TeraWulf (US:WULF)2021-11-15 21:30Financial Performance - Net sales for the three months ended September 30, 2021, increased to $4,743,452, up 51.4% from $3,134,984 in the same period of 2020[13] - Gross profit for the nine months ended September 30, 2021, was $4,007,726, representing a 66.1% increase compared to $2,411,906 for the same period in 2020[13] - The net loss for the three months ended September 30, 2021, was $851,736, compared to a net loss of $273,996 in the same period of 2020[13] - For the nine months ended September 30, 2021, total net sales were $12,068,208, a 31.5% increase from $9,204,615 in the same period of 2020[58][59] - Gross profit for the three months ended September 30, 2021 was $1,582,090, up from $873,779 in the same period of 2020, reflecting a gross margin improvement[56][57] - Gross profit for the first nine months of 2021 was $4.0 million, or 33.2% of sales, compared to $2.4 million, or 26.2% of sales in the same period of 2020[103] Assets and Liabilities - Total current assets decreased to $5,214,388 as of September 30, 2021, down 33.1% from $7,803,453 as of December 31, 2020[12] - Total liabilities decreased to $2,198,303 as of September 30, 2021, down 38.9% from $3,596,053 as of December 31, 2020[12] - Total stockholders' equity decreased to $10,181,903 as of September 30, 2021, down 14.0% from $11,839,346 as of December 31, 2020[12] - Cash at the end of the period was $1,500,847, a decrease of 59.4% from $3,693,845 at the beginning of the period[21] - As of September 30, 2021, total trade receivables amounted to $1,875,177, down from $2,119,213 as of December 31, 2020[62] Expenses - Research and development expenses for the nine months ended September 30, 2021, were $398,425, down 23.6% from $521,334 in the same period of 2020[13] - Selling, general and administrative expenses in Q3 2021 were $2.3 million, or 47.9% of sales, compared to $980,000 or 31.3% of sales in Q3 2020, primarily due to $1.1 million in professional service and stock compensation expenses related to a strategic business combination[99] - Research and development expenses for Q3 2021 were $135,000, or 2.8% of sales, similar to $137,000, or 4.4% of sales in Q3 2020[100] - Selling, general and administrative expenses increased to $5.4 million, or 44.8% of sales, in the first nine months of 2021, up from $4.0 million, or 43.1% of sales in the same period of 2020[104] Strategic Transactions - The Company has incurred approximately $1.1 million in pre-tax expenses related to the Transaction in Q3 2021 and $1.9 million for the first nine months of 2021[33] - Upon consummation of the Transaction, shareholders will receive $5.00 in cash and one share of the combined company's common stock, representing approximately 2% of the combined company's pro forma common equity ownership[29] - The Transaction is expected to close in Q4 2021, subject to regulatory approvals and shareholder approvals[31] - The Company is currently evaluating a strategic business combination with TeraWulf, Inc., which may impact future financial results[77] - The Company has incurred significant transaction costs related to the mergers, with a maximum reimbursement from TeraWulf of $640,000 for expenses incurred[147] Legal Matters - Six shareholder lawsuits have been filed against the Company related to the mergers, alleging violations of the Securities Exchange Act of 1934[141] - The Company is not currently a party to any legal proceedings that would materially affect its financial position or results of operations, except for the aforementioned lawsuits[140] - The Company believes the lawsuits are without merit but acknowledges the uncertainty and potential costs associated with them[155] Future Outlook - The Company expects to have sufficient cash to fund its operations beyond twelve months from the date of the financial statements issuance[27] - The company plans to maintain its research and development spending at approximately 5% of annual sales to expedite product development and form technological alliances[127] - The company is pursuing strategic partnerships, acquisitions, and new product development as part of its future growth strategy[131] - If the mergers are not completed, the Company's stock price may decline due to market assumptions regarding the mergers' completion[151]