UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
40-F/A
(Amendment
No. 1)
☒ Registration
statement pursuant to Section 12 of the Securities Exchange Act of 1934
or
☐ Annual
report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
|
For
the fiscal year ended
|
Commission
File Number
|
Digihost
Technology Inc.
(Exact
name of Registrant as specified in its charter)
|
British
Columbia, Canada
|
|
7379
|
|
N/A
|
(Province
or other jurisdiction of
incorporation or organization)
|
|
(Primary
Standard Industrial
Classification Code Number)
|
|
(I.R.S.
Employer
Identification Number)
|
18
King Street East
Suite
902
Toronto,
Ontario M5C 1C4
Canada
(917)
242-6549
(Address
and telephone number of Registrant’s principal executive offices)
Cogency
Global Inc.
122
E. 42nd Street, 18th Floor
New
York, New York 10168
(800)
221-0102
(Name,
address (including zip code) and telephone number (including area code) of agent for service in the United States)
Securities
registered or to be registered pursuant to Section 12(b) of the Act:
|
Title
of each class
|
|
Trading
Symbol(s)
|
|
Name
of each exchange on which registered
|
|
Subordinate
Voting Shares
|
|
DGHI
|
|
Nasdaq
Stock Market LLC (Nasdaq Capital Market)
|
Securities
registered pursuant to Section 12(g) of the Act: None
Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
For
annual reports, indicate by check mark the information filed with this Form:
|
☐
Annual information form
|
☐
Audited annual financial statements
|
Indicate
the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered
by the annual report: N/A
Indicate
by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
Yes
☐ No ☒
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant
was required to submit such files).
Yes
☐ No ☐
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.
Emerging
growth company ☒
If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided
pursuant to Section 13(a) of the Exchange Act. ☐
|
|
†
|
The
term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board
to its Accounting Standards Codification after April 5, 2012.
|
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
EXPLANATORY
NOTE
Digihost Technology Inc. (the “Registrant”)
is a Canadian issuer whose subordinate voting shares are listed on the TSX Venture Exchange and is eligible to file its registration
statement pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on Form 40-F pursuant
to the U.S.-Canadian Multijurisdictional Disclosure System. The Registrant is a “foreign private issuer” as defined in Rule
3b-4 under the Exchange Act. Equity securities of the Registrant are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and
16 of the Exchange Act pursuant to Rule 3a12-3. The Registrant filed a Registration Statement on Form 40-F on June 21, 2021 (SEC File
No. 001-40527) (the “Registration Statement”).
The Registrant is filing this Amendment No.
1 to the Registration Statement to (i) include additional exhibits, each of which is incorporated by reference in the Registration Statement
and (ii) amend the exhibit references under the heading “Principal Documents.” No other amendment to the Registration Statement
is being effected hereby.
FORWARD
LOOKING STATEMENTS
The
Exhibits incorporated by reference into this Registration Statement of the Registrant contain forward-looking statements. All statements,
other than statements of historical fact, incorporated by reference are forward-looking information. Generally, forward-looking information
may be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”,
“proposed”, “is expected”, “budgets”, “scheduled”, “estimates”, “forecasts”,
“intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such
words and phrases, or by the use of words or phrases which state that certain actions, events or results may, could, would, or might
occur or be achieved. There can be no assurance that such forward-looking information will prove to be accurate, and actual results and
future events could differ materially from those anticipated in such forward-looking information. The Registrant’s forward-looking
statements contained in the Exhibits incorporated by reference into this Registration Statement are made as of the respective dates set
forth in such Exhibits and on assumptions the Registrant believed were reasonable as of such date. Forward-looking information is subject
to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements
of the Registrant to be materially different from those expressed or implied by such forward-looking information. Such risks and other
factors may include, but are not limited to:
|
|
●
|
market
and other conditions;
|
|
|
●
|
regulatory
changes or actions may alter the nature of an investment in the Registrant’s securities
or restrict the use of cryptocurrencies in a manner that adversely affects the Registrant’s
operations;
|
|
|
●
|
continued
effects of the COVID-19 pandemic, which may have a material adverse effect on the Registrant’s
performance as supply chains are disrupted and prevent the Registrant from operating its
assets;
|
|
|
●
|
a
decrease in cryptocurrency pricing, volume of transaction activity or the profitability of
cryptocurrency mining, including in connection with a future Bitcoin halving event;
|
|
|
●
|
further
improvements to profitability and efficiency may not be realized;
|
|
|
●
|
the
Registrant’s ability to successfully mine digital currency on the cloud;
|
|
|
●
|
the
Registrant may not be able to liquidate its current digital currency inventory profitably
or at all;
|
|
|
●
|
a
decline in digital currency prices may have a significant negative impact on the Registrant’s
operations;
|
|
|
●
|
the
volatility of digital currency prices;
|
|
|
●
|
the
Registrant’s cryptocurrency inventory may be exposed to cybersecurity threats and hacks
and may otherwise be subject to loss, theft or restriction on access;
|
|
|
|
|
|
|
●
|
the Registrant could cease to be a foreign private issuer in the future, which could result in significant additional costs and
expenses to the Registrant.
|
|
|
●
|
banks
may not provide banking services or may cut off banking services to businesses that provide cryptocurrency-related services or that accept
cryptocurrencies as payment;
|
|
|
|
|
|
|
●
|
the
Registrant’s existing insurance coverage may not be adequate to cover all of its potential
losses, and self-insurance and other insurance costs could materially and adversely affect
its business and results of operations; and
|
|
|
●
|
the
availability of electricity at prevailing rates and on a continuous basis.
|
A description of assumptions used to develop
such forward-looking information and a description of additional risk factors that may cause actual results to differ materially from
forward-looking information can be found in the Registrant’s disclosure documents, such as the Registrant’s Annual Information
Form for the year ended December 31, 2019, dated January 20, 2021 (the “AIF”), on the SEDAR website at www.sedar.com, attached
hereto as Exhibit 99.49. Although the Registrant has attempted to identify important factors that could cause actual results to differ
materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated,
estimated or intended. Readers are cautioned that the foregoing list of factors is not exhaustive. Readers are further cautioned not
to place undue reliance on forward-looking information as there can be no assurance that the plans, intentions or expectations upon which
they are placed will occur. Forward-looking information contained in the Exhibits incorporated by reference are expressly qualified by
this cautionary statement. The forward-looking information contained in the Exhibits incorporated by reference represents the expectations
of the Registrant as of the date of such Exhibit and, accordingly, is subject to change after such date. However, the Registrant expressly
disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future
events or otherwise, except as expressly required by applicable securities law.
DIFFERENCES
IN UNITED STATES AND CANADIAN REPORTING PRACTICES
The
Registrant is permitted, under a multijurisdictional disclosure system adopted by the United States, to prepare this report in accordance
with Canadian disclosure requirements, which are different from those of the United States. The Registrant prepares its financial statements
in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards
Board, and the audit is subject to Canadian auditing standards. IFRS differs in certain respects from United States generally accepted
accounting principles (“US GAAP”) and from practices prescribed by the SEC. Therefore, the Registrant’s financial statements
filed with this registration statement may not be comparable to financial statements prepared in accordance with U.S. GAAP.
PRINCIPAL
DOCUMENTS
In accordance with General Instruction B.(1)
of Form 40-F, the Registrant hereby incorporates by reference Exhibits 99.1 through 99.172, inclusive, as set forth in the Exhibit
Index attached hereto.
In accordance with General Instruction D.(9)
of Form 40-F, the Registrant has filed the written consents of the independent auditors named in the foregoing Exhibits as Exhibits 99.171
and 99.172, as set forth in the Exhibit Index attached hereto.
TAX
MATTERS
Purchasing,
holding, or disposing of securities of the Registrant may have tax consequences under the laws of the United States and Canada that are
not described in this registration statement on Form 40-F.
DESCRIPTION
OF SUBORDINATE VOTING SHARES
The required
disclosure is included under the heading “Capital Structure” in the Registrant’s AIF, attached hereto as Exhibit 99.49.
CURRENCY
Unless
otherwise indicated, all dollar amounts in this Registration Statement on Form 40-F are in United States dollars.
CONTRACTUAL
OBLIGATIONS
The
following table lists information with respect to the Registrant’s known contractual obligations as of December 31, 2020.
|
|
|
Payments due by period ($ in thousands)
|
|
|
Contractual Obligations
|
|
Total
|
|
|
Less than
1 year
|
|
|
1-3 years
|
|
|
3-5 years
|
|
|
More than
5 years
|
|
|
Long-Term Debt Obligations
|
|
|
2,717
|
(1)
|
|
|
2,146
|
|
|
|
571
|
|
|
|
-
|
|
|
|
-
|
|
|
Lease Obligations
|
|
|
2,546
|
|
|
|
112
|
|
|
|
2,434
|
|
|
|
-
|
|
|
|
-
|
|
|
Other Long-Term Liabilities
|
|
|
920
|
|
|
|
920
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Total
|
|
$
|
6,183
|
|
|
$
|
3,178
|
|
|
$
|
3,005
|
|
|
|
-
|
|
|
|
-
|
|
Notes:
|
1.
|
The Long-Term Debt Obligations are for loans payable as of December 31, 2020. The loans were paid off in their entirety in Q1 2021.
|
NASDAQ CORPORATE GOVERNANCE
A foreign private issuer that follows home country
practices in lieu of certain provisions of the listing rules of the Nasdaq Stock Market LLC (the “Nasdaq Stock Market Rules”)
must disclose the ways in which its corporate governance practices differ from those followed by U.S. domestic companies. As required
by Nasdaq Rule 5615(a)(3), the Registrant will disclose on its website, https://www.digihost.ca/, as of the listing date, each requirement
of the Nasdaq Stock Market Rules that it does not follow and describe the home country practice followed in lieu of such requirements.
UNDERTAKING
AND CONSENT TO SERVICE OF PROCESS
A.
Undertaking. The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made
by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to the securities
registered pursuant to Form 40-F or transactions in said securities.
B.
Consent to Service of Process. The Registrant has concurrently filed a Form F-X in connection with the class of securities to which
this Registration Statement relates. Any change to the name or address of the Registrant’s agent for service shall be communicated
promptly to the Commission by amendment to the Form F-X referencing the file number of the Registrant.
EXHIBIT
INDEX
The
following documents are being filed with the Commission as Exhibits to this Registration Statement:
|
Exhibit
|
|
Description
|
|
|
|
|
|
99.1*
|
|
Interim
Consolidated Financial Statements as of and for the three months ended November 30, 2019 and 2018 (Unaudited)
|
|
|
|
|
|
99.2*
|
|
Management’s
Discussion & Analysis for the period ended November 30, 2019, dated as of January 28, 2020
|
|
|
|
|
|
99.3*
|
|
CFO
Certification of Interim Filings Venture Issuer Basic Certificate dated January 28, 2020
|
|
|
|
|
|
99.4*
|
|
CEO
Certification of Interim Filings Venture Issuer Basic Certificate dated January 28, 2020
|
|
|
|
|
|
99.5*
|
|
News
Release dated February 14, 2020
|
|
|
|
|
|
99.6*
|
|
Early
Warning Report dated February 19, 2020
|
|
|
|
|
|
99.7*
|
|
News
Release dated February 19, 2020
|
|
|
|
|
|
99.8*
|
|
Material
Change Report dated February 19, 2020
|
|
|
|
|
|
99.9*
|
|
News
Release dated February 21, 2020
|
|
|
|
|
|
99.10*
|
|
Material
Change Report dated February 21, 2020
|
|
|
|
|
|
99.11*
|
|
News
Release dated February 27, 2020
|
|
|
|
|
|
99.12*
|
|
Material
Change Report dated February 27, 2020
|
|
|
|
|
|
99.13*
|
|
News
Release dated March 20, 2020
|
|
|
|
|
|
99.14*
|
|
Material
Change Report dated March 20, 2020
|
|
|
|
|
|
99.15*
|
|
Notice
of Change in Corporate Structure dated April 1, 2020
|
|
|
|
|
|
99.16*
|
|
News
Release dated April 7, 2020
|
|
|
|
|
|
99.17*
|
|
Material
Change Report dated April 7, 2020
|
|
|
|
|
|
99.18*
|
|
News
Release dated April 16, 2020
|
|
|
|
|
|
99.19*
|
|
News
Release dated April 24, 2020
|
|
|
|
|
|
99.20*
|
|
News
Release dated May 27, 2020
|
|
|
|
|
|
99.21*
|
|
Audited
Financial Statements for the year ended December 31, 2019 and for the period from incorporation (October 9, 2018) to December 31,
2018, dated June 11, 2020
|
|
|
|
|
|
99.22*
|
|
Condensed
Interim Consolidated Financial Statements for the three months ended March 31, 2020
|
|
|
|
|
|
99.23*
|
|
Management’s
Discussion and Analysis for the three months ended March 31, 2020, dated July 13, 2020
|
|
|
|
|
|
99.24*
|
|
CFO
Certification of Interim Filings Venture Issuer Basic Certificate dated July 15, 2020
|
|
|
|
|
|
99.25*
|
|
CEO
Certification of Interim Filings Venture Issuer Basic Certificate dated July 15, 2020
|
|
99.26*
|
|
News
Release dated July 15, 2020
|
|
|
|
|
|
99.27*
|
|
News
Release dated August 19, 2020
|
|
|
|
|
|
99.28*
|
|
Condensed
Interim Consolidated Financial Statements for the three months and six months ended June 30, 2020
|
|
|
|
|
|
99.29*
|
|
Management’s
Discussion and Analysis for the three and six months ended June 30, 2020, dated August 28, 2020
|
|
|
|
|
|
99.30*
|
|
CFO
Certification of Interim Filings Venture Issuer Basic Certificate dated August 31, 2020
|
|
|
|
|
|
99.31*
|
|
CEO
Certification of Interim Filings Venture Issuer Basic Certificate dated August 31, 2020
|
|
|
|
|
|
99.32*
|
|
Certificate
of Change of Name filed on September 1, 2020
|
|
|
|
|
|
99.33*
|
|
News
Release dated September 8, 2020
|
|
|
|
|
|
99.34*
|
|
Material
Change Report dated September 8, 2020
|
|
|
|
|
|
99.35*
|
|
News
Release dated October 20, 2020
|
|
|
|
|
|
99.36*
|
|
Material
Change Report dated October 20, 2020
|
|
|
|
|
|
99.37*
|
|
News
Release dated November 24, 2020
|
|
|
|
|
|
99.38*
|
|
Material
Change Report dated November 24, 2020
|
|
|
|
|
|
99.39*
|
|
News
Release dated December 7, 2020
|
|
|
|
|
|
99.40*
|
|
News
Release dated December 17, 2020
|
|
|
|
|
|
99.41*
|
|
News
Release dated December 30, 2020
|
|
|
|
|
|
99.42*
|
|
News
Release dated December 31, 2020
|
|
|
|
|
|
99.43*
|
|
News
Release dated January 5, 2021
|
|
|
|
|
|
99.44*
|
|
Material
Change Report dated January 6, 2021
|
|
|
|
|
|
99.45*
|
|
Material
Change Report dated January 6, 2021
|
|
|
|
|
|
99.46*
|
|
News
Release dated January 8, 2021
|
|
99.47*
|
|
News
Release dated January 14, 2021
|
|
|
|
|
|
99.48*
|
|
Notice
Declaring Intention to Qualify Short Form Prospectus dated January 14, 2021
|
|
|
|
|
|
99.49*
|
|
Annual
Information Form for the year ended December 31, 2019, dated January 20, 2021
|
|
|
|
|
|
99.50*
|
|
CFO
Certification of Annual Filings in connection with Voluntarily Filed Annual Information Form dated January 20, 2021
|
|
|
|
|
|
99.51*
|
|
CEO
Certification of Annual Filings in connection with Voluntarily Filed Annual Information Form dated January 20, 2021
|
|
|
|
|
|
99.52*
|
|
Preliminary
Short Form Base Shelf Prospectus dated January 28, 2021
|
|
|
|
|
|
99.53*
|
|
Qualification
Certificate dated January 28, 2021
|
|
|
|
|
|
99.54*
|
|
Receipt
dated February 1, 2021
|
|
|
|
|
|
99.55*
|
|
News
Release dated February 4, 2021
|
|
|
|
|
|
99.56*
|
|
Material
Change Report dated February 4, 2021
|
|
|
|
|
|
99.57*
|
|
News
Release dated February 8, 2021
|
|
|
|
|
|
99.58*
|
|
Material
Change Report dated February 8, 2021
|
|
|
|
|
|
99.59*
|
|
News
Release dated February 12, 2021
|
|
|
|
|
|
99.60*
|
|
News
Release dated February 19, 2021
|
|
|
|
|
|
99.61*
|
|
Material
Change Report dated February 19, 2021
|
|
|
|
|
|
99.62*
|
|
Material
Change Report dated February 19, 2021
|
|
|
|
|
|
99.63*
|
|
News
Release dated February 23, 2021
|
|
|
|
|
|
99.64*
|
|
Material
Change Report dated February 23, 2021
|
|
|
|
|
|
99.65*
|
|
Press
Release dated February 28, 2021
|
|
|
|
|
|
99.66*
|
|
Early
Warning Report dated February 28, 2021
|
|
|
|
|
|
99.67*
|
|
News
Release dated March 4, 2021
|
|
|
|
|
|
99.68*
|
|
Material
Change Report dated March 4, 2021
|
|
|
|
|
|
99.69*
|
|
News
Release dated March 5, 2021
|
|
|
|
|
|
99.70*
|
|
News
Release dated March 8, 2021
|
|
|
|
|
|
99.71*
|
|
News
Release dated March 11, 2021
|
|
|
|
|
|
99.72*
|
|
News
Release dated March 11, 2021
|
|
|
|
|
|
99.73*
|
|
Material
Change Report dated March 11, 2021
|
|
|
|
|
|
99.74*
|
|
Material
Change Report dated March 12, 2021
|
|
99.75*
|
|
Material
Change Report dated March 12, 2021
|
|
|
|
|
|
99.76*
|
|
News
Release dated March 17, 2021
|
|
|
|
|
|
99.77*
|
|
Material
Change Report dated March 17, 2021
|
|
|
|
|
|
99.78*
|
|
News
Release dated March 24, 2021
|
|
|
|
|
|
99.79*
|
|
Material
Change Report dated March 24, 2021
|
|
|
|
|
|
99.80*
|
|
News
Release dated March 26, 2021
|
|
|
|
|
|
99.81*
|
|
News
Release dated March 29, 2021
|
|
|
|
|
|
99.82*
|
|
Material
Change Report dated March 29, 2021
|
|
|
|
|
|
99.83*
|
|
OSC
Notice to Public filed March 31, 2021
|
|
|
|
|
|
99.84*
|
|
News
Release dated April 6, 2021
|
|
|
|
|
|
99.85*
|
|
Material
Change Report dated April 6, 2021
|
|
|
|
|
|
99.86*
|
|
News
Release dated April 6, 2021
|
|
|
|
|
|
99.87*
|
|
Material
Change Report dated April 7, 2021
|
|
|
|
|
|
99.88*
|
|
Condensed
Interim Consolidated Financial Statements for the three months and nine months ended September 30, 2020, dated April 8, 2021
|
|
|
|
|
|
99.89*
|
|
Management’s
Discussion and Analysis for the three and nine months ended September 30, 2020, dated April 8, 2021
|
|
|
|
|
|
99.90*
|
|
CFO
Certification of Refiled Interim dated April 9, 2021
|
|
|
|
|
|
99.91*
|
|
CEO
Certification of Refiled Interim Filings dated April 9, 2021
|
|
|
|
|
|
99.92*
|
|
News
Release dated April 9, 2021
|
|
|
|
|
|
99.93*
|
|
News
Release dated April 13, 2021
|
|
|
|
|
|
99.94*
|
|
News
Release dated April 14, 2021
|
|
|
|
|
|
99.95*
|
|
Notice
of Change of Auditor dated April 12, 2021
|
|
|
|
|
|
99.96*
|
|
Letter
from Successor Auditor dated April 12, 2021
|
|
|
|
|
|
99.97*
|
|
Letter
from Former Auditor dated April 12, 2021
|
|
|
|
|
|
99.98*
|
|
Material
Change Report dated April 14, 2021
|
|
|
|
|
|
99.99*
|
|
Material
Change Report dated April 14, 2021
|
|
|
|
|
|
99.100*
|
|
News
Release dated April 22, 2021
|
|
|
|
|
|
99.101*
|
|
Notice
of Meeting of Security Holders for Annual General Meeting dated April 23, 2021
|
|
|
|
|
|
99.102*
|
|
News
Release dated April 29, 2021
|
|
99.103*
|
|
Material
Change Report dated April 29, 2021
|
|
|
|
|
|
99.104*
|
|
ON
Class 1 Reporting Issuers and Class 3B Reporting Issuers—Participation Fee Management Certification of CFO dated April 30,
2021
|
|
|
|
|
|
99.105*
|
|
Audited
Financial Statements for the years ended December 31, 2020 and 2019, dated April 30, 2021
|
|
|
|
|
|
99.106*
|
|
AB
Class 1 Reporting Issuers and Class 3B Reporting Issuers—Participation Fee Management Certification of CFO dated April 30,
2021
|
|
|
|
|
|
99.107*
|
|
Management’s
Discussion and Analysis for the year ended December 31, 2020, dated April 30, 2021
|
|
|
|
|
|
99.108*
|
|
CFO
Certification of Annual Filings Venture Issuer Basic Certificate dated April 30, 2021
|
|
|
|
|
|
99.109*
|
|
CEO
Certification of Annual Filings Venture Issuer Basic Certificate dated April 30, 2021
|
|
|
|
|
|
99.110*
|
|
News
Release dated May 3, 2021
|
|
|
|
|
|
99.111*
|
|
Material
Change Report dated May 3, 2021
|
|
|
|
|
|
99.112*
|
|
News
Release dated May 5, 2021
|
|
|
|
|
|
99.113*
|
|
News
Release dated May 10, 2021
|
|
|
|
|
|
99.114*
|
|
Material
Change Report dated May 10, 2021
|
|
|
|
|
|
99.115*
|
|
Material
Change Report dated May 10, 2021
|
|
|
|
|
|
99.116*
|
|
News
Release dated May 12, 2021
|
|
|
|
|
|
99.117*
|
|
Material
Change Report dated May 13, 2021
|
|
|
|
|
|
99.118*
|
|
News
Release dated May 14, 2021
|
|
|
|
|
|
99.119*
|
|
Material
Change Report dated May 14, 2021
|
|
|
|
|
|
99.120*
|
|
News
Release dated May 17, 2021
|
|
|
|
|
|
99.121*
|
|
Material
Change Report dated May 17, 2021
|
|
|
|
|
|
99.122*
|
|
Interim
Consolidated Financial Statements as of and for the three months ended March 31, 2021 and 2020 (Unaudited)
|
|
|
|
|
|
99.123*
|
|
Management’s
Discussion & Analysis for the period ended March 31, 2021, dated as of May 19, 2020
|
|
|
|
|
|
99.124*
|
|
CFO
Certification of Interim Filings Venture Issuer Basic Certificate dated May 19, 2021
|
|
|
|
|
|
99.125*
|
|
CEO
Certification of Interim Filings Venture Issuer Basic Certificate dated May 19, 2021
|
|
|
|
|
|
99.126*
|
|
News
Release dated May 19, 2021
|
|
|
|
|
|
99.127*
|
|
Material
Change Report dated May 19, 2021
|
|
|
|
|
|
99.128*
|
|
Notice
of Meeting of Security Holders for Annual General Meeting dated May 28, 2021
|
|
|
|
|
|
99.129*
|
|
News
Release dated June 7, 2021
|
|
|
|
|
|
99.130*
|
|
News
Release dated June 10, 2021
|
|
99.131*
|
|
Material
Change Report dated June 10, 2021
|
|
|
|
|
|
99.132*
|
|
News
Release dated June 15, 2021
|
|
|
|
|
|
99.133*
|
|
News
Release dated June 15, 2021
|
|
|
|
|
|
99.134*
|
|
Material
Change Report dated June 16, 2021
|
|
|
|
|
|
99.135*
|
|
News Release dated
June 21, 2021
|
|
|
|
|
|
99.136*
|
|
Material Change
Report dated June 21, 2021
|
|
|
|
|
|
99.137
|
|
Notice of the Meeting of Shareholders and Record Date for Annual General Meeting dated
June 21, 2021
|
|
|
|
|
|
99.138
|
|
News Release dated June 22, 2021
|
|
|
|
|
|
99.139
|
|
News Release
dated June 24, 2021
|
|
|
|
|
|
99.140
|
|
News Release
dated July 6, 2021
|
|
|
|
|
|
99.141
|
|
Material
Change Report dated July 6, 2021
|
|
|
|
|
|
99.142
|
|
Notice of
the Meeting of Shareholders and Record Date for Annual General and Special Meeting (Amended) dated July 6, 2021
|
|
|
|
|
|
99.143
|
|
Notice of
Meeting of Shareholders for Annual General and Special Meeting dated July 12, 2021
|
|
|
|
|
|
99.144
|
|
Management
Information Circular for Annual General and Special Meeting of Shareholders dated July 12, 2021
|
|
|
|
|
|
99.145
|
|
Form of
Proxy for Annual General and Special Meeting of Shareholders, dated July 12, 2021
|
|
|
|
|
|
99.146
|
|
News Release
dated July 26, 2021
|
|
|
|
|
|
99.147
|
|
Material
Change Report dated July 26, 2021
|
|
|
|
|
|
99.148
|
|
News Release
dated August 3, 2021
|
|
|
|
|
|
99.149
|
|
Interim
Consolidated Financial Statements as of and for the three and six months ended June 30, 2021 and 2020 (Unaudited)
|
|
|
|
|
|
99.150
|
|
Management’s
Discussion & Analysis for the period ended June 30, 2021, dated as of August 4, 2021
|
|
|
|
|
|
99.151
|
|
CFO Certification
of Interim Filings Venture Issuer Basic Certificate dated August 4, 2021
|
|
|
|
|
|
99.152
|
|
CEO Certification
of Interim Filings Venture Issuer Basic Certificate dated August 4, 2021
|
|
|
|
|
|
99.153
|
|
News Release
dated August 4, 2021
|
|
|
|
|
|
99.154
|
|
News Release
dated September 7, 2021
|
|
|
|
|
|
99.155
|
|
Material
Change Report dated September 8, 2021
|
|
|
|
|
|
99.156
|
|
News Release
dated October 4, 2021
|
|
|
|
|
|
99.157
|
|
Material
Change Report dated October 4, 2021
|
|
|
|
|
|
99.158
|
|
News Release
dated October 5, 2021
|
|
99.159
|
|
Material Change Report dated October 6, 2021
|
|
|
|
|
|
99.160
|
|
News Release dated October 13, 2021
|
|
|
|
|
|
99.161
|
|
Interim Consolidated Financial Statements as of and for the three and nine months ended September 30, 2021 and 2020 (Unaudited)
|
|
|
|
|
|
99.162
|
|
Management’s Discussion & Analysis for the period ended September 30, 2021, dated as of October 20, 2021
|
|
|
|
|
|
99.163
|
|
CFO Certification of Interim Filings Venture Issuer Basic Certificate dated October 21, 2021
|
|
|
|
|
|
99.164
|
|
CEO Certification of Interim Filings Venture Issuer Basic Certificate dated October 21, 2021
|
|
|
|
|
|
99.165
|
|
News Release dated October 21, 2021
|
|
|
|
|
|
99.166
|
|
Material Change Report dated October 21, 2021
|
|
|
|
|
|
99.167
|
|
News Release dated October 26, 2021
|
|
|
|
|
|
99.168
|
|
Material Change Report dated October 26, 2021
|
|
|
|
|
|
99.169
|
|
News Release dated October 28, 2021
|
|
|
|
|
|
99.170
|
|
Material Change Report dated October 28, 2021
|
|
|
|
|
|
99.171
|
|
Consent of Raymond Chabot Grant Thornton LLP dated October 29, 2021
|
|
|
|
|
|
99.172
|
|
Consent of Clearhouse LLP dated October 29, 2021
|
SIGNATURES
Pursuant to the requirements of the Exchange
Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this Amendment No. 1
to the Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized.
|
|
DIGIHOST
TECHNOLOGY INC.
|
|
|
|
|
|
By:
|
/s/ Michel Amar
|
|
|
|
Name:
|
Michel Amar
|
|
|
|
Title:
|
Chief Executive Officer
|
Date: October 29, 2021
10
Exhibit 99.137
|
June 21, 2021
|
510 Burrard St, 3rd
Floor
|
|
|
Vancouver BC, V6C 3B9
|
|
|
www.computershare.com
|
To: All Canadian Securities Regulatory Authorities
Subject: DIGIHOST TECHNOLOGY INC.
Dear Sir/Madam:
We advise of the following with
respect to the upcoming Meeting of Security Holders for the subject Issuer:
|
Meeting Type :
|
Annual General Meeting
|
|
Record Date for Notice of Meeting :
|
June 28, 2021
|
|
Record Date for Voting (if applicable) :
|
June 28, 2021
|
|
Beneficial Ownership Determination Date :
|
June 28, 2021
|
|
Meeting Date :
|
August 09, 2021
|
|
Meeting Location (if available) :
|
Toronto, ON
|
|
Issuer sending proxy
related materials directly to NOBO:
|
No
|
|
Issuer paying for delivery to OBO:
|
No
|
Notice and Access (NAA) Requirements:
|
NAA for Beneficial Holders
|
No
|
|
|
|
|
NAA for Registered Holders
|
No
|
Voting Security Details:
|
Description
|
CUSIP Number
|
ISIN
|
|
SUBORDINATE VOTING SHARES
|
25381D107
|
CA25381D1078
|
|
PROPORTIONATE VOTING CLASS
|
HSHQP0108
|
CAHSHQP01086
|
Sincerely,
Computershare
Agent for DIGIHOST TECHNOLOGY INC.
Exhibit 99.138
DIGIHOST ANNOUNCES FILING OF FORM 40-F WITH
THE SEC, FULFILLING SIGNIFICANT MILESTONE FOR NASDAQ LISTING
Toronto, ON – June 22, 2021 –
Digihost Technology Inc. (“Digihost” or the “Company”) (TSXV: DGHI; OTCQB: HSSHF) is pleased to
announce that it has filed a registration statement on Form 40-F (“Form 40-F”) with the U.S. Securities and Exchange
Commission (the “SEC”), fulfilling a significant milestone in the process for the Company to list its shares on the
Nasdaq Stock Exchange (“Nasdaq”). A copy of the Form 40-F is available on EDGAR.
The listing of the Company’s shares on Nasdaq
remains subject to the approval of Nasdaq and the satisfaction of all applicable listing and regulatory requirements, including the effectiveness
of the Form 40-F by the SEC, and, as such, there can be no assurances that Digihost’s shares will be listed on Nasdaq. Digihost
will retain its listing on the TSX Venture Exchange under the symbol “DGHI”.
Stock Option Grant
The Company also announces that it has granted
to the directors, officers, employees and consultants of the Company an aggregate of 780,000 incentive stock options (the “Stock
Options”) to purchase common shares under the Company’s incentive stock option plan (the “Plan”). Each
Stock Option is exercisable into a common share of the Company at a price of $1.40 for a period of five years from the date of grant.
The Stock Options will fully vest on the six-month anniversary of the date of grant and be subject to the terms and conditions of the
Plan and the policies of the TSX Venture Exchange.
About Digihost Technology Inc.
Digihost is a growth-oriented blockchain technology
company primarily focused on Bitcoin mining. The Company's mining facilities are located in Upstate New York and are equipped with 78.7
MW of low-cost power with the option to expand to 102MW. The Company is currently hashing at a rate of 205PH with ability to expand to
a rate of 3EH upon the completion of its previously announced acquisition of a 60MW power plant.
For further information, please contact:
Digihost Technology Inc.
www.digihost.ca
Michel Amar, Chief Executive Officer
T: 1-818-280-9758
Email: michel@digihost.ca
Cautionary Statement
Trading in the securities of the Company should
be considered highly speculative. No stock exchange, securities commission or other regulatory authority has approved or disapproved the
information contained herein. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies
of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
Except for the statements of historical fact,
this news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking
information”) that is based on expectations, estimates and projections as at the date of this news release. Forward-looking information
in this news release includes information about listing on the Nasdaq, effectiveness of the Company’s Form 40-F, hashrate expansion,
diversification of operations, potential further improvements to profitability and efficiency across mining operations, potential for
the Company’s long-term growth, and the business goals and objectives of the Company. Factors that could cause actual results, performance
or achievements to differ materially from those described in such forward-looking information include, but are not limited to: risks relating
to the Nasdaq listing process, risks relating to the effectiveness of the Company’s Form 40-F, continued effects of the COVID19
pandemic may have a material adverse effect on the Company’s performance as supply chains are disrupted and prevent the Company
from operating its assets; a decrease in cryptocurrency pricing, volume of transaction activity or generally, the profitability of cryptocurrency
mining; further improvements to profitability and efficiency may not be realized; the digital currency market; the Company’s ability
to successfully mine digital currency on the cloud; the Company may not be able to profitably liquidate its current digital currency inventory,
or at all; a decline in digital currency prices may have a significant negative impact on the Company’s operations; the volatility
of digital currency prices; and other related risks as more fully set out in the Annual Information Form of the Company and other documents
disclosed under the Company’s filings at www.sedar.com. The forward-looking information in this news release reflects the current
expectations, assumptions and/or beliefs of the Company based on information currently available to the Company. In connection with the
forward-looking information contained in this news release, the Company has made assumptions about: the current profitability in mining
cryptocurrency (including pricing and volume of current transaction activity); profitable use of the Company’s assets going forward;
the Company’s ability to profitably liquidate its digital currency inventory as required; historical prices of digital currencies
and the ability of the Company to mine digital currencies on the cloud will be consistent with historical prices; and there will be no
regulation or law that will prevent the Company from operating its business. The Company has also assumed that no significant events occur
outside of the Company's normal course of business. Although the Company believes that the assumptions inherent in the forward-looking
information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should
not be put on such information due to the inherent uncertainty therein.
Exhibit 99.139
DIGIHOST ANNOUNCES SIGNING OF CRYPTO CLIMATE
ACCORD
Toronto, ON – June 24, 2021 –
Digihost Technology Inc. (“Digihost” or the “Company”) (TSXV: DGHI; OTCQB: HSSHF) is pleased to
announce that it is now a signatory to the Crypto Climate Accord (www.cryptoclimate.org). This private-industry led initiative, modeled
on the Paris Climate Agreement, is a global pledge that aligns with the mission of the Company’s recently adopted DigiGreen Initiative
to: (1) achieving net-zero emissions from electricity consumption by 2030; and (2) developing standards, tools, and technologies to accelerate
the adoption of, and verify progress towards, 100% renewably powered-blockchains. With the alignment of the DigiGreen Initiative and the
Crypto Climate Accord, the Company aims to be an industry leader well into the future, contributing to the development of the tools and
standards that will govern the production of blockchain in Canada, the United States, and beyond.
Michel Amar, the Company’s CEO, stated:
“Having recently launched our DigiGreen Initiative, we are pleased to also pledge our support of the Crypto Climate Accord as a
signatory and lend our technical expertise to develop a greener blockchain community. This is an exciting development for the long-term
viability of our industry and the long-term health of our planet. Our business model has always focused on growth through environmentally
and socially responsible blockchain operations, and becoming a signatory to the Crypto Climate Accord further solidifies that commitment.”
About Digihost Technology Inc.
Digihost Technology Inc. is a growth-oriented
blockchain technology company primarily focused on Bitcoin mining. The Company's mining facilities are located in Upstate New York,
and are equipped with 78.7 MW of low-cost power with the option to expand to 102MW. The Company is currently hashing at a rate of 205PH
with potential to expand to a rate of 3EH upon the completion of the previously announced acquisition of a 60MW power plant.
For further information, please contact:
Digihost Technology Inc.
www.digihost.ca
Michel Amar, Chief Executive Officer
T: 1-818-280-9758
Email: michel@digihost.ca
Cautionary Statement
Trading in the securities of the Company should
be considered highly speculative. No stock exchange, securities commission or other regulatory authority has approved or disapproved the
information contained herein. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies
of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
Except for the statements of historical fact,
this news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking
information”) that is based on expectations, estimates and projections as at the date of this news release. Forward-looking information
in this news release includes information about hashrate expansion, diversification of operations, potential further improvements to profitability
and efficiency across mining operations, potential for the Company’s long-term growth, and the business goals and objectives of
the Company. Factors that could cause actual results, performance or achievements to differ materially from those described in such forward-looking
information include, but are not limited to: continued effects of the COVID19 pandemic may have a material adverse effect on the Company’s
performance as supply chains are disrupted and prevent the Company from operating its assets; a decrease in cryptocurrency pricing, volume
of transaction activity or generally, the profitability of cryptocurrency mining; further improvements to profitability and efficiency
may not be realized; the digital currency market; the Company’s ability to successfully mine digital currency on the cloud; the
Company may not be able to profitably liquidate its current digital currency inventory, or at all; a decline in digital currency prices
may have a significant negative impact on the Company’s operations; the volatility of digital currency prices; and other related
risks as more fully set out in the Annual Information Form of the Company and other documents disclosed under the Company’s filings
at www.sedar.com. The forward-looking information in this news release reflects the current expectations, assumptions and/or beliefs of
the Company based on information currently available to the Company. In connection with the forward-looking information contained in this
news release, the Company has made assumptions about: the current profitability in mining cryptocurrency (including pricing and volume
of current transaction activity); profitable use of the Company’s assets going forward; the Company’s ability to profitably
liquidate its digital currency inventory as required; historical prices of digital currencies and the ability of the Company to mine digital
currencies on the cloud will be consistent with historical prices; and there will be no regulation or law that will prevent the Company
from operating its business. The Company has also assumed that no significant events occur outside of the Company's normal course of business.
Although the Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information
is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty
therein.
Exhibit 99.140
DIGIHOST ANNOUNCES 215 BITCOINS MINED IN THE
FIRST HALF OF 2021
Toronto, ON – July 6, 2021 – Digihost
Technology Inc. (“Digihost” or the “Company”) (TSXV: DGHI; OTCQB: HSSHF) is pleased to announce
that the Company has increased its mined Bitcoin (“BTC”) holdings during the month of June 2021 by 38.22 BTC, bringing
the Company’s total BTC balance to 351.36. During the first six months of 2021, Digihost mined a total of 215.24 BTC, with 109.98
BTC mined during Q2 2021 and 105.26 BTC mined during Q1 2021.
During the second quarter, the Company also received
BTC in consideration for the sale of older generation miners and used BTC to purchase Ethereum (“ETH”). At the end
of June 2021, the Company held a balance of 351.36 BTC and 563.89 ETH.
Digihost is also pleased to report that the Company
has continued to build on the momentum of the first quarter of 2021, and has achieved many more significant milestones during the second
quarter of 2021 in its evolution as a top tier blockchain technology company, including:
|
|
●
|
filed its Form 40-F with the U.S. Securities
and Exchange Commission, fulfilling a significant milestone for a listing on Nasdaq;
|
|
|
●
|
closed approximately $70 million in total equity
financings during the first half of 2021;
|
|
|
●
|
acquired 9,900 BTC miners from Northern Data
AG to increase Digihost’s hashrate by 925PH;
|
|
|
●
|
formed a strategic collaboration with Bit Digital
USA, Inc. to increase the Company’s combined hashrates by 400PH;
|
|
|
●
|
announced industry leading green energy consumption
with over 90% of the energy consumed by the Company originating from sources that create zero carbon emissions and more than 50% of the
energy consumed by the Company generated from renewable sources;
|
|
|
●
|
announced the launch of the DigiGreen initiative
to create sustainable, environmentally and economically sound in-house practices for BTC mining that will distinguish the Company as an
industry leader in maintaining profitability, while lowering or eliminating its carbon footprint;
|
|
|
●
|
became a signatory to the Crypto Climate Accord,
an initiative modeled on the Paris Climate Agreement, which aligns with the Company’s own DigiGreen initiative;
|
|
|
●
|
appointed a new Chief Renewable Energy Officer
to oversee the management of the Company’s DigiGreen initiative;
|
|
|
●
|
diversified the Company’s business strategy
to include ETH as part of its cryptocurrency holdings; and
|
|
|
●
|
engaged international audit firm Raymond Chabot
Grant Thornton LLP, and appointed a new CFO.
|
Michel Amar, the Company’s CEO, stated:
“We are extremely pleased to report the continued success achieved by Digihost during the second quarter of 2021. Having mined an
additional 110 BTC during the second quarter, we have increased the balance of BTC and ETH held by the Company to a total 351.36 BTC and
563.89 ETH at the end of June, which is a testament to our efficient operations and highly skilled operations team. While there can be
no guarantee of future market conditions, we are optimistic that our BTC output rate will increase considerably over the next several
months as a result of the recent and significant reduction in mining difficulty rates, combined with the delivery and deployment of our
recently acquired BTC miners. The significant milestones achieved during the second quarter of 2021 are an indication that as a company,
we continue to explore every opportunity to expand our BTC mining operations through the acquisition of new miners, vertical integration,
improved operational efficiencies, and ensuring that the Company is always in a position to attract the financial resources to achieve
these goals.”
About Digihost Technology Inc.
Digihost Technology Inc. is a growth-oriented
blockchain technology company primarily focused on Bitcoin mining. The Company's mining facilities are located in Upstate New York,
and are equipped with 78.7 MW of low-cost power with the option to expand to 102MW. The Company is currently hashing at a rate of 205
with potential to expand to a rate of 3EH upon the completion of the previously announced acquisition of a 60MW power plant.
For further information, please contact:
Digihost Technology Inc.
www.digihost.ca
Michel Amar, Chief Executive Officer
Email: michel@digihost.ca
Cautionary Statement
Trading in the securities of the Company should
be considered highly speculative. No stock exchange, securities commission or other regulatory authority has approved or disapproved the
information contained herein. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies
of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
Except for the statements of historical fact,
this news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking
information”) that is based on expectations, estimates and projections as at the date of this news release. Forward-looking information
in this news release includes information about listing on the Nasdaq, effectiveness of the Company’s Form 40-F, hashrate expansion,
diversification of operations, potential further improvements to profitability and efficiency across mining operations, potential for
the Company’s long-term growth, and the business goals and objectives of the Company. Factors that could cause actual results, performance
or achievements to differ materially from those described in such forward-looking information include, but are not limited to: risks relating
to the Nasdaq listing process, risks relating to the effectiveness of the Company’s Form 40-F, continued effects of the COVID19
pandemic may have a material adverse effect on the Company’s performance as supply chains are disrupted and prevent the Company
from operating its assets; a decrease in cryptocurrency pricing, volume of transaction activity or generally, the profitability of cryptocurrency
mining; further improvements to profitability and efficiency may not be realized; the digital currency market; the Company’s ability
to successfully mine digital currency on the cloud; the Company may not be able to profitably liquidate its current digital currency inventory,
or at all; a decline in digital currency prices may have a significant negative impact on the Company’s operations; the volatility
of digital currency prices; and other related risks as more fully set out in the Annual Information Form of the Company and other documents
disclosed under the Company’s filings at www.sedar.com. The forward-looking information in this news release reflects the current
expectations, assumptions and/or beliefs of the Company based on information currently available to the Company. In connection with the
forward-looking information contained in this news release, the Company has made assumptions about: the current profitability in mining
cryptocurrency (including pricing and volume of current transaction activity); profitable use of the Company’s assets going forward;
the Company’s ability to profitably liquidate its digital currency inventory as required; historical prices of digital currencies
and the ability of the Company to mine digital currencies on the cloud will be consistent with historical prices; and there will be no
regulation or law that will prevent the Company from operating its business. The Company has also assumed that no significant events occur
outside of the Company's normal course of business. Although the Company believes that the assumptions inherent in the forward-looking
information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should
not be put on such information due to the inherent uncertainty therein.
Exhibit
99.141
FORM 51-102F3
MATERIAL
CHANGE REPORT
|
|
Item
1
|
Name
and Address of Company
|
Digihost
Technology Inc. (formerly HashChain Technology Inc.)
18
King Street East, Suite 902
Toronto,
ON M5C 1C4
|
|
Item
2
|
Date
of Material Change
|
July
6, 2021
The
press release attached as Schedule “A” was released on July 6, 2021.
|
|
Item
4
|
Summary
of Material Change
|
The
material change is described in the press release attached as Schedule “A”.
|
|
Item
5
|
Full
Description of Material Change
|
The
material change is described in the press release attached as Schedule “A”.
|
|
Item
6
|
Reliance
of subsection 7.1(2) of National Instrument 51-102
|
Not
applicable.
|
|
Item
7
|
Omitted
Information
|
Not
applicable.
Inquires
in respect of the material change referred to herein may be made to: Michel Amar, Chief Executive Officer
T:
1-818-280-9758
E:
michelamar@me.com
July
6, 2021
SCHEDULE
“A”
DIGIHOST
ANNOUNCES 215 BITCOINS MINED IN THE FIRST HALF OF 2021
Toronto,
ON – July 6, 2021 – Digihost Technology Inc. (“Digihost” or the “Company”) (TSXV:
DGHI; OTCQB: HSSHF) is pleased to announce that the Company has increased its mined Bitcoin (“BTC”) holdings during
the month of June 2021 by 38.22 BTC, bringing the Company’s total BTC balance to 351.36. During the first six months of 2021, Digihost
mined a total of 215.24 BTC, with 109.98 BTC mined during Q2 2021 and 105.26 BTC mined during Q1 2021.
During
the second quarter, the Company also received BTC in consideration for the sale of older generation miners and used BTC to purchase Ethereum
(“ETH”). At the end of June 2021, the Company held a balance of 351.36 BTC and 563.89 ETH.
Digihost
is also pleased to report that the Company has continued to build on the momentum of the first quarter of 2021, and has achieved many
more significant milestones during the second quarter of 2021 in its evolution as a top tier blockchain technology company, including:
|
|
●
|
filed
its Form 40-F with the U.S. Securities and Exchange Commission, fulfilling a significant milestone for a listing on Nasdaq;
|
|
|
●
|
closed
approximately $70 million in total equity financings during the first half of 2021;
|
|
|
●
|
acquired
9,900 BTC miners from Northern Data AG to increase Digihost’s hashrate by 925PH;
|
|
|
●
|
formed
a strategic collaboration with Bit Digital USA, Inc. to increase the Company’s combined
hashrates by 400PH;
|
|
|
●
|
announced
industry leading green energy consumption with over 90% of the energy consumed by the Company originating from sources that create zero
carbon emissions and more than 50% of the energy consumed by the Company generated from renewable sources;
|
|
|
●
|
announced
the launch of the DigiGreen initiative to create sustainable, environmentally and economically sound in-house practices for BTC mining
that will distinguish the Company as an industry leader in maintaining profitability, while lowering or eliminating its carbon footprint;
|
|
|
●
|
became
a signatory to the Crypto Climate Accord, an initiative modeled on the Paris Climate
Agreement, which aligns with the Company’s own DigiGreen initiative;
|
|
|
●
|
appointed
a new Chief Renewable Energy Officer to oversee the management of the Company’s DigiGreen initiative;
|
|
|
●
|
diversified
the Company’s business strategy to include ETH as part of its cryptocurrency holdings; and
|
|
|
●
|
engaged
international audit firm Raymond Chabot Grant Thornton LLP, and appointed a new CFO.
|
Michel
Amar, the Company’s CEO, stated: “We are extremely pleased to report the continued success achieved by Digihost during the
second quarter of 2021. Having mined an additional 110 BTC during the second quarter, we have increased the balance of BTC and ETH held
by the Company to a total 351.36 BTC and 563.89 ETH at the end of June, which is a testament to our efficient operations and highly skilled
operations team. While there can be no guarantee of future market conditions, we are optimistic that our BTC output rate will increase
considerably over the next several months as a result of the recent and significant reduction in mining difficulty rates, combined with
the delivery and deployment of our recently acquired BTC miners. The significant milestones achieved during the second quarter of 2021
are an indication that as a company, we continue to explore every opportunity to expand our BTC mining operations through the acquisition
of new miners, vertical integration, improved operational efficiencies, and ensuring that the Company is always in a position to attract
the financial resources to achieve these goals.”
About
Digihost Technology Inc.
Digihost
Technology Inc. is a growth-oriented blockchain technology company primarily focused on Bitcoin mining. The Company's mining facilities
are located in Upstate New York, and are equipped with 78.7 MW of low-cost power with the option to expand to 102MW. The Company is currently
hashing at a rate of 205 with potential to expand to a rate of 3EH upon the completion of the previously announced acquisition of a 60MW
power plant.
For
further information, please contact:
Digihost
Technology Inc.
www.digihost.ca
Michel
Amar, Chief Executive Officer
Email:
michel@digihost.ca
Cautionary
Statement
Trading
in the securities of the Company should be considered highly speculative. No stock exchange, securities commission or other regulatory
authority has approved or disapproved the information contained herein. Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Forward-Looking
Statements
Except
for the statements of historical fact, this news release contains “forward-looking information” and “forward-looking
statements” (collectively, “forward-looking information”) that is based on expectations, estimates and projections
as at the date of this news release. Forward-looking information in this news release includes information about listing on the Nasdaq,
effectiveness of the Company’s Form 40-F, hashrate expansion, diversification of operations, potential further improvements to
profitability and efficiency across mining operations, potential for the Company’s long-term growth, and the business goals and
objectives of the Company. Factors that could cause actual results, performance or achievements to differ materially from those described
in such forward-looking information include, but are not limited to: risks relating to the Nasdaq listing process, risks relating to
the effectiveness of the Company’s Form 40-F, continued effects of the COVID19 pandemic may have a material adverse effect on the
Company’s performance as supply chains are disrupted and prevent the Company from operating its assets; a decrease in cryptocurrency
pricing, volume of transaction activity or generally, the profitability of cryptocurrency mining; further improvements to profitability
and efficiency may not be realized; the digital currency market; the Company’s ability to successfully mine digital currency on
the cloud; the Company may not be able to profitably liquidate its current digital currency inventory, or at all; a decline in digital
currency prices may have a significant negative impact on the Company’s operations; the volatility of digital currency prices;
and other related risks as more fully set out in the Annual Information Form of the Company and other documents disclosed under the Company’s
filings at www.sedar.com. The forward-looking information in this news release reflects the current expectations, assumptions and/or
beliefs of the Company based on information currently available to the Company. In connection with the forward-looking information contained
in this news release, the Company has made assumptions about: the current profitability in mining cryptocurrency (including pricing and
volume of current transaction activity); profitable use of the Company’s assets going forward; the Company’s ability to profitably
liquidate its digital currency inventory as required; historical prices of digital currencies and the ability of the Company to mine
digital currencies on the cloud will be consistent with historical prices; and there will be no regulation or law that will prevent the
Company from operating its business. The Company has also assumed that no significant events occur outside of the Company's normal course
of business. Although the Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking
information is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the
inherent uncertainty therein.
3
Exhibit
99.142
|
July 6, 2021
|
510
Burrard St, 3rd Floor
|
Vancouver
BC, V6C 3B9
www.computershare.com
To: All Canadian
Securities Regulatory Authorities
Subject:
DIGIHOST TECHNOLOGY INC.
Dear Sir/Madam:
We
advise of the following with respect to the upcoming Meeting of Security Holders for the subject Issuer:
|
Meeting Type :
|
Annual General
and Special Meeting (AMENDED)
|
|
Record Date for Notice of Meeting
:
|
June 28, 2021
|
|
|
Record Date for Voting (if applicable) :
|
June 28, 2021
|
|
|
Beneficial Ownership Determination Date :
|
June 28, 2021
|
|
|
Meeting Date :
|
August 09, 2021
|
|
|
Meeting Location (if available) :
|
Toronto, ON
|
|
|
Issuer sending proxy related materials directly
to NOBO:
|
No
|
|
|
Issuer paying for delivery to OBO:
|
No
|
|
Notice
and Access (NAA) Requirements:
|
NAA for Beneficial Holders
|
No
|
|
|
NAA for Registered Holders
|
No
|
|
Voting Security Details:
|
Description
|
CUSIP Number
|
ISIN
|
|
SUBORDINATE VOTING SHARES
|
25381D107
|
CA25381D1078
|
|
PROPORTIONATE VOTING CLASS
|
HSHQP0108
|
CAHSHQP01086
|
Sincerely,
Computershare
Agent for
DIGIHOST TECHNOLOGY INC.
Exhibit 99.143
DIGIHOST TECHNOLOGY INC.
18 King St. E, Suite 902
Toronto, ON
M5C 1C4
Telephone: 1-818-280-9758
NOTICE OF ANNUAL GENERAL AND SPECIAL
MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that
an annual general and special meeting (the “Meeting”) of the holders (the “Shareholders”) of
subordinate voting shares (“SV Shares”) and proportionate voting shares (“PV Shares”)
(together the “Shares”) of Digihost Technology Inc. (the “Corporation”) will be held at the
offices of Peterson McVicar LLP, 18 King St. E, Suite 902, Toronto, ON M5C 1C4 on August 9, 2021 at 10:00 a.m. (Toronto time) for
the following purposes, all as more particularly described in the enclosed management information circular (the
“Circular”):
|
|
1.
|
to receive and consider the audited consolidated financial statements of the Corporation for the financial
years ended December 31, 2020 and December 31, 2019 together with the auditor’s report thereon;
|
|
|
2.
|
to elect directors for the ensuing year;
|
|
|
3.
|
to appoint Raymond Chabot Grant Thornton LLP, as the auditors of the Corporation for the ensuing financial
year and to authorize the directors of the Company to fix their remuneration;
|
|
|
4.
|
to consider and, if deemed advisable, to pass, with or without variation, an ordinary resolution providing
the required annual approval of the Corporation’s 10% “rolling” stock option plan;
|
|
|
5.
|
to consider and, if deemed advisable, to pass, with or without variation, an ordinary resolution as set
forth in the accompany Circular, to approve the Corporation’s restricted share unit plan;
|
|
|
6.
|
to consider and, if deemed advisable, to pass, with or without variation, a special resolution to ratify,
confirm and approve an amendment to the Articles of the Corporation, in respect of the advance notice requirements for nominations of
directors by Shareholders in certain circumstances;
|
|
|
7.
|
to consider and, if deemed advisable, to pass, with or without variation, a special resolution to ratify,
confirm and approve an amendment to the Articles of the Corporation, in respect of the forum for complaints asserting a cause of action
under the U.S. Securities Act of 1933; and
|
|
|
8.
|
transacting such further and other business as may properly come before the Meeting or any adjournment
thereof.
|
The board of directors (the “Board”)
has fixed June 28, 2021 as the record date (the “Record Date”) for determining the Shareholders who are entitled to
receive notice of and vote at the Meeting. Only Shareholders whose names have been entered in the registers of the Corporation as at the
close of business on the Record Date will be entitled to receive notice of and vote at the Meeting.
In an effort to mitigate the risks
associated with COVID- 19, we are inviting Shareholders to participate in the Meeting by dialing in to our conference line at: Toronto
(+1) 416 764 8658 or Toll Free - North America (+1) 888 886 7786. Participants should dial in at least 10 minutes prior to the scheduled
start time and ask to join the call. Shareholders will have an equal opportunity to participate at the Meeting through this method regardless
of their geographic location. We encourage Shareholders to not attend the meeting in person due to risks related to COVID- 19. We will
also take additional precautionary measures in relation to the physical Meeting, limiting access to essential personnel, registered Shareholders
and proxy holders entitled to attend and vote at the Meeting. We highly recommend Shareholders vote their Shares prior to the Meeting.
Voting
All Shareholders may attend the Meeting
in or person or be represented by proxy. Shareholders who do not plan on attending the Meeting in person are requested to complete, date
and sign the enclosed form of proxy and return it in the envelope provided. A proxy or voting instruction form will not be valid
unless it is delivered to the Corporation’s registrar and transfer agent, Computershare Investor Services Inc., Proxy Department,
by any of the following methods: by mail addressed to 8th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1; by fax within North
America to 1-866- 249-7775 and outside North America to (312) 588-4290; by telephone to 1-866-732-VOTE (8683) for registered Shareholders,
1-866-734-VOTE (8683) for non-registered Shareholders and (312) 588-4291 for international Shareholders; or online at www.investorvote.com
not less than 48 hours, excluding Saturdays, Sundays and holidays, prior to the time of the Meeting or any adjournment thereof.
A “beneficial” or “non-registered”
Shareholder will not be recognized directly at the Meeting for the purposes of voting Shares registered in the name of his/her/its broker;
however, a beneficial Shareholder may attend the Meeting as proxyholder for the registered Shareholder and vote the Shares in that capacity.
Only Shareholders as of the Record Date are entitled to receive notice of and vote at the Meeting.
If you are a non-registered objecting
beneficial owner of Shares and have received these materials through your broker, custodian, nominee or other intermediary, please complete
and return the voting instruction form provided to you by your broker, custodian, nominee or other intermediary in accordance with the
instructions provided therein.
Notwithstanding the foregoing, the Chair
of the Meeting has the discretion to accept proxies received after such deadline.
Shareholders are reminded to review
the Circular before voting.
DATED this 28th day
of June, 2021.
|
|
BY ORDER OF THE BOARD OF DIRECTORS
|
|
|
|
|
|
(Signed) “Michel Amar”
|
|
|
|
|
|
Michel Amar
|
|
|
Chief Executive Officer and Chairman
|
Exhibit 99.144
DIGIHOST TECHNOLOGY INC.
NOTICE OF MEETING
AND
MANAGEMENT INFORMATION CIRCULAR
ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 9, 2021
DIGIHOST TECHNOLOGY INC.
18 King St. E, Suite 902
Toronto, ON
M5C 1C4
Telephone: 1-818-280-9758
NOTICE OF ANNUAL GENERAL AND SPECIAL MEETING
OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that an annual general
and special meeting (the “Meeting”) of the holders (the “Shareholders”) of subordinate voting shares
(“SV Shares”) and proportionate voting shares (“PV Shares”) (together the “Shares”)
of Digihost Technology Inc. (the “Corporation”) will be held at the offices of Peterson McVicar LLP, 18 King St. E,
Suite 902, Toronto, ON M5C 1C4 on August 9, 2021 at 10:00 a.m. (Toronto time) for the following purposes, all as more particularly described
in the enclosed management information circular (the “Circular”):
|
|
1.
|
to receive and consider the audited consolidated financial statements of the Corporation for the financial
years ended December 31, 2020 and December 31, 2019 together with the auditor’s report thereon;
|
|
|
2.
|
to elect directors for the ensuing year;
|
|
|
3.
|
to appoint Raymond Chabot Grant Thornton LLP, as the auditors of the Corporation for the ensuing financial
year and to authorize the directors of the Company to fix their remuneration;
|
|
|
4.
|
to consider and, if deemed advisable, to pass, with or without variation, an ordinary resolution providing
the required annual approval of the Corporation’s 10% “rolling” stock option plan;
|
|
|
5.
|
to consider and, if deemed advisable, to pass, with or without variation, an ordinary resolution as set
forth in the accompany Circular, to approve the Corporation’s restricted share unit plan;
|
|
|
6.
|
to consider and, if deemed advisable, to pass, with or without variation, a special resolution to ratify,
confirm and approve an amendment to the Articles of the Corporation, in respect of the advance notice requirements for nominations of
directors by Shareholders in certain circumstances;
|
|
|
7.
|
to consider and, if deemed advisable, to pass, with or without variation, a special resolution to ratify,
confirm and approve an amendment to the Articles of the Corporation, in respect of the forum for complaints asserting a cause of action
under the U.S. Securities Act of 1933; and
|
|
|
8.
|
transacting such further and other business as may properly come before the Meeting or any adjournment
thereof.
|
The board of directors (the “Board”)
has fixed June 28, 2021 as the record date (the “Record Date”) for determining the Shareholders who are entitled to
receive notice of and vote at the Meeting. Only Shareholders whose names have been entered in the registers of the Corporation as at the
close of business on the Record Date will be entitled to receive notice of and vote at the Meeting.
In an effort to mitigate the risks associated
with COVID- 19, we are inviting Shareholders to participate in the Meeting by dialing in to our conference line at: Toronto (+1) 416 764
8658 or Toll Free - North America (+1) 888 886 7786. Participants should dial in at least 10 minutes prior to the scheduled start time
and ask to join the call. Shareholders will have an equal opportunity to participate at the Meeting through this method regardless of
their geographic location. We encourage Shareholders to not attend the meeting in person due to risks related to COVID-19. We will also
take additional precautionary measures in relation to the physical Meeting, limiting access to essential personnel, registered Shareholders
and proxy holders entitled to attend and vote at the Meeting. We highly recommend Shareholders vote their Shares prior to the Meeting.
