|3 Months Ended|
Mar. 31, 2021
|Subsequent Events [Abstract]|
Note 11. Subsequent Events:
Subsequent to March 31, 2021, 25,884 shares of common stock were issued to members of the Company’s board of directors, officers, employees and advisors of the Company in settlement of an equal number of fully vested restricted stock units awarded to such individuals by the Company pursuant to grants made under the Company’s 2019 Equity Plan. The Company withheld 1,875 of these shares at a fair value of approximately $0.1 million, to cover the withholding taxes related to the settlement of these vested restricted stock units.
Subsequent to March 31, 2021, for 2021 services the Company awarded 6,650 restricted common stock units vesting over a one-year period to certain employees of the Company issued pursuant to the 2019 Equity Plan.
On April 5, 2021, the Company entered into a sales agreement with Bitmain to acquire approximately 42,000 Antminer model S19j miners. Bitmain is scheduled to manufacture these new miners in 12 batches of approximately 3,500 miners (each, a “Batch”), which will be delivered, on a monthly basis, between November 2021 and October 2022. The Company will pay Bitmain approximately $138.5 million (subject to adjustments, offsets and costs as set forth in the agreement) (the “Purchase Price”), payable as follows: (i) 20% of the Purchase Price was paid on March 31, 2021 as a refundable down payment in connection with the agreement; (ii) 30% of the Purchase Price per Batch due 6 months in advance of the shipment date for such Batch; and (iii) the remaining 50% of the Purchase Price per Batch due 30 days in advance of the shipment date for such Batch.
On April 8, 2021, the Company entered into a stock purchase agreement with Northern Data AG, a German stock corporation (the “Seller”), and Whinstone US, Inc., a Delaware corporation and a wholly owned subsidiary of the Seller (“Whinstone”), which provides for Riot to acquire all of the issued and outstanding equity interests of Whinstone (the “Acquisition”). The Acquisition is currently expected to close during the second quarter of 2021, subject to the satisfaction or waiver of various closing conditions customary for a transaction of this type, including, among other things, (a) the expiration or termination of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (b) the listing authorization of the shares of Riot’s common stock, no par value, to be issued to the Seller as part of the consideration paid for the Acquisition by the Nasdaq Stock Market (“NASDAQ”), subject to official notice of issuance, to the extent required by the rules of NASDAQ, (c) the absence of government orders or laws prohibiting or making illegal the Acquisition, (d) the absence of pending legal proceedings challenging or seeking to enjoin, restrain or prohibit or make illegal the Acquisition, (e) the Seller and Whinstone obtaining certain third party consents, (f) each of Riot and the Seller executing and delivering a Shareholder Agreement and (g) the absence of any material adverse effect on Whinstone or its subsidiary, taken as a whole, or on Riot and its subsidiaries, taken as a whole.
At the closing of the Acquisition, Riot will pay to the Seller $80.0 million in cash, subject to closing adjustments and issue to the Seller 11,800,000 shares of Riot’s common stock, no par value.
Whinstone is based in Rockdale, Texas and its facility is located on an 100-acre site, hosting Bitcoin mining customers in three buildings totaling 190,000 square feet. An additional 60,000 square foot building is also under development. The site is subject to a long-term lease agreement, with electricity provided via a long-term power supply contract. Whinstone has approximately 100 employees.
In September 2017 and February 2018, the Company acquired a minority interest for $9.4 million in Coinsquare Ltd. (“Coinsquare”), which operates a digital crypto currency exchange platform in Canada. The investment resulted in an ownership in Coinsquare by the Company of approximately 11.7%, on a fully diluted basis. In 2020, the Company determined there were indicators that would cause a 100% impairment of the Coinsquare investment, resulting in the Company recording an impairment expense of $9.4 million in 2020. The Company elected under ASU-2016-01 to account for the Coinsquare investment using the measurement alternative at cost, less any impairment, plus or minus changes resulting from observable price changes.
On April 16, 2021, pursuant an investment agreement between Coinsquare, Coinsquare’s shareholders (including Riot) and Mogo Inc. (NASDAQ: MOGO) (“Mogo Investment Agreement”), a digital payments and financial technology company (“Mogo”), Riot sold 631,377 of its 3.4 million common shares of Coinsquare (the “Coinsquare Shares”) in exchange for 373,084 common shares of Mogo (the “Mogo Shares”) and approximately US $1.8 million in cash. Subsequently, on May 12, 2021, Riot entered into a binding term sheet with Mogo to sell its remaining 2.2 million Coinsquare Shares at a purchase price of approximately US $18 million, payable at Mogo’s option, in cash, Mogo Shares, or a blend of cash and Mogo Shares, following execution of a share purchase agreement. The remaining 573,830 Coinsquare Shares held by Riot, are expected to be sold in connection with Mogo’s exercise of its options to purchase additional Coinsquare Shares under the Mogo Investment Agreement.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef