Delaware | | | 7374 | | | 86-2759890 |
(State or other jurisdiction of incorporation or organization) | | | (Primary Standard Industrial Classification Code Number) | | | ( Identification No.) |
Large | | | ☐ | | | Accelerated | | | ☐ |
| | ☒ | | | Smaller | | | ☒ | |
| | | | Emerging | | | ☒ |
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• | our Annual Report on Form 10-K for the year ended December 31, |
• | our Definitive Information Statement on Schedule 14C, filed with the SEC on January 30, 2023; |
• |
• | our Quarterly Reports on Form 10-Q for the |
• | our Current Reports on Form 8-K |
• | the description of our capital stock contained in our Registration Statement on Form 8-A, |
| | | | Pro Forma Adjustments | | | | | ||||||||||||||||
| | Historical September 30, 2022 | | | Asset Purchase Agreement | | | Amendment to May PIPE Notes | | | September PIPE | | | Northern Data Settlement | | | WhiteHawk Refinancing | | | Notes | | | Pro Forma September 30, 2022 | |
CURRENT ASSETS | | | | | | | | | | | | | | | | | ||||||||
Cash | | | $16,723,511 | | | $— | | | $— | | | $— | | | $— | | | $21,624,991 | | | (a), (c) | | | $38,348,502 |
Digital currencies | | | 2,186,704 | | | — | | | — | | | — | | | — | | | — | | | | | 2,186,704 | |
Digital currencies restricted | | | — | | | — | | | — | | | — | | | — | | | — | | | | | — | |
Accounts receivable | | | 775,038 | | | — | | | — | | | — | | | — | | | — | | | | | 775,038 | |
Due from related party | | | 58,735 | | | — | | | — | | | — | | | — | | | — | | | | | 58,735 | |
Prepaid insurance | | | 980,180 | | | — | | | — | | | — | | | — | | | — | | | | | 980,180 | |
Inventory | | | 3,316,716 | | | — | | | — | | | — | | | — | | | — | | | | | 3,316,716 | |
Assets held for sale | | | 39,008,651 | | | (39,008,651) | | | — | | | — | | | — | | | — | | | (e) | | | — |
Other current assets | | | 1,527,938 | | | — | | | — | | | — | | | — | | | — | | | | | 1,527,938 | |
Total Current Assets | | | 64,577,473 | | | (39,008,651) | | | — | | | — | | | — | | | 21,624,991 | | | | | 47,193,813 | |
EQUIPMENT DEPOSITS | | | 24,385,876 | | | — | | | — | | | — | | | — | | | — | | | (d) | | | 24,385,876 |
PROPERTY, PLANT AND EQUIPMENT, NET | | | 182,869,685 | | | — | | | — | | | — | | | — | | | — | | | (e) | | | 182,869,685 |
LAND | | | 1,748,439 | | | — | | | — | | | — | | | — | | | — | | | | | 1,748,439 | |
ROAD BOND | | | 211,958 | | | — | | | — | | | — | | | — | | | — | | | | | 211,958 | |
SECURITY DEPOSITS | | | 348,888 | | | — | | | — | | | — | | | — | | | — | | | | | 348,888 | |
TOTAL ASSETS | | | $274,142,319 | | | $(39,008,651) | | | $— | | | $— | | | $— | | | $21,624,991 | | | | | $256,758,659 | |
CURRENT LIABILITIES | | | | | | | | | | | | | | | | | ||||||||
Current portion of long-term debt-net of discounts/issuance fees | | | $90,298,367 | | | $(39,008,651) | | | $— | | | $— | | | $— | | | $(27,455,195) | | | (f), (g), (h) | | | $23,834,521 |
Financed insurance premiums | | | 307,385 | | | — | | | — | | | — | | | — | | | — | | | | | 307,385 | |
Forward sale contract | | | — | | | — | | | — | | | — | | | — | | | — | | | | | — | |
Accounts payable | | | 28,491,137 | | | — | | | — | | | — | | | — | | | — | | | (b), (i) | | | 28,491,137 |
Due to related parties | | | 2,212,145 | | | — | | | — | | | — | | | — | | | — | | | | | 2,212,145 | |
Accrued liabilities | | | 7,385,258 | | | — | | | — | | | — | | | — | | | — | | | (j), (k) | | | 7,385,258 |
Total Current Liabilities | | | 128,694,292 | | | (39,008,651) | | | — | | | — | | | — | | | (27,455,195) | | | | | 62,230,446 | |