Voting
All Shareholders may attend the Meeting in
or person or be represented by proxy. Shareholders who do not plan on attending the Meeting in person are requested to complete, date
and sign the enclosed form of proxy and return it in the envelope provided. A proxy or voting instruction form will not be valid unless
it is delivered to the Corporation’s registrar and transfer agent, Computershare Investor Services Inc., Proxy Department, by any
of the following methods: by mail addressed to 8th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1; by fax within North America
to 1-866- 249-7775 and outside North America to (312) 588-4290; by telephone to 1-866-732-VOTE (8683) for registered Shareholders, 1-866-734-VOTE
(8683) for non-registered Shareholders and (312) 588-4291 for international Shareholders; or online at www.investorvote.com not less than
48 hours, excluding Saturdays, Sundays and holidays, prior to the time of the Meeting or any adjournment thereof.
A “beneficial” or “non-registered”
Shareholder will not be recognized directly at the Meeting for the purposes of voting Shares registered in the name of his/her/its broker;
however, a beneficial Shareholder may attend the Meeting as proxyholder for the registered Shareholder and vote the Shares in that capacity.
Only Shareholders as of the Record Date are entitled to receive notice of and vote at the Meeting.
If you are a non-registered objecting beneficial
owner of Shares and have received these materials through your broker, custodian, nominee or other intermediary, please complete and return
the voting instruction form provided to you by your broker, custodian, nominee or other intermediary in accordance with the instructions
provided therein.
Notwithstanding the foregoing, the Chair of the
Meeting has the discretion to accept proxies received after such deadline.
Shareholders are reminded to review the Circular
before voting.
DATED this 28th day of June, 2021.
|
|
BY ORDER OF THE BOARD OF DIRECTORS
|
|
|
|
|
|
(Signed) “Michel Amar”
|
|
|
|
|
|
Michel Amar
|
|
|
Chief Executive Officer and Chairman
|
DIGIHOST TECHNOLOGY INC.
MANAGEMENT INFORMATION CIRCULAR
SOLICITATION OF PROXIES BY MANAGEMENT
This management information circular (the “Circular”)
is furnished in connection with the solicitation by the management of Digihost Technology Inc. (the “Corporation”)
of proxies to be used at the annual and special meeting (the “Meeting”) of the holders (the “Shareholders”)
of subordinate voting shares (“SV Shares”) and proportionate voting shares (“PV Shares”) (together
the “Shares”) of the Corporation to be held at 18 King St. E., Suite 902, Toronto, Ontario, M5C 1C4 on August 9, 2021,
at 10:00 a.m. (Toronto time) for the purposes set forth in the notice of annual and special meeting dated June 28, 2021 (the “Notice
of Meeting”). References in the Circular to the Meeting include any adjournment(s) or postponement(s) thereof. It is expected
that the solicitation of proxies will be primarily by mail, however, proxies may also be solicited by the officers, directors and employees
of the Corporation by telephone, electronic mail, telecopier or personally. These persons will receive no compensation for such solicitation
other than their regular fees or salaries. All costs of solicitation by management will be borne by the Corporation.
APPOINTMENT OF PROXYHOLDER
The individuals named as proxyholders in the accompanying
form of proxy are directors and/or officers of the Corporation. A REGISTERED SHAREHOLDER WISHING TO APPOINT SOME OTHER PERSON (WHO
NEED NOT BE A SHAREHOLDER) TO REPRESENT HIM OR HER AT THE MEETING HAS THE RIGHT TO DO SO, EITHER BY STRIKING OUT THE NAMES OF THOSE PERSONS
NAMED IN THE ACCOMPANYING FORM OF PROXY AND INSERTING THE DESIRED PERSON’S NAME IN THE BLANK SPACE PROVIDED IN THE FORM OF PROXY
AND SIGNING AND DATING THE PROXY, OR BY COMPLETING ANOTHER FORM OF PROXY. A proxy will not be valid unless the completed form of proxy
is received by Computershare before 5:00 pm (Toronto time) on August 5, 2021 or, with respect to any matters to be dealt with at any adjournment
of the Meeting, before the time of the re-commencement of the adjourned Meeting. Proxies delivered after such time(s) may not be accepted.
REVOCATION OF PROXIES
A Shareholder who has given a proxy may revoke
it prior to its use by an instrument in writing executed by the Shareholder or by his attorney duly authorized in writing or, where the
Shareholder is a corporation, by a duly authorized officer or attorney of such corporation, and delivered to the registered office of
the Corporation, at 18 King St. E., Suite 902, Toronto, Ontario, M5C 1C4 (Attention: Chief Financial Officer) at any time up to and including
the last business day preceding the day of the Meeting, or if adjourned, preceding any reconvening thereof, or to the Chair of the Meeting
on the day of the Meeting or, if adjourned, any reconvening thereof, or in any other manner provided by law. A revocation of a proxy does
not affect any matter on which a vote has been taken prior to the revocation.
VOTING OF PROXIES
The Shares represented by a properly executed
proxy in favour of persons designated as proxyholders in the enclosed form of proxy will: (a) be voted or withheld from voting in accordance
with the instructions of the person appointing the proxyholder on any ballot that may be called for; and (b) where a choice with respect
to any matter to be acted upon has been specified in the form of proxy, be voted in accordance with the specifications made on such proxy.
SUCH SHARES WILL BE VOTED IN FAVOUR OF EACH MATTER FOR WHICH NO CHOICE HAS BEEN SPECIFIED, OR WHERE BOTH CHOICES HAVE BEEN SPECIFIED,
AS DIRECTED BY THE SHAREHOLDER.
The enclosed form of proxy, when properly completed
and delivered and not revoked, confers discretionary authority upon the person appointed proxyholder thereunder to vote with respect to
amendments or variations of matters identified in the notice of Meeting, and with respect to any other matters which may properly come
before the Meeting. In the event that amendments or variations to matters identified in the notice of Meeting are properly brought before
the Meeting or any further or other business is properly brought before the Meeting, it is the intention of the persons designated by
management as proxyholders in the enclosed form of proxy to vote in accordance with their best judgment on such matters or business. At
the time of the printing of this Circular, the management of the Corporation knows of no such amendment, variation or other matter that
may be presented to the Meeting. However, if any other matters which are not now known to the management should properly come before the
Meeting, the proxies hereby solicited will be exercised on such matters in accordance with the best judgment of the nominee.
GENERAL INFORMATION RESPECTING THE MEETING
No person has been authorized to give any information
or make any representations in connection with the matters being considered herein other than those contained in this Circular and, if
given or made, any such information or representations should be considered not to have been authorized by the Corporation. This Circular
does not constitute the solicitation of a proxy by any person in any jurisdiction in which such solicitation is not authorized or in which
the person making such solicitation is not qualified to do so or to any person to whom it is unlawful to make such solicitation.
In light of the global pandemic caused by COVID-19,
the Corporation is inviting Shareholders to participate in the Meeting by dialing in to our conference line at: Toronto(+1) 416 764 8658
or Toll Free - North America(+1) 888 886 7786. Participants should dial in at least 10 minutes prior to the scheduled start time and ask
to join the call. Shareholders will have an equal opportunity to participate at the Meeting through this method regardless of their geographic
location. We encourage Shareholders to not attend the meeting in person due to risks related to COVID-19. We highly recommend Shareholders
vote their Shares prior to the meeting and do not physically attend the meeting.
References in this Circular to the Meeting include
any adjournment(s) or postponement(s) thereof.
In this Circular, unless otherwise indicated,
all dollar amounts “$” are expressed in Canadian dollars.
Except where otherwise indicated, the information
contained herein is stated as of June 28, 2021.
Shareholders are reminded to review this Circular
before voting.
Notice to Beneficial Holders of Shares
Only registered Shareholders or proxyholders
duly appointed by registered Shareholders are permitted to vote at the Meeting. Most Shareholders of the Corporation are “non-registered”
shareholders because the Shares they own are not registered in their names but are instead registered in the name of a brokerage firm,
bank or other intermediary or in the name of a clearing agency. Shareholders who do not hold their Shares in their own name (referred
to herein as “Beneficial Shareholders”) should note that only registered Shareholders are entitled to vote at the Meeting.
If Shares are listed in an account statement provided to a Shareholder by a broker, then in almost all cases those Shares will not be
registered in such Shareholder’s name on the records of the Corporation. Such Shares will more likely be registered under the name
of the Shareholder’s broker or an agent of that broker. In Canada, the vast majority of such Shares are registered under the name
of CDS & Co. (the registration name for CDS Clearing and Depositary Services Inc., which company acts as nominee for many Canadian
brokerage firms). In the United States, the vast majority of such shares are registered under the name of Cede & Co. as nominee for
The Depository Trust Company (which acts as depositary for many U.S. brokerage firms and custodian banks). Shares held by brokers (or
their agents or nominees) on behalf of a broker’s client can only be voted (for or against resolutions) at the direction of the
Beneficial Shareholder. Without specific instructions, brokers and their agents and nominees are prohibited from voting Shares for the
brokers’ clients. Therefore, each Beneficial Shareholder should ensure that voting instructions are communicated to the appropriate
person well in advance of the Meeting.
Regulatory policy requires brokers and other intermediaries
to seek voting instructions from Beneficial Shareholders in advance of Shareholders’ meetings. The various brokers and other intermediaries
have their own mailing procedures and provide their own return instructions to clients, which should be carefully followed by Beneficial
Shareholders in order to ensure that their Shares are voted at the Meeting. Often the form of proxy supplied to a Beneficial Shareholder
by its broker is identical to the form of proxy provided by the Corporation to the registered Shareholders. However, its purpose is limited
to instructing the registered Shareholder (i.e. the broker or agent of the broker) how to vote on behalf of the Beneficial Shareholder.
The majority of brokers now delegate the responsibility for obtaining instructions from clients to Broadridge Financial Solutions Inc.
(“Broadridge”). Broadridge typically prepares a machine-readable voting instruction form, mails those forms to the
Beneficial Shareholders and asks Beneficial Shareholders to return the forms to Broadridge, or otherwise communicate voting instructions
to Broadridge (by way of the internet or telephone, for example). Broadridge then tabulates the results of all instructions received and
provides appropriate instructions respecting the voting of Shares to be represented at the Meeting. A Beneficial Shareholder who receives
a Broadridge voting instruction form cannot use that form to vote Shares directly at the Meeting. The voting instruction form must be
returned to Broadridge (or instructions respecting the voting of Shares must be communicated to Broadridge well in advance of the Meeting)
in order to have the Shares voted.
The Notice-and-Access Notification is being sent
to both registered Shareholders and Beneficial Shareholders. Beneficial Shareholders fall into two categories – those who object
to their identity being known to the issuers of securities which they own (“Objecting Beneficial Owners”, or “OBOs”)
and those who do not object to their identity being made known to the issuers of the securities they own (“Non-Objecting Beneficial
Owners”, or “NOBOs”). Subject to the provisions of NI 54-101, issuers may request and obtain a list of their
NOBOs from intermediaries via their transfer agents. If you are a Beneficial Shareholder, and the Corporation or its agent has sent these
materials directly to you, your name, address and information about your holdings of Shares have been obtained in accordance with applicable
securities regulatory requirements from the intermediary holding the Shares on your behalf.
The Corporation’s OBOs can expect to be
contacted by Broadridge or their broker or their broker’s agents as set out above.
Although Beneficial Shareholders may not be recognized
directly at the Meeting for the purposes of voting Shares registered in the name of their broker, a Beneficial Shareholder may attend
the Meeting as proxyholder for the registered Shareholder and vote the Shares in that capacity. Beneficial Shareholders who wish to
attend the Meeting and indirectly vote their Shares as proxyholder for the registered Shareholder should enter their own names in the
blank space on the proxy or voting instruction card provided to them and return the same to their broker (or the broker’s agent)
in accordance with the instructions provided by such broker.
All references to Shareholders in this Circular
and the accompanying form of proxy and notice of Meeting are to registered
Shareholders unless specifically stated otherwise.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE
ACTED UPON
No person who has been a director or an officer
of the Corporation at any time since the beginning of its last completed financial year, no proposed nominee for election as a director
of the Corporation nor any associate of any such director, director nominee or officer has any material interest, direct or indirect,
by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting, except as otherwise disclosed
in this Circular.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The Corporation has fixed the close of business
on June 28, 2021 (the “Record Date”) as the record date. Shareholders whose names have been entered in the register
of Shareholders at the close of business on the Record Date will be entitled to receive notice of, and to vote, at the Meeting or any
adjournments or postponements thereof. Persons registered on the books of the Corporation at the close of business on the Record Date
and persons who are transferees of any Shares acquired after such record date and who have produced properly endorsed certificates evidencing
such Shares or who otherwise establish ownership thereof and demand, not later than 10 days before the Meeting, that their names be included
in the list of Shareholders, are entitled to vote at the Meeting.
The authorized capital of the Corporation consists
of an unlimited number of SV Shares and PV Shares. As of the date hereof, there are 74,940,683 SV Shares and 10,000 PV Shares issued and
outstanding. PV Shares are not available for distribution to the public. PV Shares may be converted into SV Shares at a ratio of 200 SV
Shares for every 1 PV Share. Each holder of SV Shares is entitled to receive notice of and to attend all meeting of shareholders of the
Company. Each SV Share carries the right to one (1) vote on any matter properly coming before the Meeting. Each PV Share carries the right
to two-hundred (200) votes on any matter properly coming before the Meeting. In aggregate, and as of the date of the Circular, holders
of SV Shares hold 97.4% of the voting rights attached to the Shares, and holders of PV Shares hold 2.6% of the voting rights attached
to the Shares. Holders of PV Shares are entitled to convert each PV Share held into two- hundred (200) SV Share.
To the knowledge of the directors and executive
officers of the Corporation, as of the date hereof, no person or company beneficially owns, controls or directs, directly or indirectly,
voting securities of the Corporation carrying 10% or more of the voting rights attached to all outstanding Shares, other than as set out
below:
|
Name of Shareholder
|
|
Class of
Security
|
|
Number of
Shares (1)(2)
|
|
|
Percentage of
SV or PV
Shares (1)(2)
|
|
|
Percentage of
Total Votes
Attaching to
the Shares
|
|
|
Michel Amar
|
|
SV Shares
|
|
|
14,411,788
|
|
|
|
19.23
|
(3)
|
|
|
21.33
|
|
|
|
|
PV Shares
|
|
|
10,000
|
|
|
|
100
|
(4)
|
|
|
|
|
Notes:
|
|
(1)
|
The information as to Shares beneficially owned, controlled or directed, not being within the knowledge
of the Corporation, has been obtained by the Corporation by the Shareholder listed above.
|
|
|
(2)
|
On a non-diluted basis.
|
|
|
(3)
|
Denotes percentage of SV Shares.
|
|
|
(4)
|
Denotes percentage of PV Shares.
|
PARTICULARS OF MATTERS TO BE ACTED UPON
To the knowledge of the board of directors of
the Corporation (the “Board”), the only matters to be brought before the Meeting are those matters set forth in the
accompanying Notice of Meeting.
|
|
1.
|
Receipt of Financial Statements
|
The financial statements of the Corporation for
the fiscal years ended December 31, 2020 and December 31, 2019, and the report of the auditors thereon, will be submitted to the Meeting.
Receipt at the Meeting of the auditor’s report and the Corporation’s audited financial statements for the fiscal years ended
December 31, 2020 and December 31, 2019 and will not constitute approval or disapproval of any matters referred to therein.
The Corporation’s articles provide that
the Board will consist of a minimum of three and a maximum of ten directors.
At the Meeting, the Shareholders will be asked
to consider, and, if thought fit, approve with or without variation a resolution re-electing five (5) current members of the Board, namely
Michel Amar, Alec Amar, Adam Rossman, Manish Kshatriya and Donald Christie. It is intended that each of the directors will hold office
until the next annual meeting of Shareholders or until his or her successor is elected or appointed, unless such office is earlier vacated
in accordance with the provisions of the Business Corporations Act (British Columbia) (the “BCBCA”). In order
to be effective, this resolution requires the approval of not less than 50% of the votes cast by Shareholders represented at the Meeting
in person or by proxy.
Shareholders have the option to (i) vote for all
of the directors of the Corporation listed in the table below; (ii) vote for some of the directors and withhold for others; or (iii) withhold
for all of the directors. Unless otherwise instructed, proxies and voting instructions given pursuant to this solicitation by the management
of the Corporation will be voted FOR the election of each of the proposed nominees set forth in the table below.
Management has no reason to believe that any of
the nominees will be unable to serve as a director. However, if any proposed nominee is unable to serve as a director, the individuals
named in the enclosed form of proxy will be voted in favour of the remaining nominees, and may be voted in favour of a substitute nominee
unless the Shareholder has specified in the proxy that the Shares represented thereby are to be withheld from voting in respect of the
election of directors.
The following table states the name of each person
nominated by management for election as directors, such person’s principal occupation or employment, period of service as a director
of the Corporation, and the approximate number of voting securities of the Corporation that such person beneficially owns, or over which
such person exercises direction or control:
|
Name, and Province and Country of Residence
|
|
Principal
Occupation During the Last Five Years(1)
|
|
Director Since
|
|
Shares
Owned or
Controlled (1)
|
Michel
Amar(3)
Los Angeles, California
|
|
Chief Executive Officer and Chairman of the Corporation (2020 to present); President, NYAM LLC (2016 to present)
|
|
February 14, 2020
|
|
14,411,788 SV Shares
10,000 PV Shares
|
|
Name, and Province and Country of Residence
|
|
Principal
Occupation During the Last Five Years(1)
|
|
Director Since
|
|
Shares
Owned or
Controlled(1)
|
Alec
Amar(2)
Los Angeles, California
|
|
President and Director of the Corporation (2020 to present); President, Bit.Management, LLC (2018 to present)
|
|
February 14, 2020
|
|
149,102 SV Shares
|
Adam
Rossman(2)
Los Angeles, California
|
|
Business and real estate attorney and a member of the California Bar since 1995.
|
|
February 14, 2020
|
|
44,238 SV Shares
|
Manish Kshatriya
Toronto, Ontario
|
|
Managing Director, MZK Advisors Inc. (2016 to present); President, CEO and CFO, Liberty Silver Corp. (2014 to 2016)
|
|
February 14, 2020
|
|
25,000 SV Shares
|
Donald
Christie(2)
Toronto, Ontario
|
|
CEO, President and Director, Rockcliff Metals Corporation (2021 to present); CEO, President and Director, Norvista Capital Corporation (2011 to 2021)
|
|
February 14, 2020
|
|
250,000 SV Shares
|
Notes:
|
|
(1)
|
Information about principal occupation, business or employment and number of Shares beneficially owned,
directly or indirectly, or over which control or direction is exercised, not being within the knowledge of the Corporation, has been furnished
by respec tive persons set forth above.
|
|
|
(2)
|
Member of the Audit Committee.
|
|
|
(3)
|
1,879,633 SV Shares controlled by Michel Amar are held through Bit Mining International LLC and 6,497,669
SV Shares controlled by Michel Amar are held through Bit.Management, LLC. 4,479,486 SV Shares and 10,000 PV Shares controlled by Michel
Amar are held through NYAM, LLC.
|
Biographical Notes for Directors
Michel Amar
Mr. Amar is a French-American businessman and
entrepreneur known for his success in innovative technology, such as blockchain and electronics, as well as developing branded fashion.
With a Bachelor’s degree in accounting and business management, Mr. Amar has worked and consulted with some of the most famous international
brands, playing a vital role in their profitability and continued relevance. In 2019, Mr. Amar partnered with Brookstone, a novelty retailer,
in developing exclusive, technologically advanced products for their consumer electronics market.
Alec Amar
Mr. Amar is an entrepreneur who has achieved success
in both product development and licensing, as well as blockchain solutions. After graduating from the University of Southern California
with a degree in economics and digital entrepreneurship, Mr. Amar devised and headed a blockchain operation, building out highly efficient
and productive mining facilities. In addition to blockchain success, Mr. Amar’s product licensing company, MAT, a versatile R&D
incubator, has partnered with notable brands such as Brookstone, in developing innovative electronics. As one of the sole licensees of
Brookstone, Mr. Amar is actively curating a collection of intelligent, proprietary consumer electronics.
Adam S. Rossman
Mr. Rossman is a business and real estate attorney.
He is a member of the California Bar since 1995. Mr. Rossman has handled transactions throughout the United States relating to commercial
real estate and trademark licensing. Mr. Rossman maintains offices in Beverly Hills, CA. Mr. Rossman received his JD from Loyola Law School,
Los Angeles in 1994, a MA in Rhetoric in 1990 and a BA in Rhetoric in 1988 both from University of California at Berkeley.
Manish Kshatriya
Mr. Kshatriya currently serves as the managing
director of MZK Advisors Inc., a private business advisory firm providing executive management, governance and compliance oversight, and
capital markets advisory services to small and mid-market private and publicly listed companies. He has over 20 years of progressive experience
in corporate finance, accounting, taxation and auditing obtained in public accounting practice and industry. From January 2012 until October
2016, Mr. Kshatriya was the Chief Financial Officer of Liberty Silver Corp. and from December 2014 until October 2016 was also Director,
President and Chief Executive Officer. From January 2006 until October 2011, Mr. Kshatriya worked for Augen Capital Corp., a Toronto based,
Canadian listed mining merchant bank where he served as both the Director of Finance, and most recently the Chief Financial Officer. Mr.
Kshatriya has also served as Chief Financial Officer or senior financial executive for various other private and publicly listed companies
in the mineral resource sector. Mr. Kshatriya earned his Bachelor’s degree in Administrative Studies, with Honours in Accounting
and Finance, from York University in Toronto, CA. He is a Chartered Professional Accountant (Chartered Accountant) and a member of the
Institute of Chartered Professional Accountants of Ontario.
Donald Christie
Mr. Christie has 25 years of experience in the
Canadian financial services industry having worked in investment banking with TD Securities Inc. and Newcourt Capital Inc. Mr. Christie
entered the resource sector in 2008 where he served as CFO of Continental Gold Limited from early 2008 to December 2010. Mr. Christie
served as CFO and Director of Calvista Gold Corporation and Solvista Gold Corporation from 2011 to 2015. Mr. Christie served as CEO and
a Director of Norvista Capital Corporation from 2015 to 2021. Mr. Christie is the CEO, President and a director of Rockclilff Metals Corporation,
Chairman of the Audit Committee of Northern Graphite Corporation, and the CFO and a Director of Nevada Zinc Corporation. Mr. Christie
holds a Bachelor of Commerce Honours degree from Queen’s University and received his Chartered Public Accountant designation while
working for PricewaterhouseCoopers LLP.
Corporate Cease Trade Orders, Bankruptcies,
Penalties or Sanctions
No proposed director of the Corporation is, as
at the date of this Circular is, or within the 10 years prior to the date of this Circular, other than as listed below, has been, a director,
chief executive officer or chief financial officer, of any company (including the Corporation) that:
|
|
(a)
|
while that person was acting in that capacity was subject to:
|
|
|
(i)
|
a cease trade order (including any management cease trade order which applied to directors or executive
officers of a company, whether or not the person is named in the order), or
|
|
|
(ii)
|
an order similar to a cease trade order, or
|
|
|
(iii)
|
an order that denied the relevant company access to any exemption under securities legislation,
|
that was in effect for a period of more
than 30 consecutive days (an “Order”); or
|
|
(b)
|
was subject to an Order that was issued after the director or executive officer ceased to be a director,
chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the
capacity as director, chief executive officer or chief financial officer.
|
No proposed director of the Corporation (or any
personal holding company of any such individual) is, or within the 10 years prior to the date of this Circular has:
|
|
(a)
|
been a director or executive officer of any corporation that, while that person was acting in that capacity,
or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy
or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver manager or trustee
appointed to hold its assets; or
|
|
|
(b)
|
become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become
subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed
to hold the assets such individual.
|
No proposed director of the Corporation (or any
personal holding company of any such individual) has been subject to any penalties or sanctions imposed by a court relating to securities
legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority;
or any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor
in making an investment decision.
|
|
3.
|
Appointment of Auditors
|
Raymond Chabot Grant Thornton LLP (“RCGT”)
are the independent registered certified auditors of the Corporation. RCGT was first appointed as auditor of the Corporation on April
12, 2021. Management of the Corporation intends to nominate RCGT for reappointment as auditors of the Corporation.
At the Meeting, Shareholders will be asked to
consider and, if thought advisable, to pass an ordinary resolution to re- appoint RCGT to serve as auditors of the Corporation until the
next annual meeting of Shareholders and to authorize the directors of the Corporation to fix their remuneration as such. To be adopted,
this resolution is required to be passed by the affirmative vote of a majority of the votes cast at the Meeting.
Unless the Shareholder has specifically instructed
that his or her Shares are to be withheld from voting in connection with the appointment of RCGT, the persons named in the accompanying
proxy intend to vote FOR the re-appointment of RCGT as the auditors of the Corporation to hold office until the next annual meeting of
Shareholders or until a successor is appointed, and to authorize the Board to fix their remuneration.
|
|
4.
|
Approval of Stock Option Plan
|
The Corporation maintains a share incentive plan
(the “Stock Option Plan”), which was last approved by Shareholders at a meeting held on January 14, 2020. The Stock
Option Plan is a rolling stock option plan that sets the number of SV Shares issuable thereunder at a maximum of 10% of the Shares issued
and outstanding at the time of any grant.
Pursuant to TSX Venture Exchange (“TSXV”)
policies, a TSXV-listed issuer is required to obtain the approval of its shareholders for a “rolling” stock option plan at
each annual meeting of shareholders. Accordingly, at the Meeting, Shareholders will be asked to approve an ordinary resolution to approve
the Stock Option Plan for the ensuing year.
The Stock Option Plan provides that the Board
may from time to time, in its discretion, grant to directors, officers, employees and consultants of the Corporation, or any subsidiary
of the Corporation, the option to purchase SV Shares. The Stock Option Plan provides for a floating maximum limit of 10% of the outstanding
Shares as permitted by the policies of the TSXV. As at the date hereof, options to purchase a total of 7,345,491 SV Shares have been issued
to eligible participants under the Stock Option Plan and remain outstanding. As at the date hereof, the number of SV Shares remaining
available for issuance under the Stock Option Plan is 148,577.
For a summary of the Stock Option Plan, please
see “Statement of Executive Compensation – Stock Option Plan”. The full text of the Stock Option Plan will be
supplied free of charge to any Shareholder upon written request made directly to the Corporation at its registered head office located
at 18 King St. E, Suite 902, Toronto, ON M5C 1C4, telephone: 1-818-280-9758.
Shareholder Approval of the Stock Option
Plan
At the Meeting, Shareholders will be asked to
consider and, if deemed advisable, to pass an ordinary resolution re- approving the Stock Option Plan (the “Stock Option Plan
Resolution”), which, to be effective, pursuant to TSXV policies, must be passed by not less than a majority of the votes cast
by disinterested Shareholders at the Meeting.
The text of the Stock Option Plan Resolution is
as follows:
“BE IT HEREBY RESOLVED that:
|
|
1.
|
the stock option plan of the Corporation, as described in the Management Information Circular of the Company
dated June 28, 2021, be and the same is hereby ratified, confirmed and approved as the stock option plan of the Company;
|
|
|
2.
|
any director or officer be and is hereby authorized to amend the stock option plan of the Company should
such amendments be required by applicable regulatory authorities including, but not limited to, the TSX Venture Exchange; and
|
|
|
3.
|
any one director or officer of the Company be and is hereby authorized and directed to do all such things
and to execute and deliver all documents and instruments as may be necessary or desirable to carry out the terms of this resolution.”
|
The Board recommends that Shareholders vote
FOR the Stock Option Plan Resolution. Unless the Shareholder has specifically instructed in the form of proxy or voting instruction form
that the Shares represented by such proxy or voting instruction form are to be voted against the Stock Option Plan Resolution, the persons
named in the proxy or voting instruction form will vote FOR the Stock Option Plan Resolution.
|
|
5.
|
Approval of Restricted Share Unit Plan
|
The Board approved a restricted share unit plan
(the “RSU Plan”) for the Corporation on June 28, 2021.
The purpose of the restricted share unit plan
(the “RSU Plan”) is to attract and retain highly qualified officers, directors, key employees, consultants and other
persons, and to motivate such officers, directors, key employees, consultants and other persons to serve the Corporation and its affiliates
(“Affiliates”) and to expend maximum effort to improve the business results and earnings of the Corporation, by providing
to such persons an opportunity to acquire or increase a direct proprietary interest in the operations and future success of the Corporation.
To this end, the Plan provides for the grant of restricted share units (“RSUs”). Any of these awards of the RSUs may,
but need not, be made as performance incentives to reward attainment of annual or long-term performance goals in accordance with the terms
hereof (as such performance goals are specified in the Award Agreement). The RSU Plan is intended to complement the Corporation’s
stock option plan (the “Stock Option Plan”) by allowing the Corporation to offer a broader range of incentives to diversify
and customize the rewards for management and staff to promote long term retention.
The RSU Plan provides that the Board may from
time to time, in its discretion, grant to directors, officers, employees and consultants of the Corporation, or any subsidiary of the
Corporation, RSUs. The RSU Plan provides for a fixed maximum limit of 7,494,068 of the outstanding SV Shares as permitted by the policies
of the TSXV. At the time a grant (“Grant Date”) of RSUs is made, the Board may, in its sole discretion, establish a
period of time (a “Vesting Period”) applicable to such RSUs. Each Award of RSUs may be subject to a different Vesting
period. The Board may, in its sole discretion, at the time a grant of RSUs is made, prescribe restrictions in addition to or other than
the expiration of the Vesting Period. Notwithstanding the foregoing, (i) RSUs that vest solely by the passage of time shall not vest in
full in less than three (3) years from the Grant Date; (ii) RSUs for which vesting may be accelerated by achieving performance targets
shall not vest in full in less than one (1) year from the Grant Date; and (iii) RSUs granted to outside directors vest, (a) at the election
of an outside director at the time the award is granted, within a minimum of one (1) year to a maximum of three (3) years following the
Grant Date, as such outside director may elect, and (b) if no election is made, upon the earlier of a change of control.
As of the date of this circular, no RSUs have
been issued to employees and consultants of the Corporation. As at the date hereof, the number of SV Shares remaining available for issuance
under the Plan is 7,494,068.
The full text of the RSU Plan is attached hereto
as Schedule “B”.
Shareholder Approval for the Plan
At the Meeting, disinterested Shareholders will
be asked to consider and, if deemed advisable, to pass an ordinary resolution ratifying and approving the RSU Plan (the “RSU
Plan Resolution”), which, to be effective, pursuant to TSXV policies, must be passed by not less than a majority of the votes
cast by disinterested Shareholders at the Meeting.
The text of the RSU Plan Resolution is as follows:
“BE IT RESOLVED as an ordinary resolution
that:
|
|
4.
|
the RSU Plan, substantially in the form attached as Schedule “B” to this information circular
be, and is hereby, ratified, affirmed and approved;
|
|
|
5.
|
the form of the RSU Plan may be amended in order to satisfy the requirements or requests of any regulatory
authorities or stock exchange without requiring further approval of the shareholders of the Corporation;
|
|
|
6.
|
any one director or officer of the Corporation is hereby authorized and directed for and on behalf of
the Corporation to execute or cause to be executed and to deliver or cause to be delivered all such documents, and to do or cause to be
done all such acts and things, as such director or officer may deem necessary or desirable in connection with the foregoing resolution.”
|
The Board recommends that Shareholders vote
FOR the RSU Plan Resolution. Unless the Shareholder has specifically instructed in the form of proxy or voting instruction form that the
Shares represented by such proxy or voting instruction form are to be voted against the RSU Plan Resolution, the persons named in the
proxy or voting instruction form will vote FOR the RSU Plan Resolution.
|
|
6.
|
Approval of Advance Notice Provisions
|
The directors of the Corporation are proposing
that the Articles of the Corporation be altered to include the advance notice provisions (the “Advance Notice Provisions”),
which will: (i) facilitate orderly and efficient annual general or, where the need arises, special, meetings; (ii) ensure that all Shareholders
receive adequate notice of the director nominations and sufficient information with respect to all nominees; and (iii) allow Shareholders
to register an informed vote. The full text of the proposed alteration of the Articles to include the Advance Notice Provisions is set
out in Schedule “C” to this Circular.
Purpose of the Advance Notice Provisions
The purpose of the Advance Notice Provisions is
to provide shareholders, directors and management of the Corporation with direction on the procedure for shareholder nomination of directors.
The Advance Notice Provisions are the framework by which the Corporation seeks to fix a deadline by which Shareholders must submit director
nominations to the Corporation prior to any annual or special meeting of Shareholders and sets forth the information that a Shareholder
must include in the notice to the Company for the notice to be in proper written form.
Effect of the Advance Notice Provisions
Subject only to the BCBCA and the Articles, only
persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation.
Nominations of persons for election to the Board may be made at any annual meeting of Shareholders, or at any special meeting of Shareholders
if one of the purposes for which the special meeting was called was the election of directors: (a) by or at the direction of the Board,
including pursuant to a notice of meeting; (b) by or at the direction or request of one or more Shareholders pursuant to a proposal made
in accordance with the provisions of the BCBCA, or a requisition of the shareholders made in accordance with the provisions of the BCBCA;
or (c) by any person (a “Nominating Shareholder”): (A) who, at the close of business on the date of the giving of the
Notice provided for below in the Advance Notice Provisions and on the record date for notice of such meeting, is entered in the securities
register as a holder of one or more shares carrying the right to vote at such meeting or who beneficially owns shares that are entitled
to be voted at such meeting; and (B) who complies with the Notice procedures set forth below in the Advance Notice Provisions.
In addition to any other applicable requirements,
for a nomination to be made by a Nominating Shareholder, the Nominating Shareholder must have given timely notice thereof in proper written
form to the Secretary of the Corporation at the principal executive offices of the Corporation.
To be timely, a Nominating Shareholder’s
notice to the Secretary of the Corporation must be made: (a) in the case of an annual meeting of Shareholders, not less than 30 nor more
than 65 days prior to the date of the annual meeting of Shareholders; provided, however, that in the event that the annual meeting of
Shareholders is to be held on a date that is less than 50 days after the date (the “Notice Date”) on which the first
public announcement of the date of the annual meeting was made, notice by the Nominating Shareholder may be made not later than the close
of business on the tenth (10th) day following the Notice Date; and (b) in the case of a special meeting (which is not also an annual meeting)
of Shareholders called for the purpose of electing directors (whether or not called for other purposes), not later than the close of business
on the fifteenth (15th) day following the day on which the first public announcement of the date of the special meeting of Shareholders
was made. In no event shall any adjournment or postponement of a meeting of Shareholders or the announcement thereof commence a new time
period for the giving of a Nominating Shareholder’s notice as described above.
To be in proper written form, a Nominating Shareholder’s
notice to the Secretary of the Corporation must set forth: (a) as to each person whom the Nominating Shareholder proposes to nominate
for election as a director: (A) the name, age, business address and residential address of the person; (B) the principal occupation or
employment of the person; (C) the class or series and number of shares in the capital of the Corporation which are controlled or which
are owned beneficially or of record by the person as of the record date for the meeting of Shareholders (if such date shall then have
been made publicly available and shall have occurred) and as of the date of such notice; and (D) any other information relating to the
person that would be required to be disclosed in a dissident’s proxy circular in connection with solicitations of proxies for election
of directors pursuant to the BCBCA and Applicable Securities Laws (as defined below); and (b) as to the Nominating Shareholder giving
the notice, any proxy, contract, arrangement, understanding or relationship pursuant to which such Nominating Shareholder has a right
to vote any shares of the Corporation and any other information relating to such Nominating Shareholder that that would be required to
be made in a dissident’s proxy circular in connection with solicitations of proxies for election of directors pursuant to the BCBCA
and Applicable Securities Laws (as defined below). The Corporation may require any proposed nominee to furnish such other information
as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director
of the Corporation or that could be material to a reasonable Shareholder’s understanding of the independence, or lack thereof, of
such proposed nominee.
No person shall be eligible for election as a
director of the Corporation unless nominated in accordance with the provisions of the Advance Notice Provisions; provided, however, that
nothing in the Advance Notice Provisions shall be deemed to preclude discussion by a Shareholder (as distinct from the nomination of directors)
at a meeting of Shareholders of any matter in respect of which it would have been entitled to submit a proposal pursuant to the provisions
of the BCBCA. The Chairman of the meeting shall have the power and duty to determine whether a nomination was made in accordance with
the procedures set forth in the foregoing provisions and, if any proposed nomination is not in compliance with such foregoing provisions,
to declare that such defective nomination shall be disregarded.
For purposes of the Advance Notice Provisions:
(a) “public announcement” shall mean disclosure in a press release reported by a national news service in Canada, or in a
document publicly filed by the Corporation under its profile on SEDAR at www.sedar.com; and (b) “Applicable Securities Laws”
means the applicable securities legislation of each relevant province and territory of Canada, as amended from time to time, the rules,
regulations and forms made or promulgated under any such statute and the published national instruments, multilateral instruments, policies,
bulletins and notices of the securities commission and similar regulatory authority of each province and territory of Canada.
Notwithstanding any other provision of the Advance
Notice Provisions, notice given to the Secretary of the Corporation pursuant to the Advance Notice Provisions may only be given by personal
delivery, facsimile transmission or by email (at such email address as stipulated from time to time by the Secretary of the Corporation
for purposes of this notice), and shall be deemed to have been given and made only at the time it is served by personal delivery, email
(at the address as aforesaid) or sent by facsimile transmission (provided that receipt of confirmation of such transmission has been received)
to the Secretary at the address of the principal executive offices of the Corporation; provided that if such delivery or electronic communication
is made on a day which is a not a business day or later than 5:00 p.m. (Toronto time) on a day which is a business day, then such delivery
or electronic communication shall be deemed to have been made on the subsequent day that is a business day.
Notwithstanding the foregoing, the Board may,
in its sole discretion, waive any requirement in the Advance Notice Provisions.
The Advance Notice Provisions will be subject
to an annual review, and will reflect changes as required by securities regulatory agencies or stock exchanges, or so as to meet industry
standards.
Approval of the Advance Notice Provisions
Resolution
Under the Articles and the BCBCA, the Corporation’s
governing statute, the alteration of the Corporation’s Articles requires the approval of more than two-thirds of the votes cast
in person or represented by proxy at the Meeting by the Shareholders of the Corporation by a special resolution. Accordingly, Shareholders
will be asked at the Meeting to vote on a special resolution to approve the alteration of the Articles of the Corporation to include the
Advance Notice Provisions (the “Advance Notice Resolution”), in the following form:
“BE IT HEREBY RESOLVED AS A SPECIAL
RESOLUTION that:
|
|
(1)
|
the Articles of the Corporation be altered by adding the text substantially as set forth in Schedule “C”
to the Management Information Circular of the Corporation dated May 18, 2021 as and at Section 14.12 of the Articles;
|
|
|
(2)
|
the Corporation be authorized to revoke this special resolution and abandon or terminate the alteration
of the Articles if the Board deems it appropriate and in the best interests of the Corporation to do so without further confirmation,
ratification or approval of the Shareholders; and
|
|
|
(3)
|
any one director or officer of the Corporation be and is hereby authorized and directed to do all such
things and to execute and deliver all documents and instruments as may be necessary or desirable to carry out the terms of this special
resolution.”
|
The Board recommends that Shareholders vote
FOR the Advance Notice Resolution. Unless the Shareholder has specifically instructed in the form of proxy or voting instruction form
that the Shares represented by such proxy or voting instruction form are to be voted against the Advance Notice Resolution, the persons
named in the proxy or voting instruction form will vote FOR the Advance Notice Resolution.
|
|
7.
|
Approval of U.S. Securities Act Provisions
|
The directors of the Corporation are proposing
that the Articles of the Corporation be altered to include the provisions in connection with the forum in which certain suits related
to United States securities laws matters in respect of the Corporation may be brought (the “U.S. Securities Act Provisions”).
The full text of the proposed alteration of the Articles to include U.S. Securities Act Provisions is set out in Schedule “D”
to this Circular.
Purpose and Effect of the U.S. Securities
Act Provisions
The purpose of the U.S. Securities Act Provisions
is to provide for the forum in which certain suits related to United States securities laws matters in respect of the Corporation may
be brought. Specifically, Section 27 of the Securities Exchange Act of 1934 (United States) (the “Exchange Act”)
creates exclusive jurisdiction of the federal district courts of the United States of America over all suits brought to enforce any duty
or liability created by the Exchange Act or the rules and regulations thereunder (including the general anti-fraud provisions thereof
and thereunder), whereas Section 22 of the Securities Act of 1933 (United States) (the “Securities Act”) creates
concurrent jurisdiction for United States federal and state courts over all suits brought to enforce any duty or liability created by
the Securities Act or the rules and regulations thereunder. Through the enactment of By-Law No. 4, the federal district courts of the
United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities
Act or the rules and regulations thereunder.
Approval of the U.S. Securities Act Resolution
Under the Articles and the BCBCA, the Corporation’s
governing statute, the alteration of the Corporation’s Articles requires the approval of more than two-thirds of the votes cast
in person or represented by proxy at the Meeting by the Shareholders of the Corporation by a special resolution. Accordingly, Shareholders
will be asked at the Meeting to vote on a special resolution to approve the alteration of the Articles of the Corporation to include the
U.S. Securities Act Provisions (the “U.S. Securities Act Resolution”), in the following form:
“BE IT HEREBY RESOLVED AS A SPECIAL
RESOLUTION that:
|
|
(1)
|
the Articles of the Corporation be altered by adding the text substantially as set forth in Schedule “D”
to the Management Information Circular of the Corporation dated June 28, 2021 as and at Section 21.6 of the Articles;
|
|
|
(2)
|
the Corporation be authorized to revoke this special resolution and abandon or terminate the alteration
of the Articles if the Board deems it appropriate and in the best interests of the Corporation to do so without further confirmation,
ratification or approval of the Shareholders; and
|
|
|
(3)
|
any one director or officer of the Corporation be and is hereby authorized and directed to do all such
things and to execute and deliver all documents and instruments as may be necessary or desirable to carry out the terms of this special
resolution.”
|
The Board recommends that Shareholders vote
FOR the U.S. Securities Act Resolution. Unless the Shareholder has specifically instructed in the form of proxy or voting instruction
form that the Shares represented by such proxy or voting instruction form are to be voted against the Advance Notice Resolution, the persons
named in the proxy or voting instruction form will vote FOR the U.S. Securities Act Resolution.
Management of the Corporation knows of no amendment,
variation or other matter to come before the Meeting other than the matters referred to in the Notice of Meeting accompanying this Circular.
However, if any other matter properly comes before the Meeting, valid forms of proxy will be voted on such matter in accordance with the
best judgment of the persons voting the proxy.
STATEMENT OF EXECUTIVE COMPENSATION
Named Executive Officers
For the purposes of this Circular, a Named Executive
Officer (“NEO”) of the Corporation means each of the following individuals:
|
|
(a)
|
a chief executive officer (“CEO”) of the Corporation;
|
|
|
(b)
|
a chief financial officer (“CFO”) of the Corporation;
|
|
|
(c)
|
in respect of the Corporation and its subsidiaries, the most highly compensated executive officer other
than the individuals identified in paragraphs (a) and (b) at the end of the most recently completed financial year whose total compensation
was more than $150,000; and
|
|
|
(d)
|
each individual who would be an NEO under paragraph (c) above but for the fact that the individual was
neither an executive officer of the Corporation, nor acting in a similar capacity, at the end of that financial year.
|
Oversight and Description of Director and NEO
Compensation
Compensation plays an important role in achieving
short and long-term business objectives that ultimately drive business success. The Corporation’s compensation philosophy is to
foster entrepreneurship at all levels of the organization through, among other things, the granting of stock options (“Options”)
and RSUs for SV Shares, which will be a significant component of executive compensation. This approach is based on the assumption that
the performance of the SV Share price over the long term is an important indicator of long-term performance.
The Corporation’s compensation philosophy
is based on the following fundamental principles:
|
|
●
|
Compensation programs align with shareholder interests – the Corporation aligns the goals
of executives with maximizing long-term shareholder value;
|
|
|
●
|
Performance sensitive – compensation for executive officers should be linked to operating
and market performance of the Corporation and fluctuate with the performance; and
|
|
|
●
|
Offer market competitive compensation to attract and retain talent – the compensation program
should provide market competitive pay in terms of value and structure in order to retain existing employees who are performing according
to their objectives and to attract new individuals of the highest calibre.
|
The objectives of the compensation program in
compensating all NEOs will be developed based on the above-mentioned compensation philosophy and will be as follows:
|
|
●
|
to attract and retain highly qualified executive officers;
|
|
|
●
|
to align the interests of executive officers with shareholders’ interests and with the execution
of the Corporation’s business strategy;
|
|
|
●
|
to evaluate executive performance on the basis of key measurements that correlate to long-term shareholder
value; and
|
|
|
●
|
to tie compensation directly to those measurements and reward based on achieving and exceeding predetermined
objectives.
|
The Corporation believes that transparent, objective
and easily verified corporate goals, combined with individual performance goals, play an important role in creating and maintaining an
effective compensation strategy for the NEOs. The Corporation’s objective is to establish benchmarks and targets for its NEOs that
will enhance shareholder value if achieved.
Aggregate compensation for each NEO is designed
to be competitive. The Board performs the duties of a compensation committee, as the Corporation does not have a defined compensation
committee. The Board reviews from time to time the compensation practices of similarly situated companies when considering the Corporation’s
executive compensation practices. The Board reviews each element of compensation for market competitiveness, and although it may weigh
a particular element more heavily based on the NEO’s role within the Corporation, it is primarily focused on remaining competitive
in the market with respect to total compensation.
From time to time, on an ad hoc basis, the Board
will review data related to compensation levels and programs of various companies that are similar in size to the Corporation and operate
within the jewelry industry. The Board also relies on the experience of its members as officers and/or directors at other companies in
similar lines of business as the Corporation in assessing compensation levels. These other companies are identified in this Circular under
the heading “Corporate Governance – Directorships”.
Compensation Governance
The Board is responsible for ensuring that the
Corporation has in place an appropriate plan for executive compensation and for making recommendations to the Board with respect to the
compensation of the Corporation’s executive officers. The Board ensures that total compensation paid to all NEOs is fair, reasonable,
and consistent with the Corporation’s compensation philosophy.
A combination of fixed and variable compensation
is used to motivate executive officers to achieve overall corporate goals. The three basic components of the Corporation’s executive
officer compensation program are:
|
|
●
|
annual incentive (bonus) payments; and
|
|
|
●
|
Long-term incentive compensation (in the form of Options and/or RSUs)
|
Base salaries, if any, are paid in cash and constitute
the fixed portion of the total compensation paid to executive officers. Annual incentives and option-based compensation comprise the remainder,
and represent compensation that is “at risk” and thus may or may not be paid to the respective executive officer depending
on: (i) whether the executive officer is able to meet or exceed his or her applicable performance targets; and (ii) market performance
of the SV Shares. To date, no specific formula has been developed to assign a specific weighting to each of these components. Instead,
the Board will consider each performance target and the Corporation’s performance and assign compensation based on this assessment.
Base Salary
The Board approves the salary ranges for the NEOs.
The base salary review for each NEO is based on assessment of factors such as current competitive market conditions, compensation levels
and practices of similarly situated companies and particular skills, such as leadership ability and management effectiveness, experience,
responsibility and proven or expected performance of the particular individual. The Corporation may consider comparative data for the
Corporation’s peer group, which are accumulated from a number of external sources including independent consultants. The Corporation’s
policy for determining salary for executive officers will be consistent with the administration of salaries for all other employees.
Annual Incentive (Cash Bonus) Payments
If the Board finds it is in the best interests
of the Corporation to pay annual cash incentive awards, then awards will be based on various personal and company-wide achievements. Performance
goals for annual incentive payments are subjective and include achieving individual and corporate targets and objectives, as well as general
performance in day- to-day corporate activities.
The Board will approve target annual incentive
amounts for each NEO at the beginning of each financial year and will determine target amounts based on a number of factors, including
comparable compensation of similar companies. Funding of the annual incentive awards is capped at the company level and the distribution
of funds to the executive officers will be at the discretion of the Board. Each NEO may receive partial or full payment of the target
annual incentive amount set by the Board at the beginning of each financial year, depending on the number of the predetermined targets
met, and the assessment of such NEO’s overall performance by the Board.
The Board assesses NEO performance subjectively,
considering each NEO’s respective success in achieving his or her individual objectives, contributions to the achievement of the
Corporation’s goals, and contributions to meeting the needs of the Corporation that arise on a day-to-day basis.
The Board reserves ultimate discretion in determining
whether each NEO has met his or her targets, and has the right make positive or negative adjustments to any annual incentive payment that
it deems appropriate.
Long-Term Incentive Compensation
Options and RSUs may be granted to directors,
management, employees and certain service providers as long-term incentives to align the individual’s interests with those of the
Corporation. Options and RSUs are awarded to directors and employees, including NEOs, at the Board’s discretion. Decisions with
respect to options and RSUs granted are based upon the individual’s level of responsibility and their contribution towards the Corporation’s
goals and objectives, and additionally may be awarded in recognition of the achievement of a particular goal or extraordinary service.
The Board considers outstanding Options and RSUs granted under the Stock Option Plan and RSU Plan and held by management in determining
whether to make any new grants of options and RSUs, and the quantum or terms of any options or RSUs grant.
The objective of the proposed RSU Plan is to further
aid in retaining eligible employees while maintaining alignment of compensation with the long-term share price performance provided to
the Corporation’s Shareholders. RSUs aid in promoting greater share ownership by executives and employees at the Corporation and
aligning closer to market practices. Furthermore, the RSU Plan diversifies the types of incentive-based compensation, enabling the Board
to better tailor such awards to the duties and responsibilities of the Directors, Employees and Consultants (collectively referred to
as “Service Providers” within the plan document). While initially intended to only vest based on the continued service of
Eligible Persons with the Corporation, in the future, the proposed RSU Plan will also provide the Board with the alternative of establishing
specific performance-based goals in addition to service-based restrictions when determining the vesting of specific RSU grants. This will
provide the opportunity to further strengthen the alignment of interests of eligible employees (namely executives) with the achievement
of the Corporation’s long-term strategic plan and the interests of Shareholders.
The objective of the Corporation’s Stock
Option Plan is to further aid in retaining qualified talent while maintaining alignment of compensation with the long-term share price
performance provided to the Corporation’s shareholders. Options are awarded to directors, consultants and employees, including NEOs,
at the Board’s discretion. Decisions with respect to Options granted are based upon the individual’s level of responsibility
and their contribution towards the Corporation’s goals and objectives, and additionally may be awarded in recognition of the achievement
of a particular goal or extraordinary service. The Board considers outstanding Options granted under the Stock Option Plan held by management
in determining whether to make any new grants of Options, and the quantum or terms of any Option grant.
In order to arrive at a particular recommendation
for performance-based compensation under the Stock Option Plan, the Board will use objectively determinable performance targets, where
possible, under one or more of the following business criteria, individually or in combination: (i) Technical Matters; (ii) Capital Markets;
(iii) Corporate Development; (iv) Community Initiatives; (v) Operational Matters; and (vi) Board Liaison Matters.
Stock Option Plan
The Corporation’s current stock option plan
(the “Stock Option Plan”) was adopted by the Board on October 23, 2017 and must be re-approved by the Shareholders
on a yearly basis pursuant to the policies of the TSXV. The Stock Option Plan was last approved by the HashChain Shareholders at a meeting
of the shareholders held on January 14, 2020. At the Meeting, the Shareholders will be asked to approve the rolling 10% Stock Option Plan
for the ensuing year.
The purpose of the Stock Option Plan is to allow
the Corporation to grant options to directors, officers, employees and consultants, as additional compensation and as an opportunity to
participate in the success of the Corporation. The granting of such options is intended to align the interests of such persons with that
of the Corporation’s shareholders.
The following is a summary of the material terms
of the Stock Option Plan (any terms not defined herein have the meaning defined in the Stock Option Plan):
|
|
(i)
|
The aggregate maximum number of the SV Shares available for issuance from treasury under the Stock Option
Plan at any given time is 10% of the outstanding Shares as at the date of grant of an Option under the Stock Option Plan.
|
|
|
(ii)
|
No options shall be granted to any optionee if such grant could result, at any time, in:
|
|
|
(A)
|
the issuance of any one individual, within a one-year period, of a number of SV Shares exceeding 5% of
the issued and outstanding Shares;
|
|
|
(B)
|
the issuance to any one consultant, within any 12-month period, of a number of SV Shares exceeding 2%
of the issued and outstanding Shares; and
|
|
|
(C)
|
the issuance to employees conducting investor relations activities, within any 12 month period, of an
aggregate number of SV Shares exceeding 2% of the issued and outstanding Shares;
|
unless permitted otherwise by any applicable
stock exchange.
|
|
(iii)
|
Disinterested Shareholder Approval is required for the following:
|
|
|
(A)
|
any individual stock option grant that would result in the grant to Insiders (as a group), within a 12-month
period, of an aggregate number of options exceeding 10% of the issued Shares, calculated on the date an option is granted to any Insider;
and
|
|
|
(B)
|
any individual stock option grant that would result in the number of SV Shares issued to any individual
in any 12-month period under this Plan exceeding 5% of the issued Shares, less the aggregate number of shares reserved for issuance or
issuable under any other Share Compensation Arrangement of the Corporation.
|
|
|
(iv)
|
The term of an Option shall not exceed 10 years from the date
of grant of the Option.
|
|
|
(v)
|
An Option shall vest and may be exercised in whole or in part at any time during the term of such Option
after the date of the grant as determined by the Board, subject to extension where the expiry date falls within a Blackout Period.
|
|
|
(vi)
|
Options may be granted by the Corporation pursuant to the recommendations
of the Board or a committee appointed to administer the Stock Option Plan from time to time provided and to the extent that such decisions
are approved by the Board.
|
|
|
(vii)
|
The Stock Option Plan provides that if a change of control (as
defined in the Stock Option Plan) occurs, or if the Corporation is subject to a take-over bid, all Shares subject to options shall immediately
become vested and may thereupon be exercised in whole or in part by the option holder. The Board may also accelerate the expiry date
of outstanding options in connection with a take-over bid.
|
|
|
(viii)
|
The Stock Option Plan contains adjustment provisions with respect
to outstanding options in cases of share reorganizations, special distributions and other corporation reorganizations including an arrangement
or other transaction under which the business or assets of the Corporation become, collectively, the business and assets of two or more
companies with the same shareholder group upon the distribution to the shareholders of the Corporation, or the exchange with the shareholders
of the Corporation, of securities of the Corporation or securities of another company.
|
|
|
(ix)
|
The Stock Option Plan provides that on the death or disability
of an option holder, all vested options will expire at the earlier of 365 days after the date of death or disability and the expiry date
of such options. Where an optionee is terminated for cause, any outstanding options (whether vested or unvested) are cancelled as of
the date of termination. If an optionee retires or voluntarily resigns or is otherwise terminated by the Corporation other than for cause,
then all vested options held by such optionee will expire at the earlier of (i) the expiry date of such options and (ii) the date which
is 90 days (30 days if the optionee was engaged in investor relations activities) after the optionee ceases its office, employment or
engagement with the Corporation.
|
The Stock Option Plan contains a provision that
if pursuant to the operation of an adjustment provision of the Stock Option Plan, an optionee receives options (the “New Options”)
to purchase securities of another company (the “New Company”) in respect of the optionee’s options under the
Stock Option Plan (the “Subject Options”), the New Options shall expire on the earlier of: (i) the expiry date of the
Subject Options; (ii) if the optionee does not become an eligible person in respect of the New Company, the date that the Subject Options
expire pursuant to the applicable provisions of the Stock Option Plan relating to expiration of options in cases of death, disability
or termination of employment discussed in the preceding paragraph above (the “Termination Provisions”); (iii) if the
optionee becomes an eligible person in respect of the New Company, the date that the New Options expire pursuant to the terms of the New
Company’s stock option plan that correspond to the Termination Provisions; and (iv) the date that is one (1) year after the optionee
ceases to be an eligible person in respect of the New Company or such shorter period as determined by the Board.
The full text of the Stock Option Plan will be
supplied free of charge to any Shareholder upon written request made directly to the Corporation at its registered head office located
at 18 King St. E, Suite 902, Toronto, ON M5C 1C4, telephone: 1-818-280-9758.
Restricted Share Unit Plan
The RSU Plan is available to directors, employees
and consultants which are collectively referred to in the RSU Plan as Service Providers of the Corporation, as determined by the Board
(the “Eligible Grantees”). As of the date of this Circular, the Corporation has granted no RSUs to Eligible Grantees.
The RSU Plan is intended to complement the Stock
Option Plan by allowing the Corporation to offer a broader range of incentives to diversify and customize the rewards Eligible Grantees
to promote long term retention and greater alignment with the competitive market. The following information is intended to be a brief
description and summary of the material features of the RSU Plan.
|
|
(a)
|
The RSU Plan provides for a fixed maximum limit of 7,494,068. SV Shares as permitted by the policies of
the TSXV. The number of SV Shares issued or to be issued under the RSU Plan and all other security-based compensation arrangements, at
any time, shall not exceed 20% of the total number of the issued and outstanding Shares of the Corporation;
|
|
|
(b)
|
The total number of SV Shares issuable to insiders under the RSU Plan, at any time, together with any
other security-based compensation arrangements of the Corporation, shall not exceed 10% of the issued and outstanding Shares of the Corporation;
|
|
|
(c)
|
The total number of SV Shares issuable to insiders within any one-year period under the RSU Plan shall
not exceed 10% of the issued and outstanding Shares of the Corporation;
|
|
|
(d)
|
The total number of SV Shares issuable to any one Service Provider within any one-year period under the
RSU Plan shall not exceed 1% percent of the issued and outstanding SV Shares of the Corporation;
|
|
|
(e)
|
The total number of SV Shares issuable to all Service Providers within any one-year period under the RSU
Plan shall not exceed 2% percent of the issued and outstanding SV Shares of the Corporation;
|
|
|
(f)
|
Neither awards nor any rights under any such awards shall be assignable or transferable. If any SV Shares
covered by an award are forfeited, or if an award terminates without delivery of any SV Shares subject thereto, then the number of SV
Shares counted against the aggregate number of SV Shares available under the RSU Plan with respect to such award shall, to the extent
of any such forfeiture or termination, again be available for making awards under the RSU Plan. The RSU Plan shall terminate automatically
after ten years and may be terminated on any earlier date or extended by the Board.
|
The Board may at any time, in its sole discretion
and without the approval of Shareholders, amend, suspend, terminate or discontinue the RSU Plan and may amend the terms and conditions
of any awards thereunder, subject to (a) any required approval of any applicable regulatory authority or the TSXV, and (b) approval of
Shareholders of the Corporation, provided that Shareholder approval shall not be required for the following amendments and the Board may
make changes which may include but are not limited to: (i) amendments of a ‘housekeeping nature’; (ii) changes to vesting
provisions; or (iii) changes to the term of the RSU Plan or awards made under the RSU Plan provided those changes do not extend the restriction
period of any RSU beyond the original expiry date or restriction period. The Board may amend, modify, or supplement the terms of any outstanding
award.
Restricted Share Units
The RSU Plan provides that the Board of the Corporation
may, from time to time, in its sole discretion, grant awards of RSUs to Eligible Grantees. Each RSU shall represent one SV Share of the
Corporation. The Board may, in its sole discretion, establish a period of time (a “Vesting period”) applicable to such
RSUs. Each award of RSUs may be subject to a different Vesting period. The Board may, in its sole discretion, prescribe restrictions in
addition to or other than the expiration of the Vesting period, including the satisfaction of corporate or individual performance objectives,
which may be applicable to all or any portion of the RSUs. The performance criteria will be established by the Board in its sole discretion.
The Board may, in its sole discretion, revise the performance criteria. Notwithstanding the foregoing, (i) RSUs that vest solely by the
passage of time shall not vest in full in less than three (3) years from the grant date; (ii) RSUs for which vesting may be accelerated
by achieving performance targets shall not vest in full in less than one (1) year from the grant date; and (iii) RSUs granted to outside
directors vest, (a) at the election of an outside director at the time the award is granted, within a minimum of one (1) year to a maximum
of three (3) years following the grant date, as such outside director may elect, and (b) if no election is made, upon the earlier of a
Change of Control (as such term is defined in the RSU Plan) or his or her resignation from the Board.
Upon the expiration or termination of the Vesting
period and the satisfaction of any other restrictions prescribed by the Board, the RSUs shall vest and shall be settled in either cash
or Shares, as the Committee may so determine, unless otherwise provided in the Award Agreement.
