Riot Blockchain, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Acquisitions (Tables)

Acquisitions (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of total consideration transferred

On February 21, 2018, the Company and Kairos, completed an asset purchase under an agreement (the “Prive Purchase Agreement”) with Prive. Upon closing of the transaction, Kairos became the owner of Prive equipment used for the mining of cryptocurrency, including, but not limited to, 3,800 Bitmain Antminer S9s. The equipment was recorded for a purchase price of approximately $19.5 million as follows (in thousands):

Cash consideration	$	11,000
Fair value of common stock		8,480
Other expenses		2
Total	$	19,482

Schedule of Proforma Information for Acquisition

The following unaudited pro forma financial information summarizes the combined results of operations for Riot, Whinstone and ESS Metron as if the companies were combined as of January 1, 2020. The unaudited pro forma information does not reflect the effect of costs or synergies that may result from the acquisition. The pro forma information excludes acquisition-related costs of $21.2 million during the year ended December 31, 2021. The pro forma information does not purport to be indicative of the results of operations that actually would have resulted had the combination occurred on January 1, 2020, or of future results of the consolidated entities. This unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of future operating results of the combined company (in thousands).

	Years Ended December 31,
		2021		2020
Total revenue		$	237,650	$	73,608
Net loss		$	9,615	$	51,890

Whinstone US, Inc. [Member]

Business Acquisition [Line Items]

Schedule of Assets and Liabilities Acquired

During the period ended December 31, 2021, the Company continued reviewing its valuations of the assets acquired and liabilities assumed in the May 26, 2021 acquisition of Whinstone based on new information obtained about facts and circumstances that existed as of the acquisition date. During the period May 26, 2021 through December 31, 2021, due to further analysis of the operating forecast used in the acquisition date valuation, the Company recorded preliminary measurement period adjustments of approximately $90.3 million to decrease the value of its customer relationship intangible assets, $37.8 million to decrease the value of its acquisition date deferred tax liabilities and $0.2 million to increase its acquisition date right of use asset, with the corresponding adjustments to goodwill.

Any necessary adjustments will be finalized within one year from the date of acquisition ($ in thousands):

Cash and cash equivalents	$	10,400
Accounts receivable		1,072
Prepaid expenses and other current assets		2,176
Property and equipment		78,207
Derivative asset		13,967
Right of use asset		6,547
Security deposits		1,775
Future power credits⁽¹⁾		82,953
Accounts payable		(12,853	)
Accrued expenses		(504	)
Deferred revenues and customer deposits		(34,856	)
Operating lease liabilities		(8,184	)
Total identifiable assets and liabilities acquired		140,700
Goodwill⁽²⁾		319,684
Total purchase consideration	$	460,384

⁽¹⁾

Future power credits of $83.0 million are associated with the contingent purchase price payable.

⁽²⁾

Goodwill represents the excess of total purchase consideration over the preliminary fair value of the underlying assets acquired and liabilities assumed. Goodwill is attributable to the assembled workforce of experienced personnel at Whinstone and synergies expected to be achieved from the combined operations of Riot and Whinstone. None of the goodwill recognized is expected to be deductible for tax purposes. We assigned the goodwill to our Hosting segment. See Note 18, “Segment Information”.

The $460.4 million total purchase price consideration consisted of $326.2 million fair value of Riot common shares issued, a $53.0 million cash payment (including $38.1 million of debt payoff and certain Seller transaction costs), an $83.0 million contingent purchase price payable to the Seller and other net items of $(1.7 million).

Acquisition of ESS Metron [Member]

Business Acquisition [Line Items]

Schedule of Assets and Liabilities Acquired

Any necessary adjustments will be finalized within one year from the date of acquisition (in thousands):

Cash and cash equivalents	$	549
Accounts receivable		9,879
Prepaid and other current assets		636
Inventory and work-in-progress		1,175
Costs and estimated earnings in excess of billings		13,205
Property and equipment		4,501
Intangible assets		14,000
Right of use asset		6,714
Accounts payable		(9,235	)
Accrued expenses		(1,239	)
Billings in excess of costs and estimated earnings		(5,883	)
Operating lease liabilities		(6,714	)
Warranty liability		(116	)
Total identifiable assets and liabilities acquired		27,472
Goodwill		29,379
Total purchase consideration	$	56,851