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. 210 Barton Springs Road , Suite 300 Austin, TX 78704 (425) 998-5300 |
Large accelerated filer | ☐ | 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; |
• |
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; |
• |
attract, train and retain effective officers, key employees or directors; |
• |
upgrade and maintain information technology systems; |
• |
acquire and protect intellectual property; |
• |
meet future liquidity requirements and comply with restrictive covenants related to long-term indebtedness; |
• |
effectively respond to general economic and business conditions, including the price of bitcoin; |
• |
maintain the listing on, or to prevent the delisting of our securities from, Nasdaq or another national securities exchange; |
• |
obtain additional capital, including use of the debt market; |
• |
enhance future operating and financial results; |
• |
successfully execute expansion plans; |
• |
anticipate rapid technological changes; |
• |
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; |
• |
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; |
• |
anticipate the impact of, and response to, new accounting standards; |
• |
anticipate the significance and timing of contractual obligations; |
• |
maintain key strategic relationships with partners and distributors; |
• |
respond to uncertainties associated with product and service development and market acceptance; |
• |
anticipate the impact of changes in U.S. federal income tax laws, including the impact on deferred tax assets; |
• |
successfully defend litigation; and |
• |
successfully deploy the proceeds from the Business Combination. |
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F-1 |
• | 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, and our miners are pledged to certain other lenders. This obligation may limit our ability to obtain additional capital to grow our business and failure to repay obligations to our noteholders and other lenders 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. |
• | 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. |
• | 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. |
• | Diversification of our business by investing in additional digital assets, financial instruments and businesses could require significant investment or expose us to trading risks. |
• | 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. |
• | 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. |
• | 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. |
• | The digital assets held by us are not subject to FDIC or SIPC protections. |
• | 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. |
• | Legacy Core has identified material weaknesses in its internal control over financial reporting. Such material weaknesses may result in material misstatements of Core’s financial statements or cause it to fail to meet its periodic reporting obligations. Core may also identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal control. |
• | XPDI has identified a material weakness in its internal control over financial reporting. This material weakness could continue to adversely affect Core’s ability to report its 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 Public and Private Placement Warrants |
319,133,111 (as of April 11, 2022). |
Shares of common stock outstanding assuming exercise of all Public and Private Placement Warrants |
334,024,778 (based on the total shares outstanding as of April 11, 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 230,923,357 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 135,138,675 shares of common stock (including shares issuable upon the exercise of convertible securities) held by certain affiliates of our company; and |
• | up to 80,893,015 shares of common stock issuable upon conversion of certain Convertible Notes. |
Warrants offered by the selling securityholders |
Up to 9,466,973 warrants to purchase common stock consisting of (a) up to 6,266,667 Private Placement Warrants and (b) up to 3,200,306 warrants initially issued by Legacy Core held by certain affiliates of our company. |
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. |
Use of proceeds |
We will not receive any of the proceeds from the sale of the shares of common stock or warrants to purchase common stock 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; |
• | we fail to provide competitive pricing terms or effectively market them to potential customers; |
• | 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; |
• | businesses decide to host internally as an alternative to the use of our services; |
• | we fail to successfully communicate the benefits of our services to potential customers; |
• | we are unable to strengthen awareness of our brand; |
• | we are unable to provide services that our existing and potential customers desire; or |
• | our customers are unable to secure an adequate supply of new generation digital asset mining equipment to host with us. |
• | 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; |
• | increased costs of complying with existing or new government regulations applicable to digital assets and other factors; |
• | a downturn in the market for blockchain hosting space generally, which could be caused by an oversupply of or reduced demand for blockchain space; |
• | any transition by our customers of blockchain hosting from third-party providers like us to customer-owned and operated facilities; |
• | 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; |
• | a slowdown in the growth of the Internet generally as a medium for commerce and communication; |
• | 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 |
• | the degree of difficulty in mining digital assets and the trading price of such assets. |
• | 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; |
• | unanticipated costs or liabilities associated with Blockcap and RADAR or another acquisition or strategic partnership; |
• | difficulty integrating the accounting systems, operations and personnel of Blockcap and RADAR; |
• | adverse effects to our existing business relationships and clients or to Blockcap’s business relationships and clients as a result of the acquisition; |
• | loss of key employees, particularly those of Blockcap and RADAR; |
• | 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; |
• | difficulty in acquiring suitable businesses, including challenges in predicting the value an acquisition will ultimately contribute to our business; and |
• | use of substantial portions of our available cash or assumption of additional indebtedness to consummate an acquisition. |
• | power loss; |
• | equipment failure; |
• | human error or accidents; |
• | theft, sabotage and vandalism; |
• | failure by us or our suppliers to provide adequate service or maintain our equipment; |
• | network connectivity downtime and fiber cuts; |
• | service interruptions resulting from server relocation; |
• | security breaches of our infrastructure; |
• | improper building maintenance by us; |
• | physical, electronic and cybersecurity breaches; |
• | animal incursions; |
• | fire, earthquake, hurricane, tornado, flood and other natural disasters; |
• | extreme temperatures; |
• | water damage; |
• | public health emergencies; and |
• | terrorism. |
• | continued worldwide growth in the adoption and use of digital assets and blockchain technologies; |
• | 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; |
• | changes in consumer demographics and public tastes and preferences; |
• | the maintenance and development of the open-source software protocols or similar digital asset systems; |
• | 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; |
• | general economic conditions and the regulatory environment relating to digital assets; and |
• | negative consumer perception of digital assets, including digital assets specifically and digital assets generally. |
• | identify and acquire desirable properties that we are interested in from developers; |
• | offer hosting services at prices below current market rates or below the prices we currently charge our customers; |
• | bundle colocation services with other services or equipment they provide at reduced prices; |
• | develop superior products or services, gain greater market acceptance and expand their service offerings more efficiently or rapidly; |
• | adapt to new or emerging technologies and changes in customer requirements more quickly; |
• | take advantage of acquisition and other opportunities more readily; and |
• | adopt more aggressive pricing policies and devote greater resources to the promotion, marketing and sales of their services. |
• | 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 |
• | 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. |
• | global digital asset supply; |
• | 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; |
• | investors’ expectations with respect to the rate of inflation of fiat currencies; |
• | investors’ expectations with respect to the rate of deflation of digital assets; |
• | cyber theft of digital assets from online wallet providers, or news of such theft from such providers or from individuals’ online wallets; |
• | the availability and popularity of businesses that provide digital asset-related services; |
• | fees associated with processing a digital asset transaction; |
• | changes in the software, software requirements or hardware requirements underlying digital assets; |
• | changes in the rights, obligations, incentives, or rewards for the various participants in digital asset mining; |
• | interest rates; |
• | currency exchange rates, including the rates at which digital assets may be exchanged for fiat currencies; |
• | fiat currency withdrawal and deposit policies on digital asset exchanges and liquidity on such exchanges; |
• | interruptions in service or failures of major digital asset exchanges; |
• | investment and trading activities of large investors, including private and registered funds, that may directly or indirectly invest in digital assets; |
• | momentum pricing; |
• | monetary policies of governments, trade restrictions, currency devaluations and revaluations; |
• | 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; |
• | global or regional political, economic or financial events and conditions; |
• | 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 |
• | with respect to bitcoin, increased competition from other forms of digital assets or payments services. |
• | price and volume fluctuations in the overall stock market from time to time; |
• | volatility in the trading prices and trading volumes of technology stocks; |
• | volatility in the price of bitcoin and other digital assets; |
• | changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; |
• | sales of shares of our common stock by us or our stockholders, including sales as a result of the waiver of lock-up restrictions that went into effect in March 2022 and sales under this prospectus; |
• | 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; |
• | the financial projections we may provide to the public, any changes in those projections, or our failure to meet those projections; |
• | announcements by us or our competitors of new products, features, or services; |
• | the public’s reaction to our press releases, other public announcements and filings with the SEC; |
• | rumors and market speculation involving us or other companies in our industry; |
• | actual or anticipated changes in our results of operations or fluctuations in our results of operations; |
• | actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; |
• | litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors; |
• | developments or disputes concerning our intellectual property or other proprietary rights; |
• | announced or completed acquisitions of businesses, products, services or technologies by us or our competitors; |
• | new laws or regulations or new interpretations of existing laws or regulations applicable to our business; |
• | changes in accounting standards, policies, guidelines, interpretations or principles; |
• | any significant change in our management; and |
• | general economic conditions and slow or negative growth of our markets. |
• | the ability of our board of directors to issue one or more series of preferred stock; |
• | advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings; |
• | certain limitations on convening special stockholder meetings; |
• | limiting the persons who may call special meetings of stockholders; |
• | limiting the ability of stockholders to act by written consent; and |
• | Our board of directors have the express authority to make, alter or repeal the Bylaws. |
Bitcoin Miners in Operation | ||||||||
Mining Equipment |
Hash rate (EH/s) | Number of Miners |
||||||
Self-miners 1 |
6.6 | 66.8 | ||||||
Hosted miners |
6.9 | 73.9 | ||||||
|
|
|
|
|||||
Total mining equipment |
13.5 | 140.7 |
Bitcoin Miners to be Deployed |
||||||||
Mining Equipment |
Hash rate (EH/s) | Number of Miners |
||||||
Self-miners 1 |
11.7 | 116.5 | ||||||
Hosted miners |
11.8 | 118.0 | ||||||
|
|
|
|
|||||
Total mining equipment |
23.5 | 234.5 | ||||||
|
|
|
|
|||||
Total in operation and to be deployed |
37.0 | 375.2 | ||||||
|
|
|
|
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 | ||||||
|
|
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
(in thousands) | ||||||||
Total Revenue |
$ | 544,483 | $ | 60,320 | ||||
|
|
|
|
|||||
Cost of revenue |
305,621 | 50,928 | ||||||
|
|
|
|
|||||
Gross profit |
238,862 | 9,392 | ||||||
|
|
|
|
|||||
(Loss) gain on legal settlements |
(2,636 | ) | 5,814 | |||||
Gain from sales of digital currency assets |
4,814 | 69 | ||||||
Impairment of digital currency assets |
(37,206 | ) | (4 | ) | ||||
Total operating expenses |
72,340 | 21,598 | ||||||
|
|
|
|
|||||
Operating income (loss) |
131,494 | (6,327 | ) | |||||
|
|
|
|
|||||
Total non-operating expense, net |
68,419 | 5,879 | ||||||
|
|
|
|
|||||
Income (loss) before income taxes |
63,075 | (12,206 | ) | |||||
Income tax expense |
15,763 | — | ||||||
|
|
|
|
|||||
Net income (loss) |
$ | 47,312 | $ | (12,206 | ) | |||
|
|
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Self-Mining Hash rate (Exahash per second) |
6.60 | 0.35 | ||||||
|
|
|
|
|||||
Adjusted EBITDA (in millions) |
$ | 238.9 | $ | 6.1 | ||||
|
|
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Adjusted EBITDA |
(in thousands) | |||||||
Net income (loss) |
$ | 47,312 | $ | (12,206 | ) | |||
Adjustments: |
||||||||
Interest expense, net |
44,354 | 4,436 | ||||||
Income tax expense |
15,763 | — | ||||||
Depreciation and amortization |
33,362 | 9,403 | ||||||
Loss on debt from extinguishment |
8,016 | 1,333 | ||||||
Stock-based compensation expense |
38,937 | 3,037 | ||||||
Loss on legal settlements |
2,636 | — | ||||||
Fair value adjustment on convertible notes |
16,047 | — | ||||||
Gain from sales of digital currency assets |
(4,814 | ) | (69 | ) | ||||
Impairment of digital currency assets |
37,206 | 4 | ||||||
Losses on disposals of property, plant and equipment |
118 | 2 | ||||||
Other non-cash and non-recurring items |
3 | 111 | ||||||
|
|
|
|
|||||
Adjusted EBITDA |
$ | 238,940 | $ | 6,051 | ||||
|
|
|
|
• | Hosting revenue from customers and related parties. Certain Relationships and Related Party Transactions—Legacy Core |
• | Equipment sales to customers and related parties. |
• | Digital asset mining income. |
Revenues from digital asset mining are impacted by volatility in bitcoin prices, as well as increases in the Bitcoin blockchain’s network hash rate resulting from the growth in the overall quantity and quality of miners working to solve blocks on the Bitcoin blockchain and the difficulty index associated with 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. |
Year Ended December 31, |
Period over Period Change |
|||||||||||||||
2021 |
2020 |
Dollar |
Percentage |
|||||||||||||
Revenue: |
||||||||||||||||
Hosting revenue from customers |
$ | 62,350 | $ | 34,615 | $ | 27,735 | 80 | % | ||||||||
Hosting revenue from related parties |
16,973 | 6,983 | 9,990 | 143 | % | |||||||||||
Equipment sales to customers |
138,376 | 11,193 | 127,183 | NM | ||||||||||||
Equipment sales to related parties |
109,859 | 1,402 | 108,457 | NM | ||||||||||||
Digital asset mining income |
216,925 | 6,127 | 210,798 | NM | ||||||||||||
|
|
|
|
|
|
|||||||||||
Total revenue |
544,483 | 60,320 | 484,163 | 803 | % | |||||||||||
Cost of revenue: |
||||||||||||||||
Cost of hosting services |
77,678 | 36,934 | 40,744 | 110 | % | |||||||||||
Cost of equipment sales |
177,785 | 11,017 | 166,768 | NM | ||||||||||||
Cost of digital asset mining |
50,158 | 2,977 | 47,181 | NM | ||||||||||||
|
|
|
|
|
|
|||||||||||
Total cost of revenue |
305,621 | 50,928 | 254,693 | 500 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Gross profit |
238,862 | 9,392 | 229,470 | NM | ||||||||||||
(Loss) gain on legal settlements |
(2,636 | ) | 5,814 | (8,450 | ) | NM | ||||||||||
Gain from sales of digital currency assets |
4,814 | 69 | 4,745 | NM | ||||||||||||
Impairment of digital currency assets |
(37,206 | ) | (4 | ) | (37,202 | ) | NM | |||||||||
Operating expenses: |
||||||||||||||||
Research and development |
7,674 | 5,271 | 2,403 | 46 | % | |||||||||||
Sales and marketing |
4,062 | 1,771 | 2,291 | 129 | % | |||||||||||
General and administrative |
60,604 | 14,556 | 46,048 | 316 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Total operating expenses |
72,340 | 21,598 | 50,742 | 235 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Operating income (loss) |
131,494 | (6,327 | ) | 137,821 | NM | |||||||||||
Non-operating expenses, net: |
||||||||||||||||
Loss on debt from extinguishment |
8,016 | 1,333 | 6,683 | 501 | % | |||||||||||
Interest expense, net |
44,354 | 4,436 | 39,918 | 900 | % | |||||||||||
Other non-operating expenses, net |
16,049 | 110 | 15,939 | NM | ||||||||||||
|
|
|
|
|
|
|||||||||||
Total non-operating expense, net |
68,419 | 5,879 | 62,540 | NM | ||||||||||||
|
|
|
|
|
|
|||||||||||
Income (loss) before income taxes |
63,075 | (12,206 | ) | 75,281 | NM | |||||||||||
Income tax expense |
15,763 | — | 15,763 | NM | ||||||||||||
|
|
|
|
|
|
|||||||||||
Net income (loss) |
$ | 47,312 | $ | (12,206 | ) | $ | 59,518 | NM | ||||||||
|
|
|
|
|
|
Year Ended December 31, |
Period over Period Change |
|||||||||||||||
2021 |
2020 |
Dollar |
Percentage |
|||||||||||||
Revenue: | (in thousands, except percentages) | |||||||||||||||
Hosting revenue from customers |
$ | 62,350 | $ | 34,615 | $ | 27,735 | 80 | % | ||||||||
Hosting revenue from related parties |
16,973 | 6,983 | 9,990 | 143 | % | |||||||||||
Equipment sales to customers |
138,376 | 11,193 | 127,183 | NM | ||||||||||||
Equipment sales to related parties |
109,859 | 1,402 | 108,457 | NM | ||||||||||||
Digital asset mining income |
216,925 | 6,127 | 210,798 | NM | ||||||||||||
|
|
|
|
|
|
|||||||||||
Total revenue |
$ | 544,483 | $ | 60,320 | $ | 484,163 | 803 | % | ||||||||
|
|
|
|
|
|
|||||||||||
Percentage of total revenue: |
||||||||||||||||
Hosting revenue from customers |
11 | % | 57 | % | ||||||||||||
Hosting revenue from related parties |
3 | % | 12 | % | ||||||||||||
Equipment sales to customers |
25 | % | 19 | % | ||||||||||||
Equipment sales to related parties |
20 | % | 2 | % | ||||||||||||
Digital asset mining income |
40 | % | 10 | % | ||||||||||||
|
|
|
|
|||||||||||||
Total Revenue |
100 | % | 100 | % | ||||||||||||
|
|
|
|
1 |
The total number of bitcoin awarded on a combined self-mining basis for December 31, 2021 was 5,769 compared to 1,281 for the year ended December 31, 2020. |