A cash payment shall be in the amount equal to
the “Market Price” per share as defined in the policies of the applicable stock exchange as the trading day prior to the date
of vesting, and certified funds shall be paid for the RSUs valued at the Market Price. A Share payment shall be for Shares issued by the
Corporation from treasury and a share certificate for that number of Shares equal to the number of vested RSUs shall be free of all restrictions.
The cash payment or Shares shall be delivered to the Grantee or the Grantee’s beneficiary or estate, as the case may be.
If
a grantee’s employment is terminated with cause, the Corporation may, within 30 days, annul an award if the grantee is an employee
of the Corporation or an affiliate thereof. If a grantee’s employment is terminated with or without cause, unless the Board otherwise
provides in an award agreement or in writing after the award agreement is issued, any RSUs that have not vested and will not vest within
30 days from the date of termination, or with respect to which all applicable restrictions and conditions have not lapsed, shall immediately
be deemed forfeited. Upon the death of a grantee, any RSUs granted to said grantee which, prior to the grantee’s death, have not
vested, will immediately vest and the grantee’s estate shall be entitled to receive payment in accordance with the terms of the
RSU Plan.
Director and NEO Compensation, Excluding Compensation
Securities
The following table provides a summary of the
compensation earned by the NEOs and directors for services rendered in all capacities during the fiscal year ended December 31, 2020.
For the year ended December 31, 2020, the Corporation had two NEOs, Michel Amar and Cindy Davis.
Table of compensation excluding compensation
securities
|
Name and Principal Position
|
|
Fiscal period
|
|
Salary,
consulting fee,
retainer or
commission
($)
|
|
|
Bonus
($)
|
|
|
Committee or
meeting fees
($)
|
|
|
Value of
perquisites
($)
|
|
|
All other
compensation
($)
|
|
|
Total
compensation
($)
|
|
|
Michel Amar(1)
|
|
2020
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
Chief Executive Officer and Chairman
|
|
2019
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Alec Amar(2)
|
|
2020
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
President and Director
|
|
2019
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Cindy Davis(3)
|
|
2020
|
|
|
40,491
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
40,491
|
|
|
Chief Financial Officer
|
|
2019
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Jon Williams
|
|
2020
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
Director
|
|
2019
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Adam Rossman
|
|
2020
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
Director
|
|
2019
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Manish Kshatriya
|
|
2020
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
Director
|
|
2019
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Gerry Rotonda
|
|
2020
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
Director
|
|
2019
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Gerard Guez
|
|
2020
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
Director
|
|
2019
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Donald Christie
|
|
2020
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
Director
|
|
2019
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Geoffrey Browne
|
|
2020
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
Director
|
|
2019
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Notes:
|
|
(1)
|
On February 14, 2020, Michel Amar was appointed Chief Executive Officer of the Corporation.
|
|
|
(2)
|
On February 14, 2020, Alec Amar was appointed President of the Corporation.
|
|
|
(3)
|
On February 14, 2020, Cindy Davis became the Chief Financial Officer of the Corporation. Compensation
for Ms. Davis’ services was paid to Marrelli Support Services Inc. Ms. Davis is an employee of Marrelli Support Services Inc. On
April 29, 2021, Cindy Davis resigned as the Chief Financial Officer of the Corporation. On April 29, 2021, Paul Ciullo became the Chief
Financial Officer of the Corporation.
|
Compensation Securities Table
The following table discloses the particulars
of share and option-based awards issued and/or granted to individuals in their roles as NEOs and directors for the financial year ended
December 31, 2020:
|
Name and Position
|
|
Type of Compensation Security
|
|
Number of Compensation Security
|
|
|
Date of issue or grant
|
|
Exercise Price ($)
|
|
|
Closing price of underlying security on date of grant ($)
|
|
|
Closing price of underlying security at
2020 year end
($)
|
|
|
Compensation Security Expiration Date
|
Michel Amar
Chief Executive Officer and Chairman
|
|
Options
|
|
|
250,000
|
|
|
February 14, 2020
|
|
|
0.96
|
|
|
|
0.60
|
|
|
|
0.99
|
|
|
February 14, 2025
|
Alec Amar
President and Director
|
|
Options
|
|
|
250,000
|
|
|
February 14, 2020
|
|
|
0.96
|
|
|
|
0.60
|
|
|
|
0.99
|
|
|
February 14, 2025
|
Cindy Davis
Chief Financial Officer
|
|
Options
|
|
|
25,000
|
|
|
February 14, 2020
|
|
|
0.96
|
|
|
|
0.60
|
|
|
|
0.99
|
|
|
February 14, 2025
|
Jon Williams
Director
|
|
Options
|
|
|
150,000
|
|
|
February 14, 2020
|
|
|
0.96
|
|
|
|
0.60
|
|
|
|
0.99
|
|
|
February 14, 2025
|
Adam Rossman
Director
|
|
Options
|
|
|
150,000
|
|
|
February 14, 2020
|
|
|
0.96
|
|
|
|
0.60
|
|
|
|
0.99
|
|
|
February 14, 2025
|
Manish Kshatriya
Director
|
|
Options
|
|
|
150,000
|
|
|
February 14, 2020
|
|
|
0.96
|
|
|
|
0.60
|
|
|
|
0.99
|
|
|
February 14, 2025
|
Gerry Rotonda
Director
|
|
Options
|
|
|
150,000
|
|
|
February 14, 2020
|
|
|
0.96
|
|
|
|
0.60
|
|
|
|
0.99
|
|
|
February 14, 2025
|
Gerard Guez
Director
|
|
Options
|
|
|
150,000
|
|
|
February 14, 2020
|
|
|
0.96
|
|
|
|
0.60
|
|
|
|
0.99
|
|
|
February 14, 2025
|
Donald Christie
Director
|
|
Options
|
|
|
150,000
|
|
|
February 14, 2020
|
|
|
0.96
|
|
|
|
0.60
|
|
|
|
0.99
|
|
|
February 14, 2025
|
Geoffrey Browne
Director
|
|
Options
|
|
|
150,000
|
|
|
February 14, 2020
|
|
|
0.96
|
|
|
|
0.60
|
|
|
|
0.99
|
|
|
February 14, 2025
|
Exercise of Compensation Securities by NEOs
and Directors
There were no compensation securities exercised
by NEOs and directors during the fiscal year ended December 31, 2020.
Securities Authorized for Issuance Under Equity
Compensation Plans
The following table sets forth information
in respect of the Corporation’s equity compensation plans under which equity securities of the Corporation are authorized for issuance,
aggregated in accordance with all equity plans previously approved by the Shareholders and all equity plans not approved by Shareholders
as at December 31, 2020:
|
Plan Category
|
|
Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights
(#)
|
|
|
Weighted Average Exercise Price of Outstanding Options, Warrants and Rights ($)
|
|
|
Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans
(#)
|
|
|
Equity compensation plans approved by securityholders(1)
|
|
|
1,875,000
|
|
|
|
0.96
|
|
|
|
2,132,366
|
(1)
|
|
Equity compensation plans not approved by securityholders(2)
|
|
|
Nil
|
|
|
|
N/A
|
|
|
|
Nil
|
|
|
Total
|
|
|
1,875,000
|
|
|
|
0.96
|
|
|
|
2,132,366
|
(1)
|
Notes:
|
|
(1)
|
The Corporation’s only approved equity compensation plan is the Stock Option Plan, which is a 10%
rolling stock option plan. The number of SV Shares that may be reserved for issuance pursuant to the Stock Option Plan at any given time
is 10% of the outstanding Shares as at the date of grant of an Option under the Stock Option Plan.
|
|
|
(2)
|
On June 28, 2021, the Board approved the RSU Plan, pursuant to which a fixed maximum of 7,494,068 SV Shares
may be reserved for issuance.
|
Employment, Consulting, and Management Agreements
Alec Amar
On January 24, 2021, the Corporation entered into
a consulting agreement with Alec Amar pursuant to which Mr. Amar provides services as President of the Corporation in consideration of
a rate of US$12,500 per month, which is equivalent to US$150,000 per year. Subject to the automatic extension provided for below, this
agreement shall expire on January 1, 2022 (the “Initial Term”). Unless earlier terminated as hereinafter provided, the term
of this Agreement shall be automatically extended on a monthly basis (such monthly periods referred to as “Additional Terms”)
upon the expiration of the Initial Term or any Additional Terms, unless thirty days prior to the end of the Initial Term or any Additional
Term, the Company or the Consultant shall have given written notice to the other stating that the term of this Agreement shall not be
extended.
Cindy Davis
The Corporation paid Marrelli Support Services
Inc. cash consideration in the amount of $40,491 for the financial year ended December 31, 2020 for the services provided by Ms. Davis
in the role of Chief Financial Officer. Ms. Davis resigned as Chief Financial Officer of the Corporation and was replaced by Paul Ciullo
effective April 29, 2021.
Paul Ciullo
On March 25, 2021, the Corporation entered into
a consulting agreement with Paul Ciullo pursuant to which Mr. Ciullo provides services as Vice-President, Finance of the Corporation in
consideration of (i) a salary of USD$5,000 per month in cash, for a maximum of twenty (20) hours services per month and (ii) 50,000 Options,
exercisable to purchase 50,000 SV Shares at a price of CAD$2.50 per SV Share, expiring on March 25, 2026 and vesting as to one third immediately,
one third on the first anniversary of the consulting agreement and one third on the second anniversary of the consulting agreement every
twelve months. Mr. Ciullo became the Chief Financial Officer of the Corporation on April 29, 2021 and received a total of $nil from the
Corporation for the financial year ended December 31, 2020.
Pension Plan Benefits, Termination and Change
of Control Benefits
The Corporation has no pension or retirement plan.
The Corporation has not provided compensation, monetary or otherwise to any person who now acts as a NEO of the Corporation, in connection
with or related to the retirement, termination or resignation of such person and the Corporation has provided no compensation to such
persons as a result of a change of control of the Corporation, its subsidiaries or affiliates. Other than as may be provided pursuant
to particular employment agreements, the Corporation is not party to any compensation plan or arrangement with NEOs resulting from the
resignation, retirement or the termination of employment of any person.
Compensation Risk Considerations
The Board is responsible for considering, establishing
and reviewing executive compensation programs, and whether the programs encourage unnecessary or excessive risk taking. The Corporation
anticipates the programs will be balanced and will not motivate unnecessary or excessive risk taking. The Corporation does not currently
have a policy that restricts directors or NEOs from purchasing financial instruments, including, for greater certainty, prepaid variable
forward contracts, equity swaps, collars, or units of TSXV funds that are designed to hedge or offset a decrease in market value of equity.
However, to the knowledge of the Corporation, as of the date of hereof, no director or NEO of the Corporation has participated in the
purchase of such financial instruments.
Base salaries, if any, are fixed in amount and
do not encourage risk taking. While annual incentive awards will focus on the achievement of short-term or annual goals and short-term
goals may encourage the taking of short-term risks at the expense of long-term results, the Corporation’s annual incentive award
program will represent a small percentage of employees’ compensation opportunities.
Option awards are important to further align employees’
interests with those of the Shareholders. The ultimate value of the awards is tied to the price of the SV Shares and since awards are
expected to be staggered and may be subject to long-term vesting schedules, they will help ensure that NEOs have significant value tied
in long-term stock price performance.
Compensation of Directors
Pursuant to the Corporation’s articles,
the Corporation may have a minimum of three and a maximum of ten directors. At the date of the Circular, the Corporation currently has
nine (9) directors.
The Corporation regularly reviews the competitiveness
of non-employee director compensation levels against the competitive marketplace. As at the date hereof, the Corporation does not pay
its directors any fees or compensation other than expenses incurred. As a developing jewelry business, the Corporation has a small number
of employees and relies extensively on the input and expertise of its non-employee directors. In its efforts to attract and retain experienced
directors, the Corporation may choose to compensate directors partly with Options and/or RSUs, thereby conserving its cash resources and,
equally importantly, aligning the directors’ incentives with the interests of the Shareholders by providing them with the opportunity
to participate in the upside that results from their contributions. While other larger and/or established operating companies may place
limits on non-employee director compensation to a maximum amount per director per year in order to satisfy external policies and proxy
voting guidelines, the Corporation believes that some methodologies used to quantify the value of Options at the time of the grant (using
an option pricing model that values Options based on a theoretical value at the time of grant) are not suited to calculating such a limit
in the case of the Corporation. Because such methodologies typically incorporate stock volatility into the calculation of Option value,
the volatility of the Corporation’s stock (compared with more established operating companies) can significantly inflate Option
value. The result is that an Option grant in a given year could be valued well in excess of the proposed limits discussed above, even
if the Option is out-of-the money on the date of grant. While the Corporation does not object to the principle of limiting non-employee
director compensation, the Corporation believes that it is not currently at the right stage of its development to impose such limitations
based on external, generalized criteria. Accordingly, the Corporation intends to continue to evaluate grants of Options and/or RSUs to
non-employee directors on a case-by-case basis, making grants based on the contributions of such non-employee directors to the Corporation
and having regard to the levels of compensation offered by companies in analogous stages of development.
INDEBTEDNESS OF DIRECTORS AND OFFICERS
None of the current or proposed directors or officers
of the Corporation, nor any affiliate or associate of the current or proposed directors or officers of the Corporation, is or was indebted
to the Corporation (or to another entity which is the subject of a guarantee support agreement, letter of credit, or other similar arrangement
or undertaking provided by the Corporation) since the beginning of the most recently completed financial year.
AUDIT COMMITTEE
The Audit Committee is responsible for monitoring
the Corporation’s accounting and financial reporting practices and procedures, the adequacy of internal accounting controls and
procedures, the quality and integrity of financial statements and for directing the auditors’ examination of specific areas. The
current members of the Audit Committee are Donald Christie (Chair), Alec Amar and Adam Rossman. The members of the proposed Audit Committee
are each “independent” directors as defined in National Instrument 52-110 – Audit Committees (“NI 52-110”),
except for Alec Amar, who is an officer of the Corporation.
Each member of the current and proposed Audit
Committee is considered to be “financially literate” within the meaning of NI 52-110, which includes the ability to read and
understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable
to the breadth and complexity of the Corporation’s financial statements. The full text of the charter of the Audit Committee (the
“Audit Committee Charter”) is attached as Schedule “A”.
Relevant Education and Experience
The relevant education and experience of each
of the members of the proposed and current Audit Committee is as follows:
|
Name of Member
|
|
Education
|
|
Experience
|
|
|
|
|
|
|
|
Donald Christie
|
|
B.Comm.
|
|
Mr. Christie is the CEO, President and a director of Rockcliff Metals Corporation. Mr. Christie is also CFO and a director of TSXV-listed Nevada Zinc Corporation and Chairman of the Audit Committee of Northern Graphite Corporation. Mr. Christie holds a Bachelor of Commerce Honours degree from Queen’s University and received his Chartered Accountant designation while working for PricewaterhouseCoopers LLP.
|
|
|
|
|
|
|
|
Alec Amar
|
|
B.A.
|
|
Mr. Amar is the President of Bit.Management, LLC (2018 to present).
|
|
|
|
|
|
|
|
Adam Rossman
|
|
B.A., M.A., J.D.
|
|
Mr. Rossman is a business and real estate attorney. He is a member of the California Bar since 1995. Mr. Rossman has handled transactions throughout the United States relating to commercial real estate and trademark licensing.
|
Audit Committee Oversight
Since the commencement of the Corporation’s
most recently completed financial year, there has not been a recommendation of the Audit Committee to nominate or compensate an external
auditor which was not adopted by the Board.
Pre-Approval Policies and Procedures
The Audit Committee is required to pre-approve
all audit and non-audit services not prohibited by law to be provided by the independent auditors of the Corporation.
External Auditor Service Fees
The following table provides details in respect
of audit, audit related, tax and other fees billed by the Corporation’s external auditor during the fiscal year ended December 31,
2020.
|
Financial Year Ending
|
|
Audit
Fees(1)
|
|
|
Audit Related
Fees(2)
|
|
|
Tax
Fees(3)
|
|
|
All Other
Fees(4)
|
|
|
December 31, 2020
|
|
$
|
11,393
|
|
|
|
$nil
|
|
|
|
$nil
|
|
|
$
|
895
|
|
Notes:
|
|
(1)
|
Aggregate fees billed for professional services rendered by the auditor for the audit of the Corporation’s
annual financial statements.
|
|
|
(2)
|
Aggregate fees billed for professional services rendered by the auditor and consisted primarily of file
quality review fees and fees for the review of
quarterly financial statements and related documents.
|
|
|
(3)
|
Aggregate fees billed for tax compliance, tax advice and tax planning professional services. These services
included reviewing tax returns and assisting in responses to government tax authorities.
|
|
|
(4)
|
No other fees were billed by the auditor of the Corporation other than those listed in the other columns.
|
Exemption
Since the Corporation is a “venture issuer”
pursuant to NI 52-110 (its securities are not listed or quoted on any of the TSX, a market in the U.S., or a market outside of Canada
and the U.S.), it is exempt from the requirements of Part 3 (Composition of the Audit Committee) and Part 5 (Reporting Obligations) of
NI 52-110.
CORPORATE GOVERNANCE
National Policy 58-201 – Corporate Governance
Guidelines (“NP 58-201”) of the Canadian Securities Administrators sets out a series of guidelines for effective
corporate governance (the “Guidelines”). The Guidelines address matters such as the constitution and independence of
corporate boards, the functions to be performed by boards and their committees and the effectiveness and education of board members. National
Instrument 58-101 – Disclosure of Corporate Governance Practices (“NI 58-101”) requires the disclosure
by each listed corporation of its approach to corporate governance with reference to the Guidelines as it is recognized that the unique
characteristics of individual corporations will result in varying degrees of compliance.
Set out below is a description of the Corporation’s
approach to corporate governance in relation to the Guidelines.
Board of Directors
NI 58-101 defines an “independent director”
as a director who has no direct or indirect material relationship with the Corporation. A “material relationship” is in turn
defined as a relationship which could, in the view of the Board, be reasonably expected to interfere with such member’s independent
judgment.
The Board is currently comprised of nine (9) members,
seven (7) of whom the Board has determined to be “independent directors” within the meaning of NI 58-101. Jon Williams, Adam
Rossman, Manish Kshatriya, Gerry Rotonda, Gerard Guez, Donald Christie and Geoffrey Browne are considered independent directors within
the meaning of NI 58-101 since they are each independent of management and free from any material relationship with the Corporation. The
basis for this determination is that, since the date of incorporation of the Corporation, none of the independent directors have worked
for the Corporation, received remuneration from the Corporation or had material contracts with or material interests in the Corporation
which could interfere with their ability to act with a view to the best interests of the Corporation. Michel Amar and Alec Amar are not
considered independent directors because they are officers of the Corporation.
Assuming Shareholders elect the five (5) directors
nominated at the Meeting, the Board will have three (3) independent directors, Adam Rossman, Manish Kshatriya and Donald Christie.
The Board functions independently of management.
To enhance its ability to act independent of management, the Board may in the future meet in the absence of members of management or may
excuse such persons from all or a portion of any meeting where an actual or potential conflict of interest arises or where the Board otherwise
determines is appropriate.
Directorships
Certain of the directors and proposed directors
of the Corporation are also current directors of other reporting issuers (or equivalent) in a jurisdiction or a foreign jurisdiction as
follows:
|
Name of Director
|
|
Other reporting issuer
(or equivalent in a foreign jurisdiction)
|
|
Trading Market
|
|
|
|
Nevada Zinc Corporation
|
|
TSXV
|
|
Donald Christie
|
|
Northern Graphite Corporation
|
|
TSXV
|
|
|
|
Rockcliff Metals Corporation
|
|
CSE
|
Orientation and Continuing Education
While the Corporation currently has no formal
orientation and education program for new Board members, it is expected that sufficient information (such as recent financial statements,
technical reports and various other operating, property and budget reports) will be provided to all new Board members to ensure that new
directors are familiarized with the Corporation’s business and the procedures of the Board. In addition, new directors will be encouraged
to visit and meet with management on a regular basis. The Corporation will also encourage continuing education of its directors and officers
where appropriate in order to ensure that they have the necessary skills and knowledge to meet their respective obligations to the Corporation.
The Board’s continuing education will also consist of correspondence with the Corporation’s legal counsel to remain up to
date with developments in relevant corporate and securities law matters.
Ethical Business Conduct
The fiduciary duties placed on individual directors
by the Corporation’s governing corporate legislation and the common law and the restrictions placed by applicable corporate legislation
on an individual director’s participation in decisions of the Board in which the director has an interest will ensure that the Board
operates independently of management and in the best interests of the Corporation.
Under corporate legislation, a director is required
to act honestly and in good faith with a view to the best interests of the Corporation and to exercise the care, diligence and skill that
a reasonably prudent person would exercise in comparable circumstances. In addition, as some of the directors and proposed directors of
the Corporation also serve as directors and officers of other companies engaged in similar business activities, directors must comply
with the conflict of interest provisions of the OBCA, as well as the relevant securities regulatory instruments, in order to ensure that
directors exercise independent judgment in considering transactions and agreements in respect of which a director or officer has a material
interest.
Any interested director will be required to declare
the nature and extent of his or her interest and will not be entitled to vote at meetings of directors at which matters that give rise
to such a conflict of interest are considered.
Board Committees
The Board has one standing committee, being the
Audit Committee. The members of the Audit Committee are in this Circular under the heading “Audit Committee” above.
The Board has adopted the Audit Committee Charter, which is attached as Schedule “A” to this Circular.
Audit Committee
The current and proposed Audit Committee is comprised
of a majority of directors who are not executive officers, employees, or control persons of the Corporation or any of its affiliates,
and who are considered to be financially literate in accordance with applicable securities laws.
Assessments
The Board will consider the performance of the
directors and committee performance from time to time, as required.
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
Since the Corporation’s incorporation, no
director, executive officer, or Shareholder who beneficially owns, or controls or directs, directly or indirectly, more than 10% of either
the outstanding SV Shares or the PV Shares, or any known associates or affiliates or such persons, has or has had any material interest,
direct or indirect, in any transaction or in any proposed transaction that has materially affected or is reasonably expected to materially
affect the Corporation, other than as described below:
MANAGEMENT CONTRACTS
There are no management functions of the Corporation
which are to any substantial degree performed by a person or a company other than the directors or executive officers of the Corporation.
ADDITIONAL INFORMATION
The Corporation will provide to any shareholder,
upon written request to the Corporate Secretary or Chairman of the Corporation at 18 King St. E, Suite 902, Toronto, ON M5C 1C4, telephone:
1-818-280-9758, a copy of:
|
|
(a)
|
the audited financial statements of the Corporation for its most recently completed financial period,
together with the management’s discussion and analysis of such financial results and the auditor’s report thereon, and one
copy of any interim financial statements subsequent to the financial statements of the Corporation that have been filed for any period
after the end of its most recently completed financial period; and
|
The Meeting Materials and additional information
relating to the Corporation will be available on SEDAR at www.sedar.com and on the Corporation’s website at https://digihost.ca/investors/.
Financial information about the Corporation may be found in the Corporation’s consolidated financial statements and management’s
discussion and analysis for its most recently completed financial period.
APPROVAL
The contents of this Circular and the sending
thereof to the Shareholders have been approved by the Board.
DATED this 28th day of June, 2021.
|
|
BY ORDER OF THE BOARD OF DIRECTORS
|
|
|
|
|
|
(Signed) “Michel Amar”
|
|
|
|
|
|
Michel Amar
|
|
|
Chief Executive Officer and Chairman
|
SCHEDULE “A” DIGIHOST TECHNOLOGY
INC. (the “Corporation”)
AUDIT COMMITTEE CHARTER
MANDATE
The Audit Committee (hereinafter referred to as
the “Audit Committee”) shall i) assist the Board of Directors in its oversight role with respect to the quality and
integrity of the financial information; ii) assess the effectiveness of the Corporation’s risk management and compliance practices;
iii) assess the independent auditor’s performance, qualifications and independence; iv) assess the performance of the Corporation’s
internal audit function; v) ensure the Corporation’s compliance with legal and regulatory requirements, and vi) prepare such reports
of the Committee required to be included in any Management Information Circular in accordance with applicable laws or the rules of applicable
securities regulatory authorities.
STRUCTURE AND OPERATIONS
The committee shall be composed of not less than
three Directors. A majority of the members of the Committee shall not be an Officer or employee of the Corporation. All members shall
satisfy the applicable independence and experience requirements of the laws governing the Corporation, the applicable stock exchanges
on which the Corporation’s securities are listed and applicable securities regulatory authorities.
Each member of the Committee shall be financially
literate as such qualification is interpreted by the Board of Directors in its business judgment.
Members of the Committee shall be appointed or
reappointed at the annual meeting of the Corporation and in the normal course of business will serve a minimum of three years. Each member
shall continue to be a member of the Committee until a successor is appointed, unless the member resigns, is removed or ceases to be a
Director. The Board of Directors may fill a vacancy that occurs in the Committee at any time.
The Board of Directors or, in the event of its
failure to do so, the members of the Committee, shall appoint or reappoint, at the annual meeting of the Corporation a Chairman among
their number. The Chairman shall not be a former Officer of the Corporation. Such Chairman shall serve as a liaison between members and
senior management. The time and place of meetings of the Committee and the procedure at such meetings shall be determined from time to
time by the members therefore provided that:
|
|
(a)
|
a quorum for meetings shall be at least three members;
|
|
|
(b)
|
the Committee shall meet at least quarterly;
|
|
|
(c)
|
notice of the time and place of every meeting shall be given in writing or by telephone, facsimile, email
or other electronic communication to each member of the Committee at least 24 hours in advance of such meeting;
|
|
|
(d)
|
a resolution in writing signed by all directors entitled to vote on that resolution at a meeting of the
Committee is as valid as if it had been passed at a meeting of the Committee.
|
The Committee shall report to the Board of Directors
on its activities after each of its meetings. The Committee shall review and assess the adequacy of this charter annually and, where necessary,
will recommend changes to the Board of Directors for its approval. The Committee shall undertake and review with the Board of Directors
an annual performance evaluation of the Committee, which shall compare the performance of the Committee with the requirements of this
charter and set forth the goals and objectives of the Committee for the upcoming year. The performance evaluation by the Committee shall
be conducted in such manner as the Committee deems appropriate. The report to the Board of Directors may take the form of an oral report
by the chairperson of the Committee or any other designated member of the Committee.
SPECIFIC DUTIES
Oversight of the Independent Auditor
|
|
●
|
Sole authority to appoint or replace the independent auditor (subject to shareholder ratification) and
responsibility for the compensation and oversight of the work of the independent auditor (including resolution of disagreements between
Management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related
work. The independent auditor shall report directly to the Committee.
|
|
|
●
|
Sole authority to pre-approve all audit services as well as non-audit services (including the fees, terms
and conditions for the performance of such services) to be performed by the independent auditor.
|
|
|
●
|
Evaluate the qualifications, performance and independence of the independent auditor, including (i) reviewing
and evaluating the lead partner on the independent auditor's engagement with the Corporation, and (ii) considering whether the auditor's
quality controls are adequate and the provision of permitted non -audit services is compatible with maintaining the auditor's independence.
|
|
|
●
|
Obtain and review a report from the independent auditor at least annually regarding: the independent auditor's
internal quality-control procedures; any material issues raised by the most recent internal quality-control review, or peer review, of
the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one
or more independent audits carried out by the firm; any steps taken to deal with any such issues; and all relationships between the independent
auditor and the Corporation.
|
|
|
●
|
Review and discuss with Management and the independent auditor prior to the annual audit the scope, planning
and staffing of the annual audit.
|
|
|
●
|
Ensure the rotation of the lead (or coordinating) audit partner having primary responsibility for the
audit and the audit partner responsible for reviewing the audit as required by law.
|
|
|
●
|
Review as necessary policies for the Corporation's hiring of employees or former employees of the independent
auditor.
|
Financial Reporting
|
|
●
|
Review and discuss with Management and the independent auditor the annual audited financial statements
prior to the publication of earnings.
|
|
|
●
|
Review and discuss with Management the Corporation's annual and quarterly disclosures made in Management's
Discussion and Analysis. The Committee shall approve any reports for inclusion in the Corporation's Annual Report, as required by applicable
legislation.
|
|
|
●
|
Review and discuss with Management and the independent auditor management's report on its assessment of
internal controls over financial reporting and the independent auditor's attestation report on management's assessment.
|
|
|
●
|
Review and discuss with Management the Corporation's quarterly financial statements prior to the publication
of earnings.
|
|
|
●
|
Review and discuss with Management and the independent auditor at least annually significant financial
reporting issues and judgments made in connection with the preparation of the Corporation's financial statements, including any significant
changes in the Corporation's selection or application of accounting principles, any major issues as to the adequacy of the Corporation's
internal controls and any special steps adopted in light of material control deficiencies.
|
|
|
●
|
Review and discuss with Management and the independent auditor at least annually reports from the independent
auditors on: critical accounting policies and practices to be used; significant financial reporting issues, estimates and judgments made
in connection with the preparation of the financial statements; alternative treatments of financial information within generally accepted
accounting principles that have been discussed with Management, ramifications of the use of such alternative disclosures and treatments,
and the treatment preferred by the independent auditor; and other material written communications between the independent auditor and
Management, such as any management letter or schedule of unadjusted differences.
|
|
|
●
|
Discuss with the independent auditor at least annually any “Management” or “internal
control” letters issued or proposed to be issued by the independent auditor to the Corporation.
|
|
|
●
|
Review and discuss with Management and the independent auditor at least annually any significant changes
to the Corporation's accounting principles and practices suggested by the independent auditor, internal audit personnel or Management.
|
|
|
●
|
Discuss with Management the Corporation's earnings press releases, including the use of “pro forma”
or “adjusted” non-GAAP information, as well as financial information and earnings guidance (if any) provided to analysts and
rating agencies.
|
|
|
●
|
Review and discuss with Management and the independent auditor at least annually the effect of regulatory
and accounting initiatives as well as off-balance sheet structures on the Corporation's financial statements.
|
|
|
●
|
Review and discuss with the Chief Executive Officer and the Chief Financial Officer the procedures undertaken
in connection with the Chief Executive Officer and Chief Financial Officer certifications for the annual filings with applicable securities
regulatory authorities.
|
|
|
●
|
Review disclosures made by the Corporation's Chief Executive Officer and Chief Financial Officer during
their certification process for the annual filing with applicable securities regulatory authorities about any significant deficiencies
in the design or operation of internal controls which could adversely affect the Corporation's ability to record, process, summarize and
report financial data or any material weaknesses in the internal controls, and any fraud involving Management or other employees who have
a significant role in the Corporation's internal controls.
|
|
|
●
|
Discuss with the Corporation's General Counsel at least annually any legal matters that may have a material
impact on the financial statements, operations, assets or compliance policies and any material reports or inquiries received by the Corporation
or any of its subsidiaries from regulators or governmental agencies.
|
Oversight of Risk Management
|
|
●
|
Review and approve periodically Management's risk philosophy and risk management policies.
|
|
|
●
|
Review with Management at least annually reports demonstrating compliance with risk management policies.
|
|
|
●
|
Review with Management the quality and competence of Management appointed to administer risk management
policies.
|
|
|
●
|
Review reports from the independent auditor at least annually relating to the adequacy of the Corporation's
risk management practices together with Management's responses.
|
|
|
●
|
Discuss with Management at least annually the Corporation's major financial risk exposures and the steps
Management has taken to monitor and control such exposures, including the Corporation's risk assessment and risk management policies.
|
Oversight of Regulatory Compliance
|
|
●
|
Establish procedures for the receipt, retention and treatment of complaints received by the Corporation
regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns
regarding questionable accounting or auditing matters.
|
|
|
●
|
Discuss with Management and the independent auditor at least annually any correspondence with regulators
or governmental agencies and any published reports which raise material issues regarding the Corporation's financial statements or accounting.
|
|
|
●
|
Meet with the Corporation's regulators, according to applicable law.
|
|
|
●
|
Exercise such other powers and perform such other duties and responsibilities as are incidental to the
purposes, duties and responsibilities specified herein and as may from time to time be delegated to the Committee by the Board of Directors.
|
FUNDING FOR THE INDEPENDENT AUDITOR AND RETENTION
OF OTHER INDEPENDENT ADVISORS
The Corporation shall provide for appropriate
funding, as determined by the Committee, for payment of compensation to the independent auditor for the purpose of issuing an audit report
and to any advisors retained by the Committee. The Committee shall also have the authority to retain such other independent advisors as
it may from time to time deem necessary or advisable for its purposes and the payment of compensation therefore shall also be funded by
the Corporation.
Procedures for Receipt of Complaints and Submissions
Relating to Accounting Matters
|
|
1.
|
The Corporation shall inform employees on the Corporation’s intranet, if there is one, or via a
newsletter or e- mail that is disseminated to all employees at least annually, of the officer (the “Complaints Officer”) designated
from time to time by the Committee to whom complaints and submissions can be made regarding accounting, internal accounting controls or
auditing matters or issues of concern regarding questionable accounting or auditing matters.
|
|
|
2.
|
The Complaints Officer shall be informed that any complaints or submissions so received must be kept confidential
and that the identity of employees making complaints or submissions shall be kept confidential and shall only be communicated to the Committee
or the Chair of the Committee.
|
|
|
3.
|
The Complaints Officer shall be informed that he or she must report to the Committee as frequently as
such Complaints Officer deems appropriate, but in any event no less frequently than on a quarterly basis prior to the quarterly meeting
of the Committee called to approve interim and annual financial statements of the Corporation.
|
|
|
4.
|
Upon receipt of a report from the Complaints Officer, the Committee shall discuss the report and take
such steps as the Committee may deem appropriate.
|
|
|
5.
|
The Complaints Officer shall retain a record of a complaint or submission received for a period o f six
years following resolution of the complaint or submission.
|
Procedures for Approval of Non-Audit Services
|
|
1.
|
The Corporation’s external auditors shall be prohibited from performing for the Corporation the
following categories of non-audit services:
|
|
|
(a)
|
bookkeeping or other services related to the Corporation’s accounting records or financial statements;
|
|
|
(b)
|
financial information systems design and implementation;
|
|
|
(c)
|
appraisal or valuation services, fairness opinion or contributions-in-kind reports;
|
|
|
(e)
|
internal audit outsourcing services;
|
|
|
(f)
|
management functions;
|
|
|
(h)
|
broker or dealer, investment adviser or investment banking services;
|
|
|
(j)
|
expert services unrelated to the audit; and
|
|
|
(k)
|
any other service that the Canadian Public Accountability Board determines is impermissible.
|
|
|
2.
|
In the event that the Corporation wishes to retain the services of the Corporation’s external auditors
for tax compliance, tax advice or tax planning, the Chief Financial Officer of the Corporation shall consult with the Chair of the Committee,
who shall have the authority to approve or disapprove on behalf of the Committee, such non- audit services. All other non-audit services
shall be approved or disapproved by the Committee as a whole.
|
|
|
3.
|
The Chief Financial Officer of the Corporation shall maintain a record of non-audit services approved
by the Chair of the Committee or the Committee for each fiscal year and provide a report to the Committee no less frequently than on a
quarterly basis.
|
SCHEDULE “B” DIGIHOST TECHNOLOGY
INC. (the “Corporation”)
RESTRICTED SHARE UNIT INCENTIVE PLAN
DIGIHOST TECHNOLOGY INC.
RESTRICTED SHARE UNIT INCENTIVE PLAN
Digihost Technology Inc.,
a corporation incorporated under the laws of British Columbia (the “Company”), sets forth herein the terms of its Restricted
Share Unit Incentive Plan (the “Plan”), as follows:
The Plan is intended to enhance
the Company’s and its Affiliates’ (as defined herein) ability to attract and retain highly qualified officers, directors,
key employees, consultants and other persons, and to motivate such officers, directors, key employees, consultants and other persons to
serve the Company and its Affiliates and to expend maximum effort to improve the business results and earnings of the Company, by providing
to such persons an opportunity to acquire or increase a direct proprietary interest in the operations and future success of the Company.
To this end, the Plan provides for the grant of restricted share units. Any of these awards of restricted share units may, but need not,
be made as performance incentives to reward attainment of annual or long-term performance goals in accordance with the terms hereof (as
such performance goals are specified in the Award Agreement).
For purposes of interpreting
the Plan and related documents (including Award Agreements), the following definitions shall apply:
2.1 “Affiliate”
means, with respect to the Company, any person or company if it is a Subsidiary entity of the other or if both are Subsidiary entities
of the same person or company within the meaning of Multilateral Instrument 61-101 – Protection of Minority Shareholders in Special
Transactions.
2.2 “Award”
means a grant of Restricted Share Units under the Plan.
2.3 “Award
Agreement” means the written agreement between the Company and a Grantee that evidences and sets out the terms and
conditions of an Award.
2.4 “Board”
means the Board of Directors of the Company.
2.5 “Cause”
means, as determined by the Board and unless otherwise provided in an applicable agreement with the Company or an Affiliate, (i) gross
negligence or willful misconduct in connection with the performance of duties; (ii) conviction of a criminal offense; or (iii) material
breach of any term of any employment, consulting or other services, confidentiality, intellectual property or non-competition agreements,
if any, between the Service Provider and the Company or an Affiliate.
2.6 “Change
of Control” means, unless the Board determines otherwise, the happening, in a single transaction or in a series of related transactions,
of any of the following events:
|
|
(i)
|
any transaction (other than a transaction described in clause (iii) below) pursuant to which any Person
or group of Persons acting jointly or in concert acquires the direct or indirect beneficial ownership of securities of the Company representing
50% or more of the aggregate voting power of all of the Company’s then issued and outstanding securities entitled to vote in the
election of directors of the Company, other than any such acquisition that occurs upon the exercise or settlement of options or other
securities granted by the Company under any of the Company’s equity incentive plans;
|
|
|
(ii)
|
there is consummated an arrangement, amalgamation, merger, consolidation or similar transaction involving
(directly or indirectly) the Company and, immediately after the consummation of such arrangement, amalgamation, merger, consolidation
or similar transaction, the shareholders of the Company immediately prior thereto do not beneficially own, directly or indirectly, either
(A) outstanding voting securities representing more than 50% of the combined outstanding voting power of the surviving or resulting entity
in such amalgamation, merger, consolidation or similar transaction or (B) more than 50% of the combined outstanding voting power of the
parent of the surviving or resulting entity in such arrangement, amalgamation merger, consolidation or similar transaction, in each case
in substantially the same proportions as their beneficial ownership of the outstanding voting securities of the Company immediately prior
to such transaction;
|
|
|
(iii)
|
the sale, lease, exchange, license or other disposition of all or substantially all of the Company’s
assets to a Person other than a Person that was an Affiliate of the Company at the time of such sale, lease, exchange, license or other
disposition, other than a sale, lease, exchange, license or other disposition to an entity, more than 50% of the combined voting power
of the voting securities of which are beneficially owned by shareholders of the Company in substantially the same proportions as their
beneficial ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, exchange, license or other
disposition;
|
|
|
(iv)
|
the passing of a resolution by the Board or shareholders of
the Company to substantially liquidate the assets of the Company or wind up the Company’s business or significantly rearrange its
affairs in one or more transactions or series of transactions or the commencement of proceedings for such a liquidation, winding-up or
re-arrangement (except where such re-arrangement is part of a bona fide reorganization of the Company in circumstances where the business
of the Company is continued and the shareholdings remain substantially the same following the re-arrangement); or
|
|
|
(v)
|
individuals who, on the Effective Date, are members of the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the members of the Board; provided, however, that if the appointment or election
(or nomination for election) of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board
then still in office, such new member will, for purposes of this Plan, be considered as a member of the Incumbent Board;
|
2.7 “Class
A Shares” means the superior voting shares in the capital of the Company;
2.8 “Class
B Shares” means the subordinate voting shares in the capital of the Company;
2.9 “Committee”
means the Compensation committee of the Board, and designated from time to time by resolution of, the Board, which shall be
constituted as provided in Section 3.2.
2.10 “Company”
means Digihost Technology Inc.
2.11 “Consultant”
means, in relation to the Company, an individual (other than an Employee or a Director of the Issuer) or company that:
|
|
(a)
|
is engaged to provide on an ongoing bona fide basis, consulting, technical, management or other services
to the Company or to an Affiliate of the Company, other than services provided in relation to a distribution;
|
|
|
(b)
|
provides the services under a written contract between the Company or the Affiliate and the individual
or the company, as the case may be;
|
|
|
(i)
|
in the reasonable opinion of the Company, spends or will spend a significant amount of time and attention
on the affairs and business of the Company or an Affiliate of the Company; and
|
|
|
(ii)
|
has a relationship with the Company or an Affiliate of the Company that enables the individual to be knowledgeable
about the business and affairs of the Company.
|
2.12 “Director”
means a director, senior officer or Management Company Employee of the Company.
2.13 “Effective
Date” means June 28, 2021, the date the Plan is approved by the Board.
2.14 “Employee”
means:
|
|
(a)
|
an individual who is considered an employee of the Company or its Subsidiary under the Income Tax Act
(Canada) (and for whom income tax, employment insurance and CPP deductions must be made at source);
|
|
|
(b)
|
an individual who works full-time for the Company or its Subsidiary providing services normally provided
by an employee and who is subject to the same control and direction by the Company over the details and methods of work as an employee
of the Company, but for whom income tax deductions are not made at source; or
|
|
|
(c)
|
an individual who works for the Company or its Subsidiary on a continuing and regular basis for a minimum
amount of time per week (the number of hours should be disclosed in the submission) providing services normally provided by an employee
and who is subject to the same control and direction by the Company over the details and methods of work as an employee of the Company,
but for whom income tax deductions are not made at source.
|
2.15 “Fair
Market Value” means the value of a Share, determined as follows: if on the Grant Date or other determination date the Class
B Shares are listed on the TSX Venture Exchange or another established national or regional stock exchange or is publicly traded on an
established securities market, the Fair Market Value of the Company’s Class B Shares shall be the closing price of the Class B Shares
on such exchange or in such market (if there is more than one such exchange or market the Board shall determine the appropriate exchange
or market) on the Grant Date or such other determination date (or if there is no such reported closing price, the Fair Market Value shall
be the mean between the highest bid and lowest asked prices or between the high and low sale prices on such trading day) or, if no sale
of Class B Shares is reported for such trading day, on the next preceding day on which any sale shall have been reported. If the Class
B Shares are not listed on such an exchange, quoted on such system or traded on such a market, Fair Market Value shall be the value of
a Class B Share as determined by the Board in good faith.
2.16 “GAAP”
means, at any time, accounting principles generally accepted in Canada applying IFRS, including those set out in the Handbook of the Chartered
Professional Accountants of Canada, at the relevant time applied on a consistent basis.
2.17 “Grant
Date” means, as determined by the Board, the latest to occur of (i) the date as of which the Board approves an Award, (ii) the
date on which the recipient of an Award first becomes eligible to receive an Award under Section 6 hereof, or (iii) such other date as
may be specified by the Board.
2.18 “Grantee”
means a person who receives or holds an Award under the Plan.
2.19 “IFRS”
means International Financial Reporting Standards adopted by the International Accounting Standards Board from time to time.
2.20 “Management
Company Employee” means an individual employed by a person providing management services to the Company, which are required
for the ongoing successful operation of the business enterprise of the Company, but excluding a person engaged in investor relations activities.
2.21 “Outside
Director” means a member of the Board who is not an officer or employee of the Company.
2.22 “Plan”
means this Digihost Technology Inc. Restricted Share Unit Incentive Plan.
2.23 “Restricted
Share Unit” or “RSU” means a bookkeeping entry representing the right to receive one Share, subject to the
restrictions and vesting provisions provided herein, and awarded to a Grantee pursuant to Section 8 hereof.
2.24 “Securities
Act” means the Securities Act (Ontario), as now in effect or as hereafter amended.
2.25 “Service”
means service of a Service Provider to the Company or an Affiliate. Unless otherwise stated in the applicable Award Agreement, a Grantee’s
change in position or duties shall not result in interrupted or terminated Service, so long as such Grantee continues to be a Service
Provider to the Company or an Affiliate. Subject to the preceding sentence, whether a termination of Service shall have occurred for purposes
of the Plan shall be determined by the Board, which determination shall be final, binding and conclusive.
2.26 “Service
Provider” means an Employee, Director, or Consultant of the Company or its Subsidiary.
2.27 “Shares”
means the Class A Shares and Class B Shares in the capital of the Company.
2.28 “Subsidiary”
means any “subsidiary entity” of the Company within the meaning of Multilateral Instrument 61-101 – Protection of
Minority Shareholders in Special Transactions.
|
|
3.
|
ADMINISTRATION OF THE PLAN
|
The Board shall have such
powers and authorities related to the administration of the Plan as are consistent with the Company’s articles and applicable law.
The Board shall have full power and authority to take all actions and to make all determinations required or provided for under the Plan,
any Award or any Award Agreement, and shall have full power and authority to take all such other actions and make all such other determinations
not inconsistent with the specific terms and provisions of the Plan that the Board deems to be necessary or appropriate to the administration
of the Plan, any Award or any Award Agreement. All such actions and determinations shall be by the affirmative vote of a majority of the
members of the Board present at a meeting or by unanimous consent of the Board executed in writing in accordance with the Company’s
articles and applicable law. The interpretation and construction by the Board of any provision of the Plan, any Award or any Award Agreement
shall be final, binding and conclusive.
The Board from time to time
may delegate to the Committee such powers and authorities related to the administration and implementation of the Plan, as set forth in
Section 3.1 above and other applicable provisions, as the Board shall determine, other than the Board’s power and authority to grant
awards or to issue Class B Shares to Grantees upon the vesting of an Award, consistent with the articles of the Company and applicable
law.
(i) Except as provided in
Subsection (ii) and except as the Board may otherwise determine, the Committee, if any, appointed by the Board to administer the Plan
shall consist of two or more Outside Directors of the Company who meet such requirements as may be established from time to time by the
securities regulatory authorities for such incentive plans and who comply with the independence requirements of applicable securities
regulatory policies.
(ii) The Board may also appoint
one or more separate committees of the Board, each composed of one or more directors of the Company who need not be Outside Directors,
who may administer the Plan and may determine all terms of such Awards.
Notwithstanding the foregoing,
the Board may not delegate its authority to grant Awards or to issue Class B Shares to Grantees upon the vesting of an Award.
In the event that the Plan,
any Award or any Award Agreement entered into hereunder provides for any action to be taken by or determination to be made by the Board,
such action may be taken or such determination may be made by the Committee if the power and authority to do so has been delegated to
the Committee by the Board as provided for in this Section. Unless otherwise expressly determined by the Board, any such action or determination
by the Committee shall be final, binding and conclusive. To the extent permitted by law, the Committee may delegate its authority under
the Plan to a member of the Board.
Subject to the other terms
and conditions of the Plan, the Board shall have full and final authority to:
|
|
(ii)
|
determine the number of Class B Shares to be subject to an Award;
|
|
|
(iii)
|
establish the terms and conditions of each Award (including,
but not limited to, the nature and duration of any restriction or condition (or provision for lapse thereof) relating to the vesting
or forfeiture of an Award and any other terms or conditions);
|
|
|
(iv)
|
prescribe the form of each Award Agreement evidencing an Award;
|
|
|
(iv)
|
establish performance criteria; and
|
|
|
(v)
|
amend, modify, or supplement the terms of any outstanding Award. Such authority specifically includes
the authority, in order to effectuate the purposes of the Plan but without amending the Plan, to modify Awards to eligible individuals
who are foreign nationals or are individuals who are employed outside Canada to recognize differences in local law, tax policy, or custom.
|
As a condition to any subsequent
Award, the Board shall have the right, at its discretion, to require Grantees to return to the Company Awards previously made under the
Plan. Subject to the terms and conditions of the Plan, any such new Award shall be upon such terms and conditions as are specified by
the Board at the time the new Award is made. The Board shall have the right, in its discretion, to make Awards in substitution or exchange
for any other award under another plan of the Company, any Affiliate, or any business entity to be acquired by the Company or an Affiliate.
The Company may retain the right in an Award Agreement to cause a forfeiture of the gain realized by a Grantee on account of actions taken
by the Grantee in violation or breach of or in conflict with any employment agreement, non- competition agreement, any agreement prohibiting
solicitation of employees or clients of the Company or any Affiliate thereof or any confidentiality obligation with respect to the Company
or any Affiliate thereof or otherwise in competition with the Company or any Affiliate thereof, to the extent specified in such Award
Agreement applicable to the Grantee. Furthermore, the Company may, within 30 days, annul an Award if the Grantee is an employee of the
Company or an Affiliate thereof and is terminated for Cause. The grant of any Award shall be contingent upon the Grantee executing the
appropriate Award Agreement.
No member of the Board or
of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Award or Award Agreement.
Notwithstanding any other
provision of this Plan to the contrary, the Company may elect to satisfy any requirement under this Plan for the delivery of share certificates
through the use of book-entry.
|
|
4.
|
SHARES SUBJECT TO THE PLAN
|
The Class B Shares issued
or to be issued under the Plan shall be authorized but unissued shares. Subject to adjustment as provided in Section 11 hereof, the maximum
number of Class B Shares available for issuance under the Plan shall be 7,494,068. The number of Class B Shares issued or to be issued
under the Plan and all other security based compensation arrangements, at any time, shall not exceed 20% of the total number of the issued
and outstanding Shares. If any Class B Shares covered by an Award are forfeited, or if an Award terminates without delivery of any Class
B Shares subject thereto, then the number of Class B Shares counted against the aggregate number of Class B Shares available under the
Plan with respect to such Award shall, to the extent of any such forfeiture or termination, again be available for making Awards under
the Plan. The Board shall have the right to substitute or assume Awards in connection with mergers, reorganizations, separations, or other
transactions. The number of Class B Shares reserved pursuant to this Section 4 may be increased by the corresponding number of Awards
assumed and, in the case of a substitution, by the net increase in the number of Class B Shares subject to Awards before and after the
substitution.
Notwithstanding the foregoing:
|
|
(i)
|
the number of securities issuable to insiders of the Company under all security-based compensation arrangements,
including the Plan, at any time, cannot exceed 10% of the issued and outstanding Shares;
|
|
|
(ii)
|
the number of securities issued to insiders of the Company pursuant to such arrangements, within any one-year
period, cannot exceed 10% of the issued and outstanding Shares;
|
|
|
(iii)
|
the number of Class B Shares issuable to any one Service Provider or other individual pursuant to an Award
within any one-year period, cannot exceed 1% of the issued and outstanding Shares;
|
|
|
(iv)
|
the aggregate number of Class B Shares issuable to all Service
Providers pursuant to Awards within any one-year period, cannot exceed 2% of the issued and outstanding Shares; and
|
|
|
(v)
|
the annual grant of Awards under this Plan to any one Non-Employee Director shall not exceed $150,000
in value excluding any one time sign on awards or equity granted in lieu of cash retainers.
|
|
|
5.
|
EFFECTIVE DATE, DURATION AND AMENDMENTS
|
The Plan shall be effective
as of the Effective Date, subject to approval of the Plan by the Company’s shareholders within one year of the Effective Date. Upon
approval of the Plan by the shareholders of the Company as set forth above, all Awards made under the Plan on or after the Effective Date
shall be fully effective as if the shareholders of the Company had approved the Plan on the Effective Date. If the shareholders fail to
approve the Plan within one year after the Effective Date, any Awards made hereunder shall be null and void and of no effect.
The Plan shall terminate automatically
ten (10) years after the Effective Date and may be terminated on any earlier date or extended as provided in Section 5.3.
|
|
5.3
|
Amendment and Termination of the Plan
|
|
|
i.
|
The Board may suspend or terminate the Plan at any time, or from time to time amend or revise the terms
of the Plan or any granted Award without the consent of the Participants provided that such suspension, termination, amendment or revision
shall:
|
|
|
(a)
|
not adversely alter or impair the rights of any Participant,
without the consent of such Participant except as permitted by the provisions of the Plan;
|
|
|
(b)
|
be in compliance with applicable law and with the prior approval,
if required, of the shareholders of the Company, the TSXV, or any other regulatory body having authority over the Company; and
|
|
|
(c)
|
be subject to shareholder approval, where required by law or
the requirements of the TSXV provided that the Board may, from time to time, in its absolute discretion and without approval of the shareholders
of the Company make the following amendments to this Plan:
|
|
|
(i)
|
any amendment to the vesting provision, if applicable, or assignability
provisions of the Awards;
|
|
|
(ii)
|
any amendment regarding the effect of termination of a Participant’s
employment or engagement;
|
|
|
(iii)
|
any amendment which accelerates the date on which any RSU may
vest under the Plan;
|
|
|
(iv)
|
any amendment necessary to comply with applicable law or the
requirements of the TSXV or any other regulatory body;
|
|
|
(v)
|
any amendment of a “housekeeping” nature, including
to clarify the meaning of an existing provision of the Plan, correct or supplement any provision of the Plan that is inconsistent with
any other provision of the Plan, correct any grammatical or typographical errors or amend the definitions in the Plan;
|
|
|
(vi)
|
any amendment regarding the administration of the Plan;
|
|
|
(vii)
|
any amendment to add provisions permitting the grant of Awards
settled otherwise than with Class B Shares issued from treasury, a form of financial assistance or clawback, and any amendment to a provision
permitting the grant of Awards settled otherwise than with Class B Shares issued from treasury, a form of financial assistance or clawback
which is adopted; and
|
|
|
(viii)
|
any other amendment that does not require the approval of the
shareholders of the Company under Section 5.3(ii).
|
|
|
ii.
|
Notwithstanding Section 5.3(iii)., the Board shall be required
to obtain shareholder approval to make the following amendments:
|
|
|
(a)
|
any increase to the maximum number of Class B Shares issuable
under the Plan, except in the event of an adjustment pursuant to Article 11
|
|
|
(b)
|
any amendment which extends the Restriction Period of any RSU
beyond the original expiry date or Restriction Period [to the extent such amendment benefits a Grantee];
|
|
|
(c)
|
any amendment which increases the maximum number of Class B
Shares that may be (i) issuable to Grantees at any time; or (ii) issued to Grantees under the Plan and any other proposed or established
Share Compensation Arrangement in a one-year period, except in case of an adjustment pursuant to Article 11; and
|
|
|
(d)
|
any amendment to the amendment provisions of the Plan;
|
provided that Class B Shares held directly or
indirectly by Grantees benefiting from the amendments shall be excluded when obtaining such shareholder approval.
|
|
6.
|
AWARD ELIGIBILITY AND LIMITATIONS
|
Subject to this Section 6, Awards may be made
under the Plan to any Service Provider, as the Board shall determine and designate from time to time. The Company and the Grantee of Restricted
Share Units are responsible for ensuring and confirming that the Grantee of Restricted Share Units is a bona fide Service Provider.
|
|
6.2
|
Investor Relations Activities
|
Persons providing investor relations activities
to the Company shall not be eligible to receive any Restricted Share Units under the Plan.
An eligible person may receive more than one Award,
subject to such restrictions as are provided herein.
Each Award granted pursuant to the Plan shall
be evidenced by an Award Agreement, in such form or forms as the Board shall from time to time determine. Award Agreements granted from
time to time or at the same time need not contain similar provisions but shall be consistent with the terms of the Plan.
|
|
8.
|
TERMS AND CONDITIONS OF RESTRICTED SHARE UNITS
|
|
|
8.1
|
Grant of Restricted Share Units
|
Awards shall be in the form of Restricted Share
Units. Subject to the restrictions and vesting provisions provided in Section 8.2, each RSU shall entitle the Grantee to receive one Class
B Share.
|
|
8.2
|
Restrictions and Vesting
|
At the time a grant of Restricted Share Units
is made, the Board may, in its sole discretion, establish a period of time (a “Vesting Period”) applicable to such
Restricted Share Units. Each Award of Restricted Share Units may be subject to a different Vesting Period. The Board may, in its sole
discretion, at the time a grant of Restricted Share Units is made, prescribe restrictions in addition to or other than the expiration
of the Vesting Period, including the satisfaction of corporate or individual performance objectives, which may be applicable to all or
any portion of the Restricted Share Units in accordance with Section 9.1. Notwithstanding the foregoing, (i) Restricted Share Units shall
vest in full from a period beginning on the Grant Date to the date which is not later than three (3) years from the Grant Date; (ii) Restricted
Share Units for which vesting may be accelerated by achieving performance targets shall vest in full from a period beginning on the Grant
Date to the date which is not later than three (3) years from the Grant Date; and, (iii) at the election of an Outside Director at the
time the Award is granted, Restricted Share Units may vest in full from a period beginning on the Grant Date to the date which is not
later than three (3) years from the Grant Date, and (b) if no election is made, upon the earlier of a Change of Control in accordance
with Section 11.2 or his or her resignation from the Board.
Restricted Share Units may not be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of (other than to the Grantee’s beneficiary or estate, as the case may be,
upon the death of the Grantee) during the Vesting Period.
Upon the death of a Grantee, any RSUs granted
to such Grantee which, prior to the Grantee’s death, have not vested, will immediately vest and the Grantee’s estate shall
be entitled to receive payment in accordance with Section 8.6 hereof.
|
|
8.3
|
Restricted Share Unit Accounts
|
An account will be maintained by the Secretary
of the Company, or such other officer of the Company as the Board may designate, in the name and for the benefit of the Grantee, in which
will be recorded the number of RSUs granted to the Grantee, the Grant Date and expiry date of the RSUs.
|
|
8.4
|
Rights of Holders of Restricted Share Units
|
|
|
(a)
|
Voting and Dividend Rights
|
Grantees of Restricted Share Units shall have
no rights as shareholders of the Company. The Board may provide in an Award Agreement evidencing a grant of Restricted Share Units that
the Grantee shall be entitled to receive, upon the Company’s payment of a cash dividend on its outstanding Class B Shares, a cash
payment for each Restricted Share Unit granted equal to the per-share dividend paid on the outstanding Class B Shares. Such Award Agreement
may also provide that such cash payment will be deemed reinvested in additional Restricted Share Units at a price per unit equal to the
Fair Market Value of the Class B Shares on the date that such dividend is paid.
A Grantee shall have no rights other than those
of a general creditor of the Company. Restricted Share Units represent an unfunded and unsecured obligation of the Company, subject to
the terms and conditions of the applicable Award Agreement.
|
|
8.5
|
Termination of Service
|
Unless the Board otherwise provides in an Award
Agreement or in writing after the Award Agreement is issued, subject to prior TSX Venture Exchange approval, upon the termination of a
Grantee’s Service, any Restricted Share Units granted to a Grantee that have not vested and will not vest within 30 days from the
date of termination, or with respect to which all applicable restrictions and conditions have not lapsed, shall immediately be deemed
forfeited. Upon forfeiture of Restricted Share Units, the Grantee shall have no further rights with respect to such Award, including but
not limited to any right to receive dividends with respect to the Restricted Share Units.
|
|
8.6
|
Cash Payment or Delivery of Shares
|
Upon the expiration or termination of the Vesting
Period and the satisfaction of any other restrictions prescribed by the Board, the Restricted Share Units shall vest and shall be settled
in either cash or Class B Shares, as the Committee may so determine, unless otherwise provided in the Award Agreement.
A cash payment shall be in the amount equal to
the “Market Price” per share as defined in the policies of the applicable stock exchange as the trading day prior to the date
of vesting, and certified funds shall be paid for the Restricted Share Units valued at the Market Price. A Class B Share payment shall
be for Class B Shares issued by the Company from treasury and a share certificate for that number of Class B Shares equal to the number
of vested RSUs shall be free of all restrictions. The cash payment or Class B Shares shall be delivered to the Grantee or the Grantee’s
beneficiary or estate, as the case may be.
The Committee shall specify the circumstances
in which Awards shall be made or forfeited in the event of termination of Service by the Grantee prior to vesting.
If the Award is granted to a director, officer,
promoter or other insider of the Company, then the Award will bear an Exchange Hold Period (as defined in TSX Venture Exchange Policies),
and the following legend will be inserted onto the first page of the Award Agreement:
Without
prior written approval of the TSX Venture Exchange and compliance with all applicable securities legislation, the Class B Shares represented
by this agreement when vested and issued thereunder may not be sold, transferred, hypothecated or otherwise traded on or through the
facilities of the TSX Venture Exchange or otherwise in Canada or to or for the benefit of a Canadian resident until ♦, 20♦, [i.e.,
four months and one day after the date of Award grant].
|
|
9.
|
TERMS AND CONDITIONS OF AWARDS
|
|
|
9.1
|
Performance Conditions
|
The granting and vesting of RSUs may be subject
to such performance conditions as may be specified by the Board in the Award Agreement. The Board may use such business criteria and other
measures of performance as it may deem appropriate in establishing any performance conditions, and may exercise its discretion to reduce
the amounts payable under any Award subject to performance conditions.
|
|
9.2
|
Performance Goals Generally
|
The performance goals for Awards shall consist
of one or more business criteria and a targeted level or levels of performance with respect to each of such criteria, as specified by
the Committee consistent with this Section 9.1. Performance goals shall be objective and shall otherwise meet the requirements that the
level or levels of performance targeted by the Committee result in the achievement of performance goals being “substantially uncertain”.