LONG-TERM LIABILITIES | | | | | | | | | | | | | | | | | ||||||||
Asset retirement obligation | | | 992,201 | | | — | | | — | | | — | | | — | | | — | | | | | 992,201 | |
Contract liabilities | | | 132,093 | | | — | | | — | | | — | | | — | | | — | | | | | 132,093 | |
Paycheck Protection Program Loan | | | — | | | — | | | — | | | — | | | — | | | — | | | | | — | |
Warrant liabilities | | | 5,056,065 | | | — | | | — | | | — | | | — | | | — | | | | | 5,056,065 | |
Long-term debt-net of discounts/issuance fees | | | 7,607,240 | | | — | | | — | | | — | | | — | | | 53,528,113 | | | (h) | | | 61,135,353 |
Total Long-Term Liabilities | | | 13,787,599 | | | — | | | — | | | — | | | — | | | 53,528,113 | | | | | 67,315,712 | |
Total Liabilities | | | 142,481,891 | | | (39,008,651) | | | — | | | — | | | — | | | 26,072,918 | | | | | 129,546,158 | |
COMMITMENTS AND CONTINGENCIES | | | | | | | | | | | | | | | | | ||||||||
REDEEMABLE COMMON STOCK | | | | | | | | | | | | | | | | | ||||||||
Common Stock - Class V, $0.0001 par value; 34,560,000 shares authorized and 27,057,600 shares issued and outstanding | | | 29,433,528 | | | — | | | — | | | — | | | — | | | — | | | | | 29,433,528 | |
Total redeemable common stock | | | 29,433,528 | | | — | | | — | | | — | | | — | | | — | | | | | 29,433,528 |
| | | | Pro Forma Adjustments | | | | | ||||||||||||||||
| | Historical September 30, 2022 | | | Asset Purchase Agreement | | | Amendment to May PIPE Notes | | | September PIPE | | | Northern Data Settlement | | | WhiteHawk Refinancing | | | Notes | | | Pro Forma September 30, 2022 | |
STOCKHOLDERS' EQUITY / (DEFICIT) | | | | | | | | | | | | | | | | | ||||||||
Non-controlling Series A redeemable and convertible preferred stock, $0.0001 par value, aggregate liquidation value $5,000,000; 1,152,000 shares issued and outstanding | | | 34,140,047 | | | — | | | — | | | — | | | — | | | — | | | | | 34,140,047 | |
Common Stock - Class A, $0.0001 par value; 685,440,000 shares authorized and 23,063,813 shares issued and outstanding | | | 2,307 | | | — | | | — | | | — | | | — | | | — | | | (l), (m) | | | 2,307 |
Accumulated deficits | | | (211,325,844) | | | — | | | — | | | — | | | — | | | (7,921,691) | | | (o) | | | (219,247,535) |
Additional paid-in capital | | | 279,410,390 | | | — | | | — | | | — | | | — | | | 3,473,764 | | | (n) | | | 282,884,154 |
Stockholders' equity / (deficit) | | | 102,226,900 | | | — | | | — | | | — | | | — | | | (4,447,927) | | | | | 97,778,973 | |
Total | | | 131,660,428 | | | — | | | — | | | — | | | — | | | (4,447,927) | | | | | 127,212,501 | |
TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY / (DEFICIT) | | | $274,142,319 | | | $(39,008,651) | | | $— | | | $— | | | $— | | | $21,624,991 | | | | | $256,758,659 |
| | Historical Nine Months Ended September 30, 2022 | | | Asset Purchase Agreement | | | Amendment to May PIPE Notes | | | September PIPE | | | Northern Data Settlement | | | WhiteHawk Refinancing | | | Notes | | | Pro Forma Nine Months Ended September 30, 2022 | |
OPERATING REVENUES | | | | | | | | | | | | | | | | | ||||||||
Cryptocurrency mining | | | $50,715,424 | | | (19,062,900) | | | — | | | — | | | — | | | — | | | (p) | | | $31,652,524 |
Energy | | | 26,946,549 | | | 6,901,126 | | | — | | | — | | | — | | | — | | | (q) | | | 33,847,675 |
Capacity | | | 4,591,038 | | | — | | | — | | | — | | | — | | | — | | | | | 4,591,038 | |
Cryptocurrency hosting | | | 282,327 | | | — | | | — | | | — | | | — | | | — | | | | | 282,327 | |