Year Ended December 31, |
Period over Period Change |
|||||||||||||||
2021 |
2020 |
Dollar |
Percentage |
|||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Cost of revenue |
$ | 305,621 | $ | 50,928 | $ | 254,693 | 500 | % | ||||||||
Gross profit |
238,862 | 9,392 | 229,470 | NM | ||||||||||||
Gross margin |
44 | % | 16 | % |
Year Ended December 31, |
Period over Period Change |
|||||||||||||||
2021 |
2020 |
Dollar |
Percentage |
|||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Gain from sales of digital currency assets |
$ | 4,814 | $ | 69 | $ | 4,745 | NM | |||||||||
Percentage of total revenue |
1 | % | 0 | % |
Year Ended December 31, |
Period over Period Change |
|||||||||||||||
2021 |
2020 |
Dollar |
Percentage |
|||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Impairment of digital currency assets |
$ | (37,206 | ) | $ | (4 | ) | $ | (37,202 | ) | NM | ||||||
Percentage of total revenue |
(7 | )% | 0 | % |
Year Ended December 31, |
Period over Period Change |
|||||||||||||||
2021 |
2020 |
Dollar |
Percentage |
|||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Research and development |
$ | 7,674 | $ | 5,271 | $ | 2,403 | 46 | % | ||||||||
Percentage of total revenue |
1 | % | 9 | % |
Year Ended December 31, |
Period over Period Change |
|||||||||||||||
2021 |
2020 |
Dollar |
Percentage |
|||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Sales and marketing |
$ | 4,062 | $ | 1,771 | $ | 2,291 | 129 | % | ||||||||
Percentage of total revenue |
1 | % | 3 | % |
Year Ended December 31, |
Period over Period Change |
|||||||||||||||
2021 |
2020 |
Dollar |
Percentage |
|||||||||||||
(in thousands, except percentages) | ||||||||||||||||
General and administrative |
$ | 60,604 | $ | 14,556 | $ | 46,048 | 316 | % | ||||||||
Percentage of total revenue |
11 | % | 24 | % |
Year Ended December 31, |
Period over Period Change |
|||||||||||||||
2021 |
2020 |
Dollar |
Percentage |
|||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Non-operating expenses, net: |
||||||||||||||||
Loss on debt from extinguishment |
$ | 8,016 | $ | 1,333 | $ | 6,683 | 501 | % | ||||||||
Interest expense, net |
44,354 | 4,436 | 39,918 | 900 | % | |||||||||||
Other non-operating expenses, net |
16,049 | 110 | 15,939 | NM | ||||||||||||
|
|
|
|
|
|
|||||||||||
Total non-operating expense, net |
$ | 68,419 | $ | 5,879 | $ | 62,540 | NM | |||||||||
|
|
|
|
|
|
Year Ended December 31, |
Period over Period Change |
|||||||||||||||
2021 |
2020 |
Dollar |
Percentage |
|||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Income tax expense |
$ | 15,763 | $ | — | $ | 15,763 | NM | |||||||||
Percentage of total revenue |
3 | % | — | % |
Year Ended December 31, |
Period over Period Change |
|||||||||||||||
2021 |
2020 |
Dollar |
Percentage |
|||||||||||||
Equipment Sales and Hosting Segment | (in thousands, except percentages) | |||||||||||||||
Revenue: |
||||||||||||||||
Hosting revenue |
$ | 79,323 | $ | 41,598 | $ | 37,725 | 91 | % | ||||||||
Equipment sales |
248,235 | 12,595 | 235,640 | NM | ||||||||||||
|
|
|
|
|
|
|||||||||||
Total revenue |
327,558 | 54,193 | 273,365 | 504 | % | |||||||||||
Cost of revenue: |
||||||||||||||||
Cost of hosting services |
77,678 | 36,934 | 40,744 | 110 | % | |||||||||||
Cost of equipment sales |
177,785 | 11,017 | 166,768 | NM | ||||||||||||
|
|
|
|
|
|
|||||||||||
Total Cost of revenue |
$ | 255,463 | $ | 47,951 | $ | 207,512 | 433 | % | ||||||||
|
|
|
|
|
|
|||||||||||
Gross profit |
$ | 72,095 | $ | 6,242 | $ | 65,853 | NM | |||||||||
Mining Segment |
||||||||||||||||
Digital asset mining income |
$ | 216,925 | $ | 6,127 | $ | 210,798 | NM | |||||||||
|
|
|
|
|
|
|||||||||||
Total revenue |
216,925 | 6,127 | 210,798 | NM | ||||||||||||
Cost of revenue |
50,158 | 2,977 | 47,181 | NM | ||||||||||||
|
|
|
|
|
|
|||||||||||
Gross profit |
$ | 166,767 | $ | 3,150 | $ | 163,617 | NM | |||||||||
Consolidated total revenue |
$ | 544,483 | $ | 60,320 | $ | 484,163 | 803 | % | ||||||||
Consolidated cost of revenue |
$ | 305,621 | $ | 50,928 | $ | 254,693 | 500 | % | ||||||||
Consolidated gross profit |
$ | 238,862 | $ | 9,392 | $ | 229,470 | NM |
Year Ended December 31, |
Period over Period Change |
|||||||||||||||
2021 |
2020 |
Dollar |
Percentage |
|||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Reportable segment gross profit |
$ | 238,862 | $ | 9,392 | $ | 229,470 | NM | |||||||||
(Loss) gain on legal settlement |
(2,636 | ) | 5,814 | (8,450 | ) | NM | ||||||||||
Gain from sales of digital currency assets |
4,814 | 69 | 4,745 | NM | ||||||||||||
Impairment of digital currency assets |
(37,206 | ) | (4 | ) | (37,202 | ) | NM | |||||||||
Operating expense: |
||||||||||||||||
Research and development |
7,674 | 5,271 | 2,403 | 46 | % | |||||||||||
Sales and marketing |
4,062 | 1,771 | 2,291 | 129 | % | |||||||||||
General and administrative |
60,604 | 14,556 | 46,048 | 316 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Total operating expense |
72,340 | 21,598 | 50,742 | 235 | % | |||||||||||
|
|
|
|
|
|
|||||||||||
Operating income (loss) |
131,494 | (6,327 | ) | 137,821 | NM | |||||||||||
Non-operating expense, net: |
||||||||||||||||
Loss on debt extinguishment and other |
8,016 | 1,333 | 6,683 | 501 | % | |||||||||||
Interest expense, net |
44,354 | 4,436 | 39,918 | 900 | % | |||||||||||
Other non-operating expenses, net |
16,049 | 110 | 15,939 | NM | ||||||||||||
|
|
|
|
|
|
|||||||||||
Total non-operating expense, net |
68,419 | 5,879 | 62,540 | NM | ||||||||||||
Income (loss) before income taxes |
$ | 63,075 | $ | (12,206 | ) | $ | 75,281 | NM | ||||||||
|
|
|
|
|
|
December 31, |
Period over Period Change |
|||||||||||||||
2021 |
2020 |
Dollar |
Percentage |
|||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Cash and cash equivalents |
$ | 117,871 | $ | 8,671 | $ | 109,200 | NM | |||||||||
Restricted Cash |
13,807 | 50 | 13,757 | NM | ||||||||||||
|
|
|
|
|
|
|||||||||||
Total cash, cash equivalents and restricted cash |
$ | 131,678 | $ | 8,721 | $ | 122,957 | NM | |||||||||
|
|
|
|
|
|
December 31, |
||||||||
2021 |
2020 |
|||||||
(in thousands) | ||||||||
Cash, cash equivalents and restricted cash |
$ | 131,678 | $ | 8,721 | ||||
Cash provided by (used in) |
||||||||
Operating activities |
(56,735 | ) | (23,765 | ) | ||||
Investing activities |
(423,840 | ) | (15,144 | ) | ||||
Financing activities |
603,532 | 40,723 | ||||||
Cash, cash equivalents and restricted cash – beg. of period |
8,721 | 6,907 | ||||||
|
|
|
|
|||||
Cash, cash equivalents and restricted cash - end of period |
$ | 131,678 | $ | 8,721 | ||||
|
|
|
|
2022 |
$ | 460 | ||
2023 |
170 | |||
2024 |
170 | |||
2025 |
170 | |||
2026 |
170 | |||
Thereafter |
1,254 | |||
|
|
|||
Total minimum lease payments |
$ | 2,394 | ||
|
|
2022 |
$ | 35,531 | ||
2023 |
34,897 | |||
2024 |
33,913 | |||
2025 |
1,823 | |||
2026 |
2 | |||
|
|
|||
Total minimum lease payments |
106,166 | |||
Less: interest |
15,569 | |||
|
|
|||
Present value of net minimum lease payments |
$ | 90,597 | ||
|
|
Years Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Dividend yield |
0.00 | % | 0.00 | % | ||||
Expected volatility |
72.57 | % | 36.26 | % | ||||
Risk-free interest rate |
1.39 | % | 0.70 | % | ||||
Expected life (years) |
6.22 | 10.00 |
• | 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 | ||||
Denise Sterling |
57 | Chief Financial Officer | ||||
Todd M. DuChene |
58 | EVP, General Counsel, Chief Compliance Officer and Secretary | ||||
Directors |
||||||
Darin Feinstein |
50 | Chief Vision Officer and Co-Chair of the Board of 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 and resigned from his position on April 5, 2022, effective immediately. In connection with his separation from the Company, Mr. Trzupek will forfeit all except for 1,200,000 shares of Common Stock underlying RSUs. |
(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. |
• | determine the terms and conditions of any award granted under the plan; |
• | amend the terms of any outstanding award granted under the plan, subject to obtaining written consent from any holder of an award in the case of an amendment that would adversely affect the holder’s rights under an outstanding Award, including the authority to reduce the exercise price of any option awarded under the plan; |
• | construe and interpret the terms of the plan and individual awards, including without limitation, any notice of award or award agreement, granted pursuant to the plan; |
• | resolve and clarify inconsistencies, ambiguities and omissions in the plan and among and between the plan and any award or other related documents; |
• | take all actions and make all decisions regarding questions of coverage, eligibility and entitlement to benefits and benefit amounts; and |
• | take such other action, not inconsistent with the terms of the plan, as the plan administrator deems appropriate. |
• | select participants from among eligible employees, consultants and non-employee directors; |
• | determine the awards to be made, or shares of stock to be issued, and the timing; |
• | determine the option price, period and manner in which an option becomes exercisable; |
• | determine the duration and restrictions for restricted stock awards; |
• | determine the terms and conditions applicable to, and establish such other terms and requirements applicable to, the awards; |
• | adopt forms of award agreements that describe the conditions, rights and duties for an award; |
• | adopt rules and regulations to carry out the purposes of the RADAR Plan; |
• | correct any defect, fill any omission, or reconcile any inconsistency between the RADAR Plan and any award agreement; |
• | construe and interpret the RADAR Plan, and settle all controversies regarding the RADAR Plan and awards granted thereunder; |
• | accelerate the time at which an award may be exercised or the time during which an award or any part thereof will vest; and |
• | amend, suspend or terminate the RADAR Plan. |
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 |
22,055,350 | (2) | 7.0 | % | ||||
B. Kevin Turner |
7,971,258 | 2.5 | % | |||||
Darin Feinstein |
40,429,163 | (3) | 12.8 | % | ||||
Michael Trzupek(4) |
— | — | ||||||
Denise Sterling(5) |
— | — | ||||||
Todd M. DuChene |
— | — | ||||||
Jarvis Hollingsworth |
— | — | ||||||
Matt Minnis |
30,711,802 | (6) | 9.7 | % | ||||
Stacie Olivares |
— | — | ||||||
Kneeland Youngblood |
— | — | ||||||
All current directors and executive officers as a group (8 individuals) |
101,167,573 | 32.0 | % |
(1) | Unless otherwise indicated, the business address of each of the directors, executive officers and five percent holders of Core is 210 Barton Springs Road, Suite 300, Austin, Texas 78704. |
(2) | Consists of (i) 210,853 shares of Core common stock held of record by Mr. Levitt, (ii) 41,468 shares of Core common stock held of record by HKM Investment LLC (“HKM”), (iii) an aggregate of 1,738,219 shares of Core common stock held of record by The MJL 2012 Younger Children Trust, modified as of March 21, 2021, and The MJL 2012 Older Children Trust, modified as of March 21, 2021, (iv) 3,835,366 shares of common stock held of record by The CS 1219 Trust, dated April 13, 2017, (v) 10,629,667 shares of Core common stock held of record by The MJL Revocable Trust, modified as of June 18, 2021, (vi) 800,212 shares of Core common stock held of record by The NBL Revocable Trust, modified as of June 18, 2021, (vii) 3,199,412 shares of Core common stock held of record by MJL Blockchain LLC (“MJL Blockchain”) and (viii) 1,600,153 shares of Core common stock issuable upon exercise of warrants within 60 days of March 28, 2022 held by Mr. Levitt. Mr. Levitt is the managing member of each of HKM and MJL Blockchain and a trustee of each of (i) The MJL 2012 Younger Children Trust, modified as of March 21, 2021, (ii) The MJL 2012 Older Children Trust, modified as of March 21, 2021, (iii) The CS 1219 Trust, |
dated April 13, 2017, (iv) The MJL Revocable Trust, modified as of June 18, 2021, and (v) The NBL Revocable Trust, modified as of June 18, 2021. |
(3) | Consists of (i) 36,483,592 shares of Core common stock held of record by Mr. Feinstein, (ii) 974,301 shares of Core common stock held of record by Texas Blockchain 888 LLC (“Texas Blockchain”), (iii) 319,894 shares of Core common stock held of record by Red Moon 88, LLC (“Red Moon”) and (iv) 2,651,376 shares of Core common stock issuable upon exercise of options within 60 days of March 28, 2022 held by Mr. Feinstein. Mr. Feinstein has pledged 25,000,000 shares to certain lenders in connection with a financing arrangement. Mr. Feinstein is the managing member of each of Texas Blockchain and Red Moon. The principal business address of each of Texas Blockchain and Red Moon is 3753 Howard Hughes Pkwy, Suite 200, Las Vegas, NV 89169. Indicate number of pledged shares. |
(4) | Mr. Trzupek resigned from the Company on April 4, 2022, effective immediately. |
(5) | Ms. Sterling was appointed as Chief Financial Officer on April 4, 2022, effective immediately. |
(6) | Consists of (i) 29,111,649 shares of Core common stock held of record by MPM Life, LLC (“MPM”) and (ii) 1,600,153 shares of Core common stock issuable upon exercise of warrants within 60 days of March 28, 2022 held by Mr. Minnis through MPM. Mr. Minnis is the managing member of MPM and is deemed to be the beneficial owner of the securities held by 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 135,138,675 shares of Common Stock (including (i) 3,200,306 shares of Common Stock issuable upon the exercise of warrants, (ii) 24,962,264 shares of Common Stock issuable upon the settlement of restricted stock units, (iii) 811,917 shares of Common Stock underlying restricted stock awards and (iv) 18,819,555 shares of Common Stock issuable upon the exercise of stock options) held by certain affiliates of our company; |
• | up to 80,893,015 shares of Common Stock issuable upon conversion of certain Convertible Notes; |
• | up to 6,266,667 Private Placement Warrants; and |
• | up to 3,200,306 warrants initially issued by Legacy Core held by certain affiliates of our company. |
Shares of Common Stock |
Warrants to Purchase Common Stock |
|||||||||||||||||||||||||||||||
Name |
Number Beneficially Owned Prior to Offering |
Number Registered for Sale Hereby |
Number Beneficially Owned After Offering |
Percent Owned After Offering |
Number Beneficially Owned Prior to Offering |
Number Registered For Sale Hereby |
Number Beneficially Owned After Offering |
Percent Owned After Offering |
||||||||||||||||||||||||
Directors and Officers of Core Scientific, Inc.: |
||||||||||||||||||||||||||||||||
Michael Levitt (1) |
48,377,864 | 48,377,864 | — | — | 1,600,153 | 1,600,153 | — | — | ||||||||||||||||||||||||
Darin Feinstein (2) |
48,596,578 | 48,596,578 | — | — | — | — | — | — | ||||||||||||||||||||||||
Jarvis Hollingsworth (3) |
1,211,955 | 1,211,955 | — | — | — | — | — | — | ||||||||||||||||||||||||
MPM Life LLC (4) |
30,711,802 | 30,711,802 | — | — | 1,600,153 | 1,600,153 | — | — | ||||||||||||||||||||||||
Brian Neville (5) |
480, 044 | 480,044 | — | — | — | — | — | — | ||||||||||||||||||||||||
Kneeland Youngblood (6) |
400,038 | 400,038 | — | — | — | — | — | — | ||||||||||||||||||||||||
Michael Trzupek (7) |
1,200,000 | 1,200,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
Stacie Olivares (8) |
400,038 | 400,038 | — | — | — | — | — | — | ||||||||||||||||||||||||
Todd DuChene (9) |
3,200,304 | 3,200,304 | — | — | — | — | — | — | ||||||||||||||||||||||||
Denise Sterling (10) |
560,052 | 560,052 | — | — | — | — | — | — | ||||||||||||||||||||||||
Other Holders: |
||||||||||||||||||||||||||||||||
XPDI Sponsor LLC (12) |
11,965,834 | 11,965,834 | — | — | 5,013,334 | 5,013,334 | — | — | ||||||||||||||||||||||||
Scott Widham (13) |
30,000 | 30,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
Paul Dabbar (14) |
30,000 | 30,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
Paul Gaynor (15) |
30,000 | 30,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
Colleen Sullivan (16) |
30,000 | 30,000 | — | — | — | — | — | — | ||||||||||||||||||||||||
BlackRock Credit Alpha Master Fund L.P. (17) |
4,681,251 | 4,681,251 | — | — | 726,933 | 726,933 | — | — | ||||||||||||||||||||||||
The Obsidian Master Fund (18) |
1,639,356 | 1,639,356 | — | — | 238,133 | 238,133 | — | — | ||||||||||||||||||||||||
HC NCBR Fund (19) |
1,938,561 | 1,938,561 | — | — | 288,267 | 288,267 | — | — | ||||||||||||||||||||||||
Convertible Noteholders: |
||||||||||||||||||||||||||||||||
Amplify Transformational Data Sharing ETF (20) |
4,128,954 | 4,128,954 | — | — | — | — | — | — | ||||||||||||||||||||||||
Andrew Rosen 2004 Successor Insurance Trust (21) |
38,952 | 38,952 | — | — | — | — | — | — | ||||||||||||||||||||||||
Apollo Centre Street Partnership, LP ( 22) |
973,725 | 973,725 | — | — | — | — | — | — | ||||||||||||||||||||||||
Apollo Lincoln Fixed Income Fund, L.P. (23) |
621,276 | 621,276 | — | — | — | — | — | — | ||||||||||||||||||||||||
Apollo Moultrie Credit Fund, L.P. (24) |
483,125 | 483,125 | — | — | — | — | — | — | ||||||||||||||||||||||||
Apollo Tactical Value SPN Investments LP (25) |
1,864,464 | 1,864,464 | ||||||||||||||||||||||||||||||
Barkley Investments, LLC (26) |
311,619 | 311,619 | — | — | — | — | — | — | ||||||||||||||||||||||||
Better Downtown Miami LLC (27) |
62,323 | 62,323 | — | — | — | — | — | — |
Shares of Common Stock |
Warrants to Purchase Common Stock |
|||||||||||||||||||||||||||||||
Name |
Number Beneficially Owned Prior to Offering |
Number Registered for Sale Hereby |
Number Beneficially Owned After Offering |
Percent Owned After Offering |
Number Beneficially Owned Prior to Offering |
Number Registered For Sale Hereby |
Number Beneficially Owned After Offering |
Percent Owned After Offering |
||||||||||||||||||||||||
Birch Grove Strategies Master Fund (28) |
476,899 | 476,899 | — | — | — | — | — | — | ||||||||||||||||||||||||
BlockFi Lending LLC (29) |
779,048 | 779,048 | — | — | — | — | — | — | ||||||||||||||||||||||||
Cannon Investments LLC (30) |
38,952 | 38,952 | — | — | — | — | — | — | ||||||||||||||||||||||||
Celsius Core LLC (31) |
8,584,188 | 8,584,188 | — | — | — | — | — | — | ||||||||||||||||||||||||
Corbin ERISA Opportunity Fund, Ltd. (32) |
1,869,715 | 1,869,715 | — | — | — | — | — | — | ||||||||||||||||||||||||
Corbin Opportunity Fund, L.P. (33) |
311,619 | 311,619 | — | — | — | — | — | — | ||||||||||||||||||||||||
Cryptonic Black, LLC (34) |
934,857 | 934,857 | — | — | — | — | — | — | ||||||||||||||||||||||||
David Sarner (35) |
38,952 | 38,952 | — | — | — | — | — | — | ||||||||||||||||||||||||
Douglas Lipton (36) |
38,952 | 38,952 | — | — | — | — | — | — | ||||||||||||||||||||||||
Ferro Investments Ltd (37) |
233,714 | 233,714 | — | — | — | — | — | — | ||||||||||||||||||||||||
FGK Investments Ltd (38) |
77,904 | 77,904 | — | — | — | — | — | — | ||||||||||||||||||||||||
First Sun Investments, LLC (39) |
623,238 | 623,238 | — | — | — | — | — | — | ||||||||||||||||||||||||
Frank Pollaro (40) |
38,952 | 38,952 | — | — | — | — | — | — | ||||||||||||||||||||||||
FTF Diversified Holdings, LP (41) |
311,619 | 311,619 | — | — | — | — | — | — | ||||||||||||||||||||||||
Galaxy Digital LP (42) |
779,048 | 779,048 | — | — | — | — | — | — | ||||||||||||||||||||||||
GreensLedge Merchant Holdings LLC (43) |
317,932 | 317,932 | — | — | — | — | — | — | ||||||||||||||||||||||||
Gullane Capital Partners, LLC (44) |
389,524 | 389,524 | — | — | — | — | — | — | ||||||||||||||||||||||||
Gullane Digital Asset Partners, LLC (45) |
3,505,716 | 3,505,716 | — | — | — | — | — | — | ||||||||||||||||||||||||
Gullane Digital Asset Partners QP, LLC (46) |
4,999,655 | 4,999,655 | — | — | — | — | — | — | ||||||||||||||||||||||||
Ibex Partners (Core) LP (47) |