The Committee may determine that Awards shall vest upon achievement of any one performance goal or that two or more of the performance
goals must be achieved as a condition to the vesting of an Award. Performance goals may differ for Awards granted to any one Grantee or
to different Grantees.
The Board, in its sole discretion, may establish
business criteria for the purpose of establishing performance goals in accordance with Section 9.1, including but not limited to, one
or more of the following business criteria for the Company, on a consolidated basis, and/or specified Subsidiaries or business units of
the Company (except with respect to the total shareholder return and earnings per share criteria): (1) total shareholder return; (2) such
total shareholder return as compared to total return (on a comparable basis) to a peer group of similar publicly available companies or
of a publicly available index such as, but not limited to, the S&P/TSX Composite Index; (3) past service to the Company; (4) net income;
(5) pre-tax earnings; (6) earnings before interest expense, taxes, depreciation and amortization; (7) pre- tax operating earnings after
interest expense and before bonuses, service fees, and extraordinary or special items; (8) operating margin; (9) earnings per share; (10)
return on equity; (11) return on capital; (12) return on investment; (13) operating earnings; (14) working capital; (15) ratio of debt
to shareholders’ equity; (16) revenue; and (17) free cash flow and free cash flow per share (18) project completion milestones.
Business criteria may be measured on an absolute basis or on a relative basis (i.e., performance relative to peer companies) and on a
GAAP or non-GAAP basis.
|
|
9.4
|
Timing For Establishing Performance Goals
|
Performance goals shall be established not later
than 90 days after the beginning of any performance period applicable to such Awards, or at such other date as may be determined by the
Board.
|
|
9.5
|
Written Determinations
|
All determinations by the Committee as to the
establishment of performance goals, the amount of any Award and as to the achievement of performance goals relating to Awards, and the
amount of any final Awards, shall be made in writing.
The Plan shall comply with the provisions of any
applicable law or regulation of any governmental authority, including without limitation any federal, state or provincial securities laws
or regulations and the requirements of any stock exchange having jurisdiction. The failure to comply with such laws or regulations, including
without limitation the Securities Act, may result in a termination of the Plan and/or the forfeiture of previously granted RSUs.
|
|
11.
|
EFFECT OF CHANGES IN CAPITALIZATION
|
If the number of outstanding Shares is increased
or decreased or the Class B Shares are changed into or exchanged for a different number or kind of shares or other securities of the Company
on account of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend
or other distribution payable in capital stock, or other increase or decrease in such shares effected without receipt of consideration
by the Company occurring after the Effective Date, the number and kinds of shares for which Awards may be made under the Plan shall be
adjusted proportionately and accordingly by the Company. In addition, the number and kind of shares for which Awards are outstanding shall
be adjusted proportionately and accordingly so that the proportionate interest of the Grantee immediately following such event shall,
to the extent practicable, be the same as immediately before such event. Notwithstanding the foregoing, in the event of any distribution
to the Company’s shareholders of securities of any other entity or other assets (including an extraordinary cash dividend but excluding
a non-extraordinary dividend payable in cash or in shares of the Company) without receipt of consideration by the Company, the Company
may, in such manner as the Company deems appropriate, adjust the number and kind of shares subject to outstanding Awards.
If the Company completes a transaction constituting
a Change of Control and within twelve (12) months following the Change of Control a Grantee who was also an officer or employee of, or
Consultant to, the Company prior to the Change of Control has their position, employment or consulting agreement terminated, or the Participant
is constructively dismissed, then all unvested Awards shall immediately vest and be settled.
Adjustments under Section 11.1 relating to Shares
or securities of the Company shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. No
fractional shares or other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment
shall be eliminated in each case by rounding downward to the nearest whole Class B Share. The Board may provide in the Award Agreement
at the time of grant, or any time thereafter with the consent of the Grantee, for different provisions to apply to an Award in place of
those described in Sections 11.1 and 11.3.
|
|
11.4
|
No Limitations on Company
|
The making of Awards pursuant to the Plan shall
not affect or limit in any way the right or power of the Company to make adjustments, reclassifications, reorganizations, or changes of
its capital or business structure or to merge, consolidate, dissolve, or liquidate, or to sell or transfer all or any part of its business
or assets.
|
|
12.1
|
Disclaimer of Rights
|
No provision in the Plan or in any Award or Award
Agreement shall be construed to confer upon any individual the right to remain in the employ or service of the Company or any Affiliate,
or to interfere in any way with any contractual or other right or authority of the Company either to increase or decrease the compensation
or other payments to any individual at any time, or to terminate any employment or other relationship between any individual and the Company.
In addition, notwithstanding anything contained in the Plan to the contrary, unless otherwise stated in the applicable Award Agreement,
no Award granted under the Plan shall be affected by any change of duties or position of the Grantee, so long as such Grantee continues
to be a director, officer, consultant or employee of the Company or an Affiliate. The obligation of the Company to issue Class B Shares
or pay any benefits pursuant to this Plan shall be interpreted as a contractual obligation only in respect of those amounts described
herein, in the manner and under the conditions prescribed herein. The Plan shall in no way be interpreted to require the Company to transfer
any amounts to a third party trustee or otherwise hold any amounts in trust or escrow for payment to any Grantee or beneficiary under
the terms of the Plan.
|
|
12.2
|
Nonexclusivity of the Plan
|
Neither the adoption of the Plan nor the submission
of the Plan to the shareholders of the Company for approval shall be construed as creating any limitations upon the right and authority
of the Board to adopt such other incentive compensation arrangements (which arrangements may be applicable either generally to a class
or classes of individuals or specifically to a particular individual or particular individuals) as the Board in its discretion determines
desirable.
The Company or an Affiliate, as the case may be,
shall have the right to deduct from payments of any kind otherwise due to a Grantee any federal, provincial, state, or local taxes of
any kind required by law to be withheld with respect to the vesting of an Award or upon the issuance of any Class B Shares upon the vesting
of an Award. At the time of such vesting, lapse, or exercise, the Grantee shall pay to the Company or the Affiliate, as the case may be,
any amount that the Company or the Affiliate may reasonably determine to be necessary to satisfy such withholding obligation.
The use of captions in this Plan or any Award
Agreement is for the convenience of reference only and shall not affect the meaning of any provision of the Plan or such Award Agreement.
Each Award granted under the Plan may contain
such other terms and conditions not inconsistent with the Plan as may be determined by the Board, in its sole discretion.
With respect to words used in this Plan, the singular
form shall include the plural form, the masculine gender shall include the feminine gender, etc., as the context requires.
If any provision of the Plan or any Award Agreement
shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof
shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction.
The validity and construction of this Plan and
the instruments evidencing the Award hereunder shall be governed by the laws of the Province of Ontario, other than any conflicts or choice
of law rule or principle that might otherwise refer construction or interpretation of this Plan and the instruments evidencing the Awards
granted hereunder to the substantive laws of any other jurisdiction.
|
|
12.9
|
No Representation or Warranty
|
The Company makes no representation or warranty
as to the future market value of any Class B Shares issued in accordance with the provisions of the Plan.
In the event of any conflict between the provisions
of this Plan and an Award Agreement, the provisions of this Plan shall govern.
Time is of the essence of this Plan and of each
Award Agreement. No extension of time will be deemed to be or to operate as a waiver of the essentiality of time.
SCHEDULE “C” DIGIHOST TECHNOLOGY
INC. (the “Corporation”)
ALTERATION TO ARTICLES – ADVANCE NOTICE
PROVISIONS
|
|
14.12
|
Nominations of Directors
|
|
|
(a)
|
Only persons who are nominated in accordance with the following
procedures shall be eligible for election as directors of the Company. Nominations of persons for election to the board may be made at
any annual meeting of shareholders, or at any special meeting of shareholders if one of the purposes for which the special meeting was
called was the election of directors:
|
|
|
(i)
|
by or at the direction of the board, including pursuant to a
notice of meeting;
|
|
|
(ii)
|
by or at the direction or request of one or more shareholders
pursuant to a proposal made in accordance with the provisions of the Business Corporations Act, or a requisition of the shareholders
made in accordance with the provisions of the Business Corporations Act; or
|
|
|
(iii)
|
by by any person (a “Nominating Shareholder”): (A)
who, at the close of business on the date of the giving of the notice provided for below in this Section 14.12 and on the record date
for notice of such meeting, is entered in the securities register as a holder of one or more shares carrying the right to vote at such
meeting or who beneficially owns shares that are entitled to be voted at such meeting; and (B) who complies with the notice procedures
set forth below in this Section 14.12.
|
|
|
(b)
|
In In addition to any other applicable requirements, for a nomination
to be made by a Nominating Shareholder, the Nominating Shareholder must have given timely notice thereof in proper written form to the
Secretary of the Company at the principal executive offices of the Company.
|
|
|
(c)
|
To be timely, a Nominating Shareholder’s notice to the
Secretary of the Company must be made:
|
|
|
(i)
|
in in the case of an annual meeting of shareholders, not less
than 30 nor more than 65 days prior to the date of the annual meeting of shareholders; provided, however, that in the event that the
annual meeting of shareholders is to be held on a date that is less than 50 days after the date (the “Notice Date”) on which
the first public announcement of the date of the annual meeting was made, notice by the Nominating Shareholder may be made not later
than the close of business on the tenth (10th) day following the Notice Date; and
|
|
|
(ii)
|
in in the case of a special meeting (which is not also an annual
meeting) of shareholders called for the purpose of electing directors (whether or not called for other purposes), not later than the
close of business on the fifteenth (15th) day following the day on which the first public announcement of the date of the special meeting
of shareholders was made. In no event shall any adjournment or postponement of a meeting of shareholders or the announcement thereof
commence a new time period for the giving of a Nominating Shareholder’s notice as described above.
|
|
|
(d)
|
To be in proper written form, a Nominating Shareholder’s
notice to the Secretary of the Company must set forth:
|
|
|
(i)
|
as to each person whom the Nominating Shareholder proposes to
nominate for election as a director: (A) the name, age, business address and residential address of the person; (B) the principal occupation
or employment of the person; (C) the class or series and number of shares in the capital of the Company which are controlled or which
are owned beneficially or of record by the person as of the record date for the meeting of shareholders (if such date shall then have
been made publicly available and shall have occurred) and as of the date of such notice; and (D) any other information relating to the
person that would be required to be disclosed in a dissident’s proxy circular in connection with solicitations of proxies for election
of directors pursuant to the Business Corporations Act and Applicable Securities Laws (as defined below); and
|
|
|
(ii)
|
as to the Nominating Shareholder giving the notice, any proxy,
contract, arrangement, understanding or relationship pursuant to which such Nominating Shareholder has a right to vote any shares of
the Company and any other information relating to such Nominating Shareholder that would be required to be made in a dissident’s
proxy circular in connection with solicitations of proxies for election of directors pursuant to the Business Corporations Act
and Applicable Securities Laws (as defined below).
|
|
|
(e)
|
The Company may require any proposed nominee to furnish such
other information as may reasonably be required by the Company to determine the eligibility of such proposed nominee to serve as an independent
director of the Company or that could be material to a reasonable shareholder’s understanding of the independence, or lack thereof,
of such proposed nominee.
|
|
|
(f)
|
No person shall be eligible for election as a director of the
Company unless nominated in accordance with the provisions of this Section 14.12; provided, however, that nothing in this Section 14.12
shall be deemed to preclude discussion by a shareholder (as distinct from the nomination of directors) at a meeting of shareholders of
any matter in respect of which it would have been entitled to submit a proposal pursuant to the provisions of the Business Corporations
Act. The Chairman of the meeting shall have the power and duty to determine whether a nomination was made in accordance with the
procedures set forth in the foregoing provisions and, if any proposed nomination is not in compliance with such foregoing provisions,
to declare that such defective nomination shall be disregarded.
|
|
|
(g)
|
For the purposes of this Section 14.12:
|
|
|
(i)
|
“public announcement” shall mean disclosure in a
press release reported by a national news service in Canada, or in a document publicly filed by the Company under its profile on the
System of Electronic Document Analysis and Retrieval at www.sedar.com; and
|
|
|
(ii)
|
“Applicable Securities Laws” means the applicable
securities legislation of each relevant province and territory of Canada, as amended from time to time, the rules, regulations and forms
made or promulgated under any such statute and the published national instruments, multilateral instruments, policies, bulletins and
notices of the securities commission and similar regulatory authority of each province and territory of Canada.
|
|
|
(h)
|
Notwithstanding any other provision of this Section 14.12, notice
given to the Secretary of the Company pursuant to this Section 14.12 may only be given by personal delivery, facsimile transmission or
by email (at such email address as stipulated from time to time by the Secretary of the Company for purposes of this notice), and shall
be deemed to have been given and made only at the time it is served by personal delivery, email (at the address as aforesaid) or sent
by facsimile transmission (provided that receipt of confirmation of such transmission has been received) to the Secretary at the address
of the principal executive offices of the Company; provided that if such delivery or electronic communication is made on a day which
is a not a business day or later than 5:00 p.m. (Vancouver time) on a day which is a business day, then such delivery or electronic communication
shall be deemed to have been made on the subsequent day that is a business day.
|
|
|
(i)
|
Notwithstanding the foregoing, the board may, in its sole discretion,
waive any requirement in this Section 14.12.
|
SCHEDULE “D” DIGIHOST TECHNOLOGY
INC. (the “Corporation”)
ALTERATION TO ARTICLES – U.S. SECURITIES
ACT PROVISIONS
|
|
21.6
|
Cause of Action Arising Under U.S. Securities Act
|
Unless the Company consents in writing to the
selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution
of any complaint asserting a cause of action arising under the U.S. Securities Act of 1933, as amended, or any of the rules and regulations
thereunder. Any person or entity purchasing or otherwise acquiring any interest in any security of the Company shall be deemed to have
notice of and consented to this provision.
22
Exhibit 99.145
Exhibit 99.146
DIGIHOST AND
BIT DIGITAL ANNOUNCE EXPANSION OF STRATEGIC COLLABORATION TO FURTHER INCREASE COMBINED HASHRATES BY 2 EH
Toronto, ON – July 26, 2021
– Digihost Technology Inc. (TSXV: DGHI; OTCQB: HSSHF) (“Digihost”) and Bit Digital, Inc. (Nasdaq: BTBT) (“Bit
Digital”) (together, the “Companies”) are pleased to announce that the Companies have entered into a second
strategic co-mining agreement (the “Agreement”). Pursuant to the terms of the Agreement, Digihost will provide certain
premises (the “Premises”) to Bit Digital for the operation of a 100 MW Bitcoin mining system (the “Miners”)
to be delivered by Bit Digital for a term of two years. This expanded collaboration between Digihost and Bit Digital is expected to facilitate
an additional increase in hashrate of approximately 2 EH between the companies, and a total increase in hashrate between the two companies
of approximately 2.4 EH including the initial collaboration agreement that was previously announced on June 10, 2021.
Under the terms of the Agreement, Digihost
will provide power and management services for the operation of the Miners. In consideration for these services, after paying Digihost
a competitive rate for power, Digihost and Bit Digital will participate in a profit-sharing arrangement based on a fixed distribution
formula. It is expected that the Miners will be delivered and installed beginning in January 2022.
Michel Amar, Digihost’s CEO, stated:
“We are committed to build on and expand our strategic collaboration with Bit Digital, which based on current Bitcoin metrics, is
expected to deliver significant results through the overall increase in hashrate of 2.4 EH between the two companies. Our business strategy
continues to be growth through the expansion of our mining infrastructure, vertical integration of green sources of energy and tactical
partnerships with leading companies in the blockchain sector, while striving to maintain our focus on being an industry leading ESG company.
We are also excited to share with the marketplace that we are currently in the process of establishing a research and development facility
in Houston, Texas, which will serve as the technology headquarters for the Company from where we plan to explore cloud computing, artificial
intelligence and deep learning applications. The expansion into Texas fits with our objective of geographic diversification and access
to top tier human resources in the technology sector. We look forward to providing further updates on these most recent developments.”
Bryan Bullett, Bit Digital’s CEO,
stated: “By signing this agreement,we believe that Bit Digital has secured power and hosting sufficient to complete the migration
of our current fleet to North America in full, and additional capacity to accommodate expected miner purchases. As previously announced,
we anticipate significant purchase activity in the coming months, due to spot market dislocation in China and our unique access to that
market. This agreement with Digihost secures a key component of activating this opportunity, and is expected to enable rapid deployment
of newly purchased miners. We are delighted to build on our existing collaboration with Digihost, and look forward to continued successes
together.”
About Digihost Technology Inc.
Digihost Technology Inc. is a growth-oriented
blockchain technology company primarily focused on Bitcoin mining. The Company is currently hashing at a rate of 200PH with plans to expand
to a hashrate of 3.6 EH by the end of the first half of 2022.
About Bit Digital, Inc.
Bit Digital, Inc. is a bitcoin mining
company with one of the largest currently-owned fleets among US-listed bitcoin miners at over 1.9 EH. Headquareted in New York with offices
in Miami Beach, Bit Digital’s mining operations are in the United States and Canada.
For further information, please contact:
Digihost Technology Inc.
www.digihost.ca
Michel Amar, Chief Executive Officer
T: 1-818-280-9758
Email: michel@digihost.ca
Bit Digital, Inc.
www.bit-digital.com
Sam Tabar, Chief Strategy Officer
T: +1 (917) 854-6357
Email: sam@bit-digital.com
Cautionary Statement
Trading in the securities of the Company
should be considered highly speculative. No stock exchange, securities commission or other regulatory authority has approved or disapproved
the information contained herein. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
Except for the statements of historical
fact, this news release contains “forward-looking information” and “forward-looking statements” (collectively,
“forward-looking information”) that is based on expectations, estimates and projections as at the date of this news release.
Forward-looking information in this news release includes information about hashrate expansion, diversification of operations, potential
further improvements to profitability and efficiency across mining operations, potential for the Company’s long-term growth, and
the business goals and objectives of the Company. Factors that could cause actual results, performance or achievements to differ materially
from those described in such forward-looking information include, but are not limited to: continued effects of the COVID19 pandemic may
have a material adverse effect on the Company’s performance as supply chains are disrupted and prevent the Company from operating
its assets; the ability to establish new facilities for the purpose of research & development; a decrease in cryptocurrency pricing,
volume of transaction activity or generally, the profitability of cryptocurrency mining; delivery of mining rigs for hosting may not be
realized in the number anticipated, or at all, and resulting hashing power may materially differ from that anticipated; further improvements
to profitability and efficiency may not be realized; the digital currency market; the Company’s ability to successfully mine digital
currency on the cloud; the Company may not be able to profitably liquidate its current digital currency inventory, or at all; a decline
in digital currency prices may have a significant negative impact on the Company’s operations; the volatility of digital currency
prices; and other related risks as more fully set out in the Annual Information Form of the Company and other documents disclosed under
the Company’s filings at www.sedar.com. The forward-looking information in this news release reflects the current expectations,
assumptions and/or beliefs of the Company based on information currently available to the Company. In connection with the forward-looking
information contained in this news release, the Company has made assumptions about: the current profitability in mining cryptocurrency
(including pricing and volume of current transaction activity); profitable use of the Company’s assets going forward; the Company’s
ability to profitably liquidate its digital currency inventory as required; historical prices of digital currencies and the ability of
the Company to mine digital currencies on the cloud will be consistent with historical prices; and there will be no regulation or law
that will prevent the Company from operating its business. The Company has also assumed that no significant events occur outside of the
Company’s normal course of business. Although the Company believes that the assumptions inherent in the forward-looking information are
reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such
information due to the inherent uncertainty therein.
Exhibit 99.147
FORM 51-102F3
MATERIAL CHANGE REPORT
|
|
Item 1
|
Name and Address of Company
|
Digihost Technology Inc. (formerly HashChain Technology Inc.)
18 King Street East, Suite 902
Toronto, ON M5C 1C4
|
|
Item 2
|
Date of Material Change
|
July 26, 2021
The press release attached as Schedule “A” was
released on July 26, 2021.
|
|
Item 4
|
Summary of Material Change
|
The material change is described in the press release attached
as Schedule “A”.
|
|
Item 5
|
Full Description of Material Change
|
The material change is described in the press release attached
as Schedule “A”.
|
|
Item 6
|
Reliance of subsection 7.1(2) of National Instrument 51-102
|
Not applicable.
|
|
Item 7
|
Omitted Information
|
Not applicable.
Inquires in respect of the material change referred to herein
may be made to: Michel Amar, Chief Executive Officer
T: 1-818-280-9758
E: michelamar@me.com
July 26, 2021
SCHEDULE “A”
DIGIHOST AND
BIT DIGITAL ANNOUNCE EXPANSION OF STRATEGIC COLLABORATION TO FURTHER INCREASE COMBINED HASHRATES BY 2 EH
Toronto, ON – July 26, 2021
– Digihost Technology Inc. (TSXV: DGHI; OTCQB: HSSHF) (“Digihost”) and Bit Digital, Inc. (Nasdaq: BTBT) (“Bit
Digital”) (together, the “Companies”) are pleased to announce that the Companies have entered into a second
strategic co-mining agreement (the “Agreement”). Pursuant to the terms of the Agreement, Digihost will provide certain
premises (the “Premises”) to Bit Digital for the operation of a 100 MW Bitcoin mining system (the “Miners”)
to be delivered by Bit Digital for a term of two years. This expanded collaboration between Digihost and Bit Digital is expected to facilitate
an additional increase in hashrate of approximately 2 EH between the companies, and a total increase in hashrate between the two companies
of approximately 2.4 EH including the initial collaboration agreement that was previously announced on June 10, 2021.
Under the terms of the Agreement, Digihost
will provide power and management services for the operation of the Miners. In consideration for these services, after paying Digihost
a competitive rate for power, Digihost and Bit Digital will participate in a profit-sharing arrangement based on a fixed distribution
formula. It is expected that the Miners will be delivered and installed beginning in January 2022.
Michel Amar, Digihost’s CEO, stated:
“We are committed to build on and expand our strategic collaboration with Bit Digital, which based on current Bitcoin metrics, is
expected to deliver significant results through the overall increase in hashrate of 2.4 EH between the two companies. Our business strategy
continues to be growth through the expansion of our mining infrastructure, vertical integration of green sources of energy and tactical
partnerships with leading companies in the blockchain sector, while striving to maintain our focus on being an industry leading ESG company.
We are also excited to share with the marketplace that we are currently in the process of establishing a research and development facility
in Houston, Texas, which will serve as the technology headquarters for the Company from where we plan to explore cloud computing, artificial
intelligence and deep learning applications. The expansion into Texas fits with our objective of geographic diversification and access
to top tier human resources in the technology sector. We look forward to providing further updates on these most recent developments.”
Bryan Bullett, Bit Digital’s CEO,
stated: “By signing this agreement,we believe that Bit Digital has secured power and hosting sufficient to complete the migration
of our current fleet to North America in full, and additional capacity to accommodate expected miner purchases. As previously announced,
we anticipate significant purchase activity in the coming months, due to spot market dislocation in China and our unique access to that
market. This agreement with Digihost secures a key component of activating this opportunity, and is expected to enable rapid deployment
of newly purchased miners. We are delighted to build on our existing collaboration with Digihost, and look forward to continued successes
together.”
About Digihost Technology Inc.
Digihost Technology Inc. is a growth-oriented
blockchain technology company primarily focused on Bitcoin mining. The Company is currently hashing at a rate of 200PH with plans to expand
to a hashrate of 3.6 EH by the end of the first half of 2022.
About Bit Digital, Inc.
Bit Digital, Inc. is a bitcoin mining
company with one of the largest currently-owned fleets among US-listed bitcoin miners at over 1.9 EH. Headquareted in New York with offices
in Miami Beach, Bit Digital’s mining operations are in the United States and Canada.
For further information, please contact:
Digihost Technology Inc.
www.digihost.ca
Michel Amar, Chief Executive Officer
T: 1-818-280-9758
Email: michel@digihost.ca
Bit Digital, Inc.
www.bit-digital.com
Sam Tabar, Chief Strategy Officer
T: +1 (917) 854-6357
Email: sam@bit-digital.com
Cautionary Statement
Trading in the securities of the Company
should be considered highly speculative. No stock exchange, securities commission or other regulatory authority has approved or disapproved
the information contained herein. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
Except for the statements of historical
fact, this news release contains “forward-looking information” and “forward-looking statements” (collectively,
“forward-looking information”) that is based on expectations, estimates and projections as at the date of this news release.
Forward-looking information in this news release includes information about hashrate expansion, diversification of operations, potential
further improvements to profitability and efficiency across mining operations, potential for the Company’s long-term growth, and
the business goals and objectives of the Company. Factors that could cause actual results, performance or achievements to differ materially
from those described in such forward-looking information include, but are not limited to: continued effects of the COVID19 pandemic may
have a material adverse effect on the Company’s performance as supply chains are disrupted and prevent the Company from operating
its assets; the ability to establish new facilities for the purpose of research & development; a decrease in cryptocurrency pricing,
volume of transaction activity or generally, the profitability of cryptocurrency mining; delivery of mining rigs for hosting may not be
realized in the number anticipated, or at all, and resulting hashing power may materially differ from that anticipated; further improvements
to profitability and efficiency may not be realized; the digital currency market; the Company’s ability to successfully mine digital
currency on the cloud; the Company may not be able to profitably liquidate its current digital currency inventory, or at all; a decline
in digital currency prices may have a significant negative impact on the Company’s operations; the volatility of digital currency
prices; and other related risks as more fully set out in the Annual Information Form of the Company and other documents disclosed under
the Company’s filings at www.sedar.com. The forward-looking information in this news release reflects the current expectations,
assumptions and/or beliefs of the Company based on information currently available to the Company. In connection with the forward-looking
information contained in this news release, the Company has made assumptions about: the current profitability in mining cryptocurrency
(including pricing and volume of current transaction activity); profitable use of the Company’s assets going forward; the Company’s
ability to profitably liquidate its digital currency inventory as required; historical prices of digital currencies and the ability of
the Company to mine digital currencies on the cloud will be consistent with historical prices; and there will be no regulation or law
that will prevent the Company from operating its business. The Company has also assumed that no significant events occur outside of the
Company's normal course of business. Although the Company believes that the assumptions inherent in the forward-looking information are
reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such
information due to the inherent uncertainty therein.
3
Exhibit
99.148
DIGIHOST
ANNOUNCES A 34% INCREASE IN MONTH OVER MONTH BITCOIN PRODUCTION AND PROVIDES MINING OPERATION RESULTS FOR JULY
Toronto,
ON – August 3, 2021 – Digihost Technology Inc. (“Digihost” or the “Company”) (TSXV:
DGHI; OTCQB: HSSHF), an innovative North American based Bitcoin self-mining company, is pleased to provide unaudited Bitcoin (“BTC”)
production updates for July 2021. All amounts are expressed in USD unless otherwise indicated.
Corporate
Highlights for July 31, 2021:
|
|
●
|
Produced
51.28 BTC during the month, increasing total holdings to 402.1 BTC representing a fair market
value of approximately $16.7 million as at July 31, 2021.
|
|
|
●
|
Total
Ethereum (“ETH”) holdings of 563.89 ETH representing a fair market value
of approximately $1.4 million as at July 31, 2021.
|
|
|
●
|
Total
digital asset inventory value consisting of BTC and ETH of approximately $18.1 million at
the end of July.
|
|
|
●
|
Cash
on hand at July 31st was approximately $18.8 million, and total cash and digital asset holdings
was approximately $36.9 million.
|
|
|
●
|
Year-to-date
investment in infrastructure pertaining to core business operations of approximately $23.5
million.
|
Bitcoin
Mining Update
For
the seven-month period ended July 31, 2021, the Company’s mining fleet produced 266.51 BTC, with production broken down as follows:
|
|
●
|
Quarter
1, 2021: 105.26 BTC
|
|
|
●
|
Quarter
2, 2021: 109.97 BTC
|
|
|
●
|
Quarter
3, 2021: 51.28 BTC
|
Month-Over-Month
Comparison
In
comparison to June 2021, the Company mined an additional 13.09 BTC during July 2021, representing an increase of 34%. Based on July 31,
2021 BTC prices in comparison to the prior month (based on June 30, 2021 BTC prices), the fair market value of the Company’s BTC
mined increased by approximately $796k month over month.
Figure
1. Month-over-month BTC Mining
|
|
|
6/30/2021
|
|
7/31/2021
|
|
MoM
Increase
|
|
|
|
|
|
|
|
|
|
Mined BTC
|
|
|
38.19
|
|
|
|
51.28
|
|
|
|
13.09
|
|
|
Approximate BTC value
|
|
$
|
35,041
|
|
|
$
|
41,626
|
|
|
$
|
6,585
|
|
|
BTC mined value
|
|
$
|
1,338,216
|
|
|
$
|
2,134,581
|
|
|
$
|
796,365
|
|
Year-Over-Year
Monthly Comparison
Compared
to July of 2020, the Company mined approximately 38.18 more BTC in July of 2021, representing an increase of 291%. Based on July 31,
2021 BTC prices compared to July 31, 2020 and the increase in production of BTC mined, the fair market value of the Company’s BTC
mined in July 2021 increased by approximately $2.0 million.
Figure
2. Year-over-year BTC Mining
|
|
|
|
7/31/2020
|
|
|
|
7/31/2021
|
|
|
|
MoM
Increase
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mined BTC
|
|
|
13.10
|
|
|
|
51.28
|
|
|
|
38.18
|
|
|
Approximate BTC value
|
|
$
|
11,323
|
|
|
$
|
41,626
|
|
|
$
|
30,303
|
|
|
Value
|
|
$
|
148,331
|
|
|
$
|
2,134,581
|
|
|
$
|
1,986,250
|
|
Management
Commentary
Michel
Amar, the Company’s CEO, stated: “We are extremely pleased by the tremendous growth in our mining operations, illustrated
by the substantial increase in bitcoins mined on both a month-over-month and year-over-year perspective. The fact that these bitcoins
are being mined from an operational hub in which over 90% of the energy consumed is from zero carbon emission sources and more than 50%
of the energy consumed is generated from renewable sources is a great source of pride for the Company, as we strive to maintain our focus
on being an industry leading ESG company and on achieving the objectives of our DigiGreen initiative. We are steadfast in our intent
to be an ESG leader in the cryptocurrency mining space and in continuing being one of the cleanest green bitcoin mining operations in
the United States.”
About
Digihost Technology Inc.
Digihost
Technology Inc. is a growth-oriented blockchain technology company primarily focused on Bitcoin mining. The Company is currently hashing
at a rate of 200PH with plans to expand to a hashrate of 3.6 EH by the end of the first half of 2022.
For
further information, please contact:
Digihost
Technology Inc.
www.digihost.ca
Michel
Amar, Chief Executive Officer
T:
1-818-280-9758
Email:
michel@digihost.ca
Cautionary
Statement
Trading
in the securities of the Company should be considered highly speculative. No stock exchange, securities commission or other regulatory
authority has approved or disapproved the information contained herein. Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Forward-Looking
Statements
Except
for the statements of historical fact, this news release contains “forward-looking information” and “forward-looking
statements” (collectively, “forward-looking information”) that is based on expectations, estimates and projections
as at the date of this news release. Forward-looking information in this news release includes information about hashrate expansion,
diversification of operations, potential further improvements to profitability and efficiency across mining operations, potential for
the Company’s long-term growth, and the business goals and objectives of the Company. Factors that could cause actual results,
performance or achievements to differ materially from those described in such forward-looking information include, but are not limited
to: continued effects of the COVID19 pandemic may have a material adverse effect on the Company’s performance as supply chains
are disrupted and prevent the Company from operating its assets; the ability to establish new facilities for the purpose of research
& development; a decrease in cryptocurrency pricing, volume of transaction activity or generally, the profitability of cryptocurrency
mining; delivery of mining rigs for hosting may not be realized in the number anticipated, or at all, and resulting hashing power may
materially differ from that anticipated; further improvements to profitability and efficiency may not be realized; the digital currency
market; the Company’s ability to successfully mine digital currency on the cloud; the Company may not be able to profitably liquidate
its current digital currency inventory, or at all; a decline in digital currency prices may have a significant negative impact on the
Company’s operations; the volatility of digital currency prices; and other related risks as more fully set out in the Annual Information
Form of the Company and other documents disclosed under the Company’s filings at www.sedar.com. The forward-looking information
in this news release reflects the current expectations, assumptions and/or beliefs of the Company based on information currently available
to the Company. In connection with the forward-looking information contained in this news release, the Company has made assumptions about:
the current profitability in mining cryptocurrency (including pricing and volume of current transaction activity); profitable use of
the Company’s assets going forward; the Company’s ability to profitably liquidate its digital currency inventory as required;
historical prices of digital currencies and the ability of the Company to mine digital currencies on the cloud will be consistent with
historical prices; and there will be no regulation or law that will prevent the Company from operating its business. The Company has
also assumed that no significant events occur outside of the Company's normal course of business. Although the Company believes that
the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a guarantee of future
performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.
3
Exhibit 99.149
DIGIHOST
TECHNOLOGY INC.
CONDENSED
INTERIM CONSOLIDATED
FINANCIAL
STATEMENTS
FOR
THE THREE AND SIX MONTHS ENDED
JUNE
30, 2021 AND 2020
(EXPRESSED
IN UNITED STATES DOLLARS)
(UNAUDITED)
Notice
to Reader
The accompanying
unaudited condensed interim consolidated financial statements of Digihost Technology Inc. (the “Company”) have been prepared
by and are the responsibility of management. The unaudited condensed interim consolidated financial statements have not been reviewed
by the Company’s auditors.
Digihost
Technology Inc.
Condensed
Interim Consolidated Statements of Financial Position
(Expressed
in United States Dollars) (Unaudited)
|
|
|
As
at
June 30,
2021
|
|
|
As
at
December 31,
2020
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash
|
|
$
|
20,346,743
|
|
|
$
|
31,250
|
|
|
Digital currencies (note 5)
|
|
|
13,734,589
|
|
|
|
4,508,042
|
|
|
Amounts receivable and prepaid expenses (note 4)
|
|
|
233,726
|
|
|
|
12,622
|
|
|
Loan receivable (notes 6
and 16)
|
|
|
141,552
|
|
|
|
141,552
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
34,456,610
|
|
|
|
4,693,466
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment (note 7)
|
|
|
28,729,154
|
|
|
|
6,497,634
|
|
|
Right of use assets (note 10)
|
|
|
2,314,574
|
|
|
|
2,413,720
|
|
|
Intangible asset (note 9)
|
|
|
1,507,879
|
|
|
|
1,572,500
|
|
|
Goodwill (notes 3 and 8)
|
|
|
1,377,767
|
|
|
|
1,342,281
|
|
|
Total assets
|
|
$
|
68,385,984
|
|
|
$
|
16,519,601
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
$
|
1,663,544
|
|
|
$
|
920,914
|
|
|
Lease liabilities (note 11)
|
|
|
118,862
|
|
|
|
111,672
|
|
|
Loans payable (note 12)
|
|
|
41,495
|
|
|
|
2,010,172
|
|
|
Deposit payable
|
|
|
511,000
|
|
|
|
-
|
|
|
Total current liabilities
|
|
|
2,334,901
|
|
|
|
3,042,758
|
|
|
Lease liabilities (note 11)
|
|
|
2,371,959
|
|
|
|
2,434,488
|
|
|
Loans payable (note 12)
|
|
|
-
|
|
|
|
532,911
|
|
|
Deferred tax liability
|
|
|
65,638
|
|
|
|
65,638
|
|
|
Total liabilities
|
|
|
4,772,498
|
|
|
|
6,075,795
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
Share
capital (note 13)
|
|
|
54,960,043
|
|
|
|
12,541,038
|
|
|
Contributed surplus
|
|
|
13,119,025
|
|
|
|
1,267,551
|
|
|
Cumulative translation adjustment
|
|
|
926,110
|
|
|
|
118,162
|
|
|
Digital currency revaluation reserve
|
|
|
342,234
|
|
|
|
1,982,501
|
|
|
Deficit
|
|
|
(5,733,926
|
)
|
|
|
(5,465,446
|
)
|
|
Total shareholders’ equity
|
|
|
63,613,486
|
|
|
|
10,443,806
|
|
|
Total liabilities and shareholders’
equity
|
|
$
|
68,385,984
|
|
|
$
|
16,519,601
|
|
Nature
of operations (note 1)
The
accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
Digihost
Technology Inc.
Condensed
Interim Consolidated Statements of Comprehensive Loss
(Expressed
in United States Dollars) (Unaudited)
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
from digital currency mining (note 5)
|
|
$
|
5,112,553
|
|
|
$
|
1,089,877
|
|
|
$
|
9,879,628
|
|
|
$
|
1,928,187
|
|
|
Cost
of digital currency mining
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and maintenance
costs
|
|
|
(1,803,223
|
)
|
|
|
(1,023,457
|
)
|
|
|
(3,352,367
|
)
|
|
|
(1,609,793
|
)
|
|
Depreciation
and amortization
|
|
|
(361,628
|
)
|
|
|
(1,089,870
|
)
|
|
|
(1,471,424
|
)
|
|
|
(1,453,160
|
)
|
|
Gross
profit (loss)
|
|
|
2,947,702
|
|
|
|
(1,023,450
|
)
|
|
|
5,055,837
|
|
|
|
(1,134,766
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office and administrative
expenses
|
|
|
(919,716
|
)
|
|
|
23,010
|
|
|
|
(997,560
|
)
|
|
|
(116
|
)
|
|
Professional fees
|
|
|
(539,899
|
)
|
|
|
(36,583
|
)
|
|
|
(821,493
|
)
|
|
|
(238,542
|
)
|
|
Regulatory fees
|
|
|
(37,326
|
)
|
|
|
(2,732
|
)
|
|
|
(117,330
|
)
|
|
|
(51,771
|
)
|
|
Gain
on sale of property, plant and equipment
|
|
|
939,516
|
|
|
|
-
|
|
|
|
939,516
|
|
|
|
-
|
|
|
Loss on settlement of debt
|
|
|
(4,188
|
)
|
|
|
-
|
|
|
|
(279,070
|
)
|
|
|
-
|
|
|
Gain on sale of digital currency
(note 5)
|
|
|
-
|
|
|
|
(13,432
|
)
|
|
|
-
|
|
|
|
15,158
|
|
|
Other income
|
|
|
-
|
|
|
|
44,068
|
|
|
|
-
|
|
|
|
44,068
|
|
|
Insurance proceeds
|
|
|
-
|
|
|
|
109,900
|
|
|
|
-
|
|
|
|
109,900
|
|
|
Share
based compensation (note 15)
|
|
|
(2,605,764
|
)
|
|
|
(603,261
|
)
|
|
|
(3,771,306
|
)
|
|
|
(908,206
|
)
|
|
Operating (loss) income
|
|
|
(219,675
|
)
|
|
|
(1,502,480
|
)
|
|
|
8,594
|
|
|
|
(2,164,275
|
)
|
|
Net
financial expenses (note 17)
|
|
|
(59,174
|
)
|
|
|
(21,280
|
)
|
|
|
(214,486
|
)
|
|
|
(28,731
|
)
|
|
Net loss
for the period
|
|
|
(278,849
|
)
|
|
|
(1,523,760
|
)
|
|
|
(205,892
|
)
|
|
|
(2,193,006
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that will be reclassified
to net income Foreign currency translation adjustment
|
|
|
806,492
|
|
|
|
-
|
|
|
|
807,948
|
|
|
|
-
|
|
Items
that will not be reclassified to net income
Revaluation of digital currency
|
|
|
(7,476,828
|
)
|
|
|
228,894
|
|
|
|
(1,640,267
|
)
|
|
|
91,880
|
|
|
Total
comprehensive loss for the period
|
|
$
|
(6,949,185
|
)
|
|
$
|
(1,294,866
|
)
|
|
$
|
(1,038,211
|
)
|
|
$
|
(2,101,126
|
)
|
|
Basic
and diluted loss per share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.07
|
)
|
|
Weighted
average number of subordinate voting shares outstanding - basic and diluted
|
|
|
66,484,618
|
|
|
|
40,073,661
|
|
|
|
55,460,431
|
|
|
|
30,165,338
|
|
The
accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
Digihost
Technology Inc.
Condensed
Interim Consolidated Statements of Cash Flows
(Expressed
in United States Dollars) (Unaudited)
|
|
|
Six Months Ended
June 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Operating activities
|
|
|
|
|
Net loss for the period
|
|
$
|
(205,892
|
)
|
|
$
|
(2,193,006
|
)
|
|
Adjustments for:
|
|
|
|
|
|
|
|
|
|
Digital currency sold
|
|
|
-
|
|
|
|
705,166
|
|
|
Gain on sale of digital currency
|
|
|
-
|
|
|
|
(15,158
|
)
|
|
Digital currency mined
|
|
|
(9,879,628
|
)
|
|
|
(1,928,187
|
)
|
|
Digital currency received
|
|
|
(47,670
|
)
|
|
|
-
|
|
|
Gain on sale of property, plant and equipment
|
|
|
(939,516
|
)
|
|
|
-
|
|
|
Depreciation of right-of-use assets
|
|
|
99,146
|
|
|
|
-
|
|
|
Depreciation and amortization
|
|
|
1,372,278
|
|
|
|
1,453,160
|
|
|
Interest on lease liabilities
|
|
|
118,352
|
|
|
|
28,731
|
|
|
Share based compensation
|
|
|
3,771,306
|
|
|
|
908,206
|
|
|
Loss on settlement of debt
|
|
|
279,070
|
|
|
|
-
|
|
|
Foreign exchange loss
|
|
|
798,446
|
|
|
|
-
|
|
|
Non-cash working capital items:
|
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
(221,104
|
)
|
|
|
(848,251
|
)
|
|
Amounts receivable
|
|
|
-
|
|
|
|
(161,899
|
)
|
|
Accounts payable and accrued liabilities
|
|
|
742,630
|
|
|
|
(5,252
|
)
|
|
Deposit payable
|
|
|
511,000
|
|
|
|
-
|
|
|
Net cash used in operating activities
|
|
|
(3,601,582
|
)
|
|
|
(2,056,490
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment
|
|
|
(23,539,177
|
)
|
|
|
-
|
|
|
Net funds for loan receivable
|
|
|
-
|
|
|
|
1,002,506
|
|
|
Net cash (used in) provided
by investing activities
|
|
|
(23,539,177
|
)
|
|
|
1,002,506
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
Proceeds from private placement, net of costs
|
|
|
50,265,763
|
|
|
|
(39,355
|
)
|
|
Repurchase of shares
|
|
|
(134,233
|
)
|
|
|
-
|
|
|
Loans payable
|
|
|
1,473,495
|
|
|
|
-
|
|
|
Repayment of loan payable
|
|
|
(3,975,083
|
)
|
|
|
-
|
|
|
Lease payments
|
|
|
(173,690
|
)
|
|
|
(115,416
|
)
|
|
Net cash provided by (used in)
financing activities
|
|
|
47,456,252
|
|
|
|
(154,771
|
)
|
|
Net change in cash
|
|
|
20,315,493
|
|
|
|
(1,208,755
|
)
|
|
Cash, beginning of period
|
|
|
31,250
|
|
|
|
1,303,937
|
|
|
Cash, end of period
|
|
$
|
20,346,743
|
|
|
$
|
95,182
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
117,697
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
Digihost
Technology Inc.
Condensed
Interim Consolidated Statement of Changes in Shareholders’ Equity
(Expressed
in United States Dollars) (Unaudited)
|
|
|
Number
of shares
|
|
|
|
|
|
|
|
|
Cumulative
Digital
currency
|
|
|
|
|
|
|
|
|
|
|
Subordinate
|
|
|
Proportionate
|
|
|
Share
|
|
|
Contributed
|
|
|
Translation
|
|
|
revaluation
|
|
|
|
|
|
|
|
|
|
|
voting shares
|
|
|
voting
shares
|
|
|
Capital
|
|
|
Surplus
|
|
|
Adjustment
|
|
|
Reserve
|
|
|
Deficit
|
|
|
Total
|
|
|
Balance,
December 31, 2019
|
|
|
6,530,560
|
|
|
|
-
|
|
|
$
|
20
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(274,733
|
)
|
|
$
|
(274,713
|
)
|
|
Issuance
of Old Digihost shares for transfer of lease and property and equipment and intangibles (notes 7, 9, 10 and 11)
|
|
|
-
|
|
|
|
-
|
|
|
|
4,264,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,264,000
|
|
|
Cancellation
of founder shares (note 13(b)(ii))
|
|
|
-
|
|
|
|
-
|
|
|
|
(20
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(20
|
)
|
|
Shares
issued pursuant to reverse takeover transaction (note 3)
|
|
|
29,820,000
|
|
|
|
-
|
|
|
|
5,914,916
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,914,916
|
|
|
Private
placement (note 13(b)(i))
|
|
|
5,592,487
|
|
|
|
-
|
|
|
|
4,021,033
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,021,033
|
|
Share
exchange for proportionate
voting shares (note 13(b)(i))
|
|
|
(1,999,997
|
)
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Shares
issued as payment for accounts payable (note 13(b)(iii))
|
|
|
130,611
|
|
|
|
-
|
|
|
|
94,639
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
94,639
|
|
|
Share
based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
908,206
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
908,206
|
|
|
Transaction
with owners
|
|
|
40,073,661
|
|
|
|
10,000
|
|
|
|
14,294,588
|
|
|
|
908,206
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(274,733
|
)
|
|
|
14,928,061
|
|
|
Revaluation
of digital currency
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
91,880
|
|
|
|
-
|
|
|
|
91,880
|
|
|
Net
loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,193,006
|
)
|
|
|
(2,193,006
|
)
|
|
Total
comprehensive loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
91,880
|
|
|
|
(2,193,006
|
)
|
|
|
(2,101,126
|
)
|
|
Balance,
June 30, 2020
|
|
|
40,073,661
|
|
|
|
10,000
|
|
|
$
|
14,294,588
|
|
|
$
|
908,206
|
|
|
$
|
-
|
|
|
$
|
91,880
|
|
|
$
|
(2,467,739
|
)
|
|
$
|
12,826,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2020
|
|
|
40,073,661
|
|
|
|
10,000
|
|
|
$
|
12,541,038
|
|
|
$
|
1,267,551
|
|
|
$
|
118,162
|
|
|
$
|
1,982,501
|
|
|
$
|
(5,465,446
|
)
|
|
$
|
10,443,806
|
|
|
Private
placements (note 13(b)(vi)(vii)(viii)(ix)(x))
|
|
|
34,667,022
|
|
|
|
-
|
|
|
|
50,059,301
|
|
|
|
5,044,691
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,103,992
|
|
|
Cost
of issue - cash (note 13(b)(viii)(ix)(x))
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,838,229
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,838,229
|
)
|
|
Cost
of issue - broker warrants (note 13(b)(viii)(ix)(x))
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,035,477
|
)
|
|
|
3,035,477
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Shares
issued as payment for accounts payable (note 13(b)(v))
|
|
|
200,000
|
|
|
|
-
|
|
|
|
305,055
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
305,055
|
|
|
Share
cancelled (note 13(b)(iv))
|
|
|
(154,500
|
)
|
|
|
-
|
|
|
|
(71,645
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(62,588
|
)
|
|
|
(134,233
|
)
|
|
Units
issued as commission (note 13(b)(vii))
|
|
|
148,148
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Share
based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,771,306
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,771,306
|
|
|
Transaction
with owners
|
|
|
74,934,331
|
|
|
|
10,000
|
|
|
|
54,960,043
|
|
|
|
13,119,025
|
|
|
|
118,162
|
|
|
|
1,982,501
|
|
|
|
(5,528,034
|
)
|
|
|
64,651,697
|
|
|
Revaluation
of digital currency
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,640,267
|
)
|
|
|
-
|
|
|
|
(1,640,267
|
)
|
|
Net
loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
807,948
|
|
|
|
-
|
|
|
|
(205,892
|
)
|
|
|
602,056
|
|
|
Total
comprehensive loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
807,948
|
|
|
|
(1,640,267
|
)
|
|
|
(205,892
|
)
|
|
|
(1,038,211
|
)
|
|
Balance,
June 30, 2021
|
|
|
74,934,331
|
|
|
|
10,000
|
|
|
$
|
54,960,043
|
|
|
$
|
13,119,025
|
|
|
$
|
926,110
|
|
|
$
|
342,234
|
|
|
$
|
(5,733,926
|
)
|
|
$
|
63,613,486
|
|
The
accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
Digihost
Technology Inc.
Notes
to Condensed Interim Consolidated Financial Statements
Three
and Six Months Ended June 30, 2021
(Expressed
in United States Dollars) (Unaudited)
1. Nature of operations
Digihost
Technology Inc. (the “Digihost”) was incorporated in British Columbia, Canada, on February 18, 2017 as Chortle Capital Corp
and subsequently changed its name to HashChain Technology Inc. on September 18, 2017, and again to Digihost Technology Inc. on February
14, 2020. Digihost and its subsidiary, Digihost International, Inc., (together the “Company”) is a blockchain technology
company with operations in cryptocurrency mining. The head office of the Company is located at 1001 East Delavan Avenue, Buffalo, New
York, 14215.
On
February 14, 2020, a reverse takeover transaction (the “RTO Transaction”) between Digihost International, Inc. (“Old
Digihost”) and HashChain Technology Inc. (“HashChain”) was completed (note 3). On completion of the RTO Transaction,
Old Digihost was determined to be the accounting acquirer and accordingly, the financial statements are a continuation of the Old Digihost.
In connection with completion of the RTO Transaction, HashChain has changed its name to “Digihost Technology Inc.”. The Company
carried on the business of HashChain as a Tier 2 technology issuer under the symbol “DGHI”. Digihost subordinate voting shares
were listed for trading on the TSX Venture Exchange (“TSXV”) February 20, 2020.
These
unaudited condensed interim consolidated financial statements of the Company were reviewed, approved and authorized for issue by the
Board of Directors on August 4, 2021.
2.
Significant accounting policies
(a)
Statement of compliance
The
Company applies IFRS as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the
IFRS Interpretations Committee. These unaudited condensed interim consolidated financial statements have been prepared in accordance
with International Accounting Standard 34 - Interim Financial Reporting. Accordingly, they do not include all of the information required
for full annual financial statements.
The
policies applied in these unaudited condensed interim consolidated financial statements are based on IFRS issued and outstanding as of
August 4, 2021, the date the Board of Directors approved the statements. The same accounting policies and methods of computation are
followed in these unaudited condensed interim consolidated financial statements as compared with the most recent annual financial statements
as at and for the year ended December 31, 2020. Any subsequent changes to IFRS that are given effect in the Company’s annual financial
statements for the year ending December 31, 2021 could result in restatement of these unaudited condensed interim consolidated financial
statements.
(b)
Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Company.
At
the date of authorization of these unaudited condensed interim consolidated financial statements, several new, but not yet effective,
standards and amendments to existing standards, and interpretations have been published by the IASB. None of these standards or amendments
to existing standards have been adopted early by the Company. Management anticipates that all relevant pronouncements will be adopted
for the first period beginning on or after the effective date of the pronouncement. New standards, amendments and interpretations not
adopted in the current year have not been disclosed as they are not expected to have a material impact on the Company’s unaudited
condensed interim consolidated financial statements.
Digihost
Technology Inc.
Notes
to Condensed Interim Consolidated Financial Statements
Three
and Six Months Ended June 30, 2021
(Expressed
in United States Dollars) (Unaudited)
2.
Significant accounting policies (continued)
(c)
Critical accounting judgements, estimates and assumption
The
preparation of these financial statements in conformity with IFRS requires management to make certain estimates, judgments and assumptions
that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during
the reporting period. Actual outcomes could differ from these estimates. These financial statements include estimates that, by their
nature, are uncertain. The impacts of such estimates are pervasive throughout the financial statements, and may require accounting adjustments
based on future occurrences. Revisions to accounting estimates are recognized in the year in which the estimate is revised and future
years if the revision affects both current and future years. These estimates are based on historical experience, current and future economic
conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Significant
assumptions about the future that management has made that could result in a material adjustment to the carrying amounts of assets and
liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:
Significant
judgements
(i)
Income from digital currency mining
The
Company recognizes income from digital currency mining from the provision of transaction verification services within digital currency
networks, commonly termed “cryptocurrency mining”. As consideration for these services, the Company receives digital currency
from each specific network in which it participates (“coins”). Income from digital currency mining is measured based on the
fair value of the coins received. The fair value is determined using the spot price of the coin on the date of receipt. The coins are
recorded on the statement of financial position, as digital currencies, at their fair value less costs to sell and re- measured at each
reporting date. Revaluation gains or losses, as well as gains or losses on the sale of coins for traditional (fiat) currencies are included
in profit or loss in accordance with the Company’s treatment of its digital currencies as a traded commodity.
There
is currently no specific definitive guidance in IFRS or alternative accounting frameworks for the accounting for the mining and strategic
selling of digital currencies and management has exercised significant judgement in determining appropriate accounting treatment for
the recognition of income from digital currency mining for mining of digital currencies. Management has examined various factors surrounding
the substance of the Company’s operations, including the stage of completion being the completion and addition of a block to a
blockchain and the reliability of the measurement of the digital currency received.
(ii)
Business combination
Management
uses judgement to determines whether assets acquired and liabilities assumed constitute a business. A business consists of inputs
and processes applied to those inputs that have the ability to create outputs.
The
Company completed the RTO Transaction in February 2020 (note 3) and concluded that the entity acquired did qualify as a business combination
under IFRS 3, “Business Combinations”, as significant processes were acquired. Accordingly, the RTO Transaction has been
accounted for as a business combination.
(iii)
Leases – incremental borrowing rate
Judgment
is applied when determining the incremental borrowing rate used to measure the lease liability of each lease contract, including an estimate
of the asset-specific security impact. The incremental borrowing rate should reflect the interest rate the Company would pay to borrow
at a similar term and with similar security.
Digihost
Technology Inc.
Notes
to Condensed Interim Consolidated Financial Statements
Three
and Six Months Ended June 30, 2021
(Expressed
in United States Dollars) (Unaudited)
2.
Significant accounting policies (continued)
(c)
Critical accounting judgements, estimates and assumption (continued)
Significant
judgements (continued)
(iv)
Income, value added, withholding and other taxes
The
Company is subject to income, value added, withholding and other taxes. Significant judgment is required in determining the Company’s
provisions for taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary
course of business. The Company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes
will be due. The determination of the Company’s income, value added, withholding and other tax liabilities requires interpretation
of complex laws and regulations. The Company’s interpretation of taxation law as applied to transactions and activities may not
coincide with the interpretation of the tax authorities. All tax related filings are subject to government audit and potential reassessment
subsequent to the financial statement reporting period. Where the final tax outcome of these matters is different from the amounts that
were initially recorded, such differences will impact the tax related accruals and deferred income tax provisions in the year in which
such determination is made.
Significant
estimates
(i)
Determination of asset and liability fair values and allocation of purchase consideration
Significant
business combinations require judgements and estimates to be made at the date of acquisition in relation to determining the relative
fair value of the allocation of the purchase consideration over the fair value of the assets. The information necessary to measure the
fair values as at the acquisition date of assets acquired requires management to make certain judgements and estimates about future events,
including but not limited to availability of hardware and expertise, future production opportunities, future digital currency prices
and future operating costs.
(ii)
Useful lives of property, plant and equipment
Depreciation
of data miners and equipment are an estimate of its expected life. In order to determine the useful life of computing equipment, assumptions
are required about a range of computing industry market and economic factors, including required hashrates, technological changes, availability
of hardware and other inputs, and production costs.
(iii)
Digital currency valuation
Digital
currencies consist of cryptocurrency denominated assets (note 5) and are included in current assets. Digital currencies are carried at
their fair value determined by the spot rate less costs to sell. The digital currency market is still a new market and is highly volatile;
historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would
have a significant impact on the Company’s earnings and financial position.
(iv)
Impairment of goodwill
Goodwill
is tested for impairment if there is an indicator of impairment and annually for all CGUs with goodwill. The Company considers both external
and internal sources of information for indications that goodwill is impaired. External sources of information we consider include changes
in the market and economic and legal environment in which the CGU operates that are not within its control and affect the recoverable
amount of goodwill. Internal sources of information considered include the strategic plans for the Company including estimates of revenue
and other indications of economic performance of the assets.
Digihost
Technology Inc.
Notes
to Condensed Interim Consolidated Financial Statements
Three
and Six Months Ended June 30, 2021
(Expressed
in United States Dollars) (Unaudited)
3.
Reverse takeover
On
February 14, 2020, there was a RTO Transaction between Old Digihost and HashChain. In connection with completion of the RTO Transaction,
HashChain acquired all the issued and outstanding shares of Old Digihost in exchange for 29,820,000 subordinate voting shares of the
Company. In substance, the transaction involves Old Digihost shareholders obtaining control of the Company; accordingly, the transaction
is considered to be a reverse acquisition transaction under which Old Digihost is identified as the accounting acquirer.
At
the time of the transaction, HashChain had operations in cryptocurrency mining and met the definition of a business, and the transaction
was accordingly considered a business combination. The purpose of the RTO Transaction was to acquire the operations of HashChain and
to obtain listing on a public exchange. The transaction costs associated with this RTO Transaction was $59,149.
As
Old Digihost was deemed to be the acquirer for accounting purposes, these consolidated financial statements present the historical financial
information to the date of the Transaction are those of Old Digihost presented as a continuation of Old Digihost.
Pursuant
to the business combination transaction, the net assets acquired from the acquisition are to be recorded at their estimated fair values
in accordance with IFRS 3. The allocation of the purchase consideration is as follows:
|
Consideration
|
|
|
|
|
Fair value of 6,530,560 subordinate voting shares of
HashChain (1)
|
|
$
|
2,957,458
|
|
|
|
|
|
|
|
|
Net assets acquired
|
|
|
|
|
|
Property, plant and equipment
|
|
$
|
2,244,509
|
|
|
Accounts payable and other payables
|
|
|
(576,957
|
)
|
|
|
|
|
1,667,552
|
|
|
Goodwill acquired (2)
|
|
|
1,289,906
|
|
|
|
|
$
|
2,957,458
|
|
|
|
(1)
|
The
common shares issued were valued based on the HashChain closing price of CAD$0.60 on the
TSXV on February 14, 2020.
|
|
|
(2)
|
The
goodwill acquired from the RTO Transaction is primarily attributable to the synergies expected
to arise from vertical integration of the cryptocurrency mining operations which is the only
segment of the Company.
|
4. Prepaid expenses
|
|
|
As at
June 30,
|
|
|
As at
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Prepaid insurance
|
|
$
|
233,726
|
|
|
$
|
12,622
|
|
Digihost
Technology Inc.
Notes
to Condensed Interim Consolidated Financial Statements
Three
and Six Months Ended June 30, 2021
(Expressed
in United States Dollars) (Unaudited)
5.
Digital currencies
The
Company’s holdings of digital currencies consist of the following:
|
|
|
As
at
June 30,
|
|
|
As
at
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Bitcoin
|
|
$
|
12,451,995
|
|
|
$
|
4,508,042
|
|
|
Ethereum
|
|
|
1,282,594
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13,734,589
|
|
|
$
|
4,508,042
|
|
The continuity of digital
currency was as follows:
|
|
|
Number
of Bitcoin
|
|
|
Amount
|
|
|
Number
of Ethereum
|
|
|
Amount
|
|
|
Balance, December 31, 2020
|
|
|
154
|
|
|
$
|
4,508,042
|
|
|
|
-
|
|
|
$
|
-
|
|
|
Bitcoin mined
|
|
|
215
|
|
|
|
9,879,628
|
|
|
|
-
|
|
|
|
-
|
|
|
Received from sale of property, plant and equipment
|
|
|
13
|
|
|
|
735,197
|
|
|
|
63
|
|
|
|
204,318
|
|
|
Received from private placement
|
|
|
1
|
|
|
|
47,671
|
|
|
|
-
|
|
|
|
-
|
|
Exchange of digital currencies
|
|
|
(31
|
)
|
|
|
(1,793,619
|
)
|
|
|
501
|
|
|
|
1,793,619
|
|
|
Revaluation adjustment(1)
|
|
|
-
|
|
|
|
(924,924
|
)
|
|
|
-
|
|
|
|
(715,343
|
)
|
|
Balance, June 30, 2021
|
|
|
352
|
|
|
$
|
12,451,995
|
|
|
|
564
|
|
|
$
|
1,282,594
|
|
|
Bitcoin - current(2)
|
|
|
352
|
|
|
$
|
12,451,995
|
|
|
|
564
|
|
|
$
|
1,282,594
|
|
|
|
(1)
|
Digital
assets held are revalued each reporting period based on the fair market value of the price
of Bitcoin and Ethereum on the reporting date. As at June 30, 2021, the prices of Bitcoin
and Ethereum were $35,375 and $2,274, respectively resulting in revaluation losses of $924,924
and $715,343, respectively and recorded to other comprehensive income.
|
|
|
(2)
|
Digital
currencies that are held by the Company and available for use as at June 30, 2021.
|
6.
