Delaware
|
7370
|
86-1243837
|
||
(State or other jurisdiction of
incorporation or organization)
|
(Primary Standard Industrial
Classification Code Number)
|
(I.R.S. Employer
Identification No.)
|
Nicolas H.R. Dumont
Daniel Peale
Cooley LLP
55 Hudson Yards
New York, New York 10001
Tel: (212)
479-6000
Fax: (212)
479-6275
|
Todd M. DuChene
EVP, General Counsel
Core Scientific, Inc.
106 East 6
th
Street, Suite
900-145
Austin, TX 78701
(425) 998-5300
|
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer
|
☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☒ |
• |
execute its business strategy, including monetization of services provided and expansions in and into existing and new lines of business;
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• |
realize the benefits expected from the acquisition of Blockcap, including any related synergies;
|
• |
anticipate the uncertainties inherent in the development of new business lines and business strategies;
|
• |
retain and hire necessary employees;
|
• |
anticipate the impact of the
COVID-19
pandemic, including variant strains of
COVID-19,
and its effect on business and financial conditions;
|
• |
manage risks associated with operational changes in response to the
COVID-19
pandemic, including the emergence of variant strains of
COVID-19;
|
• |
increase brand awareness;
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• |
attract, train and retain effective officers, key employees or directors;
|
• |
upgrade and maintain information technology systems;
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• |
acquire and protect intellectual property;
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• |
meet future liquidity requirements and comply with restrictive covenants related to long-term indebtedness;
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• |
effectively respond to general economic and business conditions, including the price of bitcoin;
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• |
maintain the listing on, or to prevent the delisting of our securities from, Nasdaq or another national securities exchange;
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• |
obtain additional capital, including use of the debt market;
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• |
enhance future operating and financial results;
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• |
successfully execute expansion plans;
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• |
anticipate rapid technological changes;
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• |
comply with laws and regulations applicable to its business, including tax laws and laws and regulations related to data privacy and the protection of the environment;
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• |
stay abreast of modified or new laws and regulations applicable to its business or withstand the impact of any new laws and regulations related to its industry;
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• |
anticipate the impact of, and response to, new accounting standards;
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• |
anticipate the significance and timing of contractual obligations;
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• |
maintain key strategic relationships with partners and distributors;
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• |
respond to uncertainties associated with product and service development and market acceptance;
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• |
anticipate the impact of changes in U.S. federal income tax laws, including the impact on deferred tax assets;
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• |
successfully defend litigation; and
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• |
successfully deploy the proceeds from the Business Combination.
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• |
Our business is highly dependent on a small number of digital asset mining equipment suppliers.
|
• |
Our business is capital intensive, and failure to obtain the necessary capital when needed may force us to delay, limit or terminate our expansion efforts or other operations, which could have a material adverse effect on our business, financial condition and results of operations.
|
• |
We may not be able to obtain new hosting and transaction processing hardware or purchase such hardware at competitive prices during times of high demand, which could have a material adverse effect on our business, financial condition and results of operations.
|
• |
Our business is heavily impacted by social, political, economic and other events and circumstances in countries outside of the United States, most particularly China and other
non-Western
countries. China’s shifting position on mining activity within its borders could reduce our revenue and profitability.
|
• |
A significant portion of our assets are pledged to our senior secured noteholders. This obligation may limit our ability to obtain additional capital to grow our business and failure to repay obligations to our noteholders when due will have a material adverse effect on our business and could result in foreclosure on our assets.
|
• |
We are subject to risks associated with our need for significant electric power and the limited availability of power resources, which could have a material adverse effect on our business, financial condition and results of operations. An inability to purchase and develop additional sources of
low-cost
renewable sources of energy effectively will have a material adverse effect on our business, financial condition and results of operations.
|
• |
We plan to continue to acquire other businesses or receive offers to be acquired, which could require significant management attention, disrupt our business or dilute stockholder value.
|
• |
If we do not successfully integrate Blockcap, Blockcap’s subsidiary, RADAR, or future acquisitions or strategic partnerships that we may enter into, we may not realize the anticipated benefits of any such acquisitions or partnerships, which could have a material adverse effect on our business, financial condition and results of operations.
|
• |
We generate significant revenue from a limited number of hosting facilities in Kentucky, Georgia, North Carolina and North Dakota and a significant disruption to operations in this region could have a material adverse effect our business, financial condition and results of operations.
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• |
Our future success depends on our ability to keep pace with rapid technological changes that could make our current or future technologies less competitive or obsolete.
|
• |
The further development and acceptance of cryptographic and algorithmic protocols governing transaction validation and the issuance of, and transactions in, digital assets are subject to a variety of factors that are difficult to evaluate. The slowing or stoppage of development or acceptance of blockchain networks and digital assets would have an adverse material effect on the successful development of the mining operation and value of mined digital assets.
|
• |
Our ability to use net operating losses to offset future taxable income may be subject to limitations.
|
• |
We operate in a rapidly developing industry and have an evolving business model with a limited history of generating revenue from our services. In addition, our evolving business model increases the complexity of our business, which makes it difficult to evaluate our future business prospects and could have a material adverse effect on our business, financial condition and results of operations.
|
• |
We have experienced difficulties in establishing relationships with banks, leasing companies, insurance companies and other financial institutions that are willing to provide us with customary financial products and services, which could have a material adverse effect on our business, financial condition and results of operations.
|
• |
Digital assets exchanges and other trading venues are relatively new and, in some cases, partially unregulated and may therefore be more exposed to fraud and failure.
|
• |
We may not have adequate sources of recovery if the digital assets held by us are lost, stolen or destroyed due to third-party digital asset services, which could have a material adverse effect on our business, financial condition and results of operations.
|
• |
Losses relating to our business may be uninsured, or insurance may be limited.
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• |
Diversification of our business by investing in additional digital assets, financial instruments and businesses could require significant investment or expose us to trading risks.
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• |
As more processing power is added to a network, our relative percentage of total processing power on that network is expected to decline absent significant capital investment, which has an adverse impact on our ability to generate revenue from processing transactions on that network and could have a material adverse effect on our business, financial condition and results of operations.
|
• |
Our reliance on third-party mining pool service providers for our mining revenue payouts may have a negative impact on our operations.
|
• |
Malicious actors or botnet may obtain control of more than 50% of the processing power on the Bitcoin or other network.
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• |
Digital assets are subject to extreme price volatility. The value of digital assets is dependent on a number of factors, any of which could have a material adverse effect on our business, financial condition and results of operations.
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• |
Any loss or destruction of a private key required to access a digital asset of ours is irreversible. We also may temporarily lose access to our digital assets.
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• |
The digital assets held by us are not subject to FDIC or SIPC protections.
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• |
Our interactions with a blockchain may expose us to SDN or blocked persons or cause us to violate provisions of law that did not contemplate distribute ledger technology.
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• |
We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal control, which may result in material misstatements of Core’s financial statements or cause it to fail to meet its periodic reporting obligations.
|
• |
We have identified a material weakness in our internal control over financial reporting. This material weakness could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
|
Shares of common stock offered by us
|
14,891,667 shares of common stock, consisting of (i) 6,266,667 shares of common stock that are issuable upon exercise of the Private Placement Warrants and (ii) 8,625,000 shares of common stock that are issuable upon exercise upon the exercise of the Public Warrants. |
Shares of common stock outstanding prior to the exercise of all Warrants
|
320,124,058 (as of February 4, 2022). |
Shares of common stock outstanding assuming exercise of all Warrants
|
335,015,725 (based on the total shares outstanding as of February 4, 2022). |
Exercise price of the Public and Private Placement Warrants
|
$11.50 per share, subject to adjustment as described herein. |
Use of proceeds
|
We will receive up to an aggregate of approximately $171.3 million from the exercise of the Public and Private Placement Warrants. We expect to use the net proceeds from the exercise of the Public and Private Placement Warrants for general corporate purposes. See “
Use of Proceeds
|
Shares of common stock offered by the selling securityholders
|
We are registering the resale by the selling securityholders named in this prospectus, or their permitted transferees, an aggregate of 186,172,423 shares of common stock, consisting of: |
• |
up to 8,625,000 Founder Shares;
|
• |
up to 6,266,667 shares of common stock issuable upon exercise of the Private Placement Warrants;
|
• |
up to 91,052,355 shares of common stock (including shares issuable upon the exercise of convertible securities) held by certain affiliates of our company; and
|
• |
up to 80,228,401 shares of common stock issuable upon conversion of certain Convertible Notes.
|
Warrants offered by the selling securityholders
|
Up to 6,266,667 Private Placement Warrants. |
Redemption
|
The Public Warrants are redeemable in certain circumstances. See “
Description of Capital Stock—Public Warrants
|
Terms of the offering
|
The selling securityholders will determine when and how they will dispose of the securities registered for resale under this prospectus. |
Lock-Up
Restrictions
|
Certain of our securityholders are subject to certain restrictions on transfer until the termination of applicable
lock-up
periods. See the section titled “
Certain Relationships and Related Party
Transactions—Lock-Up
Restrictions.
|
Use of proceeds
|
We will not receive any of the proceeds from the sale of the shares of common stock or Private Placement Warrants by the selling securityholders, except with respect to amounts received by us due to the exercise of the Warrants. |
Risk factors
|
Before investing in our securities, you should carefully read and consider the information set forth in “
Risk Factors
|
Nasdaq ticker symbols
|
“CORZ” and “CORZW.” |
• |
there is a reduction in the demand for our services due to macroeconomic factors in the markets in which we operate;
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• |
we fail to provide competitive pricing terms or effectively market them to potential customers;
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• |
we provide hosting services that are deemed by existing and potential customers or suppliers to be inferior to those of our competitors, or that fail to meet customers’ or suppliers’ ongoing and evolving program qualification standards, based on a range of factors, including available power, preferred design features, security considerations and connectivity;
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• |
businesses decide to host internally as an alternative to the use of our services;
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• |
we fail to successfully communicate the benefits of our services to potential customers;
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• |
we are unable to strengthen awareness of our brand;
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• |
we are unable to provide services that our existing and potential customers desire; or
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• |
our customers are unable to secure an adequate supply of new generation digital asset mining equipment to host with us.
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• |
a decline in the adoption and use of bitcoin and other similar digital assets within the technology industry or a decline in value of digital assets;
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• |
increased costs of complying with existing or new government regulations applicable to digital assets and other factors;
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• |
a downturn in the market for blockchain hosting space generally, which could be caused by an oversupply of or reduced demand for blockchain space;
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• |
any transition by our customers of blockchain hosting from third-party providers like us to customer-owned and operated facilities;
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• |
the rapid development of new technologies or the adoption of new industry standards that render our or our customers’ current products and services obsolete or unmarketable and, in the case of our customers, that contribute to a downturn in their businesses, increasing the likelihood of a default under their service agreements or their becoming insolvent;
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• |
a slowdown in the growth of the Internet generally as a medium for commerce and communication;
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• |
availability of an adequate supply of new generation digital asset mining equipment to enable us to mine digital assets at scale and for customers who want to host with us to be able to do so; and
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• |
the degree of difficulty in mining digital assets and the trading price of such assets.
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• |
inability or difficulty integrating and benefiting from acquired technologies or solutions in a profitable manner, including as a result of reductions in operating income, increases in expenses, failure to achieve synergies or otherwise;
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• |
unanticipated costs or liabilities associated with Blockcap and RADAR or another acquisition or strategic partnership;
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• |
difficulty integrating the accounting systems, operations and personnel of Blockcap and RADAR;
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• |
adverse effects to our existing business relationships and clients or to Blockcap’s business relationships and clients as a result of the acquisition;
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• |
loss of key employees, particularly those of Blockcap and RADAR;
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• |
assumption of potential liabilities of Blockcap and RADAR, including regulatory noncompliance or acquired litigation, and expenses relating to contractual disputes of the acquired business for, infringement of intellectual property rights, data privacy violations or other claims;
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• |
difficulty in acquiring suitable businesses, including challenges in predicting the value an acquisition will ultimately contribute to our business; and
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• |
use of substantial portions of our available cash or assumption of additional indebtedness to consummate an acquisition.
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• |
power loss;
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• |
equipment failure;
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• |
human error or accidents;
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• |
theft, sabotage and vandalism;
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• |
failure by us or our suppliers to provide adequate service or maintain our equipment;
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• |
network connectivity downtime and fiber cuts;
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• |
service interruptions resulting from server relocation;
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• |
security breaches of our infrastructure;
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• |
improper building maintenance by us;
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• |
physical, electronic and cybersecurity breaches;
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• |
animal incursions;
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• |
fire, earthquake, hurricane, tornado, flood and other natural disasters;
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• |
extreme temperatures;
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• |
water damage;
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• |
public health emergencies; and
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• |
terrorism.
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• |
continued worldwide growth in the adoption and use of digital assets and blockchain technologies;
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• |
government and quasi-government regulation of digital assets and their use, or restrictions on or regulation of access to and operations of digital asset transaction processing;
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• |
changes in consumer demographics and public tastes and preferences;
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• |
the maintenance and development of the open-source software protocols or similar digital asset systems;
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• |
the availability and popularity of other forms or methods of buying and selling goods and services, or trading assets including new means of using fiat currencies;
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• |
general economic conditions and the regulatory environment relating to digital assets; and
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• |
negative consumer perception of digital assets, including digital assets specifically and digital assets generally.
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• |
identify and acquire desirable properties that we are interested in from developers;
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• |
offer hosting services at prices below current market rates or below the prices we currently charge our customers;
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• |
bundle colocation services with other services or equipment they provide at reduced prices;
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• |
develop superior products or services, gain greater market acceptance and expand their service offerings more efficiently or rapidly;
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• |
adapt to new or emerging technologies and changes in customer requirements more quickly;
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• |
take advantage of acquisition and other opportunities more readily; and
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• |
adopt more aggressive pricing policies and devote greater resources to the promotion, marketing and sales of their services.
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• |
it is an “orthodox” investment company because it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities; or
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• |
it is an inadvertent investment company because, absent an applicable exemption, it owns or proposes to acquire “investment securities” having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis.
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• |
global digital asset supply;
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• |
global digital asset demand, which can be influenced by the growth of retail merchants’ and commercial businesses’ acceptance of digital assets as payment for goods and services, the security of online digital asset exchanges and digital wallets that hold digital assets, the perception that the use and holding of digital assets is safe and secure, and the regulatory restrictions on their use;
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• |
investors’ expectations with respect to the rate of inflation of fiat currencies;
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• |
investors’ expectations with respect to the rate of deflation of digital assets;
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• |
cyber theft of digital assets from online wallet providers, or news of such theft from such providers or from individuals’ online wallets;
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• |
the availability and popularity of businesses that provide digital asset-related services;
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• |
fees associated with processing a digital asset transaction;
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• |
changes in the software, software requirements or hardware requirements underlying digital assets;
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• |
changes in the rights, obligations, incentives, or rewards for the various participants in digital asset mining;
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• |
interest rates;
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• |
currency exchange rates, including the rates at which digital assets may be exchanged for fiat currencies;
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• |
fiat currency withdrawal and deposit policies on digital asset exchanges and liquidity on such exchanges;
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• |
interruptions in service or failures of major digital asset exchanges;
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• |
investment and trading activities of large investors, including private and registered funds, that may directly or indirectly invest in digital assets;
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• |
momentum pricing;
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• |
monetary policies of governments, trade restrictions, currency devaluations and revaluations;
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• |
regulatory measures, if any, that affect the use of digital assets, restrict digital assets as a form of payment, or limit the purchase of digital assets;
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• |
global or regional political, economic or financial events and conditions;
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• |
expectations that the value of digital assets will change in the near or long term. A decrease in the price of a single digital asset may cause volatility in the entire digital asset industry and may affect other digital assets. For example, a security breach that affects investor or user confidence in bitcoin, ethereum, litecoin or another digital asset may affect the industry as a whole and may also cause the price of other digital assets to fluctuate; or
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• |
with respect to bitcoin, increased competition from other forms of digital assets or payments services.
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• |
price and volume fluctuations in the overall stock market from time to time;
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• |
volatility in the trading prices and trading volumes of technology stocks;
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• |
volatility in the price of bitcoin and other digital assets;
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• |
changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;
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• |
sales of shares of our common stock by us or our stockholders, including sales under this prospectus;
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• |
failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;
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• |
the financial projections we may provide to the public, any changes in those projections, or our failure to meet those projections;
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• |
announcements by us or our competitors of new products, features, or services;
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• |
the public’s reaction to our press releases, other public announcements and filings with the SEC;
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• |
rumors and market speculation involving us or other companies in our industry;
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• |
actual or anticipated changes in our results of operations or fluctuations in our results of operations;
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• |
actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally;
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• |
litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors;
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• |
developments or disputes concerning our intellectual property or other proprietary rights;
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• |
announced or completed acquisitions of businesses, products, services or technologies by us or our competitors;
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• |
new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
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• |
changes in accounting standards, policies, guidelines, interpretations or principles;
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• |
any significant change in our management; and
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• |
general economic conditions and slow or negative growth of our markets.
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• |
the ability of our board of directors to issue one or more series of preferred stock;
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• |
advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings;
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certain limitations on convening special stockholder meetings;
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limiting the persons who may call special meetings of stockholders;
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limiting the ability of stockholders to act by written consent; and
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• |
Our board of directors have the express authority to make, alter or repeal the Bylaws.
|
Bitcoin Miners in deployed
|
||||||||
Mining Equipment
|
Hash rate
(EH/s) |
Number of
Miners |
||||||
Self-miners
1
|
2.64 | 28,004 | ||||||
Hosted miners
|
4.48 | 50,994 | ||||||
|
|
|
|
|||||
Total mining equipment
|
7.12 | 78,998 | ||||||
Bitcoin Miners On Order
|
||||||||
Mining Equipment
|
Hash rate
(EH/s) |
Number of
Miners |
||||||
Self-miners1
|
12.57 | 125,661 | ||||||
Hosted miners
|
3.80 | 38,007 | ||||||
|
|
|
|
|||||
Total mining equipment
|
16.37 | 163,668 | ||||||
|
|
|
|
|||||
Total in operation and on order
|
23.49 | 242,666 | ||||||
|
|
|
|
1
|
Blockcap’s hash rate and number of miners is included in self-miners in the table above.
|
Impact to Revenue
|
||||
Driver
|
Increase in Driver
|
Decrease in Driver
|
||
Market Price of Bitcoin
|
Favorable |
Unfavorable
|
||
Difficulty
|
Unfavorable
|
Favorable | ||
Core Scientific Hash Rate
|
Favorable |
Unfavorable
|
Nine Months Ended
September 30, |
Year Ended
December 31, |
|||||||||||||||
2021
|
2020
|
2020
|
2019
|
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Total Revenue
|
$ | 242,688 | $ | 36,633 | $ | 60,320 | $ | 59,523 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Cost of revenue
|
145,193 | 31,906 | 50,928 | 48,996 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit
|
97,495 | 4,727 | 9,392 | 10,527 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gain on legal settlements
|
(2,603 | ) | 5,814 | 5,814 | — | |||||||||||
Gain from sales of digital currency assets
|
405 | 52 | 69 | 387 | ||||||||||||
Impairment of digital currency assets
|
(12,552 | ) | (4 | ) | (4 | ) | 419 | |||||||||
Total operating expenses
|
53,409 | 16,382 | 21,598 | 23,020 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating Income (Loss)
|
29,336 | (5,793 | ) | (6,327 | ) | (11,687 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total
non-operating
income (expense), net
|
(43,227 | ) | (4,104 | ) | (5,879 | ) | (235 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Income (loss) before income taxes
|
(13,891 | ) | (9,897 | ) | (12,206 | ) | (11,922 | ) | ||||||||
Income tax benefit
|
(697 | ) | — | — | — | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net Income (Loss)
|
$ | (13,194 | ) | $ | (9,897 | ) | $ | (12,206 | ) | $ | (11,922 | ) | ||||
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, |
Year Ended
December 31, |
|||||||||||||||
2021
|
2020
|
2020
|
2019
|
|||||||||||||
Self-Mining Hash rate (Exahash), EoP
|
2.64 | 0.12 | 0.35 | 0.08 | ||||||||||||
Adjusted EBITDA ($ Millions)
|
$ | 88.0 | $ | 3.1 | $ | 6.1 | $ | (1.9 | ) |
Nine Months Ended
September 30, |
Year Ended
December 31, |
|||||||||||||||
2021
|
2020
|
2020
|
2019
|
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Adjusted EBITDA
|
||||||||||||||||
Net income (loss)
|
$ | (13,194 | ) | $ | (9,897 | ) | $ | (12,206 | ) | $ | (11,922 | ) | ||||
Adjustments:
|
||||||||||||||||
Interest expense, net
|
34,566 | 4,104 | 5,879 | 235 | ||||||||||||
Income tax expense (benefit)
|
(697 | ) | — | — | — | |||||||||||
Depreciation and amortization
|
12,886 | 6,613 | 9,403 | 6,118 | ||||||||||||
Stock-based compensation expense
|
31,012 | 2,446 | 3,037 | 2,880 | ||||||||||||
Impairment of digital curreny assets
|
12,552 | 5 | 4 | (419 | ) | |||||||||||
Legal settlement
|
2,603 | — | — | — | ||||||||||||
Fair value adjustment on convertible note payable
|
8,661 | — | — | — | ||||||||||||
Other items
|
(388 | ) | (144 | ) | (66 | ) | 1,166 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA
|
$ | 88,001 | $ | 3,128 | $ | 6,051 | $ | (1,942 | ) | |||||||
|
|
|
|
|
|
|
|
• |
Hosting revenue from customers and related parties.
Certain Relationships and Related Party Transactions
|
• |
Equipment sales to customers and related parties.
|
• |
Digital asset mining income.
|
the secure hashing algorithm employed in solving the blocks. The diagram below provides a simple illustration of the calculation of our annual digital asset mining income.
|
1
|
Amount represents the average number of blocks mined per year, e.g., blocks are mined on average every 10 minutes, or 144 per day, 52,560 per year.
|
• |
Research and development.
|
• |
Sales and marketing.
|
• |
General and administrative.
|
Nine Months Ended
September 30, |
Year Ended
December 31, |
|||||||||||||||
2021
|
2020
|
2020
|
2019
|
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Total Revenue:
|
||||||||||||||||
Hosting revenue from customers
|
$ | 37,836 | $ | 28,667 | $ | 34,615 | $ | 53,492 | ||||||||
Hosting revenue from related parties
|
13,906 | 3,382 | 6,983 | 384 | ||||||||||||
Equipment sales to customers
|
84,378 | 1,987 | 11,193 | — | ||||||||||||
Equipment sales to related parties
|
29,057 | 285 | 1,402 | — | ||||||||||||
Digital asset mining income
|
77,511 | 2,312 | 6,127 | 5,647 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Revenue
|
242,688 | 36,633 | 60,320 | 59,523 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Cost of revenue
|
145,193 | 31,906 | 50,928 | 48,996 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit
|
97,495 | 4,727 | 9,392 | 10,527 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
(Loss) gain on legal settlements
|
(2,603 | ) | 5,814 | 5,814 | — | |||||||||||
Gain from sales of digital currency assets
|
405 | 52 | 69 | 387 | ||||||||||||
Impairment of digital currency assets
|
(12,552 | ) | (4 | ) | (4 | ) | 419 | |||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
4,231 | 4,184 | 5,271 | 5,480 | ||||||||||||
Sales and Marketing
|
2,186 | 1,401 | 1,771 | 2,833 | ||||||||||||
General and administrative
|
46,992 | 10,797 | 14,556 | 14,707 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses
|
53,409 | 16,382 | 21,598 | 23,020 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating Income (Loss)
|
29,336 | (5,793 | ) | (6,327 | ) | (11,687 | ) | |||||||||
Non-operating
income (expense), net:
|
||||||||||||||||
Loss on debt extinguishment
|
(8,016 | ) | (1,333 | ) | (1,333 | ) | — | |||||||||
Interest expense, net
|
(26,550 | ) | (2,683 | ) | (4,436 | ) | (235 | ) | ||||||||
Other
non-operating
expenses, net
|
(8,661 | ) | (88 | ) | (110 | ) | — | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total
non-operating
income (expense), net .
