|
Delaware
(State or other jurisdiction of
Incorporation or Organization) |
| |
7374
(Primary Standard Industrial
Classification Code Number) |
| |
87-1909475
(I.R.S. Employer
Identification Number) |
|
|
W. Morgan Burns
Joshua L. Colburn W. Jason Deppen Faegre Drinker Biddle & Reath LLP 90 South Seventh Street 2200 Wells Fargo Center Minneapolis, Minnesota 55402 (612) 766-7000 |
| |
Paul Prager
Chief Executive Officer TeraWulf Inc. 9 Federal Street Easton, Maryland 21601 (410) 770-9500 |
| |
Ariel J. Deckelbaum
David S. Huntington Sarah Stasny Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, New York 10019 (212) 373-3000 |
|
|
Large accelerated filer
☐
|
| |
Accelerated filer
☐
|
|
|
Non-accelerated filer
☒
|
| |
Smaller reporting company
☒
|
|
| | | |
Emerging growth company
☐
|
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| | ||||||||||||||||||||||||||||
Title of each class of securities to be registered
|
| | |
Amount to be
registered |
| | |
Proposed maximum
offering price per share |
| | |
Proposed maximum
aggregate offering price |
| | |
Amount of
registration fee |
| ||||||||||||
Common Stock, par value $0.001 per share
|
| | | | | 104,550,200(a) | | | | | | | N/A | | | | | | $ | 109,553,842(b) | | | | | | $ | 11,952.33(c) | | |
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| | | | 193 | | |
| | | | | A-1 | | | |
| | | | | B-1 | | | |
| | | | | C-1 | | | |
| | | | | D-1 | | | |
| | | | | E-1 | | | |
| | | | | F-1 | | | |
| | | | | G-1 | | | |
| | | | | H-1 | | |
| | |
(1)TeraWulf
|
| |
(2)Ikonics
|
| |
Pro Forma
Adjustments |
| |
Note 3
|
| |
Pro Forma
Combined |
| |||||||||||||||
ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CURRENT ASSETS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash
|
| | | $ | 31,721,000 | | | | | $ | 2,260,855 | | | | | $ | (10,424,625) | | | | | | (c) | | | | | $ | 23,557,230 | | |
Trade receivables, net
|
| | | | — | | | | | | 1,651,035 | | | | | | — | | | | | | | | | | | | 1,651,035 | | |
Inventories
|
| | | | — | | | | | | 1,607,828 | | | | | | (1,607,828) | | | | | | (f) | | | | | | 3,277,270 | | |
| | | | | | | | | | | | | | | | | 3,277,270 | | | | | | (g) | | | | | | | | |
Prepaid expenses and other assets
|
| | | | 2,216,000 | | | | | | 193,198 | | | | | | — | | | | | | | | | | | | 2,409,198 | | |
Total current assets
|
| | | | 33,937,000 | | | | | | 5,712,916 | | | | | | (8,755,183) | | | | | | | | | | | | 30,894,733 | | |
Equity in nest assets of investee
|
| | | | 42,100,000 | | | | | | — | | | | | | — | | | | | | | | | | | | 42,100,000 | | |
PROPERTY, PLANT, AND EQUIPMENT: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Property, plant and equipment
|
| | | | 916,000 | | | | | | 16,494,121 | | | | | | (16,494,121) | | | | | | (f) | | | | | | 10,894,166 | | |
| | | | | | | | | | | | | | | | | 9,978,166 | | | | | | (g) | | | | | | | | |
Less accumulated depreciation
|
| | | | — | | | | | | (9,410,087) | | | | | | 9,410,087 | | | | | | (f) | | | | | | — | | |
Total property, plant and equipment at cost, net
|
| | | | 916,000 | | | | | | 7,084,034 | | | | | | 2,894,132 | | | | | | | | | | | | 10,894,166 | | |