Loan receivable
As at June 30,
2021, Nyam, LLC, a company controlled by the Chief Executive Officer (“CEO”) was owed $141,552 (December 31, 2020 - $141,552).
These amounts are non-interest bearing, unsecured and due on demand.
Digihost
Technology Inc.
Notes
to Condensed Interim Consolidated Financial Statements
Three
and Six Months Ended June 30, 2021
(Expressed
in United States Dollars) (Unaudited)
7.
Property, plant and equipment
|
|
|
Data
|
|
|
|
|
|
Leasehold
|
|
|
Powerplant
|
|
|
|
|
|
|
|
miners
|
|
|
Equipment
|
|
|
improvement
|
|
|
in
progress
|
|
|
Total
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
- December 31, 2019
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Additions
|
|
|
3,558,280
|
(1)
|
|
|
2,760,000
|
(2)
|
|
|
1,040,000
|
(2)
|
|
|
-
|
|
|
|
7,358,280
|
|
|
Acquired
from RTO Transaction
|
|
|
2,244,509
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,244,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
- December 31, 2020
|
|
$
|
5,802,789
|
|
|
$
|
2,760,000
|
|
|
$
|
1,040,000
|
|
|
$
|
-
|
|
|
$
|
9,602,789
|
|
|
Additions
|
|
|
21,928,123
|
(3)
|
|
|
-
|
|
|
|
-
|
|
|
|
1,611,055
|
|
|
|
23,539,178
|
|
|
Disposal
|
|
|
(487,939
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(487,939
|
)
|
|
Balance
- June 30, 2021
|
|
$
|
27,242,973
|
|
|
$
|
2,760,000
|
|
|
$
|
1,040,000
|
|
|
$
|
1,611,055
|
|
|
$
|
32,654,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
- December 31, 2019
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Depreciation
|
|
|
2,538,211
|
|
|
|
479,888
|
|
|
|
87,056
|
|
|
|
-
|
|
|
|
3,105,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
- December 31, 2020
|
|
$
|
2,538,211
|
|
|
$
|
479,888
|
|
|
$
|
87,056
|
|
|
$
|
-
|
|
|
$
|
3,105,155
|
|
|
Depreciation
|
|
|
967,138
|
|
|
|
288,500
|
|
|
|
52,000
|
|
|
|
-
|
|
|
|
1,307,638
|
|
|
Disposal
|
|
|
(487,939
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(487,939
|
)
|
|
Balance
- June 30, 2021
|
|
$
|
3,017,410
|
|
|
$
|
768,388
|
|
|
$
|
139,056
|
|
|
$
|
-
|
|
|
$
|
3,924,854
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
carrying value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
at December 31, 2020
|
|
$
|
3,264,578
|
|
|
$
|
2,280,112
|
|
|
$
|
952,944
|
|
|
$
|
-
|
|
|
$
|
6,497,634
|
|
|
As
at June 30, 2021
|
|
$
|
24,225,563
|
|
|
$
|
1,991,612
|
|
|
$
|
900,944
|
|
|
$
|
1,611,055
|
|
|
$
|
28,729,174
|
|
|
|
(1)
|
Mining
assets of $2,404,020 purchased by the Company in February 2020 from Nyam, LLC.
|
|
|
(2)
|
Assets
acquired as part of facility lease assignment prior of the closing of the RTO Transaction
(see note 11).
|
|
|
(3)
|
On
May 12, 2021, the Company signed a definitive purchase agreement to acquire approximately
10,000 high- performance Bitcoin miners. The miners were sourced from Northern Data AG for
approximately CAD$54,000,000.
|
Pursuant to
the terms of the purchase agreement, the Company has concurrently entered into a hosting agreement with Northern Data in connection with
the miners, whereby Northern Data will provide services to the Company including the installation and hosting of the miners in proprietary
pre-manufactured performance optimized mobile data centres to be located at Digihost’s company-owned facility.
As at June 30,
2021, the Company has acquired approximately $17,903,000 of miners.
Digihost
Technology Inc.
Notes
to Condensed Interim Consolidated Financial Statements
Three
and Six Months Ended June 30, 2021
(Expressed
in United States Dollars) (Unaudited)
8. Goodwill
|
|
|
As
at
June 30,
2021
|
|
|
As
at
December 31,
2020
|
|
|
Balance, beginning of period
|
|
$
|
1,342,281
|
|
|
$
|
-
|
|
|
RTO transaction
|
|
|
-
|
|
|
|
1,289,906
|
|
|
Foreign currency translation
|
|
|
35,486
|
|
|
|
52,375
|
|
|
Balance, end of period
|
|
$
|
1,377,767
|
|
|
$
|
1,342,281
|
|
For the realization
of its impairment test, management has used the approach of fair value less costs to sell. The fair value is derived from the market
capitalization of the Company as June 30, 2021 and management determined that the fair value less cost of sales, was higher than the
carrying value of the CGU. Following this analysis, management has determined that no impairment was necessary. For these tests, the
Company allocates all of its goodwill to a single CGU, the Company as a whole, since this is the lowest level at which goodwill is monitored
for internal purposes.
9.
Intangible asset
Intangible
asset relates to the right of use of an electric power facility.
|
|
|
As at
June 30,
|
|
|
As at
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Balance, beginning of period
|
|
$
|
1,572,500
|
|
|
$
|
-
|
|
|
Addition at cost
|
|
|
-
|
|
|
|
1,680,000
|
|
|
Amortization
|
|
|
(64,621
|
)
|
|
|
(107,500
|
)
|
|
Balance, end of period
|
|
$
|
1,507,879
|
|
|
$
|
1,572,500
|
|
10.
Right-of-use assets
|
|
|
As at
June 30,
|
|
|
As at
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period
|
|
$
|
2,413,720
|
|
|
$
|
-
|
|
|
Additions
|
|
|
-
|
|
|
|
2,588,107
|
|
|
Depreciation
|
|
|
(99,146
|
)
|
|
|
(174,387
|
)
|
|
Balance, end of period
|
|
$
|
2,314,574
|
|
|
$
|
2,413,720
|
|
Rights-of-use
assets are depreciated over a 13 year term. Refer to note 11 for further details.
11.
Lease liabilities
On
February 14, 2020, prior to the closing of the RTO Transaction, BIT Management, LLC, Nyam, LLC and BIT Mining International, LLC (collectively
the “Sellers”, all companies controlled by the CEO of Digihost) sold to the Company leasehold improvements and equipment
and transferred and assigned the lease of the 1001 East Delavan facility. As consideration, Digihost issued 164,000 common shares. These
transactions resulted in increases in equipment of $2,760,000, leasehold improvements of $1,040,000, intangible assets of $1,680,000
and right of use assets and lease liabilities of $2,588,107 for a total of $5,480,000 recorded in share capital.
Digihost
Technology Inc.
Notes
to Condensed Interim Consolidated Financial Statements
Three
and Six Months Ended June 30, 2021
(Expressed
in United States Dollars) (Unaudited)
11.
Lease liabilities (continued)
The
leases have an initial term ending in March 2023 and have renewal options. The Company intends to renew the leases for an additional
10 years. When measuring lease liability, the Company’s incremental borrowing rate applied was estimated to be 10% per annum.
Nyam,
LLC made security deposits of $37,917 on the lease. The lease is also guaranteed personally by the CEO.
The
continuity of the lease liabilities are presented in the table below:
|
|
|
As at
June 30,
|
|
|
As at
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Balance, beginning of period
|
|
$
|
2,546,160
|
|
|
$
|
-
|
|
|
Additions
|
|
|
-
|
|
|
|
2,588,107
|
|
|
Interest
|
|
|
118,352
|
|
|
|
216,434
|
|
|
Lease payments
|
|
|
(173,691
|
)
|
|
|
(258,381
|
)
|
|
Balance, end of period
|
|
$
|
2,490,821
|
|
|
$
|
2,546,160
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
$
|
118,862
|
|
|
$
|
111,672
|
|
|
Non-current portion
|
|
|
2,371,959
|
|
|
|
2,434,488
|
|
|
Total lease liabilities
|
|
$
|
2,490,821
|
|
|
$
|
2,546,160
|
|
Maturity
analysis - contractual undiscounted cash flows
|
As at June 30, 2021
|
|
|
|
|
|
Less than one year
|
|
$
|
173,977
|
|
|
One to five years
|
|
|
1,405,446
|
|
|
More than five years
|
|
|
2,547,896
|
|
|
Total undiscounted lease obligations
|
|
$
|
4,127,319
|
|
Digihost
Technology Inc.
Notes
to Condensed Interim Consolidated Financial Statements
Three
and Six Months Ended June 30, 2021
(Expressed
in United States Dollars) (Unaudited)
12.
Loans payable
The
Company procured loans as follows:
|
|
|
As at
June 30,
|
|
|
As at
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Loans
at interest rate of 8%, payable on demand. Secured by Bitcoin equivalent to 120% of the value
of the loan. When the market value of the collateral drops to less than 110% or exceeds 120%
of the loan, Bitcoin must be transferred to or from the lender to maintain the collateral
amount.
|
|
$
|
-
|
|
|
$
|
1,182,333
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans at interest rate of
6.5% and 9.5%, maturing in January 2021. Secured by Bitcoin equivalent to 80% of the value of the loan. When the market value of
the collateral drops to less than 80% or exceeds 120% of the loan, Bitcoin must be transferred to or from the lender to maintain
the collateral amount.
|
|
|
-
|
|
|
|
385,750
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan at interest rate of
17.5%, maturing on April 1, 2022. The loan is to be repaid in 24 monthly payment of $19,873, capital and interest. The loan is secured
by Bitcoin equivalent to 120% of the value of the loan.
|
|
|
-
|
|
|
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan at interest rate of
17.5%, maturing on April 1, 2022. The loan is to be repaid in 24 monthly payment of $28,568, capital and interest. The loan is secured
by Bitcoin equivalent to 120% of the value of the loan.
|
|
|
-
|
|
|
|
575,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan
under Paycheck Protection Program(1)
|
|
|
41,495
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
loans
|
|
$
|
41,495
|
|
|
$
|
2,543,083
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
41,495
|
|
|
$
|
2,010,172
|
|
|
Non-current
|
|
$
|
-
|
|
|
$
|
532,911
|
|
|
|
(1)
|
On
February 18, 2021, the Company received loan proceeds in the amount of approximately $41,495
under the Paycheck Protection Program (“PPP”). The PPP, established as part of
the Coronavirus Aid, Relief and Economic Security Act, provides loans to qualifying businesses
for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business.
The loans and accrued interest are forgivable after eight weeks as long as the borrower uses
the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities,
and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower
terminates employees or reduces salaries during the eight-week period. The Company utilized
the funds received as intended and will be applying for loan forgiveness during the second
quarter of 2021.
|
|
|
|
As at
June 30,
|
|
|
As at
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Balance, beginning of the period
|
|
$
|
2,543,083
|
|
|
$
|
-
|
|
|
New loans
|
|
|
1,473,495
|
|
|
|
2,543,083
|
|
|
Repayment of loans
|
|
|
(3,975,083
|
)
|
|
|
-
|
|
|
Balance, end of the period
|
|
$
|
41,495
|
|
|
$
|
2,543,083
|
|
Digihost Technology Inc.
Notes to Condensed Interim
Consolidated Financial Statements
Three and Six Months
Ended June 30, 2021
(Expressed in United
States Dollars) (Unaudited)
13.
Share capital
a)
Authorized share capital
Unlimited
subordinate voting shares without par value and conferring 1 vote per share.
Unlimited
proportionate voting shares without par value, conferring 200 votes per share, convertible at the holder’s option into subordinate
voting shares on a basis of 200 subordinate voting shares for 1 proportionate voting shares.
b)
Subordinate voting shares and proportionate voting shares issued
(i)
In 2019, the Company closed a non-brokered private placement, for aggregate gross proceeds of $4,064,431 (CAD$5,395,338) from the sale
of 5,481,912 common share subscription receipts at a price of CAD$0.96, with each common share subscription receipt exchangeable for
one common share of Digihost, and 110,575 unit subscription receipts at a price of CAD$1.20 per unit subscription receipt, with each
unit subscription receipt exchangeable for one unit. Each unit consisted of one subordinate voting share and one subordinate voting share
purchase warrant of Digihost. Each warrant entitles the holder thereof to acquire one subordinate voting share at a price of CAD$1.75
with expiry date August 14, 2021. The proceeds were received prior to December 31, 2020 and were recorded as subscription liability.
In February 2020, prior to the closing of the RTO transaction, the subscription receipts were exchanged for 5,592,487 common shares of
Digihost and then exchanged for 5,592,487 subordinate voting shares of the Company.
The
grant date fair value of the 110,575 warrants was estimated as $20,000.
In
addition, immediately prior to completion of the RTO Transaction, the Company exchanged 1,999,997 subordinate voting shares of Digihost
owned by the CEO and director of Digihost for 10,000 proportionate voting shares.
(ii)
On February 14, 2020, the Company cancelled the 2 founder shares of Old Digihost.
(iii)
On February 14, 2020, the Company issued 130,911 subordinate voting shares as settlement of payables of $59,149.
(iv)
On December 7, 2020, the Company announced that it has received approval to undertake, at the Company’s discretion, a normal course
issuer bid program to purchase up to 2,003,683 of its subordinate voting shares for cancellation (the “Bid”). The Company
received acceptance from the TSXV to commence the Bid on December 10, 2020. The Bid will terminate on December 10, 2021, or on an earlier
date in the event that the maximum number of subordinate voting shares sought in the Bid has been repurchased. The Company reserves the
right to terminate the Bid at any time. As at June 30, 2021, the Company repurchased and cancelled 154,500 subordinate voting shares.
(v)
On February 9, 2021, the Company issued 200,000 subordinate voting shares (valued at $305,055) to settle a debt of $40,000 with two third-party
creditors.
(vi)
On January 8, 2021, the Company closed a non-brokered private placement for 349,876 subordinate voting shares for CAD$0.81 for gross
proceeds of $220,551.
(vii)
On February 18, 2021, the Company closed a non-brokered private placement financing for 4,938,271 subordinate voting shares for CAD$0.81
for gross proceeds of $3,124,018 (CAD$4,000,000). In connection with the private placement, the Company will pay a commission of 148,148
Shares to third party advisors.
Digihost Technology Inc.
Notes to Condensed Interim
Consolidated Financial Statements
Three and Six Months
Ended June 30, 2021
(Expressed in United
States Dollars) (Unaudited)
13.
Share capital (continued)
(viii)
On March 16, 2021, the Company closed a non-brokered private placement financing for 9,363,296 units for CAD$2.67 per unit for gross
proceeds of $19,985,611 (CAD$25 million). Each unit consists of 9,363,296 subordinate voting shares of the Company and warrants to purchase
9,363,296 subordinate voting shares. The warrants have an exercise price of CAD$3.14 per Share and exercise period of three years from
the issuance date.
H.C.
Wainwright & Co. acted as the exclusive placement agent and received cash commission and expenses totalling $1,978,303 and 749,064
non-transferable broker warrants. Each broker warrant entitles the holder to purchase one subordinate voting share at an exercise price
of CAD$3.3375 at any time for a period of three years from the issuance date. The warrants and broker warrants were assigned an aggregate
value of $1,976,106 using the residual method.
(ix)
On April 9, 2021, the Company closed a non-brokered private placement financing for 11,682,243 units for CAD$2.14 per unit for gross
proceeds of $19,748,795 (CAD$25 million). Each unit consists of 11,682,243 subordinate voting shares of the Company and warrants to purchase
11,682,243 subordinate voting shares. The warrants have an exercise price of CAD$2.37 per Share and exercise period of four years from
the issuance date.
H.C.
Wainwright & Co. acted as the exclusive placement agent and received cash commission and expenses totalling $1,695,460 and 934,579
non-transferable broker warrants. Each broker warrant entitles the holder to purchase one subordinate voting share at an exercise price
of CAD$2.675 at any time for a period of four years from the issuance date. The warrants and broker warrants were assigned an aggregate
value of $4,054,513 using the residual method.
(x)
On June 18, 2021, the Company closed a non-brokered private placement financing for 8,333,336 units for CAD$1.80 per unit for gross proceeds
of $12,025,016 (CAD$15 million). Each unit consists of 8,333,336 subordinate voting shares of the Company and warrants to purchase 6,250,002
subordinate voting shares. The warrants have an exercise price of CAD$1.99 per subordinate voting share and exercise period of three
years from the issuance date.
H.C.
Wainwright & Co. acted as the exclusive placement agent and received cash commission and expenses totalling $1,164,466 and 666,667
non-transferable broker warrants. Each broker warrant entitles the holder to purchase one subordinate voting share at an exercise price
of CAD$2.25 at any time for a period of three years from the issuance date. The warrants and broker warrants were assigned an aggregate
value of $2,049,549 using the residual method.
14. Warrants
|
|
|
|
|
|
|
|
Weighted
Average
|
|
|
|
|
|
Number
of
Warrants
|
|
|
|
Exercise Price
(CAD$)
|
|
|
Balance, December 31, 2019
|
|
|
-
|
|
|
|
-
|
|
|
Issued
(note 13(b)(i))
|
|
|
110,575
|
|
|
|
1.75
|
|
|
Balance, June 30, 2020
|
|
|
110,575
|
|
|
|
1.75
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2020
|
|
|
110,575
|
|
|
|
1.75
|
|
|
Issued (note 13(b)(viii)(ix)(x))
|
|
|
29,645,851
|
|
|
|
2.56
|
|
|
Balance, June 30, 2021
|
|
|
29,756,426
|
|
|
|
2.56
|
|
Digihost Technology Inc.
Notes to Condensed Interim
Consolidated Financial Statements
Three and Six Months
Ended June 30, 2021
(Expressed in United
States Dollars) (Unaudited)
14. Warrants (continued)
The
following table reflects the warrants issued and outstanding as of June 30, 2021:
Number
of
Warrants
Outstanding
|
|
Exercise
Price (CAD$)
|
|
Weighted
Average
Contractual
Life (years)
|
|
Expiry Date
|
|
|
110,575
|
|
|
1.75
|
|
|
0.12
|
|
August 14, 2021
|
|
|
9,363,296
|
|
|
3.14
|
|
|
2.71
|
|
March 16, 2024
|
|
|
749,064
|
|
|
3.3375
|
|
|
2.71
|
|
March 16, 2024
|
|
|
6,250,002
|
|
|
1.99
|
|
|
2.97
|
|
June 18, 2024
|
|
|
666,667
|
|
|
2.25
|
|
|
2.97
|
|
June 18, 2024
|
|
|
11,682,243
|
|
|
2.37
|
|
|
3.78
|
|
April 9, 2025
|
|
|
934,579
|
|
|
2.675
|
|
|
3.78
|
|
April 9, 2025
|
|
|
29,756,426
|
|
|
2.56
|
|
|
3.21
|
|
|
15.
Stock options
The
Company has a stock option plan whereby the maximum number of shares subject to the plan, in the aggregate, shall not exceed 10% of the
Company’s issued and outstanding shares. The exercise price shall be no less than the discount market price as determined in accordance
with TSXV policies.
The
following table reflects the continuity of stock options for the periods presented below:
|
|
|
Number
of Stock
Options
|
|
|
Weighted
Average Exercise Price (CAD$)
|
|
|
Balance, December 31, 2019
|
|
|
-
|
|
|
|
-
|
|
|
Granted
(i)
|
|
|
1,875,000
|
|
|
|
0.96
|
|
|
Balance,
June 30, 2020
|
|
|
1,875,000
|
|
|
|
0.96
|
|
|
Balance, December 31, 2020
|
|
|
1,875,000
|
|
|
|
0.96
|
|
|
Granted
(ii)(iii)(iv)(v)(vi)
|
|
|
5,470,491
|
|
|
|
2.01
|
|
|
Balance,
June 30, 2021
|
|
|
7,345,491
|
|
|
|
1.74
|
|
(i)
On February 14, 2020, the Company granted stock options to directors, officers and consultants of the Company to acquire an aggregate
of 1,875,000 subordinate voting shares. The stock options may be exercised at a price of CAD$0.96 per share and expire on February 14,
2025. The stock options vest six months after grant date.
A
value of CAD$0.88 per option was estimated for the 1,875,000 stock options on the date of grant with the following assumptions and inputs:
share price of CAD$0.96; exercise price of CAD$0.96; expected dividend yield of 0%; expected volatility of 154% which is based on comparable
companies; risk-free interest rate of 1.37%; and an expected average life of five years. An expense of $1,247,551 was recorded during
the year ended December 31, 2020.
Digihost Technology Inc.
Notes to Condensed Interim
Consolidated Financial Statements
Three and Six Months
Ended June 30, 2021
(Expressed in United
States Dollars) (Unaudited)
15.
Stock options (continued)
(ii)
On January 5, 2021, the Company granted stock options to directors, officers, employees and consultants of the Company to acquire an
aggregate of 1,650,491 subordinate voting shares. Each stock option is exercisable into a subordinate voting share at a price of CAD$1.25
and expire on January 5, 2026. The stock options vest fully on the six- month anniversary of the date of grant.
A
value of CAD$0.92 per option was estimated for the 1,650,491 stock options on the date of grant with the following assumptions and inputs:
share price of CAD$1.01; exercise price of CAD$1.25; expected dividend yield of 0%; expected volatility of 155% which is based on comparable
companies; risk-free interest rate of 0.39%; and an expected average life of five years. For the six months ended June 30, 2021, an expense
of $1,181,970 was recorded.
(iii)
On February 24, 2021, the Company granted stock options to consultants of the Company to acquire an aggregate of 150,000 subordinate
voting shares. Each stock option is exercisable into a subordinate voting share at a price of CAD$4.64 and expire on February 24, 2026.
The stock options vested immediately.
A
value of CAD$4.26 per option was estimated for the 150,000 stock options on the date of grant with the following assumptions and inputs:
share price of CAD$4.64; exercise price of CAD$4.64; expected dividend yield of 0%; expected volatility of 155% which is based on comparable
companies; risk-free interest rate of 0.73%; and an expected average life of five years. For the six months ended June 30, 2021, an expense
of $512,670 was recorded.
(iv)
On March 26, 2021, the Company granted stock options to directors, officers, employees and consultants of the Company to acquire an aggregate
of 1,600,000 subordinate voting shares. Each stock option is exercisable into a subordinate voting share at a price of CAD$2.49 and expire
on March 25, 2026. The stock options vest fully on the six- month anniversary of the date of grant.
A
value of CAD$2.29 per option was estimated for the 1,600,000 stock options on the date of grant with the following assumptions and inputs:
share price of CAD$2.49; exercise price of CAD$2.49; expected dividend yield of 0%; expected volatility of 155% which is based on comparable
companies; risk-free interest rate of 0.90%; and an expected average life of five years. For the six months ended June 30, 2021, an expense
of $1,547,617 was recorded.
(v)
On May 17, 2021, the Company granted stock options to directors, officers, employees and consultants of the Company to acquire an aggregate
of 1,290,000 subordinate voting shares. Each stock option is exercisable into a subordinate voting share at a price of CAD$2.45 and expire
on May 17, 2026. The stock options vest fully on the six- month anniversary of the date of grant.
A
value of CAD$2.03 per option was estimated for the 1,290,000 stock options on the date of grant with the following assumptions and inputs:
share price of CAD$2.62; exercise price of CAD$2.45; expected dividend yield of 0%; expected volatility of 105% which is based on comparable
companies; risk-free interest rate of 0.95%; and an expected average life of five years. For the six months ended June 30, 2021, an expense
of $501,184 was recorded.
(vi)
On June 22, 2021, the Company granted stock options to directors, officers, employees and consultants of the Company to acquire an aggregate
of 780,000 subordinate voting shares. Each stock option is exercisable into a subordinate voting share at a price of CAD$1.40 and expire
on June 22, 2026. The stock options vest fully on the six- month anniversary of the date of grant.
A value of CAD$1.02
per option was estimated for the 780,000 stock options on the date of grant with the following assumptions and inputs: share price of
CAD$1.34; exercise price of CAD$1.40; expected dividend yield of 0%; expected volatility of 105% which is based on comparable companies;
risk-free interest rate of 0.95%; and an expected average life of five years. For the six months ended June 30, 2021, an expense of $27,864
was recorded.
Digihost Technology Inc.
Notes to Condensed Interim
Consolidated Financial Statements
Three and Six Months
Ended June 30, 2021
(Expressed in United
States Dollars) (Unaudited)
15. Stock options (continued)
The following
table reflects the stock options issued and outstanding as of June 30, 2021:
|
|
|
|
|
|
Weighted
Average
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Expiry Date
|
|
Exercise
Price (CAD$)
|
|
|
Remaining
Contractual
Life (years)
|
|
|
Number
of
Options
Outstanding
|
|
|
Options
Vested
(exercisable)
|
|
|
Number
of
Options
Unvested
|
|
|
February 14, 2025
|
|
|
0.96
|
|
|
|
3.63
|
|
|
|
1,875,000
|
|
|
|
1,875,000
|
|
|
|
-
|
|
|
January 5, 2026
|
|
|
1.25
|
|
|
|
4.52
|
|
|
|
1,650,491
|
|
|
|
24,491
|
|
|
|
1,626,000
|
|
|
February 24, 2026
|
|
|
4.64
|
|
|
|
4.66
|
|
|
|
150,000
|
|
|
|
150,000
|
|
|
|
-
|
|
|
March 25, 2026
|
|
|
2.49
|
|
|
|
4.74
|
|
|
|
1,600,000
|
|
|
|
-
|
|
|
|
1,600,000
|
|
|
May 17, 2026
|
|
|
2.45
|
|
|
|
4.88
|
|
|
|
1,290,000
|
|
|
|
-
|
|
|
|
1,290,000
|
|
|
June 22, 2026
|
|
|
1.40
|
|
|
|
4.98
|
|
|
|
780,000
|
|
|
|
-
|
|
|
|
780,000
|
|
|
|
|
|
1.74
|
|
|
|
4.46
|
|
|
|
7,345,491
|
|
|
|
2,049,491
|
|
|
|
5,296,000
|
|
16.
Related party transactions
Parties
are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant
influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject
to common control. Related parties include key management personnel and may be individuals or corporate entities. A transaction is considered
to be a related party transaction when there is a transfer of resources or obligations between related parties. Related party transactions
are recorded at the exchange amount, being the amount agreed to between the related parties.
Key
management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of
the Company, directly or indirectly. Key management personnel include the Company’s executive officers and members of the Board
of Directors.
Remuneration
of key management personnel of the Company was as follows:
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
Professional fees(1)
|
|
$
|
43,142
|
|
|
$
|
11,258
|
|
|
$
|
53,390
|
|
|
$
|
20,861
|
|
|
Share based compensation(2)
|
|
|
2,216,020
|
|
|
|
506,740
|
|
|
|
2,748,248
|
|
|
|
762,894
|
|
|
|
|
$
|
2,259,162
|
|
|
$
|
517,998
|
|
|
$
|
2,801,638
|
|
|
$
|
783,755
|
|
|
|
(1)
|
In
September 2019, Ms. Cindy Davis was appointed Chief Financial Officer of the Company. Ms.
Davis is also a senior employee of Marrelli Support Services Inc. (“Marrelli Support”).
Marrelli Support also provides accounting services to the Company. On April 29, 2021, Mr.
Paul Ciullo was appointed as the Chief Financial Officer replacing Ms. Davis.
|
|
|
(2)
|
Represents
the share based compensation for officer and directors.
|
A Surety Bond
of $341,000 issued to a supplier is guaranteed by Nyam, LLC, a company controlled by the CEO.
See notes 6, 7,
11 and 12 for additional related party transactions.
Digihost Technology Inc.
Notes to Condensed Interim
Consolidated Financial Statements
Three and Six Months
Ended June 30, 2021
(Expressed in United
States Dollars) (Unaudited)
17. Additional information on the
nature of comprehensive loss components
|
|
|
Six
Months Ended
June 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Expenses for employee benefits
|
|
|
|
|
|
|
|
Operating
and maintenance costs
|
|
$
|
189,438
|
|
|
$
|
54,838
|
|
|
Professional fees
|
|
|
53,390
|
|
|
|
20,861
|
|
|
Share based compensation
|
|
|
3,771,306
|
|
|
|
908,206
|
|
|
|
|
$
|
4,014,134
|
|
|
$
|
983,905
|
|
|
Net financial expenses
|
|
|
|
|
|
|
|
|
|
Interest
in loans
|
|
$
|
96,134
|
|
|
$
|
-
|
|
|
Interest on lease liabilities
|
|
|
118,352
|
|
|
|
28,731
|
|
|
|
|
$
|
214,486
|
|
|
$
|
28,731
|
|
18.
Segmented reporting
The
Company has one operating segment being cryptocurrency mining located in the United States. The operations of the Company are located
in two geographic locations, Canada and the United States. Geographic segmentation is as follows:
|
As at June 30, 2021
|
|
Canada
|
|
|
United States
|
|
|
Total
|
|
|
Current assets
|
|
$
|
193,367
|
|
|
$
|
34,263,244
|
|
|
$
|
34,456,611
|
|
|
Non-current assets
|
|
|
1,377,767
|
|
|
|
32,551,606
|
|
|
|
33,929,373
|
|
|
Total assets
|
|
$
|
1,571,134
|
|
|
$
|
66,814,850
|
|
|
$
|
68,385,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, 2020
|
|
|
Canada
|
|
|
|
United States
|
|
|
|
Total
|
|
|
Current assets
|
|
$
|
-
|
|
|
$
|
4,693,466
|
|
|
$
|
4,693,466
|
|
|
Non-current assets
|
|
|
1,342,281
|
|
|
|
10,483,854
|
|
|
|
11,826,135
|
|
|
Total assets
|
|
$
|
1,342,281
|
|
|
$
|
15,177,320
|
|
|
$
|
16,519,601
|
|
-
19 -
Exhibit 99.150
DIGIHOST TECHNOLOGY INC.
MANAGEMENT’S DISCUSSION AND
ANALYSIS
FOR THE PERIOD ENDED
JUNE 30, 2021
(EXPRESSED IN UNITED
STATES DOLLARS)
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
Introduction
The
following management’s discussion & analysis (“MD&A”) of the financial condition and results of the
operations of Digihost Technology Inc. (the “Company” or “Digihost”) constitutes management’s review
of the factors that affected the Company’s financial and operating performance for the period ended June 30, 2021. This
MD&A was written to comply with the requirements of National Instrument 51-102 – Continuous Disclosure Obligations. This
discussion should be read in conjunction with the audited consolidated financial statements of the Company for the years ended
December 31, 2020 and 2019, together with the notes thereto. Results are reported in United States dollars, unless otherwise noted.
The Company’s consolidated financial statements and the financial information contained in this MD&A, unless otherwise
indicated, are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board (“IASB”) and interpretations of the IFRS Interpretations Committee. Information
contained herein is presented as of August 4, 2021, unless otherwise indicated.
For the purposes of preparing this MD&A,
management, in conjunction with the Board of Directors (the “Board”), considers the materiality of information. Information
is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the
market price or value of Conic’s common shares; (ii) there is a substantial likelihood that a reasonable investor would consider
it important in making an investment decision; or (iii) it would significantly alter the total mix of information available to investors.
Management, in conjunction with the Board, evaluates materiality with reference to all relevant circumstances, including potential market
sensitivity.
Information about the Company and its
operations can be obtained from the offices of the Company or on the System for Electronic Documents Analysis and Retrieval (“SEDAR”)
and is available for review under the Company’s profile on the SEDAR website (www.sedar.com).
COVID-19
Since the beginning of 2020, the outbreak
of the novel strain of coronavirus known as “COVID-19” has resulted in governments worldwide enacting emergency measures to
combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social
distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Global equity markets have experienced
significant volatility. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize
economic conditions. The Company’s employees, directors and consultants have fortunately not had any known cases of COVID-19. The
duration and impact of the COVID-19 pandemic is unknown at this time, as is the efficacy of the government and central bank interventions.
It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition
of the Company in future periods.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
Description of Business
Digihost Technology Inc. (the
“Digihost”) was incorporated in British Columbia, Canada, on February 18, 2017 as Chortle Capital Corp and subsequently
changed its name to HashChain Technology Inc. on September 18, 2017, and again to Digihost Technology Inc. on February 14, 2020.
Digihost and its subsidiary (together the “Company”) is a blockchain technology company with operations in cryptocurrency
mining. The head office of the Company is located at 1001 East Delavan Avenue, Buffalo, New York, 14215.
On February 14, 2020, a reverse takeover
transaction (the “RTO Transaction”) between Digihost International, Inc. (“Old Digihost”) and HashChain Technology
Inc. (“HashChain”) was completed. On completion of the RTO Transaction, Old Digihost was determined to be the accounting acquirer
and accordingly, the financial statements are a continuation of the Old Digihost. In connection with completion of the RTO Transaction,
HashChain has changed its name to “Digihost Technology Inc.”. The Company carried on the business of HashChain as a Tier 2
technology issuer under the symbol “DGHI”. Digihost subordinate voting shares were listed for trading on the TSX Venture Exchange
(“TSXV”) February 20,
2020.
After completion of the RTO transaction,
the mining operations of HashChain and Old Digihost vertically integrated to facilitate a significant reduction in the cost of mining
to allow the Company to better weather future volatility in cryptocurrency prices and increased mining competition.
Company Highlights
Reverse takeover
On
February 14, 2020, there was a RTO Transaction between Old Digihost and HashChain. In connection with completion of the RTO
Transaction, all the issued and outstanding 6,530,560 HashChain common shares were exchanged for 6,530,560 Digihost subordinate
voting shares and all the 5,756,487 Old Digihost common shares were exchanged for 33,412,490 Digihost subordinate voting shares and
10,000 Digihost proportionate voting shares. After the share exchange, former HashChain shareholders owned approximately 16% and
former Old Digihost shareholders owned approximately 84% of the issued and outstanding Digihost subordinate voting shares. In
substance, the transaction involves Old Digihost shareholders obtaining control of the Company; accordingly, the transaction is
considered to be a reverse takeover transaction under which Old Digihost is identified as the accounting acquirer.
At the time of the transaction, HashChain
had operations in cryptocurrency mining and met the definition of a business, and the transaction was accordingly considered a business
combination.
Old Digihost, the legal subsidiary, has been treated as the
accounting parent company, and the Company, the legal parent, has been treated as the accounting subsidiary in these consolidated financial
statements. As Old Digihost was deemed to be the acquirer for accounting purposes, these consolidated financial statements present the
historical financial information of Old Digihost to the date of the Transaction.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
Pursuant to the business combination
transaction, the net assets acquired from the acquisition is to be recorded at their estimated fair values in accordance with IFRS 3.
The allocation of the purchase consideration is as follows:
Consideration
|
Common shares issued pursuant to share exchange agreement (1)
|
|
$
|
2,957,458
|
|
|
|
|
|
|
|
|
Net assets acquired
|
|
Property, plant and equipment
|
|
|
2,244,509
|
|
|
Accounts payable and other payable
|
|
|
(576,957
|
)
|
|
Goodwill acquired (2)
|
|
|
1,289,906
|
|
|
|
|
$
|
2,957,458
|
|
|
(1)
|
The common shares issued were valued based on the HashChain
closing price of CAD$0.60 on the TSXV on February 14, 2020.
|
|
(2)
|
The goodwill acquired from the RTO Transaction is primarily
attributable to the synergies expected to arise from vertical integration of the cryptocurrency mining operations.
|
Private placements
|
|
√
|
On February 14, 2020, immediately prior to completion of the RTO Transaction, the Company closed a non-brokered
private placement, for aggregate gross proceeds of $4,064,431 (CAD$5,395,338) from the sale of 5,481,912 common share subscription receipts
at a price of CAD$0.96, with each common share subscription receipt exchangeable for one common share of Digihost, and 110,575 unit subscription
receipts at a price of CAD$1.20 per unit subscription receipt, with each unit subscription receipt exchangeable for one unit. Each unit
consisted of one common share and one common share purchase warrant of Digihost. Each warrant entitles the holder thereof to acquire one
common share at a price of CAD$1.75 with expiry date August 14, 2021.
|
In addition, immediately
prior to completion of the RTO Transaction, the Company exchanged 1,999,997 common shares of Digihost owned by the CEO and director
of Digihost for 10,000 proportionate voting shares.
|
|
√
|
On January 8, 2021, the Company closed a non-brokered private placement for 349,876 common shares for
CAD$0.81 for gross proceeds of CAD$283,400.
|
|
|
√
|
On February 19, 2021, the Company announced the closing of a non-brokered private placement financing
for aggregate gross proceeds of CAD$4,000,000 (the “Offering”). Pursuant to the Offering, the Company issued 4,938,271 subordinate
voting shares of the Company. In connection with the Offering, the Company paid a commission of 148,148 shares to third party advisors.
|
|
|
√
|
On March 17, 2021, the Company announced the Company the closing
of a private placement for gross proceeds of CAD$25 million. The private placement consisted of the sale of 9,363,296 subordinate voting
shares (“Share”) of the Company and warrants to purchase 9,363,296 subordinate voting shares (“Warrants”). The
Warrants have an exercise price of CAD$3.14 per Share and exercise period of three years from the issuance date.
|
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
H.C. Wainwright & Co. acted as the
exclusive placement agent and received (i) a cash commission equal to 8.0% of the gross proceeds of the Offering and (ii) 749,064 non-transferable
broker warrants (the “Broker Warrants”). Each Broker Warrant entitles the holder to purchase one subordinate voting share
at an exercise price of CAD$3.3375 at any time for a period of three years from the issuance date.
|
|
√
|
On April 9, 2021, the Company announced the closing of a private placement for gross proceeds of CAD$25
million. The private placement consisted of the sale of 11,682,243 common shares (“Share”) of the Company and warrants to purchase
11,682,243 common shares (“Warrants”), at a purchase price of CAD$2.14 per Share and associated Warrant. The Warrants have
an exercise price of CAD$2.37 per Share and exercise period of four years from the issuance date.
|
H.C. Wainwright & Co. acted as the
exclusive placement agent and received (i) a cash commission equal to 8.0% of the gross proceeds of the Offering and (ii) 934,579 non-transferable
broker warrants (the “Broker Warrants”). Each Broker Warrant entitles the holder to purchase one common share at an exercise
price of CAD$2.675 at any time for a period of four years from the issuance date.
|
|
√
|
On June 18, 2021, the Company closed a non-brokered private placement financing for 8,333,336 units for
CAD$1.80 per unit for gross proceeds of $12,025,016 (CAD$15 million). Each unit consists of 8,333,336 subordinate voting shares of the
Company and warrants to purchase 6,250,002 subordinate voting shares. The warrants have an exercise price of CAD$1.99 per subordinate
voting share and exercise period of three years from the issuance date.
|
H.C. Wainwright & Co. acted as the
exclusive placement agent and received cash commission and expenses totalling $1,164,466 and 666,667 non-transferable broker warrants.
Each broker warrant entitles the holder to purchase one subordinate voting share at an exercise price of CAD$2.25 at any time for a period
of three years from the issuance date. The warrants and broker warrants were assigned an aggregate value of $2,049,549 using the residual
method.
Transfer of lease and acquisition
of leasehold improvements
On February 14, 2020, BIT Management,
LLC, Nyam, LLC and BIT Mining International, LLC (collectively the “Sellers”, all companies controlled by the CEO of Digihost)
and Digihost completed an agreement for the sale, transfer and assignment of a 100% right, title and interest in the leasehold improvements
and equipment, the transfer of the lease of the 1001 East Delavan facility and transfer of a power contract for the supply of electricity
at the facility. As consideration and immediately prior to the closing of the RTO Transaction with HashChain, Digihost issued 104,000
common shares of Old Digihost for an aggregate value of $2,704,000.
On February 14, 2020, BIT Mining International
LLC and Digihost completed an agreement for the sale, transfer and assignment of a 100% right, title and interest in the leasehold improvements
and equipment located at a leased facility at 1001 East Delavan facility. As consideration and immediately prior to the closing of the
RTO Transaction, Digihost issued 60,000 common shares of Digihost for an aggregate value of $1,560,000.
Pursuant to the RTO Transaction, holders
of the Old Digihost shares received approximately 181.83 Digihost subordinate voting shares in exchange for each Old Digihost shares.
Accordingly, the 164,000 Old Digihost shares were exchanged for 29,820,000 post RTO Digihost subordinate voting shares.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
NASDAQ Application
As of the date of this MD&A, the
Company is currently in the advanced stages of the application process for a listing of its securities on the Nasdaq Stock Exchange (the
“NASDAQ”). In conjunction with the application process, the Company filed a registration statement with the Securities and
Exchange Commission on June 22, 2021.
Constitution of Board
The current Board consists
of eight (8) directors, with Michel Amar, Alec Amar, Jon Williams, Adam Rossman, Manish Kshatriya, Gerard Rotonda, Donald Christie
and Geoffrey Browne, serving as Directors.
Grant
of stock options
|
|
√
|
On
February 14, 2020, the Company granted stock options to directors, officers and consultants
of the Company to acquire an aggregate of 1,875,000 common shares. The stock options may
be exercised at a price of CAD$0.96 per share and expire on February 14, 2025. The stock
options vest six months after grant date.
|
|
|
√
|
On
January 5, 2021, the Company granted stock options to directors, officers, employees and
consultants of the Company to acquire an aggregate of 1,575,491 common shares. The stock
options may be exercised at a price of CAD$1.25 per share and expire on January 5, 2026.
The stock options vest six months after grant date.
|
|
|
√
|
On
March 26, 2021, the Company granted to directors, officers, employees and consultants of
the Company an aggregate of 1,600,000 incentive stock options to purchase common shares under
the Company’s incentive stock option plan. Each stock option is exercisable into a
common share of the Company at a price of CAD$2.49 for a period of five years from the date
of grant. The stock options will vest fully on the six-month anniversary of the date of grant.
|
|
|
√
|
On
May 17, 2021, the Company granted stock options to directors, officers, employees and consultants
of the Company to acquire an aggregate of 1,290,000 subordinate voting shares. Each
stock option is exercisable into a subordinate voting share at a price of CAD$2.45 and expire
on May 17, 2026. The stock options vest fully on the six-month anniversary
of the date of grant.
|
|
|
√
|
On June 22, 2021, the Company granted stock options to directors, officers, employees and consultants
of the Company to acquire an aggregate of 780,000 subordinate voting shares. Each stock option is exercisable into a subordinate voting
share at a price of CAD$1.40 and expire on June 22, 2026. The stock options vest fully on the six-month anniversary
of the date of grant.
|
Acquisition of Miners and power plant
|
|
√
|
On December 31, 2020, the Company upgraded its system through
the acquisition of Antminer S19 Pro 110TH miners. The Company received loans totalling $975,000 to procure the miners. With the most
efficient miners currently in the market, each unit utilizing a hash rate of 110TH and a power usage of 3300 watts (34W/TH), Digihost
will be integrating and adding 15.4 PH to the Company’s hash rate in the near future. Digihost has acquired 76 PH in additional
hash rate from newer and more efficient miners since the start of the year. The Company plans to continue the acquisition of the highest
performing miners, further increasing the efficiency of the Company’s operations.
|
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
|
|
√
|
On March 24, 2021, the Company announced that the Company has signed a binding agreement (the “Agreement”)
for the purchase of a 60 MW power plant (“Digifactory1”) located in the State of New York, bringing the Company’s total
power capacity to approximately 102 MW.
|
Under the terms of the Agreement, the
Company will pay to the vendor cash consideration of US$3,500,000 and issue to the vendor 437,318 common shares of the Company with a
deemed value of US$750,000 (US$1.72 per share).
The transaction is subject to TSX Venture
Exchange and all required regulatory approvals. The securities issuable in connection therewith will be subject to a statutory four month
and a day hold period.
|
|
√
|
On March 29, 2021, the Company announced the acquisition of 700 Bitmain S17+ 76TH miners for a total purchase
price of $4.025 million, that would increase the Company’s hashrate by 50PH, or approximately 20% in the second quarter of 2021.
|
The total purchase price of
$4,025,000 will be comprised of cash consideration of $2.975 million and issuance to the vendor of 533,781 common shares of the
Company with a deemed value of $1,050,000 (CAD$1,329,114 (CAD$2.49 per share)). The securities issuable in connection therewith will
be subject to a statutory four month and a day hold period and will be subject to TSX Venture Exchange and all required regulatory
approvals.
|
|
√
|
On May 12, 2021, the Company announced that it had signed a definitive purchase agreement to acquire approximately
10,000 of the most technologically advanced, high-performance Bitcoin miners that will increase the Company’s current hashrate by
approximately 925PH to 1.145EH, with delivery of the Miners to occur between August and December of this year.
|
The Miners have been sourced from Northern
Data AG, a leading infrastructure supplier for BTC mining and other high-performance computing infrastructure solutions, and the Company
is funding the purchase of the miners with capital from its equity financings closed since the beginning of 2021 of approximately CAD$69,000,000.
Pursuant to the terms of the Purchase
Agreement, the Company has concurrently entered into a hosting agreement”) with Northern Data in connection with the Miners, whereby
Northern Data will provide services to the Company including the installation and hosting of the Miners in proprietary pre-manufactured
performance optimized mobile data centers to be located at Digihost’s company- owned facility. Both parties are in advanced discussions
to expand the Purchase Agreement beyond the initial 10,000 Miners up to a total of 30,000 miners, giving Digihost the potential to increase
its current hashrate to approximately 3.0EH.
Normal Course Issuer Bid
On December 7, 2020, the Company announced
that it has received approval to undertake, at the Company’s discretion, a normal course issuer bid program to purchase up to 2,003,683
of its subordinate voting shares for cancellation (the “Bid”). The Company received acceptance from the TSXV to commence the
Bid on December 10, 2020. The Bid will terminate on December 10, 2021, or on an earlier date in the event that the maximum number of common
shares sought in the Bid has been repurchased. The Company reserves the right to terminate the Bid at any time.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
Debt Settlement
On November 24, 2020, the Company announced
that it has entered into a debt settlement agreement with two of its directors and pursuant to the debt settlement agreement will, subject
to receipt of approval of the TSXV, issue an aggregate of 200,000 common shares in the capital of the Company, at a deemed price of $0.20
per common share, in consideration for the settlement of a total of $40,000 in accrued liabilities owing to the directors in respect of
director fees. The debt settlement received final approval by the TSXV on January 27, 2021. All securities issued pursuant to the debt
settlement are subject to a four month and one-day statutory hold period from the closing date.
On
January 5, 2021, the Company announced that it has entered into a debt settlement agreement with two of its third-party creditors
(the “Creditors”) and pursuant to the debt settlement agreement will, subject to receipt of approval of the TSXV, issue
an aggregate of 96,815 common shares in the capital of the Company, at a deemed price of $1.05 per common share, in consideration
for the settlement of a total of $80,000 in accrued liabilities owing to the Creditors in respect of consulting fees (the
“Debt Settlement”). All securities to be issued pursuant to the Debt Settlement will be subject to a four month and
one-day statutory hold period from the closing date. The Debt Settlement is subject to all necessary regulatory approvals including
from the TSXV.
Business Overview and Plan of Operations
Digihost is a growth oriented
blockchain company. As the result of recent equipment acquisitions, the Company has significantly increased its hashrate from
approximately 143 Petahash in December 2020 to 200 Petahash in June 2021. The Company has the contractual plans to expand to a rate
of 3.6EH upon completion of the 60 MW power plant. The Company’s operating facility is located in Buffalo, New York, with over
70,000 square feet and a 115,000 KVA outdoor substation under lease and an option to lease additional facility space totalling
240,000 square feet. The Company focuses on validation through mining, hosting solutions and blockchain software solutions.
Following the recent purchase agreement
with Northern Data AG, the Company’s mining fleet will increase by approximately 10,000 by the end of 2021 and increase the Company’s
current hashrate by approximately 925PH.
The
Company intends to source and utilize renewable natural gas for the operations of Digifactory1 and also engage in the practice of
acquiring renewable energy certificates, all in line with the Company’s objective to mitigate its carbon footprint.
Digifactory1 will have the capacity to operate an additional 18,000 top tier Bitcoin miners, which if added to the existing fleet of
9,500 miners already in operation, would combine for a total Bitcoin mining capacity of approximately 400 Bitcoins per month as of
the most recent mining difficulty factor. Additionally, the expanded capacity would allow for a potential increase to the existing
hashrate of 190 PH to up to 3 EH. This substantial increase in both Bitcoin mining output capacity and hashrate would be the direct
result of potentially adding up to 18,000 latest generation Bitcoin miners, versus the current operating mix of 9,500 older and
newer version Bitcoin miners.
The
recent acquisition of the Bitmain S17+ miners that were delivered in early April 2021, combined with the current price of Bitcoin
and the level of mining difficulty, the Company expects to increase the Company’s monthly mined BTC by approximately 9 BTC,
which would translate to an additional $400,000 of operating profit per month. A portion of the new miners are installed at the
Company’s existing mining facility in Upstate New York with the remainder to be installed in Q3 2021.
The Company intends to aggressively pursue
every new opportunity that aligns with its goal to expand operations through the strategic acquisition of Bitcoin miners and low-cost
sources of clean energy.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
At the
end of the first six months of 2021, the Company’s total BTC balance was 351.36. During the first six months of 2021, Digihost
mined a total of 215.24 BTC, with 109.98 BTC mined during Q2 2021 and 105.26 BTC mined during Q1 2021.
During May 2021, the Company elected
to diversify its cryptocurrency holdings by converting approximately 31 BTC into Ethereum (ETH). As of the date of this MD&A, Digihost
holds 563.89 ETH in its inventory, which at the approximate Ethereum price of $2,500 per ETH, values the Ethereum holdings at approximately
$1,409,700.
As of the date of this MD&A, Digihost
held 402.19 Bitcoin in its inventory from mining, which at the approximate Bitcoin price of $38,000 per BTC, values the Bitcoin at approximately
$15,283,200.
In
prior quarters, Bitcoin has experienced a recent increase in price, which may be representative of the increased volatility of the
global financial markets, as well as the Bitcoin halving event on May 11, 2020. A Bitcoin halving event is when the Bitcoin rewards
for each block in the chain mined is cut in half, which also cuts in half the rate at which new Bitcoins enter circulation making
Bitcoin scarcer. This event occurs every 4 years. After the first halving event, the Bitcoin block reward was 25, then 12.5, and on
May 11, 2020 was halved again to 6.25 Bitcoins per block.
In the past, Bitcoin halvings have correlated
with massive surges in Bitcoin’s price. The first halving in November of 2012 saw an increase in Bitcoin prices from approximately US$12
per Bitcoin to nearly US$1,150 per Bitcoin within a year of the halving. Since the halving in May 2020, the price of Bitcoin has increased
from approximately $8,600 in May 2020 to approximately $53,000 at the end of April 2021 before settling at approximately $35,000 at the
end of June 2021.
To further diversity its operations,
the Company announce on June 10, 2021 that it had entered into a strategic co-mining agreement with Bit Digital USA, Inc (“BTBT)
(Nasdaq: BTBT). Pursuant to the terms of the Agreement, the Company will provide certain premises to BTBT for the purpose of the operation
and storage of a 20 MW Bitcoin mining system to be delivered by BTBT, and the Company will also provide services to maintain the Premises
for a term of two years. The collaboration between Digihost and BTBT is expected to generate an increase in hashrate of approximately
400 PH between the companies.
On July 26, 2021, the Company and BTBT
announced that they had entered into a second strategic co- mining agreement. Pursuant to the terms of the Agreement, Digihost will provide
certain premises to Bit Digital for the operation of a 100 MW Bitcoin mining system to be delivered by Bit Digital for a term of two years.
This expanded collaboration between Digihost and Bit Digital is expected to facilitate an additional increase in hashrate of approximately
2 EH between the companies, and a total increase in hashrate between the two companies of approximately 2.4 EH including the initial collaboration
agreement.
Under the terms of the AgreementS, the
Company will provide power for the operation of the Miners and will also provide management services necessary to maintain 95% uptime
on the Miners. In consideration for these services, after paying Digihost a very competitive rate for power, Digihost and BTBT will participate
in a profit-sharing arrangement based on a fixed distribution formula. It is expected that the Miners will be delivered and installed
during the fourth quarter of this year up until the second half of 2022.
Custodial services for digital
currencies
The Company currently custodies approximately
20% of its mined digital currencies with bitFlyer USA Inc. (“bitFlyer USA”) in San Francisco, CA. bitFlyer USA is a subsidiary
of bitFlyer Inc., headquartered in Tokyo, Japan, which operates one of the largest Bitcoin exchanges by volume in the world. The Company
uses the wallet services of bitFlyer USA, and bitFlyer USA is responsible for
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
holding/safeguarding mined digital currencies.
bitFlyer USA is not a Canadian financial institution or foreign equivalent. The Company is not aware of anything with regards to the custodian’s
operations that would adversely affect the Company’s ability to obtain an unqualified audit opinion on its audited financial statements.
In April 2021, the Company transferred
all of its coin previously held by other custodial parties into cold storage wallets. In total, as of the date of this MD&A, Digihost
has approximately 194 coins held in a number of cold storage wallets.
During April 2021, the Company was approved
for an account with Gemini Trust Company, LLC (Gemini). Gemini is a digital currency exchange and custodian that allows customers to buy,
sell, and store its digital assets. As of the date of this MD&A, the Company has holdings of approximately 120
BTC and 564 ETH coins in its Gemini account.
The Company performs credit due diligence
in the normal course of business when beginning a relationship with counterparties, as well as during on-going business activities. The
Company has not been able to insure its mined digital currency. Given the novelty of digital currency mining and associated businesses,
insurance of this nature is generally not available, or uneconomical for the Company to obtain which leads to the risk of inadequate insurance
cover.
Selected Financial Information
|
|
|
Period ended
June 30,
2020
($)
|
|
|
Year ended
December 31,
2020
($)
|
|
|
Year ended
December 31,
2019
($)
|
|
|
Revenue
|
|
|
9,879,628
|
|
|
|
3,553,362
|
|
|
|
nil
|
|
|
Net (loss)
|
|
|
(205,892
|
)
|
|
|
(5,190,713
|
)
|
|
|
(269,968
|
)
|
|
Net income (loss) per share – basic and diluted
|
|
|
(0.00
|
)
|
|
|
(0.15
|
)
|
|
|
(741.67
|
)
|
|
|
|
|
Period ended
June 30,
2020
($)
|
|
|
|
As at
December 31,
2020
($)
|
|
|
|
As at
December 31,
2019
($)
|
|
|
Total assets
|
|
|
68,385,984
|
|
|
|
16,519,601
|
|
|
|
3,897,511
|
|
|
Total long-term liabilities
|
|
|
2,437,327
|
|
|
|
3,003,037
|
|
|
|
nil
|
|
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
Selected Quarterly Information
A summary of selected information for each of the eight most
recent quarters prepared in accordance with IFRS is as follows:
|
Three Months Ended
|
|
Revenues
($)
|
|
|
Net Income or (Loss)
|
|
|
|
|
Total
($)
|
|
|
Per Share -
Basic
($)
|
|
|
Per Share -
Diluted
($)
|
|
|
2021-June 30
|
|
|
5,112,553
|
|
|
|
(205,892
|
)
|
|
|
(0.00
|
)
|
|
|
(0.00
|
)
|
|
2021-March 31
|
|
|
4,767,075
|
|
|
|
72,957
|
|
|
|
0.0013
|
|
|
|
0.0013
|
|
|
2020-December 31
|
|
|
1,187,362
|
|
|
|
(1,472,103
|
)
|
|
|
(0.15
|
)
|
|
|
(0.15
|
)
|
|
2020-September 30
|
|
|
437,813
|
|
|
|
(1,659,259
|
)
|
|
|
(0.04
|
)
|
|
|
(0.04
|
)
|
|
2020-June 30
|
|
|
1,089,877
|
|
|
|
(1,293,527
|
)
|
|
|
(0.03
|
)
|
|
|
(0.03
|
)
|
|
2020-March 31
|
|
|
838,310
|
|
|
|
(765,824
|
)
|
|
|
(0.04
|
)
|
|
|
(0.04
|
)
|
|
2019-December 31
|
|
|
-
|
|
|
|
(80,692
|
)
|
|
|
(40,346
|
)
|
|
|
(0.00
|
)
|
|
2019-September 30
|
|
|
-
|
|
|
|
(65,884
|
)
|
|
|
(32,942
|
)
|
|
|
(0.00
|
)
|
Results of Operations
For the six months ended June 30,
2021 compared to the three months ended June 30, 2020:
For the
six months ended June 30, 2021, the Company’s net income was $205,892 compared to a net loss of $2,193,006 for the six months ended
June 30, 2020. The year over year decrease in net loss of $1,987,114 is a result of the following:
|
|
√
|
During the six months ended June 30, 2021, the Company recognized gross profit of $5,055,837 as a result
of the mining of digital currencies from its cryptocurrency mining operations as opposed to a net loss of $1,134,766 in the prior year.
|
|
|
√
|
As an offset to net income, during the six months ended June 30, 2021, the Company recorded share-based
compensation of $3,771,306 (2020: 908,206). This represents the expense associated with the approximately $5.5m of stock options that
were granted during the period.
|
Liquidity and Financial Position
As of
June 30, 2021, the Company had working capital of $32,121,709, which includes cash of $20,346,743 and digital currencies of
$13,734,589. The Company commenced earning revenue from digital currency mining in mid-February 2020, however it has limited history
and no assurance that historical performance will be indicative of future performance.
The Company’s ability to continue
as a going concern is dependent on the Company’s ability to efficiently mine and liquidate digital currencies, manage operational
expenses and raise additional funds through debt or equity financing.
Cash flows
Operating
Activities
Cash used
in operating activities for the period ended June 30, 2021, was $3,601,582. Cash flows resulted from net loss of $205,892, an increase
in accounts payable and and digital currencies.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
Investing Activities
Cash used in investing activities for the period ended June
30, 2021, was $23,539,177 for the purchase of mining equipment.
Financing Activities
Cash
provided by financing activities for the period ended June 30, 2021, was $47,456,252. The Company received proceeds from a private
placement of $50,265,763, made lease payments of $173,690, repaid custodial loans of $3,975,083 and received net funds from loans of
$1,473,495.
ADJUSTED EBITDA – NON-GAAP MEASURE
“Adjusted EBITDA” is a metric
used by management which is income (loss) from operations, as reported, before interest, tax, and adjusted for removing other non-cash
items, including the stock-based compensation expense, depreciation, and further adjusted to remove acquisition related costs. Management
believes “Adjusted EBITDA” is a useful financial metric to assess its operating performance on a cash basis before the impact
of non-cash items and acquisition related activities.
|
|
|
Six months ended
June 30
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Income (Loss) before other items
|
|
$
|
(205,892
|
)
|
|
$
|
(2,193,006
|
)
|
|
Share-based compensation
|
|
|
3,771,306
|
|
|
|
908,206
|
|
|
Depreciation
|
|
|
1,471,424
|
|
|
|
1,453,160
|
|
|
Adjusted EBITDA
|
|
|
5,036,838
|
|
|
|
168,360
|
|
Loan Receivable (Payable) and Related Party Transactions
Loan receivable from related party
During the year ended December 31, 2019,
Nyam, LLC, a company controlled by the Chief Executive Officer (“CEO”) received net loan proceeds of $2,431,655. In February
2020, $2,404,020 of this amount was settled through the purchase of data miners from Nyam. These amounts are non-interest bearing, unsecured
and due on demand.
Related Party Transactions
Parties are considered to be related
if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party
in making financial and operating decisions. Parties are also considered to be related if they are subject to common control. Related
parties include key management personnel and may be individuals or corporate entities. A transaction is considered to be a related party
transaction when there is a transfer of resources or obligations between related parties. Related party transactions are recorded at
the exchange amount, being the amount agreed to between the related parties.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
Key management personnel are those persons
having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. Key
management personnel include the Company’s executive officers and members of the Board of Directors.
