Bitmine Immersion Technologies, Inc. — Form 10-Q
Reporting period: Quarter and nine months ended May 31, 2021; fiscal year-end August 31. The filing’s financial statements are unaudited. The company reported that it was a shell company with no current operations during the period. Its planned Bitcoin-mining and immersion-cooling business was approved after quarter-end in July 2021.
Financial results and position
| Metric | Three months ended May 31, 2021 | Nine months ended May 31, 2021 |
|---|---|---|
| Revenue | No revenue reported | No revenue reported |
| Operating expenses | $13,555 | $36,614 |
| Interest expense | $6,386 | $14,672 |
| Net loss | $19,941 | $51,286 |
| Basic and diluted loss per share | $0.01 | $0.02 |
The filing provides no clear comparative income-statement values for the prior-year periods, so year-over-year changes and margins cannot be assessed. With no reported revenue, revenue-based margins are not meaningful.
- Assets and liquidity: Cash and total assets were $3,466 at May 31, 2021, versus $1,930 at August 31, 2020. Current liabilities were $103,677, producing a reported working-capital deficit of $100,210.
- Debt: Current liabilities consisted of $87,447 in related-party loans and $16,230 in accrued related-party interest. The demand note owed to Coral Investment Partners bears 24% interest; the lender and company are controlled by Erik Nelson. At August 31, 2020, the corresponding balances were $50,447 and $1,558.
- Cash flow, nine months: Operating activities used $36,614. Financing provided $38,150, comprising $37,000 of related-party loans and $1,150 from a common-stock placement. Cash increased by $1,536 to $3,466. No cash interest or income taxes were paid.
- Equity: Stockholders’ deficit was $100,210 at May 31, 2021, compared with $50,075 at August 31, 2020. A 1-for-200 reverse split occurred in April 2021; the company also issued shares in a May private placement.
Changes, outlook, and risks
- Management stated that the company had no operations, products, services, or customers during the reporting period. It expected to need additional funding and said existing operating cash flow would not fund anticipated operations.
- The filing states that substantial doubt exists about the company’s ability to continue as a going concern. Continuation was described as dependent on ongoing funding from Coral Investment Partners, with no assurance that funding would continue. The company was exploring other financing sources.
- After quarter-end, the company reported a July equity offering that had sold 35,149,999 shares for cash and notes, generating stated gross proceeds of $527,250. It also reported a change in control: new directors and their affiliates acquired 21,450,000 shares and controlled 56% of outstanding common shares. Shareholders approved a plan to pursue Bitcoin mining and hosting using immersion cooling, and the company changed its name from Sandy Springs Holdings, Inc. to Bitmine Immersion Technologies, Inc.
- In July, the company amended its Class A and Class B warrant exercise prices to $2.00 and $5.00, respectively, from $0.20 and $0.40, citing correction of an error in the original issuance. These are subsequent events, not results of the quarter.
- Disclosure controls and internal control over financial reporting were reported ineffective as of May 31, 2021. Management identified weaknesses involving risk assessment and monitoring, written accounting and reporting procedures, segregation of duties and oversight, accounting expertise, IT controls, and tracking tax-filing obligations.
- The company cited limited financial and management resources, difficulty obtaining financing, uncertainty related to COVID-19, and risks associated with being a shell company. It checked “No” to having filed all required Exchange Act reports during the preceding 12 months. No threatened or pending litigation was known to officers and directors; no contractual commitments or off-balance-sheet arrangements were reported.
Key facts investors should verify
- Reconcile the July offering’s 35,149,999 shares and stated $527,250 proceeds with the cover-page count of 2,803,400 shares outstanding as of July 26, 2021, including the offering’s timing, share issuance, and any subsequent capitalization disclosures.
- Confirm the current related-party debt, accrued interest, repayment terms, and whether Coral Investment Partners continued funding the company.
- Assess the actual progress, financing needs, and execution risks of the post-quarter Bitcoin mining and immersion-cooling strategy; the filing provides no operating results or guidance for that business.
- Review the warrant amendments and the company’s explanation of the original pricing error, as well as the effect of the change in control and related-party transactions.
- Track remediation of the disclosed control weaknesses and the company’s reporting compliance, given its “No” response regarding timely filing of required reports.