Deposits
|
| | | | 407,000 | | | | | | — | | | | | | — | | | | | | | | | | | | 407,000 | | |
Intangible Assets, net
|
| | | | — | | | | | | 245,832 | | | | | | (245,832) | | | | | | (f) | | | | | | 3,699,484 | | |
| | | | | | | | | | | | | | | | | 3,699,484 | | | | | | (g) | | | | | | | | |
Goodwill
|
| | | | — | | | | | | — | | | | | | 55,345,641 | | | | | | (b) | | | | | | 55,345,641 | | |
Other assets
|
| | | | 1,464,000 | | | | | | — | | | | | | — | | | | | | | | | | | | 1,464,000 | | |
Total assets
|
| | | $ | 78,824,000 | | | | | $ | 13,042,782 | | | | | $ | 52,938,242 | | | | | | | | | | | $ | 144,805,024 | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CURRENT LIABILITIES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accounts payable and other accrued liabilities
|
| | | $ | 4,065,000 | | | | | $ | 2,088,057 | | | | | $ | 15,184,494 | | | | | | (e) | | | | | $ | 21,337,551 | | |
Current portion of operating lease liability
|
| | | | 48,000 | | | | | | — | | | | | | — | | | | | | | | | | | | 48,000 | | |
Contingent Value Rights
|
| | | | — | | | | | | — | | | | | | 10,142,967 | | | | | | (c) | | | | | | 10,142,967 | | |
Total current liabilities
|
| | | | 4,113,000 | | | | | | 2,088,057 | | | | | | 25,327,461 | | | | | | | | | | | | 31,528,518 | | |
Operating lease liability, net of current portion
|
| | | | 1,037,000 | | | | | | — | | | | | | — | | | | | | | | | | | | 1,037,000 | | |
Total liabilities
|
| | | | 5,150,000 | | | | | | 2,088,057 | | | | | | 25,327,461 | | | | | | | | | | | | 32,565,518 | | |
COMMITMENTS AND CONTINGENCIES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Series A preferred stock, par value $0.001 per share
|
| | | | 49,815,000 | | | | | | — | | | | | | (49,815,000) | | | | | | (j) | | | | | | — | | |
STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Common stock, par value $0.001 per share
|
| | | | 50,000 | | | | | | — | | | | | | 2,085 | | | | | | (c) | | | | | | 104,731 | | |
| | | | | | | | | | | | | | | | | 52,161 | | | | | | (d) | | | | | | | | |
| | | | | | | | | | | | | | | | | 485 | | | | | | (h) | | | | | | | | |
Common stock, par value $0.10 per share
|
| | | | — | | | | | | 198,069 | | | | | | (198,069) | | | | | | (a) | | | | | | — | | |
Additional paid-in-capital
|
| | | | 29,892,000 | | | | | | 2,902,790 | | | | | | (2,902,790) | | | | | | (a) | | | | | | 145,902,269 | | |
| | | | | | | | | | | | | | | | | 53,747,915 | | | | | | (c) | | | | | | | | |
| | | | | | | | | | | | | | | | | (52,161) | | | | | | (d) | | | | | | | | |
| | | | | | | | | | | | | | | | | 12,499,515 | | | | | | (h) | | | | | | | | |
| | | | | | | | | | | | | | | | | 49,815,000 | | | | | | (j) | | | | | | | | |
Retained earnings / (accumulated deficit)
|
| | | | (6,083,000) | | | | | | 7,853,866 | | | | | | (7,853,866) | | | | | | (a) | | | | | | (33,767,494) | | |
| | | | | | | | | | | | | | | | | (15,184,494) | | | | | | (e) | | | | | | | | |
| | | | | | | | | | | | | | | | | (12,500,000) | | | | | | (h) | | | | | | | | |
Total stockholders’ equity
|
| | | | 23,859,000 | | | | | | 10,954,725 | | | | | | 77,425,781 | | | | | | | | | | | | 112,239,506 | | |