Remuneration of key management personnel
of the Company was as follows:
|
|
|
Six
Months Ended
June 30,
2021
|
|
|
Six
Months Ended
June 30,
2020
|
|
|
Professional fees (1)
|
|
|
53,390
|
|
|
|
20,861
|
|
|
Share based compensation (2)
|
|
|
2,748,248
|
|
|
|
762,894
|
|
|
Total
|
|
$
|
2,801,638
|
|
|
$
|
783,755
|
|
(1) In September
2019, Ms. Cindy Davis was appointed Chief Financial Officer of the Company. Ms. Davis is also a senior employee of Marrelli Support Services
Inc. (“Marrelli Support”). Marrelli Support also provides accounting services to the Company. On April 29, 2021, Mr. Paul
Ciullo was appointed as the Chief Financial Officer replacing Ms.Davis.
(2)
Represents the share based compensation for officer and directors.
A Surety Bond of $341,000 issued to a supplier is guaranteed
by NYAM, LLC, a company controlled by the CEO.
Share Capital
As of the date of this MD&A, the
Company has 75,088,831 common shares outstanding.
As of the date of this MD&A, the
Company 7,345,491 stock options and 29,756,426 warrants.
Off-Balance Sheet Arrangements
As at the date of this MD&A, the
Company did not have any off-balance sheet arrangements.
Adoption of new accounting policies
(a) Basis of consolidation
These consolidated financial statements
include the accounts of Digihost and its wholly owned subsidiary: Digihost International, Inc. Subsidiaries are consolidated from the
date of acquisition, being the date on which the Company obtains control, and continues to be consolidated until the date that such control
ceases. Control is achieved when an investor has power over an investee to direct its activities, exposure to variable returns from an
investee, and the ability to use the power to affect the investor’s returns. All inter-company transactions and balances have been eliminated
upon consolidation.
(b) Functional and presentation currency
These
financial statements are presented in United States Dollars. The functional currency of Digihost is the Canadian dollar and the functional
currency of Digihost International, Inc. is the United States Dollars. All financial information is expressed in United States Dollars,
unless otherwise stated.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
(c) Foreign currency translation
Monetary assets and liabilities denominated
in foreign currencies are translated to United States dollars at exchange rates in effect at the reporting date. Non-monetary assets and
liabilities are translated at historical exchange rates at the respective transaction dates. Revenue and expenses are translated at the
rate of exchange at each transaction date. Gains or losses on translation are included in foreign exchange expense.
The results and financial position of
an entity whose functional currency are translated into a different presentation currency are treated as follows:
|
|
√
|
assets and liabilities are translated at the closing rate at
the reporting date;
|
|
|
√
|
income and expenses for each income statement are translated at average exchange rates at the dates of the period; and
|
|
|
√
|
all resulting exchange differences are recognized in other comprehensive income as cumulative translation adjustments.
|
(d) Revenue recognition
The Company recognizes revenue from the
provision of transaction verification services within digital currency networks, commonly termed “cryptocurrency mining”.
As consideration for these services, the Company receives digital currency from each specific cryptocurrency mining pool in which it participates.
Revenue is measured based on the fair value of the digital currencies received. The fair value is determined using the spot price of the
digital currencies on the date of receipt. Digital currencies are considered earned on the completion and addition of a block to the blockchain,
at which time the economic benefit is received and can be reliably measured.
(e) Digital currencies
Digital
currencies consist of Bitcoin. Digital currencies meet the definition of intangible assets in IAS 38 Intangible Assets as they are
identifiable non-monetary assets without physical substance. They are initially recorded at cost and the revaluation method is used
to measure the digital currencies subsequently. Where digital assets are recognized as revenue, the fair value of the bitcoin
received is considered to be the cost of the digital assets. Under the revaluation method, increases in fair value are recorded in
other comprehensive income, while decreases are recorded in profit or loss. The Company revalues its digital currencies at the end
of each quarter. There is no recycling of gains from other comprehensive income to profit or loss. However, to the extent that an
increase in fair value reverses a previous decrease in fair value that has been recorded in profit or loss, that increase is
recorded in profit or loss. Decreases in fair value that reverse gains previously recorded in other comprehensive income are
recorded in other comprehensive income. Gains and losses on digital currencies sold between revaluation dates are included in profit
or loss.
Digital
currencies are measured at fair value using the quoted price on Cryptocompare. Cryptocompare is a pricing aggregator, as the principal
market or most advantageous market is not always known. The Company believes any price difference amongst the principal market and an
aggregated price to be immaterial. Management considers this fair value to be a Level 2 input under IFRS 13 Fair Value Measurement fair
value hierarchy as the price on this source represents an average of quoted prices on multiple digital currency exchanges.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
(f) Property, plant
and equipment
Details as to the Company’s policies for property, plant
and equipment are as follows:
|
Asset
|
|
|
Measurement Basis
|
|
Amortization Method
|
|
Amortization Rate
|
|
Data miners
|
|
|
Cost
|
|
Straight-line
|
|
12 - 36 months
|
|
Equipment
|
|
|
Cost
|
|
Straight-line
|
|
36 - 120 months
|
|
Leasehold improvement
|
|
|
Cost
|
|
Straight-line
|
|
120 months
|
Property, plant and equipment are recorded
at cost less accumulated depreciation. Cost includes all expenditures incurred to bring assets to the location and condition necessary
for them to be operated in the manner intended by management.
Subsequent costs are included in the
asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any replaced
parts is derecognized. All other repairs and maintenance are charged to profit or loss during the fiscal period in which they are incurred.
Gains and losses on disposal are determined
by comparing the proceeds with the carrying amount and are recognized in profit or loss.
(g) Intangible assets
intangible assets that qualify for separate
recognition are recognized as intangible assets at their fair values. Right of use of an electric power facility is depreciated over 13
years.
(h) Impairment of non-financial assets
The Company reviews the carrying amounts
of its non-financial assets, including property, plant and equipment, when events or changes in circumstances indicate the assets may
not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of
the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates
the recoverable amount of the cash generating unit to which the asset belongs. Assets carried at fair value, such as digital currencies,
are excluded from impairment analysis.
Recoverable amount is the higher of fair
value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows to be derived from continuing
use of the asset or cash generating unit are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. Fair value less costs of disposal is the amount obtainable
from the sale of an asset or cash generating unit in an arm’s length transaction between knowledgeable, willing parties, less the
cost of disposal. When a binding sale agreement is not available, fair value less costs of disposal is estimated using a discounted cash
flow approach with inputs and assumptions consistent with those of a market participant. If the recoverable amount of an asset or cash
generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash generating unit is reduced
to its recoverable amount. An impairment loss is recognized immediately in net income. Where an impairment loss subsequently reverses,
the carrying amount of the asset or cash generating unit is increased to the revised estimate of its recoverable amount, such that the
increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
(i) Leases and right-of-use assets
All leases are accounted for by recognizing
a right-of-use asset and a lease liability except for:
|
|
√
|
Leases of low value assets; and
|
|
|
√
|
Leases with a duration of twelve months or less.
|
Lease liabilities are measured at the
present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by the incremental
borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability
if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain
unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.
On initial recognition, the carrying
value of the lease liability also includes:
|
|
√
|
Amounts expected to be payable under any residual value guarantee;
|
|
|
√
|
The exercise price of any purchase option granted if it is reasonable
certain to assess that option;
|
|
|
√
|
Any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being
exercised.
|
Right-of-use assets are initially measured
at cost, which includes the initial amount of the lease liability, reduced for any lease incentives received, and increased for:
|
|
√
|
Lease payments made at or before commencement of the lease;
|
|
|
√
|
Initial direct costs incurred; and
|
|
|
√
|
The amount of any provision recognised where the Company is contractually required to dismantle, remove or restore the leased asset.
|
Lease liabilities, on initial measurement,
increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made.
Right-of-use assets are amortized on
a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if this is judged to be shorter
than the lease term.
When the Company revises its estimate
of the term of any lease, it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term,
which are discounted at the same discount rate that applied on lease commencement. The carrying value of lease liabilities is similarly
revised when the variable element of future lease payments dependent on a rate or index is revised. In both cases an equivalent adjustment
is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised)
lease term or recorded in profit or loss if the right-of-use asset is reduced to zero.
(j) Goodwill
The Company measures goodwill as the
fair value of the cost of the acquisition less the fair value of the identifiable net assets acquired, all measured as of the acquisition
date. Goodwill is carried at cost less accumulated impairment losses.
(k) Share capital and equity
Share capital represents the amount received
on the issue of shares, less issuance costs, net of any underlying income tax benefit from these issuance costs. When warrants are issued
in connection with shares, the Company uses the residual method for allocating fair value to the shares and then to warrants.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
Contributed surplus include the value
of outstanding warrants and stock options. When warrants and stock options are exercised, the related compensation cost and value are
transferred to share capital.
Deficit include all current and prior
year losses.
Digital currency revaluation reserve
includes gains and losses from the revaluation of digital currencies, net of tax.
Cumulative translation reserve includes
foreign currency translation differences arising from the translation of financial statements of foreign entities into United States dollars.
(l) Share-based compensation
The granting of stock options to employees,
officers, directors or consultants of the Company requires the recognition of share-based compensation expense with a corresponding increase
in contributed surplus in shareholders’ equity. The fair value of stock options that vest immediately are recorded as share-based
compensation expense at the date of the grant. The expense for stock options that vest over time is recorded over the vesting period using
the graded method, which incorporates management’s estimate of the stock options that are not expected to vest. For stock options
where vesting is subject to the completion of performance milestones, the estimate for completion of the milestone is reviewed at each
reporting date for any change in the estimated vesting date, and to the extent there is a material change in the vesting date estimate,
the amortization to be recognized is recalculated for the new timeline estimate and adjusted on a prospective basis in the current period.
The effect of a change in the number of stock options expected to vest is a change in an estimate and the cumulative effect of the change
is recognized in the period when the change occurs. On exercise of an stock option, the consideration received and the estimated fair
value previously recorded in contributed surplus is recorded as an increase in share capital.
Stock options awarded to consultants
are measured based on the fair value of the goods and services received unless that fair value cannot be estimated reliably. If the fair
value of the goods and services cannot be reliably measured, then the fair value of the equity instruments granted is used to recognize
the expense.
Critical accounting judgements, estimates
and assumption
The preparation of these financial statements
in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes
could differ from these estimates. These financial statements include estimates that, by their nature, are uncertain. The impacts of such
estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions
to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both
current and future periods. These estimates are based on historical experience, current and future economic conditions and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
Significant assumptions about
the future that management has made that could result in a material adjustment to the carrying amounts of assets and liabilities, in
the event that actual results differ from assumptions made, relate to, but are not limited to, the following:
Significant judgements
(i) Income from digital currency mining
The Company recognizes income from digital
currency mining from the provision of transaction verification services within digital currency networks, commonly termed “cryptocurrency
mining”. As consideration for these services, the Company receives digital currency from each specific network in which it participates
(“coins”). Income from digital currency mining is measured based on the fair value of the coins received. The fair value is
determined using the spot price of the coin on the date of receipt. The coins are recorded on the statement of financial position, as
digital currencies, at their fair value less costs to sell and re- measured at each reporting date. Revaluation gains or losses, as well
as gains or losses on the sale of coins for traditional (fiat) currencies are included in profit or loss in accordance with the Company’s
treatment of its digital currencies as a traded commodity.
There is currently no specific definitive
guidance in IFRS or alternative accounting frameworks for the accounting for the mining and strategic selling of digital currencies and
management has exercised significant judgement in determining appropriate accounting treatment for the recognition of income from digital
currency mining for mining of digital currencies. Management has examined various factors surrounding the substance of the Company’s
operations, including the stage of completion being the completion and addition of a block to a blockchain and the reliability of the
measurement of the digital currency received.
(ii) Business combination
Management uses judgement to determines
whether assets acquired and liabilities assumed constitute a business. A business consists of inputs and processes applied to those inputs
that have the ability to create outputs.
The Company completed the RTO Transaction
in February 2020 (note 3) and concluded that the entity acquired did qualify as a business combination under IFRS 3, “Business Combinations”,
as significant processes were acquired. Accordingly, the RTO Transaction has been accounted for as a business combination.
(iii) Going concern
The assessment of the Company’s ability
to continue as a going concern involves judgment regarding future funding available for its operations and working capital requirements
as discussed in note 1.
(iv) Leases – incremental borrowing
rate
Judgment is applied when determining
the incremental borrowing rate used to measure the lease liability of each lease contract, including an estimate of the asset-specific
security impact. The incremental borrowing rate should reflect the interest rate the Company would pay to borrow at a similar term and
with similar security.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
(v) Income, value added, withholding
and other taxes
The Company is subject to income, value
added, withholding and other taxes. Significant judgment is required in determining the Company’s provisions for taxes. There are many
transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company
recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The determination
of the Company’s income, value added, withholding and other tax liabilities requires interpretation of complex laws and regulations. The
Company’s interpretation of taxation law as applied to transactions and activities may not coincide with the interpretation of the tax
authorities. All tax related filings are subject to government audit and potential reassessment subsequent to the financial statement
reporting period. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences
will impact the tax related accruals and deferred income tax provisions in the period in which such determination is made.
Significant estimates
(i) Determination of asset and liability
fair values and allocation of purchase consideration
Significant business combinations require
judgements and estimates to be made at the date of acquisition in relation to determining the relative fair value of the allocation of
the purchase consideration over the fair value of the assets. The information necessary to measure the fair values as at the acquisition
date of assets acquired requires management to make certain judgements and estimates about future events, including but not limited to
availability of hardware and expertise, future production opportunities, future digital currency prices and future operating costs.
(ii) Useful lives of property, plant
and equipment
Depreciation of data miners and equipment
are an estimate of its expected life. In order to determine the useful life of computing equipment, assumptions are required about a range
of computing industry market and economic factors, including required hashrates, technological changes, availability of hardware and other
inputs, and production costs.
(iii) Digital currency valuation
Digital currencies consist of cryptocurrency
denominated assets (note 4) and are included in current assets. Digital currencies are carried at their fair value determined by the spot
rate less costs to sell. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily
indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s
earnings and financial position.
(iv) Impairment of goodwill
Goodwill is tested for impairment if
there is an indicator of impairment and annually for all CGUs with goodwill. The Company considers both external and internal sources
of information for indications that goodwill is impaired. External sources of information we consider include changes in the market and
economic and legal environment in which the CGU operates that are not within its control and affect the recoverable amount of goodwill.
Internal sources of information considered include the strategic plans for the Company including estimates of revenue and other indications
of economic performance of the assets.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
Disclosure of Internal Controls
Management has established processes
to provide it with sufficient knowledge to support representations that it has exercised reasonable diligence to ensure that (i) the consolidated
financial statements do not contain any untrue statement of material fact or omit to state a material fact required to be stated or that
is necessary to make a statement not misleading in light of the circumstances under which it is made, as of the date of and for the periods
presented by the financial statements, and (ii) the consolidated financial statements fairly present in all material respects the financial
condition, results of operations and cash flow of the Company, as of the date of and for the periods presented.
In
contrast to the certificate required for non-venture issuers under National Instrument 52-109 - Certification of Disclosure in
Issuers’ Annual and Interim Filings (“NI 52-109”), the Venture Issuer Basic Certificate does not include
representations relating to the establishment and maintenance of disclosure controls and procedures (“DC&P”) and
internal control over financial reporting (“ICFR”), as defined in NI 52-109. In particular, the certifying officers
filing such certificate are not making any representations relating to the establishment and maintenance of:
|
|
(i)
|
controls and other procedures designed to provide reasonable assurance that information required to be
disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded,
processed, summarized and reported within the time periods specified in securities legislation; and
|
|
|
(ii)
|
a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of consolidated financial statements for external purposes in accordance with the issuer’s GAAP (IFRS).
|
The Company’s certifying officers
are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they
are making in the certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture
issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the
quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.
Risk Factors
Overview
The Company faces a number of risks that
are related to both the general cryptocurrency business as well as the Company’s business model. The risks and uncertainties described
below are not the only risks and uncertainties that the Company faces. Additional risks and uncertainties of which the Company is not
aware or that the Company currently believes to be immaterial may also adversely affect the Company’s business, financial condition,
results of operations or prospects. If any of the possible events described below occur, the Company’s business, financial condition,
results of operations or prospects could be materially and adversely affected.
Risks Related to the Company’s
Business
Bitcoin Halving Event Risk
In May
2020, the Bitcoin (“BTC”) block reward decreased from 12.5 to 6.25 BTC per block (the “Bitcoin Halving”), and
consequently the number of new BTC issued to miners would be reduced to approximately 900 per day.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
The Bitcoin Halving may have
a material impact on the Company’s profitability. Given that profitability is required for self-acting agents to perform BTC mining
to continue to support the validation of transactions, the expected impact of the Bitcoin Halving is that market variables of BTC price
and difficulty will adjust over time to ensure that the profitability of BTC mining remains profitable. The period of market normalization
after the Bitcoin Halving to incentivizing profitability levels is unknown. As a result, if BTC price and difficulty do not adjust over
time to pre-Bitcoin Halving profitability levels or the period of market normalization after the Bitcoin Halving to pre-Bitcoin Halving
profitability levels is too long, there is a risk that the Bitcoin Halving will render the Company unprofitable for a sustained time
period such that it could be unable to continue as a going concern.
COVID-19 Pandemic Risk
In March 2020, the World Health Organization
declared COVID-19 a pandemic. The global response to the pandemic is constantly evolving, including various measures implemented at the
global, national, state, provincial and local levels. The major impacts that COVID-19 is expected to have on the Company include potential
increases in cryptocurrency price volatility, difficulty obtaining new financing due to global economic slowdown, and delays in receiving
future orders of mining hardware and parts sourced from overseas. While the Company is expected to continue operating throughout the pandemic,
government-imposed restrictions encouraging social distancing may impact the number of employees permitted to work in the mining facilities.
A reduction in workforce in the mining facilities may reduce the Company’s ability to maximize operational efficiency.
The Company’s cryptocurrency
inventory may be exposed to cybersecurity threats and hacks
As with any other computer code, flaws
in the cryptocurrency codes have been exposed by certain malicious actors. Several errors and defects have been found and corrected, including
those that disabled some functionality for users and exposed users’ information. Discovery of flaws in or exploitations of the source
code that allow malicious actors to take or create money have been relatively rare.
The computer network operated by the
Company may further be vulnerable to intrusions by hackers who could interfere with and introduce defects to the mining operation. Private
keys which enable holders to transfer funds may also be lost or stolen, resulting in irreversible losses of cryptocurrencies.
Regulatory changes or actions may
alter the nature of an investment in the Company or restrict the use of cryptocurrencies in a manner that adversely affects the Company’s
operations
As cryptocurrencies have grown in both
popularity and market size, governments around the world have reacted differently to cryptocurrencies with certain governments deeming
them illegal while others have allowed their use and trade. Ongoing and future regulatory actions may alter, perhaps to a materially adverse
extent, the ability of the Company to continue to operate. The effect of any future regulatory change on the Company or any cryptocurrency
that the Company may mine is impossible to predict, but such change could be substantial and have a material adverse effect on the Company.
Governments may in the future curtail or outlaw the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading
in cryptocurrencies may then be considered illegal and subject to sanction. Governments may also take regulatory action that may increase
the cost and/or subject cryptocurrency companies to additional regulation. Governments may in the future take regulatory actions that
prohibit or severely restrict the right to acquire, own, hold, sell, use or trade cryptocurrencies or to exchange cryptocurrencies for
fiat currency. By extension, similar actions by other governments, may result in the restriction of the acquisition, ownership, holding,
selling, use or trading in the Company Subordinate Voting Shares. Such a restriction could result in the Company liquidating its cryptocurrency
inventory at unfavorable prices and may adversely affect the Company’s shareholders.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
The value of cryptocurrencies may
be subject to momentum pricing risk
Momentum pricing typically is associated
with growth stocks and other assets whose valuation, as determined by the investing public, accounts for anticipated future appreciation
in value. Cryptocurrency market prices are determined primarily using data from various exchanges, over-the-counter markets, and derivative
platforms. Momentum pricing may have resulted, and may continue to result, in speculation regarding future appreciation in the value of
cryptocurrencies, inflating and making their market prices more volatile. As a result, they may be more likely to fluctuate in value due
to changing investor confidence in future appreciation (or depreciation) in their market prices, which could adversely affect the value
of the Company’s cryptocurrency inventory and thereby affect the Company’s shareholders.
Cryptocurrency exchanges and other
trading venues are relatively new and, in most cases, largely unregulated and may therefore be more exposed to fraud and failure
To the extent that cryptocurrency exchanges
or other trading venues are involved in fraud or experience security failures or other operational issues, this could result in a reduction
in cryptocurrency prices. Cryptocurrency market prices depend, directly or indirectly, on the prices set on exchanges and other trading
venues, which are new and, in most cases, largely unregulated as compared to established, regulated exchanges for securities, derivatives
and other currencies. For example, during the past three years, a number of BTC exchanges have been closed due to fraud, business failure
or security breaches. In many of these instances, the customers of the closed BTC exchanges were not compensated or made whole for the
partial or complete losses of their account balances in such BTC exchanges. While smaller exchanges are less likely to have the infrastructure
and capitalization that provide larger exchanges with additional stability, larger exchanges may be more likely to be appealing targets
for hackers and “malware” (i.e., software used or programmed by attackers to disrupt computer operation, gather sensitive
information or gain access to private computer systems) and may be more likely to be targets of regulatory enforcement action.
Banks may not provide banking services,
or may cut off banking services, to businesses that provide cryptocurrency-related services or that accept cryptocurrencies as payment
A number of companies that provide BTC
and/or other cryptocurrency-related services have been unable to find banks that are willing to provide them with bank accounts and banking
services. Similarly, a number of such companies have had their existing bank accounts closed by their banks. Banks may refuse to provide
bank accounts and other banking services to BTC and/or other cryptocurrency-related companies or companies that accept cryptocurrencies
for a number of reasons, such as perceived compliance risks or costs. The difficulty that many businesses that provide BTC and/or other
cryptocurrency-related services have and may continue to have in finding banks willing to provide them with bank accounts and other banking
services may be currently decreasing the usefulness of cryptocurrencies as a payment system and harming public perception of cryptocurrencies
or could decrease its usefulness and harm its public perception in the future. Similarly, the usefulness of cryptocurrencies as a payment
system and the public perception of cryptocurrencies could be damaged if banks were to close the accounts of many or of a few key businesses
providing BTC and/or other cryptocurrency-related services. This could decrease the market prices of cryptocurrencies and adversely affect
the value of the Company’s cryptocurrency inventory.
The impact of geopolitical events
on the supply and demand for cryptocurrencies is uncertain
Crises may motivate large-scale purchases
of cryptocurrencies which could increase the price of cryptocurrencies rapidly. This may increase the likelihood of a subsequent price
decrease as crisis-driven purchasing behavior wanes, adversely affecting the value of the Company’s cryptocurrency inventory.
As an
alternative to fiat currencies that are backed by central governments, cryptocurrencies, which are relatively new, are subject to
supply and demand forces based upon the desirability of an alternative, decentralised means of buying and selling goods and
services, and it is unclear how such supply and demand will be impacted by geopolitical
events. Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of BTCs either globally or locally.
Large-scale sales of cryptocurrencies would result in a reduction in their market prices and adversely affect the Company’s operations
and profitability.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
The further development and acceptance
of the cryptographic and algorithmic protocols governing the issuance of and transactions in cryptocurrencies is subject to a variety
of factors that are difficult to evaluate
The use of cryptocurrencies to, among
other things, buy and sell goods and services and complete other transactions, is part of a new and rapidly evolving industry that employs
digital assets based upon a computer-generated mathematical and/or cryptographic protocol. The growth of this industry in general, and
the use of cryptocurrencies in particular, is subject to a high degree of uncertainty, and the slowing, or stopping of the development
or acceptance of developing protocols may adversely affect the Company’s operations. The factors affecting the further development
of the industry, include, but are not limited to:
|
|
√
|
Continued worldwide growth in the adoption and use of cryptocurrencies;
|
|
|
√
|
Governmental and quasi-governmental regulation of cryptocurrencies and their use, or restrictions on or
regulation of access to and operation of the network or similar cryptocurrency systems;
|
|
|
√
|
Changes in consumer demographics and public tastes and preferences;
|
|
|
√
|
The maintenance and development of the open-source software
protocol of the network;
|
|
|
√
|
The availability and popularity of other forms or methods of buying and selling goods and services, including
new means of using fiat currencies;
|
|
|
√
|
General economic conditions and the regulatory environment relating
to digital assets; and
|
|
|
√
|
Negative consumer sentiment and perception of BTCs specifically
and cryptocurrencies generally.
|
Acceptance and/or widespread use
of cryptocurrency is uncertain
Currently, there is relatively small
use of BTCs and/or other cryptocurrencies in the retail and commercial marketplace in comparison to relatively large use by speculators,
thus contributing to price volatility that could adversely affect the Company’s operations, investment strategies, and profitability.
As relatively new products and technologies,
BTC and its other cryptocurrency counterparts have not been widely adopted as a means of payment for goods and services by major retail
and commercial outlets. Conversely, a significant portion of cryptocurrency demand is generated by speculators and investors seeking to
profit from the short-term or long-term holding of cryptocurrencies.
The relative lack of acceptance of cryptocurrencies
in the retail and commercial marketplace limits the ability of end-users to use them to pay for goods and services. A lack of expansion
by cryptocurrencies into retail and commercial markets, or a contraction of such use, may result in increased volatility or a reduction
in their market prices, either of which could adversely impact the Company’s operations, investment strategies, and profitability.
The Company may be required to
sell its coins to pay for expenses
The Company may sell its coins to pay
for expenses incurred, irrespective of then-current coin prices. Consequently, the Company’s coins may be sold at a time when the
price is low, resulting in a negative effect on the Company’s profitability.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
The Company’s operations,
investment strategies, and profitability may be adversely affected by competition from other methods of investing in cryptocurrencies
The Company competes with other users
and/or companies that are mining cryptocurrencies and other potential financial vehicles, possibly including securities backed by or linked
to cryptocurrencies through entities similar to the Company. Market and financial conditions, and other conditions beyond the Company’s
control, may make it more attractive to invest in other financial vehicles, or to invest in cryptocurrencies directly which could limit
the market for the Company’s shares and reduce their liquidity.
The Company’s coins may be
subject to loss, theft or restriction on access
There is a risk that some or all of the
Company’s coins could be lost or stolen. Access to the Company’s coins could also be restricted by cybercrime (such as a denial
of service attack) against a service at which the Company maintains a hosted online wallet. Any of these events may adversely affect the
operations of the Company and, consequently, its investments and profitability.
The loss or destruction of a private
key required to access the Company’s digital wallets may be irreversible. The Company’s loss of access to its private keys
or its experience of a data loss relating to the Company’s digital wallets could adversely affect its investments.
Cryptocurrencies are controllable only
by the possessor of both the unique public and private keys relating to the local or online digital wallet in which they are held, which
wallet’s public key or address is reflected in the network’s public Blockchain. The Company will publish the public key relating
to digital wallets in use when it verifies the receipt of cryptocurrency transfers and disseminates such information into the network,
but it will need to safeguard the private keys relating to such digital wallets. To the extent such private keys are lost, destroyed or
otherwise compromised, the Company will be unable to access its coins and such private keys will not be capable of being restored by network.
Any loss of private keys relating to digital wallets used to store the Company’s cryptocurrency could adversely affect its investments
and profitability.
Incorrect or fraudulent coin transactions
may be irreversible
Cryptocurrency transactions are irrevocable
and stolen or incorrectly transferred coins may be irretrievable. As a result, any incorrectly executed or fraudulent coin transactions
could adversely affect the Company’s investments.
Coin transactions are not, from an administrative
perspective, reversible without the consent and active participation of the recipient of the transaction. In theory, cryptocurrency transactions
may be reversible with the control or consent of a majority of processing power on the network. Once a transaction has been verified and
recorded in a block that is added to the Blockchain, an incorrect transfer of a coin or a theft of coin generally will not be reversible
and the Company may not be capable of seeking compensation for any such transfer or theft. Although the Company’s transfers of coins
will regularly be made by experienced members of the management team, it is possible that, through computer or human error, or through
theft or criminal action, the Company’s coins could be transferred in incorrect amounts or to unauthorized third parties, or to
uncontrolled accounts.
If the award of coins for solving
blocks and transaction fees are not sufficiently high, miners may not have an adequate incentive to continue mining and may cease their
mining operations
As the number of coins awarded for solving
a block in the Blockchain decreases, the incentive for miners to continue to contribute processing power to the network will transition
from a set reward to transaction fees. Either the requirement from miners of higher transaction fees in exchange for recording transactions
in the Blockchain or a software upgrade that automatically charges fees for all transactions may decrease demand for the relevant coins
and prevent the expansion of the network to retail merchants and commercial businesses, resulting in a
reduction in the price of the relevant cryptocurrency that could adversely impact the Company’s cryptocurrency inventory and investments.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
In order to incentivize miners to continue
to contribute processing power to the network, the network may either formally or informally transition from a set reward to transaction
fees earned upon solving for a block. This transition could be accomplished either by miners independently electing to record on the blocks
they solve only those transactions that include payment of a transaction fee or by the network adopting software upgrades that require
the payment of a minimum transaction fee for all transactions. If transaction fees paid for the recording of transactions in the Blockchain
become too high, the marketplace may be reluctant to accept network as a means of payment and existing users may be motivated to switch
between cryptocurrencies or back to fiat currency. Decreased use and demand for coins may adversely affect their value and result in a
reduction in the market price of coins.
If the award of coins for solving blocks
and transaction fees for recording transactions are not sufficiently high to incentivize miners, miners may cease expending processing
power to solve blocks and confirmations of transactions on the Blockchain could be slowed temporarily. A reduction in the processing power
expended by miners could increase the likelihood of a malicious actor or botnet obtaining control in excess of 50 percent of the processing
power active on the Blockchain, potentially permitting such actor or botnet to manipulate the Blockchain in a manner that adversely affects
the Company’s mining activities.
If the award of coins for solving blocks
and transaction fees are not sufficiently high, miners may not have an adequate incentive to continue mining and may cease their mining
operations. Miners ceasing operations would reduce collective processing power, which would adversely affect the confirmation process
for transactions (i.e., decreasing the speed at which blocks are added to the Blockchain until the next scheduled adjustment in difficulty
for block solutions) and make the network more vulnerable to a malicious actor or botnet obtaining control in excess of 50 percent of
the processing power. Any reduction in confidence in the confirmation process or processing power of the network may adversely impact
the Company’s mining activities, inventory of coins, and future investment strategies.
The price of coins may be affected
by the sale of coins by other vehicles investing in coins or tracking cryptocurrency markets
To the extent that other vehicles investing
in coins or tracking cryptocurrency markets form and come to represent a significant proportion of the demand for coins, large redemptions
of the securities of those vehicles and the subsequent sale of coins by such vehicles could negatively affect cryptocurrency prices and
therefore affect the value of the inventory held by the Company.
Risk related to technological obsolescence
and difficulty in obtaining hardware
To remain competitive, the Company will
continue to invest in hardware and equipment required for maintaining the Company’s mining activities. Should competitors introduce
new services/software embodying new technologies, the Company’s hardware and equipment and its underlying technology may become
obsolete and require substantial capital to replace such equipment.
The increase in interest and demand for
cryptocurrencies has led to a shortage of mining hardware as individuals purchase equipment for mining at home.
Equipment will require replacement from
time to time. Shortages of graphics processing units may lead to unnecessary downtime as the Company searches for replacement equipment.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
Facility Developments
The continued development of existing
and planned facilities is subject to various factors and may be delayed or adversely affected by such factors beyond the Company’s
control, including delays in the delivery or installation of equipment by suppliers, difficulties in integrating new equipment into existing
infrastructure, shortages in materials or labour, defects in design or construction, diversion of management resources, insufficient funding,
or other resource constraints. Actual costs for development may exceed the Company’s planned budget. Delays, cost overruns, changes
in market circumstances and other factors may result in different outcomes than those intended.
Environmental Liability
The Company may be subject to potential
risks and liabilities associated with pollution of the environment through its use of electricity to mine cryptocurrencies. In addition,
environmental hazards may exist on a property in which the Company directly or indirectly holds an interest which are unknown to the Company
at present which have been caused by previous or existing owners or operators of the property which would result in environmental pollution.
A breach of such legislation may result in the imposition of fines and penalties.
To the extent the Company is subject
to environmental liabilities, the payment of such liabilities or the costs that it may incur to remedy environmental pollution would reduce
funds otherwise available to it and could have a material adverse effect on the Company. If the Company is unable to fully remedy an environmental
problem, it might be required to suspend operations or enter into interim compliance measures pending completion of the required remedy.
The potential exposure may be significant and could have a material adverse effect on the Company.
General Business Risks Related to
the Company
Management Experience and Dependence
on Key Personnel and Employees
The Company’s success is currently
largely dependent on the performance of the Company’s directors and officers. Certain members of the Company’s management
team have experience in the cryptocurrency industry, while others have experience in areas including financial management, corporate finance
and sales and marketing. The experience of these individuals is a factor which will contribute to the Company’s continued success
and growth. The Company will initially be relying on the Company’s board members, as well as independent consultants, for certain
aspects of the Company’s business. The amount of time and expertise expended on the Company’s affairs by each of the Company’s
management team and the Company’s directors will vary according to the Company’s needs. The Company does not intend to acquire
any key man insurance policies and there is, therefore, a risk that the death or departure of any member of management, the Company’s
board, or any key employee or consultant, could have a material adverse effect on the Company’s future. Investors who are not prepared
to rely on the Company’s management team should not invest in the Company’s securities.
Uncertainty of Additional Funding
Further acquisitions of additional cryptocurrency
mining rigs will require additional capital and the Company will require funds to continue to operate as a public company. There is no
assurance that the Company will be successful in obtaining any required financing(s) or that such financing(s) will be available on terms
acceptable to the Company. Any future financing(s) may also be dilutive to the Company’s existing shareholders at that time.
Negative Cash Flow
The Company’s operations will be
those of HashChain, which has a limited history of operations. HashChain has had negative operating cash flow since HashChain’s
inception, and the Company will continue to have negative operating cash
flow for the foreseeable future. No assurance can be given that the Company will ever attain positive cash flow or profitability additional
or that additional funding will be available for operations.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
Uninsured or Uninsurable Risks
The Company intends to insure its operations
in accordance with technology industry practice. However, given the novelty of cryptocurrency mining and associated businesses, such insurance
may not be available, uneconomical for the Company, or the nature or level may be insufficient to provide adequate insurance cover. The
Company may become subject to liability for hazards against which the Company cannot insure or against which the Company may elect not
to insure because of high premium costs or for other reasons. The payment of any such liabilities would reduce or eliminate the funds
available for operations. Payments of liabilities for which the Company does not carry insurance may have a material adverse effect on
the Company’s financial position.
Dividend Risk
The Company does not anticipate paying
dividends in the near future. The Company expects to retain earnings to finance further growth and, where appropriate, retire debt.
Share Price Volatility Risk
The Company has applied to list on the
TSXV the Company Subordinate Voting Shares. In the event of such listing, external factors outside of the Company’s control, such
as announcements of quarterly variations in operating results, revenues and costs, and sentiments toward stocks, may have a significant
impact on the market price of the Company Subordinate Voting Shares. Global stock markets, including the TSXV, have experienced extreme
price and volume fluctuations from time to time. There can be no assurance that an active or liquid market will develop or be sustained
for the Company Subordinate Voting Shares.
Costs of Being a Publicly Traded
Company
As the Company will have publicly-traded
securities, significant legal, accounting and filing fees will continue to be incurred. Securities legislation and the rules and policies
of the TSXV require publicly listed companies to, among other things, adopt corporate governance policies and related practices and to
continuously prepare and disclose material information, all of which carry significant legal, financial and securities regulatory compliance
costs.
Conflicts of Interest
Certain of the Company’s directors
and officers are, and may continue to be, involved in the cryptocurrency industry through their direct and indirect participation in corporations,
partnerships or joint ventures which are potential competitors of the Company. Situations may arise in connection with potential acquisitions
or opportunities where the other interests of these directors and officers may conflict with the Company’s interests. Directors
and officers of the Company with conflicts of interest will be subject to and must follow the procedures set out in applicable corporate
and securities legislation, regulations, rules and policies. Notwithstanding this, there may be corporate opportunities which the Company
is not able to procure due to a conflict of interest of one or more of the Company’s directors or officers.
Tax Risk
The Company will be subject to various
taxes including, but not limited to the following: Canadian income tax; goods and services tax; provincial sales tax; land transfer tax;
and payroll tax. The Company tax filings will be subject to audit by various taxation authorities. While the Company intends to base its
tax filings and compliance on the advice of its tax advisors, there can be no assurance that its tax filing positions will never be challenged
by a relevant taxation authority resulting in a greater than anticipated tax liability
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the Period Ended June 30, 2021
Discussion dated: August
4, 2021
Cautionary Note Regarding Forward-Looking
Information
This MD&A contains certain forward-looking
information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as “forward-looking
statements”). These statements relate to future events or the Company’s future performance. All statements other than statements
of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words
such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”,
“continues”, “forecasts”, “projects”, “predicts”, “intends”, “anticipates”
or “believes”, or variations of, or the negatives of, such words and phrases, or statements that certain actions, events or
results “may”, “could”, “would”, “should”, “might” or “will” be
taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause
actual results to differ materially from those anticipated in such forward-looking statements. The forward-looking statements in this
MD&A speak only as of the date of this MD&A or as of the date specified in such statement. The following table outlines certain
significant forward-looking statements contained in this MD&A and provides the material assumptions used to develop such forward-
looking statements and material risk factors that could cause actual results to differ materially from the forward-looking statements.
In particular, this MD&A contains forward-looking statements pertaining to the following:
|
|
√
|
the impact of the ongoing novel coronavirus disease outbreak (COVID-19) on the business, operations, financial results and prospects
of the Company;
|
|
|
√
|
the impact of the Bitcoin Halving in May 2020 on the price
of BTC and the normalization after the Bitcoin Halving to pre-Bitcoin Halving
profitability levels;
|
|
|
√
|
future debt levels, financial capacity, liquidity and capital
resources;
|
|
|
√
|
anticipated future sources of funds to meet working capital
requirements;
|
|
|
√
|
future capital expenditures and contractual commitments;
|
|
|
√
|
expectations respecting future financial results;
|
|
|
√
|
expectations regarding benefits of certain transactions and
capital investments;
|
|
|
√
|
the Company’s objectives, strategies and competitive strengths;
|
|
|
√
|
future development activities;
|
|
|
√
|
the Company’s growth strategy;
|
|
|
√
|
expectations with respect to future opportunities;
|
|
|
√
|
expectations with respect to the Company’s financial position;
|
|
|
√
|
the Company’s capital expenditure programs and future
capital requirements;
|
|
|
√
|
capital resources and the Company’s ability to raise capital;
and
|
|
|
√
|
industry conditions pertaining to the cryptocurrency industry;
|
|
|
√
|
the other factors
discussed under “Risk Factors”.
|
This list of factors should not be construed as exhaustive.
Additional Information
Additional information concerning the
Company is available on SEDAR at www.sedar.com.
Page | 28
Exhibit 99.151
FORM 52-109FV2
CERTIFICATION OF INTERIM FILINGS
VENTURE ISSUER BASIC CERTIFICATE
I, Paul Ciullo, Chief Financial Officer of
Digihost Technology Inc., certify the following:
|
|
1.
|
Review: I have reviewed the interim
financial report and interim MD&A (together, the “interim filings”) of Digihost
Technology Inc. (the “issuer”) for the interim period ended June 30, 2021.
|
|
|
2.
|
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim
filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary
to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim
filings.
|
|
|
3.
|
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial
report together with the other financial information included in the interim filings fairly present in all material respects the financial
condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
|
Date: August 4, 2021
Signed “Paul Ciullo”
Paul Ciullo
Chief Financial Officer
NOTE TO READER
In contrast to the certificate required for non-venture
issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture
Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures
(DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing
this certificate are not making any representations relating to the establishment and maintenance of
|
|
i)
|
controls and other procedures designed to provide reasonable assurance that information required to be
disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded,
processed, summarized and reported within the time periods specified in securities legislation; and
|
|
|
ii)
|
a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with the issuer’s GAAP.
|
The issuer’s certifying officers are responsible
for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this
certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and
implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability,
transparency and timeliness of interim and annual filings and other reports provided under securities legislation.
Exhibit 99.152
FORM 52-109FV2
CERTIFICATION OF INTERIM FILINGS
VENTURE ISSUER BASIC CERTIFICATE
I, Michel Amar, Chief Executive Officer of
Digihost Technology Inc., certify the following:
|
|
1.
|
Review: I have reviewed the interim financial report and interim MD&A (together, the “interim
filings”) of Digihost Technology Inc. (the
“issuer”) for the interim period ended June 30, 2021.
|
|
|
2.
|
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim
filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary
to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim
filings.
|
|
|
3.
|
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial
report together with the other financial information included in the interim filings fairly present in all material respects the financial
condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
|
Date: August 4, 2021
Signed “Michel Amar”
Michel Amar
Chief Executive Officer
NOTE TO READER
In contrast to the certificate required for non-venture
issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture
Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures
(DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing
this certificate are not making any representations relating to the establishment and maintenance of
|
|
i)
|
controls and other procedures designed to provide reasonable assurance that information required to be
disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded,
processed, summarized and reported within the time periods specified in securities legislation; and
|
|
|
ii)
|
a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with the issuer’s GAAP.
|
The issuer’s certifying officers are responsible
for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this
certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and
implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability,
transparency and timeliness of interim and annual filings and other reports provided under securities legislation.
Exhibit 99.153
DIGIHOST ANNOUNCES RECORD REVENUE FROM DIGITAL
CURRENCY MINING FOR Q2 2021
Toronto, ON – August 4, 2021 –
Digihost Technology Inc. (“Digihost” or the “Company”) (TSXV: DGHI; OTCQB: HSSHF) is pleased to
announce its financial results for the second quarter ended June 30, 2021 (all amounts in U.S. dollars, unless otherwise indicated).
Revenue from digital currency mining was $5.1
million in the second quarter of 2021, a 369% increase over the corresponding quarter in 2020, and a 7% increase over the previous quarter.
The Company generated cash flow of $20.3 million in the second quarter of 2021, up significantly from $95k for the same period in 2020,
and $7.1 million higher than the previous quarter. Gross profit increased to $2.9 million compared to a gross loss of $1.0 million in
Q2 of 2020 and is $0.8 million higher compared to Q1 of 2021.
Michel Amar, CEO of Digihost, stated: “We
are proud of the record top-line revenue growth, as well as gross profit from mining, achieved by Digihost during the second quarter of
2021. As a Company, we are looking forward to building on these results through the expansion of our mining capacity and strategic co-location
agreements in order to continue to deliver record revenue and profit for our shareholders.”
Second Quarter 2021 Financial Highlights
The following information compares the financial
results of the Company for the three months ended June 30, 2021 (“2021”) and the three months ended June 30, 2020 (“2020”):
|
|
-
|
Record revenue from digital currency mining of $5.1 million reported in 2021, compared to $1.1 million
in 2020, an increase of 369%;
|
|
|
|
|
|
|
-
|
Gross profit margin from operations was 58% in 2021 compared to a gross loss margin from operations of
94% million in 2020;
|
|
|
|
|
|
|
-
|
Generated Adjusted EBITDA of $2.7 million in 2021, a significant increase from $169k in 2020.
|
The following information compares the financial
position of the Company as at June 30, 2021 (“2021”) and as at December 31, 2020 (“2020”):
|
|
-
|
Cash balance of $20.3 million in 2021 compared to $0.03 million in 2020, an increase of $20.27 million;
|
|
|
|
|
|
|
-
|
Digital currencies balance of $13.7 million in 2021, comprised of 351.94 Bitcoins and 563.89 Ethereum,
compared to $4.5 million in 2020, comprised of 153.72 Bitcoins and 0 Ethereum, an increase of $9.2 million and 198 Bitcoins and 564 Ethereum;
|
|
|
|
|
|
|
-
|
Total assets of $68.4 million in 2021 compared to $16.5 million in 2020, an increase of $51.9 million;
|
|
|
|
|
|
|
-
|
Total liabilities of $4.8 million in 2021 compared to $6.1 million in 2020, a decrease of $1.3 million;
and
|
|
|
|
|
|
|
-
|
Total shareholders’ equity of $63.6 million in 2021 compared to $10.4 million in 2020, an increase
of $53.2 million.
|
Recent Highlights
|
|
-
|
On June 21, 2021, the Company closed a private placement of 8,333,333 units
at a price of CAD$1.80 per unit for gross proceeds of CAD$15 million, bringing the total the Company has closed in equity financings during
the first half of 2021 to CAD$69.2 million;
|
|
|
|
|
|
|
-
|
On June 22, 2021, the Company announced that it had filed its Form 40-F
with the U.S. Securities and Exchange Commission, fulfilling a significant milestone for a listing on Nasdaq;
|
|
|
|
|
|
|
-
|
The Company became a signatory to the Crypto Climate Accord, an initiative modeled on the Paris Climate
Agreement, which aligns with the Company’s own DigiGreen initiative;
|
|
|
|
|
|
|
-
|
On June 10 and June 26, 2021, respectively, the Company formed a strategic
collaboration with Bit Digital USA, Inc. to increase the Companies’ combined hashrates by 2.4 EH;
|
|
|
|
|
|
|
-
|
The Company’s current cryptocurrency holdings are comprised of 402.19
Bitcoin and 563.89 Ethereum.
|
Michel Amar commented: “Our long-term vision
and business strategy is to increase our mining capacity and continue to grow as a leader in the blockchain technology space. The efforts
we have undertaken in the past few months illustrate our commitment to pursuing every opportunity in this sector as well as our sustained
efforts to generate significant shareholder value in an environmentally conscious manner.”
|
(U.S.$ except per share data)
|
|
Three Months Ended
June 30
|
|
|
|
|
2021
|
|
|
2020
|
|
|
For the periods ended as indicated
|
|
|
|
|
|
|
|
|
|
Revenue from digital currency mining
|
|
|
5,112,553
|
|
|
|
1,089,877
|
|
|
Operating and maintenance costs
|
|
|
(1,803,223
|
)
|
|
|
(1,023,457
|
)
|
|
Depreciation
|
|
|
(361,628
|
)
|
|
|
(1,089,870
|
)
|
|
Gross profit (loss)
|
|
|
2,947,702
|
|
|
|
(1,023,450
|
)
|
|
General and administrative and other expenses
|
|
|
(3,167,377
|
)
|
|
|
(479,030
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(219,675
|
)
|
|
|
(1,502,480
|
)
|
|
Net financial expenses
|
|
|
(59,174
|
)
|
|
|
(21,280
|
)
|
|
Net loss for the period
|
|
|
(278,849
|
)
|
|
|
(1,523,760
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
806,492
|
|
|
|
-
|
|
|
Revaluation of digital currency (1)
|
|
|
(7,476,828
|
)
|
|
|
228,894
|
|
|
Total comprehensive income (loss)
|
|
|
(6,949,185
|
)
|
|
|
(1,294,866
|
)
|
|
Basic and diluted loss per share – diluted
|
|
|
(0.00
|
)
|
|
|
(0.04
|
)
|
|
Weighted average number of subordinate voting shares outstanding – basic and diluted
|
|
|
66,484,618
|
|
|
|
40,073,661
|
|
|
EBITDA (2)
|
|
|
82,779
|
|
|
|
(433,890
|
)
|
|
Adjusted EBITDA (2)
|
|
|
2,688,543
|
|
|
|
169,371
|
|
|
|
1.
|
Non-IFRS measure. A reconciliation to its nearest IFRS measures is provided under "Adoption of new
accounting policies – Digital Currencies" in the Company’s MD&A.
|
|
|
2.
|
Non-IFRS measure. A reconciliation to its nearest IFRS measures is provided under "Adjusted EBITDA
– Non-GAAP Measure" in the Company’s MD&A.
|
Financial Statements and MD&A
The Company’s Condensed Interim Consolidated
Financial Statements and Management’s Discussion and Analysis (“MD&A”) thereon for the three and six months
ended June 30, 2021, will be accessible on SEDAR at www.sedar.com under Digihost’s profile.
About Digihost Technology Inc.
Digihost Technology Inc. is a growth-oriented
blockchain technology company primarily focused on Bitcoin mining. The Company is currently hashing at a rate of 200PH with plans to expand
to a hashrate of 3.6 EH by the end of the first half of 2022.
For further information, please contact:
Digihost Technology Inc.
www.digihost.ca
Michel Amar, Chief Executive Officer
T: 1-818-280-9758
Email: michel@digihost.ca
Cautionary Statement
Trading in the securities of the Company should
be considered highly speculative. No stock exchange, securities commission or other regulatory authority has approved or disapproved the
information contained in this news release. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined
in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Forward-Looking Statements
Except for the statements of historical fact,
this news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking
information”) that is based on expectations, estimates and projections as at the date of this news release. Forward-looking information
in this news release includes information about hashrate expansion, diversification of operations, potential further improvements to profitability
and efficiency across mining operations, potential for the Company’s long-term growth, and the business goals and objectives of
the Company. Factors that could cause actual results, performance or achievements to differ materially from those described in such forward-looking
information include, but are not limited to: continued effects of the COVID19 pandemic may have a material adverse effect on the Company’s
performance as supply chains are disrupted and prevent the Company from operating its assets; the ability to establish new facilities
for the purpose of research & development; a decrease in cryptocurrency pricing, volume of transaction activity or generally, the
profitability of cryptocurrency mining; delivery of mining rigs for hosting may not be realized in the number anticipated, or at all,
and resulting hashing power may materially differ from that anticipated; further improvements to profitability and efficiency may not
be realized; the digital currency market; the Company’s ability to successfully mine digital currency on the cloud; the Company
may not be able to profitably liquidate its current digital currency inventory, or at all; a decline in digital currency prices may have
a significant negative impact on the Company’s operations; the volatility of digital currency prices; and other related risks as
more fully set out in the Annual Information Form of the Company and other documents disclosed under the Company’s filings at www.sedar.com.
The forward-looking information in this news release reflects the current expectations, assumptions and/or beliefs of the Company based
on information currently available to the Company. In connection with the forward-looking information contained in this news release,
the Company has made assumptions about: the current profitability in mining cryptocurrency (including pricing and volume of current transaction
activity); profitable use of the Company’s assets going forward; the Company’s ability to profitably liquidate its digital
currency inventory as required; historical prices of digital currencies and the ability of the Company to mine digital currencies on the
cloud will be consistent with historical prices; and there will be no regulation or law that will prevent the Company from operating its
business. The Company has also assumed that no significant events occur outside of the Company's normal course of business. Although the
Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a
guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.
3
Exhibit 99.154
DIGIHOST PROVIDES MINING OPERATION RESULTS FOR
AUGUST AND ANNOUNCES A 185% INCREASE IN YEAR-OVER-YEAR MONTHLY BITCOIN PRODUCTION
Toronto, ON – September 7, 2021 –
Digihost Technology Inc. (“Digihost” or the “Company”) (TSXV: DGHI; OTCQB: HSSHF), an innovative
North American based Bitcoin self-mining company, is pleased to provide unaudited Bitcoin (“BTC”) production updates
for August 2021. All amounts are expressed in USD unless otherwise indicated.
Corporate Highlights for August 31, 2021:
|
|
●
|
Produced
44.07 BTC during the month, increasing total holdings to 446.2 BTC representing a fair market
value of approximately $21.0 million as at August 31, 2021.
|
|
|
●
|
Total
Ethereum (“ETH”) holdings of 563.89 ETH representing a fair market value
of approximately $1.9 million as at August 31, 2021.
|
|
|
●
|
Total
digital asset inventory value consisting of BTC and ETH of approximately $22.9 million at
the end of August.
|
|
|
●
|
Cash
on hand at August 31st was approximately $18.9 million, and total cash and digital asset
holdings was approximately $41.7 million.
|
|
|
●
|
Year-to-date
deposits on equipment and infrastructure to be completed in Q4 2021 pertaining to the Company’s
core business of approximately $24.1 million.
|
Bitcoin
Mining Update
For the eight-month period ended August 31, 2021,
the Company’s mining fleet produced 310.58 BTC, with production broken down as follows:
|
|
●
|
Quarter
1, 2021: 105.26 BTC
|
|
|
●
|
Quarter
2, 2021: 109.97 BTC
|
|
|
●
|
Quarter
3, 2021: 95.35 BTC
|
Quarter-Over-Quarter
Comparison
The Company mined approximately 23.57 more BTC
in the first two months of Q3 2021 (July and August 2021) compared to the first two months of the previous quarter (April and May 2021),
representing an increase of 33%. Based on the BTC prices in these respective quarters and the increase in production of BTC mined, the
fair market value of the Company’s BTC mined on a quarter over quarter basis increased by approximately $821k.
Figure 1. Quarter-over-quarter BTC Mining
|
|
|
Apr. & May
|
|
|
Jul. & Aug.
|
|
|
QTD
|
|
|
|
|
2021
|
|
|
2021
|
|
|
Increase
|
|
|
Mined BTC
|
|
|
71.78
|
|
|
|
95.35
|
|
|
|
23.57
|
|
|
Approximate BTC value
|
|
$
|
47,542
|
|
|
$
|
44,396
|
|
|
$
|
(3,145
|
)
|
|
Value
|
|
$
|
3,412,565
|
|
|
$
|
4,233,159
|
|
|
$
|
820,594
|
|
Year-Over-Year Monthly Comparison
Compared to August of 2020, the Company mined
approximately 28.58 more BTC in August of 2021, representing an increase of 185%. Based on August 31, 2021, BTC prices compared to August
31, 2020, and the increase in production of BTC mined, the fair market value of the Company’s BTC mined in August 2021 increased
by approximately $1.9 million.
Figure 2. Year-over-year Monthly BTC Mining
|
|
|
8/31/2020
|
|
|
8/31/2021
|
|
|
MoM Increase
|
|
|
Mined BTC
|
|
|
15.49
|
|
|
|
44.07
|
|
|
|
28.58
|
|
|
Approximate BTC value
|
|
$
|
11,681
|
|
|
$
|
47,167
|
|
|
$
|
35,486
|
|
|
Value
|
|
$
|
180,939
|
|
|
$
|
2,078,650
|
|
|
$
|
1,897,711
|
|
Management Commentary
Michel Amar, the Company’s CEO, stated:
“We are proud of the tremendous growth in our mining operations, as we are on track to mine a higher fair market value of Bitcoin
in Q3 compared to any previous quarter to-date. The expansion of our mining production is exemplified by the substantial increase in Bitcoins
mined on a year-over-year basis. Consistent with the Company’s objective to maintain continuous ESG compliance, we are pleased to
report that we voluntarily gave up peak hours of mining for five days during the month of August in the middle of the heatwave, providing
our power to the grid in order to sustain air conditioning for the local community. Maintaining environmentally responsible operations
remains one of our top priorities as part of our DigiGreen Initiative, which includes a focus on being a responsible corporate neighbor.
We are proud to partner with the local utility through their on demand program to ensure that our community is able to sustain constant
power during critical events such as heat waves, and we will continue to commit to making power available as needed.”
About Digihost Technology Inc.
Digihost Technology Inc. is a growth-oriented
blockchain technology company primarily focused on Bitcoin mining. The Company is currently hashing at a rate of 200PH with plans to expand
to a hashrate of 3.6 EH by the end of the first half of 2022.
For further information, please contact:
Digihost Technology Inc.
www.digihost.ca
Michel Amar, Chief Executive Officer
T: 1-818-280-9758
Email: michel@digihostblockchain.com
Cautionary Statement
Trading in the securities of the Company should
be considered highly speculative. No stock exchange, securities commission or other regulatory authority has approved or disapproved the
information contained herein. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies
of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Forward-Looking Statements
Except for the statements of historical fact,
this news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking
information”) that is based on expectations, estimates and projections as at the date of this news release. Forward-looking information
in this news release includes information about hashrate expansion, diversification of operations, potential further improvements to profitability
and efficiency across mining operations, potential for the Company’s long-term growth, and the business goals and objectives of
the Company. Factors that could cause actual results, performance or achievements to differ materially from those described in such forward-looking
information include, but are not limited to: continued effects of the COVID19 pandemic may have a material adverse effect on the Company’s
performance as supply chains are disrupted and prevent the Company from operating its assets; the ability to establish new facilities
for the purpose of research & development; a decrease in cryptocurrency pricing, volume of transaction activity or generally, the
profitability of cryptocurrency mining; delivery of mining rigs for hosting may not be realized in the number anticipated, or at all,
and resulting hashing power may materially differ from that anticipated; further improvements to profitability and efficiency may not
be realized; the digital currency market; the Company’s ability to successfully mine digital currency on the cloud; the Company
may not be able to profitably liquidate its current digital currency inventory, or at all; a decline in digital currency prices may have
a significant negative impact on the Company’s operations; the volatility of digital currency prices; and other related risks as
more fully set out in the Annual Information Form of the Company and other documents disclosed under the Company’s filings at www.sedar.com.
The forward-looking information in this news release reflects the current expectations, assumptions and/or beliefs of the Company based
on information currently available to the Company. In connection with the forward-looking information contained in this news release,
the Company has made assumptions about: the current profitability in mining cryptocurrency (including pricing and volume of current transaction
activity); profitable use of the Company’s assets going forward; the Company’s ability to profitably liquidate its digital
currency inventory as required; historical prices of digital currencies and the ability of the Company to mine digital currencies on the
cloud will be consistent with historical prices; and there will be no regulation or law that will prevent the Company from operating its
business. The Company has also assumed that no significant events occur outside of the Company’s normal course of business. Although the
Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a
guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.
3
Exhibit 99.155
FORM 51-102F3
MATERIAL CHANGE REPORT
|
|
Item 1
|
Name and Address of Company
|
Digihost Technology Inc. (formerly HashChain Technology Inc.)
18 King Street East, Suite 902
Toronto, ON M5C 1C4
|
|
Item 2
|
Date of Material Change
|
September 7, 2021
The press release attached as Schedule “A” was
released on September 7, 2021.
|
|
Item 4
|
Summary of Material Change
|
The material change is described in the press release attached
as Schedule “A”.
|
|
Item 5
|
Full Description of Material Change
|
The material change is described in the press release attached
as Schedule “A”.
|
|
Item 6
|
Reliance of subsection 7.1(2) of National Instrument 51-102
|
Not applicable.
|
|
Item 7
|
Omitted Information
|
Not applicable.
Inquires in respect of the material change referred to herein
may be made to:
Michel Amar, Chief Executive Officer
T: 1-818-280-9758
E: michel@digihostblockchain.com
September 8, 2021
SCHEDULE “A”
DIGIHOST PROVIDES
MINING OPERATION RESULTS FOR AUGUST
AND ANNOUNCES A 185% INCREASE IN YEAR-OVER-YEAR MONTHLY BITCOIN
PRODUCTION AND
Toronto, ON – September 7, 2021
– Digihost Technology Inc. (“Digihost” or the “Company”) (TSXV: DGHI; OTCQB: HSSHF), an
innovative North American based Bitcoin self-mining company, is pleased to provide unaudited Bitcoin (“BTC”) production
updates for August 2021. All amounts are expressed in USD unless otherwise indicated.
Corporate Highlights for August 31,
2021:
|
|
●
|
Produced 44.07 BTC during the month, increasing total holdings
to 446.2 BTC representing a fair market value of
approximately $21.0 million as at August 31, 2021.
|
|
|
●
|
Total Ethereum (“ETH”) holdings of 563.89
ETH representing a fair market value of approximately $1.9 million as at August 31, 2021.
|
|
|
●
|
Total digital asset inventory value consisting of BTC and ETH of approximately $22.9 million at the end of August.
|
|
|
●
|
Cash on hand at August 31st was approximately $18.9 million, and total cash and digital asset holdings was approximately $41.7 million.
|
|
|
●
|
Year-to-date deposits on equipment and infrastructure to be completed in Q4 2021 pertaining to the
Company’s core business of approximately $24.1 million.
|
Bitcoin Mining Update
For the eight-month period
ended August 31, 2021, the Company’s mining fleet produced 310.58 BTC, with production broken down as follows:
|
|
●
|
Quarter 1, 2021: 105.26 BTC
|
|
|
●
|
Quarter 2, 2021: 109.97 BTC
|
|
|
●
|
Quarter 3, 2021: 95.35 BTC
|
Quarter-Over-Quarter Comparison
The Company mined approximately 23.57
more BTC in the first two months of Q3 2021 (July and August 2021) compared to the first two months of the previous quarter (April and
May 2021), representing an increase of 33%. Based on the BTC prices in these respective quarters and the increase in production of BTC
mined, the fair market value of the Company’s BTC mined on a quarter over quarter basis increased by approximately $821k.