Other | | | 91,941 | | | — | | | — | | | — | | | — | | | — | | | | | 91,941 | |
Total operating revenues | | | 82,627,279 | | | (12,161,774) | | | — | | | — | | | — | | | — | | | | | 70,465,505 | |
OPERATING EXPENSES | | | | | | | | | | | | | | | | | ||||||||
Fuel | | | 26,485,096 | | | — | | | — | | | — | | | — | | | — | | | | | 26,485,096 | |
Operations and maintenance | | | 47,449,177 | | | — | | | — | | | — | | | — | | | — | | | (r) | | | 47,449,177 |
General and administrative | | | 32,848,291 | | | — | | | — | | | — | | | — | | | — | | | (s) | | | 32,848,291 |
Impairments of digital currencies | | | 8,176,868 | | | (2,163,063) | | | — | | | — | | | — | | | — | | | (t) | | | 6,013,805 |
Impairments of equipment deposits | | | 12,228,742 | | | — | | | — | | | — | | | — | | | — | | | | | 12,228,742 | |
Impairments of miner assets | | | 16,600,000 | | | — | | | — | | | — | | | — | | | — | | | | | 16,600,000 | |
Realized gain on sale of digital currencies | | | (936,506) | | | — | | | — | | | — | | | — | | | — | | | | | (936,506) | |
Loss on disposal of fixed assets | | | 2,231,540 | | | — | | | — | | | — | | | — | | | — | | | | | 2,231,540 | |
Realized loss on sale of miner assets | | | 8,012,248 | | | — | | | — | | | — | | | — | | | — | | | | | 8,012,248 | |
Depreciation and amortization | | | 37,234,126 | | | — | | | — | | | — | | | — | | | — | | | | | 37,234,126 | |
Total operating expenses | | | 190,329,582 | | | (2,163,063) | | | — | | | — | | | — | | | — | | | | | 188,166,519 | |
NET OPERATING LOSS | | | (107,702,303) | | | (9,998,711) | | | — | | | — | | | — | | | — | | | | | (117,701,014) | |
OTHER INCOME (EXPENSE) | | | | | | | | | | | | | | | | | ||||||||
Interest expense | | | (10,813,302) | | | 2,239,640 | | | — | | | — | | | — | | | 412,762 | | | (v), (y) | | | (8,160,900) |
Loss on debt extinguishment | | | (28,697,021) | | | — | | | — | | | — | | | — | | | (7,661,682) | | | (x), (z) | | | (36,358,703) |
Impairment on assets held for sale | | | (4,159,004) | | | — | | | — | | | — | | | — | | | — | | | (x) | | | (4,159,004) |
Gain on extinguishment of PPP loan | | | 841,670 | | | — | | | — | | | — | | | — | | | — | | | | | 841,670 | |
Changes in fair value of warrant liabilities | | | 1,302,065 | | | — | | | — | | | — | | | — | | | — | | | | | 1,302,065 | |
Realized gain on sale of derivative contract | | | 90,953 | | | — | | | — | | | — | | | — | | | — | | | | | 90,953 | |
Changes in fair value of forward sale derivative | | | 3,435,639 | | | — | | | — | | | — | | | — | | | — | | | | | 3,435,639 | |
Changes in fair value of convertible note | | | (2,167,500) | | | — | | | — | | | — | | | — | | | — | | | | | (2,167,500) | |
Waste coal credits | | | 53,443 | | | — | | | — | | | — | | | — | | | — | | | | | 53,443 | |
Other | | | 50,000 | | | — | | | — | | | — | | | — | | | — | | | | | 50,000 | |
Total other income / (expense) | | | (40,063,057) | | | 2,239,640 | | | — | | | — | | | — | | | (7,248,920) | | | | | (45,072,337) | |
NET LOSS | | | $(147,765,360) | | | (7,759,071) | | | — | | | — | | | — | | | $(7,248,920) | | | | | $(162,773,351) | |
NET LOSS - attributable to non-controlling interest | | | $(86,435,347) | | | $(4,538,669) | | | — | | | — | | | — | | | $(4,240,256) | | | | | $(95,214,272) | |
NET LOSS - Stronghold Digital Mining, Inc. | | | $(61,330,013) | | | $(3,220,402) | | | — | | | — | | | — | | | $(3,008,664) | | | | | $(67,559,079) | |
NET LOSS attributable to Class A Common Shares | | | | | | | | | | | | | | | | | ||||||||