10,332,819 | 10,332,819 | — | — | — | — | — | — | ||||||||||||||||||||||||
ICG CoreSci Holdings, LP (48) |
6,517,624 | 6,517,624 | — | — | — | — | — | — | ||||||||||||||||||||||||
James Pulaski (49) |
155,809 | 155,809 | — | — | — | — | — | — | ||||||||||||||||||||||||
Jason Capello (50) |
311,619 | 311,619 | — | — | — | — | — | |||||||||||||||||||||||||
John B. Quinn (51) |
77,904 | 77,904 | — | — | — | — | — | — | ||||||||||||||||||||||||
John P. Joliet (52) |
31,161 | 31,161 | — | — | — | — | — | — | ||||||||||||||||||||||||
JPAS – Credit-A S.P.(53) |
649,156 | 649,156 | — | — | — | — | — | — | ||||||||||||||||||||||||
JPAS – Credit LLC (54) |
1,298,463 | 1,298,463 | — | — | — | — | — | — | ||||||||||||||||||||||||
JPAS – Crypto Infrastructure LLC (55) |
1,810,467 | 1,810,467 | — | — | — | — | — | — |
Shares of Common Stock |
Warrants to Purchase Common Stock |
|||||||||||||||||||||||||||||||
Name |
Number Beneficially Owned Prior to Offering |
Number Registered for Sale Hereby |
Number Beneficially Owned After Offering |
Percent Owned After Offering |
Number Beneficially Owned Prior to Offering |
Number Registered For Sale Hereby |
Number Beneficially Owned After Offering |
Percent Owned After Offering |
||||||||||||||||||||||||
JPAS – Crypto Infrastructure-A S.P. (56) |
682,486 | 682,486 | — | — | — | — | — | — | ||||||||||||||||||||||||
JSK Partnership LLC (57) |
155,809 | 155,809 | — | — | — | — | — | — | ||||||||||||||||||||||||
Kenneth Wormser (58) |
475,320 | 475,320 | — | — | — | |||||||||||||||||||||||||||
Kensico Associates, L.P. (59) |
3,974,161 | 3,974,161 | — | — | — | — | — | — | ||||||||||||||||||||||||
KMR CS Holdings, LLC (60) |
127,763 | 127,763 | — | — | — | — | — | — | ||||||||||||||||||||||||
Leon J. Simkins Non-Exempt Trust FBO Michael Simkins(61) |
116,857 | 116,857 | — | — | — | — | — | — | ||||||||||||||||||||||||
Levbern Management LLC (62) |
38,952 | 38,952 | — | — | — | — | — | — | ||||||||||||||||||||||||
Marsico AXS CS LLC (63) |
3,360,013 | 3,360,013 | — | — | — | — | — | — | ||||||||||||||||||||||||
Massachusetts Mutual Life Insurance Company (64) |
6,232,385 | 6,232,385 | — | — | — | — | — | — | ||||||||||||||||||||||||
Milos Core LLC (65) |
155,809 | 155,809 | — | — | — | — | — | — | ||||||||||||||||||||||||
Monbanc Inc. (66) |
15,580 | 15,580 | — | — | — | — | — | — | ||||||||||||||||||||||||
Neso Investment Group Ltd (67) |
77,904 | 77,904 | — | — | — | — | — | — | ||||||||||||||||||||||||
Northdata Holdings Inc. (68) |
31,161 | 31,161 | — | — | — | — | — | — | ||||||||||||||||||||||||
OIP SPV Core Scientific, LLC (69) |
154,724 | 154,724 | — | — | — | — | — | — | ||||||||||||||||||||||||
OIP SPV CS, LLC (70) |
136,157 | 136,157 | — | — | — | — | — | — | ||||||||||||||||||||||||
Omega Interceptor Restricted Ltd (71) |
1,530,473 | 1,530,473 | — | — | — | — | — | — | ||||||||||||||||||||||||
Pescadero Capital, LLC (72) |
779,048 | 779,048 | — | — | — | — | — | — | ||||||||||||||||||||||||
Richard Katz 2016 GST Trust (73) |
38,952 | 38,952 | — | — | — | — | — | — | ||||||||||||||||||||||||
Robert Fedrock (74) |
62,323 | 62,323 | — | — | — | — | — | — | ||||||||||||||||||||||||
Sabby Volatility Warrant Master Fund, Ltd. (75) |
389,524 | 389,524 | — | — | — | — | — | — | ||||||||||||||||||||||||
SunnySide Consulting and Holdings, Inc. (76) |
17,139 | 17,139 | — | — | — | — | — | — | ||||||||||||||||||||||||
TBC 222 LLC (77) |
389,524 | 389,524 | — | — | — | — | — | — | ||||||||||||||||||||||||
The Kimmel Family Foundation (78) |
238,449 | 238,449 | — | — | — | — | — | — | ||||||||||||||||||||||||
The Michael O. Johnson Revocable Trust (79) |
158,966 | 158,966 | — | — | — | — | — | — | ||||||||||||||||||||||||
The Sear Family 1996 Trust (80) |
77,904 | 77,904 | — | — | — | — | — | — | ||||||||||||||||||||||||
TJC3 LLC (81) |
623,238 | 623,238 | — | — | — | — | — | — | ||||||||||||||||||||||||
Transatlantic Mobility Holdings II LLC (82) |
155,809 | 155,809 | — | — | — | — | — | — | ||||||||||||||||||||||||
Vineet Agrawal (83) |
38,952 | 38,952 | — | — | — | — | — | — |
Shares of Common Stock |
Warrants to Purchase Common Stock |
|||||||||||||||||||||||||||||||
Name |
Number Beneficially Owned Prior to Offering |
Number Registered for Sale Hereby |
Number Beneficially Owned After Offering |
Percent Owned After Offering |
Number Beneficially Owned Prior to Offering |
Number Registered For Sale Hereby |
Number Beneficially Owned After Offering |
Percent Owned After Offering |
||||||||||||||||||||||||
William R. Guthy Separate Property Trust (84) |
794,832 | 794,832 | — | — | — | — | — | — | ||||||||||||||||||||||||
Wolfswood Partners LP (85) |
155,809 | 155,809 | — | — | — | — | — | — | ||||||||||||||||||||||||
XMS Core Convert Holdings LLC (86) |
155,809 | 155,809 | — | — | — | — | — | — | ||||||||||||||||||||||||
1994 Steinfeld Family Trust (87) |
77,904 | 77,904 | — | — | — | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total |
230,923,357 |
230,923,357 |
— | — | 9,466,973 |
9,466,973 |
— | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Number of shares of Common Stock being registered for sale hereby consists of (i) 210,853 shares of Common Stock held by Michael Levitt, Chief Executive Officer and Co-Chair of the board of directors of Core; (ii) 41,468 shares of Common Stock held by HKM Investment LLC (“HKM”), (iii) an aggregate of 1,738,219 shares of Common Stock held by The MJL 2012 Younger Children Trust, modified as of March 21, 2021, and The MJL 2012 Older Children Trust, modified as of March 21, 2021, (iv) 3,835,366 shares of Common Stock held by The CS 1219 Trust, dated April 13, 2017, (v) 10,629,667 shares of Common Stock held by The MJL Revocable Trust, modified as of June 18, 2021, (vi) 800,212 shares of Common Stock held by The NBL Revocable Trust, modified as of June 18, 2021, (vii) 3,199,412 shares of Common Stock held by MJL Blockchain LLC (“MJL Blockchain”), (viii) 1,600,153 shares of Common Stock issuable upon exercise of warrants held by Mr. Levitt, (ix) 18,321,750 shares of Common Stock issuable upon settlement of restricted stock units held by Mr. Levitt and (x) 8,000,764 shares of Common Stock issuable upon exercise of stock options held by Mr. Levitt. Mr. Levitt is the managing member of each of HKM and MJL Blockchain and a trustee of each of (i) The MJL 2012 Younger Children Trust, modified as of March 21, 2021, (ii) The MJL 2012 Older Children Trust, modified as of March 21, 2021, (iii) The CS 1219 Trust, dated April 13, 2017, (iv) The MJL Revocable Trust, modified as of June 18, 2021, and (v) The NBL Revocable Trust, modified as of June 18, 2021. |
(2) | Number of shares of Common Stock being registered for sale hereby consists of (i) 36,483,592 shares held by Darin Feinstein, Chief Vision Officer and Co-Chair of the board of directors of Core; (ii) 974,301 shares held by Texas Blockchain 888 LLC (“Texas Blockchain”); (iii) 319,894 shares held by Red Moon 88, LLC (“Red Moon”) and (iv) 10,818,791 shares of Common Stock issuable upon exercise of stock options held by Mr. Feinstein. Mr. Feinstein is the managing member of each of Texas Blockchain and Red Moon. The principal business address of each of Texas Blockchain and Red Moon is 3753 Howard Hughes Pkwy, Suite 200, Las Vegas, NV 89169. |
(3) | Number of shares of Common Stock being registered for sale hereby consists of (i) 811,917 shares of Common Stock underlying restricted stock awards held by Jarvis Hollingsworth and (ii) 400,038 shares of Common Stock issuable upon settlement of restricted stock units held by Mr. Hollingsworth. |
(4) | Number of shares of Common Stock being registered for sale hereby consists of (i) 29,111,649 shares held by MPM Life, LLC (“MPM”) and (ii) 1,600,153 shares of Common Stock issuable upon exercise of warrants held by MPM. Matthew Minnis, a member of the board of directors of Core, is the managing member of MPM and is deemed to be the beneficial owner of the securities held by MPM. |
(5) | Number of shares of Common Stock being registered for sale hereby consists of 480,044 shares of Common Stock issuable upon settlement of restricted stock units held by Brian Neville, Chief Accounting Officer of Core. |
(6) | Number of shares of Common Stock being registered for sale hereby consists of 400,038 shares of Common Stock issuable upon settlement of restricted stock units held by Kneeland Youngblood, a member of the board of directors of Core. |
(7) | Number of shares of Common Stock being registered for sale hereby consists of 1,200,000 shares of Common Stock issuable upon settlement of restricted stock units held by Michael Trzupek, former Chief Financial Officer of Core who resigned in April 2022. All other RSUs held by Mr. Trzupek were forfeited in connection with his separation from the Company. |
(8) | Number of shares of Common Stock being registered for sale hereby consists of 400,038 shares of Common Stock issuable upon settlement of restricted stock units held by Stacie Olivares, a member of the board of directors of Core. |
(9) | Number of shares of Common Stock being registered for sale hereby consists of 3,200,304 shares of Common Stock issuable upon settlement of restricted stock units held by Todd DuChene, EVP, General Counsel, Chief Compliance Officer and Secretary of Core. |
(10) | Number of shares of Common Stock being registered for sale hereby consists of 560,052 shares of Common Stock issuable upon settlement of restricted stock units held by Denise Sterling, Chief Financial Officer of Core who was appointed in April 2022. |
(12) | Number of shares of Common Stock being registered for sale hereby consists of (i) 6,952,500 Founder Shares and (ii) 5,013,334 shares of Common Stock that are issuable upon the exercise of Private Placement Warrants. Number of warrants to purchase Common Stock being registered for sale hereby represents 5,013,334 Private Placement Warrants. Transition Equity Partners, LLC and XMS XPDI Sponsor Holdings LLC are the managing members of XPDI Sponsor LLC. Transition Equity Partners, LLC is controlled by Patrick C. Eilers, former Chief Executive Officer and a member of the board of directors of XPDI, predecessor registrant prior to the consummation of the Business Combination. XMS XPDI Sponsor Holdings LLC is controlled by Theodore J. Brombach, former chairman of the board of directors of XPDI, and John Spence, Each of Messrs. Eilers, Brombach and Spence controls XPDI Sponsor LLC and may be deemed to be the beneficial owner of the securities held by XPDI Sponsor LLC. Each such person disclaims beneficial ownership of these securities, except to the extent, if any, of his pecuniary interest therein. |
(13) | Number of shares of Common Stock being registered for sale hereby represents 30,000 Founder Shares. The registered holder of such securities was an independent director of XPDI, predecessor registrant prior to the consummation of the Business Combination, and resigned at the closing of the Business Combination. |
(14) | Number of shares of Common Stock being registered for sale hereby represents 30,000 Founder Shares. The registered holder of such securities was an independent director of XPDI, predecessor registrant prior to the consummation of the Business Combination, and resigned at the closing of the Business Combination. |
(15) | Number of shares of Common Stock being registered for sale hereby represents 30,000 Founder Shares. The registered holder of such securities was an independent director of XPDI, predecessor registrant prior to the consummation of the Business Combination, and resigned at the closing of the Business Combination. |
(16) | Number of shares of Common Stock being registered for sale hereby represents 30,000 Founder Shares. The registered holder of such securities was an independent director of XPDI, predecessor registrant prior to the consummation of the Business Combination, and resigned at the closing of the Business Combination. |
(18) | Number of shares of Common Stock being registered for sale hereby consists of (i) 294,975 Founder Shares, (ii) 1,106,248 shares issuable upon conversion of the Convertible Notes held by The Obsidian Master Fund and (iii) 238,133 shares of Common Stock that are issuable upon the exercise of Private Placement Warrants. Number of warrants to purchase Common Stock being registered for sale hereby represents 238,133 Private Placement Warrants. The registered holders of the referenced shares to be registered are the following funds and accounts under management by subsidiaries of BlackRock, Inc.: BlackRock Credit Alpha Master Fund, LP; HC NCBR Fund; and The Obsidian Master Fund. BlackRock, Inc. is the ultimate parent holding company of such subsidiaries. On behalf of such subsidiaries, the applicable portfolio managers, as managing directors (or in other capacities) of such entities, and/or the applicable investment committee members of such funds and accounts, have voting and investment power over the shares held by the funds and accounts which are the registered holders of the referenced shares. Such portfolio managers and/or investment committee members expressly disclaim beneficial ownership of all shares held by such funds and accounts. The address of such funds and accounts, such subsidiaries and such portfolio managers and/or investment committee members is 55 East 52nd Street, New York, NY 10055. Shares shown include only the securities being registered for resale and may not incorporate all shares deemed to be beneficially held by the registered holders or BlackRock, Inc. |
(19) | Number of shares of Common Stock being registered for sale hereby consists of (i) 357,075 Founder Shares, (ii) 1,293,219 shares issuable upon conversion of the Convertible Notes held by HC NCBR Fund and (iii) 288,267 shares of Common Stock that are issuable upon the exercise of Private Placement Warrants. Number of warrants to purchase Common Stock being registered for sale hereby represents 288,267 Private Placement Warrants. The registered holders of the referenced shares to be registered are the following funds and accounts under management by subsidiaries of BlackRock, Inc.: BlackRock Credit Alpha Master Fund, LP; HC NCBR Fund; and The Obsidian Master Fund. BlackRock, Inc. is the ultimate parent holding company of such subsidiaries. On behalf of such subsidiaries, the applicable portfolio managers, as managing directors (or in other capacities) of such entities, and/or the applicable investment committee members of such funds and accounts, have voting and investment power over the shares held by the funds and accounts which are the registered holders of the referenced shares. Such portfolio managers and/or investment committee members expressly disclaim beneficial ownership of all shares held by such funds and accounts. The address of such funds and accounts, such subsidiaries and such portfolio managers and/or investment committee members is 55 East 52nd Street, New York, NY 10055. Shares shown include only the securities being registered for resale and may not incorporate all shares deemed to be beneficially held by the registered holders or BlackRock, Inc. |
(20) | Number of shares of Common Stock being registered for sale hereby represents 4,128,954 shares issuable upon conversion of the Convertible Notes held by Amplify Transformational Data Sharing ETF. Amplify ETF Trust (and specifically Amplify Transformational Data ETF, a series of that trust) have the voting rights and is the beneficial owner of the securities via that trust. Charles Ragauss, representing the sub advisor to the trust, and John Phillips, representing the advisor and sponsor of the trusts, are the appointed contacts for the trust and can act within those capacities as needed. |
(21) | Number of shares of Common Stock being registered for sale hereby represents 38,952 shares issuable upon conversion of the Convertible Notes held by Andrew Rosen 2004 Successor Insurance Trust. |
(22) | Number of shares of Common Stock being registered for sale hereby represents (i) 389,524 shares of common stock held by Apollo Centre Street Partnership, LP (“Apollo Centre”) and (ii) 584,201 shares issuable upon conversion of the Convertible Notes held by Apollo Centre. |
(23) | Number of shares of Common Stock being registered for sale hereby represents (i) 249,295 shares of common stock held by Apollo Lincoln Fixed Income Fund, L.P. (“Apollo Lincoln”) and (ii) 371,981 shares issuable upon conversion of the Convertible Notes held by Apollo Lincoln. |
(24) | Number of shares of Common Stock being registered for sale hereby represents (i) 186,971 shares of common stock held by Apollo Moultrie Credit Fund, L.P. (“Apollo Moultrie”) and (ii) 296,154 shares issuable upon conversion of the Convertible Notes held by Apollo Moultrie. |
(25) | Number of shares of Common Stock being registered for sale hereby represents (i) 732,305 shares of common stock held by Apollo Tactical Value SPN Investments LP (“Apollo Tactical”) and (ii) 1,132,159 shares issuable upon conversion of the Convertible Notes held by Apollo Tactical. |
(26) | Number of shares of Common Stock being registered for sale hereby represents 311,619 shares issuable upon conversion of the Convertible Notes held by Barkley Investments, LLC. Jason P. Godfrey has voting and dispositive power with respect to the securities held by Barkley Investments, LLC and may be deemed to be the beneficial owner of such securities. |
(27) | Number of shares of Common Stock being registered for sale hereby represents 62,323 shares issuable upon conversion of the Convertible Notes held by Better Downtown Miami LLC. Marc Roberts has voting and dispositive power with respect to the securities held by Better Downtown Miami LLC and may be deemed to be the beneficial owner of such securities. |
(28) | Number of shares of Common Stock being registered for sale hereby represents 476,899 shares issuable upon conversion of the Convertible Notes held by Birch Grove Strategies Master Fund. |
(29) | Number of shares of Common Stock being registered for sale hereby represents 779,048 shares issuable upon conversion of the Convertible Notes held by BlockFi Lending LLC. BlockFi Lending LLC is a lender to Core under the following two loan agreements: (i) the Facility and Security Agreement, dated December 30, 2021, by and between BlockFi Lending LLC and Core for an aggregate principal amount of $10.0 million and (ii) the Facility and Security Agreement, dated December 30, 2021, by and between BlockFi Lending LLC and Core for an aggregate principal amount of up to $100.0 million, of which $70 million has been disbursed as of the date hereof and the remaining $30 million may be disbursed subject to the satisfaction of certain conditions precedent. |
(30) | Number of shares of Common Stock being registered for sale hereby represents 38,952 shares issuable upon conversion of the Convertible Notes held by Cannon Investments LLC. |
(31) | Number of shares of Common Stock being registered for sale hereby represents 8,584,188 shares issuable upon conversion of the Convertible Notes held by Celsius Core LLC. |
(32) | Number of shares of Common Stock being registered for sale hereby represents 1,869,715 shares issuable upon conversion of the Convertible Notes held by Corbin ERISA Opportunity Fund, Ltd. Corbin Capital Partners, L.P. (“CCP”) is the investment manager of Corbin ERISA Opportunity Fund, Ltd., CCP and its general partner, Corbin Capital Partners GP, LLC, may be deemed beneficial owners of the securities being registered hereby for sale by Corbin ERISA Opportunity Fund, Ltd. Craig Bergstrom, as the Chief Investment Officer of CCP, makes voting and investment decisions for Corbin ERISA Opportunity Fund, Ltd., but disclaims beneficial ownership of the shares held by it. |