|
(43,227 | ) | (4,104 | ) | (5,879 | ) | (235 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Income (loss) before income taxes
|
(13,891 | ) | (9,897 | ) | (12,206 | ) | (11,922 | ) | ||||||||
Income tax expense
|
(697 | ) | — | — | — | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net Income (Loss)
|
$ | (13,194 | ) | $ | (9,897 | ) | $ | (12,206 | ) | $ | (11,922 | ) | ||||
|
|
|
|
|
|
|
|
Nine Months
Ended September 30, |
Year Ended
December 31, |
|||||||||||||||
2021
|
2020
|
2020
|
2019
|
|||||||||||||
Total Revenue:
|
||||||||||||||||
Hosting revenue from customers
|
16 | % | 78 | % | 57 | % | 90 | % | ||||||||
Hosting revenue from related parties
|
6 | 9 | 12 | 1 | ||||||||||||
Equipment sales to customers
|
35 | 5 | 19 | — | ||||||||||||
Equipment sales to related parties
|
12 | 1 | 2 | — | ||||||||||||
Digital asset mining income
|
32 | 6 | 10 | 9 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Revenue
|
100 | 100 | 100 | 100 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Cost of revenue
|
60 | 87 | 84 | 82 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit
|
40 | 13 | 16 | 18 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
(Loss) gain on legal settlements
|
(1 | ) | 16 | 10 | — | |||||||||||
Gain from sales of digital currency assets
|
0 | 0 | 0 | 1 | ||||||||||||
Impairment of digital currency assets
|
(5 | ) | (0 | ) | 0 | 1 | ||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
2 | 11 | 9 | 9 | ||||||||||||
Sales and Marketing
|
1 | 4 | 3 | 5 | ||||||||||||
General and administrative
|
19 | 29 | 24 | 25 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses
|
22 | 45 | 36 | 39 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating Income (Loss)
|
17 | (16 | ) | (10 | ) | (20 | ) | |||||||||
Non-operating
income (expense), net:
|
||||||||||||||||
Loss on debt extinguishment and other
|
(3 | ) | (4 | ) | (2 | ) | — | |||||||||
Interest expense, net
|
(11 | ) | (7 | ) | (7 | ) | (0 | ) | ||||||||
Other
non-operating
expenses, net
|
(4 | ) | (0 | ) | (0 | ) | — | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total
non-operating
income (expense), net
|
(18 | ) | (11 | ) | (10 | ) | (0 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Income (loss) before income taxes
|
(6 | ) | (27 | ) | (20 | ) | (21 | ) | ||||||||
Income tax expense
|
(0 | ) | — | — | — | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net Income (Loss)
|
(5 | )% | (27 | )% | (20 | )% | (21 | )% | ||||||||
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, |
Period to Period
Change |
|||||||||||||||
2021
|
2020
|
$ Change
|
%
Change |
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Total Revenue:
|
||||||||||||||||
Hosting revenue from customers
|
$ | 37,836 | $ | 28,667 | $ | 9,169 | 32 | % | ||||||||
Hosting revenue from related parties
|
13,906 | 3,382 | 10,524 | 311 | % | |||||||||||
Equipment sales to customers
|
84,378 | 1,987 | 82,391 | 4147 | % | |||||||||||
Equipment sales to related parties
|
29,057 | 285 | 28,772 | n.m. | ||||||||||||
Digital asset mining income
|
77,511 | 2,312 | 75,199 | 3253 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Revenue
|
$ | 242,688 | $ | 36,633 | $ | 206,055 | 562 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Percentage of total revenue:
|
||||||||||||||||
Hosting revenue from customers
|
16 | % | 78 | % | ||||||||||||
Hosting revenue from related parties
|
6 | 9 | ||||||||||||||
Equipment sales to customers
|
35 | 5 | ||||||||||||||
Equipment sales to related parties
|
12 | 1 | ||||||||||||||
Digital asset mining income
|
32 | 6 | ||||||||||||||
|
|
|
|
|||||||||||||
Total Revenue
|
100 | 100 | ||||||||||||||
|
|
|
|
Nine Months Ended
September 30, |
Period to Period
Change |
|||||||||||||||
2021
|
2020
|
$ Change
|
%
Change |
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Cost of revenue
|
$ | 145,193 | $ | 31,906 | $ | 113,287 | 355 | % | ||||||||
Gross profit
|
97,495 | 4,727 | 92,768 | 1963 | % | |||||||||||
Gross margin
|
40 | % | 13 | % | — | 27 | % |
Nine Months
Ended September 30, |
Period to Period
Change |
|||||||||||||||
2021
|
2020
|
$
Change |
%
Change |
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Gain (loss) from sales of digital currency assets
|
$ | 405 | $ | 52 | $ | 353 | 679 | % | ||||||||
Percentage of total revenue
|
0 | % | 0 | % |
Nine Months Ended
September 30, |
Period to Period Change
|
|||||||||||||||
2021
|
2020
|
$ Change
|
%
Change |
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Impairment of digital currency assets
|
$ | (12,552 | ) | $ | (4 | ) | $ | (12,548 | ) | n.m. | ||||||
Percentage of total revenue
|
(5 | )% | 0 | % |
Nine Months Ended
September 30, |
Period to Period
Change |
|||||||||||||||
2021
|
2020
|
$
Change |
%
Change |
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Research and development
|
$ | 4,231 | $ | 4,184 | $ | 47 | 1 | % | ||||||||
Percentage of total revenue
|
2 | % | 11 | % |
Nine Months Ended
September 30, |
Period to Period
Change |
|||||||||||||||
2021
|
2020
|
$
Change |
%
Change |
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Sales and marketing
|
$ | 2,186 | $ | 1,401 | $ | 785 | 56 | % | ||||||||
Percentage of total revenue
|
1 | % | 4 | % |
Nine Months Ended
September 30, |
Period to Period
Change |
|||||||||||||||
2021
|
2020
|
$ Change
|
%
Change |
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
General and administrative
|
$ | 46,992 | $ | 10,797 | $ | 36,195 | 335 | % | ||||||||
Percentage of total revenue
|
19 | % | 29 | % |
Nine Months Ended
September 30, |
Period to Period
Change |
|||||||||||||||
2021
|
2020
|
$ Change
|
%
Change |
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Non-operating
income (expense), net:
|
||||||||||||||||
Loss on debt extinguishment
|
$ | (8,016 | ) | $ | (1,333 | ) | $ | (6,683 | ) | 501 | % | |||||
Interest expense, net
|
(26,550 | ) | (2,683 | ) | (23,867 | ) | 890 | % | ||||||||
Other
non-operating
expenses, net
|
(8,661 | ) | (88 | ) | (8,573 | ) | n.m. | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total
non-operating
income (expense), net
|
$ | (43,227 | ) | $ | (4,104 | ) | $ | (39,123 | ) | 953 | % | |||||
|
|
|
|
|
|
|
|
For the Nine Months
Ended September 30, |
Period to Period
Change |
|||||||||||||||
2021
|
2020
|
$ Change
|
%
Change |
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Hosting and Equipment Sales Segment
|
||||||||||||||||
Hosting revenue from customers
|
$ | 51,742 | $ | 32,049 | $ | 19,693 | 61 | % | ||||||||
Equipment sales to customers
|
113,435 | 2,272 | 111,163 | n.m. | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenue
|
165,177 | 34,321 | 130,856 | 381 | % | |||||||||||
Cost of revenue
|
131,284 | 30,308 | 100,976 | 333 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit
|
$ | 33,893 | $ | 4,013 | $ | 29,880 | 745 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Mining Segment
|
||||||||||||||||
Digital asset mining income
|
$ | 77,511 | $ | 2,312 | $ | 75,199 | n.m. | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenue
|
$ | 77,511 | 2,312 | 75,199 | n.m. | |||||||||||
Cost of revenue
|
13,909 | 1,598 | 12,311 | 770 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit
|
$ | 63,602 | $ | 714 | $ | 62,888 | n.m. | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Consolidated total revenue
|
$ | 242,688 | $ | 36,633 | $ | 206,055 | 562 | % | ||||||||
Consolidated cost of revenue
|
$ | 145,193 | $ | 31,906 | $ | 113,287 | 355 | % | ||||||||
Consolidated gross profit
|
$ | 97,495 | $ | 4,727 | $ | 92,768 | 1963 | % |
For the Nine
Months Ended September 30, |
||||||||
Customer
|
2021
|
2020
|
||||||
A
|
34 | % | n/a | |||||
B
|
21 | % | n/a | |||||
C (related party)
|
18 | % | n/a | |||||
D
|
n/a | 42 | % | |||||
E
|
n/a | 16 | % |
For the Nine Months
Ended September 30, |
Period to Period
Change |
|||||||||||||||
2021
|
2020
|
$ Change
|
%
Change |
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Reportable segment gross profit
|
$ | 97,495 | $ | 4,727 | $ | 92,768 | 1963 | % | ||||||||
(Loss) gain on legal settlements
|
(2,603 | ) | 5,814 | (8,417 | ) | (145 | %) | |||||||||
Gain (loss) from sales of digital currency assets
|
405 | 52 | 353 | 679 | % | |||||||||||
Impairment of digital currency assets
|
(12,552 | ) | (4 | ) | (12,548 | ) | n.m. | |||||||||
Operating expense (income):
|
||||||||||||||||
Research and development
|
4,231 | 4,184 | 47 | 1 | % | |||||||||||
Sales and marketing
|
2,186 | 1,401 | 785 | 56 | % | |||||||||||
General and administrative
|
46,992 | 10,797 | 36,195 | 335 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expense (income)
|
53,409 | 16,382 | 37,027 | 226 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating Income (Loss)
|
29,336 | (5,794 | ) | 35,130 | (606 | %) | ||||||||||
Other income (expense):
|
||||||||||||||||
Loss on debt extinguishment
|
(8,016 | ) | (1,333 | ) | (6,683 | ) | 501 | % | ||||||||
Interest expense, net
|
(26,550 | ) | (2,683 | ) | (23,867 | ) | 890 | % | ||||||||
Other
non-operating
expenses, net
|
(8,661 | ) | (88 | ) | (8,573 | ) | n.m. | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total other income (expense)
|
(43,227 | ) | (4,104 | ) | (39,123 | ) | 953 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Income (loss) before income taxes
|
$ | (13,891 | ) | $ | (9,897 | ) | $ | (3,993 | ) | 40 | % | |||||
|
|
|
|
|
|
|
|
Year Ended
December 31, |
Period to Period
Change |
|||||||||||||||
2020
|
2019
|
$ Change
|
%
Change |
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Total Revenue:
|
||||||||||||||||
Hosting revenue from customers
|
$ | 34,615 | $ | 53,492 | $ | (18,877 | ) | (35 | %) | |||||||
Hosting revenue from related parties
|
6,983 | 384 | 6,599 | n.m. | ||||||||||||
Equipment sales to customers
|
11,193 | — | 11,193 | — | ||||||||||||
Equipment sales to related parties
|
1,402 | — | 1,402 | — | ||||||||||||
Digital asset mining income
|
6,127 | 5,647 | 480 | 8 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Revenue
|
$ | 60,320 | $ | 59,523 | $ | 797 | 1 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Percentage of total revenue:
|
||||||||||||||||
Hosting revenue from customers
|
57 | % | 90 | % | ||||||||||||
Hosting revenue from related parties
|
12 | 1 | ||||||||||||||
Equipment sales to customers
|
19 | — | ||||||||||||||
Equipment sales to related parties
|
2 | — | ||||||||||||||
Digital asset mining income
|
10 | 9 | ||||||||||||||
|
|
|
|
|||||||||||||
Total Revenue
|
100 | 100 | ||||||||||||||
|
|
|
|
Year Ended
December 31, |
Period to Period
Change |
|||||||||||||||
2020
|
2019
|
$
Change |
%
Change |
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Cost of revenue
|
$ | 50,928 | $ | 48,996 | $ | 1,932 | 4 | % | ||||||||
Gross profit
|
9,392 | 10,527 | (1,135 | ) | (11 | %) | ||||||||||
Gross margin
|
16 | % | 18 | % | — | (2 | %) |
Year Ended
December 31, |
Period to Period
Change |
|||||||||||||||
2020
|
2019
|
$
Change |
%
Change |
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Gain (loss) on sales of digital currency assets
|
$ | 69 | $ | 387 | $ | (318 | ) | (82 | %) | |||||||
Percentage of total revenue
|
0 | % | 1 | % |
Year Ended
December 31, |
Period to Period
Change |
|||||||||||||||
2020
|
2019
|
$
Change |
%
Change |
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Impairment of digital currency assets
|
$ | (4 | ) | $ | 419 | $ | (423 | ) | (101 | %) | ||||||
Percentage of total revenue
|
0 | % | 1 | % |
Year Ended
December 31, |
Period to Period
Change |
|||||||||||||||
2020
|
2019
|
$
Change |
%
Change |
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Research and development
|
$ | 5,271 | $ | 5,480 | $ | (209 | ) | (4 | %) | |||||||
Percentage of total revenue
|
9 | % | 9 | % |
Year Ended
December 31, |
Period to Period
Change |
|||||||||||||||
2020
|
2019
|
$ Change
|
%
Change |
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Sales and marketing
|
$ | 1,771 | $ | 2,833 | $ | (1,062 | ) | (37 | %) | |||||||
Percentage of total revenue
|
3 | % | 5 | % |
Year Ended
December 31, |
Period to Period
Change |
|||||||||||||||
2020
|
2019
|
$
Change |
%
Change |
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
General and administrative
|
$ | 14,556 | $ | 14,707 | $ | (151 | ) | (1 | %) | |||||||
Percentage of total revenue
|
24 | % | 25 | % |
Year Ended
December 31, |
Period to Period
Change |
|||||||||||||||
2020
|
2019
|
$
Change |
%
Change |
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Non-operating
income (expense), net:
|
||||||||||||||||
Loss on debt extinguishment
|
$ | (1,333 | ) | — | $ | (1,333 | ) | — | % | |||||||
Interest expense, net
|
(4,436 | ) | (235 | ) | (4,201 | ) | 1788 | % | ||||||||
Other
non-operating
expenses, net
|
(110 | ) | — | (110 | ) | — | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total
non-operating
income (expense), net
|
$ | (5,879 | ) | $ | (235 | ) | $ | (5,644 | ) | 2402 | % | |||||
|
|
|
|
|
|
|
|
For the Years Ended
December 31, |
Period to Period
Change |
|||||||||||||||
2020
|
2019
|
$ Change
|
%
Change |
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Equipment Sales and Hosting Segment
|
||||||||||||||||
Hosting revenue from customers
|
$ | 41,598 | $ | 53,876 | $ | (12,278 | ) | (23 | %) | |||||||
Equipment sales to customers
|
12,595 | — | 12,595 | n.m. | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenue
|
54,193 | 53,876 | 317 | 1 | % | |||||||||||
Cost of revenue
|
47,951 | 43,005 | 4,946 | 12 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit
|
$ | 6,242 | $ | 10,871 | $ | (4,629 | ) | (43 | %) | |||||||
|
|
|
|
|
|
|
|
|||||||||
Mining Segment
|
||||||||||||||||
Digital asset mining income
|
$ | 6,127 | $ | 5,647 | $ | 480 | 8 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenue
|
6,127 | 5,647 | 480 | 8 | % | |||||||||||
Cost of revenue
|
2,977 | 5,991 | (3,014 | ) | (50 | %) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit
|
$ | 3,150 | $ | (344 | ) | $ | 3,494 | n.m | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Consolidated total revenue
|
$ | 60,320 | $ | 59,523 | $ | 797 | 1 | % | ||||||||
Consolidated cost of revenue
|
$ | 50,928 | $ | 48,996 | $ | 1,932 | 4 | % | ||||||||
Consolidated gross profit
|
$ | 9,392 | $ | 10,527 | $ | (1,135 | ) | (11 | %) |
For the Years Ended
December 31, |
Period to Period
Change |
|||||||||||||||
2020
|
2019
|
$
Change |
%
Change |
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Reportable segment gross profit
|
$ | 9,392 | $ | 10,527 | $ | (1,135 | ) | (11 | %) | |||||||
Gain on legal settlements
|
5,814 | — | 5,814 | n.m. | ||||||||||||
Gain (loss) from sales of digital currency assets
|
69 | 387 | (318 | ) | (82 | %) | ||||||||||
Impairment of digital currency assets
|
(4 | ) | 419 | (423 | ) | (101 | %) | |||||||||
Operating expense (income):
|
||||||||||||||||
Research and development
|
$ | 5,271 | $ | 5,480 | $ | (209 | ) | (4 | %) | |||||||
Sales and marketing
|
1,771 | 2,833 | (1,062 | ) | (37 | %) | ||||||||||
General and administrative
|
14,556 | 14,707 | (151 | ) | (1 | %) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expense (income)
|
21,598 | 23,020 | (1,422 | ) | (6 | %) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating Income (loss)
|
(6,327 | ) | (11,687 | ) | 5,360 | (46 | %) | |||||||||
Other income (expense):
|
||||||||||||||||
Loss on debt extinguishment
|
(1,333 | ) | — | (1,333 | ) | n.m. | ||||||||||
Interest expense, net
|
(4,436 | ) | (235 | ) | (4,201 | ) | 1788 | % | ||||||||
Other
non-operating
expenses, net
|
(110 | ) | — | (110 | ) | n.m. | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total other income (expense)
|
(5,879 | ) | (235 | ) | (5,644 | ) | 2402 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Income (loss) before income taxes
|
$ | (12,206 | ) | $ | (11,922 | ) | $ | (284 | ) | 2 | % | |||||
|
|
|
|
|
|
|
|
As of the
Nine Months Ended September 30, |
Period to Period
Change |
As of the Year
Ended December 31, |
Period to Period
Change |
|||||||||||||||||||||||||||||
2021
|
2020
|
$ Change
|
%
Change |
2020
|
2019
|
$
Change |
%
Change |
|||||||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||||||
Cash and cash equivalents
|
$ | 147,906 | $ | 6,573 | $ | 141,333 | n.m. | $ | 8,671 | $ | 6,657 | $ | 2,014 | 30 | % | |||||||||||||||||
Restricted cash
|
12,101 | 125 | 11,976 | n.m. | 50 | 250 | (200 | ) | (80 | %) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Cash, cash equiv. and restricted cash
|
$ | 160,007 | $ | 6,698 | $ | 8,721 | $ | 6,907 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
As of and for the Nine
Months Ended September 30, |
As of and for the Year
Ended December 31, |
|||||||||||||||
2021
|
2020
|
2020
|
2019
|
|||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Cash, cash equivalents and restricted cash
|
$ | 160,007 | $ | 6,698 | $ | 8,721 | $ | 6,907 | ||||||||
Cash provided by (used in)
|
||||||||||||||||
Operating activities
|
(166,474 | ) | (18,462 | ) | (23,765 | ) | (832 | ) | ||||||||
Investing activities
|
(115,524 | ) | (9,228 | ) | (15,144 | ) | (37,360 | ) | ||||||||
Financing activities
|
433,284 | 27,481 | 40,723 | 28,694 | ||||||||||||
Cash, cash equivalents and restricted cash—beg. of period
|
8,721 | 6,907 | 6,907 | 16,405 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Cash, cash equivalents and restricted cash—end of period
|
$ | 160,007 | $ | 6,698 | $ | 8,721 | $ | 6,907 | ||||||||
|
|
|
|
|
|
|
|
Year ending December 31,
|
||||
2021
|
$ | 111 | ||
2022-2025
|
— | |||
|
|
|||
Total minimum lease payments
|
$ | 111 | ||
|
|
Year ending December 31,
|
||||
2021
|
$ | 2,467 | ||
2022
|
1,990 | |||
2023
|
271 | |||
2024
|
102 | |||
2025
|
46 | |||
|
|
|||
Total minimum lease payments
|
4,876 | |||
Less: interest
|
(467 | ) | ||
|
|
|||
Present value of net minimum lease payments
|
$ | 4,409 | ||
|
|
Year Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Expected term (years)
|
10.0 |
5.43-5.57
|
||||||
Expected volatility
|
36.26 | % | 30.59 | % | ||||
Risk-free interest rate
|
0.70 | % | 1.65 | % | ||||
Expected dividend yield
|
0.0 | % | 0.0 | % |
• |
Acting as a fraud deterrent, as digital assets recorded on a blockchain are virtually impossible to counterfeit, reverse, or modify;
|
• |
Immediate settlement;
|
• |
Elimination of counterparty risk;
|
• |
No requirement for a trusted intermediary;
|
• |
Lower transaction fees;
|
• |
Identity theft prevention;
|
• |
Universal accessibility;
|
• |
Transaction verification and confirmation processes that prevent double spending;
|
• |
Decentralized transaction processing at any time of day without any central authority (governments or financial institutions); and
|
• |
Universal value free from currency exchange rates.
|
• |
Argo Blockchain PLC;
|
• |
Bit Digital, Inc.;
|
• |
Bitcoin Investment Trust;
|
• |
Bitfarms Technologies Ltd. (formerly Blockchain Mining Ltd);
|
• |
Blockchain Industries, Inc. (formerly Omni Global Technologies, Inc.);
|
• |
Cipher Mining Inc.;
|
• |
Coinbase, Inc.;
|
• |
Digihost International, Inc.;
|
• |
DMG Blockchain Solutions Inc.;
|
• |
DPW Holdings, Inc. (through its ownership of Digital Farms Inc.);
|
• |
Greenidge Generation Holdings Inc.;
|
• |
HashChain Technology, Inc.;
|
• |
Hive Blockchain Technologies Inc.;
|
• |
Hut 8 Mining Corp.;
|
• |
Layer1 Technologies, Inc.;
|
• |
Marathon Digital Holdings, Inc.;
|
• |
MGT Capital Investments, Inc.;
|
• |
Northern Data AG;
|
• |
Overstock.com Inc.; and
|
• |
Riot Blockchain, Inc.
|
Name
|
Age
|
Position
|
||||
Executive Officers
|
||||||
Michael Levitt
|
63 |
Chief Executive Officer and
Co-Chair
of the Board of Directors
|
||||
Darin Feinstein
|
50 |
Chief Vision Officer and
Co-Chair
of the Board of Directors
|
||||
Michael Trzupek
|
51 | EVP and Chief Financial Officer | ||||
Todd M. DuChene
|
58 | EVP, General Counsel, Chief Compliance Officer and Secretary | ||||
Non-Employee
Directors
|
||||||
Jarvis Hollingsworth(1)(3)
|
59 | Director | ||||
Matt Minnis(2)(3)
|
57 | Director | ||||
Stacie Olivares(1)(2)(3)
|
47 | Director | ||||
Kneeland Youngblood(1)(2)(3)
|
66 | Director |
(1) |
Member of the Audit Committee.
|
(2) |
Member of the Compensation Committee.
|
(3) |
Member of the Nominating and Corporate Governance Committee.
|
• |
Helping the board of directors of Core oversee corporate accounting and financial reporting processes;
|
• |
Managing the selection, engagement, qualifications, independence and performance of a qualified firm to serve as the independent registered public accounting firm to audit the financial statements;
|
• |
Discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and the independent accountants, the interim and
year-end
operating results;
|
• |
Developing procedures for employees to submit concerns anonymously about questionable accounting or audit matters;
|
• |
Reviewing related person transactions;
|
• |
Obtaining and reviewing a report by the independent registered public accounting firm at least annually that describes internal quality control procedures, any material issues with such procedures and any steps taken to deal with such issues when required by applicable law; and
|
• |
Approving or, as permitted,
pre-approving,
audit and permissible
non-audit
services to be performed by the independent registered public accounting firm.
|
• |
Reviewing and approving the compensation of the chief executive officer, other executive officers and senior management;
|
• |
Administering the equity incentive plans and other benefit programs;
|
• |
Reviewing, adopting, amending and terminating incentive compensation and equity plans, severance agreements, profit sharing plans, bonus plans,
change-of-control
|
• |
Reviewing and establishing general policies relating to compensation and benefits of the employees.
|
• |
Specific responsibilities of the nominating and corporate governance committee include:
|
• |
Identifying and evaluating candidates, including the nomination of incumbent directors for reelection and nominees recommended by stockholders, to serve on the board of directors of Core;
|
• |
Considering and making recommendations to the board of directors regarding the composition and chairmanship of the committees of the board of directors of Core;
|
• |
Developing and making recommendations to the board of directors regarding corporate governance guidelines and matters, including in relation to corporate social responsibility; and
|
• |
Overseeing periodic evaluations of the performance of the board of directors of Core, including its individual directors and committees.
|
• |
for any transaction from which the director derives an improper personal benefit;
|
• |
for any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
|
• |
for any unlawful payment of dividends or redemption of shares; or
|
• |
for any breach of a director’s duty of loyalty to the corporation or its stockholders.
|
• |
Michael Levitt, Chief Executive Officer;
|
• |
Kevin Turner, former President and Chief Executive Officer;
|
• |
Michael Trzupek, Executive Vice President and Chief Financial Officer; and
|
• |
Todd M. DuChene, Executive Vice President, General Counsel, Chief Compliance Officer and Secretary.
|
Name and Principal Position
|
Year
|
Salary($)(1)
|
Stock
Awards($)(2) |
All Other
Compensation ($) |
Total($)
|
|||||||||||||||
Michael Levitt(3)
|
||||||||||||||||||||
Chief Executive Officer
|
2021 | 30,824 | (4) | 160,664,903 | — | 160,695,727 | ||||||||||||||
B. Kevin Turner(5)
|
2020 | 300,000 | 9,716,229 | 33,217 | (6) | 10,049,446 | ||||||||||||||
Former President and Chief Executive Officer
|
2021 | 121,978 | (7) | — | 153,679 | (8) | 275,721 | |||||||||||||
Michael Trzupek(9)
|
2020 | 75,000 | (10) | 13,803,152 | — | 13,878,152 | ||||||||||||||
EVP and Chief Financial Officer
|
2021 | 300,824 | 9,210,000 | — | 9,510,824 | |||||||||||||||
Todd M. DuChene
|
2020 | 300,000 | 795,049 | — | 1,095,049 | |||||||||||||||
EVP, General Counsel, Chief Compliance Officer and Secretary
|
2021 | 300,824 | 12,292,500 | 498,691 | (11) | 13,092,015 |
(1) |
Salary amounts represent actual amounts earned during the fiscal year.
|
(2) |
Amounts reported represent the aggregate grant date fair value of RSUs granted to the named executive officer during the fiscal year. The aggregate grant date fair value is based upon an estimate of Legacy Core Common Stock at the grant date. In accordance with the Financial Accounting Standard Board Accounting Standards Codification, Topic 718, or ASC Topic 718, recognition of compensation cost was deferred until consummation of the Business Combination. See Note 2 of the audited consolidated financial statements of Legacy Core included in the Prospectus for a discussion of the relevant assumptions used in calculating this amount. This amount does not reflect the actual economic value that may be realized by the named executive officer.
|
(3) |
Mr. Levitt was not one of our named executive officers for the year ended December 31, 2020, and was appointed as our Chief Executive Officer in May 2021.
|
(4) |
The salary reported for Mr. Levitt represents a
pro-rata
portion of his salary in 2021. His annualized base salary for 2021 was $60,000.
|
(5) |
Mr. Turner resigned as our President and Chief Executive Officer in May 2021.
|
(6) |
Amount shown consists of medical benefits of $32,325, and $64 group life insurance premiums and
$828 out-of-pocket
|
(7) |
The salary reported for Mr. Turner represents a
pro-rata
portion of his salary in 2021. His annualized base salary for 2021 was $300,000.
|
(8) |
Amount shown consists of $17,217 COBRA payments and $136,462 severance payment upon the termination of Mr. Turner’s employment with us.
|
(9) |
Mr. Trzupek was appointed as our Chief Financial Officer in September 2020.
|
(10) |
The salary reported for Mr. Trzupek represents a
pro-rata
portion of his salary in 2020. His annualized base salary for 2020 was $300,000.
|
(11) |
Amount shown represents $498,691 relocation expenses reimbursed by Legacy Core to Mr. DuChene.
|
Name
|
Fiscal Year
2020 Base Salary($) |
Fiscal Year
2021 Base Salary($) |
||||||
Michael Levitt
|
— | (1) | 60,000 | |||||
B. Kevin Turner
|
300,000 | 300,000 | ||||||
Michael Trzupek
|
300,000 | 300,000 | ||||||
Todd M. DuChene
|
300,000 | 300,000 |
(1) |
Mr. Levitt was not one of our named executive officers for the year ended December 31, 2020, and was appointed as our Chief Executive Officer in May 2021.
|
Stock Awards(1)
|
||||||||||||||||
Name
|
Grant
Date |
Vesting
Commencement Date |
Number of
Shares or Units of Stock that Have Not Vested (#) |
Market Value
of Shares or Units of Stock that Have Not Vested($)(2) |
||||||||||||
Michael Levitt(3)
|
July 2, 2021 | July 2, 2021 | 8,400,000 | (4) | 146,664,000 | |||||||||||
B. Kevin Turner(5)
|
September 21, 2018 | July 1, 2018 | 3,645,864 | (5) | 63,656,785 | |||||||||||
October 1, 2018 | July 1, 2018 | 2,187,477 | (5) | 38,193,348 | ||||||||||||
October 9, 2018 | July 1, 2018 | 729,159 | (5) | 12,731,116 | ||||||||||||
July 31, 2019 | July 1, 2019 | 500,000 | (5) | 8,730,000 | ||||||||||||
April 29, 2020 | April 30, 2020 | 1,725,000 | (5) | 30,118,500 | ||||||||||||
August 24, 2020 | August 25, 2020 | 250,000 | (5) | 4,365,000 | ||||||||||||
Michael Trzupek(6)
|
October 1, 2020 | September 21, 2020 | 2,000,000 | (4) | 34,920,000 | |||||||||||
July 9, 2021 | June 9, 2021 | 500,000 | (4) | 8,730,000 | ||||||||||||
Todd M. DuChene
|
April 1, 2019 | April 1, 2019 | 1,000,000 | (7) | 17,460,000 | |||||||||||
June 12, 2020 | June 12, 2020 | 250,000 | (4) | 4,365,000 | ||||||||||||
February 2, 2021 | January 1, 2021 | 250,000 | (4) | 4,365,000 | ||||||||||||
July 9, 2021 | June 24, 2021 | 500,000 | (4) | 8,730,000 |
(1) |
All stock awards listed in this table represent RSUs granted pursuant to the 2018 Plan, the terms of which are described below under “-
Equity Plan
|
(2) |
This column represents the fair market value of a share of Core Common Stock of $17.46 as of December 31, 2021 as determined by its board of directors, multiplied by the amount shown in the column “Stock Awards-Number of Shares or Units of Stock that Have Not Vested.”
|
(3) |
Mr. Levitt joined Core as Chief Executive Officer in May 2021.
|
(4) |
One fourth of these RSUs vest on each of the first four anniversaries of the vesting commencement date, provided that the recipient remains in continuous service with us through each vesting date, and subject to the earlier to occur of (i) a change of control event, and (ii) an initial public offering of Legacy Core’s equity securities.
|
(5) |
Mr. Turner resigned as Legacy Core’s President and Chief Executive Officer in May 2021. Mr. Turner’s separation agreement provides that, as of Mr. Turner’s separation date, 9,037,500 RSUs had satisfied the time-based vesting condition, but these RSUs remain subject to the transaction-based vesting condition described in Note 11 to Legacy Core’s consolidated financial statements as of and for the years ended December 31, 2020 and 2019, which are included elsewhere in the registration statement of which this prospectus forms a part. The transaction-based vesting condition must be satisfied within three years of Mr. Turner’s separation date.
|
(6) |
Mr. Trzupek joined Core as Chief Financial Officer in September 2020.
|
(7) |
One fourth of these RSUs vest on the one year anniversary of the vesting commencement date and 1/36 of the remaining RSUs vest monthly thereafter, provided that the recipient remains in continuous service with us through each vesting date, and subject to the earlier to occur of (i) a change of control event, and (ii) an initial public offering of Legacy Core’s equity securities.
|
• |
select the eligible individual to whom awards may be granted;
|
• |
determine whether and to what extent awards are to be granted to eligible individuals;
|
• |
determine the number of shares of common stock to be covered by each award;
|
• |
determine the terms and conditions of awards (including exercise price, purchase price, vesting schedule or acceleration thereof, and forfeiture restrictions or waiver thereof);
|
• |
determine the amount of cash to be covered by each award;
|
• |
determine whether, to what extent and under what circumstances grants of awards under the 2018 Plan are to operate on a tandem basis and/or in conjunction with or apart from other awards made by the Company outside of the 2018 Plan;
|
• |
determine whether and under what circumstances, options may be settled in cash, common stock, and/or restricted stock;
|
• |
determine whether an option is an ISO or NSO;
|
• |
determine whether to require a participant not to sell or otherwise dispose of shares acquired pursuant to the exercise of an award for a period of time as determined by the plan administrator, in its sole discretion, following the date of the acquisition of such award;
|
• |
modify, extend or renew an award; and
|
• |
determine whether, to what extent and under what circumstances to provide loans to participants in order to exercise options under the 2018 Plan.
|
• |
awards may be continued, assumed, or have new rights substituted therefore;
|
• |
the plan administrator may provide for the purchase of any awards by the Company or an Affiliate for cash;
|
• |
the plan administrator may, in its sole discretion, terminate all outstanding and unexercised options, stock appreciation rights, or any other stock-based award that provides for a Participant elected exercise; and/or
|
• |
the plan administrator may, in its sole discretion, provide for accelerated vesting or lapse of restrictions.
|
Name
|
Stock awards
($)(1) |
Total($)
|
||||||
Matthew Bishop(2)
|
95,000 | (3) | 95,000 | |||||
921,000 | (4) | 921,000 | ||||||
Jarvis Hollingsworth(5)
|
4,060,000 | (6) | 4,060,000 |
(1) |
The amount reported represents the aggregate grant date fair value of the RSUs granted during the fiscal year ended December 31, 2020 under the 2018 Plan, computed in accordance with ASC Topic 718. The assumptions used in calculating the grant date fair value of the RSUs reported in this column are set forth in Note 11 to the notes to Legacy Core’s consolidated financial statements included elsewhere in this prospectus. These amounts do not reflect the actual economic value that may be realized by the
non-employee
director. As of December 31, 2020, Mr. Bishop held 625,000 RSUs all of which are subject to forfeiture if the transaction vesting condition of the award is not met on or before March 31, 2024.
|
(2) |
Mr. Bishop was appointed to the board of directors of Legacy Core in March 2020. Prior to that, Mr. Bishop served as Legacy Core’s Chief Administrative Officer, in which capacity Mr. Bishop was paid $133,077 during 2020.
|
(3) |
During the fiscal year ended December 31, 2020, Mr. Bishop was granted 50,000 RSUs in connection with his service on the board of directors of Legacy Core. These RSUs have satisfied the time-based vesting condition on April 1, 2021, but remain subject to the earlier to occur of (i) a change of control event, and (ii) an initial public offering of Legacy Core’s equity securities, provided that the recipient remains in continuous service with us through such vesting date.
|
(4) |
During the fiscal year ended December 31, 2021, Mr. Bishop was granted 50,000 RSUs in connection with his service on the board of directors of Legacy Core. One fourth of these RSUs vest on each of the first four anniversaries of April 1, 2021, provided that the recipient remains in continuous service with us through each vesting date, and subject to the earlier to occur of (i) a change of control event, and (ii) an initial public offering of Legacy Core’s equity securities.
|
(5) |
Mr. Hollingsworth was appointed to the board of directors of Legacy Core in July 2021.
|
(6) |
During the fiscal year ended December 31, 2021, Mr. Hollingsworth was granted 250,000 RSUs in connection with his service on the board of directors of Legacy Core. One fourth of these RSUs vest on each of the first four anniversaries of July 15, 2021, provided that the recipient remains in continuous service with us through each vesting date, and subject to the earlier to occur of (i) a change of control event, and (ii) an initial public offering of Legacy Core’s equity securities.
|
1. |
Annual Board Service Retainer
:
|
a. |
All Eligible Directors: $150,000
|
b. |
Lead Director: $200,000
|
2. |
Annual Committee Chair Service Retainer
:
|
a. |
Chair of the Audit Committee: $20,000
|
b. |
Chair of the Compensation Committee: $20,000
|
c. |
Chair of the Corporate Governance and Nominating Committee: $20,000
|
3. |
Annual Committee Member Service Retainer (not applicable to Committee Chairs)
:
|
a. |
Member of the Audit Committee: $10,000
|
b. |
Member of the Compensation Committee: $10,000
|
c. |
Member of the Nominating and Corporate Governance Committee: $10,000
|
• |
the amounts involved exceeded or will exceed $120,000; and
|
• |
any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of, or person sharing the household with, the foregoing persons, had or will have a direct or indirect material interest.
|
Stockholder
|
Series A
Preferred Stock |
Total
Purchase Price |
||||||
Kevin Turner (1)
|
146,412 | $ | 999,994 | |||||
Michael Levitt (2)
|
146,412 | $ | 999,994 | |||||
MPM Life, LLC (3)
|
124,088 | $ | 847,521 | |||||
The Aber Whitcomb Trust (4)
|
124,088 | $ | 847,521 | |||||
William & Marilyn Humes Charitable Lead Annuity Trust 2017 (5)
|
29,283 | $ | 200,003 | |||||
Darin Feinstein (6)
|
124,088 | $ | 847,421 |
(1) |
Kevin Turner is Legacy Core’s former President and Chief Executive Officer, and a former member of Core’s board of directors.
|
(2) |
Michael Levitt is Core’s Chief Executive Officer and is the
Co-Chair
and a member of Core’s board of directors. 14,641 shares of Mr. Levitt’s Series A Preferred Stock holdings are held indirectly through HKM Investment LLC.
|
(3) |
Matthew Minnis, a member of Core’s board of directors, is the managing member of MPM Life, LLC.
|
(4) |
Aber Whitcomb, a former member of Legacy Core’s board of directors, is a trustee for The Aber Whitcomb Trust.
|
(5) |
William Humes, Core’s former Chief Financial Officer, is a trustee for the William & Marilyn Charitable Lead Annuity Trust 2017.
|
(6) |
Darin Feinstein is an owner of greater than 5% of Core’s capital stock through the BCV Entities (as defined below) and is the
Co-Chair
of Core’s board of directors.
|
• |
the risks, costs, and benefits to us;
|
• |
the impact on a director’s independence in the event the related person is a director, immediate family member of a director or an entity with which a director is affiliated;
|
• |
the terms of the transaction;
|
• |
the availability of other sources for comparable services or products; and
|
• |
the terms available to or from, as the case may be, unrelated third parties.
|
• |
each person known by us to be the beneficial owner of more than 5% of our common stock;
|
• |
each of our executive officers and directors; and
|
• |
all of our executive officers and directors as a group.
|
Name and Address of Beneficial Owner(1)
|
Number of
Shares |
Percentage
of Ownership |
||||||
Named Executive Officers and Directors
|
||||||||
Michael Levitt
|
22,055,357 | (2) | 6.9 | % | ||||
Chief Executive Officer and
Co-Chair
of the Board of Directors
|
||||||||
B. Kevin Turner
|
8,281,826 | (3) | 2.6 | % | ||||
Former President and Chief Executive Officer
|
||||||||
Darin Feinstein
|
40,362,498 | (4) | 12.6 | % | ||||
Chief Vision Officer and
Co-Chair
of the Board of Directors
|
||||||||
Michael Trzupek
|
— | — | ||||||
Executive Vice President and Chief Financial Officer
|
||||||||
Todd M. DuChene
|
— | — | ||||||
Executive Vice President, General Counsel, Chief Compliance Officer and Secretary
|
||||||||
Jarvis Hollingsworth
|
— | — | ||||||
Director
|
||||||||
Matt Minnis
|
30,711,805 | (5) | 9.6 | % | ||||
Director
|
||||||||
Stacie Olivares
|
— | — | ||||||
Director
|
||||||||
Kneeland Youngblood
|
— | — | ||||||
Director
|
||||||||
All current directors and executive officers as a group (8 individuals)
|
93,129,660 | 28.5 | % |
(1) |
Unless otherwise indicated, the business address of each of the directors, executive officers and five percent holders of Core is 106 East 6th Street, Suite
900-145,
Austin, Texas 78701.
|
(2) |
Consists of (i) 210,854 shares of Core common stock held of record by Mr. Levitt, (ii) 41,470 shares of Core common stock held of record by HKM Investment LLC (“
HKM
MJL Blockchain
|
(3) |
Consists of (i) 5,081,520 shares of Core common stock held of record by Mr. Turner and (ii) 3,200,306 shares of Core common stock issuable upon exercise of warrants within 60 days of the Closing Date held by Mr. Turner.
|
(4) |
Consists of (i) 36,965,875 shares of Core common stock held of record by Mr. Feinstein, (ii) 811,918 shares of Core common stock held of record by Red Moon 88, LLC (“
Red Moon
|
(5) |
Consists of (i) 29,111,651 shares of Core common stock held of record by MPM Life, LLC (“
MPM
|
• |
up to 8,625,000 Founder Shares;
|
• |
up to 6,266,667 shares of common stock issuable upon exercise of the Private Placement Warrants;
|
• |
up to 91,052,355 shares of common stock (including shares issuable upon the exercise of convertible securities) held by certain affiliates of our company; and
|
• |
up to 80,228,401 shares of common stock issuable upon conversion of certain Convertible Notes.
|
• |
in whole and not in part;
|
• |
at a price of $0.01 per warrant;
|
• |
upon not less than 30 days’ prior written notice of redemption to each warrantholder; and
|
• |
if, and only if, the last reported sale price of the Core common stock for any 20 trading days within a
30-trading
day period ending three (3) business days before Core sends the notice of redemption to the
|
warrantholders (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described under the heading “
—Public Warrants—Anti-dilution Adjustments
|
• |
in whole and not in part;
|
• |
at $0.10 per warrant;
|
• |
upon a minimum of 30 days’ prior written notice of redemption, provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to the table below, based on the redemption date and the “fair market value” of Core common stock except as otherwise described below;
|
• |
if, and only if, the Reference Value equals or exceeds $10.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described under the heading “—
Public Warrants
Anti-dilution Adjustments
|
• |
if the Reference Value is less than $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described under the heading “
—Public Warrants—Anti-dilution Adjustments
|
Redemption Date
(period to expiration of warrants) |
Fair Market Value of Core Common Stock
|
|||||||||||||||||||||||||||||||||||
≤
$10.00
|
$11.00
|
$12.00
|
$13.00
|
$14.00
|
$15.00
|
$16.00
|
$17.00
|
≥
$18.00
|
||||||||||||||||||||||||||||
60 months
|
0.261 | 0.281 | 0.297 | 0.311 | 0.324 | 0.337 | 0.348 | 0.358 | 0.361 | |||||||||||||||||||||||||||
57 months
|
0.257 | 0.277 | 0.294 | 0.310 | 0.324 | 0.337 | 0.348 | 0.358 | 0.361 | |||||||||||||||||||||||||||
54 months
|
0.252 | 0.272 | 0.291 | 0.307 | 0.322 | 0.335 | 0.347 | 0.357 | 0.361 | |||||||||||||||||||||||||||
51 months
|
0.246 | 0.268 | 0.287 | 0.304 | 0.320 | 0.333 | 0.346 | 0.357 | 0.361 | |||||||||||||||||||||||||||
48 months
|
0.241 | 0.263 | 0.283 | 0.301 | 0.317 | 0.332 | 0.344 | 0.356 | 0.361 | |||||||||||||||||||||||||||
45 months
|
0.235 | 0.258 | 0.279 | 0.298 | 0.315 | 0.330 | 0.343 | 0.356 | 0.361 | |||||||||||||||||||||||||||
42 months
|
0.228 | 0.252 | 0.274 | 0.294 | 0.312 | 0.328 | 0.342 | 0.355 | 0.361 | |||||||||||||||||||||||||||
39 months
|
0.221 | 0.246 | 0.269 | 0.290 | 0.309 | 0.325 | 0.340 | 0.354 | 0.361 | |||||||||||||||||||||||||||
36 months
|
0.213 | 0.239 | 0.263 | 0.285 | 0.305 | 0.323 | 0.339 | 0.353 | 0.361 | |||||||||||||||||||||||||||
33 months
|
0.205 | 0.232 | 0.257 | 0.280 | 0.301 | 0.320 | 0.337 | 0.352 | 0.361 | |||||||||||||||||||||||||||
30 months
|
0.196 | 0.224 | 0.250 | 0.274 | 0.297 | 0.316 | 0.335 | 0.351 | 0.361 | |||||||||||||||||||||||||||
27 months
|
0.185 | 0.214 | 0.242 | 0.268 | 0.291 | 0.313 | 0.332 | 0.350 | 0.361 | |||||||||||||||||||||||||||
24 months
|
0.173 | 0.204 | 0.233 | 0.260 | 0.285 | 0.308 | 0.329 | 0.348 | 0.361 | |||||||||||||||||||||||||||
21 months
|
0.161 | 0.193 | 0.223 | 0.252 | 0.279 | 0.304 | 0.326 | 0.347 | 0.361 | |||||||||||||||||||||||||||
18 months
|
0.146 | 0.179 | 0.211 | 0.242 | 0.271 | 0.298 | 0.322 | 0.345 | 0.361 | |||||||||||||||||||||||||||
15 months
|
0.130 | 0.164 | 0.197 | 0.230 | 0.262 | 0.291 | 0.317 | 0.342 | 0.361 | |||||||||||||||||||||||||||
12 months
|
0.111 | 0.146 | 0.181 | 0.216 | 0.250 | 0.282 | 0.312 | 0.339 | 0.361 | |||||||||||||||||||||||||||
9 months
|
0.090 | 0.125 | 0.162 | 0.199 | 0.237 | 0.272 | 0.305 | 0.336 | 0.361 | |||||||||||||||||||||||||||
6 months
|
0.065 | 0.099 | 0.137 | 0.178 | 0.219 | 0.259 | 0.296 | 0.331 | 0.361 | |||||||||||||||||||||||||||
3 months
|
0.034 | 0.065 | 0.104 | 0.150 | 0.197 | 0.243 | 0.286 | 0.326 | 0.361 | |||||||||||||||||||||||||||
0 months
|
— | — | 0.042 | 0.115 | 0.179 | 0.233 | 0.281 | 0.323 | 0.361 |
• |
before such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
|
• |
upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction began, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned (i) by persons
|
who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
|
• |
on or after such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of the stockholders, and not by written consent, by the affirmative vote of at least 66
2
⁄
3
% of the outstanding voting stock that is not owned by the interested stockholder.
|
• |
any merger or consolidation involving the corporation and the interested stockholder;
|
• |
any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;
|
• |
subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;
|
• |
any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class or series of the corporation beneficially owned by the interested stockholder; and
|
• |
the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits by or through the corporation.
|
• |
an individual who is a citizen or resident of the United States;
|
• |
a corporation, or an entity treated as a corporation for U.S. federal income tax purposes, created or organized in the United States or under the laws of the United States or of any state thereof or the District of Columbia;
|
• |
an estate, the income of which is subject to U.S. federal income tax regardless of its source; or
|
• |
a trust if (a) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons have the authority to control all of the trust’s substantial decisions or (b) the trust has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person.
|
• |
the gain is effectively connected with the conduct of a trade or business by the
non-U.S.