Basic | | | $(2.82) | | | | | | | | | | | | | | | $(2.62) | ||||||
Diluted | | | $(2.82) | | | | | | | | | | | | | | | $(2.62) | ||||||
Class A Common Shares Outstanding | | | | | | | | | | | | | | | | | ||||||||
Basic | | | 21,772,057 | | | — | | | — | | | — | | | — | | | 4,000,000 | | | | | 25,772,057 | |
Diluted | | | 21,772,057 | | | — | | | — | | | — | | | — | | | 4,000,000 | | | | | 25,772,057 |
| | Historical Year Ended December 31, 2021 | | | Asset Purchase Agreement | | | Amendment to May PIPE Notes | | | September PIPE | | | Northern Data Settlement | | | Panther Creek Acquisition | | | WhiteHawk Refinancing | | | Notes | | | Pro Forma Year Ended December 31, 2021 | |
OPERATING REVENUES | | | | | | | | | | | | | | | | | | | |||||||||
Cryptocurrency mining | | | $12,494,581 | | | (4,202,268) | | | — | | | — | | | — | | | — | | | — | | | (p) | | | $8,292,313 |
Energy | | | 11,870,817 | | | 946,288 | | | — | | | — | | | — | | | 3,174,344 | | | — | | | (q), (x) | | | 15,991,449 |
Capacity | | | 4,238,921 | | | — | | | — | | | — | | | — | | | 2,731,428 | | | — | | | (x) | | | 6,970,349 |
Cryptocurrency hosting | | | 2,297,489 | | | — | | | — | | | — | | | — | | | — | | | — | | | | | 2,297,489 | |
Other | | | 13,329 | | | — | | | — | | | — | | | — | | | 91,384 | | | — | | | (x) | | | 104,713 |
Total operating revenues | | | 30,915,137 | | | (3,255,980) | | | — | | | — | | | — | | | 5,997,156 | | | — | | | | | 33,656,313 | |
OPERATING EXPENSES | | | | | | | | | | | | | | | | | | | |||||||||
Fuel | | | 13,190,828 | | | — | | | — | | | — | | | — | | | 1,380,026 | | | — | | | (x) | | | 14,570,854 |
Operations and maintenance | | | 15,492,763 | | | — | | | — | | | — | | | — | | | 6,987,030 | | | — | | | (x) | | | 22,479,793 |
General and administrative | | | 14,955,626 | | | — | | | — | | | — | | | — | | | (1,211,665) | | | — | | | (x) | | | 13,743,961 |
Impairments of digital currencies | | | 1,870,274 | | | (388,322) | | | — | | | — | | | — | | | — | | | — | | | (t) | | | 1,481,952 |
Depreciation and amortization | | | 7,607,721 | | | (244,992) | | | — | | | — | | | — | | | 342,364 | | | — | | | (u), (x) | | | 7,705,093 |
Total operating expenses | | | 53,117,212 | | | (633,314) | | | — | | | — | | | — | | | 7,497,755 | | | — | | | | | 59,981,653 | |
NET OPERATING LOSS | | | (22,202,075) | | | (2,622,666) | | | — | | | — | | | — | | | (1,500,599) | | | — | | | | | (26,325,340) | |
OTHER INCOME (EXPENSE) | | | | | | | | | | | | | | | | | | | |||||||||
Interest expense | | | (4,622,655) | | | 1,605,786 | | | — | | | — | | | — | | | (130) | | | 735,140 | | | (v), (x), (y) | | | (2,281,859) |
Loss on debt extinguishment | | | — | | | (19,489,871) | | | — | | | — | | | — | | | — | | | — | | | (w) | | | (19,489,871) |
Impairment on assets held for sale | | | — | | | — | | | — | | | — | | | — | | | — | | | �� | | | | | — | |
Gain on extinguishment of PPP loan | | | 638,800 | | | — | | | — | | | — | | | — | | | — | | | — | | | | | 638,800 | |
Realized gain on sale of digital currencies | | | 149,858 | | | — | | | — | | | — | | | — | | | — | | | — | | | | | 149,858 | |
Changes in fair value of warrant liabilities | | | (1,143,809) | | | — | | | — | | | — | | | — | | | — | | | — | | | | | (1,143,809) | |
Changes in fair value of forward sale derivative | | | (116,488) | | | — | | | — | | | — | | | — | | | — | | | — | | | | | (116,488) | |
Waste coal credits | | | 47,752 | | | — | | | — | | | — | | | — | | | — | | | — | | | | | 47,752 | |
