TeraWulf (US:WULF)2022-08-15 22:20Revenue and Expenses - Revenue increased to $1.4 million and $1.6 million for the three and six months ended June 30, 2022, respectively, compared to $0 for the same periods in 2021, primarily due to the commencement of mining activities at the Lake Mariner Facility in March 2022 [144]. - Revenue from mining was $1.2 million and revenue from hosting was $0.4 million during the six months ended June 30, 2022 [144]. - Operating expenses increased by $980,000 from the three months ended June 30, 2021, to the same period in 2022, and by $669,000 from the period February 8, 2021, to June 30, 2021, to the six months ended June 30, 2022 [145]. - Selling, general and administrative expenses increased by $2.6 million from the three months ended June 30, 2021, to the same period in 2022, and by $10.6 million from the period February 8, 2021, to June 30, 2021, to the six months ended June 30, 2022 [147]. - Interest expense for the six months ended June 30, 2022, was $9.5 million, with $4.4 million related to amortization of debt issuance costs [148]. - The company reported a net loss of $32.1 million for the six months ended June 30, 2022, including a net impairment charge of $3.1 million related to discontinued operations [151]. - Cash used in operating activities for continuing operations was $29.8 million for the six months ended June 30, 2022, compared to $4.7 million for the same period in 2021 [152]. - The company reported equity in net loss of investee of $1.9 million for the six months ended June 30, 2022, related to its 50% share of losses from Nautilus [149]. - Loss from discontinued operations for the six months ended June 30, 2022, was $3.5 million, primarily due to an impairment loss on the IKONICS business [150]. Mining Operations and Facilities - TeraWulf expects to achieve an average long-term cost of electricity of approximately 3.0 cents/kWh, positioning the company competitively in the bitcoin mining sector [130]. - The Lake Mariner Facility has secured an initial 90 MW of energy with the potential to expand into an additional 410 MW [131]. - The Nautilus Cryptomine Facility has access to up to 300 MW of bitcoin mining capacity and is expected to be powered by 100% zero-carbon nuclear energy [132]. - The company plans to continue developing its initial bitcoin mining facilities over the next twelve months [142]. - The company anticipates receiving an initial batch of 3,000 S19 XP miners in August 2022, as part of a total order of 18,000 miners [154]. Financial Position and Obligations - The company has a working capital deficiency of $76.0 million as of June 30, 2022, with total stockholders' equity of $135.0 million [151]. - The company has significant future obligations related to miner purchase agreements totaling $201.6 million as of June 30, 2022 [153]. - The company invested $75.7 million in investing activities for the six months ended June 30, 2022, primarily for miner deposits and mining facility buildout [152]. Capital Raising and Stock Issuance - The company entered into an At Market Issuance Sales Agreement for the sale of shares of Common Stock with an aggregate offering price of up to $200.0 million [156]. - The Company has the right to sell up to $50.0 million of its Common Stock to Yorkville under the SEPA, with each sale subject to a minimum of $5.0 million or 30% of the daily trading value [158]. - The Company drew $15.0 million from a new term loan facility of $50.0 million, with the remaining amount available subject to certain conditions [159]. - The New Term Facility requires the Company to issue warrants to purchase 5,787,732 shares of Common Stock at $0.01 per share, representing 5.0% of the fully diluted equity [160]. - As of August 14, 2022, the Company sold 2,675,419 shares of Common Stock for net proceeds of approximately $9.4 million under the ATM Offering [157]. - The Company issued 839,398 shares of Common Stock in connection with a $123.5 million term loan facility, representing 1.5% of the outstanding shares [172]. Accounting and Impairment - The Company accounts for cryptocurrencies as intangible assets with indefinite useful lives, assessed for impairment daily [170]. - The Company recorded a $1.4 million remeasurement gain on the CVR contingent consideration during the six months ended June 30, 2022 [175]. - A $4.5 million impairment loss on long-lived assets of IKONICS held for sale was recorded during the same period [177]. - The classification of the IKONICS business as held-for-sale resulted in a $48.9 million impairment charge included in loss from discontinued operations in 2021 [179]. - A change in estimated net fair value of acquired assets and assumed liabilities of IKONICS by 10% would result in a $1.4 million change to the impairment on held-for-sale classification [177]. - Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred [178]. - The Company allocates the purchase price of acquisitions to the assets acquired and liabilities assumed based on their estimated fair values [175]. - Goodwill is recorded as the excess of the purchase price over the fair values of identifiable assets and liabilities [175]. - The Company follows ASC 740-10 for accounting for income taxes, requiring recognition of deferred tax assets and liabilities [174]. - The most critical estimate for income taxes is the determination of whether to record a valuation allowance for any net deferred tax asset [174]. - Newly acquired businesses that meet the held-for-sale classification criteria upon acquisition are reported as discontinued operations [180].