Bitmine Immersion Technologies, Inc. — Form 10-Q Summary
Reporting period: Quarter and six months ended February 28, 2022; fiscal year ends August 31. Financial statements are unaudited. The company had recently transitioned from a shell company into Bitcoin mining, mining-equipment sales, and plans for immersion-cooled hosting.
Financial performance and position
| Metric | Three months ended Feb. 28, 2022 | Six months ended Feb. 28, 2022 | Prior comparable period |
|---|---|---|---|
| Revenue | $349,274 | $349,274 | $0 |
| Gross profit | $117,148 (33.5% gross margin) | $117,148 (33.5% gross margin) | $0 |
| Operating expenses | $156,114 | $820,157 | $5,849 quarterly; $23,059 six-month |
| Operating loss | $(38,966) | $(703,009) | $(5,849) quarterly; $(23,059) six-month |
| Interest expense | $73,162 | $117,874 | $4,519 quarterly; $8,286 six-month |
| Net loss | $(112,127) | $(820,883) | $(10,368) quarterly; $(31,345) six-month |
| Cash used in operations | — | $(56,788) | $(23,059) six-month |
| Cash used in investing | — | $(1,602,546) | $0 six-month |
| Cash provided by financing | — | $2,341,813 | $24,000 six-month |
Quarter revenue consisted of $344,700 from mining-equipment sales and $4,574 from Bitcoin mining. Equipment sales generated $158,043 gross profit; mining revenue had $45,468 of associated cost of sales, exceeding mining revenue. Management said mining-related costs are expected to exceed mining revenue in the immediate future while infrastructure is being established.
At February 28, cash was $901,216; current assets were $1,079,540 and current liabilities were $2,113,408, implying negative working capital of about $1.03 million. Total assets were $2,943,537 and stockholders’ equity was $830,129. Related-party loans were $1,863,997, with $122,379 of accrued related-party interest; the loans bear 15% annual interest, compounded monthly. Fixed assets not yet in service were $1,863,997. Six-month equipment purchases accounted for the investing cash outflow.
Material changes and financing
- Revenue began in the current period, compared with no revenue in the 2021 comparable periods. Six-month net loss rose to $820,883 from $31,345, reflecting start-up costs, professional fees, related-party compensation, and higher interest expense.
- Six-month operating expenses included $667,025 of professional fees, including $550,000 of non-cash stock-based compensation, and $104,460 of related-party compensation.
- The company raised $725,000 in a private Unit Offering during the six months. The $10 million offering consists of one share and two warrants per $1.25 unit; warrants have exercise prices of $2 and $4. The filing reports an additional $527,500 in subscriptions after February 28.
- On March 30, 2022, the related-party lender extended the credit-line maturity from March 31 to May 31, increased the facility ceiling from $2.5 million to $3 million, and permitted working-capital borrowing.
- Shares outstanding were 43,313,399 at February 28 and 43,619,399 at March 31. The New O&Ds or affiliated entities collectively held 57.5% as of February 28.
Outlook, risks, and other matters
Management believes cash, access to the credit line, and expected business revenue will fund operations for the next 12 months, but is also pursuing additional financing. It warns that further funding may not be available on acceptable terms and may dilute shareholders. Management expects materially higher operating expenses as it pays regular compensation, hires employees, and commences operations. Additional equipment was in transit, but delivery timing and resulting revenue are uncertain; the filing provides no numerical revenue or earnings guidance.
Identified risks include Bitcoin price and mining-difficulty volatility, Bitcoin halving, regulatory changes, dependence on utility rates and incentives, demand uncertainty, and supply-chain and shipping delays that could raise costs, delay equipment deliveries, or reduce sales and mining output. The company disclosed no contractual commitments or off-balance-sheet arrangements and reported no known threatened or pending litigation. Management stated disclosure controls and internal control over financial reporting were effective as of February 28, after remediation of previously reported weaknesses.
Important facts for investors to verify
- The cover page checks “No” for having filed all required reports during the preceding 12 months; verify the nature and status of any filing delinquency.
- Confirm the credit-line balance, accrued interest, repayment status, and availability after its May 31, 2022 maturity extension; the financing is related-party debt at 15% compounded monthly.
- Verify equipment delivery, deployment, hosting arrangements, and whether mining operations can generate revenue above direct costs.
- Track proceeds and terms of the Unit Offering and any additional capital raises, including potential dilution and warrant overhang.
- Reconcile filing inconsistencies: the balance-sheet common-stock par value is stated as $0.0001, while Note 5 states $0.001; the cover page also reports a different March 31 share count than the February 28 balance-sheet count, which is expected to reflect subsequent issuance but should be confirmed.