(33) | Number of shares of Common Stock being registered for sale hereby represents 311,619 shares issuable upon conversion of the Convertible Notes held by Corbin Opportunity Fund, L.P. Corbin Capital Partners, L.P. (“CCP”) is the investment manager of Corbin Opportunity Fund, L.P. CCP and its general partner, Corbin Capital Partners GP, LLC, may be deemed beneficial owners of the securities being registered hereby for sale by Corbin Opportunity Fund, L.P. Craig Bergstrom, as the Chief Investment Officer of CCP, makes voting and investment decisions for Corbin Opportunity Fund, L.P., but disclaims beneficial ownership of the shares held by it. |
(34) | Number of shares of Common Stock being registered for sale hereby represents 934,857 shares issuable upon conversion of the Convertible Notes held by Cryptonic Black LLC (“Cryptonic”). |
(35) | Number of shares of Common Stock being registered for sale hereby represents 38,952 shares issuable upon conversion of the Convertible Notes held by David Sarner. |
(36) | Number of shares of Common Stock being registered for sale hereby represents 38,952 shares issuable upon conversion of the Convertible Notes held by Douglas Lipton. |
(37) | Number of shares of Common Stock being registered for sale hereby represents 233,714 shares issuable upon conversion of the Convertible Notes held by Ferro Investments Ltd. |
(38) | Number of shares of Common Stock being registered for sale hereby represents 77,904 shares issuable upon conversion of the Convertible Notes held by FGK Investments Ltd. |
(39) | Number of shares of Common Stock being registered for sale hereby represents 623,238 shares issuable upon conversion of the Convertible Notes held by First Sun Investments, LLC. |
(40) | Number of shares of Common Stock being registered for sale hereby represents 38,952 shares issuable upon conversion of the Convertible Notes held by Frank Pollaro. |
(41) | Number of shares of Common Stock being registered for sale hereby represents 311,619 shares issuable upon conversion of the Convertible Notes held by FTF Diversified Holdings, LP. |
(42) | Number of shares of Common Stock being registered for sale hereby represents 779,048 shares issuable upon conversion of the Convertible Notes held by Galaxy Digital LP. |
(43) | Number of shares of Common Stock being registered for sale hereby represents 317,932 shares issuable upon conversion of the Convertible Notes held by GreensLedge Merchant Holdings LLC. |
(44) | Number of shares of Common Stock being registered for sale hereby represents 389,524 shares issuable upon conversion of the Convertible Notes held by Gullane Capital Partners, LLC. Richard A. Miller III has voting and dispositive power with respect to the securities held by Gullane Capital Partners, LLC and may be deemed to be the beneficial owner of such securities. |
(45) | Number of shares of Common Stock being registered for sale hereby represents 3,505,716 shares issuable upon conversion of the Convertible Notes held by Gullane Digital Asset Partners, LLC. Richard A. Miller III has voting and dispositive power with respect to the securities held by Gullane Digital Asset Partners, LLC and may be deemed to be the beneficial owner of such securities. |
(46) | Number of shares of Common Stock being registered for sale hereby represents 4,999,655 shares issuable upon conversion of the Convertible Notes held by Gullane Digital Asset Partners QP, LLC. Richard A. Miller III has voting and dispositive power with respect to the securities held by Gullane Digital Asset Partners QP, LLC and may be deemed to be the beneficial owner of such securities. |
(47) | Number of shares of Common Stock being registered for sale hereby represents 10,332,819 shares issuable upon conversion of the Convertible Notes held by Ibex Partners (Core) LP. Justin B. Borus is the manager of Ibex GP LLC, the securityholder’s general partner, and Mr. Borus is also the manager of Ibex Investors LLC, the securityholder’s investment manager. Each of Ibex GP LLC, Ibex Investors LLC and Mr. Borus expressly disclaims beneficial ownership of the securities being registered hereby for sale. The business address for the securityholder and Ibex GP LLC, Ibex Investors LLC and Mr. Borus is 260 N. Josephine Street, Suite 300, Denver, CO 80206. |
(48) | Number of shares of Common Stock being registered for sale hereby represents 6,517,624 shares issuable upon conversion of the Convertible Notes held by ICG CoreSci Holdings, LP. |
(49) | Number of shares of Common Stock being registered for sale hereby represents 155,809 shares issuable upon conversion of the Convertible Notes held by James Pulaski. |
(50) | Number of shares of Common Stock being registered for sale hereby represents 311,619 shares issuable upon conversion of the Convertible Notes held by Jason Capello. |
(51) | Number of shares of Common Stock being registered for sale hereby represents 77,904 shares issuable upon conversion of the Convertible Notes held by John B. Quinn. |
(52) | Number of shares of Common Stock being registered for sale hereby represents 31,161 shares issuable upon conversion of the Convertible Notes held by John P. Joliet. |
(53) | Number of shares of Common Stock being registered for sale hereby represents 649,156 shares issuable upon conversion of the Convertible Notes held by JPAS – Credit-A S.P. |
(54) | Number of shares of Common Stock being registered for sale hereby represents 1,298,463 shares issuable upon conversion of the Convertible Notes held by JPAS – Credit LLC. |
(55) | Number of shares of Common Stock being registered for sale hereby represents 1,810,467 shares issuable upon conversion of the Convertible Notes held by JPAS – Crypto Infrastructure LLC. |
(56) | Number of shares of Common Stock being registered for sale hereby represents 652,486 shares issuable upon conversion of the Convertible Notes held by JPAS – Crypto Infrastructure-A S.P. |
(57) | Number of shares of Common Stock being registered for sale hereby represents 155,809 shares issuable upon conversion of the Convertible Notes held by JSK Partnership LLC. PB Investment LLC and Jarrett Posner have voting and dispositive power with respect to the securities held by JSK Partnership LLC and may be deemed to be the beneficial owner of such securities. |
(58) | Number of shares of Common Stock being registered for sale hereby represents (i) 397,416 shares issuable upon conversion of the Convertible Notes held by Kenneth Wormser and (ii) 77,904 shares issuable upon conversion of the Convertible Notes held by the Wormser Family Partnership II L.P. Kenneth Wormser has voting and dispositive power with respect to the securities held by the Wormser Family Partnership II L.P. and may be deemed to be the beneficial owner of such securities. |
(59) | Number of shares of Common Stock being registered for sale hereby represents (i) 2,722,936 shares issuable upon conversion of the Convertible Notes held by Kensico Associates, L.P. (“Kensico Associates”) and |
(ii) 1,251,225 shares issuable upon conversion of the Convertible Notes held by Convertible Notes held by Kensico Offshore Fund Master, LTD (“Kensico Offshore Fund Master” and together with Kensico Associates, collectively, the “Kensico Funds”). Kensico Capital Management Corp. (“KCM”), a registered investment adviser, is the investment adviser to the Kensico Funds and, in such capacity, exercises voting and investment power with respect to the securities held by the Kensico Funds. Michael Lowenstein and Thomas J. Coleman are the Co-Presidents of KCM. As a result, and by virtue of the relationships described in this footnote, each of Messrs. Lowenstein and Coleman as well as KCM may be deemed to share beneficial ownership over the securities held by the Kensico Funds. |
(60) | Number of shares of Common Stock being registered for sale hereby represents 127,763 shares issuable upon conversion of the Convertible Notes held by KMR CS Holdings, LLC. Kamran Yaghoubzadeh has voting and dispositive power with respect to the securities held by KMR CS Holdings, LLC and may be deemed to be the beneficial owner of such securities. |
(61) | Number of shares of Common Stock being registered for sale hereby represents 116,857 shares issuable upon conversion of the Convertible Notes held by Leon J. Simkins Non-Exempt Trust FBO Michael Simkins. Michelle Simkins-Rubell has voting and dispositive power with respect to the securities held by Leon J. Simkins Non-Exempt Trust FBO Michael Simkins and may be deemed to be the beneficial owner of such securities. |
(62) | Number of shares of Common Stock being registered for sale hereby represents 38,952 shares issuable upon conversion of the Convertible Notes held by Levbern Management LLC. Andrew Michael Ward has voting and dispositive power with respect to the securities held by Levbern Management LLC and may be deemed to be the beneficial owner of such securities. Mr. Ward is the brother-in-law Co-Chair of the board of directors. |
(63) | Number of shares of Common Stock being registered for sale hereby represents 3,360,013 shares issuable upon conversion of the Convertible Notes held by Marsico AXS CS LLC. |
(64) | Number of shares of Common Stock being registered for sale hereby represents 6,232,385 shares issuable upon conversion of the Convertible Notes held by Massachusetts Mutual Life Insurance Company. |
(65) | Number of shares of Common Stock being registered for sale hereby represents 155,809 shares issuable upon conversion of the Convertible Notes held by Milos Core LLC. |
(66) | Number of shares of Common Stock being registered for sale hereby represents 15,580 shares issuable upon conversion of the Convertible Notes held by Monbanc Inc. Daniels W.K. Rafuse LLB, LLC has voting and dispositive power with respect to the securities held by Monbanc Inc. and may be deemed to be the beneficial owner of such securities. |
(67) | Number of shares of Common Stock being registered for sale hereby represents 77,904 shares issuable upon conversion of the Convertible Notes held by Neso Investment Group Ltd. |
(68) | Number of shares of Common Stock being registered for sale hereby represents 31,161 shares issuable upon conversion of the Convertible Notes held by Northdata Holdings Inc. Daniels W.K. Rafuse LLB, LLC has voting and dispositive power with respect to the securities held by Northdata Holdings Inc. and may be deemed to be the beneficial owner of such securities. |
(69) | Number of shares of Common Stock being registered for sale hereby represents 154,724 shares issuable upon conversion of the Convertible Notes held by OIP SPV Core Scientific, LLC. |
(70) | Number of shares of Common Stock being registered for sale hereby represents 136,157 shares issuable upon conversion of the Convertible Notes held by OIP SPV CS, LLC. |
(71) | Number of shares of Common Stock being registered for sale hereby represents 1,530,473 shares issuable upon conversion of the Convertible Notes held by Omega Interceptor Restricted Ltd. Mohamed Hassan Mohamed Hassan Al Suwaidi and Bashar Basahr Adel Suleiman Alrosan have voting and dispositive power with respect to the securities held by Omega Interceptor Restricted Ltd and may be deemed to be the beneficial owner of such securities. |
(72) | Number of shares of Common Stock being registered for sale hereby represents 779,048 shares issuable upon conversion of the Convertible Notes held by Pescadero Capital, LLC. |
(73) | Number of shares of Common Stock being registered for sale hereby represents 38,952 shares issuable upon conversion of the Convertible Notes held by Richard Katz 2016 Trust. Richard Katz has voting and |
dispositive power with respect to the securities held by Richard Katz 2016 Trust and may be deemed to be the beneficial owner of such securities. |
(74) | Number of shares of Common Stock being registered for sale hereby represents 62,323 shares issuable upon conversion of the Convertible Notes held by Robert Fedrock. |
(75) | Number of shares of Common Stock being registered for sale hereby represents 389,524 shares issuable upon conversion of the Convertible Notes held by Sabby Volatility Warrant Master Fund, Ltd. Sabby Management, LLC is the investment manager of Sabby Volatility Warrant Master Fund, Ltd. and shares voting and investment power with respect to the securities being registered hereby in this capacity. As manager of Sabby Management, LLC, Hal Mintz also shares voting and investment power on behalf of Sabby Volatility Warrant Master Fund, Ltd. Each of Sabby Management, LLC and Hal Mintz disclaims beneficial ownership over the securities being registered hereby except to the extent of their pecuniary interest therein. |
(76) | Number of shares of Common Stock being registered for sale hereby represents 17,139 shares issuable upon conversion of the Convertible Notes held by SunnySide Consulting and Holdings, Inc. Taras Kulyk has voting and dispositive power with respect to the securities held by SunnySide Consulting and Holdings, Inc. and may be deemed to be the beneficial owner of such securities. |
(77) | Number of shares of Common Stock being registered for sale hereby represents 389,524 shares issuable upon conversion of the Convertible Notes held by TBC 222 LLC. |
(78) | Number of shares of Common Stock being registered for sale hereby represents 238,449 shares issuable upon conversion of the Convertible Notes held by The Kimmel Family Foundation. |
(79) | Number of shares of Common Stock being registered for sale hereby represents 158,966 shares issuable upon conversion of the Convertible Notes held by The Michael O. Johnson Revocable Trust. |
(80) | Number of shares of Common Stock being registered for sale hereby represents 77,904 shares issuable upon conversion of the Convertible Notes held by The Sear Family 1996 Trust. Mark Sear has voting and dispositive power with respect to the securities held The Sear Family 1996 Trust and may be deemed to be the beneficial owner of such securities. |
(81) | Number of shares of Common Stock being registered for sale hereby represents 623,238 shares issuable upon conversion of the Convertible Notes held by TJC3 LLC. Thomas J. Coleman has voting and dispositive power with respect to the securities held by TJC3 LLC and may be deemed to be the beneficial owner of such securities. |
(82) | Number of shares of Common Stock being registered for sale hereby represents 155,809 shares issuable upon conversion of the Convertible Notes held by Transatlantic Mobility Holdings II LLC. Abel Nararro has voting and dispositive power with respect to the securities held by Transatlantic Mobility Holdings II LLC and may be deemed to be the beneficial owner of such securities. |
(83) | Number of shares of Common Stock being registered for sale hereby represents 38,952 shares issuable upon conversion of the Convertible Notes held by Vineet Agrawal. |
(84) | Number of shares of Common Stock being registered for sale hereby represents 794,832 shares issuable upon conversion of the Convertible Notes held by the William R. Guthy Separate Property Trust. |
(85) | Number of shares of Common Stock being registered for sale hereby represents 155,809 shares issuable upon conversion of the Convertible Notes held by Wolfswood Partners LP. |
(86) | Number of shares of Common Stock being registered for sale hereby represents 155,809 shares issuable upon conversion of the Convertible Notes held by XMS Core Convert Holdings LLC. |
(87) | Number of shares of Common Stock being registered for sale hereby represents 77,904 shares issuable upon conversion of the Convertible Notes held by the 1994 Steinfeld Family Trust. Jake Steinfeld has voting and dispositive power with respect to the securities held by the 1994 Steinfeld Family Trust and may be deemed to be the beneficial owner of such securities. |
• | 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 |
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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 135,138,675 shares of common stock (including shares issuable upon the exercise of convertible securities) held by certain affiliates of our company; and |
• | up to 80,893,015 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 |
• | 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. |
Blockcap (Historical) for the period January 1, 2021 through July 30, 2021 |
Core Scientific Historical |
Core Scientific Pro Forma Combined |
XPDI Historical |
Pro Forma Combined New Core |
Pro Forma Equivalent New Core |
|||||||||||||||||||
Net (loss) income per share: |
||||||||||||||||||||||||
Basic |
$ | (0.16 | ) | $ | 0.37 | $ | (2.04 | ) | $ | (0.83 | ) | $ | (1.81 | ) | $ | (1.21 | ) | |||||||
Diluted (1) |
$ | (0.16 | ) | $ | 0.32 | $ | (2.04 | ) | $ | (0.83 | ) | $ | (1.81 | ) | $ | (1.21 | ) |
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 Core Scientific; |
• | Core Scientific’s acquisition of Blockcap (described below), including any elimination of the effect of transactions between Core Scientific and Blockcap, as required, is included in the Core Scientific historical financial statements as of and for the year ended December 31, 2021. The pro forma impact to the Statement of Operations had the acquisition taken place on January 1, 2021 is included as an adjustment for the year ended December 31, 2021. |
• | The issuance by Core Scientific of secured convertible notes in April, 2021, net of the repayment of the existing Core Scientific loan (the “Silverpeak loan”) and the issuance during the period August through November, 2021 of unsecured convertible notes is included in the Core Scientific historical financial statements as of and for the year ended December 31, 2021. The pro forma impact to interest expense for the year ended December 31, 2021 is included as an adjustment. |
• | the historical audited condensed consolidated financial statements of XPDI as of and for the year ended December 31, 2021 and the related notes, which are included elsewhere in this 8-K/A; |
• | the historical audited financial statements of Core Scientific as of and for the year ended December 31, 2021 and the related notes, which are included elsewhere in this 8-K/A; |
• | the historical unaudited financial statements of Blockcap for the period from January 1, 2021 through the acquisition date of July 30, 2021; |
• | other information relating to XPDI and Core Scientific contained in this 8-K/A, including the merger agreement and the description of certain terms thereof set forth in the section entitled “The Merger Agreement.” |
Share Ownership in New Core |
||||||||
Shares |
% of Total |
|||||||
Core Scientific 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 Core Scientific common shares exchanged for New Core shares using the exchange rate of 1.6001528688 consisting of: |
a. | Core Scientific common shares of 158,212 |
b. | Core Scientific common shares from convertible Series A and B preferred stock of 10,826 |
c. | Core Scientific vested warrants and options of 10,556 |
d. | Blockcap equivalent Core Scientific common shares of 115,508 |
e. | Blockcap equivalent Core Scientific common shares from vested RSUs of 1,956 |
f. | Blockcap equivalent Core Scientific 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 Core Scientific and Blockcap equivalent Core Scientific 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 Core Scientific options, warrants, restricted stock units and convertible notes as well as XPDI warrants. See Note 5—Earnings per Share. |
4 |
Includes the impact of the redemption by XPDI shareholders of 12,347 shares of Class A common stock subject to redemption. |
December 31, 2021 |
December 31, 2021 |
|||||||||||||||||