Other | | | (6,712) | | | — | | | — | | | — | | | — | | | 276,401 | | | — | | | (x) | | | 269,689 |
Total other income / (expense) | | | (5,053,254) | | | (17,884,085) | | | — | | | — | | | — | | | 276,271 | | | 735,140 | | | | | (21,925,928) | |
NET LOSS | | | $(27,255,329) | | | (20,506,751) | | | — | | | — | | | — | | | (1,224,328) | | | 735,140 | | | | | $(48,251,268) | |
NET LOSS - attributable to predecessor (1/1-3/31) | | | $(238,948) | | | — | | | — | | | — | | | — | | | — | | | — | | | | | (238,948) | |
NET LOSS - attributable to non-controlling interest | | | $(15,803,234) | | | (11,995,426) | | | — | | | — | | | — | | | (716,171) | | | 430,020 | | | | | (28,084,811) | |
NET LOSS - Stronghold Digital Mining, Inc. | | | $(11,213,147) | | | (8,511,325) | | | — | | | — | | | — | | | (508,157) | | | 305,120 | | | | | $(19,927,509) | |
NET LOSS attributable to Class A Common Shares | | | | | | | | | | | | | | | | | | | |||||||||
Basic | | | $(2.03) | | | | | | | | | | | | | | | | | $(0.93) | |||||||
Diluted | | | $(2.03) | | | | | | | | | | | | | | | | | $(0.93) | |||||||
Class A Common Shares Outstanding | | | | | | | | | | | | | | | | | | | |||||||||
Basic | | | 5,518,752 | | | — | | | 6,318,000 | | | 5,602,409 | | | — | | | — | | | 4,000,000 | | | | | 21,439,161 | |
Diluted | | | 5,518,752 | | | — | | | 6,318,000 | | | 5,602,409 | | | — | | | — | | | 4,000,000 | | | | | 21,439,161 |
| | Shares Beneficially Owned Prior to the Offering(1) | | | Number of Shares Being Offered(1) | | | Shares Beneficially Owned After the Offering(1) | |||||||||||||
| | Class A Common Stock | | | Cumulative Voting Power | | | Class A Common Stock | | | Class A Common Stock | | | Cumulative Voting Power | |||||||
Name of Selling Stockholder | | | Number | | | %(1) | | | %(1) | | | Number | | | Number | | | % | | | % |
Armistice Capital Master Fund Ltd.(2) | | | 10,000,000 | | | 23.68% | | | 14.64% | | | 10,000,000 | | | — | | | —% | | | —% |
| | Shares Beneficially Owned Prior to the Offering(1) | | | Number of Shares Being Offered(1) | | | Shares Beneficially Owned After the Offering(1) | |||||||||||||
| | Class A Common Stock | | | Cumulative Voting Power | | | Class A Common Stock | | | Class A Common Stock | | | Cumulative Voting Power | |||||||
Name of Selling Stockholder | | | Number | | | %(1) | | | %(1) | | | Number | | | Number | | | % | | | % |
Adage Capital Partners L.P.(2) | | | 2,800,910 | | | 25.6% | | | 21.0% | | | 2,798,590 | | | 2,320 | | | * | | | * |
* | Indicates beneficial ownership of less than 1%. |
(1) | Assumes that the outstanding |
(2) | Consists of (i) Boston, Massachusetts 02116. |
(a) | the equity interests acquired by ERISA Plans are “publicly offered securities” (as defined in the DOL regulations)—i.e., the equity interests are part of a class of securities that is widely held by 100 or more investors independent of the issuer and each other, are freely transferable, and are either registered under certain provisions of the federal securities laws or sold to the ERISA Plan as part of a public offering under certain conditions; |
(b) | the entity is an “operating company” (as defined in the DOL regulations)—i.e., it is primarily engaged in the production or sale of a product or service, other than the investment of capital, either directly or through a majority-owned subsidiary or subsidiaries; or |
