ) 17,647 Other adjustment from operations, net — ( 222 ) — ( 222 ) Changes in operating assets and liabilities: Prepaid expenses and other assets ( 6,211 ) — 1,322 ( 4,889 ) Accounts payable and accrued expenses ( 1,087 ) 447 — ( 640 ) All other adjustments to reconcile net loss to net cash used in operating activities ( 26,599 ) — — ( 26,599 ) Net cash used in operating activities ( 26,059 ) 31 — ( 26,028 ) Cash flows from investing activities All other adjustments to reconcile net loss to net cash used in investing activities ( 209,425 ) — — ( 209,425 ) Net cash used in investing activities ( 209,425 ) — — ( 209,425 ) Cash flows from financing activities All other adjustments to reconcile net loss to net cash used in financing activities 85,473 — — 85,473 Net cash used in financing activities 85,473 — — 85,473 Net (decrease) increase in cash, cash equivalents, and restricted cash ( 150,011 ) 31 — ( 149,980 ) Cash, cash equivalents, and restricted cash — beginning of period 268,522 — — 268,522 Cash, cash equivalents, and restricted cash — end of period 118,511 31 — 118,542 101 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated For the six months ended June 30, 2022 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated Cash flows from operating activities Net loss ( 204,605 ) ( 14,332 ) ( 2,382 ) ( 221,319 ) Adjustments to reconcile net less to net cash used in operating activities: Gain on sale of assets ( 58,182 ) 4,122 — ( 54,060 ) Deferred tax expense 5,550 ( 353 ) 1,019 6,216 Realized and unrealized losses (gains) on digital assets held within Investment Fund — 85,017 — 85,017 Realized and unrealized gains (losses) on digital assets loan receivable and digital assets — — 14,460 14,460 Change in fair value of digital assets held in Investment Fund 85,452 ( 85,452 ) — — Impairment of digital assets 147,141 10,552 ( 12,246 ) 145,447 Other adjustment from operations, net 498 447 — 945 Changes in operating assets and liabilities: — Prepaid expenses and other assets ( 1,269 ) — ( 851 ) ( 2,120 ) All other adjustments to reconcile net loss to net cash used in operating activities ( 15,424 ) — — ( 15,424 ) Net cash used in operating activities ( 40,839 ) 1 — ( 40,838 ) Cash flows from investing activities Deconsolidation of Fund — ( 500 ) — ( 500 ) All other adjustments to reconcile net loss to net cash used in investing activities ( 334,020 ) — — ( 334,020 ) Net cash used in investing activities ( 334,020 ) ( 500 ) — ( 334,520 ) Cash flows from financing activities All other adjustments to reconcile net loss to net cash used in financing activities 195,998 — — 195,998 Net cash used in financing activities 195,998 — — 195,998 Net (decrease) increase in cash, cash equivalents, and restricted cash ( 178,861 ) ( 499 ) — ( 179,360 ) Cash, cash equivalents, and restricted cash — beginning of period 268,522 — — 268,522 Cash, cash equivalents, and restricted cash — end of period 89,661 ( 499 ) — 89,162 102 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated For the nine months ended September 30, 2022 (in thousands) As Reported Restatement Adjustments Accounting Policy Adjustments As Restated Cash flows from operating activities Net loss ( 280,028 ) ( 11,590 ) ( 2,396 ) ( 294,014 ) Adjustments to reconcile net less to net cash used in operating activities: Gain on Sale of Asset, net of disposals ( 90,117 ) 6,237 — ( 83,880 ) Deferred tax expense ( 194 ) ( 475 ) 1,033 364 Realized and unrealized losses (gains) on digital currencies held within Investment Fund — 85,017 — 85,017 Realized and unrealized gains (losses) on digital assets loan receivable and digital assets — — 14,460 14,460 Change in fair value of digital assets held in Investment Fund 85,686 ( 85,686 ) — — Impairment of digital currencies 153,045 6,023 ( 12,246 ) 146,822 Other adjustment from operations, net 898 1,181 — 2,079 Changes in operating assets and liabilities: — Prepaid expenses and other assets ( 30,583 ) — ( 851 ) ( 31,434 ) Accounts payable and accrued expenses 8,094 ( 206 ) — 7,888 All other adjustments to reconcile net loss to net cash used in operating activities 68,956 — — 68,956 Net cash used in operating activities ( 84,243 ) 501 — ( 83,742 ) Cash flows from investing activities Deconsolidation of Fund — ( 500 ) — ( 500 ) All other adjustments to reconcile net loss to net cash used in investing activities ( 368,073 ) — — ( 368,073 ) Net cash used in investing activities ( 368,073 ) ( 500 ) — ( 368,573 ) Cash flows from financing activities All other adjustments to reconcile net loss to net cash used in financing activities 247,899 — — 247,899 Net cash used in financing activities 247,899 — — 247,899 Net (decrease) increase in cash, cash equivalents, and restricted cash ( 204,417 ) 1 — ( 204,416 ) Cash, cash equivalents, and restricted cash — beginning of period 268,556 — — 268,556 Cash, cash equivalents, and restricted cash — end of period 64,139 1 — 64,140 NOTE 17 – SUBSEQUENT EVENTS On January 27, 2023, the Company and FSI entered into an Agreement regarding formation of an Abu Dhabi Global Markets company (the “ADGM Entity”), whose purpose shall be to jointly (a) establish and operate one or more mining facilities for digital assets; and (b) mine digital assets. The initial project by the ADGM Entity shall consist of two digital asset mining sites comprising 250 MW in Abu Dhabi, and the initial equity ownership in the ADGM Entity shall be 80% FSI and 20% the Company , and capital contributions will be made, subject to the satisfaction or waiver of certain conditions, during the 2023 development period in those proportions, consisting of both cash and in kind, in amounts of approximately $ 406,000 thousand in aggregate. On February 6, 2023, the Company provided Silvergate Bank with the required 30-day notice stating the Company’s intent to prepay the outstanding balance on its term loan facility as well as the Company’s intent to terminate the term loan facility. The Company and Silvergate subsequently agreed to also terminate the revolving line of credit (“RLOC”) facility. On March 8, 2023, the term loan prepayment was completed, and the Company’s term loan and RLOC facilities with Silvergate Bank were terminated. On March 12, 2023, Signature Bank was closed by its state chartering authority, the New York State Department of Financial Services. On the same date the Federal Deposit Insurance Corporation (“FDIC”) was appointed as receiver and transferred all customer deposits and substantially all of the assets of Signature Bank to Signature Bridge Bank, N.A., a full-service bank that is being operated by the FDIC. The Company automatically became a customer of Signature Bridge Bank, N.A. as part of this action. The Company held approximately $ 142,000 thousand cash deposits at Signature Bridge Bank, N.A.as of March 12, 2023. Normal banking activities resumed on Monday, March 13, 2023. 103 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.