Core Scientific Pro Forma (Note 2) |
XPDI (Historical) |
Merger Adjustments |
Pro Forma Combined |
|||||||||||||||
Assets |
||||||||||||||||||
Current Assets: |
||||||||||||||||||
Cash and cash equivalents |
$ | 117,871 | $ | 971 | $ | (39,000 | ) | A | $ | 301,406 | ||||||||
221,564 | B | |||||||||||||||||
Restricted cash |
13,807 | — | — | 13,807 | ||||||||||||||
Accounts receivable, net of allowance of $— and $620, respectively |
1,382 | — | — | 1,382 | ||||||||||||||
Accounts receivable from related parties |
300 | — | — | 300 | ||||||||||||||
Deposits for equipment |
358,791 | — | — | 358,791 | ||||||||||||||
Digital currency assets |
234,298 | — | — | 234,298 | ||||||||||||||
Prepaid expenses and other current assets |
30,111 | 363 | — | 30,474 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total Current Assets |
756,560 | 1,334 | 182,564 | 940,458 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Property, plant and equipment, net |
597,304 | — | — | 597,304 | ||||||||||||||
Goodwill |
1,055,760 | — | — | 1,055,760 | ||||||||||||||
Intangible assets, net |
8,195 | — | — | 8,195 | ||||||||||||||
Investments held in Trust Account |
— | 345,035 | (345,035 | ) | B | — | ||||||||||||
Other noncurrent assets |
21,045 | — | — | 21,045 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total Assets |
$ | 2,438,864 | $ | 346,369 | $ | (162,471 | ) | $ | 2,622,762 | |||||||||
|
|
|
|
|
|
|
|
|||||||||||
Liabilities, Redeemable Preferred Stock and Stockholders’ Equity |
||||||||||||||||||
Current Liabilities: |
||||||||||||||||||
Accounts payable |
$ | 11,617 | $ | 263 | $ | — | $ | 11,880 | ||||||||||
Accrued expenses and other |
67,862 | 3,749 | — | 71,611 | ||||||||||||||
Deferred revenue |
63,417 | — | — | 63,417 | ||||||||||||||
Deferred revenue from related parties |
72,945 | — | — | 72,945 | ||||||||||||||
Capital lease obligations, current portion |
28,452 | — | — | 28,452 | ||||||||||||||
Notes payable, current portion |
75,996 | — | — | 75,996 | ||||||||||||||
Other current liabilities |
— | 200 | — | 200 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total Current Liabilities |
320,289 | 4,212 | — | 324,501 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Capital lease obligations, net of current portion |
62,145 | — | — | 62,145 | ||||||||||||||
Notes payable, net of current portion (includes $557,007 and $— at fair value) |
1,018,857 | — | — | 1,018,857 | ||||||||||||||
Derivative warrant liabilities |
— | 49,291 | — | 49,291 | ||||||||||||||
Deferred underwriting commissions |
— | 12,075 | (12,075 | ) | — | |||||||||||||
Other noncurrent liabilities |
18,531 | — | — | 18,531 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total Liabilities |
1,419,822 | 65,578 | (12,075 | ) | 1,473,325 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Contingently redeemable preferred stock |
44,476 | — | (44,476 | ) | D | — | ||||||||||||
Commitments and contingencies |
||||||||||||||||||
Class A common stock subject to redemption |
— | 345,000 | (345,000 | ) | E | — |
December 31, 2021 |
December 31, 2021 |
|||||||||||||||||
Core Scientific Pro Forma (Note 2) |
XPDI (Historical) |
Merger Adjustments |
Pro Forma Combined |
|||||||||||||||
Stockholders’ Equity: |
||||||||||||||||||
Common stock; $0.00001 par value |
2 | — | 1 | F | 3 | |||||||||||||
Class B common stock, $0.0001 par value |
— | 1 | (1 | ) | F | — | ||||||||||||
Additional paid-in capital |
1,379,606 | — | (64,210 | ) | F | 1,558,228 | ||||||||||||
(23,173 | ) | A | ||||||||||||||||
44,476 | D | |||||||||||||||||
345,000 | E | |||||||||||||||||
(123,471 | ) | C | ||||||||||||||||
Accumulated deficit |
(394,076 | ) | (64,210 | ) | 64,210 | F | (397,828 | ) | ||||||||||
(3,752 | ) | A | ||||||||||||||||
Accumulated other comprehensive loss |
(10,966 | ) | — | — | (10,966 | ) | ||||||||||||
Total Stockholders’ Equity |
974,566 | (64,209 | ) | 239,080 | 1,149,437 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total Liabilities, Redeemable Preferred Stock and Stockholders’ Equity |
$ | 2,438,864 | $ | 346,369 | $ | (162,471 | ) | $ | 2,622,762 | |||||||||
|
|
|
|
|
|
|
|
December 31, 2021 |
December 31, 2021 |
|||||||||||||||
Core Scientific Pro Forma (Note 2) |
XPDI (Historical) |
Merger Adjustments |
Pro Forma Combined |
|||||||||||||
Revenue: |
||||||||||||||||
Hosting revenue from customers |
$ | 67,495 | $ | — | $ | — | $ | 67,495 | ||||||||
Equipment sales to customers |
230,541 | — | — | 230,541 | ||||||||||||
Digital asset mining income |
288,955 | — | — | 288,955 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenue |
586,991 | — | — | 586,991 | ||||||||||||
Cost of revenue |
296,430 | — | — | 296,430 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit |
290,561 | — | — | 290,561 | ||||||||||||
(Loss) gain on legal settlements |
(2,636 | ) | — | — | (2,636 | ) | ||||||||||
Gain from sales of digital currency assets |
$ | 4,959 | $ | — | $ | — | 4,959 | |||||||||
Impairment of digital currency assets |
(54,678 | ) | — | — | (54,678 | ) | ||||||||||
Operating expenses: |
||||||||||||||||
Research and development |
7,674 | — | — | 7,674 | ||||||||||||
Sales and marketing |
4,062 | — | — | 4,062 | ||||||||||||
General and administrative |
89,361 | 4,794 | 3,752 | c | 97,907 | |||||||||||
General and administrative - related party |
— | 220 | — | 220 | ||||||||||||
Franchise tax expenses |
— | 200 | — | 200 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
$ | 101,097 | $ | 5,214 | $ | — | $ | 106,311 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating income (loss) |
137,109 | (5,214 | ) | — | 131,895 | |||||||||||
Non-operating expenses, net: |
||||||||||||||||
Loss on debt from extinguishment |
8,016 | — | — | 8,016 | ||||||||||||
Interest expense, net |
71,144 | — | — | 71,144 | ||||||||||||
Other non-operating expenses, net |
384,165 | — | — | 384,165 | ||||||||||||
Change in fair value of derivative warrant liabilities |
— | 26,264 | — | 26,264 | ||||||||||||
Offering costs associated with derivative warrant liabilities |
— | 1,056 | — | 1,056 | ||||||||||||
Income from investments held in trust |
— | (35 | ) | 35 | d | — | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total non-operating expense, net |
463,325 | 27,285 | 35 | 490,645 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss before income taxes |
(326,216 | ) | (32,499 | ) | (35 | ) | (358,750 | ) | ||||||||
Income tax expense |
22,237 | — | — | 22,237 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
(348,453 | ) | (32,499 | ) | (35 | ) | (380,987 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Deemed dividend from common to preferred exchange |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) attributable to common stockholders |
(348,453 | ) | (32,499 | ) | (35 | ) | (380,987 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss per share: |
||||||||||||||||
Basic |
$ | (2.04 | ) | $ | (0.83 | ) | $ | — | $ | (1.21 | ) | |||||
Diluted |
$ | (2.04 | ) | $ | (0.83 | ) | $ | — | $ | (1.21 | ) | |||||
Weighted average shares outstanding: |
||||||||||||||||
Basic |
171,059 | 39,026 | — | 313,599 | ||||||||||||
Diluted |
171,059 | 39,026 | — | 313,599 |
1. |
Basis of Presentation |
• | 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. |
2. |
Historical Core Scientific, Blockcap Acquisition and Convertible Note Issuance |
• | The pro forma interest expense impact of the Core Scientific issuance of $515 million of convertible notes ($215 million in April 2021 and $300 million in August through November 2021) and the subsequent repayment of the $30 million Silverpeak loan net of prepayment penalties. The holders of the convertible notes have not exercised their conversion rights as a result of the merger; and |
• | The acquisition of Blockcap by Core Scientific on July 30, 2021, including any elimination of the effect of transactions between Core Scientific and Blockcap, as required, is included in the Core Scientific historical financial statements as of and for the year ended December 31, 2021. The pro forma impact to the Statement of Operations had the acquisition taken place on January 1, 2021 is included as an adjustment for the period from January 1, 2021 through July 30, 2021. Consideration paid consisted of 72,186 Core Scientific common shares, 657 common shares from vested options settlement, 4,256 Core Scientific Restricted Stock Units and 2,393 Core Scientific 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 Core Scientific and Blockcap has been included in the aggregate purchase price of $1.14 billion. |
Consideration (in thousands) |
||||
71.2 million common shares valued at $16.18 per share 1,2 |
$ | 1,151,985 | ||
Fair value of replaced Blockcap share-based payments attributable to pre-combination service3 |
21,768 | |||
Settlement of Blockcap debt 4 |
25,607 | |||
Settlement of preexisting contracts 5 |
(60,522) | |||
|
|
|||
Total Consideration |
$ | 1,138,838 | ||
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 |
97,964 | |||
Other noncurrent assets |
1,293 | |||
|
|
|||
Total assets acquired |
181,079 |
|||
Accounts payable |
492 | |||
Accrued expenses and other |
22,647 | |||
Deferred revenue |
414 | |||
Other current liabilities |
7,204 | |||
Deferred tax liability |
9,003 | |||
|
|
|||
Total liabilities assumed |
$ | 39,760 | ||
Total identifiable net assets |
$ | 141,319 | ||
Goodwill on acquisition |
$ | 997,519 |
1 |
71.2 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. Objective 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 period. The fair value of the stock-based awards was determined utilizing the Black-Scholes pricing model. |
4 |
Reflects the fair value of loans issued by the Company in July 2021 that were effectively used to settle debt that had previously been held by Blockcap. |
5 |
Blockcap had preexisting hosting and equipment with Core Scientific that were effectively settled by Core Scientific’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. |
December 31, 2021 |
||||||||||||||||
Core Scientific Pro Forma (Historical) (A) |
Convertible Note Adjustments |
Pro Forma Combined |
||||||||||||||
Assets |
||||||||||||||||
Current Assets: |
||||||||||||||||
Cash and cash equivalents |
$ | 117,871 | $ | — | $ | 117,871 | ||||||||||
Restricted cash |
13,807 | — | 13,807 | |||||||||||||
Accounts receivable, net of allowance of $— and $620, respectively |
1,382 | — | 1,382 | |||||||||||||
Accounts receivable from related parties |
300 | — | 300 | |||||||||||||
Deposits for equipment |
358,791 | — | 358,791 | |||||||||||||
Digital currency assets |
234,298 | — | 234,298 | |||||||||||||
Prepaid expenses and other current assets |
30,111 | — | 30,111 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total Current Assets |
756,560 | — | 756,560 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Property, plant and equipment, net |
597,304 | — | 597,304 | |||||||||||||
Goodwill |
1,055,760 | — | 1,055,760 | |||||||||||||
Intangible assets, net |
8,195 | — | 8,195 | |||||||||||||
Other noncurrent assets |
21,045 | — | 21,045 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total Assets |
$ | 2,438,864 | $ | — | $ | 2,438,864 | ||||||||||
|
|
|
|
|
|
|||||||||||
Liabilities, Redeemable Preferred Stock and Stockholders’ Equity |
||||||||||||||||
Current Liabilities: |
||||||||||||||||
Accounts payable |
$ | 11,617 | $ | — | $ | 11,617 | ||||||||||
Accrued expenses and other |
67,862 | — | 67,862 | |||||||||||||
Deferred revenue |
63,417 | — | 63,417 | |||||||||||||
Deferred revenue from related parties |
72,945 | — | 72,945 | |||||||||||||
Capital lease obligations, current portion |
28,452 | — | 28,452 | |||||||||||||
Notes payable, current portion |
75,996 | — | 75,996 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total Current Liabilities |
320,289 | — | 320,289 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Capital lease obligations, net of current portion |
62,145 | — | 62,145 | |||||||||||||
Notes payable, net of current portion (includes $557,007 and $—at fair value) |
652,213 | 366,644 | B | 1,018,857 | ||||||||||||
Other noncurrent liabilities |
18,531 | — | 18,531 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total Liabilities |
1,053,178 | 366,644 | 1,419,822 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Contingently redeemable preferred stock; $0.00001 par value; 50,000 shares authorized; 6,766 shares issued and outstanding at December 31, 2021 and 2020, respectively |
44,476 | — | 44,476 | |||||||||||||
Commitments and contingencies |
||||||||||||||||
Stockholders’ Equity: |
||||||||||||||||
Common stock; $0.00001 par value; 300,000 and 200,000 shares authorized at December 31, 2021 and 2020, respectively; 170,976 and 98,607 shares issued and outstanding at December 31, 2021 and 2020, respectively |
2 | — | 2 | |||||||||||||
Additional paid-in capital |
1,379,606 | — | 1,379,606 | |||||||||||||
Accumulated deficit |
(27,432 | ) | (366,644 | ) | (394,076 | ) | ||||||||||
Accumulated other comprehensive loss |
(10,966 | ) | — | (10,966 | ) | |||||||||||
|
|
|
|
|
|
|||||||||||
Total Stockholders’ Equity |
1,341,210 | (366,644 | ) | 974,566 | ||||||||||||
|
|
|
|
|
|
|||||||||||
Total Liabilities, Redeemable Preferred Stock and Stockholders’ Equity |
$ | 2,438,864 | $ | — | $ | 2,438,864 | ||||||||||
|
|
|
|
|
|
Transaction Accounting Adjustments |
||||||||||||||||||||||||||||||||||||
Core Scientific Historical December 31, 2021 |
Blockcap (Historical) for the period January 1, 2021 through July 30, 2021 |
Elimination Adjustments |
Blockcap Acquisition |
Convertible Note |
Core Scientific Pro Forma Combined |
|||||||||||||||||||||||||||||||
Revenue: |
||||||||||||||||||||||||||||||||||||
Hosting revenue from customers |
$ | 79,323 | $ | — | $ | (11,828 | ) | $ | — | $ | — | $ | 67,495 | |||||||||||||||||||||||
Equipment sales to customers |
248,235 | — | (17,694 | ) | e1 | — | — | 230,541 | ||||||||||||||||||||||||||||
Digital asset mining income |
216,925 | 72,030 | — | e1 | — | — | 288,955 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total revenue |
544,483 | 72,030 | (29,522 | ) | — | — | 586,991 | |||||||||||||||||||||||||||||
Cost of revenue |
305,621 | 17,903 | (26,226 | ) | (868 | ) | a | — | 296,430 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Gross profit |
238,862 | 54,127 | (3,296 | ) | e1 | 868 | — | 290,561 | ||||||||||||||||||||||||||||
(Loss) gain on legal settlements |
(2,636 | ) | — | — | — | — | (2,636 | ) | ||||||||||||||||||||||||||||
Gain from sales of digital currency assets |
4,814 | 145 | — | — | — | 4,959 | ||||||||||||||||||||||||||||||
Impairment of digital currency assets |
(37,206 | ) | (17,472 | ) | — | — | — | (54,678 | ) | |||||||||||||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||||||||||||||
Research and development |
7,674 | — | — | — | — | 7,674 | ||||||||||||||||||||||||||||||
Sales and marketing |
4,062 | — | — | — | — | 4,062 | ||||||||||||||||||||||||||||||
General and administrative |
60,604 | 47,997 | — | (19,240 | ) | b | — | 89,361 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total operating expenses |
72,340 | 47,997 | — | (19,240 | ) | — | 101,097 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Operating income (loss) |
131,494 | (11,197 | ) | (3,296 | ) | 20,108 | — | 137,109 | ||||||||||||||||||||||||||||
Non-operating expenses, net: |
||||||||||||||||||||||||||||||||||||
Loss on debt from extinguishment |
8,016 | — | — | — | — | 8,016 | ||||||||||||||||||||||||||||||
Interest expense, net |
44,354 | 1,717 | — | — | 25,073 | c | 71,144 | |||||||||||||||||||||||||||||
Other non-operating expenses, net |
16,049 | 1,472 | — | — | 366,644 | d | 384,165 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Total non-operating expense, net |
68,419 | 3,189 | — | — | 391,717 | 463,325 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Income (loss) before income taxes |
63,075 | (14,386 | ) | (3,296 | ) | 20,108 | (391,717 | ) | (326,216 | ) | ||||||||||||||||||||||||||
Income tax expense |
15,763 | 6,474 | — | — | — | 22,237 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Net income (loss) |
$47,312 | $(20,860) | $(3,296) | $20,108 | $(391,717) | $(348,453) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(A) | The following purchase price adjustments related to the acquisition of Blockcap by Core Scientific have been included in the Core Scientific historical balance sheet as of December 31, 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 |
||||||||||||||||
Quantity |
Price |
Fair value |
Carrying value |
|||||||||||||
Bitcoin (BTC) |
$ | 1,736 | $ | 42,235.55 | 73,304 | 55,568 | ||||||||||
Ethereum (ETH) |
148 | 2,466.96 | 365 | 1,263 | ||||||||||||
Bitcoin Cash (BCH) |
16 | 491.00 | 8 | 7 | ||||||||||||
Siacoin (SC) |
39,487,794 | 0.01 | 554 | 384 | ||||||||||||
Other |
Various | Various | 3,329 | 1,777 | ||||||||||||
|
|
|
|
|||||||||||||
Total digital currencies |
$ | 77,560 | $ | 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 Core Scientific has recorded as compensation expense in its financial statements for the period ending December 31, 2021 for the acceleration of certain equity awards of Blockcap’s CEO and others. |
(B) | The fair value of the Core Scientific’s convertible notes as of December 31, 2021 included the effect of a negotiation discount, which is a calibration adjustment that reflects the illiquidity of the instruments and the Company’s negotiating position. Since the transaction was an orderly transaction, the Company deemed that the fair value equaled the transaction price at initial recognition. However, the closing of the merger of XPDI (which represents the occurrence of a qualified financing event) would have resulted in the elimination of the negotiation discount along with other changes in fair value which is estimated to significantly increase in the fair value of the convertible notes, with a corresponding increase to Other Non-operating Expenses, net, The final valuation adjustment to the convertible note as a result of the closing of the merger could differ materially from this preliminary estimate based changes in the share price and other factors. |
(e1) | Reflects the elimination of Core Scientific Hosting and Equipment sales revenue and Cost of revenue from Blockcap and the corresponding Blockcap revenue and cost of revenue. |
(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 for the period January 1, 2021 through July 30, 2021. |
(b) | Reflects the elimination of $19,240 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 December 31, 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. |
(c) | 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 reduction of $1,125 in interest expense due to the elimination of the Silverpeak loan, an increase in interest expense of $26,198 due to the issuance of the convertible notes for a net increase in interest expense of $25,073 for the year ended December 31, 2021. |
(d) | Reflects the adjustment to expense related to the elimination of the negotiation discount included in the December 31, 2021 fair value adjustment of the outstanding convertible notes. Due to the increase in liquidity associated with the Transactions, the negotiation discount has been removed. |
3. |
Transaction Accounting Adjustments-Merger |
(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. An additional $3,752 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 $23,173 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 $221,564 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 Core Scientific 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 Core Scientific and XPDI outstanding equity instruments for New Core common stock as follows: |
