Item 1.01. Entry into a Material Definitive Agreement.
On
Acquisition Consideration
The consideration payable to the Sellers for the Acquisition consists of
Representations, Warranties, Covenants and Indemnification
Riot, the Riot Acquisition Entity and the Sellers have agreed to representations and warranties in the Membership Interest Purchase Agreement that are customary for a transaction of this type. The Membership Interest Purchase Agreement also includes various covenants and agreements by the parties, including, among others, customary non-competition and non-solicitation covenants by the Sellers surviving for a period of five years after the Closing.
The Membership Interest Purchase Agreement provides that each of the Sellers and the Riot Acquisition Entity is obligated, from and after the Closing, and subject to certain limitations (including, as applicable, threshold amounts, maximum amounts and survival periods), to indemnify Riot and the Seller, respectively, for certain customary matters specified in the Membership Interest Purchase Agreement. The Sellers' indemnification obligations are secured by the Holdback Share Consideration for a period of 18 months following the Closing.
Registration Rights
The Membership Interest Purchase Agreement also provides the Sellers with
certain registration rights with respect to the Share Consideration. Pursuant to
the Membership Interest Purchase Agreement, on each of the date hereof and the
date of issuance of the Holdback Share Consideration, Riot is obligated to file
a prospectus supplement with respect to Riot's registration statement on Form
S-3 previously filed with
The above description of the Membership Interest Purchase Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Membership Interest Purchase Agreement, a copy of which is attached as Exhibit 2.1 to this Current Report on Form 8-K (this "Current Report") and is incorporated in this Current Report by reference. The Membership Interest Purchase Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of such agreement or other specific dates. The assertions embodied in those representations, warranties and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating such agreement. The Membership Interest Purchase Agreement has been attached to provide investors with information regarding its terms. It is not intended to provide any other . . .
Item 2.01. Completion of Acquisition or Disposition of Assets.
The information contained in Item 1.01 of this Current Report is hereby
incorporated into this Item 2.02 of this Current Report. On
Item 3.02. Unregistered Sales of
The information contained in Item 1.01 of this Current Report is hereby
incorporated into this Item 3.02 of this Current Report. In accordance with the
Membership Interest Purchase Agreement, a portion of the consideration for the
Acquisition consists of shares of Common Stock. On
Item 7.01. Regulation FD Disclosure.
On
The information furnished herewith pursuant to this Item 7.01 of this Current Report, including Exhibit 99.1, shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section. The information in this Item 7.01 of this Current Report shall not be incorporated by reference into any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 8.01. Other Events.
ESS Metron, all of the issued and outstanding equity interests of which were
acquired by Riot on
The following table summarizes certain of ESS Metron's unaudited financial data for the fiscal year endedDecember 31, 2020 and the nine months endedSeptember 30, 2020 . These condensed financial highlights of ESS Metron are included to facilitate an understanding of ESS Metron's financial position and results of operations and have been derived from the historical unaudited financial statements of ESS Metron. Unaudited Balance Sheets (In thousands of dollars) September 30, December 31, 2021 2020 (Unaudited) (Unaudited) ASSETS Current assets Cash and cash equivalents $ 3,342$ 4,758 Trade receivables, net 9,952 6,494 Inventories and work in process 1,245 722 Costs and estimated earnings in excess of billings 10,948 4,777 Prepaid expenses and other current assets 245 256 Total current assets 25,732 17,007 Property and equipment, net 3,478 3,809 Deposits 13 - Intangibles, net - - Affiliate receivable - - Total assets$ 29,223 $ 20,816 LIABILITIES AND MEMBERS' EQUITY Current liabilities Accounts payable and accrued expenses $ 8,855$ 6,725 Billings in excess of costs and estimated earnings 8,998 1,963 Other current liabilities - - Long-term debt, current portion 215 206 Total current liabilities 18,068 8,894 Long-term debt, less current portion 5,401 6,564 Warranty liability 109 17 Affiliate payable 1,250 930 Total liabilities 24,828 16,405 Members' equity Total, net 4,395 4,411 Total members' equity 4,395 4,411 Total liabilities and equity$ 29,223 $ 20,816 Unaudited Statements of Operations (In thousands of dollars) Nine Months Ended Year Ended September 30, December 31, 2021 2020 (Unaudited) (Unaudited) Total revenues $ 44,439$ 50,228 Operating costs and expenses: Cost of sales 36,207 41,273 Operating expenses 5,961 8,333 Total costs and expenses 42,168 49,606 Operating income $ 2,271 $ 622
This financial data of ESS Metron is unaudited, has been derived from financial
statements prepared in accordance with the
We caution you not to place undue reliance on these unaudited financial highlights, because they include a number of estimates and do not include all information and disclosures required by GAAP.