(c) | there is no significant investment by “benefit plan investors” (as defined in the DOL regulations)—i.e., immediately after the most recent acquisition by an ERISA Plan of any equity interest in the entity, less than 25% of the total value of each class of equity interest (disregarding certain interests held by persons (other than benefit plan investors) with discretionary authority or control over the assets of the entity or who provide investment advice for a fee (direct or indirect) with respect to such assets, and any affiliates thereof) is held by ERISA Plans, individual retirement accounts and certain other Plans (but not including governmental plans, foreign plans and certain church plans), and entities whose underlying assets are deemed to include plan assets by reason of a Plan’s investment in the entity. |
| | September 30, 2021 | | | December 31, 2020 | |
Assets | | | | | ||
Current assets | | | | | ||
Cash and cash equivalents | | | $90,907 | | | $33,241 |
Accounts receivable | | | 778,717 | | | 69,539 |
Inventory | | | 1,640,745 | | | 2,268,653 |
Prepaids and other current assets | | | 64,436 | | | 181,151 |
Total current assets | | | 2,574,805 | | | 2,552,584 |
| | | | |||
Property, plant and equipment | | | 10,270,443 | | | 10,270,443 |
Less: accumulated depreciation | | | 4,504,732 | | | 4,198,472 |
Property, plant and equipment, net | | | 5,765,711 | | | 6,071,971 |
| | | | |||
Security Deposits | | | 214,869 | | | 246,869 |
| | | | |||
Total assets | | | $8,555,385 | | | $8,871,424 |
| | | | |||
Liabilities and Members’ Equity | | | | | ||
Current liabilities | | | | | ||
Accounts payable | | | $1,941,836 | | | $940,895 |
Payable to affiliates, net | | | 3,127,497 | | | 2,628,123 |
Accrued liabilities | | | 294,096 | | | 426,406 |
Notes payable - current portion | | | 81,809 | | | 77,290 |
Total current liabilities | | | 5,445,238 | | | 4,072,714 |
| | | | |||
Notes payable - non-current portion | | | 142,899 | | | 204,833 |
Total long-term liabilities | | | 142,899 | | | 204,833 |
| | | | |||
Commitments and contingencies | | | | | ||
| | | | |||
Members’ Equity | | | 2,967,248 | | | 4,593,877 |
Total liabilities and members’ equity | | | $8,555,385 | | | $8,871,424 |
| | 2021 | | | 2020 | |
Operating revenues | | | | | ||
Electricity | | | $4,944,358 | | | $3,391,972 |
Other revenue | | | 692,705 | | | 423,486 |
Total operating revenues | | | 5,637,063 | | | 3,815,458 |
| | | | |||
Operating expenses | | | | | ||
Fuel | | | 1,694,501 | | | 1,911,130 |
Operations and maintenance | | | 5,512,576 | | | 3,257,572 |
Depreciation | | | 306,260 | | | 314,850 |
Total operating expenses | | | 7,513,337 | | | 5,483,553 |
| | | | |||
Loss from operations | | | (1,876,274) | | | (1,668,094) |
| | | | |||
Other income (expense) | | | | | ||
Interest income | | | 243 | | | — |
Interest expense | | | (7,913) | | | (18,833) |
Waste coal credit | | | 257,316 | | | — |
Total other income (expense) | | | 249,646 | | | (18,833) |
Loss before income taxes | | | (1,626,628) | | | (1,686,927) |
Net loss | | | $(1,626,628) | | | $(1,686,927) |
| | Olympus Panther Holdings, LLC | | | Liberty Bell Funding, LLC | | | Total Members’ Equity | |
Balance, January 1, 2020 | | | $2,325,426 | | | $4,829,678 | | | $7,155,104 |
Net loss | | | (548,251) | | | (1,138,676) | | | (1,686,927) |
Balance, September 30, 2020 | | | $1,777,174 | | | $3,691,002 | | | $5,468,176 |
| | Olympus Panther Holdings, LLC | | | Liberty Bell Funding, LLC | | | Total Members’ Equity | |
Balance, January 1, 2021 | | | $1,493,027 | | | $3,100,850 | | | $4,593,877 |
Net loss for the period January 1, 2021 to April 15, 2021 | | | (109,444) | | | (227,306) | | | (336,750) |