Holder within the United States (and, if an applicable tax treaty so requires, is attributable to a U.S. permanent establishment or fixed place of business maintained by the
non-U.S.
Holder);
|
• |
the
non-U.S.
Holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are met; or
|
• |
we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the
non-U.S.
Holder held our common stock or Warrants and, in the case where our common stock is regularly traded on an established securities market, (i) the
non-U.S.
Holder has owned, actually or constructively, more than 5% of our common stock at any time within the relevant period or (ii) provided that our Warrants are regularly traded on an established securities market, the
non-U.S.
Holder has owned, actually or constructively, more than 5% of our Warrants at any time within the within the relevant period. It is unclear how a
non-U.S.
Holder’s ownership of Warrants will affect the determination of whether the
non-U.S.
Holder owns more than 5% of our common stock. In addition, special rules may apply in the case of a disposition of our Warrants if our common stock is considered to be regularly traded, but our Warrants are not considered to be regularly traded. There can be no assurance that our common stock or Warrants will or will not be treated as regularly traded on an established securities market for this purpose.
|
• |
up to 8,625,000 Founder Shares;
|
• |
up to 6,266,667 shares of common stock issuable upon exercise of the Private Placement Warrants;
|
• |
up to 91,052,355 shares of common stock (including shares issuable upon the exercise of convertible securities) held by certain affiliates of our company; and
|
• |
up to 80,228,401 shares of common stock issuable upon conversion of certain Convertible Notes.
|
• |
purchases by a broker-dealer as principal and resale by such broker-dealer for its own account pursuant to this prospectus;
|
• |
ordinary brokerage transactions and transactions in which the broker solicits purchasers;
|
• |
block trades in which the broker-dealer so engaged will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
|
• |
an over-the-counter distribution in
|
• |
through trading plans entered into by a selling securityholder
pursuant to Rule 10b5-1 under the
Exchange Act, that are in place at the time of an offering pursuant to this prospectus and any applicable prospectus supplement hereto that provide for periodic sales of their securities on the basis of parameters described in such trading plans;
|
• |
short sales;
|
• |
distribution to employees, members, limited partners or stockholders of the selling securityholders; through the writing or settlement of options or other hedging transaction, whether through an options exchange or otherwise;
|
• |
by pledge to secured debts and other obligations;
|
• |
delayed delivery arrangements;
|
• |
to or through underwriters or broker-dealers;
|
• |
in “at the market” offerings, as defined in Rule 415 under the Securities Act, at negotiated prices, at prices prevailing at the time of sale or at prices related to such prevailing market prices, including sales made directly on a national securities exchange or sales made through a market maker other than on an exchange or other similar offerings through sales agents;
|
• |
in privately negotiated transactions;
|
• |
in options transactions;
|
• |
through a combination of any of the above methods of sale; or
|
• |
any other method permitted pursuant to applicable law.
|
December 31, 2020
|
||||||||||||||||||||||||
Blockcap
Historical
|
Legacy
Core
Historical
|
Legacy
Core
Pro Forma
Combined
|
XPDI
Historical
|
Pro
Forma
Combined
Core
|
Pro
Forma
Equivalent
Core
|
|||||||||||||||||||
Earnings (loss) per share for the twelve months ended December 31, 2020:
|
||||||||||||||||||||||||
Net income (loss) per share (Basic and Diluted)
(1)
|
$ | (0.56 | ) | $ | (0.23 | ) | (0.60 | ) | $ | 0.00 | $ | (0.46 | ) | $ | (0.30 | ) |
(1) |
Potentially dilutive securities are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive.
|
Blockcap
(Historical)
for
the period
January 1,
2021
through
July 30,
2021
|
Legacy
Core
Historical
|
Legacy
Core
Pro Forma
Combined
|
XPDI
Historical
|
Pro
Forma
Combined
Core
|
Pro
Forma
Equivalent
Core
|
|||||||||||||||||||
Earnings per share for the nine months ended September 30, 2021:
|
||||||||||||||||||||||||
Net income (loss) per share (Basic and Diluted)
(1)
|
$ | (0.16 | ) | $ | (0.11 | ) | $ | (0.32 | ) | $ | (0.51 | ) | $ | (0.36 | ) | $ | (0.24 | ) |
(1) |
Potentially dilutive securities are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive.
|
• |
The merger, which includes the merger of XPDI and the Merger Sub with Legacy Core;
|
• |
Legacy Core’s acquisition of Blockcap (described below), including any elimination of the effect of transactions between Legacy Core and Blockcap, as required, is included in the Legacy Core historical financial statements as of and for the nine months ended September 30, 2021. The pro forma impact to the Statement of Operations had the acquisition taken place on January 1, 2020 is included as an adjustment for the nine months ended September 30, 2021 and the twelve months ended December 31, 2020.
|
• |
The issuance by Legacy Core of secured convertible notes in April, 2021, net of the repayment of the existing Legacy Core loan (the “Silverpeak loan”) and the issuance in August and September, 2021 of unsecured convertible notes is included in the Legacy Core historical financial statements as of and for the nine months ended September 30, 2021. The pro forma impact to interest expense for the nine months ended September 30, 2021 and the twelve months ended December 31, 2020 is included as an adjustment. Also included as pro forma adjustments is the impact of additional issuance of unsecured convertible notes during October and November of 2021.
|
• |
the historical unaudited condensed consolidated financial statements of XPDI as of and for the nine months ended September 30, 2021 and the related notes, which are included elsewhere in the registration statement of which this prospectus forms a part;
|
• |
the historical audited financial statements of XPDI as of and for the period from December 29, 2020 (inception) through December 31, 2020 and the related notes, which are included elsewhere in the registration statement of which this prospectus forms a part;
|
• |
the historical unaudited financial statements of Legacy Core as of and for the nine months ended September 30, 2021 and the related notes, which are included elsewhere in the registration statement of which this prospectus forms a part;
|
• |
the historical audited financial statements of Legacy Core as of and for the year ended December 31, 2020 and the related notes, which are included elsewhere in the registration statement of which this prospectus forms a part;
|
• |
the historical unaudited financial statements of Blockcap for the period from January 1, 2021 through the acquisition date of July 30, 2021;
|
• |
the historical audited financial statements of Blockcap as of and for the year ended December 31, 2020 and the related notes, which are included elsewhere in the registration statement of which this prospectus forms a part;
|
• |
the historical audited financial statements of RME Black 88, LLC (“RME 88”), RME Black 100 LLC (“RME 100”), RME Black 200 (“RME 200”) and BEP 888 LLC (“BEP 888”) as of and for the periods from inception through December 31, 2020 and the related notes, which are included elsewhere in the registration statement of which this prospectus forms a part; and
|
• |
other information relating to XPDI and Legacy Core contained in the registration statement of which this prospectus forms a part.
|
Share Ownership in
New
Core
|
||||||||
amounts in thousands
|
Shares
|
% of
Total
|
||||||
Legacy Core shareholders (1)
|
|
301,292
|
|
|
90.7
|
%
|
||
|
|
|
|
|||||
XPDI:
|
||||||||
XPDI Class A shares (4)
|
22,153 | 6.7 | % | |||||
XPDI Class B shares converted to Class A (2)
|
8,625 | 2.6 | % | |||||
|
|
|
|
|||||
XPDI shareholders
|
|
30,778
|
|
|
9.3
|
%
|
||
|
|
|
|
|||||
Closing Shares (3)
|
|
332,070
|
|
|
100.0
|
%
|
||
|
|
|
|
(1) |
Includes equivalent Legacy Core common shares exchanged for New Core shares using the exchange rate of 1.6001528688 consisting of:
|
a. |
Legacy Core common shares of 158,212
|
b. |
Legacy Core common shares from convertible Series A and B preferred stock of 10,826
|
c. |
Legacy Core vested warrants and options of 10,556
|
d. |
Blockcap equivalent Legacy Core common shares of 115,508
|
e. |
Blockcap equivalent Legacy Core common shares from vested RSUs of 1,956
|
f. |
Blockcap equivalent Legacy Core vested options of 4,234
|
(2) |
Includes 1,725 Class B common shares that will be converted to Class A unvested shares and will vest upon the date on which the volume-weighted average price of the Class A Common Stock is greater than $12.50 per share for any 20 trading days within any 30 consecutive trading day period within five years of the Closing date. The unvested shares will be excluded from pro forma earnings per share calculations because the stock price threshold contingency has not yet been met.
|
(3) |
Excludes Legacy Core and Blockcap equivalent Legacy Core common shares from unvested RSUs of 97,409 and 4,855, respectively, and 21,103 and 3,111 from unvested options, respectively, using the exchange rate of 1.6001528688 and all other potentially dilutive securities including Legacy Core options, warrants, restricted stock units and convertible notes as well as XPDI warrants. See Note 5
—
|
(4) |
Includes the impact of the redemption by XPDI shareholders of 12,347 shares of Class A common stock subject to redemption.
|
September 30, 2021
|
September 30,
2021 |
|||||||||||||||||
in thousands
|
Legacy
Core
Pro
Forma
(Note 2)
|
XPDI
(Historical)
|
Merger
Adjustments
|
Pro Forma
Combined
|
||||||||||||||
Hosting revenue from customers
|
$ | 39,914 | $ | — | $ | — | $ | 39,914 | ||||||||||
Equipment sales to customers
|
95,741 | — | — | 95,741 | ||||||||||||||
Digital asset mining income
|
149,541 | — | — | 149,541 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total revenue
|
285,196 | — | — | 285,196 | ||||||||||||||
Costs of revenue
|
136,002 | — | — | 136,002 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Gross profit
|
149,194 | — | — | 149,194 | ||||||||||||||
(Loss) gain on legal settlements
|
(2,603 | ) | — | — | (2,603 | ) | ||||||||||||
Gain (loss) from sales of digital currency assets
|
550 | — | — | 550 | ||||||||||||||
Impairment of digital currency assets
|
(30,024 | ) | — | — | (30,024 | ) | ||||||||||||
Operating expenses:
|
||||||||||||||||||
Research and development
|
4,231 | — | — | 4,231 | ||||||||||||||
Sales and marketing
|
2,186 | — | — | 2,186 | ||||||||||||||
General and administrative
|
75,749 | 4,078 | — | 79,827 | ||||||||||||||
General and administrative-related party
|
— | 160 | — | 160 | ||||||||||||||
Franchise tax expenses
|
— | 148 | — | 148 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total operating expenses
|
82,166 | 4,386 | — | 86,552 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Operating income
|
34,951 | (4,386 | ) | — | 30,565 | |||||||||||||
Other (expense) income:
|
||||||||||||||||||
(Loss) gain from sales of digital currency assets
|
(1,472 | ) | — | — | (1,472 | ) | ||||||||||||
(Loss) on debt from extinguishment
|
(8,016 | ) | — | — | (8,016 | ) | ||||||||||||
Change in fair value of derivative warrant liabilities
|
— | (13,904 | ) | — | (13,904 | ) | ||||||||||||
Offering costs associated with derivative warrant liabilities
|
— | (1,055 | ) | — | (1,055 | ) | ||||||||||||
Income from investments held in Trust Account
|
— | 27 | (27 | ) |
e
|
— | ||||||||||||
Other income (expense)
|
(8,661 | ) | — | — | (8,661 | ) | ||||||||||||
Interest expense, net
|
(65,767 | ) | — | — | (65,767 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total other (expense) income
|
(83,916 | ) | (14,932 | ) | (27 | ) | (98,875 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) before income taxes
|
(48,965 | ) | (19,318 | ) | (27 | ) | (68,310 | ) | ||||||||||
Income tax provision (benefit)
|
5,777 | — | — | 5,777 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss) and other comprehensive income (loss)
|
$ | (54,742 | ) | $ | (19,318 | ) | $ | (27 | ) | $ | (74,087 | ) | ||||||
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss) attributable to common stockholders
|
$ | (54,742 | ) | $ | (19,318 | ) | $ | (27 | ) | $ | (74,087 | ) | ||||||
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss) per share
|
||||||||||||||||||
Common stock – Basic and Diluted
|
$ | (0.32 | ) | $ | (0.51 | ) |
a
|
$ | (0.24 | ) | ||||||||
Weighted average shares outstanding:
|
||||||||||||||||||
Basic and Diluted common stock
|
171,059 | 37,644 |
b
|
313,599 |
December 31, 2020
|
December 31,
2020 |
|||||||||||||||||
in thousands
|
Legacy
Core
Pro
Forma
(Note 2)
|
XPDI
(Historical)
|
Merger
Adjustments
|
Pro
Forma
Combined
|
||||||||||||||
Hosting revenue from customers
|
$ | 39,470 | $ | — | $ | — | $ | 39,470 | ||||||||||
Equipment sales to customers
|
11,842 | — | — | 11,842 | ||||||||||||||
Digital asset mining income
|
19,636 | — | — | 19,636 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total revenue
|
70,948 | — | — | 70,948 | ||||||||||||||
Costs of revenue
|
54,237 | — | — | 54,237 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Gross profit
|
16,711 | — | — | 16,711 | ||||||||||||||
Gain on legal settlements
|
5,814 | — | — | 5,814 | ||||||||||||||
Gain on sale of digital assets
|
353 | — | — | 353 | ||||||||||||||
Operating expenses:
|
||||||||||||||||||
Research and development
|
5,271 | — | — | 5,271 | ||||||||||||||
Sales and marketing
|
1,771 | — | — | 1,771 | ||||||||||||||
General and administrative
|
39,190 | 10 | 2,812 |
c
|
42,012 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total operating expenses
|
46,232 | 10 | 2,812 | 49,054 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Operating income
|
(23,354 | ) | (10 | ) | (2,812 | ) | (26,176 | ) | ||||||||||
Other (expense) income:
|
||||||||||||||||||
(Loss) on debt from extinguishment
|
(1,333 | ) | — | — | (1,333 | ) | ||||||||||||
Other income (expense)
|
(10,113 | ) | — | — | (10,113 | ) | ||||||||||||
Interest expense, net
|
(56,988 | ) | — | — | (56,988 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total other (expense) income
|
(68,434 | ) | — | — | (68,434 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) before income taxes
|
(91,788 | ) | (10 | ) | (2,812 | ) | (94,610 | ) | ||||||||||
Income tax provision (benefit)
|
(134 | ) | — | — | (134 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss) and other comprehensive income (loss)
|
$ | (91,653 | ) | $ | (10 | ) | $ | (2,812 | ) | $ | (94,475 | ) | ||||||
|
|
|
|
|
|
|
|
|||||||||||
Deemed divided from common to preferred exchange
|
(10,478 | ) | — | 10,478 |
d
|
— | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss) attributable to common stockholders
|
$ | (102,131 | ) | $ | (10 | ) | $ | 7,666 | $ | (94,475 | ) | |||||||
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss) per share
|
||||||||||||||||||
Common stock – Basic and Diluted
|
$ | (0.60 | ) | $ | — |
a
|
$ | (0.30 | ) | |||||||||
Weighted average shares outstanding:
|
||||||||||||||||||
Common stock – Basic and Diluted
|
171,059 | 7,500 |
b
|
313,599 |
• |
any anticipated synergies, operating efficiencies, tax savings, cost savings or increased costs of a public company that may be associated with the Transactions, or
|
• |
the potential purchases of mining and hosting equipment.
|
• |
The pro forma interest expense impact of the April 2021 Legacy Core issuance of $215 million of convertible notes, net of $5.6 million origination fees and the subsequent repayment of the $30 million Silverpeak loan net of prepayment penalties, the interest expense impact of the August and September Convertible Notes issuance of $205 million and the pro forma impact of the subsequent issuance in October and November 2021 of $95 million of additional Convertible Notes. It is not anticipated that the holders of the convertible notes will exercise their conversion rights as a result of the merger; and
|
• |
The acquisition of Blockcap by Legacy Core on July 30, 2021, including any elimination of the effect of transactions between Legacy Core and Blockcap, as required, is included in the Legacy Core historical financial statements as of and for the nine months ended September 30, 2021. The pro forma impact to the Statement of Operations had the acquisition taken place on January 1, 2020 is included as an adjustment for the period from January 1, 2021 through July 30, 2021 and the twelve months ended December 31, 2020. Consideration paid consisted of 72,186 Legacy Core common shares, 657 common shares from vested options settlement, 4,256 Legacy Core Restricted Stock Units and 2,393 Legacy Core Options. The portion of the fair value of the replaced Blockcap share based payments attributable to
pre-combination
service as well as the impact of the effective settlement of preexisting hosting and equipment contracts between Legacy Core and Blockcap has been included in the aggregate purchase price of $1,129.4 million.
|
Consideration
(in thousands)
|
||||
72,186 common shares valued at $16.18 per share (1) (2)
|
1,167,965 | |||
Fair value of replaced Blockcap share-based payments attributable to
pre-combination
service (3)
|
21,941 | |||
Settlement of
pre-existing
contracts (4)
|
(60,522 | ) | ||
|
|
|||
Total Consideration:
|
$ | 1,129,384 | ||
Fair value of assets acquired, and liabilities assumed:
|
||||
Cash and cash equivalents
|
$ | 704 | ||
Digital assets-Bitcoin
|
73,304 | |||
Digital assets-Ethereum
|
365 | |||
Digital assets-Bitcoin cash
|
8 | |||
Digital assets-Siacoin
|
554 | |||
Digital asset-Other
|
3,329 | |||
Other current assets
|
633 | |||
Intangible assets, net
|
2,925 | |||
Property, plant and equipment, net
|
27,089 | |||
Other noncurrent assets
|
1,293 | |||
|
|
|||
Total assets acquired
|
$
|
110,204
|
|
|
Accounts payable
|
492 | |||
Accrued expenses and other
|
22,647 | |||
Other current liabilities
|
6,408 | |||
|
|
|||
Total liabilities assumed
|
$
|
29,547
|
|
|
Total identifiable net assets
|
$
|
80,657
|
|
|
Goodwill on acquisition
|
$
|
1,048,727
|
|
(1) |
72,186 common shares represent the equivalent Legacy Core common shares issued to Blockcap shareholders as consideration for the purchase.
|
(2) |
The price per share of our common shares was estimated to be $16.18. As the Legacy Core common shares were not listed on a public marketplace, the calculation of the fair value of the common shares was subject to a greater degree of estimation. Given the absence of a public market, an estimate of the fair value of the common shares was required at the time of the Blockcap Acquisition. Objective and subjective factors were considered in determining the estimated fair value and because there is no active trading of the Legacy Core equity shares on an established securities market, an independent valuation specialist was engaged. The valuation was determined by weighting the outcomes of scenarios estimating share value based on both public company valuations and private company valuations. Both a market approach and common stock equivalency model were used to determine a range of outcomes, which were weighted based on probability to determine the result.
|
(3) |
Reflects the estimated fair value of replaced Blockcap share-based payments allocated to purchase price based on the proportion of service related to the
pre-combination
period. The fair value of the stock-based awards was determined utilizing the Black-Scholes pricing model.
|
(4) |
Blockcap had preexisting hosting and equipment with Legacy Core that were effectively settled by Legacy Core’s acquisition of Blockcap. As a result, the consideration transferred to Blockcap has been adjusted by the deferred revenue balances that were settled at the time of acquisition.
|
As of
September 30, 2021 |
||||||||||||||||
in thousands
|
Core
Scientific
(Historical)
(A) |
Convertible
Note adjustments |
Core
Scientific Pro Forma Combined |
|||||||||||||
Assets
|
||||||||||||||||
Current Assets:
|
||||||||||||||||
Cash and cash equivalents
|
$ | 147,906 | $ | 92,521 |
|
B
|
|
$ | 240,427 | |||||||
Restricted cash
|
12,101 | — | 12,101 | |||||||||||||
Accounts receivable, net of allowance of $620
|
602 | — | 602 | |||||||||||||
Accounts receivable from related parties
|
261 | — | 261 | |||||||||||||
Deposits for equipment
|
469,890 | — | 469,890 | |||||||||||||
Digital currency assets
|
116,233 | — | 116,233 | |||||||||||||
Other current assets
|
9,978 | — | 9,978 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total current assets
|
756,971 | 92,521 | 849,492 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Property, plant and equipment, net
|
219,795 | — | 219,795 | |||||||||||||
Goodwill
|
1,106,968 | — | 1,106,968 | |||||||||||||
Intangible assets, net
|
8,709 | — | 8,709 | |||||||||||||
Other noncurrent assets
|
14,110 | — | 14,110 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total assets
|
$ | 2,106,553 | $ | 92,521 | $ | 2,199,074 | ||||||||||
|
|
|
|
|
|
|||||||||||
Current Liabilities:
|
||||||||||||||||
Accounts payable
|
$ | 28,796 | — | $ | 28,796 | |||||||||||
Accrued expenses and other
|
35,074 | — | 35,074 | |||||||||||||
Deferred revenue
|
206,139 | — | 206,139 | |||||||||||||
Capital lease obligations, current portion
|
2,525 | — | 2,525 | |||||||||||||
Notes payable, current portion
|
25,202 | — | 25,202 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total current liabilities
|
297,736 | — | 297,736 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Capital lease obligations, net of current portion
|
1,524 | 1,524 | ||||||||||||||
Notes payable, net of current portion
|
471,930 | 95,000 |
|
B
|
|
566,930 | ||||||||||
Other noncurrent liabilities
|
1,994 | — | 1,994 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total liabilities
|
773,184 | 95,000 | 868,184 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Contingently redeemable preferred stock
|
44,476 | — | 44,476 | |||||||||||||
Stockholders’ Equity:
|
||||||||||||||||
Common stock; $0.00001 par value
|
2 | — | 2 | |||||||||||||
Additional Paid in Capital
|
1,385,381 | — | 1,385,381 | |||||||||||||
Accumulated (deficit) / Earnings
|
(87,938 | ) | (2,479 | ) |
|
B
|
|
(90,417 | ) | |||||||
Accumulated other comprehensive loss
|
(8,552 | ) | — | (8,552 | ) | |||||||||||
|
|
|
|
|
|
|||||||||||
Total Stockholders’ Equity
|
1,288,893 | (2,479 | ) | 1,286,414 | ||||||||||||
|
|
|
|
|
|
|||||||||||
Total Liabilities, Redeemable Preferred
Stock, and Stockholders’ Equity
|
$ | 2,106,553 | $ | 92,521 | $ | 2,199,074 | ||||||||||
|
|
|
|
|
|
Transaction Accounting
Adjustments |
||||||||||||||||||||||||||||||||||||
in thousands
|
Core
Scientific (Historical) September 30, 2021 |
Blockcap
(Historical) for the period January 1, 2021 through July 30, 2021 |
Elimination
Adjustments |
Blockcap
Acquisition |
Convertible
Note |
Core
Scientific Pro Forma Combined |
||||||||||||||||||||||||||||||
Hosting revenue from customers
|
$ | 51,742 | $ | — | $ | (11,828 | ) |
|
e1
|
|
$ | — | — | $ | 39,914 | |||||||||||||||||||||
Equipment sales to customers
|
113,435 | — | (17,694 | ) |
|
e2
|
|
— | — | 95,741 | ||||||||||||||||||||||||||
Digital asset mining income
|
77,511 | 72,030 | — | — | — | 149,541 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total revenue
|
242,688 | 72,030 | (29,522 | ) | — | — | 285,196 | |||||||||||||||||||||||||||||
Costs of revenue
|
145,193 | 17,903 | (11,828 | ) |
|
e1
|
|
(868 | ) |
|
a
|
|
— | 136,002 | ||||||||||||||||||||||
— | — | (14,398 | ) |
|
e2
|
|
— | — | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Gross profit
|
97,495 | 54,127 | (3,296 | ) | 868 | — | 149,194 | |||||||||||||||||||||||||||||
(Loss) / gain on legal settlements
|
(2,603 | ) | — | — | — | — | (2,603 | ) | ||||||||||||||||||||||||||||
Gain on sale of digital assets
|
405 | 145 | — | — | — | 550 | ||||||||||||||||||||||||||||||
Impairment of digital currency asset
|
(12,552 | ) | (17,472 | ) | — | — | — | (30,024 | ) | |||||||||||||||||||||||||||
Operating expenses:
|
||||||||||||||||||||||||||||||||||||
Research and development
|
4,231 | — | — | — | — | 4,231 | ||||||||||||||||||||||||||||||
Sales and marketing
|
2,186 | — | — | — | — | 2,186 | ||||||||||||||||||||||||||||||
General and administrative
|
46,992 | 47,997 | — | (19,240 | ) |
|
c
|
|
— | 75,749 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total operating expenses
|
53,409 | 47,997 | — | (19,240 | ) | — | 82,166 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Operating income (loss)
|
29,336 | (11,197 | ) | (3,296 | ) | 20,108 | 34,951 | |||||||||||||||||||||||||||||
Other (expense) income:
|
||||||||||||||||||||||||||||||||||||
(Loss) on sale of assets
|
— | (1,472 | ) | — | — | — | (1,472 | ) | ||||||||||||||||||||||||||||
(Loss) on debt from extinguishment
|
(8,016 | ) | — | — | — | — | (8,016 | ) | ||||||||||||||||||||||||||||
Other income (expense)
|
(8,661 | ) | — | — | — | — | (8,661 | ) | ||||||||||||||||||||||||||||
Interest (expense), net
|
(26,550 | ) | (1,717 | ) | — | — | (37,500 | ) |
|
d
|
|
(65,767 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total other (expense) income
|
(43,227 | ) | (3,189 | ) | — | — | (37,500 | ) | (83,916 | ) | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Income (loss) before income taxes
|
(13,891 | ) | (14,386 | ) | (3,296 | ) | 20,108 | (37,500 | ) | (48,965 | ) | |||||||||||||||||||||||||
Income tax provision (benefit)
|
(697 | ) | 6,474 | — | — | — | 5,777 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Net income (loss) and other comprehensive income (loss)
|
$ | (13,194 | ) | $ | (20,860 | ) | $ | (3,296 | ) | $ | 20,108 | $ | (37,500 | ) | $ | (54,742 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Net income (loss) attributable to common stockholders
|
$ | (13,194 | ) | $ | (20,860 | ) | $ | (3,296 | ) | $ | 20,108 | $ | (37,500 | ) | $ | (54,742 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
Transaction Accounting
Adjustments |
|||||||||||||||||||||||||||||||||||
in thousands
|
Core
Scientific (Historical) |
Blockcap
Pro Forma (Adjustment f) |
Elimination
Adjustments |
Blockcap
Acquisition |
Convertible
Note |
Core
Scientific Pro Forma Combined |
||||||||||||||||||||||||||||||
Hosting revenue from customers
|
$ | 41,598 | $ | — | $ | (2,128 | ) |
|
e1
|
|
$ | — | — | $ | 39,470 | |||||||||||||||||||||
Equipment sales to customers
|
12,595 | — | (753 | ) | e2 | — | — | 11,842 | ||||||||||||||||||||||||||||
Digital asset mining income
|
6,127 | 13,509 | — | — | — | 19,636 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total revenue
|
60,320 | 13,509 | (2,881 | ) | — | — | 70,948 | |||||||||||||||||||||||||||||
Costs of revenue
|
50,928 | 7,655 | (2,128 | ) |
|
e1
|
|
(1,488 | ) |
|
a
|
|
— | 54,237 | ||||||||||||||||||||||
— | — | (730 | ) |
|
e2
|
|
— | — | — | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Gross profit
|
9,392 | 5,854 | (23 | ) | 1,488 | — | 16,711 | |||||||||||||||||||||||||||||
Gain on legal settlements
|
5,814 | — | — |
|
—
|
|
— | 5,814 | ||||||||||||||||||||||||||||
Gain on sale of digital assets
|
65 | 288 | — | — | — | 353 | ||||||||||||||||||||||||||||||
Operating expenses:
|
||||||||||||||||||||||||||||||||||||
Research and development
|
5,271 | — | — | — | — | 5,271 | ||||||||||||||||||||||||||||||
Sales and marketing
|
1,771 | — | — | — | — | 1,771 | ||||||||||||||||||||||||||||||
General and administrative
|
14,556 | 7,073 | — | 17,561 |
|
b
|
|
— | 39,190 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total operating expenses
|
21,598 | 7,073 | — | 17,561 | — | 46,232 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Operating income
|
(6,327 | ) | (931 | ) | (23 | ) | (16,073 | ) | — | (23,354 | ) | |||||||||||||||||||||||||
Other (expense) income:
|
||||||||||||||||||||||||||||||||||||
(Loss) on debt from extinguishment
|
(1,333 | ) | — | — | — | — | (1,333 | ) | ||||||||||||||||||||||||||||
Other income (expense)
|
(110 | ) | (10,003 | ) | — | — | — | (10,113 | ) | |||||||||||||||||||||||||||
Interest (expense), net
|
(4,436 | ) | (1,198 | ) | — | — | (2,479 | ) |
|
e
|
|
(56,988 | ) | |||||||||||||||||||||||
— | — | — | — | (48,875 | ) |
|
d
|
|
— | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total other (expense) income
|
(5,879 | ) | (11,201 | ) | — | — | (51,354 | ) | (68,434 | ) | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Income (loss) before income taxes
|
(12,206 | ) | (12,132 | ) | (23 | ) | (16,073 | ) | (51,354 | ) | (91,788 | ) | ||||||||||||||||||||||||
Income tax provision (benefit)
|
— | (134 | ) | — | — | — | (134 | ) | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Net income (loss) and other comprehensive income (loss)
|
$ | (12,206 | ) | $ | (11,998 | ) | $ | (23 | ) | $ | (16,073 | ) | $ | (51,354 | ) | $ | (91,653 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Deemed divided from common to preferred exchange
|
(10,478 | ) | — | — | — | — | (10,478 | ) | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Net income (loss) attributable to common stockholders
|
$ | (22,684 | ) | $ | (11,998 | ) | $ | (23 | ) | $ | (16,073 | ) | $ | (51,354 | ) | $ | (102,131 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(A) |
The following purchase price adjustments related to the acquisition of Blockcap by Legacy Core have been included in the Legacy Core historical balance sheet as of September 30, 2021:
|
1.