a. | 171,059 existing Class A Core Scientific shares and 6,766 shares of Core Scientific 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—Earnings per Share. |
(b) | Reflects the total New Core common shares outstanding at the completion of the transaction. See Note 5—Earnings per Share. |
(c) | Reflects the $3,752 related to the direct and incremental costs allocated to the XPDI liability-classified instruments that are measured at fair value through earnings. |
(d) | 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 Core Scientific shares and 6,766 Core Scientific 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. |
Existing Shares |
Shares just prior to exchange |
After exchange and redemption of 12,347 shares |
||||||||||
Core Scientific 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 | |||||||||
|
|
|
|
|
|
|||||||
Year ended December 31, 2021 |
||||||||||||
Pro forma net income (loss) |
$ | (380,987) | ||||||||||
Pro forma EPS – Basic and diluted (1) |
$ | (1.21) |
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. |
2 |
Total Core Scientific 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 |
Core Scientific 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 $631.0 million as of December 31, 2021. Included in the total of Core Scientific’s unvested RSUs are 9,038 RSUs held by a former employee. These units have met the time-based 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 December 31, 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 Core Scientific RSUs as of December 30, 2021 |
55,370 | |||
RSUs to be reserved for future issuances |
5,504 | |||
|
|
|||
Unvested RSUs of Core Scientific (excluding Blockcap) |
60,874 | |||
Exchange Rate |
1.6001528688 | |||
|
|
|||
Unvested pro forma RSUs of Core Scientific (excluding Blockcap) after applying exchange rate |
97,409 |
CORE SCIENTIFIC, INC. (F/K/A POWER & DIGITAL INFRASTRUCTURE ACQUISITION CORP. |
||||
Audited Financial Statements of Core Scientific, Inc. (f/k/a Power & Digital Infrastructure Acquisition Corp.) as of December 31, 2021 and 2020 and for the Year Ended December 31, 2021 and the Period from December 29, 2020 (inception) Through December 31, 2020 |
||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7–F-24 |
||||
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, 2021 and 2020 |
||||
F-25 | ||||
F-26 | ||||
F-27–F-28 | ||||
F-29 | ||||
F-30 | ||||
F-32–F-73 |
December 31, 2021 |
December 31, 2020 |
|||||||
Assets: |
||||||||
Current assets: |
||||||||
Cash |
$ | $ | — | |||||
Prepaid expenses |
— | |||||||
|
|
|
|
|||||
Total current assets |
— | |||||||
Investments held in Trust Account |
— | |||||||
Deferred offering costs |
— | |||||||
|
|
|
|
|||||
Total Assets |
$ |
$ |
||||||
|
|
|
|
|||||
Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit: |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | $ | — | |||||
Accrued expenses |
||||||||
Franchise tax payable |
— | |||||||
|
|
|
|
|||||
Total current liabilities |
||||||||
Derivative warrant liabilities |
— | |||||||
Deferred underwriting commissions |
— | |||||||
|
|
|
|
|||||
Total liabilities |
||||||||
Commitments and Contingencies |
||||||||
Class A common stock subject to possible redemption, $ |
— | |||||||
Stockholders’ Equity (Deficit): |
||||||||
Preferred stock, $ |
||||||||
Class A common stock, $ |
||||||||
Class B common stock, $ |
||||||||
Additional paid-in capital |
— | |||||||
Accumulated deficit |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total stockholders’ equity (deficit) |
( |
) | ||||||
|
|
|
|
|||||
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit) |
$ |
$ |
||||||
|
|
|
|
For the Year Ended December 31, 2021 |
For The Period From December 29, 2020 (inception) through December 31, 2020 |
|||||||
General and administrative expenses |
$ | $ | ||||||
General and administrative expenses—related party |
— | |||||||
Franchise tax expenses |
— | |||||||
|
|
|
|
|||||
Loss from operations |
( |
) | ( |
) | ||||
Change in fair value of derivative warrant liabilities |
( |
) | — | |||||
Offering costs associated with derivative warrant liabilities |
( |
) | — | |||||
Income from investments held in Trust Account |
— | |||||||
|
|
|
|
|||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
|
|
|
|
|||||
Weighted average shares outstanding of Class A common stock, basic and diluted |
— | |||||||
|
|
|
|
|||||
Basic and diluted net loss per share, Class A common stock |
$ | ( |
) | $ | — | |||
|
|
|
|
|||||
Weighted average shares outstanding of Class B common stock, basic and diluted |
(1) | |||||||
|
|
|
|
|||||
Basic and diluted net loss per share, Class B common stock |
$ | ( |
) | $ | ( |
) | ||
|
|
|
|
For the Year Ended December 31, 2021 |
||||||||||||||||||||||||||||
Common Stock |
Total |
|||||||||||||||||||||||||||
Class A |
Class B |
Additional Paid-In |
Accumulated |
Stockholders’ |
||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Equity (Deficit) |
||||||||||||||||||||||
Balance— December 31, 2020 |
— |
$ |
— |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||||||||
Deemed capital contribution from Sponsor |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
Remeasurement of Class A common stock subject to possible redemption amount |
— | — | — | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance— December 31, 2021 |
— |
$ |
— |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Period from December 29, 2020 (inception) through December 31, 2020 |
||||||||||||||||||||||||||||
Common Stock |
Total |
|||||||||||||||||||||||||||
Class A |
Class B |
Additional Paid-In |
Accumulated |
Stockholders’ |
||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Equity (Deficit) |
||||||||||||||||||||||
Balance— December 29, 2020 (inception) |
— |
$ |
— |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Issuance of Class B common stock to Sponsor |
— | — | — | |||||||||||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance— December 31, 2020 |
— |
$ |
— |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2021 |
For The Period From December 29, 2020 (inception) through December 31, 2020 |
|||||||
Cash Flows from Operating Activities: |
||||||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Change in fair value of derivative warrant liabilities |
— | |||||||
Offering costs associated with derivative warrant liabilities |
— | |||||||
Income from investments held in Trust Account |
( |
) | — | |||||
General and administrative expenses paid by related party under promissory note |
||||||||
Changes in operating assets and liabilities: |
||||||||
Prepaid expenses |
( |
) | — | |||||
Accrued expenses |
||||||||
Accounts payable |
— | |||||||
Franchise tax payable |
— | |||||||
|
|
|
|
|||||
Net cash used in operating activities |
( |
) | — | |||||
|
|
|
|
|||||
Cash Flows from Investing Activities |
||||||||
Cash deposited in Trust Account |
( |
) | — | |||||
|
|
|
|
|||||
Net cash used in investing activities |
( |
) | — | |||||
|
|
|
|
|||||
Cash Flows from Financing Activities: |
||||||||
Proceeds received from initial public offering, gross |
— | |||||||
Proceeds received from private placement |
— | |||||||
Repayment of note payable to related party |
( |
) | — | |||||
Offering costs paid |
( |
) | — | |||||
|
|
|
|
|||||
Net cash provided by financing activities |
— |
|||||||
|
|
|
|
|||||
Net change in cash |
— | |||||||
Cash—beginning of the period |
— | |||||||
|
|
|
|
|||||
Cash—end of the period |
$ |
$ |
— |
|||||
|
|
|
|
|||||
Supplemental disclosure of noncash activities: |
||||||||
Offering costs included in accrued expenses |
$ | $ | — | |||||
Offering costs paid by related party under promissory note |
$ | $ | — | |||||
Deferred underwriting commissions in connection with the initial public |
$ | $ | — | |||||
Deferred offering costs paid by Sponsor in exchange for issuance of Class B |
$ | — | $ |
• | 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 Year Ended December 31, 2021 |
||||||||
Class A |
Class B |
|||||||
Basic and diluted net loss per common stock: |
||||||||
Numerator: |
||||||||
Allocation of net loss |
$ | ( |
) | $ | ( |
) | ||
Denominator: |
||||||||
Basic and diluted weighted average common stock outstanding |
||||||||
|
|
|
|
|||||
Basic and diluted net loss per common stock |
$ | ( |
) | $ | ( |
) | ||
|
|
|
|
For The Period From December 29, 2020 (inception) through December 31, 2020 |
||||||||
Class A |
Class B |
|||||||
Basic and diluted net loss per common stock: |
||||||||
Numerator: |
||||||||
Allocation of net loss |
$ | |
$ | ( |
) | |||
Denominator: |
||||||||
Basic and diluted weighted average common stock outstanding (1) |
||||||||
|
|
|
|
|||||
Basic and diluted net loss per common stock |
$ | $ | ( |
) | ||||
|
|
|
|
(1) This number excludes an aggregate of up to |
|
Gross proceeds |
$ | |||
Less: |
||||
Fair value of Public Warrants at issuance |
( |
) | ||
Offering costs allocated to Class A common stock subject to possible redemption |
( |
) | ||
Plus: |
||||
Remeasurement on Class A common stock subject to possible redemption amount |
||||
|
|
|||
Class A common stock subject to possible redemption |
$ | |||
|
|
• |
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 |
$ | $ | $ | |||||||||
Liabilities: |
||||||||||||
Derivative warrant liabilities—Public warrants |
$ | $ | $ | |||||||||
Derivative warrant liabilities—Private placement warrants |
$ | $ | $ |
February 12, 2021 |
December 31, 2021 |
|||||||
Exercise price |
$ | $ | ||||||
Stock price |
$ | $ | ||||||
Volatility |
% | % | ||||||
Term |
||||||||
Risk-free rate |
% | % |
Derivative warrant liabilities at December 31, 2020 |
$ | |||
Issuance of Public and Private Warrants |
||||
Transfer of Public Warrants to Level 1 |
( |
) | ||
Change in fair value of derivative warrant liabilities |
||||
Derivative warrant liabilities at December 31, 2021 |
$ | |||
December 31, 2021 |
For The Period From December 29, 2020 (inception) through December 31, 2020 |
|||||||
Current |
||||||||
Federal |
$ | $ | ||||||
State |
||||||||
Deferred |
||||||||
Federal |
( |
) | ( |
) | ||||
State |
||||||||
Change in valuation allowance |
||||||||
Income tax provision |
$ | $ | ||||||
December 31, 2021 |
For The Period From December 29, 2020 (inception) through December 31, 2020 |
|||||||
Deferred tax assets: |
||||||||
Start-up/Organization costs |
$ | |
$ | |
||||
Net operating loss carryforwards |
||||||||
|
|
|
|
|||||
Total deferred tax assets |
||||||||
Valuation allowance |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Deferred tax asset, net of allowance |
$ | $ | ||||||
|
|
|
|
December 31, 2021 |
For The Period From December 29, 2020 (inception) through December 31, 2020 |
|||||||
Statutory federal income tax rate |
% | % | ||||||
Change in fair value of derivative warrant liabilities |
( |
)% | % | |||||
Transaction costs allocated to derivative warrant liabilities |
( |
)% | % | |||||
Merger costs |
( |
)% | % | |||||
Change in valuation allowance |
( |
)% | ( |
)% | ||||
|
|
|
|
|||||
Income Taxes Benefit |
% | % | ||||||
|
|
|
|
December 31, |
||||||||
2021 |
2020 |
|||||||
Assets |
||||||||
Current Assets: |
||||||||
Cash and cash equivalents |
$ | 117,871 | $ | 8,671 | ||||
Restricted cash |
13,807 | 50 | ||||||
Accounts receivable, net of allowance of $— and $620, respectively |
1,382 | 792 | ||||||
Accounts receivable from related parties |
300 | 315 | ||||||
Deposits for equipment |
358,791 | 54,818 | ||||||
Digital currency assets |
234,298 | 63 | ||||||
Prepaid expenses and other current assets |
30,111 | 6,210 | ||||||
|
|
|
|
|||||
Total Current Assets |
756,560 | 70,919 | ||||||
|
|
|
|
|||||
Property, plant and equipment, net |
597,304 | 85,244 | ||||||
Goodwill |
1,055,760 | 58,241 | ||||||
Intangible assets, net |
8,195 | 6,674 | ||||||
Other noncurrent assets |
21,045 | 4,499 | ||||||
|
|
|
|
|||||
Total Assets |
$ | 2,438,864 | $ | 225,577 | ||||
|
|
|
|
|||||
Liabilities, Redeemable Preferred Stock and Stockholders’ Equity |
||||||||
Current Liabilities: |
||||||||
Accounts payable |
$ | 11,617 | $ | 3,057 | ||||
Accrued expenses and other |
67,862 | 3,585 | ||||||
Deferred revenue |
63,417 | 38,113 | ||||||
Deferred revenue from related parties |
72,945 | 6,730 | ||||||
Capital lease obligations, current portion |
28,452 | 2,146 | ||||||
Notes payable, current portion |
75,996 | 16,016 | ||||||
|
|
|
|
|||||
Total Current Liabilities |
320,289 | 69,647 | ||||||
|
|
|
|
|||||
Capital lease obligations, net of current portion |
62,145 | 2,263 | ||||||
Notes payable, net of current portion (includes $557,007 and $— at fair value) |
652,213 | 19,864 | ||||||
Other noncurrent liabilities |
18,531 | 103 | ||||||
|
|
|
|
|||||
Total Liabilities |
1,053,178 | 91,877 | ||||||
|
|
|
|
|||||
Contingently redeemable preferred stock; $0.00001 par value; 50,000 shares authorized; 6,766 shares issued and outstanding at December 31, 2021 and 2020, respectively; $45,164 total liquidation preference for both December 31, 2021 and 2020 |
44,476 | 44,476 | ||||||
Commitments and contingencies (Note 10) |
||||||||
Stockholders’ Equity: |
||||||||
Common stock; $0.00001 par value; 300,000 and 200,000 shares authorized at December 31, 2021 and 2020, respectively; 169,719 and 98,607 shares issued and outstanding at December 31, 2021 and 2020, respectively |
2 | 1 | ||||||
Additional paid-in capital |
1,379,606 | 163,967 | ||||||
Accumulated deficit |
(27,432 | ) | (74,744 | ) | ||||
Accumulated other comprehensive loss |
(10,966 | ) | — | |||||
|
|
|
|
|||||
Total Stockholders’ Equity |
1,341,210 | 89,224 | ||||||
|
|
|
|
|||||
Total Liabilities, Redeemable Preferred Stock and Stockholders’ Equity |
$ | 2,438,864 | $ | 225,577 | ||||
|
|
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Revenue: |
||||||||
Hosting revenue from customers |
$ | 62,350 | $ | 34,615 | ||||
Hosting revenue from related parties |
16,973 | 6,983 | ||||||
Equipment sales to customers |
138,376 | 11,193 | ||||||
Equipment sales to related parties |
109,859 | 1,402 | ||||||
Digital asset mining income |
216,925 | 6,127 | ||||||
|
|
|
|
|||||
Total revenue |
544,483 | 60,320 | ||||||
Cost of revenue: |
||||||||
Cost of hosting services |
77,678 | 36,934 | ||||||
Cost of equipment sales |
177,785 | 11,017 | ||||||
Cost of digital asset mining |
50,158 | 2,977 | ||||||
|
|
|
|
|||||
Total cost of revenue |
305,621 | 50,928 | ||||||
|
|
|
|
|||||
Gross profit |
238,862 | 9,392 | ||||||
(Loss) gain on legal settlements |
(2,636 | ) | 5,814 | |||||
Gain from sales of digital currency assets |
4,814 | 69 | ||||||
Impairment of digital currency assets |
(37,206 | ) | (4 | ) | ||||
Operating expenses: |
||||||||
Research and development |
7,674 | 5,271 | ||||||
Sales and marketing |
4,062 | 1,771 | ||||||
General and administrative |
60,604 | 14,556 | ||||||
|
|
|
|
|||||
Total operating expenses |
72,340 | 21,598 | ||||||
|
|
|
|
|||||
Operating income (loss) |
131,494 | (6,327 | ) | |||||
Non-operating expenses, net: |
||||||||
Loss on debt from extinguishment |
8,016 | 1,333 | ||||||
Interest expense, net |
44,354 | 4,436 | ||||||
Other non-operating expenses, net |
16,049 | 110 | ||||||
|
|
|
|
|||||
Total non-operating expense, net |
68,419 | 5,879 | ||||||
|
|
|
|
|||||
Income (loss) before income taxes |
63,075 | (12,206 | ) | |||||
Income tax expense |
15,763 | — | ||||||
|
|
|
|
|||||
Net income (loss) |
$ | 47,312 | $ | (12,206 | ) | |||
|
|
|
|
|||||
Deemed dividend from common to preferred exchange |
— | (10,478 | ) | |||||
|
|
|
|
|||||
Net income (loss) attributable to common stockholders |
$ | 47,312 | $ | (22,684 | ) | |||
|
|
|
|
|||||
Net income (loss) per share (Note 13): |
||||||||
Basic |
$ | 0.37 | $ | (0.23 | ) | |||
|
|
|
|
|||||
Diluted |
$ | 0.32 | $ | (0.23 | ) | |||
|
|
|
|
|||||
Weighted average shares outstanding: |
||||||||
Basic |
129,527 | 98,492 | ||||||
|
|
|
|
|||||
Diluted |
145,802 | 98,492 | ||||||
|
|
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Net income (loss) |
$ | 47,312 | $ | (12,206 | ) | |||
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 $— |
(10,966 | ) | — | |||||
|
|
|
|
|||||
Total other comprehensive loss, net of income taxes |
(10,966 | ) | — | |||||
|
|
|
|
|||||
Comprehensive income (loss) |
$ | 36,346 | $ | (12,206 | ) | |||
|
|
|
|
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, 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 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 | — | 1,967 | — | — | 1,967 | ||||||||||||||||||||||||
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 | |||||||||||||||||
Net income |
— | — | — | — | — | 47,312 | — | 47,312 | ||||||||||||||||||||||||
Stock-based compensation |
— | — | 25 | — | 38,937 | — | — | 38,937 | ||||||||||||||||||||||||
Other comprehensive loss |
— | — | — | — | — | — | (10,966 | ) | (10,966 | ) | ||||||||||||||||||||||
Issuance of common stock- employee stock options |
— | — | 8 | — | 17 | — | — | 17 | ||||||||||||||||||||||||
Issuances of common stock- business combination |
— | — | 70,929 | 1 | 1,173,753 | — | — | 1,173,754 | ||||||||||||||||||||||||
Issuances of common stock- legal settlements |
— | 150 | — | 2,436 | — | — | 2,436 | |||||||||||||||||||||||||
Issuances of common stock- warrants and options |
— | — | — | — | 496 | — | — | 496 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance at December 31, 2021 |
6,766 | $ | 44,476 | 169,719 | $ | 2 | $ | 1,379,606 | $ | (27,432 | ) | $ | (10,966 | ) | $ | 1,341,210 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Cash flows from Operating Activities: |
||||||||
Net income (loss) |
$ | 47,312 | $ | (12,206 | ) | |||
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
||||||||
Depreciation and amortization |
33,362 | 9,403 | ||||||
Stock-based compensation |
38,937 | 3,037 | ||||||
Digital asset mining income |
(216,925 | ) | (6,127 | ) | ||||
Deferred income taxes |
9,528 | — | ||||||
Loss on legal settlements |
2,636 | — | ||||||
Loss on debt extinguishment |
8,016 | 1,333 | ||||||
Fair value adjustment on convertible notes |
31,217 | — | ||||||
Amortization of debt discount and debt issuance costs |
1,374 | 1,300 | ||||||
Losses on disposals of property, plant and equipment |
118 | 2 | ||||||
Impairments of digital currency assets |
37,206 | 4 | ||||||
Provision for doubtful accounts |
— | 616 | ||||||
Changes in working capital components: |
||||||||
Accounts receivable, net |
(7,421 | ) | (1,303 | ) | ||||
Accounts receivable from related parties |
16 | (243 | ) | |||||
Digital currency assets |
24,011 | 6,090 | ||||||
Deposits for equipment for sales to customers |
(244,399 | ) | (54,736 | ) | ||||
Prepaid expenses and other current assets |
(34,076 | ) | (2,353 | ) | ||||
Accounts payable |
(21,991 | ) | (1,770 | ) | ||||
Accrued expenses and other |
56,200 | 1,625 | ||||||
Deferred revenue |
184,340 | 30,009 | ||||||
Other noncurrent assets and liabilities, net |
(6,196 | ) | 1,554 | |||||
|
|
|
|
|||||
Net cash used in operating activities |
(56,735 | ) | (23,765 | ) | ||||
|
|
|
|
|||||
Cash flows from Investing Activities: |
||||||||
Purchases of property, plant and equipment |
(365,210 | ) | (13,668 | ) | ||||
Cash acquired (paid) in acquisitions |
704 | (1,568 | ) | |||||
Deposits for self-mining equipment |
(59,275 | ) | — | |||||
Other |
(59 | ) | 92 | |||||
|
|
|
|
|||||
Net cash used in investing activities |
(423,840 | ) | (15,144 | ) | ||||
|
|
|
|
|||||
Cash flows from Financing Activities: |
||||||||
Proceeds from issuances of common stock options and warrants |
513 | 2,642 | ||||||
Issuances of debt |
670,750 | 45,178 | ||||||
Principal payments on debt |
(57,049 | ) | (7,097 | ) | ||||
Payment for transaction cost |
(10,682 | ) | — | |||||
|
|
|
|
|||||
Net cash provided by financing activities |
603,532 | 40,723 | ||||||
|
|
|