Balance, April 15, 2021 | | | 1,383,583 | | | 2,873,544 | | | 4,257,127 |
Transfer of membership interests on April 16, 2021 | | | (1,383,583) | | | 1,383,583 | | | — |
Net income for the period April 16, 2021 to September 30, 2021 | | | — | | | (1,289,878) | | | (1,289,878) |
Balance, September 30, 2021 | | | $— | | | $2,967,249 | | | $2,967,249 |
| | 2021 | | | 2020 | |
Operating activities | | | | | ||
Net loss | | | $(1,626,628) | | | $(1,686,927) |
Adjustment to reconcile net loss to net cash provided by operating activities: | | | | | ||
Depreciation | | | 306,260 | | | 314,850 |
Changes in operating assets and liabilities: | | | | | ||
Accounts receivable | | | (709,178) | | | 179,263 |
Inventory | | | 627,908 | | | 1,256,044 |
Prepaids and other current assets | | | 116,715 | | | 68,694 |
Security deposits | | | 32,000 | | | |
Accounts payable | | | 1,000,941 | | | (595,797) |
Payable to affiliates, net | | | 499,374 | | | 463,720 |
Accrued liabilities | | | (132,311) | | | 64,358 |
Net cash provided by operating activities | | | 115,081 | | | 64,206 |
| | | | |||
Investing activities | | | | | ||
Purchases of property, plant and equipment | | | — | | | — |
Net cash used in investing activities | | | — | | | — |
| | | | |||
Financing activities | | | | | ||
Payment of notes payable | | | (57,415) | | | (22,006) |
Net cash used in financing activities | | | (57,415) | | | (22,006) |
Net increase (decrease) in cash and cash equivalents | | | 57,666 | | | 42,199 |
Cash and cash equivalents, beginning of period | | | 33,241 | | | 16,670 |
Cash and cash equivalents, end of period | | | $90,907 | | | $58,869 |
Supplemental disclosure | | | | | ||
Cash paid for interest | | | $14,642 | | | $17,731 |
| | Estimated Life | | | 2021 | | | 2020 | |
Plant facility | | | 30 years | | | $8,322,521 | | | $8,322,521 |
Rolling stock | | | 2-5 years | | | 1,896,395 | | | 1,896,395 |
Furniture & fixtures | | | 5 years | | | 22,000 | | | 22,000 |
Office equipment | | | 3-5 years | | | 29,527 | | | 29,527 |
| | | | 10,270,443 | | | 10,270,443 | ||
Less: accumulated depreciation | | | | | (4,504,732) | | | (4,198,472) | |
Total property, plant and equipment, net | | | | | $5,765,711 | | | $6,071,971 |
2022 | | | $81,809 |
2023 | | | 88,248 |
2024 | | | 54,651 |
Total minimum payments required | | | $ 224,708 |
2022 | | | $193,750 |
2023 | | | 218,750 |
2024 | | | 243,750 |
2025 | | | 255,849 |
2026 | | | 262,633 |
Thereafter | | | 336,911 |
Total minimum payments required | | | $ 1,511,643 |
| | Amount | |
SEC registration fee | | | |
Accountants’ fees and expenses | | | 20,000 |
Legal fees and expenses | | | 75,000 |
Miscellaneous expenses | | | 15,000 |
Total | | | $ |
Item 15. | Indemnification of Directors and Officers |
Item 16. | Exhibits and financial statement schedules |
Item 17. | Undertakings |
(a) | The undersigned registrant hereby undertakes: |
(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; |
(ii) | to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective 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 SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Filing Fee Tables” in the effective registration statement; and |
(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, 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 to any purchaser: |
(i) | Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and |
(ii) | Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which the prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 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 |