|
Changes to the Blockcap historical financials to represent the fair value changes associated with the acquisition. The resulting goodwill adjustment represents the excess of the purchase price over the aggregate fair value of the net identifiable assets acquired and liabilities assumed, including identifiable intangible assets. The goodwill is not deductible for U.S. federal income tax purposes.
|
As of July 30, 2021
|
||||||||||||||||
dollars excluding Price in thousands
|
Quantity
|
Price
|
Fair
value |
Carrying
value |
||||||||||||
Bitcoin (BTC)
|
1,747 | $ | 42,235.55 | $ | 73,805 | $ | 55,568 | |||||||||
Ethereum (ETH)
|
575 | $ | 2,466.96 | $ | 1,420 | $ | 1,263 | |||||||||
Bitcoin Cash (BCH)
|
15 | $ | 491 | $ | 7 | $ | 7 | |||||||||
Siacoin (SIA)
|
39,487,794 | $ | 0.01 | $ | 554 | $ | 384 | |||||||||
Other
|
Various | Various | $ | 2,714 | $ | 1,777 | ||||||||||
|
|
|
|
|||||||||||||
TOTAL
|
$
|
78,500
|
|
$
|
58,999
|
|
||||||||||
|
|
|
|
2.
|
The elimination of Blockcap additional paid in capital and accumulated earnings.
|
3.
|
The total consideration added to APIC as a result of the acquisition.
|
4.
|
The transaction costs associated with the Blockcap acquisition that were expensed as an adjustment to cash and retained earnings.
|
5.
|
The one-time expense Legacy Core has recorded as compensation expense in its financial statements for the period ending September 30, 2021 for the acceleration of certain equity awards of Blockcap’s CEO and others.
|
(B) |
During April, August and September 2021, Legacy Core entered into a Convertible Note Purchase Agreement with various Purchasers (Investors) and is continuing to enter into these agreements. As of the date of this filing, Legacy Core has issued notes in the aggregate amount of $515 million with origination fees estimated at $13,332. Legacy Core elected to measure the April, August and September issuance of convertible notes at fair value and accordingly recognized $10,853 of debt issuance costs as incurred as interest expense. The pro forma adjustments reflect the same election for the additional $95,000 issuance and recognize an additional $2,479 of debt issuance cost as interest expense. The related adjustments for this transaction resulted in an increase to cash of $92,521, an increase to notes payable of $95,000 and an increase to accumulated deficit of $2,479.
|
(e1) |
Reflects the elimination of Legacy Core hosting revenue from Blockcap and the corresponding Blockcap cost of revenue.
|
(e2) |
Reflects the elimination of Legacy Core equipment sales revenue and cost of revenue sold from Blockcap.
|
(a) |
Reflects the change in the cost of revenue attributable to incremental depreciation as a result of the fair value decrease to the basis of the Blockcap mining equipment assets as a result of the acquisition. The fair value adjustment decreases the historical cost of these assets by $4.5 million on assets with an assumed useful life of three years resulting in a decrease in depreciation expense of $0.9 million and $1.5 million for the period January 1, 2021 through July 30, 2021 and for the twelve months ended December 31, 2020, respectively.
|
(b) |
Reflects incremental stock compensation expense related to the replacement of unvested Blockcap share-based payments with awards issued by Legacy Core that will be recognized over the remaining service period using the acquisition date fair value, in excess of amounts recognized historically by Blockcap for the twelve months ended December 31, 2020. The associated incremental stock compensation expense for the nine months ended September 30, 2021 is included in the Legacy Core historical statement of operations.
|
(c) |
Reflects the elimination of $19,239 of expense recognized by Blockcap in July 2021 for the acceleration of certain equity awards of its CEO and others. Because this acceleration was deemed to be in contemplation of the Merger, Legacy Core has recorded $23,294 of compensation expense for the acceleration in its financial statements for the period ending September 30, 2021, which was determined based on the fair value of the awards at the time of the Merger. This adjustment is necessary to avoid duplication of the expense attributable to the combined company related to the acceleration of the same awards.
|
(d) |
Reflects the impact to interest expense derived from removing 15% per annum interest on the $30,000 Silverpeak loan, originated in May 2020, and replacing it with 10% per annum interest on the $515,000 million convertible notes ($215,000 issued in April 2021 and the remaining $300,000 issued in August through November 2021). This adjustment resulted in:
|
a. |
a reduction of $2,625 in interest expense due to the elimination of the Silverpeak loan, an increase in interest expense of $51,500 due to the issuance of the convertible notes r a net increase in interest expense of $48,875 for the twelve months ending December 31, 2020.
|
b. |
a reduction of $1,125 in interest expense due to the elimination of the Silverpeak loan, an increase in interest expense of $38,625 due to the issuance of the convertible note for a net increase in interest expense of $37,500 for the nine months ending September 30, 2021.
|
(e) |
Reflects the
non-recurring
interest expense related to the assumption that Legacy Core will elect to measure the October through November issuance of convertible notes at fair value similarly to the April, August and September issuance of convertible notes and accordingly included $2,479 of debt issuance costs as incurred as interest expense in the pro forma adjustments.
|
(f) |
Reflects the pro forma results for Blockcap for the year ending December 31, 2020 assuming the three significant LLCs acquired by Blockcap on December 1, 2020 had been in place for the full year as follows:
|
For the year
ended December 31, 2020 |
For the periods from inception
through November 30, 2020 |
December 31, 2020
|
||||||||||||||||||||||||||
in thousands
|
Blockcap
Historical |
RME
Black 100 |
RME
Black 200 |
BEP 888
|
Acquisition
Adjustments |
Blockcap
Pro forma |
||||||||||||||||||||||
Hosting revenue from customers
|
$ | — | $ | — | $ | — | $ | — | — | $ | — | |||||||||||||||||
Equipment sales to customers
|
— | — | — | — | — | — | ||||||||||||||||||||||
Digital asset mining income
|
5,972 | 4,010 | 3,374 | 153 | — | 13,509 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total revenue
|
5,972 | 4,010 | 3,374 | 153 | — | 13,509 | ||||||||||||||||||||||
Costs of revenue
|
2,781 | 2,623 | 2,034 | 48 | 169 | i | 7,655 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Gross profit
|
3,191 | 1,387 | 1,340 | 105 | (169 | ) | 5,854 | |||||||||||||||||||||
Gain on legal settlements
|
— | — | — |
|
—
|
|
— | — | ||||||||||||||||||||
Gain on sale of digital assets
|
53 | 152 | 80 | 3 | — | 288 | ||||||||||||||||||||||
Operating expenses:
|
||||||||||||||||||||||||||||
Research and development
|
— | — | — | — | — | — | ||||||||||||||||||||||
Sales and marketing
|
— | — | — | — | — | — | ||||||||||||||||||||||
General and administrative
|
2,221 | 1,559 | 1,343 | 1,950 | — | 7,073 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total operating expenses
|
2,221 | 1,559 | 1,343 | 1,950 | — | 7,073 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Operating income (loss)
|
1,023 | (20 | ) | 77 | (1,842 | ) | (169 | ) | (931 | ) | ||||||||||||||||||
Other (expense) income:
|
||||||||||||||||||||||||||||
(Loss) on debt from extinguishment
|
— | — | — | — | — | — | ||||||||||||||||||||||
Other income (expense)
|
(10,003 | ) | — | — | — | — | (10,003 | ) | ||||||||||||||||||||
Interest expense, net
|
(419 | ) | (414 | ) | (365 | ) | — | — | (1,198 | ) | ||||||||||||||||||
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total other (expense) income
|
(10,422 | ) | (414 | ) | (365 | ) | — | — | (11,201 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Income (loss) before income taxes
|
(9,399 | ) | (434 | ) | (288 | ) | (1,842 | ) | (169 | ) | (12,132 | ) | ||||||||||||||||
Income tax expense/(benefit)
|
538 | (107 | ) | (71 | ) | (453 | ) | (42 | ) | ii | (134 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net income (loss)
|
$ | (9,937 | ) | $ | (327 | ) | $ | (217 | ) | $ | (1,389 | ) | $ | (127 | ) | $ | (11,998 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
i. |
Reflects additional depreciation expense related to the acquisitions of the LLCs
|
ii. |
The combined net income before tax of the Company includes net income before tax of $ 406.5 attributable to multiple limited liability companies (of which $409.3 is included in Blockcap Historical) that are classified as partnerships for Federal income tax purposes, and as such, any partnership income or loss, specifically allocated or otherwise are subjected to tax at the individual partner level.
|
(A) |
Reflects the estimated $39,000 reduction in cash for estimated transaction related expenses. This includes $12,075 that was previously recorded as deferred underwriting commissions and was therefore reversed and $1,000 related to
non-recurring
expenses from third party consulting and other fees
|
related to the merger that were not considered direct and incremental to the offering and are therefore reflected as an adjustment to the accumulated deficit. An additional $1,812 of the $39,000 is reflected as an adjustment to the accumulated deficit to properly reflect the direct and incremental costs allocated to the XPDI liability-classified instruments that are measured at fair value through earnings. The remaining $24,113 is adjusted against additional paid in capital as direct and incremental costs of the offering. |
(B) |
Reflects the increase in cash from the release of the balance of funds equal to $221,556 from the Trust Account after payment of $123,471 for the redemption of 12,347 shares.
|
C) |
Reflects the impact to equity related to $123,471 of Trust Account funds paid to holders that redeemed 12,347 Class A redeemable shares at $10 per share for a total of $123,471.
|
D) |
Reflects the conversion of 6,452 shares of Series A Preferred Stock and 314 shares of Series B Preferred Stock redeemable preferred stock to 6,766 shares of Legacy Core common stock just prior to the merger, eliminating the preferred stock balance. Subsequent to this conversion, these shares will be exchanged for New Core common shares using the exchange rate calculated per the merger agreement.
|
(E) |
Reflects the elimination of 34,500 shares of Class A Common Stock subject to redemption. The $345,000 subject to redemption is eliminated and added to additional paid in capital.
|
(F) |
Represents the elimination of XPDI equity and accumulated earnings and the exchange of existing Legacy Core and XPDI outstanding equity instruments for New Core common stock as follows:
|
a. |
171,059 existing Class A Legacy Core shares and 6,766 shares of Legacy Core Series A and Series B convertible preferred stock, were exchanged for New Core shares using an exchange rate of 1.6001528688 per the merger agreement resulting in a total of 284,546 New Core common shares outstanding with a par value of $0.0001.
|
b. |
22,153 existing Class A XPDI shares not redeemed and 8,625 existing XPDI Class B shares into 30,778 common shares of New Core. Immediately prior to the Closing, 1,725 Class B common shares will be unvested and will vest upon the date on which the volume-weighted average price of the Class A Common Stock is greater than $12.50 per share for any 20 trading days within any 30 consecutive trading day period within five years of the Closing date. These unvested shares are excluded from earnings per share calculations until such time as conditions are met for vesting.
|
c. |
Removes XPDI accumulated earnings with the offsetting adjustment to paid in capital.
|
(a) |
Reflects the calculation of earnings per share, basic and diluted, of the combined companies after the conversion of equity shares into New Core shares using the adjusted net income of the combined companies. See Note 5
—
|
(b) |
Reflects the total New Core common shares outstanding at the completion of the transaction. See Note 5
—
|
(c) |
Reflects the sum of a) $1,000 related to
non-recurring
expenses from third-party consulting and other fees related to the merger that were not considered direct and incremental to the offering and therefore reflected as an operating expense and b) $1,812 related to the direct and incremental costs allocated to the XPDI liability-classified instruments that are measured at fair value through earnings, for a total adjustment of $2,812.
|
(d) |
Reflects the elimination of the dividend from common to preferred exchange. In February 2020, the Company completed an exchange of 1,096 shares of common stock that were originally issued in the
|
private placement offering from October 2018 to December 2019 for 1,802 newly issued shares of Series A Preferred Stock. The shares of common stock were retired upon reacquisition by the Company. The Company received no net proceeds from the exchange and recognized a deemed dividend of $10,478 based on the incremental fair value of the preferred stock received by the stockholders compared to the fair value of the common stock exchanged. Upon consummation of the transactions, all preferred stock was exchanged for common stock under the terms of the merger agreement, eliminating the dividend. |
(e) |
Reflects the elimination of income earned on investments in trust due to the release of trust funds to cash or the reduction in trust funds due to the redemption of redeemable stock.
|
• |
171,059 existing Class A Legacy Core shares and 6,766 Legacy Core Series A and Series B convertible preferred stock were exchanged for New Core shares using an exchange rate of 1.6001528688 per the merger agreement resulting in a total of 284,546 New Core common shares outstanding with a par value of $0.0001.
|
• |
22,153 existing Class A XPDI shares that were not redeemed and 8,625 existing XPDI Class B shares into 30,778 common shares of New Core. Immediately prior to the Closing, 1,725 Class B common shares will be unvested and will vest upon the date on which the volume-weighted average price of the Class A Common Stock is greater than $12.50 per share for any 20 trading days within any 30 consecutive trading day period within five years of the Closing date. These unvested shares are excluded from earnings per share calculations until such time as conditions are met for vesting.
|
in thousands
|
Existing
Shares |
Shares
just prior to exchange |
After
exchange and redemption of 12,347 shares |
|||||||||
Legacy Core common stock
|
171,059 | 177,825 | 284,546 | |||||||||
XPDI Class A redeemable shares
|
22,153 | 22,153 | 22,153 | |||||||||
XPDI Class B sponsor shares net of unvested shares
|
8,625 | 6,900 | 6,900 | |||||||||
|
|
|
|
|
|
|||||||
Total weighted average common shares—Basic and Diluted (1) and (2)
|
|
201,837
|
|
|
206,878
|
|
|
313,599
|
|
|||
|
|
|
|
|
|
|||||||
For the nine months ended September 30, 2021
|
|
|||||||||||
Pro forma net income (loss)
|
$ | (74,087 | ) | |||||||||
Pro forma EPS—Basic and diluted (1)
|
$ | (0.24 | ) | |||||||||
For the twelve months ended December, 2020
|
|
|||||||||||
Pro forma net income (loss)
|
$ | (94,475 | ) | |||||||||
Pro forma net income (loss)—Basic and Diluted (1)
|
$ | (0.30 | ) |
(1) |
Potentially dilutive securities are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive. Shares potentially dilutive with the conversion of the convertible debt were not included due to the add back of interest avoided upon conversion causing the conversion to be anti-dilutive.
|
Conversion Event
|
Discount
|
|||
On or prior to April 19, 2022
|
20 | % | ||
On or after April 19, 2022 but prior to April 19, 2023
|
25 | % | ||
On or after April 19, 2023 but prior to April 19, 2024
|
30 | % | ||
On or after April 19, 2024 but prior to April 19, 2025
|
35 | % |
(2) |
Total Legacy Core outstanding options and warrants after exchanged is 32,195 and 6,808, respectively and are anti-dilutive so not included in the calculation of diluted EPS. 14,892 XPDI warrants are anti-dilutive so not included the calculation of diluted EPS.
|
(3) |
Legacy Core outstanding RSUs are not included as these are contingently issuable shares for which the transaction condition has not yet been met. These RSUs are subject to a time-based vesting condition and a
|
transaction vesting condition. The transaction vesting condition is satisfied upon the earlier of a change in control or an initial public offering. The transaction vesting condition can be met in future years only with respect to a change in control or waiver of the condition by the Company’s board of directors and is not expected to occur, if at all, prior to expiration of the applicable
lock-up
period. In the event the transaction-based condition were to be met, including by future action of the board of directors, the unrecognized compensation expense for which the requisite service had been provided that would have been recognized was $526,064 as of September 30, 2021. Included in the total of Legacy Core’s unvested RSUs are 9,038 RSUs held by a former employee. These units have met the timebased vesting condition but similarly have not met the transaction-based vesting condition. The transaction-based vesting condition must be satisfied within three years of the former employee’s separation date or they will be forfeited. Had the transaction based vesting condition been met, unrecognized compensation expense would have been $82,674 as of June 30, 2021. This does not account for 6,912 Blockcap RSUs granted to legacy Blockcap shareholders and subject only to time-vesting conditions because the inclusion of such RSUs would be anti-dilutive.
|
Unvested Legacy Core RSUs as of September 30, 2021
|
45,793 | |||
RSUs to be granted in October 2021
|
9,777 | |||
RSUs to be reserved for future issuances
|
5,304 | |||
|
|
|||
Unvested RSUs of Legacy Core (excluding Blockcap)
|
60,874 | |||
Exchange Rate
|
1.6001528688 | |||
|
|
|||
Unvested pro forma RSUs of Legacy Core (excluding Blockcap) after applying exchange rate
|
97,409 |
POWER & DIGITAL INFRASTRUCTURE ACQUISITION CORP.
|
||||
Audited Financial Statements of Power & Digital Infrastructure Acquisition Corp. as of December 31, 2020, for the Year Ended December 31, 2020 and the Period from December 29, 2020 (inception) Through December 31, 2020
|
||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
F-8 | ||||
F-9–F-20
|
||||
Unaudited Condensed Consolidated Financial Statements of Power & Digital Infrastructure Acquisition Corp. as of and for the Nine Months Ended September 30, 2021
|
||||
F-21 | ||||
F-22 | ||||
F-23 | ||||
F-24 | ||||
F-25–F-45
|
||||
F-47 | ||||
F-48 | ||||
F-49–F-62 | ||||
CORE SCIENTIFIC HOLDING CO. AND SUBSIDIARIES
|
||||
Audited Consolidated Financial Statements of Core Scientific Holding Co. and Subsidiaries as of and for the Years Ended December 31, 2020 and 2019
|
||||
F-63 | ||||
F-64 | ||||
F-65 | ||||
F-66 | ||||
F-67 | ||||
F-68–F-98 | ||||
Consolidated Financial Statements of Core Scientific Holding Co. and Subsidiaries as of September 30, 2021 (Unaudited) and December 31, 2020 and for the Nine Months Ended September 30, 2021 and 2020 (Unaudited)
|
||||
F-99 | ||||
F-100 | ||||
F-102 | ||||
F-103 | ||||
F-104–F-127 |
Assets:
|
||||
Deferred offering costs associated with proposed public offering
|
$ | 15,000 | ||
|
|
|||
Total Assets
|
$
|
15,000
|
|
|
|
|
|||
Liabilities and Stockholder’s Equity:
|
|
|
|
|
Current liabilities:
|
||||
Accrued expenses
|
$ | 400 | ||
|
|
|||
Total current liabilities
|
400 | |||
|
|
|||
Commitments and Contingencies
|
||||
Stockholder’s Equity:
|
|
|
|
|
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
— | |||
Class A common stock, $0.0001 par value; 500,000,000 shares authorized; none issued and outstanding
|
— | |||
Class B common stock, $0.0001 par value; 50,000,000 shares authorized; 8,625,000 shares issued and outstanding
(1)(2)
|
863 | |||
Additional
paid-in
capital
|
24,137 | |||
Accumulated deficit
|
(10,400 | ) | ||
|
|
|||
Total stockholder’s equity
|
14,600 | |||
|
|
|||
Total Liabilities and Stockholder’s Equity
|
$
|
15,000
|
|
|
|
|
(1)
|
This number includes up to 1,125,000 shares of Class B common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters. (see Note 4)
|
(2)
|
On February 9, 2021, the Company effected a share capitalization of 1,437,500 shares of Class B common stock, resulting in an aggregate of 8,625,000 shares Class B common stock outstanding. All shares and associated amounts have been retroactively restated to reflect the share capitalization. (see Note 4, 6 and 7)
|
General and administrative expenses
|
$ | 10,400 | ||
|
|
|||
Net loss
|
$ | (10,400 | ) | |
|
|
|||
Weighted average shares outstanding, basic and diluted
(1)(2)
|
7,500,000 | |||
|
|
|||
Basic and diluted net loss per share
|
$ | (0.00 | ) | |
|
|
(1)
|
This number excludes an aggregate of up to 1,125,000 Class B common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters. (see Note 4)
|
(2)
|
On February 9, 2021, the Company effected a share capitalization of 1,437,500 shares of Class B common stock, resulting in an aggregate of 8,625,000 shares Class B common stock outstanding. All shares and associated amounts have been retroactively restated to reflect the share capitalization. (see Note 4, 6 and 7)
|
Common Stock
|
Additional
Paid-In
Capital |
Accumulated
Deficit |
Total
Stockholder’s Equity |
|||||||||||||||||||||||||
Class A
|
Class B
|
|||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||
Balance — December 29, 2020 (inception)
|
|
—
|
|
$
|
—
|
|
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|||||||
Issuance of Class B common stock to Sponsors
(1)(2)
|
— | — | 8,625,000 | 863 | 24,137 | — | 25,000 | |||||||||||||||||||||
Net loss
|
— | — | — | — | — | (10,400 | ) | (10,400 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance — December 31, 2020
|
|
—
|
|
$
|
—
|
|
|
8,625,000
|
|
$
|
863
|
|
$
|
24,137
|
|
$
|
(10,400
|
)
|
$
|
14,600
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
This number includes up to 1,125,000 shares of Class B common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters. (see Note 4)
|
(2)
|
On February 9, 2021, the Company effected a share capitalization of 1,437,500 shares of Class B common stock, resulting in an aggregate of 8,625,000 shares Class B common stock outstanding. All shares and associated amounts have been retroactively restated to reflect the share capitalization. (see Note 4, 6 and 7)
|
Cash Flows from Operating Activities:
|
||||
Net loss
|
$ | (10,400 | ) | |
General and administrative expenses paid by related party
|
10,000 | |||
Changes in operating assets and liabilities:
|
||||
Accrued expenses
|
$ | 400 | ||
|
|
|||
Net cash used in operating activities
|
— | |||
|
|
|||
Net change in cash
|
— | |||
Cash — beginning of the period
|
— | |||
|
|
|||
Cash — end of the period
|
$
|
—
|
|
|
|
|
|||
Supplemental disclosure of noncash activities:
|
||||
Deferred offering costs paid by Sponsor in exchange for issuance of Class B common stock
|
$ | 15,000 |
|
•
|
|
in whole and not in part;
|
|
•
|
|
at a price of $0.01 per warrant;
|
|
•
|
|
upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; and
|
|
•
|
|
if, and only if, the last reported sale price of Class A common stock for any 20 trading days within a
30-trading
day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted).
|
|
•
|
|
in whole and not in part;
|
|
•
|
|
at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value” (as defined below) of Class A common stock;
|
|
•
|
|
if, and only if, the Reference Value equals or exceeds $10.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described herein under the heading “Description of Securities — Warrants — Public Stockholders’ Warrants — Anti-dilution Adjustments” ); and
|
|
•
|
|
if the Reference Value is less than $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described herein under the heading “Description of Securities — Warrants — Public Stockholders’ Warrants — Anti-dilution Adjustments”), the Private Placement Warrants must also concurrently be called for redemption on the same terms as the outstanding Public Warrants, as described above.
|
|
|
September 30,
2021 |
|
|
December 31,
2020 |
|
||
|
|
(Unaudited)
|
|
|
|
|
||
Assets:
|
|
|
||||||
Current assets:
|
|
|
||||||
Cash
|
$ | 1,598,506 | $ | — | ||||
Prepaid expenses
|
446,855 | — | ||||||
|
|
|
|
|||||
Total current assets
|
2,045,361 | — | ||||||
Investments held in Trust Account
|
345,027,247 | — | ||||||
Deferred offering costs
|
— | 15,000 | ||||||
|
|
|
|
|||||
Total Assets
|
$
|
347,072,608
|
|
$
|
15,000
|
|
||
|
|
|
|
|||||
Liabilities
, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit:
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 721,484 | $ | — | ||||
Accrued expenses
|
3,225,538 | 400 | ||||||
Franchise tax payable
|
148,395 | — | ||||||
|
|
|
|
|||||
Total current liabilities
|
4,095,417 | 400 | ||||||
Derivative warrant liabilities
|
36,931,330 | — | ||||||
Deferred underwriting commissions
|
12,075,000 | — | ||||||
|
|
|
|
|||||
Total liabilities
|
53,101,747 | 400 | ||||||
Commitments and Contingencies
|
||||||||
Class A common stock
subject to possible redemption
$0.0001 par value; 34,500,000 shares at $10.00 per share
,
|
345,000,000 | — | ||||||
Stockholders’ Equity (Deficit):
|
||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
— | — | ||||||
Class A common stock, $0.0001 par value; 500,000,000 shares authorized
|
— | — | ||||||
Class B common stock, $0.0001 par value; 50,000,000 shares authorized; 8,625,000 shares issued and
outstanding as of
September 30, 2021 and December 31, 2020
|
863 | 863 | ||||||
Additional
paid-in
capital
|
— | 24,137 | ||||||
Accumulated deficit
|
(51,030,002 |
)
|
(10,400 | ) | ||||
|
|
|
|
|||||
Total stockholders’ equity (deficit)
|
(51,029,139 | ) | 14,600 | |||||
|
|
|
|
|||||
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Equity
(Deficit) |
$
|
347,072,608
|
|
$
|
15,000
|
|
||
|
|
|
|
|
|
For the
Three Months Ended September 30, 2021 |
|
|
For the
Nine Months Ended September 30, 2021 |
|
||
General and administrative expenses
|
$ | 2,387,202 |
|
$
|
4,077,585
|
|
||
General and administrative expenses — related party
|
60,000 |
|
|
160,000
|
|
|||
Franchise tax expenses
|
49,863 |
|
|
147,995
|
|
|||
|
|
|
|
|
|
|
|
|
Loss from operations
|
(2,497,065 | ) |
|
|
(4,385,580
|
)
|
||
Change in fair value of derivative warrant liabilities
|
(16,231,910 | ) |
|
|
(13,903,830
|
|
||
Offering costs associated with derivative warrant liabilities
|
— |
|
|
(1,055,577
|
)
|
|||
Income from investments held in Trust Account
|
4,440 |
|
|
27,247
|
|
|||
|
|
|
|
|
|
|||
Net
loss
|
$ | (18,724,535 | ) |
|
$
|
(19,317,740
|
)
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding of Class A common stock
,
basic and diluted
|
|
34,500,000 |
|
|
29,192,308
|
|
||
Basic and diluted net
loss
per share, Class A common stock
|
$ | (0.43 | ) |
|
$
|
(0.51
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding of
Class B
common stock, basic and diluted
|
8,625,000 |
|
|
8,451,923
|
|
|||
Basic and diluted
net loss per share,
Class B
common stock
|
$ | (0.43 | ) |
|
$
|
(0.51
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Additional
Paid-In
Capital
|
|
|
Accumulated
Deficit
|
|
|
Total
Stockholders’
Equity
(Deficit)
|
|
||||||||||||||||
|
|
Class A
|
|
|
Class B
|
|
||||||||||||||||||||||
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
||||||||||||||||
Balance — December 31, 2020
|
|
—
|
|
$
|
—
|
|
|
8,625,000
|
|
$
|
863
|
|
$
|
24,137
|
|
$
|
(10,400
|
)
|
$
|
14,600
|
|
|||||||
Accretion of Class A common stock subject to possible redemption amount
|
— | — | — | — | (24,137 |
)
|
(31,701,862
|
)
|
(31,725,999 | ) | ||||||||||||||||||
Net income
|
— |
—
|
— | — | — | 4,962,873 | 4,962,873 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance —
March 31, 2021 (restated)
|
|
—
|
|
$
|
—
|
|
|
8,625,000
|
|
$
|
863
|
|
$
|
—
|
|
$
|
(26,749,389
|
) |
$
|
(26,748,526
|
) | |||||||
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,556,078
|
)
|
|
|
(5,556,078
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance —
June 30, 2021 (restated)
|
|
|
—
|
|
|
$
|
—
|
|
|
|
8,625,000
|
|
|
$
|
863
|
|
|
$
|
—
|
|
|
$
|
(32,305,467
|
)
|
|
$
|
(32,304,604
|
) |
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(18,724,535
|
)
|
|
|
(18,724,535
|
)
|
Balance — September 30, 2021
|
|
|
—
|
|
|
$
|
—
|
|
|
|
8,625,000
|
|
|
$
|
863
|
|
|
$
|
—
|
|
|
$
|
(51,030,002
|
)
|
|
$
|
(51,029,139
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities:
|
||||
Net
loss
|
$ | (19,317,740 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||
Change in fair value of derivative warrant liabilities
|
|
|
13,903,830
|
|
Offering costs associated with derivative warrant liabilities
|
1,055,577 | |||
Income from investments held in Trust Account
|
(27,247 | ) | ||
General and administrative expenses paid by related party under promissory note
|
144 | |||
Changes in operating assets and liabilities:
|
||||
Prepaid expenses
|
(446,855 | ) | ||
Accrued expenses
|
2,718,988 | |||
Accounts payable
|
721,484 | |||
Franchise tax payable
|
147,995 | |||
|
|
|||
Net cash used in operating activities
|
(1,243,824 | ) | ||
|
|
|||
Cash Flows from Investing Activities
|
||||
Cash deposited in Trust Account
|
(345,000,000 | ) | ||
|
|
|||
Net cash used in investing activities
|
(345,000,000 | ) | ||
|
|
|||
Cash Flows from Financing Activities:
|
||||
Proceeds received from initial public offering, gross
|
345,000,000 | |||
Proceeds received from private placement
|
9,400,000 | |||
Repayment of note payable to related party
|
(90,035 | ) | ||
Offering costs paid
|
(6,467,635 | ) | ||
|
|
|||
Net cash provided by financing activities
|
347,842,330 | |||
|
|
|||
Net change in cash
|
1,598,506 | |||
Cash — beginning of the period
|
— | |||
|
|
|||
Cash — end of the period
|
$
|
1,598,506
|
|
|
|
|
|||
Supplemental disclosure of noncash activities:
|
||||
Offering costs included in accrued expenses
|
$ | 506,550 | ||
Offering costs paid by related party under promissory note
|
$ | 89,891 | ||
Deferred underwriting commissions in connection with the initial public
|
$ | 12,075,000 |
As of February 12, 2021
|
As Reported,
As Restated
|
Adjustment
|
As Restated
|
|||||||||
Total assets
|
|
$
|
348,644,865
|
|
|
$
|
348,644,865
|
|
||||
Total liabilities
|
|
$
|
36,448,520
|
|
|
$
|
36,448,520
|
|
||||
Class A common stock subject to possible redemption
|
|
|
307,196,340
|
|
|
|
37,803,660
|
|
|
|
345,000,000
|
|
Preferred stock
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Class A common stock
|
|
|
378
|
|
|
|
(378
|
)
|
|
|
—
|
|
Class B common stock
|
|
|
863
|
|
|
|
—
|
|
|
|
863
|
|
Additional
paid-in
capital
|
|
|
5,809,812
|
|
|
|
(5,809,812
|
)
|
|
|
—
|
|
Retained earnings (accumulated deficit)
|
|
|
(811,048
|
)
|
|
|
(31,993,470
|
)
|
|
|
(32,804,518
|
)
|
Total stockholders’ equity (deficit)
|
|
$
|
5,000,005
|
|
|
$
|
(37,803,660
|
)
|
|
$
|
(32,803,655
|
)
|
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit)
|
|
$
|
348,644,865
|
|
|
$
|
—
|
|
|
$
|
348,644,865
|
|
As of March 31, 2021
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
|||
Total assets
|
|
$
|
347,742,624
|
|
|
|
$
|
347,742,624
|
|
|||
Total liabilities
|
|
$
|
29,769,286
|
|
|
|
$
|
29,769,286
|
|
|||
Class A common stock subject to possible redemption
|
|
|
312,973,330
|
|
|
|
32,026,670
|
|
|
|
345,000,000
|
|
Preferred stock
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Class A common stock
|
|
|
320
|
|
|
|
(320
|
)
|
|
|
—
|
|
Class B common stock
|
|
|
863
|
|
|
|
—
|
|
|
|
863
|
|
Additional
paid-in
capital
|
|
|
46,352
|
|
|
|
(46,352
|
)
|
|
|
—
|
|
Retained earnings (accumulated deficit)
|
|
|
4,952,473
|
|
|
|
(31,979,998
|
)
|
|
|
(27,027,525
|
)
|
Total stockholders’ equity (deficit)
|
|
$
|
5,000,008
|
|
|
$
|
(32,026,670
|
)
|
|
$
|
(27,026,662
|
)
|
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit)
|
|
$
|
347,742,624
|
|
|
$
|
—
|
|
|
$
|
347,742,624
|
|
|
||||||||||||
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
|||
Cash Flow used in Operating Activities
|
|
$
|
(798,200
|
)
|
|
$
|
—
|
|
|
$
|
(798,200
|
)
|
Cash Flows used in Investing Activities
|
|
$
|
(345,000,000
|
)
|
|
$
|
—
|
|
|
$
|
(345,000,000
|
)
|
Cash Flows provided by Financing Activities
|
|
$
|
347,842,331
|
|
|
$
|
—
|
|
|
$
|
347,842,331
|
|
Supplemental Disclosure of Noncash Financing Activities:
|
|
|
|
|||||||||
Offering costs included in accrued expenses
|
|
$
|
506,550
|
|
|
$
|
—
|
|
|
$
|
506,550
|
|
Offering costs paid by related party under promissory note
|
|
$
|
89,891
|
|
|
$
|
—
|
|
|
$
|
89,891
|
|
Deferred underwriting commissions in connection with the initial public offering
|
|
$
|
12,075,000
|
|
|
$
|
—
|
|
|
$
|
12,075,000
|
|
Initial value of Class A common stock subject to possible redemption
|
|
$
|
307,196,340
|
|
|
$
|
(307,196,340
|
)
|
|
$
|
—
|
|
Change in value of Class A common stock subject to possible redemption
|
|
$
|
499,050
|
|
|
$
|
(499,050
|
)
|
|
$
|
—
|
|
As of June 30, 2021
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
|||
Total assets
|
|
$
|
347,606,096
|
|
|
|
$
|
347,606,096
|
|
|||
Total liabilities
|
|
$
|
34,910,699
|
|
|
|
$
|
34,910,699
|
|
|||
Class A common stock subject to possible redemption
|
|
|
307,695,390
|
|
|
|
37,304,610
|
|
|
|
345,000,000
|
|
Preferred stock
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Class A common stock
|
|
|
373
|
|
|
|
(373
|
)
|
|
|
—
|
|
Class B common stock
|
|
|
863
|
|
|
|
—
|
|
|
|
863
|
|
Additional
paid-in
capital
|
|
|
5,602,376
|
|
|
|
(5,602,376
|
)
|
|
|
—
|
|
Retained earnings (accumulated deficit)
|
|
|
(603,605
|
)
|
|
|
(31,701,861
|
)
|
|
|
(32,305,466
|
)
|
Total stockholders’ equity (deficit)
|
|
$
|
5,000,007
|
|
|
$
|
(37,304,610
|
)
|
|
$
|
(32,304,603
|
)
|
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit)
|
|
$
|
347,606,096
|
|
|
$
|
—
|
|
|
$
|
347,606,096
|
|
Form
10-Q:
Six Months Ended June 30, 2021
|
|
|||||||||||
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
|||
Cash Flow used in Operating Activities
|
|
$
|
(730,082
|
)
|
|
$
|
—
|
|
|
$
|
(730,082
|
)
|
Cash Flows used in Investing Activities
|
|
$
|
(345,000,000
|
)
|
|
$
|
—
|
|
|
$
|
(345,000,000
|
)
|
Cash Flows provided by Financing Activities
|
|
$
|
347,784,164
|
|
|
$
|
—
|
|
|
$
|
347,784,164
|
|
Supplemental Disclosure of Noncash Financing Activities:
|
|
|
|
|||||||||
Offering costs included in accrued expenses
|
|
$
|
448,383
|
|
|
$
|
—
|
|
|
$
|
448,383
|
|
Offering costs paid by related party under promissory note
|
|
$
|
89,891
|
|
|
$
|
—
|
|
|
$
|
89,891
|
|
Deferred underwriting commissions in connection with the initial public offering
|
|
$
|
12,075,000
|
|
|
$
|
—
|
|
|
$
|
12,075,000
|
|
Initial value of Class A common stock subject to possible redemption
|
|
$
|
307,196,340
|
|
|
$
|
(307,196,340
|
)
|
|
$
|
—
|
|
Change in value of Class A common stock subject to possible redemption
|
|
$
|
5,776,990
|
|
|
$
|
(5,776,990
|
)
|
|
$
|
—
|
|
|
|
EPS for Class A common stock (redeemable)
|
|
|||||||||
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Adjusted
|
|
|||
Form
10-Q
(March 31, 2021) — three months ended March 31, 2021
|
|
|
|
|||||||||
Net income
|
|
$
|
4,962,873
|
|
|
$
|
—
|
|
|
$
|
4,962,873
|
|
Weighted average shares outstanding
|
|
|
30,731,669
|
|
|
|
3,768,331
|
|
|
|
34,500,000
|
|
Basic and diluted earnings per share
|
|
$
|
—
|
|
|
$
|
0.12
|
|
|
$
|
0.12
|
|
Form
10-Q
(June 30, 2021) — three months ended June 30, 2021
|
|
|
|
|||||||||
Net loss
|
|
$
|
(5,556,078
|
)
|
|
$
|
—
|
|
|
$
|
(5,556,078
|
)
|
Weighted average shares outstanding
|
|
|
31,291,533
|
|
|
|
3,208,467
|
|
|
|
34,500,000
|
|
Basic and diluted earnings per share
|
|
$
|
—
|
|
|
$
|
(0.13
|
)
|
|
$
|
(0.13
|
)
|
Form
10-Q
(June 30, 2021) — six months ended June 30, 2021
|
|
|
|
|||||||||
Net loss
|
|
$
|
(593,205
|
)
|
|
$
|
—
|
|
|
$
|
(593,205
|
)
|
Weighted average shares outstanding
|
|
|
31,098,199
|
|
|
|
3,401,801
|
|
|
|
34,500,000
|
|
Basic and diluted earnings per share
|
|
$
|
—
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
|
EPS for Class B common stock
(non-redeemable)
|
|
|||||||||
|
|
As Reported
|
|
|
Adjustment
|
|
|
As Adjusted
|
|
|||
Form
10-Q
(March 31, 2021) — three months ended March 31, 2021
|
|
|
|
|||||||||
Net income
|
|
$
|
4,962,873
|
|
|
$
|
—
|
|
|
$
|
4,962,873
|
|
Weighted average shares outstanding
|
|
|
10,109,776
|
|
|
|
(2,009,776
|
)
|
|
|
8,100,000
|
|
Basic and diluted earnings per share
|
|
$
|
0.49
|
|
|
$
|
(0.37
|
)
|
|
$
|
0.12
|
|
Form
10-Q
(June 30, 2021) — three months ended June 30, 2021
|
|
|
|
|||||||||
Net loss
|
|
$
|
(5,556,078
|
)
|
|
$
|
—
|
|
|
$
|
(5,556,078
|
)
|
Weighted average shares outstanding
|
|
|
11,833,467
|
|
|
|
(3,208,467
|
)
|
|
|
8,625,000
|
|
Basic and diluted earnings per share
|
|
$
|
(0.47
|
)
|
|
$
|
0.34
|
|
|
$
|
(0.13
|
)
|
Form
10-Q
(June 30, 2021) — six months ended June 30, 2021
|
|
|
|
|||||||||
Net loss
|
|
$
|
(593,205
|
)
|
|
$
|
—
|
|
|
$
|
(593,205
|
)
|
Weighted average shares outstanding
|
|
|
10,976,383
|
|
|
|
(2,612,433
|
)
|
|
|
8,363,950
|
|
Basic and diluted earnings per share
|
|
$
|
(0.05
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.01
|
)
|
• |
Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
|
• |
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
|
• |
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
|
|
For the Three Months Ended
September 30, 2021 |
|
|
For the Nine Months Ended
September 30, 2021 |
|
||||||||||
|
|
Class A
|
|
|
Class B
|
|
|
Class A
|
|
|
Class B
|
|
||||
Basic and diluted net loss per common stock:
|
|
|
|
|
||||||||||||
Numerator:
|
|
|
|
|
||||||||||||
Allocation of net loss
|
|
$
|
(14,979,628
|
)
|
|
$
|
(3,744,907
|
)
|
|
$
|
(14,980,500
|
)
|
|
$
|
(4,337,240
|
)
|
Denominator:
|
|
|
|
|
||||||||||||
Basic and diluted weighted average common stock outstanding
|
|
|
34,500,000
|
|
|
|
8,625,000
|
|
|
|
29,192,308
|
|
|
|
8,451,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common stock
|
|
$
|
(0.43
|
)
|
|
$
|
(0.43
|
)
|
|
$
|
(0.51
|
)
|
|
$
|
(0.51
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross proceeds
|
|
$
|
345,000,000
|
|
Less:
|
|
|||
Fair value of Public Warrants at issuance
|
|
|
(13,627,500
|
)
|
Offering costs allocated to Class A common stock subject to possible redemption
|
|
|
(18,098,499
|
)
|
Plus:
|
|
|||
Accretion on Class A common stock subject to possible redemption amount
|
|
|
31,725,999
|
|
|
|
|
|
|
Class A common stock subject to possible redemption
|
|
$
|
345,000,000
|
|
|
|
|
|
|
•
|
|
in whole and not in part;
|
|
•
|
|
at a price of $0.01 per warrant;
|
|
•
|
|
upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; and
|
|
•
|
|
if, and only if, the last reported sale price of Class A common stock for any 20 trading days within a
30-trading
day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted).