The Acquisition is expected to be accounted for by Riot using the acquisition method of accounting in accordance with ASC 805, which requires recognition of assets acquired and liabilities assumed at their respective fair values on the date of acquisition. Riot has not completed a preliminary allocation of the purchase consideration in the Acquisition. Therefore, the allocation of the purchase consideration to the assets acquired and liabilities assumed may require, following the Closing, revisions to ESS Metron's financial position and results of operations and such revisions could be material.
Cautionary Note Regarding Forward-Looking Statements
Statements in this Current Report, including those made in the documents
incorporated by reference herein, that are not statements of historical fact may
be forward-looking statements that reflect management's current expectations,
assumptions and estimates of future performance and economic conditions. Such
statements are made in reliance on the safe harbor provisions of Section 27A of
the Securities Act and Section 21E of the Exchange Act. Because such statements
are subject to risks and uncertainties, actual results may differ materially
from those expressed or implied by such forward-looking statements. Words such
as "anticipates," "believes," "plans," "expects," "intends," "will,"
"potential," "hope" and similar expressions are intended to identify
forward-looking statements. The assumptions and expectations expressed in these
forward-looking statements may never materialize or may prove to be incorrect.
Actual results and the timing of events could differ materially from those
anticipated in such forward-looking statements as a result of various risks and
uncertainties. These forward-looking statements may include, but are not limited
to, statements about the benefits of acquisitions, including financial and
operating results of both companies following the acquisitions, and the
Company's plans, objectives, expectations and intentions for the future. Among
the risks and uncertainties that could cause actual results to differ from those
expressed in forward-looking statements, include, but are not limited to:
unaudited estimates of Bitcoin production; our future hash rate growth
(expressed in terms of exahashes per second (EH/s)); our anticipated benefits of
immersion-cooling, our expected schedule of new miner deliveries; our ability to
successfully deploy new miners; MW capacity under development; the integration
of the acquired businesses may not be successful, or such integration may take
longer or be more difficult, time-consuming or costly to accomplish than
anticipated; failure to otherwise realize anticipated efficiencies and strategic
and financial benefits from acquisitions; and the impact of COVID-19 on us, our
customers, or on our suppliers in connection with our estimated timelines.
Detailed information regarding other factors that may cause actual results to
differ materially from those expressed or implied by statements in this press
release may be found in the Company's filings with the
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
The financial statements required by Item 9.01(a) of Form 8-K will be filed by amendment to this Current Report not later than 71 calendar days after the date this Current Report is required to be filed.
(b) Pro Forma Financial Information.
The pro forma financial information required by Item 9.01(b) of Form 8-K will be filed by amendment to this Current Report not later than 71 calendar days after the date this Current Report is required to be filed.
(d) Exhibits. Exhibit Number Description 2.1* Membership Interest Purchase Agreement, dated as ofDecember 1, 2021 , by and amongRiot Blockchain, Inc. (solely for purposes of Article VII thereof),Electrode Acquisition Corp. , Steven R. Ferrie,David P. Franzmann and the Seller Representative party thereto. 99.1 Press Release, issued byRiot Blockchain, Inc. onDecember 1, 2021 . 104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
* Certain exhibits and schedules in this Exhibit have been omitted pursuant to
Item 601(a)(5) of Regulation S-K. The registrant agrees to furnish
supplementally a copy of any such omitted exhibit or schedule to the
S I G N A T U R E
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
RIOT BLOCKCHAIN, INC. By: /s/Jeffrey McGonegal Jeffrey McGonegal Chief Financial Officer Date:December 1, 2021
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