|
|||||
Increase in cash, cash equivalents, and restricted cash |
122,957 | 1,814 | ||||||
Cash, cash equivalents and restricted cash—beginning of period |
8,721 | 6,907 | ||||||
|
|
|
|
|||||
Cash, cash equivalents and restricted cash—end of period |
$ | 131,678 | $ | 8,721 | ||||
|
|
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Supplemental disclosure of other cash flow information: |
||||||||
Cash paid for interest |
$ | 38,180 | $ | 2,903 | ||||
Income tax payments |
$ | 9,619 | — | |||||
Supplemental disclosure of noncash investing and financing activities: |
||||||||
Noncash consideration paid for acquisitions |
$ | 1,138,838 | $ | 1,966 | ||||
Accrued capital expenditures |
$ | 9,002 | $ | 2,544 | ||||
Increase in notes payable for acquisition of property, plant and equipment |
$ | — | $ | 19,882 | ||||
Decrease in notes payable in exchange for equipment |
$ |
6,842 |
|
$ | 7,000 | |||
Property, plant and equipment acquired under capital leases |
$ | 93,956 | $ | — | ||||
Payment-in-kind |
$ | 7,274 | $ | — | ||||
Common stock issuances for acquisition of long-lived assets |
$ | — | $ | 1,486 |
1. |
ORGANIZATION AND DESCRIPTION OF BUSINESS |
• | 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; |
• | Owning and operating datacenter facilities in the U.S. to provide colocation and hosting services for distributed ledger technology, also commonly known as blockchain; |
• | Developing blockchain-based platforms and applications, including infrastructure management, security technologies, mining optimization, and recordkeeping; |
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
December 31, |
||||||||
2021 |
2020 |
|||||||
Cash and cash equivalents |
$ | 117,871 | $ | 8,671 | ||||
Restricted Cash |
13,807 | 50 | ||||||
|
|
|
|
|||||
Total cash, cash equivalents and restricted cash |
$ | 131,678 | $ | 8,721 | ||||
|
|
|
|
Fair value hierarchy |
||||||||||||||||||||
Principal |
Level 1 |
Level 2 |
Level 3 |
Fair value |
||||||||||||||||
Convertible notes: |
||||||||||||||||||||
April 19, 2021 1 |
$ | 91,430 | $ | — | $ | — | $ | 101,078 | $ | 101,078 | ||||||||||
April 21, 2021 1 |
5,137 | — | — | 5,674 | 5,674 | |||||||||||||||
April 23, 2021 1 |
46,229 | — | — | 51,062 | 51,062 | |||||||||||||||
April 26, 2021 1 |
78,075 | — | — | 86,165 | 86,165 | |||||||||||||||
August 20, 2021 2 |
50,597 | — | — | 50,941 | 50,941 | |||||||||||||||
September 10, 2021 2 |
16,110 | — | — | 16,472 | 16,472 | |||||||||||||||
September 23, 2021 2 |
76,051 | — | — | 77,559 | 77,559 | |||||||||||||||
September 24, 2021 2 |
60,016 | — | — | 61,179 | 61,179 | |||||||||||||||
September 27, 2021 2 |
1,974 | — | — | 2,012 | 2,012 | |||||||||||||||
October 1, 2021 2 |
86,655 | — | — | 87,150 | 87,150 | |||||||||||||||
November 10, 2021 2 |
9,823 | — | — | 9,819 | 9,819 | |||||||||||||||
Accrued PIK interest 1,2,3 |
— | — | — | 7,896 | 7,896 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total convertible notes |
$ | 522,097 | $ | — | $ | — | $ | 557,007 | $ | 557,007 | ||||||||||
|
|
|
|
|
|
|
|
|
|
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 December 31, 2021 which will be recorded as additional principal for each respective convertible note on January 1, 2022. |
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Balance at December 31, 2020 |
$ | — | $ | — | $ | — | $ | — | ||||||||
Convertible notes issued (including PIK principal recorded) |
— | 522,097 | — | 522,097 | ||||||||||||
Transfers to level 3 |
— | (522,097 | ) | 522,097 | — | |||||||||||
Change in fair value from inception |
— | — | 34,910 | 34,910 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at December 31, 2021 |
$ | — | $ | — | $ | 557,007 | $ | 557,007 | ||||||||
|
|
|
|
|
|
|
|
Fair value |
Unobservable Input |
Low |
High |
Weighted Average 1 |
||||||||||||||
Convertible notes (Level 3) |
$ | 557,007 | Probability of financing event |
100.0 | % | 100.0 | % | 100.0 | % | |||||||||
Expected term (years) |
0.04 | 0.50 | 0.27 | |||||||||||||||
Volatility | 40.3 | % | 40.8 | % | 40.6 | % | ||||||||||||
Negotiation discount |
43.4 | % | 54.0 | % | 48.3 | % |
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. |
Financial statement line item |
Year ended December 31, 2021 |
|||||
Cash interest payments |
Interest expense, net | $ | 10,114 | |||
Payment-in-kind (PIK) interest |
Interest expense, net | 15,170 | ||||
Instrument specific credit risk |
Other comprehensive loss | 10,966 | ||||
Other fair value adjustments |
Other non-operating expense, net |
16,047 | ||||
|
|
|||||
Total fair value adjustments |
$ | 52,297 | ||||
|
|
|||||
Debt issuance costs |
Interest expense, net | $ | 12,831 |
December 31 2021 |
December 31 2020 |
|||||||
Bitcoin (BTC) |
$ | 224,843 | $ | 51 | ||||
Ethereum (ETH) |
4,665 | — | ||||||
Siacoin (SC) |
803 | — | ||||||
Polygon (MATIC) |
1,085 | — | ||||||
Dai (DAI) |
1,353 | — | ||||||
Other |
1,549 | 12 | ||||||
|
|
|
|
|||||
Total digital currencies |
$ | 234,298 | $ | 63 | ||||
|
|
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Cost of revenue |
$ | 4,084 | $ | — | ||||
Research and development |
1,140 | — | ||||||
Sales and marketing |
836 | — | ||||||
General and administrative |
32,877 | 3,038 | ||||||
|
|
|
|
|||||
Total stock-based compensation expense |
$ | 38,937 | $ | 3,038 | ||||
|
|
|
|
3. |
ACQUISITIONS |
Consideration (in thousands) |
||||
71.2 million common shares valued at $16.18 per share 1,2 |
$ | 1,151,985 | ||
Fair value of replaced Blockcap share-based payments attributable to pre-combination service3 |
21,768 | |||
Settlement of Blockcap debt 4 |
25,607 | |||
Settlement of preexisting contracts 5 |
(60,522 | ) | ||
|
|
|||
Total Consideration |
$ | 1,138,838 | ||
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 |
97,964 | |||
Other noncurrent assets |
1,293 | |||
|
|
|||
Total assets acquired |
181,079 |
|||
Accounts payable |
492 | |||
Accrued expenses and other |
22,647 | |||
Deferred revenue |
414 | |||
Other current liabilities |
7,204 | |||
Deferred tax liability |
9,003 | |||
|
|
|||
Total liabilities assumed |
$ |
39,760 |
||
Total identifiable net assets |
$ |
141,319 |
||
Goodwill on acquisition |
$ |
997,519 |
1 |
71.2 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. Objective and subjective factors were considered in determining the estimated fair value and because there was 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 period |
4 |
Reflects the fair value of loans issued by the Company in July 2021 that were effectively used to settle debt that had previously been held by Blockcap. Refer to Note 8 for further discussion of the debt issuance. |
5 |
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. |
Goodwill |
||||
Balance as of December 31, 2020 |
$ | 58,241 | ||
Acquisitions |
1,048,727 | |||
Subsequent measurement period adjustment |
$ | (51,208 | ) | |
|
|
|||
Balance as of December 31, 2021 |
$ | 1,055,760 | ||
|
|
• | $16.0 million decrease to consideration transferred, resulting in a 16.0 million decrease to goodwill, related to shares that were allocated to settle a liability of Blockcap. |
• | $0.2 million decrease to consideration transferred, resulting in a $0.2 million decrease to goodwill, related to Blockcap share-based payment replacement awards that were attributed to pre-combination services. |
• | $25.6 million increase to consideration transferred and a $70.9 million increase to property, plant, and equipment, net acquired, resulting in a $45.3 million decrease to goodwill, related to a transaction entered into in contemplation of the Blockcap acquisition whereby the Company effectively settled $25.6 million of debt held by Blockcap in exchange for acquiring digital asset mining equipment with a fair value of $70.9 million. The adjustment resulted in an increase to cost of revenue related to additional deprecation expense of $6.3 million for the year ended December 31, 2021. |
• | $0.4 million increase to deferred revenue, resulting in a $0.4 million increase to goodwill, related to acquired customer contracts. |
• | $0.8 million increase other current liabilities and $9.0 million increase to deferred tax liabilities, resulting in a $9.8 million increase to goodwill, as a result of tax adjustments. |
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Total revenue |
$ | 586,991 | $ | 70,948 | ||||
Operating income (loss) |
$ | 137,109 | $ | (23,354 | ) |
• | 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 $19.2 million 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 $23.3 million of compensation expense for the acceleration in its financial statements for the period ending December 31, 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. |
4. |
OTHER ASSETS |
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Prepaid expenses |
$ | 27,055 | $ | 1,212 | ||||
Security deposits |
355 | 2,230 | ||||||
Prepaid rent |
453 | — | ||||||
Other |
2,248 | 2,768 | ||||||
|
|
|
|
|||||
Total other current assets |
$ | 30,111 | $ | 6,210 | ||||
|
|
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Security deposits |
$ | 2,079 | $ | 1,150 | ||||
Utility construction contributions |
2,453 | 3,000 | ||||||
Prepaid rent |
4,478 | — | ||||||
Capitalized transaction costs |
10,682 | — | ||||||
Other |
1,354 | 349 | ||||||
|
|
|
|
|||||
Total other noncurrent assets |
$ | 21,045 | $ | 4,499 | ||||
|
|
|
|
5. |
PROPERTY, PLANT AND EQUIPMENT, NET |
December 31, |
Estimated Useful Lives |
|||||||||||
2021 |
2020 |
|||||||||||
Land and improvements 1 |
$ | 12,995 | $ | 5,458 | 20 years | |||||||
Building and improvements |
93,064 | 46,811 | 12 to 39 years | |||||||||
Computer, mining and network equipment 2 |
475,331 | 20,270 | 1 to 5 years | |||||||||
Electrical equipment 3 |
59,253 | 24,681 | 5 to 10 years | |||||||||
Other property, plant and equipment 4 |
1,156 | 1,243 | 5 to 7 years | |||||||||
|
|
|
|
|||||||||
Total |
641,799 | 98,463 | ||||||||||
Less accumulated depreciation and amortization 5 |
44,495 | 13,219 | ||||||||||
|
|
|
|
|||||||||
Property, plant and equipment, net 6 |
$ | 597,304 | $ | 85,244 | ||||||||
|
|
|
|
1 |
Estimated useful life of improvements. Land is not depreciated. |
2 |
Includes capital lease assets of $103.9 million and $3.3 million at December 31, 2021 and 2020, respectively. |
3 |
Includes capital lease assets of $12.6 million and $2.6 million at December 31, 2021 and 2020, respectively. |
4 |
Includes capital lease assets of $0.4 million and $0.4 million at December 31, 2021 and 2020, respectively. |
5 |
Includes accumulated amortization for assets under capital leases of $10.3 million and $1.8 million at December 31, 2021 and 2020, respectively. |
6 |
Includes construction in progress of $42.6 million and $10.5 million for the year ended December 31, 2021 and 2020, respectively. |
6. |
INTANGIBLE ASSETS, NET |
December 31, 2021 |
||||||||||||||||
Gross |
Accumulated Amortization |
Net Carrying Amount |
Estimated Useful Lives |
|||||||||||||
Acquired software |
$ | 10,093 | $ | (2,503 | ) | $ | 7,590 | 3-8 years |
||||||||
Patents |
423 | (9 | ) | 414 | 20 years | |||||||||||
Customer relationships |
150 | (21 | ) | 129 | 3 years | |||||||||||
Trademarks |
73 | (11 | ) | 62 | 8 years | |||||||||||
|
|
|
|
|
|
|||||||||||
Total intangible assets, net |
$ | 10,739 | $ | (2,544 | ) | $ | 8,195 | |||||||||
|
|
|
|
|
|
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 | |||||||||
|
|
|
|
|
|
Amortization |
||||
2022 |
$ | 2,145 | ||
2023 |
2,145 | |||
2024 |
1,743 | |||
2025 |
843 | |||
2026 |
507 | |||
Thereafter |
812 | |||
|
|
|||
Total |
$ | 8,195 | ||
|
|
7. |
ACCRUED EXPENSES AND OTHER |
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Accrued expenses and other |
$ | 25,332 | $ | 653 | ||||
Accrued taxes |
5,736 | 1,645 | ||||||
Vendor payable |
21,313 | — | ||||||
Customer deposits 1 |
5,570 | — | ||||||
Accrued interest |
5,521 | 283 | ||||||
Other current liabilities |
4,390 | 1,004 | ||||||
|
|
|
|
|||||
Total accrued expenses and other |
$ | 67,862 | $ | 3,585 | ||||
|
|
|
|
1 |
Consists of amounts deposited by the Company’s customers relating to future tax estimates. Should the deposits be unnecessary once the customer units are owned and deployed, the deposits are either applied against an existing equipment balance due, or applied against future hosting invoices. |
8. |
NOTES PAYABLE |
December 31 2021 |
December 31 2020 |
|||||||
Kentucky note |
$ | 1,032 | $ | 1,511 | ||||
PPP loan |
— | 2,154 | ||||||
Silverpeak loan |
— | 22,260 | ||||||
Stockholder loan |
10,000 | — | ||||||
Genesis loan |
552 | 4,648 | ||||||
NYDIG loan |
67,435 | 718 | ||||||
Trinity loan |
19,641 | — | ||||||
Celsius loan |
— | 6,842 | ||||||
Bremer |
15,066 | — | ||||||
Blockfi |
60,000 | — | ||||||
Secured Convertible Notes 1 |
220,871 | — | ||||||
Unsecured Convertible Notes 2 |
301,226 | — | ||||||
Other |
663 | 581 | ||||||
|
|
|
|
|||||
Total |
696,486 | 38,714 | ||||||
Unamortized discount and debt issuance costs |
(3,187 | ) | (2,834 | ) | ||||
Fair value adjustments to convertible notes |
34,910 | — | ||||||
|
|
|
|
|||||
Total notes payable, net |
$ | 728,209 | $ | 35,880 | ||||
|
|
|
|
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. The minimum payoff at maturity related to the principal balance was $441.7 million December 31, 2021. |
2 |
Unsecured Convertible Notes which considers the minimum payoff at maturity of one times the face value of the note plus accrued interest. |
Year ending December 31, |
||||
2022 |
$ | 78,597 | ||
2023 |
80,202 | |||
2024 |
11,249 | |||
2025 1 |
524,378 | |||
2026 |
1,522 | |||
Thereafter |
538 | |||
|
|
|||
Total |
696,486 | |||
Unamortized discount and debt issuance costs |
(3,187 | ) | ||
Fair value adjustments to convertible notes |
34,910 | |||
|
|
|||
Total maturities |
$ | 728,209 | ||
|
|
1 |
Includes $220.9 million for the face value of the Secured Convertible Notes which have payoff at maturity of two times the face value of the note plus accrued interest. The total amount that would be owed on the Secured Convertible Notes outstanding as of December 31, 2021 if held to maturity was $441.7 million. |
9. |
CONTINGENTLY REDEEMABLE CONVERTIBLE PREFERRED STOCK |
For Both December 31, 2021 and 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 | ||||||||||||||
|
|
|
|
|
|
|
|
10. |
COMMITMENTS AND CONTINGENCIES |
2022 |
$ | 460 | ||
2023 |
170 | |||
2024 |
170 | |||
2025 |
170 | |||
2026 |
170 | |||
Thereafter |
1,254 | |||
|
|
|||
Total minimum lease payments |
$ | 2,394 | ||
|
|
2022 |
$ | 35,531 | ||
2023 |
34,897 | |||
2024 |
33,913 | |||
2025 |
1,823 | |||
2026 |
2 | |||
|
|
|||
Total minimum lease payments |
106,166 | |||
Less: interest |
15,569 | |||
|
|
|||
Present value of net minimum lease payments |
$ | 90,597 | ||
|
|
11. |
STOCKHOLDERS’ EQUITY |
Options outstanding |
19,962 | |||
Unvested restricted stock units outstanding |
55,370 | |||
Vested restricted stock units outstanding |
1,617 | |||
Available for future stock option and restricted stock units and grants |
5,551 | |||
|
|
|||
Total outstanding and reserved for future issuance |
82,500 | |||
|
|
Years Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Dividend yield |
0.00 | % | 0.00 | % | ||||
Expected volatility |
72.57 | % | 36.26 | % | ||||
Risk-free interest rate |
1.39 | % | 0.70 | % | ||||
Expected life (years) |
6.22 | 10.00 |
Number of Shares |
Weighted- Average Exercise Price |
Weighted- Average Remaining Contractual Term (in years) |
Aggregate Intrinsic Value |
|||||||||||||
Options outstanding - December 31, 2020 |
2,530 | 9.41 | ||||||||||||||
Granted |
17,790 | 14.53 | ||||||||||||||
Exercised |
(8 | ) | 1.97 | |||||||||||||
Forfeited |
(200 | ) | 6.83 | |||||||||||||
Expired |
(150 | ) | 6.83 | |||||||||||||
|
|
|
|
|||||||||||||
Options outstanding - December 31, 2021 |
19,962 | $ | 14.02 | 8.8 | $ | 75,712 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Options vested and expected to vest as of December 31, 2021 |
19,962 | $ | 14.02 | 8.8 | $ | 75,712 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Options vested and exercisable as of December 31, 2021 |
4,464 | $ | 7.66 | 6.6 | $ | 45,057 | ||||||||||
|
|
|
|
|
|
|
|
• | 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, 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 | |||||
Granted |
26,499 | 17.23 | ||||||
Vested |
(815 | ) | 16.24 | |||||
Forfeited |
(7,458 | ) | 10.41 | |||||
|
|
|
|
|||||
Unvested - December 31, 2021 |
55,370 | $ | 12.39 | |||||
|
|
|
|
12. |
INCOME TAXES |
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Current tax: |
||||||||
Federal |
$ | — | $ | — | ||||
State |
6,235 | — | ||||||
|
|
|
|
|||||
Total current tax |
6,235 | — | ||||||
Deferred tax: |
||||||||
Federal |
11,218 | — | ||||||
State |
(1,690 | ) | — | |||||
|
|
|
|
|||||
Total deferred tax |
9,528 | — | ||||||
|
|
|
|
|||||
Total income tax expense |
$ | 15,763 | $ | — | ||||
|
|
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
U.S. federal statutory income tax expense (benefit) applied to loss before income taxes |
$ | 13,246 | $ | (2,563 | ) | |||
State income taxes, net of federal benefit |
3,591 | (410 | ) | |||||
Stock compensation |
141 | — | ||||||
Non-deductible interest |
5,310 | — | ||||||
Fair value adjustment - convertible notes |
3,370 | — | ||||||
Non-deductible expenses |
(702 | ) | — | |||||
Valuation allowance |
(9,180 | ) | 1,106 | |||||
Deferred tax adjustments |
— | 1,827 | ||||||
Other permanent items |
(13 | ) | 40 | |||||
|
|
|
|
|||||
Total income tax expense |
$ | 15,763 | $ | — | ||||
|
|
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Deferred tax assets: |
||||||||
Net operating loss carryforward |
$ | 29,837 | $ | 10,674 | ||||
Research tax credit carryforward |
404 | — | ||||||
Interest expense limitation |
— | 137 | ||||||
Reserves and accruals |
148 | 159 | ||||||
Stock-based compensation |
15,190 | 3,579 | ||||||
Unrealized capital loss |
— | 548 | ||||||
Digital asset impairment loss |
8,368 | 61 | ||||||
Debt extinguishment loss |
2,558 | 406 | ||||||
Intangibles (other than goodwill) |
2,270 | 3,015 | ||||||
Leases |
5,231 | — | ||||||
Other |
3 | — | ||||||
|
|
|
|
|||||
Gross deferred tax assets |
64,009 | 18,579 | ||||||
Valuation allowance |
(6,781 | ) | (15,961 | ) | ||||
|
|
|
|
|||||
Deferred tax assets, net of valuation allowance |
57,228 | 2,618 | ||||||
|
|
|
|
|||||
Deferred tax liabilities: |
||||||||
Property, plant and equipment, net |
(75,759 | ) | (2,618 | ) | ||||
|
|
|
|
|||||
Deferred tax liabilities, net |
(75,759 | ) | (2,618 | ) | ||||
|
|
|
|
|||||
Total net deferred tax assets (liabilities) |
$ | (18,531 | ) | $ | — | |||
|
|
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Beginning Balance |
$ | 15,961 | $ | 14,855 | ||||
Change related to current net operating losses |
20,680 | 2,238 | ||||||
Net change related to generation of tax attributes |
(695 | ) | 695 | |||||
Change related to deferred tax adjustments |
(20,025 | ) | (1,827 | ) | ||||
Change related to prior period adjustments |
(137 | ) | — | |||||
Acquisition deferred tax liabilities |
(9,003 | ) | — | |||||
|
|
|
|
|||||
Ending Balance |
$ | 6,781 | $ | 15,961 | ||||
|
|
|
|
13. |
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS |
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Net income (loss) |
$ | 47,312 | $ | (12,206 | ) | |||
Deemed dividend from common to preferred exchange |
— | (10,478 | ) | |||||
|
|
|
|
|||||
Net income (loss) attributable to common stockholders |
$ | 47,312 | $ | (22,684 | ) | |||
Weighted average shares outstanding - basic |
129,527 | 98,492 | ||||||
Add: Dilutive share-based compensation awards |
16,275 | — | ||||||
|
|
|
|
|||||
Weighted average shares outstanding - diluted |
145,802 | 98,492 | ||||||
Net income (loss) per share - basic |