|
|
•
|
|
in whole and not in part;
|
|
•
|
|
at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value” (as defined below) of Class A common stock;
|
|
•
|
|
if, and only if, the Reference Value equals or exceeds $10.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described herein under the heading “Description of Securities — Warrants — Public Stockholders’ Warrants — Anti-dilution Adjustments”); and
|
|
•
|
|
if the Reference Value is less than $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described herein under the heading “Description of Securities — Warrants — Public Stockholders’ Warrants — Anti-dilution Adjustments”), the Private Placement Warrants must also concurrently be called for redemption on the same terms as the outstanding Public Warrants, as described above.
|
Description
|
|
Quoted
Prices in
Active
Markets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2) |
|
|
Significant
Other
Unobservable
Inputs
(Level 3)
|
|
|||
Assets:
|
||||||||||||
Investments held in Trust Account — Money market fund
|
$ | 345,027,247 | $ | — | $ | — | ||||||
Liabilities:
|
||||||||||||
Derivative warrant liabilities — Public warrants
|
$ | 21,390,000 | $ | — | $ |
—
|
||||||
Derivative warrant liabilities — Private placement warrants
|
$ | — | $ | — | $ | 15,541,330 |
|
|
February 12,
2021 |
|
|
September 30,
2021 |
|
||
Exercise price
|
$ | 11.50 | $ | 11.50 | ||||
Stock price
|
$ | 10.87 | $ | 10.11 | ||||
Volatility
|
20.0 | % | 31.3 |
%
|
||||
Term
|
5.0 | 5.0 | ||||||
Risk-free rate
|
0.50 | % | 0.98 | % |
Derivative warrant liabilities at December 31, 2020
|
$ | — | ||
Issuance of Public and Private Warrants
|
23,027,500 | |||
Change in fair value of derivative warrant liabilities
|
(6,160,830 | ) | ||
Derivative warrant liabilities at March 31, 2021
|
$ | 16,866,670 | ||
Transfer of Public Warrants to Level 1
|
|
|
(9,660,000
|
)
|
Change in fair value of derivative warrant liabilities
|
|
|
1,504,000
|
|
|
|
|
|
|
Derivative warrant liabilities at June 30, 2021
|
|
$
|
8,710,670
|
|
Change in fair value of derivative warrant liabilities
|
|
|
6,830,660
|
|
Derivative warrant liabilities at September 30, 2021
|
|
$
|
15,541,330
|
|
Assets:
|
||||
Current assets:
|
||||
Cash
|
$ | 2,968,065 | ||
Prepaid expenses
|
676,800 | |||
|
|
|||
Total current assets
|
3,644,865 | |||
Cash held in Trust Account
|
345,000,000 | |||
|
|
|||
Total Assets
|
$
|
348,644,865
|
|
|
|
|
|||
Liabilities and Stockholders’ Equity:
|
||||
Current liabilities:
|
||||
Accounts payable
|
$ | 687,500 | ||
Accrued expenses
|
545,021 | |||
Franchise tax payable
|
23,464 | |||
Note payable - related party
|
90,035 | |||
|
|
|||
Total current liabilities
|
1,346,020 | |||
|
|
|||
Deferred underwriting commissions
Derivative warrant liabilities
|
|
12,075,000
23,027,500
|
|
|
|
|
|||
Total liabilities
|
36,448,520 | |||
Commitments and Contingencies
|
||||
Class A common stock, $0.0001 par value; 34,500,000 shares subject to possible redemption at $10.00 per share
|
345,000,000 | |||
Stockholders’ Equity:
|
||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
— | |||
Class A common stock, $0.0001 par value; 500,000,000 shares authorized;
|
— | |||
Class B common stock, $0.0001 par value; 50,000,000 shares authorized; 8,625,000 shares issued and outstanding
|
863 | |||
Additional paid-in capital
|
— | |||
Accumulated deficit
|
(32,804,518 | ) | ||
|
|
|||
Total stockholders’ equity
|
(32,803,655 | ) | ||
|
|
|||
Total Liabilities and Stockholders’ Equity
|
$
|
348,644,865
|
|
|
|
|
As of February 12, 2021
|
As Reported
|
Adjustment
|
As Restated
|
|||||||||
Total assets
|
$
|
348,644,865
|
|
$
|
348,644,865
|
|
||||||
Total current liabilities
|
$
|
1,346,020
|
|
|
—
|
|
$
|
1,346,020
|
|
|||
Deferred underwriting commissions
|
12,075,000 | — | 12,075,000 | |||||||||
Derivative warrant liabilities
|
— | 23,027,500 | 23,027,500 | |||||||||
Total liabilities
|
$
|
13,421,020
|
|
$
|
36,448,520
|
|
||||||
Class A common stock subject to possible redemption
|
330,223,840 | 14,776,160 | 345,000,000 | |||||||||
Preferred stock
|
— | — | — | |||||||||
Class A common stock
|
148 | (148 | ) | — | ||||||||
Class B common stock
|
863 | — | 863 | |||||||||
Additional paid-in capital
|
5,032,602 | (5,032,602 | ) | — | ||||||||
Retained earnings (accumulated deficit)
|
(33,608 | ) | (32,770,910 | ) | (32,804,518 | ) | ||||||
Total stockholders’ equity (deficit)
|
$
|
5,000,005
|
|
$
|
(37,803,660
|
)
|
$
|
(32,803,655
|
)
|
|||
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit)
|
$
|
348,644,865
|
|
$
|
—
|
|
$
|
348,644,865
|
|
• |
in whole and not in part;
|
• |
at a price of $0.01 per warrant;
|
• |
upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; and
|
• |
if, and only if, the last reported sale price of Class A common stock for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted).
|
• |
in whole and not in part;
|
• |
at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value” (as defined below) of Class A common stock;
|
• |
if, and only if, the Reference Value equals or exceeds $10.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described herein under the heading “Description of Securities — Warrants — Public Stockholders’ Warrants — Anti-dilution Adjustments” ); and
|
• |
if the Reference Value is less than $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described herein under the heading “Description of Securities — Warrants — Public Stockholders’ Warrants — Anti-dilution Adjustments”), the Private Placement Warrants must also concurrently be called for redemption on the same terms as the outstanding Public Warrants, as described above.
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Assets
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 8,671 | $ | 6,657 | ||||
Restricted cash
|
50 | 250 | ||||||
Accounts receivable, net of allowance of $620 and $76, respectively
|
792 | 105 | ||||||
Accounts receivable from related parties
|
315 | 72 | ||||||
Deposits for equipment
|
54,818 | — | ||||||
Other current assets
|
6,273 | 3,969 | ||||||
|
|
|
|
|||||
Total Current Assets
|
70,919 | 11,053 | ||||||
|
|
|
|
|||||
Property, plant and equipment, net
|
85,244 | 81,296 | ||||||
Goodwill
|
58,241 | 58,241 | ||||||
Intangible assets, net
|
6,674 | 3,977 | ||||||
Other noncurrent assets
|
4,499 | 7,447 | ||||||
|
|
|
|
|||||
Total Assets
|
$ | 225,577 | $ | 162,014 | ||||
|
|
|
|
|||||
Liabilities, Redeemable Preferred Stock and Stockholders’ Equity
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable
|
$ | 3,057 | $ | 7,503 | ||||
Accrued expenses and other
|
3,585 | 1,916 | ||||||
Deferred revenue
|
44,843 | 7,834 | ||||||
Capital lease obligations, current portion
|
2,146 | 1,571 | ||||||
Notes payable, current portion
|
16,016 | 648 | ||||||
|
|
|
|
|||||
Total Current Liabilities
|
69,647 | 19,472 | ||||||
|
|
|
|
|||||
Capital lease obligations, net of current portion
|
2,263 | 3,183 | ||||||
Notes payable, net of current portion
|
19,864 | 2,092 | ||||||
Other noncurrent liabilities
|
103 | 1,412 | ||||||
|
|
|
|
|||||
Total Liabilities
|
91,877 | 26,159 | ||||||
|
|
|
|
|||||
Contingently redeemable convertible preferred stock; $0.00001 par value; 50,000 shares authorized; 6,766 and 4,421 shares issued and outstanding at December 31, 2020 and 2019; $45,164 and $30,195 total liquidation preference at December 31, 2020 and 2019
|
44,476 | 29,526 | ||||||
Commitments and contingencies
|
||||||||
Stockholders’ Equity:
|
||||||||
Common stock; $0.00001 par value; 200,000 shares authorized; 98,607 and 99,141 shares issued and outstanding at December 31, 2020 and 2019
|
1 | 1 | ||||||
Additional
paid-in
capital
|
163,967 | 168,866 | ||||||
Accumulated deficit
|
(74,744 | ) | (62,538 | ) | ||||
|
|
|
|
|||||
Total Stockholders’ Equity
|
89,224 | 106,329 | ||||||
|
|
|
|
|||||
Total Liabilities, Contingently Redeemable Convertible Preferred Stock and Stockholders’ Equity
|
$ | 225,577 | $ | 162,014 | ||||
|
|
|
|
For the Years Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Hosting revenue from customers
|
$ | 34,615 | $ | 53,492 | ||||
Hosting revenue from related parties
|
6,983 | 384 | ||||||
Equipment sales to customers
|
11,193 | — | ||||||
Equipment sales to related parties
|
1,402 | — | ||||||
Digital asset mining income
|
6,127 | 5,647 | ||||||
|
|
|
|
|||||
Total revenue
|
60,320 | 59,523 | ||||||
Costs of revenue
|
50,928 | 48,996 | ||||||
|
|
|
|
|||||
Gross profit
|
9,392 | 10,527 | ||||||
Gain on legal settlements
|
5,814 | — | ||||||
Gain from sales of digital currency assets
|
65 | 806 | ||||||
Operating expense:
|
||||||||
Research and development
|
5,271 | 5,480 | ||||||
Sales and marketing
|
1,771 | 2,833 | ||||||
General and administrative
|
14,556 | 14,707 | ||||||
|
|
|
|
|||||
Total operating expense
|
21,598 | 23,020 | ||||||
|
|
|
|
|||||
Operating loss
|
(6,327 | ) | (11,687 | ) | ||||
|
|
|
|
|||||
Non-operating
income (expense), net:
|
||||||||
Loss on debt extinguishment
|
(1,333 | ) | — | |||||
Interest expense, net
|
(4,436 | ) | (235 | ) | ||||
Other
non-operating
expenses, net
|
(110 | ) | — | |||||
|
|
|
|
|||||
Total
non-operating
income (expense), net
|
(5,879 | ) | (235 | ) | ||||
|
|
|
|
|||||
Loss before income taxes
|
(12,206 | ) | (11,922 | ) | ||||
Income tax expense
|
— | — | ||||||
|
|
|
|
|||||
Net loss and comprehensive loss
|
$ | (12,206 | ) | $ | (11,922 | ) | ||
|
|
|
|
|||||
Deemed dividend from common to preferred exchange
|
(10,478 | ) | — | |||||
|
|
|
|
|||||
Net loss attributable to common stockholders
|
$ | (22,684 | ) | $ | (11,922 | ) | ||
|
|
|
|
|||||
Net loss attributable to common stockholders per share (Note 13):
|
||||||||
Basic and diluted
|
$ | (0.23 | ) | $ | (0.12 | ) | ||
|
|
|
|
|||||
Weighted average shares outstanding:
|
||||||||
Basic and diluted
|
98,492 | 98,684 | ||||||
|
|
|
|
Contingently Redeemable
Convertible Preferred Stock |
Common Stock
|
Additional
Paid-In Capital
|
Accumulated
Deficit |
Total
Stockholders’ Equity |
||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Amount
|
Amount
|
Amount
|
||||||||||||||||||||||||
Balance at December 31, 2018
|
— | $ | — |
|
98,531 | $ | 1 | $ | 161,365 | $ | (50,616 | ) | $ | 110,750 | ||||||||||||||||
Net loss
|
|
(11,922 | ) | (11,922 | ) | |||||||||||||||||||||||||
Stock-based compensation
|
|
50 | — | 3,100 | 3,100 | |||||||||||||||||||||||||
Issuances of Series A contingently redeemable convertible preferred stock
|
4,421 | 29,526 |
|
|||||||||||||||||||||||||||
Issuances of common stock
|
|
560 | — | 4,401 | 4,401 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance at December 31, 2019
|
4,421 | $ | 29,526 | 99,141 | $ | 1 | $ | 168,866 | $ | (62,538 | ) | $ | 106,329 | |||||||||||||||||
Net loss
|
(12,206 | ) | (12,206 | ) | ||||||||||||||||||||||||||
Stock-based compensation
|
3,037 | 3,037 | ||||||||||||||||||||||||||||
Exchange of common stock for Series A contingently redeemable convertible preferred stock
|
1,802 | 12,308 | (1,096 | ) | — | (12,308 | ) | (12,308 | ) | |||||||||||||||||||||
Issuances of common stock- asset acquisition
|
562 | — | 1,967 | 1,967 | ||||||||||||||||||||||||||
Issuances of Series A contingently redeemable convertible preferred stock
|
229 | 1,545 | ||||||||||||||||||||||||||||
Issuances of Series B contingently redeemable convertible preferred stock
|
314 | 1,097 | ||||||||||||||||||||||||||||
Issuances of common stock warrants and options
|
2,405 | 2,405 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance at December 31, 2020
|
6,766 | $ | 44,476 | 98,607 | $ | 1 | $ | 163,967 | $ | (74,744 | ) | $ | 89,224 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Cash flows from Operating Activities:
|
||||||||
Net loss
|
$ | (12,206 | ) | $ | (11,922 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
9,403 | 6,118 | ||||||
Stock-based compensation
|
3,037 | 2,880 | ||||||
Digital asset mining income
|
(6,127 | ) | (5,647 | ) | ||||
Amortization of debt discount and debt issuance costs
|
1,300 | — | ||||||
Impairments of long-lived assets
|
— | 932 | ||||||
Losses on disposals of property, plant and equipment
|
2 | 621 | ||||||
Loss on debt extinguishment
|
1,333 | — | ||||||
Provision for doubtful accounts
|
616 | 14 | ||||||
Changes in working capital:
|
||||||||
Accounts receivable, net
|
(1,303 | ) | (11 | ) | ||||
Accounts receivable from related parties
|
(243 | ) | (72 | ) | ||||
Digital currency assets
|
6,094 | 6,497 | ||||||
Deposits for equipment
|
(54,736 | ) | — | |||||
Other current assets
|
(2,353 | ) | (1,603 | ) | ||||
Accounts payable
|
(1,770 | ) | 1,398 | |||||
Accrued expenses and other
|
1,625 | 266 | ||||||
Deferred revenue
|
30,009 | (911 | ) | |||||
Other noncurrent assets and liabilities, net
|
1,554 | 608 | ||||||
|
|
|
|
|||||
Net cash used in operating activities
|
(23,765 | ) | (832 | ) | ||||
|
|
|
|
|||||
Cash flows from Investing Activities:
|
||||||||
Purchases of property, plant and equipment
|
(13,668 | ) | (37,412 | ) | ||||
Proceeds from sales of property, plant and equipment
|
92 | 160 | ||||||
Acquisition of intangible assets and other
|
(1,568 | ) | (108 | ) | ||||
|
|
|
|
|||||
Net cash used in investing activities
|
(15,144 | ) | (37,360 | ) | ||||
|
|
|
|
|||||
Cash flows from Financing Activities:
|
||||||||
Proceeds from issuances of preferred stock
|
2,642 | 29,526 | ||||||
Issuances of debt
|
45,178 | — | ||||||
Principal payments on debt
|
(7,097 | ) | (832 | ) | ||||
|
|
|
|
|||||
Net cash provided by financing activities
|
40,723 | 28,694 | ||||||
|
|
|
|
|||||
Increase (decrease) in cash, cash equivalents, and restricted cash
|
1,814 | (9,498 | ) | |||||
Cash, cash equivalents and restricted cash - beginning of year
|
6,907 | 16,405 | ||||||
|
|
|
|
|||||
Cash, cash equivalents and restricted cash - end of year
|
$ | 8,721 | $ | 6,907 | ||||
|
|
|
|
|||||
Supplemental disclosure of other cash flow information:
|
||||||||
Cash paid for interest
|
$ | 2,903 | $ | 336 | ||||
Supplemental disclosure of noncash investing and financing activities:
|
||||||||
Acquisition:
|
||||||||
Fair value of assets acquired
|
$ | 3,359 | $ | — | ||||
Fair value of common stock issued as consideration
|
1,966 | — | ||||||
Accrued capital expenditures
|
$ | 2,544 | $ | 3,341 | ||||
Increase in notes payable for acquisition of property, plant and equipment
|
$ | 19,882 | $ | — | ||||
Decrease in notes payable in exchange for equipment
|
$ | 7,000 | $ | — | ||||
Property, plant and equipment acquired under capital leases
|
$ | 1,486 | $ | 4,957 | ||||
Common stock issuances for acquisition of long-lived assets
|
$ | — | $ | 3,825 |
1.
|
ORGANIZATION AND DESCRIPTION OF BUSINESS
|
• |
Owning and operating datacenter facilities in the U.S. to provide colocation and hosting services for artificial intelligence (“AI”) and distributed ledger technology, also commonly known as blockchain;
|
• |
Owning and operating computer equipment used to process transactions conducted on one or more blockchain networks in exchange for transaction processing fees rewarded in digital currency assets, commonly referred to as mining;
|
• |
Developing AI and blockchain-based platforms and applications, including infrastructure management, security technologies, mining optimization, and record keeping;
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Cash and cash equivalents
|
$ | 8,671 | $ | 6,657 | ||||
Restricted Cash
|
50 | 250 | ||||||
|
|
|
|
|||||
Total cash, cash equivalents and restricted cash
|
$ | 8,721 | $ | 6,907 | ||||
|
|
|
|
For the Years Ended
December 31, |
||||||||
2020
|
2019
|
|||||||
Customer
|
||||||||
A
|
26 | % | N/A | |||||
B
|
N/A | 92 | % |
For the Years Ended
December 31, |
||||||||
2020
|
2019
|
|||||||
Customer
|
||||||||
B
|
24 | % | 74 | % | ||||
C
|
13 | % | N/A |
3.
|
ASSET ACQUISITIONS
|
4.
|
OTHER ASSETS
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Prepaid expenses
|
$ | 1,212 | $ | 2,702 | ||||
Security deposits
|
2,230 | 972 | ||||||
Customer contract asset
|
— | 110 | ||||||
Other
|
2,831 | 185 | ||||||
|
|
|
|
|||||
Total other current assets
|
$ | 6,273 | $ | 3,969 | ||||
|
|
|
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Security deposits
|
$ | 1,150 | $ | 1,246 | ||||
Utility construction contributions
|
3,000 | 5,348 | ||||||
Deferred income taxes
|
— | 535 | ||||||
Customer contract asset and other
|
349 | 318 | ||||||
|
|
|
|
|||||
Total other noncurrent assets
|
$ | 4,499 | $ | 7,447 | ||||
|
|
|
|
5.
|
PROPERTY, PLANT AND EQUIPMENT, NET
|
December 31,
|
||||||||||||
2020
|
2019
|
Estimated Useful Lives
|
||||||||||
Land and improvements
|
$ | 5,458 | $ | 5,258 |
20 years
(1)
|
|||||||
Building and improvements
|
46,811 | 43,407 | 12 to 39 years | |||||||||
Computer, mining and network equipment
(2)
|
20,270 | 19,247 | 1 to 5 years | |||||||||
Electrical equipment
(3)
|
24,681 | 24,259 | 10 years | |||||||||
Other property, plant and equipment
(4)
|
1,243 | 1,499 | 5 to 7 years | |||||||||
|
|
|
|
|||||||||
Total
|
98,463 | 93,670 | ||||||||||
Less accumulated depreciation and amortization
(5)
|
(13,219 | ) | (12,374 | ) | ||||||||
|
|
|
|
|||||||||
Property, plant and equipment, net
|
$ | 85,244 | $ | 81,296 | ||||||||
|
|
|
|
(1)
|
Estimated useful life of improvements. Land is not depreciated.
|
(2)
|
Includes capital lease assets of $3,277 and $2,951 at December 31, 2020 and 2019, respectively.
|
(3)
|
Includes capital lease assets of $2,588 and $2,588 at December 31, 2020 and 2019, respectively.
|
(4)
|
Includes capital lease assets of $432 and $0 at December 31, 2020 and 2019, respectively.
|
(5)
|
Includes accumulated amortization for assets under capital leases of $1,762 and $290 at December 31, 2020 and 2019, respectively.
|
6.
|
INTANGIBLE ASSETS, NET
|
December 31, 2020
|
||||||||||||||||
Gross
|
Accumulated
Amortization |
Net
Carrying Amount |
Estimated
Useful
Lives |
|||||||||||||
Acquired software
|
$ | 7,318 | $ | (954 | ) | $ | 6,364 |
5-8 years
|
||||||||
Patents
|
260 | (4 | ) | 256 | 20 years | |||||||||||
Trademarks
|
59 | (5 | ) | 54 | 8 years | |||||||||||
|
|
|
|
|
|
|||||||||||
Total intangible assets, net
|
$ | 7,637 | $ | (963 | ) | $ | 6,674 | |||||||||
|
|
|
|
|
|
December 31, 2019
|
||||||||||||||||
Gross
|
Accumulated
Amortization |
Net
Carrying Amount |
Estimated
Useful
Lives |
|||||||||||||
Acquired software
|
$ | 3,959 | $ | (124 | ) | $ | 3,835 | 8 years | ||||||||
Patents
|
111 | (2 | ) | 109 | 20 years | |||||||||||
Trademarks
|
34 | (1 | ) | 33 | 8 years | |||||||||||
|
|
|
|
|
|
|||||||||||
Total intangible assets, net
|
$ | 4,104 | $ | (127 | ) | $ | 3,977 | |||||||||
|
|
|
|
|
|
7.
|
ACCRUED EXPENSES AND OTHER
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Accrued expenses and other
|
$ | 936 | $ | 1,058 | ||||
Accrued taxes
|
1,645 | 847 | ||||||
Other current liabilities
|
1,004 | 11 | ||||||
|
|
|
|
|||||
Total accrued expenses and other
|
$ | 3,585 | $ | 1,916 | ||||
|
|
|
|
8.
|
NOTES PAYABLE
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Georgia note
|
$ | 581 | $ | 773 | ||||
Kentucky note
|
1,511 | 1,967 | ||||||
PPP note
|
2,154 | — | ||||||
Silverpeak note
|
22,260 | — | ||||||
Genesis note
|
4,648 | — | ||||||
NYDIG note
|
718 | — | ||||||
Celsius note
|
6,842 | — | ||||||
|
|
|
|
|||||
Total
|
38,714 | 2,740 | ||||||
|
|
|
|
|||||
Unamortized discount and debt issuance costs
|
(2,834 | ) | — | |||||
|
|
|
|
|||||
Total notes payable, net
|
$ | 35,880 | $ | 2,740 | ||||
|
|
|
|
Year ending December 31,
|
||||
2021
|
$ | 16,016 | ||
2022
|
6,743 | |||
2023
|
15,955 | |||
|
|
|||
Total notes payable
|
$ | 38,714 | ||
|
|
9.
|
CONTINGENTLY REDEEMABLE CONVERTIBLE PREFERRED STOCK
|
December 31, 2020
|
||||||||||||||||||||
Shares
Authorized |
Shares
Issued and Outstanding |
Issuance
Price per Share |
Net Proceeds
|
Liquidation
preference |
||||||||||||||||
Contingently Redeemable Convertible Preferred Stock:
|
||||||||||||||||||||
Series A
|
14,641 | 6,452 | $ | 6.83 | $ | 31,070 | $ | 44,064 | ||||||||||||
Series B
|
14,327 | 314 | 3.50 | 1,097 | 1,100 | |||||||||||||||
Undesignated
|
21,032 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Total contingently redeemable convertible preferred stock
|
50,000 | 6,766 | $ | 32,167 | $ | 45,164 | ||||||||||||||
|
|
|
|
|
|
|
|
December 31, 2019
|
||||||||||||||||||||
Shares
Authorized |
Shares
Issued and Outstanding |
Issuance Price
per Share |
Net Proceeds
|
Liquidation
preference |
||||||||||||||||
Contingently Redeemable Convertible Preferred Stock:
|
||||||||||||||||||||
Series A
|
14,641 | 4,421 | $ | 6.83 | $ | 29,526 | $ | 30,195 | ||||||||||||
Undesignated
|
35,359 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Total contingently redeemable convertible preferred stock
|
50,000 | 4,421 | $ | 29,526 | $ | 30,195 | ||||||||||||||
|
|
|
|
|
|
|
|
10.
|
COMMITMENTS AND CONTINGENCIES
|
Year ending December 31,
|
||||
2021
|
$ | 111 | ||
2022 - 2025
|
— | |||
|
|
|||
Total minimum lease payments
|
$ | 111 | ||
|
|
Year ending December 31,
|
||||
2021
|
$ | 2,467 | ||
2022
|
1,990 | |||
2023
|
271 | |||
2024
|
102 | |||
2025
|
46 | |||
|
|
|||
Total minimum lease payments
|
4,876 | |||
Less: interest
|
(467 | ) | ||
|
|
|||
Present value of net minimum lease payments
|
$ | 4,409 | ||
|
|
11.