Total liabilities and stockholders’ equity
|
| | | $ | 78,824,000 | | | | | $ | 13,042,782 | | | | | $ | 52,938,242 | | | | | | | | | | | $ | 144,805,024 | | |
| | |
(1)TeraWulf
|
| |
(2)Ikonics
|
| |
Pro Forma
Adjustments |
| |
Note 3
|
| |
Pro Forma
Combined |
| |||||||||||||||
Net sales
|
| | | $ | — | | | | | $ | 7,324,756 | | | | | $ | — | | | | | | | | | | | $ | 7,324,756 | | |
Cost of goods sold
|
| | | | — | | | | | | 4,899,120 | | | | | | — | | | | | | | | | | | | 4,899,120 | | |
Gross profit
|
| | | | — | | | | | | 2,425,636 | | | | | | — | | | | | | | | | | | | 2,425,636 | | |
Cost of opertions: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating expenses
|
| | | | 968,000 | | | | | | — | | | | | | — | | | | | | | | | | | | 968,000 | | |
Selling, general and administrative expenses
|
| | | | 4,975,000 | | | | | | 3,128,093 | | | | | | (1,815,506) | | | | | | (e) | | | | | | 6,412,797 | | |
| | | | | | | | | | | | | | | | | (413,933) | | | | | | (f) | | | | | | | | |
| | | | | | | | | | | | | | | | | 539,143 | | | | | | (g) | | | | | | | | |
Research and development expenses
|
| | | | — | | | | | | 263,817 | | | | | | — | | | | | | | | | | | | 263,817 | | |
Total cost of operations
|
| | | | 5,943,000 | | | | | | 3,391,910 | | | | | | (1,690,296) | | | | | | | | | | | | 7,644,614 | | |
Loss from operations
|
| | | | (5,943,000) | | | | | | (966,274) | | | | | | 1,690,296 | | | | | | | | | | | | (5,218,978) | | |
Interest expense
|
| | | | — | | | | | | (102,340) | | | | | | — | | | | | | | | | | | | (102,340) | | |
Other income
|
| | | | — | | | | | | 5,175 | | | | | | — | | | | | | | | | | | | 5,175 | | |
Loss before income taxes
|
| | | | (5,943,000) | | | | | | (1,063,439) | | | | | | 1,690,296 | | | | | | | | | | | | (5,316,143) | | |
Income tax benefit
|
| | | | — | | | | | | (19,524) | | | | | | — | | | | | | | | | | | | (19,524) | | |
Equity in net loss of investee, net of tax
|
| | | | 140,000 | | | | | | — | | | | | | — | | | | | | | | | | | | 140,000 | | |
Net loss
|
| | | $ | (6,083,000) | | | | | $ | (1,043,915) | | | | | $ | 1,690,296 | | | | | | | | | | | $ | (5,436,619) | | |
Loss per common share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted
|
| | | | | | | | | $ | (0.53) | | | | | | | | | | | | | | | | | $ | (0.05) | | |
Weighted average common shares outstanding:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted
|
| | | | | | | | | | 1,977,368 | | | | | | 102,753,748 | | | | | | (i) | | | | | | 104,731,116 | | |
| | |
(1)TeraWulf
|
| |
(2)IKONICS
|
| |
Pro Forma
Adjustments |
| |
Note 3
|
| |
Pro Forma
Combined |
| |||||||||||||||
Net sales
|
| | | $ | — | | | | | $ | 13,432,220 | | | | | $ | — | | | | | | | | | | | $ | 13,432,220 | | |
Cost of goods sold
|
| | | | — | | | | | | 9,527,143 | | | | | | — | | | | | | | | | | | | 9,527,143 | | |
Gross profit
|
| | | | — | | | | | | 3,905,077 | | | | | | — | | | | | | | | | | | | 3,905,077 | | |
Cost of operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Selling, general and administrative expenses
|
| | | | — | | | | | | 5,019,604 | | | | | | (698,054) | | | | | | (f) | | | | | | 5,399,836 | | |