Figure 1. Quarter-over-quarter BTC Mining
|
|
|
Apr. & May
2021
|
|
|
Jul. & Aug.
2021
|
|
|
QTD
Increase
|
|
|
Mined BTC
|
|
|
71.78
|
|
|
|
95.35
|
|
|
|
23.57
|
|
|
Approximate BTC value
|
|
$
|
47,542
|
|
|
$
|
44,396
|
|
|
($
|
3,145
|
)
|
|
Value
|
|
$
|
3,412,565
|
|
|
$
|
4,233,159
|
|
|
$
|
820,594
|
|
Year-Over-Year Monthly Comparison
Compared
to August of 2020, the Company mined approximately 28.58 more BTC in August of 2021, representing an increase of 185%. Based on
August 31, 2021, BTC prices compared to August 31, 2020, and the increase in production of BTC mined, the fair market value of the
Company’s BTC mined in August 2021 increased by approximately $1.9 million.
Figure 2. Year-over-year Monthly BTC
Mining
|
|
|
8/31/2020
|
|
|
8/31/2021
|
|
|
MoM Increase
|
|
|
Mined BTC
|
|
|
15.49
|
|
|
|
44.07
|
|
|
|
28.58
|
|
|
Approximate BTC value
|
|
$
|
11,681
|
|
|
$
|
47,167
|
|
|
$
|
35,486
|
|
|
Value
|
|
$
|
180,939
|
|
|
$
|
2,078,650
|
|
|
$
|
1,897,711
|
|
Management Commentary
Michel Amar, the Company’s CEO,
stated: “We are proud of the tremendous growth in our mining operations, as we are on track to mine a higher fair market value of
Bitcoin in Q3 compared to any previous quarter to-date. The expansion of our mining production is exemplified by the substantial increase
in Bitcoins mined on a year-over-year basis. Consistent with the Company’s objective to maintain continuous ESG compliance, we are
pleased to report that we voluntarily gave up peak hours of mining for five days during the month of August in the middle of the heatwave,
providing our power to the grid in order to sustain air conditioning for the local community. Maintaining environmentally responsible
operations remains one of our top priorities as part of our DigiGreen Initiative, which includes a focus on being a responsible corporate
neighbor. We are proud to partner with the local utility through their on demand program to ensure that our community is able to sustain
constant power during critical events such as heat waves, and we will continue to commit to making power available as needed.”
About Digihost Technology Inc.
Digihost Technology Inc. is a growth-oriented
blockchain technology company primarily focused on Bitcoin mining. The Company is currently hashing at a rate of 200PH with plans to expand
to a hashrate of 3.6 EH by the end of the first half of 2022.
For further information, please contact:
Digihost Technology Inc.
www.digihost.ca
Michel Amar, Chief Executive Officer
T: 1-818-280-9758
Email: michel@digihostblockchain.com
Cautionary Statement
Trading in the securities of the Company
should be considered highly speculative. No stock exchange, securities commission or other regulatory authority has approved or disapproved
the information contained herein. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Forward-Looking Statements
Except for the statements of historical
fact, this news release contains “forward-looking information” and “forward-looking statements” (collectively,
“forward-looking information”) that is based on expectations, estimates and projections as at the date of this news release.
Forward-looking information in this news release includes information about hashrate expansion, diversification of operations, potential
further improvements to profitability and efficiency across mining operations, potential for the Company’s long-term growth, and
the business goals and objectives of the Company. Factors that could cause actual results, performance or achievements to differ materially
from those described in such forward-looking information include, but are not limited to: continued effects of the COVID19 pandemic may
have a material adverse effect on the Company’s performance as supply chains are disrupted and prevent the Company from operating
its assets; the ability to establish new facilities for the purpose of research & development; a decrease in cryptocurrency pricing,
volume of transaction activity or generally, the profitability of cryptocurrency mining; delivery of mining rigs for hosting may not be
realized in the number anticipated, or at all, and resulting hashing power may materially differ from that anticipated; further improvements
to profitability and efficiency may not be realized; the digital currency market; the Company’s ability to successfully mine digital
currency on the cloud; the Company may not be able to profitably liquidate its current digital currency inventory, or at all; a decline
in digital currency prices may have a significant negative impact on the Company’s operations; the volatility of digital currency
prices; and other related risks as more fully set out in the Annual Information Form of the Company and other documents disclosed under
the Company’s filings at www.sedar.com. The forward-looking information in this news release reflects the current expectations,
assumptions and/or beliefs of the Company based on information currently available to the Company. In connection with the forward-looking
information contained in this news release, the Company has made assumptions about: the current profitability in mining cryptocurrency
(including pricing and volume of current transaction activity); profitable use of the Company’s assets going forward; the Company’s
ability to profitably liquidate its digital currency inventory as required; historical prices of digital currencies and the ability of
the Company to mine digital currencies on the cloud will be consistent with historical prices; and there will be no regulation or law
that will prevent the Company from operating its business. The Company has also assumed that no significant events occur outside of the
Company's normal course of business. Although the Company believes that the assumptions inherent in the forward-looking information are
reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such
information due to the inherent uncertainty therein.
4
Exhibit
99.156
DIGIHOST
PROVIDES MINING OPERATION RESULTS FOR Q3 2021 AND ANNOUNCES A 218% INCREASE IN QUARTERLY BITCOIN PRODUCTION OVER THE PREVIOUS YEARS’
QUARTER
Toronto,
ON – October 4, 2021 – Digihost Technology Inc. (“Digihost” or the “Company”) (TSXV:
DGHI; OTCQB: HSSHF), an innovative North American based Bitcoin self-mining company, is pleased to provide unaudited Bitcoin (“BTC”)
production updates for the quarter ended September 2021. All amounts are expressed in USD unless otherwise indicated.
Corporate
Highlights for September 30, 2021:
|
|
●
|
Produced
133.02 BTC during the quarter, increasing total holdings to 452.24 BTC representing a fair
market value of approximately $19.9 million as at September 30, 2021.
|
|
|
●
|
Diversified
holdings with the conversion of 31.62 BTC into Ethereum (“ETH”) during
the quarter, bringing total ETH holdings to 1,000.89 representing a fair market value of
approximately $3.0 million as at September 30, 2021.
|
|
|
●
|
Total
digital asset inventory value consisting of BTC and ETH of approximately $22.9 million at
the end of September.
|
|
|
●
|
Cash
on hand at September 30th was approximately $17.2 million, and total cash and digital asset
holdings was approximately $40.1 million.
|
|
|
●
|
Year-to-date
deposits on equipment and infrastructure to be completed in Q4 2021 pertaining to the Company’s
core business of approximately $24.8 million.
|
|
|
●
|
Pursuant
to its May 12, 2021 press release, the Company is on target to put online the approximately
9,900 newest generation miners it has purchased before the end of 2021. Once fully installed,
these miners will increase the Company’s current hashrate to between approximately
925PH and 1.1EH.
|
Bitcoin
Mining Update
For
the nine-month period ended September 30, 2021, the Company’s mining fleet produced 348.25 BTC, with production broken down as
follows:
|
|
●
|
Quarter
1, 2021: 105.26 BTC
|
|
|
|
|
|
|
●
|
Quarter
2, 2021: 109.97 BTC
|
|
|
|
|
|
|
●
|
Quarter
3, 2021: 133.02 BTC
|
|
|
|
|
Quarter-Over-Quarter
Comparison
The
Company mined approximately 23.05 more BTC in Q3 2021 than in Q2 2021, representing an increase of 21%. Based on the BTC prices in these
respective quarters and the increase in production of BTC mined, the fair market value of the Company’s BTC mined on a quarter
over quarter basis increased by approximately $2m.
Figure
1. Quarter-over-quarter BTC Mining
|
|
|
Q2
|
|
|
Q3
|
|
|
QoQ
|
|
|
|
|
2021
|
|
|
2021
|
|
|
Increase
|
|
|
Mined BTC
|
|
|
109.97
|
|
|
|
133.02
|
|
|
|
23.05
|
|
|
Approximate BTC value
|
|
$
|
35,041
|
|
|
$
|
44,010
|
|
|
$
|
8,969
|
|
|
Value
|
|
$
|
3,853,441
|
|
|
$
|
5,854,416
|
|
|
$
|
2,000,976
|
|
Year-Over-Year
Quarterly Comparison
Compared
to Q3 of 2020, the Company mined approximately 91.22 more BTC in Q3 of 2021, representing an increase of 218%. Based on September 30,
2021 BTC prices compared to September 30, 2020, and the increase in production of BTC mined, the fair market value of the Company’s
BTC mined in Q3 2021 increased by approximately $5.4 million.
Figure
2. Year-over-year Quarterly BTC Mining
|
|
|
Q3
2020
|
|
|
Q3
2021
|
|
|
YoY
Increase
|
|
|
Mined BTC
|
|
|
41.80
|
|
|
|
133.02
|
|
|
|
91.22
|
|
|
Approximate BTC value
|
|
$
|
10,788
|
|
|
$
|
44,010
|
|
|
$
|
33,222
|
|
|
Value
|
|
$
|
450,922
|
|
|
$
|
5,854,416
|
|
|
$
|
5,403,494
|
|
Management
Commentary
Michel
Amar, the Company’s CEO, stated: “We are extremely pleased with the continued success achieved by Digihost and are proud
to report that in Q3 2021 we successfully mined a higher fair market value of Bitcoin than in any previous quarter since the Company’s
inception. Our operations delivered a record number of coins this quarter despite voluntarily giving up peak hours of mining for five
days during the month of August during peak community energy demand.” Amar continued, “As a Company, we are prepared to begin
receiving a large quantity of new generation miners in Q4 2021. We remain especially well situated to scale up and thrive in the current
mining environment and to increase our hashrate to up to 1.5 EH in by Q1 2022. We are committed to operating our business growth in an
environmentally conscious way and our priority is to sustain our focus on green energy and ESG initiatives.”
About
Digihost Technology Inc.
Digihost
Technology Inc. is a growth-oriented blockchain technology company primarily focused on Bitcoin mining. The Company is currently hashing
at a rate of 200PH with plans to expand to a hashrate of 3.6 EH by the end of the first half of 2022.
For
further information, please contact:
Digihost
Technology Inc.
www.digihost.ca
Michel
Amar, Chief Executive Officer
T:
1-818-280-9758
Email:
michel@digihostblockchain.com
Cautionary
Statement
Trading
in the securities of the Company should be considered highly speculative. No stock exchange, securities commission or other regulatory
authority has approved or disapproved the information contained herein. Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of
this news release.
Forward-Looking
Statements
Except
for the statements of historical fact, this news release contains “forward-looking information” and “forward-looking
statements” (collectively, “forward-looking information”) that is based on expectations, estimates and projections
as at the date of this news release. Forward-looking information in this news release includes information about hashrate expansion,
diversification of operations, potential further improvements to profitability and efficiency across mining operations, potential for
the Company’s long-term growth, and the business goals and objectives of the Company. Factors that could cause actual results,
performance or achievements to differ materially from those described in such forward-looking information include, but are not limited
to: continued effects of the COVID19 pandemic may have a material adverse effect on the Company’s performance as supply chains
are disrupted and prevent the Company from operating its assets; the ability to establish new facilities for the purpose of research
& development; a decrease in cryptocurrency pricing, volume of transaction activity or generally, the profitability of cryptocurrency
mining; delivery of mining rigs for hosting may not be realized in the number anticipated, or at all, and resulting hashing power may
materially differ from that anticipated; further improvements to profitability and efficiency may not be realized; the digital currency
market; the Company’s ability to successfully mine digital currency on the cloud; the Company may not be able to profitably liquidate
its current digital currency inventory, or at all; a decline in digital currency prices may have a significant negative impact on the
Company’s operations; the volatility of digital currency prices; and other related risks as more fully set out in the Annual Information
Form of the Company and other documents disclosed under the Company’s filings at www.sedar.com. The forward-looking information
in this news release reflects the current expectations, assumptions and/or beliefs of the Company based on information currently available
to the Company. In connection with the forward-looking information contained in this news release, the Company has made assumptions about:
the current profitability in mining cryptocurrency (including pricing and volume of current transaction activity); profitable use of
the Company’s assets going forward; the Company’s ability to profitably liquidate its digital currency inventory as required;
historical prices of digital currencies and the ability of the Company to mine digital currencies on the cloud will be consistent with
historical prices; and there will be no regulation or law that will prevent the Company from operating its business. The Company has
also assumed that no significant events occur outside of the Company’s normal course of business. Although the Company believes that
the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a guarantee of future
performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.
Exhibit 99.157
MATERIAL CHANGE REPORT
Item 1 Name and Address of Company
Digihost Technology Inc. (formerly HashChain Technology Inc.)
18 King Street East, Suite 902
Toronto, ON M5C 1C4
Item 2 Date of Material Change
October 04, 2021
Item 3 News Release
The press release attached as Schedule “A” was
released on October 04, 2021 by a newswire company in Canada.
Item 4 Summary of Material Change
The material change is described in the press release attached
as Schedule “A”.
Item 5 Full Description of Material Change
The material change is described in the press release attached
as Schedule “A”.
Item 6 Reliance of subsection 7.1(2) of National Instrument
51-102
Not applicable.
Item 7 Omitted Information
Not applicable.
Item 8 Executive Officer
Inquires in respect of the material change referred to herein
may be made to:
Michel Amar, Chief Executive Officer
T: 1-818-280-9758
E: michel@digihostblockchain.com
Item 9 Date of Report
October 04, 2021
Schedule “A”
DIGIHOST PROVIDES MINING OPERATION
RESULTS FOR Q3 2021 AND ANNOUNCES A 218% INCREASE IN QUARTERLY BITCOIN PRODUCTION OVER THE PREVIOUS YEARS’ QUARTER
Toronto, ON – October 4, 2021
– Digihost Technology Inc. (“Digihost” or the “Company”) (TSXV: DGHI; OTCQB: HSSHF), an
innovative North American based Bitcoin self-mining company, is pleased to provide unaudited Bitcoin (“BTC”) production
updates for the quarter ended September 2021. All amounts are expressed in USD unless otherwise indicated.
Corporate Highlights for September
30, 2021:
|
|
●
|
Produced
133.02 BTC during the quarter, increasing total holdings to 452.24 BTC representing a fair
market value of approximately $19.9 million as at September 30, 2021.
|
|
|
|
|
|
|
●
|
Diversified
holdings with the conversion of 31.62 BTC into Ethereum (“ETH”) during
the quarter, bringing total ETH holdings to 1,000.89 representing a fair market value of
approximately $3.0 million as at September 30, 2021.
|
|
|
|
|
|
|
●
|
Total
digital asset inventory value consisting of BTC and ETH of approximately $22.9 million at
the end of September.
|
|
|
|
|
|
|
●
|
Cash
on hand at September 30th was approximately $17.2 million, and total cash and digital asset
holdings was approximately $40.1 million.
|
|
|
|
|
|
|
●
|
Year-to-date
deposits on equipment and infrastructure to be completed in Q4 2021 pertaining to the Company’s
core business of approximately $24.8 million.
|
|
|
|
|
|
|
●
|
Pursuant
to its May 12, 2021 press release, the Company is on target to put online the approximately
9,900 newest generation miners it has purchased before the end of 2021. Once fully installed,
these miners will increase the Company’s current hashrate to between approximately
925PH and 1.1EH.
|
Bitcoin Mining Update
For the nine-month period ended September
30, 2021, the Company’s mining fleet produced 348.25
BTC, with production broken down as
follows:
|
|
●
|
Quarter
1, 2021: 105.26 BTC
|
|
|
●
|
Quarter
2, 2021: 109.97 BTC
|
|
|
●
|
Quarter
3, 2021: 133.02 BTC
|
Quarter-Over-Quarter Comparison
The Company mined approximately 23.05 more BTC in Q3 2021 than in
Q2 2021, representing an increase of 21%. Based on the BTC prices in these respective quarters and the increase in production of BTC
mined, the fair market value of the Company’s BTC mined on a quarter over quarter basis increased by approximately $2m.
Figure 1. Quarter-over-quarter BTC Mining
|
|
|
Q2
2021
|
|
|
Q3
2021
|
|
|
QoQ Increase
|
|
|
Mined BTC
|
|
|
109.97
|
|
|
|
133.02
|
|
|
|
23.05
|
|
|
Approximate BTC value
|
|
$
|
35,041
|
|
|
$
|
44,010
|
|
|
$
|
8,969
|
|
|
Value
|
|
$
|
3,853,441
|
|
|
$
|
5,854,416
|
|
|
$
|
2,000,976
|
|
|
|
|
Q2
2021
|
|
|
Q3
2021
|
|
|
QoQ Increase
|
|
|
Mined BTC
|
|
|
109.97
|
|
|
|
133.02
|
|
|
|
23.05
|
|
|
Approximate BTC value
|
|
$
|
35,041
|
|
|
$
|
44,010
|
|
|
$
|
8,969
|
|
|
Value
|
|
$
|
3,853,441
|
|
|
$
|
5,854,416
|
|
|
$
|
2,000,976
|
|
Year-Over-Year Quarterly Comparison
Compared to Q3 of 2020, the Company mined approximately 91.22
more BTC in Q3 of 2021, representing an increase of 218%. Based on September 30, 2021 BTC prices compared to September 30, 2020, and
the increase in production of BTC mined, the fair market value of the Company’s BTC mined in Q3 2021 increased by
approximately $5.4 million.
Figure 2. Year-over-year Quarterly
BTC Mining
|
|
|
Q3
2020
|
|
|
Q3
2021
|
|
|
YoY Increase
|
|
|
Mined BTC
|
|
|
41.80
|
|
|
|
133.02
|
|
|
|
91.22
|
|
|
Approximate BTC value
|
|
$
|
10,788
|
|
|
$
|
44,010
|
|
|
$
|
33,222
|
|
|
Value
|
|
$
|
450,922
|
|
|
$
|
5,854,416
|
|
|
$
|
5,403,494
|
|
Management Commentary
Michel Amar, the Company’s CEO,
stated: “We are extremely pleased with the continued success achieved by Digihost and are proud to report that in Q3 2021 we successfully
mined a higher fair market value of Bitcoin than in any previous quarter since the Company’s inception. Our operations delivered
a record number of coins this quarter despite voluntarily giving up peak hours of mining for five days during the month of August during
peak community energy demand.” Amar continued, “As a Company, we are prepared to begin receiving a large quantity of new generation
miners in Q4 2021. We remain especially well situated to scale up and thrive in the current mining environment and to increase our hashrate
to up to 1.5 EH in by Q1 2022. We are committed to operating our business growth in an environmentally conscious way and our priority
is to sustain our focus on green energy and ESG initiatives.”
About Digihost Technology Inc.
Digihost Technology Inc. is a growth-oriented
blockchain technology company primarily focused on Bitcoin mining. The Company is currently hashing at a rate of 200PH with plans to expand
to a hashrate of 3.6 EH by the end of the first half of 2022.
For further information, please contact:
Digihost Technology Inc.
www.digihost.ca
Michel Amar, Chief Executive Officer
T: 1-818-280-9758
Email: michel@digihostblockchain.com
Cautionary Statement
Trading in the securities of the
Company should be considered highly speculative. No stock exchange, securities commission or other regulatory authority has approved or
disapproved the information contained herein. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined
in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Forward-Looking Statements
Except for the statements of historical
fact, this news release contains “forward-looking information” and “forward-looking statements” (collectively,
“forward-looking information”) that is based on expectations, estimates and projections as at the date of this news release.
Forward-looking information in this news release includes information about hashrate expansion, diversification of operations, potential
further improvements to profitability and efficiency across mining operations, potential for the Company’s long-term growth, and
the business goals and objectives of the Company. Factors that could cause actual results, performance or achievements to differ materially
from those described in such forward-looking information include, but are not limited to: continued effects of the COVID19 pandemic may
have a material adverse effect on the Company’s performance as supply chains are disrupted and prevent the Company from operating
its assets; the ability to establish new facilities for the purpose of research & development; a decrease in cryptocurrency pricing,
volume of transaction activity or generally, the profitability of cryptocurrency mining; delivery of mining rigs for hosting may not be
realized in the number anticipated, or at all, and resulting hashing power may materially differ from that anticipated; further improvements
to profitability and efficiency may not be realized; the digital currency market; the Company’s ability to successfully mine digital
currency on the cloud; the Company may not be able to profitably liquidate its current digital currency inventory, or at all; a decline
in digital currency prices may have a significant negative impact on the Company’s operations; the volatility of digital currency
prices; and other related risks as more fully set out in the Annual Information Form of the Company and other documents disclosed under
the Company’s filings at www.sedar.com. The forward-looking information in this news release reflects the current expectations,
assumptions and/or beliefs of the Company based on information currently available to the Company. In connection with the forward-looking
information contained in this news release, the Company has made assumptions about: the current profitability in mining cryptocurrency
(including pricing and volume of current transaction activity); profitable use of the Company’s assets going forward; the Company’s
ability to profitably liquidate its digital currency inventory as required; historical prices of digital currencies and the ability of
the Company to mine digital currencies on the cloud will be consistent with historical prices; and there will be no regulation or law
that will prevent the Company from operating its business. The Company has also assumed that no significant events occur outside of the
Company’s normal course of business. Although the Company believes that the assumptions inherent in the forward-looking information are
reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such
information due to the inherent uncertainty therein.
4
Exhibit
99.158
DIGIHOST
ANNOUNCES SHARE CONSOLIDATION
TO
FACILITATE NASDAQ LISTING
Toronto,
ON – October 5, 2021 – Digihost Technology Inc. (“Digihost” or the “Company”) (TSXV:
DGHI; OTCQB: HSSHF), an innovative North American-based Bitcoin self-mining company, announces that, to facilitate a proposed listing
of its subordinate voting shares on the Nasdaq Capital Market (“Nasdaq”) and satisfy the minimum share price requirement
set by Nasdaq, the Company intends to consolidate the outstanding subordinate voting shares and proportionate voting shares of the Company
(collectively, the “Shares”) on the basis of three (3) pre-consolidation Shares for every one (1) post-consolidation
Share (the “Consolidation”).
The
Company currently has 75,078,831 subordinate voting shares and 10,000 proportionate voting shares issued and outstanding, and, following
the Consolidation, it is expected there will be approximately 25,026,277 subordinate voting shares and 3,333 proportionate voting shares
issued and outstanding. The exercise price and number of subordinate voting shares issuable upon the exercise of the Company’s
outstanding options and warrants will also be proportionately adjusted upon completion of the Consolidation. The Company will not issue
any factional post-Consolidation Shares as a result of the Consolidation. Instead, each fractional share remaining after conversion will
be rounded down to the nearest whole post-Consolidation Share.
The
Company is pursuing a Nasdaq listing to enhance its investor profile and increase liquidity for its shareholders. The listing of the
Company on Nasdaq remains subject to the approval of Nasdaq and the satisfaction of all applicable listing and regulatory requirements.
As a result, there can be no assurances that Digihost’s shares will be listed on Nasdaq. Digihost expects to retain its listing
on the TSX Venture Exchange under the symbol “DGHI” and, until Digihost shares are listed on Nasdaq, on the OTCQB under the
ticker symbol “HSSHF”.
Michel
Amar, the Company’s CEO stated: “A key aspect of our Company’s growth strategy is to provide our investors with greater
liquidity through the listing of its shares on an internationally recognized stock exchange. Uplisting the Company’s shares from
the OTC market to Nasdaq will also provide the Company with broader access to capital and institutional recognition. The Company’s
current financial position presents the opportunity to accelerate the plan for meeting the listing requirements of the Nasdaq by consolidating
the Company’s shares.”
Completion
of the Consolidation is subject to approval by the TSXV. The Company will issue a further news release announcing the effective date
of the Consolidation once such date is determined.
The
Company will not be changing its name or trading symbol in connection with the Consolidation.
About
Digihost Technology Inc.
Digihost
Technology Inc. is a growth-oriented blockchain technology company primarily focused on Bitcoin mining. The Company is currently hashing
at a rate of 200PH with plans to expand to a hashrate of 3.6 EH by the end of the first half of 2022.
For
further information, please contact:
Digihost
Technology Inc.
www.digihost.ca
Michel
Amar, Chief Executive Officer
T:
1-818-280-9758
Email:
michel@digihostblockchain.com
Cautionary
Statement
Trading
in the securities of the Company should be considered highly speculative. No stock exchange, securities commission or other regulatory
authority has approved or disapproved the information contained herein. Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Forward-Looking
Statements
Except
for the statements of historical fact, this news release contains “forward-looking information” and “forward-looking
statements” (collectively, “forward-looking information”) that are based on expectations, estimates and projections
as at the date of this news release. Forward-looking information in this news release includes information about the proposed consolidation,
expectations in respect to listing and trading on Nasdaq and future plans and objectives of the Company. Other forward-looking information
includes, but is not limited to, information concerning: hashrate expansion, diversification of operations, potential further improvements
to profitability and efficiency across mining operations, potential for the Company’s long-term growth, and the business goals
of the Company Factors that could cause actual results, performance or achievements to differ materially from those described in such
forward-looking information include, but are not limited to: completion of the proposed consolidation; continued effects of the COVID19
pandemic may have a material adverse effect on the Company’s performance as supply chains are disrupted and prevent the Company
from operating its assets; a decrease in cryptocurrency pricing, volume of transaction activity or generally, the profitability of cryptocurrency
mining; further improvements to profitability and efficiency may not be realized; the digital currency market; the Company’s ability
to successfully mine digital currency on the cloud; the Company may not be able to profitably liquidate its current digital currency
inventory, or at all; a decline in digital currency prices may have a significant negative impact on the Company’s operations;
the volatility of digital currency prices; and other related risks as more fully set out in the Annual Information Form of the Company
and other documents disclosed under the Company’s filings at www.sedar.com. The forward-looking information in this news release
reflects the current expectations, assumptions and/or beliefs of the Company based on information currently available to the Company.
In connection with the forward-looking information contained in this news release, the Company has made assumptions about: the current
profitability in mining cryptocurrency (including pricing and volume of current transaction activity); profitable use of the Company’s
assets going forward; the Company’s ability to profitably liquidate its digital currency inventory as required; historical prices
of digital currencies and the ability of the Company to mine digital currencies on the cloud will be consistent with historical prices;
and there will be no regulation or law that will prevent the Company from operating its business. The Company has also assumed that no
significant events occur outside of the Company’s normal course of business. Although the Company believes that the assumptions inherent
in the forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and accordingly
undue reliance should not be put on such information due to the inherent uncertainty therein.
Exhibit
99.159
FORM 51-102F3
FORM 51-102F3
MATERIAL CHANGE REPORT
|
Item 1
|
Name and Address of Company
|
Digihost Technology Inc. (formerly HashChain Technology Inc.)
18 King Street East, Suite 902
Toronto, ON M5C 1C4
|
Item 2
|
Date of Material Change
|
October 5, 2021
The press release attached as Schedule “A” was
released on October 5, 2021.
|
Item 4
|
Summary of Material Change
|
The material change is described in the press release attached
as Schedule “A”.
|
Item 5
|
Full Description of Material Change
|
The material change is described in the press release attached
as Schedule “A”.
|
Item 6
|
Reliance of subsection 7.1(2) of National Instrument 51-102
|
Not applicable.
|
Item 7
|
Omitted Information
|
Not applicable.
Inquires in respect of the material change referred to
herein may be made to:
Michel Amar, Chief Executive Officer
T: 1-818-280-9758
E: michel@digihostblockchain.com
October 6, 2021
SCHEDULE “A”
DIGIHOST ANNOUNCES SHARE CONSOLIDATION
TO FACILITATE NASDAQ LISTING
Toronto, ON – October 5,
2021 – Digihost Technology Inc. (“Digihost” or the “Company”) (TSXV: DGHI; OTCQB: HSSHF),
an innovative North American-based Bitcoin self-mining company, announces that, to facilitate a proposed listing of its subordinate voting
shares on the Nasdaq Capital Market (“Nasdaq”) and satisfy the minimum share price requirement set by Nasdaq, the Company
intends to consolidate the outstanding subordinate voting shares and proportionate voting shares of the Company (collectively, the “Shares”)
on the basis of three (3) pre-consolidation Shares for every one (1) post-consolidation Share (the “Consolidation”).
The Company currently has 75,078,831
subordinate voting shares and 10,000 proportionate voting shares issued and outstanding, and, following the Consolidation, it is expected
there will be approximately 25,026,277 subordinate voting shares and 3,333 proportionate voting shares issued and outstanding. The exercise
price and number of subordinate voting shares issuable upon the exercise of the Company’s outstanding options and warrants will
also be proportionately adjusted upon completion of the Consolidation. The Company will not issue any factional post- Consolidation Shares
as a result of the Consolidation. Instead, each fractional share remaining after conversion will be rounded down to the nearest whole
post-Consolidation Share.
The Company is pursuing a Nasdaq listing
to enhance its investor profile and increase liquidity for its shareholders. The listing of the Company on Nasdaq remains subject to the
approval of Nasdaq and the satisfaction of all applicable listing and regulatory requirements. As a result, there can be no assurances
that Digihost’s shares will be listed on Nasdaq. Digihost expects to retain its listing on the TSX Venture Exchange under the symbol
“DGHI” and, until Digihost shares are listed on Nasdaq, on the OTCQB under the ticker symbol “HSSHF”.
Michel Amar, the Company’s
CEO stated: “A key aspect of our Company’s growth strategy is to provide our investors with greater liquidity through the
listing of its shares on an internationally recognized stock exchange. Uplisting the Company’s shares from the OTC market to Nasdaq
will also provide the Company with broader access to capital and institutional recognition. The Company’s current financial position
presents the opportunity to accelerate the plan for meeting the listing requirements of the Nasdaq by consolidating the Company’s
shares.”
Completion of the Consolidation is subject
to approval by the TSXV. The Company will issue a further news release announcing the effective date of the Consolidation once such date
is determined.
The Company will not be changing its
name or trading symbol in connection with the
Consolidation.
About Digihost Technology
Inc.
Digihost Technology Inc. is a growth-oriented
blockchain technology company primarily focused on Bitcoin mining. The Company is currently hashing at a rate of 200PH with plans to expand
to a hashrate of 3.6 EH by the end of the first half of 2022.
For further
information, please contact:
Digihost Technology Inc.
www.digihost.ca
Michel Amar, Chief Executive Officer
T: 1-818-280-9758
Email: michel@digihostblockchain.com
Cautionary Statement
Trading in the securities of the
Company should be considered highly speculative. No stock exchange, securities commission or other regulatory authority has approved or
disapproved the information contained herein. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined
in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
Except for the statements of historical fact,
this news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking
information”) that are based on expectations, estimates and projections as at the date of this news release. Forward-looking information
in this news release includes information about the proposed consolidation, expectations in respect to listing and trading on Nasdaq
and future plans and objectives of the Company. Other forward-looking information includes, but is not limited to, information concerning:
hashrate expansion, diversification of operations, potential further improvements to profitability and efficiency across mining operations,
potential for the Company’s long-term growth, and the business goals of the Company Factors that could cause actual results, performance
or achievements to differ materially from those described in such forward-looking information include, but are not limited to: completion
of the proposed consolidation; continued effects of the COVID19 pandemic may have a material adverse effect on the Company’s performance
as supply chains are disrupted and prevent the Company from operating its assets; a decrease in cryptocurrency pricing, volume of transaction
activity or generally, the profitability of cryptocurrency mining; further improvements to profitability and efficiency may not be realized;
the digital currency market; the Company’s ability to successfully mine digital currency on the cloud; the Company may not be able
to profitably liquidate its current digital currency inventory, or at all; a decline in digital currency prices may have a significant
negative impact on the Company’s operations; the volatility of digital currency prices; and other related risks as more fully set
out in the Annual Information Form of the Company and other documents disclosed under the Company’s filings at www.sedar.com. The
forward-looking information in this news release reflects the current expectations, assumptions and/or beliefs of the Company based on
information currently available to the Company. In connection with the forward-looking information contained in this news release, the
Company has made assumptions about: the current profitability in mining cryptocurrency (including pricing and volume of current transaction
activity); profitable use of the Company’s assets going forward; the Company’s ability to profitably liquidate its digital
currency inventory as required; historical prices of digital currencies and the ability of the Company to mine digital currencies on
the cloud will be consistent with historical prices; and there will be no regulation or law that will prevent the Company from operating
its business. The Company has also assumed that no significant events occur outside of the Company’s normal course of business. Although
the Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is
not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty
therein.
Exhibit 99.160
DIGIHOST ANNOUNCES RECEIPT OF 1,952 NEW M30
BITCOIN MINERS
Toronto, ON – October 13, 2021 –
Digihost Technology Inc. (“Digihost” or the “Company”) (TSXV: DGHI; OTCQB: HSSHF), an innovative
North American based Bitcoin self-mining company, is pleased to announce that it has received 1,952 new, technologically advanced, high-performance
M30 Bitcoin (“BTC”) miners (the “Miners”).
The Miners are currently being installed at the
Company’s data center and are expected to be fully operational within the next two weeks. Once connected, the Miners’ additional
processing capacity will serve to increase Digihost’s existing hashrate. Digihost expects additional Miners will be received and
deployed in the Company’s data center by early November as the Company continues to execute on its strategy of upgrading older miners
to more efficient new generation miners.
Michel Amar, the Company’s CEO, stated:
“We are pleased to announce receipt of these 1,952 new generation miners, representing another significant operational milestone
as part of our ongoing efforts to scale up our mining operations. The Company anticipates receiving additional shipments of the same miners
in the coming weeks as we maintain focus on our strategy of generating tremendous growth and value for our shareholders.”
About Digihost Technology Inc.
Digihost Technology Inc. is a growth-oriented
blockchain technology company primarily focused on Bitcoin mining. The Company is currently hashing at a rate of 200PH with plans to expand
to a hashrate of approximately 3.6 EH, through a combination of self-mining and hosting arrangements with joint venture partners, by the
end of 2022.
For further information, please contact:
Digihost Technology Inc.
www.digihost.ca
Michel Amar, Chief Executive Officer
T: 1-818-280-9758
Email: michel@digihostblockchain.com
Cautionary Statement
Trading in the securities of the Company should
be considered highly speculative. No stock exchange, securities commission or other regulatory authority has approved or disapproved the
information contained herein. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies
of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Forward-Looking Statements
Except for the statements of historical fact,
this news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking
information”) that is based on expectations, estimates and projections as at the date of this news release. Forward-looking information
in this news release includes information about hashrate expansion, diversification of operations, potential further improvements to
profitability and efficiency across mining operations, potential for the Company’s long-term growth, and the business goals and
objectives of the Company. Factors that could cause actual results, performance or achievements to differ materially from those described
in such forward-looking information include, but are not limited to: continued effects of the COVID19 pandemic may have a material adverse
effect on the Company’s performance as supply chains are disrupted and prevent the Company from operating its assets; the ability
to establish new facilities for the purpose of research & development; a decrease in cryptocurrency pricing, volume of transaction
activity or generally, the profitability of cryptocurrency mining; delivery of mining rigs for hosting may not be realized in the number
anticipated, or at all, and resulting hashing power may materially differ from that anticipated; further improvements to profitability
and efficiency may not be realized; the digital currency market; the Company’s ability to successfully mine digital currency on
the cloud; the Company may not be able to profitably liquidate its current digital currency inventory, or at all; a decline in digital
currency prices may have a significant negative impact on the Company’s operations; the volatility of digital currency prices;
and other related risks as more fully set out in the Annual Information Form of the Company and other documents disclosed under the Company’s
filings at www.sedar.com. The forward-looking information in this news release reflects the current expectations, assumptions and/or
beliefs of the Company based on information currently available to the Company. In connection with the forward-looking information contained
in this news release, the Company has made assumptions about: the current profitability in mining cryptocurrency (including pricing and
volume of current transaction activity); profitable use of the Company’s assets going forward; the Company’s ability to profitably
liquidate its digital currency inventory as required; historical prices of digital currencies and the ability of the Company to mine
digital currencies on the cloud will be consistent with historical prices; and there will be no regulation or law that will prevent the
Company from operating its business. The Company has also assumed that no significant events occur outside of the Company’s normal course
of business. Although the Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking
information is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the
inherent uncertainty therein.
Exhibit
99.161
DIGIHOST
TECHNOLOGY INC.
CONDENSED
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(EXPRESSED
IN UNITED STATES DOLLARS) (UNAUDITED)
Notice
to Reader
The
accompanying unaudited condensed interim consolidated financial statements of Digihost Technology Inc. (the "Company") have
been prepared by and are the responsibility of management. The unaudited condensed interim consolidated financial statements have not
been reviewed by the Company's auditors.
Digihost
Technology Inc.
Condensed
Interim Consolidated Statements of Financial Position
(Expressed
in United States Dollars) (Unaudited)
|
|
|
As at
September 30,
|
|
|
As at
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash
|
|
$
|
17,286,760
|
|
|
$
|
31,250
|
|
|
Digital currencies (note 5)
|
|
|
22,811,962
|
|
|
|
4,508,042
|
|
|
Amounts receivable and prepaid expenses (note 4)
|
|
|
528,967
|
|
|
|
12,622
|
|
|
Loan receivable (notes 6 and 16)
|
|
|
141,552
|
|
|
|
141,552
|
|
|
Total current assets
|
|
|
40,769,241
|
|
|
|
4,693,466
|
|
|
Property, plant and equipment (note 7)
|
|
|
28,630,044
|
|
|
|
6,497,634
|
|
|
Right of use assets (note 10)
|
|
|
2,265,002
|
|
|
|
2,413,720
|
|
|
Intangible asset (note 9)
|
|
|
1,475,568
|
|
|
|
1,572,500
|
|
|
Goodwill (notes 3 and 8)
|
|
|
1,340,244
|
|
|
|
1,342,281
|
|
|
Total assets
|
|
$
|
74,480,099
|
|
|
$
|
16,519,601
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
1,176,492
|
|
|
$
|
920,914
|
|
|
Lease liabilities (note 11)
|
|
|
122,636
|
|
|
|
111,672
|
|
|
Loans payable (note 12)
|
|
|
-
|
|
|
|
2,010,172
|
|
|
Deposit payable
|
|
|
1,788,500
|
|
|
|
-
|
|
|
Total current liabilities
|
|
|
3,087,628
|
|
|
|
3,042,758
|
|
|
Lease liabilities (note 11)
|
|
|
2,340,360
|
|
|
|
2,434,488
|
|
|
Loans payable (note 12)
|
|
|
-
|
|
|
|
532,911
|
|
|
Deferred tax liability
|
|
|
65,638
|
|
|
|
65,638
|
|
|
Total liabilities
|
|
|
5,493,626
|
|
|
|
6,075,795
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
|
|
|
|
|
Share
capital (note 13)
|
|
|
54,796,263
|
|
|
|
12,541,038
|
|
|
Contributed surplus
|
|
|
15,885,980
|
|
|
|
1,267,551
|
|
|
Cumulative translation adjustment
|
|
|
(526,274
|
)
|
|
|
118,162
|
|
|
Digital currency revaluation reserve
|
|
|
3,933,863
|
|
|
|
1,982,501
|
|
|
Deficit
|
|
|
(5,103,359
|
)
|
|
|
(5,465,446
|
)
|
|
Total shareholders' equity
|
|
|
68,986,473
|
|
|
|
10,443,806
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
74,480,099
|
|
|
$
|
16,519,601
|
|
Nature of operations (note 1)
Subsequent event (note 19)
The accompanying notes are an integral part of these unaudited condensed
interim consolidated financial statements.
Digihost Technology Inc.
Condensed Interim Consolidated Statements of Comprehensive Income (Loss)
(Expressed in United States Dollars) (Unaudited)
|
|
|
Three
Months Ended
September 30,
|
|
|
Nine
Months Ended
September 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
Revenue
from digital currency mining (note 5)
|
|
$
|
5,485,754
|
|
|
$
|
437,813
|
|
|
$
|
15,365,382
|
|
|
$
|
2,366,000
|
|
|
Cost
of digital currency mining
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
and maintenance costs
|
|
|
(1,882,023
|
)
|
|
|
(1,224,911
|
)
|
|
|
(5,234,390
|
)
|
|
|
(2,834,704
|
)
|
|
Depreciation
and amortization
|
|
|
(891,386
|
)
|
|
|
(1,089,869
|
)
|
|
|
(2,362,810
|
)
|
|
|
(2,543,029
|
)
|
|
Gross
profit (loss)
|
|
|
2,712,345
|
|
|
|
(1,876,967
|
)
|
|
|
7,768,182
|
|
|
|
(3,011,733
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office
and administrative expenses
|
|
|
(478,275
|
)
|
|
|
(78,746
|
)
|
|
|
(698,023
|
)
|
|
|
(37,087
|
)
|
|
Professional
fees
|
|
|
(115,443
|
)
|
|
|
(70,965
|
)
|
|
|
(936,936
|
)
|
|
|
(309,507
|
)
|
|
Regulatory
fees
|
|
|
(24,756
|
)
|
|
|
(1,549
|
)
|
|
|
(142,086
|
)
|
|
|
(53,320
|
)
|
|
Gain
on sale of property, plant and equipment
|
|
|
-
|
|
|
|
-
|
|
|
|
939,516
|
|
|
|
-
|
|
|
Loss
on settlement of debt
|
|
|
959
|
|
|
|
-
|
|
|
|
(278,111
|
)
|
|
|
-
|
|
|
Foreign
exchange
|
|
|
1,399,701
|
|
|
|
-
|
|
|
|
621,889
|
|
|
|
-
|
|
|
Gain
on sale of digital currency (note 5)
|
|
|
-
|
|
|
|
10,079
|
|
|
|
-
|
|
|
|
25,237
|
|
|
Other
income
|
|
|
58,519
|
|
|
|
-
|
|
|
|
58,519
|
|
|
|
44,068
|
|
|
Insurance
proceeds
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
109,900
|
|
|
Share
based compensation (note 15)
|
|
|
(2,766,955
|
)
|
|
|
214,207
|
|
|
|
(6,538,261
|
)
|
|
|
(693,999
|
)
|
|
Operating
income (loss)
|
|
|
786,095
|
|
|
|
(1,803,941
|
)
|
|
|
794,689
|
|
|
|
(3,926,441
|
)
|
|
Net
financial expenses (note 17)
|
|
|
(59,164
|
)
|
|
|
(19,633
|
)
|
|
|
(273,650
|
)
|
|
|
(48,364
|
)
|
|
Net
income (loss) for the period
|
|
|
726,931
|
|
|
|
(1,823,574
|
)
|
|
|
521,039
|
|
|
|
(3,974,805
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items
that will be reclassified to net income Foreign currency translation adjustment
|
|
|
(1,452,384
|
)
|
|
|
-
|
|
|
|
(644,436
|
)
|
|
|
-
|
|
|
Items
that will not be reclassified to net income Revaluation of digital currency
|
|
|
3,591,629
|
|
|
|
164,315
|
|
|
|
1,951,362
|
|
|
|
256,195
|
|
|
Total
comprehensive income (loss) for the period
|
|
$
|
2,866,176
|
|
|
$
|
(1,659,259
|
)
|
|
$
|
1,827,965
|
|
|
$
|
(3,718,610
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted income (loss) per share
|
|
$
|
0.01
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.12
|
)
|
Weighted
average number of subordinate voting
shares outstanding - basic and diluted
|
|
|
74,934,331
|
|
|
|
40,073,661
|
|
|
|
62,023,064
|
|
|
|
33,492,221
|
|
The
accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
Digihost Technology Inc.
Condensed Interim Consolidated Statements of Cash Flows
(Expressed
in United States Dollars) (Unaudited)
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Operating activities
|
|
|
|
|
|
|
|
Net income (loss) for the period
|
|
$
|
521,039
|
|
|
$
|
(3,974,805
|
)
|
|
Adjustments for:
|
|
|
|
|
|
|
|
|
|
Digital currency sold
|
|
|
-
|
|
|
|
1,252,948
|
|
|
Gain on sale of digital currency
|
|
|
-
|
|
|
|
(25,237
|
)
|
|
Digital currency mined
|
|
|
(15,365,382
|
)
|
|
|
(2,366,000
|
)
|
|
Digital currency received
|
|
|
(47,670
|
)
|
|
|
-
|
|
|
Gain on sale of property, plant and equipment
|
|
|
(939,516
|
)
|
|
|
-
|
|
|
Depreciation of right-of-use assets
|
|
|
148,718
|
|
|
|
-
|
|
|
Depreciation and amortization
|
|
|
2,214,092
|
|
|
|
2,543,029
|
|
|
Interest on lease liabilities
|
|
|
177,516
|
|
|
|
48,364
|
|
|
Share based compensation
|
|
|
6,538,261
|
|
|
|
693,999
|
|
|
Loss on settlement of debt
|
|
|
236,616
|
|
|
|
-
|
|
|
Foreign exchange gain
|
|
|
(619,804
|
)
|
|
|
-
|
|
|
Non-cash working capital items:
|
|
|
|
|
|
|
|
|
|
Amounts receivable and prepaid expenses
|
|
|
(516,345
|
)
|
|
|
(28,690
|
)
|
|
Accounts payable and accrued liabilities
|
|
|
255,578
|
|
|
|
120,023
|
|
|
Deposit payable
|
|
|
1,788,500
|
|
|
|
-
|
|
|
Net cash used in operating activities
|
|
|
(5,608,397
|
)
|
|
|
(1,736,369
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment
|
|
|
(24,249,559
|
)
|
|
|
(393,660
|
)
|
|
Net funds for loan receivable
|
|
|
-
|
|
|
|
1,074,257
|
|
|
Net cash (used in) provided by investing activities
|
|
|
(24,249,559
|
)
|
|
|
680,597
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
Proceeds from private placement, net of costs
|
|
|
50,265,763
|
|
|
|
(39,355
|
)
|
|
Repurchase of shares
|
|
|
(390,029
|
)
|
|
|
-
|
|
|
Loans payable
|
|
|
1,473,495
|
|
|
|
-
|
|
|
Repayment of loan payable
|
|
|
(3,975,083
|
)
|
|
|
-
|
|
|
Lease payments
|
|
|
(260,680
|
)
|
|
|
(201,977
|
)
|
|
Net cash provided by (used in) financing activities
|
|
|
47,113,466
|
|
|
|
(241,332
|
)
|
|
Net change in cash
|
|
|
17,255,510
|
|
|
|
(1,297,104
|
)
|
|
Cash, beginning of period
|
|
|
31,250
|
|
|
|
1,303,937
|
|
|
Cash, end of period
|
|
$
|
17,286,760
|
|
|
$
|
6,833
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
117,697
|
|
|
$
|
6,507
|
|
The
accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
Digihost Technology Inc.
Condensed
Interim Consolidated Statement of Changes in Shareholders’ Equity
(Expressed in United States Dollars) (Unaudited)
|
|
|
Number of shares
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
Digital currency
|
|
|
|
|
|
|
|
|
|
|
Subordinate
voting shares
|
|
|
Proportionate voting shares
|
|
|
Share
capital
|
|
|
Contributed surplus
|
|
|
Translation Adjustment
|
|
|
revaluation reserve
|
|
|
Deficit
|
|
|
Total
|
|
|
Balance, December 31, 2019
|
|
|
6,530,560
|
|
|
|
-
|
|
|
$
|
20
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(274,733
|
)
|
|
$
|
(274,713
|
)
|
|
Issuance of Old Digihost shares for transfer of lease and property and equipment and intangibles (notes 7, 9, 10 and 11)
|
|
|
-
|
|
|
|
-
|
|
|
|
4,264,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,264,000
|
|
Cancellation of founder shares
(note 13(b)(ii))
|
|
|
-
|
|
|
|
-
|
|
|
|
(20
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(20
|
)
|
|
Shares issued pursuant to reverse takeover transaction (note 3)
|
|
|
29,820,000
|
|
|
|
-
|
|
|
|
5,914,916
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,914,916
|
|
|
Private placement (note 13(b)(i))
|
|
|
5,592,487
|
|
|
|
-
|
|
|
|
4,021,033
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,021,033
|
|
|
Share exchange for proportionate voting shares (note 13(b)(i))
|
|
|
(1,999,997
|
)
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Shares issued as payment for accounts payable (note 13(b)(iii))
|
|
|
130,611
|
|
|
|
-
|
|
|
|
94,639
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
94,639
|
|
|
Share based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
693,999
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
693,999
|
|
|
Transaction with owners
|
|
|
40,073,661
|
|
|
|
10,000
|
|
|
|
14,294,588
|
|
|
|
693,999
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(274,733
|
)
|
|
|
14,713,854
|
|
|
Revaluation of digital currency
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
256,195
|
|
|
|
-
|
|
|
|
256,195
|
|
|
Net loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,974,805
|
)
|
|
|
(3,974,805
|
)
|
|
Total comprehensive loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
256,195
|
|
|
|
(3,974,805
|
)
|
|
|
(3,718,610
|
)
|
|
Balance, September 30, 2020
|
|
|
40,073,661
|
|
|
|
10,000
|
|
|
$
|
14,294,588
|
|
|
$
|
693,999
|
|
|
$
|
-
|
|
|
$
|
256,195
|
|
|
$
|
(4,249,538
|
)
|
|
$
|
10,995,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2020
|
|
|
40,073,661
|
|
|
|
10,000
|
|
|
$
|
12,541,038
|
|
|
$
|
1,267,551
|
|
|
$
|
118,162
|
|
|
$
|
1,982,501
|
|
|
$
|
(5,465,446
|
)
|
|
$
|
10,443,806
|
|
|
Private placements (note 13(b)(vi)(vii)(viii)(ix)(x))
|
|
|
34,667,022
|
|
|
|
-
|
|
|
|
50,059,301
|
|
|
|
5,044,691
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,103,992
|
|
|
Cost of issue - cash (note 13(b)(viii)(ix)(x))
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,838,229
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,838,229
|
)
|
Cost of issue - broker warrants
(note 13(b)(viii)(ix)(x))
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,035,477
|
)
|
|
|
3,035,477
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Shares issued as payment for accounts payable (note 13(b)(v))
|
|
|
200,000
|
|
|
|
-
|
|
|
|
305,055
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
305,055
|
|
|
Share cancelled (note 13(b)(iv))
|
|
|
(379,600
|
)
|
|
|
-
|
|
|
|
(235,425
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(158,952
|
)
|
|
|
(394,377
|
)
|
|
Units issued as commission (note 13(b)(vii))
|
|
|
148,148
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Share based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,538,261
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,538,261
|
|
|
Transaction with owners
|
|
|
74,709,231
|
|
|
|
10,000
|
|
|
|
54,796,263
|
|
|
|
15,885,980
|
|
|
|
118 162
|
|
|
|
1,982,501
|
|
|
|
(5,624,398
|
)
|
|
|
67,158,508
|
|
|
Revaluation of digital currency
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,951,362
|
|
|
|
-
|
|
|
|
1,951,362
|
|
|
Net income (loss) for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(644,436
|
)
|
|
|
-
|
|
|
|
521,039
|
|
|
|
(123,397
|
)
|
|
Total comprehensive income for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(644,436
|
)
|
|
|
1,951,362
|
|
|
|
521,039
|
|
|
|
1,827,965
|
|
|
Balance, September 30, 2021
|
|
|
74,709,231
|
|
|
|
10,000
|
|
|
$
|
54,796,263
|
|
|
$
|
15,885,980
|
|
|
$
|
(526,274
|
)
|
|
$
|
3,933,863
|
|
|
$
|
(5,103,359
|
)
|
|
$
|
68,986,473
|
|
The
accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
Digihost Technology Inc.
Notes to Condensed Interim Consolidated Financial Statements
Three and Nine Months Ended September 30, 2021
(Expressed
in United States Dollars) (Unaudited)
Digihost Technology Inc. (the "Digihost")
was incorporated in British Columbia, Canada, on February 18, 2017 as Chortle Capital Corp and subsequently changed its name to HashChain
Technology Inc. on September 18, 2017, and again to Digihost Technology Inc. on February 14, 2020. Digihost and its subsidiary, Digihost
International, Inc., (together the "Company") is a blockchain technology company with operations in cryptocurrency mining. The
head office of the Company is located at 1001 East Delavan Avenue, Buffalo, New York, 14215.
On February 14, 2020, a reverse takeover
transaction (the “RTO Transaction”) between Digihost International, Inc. ("Old Digihost") and HashChain Technology
Inc. ("HashChain") was completed (note 3). On completion of the RTO Transaction, Old Digihost was determined to be the accounting
acquirer and accordingly, the financial statements are a continuation of the Old Digihost. In connection with completion of the RTO Transaction,
HashChain has changed its name to “Digihost Technology Inc.”. The Company carried on the business of HashChain as a Tier 2
technology issuer under the symbol "DGHI". Digihost subordinate voting shares were listed for trading on the TSX Venture Exchange
("TSXV") February 20, 2020.
These unaudited condensed interim
consolidated financial statements of the Company were reviewed, approved and authorized for issue by the Board of Directors on October
19, 2021.
|
2.
|
Significant accounting policies
|
|
(a)
|
Statement of compliance
|
The Company applies IFRS as issued
by the International Accounting Standards Board (“IASB”) and interpretations issued by the IFRS Interpretations Committee.
These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard
34 - Interim Financial Reporting. Accordingly, they do not include all of the information required for full annual financial statements.
The policies applied in these unaudited
condensed interim consolidated financial statements are based on IFRS issued and outstanding as of October 19, 2021, the date the Board
of Directors approved the statements. The same accounting policies and methods of computation are followed in these unaudited condensed
interim consolidated financial statements as compared with the most recent annual financial statements as at and for the year ended December
31, 2020. Any subsequent changes to IFRS that are given effect in the Company’s annual financial statements for the year ending
December 31, 2021 could result in restatement of these unaudited condensed interim consolidated financial statements.
|
(b)
|
Standards, amendments and interpretations to existing standards that are not yet effective and have not
been adopted early by the Company.
|
At the date of authorization of
these unaudited condensed interim consolidated financial statements, several new, but not yet effective, standards and amendments to
existing standards, and interpretations have been published by the IASB. None of these standards or amendments to existing standards
have been adopted early by the Company. Management anticipates that all relevant pronouncements will be adopted for the first period
beginning on or after the effective date of the pronouncement. New standards, amendments and interpretations not adopted in the current
year have not been disclosed as they are not expected to have a material impact on the Company’s unaudited condensed interim consolidated
financial statements.
Digihost Technology Inc.
Notes to Condensed Interim Consolidated Financial Statements
Three and Nine Months Ended September 30, 2021
(Expressed
in United States Dollars) (Unaudited)
|
2.
|
Significant accounting policies (continued)
|
|
(c)
|
Critical accounting judgements, estimates and assumption
|
The preparation of these financial
statements in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual
outcomes could differ from these estimates. These financial statements include estimates that, by their nature, are uncertain. The impacts
of such estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences.
Revisions to accounting estimates are recognized in the year in which the estimate is revised and future years if the revision affects
both current and future years. These estimates are based on historical experience, current and future economic conditions and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
Significant assumptions about the future
that management has made that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that
actual results differ from assumptions made, relate to, but are not limited to, the following:
Significant judgements
|
(i)
|
Income from digital currency mining
|
The Company recognizes income from
digital currency mining from the provision of transaction verification services within digital currency networks, commonly termed “cryptocurrency
mining”. As consideration for these services, the Company receives digital currency from each specific network in which it participates
(“coins”). Income from digital currency mining is measured based on the fair value of the coins received. The fair value is
determined using the spot price of the coin on the date of receipt. The coins are recorded on the statement of financial position, as
digital currencies, at their fair value less costs to sell and re- measured at each reporting date. Revaluation gains or losses, as well
as gains or losses on the sale of coins for traditional (fiat) currencies are included in profit or loss in accordance with the Company’s
treatment of its digital currencies as a traded commodity.
There is currently no specific definitive
guidance in IFRS or alternative accounting frameworks for the accounting for the mining and strategic selling of digital currencies and
management has exercised significant judgement in determining appropriate accounting treatment for the recognition of income from digital
currency mining for mining of digital currencies. Management has examined various factors surrounding the substance of the Company’s
operations, including the stage of completion being the completion and addition of a block to a blockchain and the reliability of the
measurement of the digital currency received.
|
(ii)
|
Business combination
|
Management uses judgement to determines
whether assets acquired and liabilities assumed constitute a business. A business consists of inputs and processes applied to those inputs
that have the ability to create outputs.
The Company completed the RTO Transaction
in February 2020 (note 3) and concluded that the entity acquired did qualify as a business combination under IFRS 3, “Business Combinations”,
as significant processes were acquired. Accordingly, the RTO Transaction has been accounted for as a business combination.
|
(iii)
|
Leases – incremental borrowing rate
|
Judgment is applied when determining
the incremental borrowing rate used to measure the lease liability of each lease contract, including an estimate of the asset-specific
security impact. The incremental borrowing rate should reflect the interest rate the Company would pay to borrow at a similar term and
with similar security.
Digihost Technology Inc.
Notes to Condensed Interim Consolidated Financial Statements
Three and Nine Months Ended September 30, 2021
(Expressed
in United States Dollars) (Unaudited)
|
2.
|
Significant accounting policies (continued)
|
|
(c)
|
Critical accounting judgements, estimates and assumption (continued)
|
Significant judgements (continued)
|
(iv)
|
Income, value added, withholding
and other taxes
|
The Company is subject to income,
value added, withholding and other taxes. Significant judgment is required in determining the Company's provisions for taxes. There are
many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company
recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The determination
of the Company's income, value added, withholding and other tax liabilities requires interpretation of complex laws and regulations. The
Company's interpretation of taxation law as applied to transactions and activities may not coincide with the interpretation of the tax
authorities. All tax related filings are subject to government audit and potential reassessment subsequent to the financial statement
reporting period. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences
will impact the tax related accruals and deferred income tax provisions in the year in which such determination is made.
Significant estimates
|
(i)
|
Determination of asset and liability fair values and allocation of purchase consideration
|
Significant business combinations
require judgements and estimates to be made at the date of acquisition in relation to determining the relative fair value of the allocation
of the purchase consideration over the fair value of the assets. The information necessary to measure the fair values as at the acquisition
date of assets acquired requires management to make certain judgements and estimates about future events, including but not limited to
availability of hardware and expertise, future production opportunities, future digital currency prices and future operating costs.
|
(ii)
|
Useful lives of property, plant and equipment
|
Depreciation of data miners and equipment
are an estimate of its expected life. In order to determine the useful life of computing equipment, assumptions are required about a range
of computing industry market and economic factors, including required hashrates, technological changes, availability of hardware and other
inputs, and production costs.
|
(iii)
|
Digital currency valuation
|
Digital currencies consist of cryptocurrency
denominated assets (note 5) and are included in current assets. Digital currencies are carried at their fair value determined by the spot
rate less costs to sell. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily
indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s
earnings and financial position.
|
(iv)
|
Impairment of goodwill
|
Goodwill is tested for impairment
if there is an indicator of impairment and annually for all CGUs with goodwill. The Company considers both external and internal sources
of information for indications that goodwill is impaired. External sources of information we consider include changes in the market and
economic and legal environment in which the CGU operates that are not within its control and affect the recoverable amount of goodwill.
Internal sources of information considered include the strategic plans for the Company including estimates of revenue and other indications
of economic performance of the assets.
Digihost Technology Inc.
Notes to Condensed Interim Consolidated Financial Statements
Three and Nine Months Ended September 30, 2021
(Expressed
in United States Dollars) (Unaudited)
On February 14, 2020, there was a RTO
Transaction between Old Digihost and HashChain. In connection with completion of the RTO Transaction, HashChain acquired all the issued
and outstanding shares of Old Digihost in exchange for 29,820,000 subordinate voting shares of the Company. In substance, the transaction
involves Old Digihost shareholders obtaining control of the Company; accordingly, the transaction is considered to be a reverse acquisition
transaction under which Old Digihost is identified as the accounting acquirer.
At the time of the transaction, HashChain had
operations in cryptocurrency mining and met the definition of a business, and the transaction was accordingly considered a business combination.
The purpose of the RTO Transaction was to acquire the operations of HashChain and to obtain listing on a public exchange. The transaction
costs associated with this RTO Transaction was $59,149.
As Old Digihost was deemed to be the acquirer
for accounting purposes, these consolidated financial statements present the historical financial information to the date of the Transaction
are those of Old Digihost presented as a continuation of Old Digihost.