|
STOCKHOLDERS’ EQUITY
|
Options outstanding
|
2,530 | |||
Restricted stock units and awards outstanding
|
37,946 | |||
Available for future stock option and restricted stock units and grants
|
12,024 | |||
|
|
|||
Total outstanding and reserved for future issuance
|
52,500 | |||
|
|
For the Years Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Dividend yield
|
0.00 | % | 0.00 | % | ||||
Expected volatility
|
36.26 | % | 30.59 | % | ||||
Risk-free interest rate
|
0.70 | % | 1.65 | % | ||||
Expected life (years)
|
10.00 | 5.51 |
Number of
Shares |
Weighted-
Average Exercise Price |
Weighted-Average
Remaining Contractual Term (in years) |
Aggregate
Intrinsic Value |
|||||||||||||
Options outstanding - December 31, 2018
|
1,880 | $ | 11.23 | |||||||||||||
Granted
|
350 | 6.83 | ||||||||||||||
Exercised
|
— | — | ||||||||||||||
Forfeited
|
— | — | ||||||||||||||
|
|
|
|
|||||||||||||
Options outstanding - December 31, 2019
|
2,230 | 10.54 | ||||||||||||||
Granted
|
300 | 1 | ||||||||||||||
Exercised
|
— | — | ||||||||||||||
Forfeited
|
— | — | ||||||||||||||
|
|
|
|
|||||||||||||
Options outstanding - December 31, 2020
|
2,530 | $ | 9.41 | 8.08 | $ | 3,959 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Options vested and expected to vest as of December 31, 2020
|
2,530 | $ | 9.41 | 8.08 | $ | 3,959 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Options vested and exercisable as of December 31, 2020
|
1,159 | $ | 7.54 | 8.43 | $ | 3,704 | ||||||||||
|
|
|
|
|
|
|
|
• |
Over a
4-year
service period, or
|
• |
Over a
4-year
service period and upon either i) completion of an initial public offering of the Company’s common stock, or ii) upon consummation of a transaction resulting in a change in control of the Company.
|
Number of
Shares |
Weighted-Average
Grant Date Fair Value |
|||||||
Unvested - December 31, 2018
|
28,412 | $ | 11.23 | |||||
Granted
|
13,065 | 6.83 | ||||||
Vested
|
— | — | ||||||
Forfeited
|
(6,430 | ) | 10.42 | |||||
|
|
|
|
|||||
Unvested - December 31, 2019
|
35,047 | $ | 9.39 | |||||
Granted
|
8,056 | 4.46 | ||||||
Vested
|
(802 | ) | 11.23 | |||||
Forfeited
|
(5,157 | ) | 6.83 | |||||
|
|
|
|
|||||
Unvested - December 31, 2020
|
37,144 | $ | 8.55 | |||||
|
|
|
|
12.
|
INCOME TAXES
|
For the Years Ended
December 31, |
||||||||
2020
|
2019
|
|||||||
U.S. federal statutory income tax benefit applied to loss before income taxes
|
$ | (2,563 | ) | $ | (2,525 | ) | ||
State income taxes, net of federal benefit
|
(410 | ) | (429 | ) | ||||
Valuation allowance
|
1,106 | 2,835 | ||||||
Deferred tax adjustments
|
1,827 | — | ||||||
Other permanent items
|
40 | 119 | ||||||
|
|
|
|
|||||
Total income tax expense
|
$ | — | $ | — | ||||
|
|
|
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Deferred tax assets:
|
||||||||
Net operating loss
|
$ | 10,674 | $ | 8,438 | ||||
Interest expense limitation
|
137 | 177 | ||||||
Allowance for doubtful accounts
|
151 | 19 | ||||||
Vacation pay accrual
|
8 | 104 | ||||||
Stock-based compensation
|
3,579 | 2,943 | ||||||
Unrealized capital loss
|
548 | 499 | ||||||
Impairment loss
|
61 | 141 | ||||||
Debt extinguishment loss
|
406 | — | ||||||
Intangibles (other than goodwill)
|
3,015 | 3,069 | ||||||
|
|
|
|
|||||
Gross deferred tax assets
|
18,579 | 15,390 | ||||||
Valuation allowance
|
(15,961 | ) | (14,855 | ) | ||||
|
|
|
|
|||||
Deferred tax assets, net of valuation allowance
|
2,618 | 535 | ||||||
|
|
|
|
|||||
Deferred tax liabilities:
|
||||||||
Property, plant and equipment, net
|
(2,618 | ) | (535 | ) | ||||
|
|
|
|
|||||
Deferred tax liabilities, net
|
(2,618 | ) | (535 | ) | ||||
|
|
|
|
|||||
Total net deferred tax assets
|
$ | — | $ | — | ||||
|
|
|
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Beginning Balance
|
$ | 14,855 | $ | 11,689 | ||||
Change related to current net operating losses
|
2,238 | 2,835 | ||||||
Net change related to generation of tax attributes
|
695 | 331 | ||||||
Change related to deferred tax adjustments
|
(1,827 | ) | — | |||||
|
|
|
|
|||||
Ending Balance
|
$ | 15,961 | $ | 14,855 | ||||
|
|
|
|
13.
|
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
For the Years Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Net loss
|
$ | (12,206 | ) | $ | (11,922 | ) | ||
Deemed dividend
|
(10,478 | ) | — | |||||
|
|
|
|
|||||
Net loss attributable to common stockholders (numerator)
|
$ | (22,684 | ) | $ | (11,922 | ) | ||
Weighted average common shares outstanding – basic and diluted (denominator)
|
98,492 | 98,684 | ||||||
Net loss per share – basic and diluted
|
$ | (0.23 | ) | $ | (0.12 | ) |
December 31,
|
||||||||
2020
|
2019
|
|||||||
Stock options
|
2,530 | 2,230 | ||||||
Preferred stock
|
6,766 | 4,421 | ||||||
Warrants
|
4,135 | 150 | ||||||
Restricted stock
|
37,946 | 35,047 | ||||||
|
|
|
|
|||||
Total potentially anti-dilutive shares
|
51,377 | 41,848 | ||||||
|
|
|
|
14.
|
SEGMENT REPORTING
|
For the Years Ended
December 31, |
||||||||
2020
|
2019
|
|||||||
Equipment Sales and Hosting Segment
|
||||||||
Hosting revenue
|
$ | 41,598 | $ | 53,876 | ||||
Equipment sales
|
12,595 | — | ||||||
|
|
|
|
|||||
Total revenue
|
54,193 | 53,876 | ||||||
Cost of revenue
|
47,951 | 43,005 | ||||||
|
|
|
|
|||||
Gross profit
|
$ | 6,242 | $ | 10,871 | ||||
Mining Segment
|
||||||||
Digital asset mining income
|
$ | 6,127 | $ | 5,647 | ||||
|
|
|
|
|||||
Total revenue
|
6,127 | 5,647 | ||||||
Cost of revenue
|
2,977 | 5,991 | ||||||
|
|
|
|
|||||
Gross profit
|
$ | 3,150 | $ | (344 | ) | |||
Consolidated total revenue
|
$ | 60,320 | $ | 59,523 | ||||
Consolidated cost of revenue
|
$ | 50,928 | $ | 48,996 | ||||
Consolidated gross profit
|
$ | 9,392 | $ | 10,527 |
For the Years Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Reportable segment gross profit
|
9,392 | 10,527 | ||||||
Gain on legal settlement
|
5,814 | — | ||||||
Gain from sales of digital currency assets
|
65 | 806 | ||||||
Operating expense (income):
|
||||||||
Research and development
|
5,271 | 5,480 | ||||||
Sales and marketing
|
1,771 | 2,833 | ||||||
General and administrative
|
14,556 | 14,707 | ||||||
|
|
|
|
|||||
Total operating expense (income)
|
21,598 | 23,020 | ||||||
|
|
|
|
|||||
Operating loss
|
(6,327 | ) | (11,687 | ) |
For the Years Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Non-operating
income (expense), net:
|
||||||||
Loss on debt extinguishment and other
|
(1,333 | ) | — | |||||
Interest expense, net
|
(4,436 | ) | (235 | ) | ||||
Other
non-operating
expenses, net
|
(110 | ) | — | |||||
|
|
|
|
|||||
Total
non-operating
income (expense), net
|
(5,879 | ) | (235 | ) | ||||
|
|
|
|
|||||
Loss before income taxes
|
(12,206 | ) | (11,922 | ) | ||||
|
|
|
|
15.
|
RELATED-PARTY TRANSACTIONS
|
16.
|
SUBSEQUENT EVENTS
|
September 30,
2021 |
December 31,
2020 |
|||||||
Restated
(Unaudited)
|
||||||||
Assets
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 147,906 | $ | 8,671 | ||||
Restricted cash
|
12,101 | 50 | ||||||
Accounts receivable
|
602 | 792 | ||||||
Accounts receivable from related parties
|
261 | 315 | ||||||
Deposits for equipment
|
469,890 | 54,818 | ||||||
Digital currency assets
|
116,233 | 63 | ||||||
Other current assets
|
9,978 | 6,210 | ||||||
|
|
|
|
|||||
Total Current Assets
|
756,971 | 70,919 | ||||||
|
|
|
|
|||||
Property, plant and equipment, net
|
219,795 | 85,244 | ||||||
Goodwill
|
1,106,968 | 58,241 | ||||||
Intangible assets, net
|
8,709 | 6,674 | ||||||
Other noncurrent assets
|
14,110 | 4,499 | ||||||
|
|
|
|
|||||
Total Assets
|
$ | 2,106,553 | $ | 225,577 | ||||
|
|
|
|
|||||
Liabilities, Redeemable Preferred Stock and Stockholders’ Equity
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable
|
$ | 28,796 | $ | 3,057 | ||||
Accrued expenses and other
|
35,074 | 3,585 | ||||||
Deferred revenue
|
74,855 | 38,113 | ||||||
Deferred revenue from related parties
|
131,284 | 6,730 | ||||||
Capital lease obligations, current portion
|
2,525 | 2,146 | ||||||
Notes payable, current portion
|
25,202 | 16,016 | ||||||
|
|
|
|
|||||
Total Current Liabilities
|
297,736 | 69,647 | ||||||
|
|
|
|
|||||
Capital lease obligations, net of current portion
|
1,524 | 2,263 | ||||||
Notes payable, net of current portion (includes $442,834 and $- at fair value)
|
471,930 | 19,864 | ||||||
Other noncurrent liabilities
|
1,994 | 103 | ||||||
|
|
|
|
|||||
Total Liabilities
|
773,184 | 91,877 | ||||||
|
|
|
|
|||||
Contingently redeemable preferred stock; $0.00001 par value; 50,000 shares authorized; 6,766 shares issued and outstanding at September 30, 2021 and December 31, 2020
|
44,476 | 44,476 | ||||||
Commitments and contingencies (Note 6)
|
||||||||
Stockholders’ Equity:
|
||||||||
Common stock; $0.00001 par value; 200,000 shares authorized; 170,818 and 98,607 shares issued and outstanding at September 30, 2021 and December 31, 2020
|
2 | 1 | ||||||
Additional paid-in capital
|
1,385,381 | 163,967 | ||||||
Accumulated deficit
|
(87,938 | ) | (74,744 | ) | ||||
|
|
|
|
|||||
Accumulated other comprehensive loss
|
(8,552 | ) | — | |||||
Total Stockholders’ Equity
|
1,288,893 | 89,224 | ||||||
|
|
|
|
|||||
Total Liabilities, Redeemable Preferred Stock and Stockholders’ Equity
|
$ | 2,106,553 | $ | 225,577 | ||||
|
|
|
|
Nine Months Ended September 30,
|
||||||||
2021
|
2020
|
|||||||
Restated
|
||||||||
Total evenue:
|
||||||||
Hosting revenue from customers
|
$ | 37,836 | $ | 28,667 | ||||
Hosting revenue from related parties
|
13,906 | 3,382 | ||||||
Equipment sales to customers
|
84,378 | 1,987 | ||||||
Equipment sales to related parties
|
29,057 | 285 | ||||||
Digital asset mining income
|
77,511 | 2,312 | ||||||
|
|
|
|
|||||
Total revenue
|
242,688 | 36,633 | ||||||
|
|
|
|
|||||
Costs of revenue:
|
||||||||
Cost of hosting services
|
48,956 | 28,185 | ||||||
Cost of equipment sales
|
82,328 | 2,123 | ||||||
Cost of digital asset mining
|
13,909 | 1,598 | ||||||
|
|
|
|
|||||
Total costs of revenue
|
145,193 | 31,906 | ||||||
|
|
|
|
|||||
Gross profit
|
97,495 | 4,727 | ||||||
(Loss) gain on legal settlements
|
(2,603 | ) | 5,814 | |||||
Gain from sales of digital currency assets
|
405 | 52 | ||||||
Impairment of digital currency assets
|
(12,552 | ) | (5 | ) | ||||
Operating expenses:
|
||||||||
Research and development
|
4,231 | 4,183 | ||||||
Sales and marketing
|
2,186 | 1,401 | ||||||
General and administrative
|
46,992 | 10,797 | ||||||
|
|
|
|
|||||
Total operating expenses
|
53,409 | 16,381 | ||||||
|
|
|
|
|||||
Operating income (loss)
|
29,336 | (5,793 | ) | |||||
Non-operating expenses,
net:
|
||||||||
Loss on debt from extinguishment
|
8,016 | 1,333 | ||||||
Interest expense, net
|
26,550 | 2,683 | ||||||
Other non-operating expense,
net
|
8,661 | 88 | ||||||
|
|
|
|
|||||
Total non-operating expense,
net
|
43,227 | 4,104 | ||||||
|
|
|
|
|||||
Loss before income taxes
|
(13,891 | ) | (9,897 | ) | ||||
Income tax expense
|
(697 | ) | — | |||||
|
|
|
|
|||||
Net loss
|
(13,194 | ) | (9,897 | ) | ||||
|
|
|
|
|||||
Deemed dividend from common to preferred exchange
|
— | (10,478 | ) | |||||
|
|
|
|
|||||
Net loss attributable to common stockholders
|
$ | (13,194 | ) | $ | (20,375 | ) | ||
|
|
|
|
|||||
Net loss per share (Note 8):
|
||||||||
Basic
|
$ | (0.11 | ) | $ | (0.21 | ) | ||
|
|
|
|
|||||
Diluted
|
$ | (0.11 | ) | $ | (0.21 | ) | ||
|
|
|
|
|||||
Weighted average shares outstanding:
|
||||||||
Basic
|
115,482 | 98,453 | ||||||
|
|
|
|
|||||
Diluted
|
115,482 | 98,453 | ||||||
|
|
|
|
Nine Months Ended
September 30, |
||||||||
2021
|
2020
|
|||||||
Restated
|
||||||||
Net loss
|
$ | (13,194 | ) | $ | (9,897 | ) | ||
Other comprehensive loss, net of income taxes:
|
||||||||
Change in fair value attributable to instrument-specific credit risk of convertible notes measured at fair value under the fair value option, net of tax effect of $— and $—
|
(8,552 | ) | — | |||||
|
|
|
|
|||||
Total other comprehensive loss, net of income taxes
|
(8,552 | ) | — | |||||
Comprehensive loss
|
$ | (21,746 | ) | $ | (9,897 | ) | ||
|
|
|
|
Contingently Redeemable
Convertible Preferred Stock
|
Common Stock
|
Additional
Paid-In
Capital
|
Accumulated
Deficit
|
Accumulated
Other Comprehensive Loss |
Total
Stockholders’
Equity
|
|||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020
|
6,766 | $ | 44,476 |
|
98,607 | $ | 1 | $ | 163,967 | $ | (74,744 | ) | $ | — | $ | 89,224 | ||||||||||||||||||||||||
Net loss (restated)
|
— | — |
|
— | — | — | (13,194 | ) | — | (13,194 | ) | |||||||||||||||||||||||||||||
Stock-based compensation
|
— | — |
|
— | — | 31,012 | — | — | 31,012 | |||||||||||||||||||||||||||||||
Accumulated other comprehensive loss (restated)
|
— | — |
|
— | — | — | — | (8,552 | ) | (8,552 | ) | |||||||||||||||||||||||||||||
Issuances of common stock- business combination
|
— | — |
|
72,186 | 1 | 1,189,906 | — | — | 1,189,907 | |||||||||||||||||||||||||||||||
Issuances of common stock warrants and options
|
— | — |
|
25 | — | 496 | — | — | 496 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Balance at September 30, 2021 (restated)
|
6,766 | $ | 44,476 |
|
170,818 | $ | 2 | $ | 1,385,381 | $ | (87,938 | ) | $ | (8,552 | ) | $ | 1,288,893 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Balance at December 31, 2019
|
4,421 | $ | 29,526 |
|
99,141 | $ | 1 | $ | 168,866 | $ | (62,538 | ) | $ | — | $ | 106,329 | ||||||||||||||||||||||||
Net loss
|
— | — |
|
— | — | — | (9,897 | ) | — | (9,897 | ) | |||||||||||||||||||||||||||||
Stock-based compensation
|
— | — |
|
— | — | 2,446 | — | — | 2,446 | |||||||||||||||||||||||||||||||
Exchange of common stock for Series A contingently redeemable convertible preferred stock
|
1,802 | 12,308 |
|
(1,096 | ) | — | (12,308 | ) | — | — | (12,308 | ) | ||||||||||||||||||||||||||||
Issuances of Series A contingently redeemable convertible preferred stock
|
229 | 1,545 |
|
— | — | — | — | — | — | |||||||||||||||||||||||||||||||
Issuances of Series B contingently redeemable convertible preferred stock
|
314 | 1,097 |
|
— | — | — | — | — | — | |||||||||||||||||||||||||||||||
Issuances of common stock- asset acquisition
|
— | — |
|
562 | — | 2,405 | — | — | 2,405 | |||||||||||||||||||||||||||||||
Issuances of common stock warrants and options
|
— | — |
|
— | — | 1,967 | — | — | 1,967 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Balance at September 30, 2020
|
6,766 | $ | 44,476 |
|
98,607 | $ | 1 | $ | 163,376 | $ | (72,435 | ) | $ | — | $ | 90,942 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, |
||||||||
2021
|
2020
|
|||||||
Restated
|
||||||||
Cash flows from Operating Activities:
|
||||||||
Net loss
|
$ | (13,194 | ) | $ | (9,897 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
||||||||
Depreciation and amortization
|
12,886 | 6,613 | ||||||
Stock-based compensation
|
31,012 | 2,446 | ||||||
Digital asset mining income
|
(77,511 | ) | (2,312 | ) | ||||
Deferred income taxes
|
3,604 | — | ||||||
Loss on legal settlements
|
2,603 | — | ||||||
Loss on debt extinguishment
|
8,016 | 1,333 | ||||||
Fair value adjustment on convertible notes
|
15,937 | — | ||||||
Amortization of debt discount and debt issuance costs
|
1,024 | 858 | ||||||
Losses on disposals of property, plant and equipment
|
17 | (92 | ) | |||||
Impairments of digital currency assets
|
12,552 | 5 | ||||||
Provision for doubtful accounts
|
— | (4 | ) | |||||
Changes in working capital components:
|
||||||||
Accounts receivable, net
|
(6,641 | ) | (3,415 | ) | ||||
Accounts receivable from related parties
|
55 | (1,903 | ) | |||||
Digital currency assets
|
27,316 | 2,314 | ||||||
Deposits for equipment
|
(414,771 | ) | (19,846 | ) | ||||
Other current assets
|
970 | (360 | ) | |||||
Accounts payable
|
(35,132 | ) | (790 | ) | ||||
Accrued expenses and other
|
17,945 | 1,330 | ||||||
Deferred revenue
|
254,530 | 5,878 | ||||||
Other noncurrent assets and liabilities, net
|
(7,692 | ) | (620 | ) | ||||
|
|
|
|
|||||
Net cash used in operating activities
|
(166,474 | ) | (18,462 | ) | ||||
|
|
|
|
|||||
Cash flows from Investing Activities:
|
||||||||
Purchases of property, plant and equipment
|
(116,074 | ) | (7,970 | ) | ||||
Cash acquired in business combination
|
704 | — | ||||||
Proceeds from sales of property, plant and equipment
|
— | 92 | ||||||
Other
|
(154 | ) | (1,350 | ) | ||||
|
|
|
|
|||||
Net cash used in investing activities
|
(115,524 | ) | (9,228 | ) | ||||
|
|
|
|
|||||
Cash flows from Financing Activities:
|
||||||||
Proceeds from issuances of common stock options and warrants
|
496 | 2,642 | ||||||
Issuances of debt
|
475,301 | 30,658 | ||||||
Principal payments on debt
|
(42,513 | ) | (5,819 | ) | ||||
|
|
|
|
|||||
Net cash provided by financing activities
|
433,284 | 27,481 | ||||||
|
|
|
|
|||||
Increase (decrease) in cash, cash equivalents, and restricted cash
|
151,286 | (209 | ) | |||||
Cash, cash equivalents and restricted cash—beginning of period
|
8,721 | 6,907 | ||||||
|
|
|
|
|||||
Cash, cash equivalents and restricted cash—end of period
|
$ | 160,007 | $ | 6,698 | ||||
|
|
|
|
1.
|
ORGANIZATION AND DESCRIPTION OF BUSINESS
|
• |
Owning and operating datacenter facilities in the U.S. to provide colocation and hosting services for distributed ledger technology, also commonly known as blockchain;
|
• |
Owning and operating computer equipment used to process transactions conducted on one or more blockchain networks in exchange for transaction processing fees rewarded in digital currency assets, commonly referred to as mining;
|
• |
Developing blockchain-based platforms and applications, including infrastructure management, security technologies, mining optimization, and recordkeeping;
|
2.
|
RESTATEMENT OF PREVIOUSLY-ISSUED FINANCIAL STATEMENTS
|
Consolidated Balance Sheets
|
September 30, 2021
|
|||||||||||
Reported
|
Adjustment
|
Restated
|
||||||||||
Assets:
|
||||||||||||
Digital currency assets
|
$ | 115,856 | $ | 377 | $ | 116,233 | ||||||
Total Current Assets
|
$ | 756,594 | $ | 377 | $ | 756,971 | ||||||
Goodwill
|
$ | 1,106,015 | $ | 953 | $ | 1,106,968 | ||||||
Total Assets
|
$ | 2,105,223 | $ | 1,330 | $ | 2,106,553 | ||||||
Liabilities:
|
||||||||||||
Accounts payable
|
$ | 28,689 | $ | 107 | $ | 28,796 | ||||||
Accrued expenses and other
|
$ | 33,849 | $ | 1,225 | $ | 35,074 | ||||||
Total Current Liabilities
|
$ | 296,404 | $ | 1,332 | $ | 297,736 | ||||||
Notes payable, net of current portion
|
$ | 467,662 | $ | 4,268 | $ | 471,930 | ||||||
Total Liabilities
|
$ | 767,584 | $ | 5,600 | $ | 773,184 | ||||||
Stockholders’ Equity:
|
||||||||||||
Accumulated deficit
|
$ | (92,220 | ) | $ | 4,282 | $ | (87,938 | ) | ||||
Accumulated other comprehensive loss
|
$ | — | $ | (8,552 | ) | $ | (8,552 | ) | ||||
Total Stockholders’ Equity
|
$ | 1,293,163 | $ | (4,270 | ) | $ | 1,288,893 | |||||
Notes payable, net of current portion at fair value
|
$ | 438,566 | $ | 4,268 | $ | 442,834 |
Consolidated Statements of Operations
|
Nine Months Ended September 30, 2021
|
|||||||||||
Reported
|
Adjustment
|
Restated
|
||||||||||
Interest expense, net
|
$ | 26,806 | $ | (256 | ) | $ | 26,550 | |||||
Other non-operating expense,
net
|
$ | 12,945 | $ | (4,284 | ) | $ | 8,661 | |||||
Total non-operating expense,
net
|
$ | 47,767 | $ | (4,540 | ) | $ | 43,227 | |||||
Loss before income taxes
|
$ | (18,431 | ) | $ | 4,540 | $ | (13,891 | ) | ||||
Income tax (benefit)
|
$ | (955 | ) | $ | 258 | $ | (697 | ) | ||||
Net loss
|
$ | (17,476 | ) | $ | 4,282 | $ | (13,194 | ) | ||||
Net loss per share (Note 9):
|
||||||||||||
Basic
|
$ | (0.15 | ) | $ | 0.04 | $ | (0.11 | ) | ||||
Diluted
|
$ | (0.15 | ) | $ | 0.04 | $ | (0.11 | ) |
Consolidated Statements of Other Comprehensive Loss
|
Nine Months Ended September 30, 2021
|
|||||||||||
Reported
|
Adjustment
|
Restated
|
||||||||||
Net loss
|
$ | (17,476 | ) | $ | 4,282 | $ | (13,194 | ) | ||||
Other comprehensive loss, net of income taxes:
|
||||||||||||
Change in fair value attributable to instrument-specific credit risk of convertible notes measured at fair value under the fair value option, net of tax effect of $— and $—
|
— | (8,552 | ) | (8,552 | ) | |||||||
|
|
|
|
|
|
|||||||
Comprehensive loss
|
$ | (17,476 | ) | $ | (4,270 | ) | $ | (21,746 | ) | |||
|
|
|
|
|
|
Consolidated Statements of Cash Flows
|
Nine Months Ended September 30, 2021
|
|||||||||||
Reported
|
Adjustment
|
Restated
|
||||||||||
Cash flows from Operating Activities:
|
||||||||||||
Net loss
|
$ | (17,476 | ) | $ | 4,282 | $ | (13,194 | ) | ||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
||||||||||||
Fair value adjustment on convertible notes
|
$ | 20,221 | $ | (4,284 | ) | $ | 15,937 | |||||
Changes in working capital components:
|
||||||||||||
Accrued expenses and other
|
$ | 17,943 | $ | 2 | $ | 17,945 |
3.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Reported
|
Adjustment
|
Restated
|
Fair value hierarchy
|
||||||||||||||||||||
Principal
|
Level 1
|
Level 2
|
Level 3
|
Fair value
|
||||||||||||||||
Convertible notes:
|
||||||||||||||||||||
April 19, 2021
1
|
$ | 96,068 | $ | — | $ | — | $ | 97,618 | $ | 97,618 | ||||||||||
April 21, 2021
1
|
5,060 | — | — | 5,480 | 5,480 | |||||||||||||||
April 23, 2021
1
|
45,540 | — | — | 49,314 | 49,314 | |||||||||||||||
April 26, 2021
1
|
76,912 | — | — | 83,215 | 83,215 | |||||||||||||||
August 20, 2021 notes
2
|
50,250 | — | — | 49,508 | 49,508 | |||||||||||||||
September 10, 2021
2
|
16,000 | — | — | 15,910 | 15,910 | |||||||||||||||
September 23, 2021
2
|
75,530 | — | 75,530 | — | 75,530 | |||||||||||||||
September 24, 2021
2
|
59,604 | — | 59,604 | — | 59,604 | |||||||||||||||
September 27, 2021
2
|
1,961 | — | 1,961 | — | 1,961 | |||||||||||||||
Accrued PIK interest
1,2,3
|
— | — | 4,694 | — | 4,694 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total convertible notes
|
$ | 420,925 | $ | — | $ | 141,789 | $ | 301,045 | $ | 442,834 | ||||||||||
|
|
|
|
|
|
|
|
|
|
1
|
Secured convertible notes (includes principal balance at issuance and PIK interest) which considers the minimum payoff at maturity of two times the face value of the note plus accrued interest.
|
2
|
Unsecured convertible notes which considers the minimum payoff at maturity of one times the face value of the note plus accrued interest.
|
3
|
Represents PIK interest accrued as of September 30, 2021 which will be recorded as additional principal for each respective convertible note on October 1, 2021.
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Balance at December 31, 2020
|
$ | — | $ | — | $ | — | $ | — | ||||||||
Convertible notes issued (including PIK principal recorded)
|
— | 420,925 | — | 420,925 | ||||||||||||
Transfers to level 3
|
— | (283,830 | ) | 283,830 | — | |||||||||||
Change in fair value from inception
|
— | 4,694 | 17,215 | 21,909 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at September 30, 2021
|
$ | — | $ | 141,789 | $ | 301,045 | $ | 442,834 | ||||||||
|
|
|
|
|
|
|
|
Fair value
|
Unobservable
Input |
Low
|
High
|
Weighted
Average
1
|
||||||||||||||
Convertible notes (Level 3)
|
$ | 301,045 | Probability of financing event | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||
Expected term (years) | 0.25 | 0.75 | 0.28 | |||||||||||||||
Volatility | 39.8 | % | 40.2 | % | 39.8 | % | ||||||||||||
Negotiation discount | 44.6 | % | 54.0 | % | 52.0 | % |
1
|
Weighted average based on the fair value of convertible notes. In addition, expected term and volatility are also weighted based on 95% probability of a SPAC merger occurring and 5% probability of a qualified financing occurring.
|
(in thousands)
|
Financial statement line item
|
Nine months ended
September 30, 2021
|
||||
Cash interest payments
|
Interest expense, net | $ | 4,850 | |||
Payment-in-kind (PIK) interest
|
Interest expense, net | 7,274 | ||||
Instrument specific credit risk
|
Accumulated other comprehensive loss |
8,552 | ||||
Other fair value adjustments
|
Other non-operating expense, net | 8,663 | ||||
|
|
|||||
Total fair value adjustments
|
$ | 29,339 | ||||
Debt issuance costs
|
Interest expense, net | $ | 10,664 |
(in thousands)
|
September 30
2021 |
December 31
2020 |
||||||
Bitcoin (BTC)
|
$ | 109,871 | $ | 51 | ||||
Ethereum (ETH)
|
1,834 | — | ||||||
Siacoin (SC)
|
945 | — | ||||||
Other
|
3,583 | 12 | ||||||
|
|
|
|
|||||
Total digital currencies
|
$ | 116,233 | $ | 63 | ||||
|
|
|
|
4.
|
ACQUISITIONS
|
Consideration
(in thousands)
|
||||
72.2 million common shares valued at $16.18 per share
1,2
|
$ | 1,167,965 | ||
Fair value of replaced Blockcap share-based payments attributable to
pre-combination
service
3
|
21,941 | |||
Settlement of preexisting services contracts
4
|
(60,522 | ) | ||
|
|
|||
Total Consideration:
|
$ | 1,129,384 | ||
Fair value of assets acquired, and liabilities assumed:
|
||||
Cash and cash equivalents
|
$ | 704 | ||
Digital assets-Bitcoin
|
73,304 | |||
Digital assets-Ethereum
|
365 | |||
Digital assets-Bitcoin cash
|
8 | |||
Digital assets-Siacoin
|
554 | |||
Digital assets-Other
|
3,329 | |||
Other current assets
|
633 | |||
Intangible assets, net
|
2,925 | |||
Property, plant and equipment, net
|
27,089 | |||
Other noncurrent assets
|
1,293 | |||
|
|
|||
Total assets acquired
|
|
110,204
|
|
|
Accounts payable
|
492 | |||
Accrued expenses and other
|
22,647 | |||
Other current liabilities
|
6,408 | |||
Deferred tax liability
|
— | |||
|
|
|||
Total liabilities assumed
|
$
|
29,547
|
|
|
Total identifiable net assets
|
$
|
80,657
|
|
|
Goodwill on acquisition
|
$
|
1,048,727
|
|
1 |
72.2 million common shares represent the equivalent Core Scientific common shares issued to Blockcap shareholders as consideration for the purchase.
|
2 |
The price per share of our common shares was estimated to be $16.18. As the Core Scientific common shares were not listed on a public marketplace, the calculation of the fair value of the common shares was subject to a greater degree of estimation. Given the absence of a public market, an estimate of the fair value of the common shares was required at the time of the Blockcap Acquisition. the Company’s and subjective factors were considered in determining the estimated fair value and because there is no active trading of the Core Scientific equity shares on an established securities market, an independent valuation specialist was engaged. The valuation was determined by weighting the outcomes of scenarios estimating share value based on both public company valuations and private company valuations. Both a market approach and common stock equivalency model were used to determine a range of outcomes, which were weighted based on probability to determine the result.
|
3 |
Reflects the estimated fair value of replaced Blockcap share-based payments allocated to purchase price based on the proportion of service related to the
pre-combination
services.
|
4 |
Blockcap had preexisting hosting and equipment contracts with the Company that were effectively settled by the Company’s acquisition of Blockcap. As a result, the consideration transferred to Blockcap has been adjusted by the deferred revenue balances that were settled at the time of acquisition.
|
(in thousands)
|
Goodwill
|
|||
Balance as of December 31, 2020
|
$ | 58,241 | ||
Acquisitions
|
1,048,727 | |||
|
|
|||
Balance as of September 30, 2021
|
$ | 1,106,968 | ||
|
|
Nine Months Ended
September 30, |
||||||||
(in thousands)
|
2021
|
2020
|
||||||
Total revenues
|
$ | 285,196 | $ | 38,645 | ||||
Operating income (loss)
|
$ | 34,951 | $ | (4,024 | ) |
• |
Transaction costs of $1.9 million are assumed to have occurred on the pro forma close date of January 1, 2020, and are recognized as if incurred in the first quarter of 2020;
|
• |
Tangible and intangible assets are assumed to be recorded at their estimated fair values as of January 1, 2020 and are depreciated or amortized over their estimated useful lives; and
|
• |
Accounting policies of Blockcap are conformed to those of Core Scientific including depreciation for mining equipment.
|
• |
Share-based compensation awards of Blockcap for which the performance condition of the award is assumed to be probable of being met as of January 1, 2020 and expensed as they are earned based on the service condition.
|
• |
The elimination of $19,239 of expense recognized by Blockcap in July 2021 for the acceleration of certain equity awards of its CEO and others. Because this acceleration was deemed to be in contemplation of the Merger, Core Scientific has recorded $23,294 of compensation expense for the acceleration in its financial statements for the period ending September 30, 2021, which was determined based on the fair value of the awards at the time of the Merger. This adjustment is necessary to avoid duplication of the expense attributable to the combined company related to the acceleration of the same awards.