(5) | That, for the purpose of determining liability of the registrant under the Securities Act 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 its 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) | The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by reference in the registration statement 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. |
(c) | Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant 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 registrant of expenses incurred or paid by a director, officer or controlling person of the registrant 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 registrant will, unless in the opinion of its 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 Securities Act and will be governed by the final adjudication of such issue. |
Exhibit Number | | | Description |
| | Master Transaction Agreement, dated as of April 1, 2021, by and among Q Power LLC, Stronghold Digital Mining Holdings LLC, Stronghold Digital Mining, Inc., Stronghold Digital Mining LLC, EIF Scrubgrass, LLC, Falcon Power LLC, Scrubgrass Power LLC, Scrubgrass Generating Company, L.P., Gregory A. Beard and William Spence (incorporated by reference to Exhibit 2.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-258188) filed on July 27, 2021). | |
| | ||
| | Second Amended and Restated Certificate of Incorporation of Stronghold Digital Mining, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-40931) filed on October 25, 2021). | |
| | ||
| | Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of Stronghold Digital Mining, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-40931) filed on May 19, 2023). | |
| | ||
| | Certificate of Designations of the Series C Convertible Preferred Stock of Stronghold Digital Mining, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-40931) filed on February 24, 2023). | |
| | ||
| | Certificate of Designations of the Series D Convertible Preferred Stock of Stronghold Digital Mining, Inc. (incorporated by reference to Exhibit 3.5 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-40931) filed on November 14, 2023). | |
| | ||
| | Amended and Restated Bylaws of Stronghold Digital Mining, Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (File No. 001-40931) filed on October 25, 2021). | |
| | ||
| | Form of | |
| | ||
| | Opinion of Vinson & Elkins L.L.P. as to the legality of the securities being registered. | |
| | ||
| | Consent of Urish Popeck & Co., LLC. | |
| | ||
| | Consent of Vinson & Elkins L.L.P. (included as part of Exhibit 5.1 hereto). | |
| | ||
| | Power of Attorney (included on the signature page of this Registration Statement). | |
| | ||
| | Filing Fee Table |
* | Previously filed. |
** | Filed herewith. |
¥ | Certain schedules and exhibits to this agreement have been omitted in accordance with Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC on request. |
# | Certain portions of this exhibit were redacted pursuant to Item 601(b)(2)(ii) of Regulation S-K. |
| | Stronghold Digital Mining Inc. | ||||
| | | | |||
| | By: | | | /s/ Gregory A. Beard | |
| | | | Gregory A. Beard | ||
| | | | Chief Executive Officer and |
Name | | | Title | | | Date |
/s/ Gregory A. Beard | | | Chief Executive Officer and Chairman (Principal Executive Officer) | | | December 5, 2023 |
Gregory A. Beard | | |||||
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/s/ | | | Chief (Principal | | | |
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Thomas | | |||||