Quarterly report pursuant to Section 13 or 15(d)

Liquidity and Financial Condition

v3.20.2
Liquidity and Financial Condition
9 Months Ended
Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Liquidity and Financial Condition

Note 2. Liquidity and Financial Condition

At September 30, 2020, the Company had approximate balances of cash and cash equivalents of $30.1 million, cryptocurrencies of $9.0 million, working capital of $39.3 million, total stockholders' equity of $60.7 million and an accumulated deficit of $233.8 million. To date, the Company has, in large part, relied on equity and debt financing to fund its operations.

As of September 30, 2020, the Company has executed purchase agreements for the purchase of Miners from Bitmain for a total of 16,600 new S19 Pro miners. The purchase commitment totals $37.2 million, with $12.8 million in deposits paid and the remaining $24.4 million due to be paid over the delivery schedule through the second quarter of 2021.

2019 ATM Offering

As disclosed in Note 8, the Company entered into an At-The-Market Sales Agreement with H.C. Wainwright & Co., LLC (“H.C. Wainwright”), dated May 24, 2019 (the “Sales Agreement”), relating to the sale by the Company through its sales agent, H.C. Wainwright, of up to $100.0 million in shares of the Company’s common stock from time to time in an at-the-market offering (“2019 ATM Offering”). All sales of the Company’s common stock in the 2019 ATM Offering were made pursuant to the prospectus forming a part of the Company’s shelf registration statement on Form S-3, as amended (Registration No. 333-226111), which was declared effective as of May 8, 2019 (the “2019 Registration Statement”).

The Company received proceeds on sales of 22,210,095 shares of common stock under the Sales Agreement of approximately $49.6 million (excluding commissions and expenses of $1.6 million), at a weighted average price of $2.23 per share, during the nine months ended September 30, 2020. According to the terms of the Sales Agreement, the Company paid H.C. Wainwright a commission of 3.0% of the aggregate gross proceeds the Company received from sales of its common stock in the 2019 ATM Offering.

2020 ATM Offering

As of October 15, 2020, the Company and H.C. Wainwright entered into the first amendment to the Sales Agreement (the “First Amendment to the Sales Agreement”). Pursuant to the First Amendment to the Sales Agreement, the Company may sell, through H.C. Wainwright as its sales agent, up to $100.0 million in shares of the Company’s common stock from time to time in an at-the-market offering (the “2020 ATM Offering”). According to the First Amendment to the Sales Agreement, the Company shall pay H.C. Wainwright a commission of up to 3.0% of the aggregate gross proceeds the Company receives from all sales of its common stock in the 2020 ATM Offering.

Sales of shares of the Company’s common stock in the 2020 ATM Offering will be made pursuant to the prospectus and prospectus supplement filed with and forming a part of the Company’s shelf registration statement on Form S-3 (Registration No. 333-249356), filed with the SEC on October 7, 2020 and declared effective as of October 15, 2020 (the “2020 Registration Statement”).

Termination of 2019 ATM Offering

Effective as of October 15, 2020, the Company and H.C. Wainwright terminated the 2019 ATM Offering and replaced it with the 2020 ATM Offering under the terms of the First Amendment to the Sales Agreement. As of its termination, the Company had cumulatively sold 30.6 million shares of its common stock, for an aggregate gross sales price of approximately $74 million pursuant to the 2019 ATM Offering. With the termination of the 2019 ATM Offering, no additional securities will be sold by the Company pursuant to the prospectus supplement relating to the 2019 Registration Statement.

COVID-19

The COVID-19 global pandemic has been unprecedented and unpredictable and is likely to continue to result in significant national and global economic disruption, which may adversely affect our business. Based on the Company’s current assessment, however, the Company does not expect any material impact on its long-term strategic plans, its operations, or its liquidity due to the worldwide spread of the COVID-19 virus. However, the Company is actively monitoring this situation and the possible effects on its financial condition, liquidity, operations, suppliers, and industry.

The Company believes its current cash on hand is sufficient to meet its operating and capital requirements for at least the next twelve months from the date these financial statements are issued.