| | | | | | | | | | | | | | | | | 1,078,286 | | | | | | (g) | | | | | | | | |
Selling, general and administrative expenses attributable to related party share issuance
|
| | | | — | | | | | | — | | | | | | 12,500,000 | | | | | | (h) | | | | | | 12,500,000 | | |
Research and development expenses
|
| | | | — | | | | | | 671,493 | | | | | | — | | | | | | | | | | | | 671,493 | | |
Total cost of operations
|
| | | | — | | | | | | 5,691,097 | | | | | | 12,880,232 | | | | | | | | | | | | 18,571,329 | | |
Loss from operations
|
| | | | — | | | | | | (1,786,020) | | | | | | (12,880,232) | | | | | | | | | | | | (14,666,252) | | |
Interest expense
|
| | | | — | | | | | | (86,561) | | | | | | — | | | | | | | | | | | | (86,561) | | |
Other income
|
| | | | — | | | | | | 1,223,261 | | | | | | — | | | | | | | | | | | | 1,223,261 | | |
Loss before income taxes
|
| | | | — | | | | | | (649,320) | | | | | | (12,880,232) | | | | | | | | | | | | (13,529,552) | | |
Income tax benefit
|
| | | | — | | | | | | (210,000) | | | | | | — | | | | | | | | | | | | (210,000) | | |
Net loss
|
| | | $ | — | | | | | $ | (439,320) | | | | | $ | (12,880,232) | | | | | | | | | | | $ | (13,319,552) | | |
Loss per common share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted
|
| | | | | | | | | $ | (0.22) | | | | | | | | | | | | | | | | | $ | (0.13) | | |
Weighted average common shares outstanding:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted
|
| | | | | | | | | | 1,976,354 | | | | | | 102,753,748 | | | | | | (i) | | | | | | 104,730,102 | | |
|
Estimated IKONICS shares outstanding(1)
|
| | | | 1,981,527 | | |
|
Estimated RSUs and stock options subject to accelerated vesting(2)
|
| | | | 103,398 | | |
|
Subtotal
|
| | | | 2,084,925 | | |
|
Cash consideration (per IKONICS share)
|
| | | $ | 5.00 | | |
|
Estimated share-based cash portion of purchase price
|
| | | $ | 10,424,625 | | |
|
Contingent Value Rights
|
| | | $ | 10,142,967 | | |
|
Estimated TeraWulf enterprise value
|
| | | $ | 2,700,000,000 | | |
|
Estimated shares at consummation of the mergers(3)
|
| | | | 104,731,116 | | |
|
Implied Holdco share price
|
| | | $ | 25.78 | | |
|
Estimated IKONICS shares outstanding(1)
|
| | | | 1,981,527 | | |
|
Estimated RSUs and stock options subject to accelerated vesting(2)
|
| | | | 103,398 | | |
|
Subtotal
|
| | | | 2,084,925 | | |
|
Equity portion of purchase price
|
| | | $ | 53,750,000 | | |
|
Total estimated consideration to be paid
|
| | | $ | 74,317,592 | | |
|
Shares issued to TeraWulf stockholders
|
| | | | 102,161,325 | | |
|
Shares issued to IKONICS stockholders
|
| | | | 2,084,925 | | |
|
Shares issued under awards to employees of Beowulf E&D
|
| | | | 484,866 | | |
| | | | | | 104,731,116 | | |
| | |
Implied Holdco
share price |
| |
Purchase Price
(equity portion) |
| ||||||
As presented
|
| | | $ | 25.78 | | | | | $ | 53,750,000 | | |
10% increase
|
| | | $ | 28.36 | | | | | $ | 59,128,473 | | |
10% decrease
|
| | | $ | 23.20 | | | | | $ | 48,370,260 | | |
20% increase
|
| | | $ | 30.94 | | | | | $ | 64,507,580 | | |
20% decrease
|