|
5.
|
NOTES PAYABLE
|
(in thousands)
|
September 30
2021 |
December 31
2020 |
||||||
Georgia note
|
$ | 430 | $ | 581 | ||||
Kentucky note
|
1,154 | 1,511 | ||||||
PPP loan
|
— | 2,154 | ||||||
Silverpeak loan
|
— | 22,260 | ||||||
Stockholder loan
|
10,000 | — | ||||||
Genesis loan
|
2,015 | 4,648 | ||||||
Celsius loan
|
— | 6,842 | ||||||
NYDIG loan
|
40,510 | 718 | ||||||
Trinity loan
|
1,000 | — | ||||||
Convertible notes
|
420,925 | — | ||||||
Other
|
304 | — | ||||||
|
|
|
|
|||||
Total
|
476,338 | 38,714 | ||||||
Unamortized discount and debt issuance costs
|
(1,115 | ) | (2,834 | ) | ||||
Fair value adjustments to convertible notes
|
21,909 | — | ||||||
|
|
|
|
|||||
Total notes payable, net
|
$ | 497,132 | $ | 35,880 | ||||
|
|
|
|
6.
|
CONTINGENTLY REDEEMABLE CONVERTIBLE PREFERRED STOCK
|
7.
|
COMMITMENTS AND CONTINGENCIES
|
8.
|
INCOME TAXES
|
9.
|
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
Nine Months Ended
September 30, |
||||||||
2021
|
2020
|
|||||||
Net loss
|
$ | (13,194 | ) | $ | (9,897 | ) | ||
Deemed dividend from common to preferred exchange
|
— | (10,478 | ) | |||||
|
|
|
|
|||||
Net loss attributable to common stockholders
|
$ | (13,194 | ) | $ | (20,375 | ) | ||
Weighted average shares outstanding - basic
|
115,482 | 98,453 | ||||||
Add: Dilutive share-based compensation awards
|
— | — | ||||||
|
|
|
|
|||||
Weighted average shares outstanding - diluted
|
115,482 | 98,453 | ||||||
Net income (loss) per share - basic
|
$ | (0.11 | ) | $ | (0.21 | ) | ||
Net income (loss) per share - diluted
|
$ | (0.11 | ) | $ | (0.21 | ) |
Nine Months Ended
September 30, |
||||||||
2021
|
2020
|
|||||||
Stock options
|
7,320 | 7,320 | ||||||
Preferred stock
|
6,766 | 6,766 | ||||||
Warrants
|
4,255 | 4,255 | ||||||
Restricted stock
|
50,901 | 37,512 | ||||||
|
|
|
|
|||||
Total potentially dilutive shares
|
69,242 | 55,853 | ||||||
|
|
|
|
10.
|
SEGMENT REPORTING
|
Nine Months Ended
September 30, |
||||||||
2021
|
2020
|
|||||||
Equipment Sales and Hosting Segment
|
||||||||
Hosting revenue from customers
|
$ | 51,742 | $ | 32,049 | ||||
Equipment sales to customers
|
113,435 | 2,272 | ||||||
|
|
|
|
|||||
Total revenue
|
165,177 | 34,321 | ||||||
Cost of revenue
|
131,284 | 30,308 | ||||||
|
|
|
|
|||||
Gross profit
|
$ | 33,893 | $ | 4,013 | ||||
Mining Segment
|
||||||||
Digital asset mining income
|
$ | 77,511 | $ | 2,312 | ||||
|
|
|
|
|||||
Total revenue
|
77,511 | 2,312 | ||||||
Cost of revenue
|
13,909 | 1,598 | ||||||
|
|
|
|
|||||
Gross profit
|
$ | 63,602 | $ | 714 | ||||
Consolidated total revenue
|
$ | 242,688 | $ | 36,633 | ||||
Consolidated cost of revenue
|
$ | 145,193 | $ | 31,906 | ||||
Consolidated gross profit
|
$ | 97,495 | $ | 4,727 |
Nine Months
Ended September 30, |
||||||||
2021
|
2020
|
|||||||
Customer
|
||||||||
A
|
34 | % | N/A | |||||
B
|
21 | % | N/A | |||||
Blockcap
|
18 | % | N/A | |||||
C
|
N/A | 42 | % | |||||
D
|
N/A | 16 | % |
Nine Months Ended
September 30, |
||||||||
2021
|
2020
|
|||||||
Gross profit
|
97,495 | 4,727 | ||||||
(Loss) gain on legal settlements
|
(2,603 | ) | 5,814 | |||||
Gain from sales of digital currency assets
|
405 | 52 | ||||||
Impairment of digital currency assets
|
(12,552 | ) | (5 | ) | ||||
Operating expenses:
|
||||||||
Research and development
|
4,231 | 4,183 | ||||||
Sales and marketing
|
2,186 | 1,401 | ||||||
General and administrative
|
46,992 | 10,797 | ||||||
|
|
|
|
|||||
Total operating expenses
|
53,409 | 16,381 | ||||||
|
|
|
|
|||||
Operating income (loss)
|
29,336 | (5,793 | ) | |||||
Non-operating expenses,
net:
|
||||||||
Loss on debt from extinguishment
|
8,016 | 1,333 | ||||||
Interest expense, net
|
26,550 | 2,683 | ||||||
Other non-operating (income)
expense, net
|
8,661 | 88 | ||||||
|
|
|
|
|||||
Total non-operating expense,
net
|
43,227 | 4,104 | ||||||
|
|
|
|
|||||
Income (loss) before income taxes
|
$ | (13,891 | ) | (9,897 | ) |
11.
|
RELATED-PARTY TRANSACTIONS
|
12.
|
SUBSEQUENT EVENTS
|
2020
|
2019
|
|||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash
|
$ | 8,756,697 | — | |||||
Digital assets
|
2,404,047 | — | ||||||
Digital assets receivable
|
50,979 | — | ||||||
Prepaid expenses
|
1,664,186 | — | ||||||
|
|
|
|
|||||
Total current assets
|
12,875,909 | — | ||||||
Deposits on mining equipment assets
|
5,087,685 | — | ||||||
Mining equipment assets, net
|
16,715,171 | — | ||||||
Goodwill
|
21,171,370 | — | ||||||
|
|
|
|
|||||
Total assets
|
$ | 55,850,135 | — | |||||
|
|
|
|
|||||
Liabilities and stockholders’ equity
|
||||||||
Current liabilities
|
||||||||
Accounts payable and accrued liabilities
|
$ | 60,556 | $ | 609 | ||||
Loans payable
|
7,992,455 | — | ||||||
Due to related parties
|
41,884 | — | ||||||
Common shares issuable
|
6,204,202 | — | ||||||
Taxes payable
|
115,564 | — | ||||||
|
|
|
|
|||||
Total current liabilities
|
14,414,661 | 609 | ||||||
Long term liabilities
|
||||||||
Deferred tax liability
|
1,125,495 | — | ||||||
|
|
|
|
|||||
Total liabilities
|
15,540,156 | 609 | ||||||
|
|
|
|
|||||
Commitments and contingencies (Note 15) | ||||||||
Stockholders’ equity (deficit)
|
||||||||
Common stock, $0.00001 par value; 400,000,000 shares authorized; 121,909,000 and nil shares issued and outstanding as of December 31, 2020 and 2019, respectively
|
1,219 | — | ||||||
Additional
paid-in
capital
|
50,246,144 | — | ||||||
Accumulated deficit
|
(9,937,384 | ) | (609 | ) | ||||
|
|
|
|
|||||
Total stockholders’ equity (deficit)
|
40,309,979 | (609 | ) | |||||
|
|
|
|
|||||
Total liabilities and stockholders’ equity
|
$ | 55,850,135 | — | |||||
|
|
|
|
2020
|
2019
|
|||||||
Revenue
|
||||||||
Digital assets mined
|
$ | 5,972,142 | — | |||||
Cost of Revenue
|
||||||||
Hosting costs
|
2,128,211 | — | ||||||
Depreciation
|
652,765 | — | ||||||
|
|
|
|
|||||
Total cost of revenue
|
2,780,976 | — | ||||||
Gross profit
|
3,191,166 | — | ||||||
Operating expenses
|
||||||||
Share-based compensation
|
1,992,000 | — | ||||||
Management and professional fees
|
104,162 | — | ||||||
Office and administration
|
125,028 | 609 | ||||||
|
|
|
|
|||||
Total operating expenses
|
2,221,190 | 609 | ||||||
Operating income (loss)
|
969,976 | (609 | ) | |||||
Other expenses
|
||||||||
Share-based merger expense
|
10,002,974 | — | ||||||
Interest expense
|
419,121 | — | ||||||
Gain on sale of digital assets
|
(53,518 | ) | ||||||
|
|
|
|
|||||
Total other expenses, net
|
10,368,577 | — | ||||||
Net loss before tax
|
(9,398,601 | ) | (609 | ) | ||||
Income tax expense
|
$ | 538,174 | — | |||||
|
|
|
|
|||||
Net loss
|
$ | (9,936,775 | ) | $ | (609 | ) | ||
|
|
|
|
|||||
Basic and diluted net loss per share
|
($0.46 | ) | $ | nil | ||||
Weighted average number of shares outstanding:
|
||||||||
Basic and diluted
|
21,587,741 | — |
Number of
shares |
Common
stock |
Additional paid
in capital |
Accumulated
deficit |
Total
|
||||||||||||||||
February 19, 2019
|
— | — | — | — | — | |||||||||||||||
Net loss
|
— | — | — | $ | (609 | ) | $ | (609 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
December 31, 2019
|
— | — | — | $ | (609 | ) | $ | (609 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Common shares issued in connection with reverse merger (note 3)
|
43,688,944 | $ | 437 | $ | 12,718,245 | — | 12,718,682 | |||||||||||||
Common shares issued in connection with Business Combinations (note 4)
|
71,037,695 | 710 | 34,097,596 | — | 34,098,306 | |||||||||||||||
Common shares issued in connection with asset acquisition (note 5)
|
7,182,361 | 72 | 3,430,303 | — | 3,430,375 | |||||||||||||||
Net loss
|
— | — | (9,936,775 | ) | (9,936,775 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
December 31, 2020
|
121,909,000 | $ | 1,219 | $ | 50,246,144 | $ | (9,937,384 | ) | $ | 40,309,979 | ||||||||||
|
|
|
|
|
|
|
|
|
|
2020
|
2019
|
|||||||
Operating activities
|
|
|||||||
Net loss
|
$ | (9,936,775 | ) | $ | (609 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities Digital assets mined
|
(5,972,142 | ) | — | |||||
Gain on sale of digital assets
|
(53,518 | ) | — | |||||
Depreciation
|
652,765 | — | ||||||
Income taxes
|
538,174 | — | ||||||
Share-based compensation
|
1,992,000 | |||||||
Share-based merger expense
|
10,002,974 | — | ||||||
Digital assets receivable
|
(28,579 | ) | — | |||||
Changes in operating assets and liabilities
|
||||||||
Prepaid expenses
|
(246,332 | ) | — | |||||
Accounts payable and accrued liabilities
|
(217,325 | ) | 609 | |||||
|
|
|
|
|||||
Net cash used in operating activities
|
(3,268,758 | ) | — | |||||
Investing activities
|
||||||||
Purchase of mining equipment assets
|
(3,064,216 | ) | — | |||||
Deposits made on mining equipment assets
|
(2,364,135 | ) | ||||||
Sales of digital assets
|
4,615,466 | |||||||
Advances from related parties
|
436,823 | |||||||
Advances to related parties
|
(498,613 | ) | — | |||||
Cash received on acquisition of RME Black 100 (Note 4(a))
|
266,490 | — | ||||||
Cash received on acquisition of RME Black 200 (Note 4(b))
|
152,264 | — | ||||||
Cash received on acquisition of BEP 888 (Note 4(c))
|
794,445 | — | ||||||
Cash received on acquisition of BEP 999 (Note 5)
|
1,150,000 | — | ||||||
Proceeds from BEP 999 subscriptions receivable
|
2,450,000 | — | ||||||
|
|
|
|
|||||
Net cash provided by investing activities
|
3,938,524 | — | ||||||
Financing activities
|
||||||||
Founders’ initial contributions
|
723,921 | — | ||||||
Cash received for common shares issuable
|
6,204,202 | |||||||
Repayments of loan payable
|
(1,338,721 | ) | — | |||||
Proceeds from loan payable
|
2,497,529 | — | ||||||
|
|
|
|
|||||
Net cash provided by financing activities
|
8,086,931 | — | ||||||
|
|
|
|
|||||
Net increase in cash
|
8,756,697 | — | ||||||
Cash, beginning of year
|
— | — | ||||||
|
|
|
|
|||||
Cash, end of year
|
$ | 8,756,697 | $ | — | ||||
|
|
|
|
|||||
Supplemental disclosure of cash flow information
|
||||||||
Cash paid for interest
|
$ | 415,686 | ||||||
|
|
|||||||
Cash paid for taxes
|
$ | — | ||||||
|
|
1.
|
Organization and description of business
|
2.
|
Summary of significant accounting policies
|
a) |
Basis of presentation
|
b) |
COVID-19
|
c) |
Use of estimates
|
d) |
Fair Value Measurements
|
• |
Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets.
|
• |
Level 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
|
• |
Level 3 — Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.
|
e) |
Cash
|
f) |
Digital assets
|
g) |
Digital assets receivable
|
h) |
Mining equipment assets
|
i) |
Business combinations and asset acquisitions
|
j) |
Revenue from contracts with customers
|
• |
Identification of the contract with a customer
|
• |
Identification of the performance obligations in the contract
|
• |
Determination of the transaction price
|
• |
Allocation of the transaction price to the performance obligations in the contract
|
• |
Recognition of revenue when, or as, the performance obligations are satisfied
|
k) |
Cost of Revenue
|
l) |
Depreciation
|
m) |
Deferred taxes
|
n) |
Stock compensation
|
o) |
Income Taxes
|
p) |
Loss per common share
|
q) |
Segment reporting
|
r) |
Recently issued and adopted accounting pronouncements
|
3.
|
Reverse merger
|
4.
|
Business combinations
|
a) |
RME Black 100
|
Consideration:
|
||||
30,708,776 common shares valued at $0.48 per share
|
$ | 14,740,213 | ||
|
|
|||
Fair value of assets acquired and liabilities assumed:
|
||||
Cash
|
$ | 266,490 | ||
Digital assets
|
450,412 | |||
Digital assets receivable
|
10,557 | |||
Prepaid expenses
|
675,323 | |||
Due from related parties
|
26,628 | |||
Mining equipment assets
|
6,852,352 | |||
Accrued liabilities
|
(7,655 | ) | ||
Loan payable
|
(3,292,973 | ) | ||
Deferred tax liability
|
($ | 336,725 | ) | |
|
|
|||
Total identifiable net assets
|
$ | 4,644,409 | ||
|
|
|||
Goodwill on acquisition, not deductible for income tax purposes
|
$ | 10,095,804 | ||
|
|
b) |
RME Black 200
|
Consideration:
|
||||
26,827,730 common shares valued at $0.48 per share
|
$ | 12,877,310 | ||
|
|
|||
Fair value of assets acquired and liabilities assumed:
|
||||
Cash
|
$ | 152,264 | ||
Digital assets
|
461,788 | |||
Digital assets receivable
|
10,789 | |||
Prepaid expenses
|
674,256 | |||
Due from related parties
|
16,958 | |||
Mining equipment assets
|
6,841,524 | |||
Accrued liabilities
|
(5,770 | ) | ||
Investor draws payable
|
(18,519 | ) | ||
Due to related parties
|
(27,626 | ) | ||
Loan payable
|
(3,540,673 | ) | ||
Deferred tax liability
|
($ | 336,193 | ) | |
|
|
|||
Total identifiable net assets
|
$ | 4,228,798 | ||
|
|
|||
Goodwill on acquisition, not deductible for income tax purposes
|
$ | 8,648,512 | ||
|
|
c) |
BEP 888
|
Consideration:
|
||||
13,501,189 common shares valued at $0.48 per share
|
$ | 6,480,571 | ||
|
|
|||
Fair value of assets acquired and liabilities assumed:
|
||||
Cash
|
$ | 794,445 | ||
Digital assets
|
81,653 | |||
Digital assets receivable
|
1,052 | |||
Prepaid expenses
|
68,277 | |||
Deposits on mining equipment assets
|
2,723,550 | |||
Mining equipment assets
|
609,842 | |||
Due to related parties
|
(195,336 | ) | ||
Deferred tax liability
|
($ | 29,967 | ) | |
|
|
|||
Total identifiable net assets
|
$ | 4,053,516 | ||
|
|
|||
Goodwill on acquisition, not deductible for income tax purposes
|
$ | 2,427,055 | ||
|
|
5.
|
Asset acquisition
|
Purchase price:
|
||||
7,182,361 common shares
|
$ | 3,430,375 | ||
|
|
|||
Fair value of assets acquired and liabilities assumed:
|
||||
Cash
|
$ | 1,150,000 | ||
Subscription receivable from shareholders
|
2,450,000 | |||
Due to related parties
|
(169,625 | ) | ||
|
|
|||
Total identifiable net assets
|
$ | 3,430,375 | ||
|
|
6.
|
Digital assets
|
Bitcoin
|
||||
Opening balance as of January 1, 2020
|
— | |||
Revenue from Bitcoin mined
|
$ | 5,972,142 | ||
Bitcoin acquired through the business combinations
|
993,853 | |||
Bitcoin sold
|
(4,561,948 | ) | ||
|
|
|||
End balance as of December 31, 2020
|
$ | 2,404,047 | ||
|
|
7.
|
Digital assets receivable
|
8.
|
Prepaid expenses
|
December 31,
2020 |
December 31,
2019 |
|||||||
Prepaid hosting fees (see note 13)
|
$ | 1,622,349 | — | |||||
Other prepaid expenses
|
41,837 | — | ||||||
|
|
|
|
|||||
Total
|
$ | 1,664,186 | — | |||||
|
|
|
|
9.
|
Mining equipment assets
|
Cost
|
||||
Balance, January 1, 2019
|
|
—
|
|
|
Additions
|
|
—
|
|
|
|
|
|||
Balance December 1, 2019
|
|
—
|
|
|
|
|
|||
Additions
|
$ | 3,064,216 | ||
Mining equipment assets acquired through the business combinations
|
14,303,720 | |||
|
|
|||
Balance December 31, 2020
|
$
|
17,367,936
|
|
|
|
|
|||
Accumulated depreciation
|
||||
Balance, January 1, 2019
|
|
—
|
|
|
Additions
|
|
—
|
|
|
|
|
|||
Balance December 31, 2019
|
|
—
|
|
|
|
|
|||
Additions
|
$ | 652,765 | ||
Balance December 31, 2020
|
$
|
652,765
|
|
|
|
|
|||
Net Book value
|
||||
Cost
|
$ | 17,367,936 | ||
Accumulated depreciation
|
(652,765 | ) | ||
|
|
|||
Mining equipment assets, net December 31, 2020
|
$ | 16,715,171 | ||
|
|
10.
|
Accounts payable and accrued liabilities
|
December 31, 2020
|
||||
Accounts payable
|
$ | 10,167 | ||
Accrued liabilities
|
50,389 | |||
|
|
|||
Total
|
$ | 60,556 | ||
|
|
11.
|
Loans payable
|
12.
|
Stockholders’ equity
|
a) |
Authorized
|
b) |
Issued and outstanding
|
i. |
The Company received $723,458 in connection with its initial formation. As a result of the Transaction, the issuance of the 43,688,944 shares of common stock has been presented on the statement of stockholders’ equity to show the retroactive effect of that issuance. The Company also incurred charges of $11,995,224 in connection with a portion of the share issuance being made to individuals with no prior ownership in the entities. (see note 3)
|
ii. |
The Company issued 71,037,695 shares through the business combinations (see note 4).
|
iii. |
The Company entered into subscription agreements for the issuance of 7,182,361 shares through the asset acquisition (see note 5).
|
13.
|
Related party transactions
|
14.
|
Income taxes
|
Current
|
2020
|
2019
|
||||||
Federal
|
$ | 98,626 | — | |||||
State
|
16,938 | — | ||||||
|
|
|
|
|||||
Total current
|
$ | 115,564 | — | |||||
|
|
|
|
Deferred
|
2020
|
2019
|
||||||
Federal
|
$ | 360,668 | — | |||||
State
|
61,942 | — | ||||||
|
|
|
|
|||||
Total deferred
|
422,610 | — | ||||||
|
|
|
|
|||||
Total income tax expense from continuing operations
|
$ | 538,174 | — | |||||
|
|
|
|
2020
|
2019
|
|||||||
(609 | ||||||||
|
|
|||||||
US federal statutory income tax benefit applied to loss before income taxes
|
$ | (1,973,706 | ) | — | ||||
State income taxes, net of federal benefit
|
(338,552 | ) | — | |||||
RME 88
pre-merger
income
|
(100,793 | ) | — | |||||
Transaction expense
|
2,951,225 | — | ||||||
|
|
|
|
|||||
Income tax provision
|
$ | 538,174 | — | |||||
|
|
|
|
2020
|
2019
|
|||||||
Computer servers
|
($ | 742,391 | ) | — | ||||
Prepaid expenses
|
(383,104 | ) | — | |||||
|
|
|
|
|||||
Total deferred tax liabilities
|
($ | 1,125,495 | ) | — | ||||
|
|
|
|
15.
|
Commitments
|
Year ended
|
Year ended
|
|||||||
December 31, 2020
|
December 31, 2019
|
|||||||
Within one year
|
$ | 20,251,566 | — | |||||
Later than one year but not later than five years
|
$ | 66,727,201 | — | |||||
|
|
|
|
|||||
Total
|
$ | 86,978,767 | — | |||||
|
|
|
|
16.
|
Subsequent events
|
Options granted
|
Exercise Price
|
Vesting period
|
Expiration Date
|
Quantity
|
||||||||||||
January 2021
|
$ | 2.25 | Immediate |
Jan-28
|
15,000 | |||||||||||
January 2021
|
$ | 2.25 | 4 years |
Jan-28
|
4,295,000 | |||||||||||
February 2021
|
$ | 2.25 | Immediate |
Feb-28
|
20,000 | |||||||||||
January 2021
|
$ | 3.15 | 4 years |
Jan-28
|
1,360,000 | |||||||||||
March 2021
|
$ | 6.00 | 4 years |
Mar-28
|
565,000 | |||||||||||
March 2021
|
$ | 10.95 | 4 years |
Mar-28
|
1,940,000 | |||||||||||
April 2021
|
$ | 10.95 | 4 years |
Apr-28
|
250,000 | |||||||||||
May 2021
|
$ | 10.95 | 4 years |
May-28
|
170,000 | |||||||||||
June 2021
|
$ | 10.95 | 4 years |
Jun-28
|
250,000 | |||||||||||
July 2021
|
$ | 10.95 | Immediate |
Jul-28
|
196,466 | |||||||||||
|
|
|||||||||||||||
9,061,466 | ||||||||||||||||
|
|
|||||||||||||||
Forfeited | (650,000 | ) | ||||||||||||||
|
|
|||||||||||||||
Total | 8,411,466 | |||||||||||||||
|
|
Shares granted
|
Vesting period
|
Quantity
|
||||||
May 2021
|
4 years | 100,000 | ||||||
June 2021
|
4 years | 1,200,000 | ||||||
June 2021
|
4 years | 1,775,000 | ||||||
June 2021
|
4 years | 25,000 | ||||||
June 2021
|
4 years | 20,000 | ||||||
July 2021
|
4 years | 4,985,000 | ||||||
July 2021
|
Immediate | 30,000 | ||||||
July 2021
|
Immediate | 253,534 | ||||||
|
|
|||||||
8,388,534 | ||||||||
|
|
a) |
On February 11, 2021, the Company entered into an office lease in Dallas, TX effective as of April 1, 2021 for a term of 37 months. Expected rent and operating costs were expected to be approximately $268,000 per year.
|
b) |
On March 16, 2021, the Company entered into an office lease in Austin, TX effective as of May 1, 2021 for a term of 6 months at a cost of $38,000 per month.
|
As of
|
||||||||
June 30,
2021
|
December 31,
2020
|
|||||||
(Unaudited)
|
||||||||
Assets
|
||||||||
Current Assets:
|
||||||||
Cash
|
$ | 552 | $ | 8,757 | ||||
Digital assets
|
43,884 | 2,404 | ||||||
Digital assets receivable
|
74 | 51 | ||||||
Taxes receivable
|
115 | — | ||||||
Prepaid expenses
|
4,039 | 1,664 | ||||||
|
|
|
|
|||||
Total Current Assets
|
48,664 | 12,876 | ||||||
|
|
|
|
|||||
Deposits on mining equipment assets
|
78,071 | 5,087 | ||||||
Property, plant, and equipment, net
|
55,318 | 16,715 | ||||||
Goodwill
|
21,172 | 21,172 | ||||||
|
|
|
|
|||||
Total Assets
|
$ | 203,225 | $ | 55,850 | ||||
|
|
|
|
|||||
Liabilities and Stockholders’ Equity
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$ | 220 | $ | 61 | ||||
Equipment purchase payable
|
21,313 | — | ||||||
Lease termination payable
|
102 | — | ||||||
Accrued interest
|
190 | — | ||||||
Accrued interest, related party
|
83 | — | ||||||
Notes payable
|
24,455 | — | ||||||
Notes payable, related party
|
16,146 | 7,992 | ||||||
Due to related parties
|
97 | 42 | ||||||
Common shares issuable
|
— | 6,204 | ||||||
Taxes payable
|
— | 116 | ||||||
|
|
|
|
|||||
Total Current Liabilities
|
62,606 | 14,415 | ||||||
|
|
|
|
|||||
Deferred tax liability
|
9,903 | 1,125 | ||||||
|
|
|
|
|||||
Total Liabilities
|
72,509 | 15,540 | ||||||
|
|
|
|
|||||
Commitments and contingencies (Note 6)
|
||||||||
Stockholders’ Equity:
|
||||||||
Common stock; $0.00001 par value; 400,000 shares authorized; 138,078 and 121,909 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively
|
1 | 1 | ||||||
Additional paid-in capital
|
131,681 | 50,246 | ||||||
Accumulated deficit
|
(966 | ) | (9,937 | ) | ||||
|
|
|
|
|||||
Total Stockholders’ Equity
|
130,716 | 40,310 | ||||||
|
|
|
|
|||||
Total Liabilities and Stockholders’ Equity
|
$ | 203,225 | $ | 55,850 | ||||
|
|
|
|
For the Six Months Ended
June 30,
|
||||||||
2021
|
2020
|
|||||||
Digital asset mining
|
$
|
59,390
|
|
|
208
|
|
||
|
|
|
|
|||||
Total revenue
|
|
59,390
|
|
|
208
|
|
||
Costs of revenue
|
||||||||
Hosting costs
|
|
9,468
|
|
|
117
|
|
||
Depreciation
|
|
4,340
|
|
|
22
|
|
||
|
|
|
|
|||||
Total costs of revenue
|
|
13,808
|
|
|
139
|
|
||
|
|
|
|
|||||
Gross profit
|
|
45,582
|
|
|
69
|
|
||
Operating expenses:
|
||||||||
Wage, benefits, and contractor costs
|
|
7,218
|
|
|
2
|
|
||
Amortization
|
|
60
|
|
|
—
|
|
||
General and administrative
|
|
1,006
|
|
|
—
|
|
||
Loss on impairment of assets
|
|
17,607
|
|
|
—
|
|
||
|
|
|
|
|||||
Total operating expenses
|
|
25,891
|
|
|
2
|
|
||
|
|
|
|
|||||
Operating profit
|
|
19,691
|
|
|
67
|
|
||
|
|
|
|
|||||
Non-operating income (expense), net:
|
||||||||
Gain on sale of digital assets
|
|
145
|
|
|
10
|
|
||
Interest expense
|
|
(2,204
|
)
|
|
—
|
|
||
Loss on termination of lease
|
|
(81
|
)
|
|
—
|
|
||
Miscellaneous income
|
|
135
|
|
|
—
|
|
||
|
|
|
|
|||||
Total non-operating income (expense), net
|
|
(2,005
|
)
|
|
10
|
|
||
|
|
|
|
|||||
Income before income taxes
|
|
17,686
|
|
|
77
|
|
||
Income tax expense
|
|
8,715
|
|
|
-
|
|
||
|
|
|
|
|||||
Net income
|
|
8,971
|
|
|
77
|
|
||
|
|
|
|
|||||
Net income per share:
|
||||||||
Basic
|
$
|
0.07
|
|
$
|
—
|
|
||
|
|
|
|
|||||
Diluted
|
$
|
0.07
|
|
$
|
—
|
|
||
|
|
|
|
|||||
Weighted average shares outstanding:
|
||||||||
Basic
|
|
133,826
|
|
|
—
|
|
||
|
|
|
|
|||||
Diluted
|
|
133,855
|
|
|
—
|
|
||
|
|
|
|
Common Stock
|
Additional Paid-In
Capital |
Accumulated
Deficit |
Total
Stockholders’ Equity |
|||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||
Balance at January 1, 2021
|
121,909 | $ | 1 | $ | 50,246 | $ | (9,937 | ) | $ | 40,310 | ||||||||||
Net income
|
— | — | — | 8,971 | 8,971 | |||||||||||||||
Issuance of common stock for cash and digital assets
|
15,840 | — | 73,719 | — | 73,719 | |||||||||||||||
Repurchase of shares
|
(3,426 | ) | — | — | — | — | ||||||||||||||
Conversion of note payable into common shares
|
635 | — | 2,000 | — | 2,000 | |||||||||||||||
Stock-based compensation from issuance of restricted shares
|
3,120 | — | 1,153 | 1,153 | ||||||||||||||||
Stock-based compensation from issuance of stock options
|
— | — | 4,563 | — | 4,563 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at June 30, 2021
|
138,078 | $ | 1 | $ | 131,681 | ($ | 966 | ) | $ | 130,716 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Common Stock
|
Additional
Paid-In Capital
|
Retained
Earnings (Accumulated Deficit) |
Total
Stockholders’ Equity |
|||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||
Balance at January 1, 2020
|
— | — | $ | — | $ | (1 | ) | $ | (1 | ) | ||||||||||
Net income
|
— | — | — | 77 | 77 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at June 30, 2020
|
— | — | — | 76 | $ | 76 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30,
|
||||||||
2021
|
2020
|
|||||||
Cash flows from Operating Activities:
|
||||||||
Net income
|
$ | 8,971 | 77 | |||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
||||||||
Depreciation and amortization
|
4,400 | 22 | ||||||
Stock-based compensation
|
5,716 | — | ||||||
Digital asset mining
|
(59,390 | ) | (208 | ) | ||||
Deferred income taxes
|
8,778 | — | ||||||
Gain on sale of digital assets
|
(145 | ) | (10 | ) | ||||
Loss on impairment of digital assets
|
17,607 | — | ||||||
Loss on termination of lease
|
81 | — | ||||||
Changes in working capital components:
|
||||||||
Prepaid expenses
|
(2,398 | ) | — | |||||
Lease liability
|
9 | — | ||||||
Income taxes payable
|
(231 | ) | — | |||||
Net charges paid through related parties
|
55 | 2 | ||||||
Accrued interest
|
190 | — | ||||||
Accrued interest, related party
|
83 | — | ||||||
Accounts payable and accrued expenses
|
159 | 19 | ||||||
|
|
|
|
|||||
Net cash used in operating activities
|
(16,115 | ) | (98 | ) | ||||
|
|
|
|
|||||
Cash flows from Investing Activities:
|
||||||||
Deposits on mining equipment assets
|
(88,303 | ) | — | |||||
Purchase of property, plant, and equipment
|
(6,335 | ) | (3,064 | ) | ||||
Proceeds from sale of digital assets
|
871 | 213 | ||||||
|
|
|
|
|||||
Net cash used in investing activities
|
(93,767 | ) | (2,851 | ) | ||||
|
|
|
|
|||||
Cash flows from Financing Activities:
|
||||||||
Proceeds from issuances of common stock, net
|
67,068 | — | ||||||
Advances from related parties
|
— | 723 | ||||||
Proceeds from notes payable
|
24,455 | 2,498 | ||||||
Proceeds from notes payable, related party
|
16,146 | — | ||||||
Amounts due from related parties
|
— | (63 | ) | |||||
Repayment of notes payable
|
(5,992 | ) | — | |||||
|
|
|
|
|||||
Net cash provided by financing activities
|
101,677 | 3,158 | ||||||
|
|
|
|
|||||
(Decrease) increase in cash
|
(8,205 | ) | 209 | |||||
Cash - beginning of period
|
8,757 | — | ||||||
|
|
|
|
|||||
Cash - end of period
|
$ | 552 | 209 | |||||
|
|
|
|
|||||
Cash paid for interest
|
$ | 1,931 | — | |||||
Cash paid for taxes
|
$ | 168 | — | |||||
Supplemental disclosure of noncash investing and financing activities:
|
||||||||
Digital assets received for common shares issued
|
$ | 445 | — | |||||
Conversion of notes payable to common shares
|
$ | 2,000 | — | |||||
Issuance of common shares to settle shares issuable
|
$ | 6,204 | — | |||||
Reclassification of miner deposits to fixed assets
|
$ | 15,319 | — | |||||
Equipment purchase payable
|
$ | 21,313 | — | |||||
Recognition of right of use asset and liability
|
$ | 439 | — |
1.
