Item 1.01. Entry into a Material Definitive Agreement.
Asset Purchase Agreement with Prive Technologies LLC
On February 15, 2018, Riot Blockchain, Inc. (the "Company") entered into an asset purchase agreement (the "Purchase Agreement") with Kairos Global Technology Inc., a Nevada corporation and wholly owned subsidiary of the Company ("Kairos"), and Prive Technologies LLC ("Prive"), on behalf of the persons and entities (the "Sellers") which own certain bitcoin mining machines (the "Equipment"). Pursuant to the Purchase Agreement, the aggregate consideration for the Equipment consisted of (i) Eleven Million Dollars ($11,000,000) and (ii) One Million (1,000,000) shares of the Company's common stock, no par value per share (the "Shares").
The closing of the transaction is subject to customary closing conditions and is expected to close on or before February 21, 2018. Upon closing of the transaction, and pursuant to the terms of the Purchase Agreement, Kairos became the owner of the Equipment and other assets used for the mining of cryptocurrency, including, but not limited to, 3,800 AntMiner S9s, all manufactured by industry leader Bitmain. Each of the Sellers has executed a General Assignment, Bill of Sale and Assumption Agreement with respect to their respective Equipment.
Two Hundred Thousand (200,000) of the Shares (the "Escrow Shares") were deposited into an escrow account with Corporate Stock Transfer, Inc., as escrow agent (the "Escrow Agent"), pursuant to an escrow agreement (the "Escrow Agreement"). Certificates representing the Escrow Shares were deposited and recorded with the Escrow Agent to be held in escrow and not be transferred, pledged or hypothecated except as provided in the Escrow Agreement. The Escrow Shares will be released to the Sellers upon the Company generating Net Cash Flow (as defined in the Purchase Agreement) of at least Ten Million Dollars ($10,000,000) from the Equipment. If the Escrow Shares are not released to the Sellers on or before the two year anniversary of the Purchase Agreement, the Escrow Shares shall be returned to the Company for cancellation.
The foregoing descriptions of the Purchase Agreement and Escrow Agreement do not purport to be complete and are qualified in their entirety by reference to the complete text of the Form of Purchase Agreement and Form of Escrow Agreement, copies of which are filed as Exhibit 10.1 and Exhibit 10.2, respectively, to this Current Report on Form 8-K and incorporated by reference herein.
Asset Purchase Agreement with Blockchain Mining Supply & Services Ltd.
On February 15, 2018, the Company entered into an asset purchase agreement (the "BMSS Purchase Agreement") with Blockchain Mining Supply & Services Ltd., a corporation incorporated under the laws of the Province of Ontario ("BMSS"), which owns certain bitcoin mining machines (the "BMSS Equipment"). Pursuant to the BMSS Purchase Agreement, the aggregate consideration for the BMSS Equipment consisted of Eight Million Five Hundred Thousand Dollars ($8,500,000).
The closing of the transaction is subject to customary closing conditions and is expected to close on or before February 21, 2018. Upon closing of the transaction, and pursuant to the terms of the BMSS Purchase Agreement, the Company became the owner of the BMSS Equipment and other assets used for the mining of cryptocurrency, including, but not limited to, 3,000 AntMiner S9s, all manufactured by industry leader Bitmain.
Seven Million Dollars ($7,000,000) (the "Escrow Funds") were deposited into an escrow account with Rosen and Kirshen Professional Corporation, as escrow agent (the "BMSS Escrow Agent"), pursuant to an escrow agreement (the "BMSS Escrow Agreement"). The Escrow Funds will be released to BMSS upon such time that the BMSS Equipment is physically retrieved by the Company. The remainder of the purchase price, One Million Five Hundred Thousand Dollars ($1,500,000), shall be payable on the earlier of (a) one hundred and eighty (180) days after the Closing Date (as defined in the BMSS Purchase Agreement) or (b) such time when the BMSS Equipment becomes operational.
The foregoing descriptions of the BMSS Purchase Agreement and BMSS Escrow Agreement do not purport to be complete and are qualified in their entirety by reference to the complete text of the Form of Purchase Agreement and Form of Escrow Agreement, copies of which are filed as Exhibit 10.3 and Exhibit 10.4, respectively, to this Current Report on Form 8-K and incorporated by reference herein.
Item 3.02. Unregistered Sales of Equity Securities.
Item 1.01 is incorporated by reference in its entirety into this Item 3.02. The transaction was conducted pursuant to the exemption set forth in Section 4(a)(2) of the Securities Act of 1933, as amended.