| | | $ | 20.62 | | | | | $ | 42,991,154 | | |
| | |
Implied Holdco
share price |
| |
Purchase Price
(equity portion) |
| ||||||
50% increase
|
| | | $ | 38.67 | | | | | $ | 80,624,050 | | |
50% decrease
|
| | | $ | 12.89 | | | | | $ | 26,874,683 | | |
|
Cash
|
| | | $ | 2,260,855 | | |
|
Trade receivables, net
|
| | | | 1,651,035 | | |
|
Inventories
|
| | | | 3,277,270 | | |
|
Prepaid expenses and other assets
|
| | | | 193,198 | | |
|
Property, plant and equipment
|
| | | | 9,978,166 | | |
|
Intangible assets
|
| | | | 3,699,484 | | |
| Goodwill | | | | | 55,345,641 | | |
|
Accounts payable and accrued liabilities
|
| | | | (2,088,057) | | |
|
Total estimated consideration
|
| | | $ | 74,317,592 | | |
|
Shares attributed to IKONICS common stock conversion
|
| | | | 2,084,925 | | |
|
Aggregate TeraWulf share amount – multiple of IKONICS attributed shares
|
| | | | 49 | | |
|
Aggregate TeraWulf share amount
|
| | | | 102,161,325 | | |
|
Less: number of outstanding TeraWulf shares
|
| | | | 50,000,000 | | |
|
Incremental TeraWulf shares
|
| | | | 52,161,325 | | |
|
Par value
|
| | | $ | 0.001 | | |
|
Par value of incremental TeraWulf shares
|
| | | $ | 52,161 | | |
|
|
Merger costs reflected in the historical financial statements(1)
|
| | | $ | 1,815,506 | | |
|
Merger costs not yet reflected in the historical financial statements(2)
|
| | | | 15,184,494 | | |
|
Total estimated direct, incremental Merger transaction costs
|
| | | $ | 17,000,000 | | |
| | |
Preliminary
Purchase Price Allocation |
| |
Weighted
Average Useful Life |
| |
Depreciation
or Amortization for the Year Ended December 31, 2020 |
| |
Depreciation
or Amortization for the Six Months Ended June 30, 2021 |
| | ||||||||||||||
Inventory
|
| | | $ | 3,277,270 | | | | | | | | | | | | | | | | | | | | | | | |
Property, plant and
equipment |
| | | $ | 9,978,166 | | | | | | 23.3 | | | | | $ | 515,772 | | | | | $ | 257,886 | | | | ||
Intangible Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Intellectual property
|
| | | $ | 1,535,045 | | | | | | 7.1 | | | | | $ | 216,535 | | | | | $ | 108,268 | | | | ||
Trademarks and trade
names |
| | | | 869,084 | | | | | | 10.0 | | | | | | 86,908 | | | | | | 43,454 | | | | ||
Customer relationships
|
| | | | 1,295,355 | | | | | | 5.0 | | | | | | 259,071 | | | | | | 129,535 | | | | ||
Total intangible assets
|
| | | $ | 3,699,484 | | | | | | | | | | | $ | 562,514 | | | | | $ | 281,257 | | | |
|
Value of share awards due to Beowulf E&D employees
|
| | | $ | 12,500,000 | | |
|
Implied Holdco share price
|
| | | $ | 25.78 | | |
|
Shares issued under awards to Beowulf E&D employees
|
| | | | 484,866 | | |
|
Par value
|
| | | $ | 0.001 | | |
|
Par value of shares issued under awards to Beowulf E&D employees
|
| | | $ | 485 | | |
|
Shares issued to TeraWulf stockholders
|
| | | | 102,161,325 | | |
|
Shares issued to IKONICS holders of RSUs or stock options
|
| | | | 107,557 | | |
|
Shares issued under awards to employees of Beowulf E&D
|
| | | | 484,866 | | |
| | | | | | 102,753,748 | | |
| | |
IKONICS
Common Stock |
| |||
June 24, 2021
|
| | | $ | 11.30 | | |
November 8, 2021
|
| | | $ | 31.675 | | |