$ | 0.37 | $ | (0.23 | ) | |||
Net income (loss) per share - diluted |
$ | 0.32 | $ | (0.23 | ) |
December 31, |
||||||||
2021 |
2020 |
|||||||
Stock options |
4,197 | 2,530 | ||||||
Preferred stock |
— | 6,766 | ||||||
Warrants |
— | 4,135 | ||||||
Restricted stock |
52,517 | 37,946 | ||||||
Share settled liability |
1,214 | — | ||||||
|
|
|
|
|||||
Total potentially anti-dilutive shares |
57,928 | 51,377 | ||||||
|
|
|
|
14. |
SEGMENT REPORTING |
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Equipment Sales and Hosting Segment |
||||||||
Revenue: |
||||||||
Hosting revenue |
$ | 79,323 | $ | 41,598 | ||||
Equipment sales |
248,235 | 12,595 | ||||||
|
|
|
|
|||||
Total revenue |
327,558 | 54,193 | ||||||
Cost of revenue: |
||||||||
Cost of hosting services |
77,678 | 36,934 | ||||||
Cost of equipment sales |
177,785 | 11,017 | ||||||
|
|
|
|
|||||
Total Cost of revenue |
$ | 255,463 | $ | 47,951 | ||||
|
|
|
|
|||||
Gross profit |
$ | 72,095 | $ | 6,242 | ||||
Mining Segment |
||||||||
Digital asset mining income |
$ | 216,925 | $ | 6,127 | ||||
|
|
|
|
|||||
Total revenue |
216,925 | 6,127 | ||||||
Cost of revenue |
50,158 | 2,977 | ||||||
|
|
|
|
|||||
Gross profit |
$ | 166,767 | $ | 3,150 | ||||
Consolidated total revenue |
$ | 544,483 | $ | 60,320 | ||||
Consolidated cost of revenue |
$ | 305,621 | $ | 50,928 | ||||
Consolidated gross profit |
$ | 238,862 | $ | 9,392 |
Year Ended December 31, |
Year Ended December 31, |
Year Ended December 31, |
||||||||||||||||||||||||||||||||||
2021 |
2020 |
2021 |
2020 |
2021 |
2020 |
|||||||||||||||||||||||||||||||
Percent of total revenue: | Percent of Equipment Sales and Hosting segment: |
Percent of accounts receivable, net: |
||||||||||||||||||||||||||||||||||
Customer |
||||||||||||||||||||||||||||||||||||
A |
15 | % | N/A | 26 | % | N/A | N/A | N/A | ||||||||||||||||||||||||||||
B |
14 | % | N/A | 23 | % | N/A | N/A | N/A | ||||||||||||||||||||||||||||
C 1 |
N/A | 24 | % | N/A | 27 | % | N/A | N/A | ||||||||||||||||||||||||||||
D |
N/A | 13 | % | N/A | 14 | % | N/A | N/A | ||||||||||||||||||||||||||||
E |
N/A | N/A | N/A | N/A | N/A | 26 | % |
1 |
Customer terminated its hosting contracts with the Company effective April 2020. |
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Reportable segment gross profit |
$ | 238,862 | $ | 9,392 | ||||
(Loss) gain on legal settlement |
(2,636 | ) | 5,814 | |||||
Gain from sales of digital currency assets |
4,814 | 69 | ||||||
Impairment of digital currency assets |
(37,206 | ) | (4 | ) | ||||
Operating expense: |
||||||||
Research and development |
7,674 | 5,271 | ||||||
Sales and marketing |
4,062 | 1,771 | ||||||
General and administrative |
60,604 | 14,556 | ||||||
|
|
|
|
|||||
Total operating expense |
72,340 | 21,598 | ||||||
|
|
|
|
|||||
Operating income (loss) |
131,494 | (6,327 | ) | |||||
Non-operating expense, net: |
||||||||
Loss on debt extinguishment and other |
8,016 | 1,333 | ||||||
Interest expense, net |
44,354 | 4,436 | ||||||
Other non-operating expenses, net |
16,049 | 110 | ||||||
|
|
|
|
|||||
Total non-operating expense, net |
68,419 | 5,879 | ||||||
Income (loss) before income taxes |
$ | 63,075 | $ | (12,206 | ) | |||
|
|
|
|
15. |
RELATED-PARTY TRANSACTIONS |
16. |
SUBSEQUENT EVENTS |
Amount |
||||
SEC registration fee |
$ | 171,822.06 | ||
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 |
$ | 611,822.06 |
(a) | Exhibits. |
Incorporated by Reference |
||||||||||||||||||
Exhibit |
Description |
Schedule/ Form |
File Number |
Exhibits |
Filing Date |
|||||||||||||
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. |
** | Previously filed. |
# | 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 because they are not material and are the type that the Registrant treats as private or confidential. |
(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 | April 21, 2022 | ||
Michael Levitt | Co-Chair of the Board( Principal Executive Officer |
|||
/s/ Denise Sterling |
Chief Financial Officer |
April 21, 2022 | ||
Denise Sterling | ( Principal Financial Officer |
|||
/s/ Brian Neville |
Chief Accounting Officer | April 21, 2022 | ||
Brian Neville | ( Principal Accounting Officer |
|||
* |
Chief Vision Officer and Co-Chair of the |
April 21, 2022 | ||
Darin Feinstein | Board | |||
* |
Director | April 21, 2022 | ||
Jarvis Hollingsworth | ||||
* |
Director | April 21, 2022 | ||
Matt Minnis | ||||
* |
Director | April 21, 2022 | ||
Stacie Olivares | ||||
* |
Director | April 21, 2022 | ||
Kneeland Youngblood |
*By: | /s/ Todd DuChene | |
Attorney-in-fact |
Exhibit 5.1
Nicolas H.R. Dumont
+1 212 479 6446
ndumont@cooley.com
April 21, 2022
Core Scientific, Inc.
210 Barton Springs Road
Suite 300
Austin, TX 78704
Re: Core Scientific, Inc. Registration Statement on Form S-1
Ladies and Gentlemen:
We have acted as counsel to Core Scientific, Inc., a Delaware corporation (the Company), with respect to certain matters in connection with the filing by the Company of a Registration Statement on Form S-1 (the Registration Statement) (No. 333-262596) with the Securities and Exchange Commission, including a related prospectus included in the Registration Statement (the Prospectus), covering the registration of (a) the issuance of shares of common stock, par value of $0.0001 per share (the Common Stock), of the Company upon the exercise of warrants issued by the Company, and (b) the resale of Common Stock and warrants to purchase Common Stock, as follows:
(i) | the issuance of up to 6,266,667 shares (the Private Warrant Shares) of Common Stock upon the exercise of certain outstanding warrants (the Private Warrants) by the holders thereof; |
(ii) | the issuance of up to 8,625,000 shares (the Public Warrant Shares and, together with the Private Warrant Shares, the Warrant Shares) of Common Stock upon the exercise of certain outstanding warrants (the Public Warrants and, together with the Private Warrants, the Warrants) by the holders thereof; |
(iii) | the resale of 6,266,667 Private Warrants; |
(iv) | the resale of 3,200,306 warrants (the Legacy Warrants and together with the Private Warrants, the Resale Warrants) assumed by the Company that were initially issued by Core Scientific Holding Co. (the Legacy Core); and |
(v) | the resale of up to 230,923,357 shares of Common Stock (the Selling Stockholder Shares) consisting of: |
| 8,625,000 shares of Common Stock issued in a private placement in connection with the Companys initial public offering; |
| 87,344,633 shares of Common Stock issued pursuant to that certain Agreement and Plan of Reorganization and Merger, dated as of July 20, 2021, as amended on October 1, 2021, and as further amended on December 29, 2021, by and among Core Scientific Holding Co., a Delaware corporation, XPDI Merger Sub Inc., a Delaware corporation, and the Company (f/k/a Power & Digital Infrastructure Acquisition Corp.); |
| up to 6,266,667 Private Warrant Shares; |
Cooley LLP 55 Hudson Yards New York, NY 10001-2157
t: (212) 479-6000 f: (212) 479-6275 cooley.com
Core Scientific, Inc.
April 21, 2022
Page Two
| up to (i) 3,200,306 shares (the Legacy Warrant Shares) of Common Stock issuable upon the exercise of the Legacy Warrants, (ii) 24,962,264 shares of Common Stock issuable upon the settlement of restricted stock units, (iii) 811,917 outstanding shares of Common Stock underlying restricted stock awards that are subject to vesting and (iv) 18,819,555 shares of Common Stock issuable upon the exercise of stock options (collectively, the Convertible Security Shares) held by certain affiliates of the Company; and |
| up to 80,893,015 shares (the Conversion Shares) of Common Stock issuable upon the conversion of certain convertible promissory notes (collectively, the Convertible Notes) assumed by the Company that were initially issued pursuant to (i) the Secured Convertible Note Purchase Agreement, dated as of April 19, 2021, as amended on April 22, 2021, and (ii) the Convertible Note Purchase agreement, dated as of August 20, 2021, as amended on September 23, 2021, each by and among Legacy Core, the guarantors thereto, the purchasers thereto and U.S. Bank National Association as note agent and collateral agent (collectively, the Note Agreements). |
The Warrants were issued pursuant to a Warrant Agreement, dated as of February 9, 2021, by and between Power & Digital Infrastructure Acquisition Corp. and Continental Stock Transfer & Trust Company, as warrant agent (as amended, the Warrant Agreement).
In connection with this opinion, we have examined and relied upon (a) the Registration Statement and the Prospectus, (b) the Companys certificate of incorporation and bylaws, each as currently in effect, (c) the Warrant Agreement, (d) the Warrants, (e) the Legacy Warrants, (f) the Note Agreements, (g) forms of Convertible Notes and (h) originals, or copies certified to our satisfaction, of such records, documents, certificates, memoranda and other instruments as in our judgment are necessary or appropriate to enable us to render the opinion expressed below. We have assumed the genuineness of all signatures; the authenticity of all documents submitted to us as originals; the conformity to originals of all documents submitted to us as copies; and the accuracy, completeness and authenticity of certificates of public officials and the due authorization, execution and delivery of all documents by all persons other than the Company where authorization, execution and delivery are prerequisites to the effectiveness thereof. As to certain factual matters, we have relied upon a certificate of an officer of the Company and have not independently verified such matters.
With respect to the Warrants, the Warrant Shares, the Legacy Warrants, the Legacy Warrant Shares and the Conversion Shares, we express no opinion to the extent that future issuances of securities of the Company, including the Warrant Shares, the Legacy Warrant Shares and the Conversion Shares, and/or antidilution adjustments to outstanding securities of the Company, including the Warrants, the Legacy Warrants and the Convertible Notes, cause the Warrants, the Legacy Warrants or the Convertible Notes to be exercisable for more shares of Common Stock than the number of shares of Common Stock that then remain authorized but unissued. Further, we have assumed that the exercise price of the Warrants and the Legacy Warrants and the conversion price of the Convertible Notes will not be adjusted to an amount below the par value per share of Common Stock.
Our opinion herein is expressed solely with respect to the General Corporation Law of the State of Delaware and the laws of the State of New York. We express no opinion to the extent that any other laws are applicable to the subject matter hereof and express no opinion and provide no assurance as to compliance with any federal or state securities law, rule or regulation.
With regard to our opinion concerning the Resale Warrants constituting valid and binding obligations of the Company:
Cooley LLP 55 Hudson Yards New York, NY 10001-2157
t: (212) 479-6000 f: (212) 479-6275 cooley.com
Core Scientific, Inc.
April 21, 2022
Page Three
(i) Our opinion is subject to, and may be limited by, (a) applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance, debtor and creditor, and similar laws which relate to or affect creditors rights generally, and (b) general principles of equity (including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing) regardless of whether considered in a proceeding in equity or at law.
(ii) Our opinion is subject to the qualification that the availability of specific performance, an injunction or other equitable remedies is subject to the discretion of the court before which the request is brought.
(iii) We express no opinion as to any provision of the Resale Warrants that: (a) provides for liquidated damages, buy-in damages, monetary penalties, prepayment or make-whole payments or other economic remedies to the extent such provisions may constitute unlawful penalties; (b) relates to advance waivers of claims, defenses, rights granted by law, or notice, opportunity for hearing, evidentiary requirements, statutes of limitations, trial by jury, or procedural rights; (c) restricts non-written modifications and waivers; (d) provides for the payment of legal and other professional fees where such payment is contrary to law or public policy; (e) relates to exclusivity, election or accumulation of rights or remedies; (f) authorizes or validated conclusive or discretionary determinations; or (g) provides that provisions of the Warrants are severable to the extent an essential part of the agreed exchange is determined to be invalid and unenforceable.
(iv) We express no opinion as to whether a state court outside of the State of New York or a federal court of the United States would give effect to the choice of New York law provided for in the Resale Warrants.
On the basis of the foregoing, and in reliance thereon, we are of the opinion that:
1. | The Warrant Shares, when issued and paid for upon exercise of the Warrants in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable. |
2. | The Resale Warrants constitute valid and binding obligations of the Company. |
3. | The Selling Stockholder Shares, other than any Private Warrant Shares, Convertible Security Shares (including Legacy Warrant Shares) or Conversion Shares included in the Selling Stockholder Shares, are validly issued, fully paid and non-assessable. Any Private Warrant Shares, Convertible Security Shares (including Legacy Warrant Shares) or Conversion Shares included in the Selling Stockholder Shares, when issued and paid for or vest in accordance with the terms of the Private Warrants, the applicable equity award agreements, the Legacy Warrants or the Convertible Notes, as applicable, will be validly issued, fully paid and nonassessable. |
Our opinion is limited to the matters stated herein and no opinion is implied or may be inferred beyond the matters expressly stated. Our opinion is based on these laws as in effect on the date hereof, and we disclaim any obligation to advise you of facts, circumstances, events or developments which hereafter may be brought to our attention and which may alter, affect or modify the opinion expressed herein.
We hereby consent to the reference to our firm under the caption Legal Matters in the Prospectus and to the filing of this opinion as an exhibit to the Registration Statement.
Cooley LLP 55 Hudson Yards New York, NY 10001-2157
t: (212) 479-6000 f: (212) 479-6275 cooley.com
Core Scientific, Inc.
April 21, 2022
Page Four
Sincerely, | ||
COOLEY LLP | ||
By: | /S/ NICOLAS H.R. DUMONT | |
Nicolas H.R. Dumont |
Cooley LLP 55 Hudson Yards New York, NY 10001-2157
t: (212) 479-6000 f: (212) 479-6275 cooley.com
Exhibit 23.1
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS CONSENT
We consent to the inclusion in this Registration Statement of Core Scientific, Inc. (f/k/a Power & Digital Infrastructure Acquisition Corp.) on Amendment No. 1 to Form S-1 (File No. 333-262596) of our report dated March 30, 2022, with respect to our audits of the consolidated financial statements of Core Scientific, Inc. (f/k/a Power & Digital Infrastructure Acquisition Corp.) as of December 31, 2021 and 2020 and for the year ended December 31, 2021 and for the period from December 29, 2020 (inception) through December 31, 2020, which report appears in the Prospectus, which is part of this Registration Statement. We also consent to the reference to our Firm under the heading Experts in such Prospectus.
/s/ Marcum LLP
Marcum LLP
New York, NY
April 21, 2022
Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the caption Experts and to the use of our report dated March 31, 2022 with respect to the consolidated financial statements of Core Scientific Holding Co. included in the Registration Statement (Form S-1) in Amendment No. 1 and related Prospectus of Core Scientific, Inc. for the registration of up to 230,923,357 shares of its common stock, up to 14,891,667 shares of its common stock issuable upon exercise of warrants, and up to 9,466,973 warrants to purchase common stock.
/s/ Ernst & Young LLP
Seattle, Washington
April 21, 2022
Exhibit 107
Calculation of Filing Fee Tables
Form S-1
(Form Type)
Core Scientific, Inc.
(Exact Name of Registrant as Specified in its Charter)
Table 1: Newly Registered Securities
Security Type |
Security Class Title | Fee Calculation or Carry Forward Rule |
Amount Registered(1) | Proposed Maximum Offering Price Per Unit |
Maximum Aggregate Offering Price |
Fee Rate | Amount of Registration Fee | |||||||||
Fees to Be Paid | Equity | Common Stock, par value $0.0001 per share | 457(o) | 14,891,667(2) | $9.00(5) | $134,025,003.00 | 0.0000927 | $12,424.12(5) | ||||||||
Fees to Be Paid | Equity | Common Stock, par value $0.0001 per share | 457(o) | 230,923,357(3) | $6.98(6) | $1,611,845,031.86 | 0.0000927 | $149,418.04(6) | ||||||||
Fees to Be Paid | Equity | Warrants to purchase shares of common stock | 457(i) | 9,466,973(4) | | | | (7) | ||||||||
Total Offering Amounts | $1,745,870,034.86 | $161,842.16 | ||||||||||||||
Total Fees Previously Paid | $167,747.78 | |||||||||||||||
Total Fee Offsets | N/A | |||||||||||||||
Net Fee Due | N/A |
(1) | In the event of a stock split, stock dividend or other similar transaction involving the registrants common stock, in order to prevent dilution, the number of shares of common stock registered hereby shall be automatically increased to cover the additional shares of common stock in accordance with Rule 416(a) under the Securities Act. |
(2) | Consists of (i) 6,266,667 shares of common stock issuable upon the exercise of warrants issued to the XPDI Sponsor LLC and certain funds and accounts managed by subsidiaries of BlackRock, Inc. in a private placement (the Private Placement Warrants) and (ii) 8,625,000 shares of common stock issuable upon the exercise of warrants included in the publicly sold units (the Public Warrants) to purchase common stock, in each case at an exercise price of $11.50 per share. |
(3) | Consists of (i) 8,625,000 Founder Shares issued in a private placement in connection with the initial public offering of XPDI, (ii) up to 6,266,667 shares of common stock issuable upon exercise of the Private Placement Warrants, (iii) up to 135,138,675 shares of common stock (including shares issuable upon the exercise of convertible securities) held by certain affiliates of our company and (iv) up to 80,893,015 shares of common stock issuable upon conversion of certain Convertible Notes. |
(4) | Consists of (i) 6,266,667 Private Placement Warrants and (ii) 3,200,306 warrants (the Legacy Core Warrants) initially issued by Core Scientific Holding Co. that are held by certain affiliates of the Registrant. |
(5) | Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(c) under the Securities Act. The price per share and aggregate offering price are based on the average of the high and low prices of the Registrants common stock on February 3, 2022, as reported on the Nasdaq Stock Market (such date being within five business days of the filing of the initial registration statement). |
(6) | Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(c) under the Securities Act. The price per share and aggregate offering price are based on the average of the high and low prices of the Registrants common stock on April 21, 2022, as reported on the Nasdaq Stock Market. |
(7) | In accordance with Rule 457(i), the entire registration fee for the Private Placement Warrants and the Legacy Core Warrants is allocated to the shares of common stock underlying such warrants, and no separate fee is payable for such warrants. |
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