|
ORGANIZATION AND DESCRIPTION OF BUSINESS
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
• |
Identification of the contract with a customer
|
• |
Identification of the performance obligations in the contract
|
• |
Determination of the transaction price
|
• |
Allocation of the transaction price to the performance obligations in the contract
|
• |
Recognition of revenue when, or as, the performance obligations are satisfied
|
3.
|
DIGITAL ASSETS
|
As of
|
||||||||
June 30
|
December 31
|
|||||||
2021
|
2020
|
|||||||
Opening balance
|
$ | 2,404 | $ | — | ||||
Revenue from digital asset mining
|
59,390 | 5,972 | ||||||
Digital assets acquired through business combinations
|
— | 994 | ||||||
Digital assets acquired through issuance of shares
|
445 | — | ||||||
Net digital asset receivable change in revenue
|
(23 | ) | — | |||||
Digital assets sold
|
(726 | ) | (4,562 | ) | ||||
Impairment of digital assets
|
(17,606 | ) | — | |||||
|
|
|
|
|||||
Ending balance
|
$ | 43,884 | $ | 2,404 | ||||
|
|
|
|
4.
|
PROPERTY, PLANT AND EQUIPMENT
|
Cost
|
||||
Balance January 1, 2021
|
$ | 17,368 | ||
Additions: mining equipment assets
|
42,889 | |||
Additions: Office equipment
|
79 | |||
Disposal of furniture
|
(25 | ) | ||
|
|
|||
Balance June 30, 2021
|
$ | 60,311 | ||
|
|
|||
Accumulated depreciation
|
||||
Balance January 1, 2021
|
$ | 653 | ||
Additions: mining equipment assets
|
4,340 | |||
|
|
|||
Balance June 30, 2021
|
$ | 4,993 | ||
|
|
|||
Net Book Value
|
||||
Cost
|
$ | 60,311 | ||
Accumulated depreciation
|
(4,993 | ) | ||
|
|
|||
Balance June 30, 2021
|
$ | 55,318 | ||
|
|
5.
|
NOTES PAYABLE
|
As of
|
||||||||
June 30
|
December 31
|
|||||||
2021
|
2020
|
|||||||
Foundry
|
$ | — | $ | 7,992 | ||||
|
|
|
|
|||||
NYDIG repurchase agreement
|
24,455 | — | ||||||
|
|
|
|
|||||
Core Scientific promissory note
|
16,146 | — | ||||||
|
|
|
|
|||||
Total notes payable, net
|
$ | 40,601 | $ | 7,992 | ||||
|
|
|
|
6.
|
COMMITMENTS AND CONTINGENCIES
|
As of,
|
||||||||
June 30
|
June 30
|
|||||||
2021
|
2020
|
|||||||
Within one year
|
$ | 39,377 | $ | 2,646 | ||||
|
|
|
|
|||||
Later than one year but not later than five years
|
163,076 | 7,095 | ||||||
|
|
|
|
|||||
Total
|
$ | 202,453 | $ | 9,741 | ||||
|
|
|
|
7.
|
STOCKHOLDERS’ EQUITY
|
Number of options
|
Weighted average
exercise price
|
|||||||
Unvested at January 1, 2021
|
— | — | ||||||
Granted
|
10,615,000 | 4.73 | ||||||
Vested
|
(35,000 | ) | 2.25 | |||||
Forfeited
|
(1,900,000 | ) | 2.25 | |||||
Cancelled
|
(250,000 | ) | 3.15 | |||||
|
|
|
|
|||||
Unvested at June 30, 2021
|
8,430,000 | 5.33 | ||||||
|
|
|
|
For the six months
ended June 30, |
||||||||
2021
|
2020
|
|||||||
Net income attributable to common stockholders
|
$ | 8,971 | $ | 77 | ||||
Weighted average common shares outstanding - basic
|
133,826 | — | ||||||
Net income per share – basic
|
$ | 0.07 | $ | — | ||||
Weighted average common shares outstanding – diluted
|
133,855 | — | ||||||
Net income per share – diluted
|
$ | 0.07 | $ | — |
8.
|
INCOME TAXES
|
9.
|
RELATED-PARTY TRANSACTIONS
|
10.
|
SUBSEQUENT EVENTS
|
Options Granted
|
Exercise Price
|
Vesting Period
|
Expiration Date
|
Quantity
|
||||||||||||
July 2021
|
$0.74 | Immediate |
|
December
2028 |
|
287,637 | ||||||||||
July 2021
|
$0.74 | Immediate |
|
September
2029 |
|
6,403 | ||||||||||
July 2021
|
$1.16 | Immediate | July 2030 | 341,111 | ||||||||||||
|
|
|||||||||||||||
Total
|
|
635,151
|
|
|||||||||||||
|
|
Restricted Stock
Units Granted
|
Vesting Period
|
Vesting Notes
|
Expiration Date
|
Quantity
|
||||||||||||
July 2021
|
4 | N/A | 4,985,000 | |||||||||||||
July 2021
|
Immediate | N/A | 283,534 | |||||||||||||
|
|
|||||||||||||||
Total
|
|
5,268,534
|
|
|||||||||||||
|
|
Options Granted
|
Exercise Price
|
Vesting Period
|
Expiration Date
|
Quantity
|
||||||||||||
July 2021
|
$10.95 | Immediate |
|
July
2028 |
|
196,466 | ||||||||||
|
|
|||||||||||||||
Total
|
|
196,466
|
|
|||||||||||||
|
|
Options Granted
|
Exercise Price
|
Vesting Period
|
Forfeiture Date
|
Quantity
|
||||||||||||
April 2021
|
$10.95 | 4 | July 2021 | 250,000 | ||||||||||||
Total
|
|
250,000
|
|
|||||||||||||
|
|
2020
|
||||
Assets
|
||||
Current assets
|
||||
Cash
|
$ | 794,445 | ||
Digital assets
|
74,790 | |||
Digital assets receivable
|
1,052 | |||
Prepaid expenses
|
68,277 | |||
|
|
|||
Total current assets
|
938,564 | |||
Deposits on mining equipment assets
|
2,723,550 | |||
Mining equipment assets
|
538,701 | |||
|
|
|||
Total assets
|
$ | 4,200,815 | ||
|
|
|||
Liabilities and members’ equity
|
||||
Current liabilities
|
||||
Due to related parties
|
$ | 195,336 | ||
|
|
|||
Total liabilities
|
195,336 | |||
Commitments and Contingencies (Note 9)
|
||||
Members’ equity
|
||||
Ownership interests
|
5,847,143 | |||
Accumulated deficit
|
(1,841,664 | ) | ||
|
|
|||
Total members’ equity
|
4,005,479 | |||
|
|
|||
Total liabilities and members’ equity
|
$ | 4,200,815 | ||
|
|
Revenue
|
||||
Digital assets mined
|
$ | 152,672 | ||
Cost of revenue
|
||||
Hosting costs
|
40,023 | |||
Depreciation
|
7,653 | |||
|
|
|||
Total cost of revenue
|
47,676 | |||
Gross profit
|
104,996 | |||
Operating expenses
|
||||
Management and
start-up
fees
|
193,960 | |||
Compensation expense from ownership interests
|
1,754,143 | |||
Administrative expenses
|
1,630 | |||
|
|
|||
Total operating expenses
|
1,949,733 | |||
Operating loss
|
$ | (1,844,737 | ) | |
Other income
|
||||
Gain on sale of digital assets
|
3,073 | |||
|
|
|||
Net loss
|
$ | (1,841,664 | ) | |
|
|
Ownership
units
|
Ownership
interests
|
Accumulated
deficit
|
Total
|
|||||||||||||
June 1, 2020
|
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
||||
Issuance of ownership units to managing member
|
30 | 1,754,143 | — | 1,754,143 | ||||||||||||
Issuance of ownership units for cash
|
70 | 4,093,000 | — | 4,093,000 | ||||||||||||
Net loss
|
— | — | (1,841,664 | ) | (1,841,664 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
November 30, 2020
|
100 | $ | 5,847,143 | $ | (1,841,664 | ) | $ | 4,005,479 | ||||||||
|
|
|
|
|
|
|
|
2020
|
||||
Operating activities
|
||||
Net loss
|
$ | (1,841,664 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities
|
||||
Digital assets mined
|
(152,672 | ) | ||
Compensation expense from ownership interests
|
1,754,143 | |||
Gain on sale of digital assets
|
(3,073 | ) | ||
Digital assets receivable
|
(1,052 | ) | ||
Depreciation
|
7,653 | |||
Net changes in working capital
|
||||
Prepaid expenses
|
(68,276 | ) | ||
Due to related parties
|
193,960 | |||
|
|
|||
Net cash used in operating activities
|
(110,981 | ) | ||
Investing activities
|
||||
Sales of digital assets
|
80,955 | |||
Deposits on mining equipment assets
|
(2,723,550 | ) | ||
Purchase of mining equipment assets
|
(546,354 | ) | ||
|
|
|||
Net cash used in investing activities
|
(3,188,949 | ) | ||
Financing activities
|
||||
Proceeds from private placements
|
4,093,000 | |||
Advances from related parties
|
1,375 | |||
|
|
|||
Net cash provided by financing activities
|
4,094,375 | |||
|
|
|||
Net increase in cash
|
794,445 | |||
Cash, beginning of period
|
— | |||
|
|
|||
Cash, end of period
|
$ | 794,445 | ||
|
|
Supplemental disclosure of cash flow information | ||||
Cash paid for interest
|
$ | — | ||
|
|
|||
Cash paid for taxes
|
$ | — | ||
|
|
1.
|
Nature of operations
|
2.
|
Summary of significant accounting policies
|
a) |
Basis of presentation
|
b) |
COVID-19
|
c) |
Recently issued and adopted accounting pronouncements
|
d) |
Use of estimates
|
e) |
Fair value measurements
|
• |
Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets.
|
• |
Level 2 — Valuations based on observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
|
• |
Level 3 — Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.
|
f) |
Cash
|
g) |
Digital assets
|
h) |
Digital assets receivable
|
i) |
Mining equipment assets
|
j) |
Revenue from contracts with customers
|
• |
Identification of the contract with a customer
|
• |
Identification of the performance obligations in the contract
|
• |
Determination of the transaction price
|
• |
Allocation of the transaction price to the performance obligations in the contract
|
• |
Recognition of revenue when, or as, the performance obligations are satisfied
|
k) |
Cost of Revenue
|
l) |
Depreciation
|
m) |
Segment reporting
|
n) |
Stock Compensation
|
o) |
Income Taxes
|
3.
|
Digital assets
|
Bitcoin
|
2020
|
|||
Opening balance at June 1, 2020
|
$ | — | ||
Revenue from Bitcoin mined
|
152,672 | |||
Bitcoin sold
|
(77,882 | ) | ||
|
|
|||
Ending balance as of November 30, 2020
|
$ | 74,790 | ||
|
|
4.
|
Digital assets receivable
|
5.
|
Prepaid expenses
|
November 30,
2020 |
||||
Prepaid hosting fees (see note 7)
|
$ | 68,277 | ||
|
|
|||
Total
|
$ | 68,277 | ||
|
|
6.
|
Mining equipment assets
|
Cost
|
||||
Additions
|
$ | 546,354 | ||
|
|
|||
Balance November 30, 2020
|
$ | 546,354 | ||
|
|
|||
Accumulated depreciation
|
||||
Additions
|
$ | 7,653 | ||
|
|
|||
Balance November 30, 2020
|
$ | 7,653 | ||
|
|
|||
Net Book value
|
||||
Cost
|
$ | 546,354 | ||
Accumulated depreciation
|
($ | 7,653 | ) | |
|
|
|||
Mining equipment assets, net November 30, 2020
|
$ | 538,701 | ||
|
|
7.
|
Due to related parties
|
8.
|
Members’ equity
|
i. |
On June 1, 2020, the Company issued 30 membership units to the managing member to which a charge of $1,754,143 was recorded against compensation expense.
|
ii. |
Between August 26, 2020 and November 9, 2020, the Company raised a total of $4,093,000 in exchange for a total of 70 ownership units.
|
9.
|
Commitments
|
As of
November 30, 2020 |
||||
Within one year
|
$ | 3,233,516 | ||
Later than one year but not later than five years
|
$ | 9,548,122 | ||
|
|
|||
Total
|
$ | 12,781,638 | ||
|
|
10.
|
Subsequent events
|
Opinion
|
on the Financial Statements
|
Basis
|
for Opinion
|
2020
|
||||
Assets
|
||||
Current assets
|
||||
Cash
|
$ | 1,150,000 | ||
|
|
|||
Total assets
|
$ | 1,150,000 | ||
|
|
|||
Liabilities and members’ equity
|
||||
Current liabilities
|
||||
Due to related parties
|
$ | 169,625 | ||
|
|
|||
Total liabilities
|
169,625 | |||
Members’ equity
|
||||
Ownership interests
|
3,600,000 | |||
Investors’ equity receivable
|
(2,450,000 | ) | ||
Accumulated deficit
|
(169,625 | ) | ||
|
|
|||
Total members’ equity
|
980,375 | |||
|
|
|||
Total liabilities and members’ equity
|
$ | 1,150,000 | ||
|
|
Ownership
units
|
Ownership
interests
|
Accumulated
deficit
|
Total
|
|||||||||||||
November 5, 2020
|
|
—
|
|
$ | — | $ | — | $ | — | |||||||
Issuance of ownership units to managing member
|
30 | — | — | — | ||||||||||||
Issuance of ownership units for cash
|
70 | 3,600,000 | — | 3,600,000 | ||||||||||||
Investors equity receivable
|
— | (2,450,000 | ) | — | (2,450,000 | ) | ||||||||||
Net loss
|
— | — | (169,625 | ) | (169,625 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
November 30, 2020
|
100 | $ | 2,692,857 | $ | (169,625 | ) | $ | 980,375 | ||||||||
|
|
|
|
|
|
|
|
2020
|
||||
Operating activities
|
||||
Net loss
|
$ | (169,625 | ) | |
Due to related parties
|
169,200 | |||
|
|
|||
Net cash used in operating activities
|
(425 | ) | ||
Financing activities
|
||||
Proceeds from private placements
|
1,150,000 | |||
Advances from related parties
|
425 | |||
|
|
|||
Net cash provided by financing activities
|
1,150,425 | |||
Net increase in cash
|
1,150,000 | |||
Cash, beginning of period
|
— | |||
|
|
|||
Cash, end of period
|
$ | 1,150,000 | ||
|
|
|||
Supplemental disclosure of cash flow information | ||||
Cash paid for interest
|
$ | — | ||
|
|
|||
Cash paid for taxes
|
$ | — | ||
|
|
1.
|
Nature of operations
|
2.
|
Summary of significant accounting policies
|
a) |
Basis of presentation
|
b) |
COVID-19
|
c) |
Recently issued and adopted accounting pronouncements
|
d) |
Use of estimates
|
e) |
Cash
|
f) |
Income Tax
|
3.
|
Due to related parties
|
4.
|
Members’ equity
|
i. |
In connection with the initial formation and capital raising efforts, the Company issued 30 ownership units to the managing member for no consideration. On December 1, 2020, in connection with the amendment and exchange agreement with Blockcap, Inc., the managing member forfeited these units.
|
ii. |
Between November 22, 2020 and November 30, 2020, the Company issued 70 ownership units for $3,600,000 of which $2,450,000 was outstanding as of November 30, 2020. The outstanding amount was assigned to, and collected by, Blockcap, Inc. in December 2020 (note 5).
|
5.
|
Subsequent events
|
2020
|
||||
Assets
|
||||
Current assets
|
||||
Cash
|
$ | 266,490 | ||
Digital assets
|
436,370 | |||
Digital assets receivable
|
10,557 | |||
Due from related parties
|
26,628 | |||
Prepaid expenses
|
675,323 | |||
|
|
|||
Total current assets
|
1,415,368 | |||
Mining equipment assets
|
5,708,446 | |||
|
|
|||
Total assets
|
$ | 7,123,814 | ||
|
|
|||
Liabilities and members’ equity
|
||||
Current liabilities
|
||||
Accrued interest
|
$ | 7,655 | ||
Loan payable
|
3,292,973 | |||
|
|
|||
Total liabilities
|
3,300,628 | |||
Commitments and contingencies (Note 10)
|
||||
Members’ equity
|
||||
Ownership interests
|
4,257,140 | |||
Accumulated deficit
|
(433,954 | ) | ||
|
|
|||
Total members’ equity
|
3,823,186 | |||
|
|
|||
Total liabilities and members’ equity
|
$ | 7,123,814 | ||
|
|
2020
|
||||
Revenue
|
||||
Digital assets mined
|
$ | 4,010,167 | ||
Cost of Revenue
|
||||
Hosting costs
|
1,959,327 | |||
Depreciation
|
663,773 | |||
|
|
|||
Total cost of revenue
|
2,623,100 | |||
Gross profit
|
1,387,067 | |||
Operating Expenses
|
||||
Management and professional fees
|
64,389 | |||
Compensation expense from ownership interests
|
1,307,143 | |||
Management and
start-up
fees
|
143,350 | |||
Office and administration fees
|
44,263 | |||
|
|
|||
Total operating expenses
|
1,559,145 | |||
Operating loss
|
($ | 172,078 | ) | |
Other expenses
|
||||
Interest expense
|
414,070 | |||
Gain on sale of digital assets
|
(152,194 | ) | ||
|
|
|||
Total other expenses, net
|
$ | 261,876 | ||
Net loss
|
($ | 433,954 | ) | |
|
|
Ownership
units
|
Ownership
interests
|
Accumulated
deficit |
Total
|
|||||||||||||
April 16, 2020
|
— | $ | — | $ | — | $ | — | |||||||||
Issuance of ownership units to managing member
|
30 | 1,307,143 | — | 1,307,143 | ||||||||||||
Issuance of ownership units for cash
|
70 | 3,050,000 | — | 3,050,000 | ||||||||||||
Members draws
|
— | (100,003 | ) | — | (100,003 | ) | ||||||||||
Net loss
|
— | — | (433,954 | ) | (433,954 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
November 30, 2020
|
100 | $ | 4,257,140 | ($ | 433,954 | ) | $ | 3,823,186 | ||||||||
|
|
|
|
|
|
|
|
2020
|
||||
Operating activities
|
||||
Net loss
|
$ | (433,954 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities
|
||||
Digital asset mined
|
(4,010,167 | ) | ||
Compensation expense from ownership interests
|
1,307,143 | |||
Gain on sale of digital assets
|
(152,194 | ) | ||
Digital assets receivable
|
(10,557 | ) | ||
Depreciation
|
663,773 | |||
Net changes in working capital
|
||||
Prepaid expenses
|
(675,323 | ) | ||
Accrued liabilities
|
7,655 | |||
|
|
|||
Net cash used in operating activities
|
(3,303,624 | ) | ||
Investing activities
|
||||
Sales of digital assets
|
3,725,991 | |||
Advances to related parties
|
(313,967 | ) | ||
Purchase of mining equipment assets
|
(6,372,219 | ) | ||
|
|
|||
Net cash used in investing activities
|
(2,960,195 | ) | ||
Financing activities
|
|
|||
Proceeds from private placements
|
3,050,000 | |||
Members draws
|
(100,003 | ) | ||
Payments received from related parties
|
287,339 | |||
Repayments of loan payable
|
(1,266,528 | ) | ||
Finance draw on loan payable
|
4,559,501 | |||
|
|
|||
Net cash provided by financing activities
|
6,530,309 | |||
|
|
|||
Net increase in cash
|
266,490 | |||
Cash, beginning of period
|
— | |||
|
|
|||
Cash, end of period
|
$ | 266,490 | ||
|
|
|||
Supplemental disclosure of cash flow information
|
||||
Cash paid for interest
|
$ | 406,414 | ||
|
|
|||
Cash paid for taxes
|
$ | — | ||
|
|
1.
|
Nature of operations
|
2.
|
Summary of significant accounting policies
|
a) |
Basis of presentation
|
b) |
COVID-19
|
c) |
Recently issued and adopted accounting pronouncements
|
d) |
Use of estimates
|
e) |
Fair value measurements
|
• |
Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.
|
• |
Level 2—Valuations based on observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
|
• |
Level 3—Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.
|
f) |
Cash
|
g) |
Digital assets
|
h) |
Digital assets receivable
|
i) |
Mining equipment assets
|
j) |
Revenue from contracts with customers
|
• |
Identification of the contract with a customer
|
• |
Identification of the performance obligations in the contract
|
• |
Determination of the transaction price
|
• |
Allocation of the transaction price to the performance obligations in the contract
|
• |
Recognition of revenue when, or as, the performance obligations are satisfied
|
k) |
Cost of Revenue
|
l) |
Depreciation
|
m) |
Segment reporting
|
n) |
Stock compensation
|
o) |
Income taxes
|
3.
|
Digital assets
|
Bitcoin
|
2020
|
|||
Opening balance at April 16, 2020
|
$ | — | ||
Revenue from Bitcoin mined
|
4,010,167 | |||
Bitcoin sold
|
(3,573,797 | ) | ||
|
|
|||
Ending balance as of November 30, 2020
|
$ | 436,370 |
4.
|
Digital assets receivable
|
5.
|
Prepaid expenses
|
November 30, 2020
|
||||
Prepaid hosting fees (see note 9)
|
$ | 675,323 | ||
|
|
|||
Total
|
$ | 675,323 |
6.
|
Mining equipment assets
|
Cost
|
||||
Additions
|
$ | 6,372,219 | ||
|
|
|||
Balance November 30, 2020
|
$ | 6,372,219 | ||
|
|
|||
Accumulated depreciation
|
||||
Additions
|
$ | 663,773 | ||
|
|
|||
Balance November 30, 2020
|
$ | 663,773 | ||
|
|
|||
Net Book value
|
||||
Cost
|
$ | 6,372,219 | ||
Accumulated depreciation
|
(663,773 | ) | ||
|
|
|||
Net mining equipment assets, November 30, 2020
|
$ | 5,708,446 | ||
|
|
7.
|
Loan payable
|
8.
|
Members’ equity
|
i. |
On April 16, 2020, the Company issued 30 ownership units to the managing to which a charge of $1,307,143 was recorded against compensation expense.
|
ii. |
Between April 20, 2020 and May 8, 2020, the Company raised a total of $3,050,000 in exchange for a total of 70 ownership units.
|
iii. |
During the period ended November 30, 2020, members withdrew total funds amounting to $100,003 of their initial investment.
|
9.
|
Related party transactions
|
10.
|
Commitments
|
As of November 30,
2020
|
||||
Within one year
|
$ | 5,361,399 | ||
Later than one year but not later than five years
|
$ | 13,850,281 | ||
|
|
|||
Total
|
$ | 19,211,680 | ||
|
|
11.
|
Subsequent events
|
2020
|
||||
Assets
|
||||
Current assets
|
||||
Cash
|
$ | 152,264 | ||
Digital assets
|
447,397 | |||
Digital assets receivable
|
10,789 | |||
Prepaid expenses
|
674,256 | |||
Due from related parties
|
16,958 | |||
|
|
|||
Total current assets
|
1,301,664 | |||
Mining equipment assets
|
5,760,051 | |||
|
|
|||
Total assets
|
$ | 7,061,715 |
|
|
|
|
|||
Liabilities and equity
|
||||
Current liabilities
|
||||
Accrued liabilities
|
$ | 5,770 | ||
Members’ draws payable
|
18,519 | |||
Due to related parties
|
27,626 | |||
Loan payable
|
3,540,673 | |||
|
|
|||
Total liabilities
|
3,592,588 | |||
Commitments and contingencies (note 10)
|
||||
Members’ equity
|
||||
Ownership interests
|
3,757,140 | |||
Accumulated deficit
|
(288,013 | ) | ||
|
|
|||
Total members’ equity
|
3,469,127 | |||
|
|
|||
Total liabilities and members’ equity
|
$ | 7,061,715 | ||
|
|
2020
|
||||
Revenue
|
||||
Digital assets mined
|
$ | 3,373,890 | ||
Cost of Revenue
|
||||
Hosting costs
|
1,510,439 | |||
Depreciation
|
523,641 | |||
|
|
|||
Total cost of revenue
|
2,034,080 | |||
Gross Profit
|
1,339,810 | |||
Operating expenses
|
||||
Professional fees
|
5,000 | |||
Compensation expense from ownership interests
|
1,157,143 | |||
Management and
start-up
fees
|
165,908 | |||
Office and administration fees
|
14,914 | |||
|
|
|||
Total operating expenses
|
1,342,965 | |||
Operating loss
|
(3,155 | ) | ||
Other expenses
|
||||
Interest expense
|
365,457 | |||
Gain on sale of digital assets
|
(80,599 | ) | ||
|
|
|||
Total other expenses, net
|
284,858 | |||
Net loss
|
$
|
(288,013
|
)
|
Ownership
units |
Ownership
interests |
Accumulated
deficit |
Total
|
|||||||||||||
April 27, 2020
|
— | $ | — | $ | — | $ | — | |||||||||
Issuance of ownership units to managing member
|
30 | 1,157,143 | — | 1,157,143 | ||||||||||||
Issuance of ownership units for cash
|
70 | 2,700,000 | — | 2,700,000 | ||||||||||||
Members draws
|
— | (100,003 | ) | — | (100,003 | ) | ||||||||||
Net loss
|
— | — | (288,013 | ) | (288,013 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
November 30, 2020
|
100 | $ | 3,757,140 | $ | (288,013 | ) | $ | 3,469,127 | ||||||||
|
|
|
|
|
|
|
|
2020
|
||||
Operating activities
|
||||
Net loss
|
$ | (288,013 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities
|
||||
Digital asset mined
|
(3,373,890 | ) | ||
Compensation expense from ownership interests
|
1,157,143 | |||
Gain on sale of digital assets
|
(80,599 | ) | ||
Digital assets receivable
|
(10,789 | ) | ||
Depreciation
|
523,641 | |||
Net changes in working capital
|
||||
Prepaid expenses
|
(674,256 | ) | ||
Members draws payable
|
18,519 | |||
Accrued liabilities
|
5,770 | |||
|
|
|||
Net cash used in operating activities
|
(2,722,474 | ) | ||
Investing activities
|
||||
Advances to related parties
|
(463,911 | ) | ||
Purchase of mining equipment assets
|
(6,283,692 | ) | ||
Sale of digital assets
|
3,007,092 | |||
|
|
|||
Net cash used in investing activities
|
(3,740,511 | ) | ||
Financing activities
|
||||
Proceeds from private placements
|
2,700,000 | |||
Members draws
|
(100,003 | ) | ||
Advances from related parties
|
474,579 | |||
Repayments of loan payable
|
(1,011,621 | ) | ||
Finance draw on loan payable
|
4,552,294 | |||
|
|
|||
Net cash provided by financing activities
|
6,615,249 | |||
|
|
|||
Net increase in cash
|
152,264 | |||
Cash, beginning of period
|
— | |||
|
|
|||
Cash, end of period
|
$ | 152,264 | ||
|
|
|||
Supplemental disclosure of cash flow information
|
||||
Cash paid for interest
|
$ | 359,687 | ||
|
|
|||
Cash paid for taxes
|
$ | — | ||
|
|
|||
Supplemental disclosure of noncash investing activities
|
||||
Digital assets used to pay finance and management fees
|
$ | 233,487 |
1.
|
Nature of operations
|
2.
|
Summary of significant accounting policies
|
a) |
Basis of presentation
|
b) |
COVID-19
|
c) |
Recently issued and adopted accounting pronouncements
|
d) |
Use of estimates
|
e) |
Fair value measurements
|
• |
Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets.
|
• |
Level 2 — Valuations based on observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
|
• |
Level 3 — Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.
|
f) |
Cash
|
g) |
Digital assets
|
h) |
Digital assets receivable
|
i) |
Mining equipment assets
|
j) |
Revenue from contracts with customers
|
• |
Identification of the contract with a customer
|
• |
Identification of the performance obligations in the contract
|
• |
Determination of the transaction price
|
• |
Allocation of the transaction price to the performance obligations in the contract
|
• |
Recognition of revenue when, or as, the performance obligations are satisfied
|
k) |
Cost of Revenue
|
l) |
Depreciation
|
m) |
Segment reporting
|
n) |
Stock compensation
|
o) |
Income Tax
|
3.
|
Digital assets
|
Bitcoin
|
2020
|
|||
Opening balance at April 27, 2020
|
$ | — | ||
Revenue from Bitcoin mined
|
3,373,890 | |||
Bitcoin sold
|
(2,926,493 | ) | ||
|
|
|||
Ending balance as of November 30, 2020
|
$ | 447,397 | ||
|
|
4.
|
Digital assets receivable
|
5.
|
Prepaid expenses
|
November 30,
2020 |
||||
Prepaid hosting fees (see note 9)
|
$ | 674,256 | ||
|
|
|||
Total
|
$ | 674,256 | ||
|
|
6.
|
Mining equipment assets
|
Cost
|
||||
Additions
|
$ | 6,283,692 | ||
|
|
|||
Balance November 30, 2020
|
$ | 6,283,692 | ||
|
|
Accumulated depreciation
|
||||
Additions
|
$ | 523,641 | ||
|
|
|||
Balance November 30, 2020
|
$ | 523,641 | ||
|
|
Net Book value
|
||||
Cost
|
$ | 6,283,692 | ||
Accumulated depreciation
|
($ | 523,641 | ) | |
|
|
|||
Net mining equipment assets, November 30, 2020
|
$ | 5,760,051 | ||
|
|
7.
|
Loan payable
|
8.
|
Members’ equity
|
i. |
On April 27, 2020, the Company issued 30 ownership units to the managing member to which a charge of $1,157,143 was recorded against compensation expense.
|
ii. |
Between April 27, 2020 and May 15, 2020, the Company raised a total of $2,700,000 in exchange for a total of 70 ownership units.
|
iii. |
On November 25, 2020 members withdrew $100,003 of their initial investment of which $18,519 remained payable as of November 30, 2020.
|
9.
|
Related party transactions
|
10.
|
Commitments
|
As of
November 30, 2020 |
||||
Within one year
|
$ | 4,898,297 | ||
Later than one year but not later than five years
|
$ | 12,653,934 | ||
|
|
|||
Total
|
$ | 17,552,231 | ||
|
|
11.
|
Subsequent events
|
Amount
|
||||
SEC registration fee
|
$ | 167,747.78 | ||
Accountants’ fees and expenses
|
100,000.00 | |||
Legal fees and expenses
|
200,000.00 | |||
Printing fees
|
90,000.00 | |||
Miscellaneous
|
50,000.00 | |||
Total expenses
|
$ | 607,747.78 |
(a) |
Exhibits.
|
Incorporated by Reference
|
||||||||||||||||||
Exhibit
|
Description
|
Schedule/
Form |
File
Number |
Exhibits
|
Filing
Date |
|||||||||||||
23.7* | Consent of independent registered public accounting firm of RME Black 200, LLC. | |||||||||||||||||
23.8** | Consent of Cooley LLP (included in Exhibit 5.1). | |||||||||||||||||
24.1* | Power of Attorney (included on signature page). | |||||||||||||||||
101.INS | Inline XBRL Instance Document. | |||||||||||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |||||||||||||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||||||||||||
101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document. | |||||||||||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||||||||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||||||||||||
107* | Filing Fee Table |
* |
Filed herewith.
|
** |
To be filed by amendment.
|
# |
Indicates a management contract or compensatory plan, contract or arrangement.
|
† |
Certain of the exhibits and schedules to these exhibits have been omitted in accordance with Regulation
S-K
Item 601(a)(5). The registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.
|
+ |
Portions of this Exhibit (indicated with [***]) have been omitted as the Registrant has determined that (i) the omitted information is not material and (ii) the omitted information would likely cause competitive harm to the Registrant if publicly disclosed.
|
(a) |
The undersigned registrant hereby undertakes as follows:
|
(1) |
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
|
(i) |
To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
|
(ii) |
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent posteffective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price
|
represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; |
(iii) |
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
|
(2) |
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
(3) |
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
|
(4) |
That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
|
(5) |
That, for the purpose of determining any liability under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
|
(i) |
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
|
(ii) |
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
|
(iii) |
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or our securities provided by or on behalf of the undersigned registrant; and
|
(iv) |
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
|
(b) |
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the undersigned pursuant to the foregoing provisions, or otherwise, the undersigned has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the undersigned of expenses incurred or paid by a director, officer or controlling person of the undersigned in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the undersigned will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
|
CORE SCIENTIFIC, INC.
|
||
By: |
/s/ Michael Levitt
|
|
Michael Levitt | ||
Chief Executive Officer and
Co-Chair
of the Board of Directors
|
Signature | Title | Date | ||
/s/ Michael Levitt
|
Chief Executive Officer and | February 8, 2022 | ||
Michael Levitt |
Co-Chair
of the Board
(
Principal Executive Officer
|
|||
/s/ Michael Trzupek
|
Executive Vice President and | February 8, 2022 | ||
Michael Trzupek |
Chief Financial Officer
(
Principal Financial Officer
|
|||
/s/ Brian Neville
|
Chief Accounting Officer | February 8, 2022 | ||
Brian Neville |
(
Principal Accounting
Officer
|
|||
/s/ Darin Feinstein
|
Chief Vision Officer and
Co-Chair
of the
|
February 8, 2022 | ||
Darin Feinstein | Board | |||
/s/ Jarvis Hollingsworth
|
Director | February 8, 2022 | ||
Jarvis Hollingsworth |
Signature | Title | Date | ||
/s/ Matt Minnis
|
Director | February 8, 2022 | ||
Matt Minnis | ||||
/s/ Stacie Olivares
|
Director | February 8, 2022 | ||
Stacie Olivares | ||||
/s/ Kneeland Youngblood
|
Director | February 8, 2022 | ||
Kneeland Youngblood |