Pursuant to the business combination transaction,
the net assets acquired from the acquisition are to be recorded at their estimated fair values in accordance with IFRS 3. The allocation
of the purchase consideration is as follows:
|
Consideration
|
|
|
|
|
Fair value of 6,530,560 subordinate voting shares of HashChain (1)
|
|
$
|
2,957,458
|
|
|
|
|
|
|
|
|
Net assets acquired
|
|
|
|
|
|
Property, plant and equipment
|
|
$
|
2,244,509
|
|
|
Accounts payable and other payables
|
|
|
(576,957
|
)
|
|
|
|
|
1,667,552
|
|
|
Goodwill acquired (2)
|
|
|
1,289,906
|
|
|
|
|
$
|
2,957,458
|
|
|
|
(1)
|
The common shares issued were valued based on the HashChain closing
price of CAD$0.60 on the TSXV on February 14, 2020.
|
|
|
(2)
|
The goodwill acquired from the RTO Transaction is primarily attributable
to the synergies expected to arise from vertical integration of the cryptocurrency mining operations which is the only segment of the
Company.
|
|
4.
|
Amounts receivable and prepaid expenses
|
|
|
|
As at
|
|
|
As at
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Prepaid insurance
|
|
$
|
197,387
|
|
|
$
|
12,622
|
|
|
Amounts receivable
|
|
|
331,580
|
|
|
|
-
|
|
|
|
|
$
|
528,967
|
|
|
$
|
12,622
|
|
Digihost Technology Inc.
Notes to Condensed Interim Consolidated Financial Statements
Three and Nine Months Ended September 30, 2021
(Expressed
in United States Dollars) (Unaudited)
The
Company's holdings of digital currencies consist of the following:
|
|
|
As at
|
|
|
As at
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Bitcoin
|
|
$
|
19,807,612
|
|
|
$
|
4,508,042
|
|
|
Ethereum
|
|
|
3,004,350
|
|
|
|
-
|
|
|
|
|
$
|
22,811,962
|
|
|
$
|
4,508,042
|
|
The continuity of digital currency was as follows:
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
Bitcoin
|
|
|
Amount
|
|
|
Ethereum
|
|
|
Amount
|
|
|
Balance, December 31, 2020
|
|
|
154
|
|
|
$
|
4,508,042
|
|
|
|
-
|
|
|
$
|
-
|
|
|
Bitcoin mined
|
|
|
348
|
|
|
|
15,365,382
|
|
|
|
-
|
|
|
|
-
|
|
|
Received from sale of property, plant and equipment
|
|
|
13
|
|
|
|
735,197
|
|
|
|
63
|
|
|
|
204,318
|
|
|
Received from private placement
|
|
|
1
|
|
|
|
47,671
|
|
|
|
-
|
|
|
|
-
|
|
|
Exchange of digital currencies
|
|
|
(63
|
)
|
|
|
(3,219,388
|
)
|
|
|
938
|
|
|
|
3,219,388
|
|
|
Revaluation adjustment(1)
|
|
|
-
|
|
|
|
2,370,708
|
|
|
|
-
|
|
|
|
(419,356
|
)
|
|
Balance, September 30, 2021
|
|
|
453
|
|
|
$
|
19,807,612
|
|
|
|
1,001
|
|
|
$
|
3,004,350
|
|
|
Bitcoin - current(2)
|
|
|
453
|
|
|
$
|
19,807,612
|
|
|
|
1,001
|
|
|
$
|
3,004,350
|
|
|
|
(1)
|
Digital assets held are revalued each reporting period based on
the fair market value of the price of Bitcoin and Ethereum on the reporting date. As at September 30, 2021, the prices of Bitcoin and
Ethereum were $43,791 and $3,002, respectively resulting in revaluation (loss) gain of $(2,370,708) and $419,356, respectively and recorded
to other comprehensive income.
|
|
|
(2)
|
Digital currencies that are held by the Company and available
for use as at September 30, 2021.
|
As at September 30, 2021, Nyam, LLC, a company controlled
by the Chief Executive Officer ("CEO") was owed $141,552 (December 31, 2020 - $141,552). These amounts are non-interest bearing,
unsecured and due on demand.
Digihost Technology Inc.
Notes to Condensed Interim Consolidated Financial Statements
Three and Nine Months Ended September 30, 2021
(Expressed
in United States Dollars) (Unaudited)
|
7.
|
Property, plant and equipment
|
|
|
|
Data
|
|
|
|
|
|
Leasehold
|
|
|
Powerplant
|
|
|
|
|
|
|
|
miners
|
|
|
Equipment
|
|
|
improvement
|
|
|
in progress
|
|
|
Total
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2019
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Additions
|
|
|
3,558,280
|
(1)
|
|
|
2,760,000
|
(2)
|
|
|
1,040,000
|
(2)
|
|
|
-
|
|
|
|
7,358,280
|
|
|
Acquired from RTO Transaction
|
|
|
2,244,509
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,244,509
|
|
|
Balance - December 31, 2020
|
|
$
|
5,802,789
|
|
|
$
|
2,760,000
|
|
|
$
|
1,040,000
|
|
|
$
|
-
|
|
|
$
|
9,602,789
|
|
|
Additions
|
|
|
20,878,123
|
(3)
|
|
|
438,285
|
|
|
|
-
|
|
|
|
2,933,151
|
|
|
|
24,249,559
|
|
|
Disposal
|
|
|
(487,939
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(487,939
|
)
|
|
Balance - September 30, 2021
|
|
$
|
26,192,973
|
|
|
$
|
3,198,285
|
|
|
$
|
1,040,000
|
|
|
$
|
2,933,151
|
|
|
$
|
33,364,409
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2019
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Depreciation
|
|
|
2,538,211
|
|
|
|
479,888
|
|
|
|
87,056
|
|
|
|
-
|
|
|
|
3,105,155
|
|
|
Balance - December 31, 2020
|
|
$
|
2,538,211
|
|
|
$
|
479,888
|
|
|
$
|
87,056
|
|
|
$
|
-
|
|
|
$
|
3,105,155
|
|
|
Depreciation
|
|
|
1,594,216
|
|
|
|
444,937
|
|
|
|
78,006
|
|
|
|
-
|
|
|
|
2,117,159
|
|
|
Disposal
|
|
|
(487,949
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(487,949
|
)
|
|
Balance - September 30, 2021
|
|
$
|
3,644,478
|
|
|
$
|
924,825
|
|
|
$
|
165,062
|
|
|
$
|
-
|
|
|
$
|
4,734,365
|
|
|
Net carrying value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, 2020
|
|
$
|
3,264,578
|
|
|
$
|
2,280,112
|
|
|
$
|
952,944
|
|
|
$
|
-
|
|
|
$
|
6,497,634
|
|
|
As at September 30, 2021
|
|
$
|
22,548,495
|
|
|
$
|
2,273,460
|
|
|
$
|
874,938
|
|
|
$
|
2,933,151
|
|
|
$
|
28,630,044
|
|
|
(1)
|
Mining assets of $2,404,020 purchased by the Company in February
2020 from Nyam, LLC.
|
|
(2)
|
Assets acquired as part of facility lease assignment prior of
the closing of the RTO Transaction (see note 11).
|
|
(3)
|
On May 12, 2021, the Company signed a definitive purchase agreement
to acquire approximately 10,000 high-performance Bitcoin miners. The miners were sourced from Northern Data AG for approximately CAD$54,000,000.
|
Pursuant to the terms of the purchase agreement,
the Company has concurrently entered into a hosting agreement with Northern Data in connection with the miners, whereby Northern Data
will provide services to the Company including the installation and hosting of the miners in proprietary pre-manufactured performance
optimized mobile data centres to be located at Digihost’s company-owned facility.
As at September 30, 2021, the Company has acquired approximately
$17,903,000 of miners.
|
|
|
As at
|
|
|
As at
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Balance, beginning of period
|
|
$
|
1,342,281
|
|
|
$
|
-
|
|
|
RTO transaction
|
|
|
-
|
|
|
|
1,289,906
|
|
|
Foreign currency translation
|
|
|
(2,037
|
)
|
|
|
52,375
|
|
|
Balance, end of period
|
|
$
|
1,340,244
|
|
|
$
|
1,342,281
|
|
For the realization of its impairment test,
management has used the approach of fair value less costs to sell. The fair value is derived from the market capitalization of the Company
as September 30, 2021 and management determined that the fair value less cost of sales, was higher than the carrying value of the CGU.
Following this analysis, management has determined that no impairment was necessary. For these tests, the Company allocates all of its
goodwill to a single CGU, the Company as a whole, since this is the lowest level at which goodwill is monitored for internal purposes.
Digihost Technology Inc.
Notes to Condensed Interim Consolidated Financial Statements
Three and Nine Months Ended September 30, 2021
(Expressed
in United States Dollars) (Unaudited)
Intangible asset relates to the right of use of an electric power facility.
|
|
|
As at
|
|
|
As at
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Balance, beginning of period
|
|
$
|
1,572,500
|
|
|
$
|
-
|
|
|
Addition at cost
|
|
|
-
|
|
|
|
1,680,000
|
|
|
Amortization
|
|
|
(96,932
|
)
|
|
|
(107,500
|
)
|
|
Balance, end of period
|
|
$
|
1,475,568
|
|
|
$
|
1,572,500
|
|
|
|
|
As at
|
|
|
As at
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Balance, beginning of period
|
|
$
|
2,413,720
|
|
|
$
|
-
|
|
|
Additions
|
|
|
-
|
|
|
|
2,588,107
|
|
|
Depreciation
|
|
|
(148,718
|
)
|
|
|
(174,387
|
)
|
|
Balance, end of period
|
|
$
|
2,265,002
|
|
|
$
|
2,413,720
|
|
Rights-of-use assets are depreciated over a 13 year term. Refer
to note 11 for further details.
On February 14, 2020, prior to the closing
of the RTO Transaction, BIT Management, LLC, Nyam, LLC and BIT Mining International, LLC (collectively the "Sellers", all companies
controlled by the CEO of Digihost) sold to the Company leasehold improvements and equipment and transferred and assigned the lease of
the 1001 East Delavan facility. As consideration, Digihost issued 164,000 common shares. These transactions resulted in increases in equipment
of $2,760,000, leasehold improvements of $1,040,000, intangible assets of $1,680,000 and right of use assets and lease liabilities of
$2,588,107 for a total of $5,480,000 recorded in share capital.
The leases have an initial term ending in March
2023 and have renewal options. The Company intends to renew the leases for an additional 10 years. When measuring lease liability, the
Company's incremental borrowing rate applied was estimated to be 10% per annum.
Nyam, LLC made security deposits of $37,917 on the lease. The
lease is also guaranteed personally by the CEO.
Digihost Technology Inc.
Notes to Condensed Interim Consolidated Financial Statements
Three and Nine Months Ended September 30, 2021
(Expressed
in United States Dollars) (Unaudited)
|
11.
|
Lease liabilities (continued)
|
The continuity of the lease liabilities are presented in the table
below:
|
|
|
As at
|
|
|
As at
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Balance, beginning of period
|
|
$
|
2,546,160
|
|
|
$
|
-
|
|
|
Additions
|
|
|
-
|
|
|
|
2,588,107
|
|
|
Interest
|
|
|
177,516
|
|
|
|
216,434
|
|
|
Lease payments
|
|
|
(260,680
|
)
|
|
|
(258,381
|
)
|
|
Balance, end of period
|
|
$
|
2,462,996
|
|
|
$
|
2,546,160
|
|
|
Current portion
|
|
$
|
122,636
|
|
|
$
|
111,672
|
|
|
Non-current portion
|
|
|
2,340,360
|
|
|
|
2,434,488
|
|
|
Total lease liabilities
|
|
$
|
2,462,996
|
|
|
$
|
2,546,160
|
|
Maturity analysis - contractual undiscounted cash flows
|
As at September 30, 2021
|
|
|
|
|
Less than one year
|
|
$
|
350,274
|
|
|
One to five years
|
|
|
1,405,736
|
|
|
More than five years
|
|
|
2,284,320
|
|
|
Total undiscounted lease obligations
|
|
$
|
4,040,330
|
|
Digihost Technology Inc.
Notes to Condensed Interim Consolidated Financial Statements
Three and Nine Months Ended September 30, 2021
(Expressed
in United States Dollars) (Unaudited)
12. Loans payable
The Company procured loans as follows:
|
|
|
As at
|
|
|
As at
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Loans at interest rate of 8%, payable on demand. Secured by Bitcoin equivalent to 120% of the value of the loan. When the market value of the collateral drops to less than 110% or exceeds 120% of the loan, Bitcoin must be transferred to or from the lender to maintain the collateral amount.
|
|
$
|
-
|
|
|
$
|
1,182,333
|
|
|
Loans at interest rate of 6.5% and 9.5%, maturing in January 2021. Secured by Bitcoin equivalent to 80% of the value of the loan. When the market value of the collateral drops to less than 80% or exceeds 120% of the loan, Bitcoin must be transferred to or from the lender to maintain the collateral amount.
|
|
|
-
|
|
|
|
385,750
|
|
|
Loan at interest rate of 17.5%, maturing on April 1, 2022. The loan is to be repaid in 24 monthly payment of $19,873, capital and interest. The loan is secured by Bitcoin equivalent to 120% of the value of the loan.
|
|
|
-
|
|
|
|
400,000
|
|
|
Loan at interest rate of 17.5%, maturing on April 1, 2022. The loan is to be repaid in 24 monthly payment of $28,568, capital and interest. The loan is secured by Bitcoin equivalent to 120% of the value of the loan.
|
|
|
-
|
|
|
|
575,000
|
|
|
Total loans
|
|
$
|
-
|
|
|
$
|
2,543,083
|
|
|
Current
|
|
$
|
-
|
|
|
$
|
2,010,172
|
|
|
Non-current
|
|
$
|
-
|
|
|
$
|
532,911
|
|
|
(1)
|
On February 18, 2021, the Company received loan proceeds in the
amount of approximately $41,495 under the Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus
Aid, Relief and Economic Security Act, provides loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll
expenses of the qualifying business. The loans and accrued interest are forgivable after eight weeks as long as the borrower uses the
loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of
loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week period. The Company utilized
the funds received as intended and the loan was forgiven during the third quarter of 2021.
|
|
|
|
As at
|
|
|
As at
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Balance, beginning of the period
|
|
$
|
2,543,083
|
|
|
$
|
-
|
|
|
New loans
|
|
|
1,473,495
|
|
|
|
2,543,083
|
|
|
Repayment of loans
|
|
|
(3,975,083
|
)
|
|
|
-
|
|
|
Forgiveness of loan
|
|
|
(41,495
|
)
|
|
|
-
|
|
|
Balance, end of the period
|
|
$
|
-
|
|
|
$
|
2,543,083
|
|
Digihost Technology Inc.
Notes to Condensed Interim Consolidated Financial
Statements
Three and Nine Months Ended September 30, 2021
(Expressed in United States Dollars) (Unaudited)
a) Authorized share capital
Unlimited subordinate voting shares without par value and
conferring 1 vote per share.
Unlimited proportionate voting shares without par value,
conferring 200 votes per share, convertible at the holder's option into subordinate voting shares on a basis of 200 subordinate voting
shares for 1 proportionate voting shares.
b) Subordinate voting shares and proportionate voting shares
issued
(i) In 2019, the Company closed a non-brokered private placement, for aggregate gross proceeds of $4,064,431 (CAD$5,395,338) from the sale of 5,481,912 common share subscription receipts at a price of CAD$0.96, with each common share subscription receipt exchangeable for one common share of Digihost, and 110,575 unit subscription receipts at a price of CAD$1.20 per unit subscription receipt, with each unit subscription receipt exchangeable for one unit. Each unit consisted of one subordinate voting share and one subordinate voting share purchase warrant of Digihost. Each warrant entitles the holder thereof to acquire one subordinate voting share at a price of CAD$1.75 with expiry date August 14, 2021. The proceeds were received prior to December 31, 2020 and were recorded as subscription liability. In February 2020, prior to the closing of the RTO transaction, the subscription receipts were exchanged for 5,592,487 common shares of Digihost and then exchanged for 5,592,487 subordinate voting shares of the Company.
The grant date fair value of the 110,575 warrants was estimated
as $20,000.
In addition, immediately prior to completion of the RTO
Transaction, the Company exchanged 1,999,997 subordinate voting shares of Digihost owned by the CEO and director of Digihost for 10,000
proportionate voting shares.
(ii) On February 14, 2020, the Company cancelled the 2 founder shares of Old Digihost.
(iii) On February 14, 2020, the Company issued 130,911 subordinate voting shares as settlement of payables of $59,149.
(iv) On December 7, 2020, the Company announced that it has received approval to undertake, at the Company’s discretion, a normal course issuer bid program to purchase up to 2,003,683 of its subordinate voting shares for cancellation (the “Bid”). The Company received acceptance from the TSXV to commence the Bid on December 10, 2020. The Bid will terminate on December 10, 2021, or on an earlier date in the event that the maximum number of subordinate voting shares sought in the Bid has been repurchased. The Company reserves the right to terminate the Bid at any time. As at September 30, 2021, the Company repurchased and cancelled 154,500 subordinate voting shares.
(v) On February 9, 2021, the Company issued 200,000 subordinate voting shares (valued at $305,055) to settle a debt of $40,000 with two third-party creditors.
(vi) On January 8, 2021, the Company closed a non-brokered private placement for 349,876 subordinate voting shares for CAD$0.81 for gross proceeds of $220,551.
(vii) On February 18, 2021, the Company closed a non-brokered private placement financing for 4,938,271 subordinate voting shares for CAD$0.81 for gross proceeds of $3,124,018 (CAD$4,000,000). In connection with the private placement, the Company will pay a commission of 148,148 Shares to third party advisors.
Digihost
Technology Inc.
Notes to Condensed Interim Consolidated Financial Statements
Three and Nine Months Ended September 30, 2021
(Expressed in United States Dollars) (Unaudited)
|
13.
|
Share capital (continued)
|
(viii) On March 16, 2021, the Company closed a non-brokered private placement financing for 9,363,296 units for CAD$2.67 per unit for gross proceeds of $19,985,611 (CAD$25 million). Each unit consists of 9,363,296 subordinate voting shares of the Company and warrants to purchase 9,363,296 subordinate voting shares. The warrants have an exercise price of CAD$3.14 per Share and exercise period of three years from the issuance date.
H.C. Wainwright & Co. acted as the exclusive
placement agent and received cash commission and expenses totalling $1,978,303 and 749,064 non-transferable broker warrants. Each broker
warrant entitles the holder to purchase one subordinate voting share at an exercise price of CAD$3.3375 at any time for a period of three
years from the issuance date. The warrants and broker warrants were assigned an aggregate value of $1,976,106 using the residual method.
(ix) On April 9, 2021, the Company closed a non-brokered private placement financing for 11,682,243 units for CAD$2.14 per unit for gross proceeds of $19,748,795 (CAD$25 million). Each unit consists of 11,682,243 subordinate voting shares of the Company and warrants to purchase 11,682,243 subordinate voting shares. The warrants have an exercise price of CAD$2.37 per Share and exercise period of four years from the issuance date.
H.C. Wainwright & Co. acted as the exclusive
placement agent and received cash commission and expenses totalling $1,695,460 and 934,579 non-transferable broker warrants. Each broker
warrant entitles the holder to purchase one subordinate voting share at an exercise price of CAD$2.675 at any time for a period of four
years from the issuance date. The warrants and broker warrants were assigned an aggregate value of $4,054,513 using the residual method.
(x) On June 18, 2021, the Company closed a non-brokered private placement financing for 8,333,336 units for CAD$1.80 per unit for gross proceeds of $12,025,016 (CAD$15 million). Each unit consists of 8,333,336 subordinate voting shares of the Company and warrants to purchase 6,250,002 subordinate voting shares. The warrants have an exercise price of CAD$1.99 per subordinate voting share and exercise period of three years from the issuance date.
H.C. Wainwright & Co. acted as the exclusive
placement agent and received cash commission and expenses totalling $1,164,466 and 666,667 non-transferable broker warrants. Each broker
warrant entitles the holder to purchase one subordinate voting share at an exercise price of CAD$2.25 at any time for a period of three
years from the issuance date. The warrants and broker warrants were assigned an aggregate value of $2,049,549 using the residual method.
14. Warrants
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
Number of
|
|
|
Exercise Price
|
|
|
|
|
Warrants
|
|
|
(CAD$)
|
|
|
Balance, December 31, 2019
|
|
|
-
|
|
|
|
-
|
|
|
Issued (note 13(b)(i))
|
|
|
110,575
|
|
|
|
1.75
|
|
|
Balance, September 30, 2020
|
|
|
110,575
|
|
|
|
1.75
|
|
|
Balance, December 31, 2020
|
|
|
110,575
|
|
|
|
1.75
|
|
|
Issued (note 13(b)(viii)(ix)(x))
|
|
|
29,645,851
|
|
|
|
2.56
|
|
|
Expired
|
|
|
(110,575
|
)
|
|
|
1.75
|
|
|
Balance, September 30, 2021
|
|
|
29,645,851
|
|
|
|
2.56
|
|
Digihost Technology Inc.
Notes to Condensed Interim Consolidated Financial Statements
Three and Nine Months Ended September 30, 2021
(Expressed in United States Dollars) (Unaudited)
The following table reflects the warrants issued and outstanding
as of September 30, 2021:
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
Number of
|
|
|
|
|
|
Average
|
|
|
|
|
Warrants
|
|
|
Exercise
|
|
|
Contractual
|
|
|
|
|
Outstanding
|
|
|
Price (CAD$)
|
|
|
Life (years)
|
|
|
Expiry Date
|
|
|
9,363,296
|
|
|
|
3.14
|
|
|
|
2.46
|
|
|
March 16, 2024
|
|
|
749,064
|
|
|
|
3.3375
|
|
|
|
2.46
|
|
|
March 16, 2024
|
|
|
6,250,002
|
|
|
|
1.99
|
|
|
|
2.72
|
|
|
June 18, 2024
|
|
|
666,667
|
|
|
|
2.25
|
|
|
|
2.72
|
|
|
June 18, 2024
|
|
|
11,682,243
|
|
|
|
2.37
|
|
|
|
3.53
|
|
|
April 9, 2025
|
|
|
934,579
|
|
|
|
2.675
|
|
|
|
3.53
|
|
|
April 9, 2025
|
|
|
29,645,851
|
|
|
|
2.56
|
|
|
|
2.97
|
|
|
|
The Company has a stock option plan whereby
the maximum number of shares subject to the plan, in the aggregate, shall not exceed 10% of the Company's issued and outstanding shares.
The exercise price shall be no less than the discount market price as determined in accordance with TSXV policies.
The following table reflects the continuity of stock options
for the periods presented below:
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
Number of
|
|
|
Exercise Price
|
|
|
|
|
Stock Options
|
|
|
(CAD$)
|
|
|
Balance, December 31, 2019
|
|
|
-
|
|
|
|
-
|
|
|
Granted (i)
|
|
|
1,875,000
|
|
|
|
0.96
|
|
|
Balance, September 30, 2020
|
|
|
1,875,000
|
|
|
|
0.96
|
|
|
Balance, December 31, 2020
|
|
|
1,875,000
|
|
|
|
0.96
|
|
|
Granted (ii)(iii)(iv)(v)(vi)
|
|
|
5,470,491
|
|
|
|
2.01
|
|
|
Balance, September 30, 2021
|
|
|
7,345,491
|
|
|
|
1.74
|
|
(i) On February 14, 2020, the Company granted stock options to directors, officers and consultants of the Company to acquire an aggregate of 1,875,000 subordinate voting shares. The stock options may be exercised at a price of CAD$0.96 per share and expire on February 14, 2025. The stock options vest six months after grant date.
A value of CAD$0.88 per option was estimated
for the 1,875,000 stock options on the date of grant with the following assumptions and inputs: share price of CAD$0.96; exercise price
of CAD$0.96; expected dividend yield of 0%; expected volatility of 154% which is based on comparable companies; risk-free interest rate
of 1.37%; and an expected average life of five years. An expense of $1,247,551 was recorded during the year ended December 31, 2020.
Digihost Technology Inc.
Notes to Condensed Interim Consolidated Financial Statements
Three
and Nine Months Ended September 30, 2021
(Expressed in United States Dollars) (Unaudited)
|
15.
|
Stock options (continued)
|
(ii) On January 5, 2021, the Company granted stock options to directors, officers, employees and consultants of the Company to acquire an aggregate of 1,650,491 subordinate voting shares. Each stock option is exercisable into a subordinate voting share at a price of CAD$1.25 and expire on January 5, 2026. The stock options vest fully on the six-month anniversary of the date of grant.
A value of CAD$0.92 per option was
estimated for the 1,650,491 stock options on the date of grant with the following assumptions and inputs: share price of CAD$1.01; exercise
price of CAD$1.25; expected dividend yield of 0%; expected volatility of 155% which is based on comparable companies; risk-free interest
rate of 0.39%; and an expected average life of five years. For the nine months ended September 30, 2021, an expense of $1,181,970 was
recorded.
(iii) On February 24, 2021, the Company granted stock options to consultants of the Company to acquire an aggregate of 150,000 subordinate voting shares. Each stock option is exercisable into a subordinate voting share at a price of CAD$4.64 and expire on February 24, 2026. The stock options vested immediately.
A value of CAD$4.26 per option was
estimated for the 150,000 stock options on the date of grant with the following assumptions and inputs: share price of CAD$4.64; exercise
price of CAD$4.64; expected dividend yield of 0%; expected volatility of 155% which is based on comparable companies; risk-free interest
rate of 0.73%; and an expected average life of five years. For the nine months ended September 30, 2021, an expense of $512,670 was recorded.
(iv) On March 26, 2021, the Company granted stock options to directors, officers, employees and consultants of the Company to acquire an aggregate of 1,600,000 subordinate voting shares. Each stock option is exercisable into a subordinate voting share at a price of CAD$2.49 and expire on March 25, 2026. The stock options vest fully on the six - month anniversary of the date of grant.
A value of CAD$2.29 per option was
estimated for the 1,600,000 stock options on the date of grant with the following assumptions and inputs: share price of CAD$2.49; exercise
price of CAD$2.49; expected dividend yield of 0%; expected volatility of 155% which is based on comparable companies; risk-free interest
rate of 0.90%; and an expected average life of five years. For the nine months ended September 30, 2021, an expense of $1,547,617 was
recorded.
(v) On May 17, 2021, the Company granted stock options to directors, officers, employees and consultants of the Company to acquire an aggregate of 1,290,000 subordinate voting shares. Each stock option is exercisable into a subordinate voting share at a price of CAD$2.45 and expire on May 17, 2026. The stock options vest fully on the six - month anniversary of the date of grant.
A value of CAD$2.03 per option was
estimated for the 1,290,000 stock options on the date of grant with the following assumptions and inputs: share price of CAD$2.62; exercise
price of CAD$2.45; expected dividend yield of 0%; expected volatility of 105% which is based on comparable companies; risk-free interest
rate of 0.95%; and an expected average life of five years. For the nine months ended September 30, 2021, an expense of $501,184 was recorded.
(vi) On June 22, 2021, the Company granted stock options to directors, officers, employees and consultants of the Company to acquire an aggregate of 780,000 subordinate voting shares. Each stock option is exercisable into a subordinate voting share at a price of CAD$1.40 and expire on June 22, 2026. The stock options vest fully on the six-month anniversary of the date of grant.
A value of CAD$1.02 per option was
estimated for the 780,000 stock options on the date of grant with the following assumptions and inputs: share price of CAD$1.34; exercise
price of CAD$1.40; expected dividend yield of 0%; expected volatility of 105% which is based on comparable companies; risk-free interest
rate of 0.95%; and an expected average life of five years. For the nine months ended September 30, 2021, an expense of $27,864 was recorded.
Digihost
Technology Inc.
Notes to Condensed Interim Consolidated Financial Statements
Three and Nine Months Ended September 30, 2021
(Expressed in United States Dollars) (Unaudited)
|
15.
|
Stock options (continued)
|
The following table reflects the stock options issued and outstanding
as of September 30, 2021:
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Remaining
|
|
|
Number of
|
|
|
Options
|
|
|
Number of
|
|
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Options
|
|
|
Vested
|
|
|
Options
|
|
|
Expiry Date
|
|
Price (CAD$)
|
|
|
Life (years)
|
|
|
Outstanding
|
|
|
(exercisable)
|
|
|
Unvested
|
|
|
February 14, 2025
|
|
|
0.96
|
|
|
|
3.38
|
|
|
|
1,875,000
|
|
|
|
1,875,000
|
|
|
|
-
|
|
|
January 5, 2026
|
|
|
1.25
|
|
|
|
4.27
|
|
|
|
1,650,491
|
|
|
|
1,650,491
|
|
|
|
-
|
|
|
February 24, 2026
|
|
|
4.64
|
|
|
|
4.41
|
|
|
|
150,000
|
|
|
|
150,000
|
|
|
|
-
|
|
|
March 25, 2026
|
|
|
2.49
|
|
|
|
4.48
|
|
|
|
1,600,000
|
|
|
|
1,600,000
|
|
|
|
-
|
|
|
May 17, 2026
|
|
|
2.45
|
|
|
|
4.63
|
|
|
|
1,290,000
|
|
|
|
-
|
|
|
|
1,290,000
|
|
|
June 22, 2026
|
|
|
1.40
|
|
|
|
4.73
|
|
|
|
780,000
|
|
|
|
-
|
|
|
|
780,000
|
|
|
|
|
|
1.74
|
|
|
|
4.20
|
|
|
|
7,345,491
|
|
|
|
5,275,491
|
|
|
|
2,070,000
|
|
|
16.
|
Related party transactions
|
Parties are considered to be related if one
party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making
financial and operating decisions. Parties are also considered to be related if they are subject to common control. Related parties include
key management personnel and may be individuals or corporate entities. A transaction is considered to be a related party transaction when
there is a transfer of resources or obligations between related parties. Related party transactions are recorded at the exchange amount,
being the amount agreed to between the related parties.
Key management personnel are those persons having
authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. Key management
personnel include the Company’s executive officers and members of the Board of Directors.
Remuneration of key management personnel of the Company was
as follows:
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
Professional fees (1)
|
|
$
|
18,849
|
|
|
$
|
10,320
|
|
|
$
|
72,239
|
|
|
$
|
31,181
|
|
|
Share based compensation(2)
|
|
|
2,500,175
|
|
|
|
144,138
|
|
|
|
5,248,423
|
|
|
|
582,959
|
|
|
|
|
$
|
2,519,024
|
|
|
$
|
154,458
|
|
|
$
|
5,320,662
|
|
|
$
|
614,140
|
|
|
(1)
|
In September 2019, Ms. Cindy Davis was appointed Chief Financial
Officer of the Company. Ms. Davis is also a senior employee of Marrelli Support Services Inc. (“Marrelli Support”). Marrelli
Support also provides accounting services to the Company. On April 29, 2021, Mr. Paul Ciullo was appointed as the Chief Financial Officer
replacing Ms. Davis.
|
|
(2)
|
Represents the share based compensation for officer and directors.
|
A Surety Bond of $341,000 issued to a supplier is guaranteed
by Nyam, LLC, a company controlled by the CEO.
See notes 6, 7, 11 and 12 for additional related party transactions.
Digihost Technology Inc.
Notes to Condensed Interim Consolidated Financial Statements
Three and Nine Months Ended September 30, 2021
(Expressed in United States Dollars) (Unaudited)
|
17.
|
Additional information on the nature of comprehensive
loss components
|
|
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Expenses for employee benefits
|
|
|
|
|
|
|
|
Operating and maintenance costs
|
|
$
|
349,833
|
|
|
$
|
108,313
|
|
|
Professional fees
|
|
|
72,239
|
|
|
|
31,181
|
|
|
Share based compensation
|
|
|
6,538,261
|
|
|
|
693,999
|
|
|
|
|
$
|
6,960,333
|
|
|
$
|
833,493
|
|
|
|
|
|
|
|
|
|
|
|
|
Net financial expenses
|
|
|
|
|
|
|
|
|
|
Interest in loans
|
|
$
|
96,134
|
|
|
$
|
20,280
|
|
|
Interest on lease liabilities
|
|
|
177,516
|
|
|
|
48,364
|
|
|
|
|
$
|
273,650
|
|
|
$
|
68,644
|
|
The Company has one operating segment
being cryptocurrency mining located in the United States. The operations of the Company are located in two geographic locations, Canada
and the United States. Geographic segmentation is as follows:
|
As at September 30, 2021
|
|
Canada
|
|
|
United States
|
|
|
Total
|
|
|
Current assets
|
|
$
|
129,177
|
|
|
$
|
40,640,064
|
|
|
$
|
40,769,241
|
|
|
Non-current assets
|
|
|
1,340,244
|
|
|
|
32,370,614
|
|
|
|
33,710,858
|
|
|
Total assets
|
|
$
|
1,469,421
|
|
|
$
|
73,010,678
|
|
|
$
|
74,480,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, 2020
|
|
|
Canada
|
|
|
|
United States
|
|
|
|
Total
|
|
|
Current assets
|
|
$
|
-
|
|
|
$
|
4,693,466
|
|
|
$
|
4,693,466
|
|
|
Non-current assets
|
|
|
1,342,281
|
|
|
|
10,483,854
|
|
|
|
11,826,135
|
|
|
Total assets
|
|
$
|
1,342,281
|
|
|
$
|
15,177,320
|
|
|
$
|
16,519,601
|
|
On October 5, 2021, the Company announced
that it intends to consolidate the outstanding subordinate voting shares and proportionate voting shares of the Company on the basis of
three (3) pre-consolidation shares for every one (1) post-consolidation share in order to facilitate a proposed listing of its subordinate
voting shares on the Nasdaq Capital Market and satisfy the minimum share price requirement set by Nasdaq.
The Company currently has 75,078,831
subordinate voting shares and 10,000 proportionate voting shares issued and outstanding, and, following the Consolidation, it is expected
there will be approximately 25,026,277 subordinate voting shares and 3,333 proportionate voting shares issued and outstanding. The exercise
price and number of subordinate voting shares issuable upon the exercise of the Company’s outstanding options and warrants will
also be proportionately adjusted upon completion of the Consolidation. The Company will not issue any factional post-consolidation shares
as a result of the Consolidation. Instead, each fractional share remaining after conversion will be rounded down to the nearest whole
post (1) consolidation share.
- 19 -
Exhibit 99.162
DIGIHOST TECHNOLOGY INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE AND NINE MONTH PERIODS ENDED
SEPTEMBER 30, 2021
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the three and nine month periods ended September 30, 2021
October
20, 2021
Introduction
The following management’s discussion &
analysis (“MD&A”) of the financial condition and results of operations of Digihost Technology Inc. (the “Company”
or “Digihost”) constitutes management’s review of the factors that affected the Company’s financial and operating
performance for the three and nine month periods ended September 30, 2021. This MD&A was written to comply with the requirements of
National Instrument 51-102 – Continuous Disclosure Obligations. This discussion should be read in conjunction with the audited consolidated
financial statements of the Company for the years ended December 31, 2020, and 2019, together with the notes thereto. Results are reported
in United States dollars, unless otherwise noted. The Company’s consolidated financial statements and the financial information
contained in this MD&A, unless otherwise indicated, are prepared in accordance with International Financial Reporting Standards (“IFRS”)
as issued by the International Accounting Standards Board (“IASB”) and interpretations of the IFRS Interpretations Committee.
Information contained herein is presented as of October 20, 2021, unless otherwise indicated.
For the purposes of preparing this MD&A, management,
in conjunction with the Board of Directors (the “Board”), considers the materiality of information. Information is considered
material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or
value of Company’s common shares; (ii) there is a substantial likelihood that a reasonable investor would consider it important
in making an investment decision; or (iii) it would significantly alter the total mix of information available to investors. Management,
in conjunction with the Board, evaluates materiality with reference to all relevant circumstances, including potential market sensitivity.
Information about the Company and its operations
can be obtained from the offices of the Company or on the System for Electronic Documents Analysis and Retrieval (“SEDAR”)
and is available for review under the Company's profile on the SEDAR website (www.sedar.com).
COVID-19
Since the beginning of 2020, the outbreak of the
novel strain of coronavirus known as “COVID-19” has resulted in governments worldwide enacting emergency measures to combat
the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing,
have caused material disruption to businesses globally resulting in an economic slowdown. Global equity markets have experienced significant
volatility. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic
conditions. The Company’s employees, directors and consultants have fortunately not had any known cases of COVID-19. The duration
and impact of the COVID-19 pandemic is unknown at this time, as is the efficacy of the government and central bank interventions. It is
not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition
of the Company in future periods.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the three and nine month periods ended September 30, 2021
October
20, 2021
Description of Business
Digihost and its US operating subsidiary
(together “Digihost” or the "Company") is a blockchain technology company currently focussed on bitcoin mining.
The Company’s growth-oriented strategy is to continuously exploit opportunities that increase mining hash rate, reduce energy costs
through favourable contracts and vertical integration, and increase the Company’s inventory of coins mined and held. The Company’s
operating facility is located in Buffalo, New York, with over 70,000 square feet of usable space and a 115,000 KVA outdoor substation
under lease with an option to lease additional space totaling 240,000 square feet. The Company focuses on validation through mining, hosting
solutions and blockchain software solutions.
The Company’s operating strengths include
the following:
|
|
●
|
Data: Digihost utilizes low-cost power and infrastructure
in upstate New York and currently operates approximately 9,000 miners. The Company is in the process of adding an additional 18MW to its
existing facility.
|
|
|
●
|
Acquisitions: Focused on sourcing industry-low
energy costs through the acquisition of independent power plants.
|
|
|
●
|
Currently working through the approval process
to complete the acquisition of a 60MW independent power project in upstate New York to accommodate approximately 17,000 new miners.
|
The head office of the Company is located at 1001
East Delavan Avenue, Buffalo, New York, 14215.
Recent Highlights
Financings
On February 19, 2021, the Company announced the
closing of a non-brokered private placement financing for aggregate gross proceeds of CAD$4,000,000. Pursuant to the financing, the Company
issued 4,938,271 subordinate voting shares of the Company at a price of CAD $0.81 per share. (Can you please put the bullet back in, thx)
|
|
●
|
On March 17, 2021, the Company announced the
closing of a private placement of 9,363,296 units at a price of CAD$2.67 per unit for gross proceeds of CAD$25 million. Each unit consists
of one subordinate voting shares and one warrant to purchase one subordinate voting shares. The warrants have an exercise price of CAD$3.14
per share and an exercise period of three years from the issuance date.
|
H.C. Wainwright & Co. acted as
the exclusive placement agent and received (i) a cash commission equal to 8.0% of the gross proceeds of the offering and (ii) 749,064
non-transferable broker warrants. Each broker warrant entitles the holder to purchase one subordinate voting share at an exercise price
of CAD$3.3375 at any time for a period of three years from the issuance date.
|
|
●
|
On April 6, 2021, the Company announced the closing
of a private placement of 11,682,243 units at a price of CAD$2.14 per unit for gross proceeds of CAD$25 million. Each unit consisted of
one subordinate voting share and one warrant to purchase one subordinate voting share, at a purchase price of CAD$2.37 per share. The
warrants have an exercise period of four years from the issuance date.
|
H.C. Wainwright & Co. acted as
the exclusive placement agent and received (i) a cash commission equal to 8.0% of the gross proceeds of the Offering and (ii) 934,579
non-transferable broker warrants. Each broker warrant entitles the holder to purchase one subordinate voting share at an exercise price
of CAD$2.675 at any time for a period of four years from the issuance date.
|
|
●
|
On June 21, 2021, the Company announced the closing
of a non-brokered private placement of 8,333,336 units at a price of CAD$1.80 per unit for gross proceeds of CAD$15 million. Each unit
consists of 8,333,336 subordinate voting shares of the Company and warrants to purchase 6,250,002 subordinate voting shares. The warrants
have an exercise price of CAD$1.99 per subordinate voting share and exercise period of three years from the issuance date.
|
H.C. Wainwright & Co. acted as
the exclusive placement agent and received cash commission and expenses totalling $1,164,466 and 666,667 non-transferable broker warrants.
Each broker warrant entitles the holder to purchase one subordinate voting share at an exercise price of CAD$2.25 at any time for a period
of three years from the issuance date.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the three and nine month periods ended September 30, 2021
October
20, 2021
Acquisitions and Joint Ventures
|
|
●
|
On March 24, 2021, the Company announced the
signing of a binding agreement for the purchase of a 60 MW power plant (“Digifactory1”) located in upper New York state, bringing
the Company’s total power capacity to approximately 102 MW.
|
Under the terms of the agreement, the
Company will pay to the vendor cash consideration of US$3,500,000 and issue to the vendor 437,318 common shares of the Company with a
deemed value of US$750,000 (US$1.72 per share).
The transaction is subject to New York
regulatory approval as well as the approval of the TSX Venture Exchange. The securities issuable in connection therewith will be subject
to a statutory four month and a day hold period.
|
|
●
|
On March 29, 2021, the Company announced the
acquisition of 700 Bitmain S17+ 76TH miners for a total purchase price of $2.975 million, that increased the Company’s hashrate
by 50PH, or approximately 20% in the second quarter of 2021.
|
|
|
●
|
On May 14, 2021, the Company announced that it
had signed a definitive purchase agreement to acquire approximately 9,900 high-performance Bitcoin miners that will increase the Company’s
current hashrate by approximately 925PH to approximately 1.2 EH, with delivery of the Miners to occur between November of this year and
the Q1 of 2022.
|
The Miners have been sourced from Northern
Data AG, a leading infrastructure supplier for BTC mining and other high-performance computing infrastructure solutions.
Pursuant to the terms of the Purchase
Agreement, the Company has concurrently entered into a hosting agreement”) with Northern Data in connection with the Miners, whereby
Northern Data will provide services to the Company including the installation and hosting of the Miners in proprietary pre-manufactured
performance optimized mobile data centers to be located at Digihost’s company-owned facility. Miners associated with this agreement
began arriving at the Company’s premises for setup in October 2021. Both parties are in advanced discussions to expand the Purchase
Agreement beyond the initial 9,900 Miners up to a total of 30,000 miners, giving Digihost the potential to increase its current hashrate
to approximately 3.0EH.
|
|
●
|
On June 10, 2021, that it had entered into a
strategic co-mining agreement with Bit Digital USA, Inc (“BTBT) (Nasdaq: BTBT). Pursuant to the terms of the agreement, the Company
will provide certain premises to BTBT for the purpose of the operation and storage of a 20 MW bitcoin mining system to be delivered by
BTBT, and the Company will also provide services to maintain the premises for a term of two years. Miners under this agreement are expected
to begin arriving in Q1 of 2022. The collaboration between Digihost and BTBT is expected to generate an increase in hashrate of approximately
400 PH between the companies.
|
|
|
●
|
On July 26, 2021, the Company and BTBT announced
that they had entered into a second strategic co-mining agreement. Pursuant to the terms of the agreement, Digihost will provide certain
premises to Bit Digital for the operation of a 100 MW bitcoin mining system to be delivered by Bit Digital for a term of two years. This
expanded collaboration between Digihost and Bit Digital is expected to facilitate an additional increase in hashrate of approximately
2 EH between the companies, and a total increase in hashrate between the two companies of approximately 2.4 EH including the initial collaboration
agreement. Miners under this agreement are expected to begin arriving in the second half of 2022.
|
Under the terms of the agreements,
the Company will provide power for the operation of the miners and will also provide management services necessary to maintain 95% uptime
on the miners. In consideration for these services, after paying Digihost a very competitive rate for power, Digihost and BTBT will participate
in a profit-sharing arrangement based on a fixed distribution formula.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the three and nine month periods ended September 30, 2021
October
20, 2021
Mining Operations
As of September 30, 2021, the Company
held a total of 452.24 bitcoins. During the first nine months of 2021, Digihost mined a total of 348.25 bitcoins, with 133.02 bitcoins
mined during Q3 2021, 109.97 bitco mined during Q2 2021 and 105.26 BTC mined during Q1 2021.
During May 2021, the Company elected
to differentiate its cryptocurrency holdings by converting approximately 31 BTC into Ethereum (ETH). In September 2021, approximately
32 additional BTC were converted to ETH. As of the date of this MD&A, Digihost holds 1,000.89 ETH in its inventory, which at the approximate
Ethereum price of $4,150 per ETH, values the Ethereum holdings at approximately $4,153,700.
As of the date of this MD&A, Digihost
held 472.58 bitcoins, which at the approximate bitcoin price of $66,000 values the bitcoin inventory at approximately $31,190,300.
NASDAQ Application
As of the date of this MD&A, the Company is
currently in the advanced stages of the application process for a listing of its securities on the Nasdaq Stock Exchange (the “NASDAQ”).
In conjunction with the application process, the Company filed a registration statement with the Securities and Exchange Commission on
June 22, 2021.
On October 5, 2021, the Company announced that
it intends to consolidate the outstanding subordinate voting shares and proportionate voting shares of the Company on the basis of three
(3) pre-consolidation shares for every one (1) post-consolidation share in order to facilitate a proposed listing of its subordinate voting
shares on the Nasdaq Capital Market and satisfy the minimum share price requirement set by Nasdaq. The consolidation ratio is subject
to change by the Company based upon the trading value of the shares at the time of consolidation.
Green Initiative
Currently, 90% of the energy consumed by Digihost
operations is from sources that create zero-carbon emissions, with more than 50% of the energy consumed being generated from renewable
sources. As Digihost intends to purchase and bring online its own power generation facilities, the Company will focus on powering these
facilities using “bridge” power sources for low-carbon or renewable sources of energy where available.
Current Carbon-Netruality Efforts & Initiatives
include:
|
|
●
|
100% Carbon Neutral: Digihost plans for 100%
of its operations to achieve carbon neutrality with a net-zero footprint by the end of 2025, and 100% renewable by 2030.
|
|
|
●
|
Digigreen Initiative: A Digihost initiative focused
on immediate steps to create sustainable, environmentally, and economically sound in-house practices, distinguishing the Company as an
industry leader in lowering/eliminating its carbon footprint while maintaining profitability.
|
|
|
●
|
Crypto Climate Accord: Digihost has joined a
private sector-led initiative for the entire crypto community focused on decarbonizing the cryptocurrency industry in record time.
|
|
|
●
|
Proof of Green: Digihost has begun initial research
into developing proprietary standards for measuring the Company’s carbon impact. Using these standards as an environmental audit
tool for the various operations, we will be able to generate accountability reports and to advise Directors and Shareholders on efforts
to minimize the Company’s the carbon footprint.
|
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the three and nine month periods ended September 30, 2021
October
20, 2021
Normal Course Issuer Bid Facility
On December 7, 2020, the Company announced that
it has received approval to undertake, at the Company’s discretion, a normal course issuer bid program to purchase up to 2,003,683
of its subordinate voting shares for cancellation. The Company received acceptance from the TSXV to commence utilizing the facility on
December 10, 2020. The facility will terminate on December 10, 2021, or on an earlier date in the event that the maximum number of common
shares bought pursuant to the facility have been purchased. The Company reserves the right to terminate the facility at any time.
Custodial
services for digital currencies
The Company currently custodies approximately
20% of its mined digital currencies with bitFlyer USA Inc. (“bitFlyer USA”) in San Francisco, CA. bitFlyer USA is a subsidiary
of bitFlyer Inc., headquartered in Tokyo, Japan, which operates one of the largest Bitcoin exchanges by volume in the world. The Company
uses the wallet services of bitFlyer USA, and bitFlyer USA is responsible for holding/safeguarding mined digital currencies. bitFlyer
USA is not a Canadian financial institution or foreign equivalent. The Company is not aware of anything with regards to the custodian’s
operations that would adversely affect the Company’s ability to obtain an unqualified audit opinion on its audited financial statements.
In April 2021, the Company transferred
all of its coin previously held by other custodial parties into cold storage wallets. In total, as of the date of this MD&A, Digihost
has approximately 194 coins held in a number of cold storage wallets.
During April 2021, the Company was
approved for an account with Gemini Trust Company, LLC (Gemini). Gemini is a digital currency exchange and custodian that allows customers
to buy, sell, and store its digital assets. As of the date of this MD&A, the Company has holdings of 187.89 BTC and 1000.89 ETH coins
in its Gemini account.
The Company performs credit due diligence
in the normal course of business when beginning a relationship with counterparties, as well as during on-going business activities. The
Company has not been able to insure its mined digital currency. Given the novelty of digital currency mining and associated businesses,
insurance of this nature is generally not available, or uneconomical for the Company to obtain which leads to the risk of inadequate insurance
cover.
Selected Financial Information
|
|
|
Period ended
September 30,
2021
($)
|
|
|
Year ended
December 31,
2020
($)
|
|
|
Year ended
December 31,
2019
($)
|
|
|
Revenue
|
|
|
15,365,382
|
|
|
|
3,553,362
|
|
|
|
nil
|
|
|
Net income (loss)
|
|
|
521,039
|
|
|
|
(5,190,713
|
)
|
|
|
(269,968
|
)
|
|
Net income (loss) per share – basic and diluted
|
|
|
0.01
|
|
|
|
(0.15
|
)
|
|
|
(742
|
)
|
|
|
|
Period ended
September 30,
2021
($)
|
|
|
As at
December 31,
2020
($)
|
|
|
As at
December 31,
2019
($)
|
|
|
Total assets
|
|
|
74,480,099
|
|
|
|
16,519,601
|
|
|
|
3,897,511
|
|
|
Total long-term liabilities
|
|
|
2,405,998
|
|
|
|
3,003,037
|
|
|
|
nil
|
|
Selected Quarterly Information
A summary of selected information for each of
the eight most recent quarters prepared in accordance with IFRS is as follows:
|
|
|
|
|
|
Net Income or (Loss)
|
|
|
Three Months Ended
|
|
Revenues
($)
|
|
|
Total
($)
|
|
|
Per Share -
Basic
($)
|
|
|
Per Share -
Diluted
($)
|
|
|
2021-September 30
|
|
|
5,485,754
|
|
|
|
726,931
|
|
|
|
0.01
|
|
|
|
0.01
|
|
|
2021-June 30
|
|
|
5,112,553
|
|
|
|
(278,849
|
)
|
|
|
(0.00
|
)
|
|
|
(0.00
|
)
|
|
2021-March 31
|
|
|
4,767,075
|
|
|
|
72,957
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
2020-December 31
|
|
|
1,187,362
|
|
|
|
(959,580
|
)
|
|
|
(0.02
|
)
|
|
|
(0.02
|
)
|
|
2020-September 30
|
|
|
437,813
|
|
|
|
(2,171,782
|
)
|
|
|
(0.05
|
)
|
|
|
(0.05
|
)
|
|
2020-June 30
|
|
|
1,089,877
|
|
|
|
(1,293,527
|
)
|
|
|
(0.03
|
)
|
|
|
(0.03
|
)
|
|
2020-March 31
|
|
|
838,310
|
|
|
|
(765,824
|
)
|
|
|
(0.04
|
)
|
|
|
(0.04
|
)
|
|
2019-December 31
|
|
|
-
|
|
|
|
(80,692
|
)
|
|
|
(40,346
|
)
|
|
|
(40,346
|
)
|
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the three and nine month periods ended September 30, 2021
October
20, 2021
Results of Operations
For the nine months ended September 30, 2021,
compared to the nine months ended September 30, 2020:
For the nine months ended September 30, 2021,
the Company’s net income was $521,039 compared to a net loss of $3,974,805 for the nine months ended September 30, 2020. The year
over year decrease in net loss of $4,495,844 is a result of the following:
|
|
●
|
During the nine months ended September 30, 2021,
the Company recognized gross profit of $7,768,182 as a result of the mining of digital currencies from its cryptocurrency mining operations
as opposed to a net loss of $3,011,733 in the prior year.
|
|
|
●
|
As an offset to net income, during the nine months
ended September 30, 2021, the Company recorded share-based compensation of $6,538,261 (2020: $693,999). This represents the expense associated
with the vesting of stock options during the periods.
|
Liquidity and Financial Position
As of September 30, 2021, the Company had working
capital of $37,681,613, which includes cash of $17,286,760 and digital currencies of $22,811,962. The Company commenced earning revenue
from digital currency mining in mid-February 2020, however it has limited history and no assurance that historical performance will be
indicative of future performance.
The Company’s ability to continue as a going
concern is dependent on the Company’s ability to efficiently mine and liquidate digital currencies, manage operational expenses,
and raise additional funds through debt or equity financing.
Cash flows
Operating Activities
Cash used in operating activities for the reporting
period ended September 30, 2021, was $5,608,397. Cash flows resulted from net income of $521,039, an increase in accounts payable and
digital currencies.
Investing Activities
Cash used in investing activities for the reporting
period ended September 30, 2021, was $24,259,559 for the purchase of mining and data centre equipment.
Financing Activities
Cash provided by financing activities for the
reporting period ended September 30, 2021, was $47,113,466. The Company received proceeds from a private placement of $50,265,763, made
lease payments of $260,679, repaid custodial loans of $3,975,083, repurchased shares of $390,029 and received net funds from loans of
$1,473,495.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the three and nine month periods ended September 30, 2021
October
20, 2021
ADJUSTED EBITDA – NON-GAAP MEASURE
“Adjusted EBITDA” is a metric used
by management which is income (loss) from operations, as reported, before interest, tax, and adjusted for removing other non-cash items,
including the stock-based compensation expense, depreciation, and further adjusted to remove acquisition related costs. Management believes
“Adjusted EBITDA” is a useful financial metric to assess its operating performance on a cash basis before the impact of non-cash
items and acquisition related activities.
|
|
|
Nine months ended Sept 30
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
$
|
|
|
$
|
|
|
Income (Loss) before other items
|
|
|
521,039
|
|
|
|
(3,974,805
|
)
|
|
Share-based compensation
|
|
|
6,538,261
|
|
|
|
693,999
|
|
|
Depreciation
|
|
|
2,362,810
|
|
|
|
2,543,029
|
|
|
Adjusted EBITDA
|
|
|
9,422,110
|
|
|
|
(737,777
|
)
|
Loan Receivable (Payable) and Related Party
Transactions
Loan receivable from related party
During the year ended December 31, 2019, Nyam,
LLC, a company controlled by the Chief Executive Officer ("CEO") received net loan proceeds of $2,431,655. In February 2020,
$2,404,020 of this amount was settled through the purchase of data miners from Nyam. These amounts are non-interest bearing, unsecured
and due on demand.
Related Party Transactions
Parties are considered to be related if one party
has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial
and operating decisions. Parties are also considered to be related if they are subject to common control. Related parties include key
management personnel and may be individuals or corporate entities. A transaction is considered to be a related party transaction when
there is a transfer of resources or obligations between related parties. Related party transactions are recorded at the exchange amount,
being the amount agreed to between the related parties.
Key management personnel are those persons having
authority and responsibility for planning, directing, and controlling the activities of the Company, directly or indirectly. Key management
personnel include the Company’s executive officers and members of the Board of Directors.
Remuneration of key management personnel of the
Company was as follows:
|
|
|
Nine Months
Ended
September 30,
2021
|
|
|
Nine Months
Ended September 30,
2020
|
|
|
Professional fees (1)
|
|
|
72,239
|
|
|
|
31,181
|
|
|
Share based compensation(2)
|
|
|
5,248,423
|
|
|
|
582,959
|
|
|
Total
|
|
$
|
5,320,662
|
|
|
$
|
614,140
|
|
|
|
(1)
|
In September 2019, Ms. Cindy Davis was appointed Chief Financial
Officer of the Company. Ms. Davis is also a senior employee of Marrelli Support Services Inc. (“Marrelli Support”). Marrelli
Support also provides accounting services to the Company. On April 29, 2021, Mr. Paul Ciullo was appointed as the Chief Financial Officer
replacing Ms. Davis.
|
|
|
(2)
|
Represents the share-based compensation for officer and directors.
|
A Surety Bond of $341,000 issued to a supplier
is guaranteed by NYAM, LLC, a company controlled by the CEO.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the three and nine month periods ended September 30, 2021
October
20, 2021
Share Capital
As of the date of this MD&A, the Company has
74,709,231 common shares outstanding.
As of the date of this MD&A, the Company 7,345,491
stock options and 29,645,851 warrants.
Off-Balance Sheet Arrangements
As at the date
of this MD&A, the Company did not have any off-balance sheet arrangements.
Adoption of new accounting policies
(a) Basis
of consolidation
These consolidated financial statements include
the accounts of Digihost and its wholly owned subsidiary: Digihost International, Inc. Subsidiaries are consolidated from the date of
acquisition, being the date on which the Company obtains control, and continues to be consolidated until the date that such control ceases.
Control is achieved when an investor has power over an investee to direct its activities, exposure to variable returns from an investee,
and the ability to use the power to affect the investor's returns. All inter-company transactions and balances have been eliminated upon
consolidation.
(b) Functional
and presentation currency
These financial statements are presented in United
States Dollars. The functional currency of Digihost is the Canadian dollar and the functional currency of Digihost International, Inc.
is the United States Dollars. All financial information is expressed in United States Dollars, unless otherwise stated.
(c) Foreign
currency translation
Monetary assets and liabilities denominated in
foreign currencies are translated to United States dollars at exchange rates in effect at the reporting date. Non-monetary assets and
liabilities are translated at historical exchange rates at the respective transaction dates. Revenue and expenses are translated at the
rate of exchange at each transaction date. Gains or losses on translation are included in foreign exchange expense.
The results and financial position of an entity
whose functional currency are translated into a different presentation currency are treated as follows:
|
|
●
|
assets and liabilities are translated at the
closing rate at the reporting date;
|
|
|
●
|
income and expenses for each income statement
are translated at average exchange rates at the dates of the period; and
|
|
|
●
|
all resulting exchange differences are recognized
in other comprehensive income as cumulative translation adjustments.
|
(d) Revenue
recognition
The Company recognizes revenue from the provision
of transaction verification services within digital currency networks, commonly termed “cryptocurrency mining”. As consideration
for these services, the Company receives digital currency from each specific cryptocurrency mining pool in which it participates. Revenue
is measured based on the fair value of the digital currencies received. The fair value is determined using the spot price of the digital
currencies on the date of receipt. Digital currencies are considered earned on the completion and addition of a block to the blockchain,
at which time the economic benefit is received and can be reliably measured.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the three and nine month periods ended September 30, 2021
October
20, 2021
(e) Digital
currencies
Digital currencies consist of Bitcoin. Digital
currencies meet the definition of intangible assets in IAS 38 Intangible Assets as they are identifiable non-monetary assets without physical
substance. They are initially recorded at cost and the revaluation method is used to measure the digital currencies subsequently. Where
digital assets are recognized as revenue, the fair value of the bitcoin received is considered to be the cost of the digital assets. Under
the revaluation method, increases in fair value are recorded in other comprehensive income, while decreases are recorded in profit or
loss. The Company revalues its digital currencies at the end of each quarter. There is no recycling of gains from other comprehensive
income to profit or loss. However, to the extent that an increase in fair value reverses a previous decrease in fair value that has been
recorded in profit or loss, that increase is recorded in profit or loss. Decreases in fair value that reverse gains previously recorded
in other comprehensive income are recorded in other comprehensive income. Gains and losses on digital currencies sold between revaluation
dates are included in profit or loss.
Digital currencies are measured at fair value
using the quoted price on Cryptocompare. Cryptocompare is a pricing aggregator, as the principal market or most advantageous market is
not always known. The Company believes any price difference amongst the principal market and an aggregated price to be immaterial. Management
considers this fair value to be a Level 2 input under IFRS 13 Fair Value Measurement fair value hierarchy as the price on this source
represents an average of quoted prices on multiple digital currency exchanges.
(f) Property,
plant, and equipment
Details as to the Company’s policies for
property, plant and equipment are as follows:
|
Asset
|
|
Measurement
Basis
|
|
Amortization
Method
|
|
Amortization
Rate
|
|
Data miners
|
|
Cost
|
|
Straight-line
|
|
12 - 36 months
|
|
Equipment
|
|
Cost
|
|
Straight-line
|
|
36 - 120 months
|
|
Leasehold improvement
|
|
Cost
|
|
Straight-line
|
|
120 months
|
Property, plant, and equipment are recorded at
cost less accumulated depreciation. Cost includes all expenditures incurred to bring assets to the location and condition necessary for
them to be operated in the manner intended by management.
Subsequent costs are included in the asset’s
carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with
the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any replaced parts is derecognized.
All other repairs and maintenance are charged to profit or loss during the fiscal period in which they are incurred.
Gains and losses on disposal are determined by
comparing the proceeds with the carrying amount and are recognized in profit or loss.
(g) Intangible
assets
intangible assets that qualify for separate recognition
are recognized as intangible assets at their fair values. Right of use of an electric power facility is depreciated over 13 years.
(h) Impairment
of non-financial assets
The Company reviews the carrying amounts of its
non-financial assets, including property, plant, and equipment, when events or changes in circumstances indicate the assets may not be
recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment
loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable
amount of the cash generating unit to which the asset belongs. Assets carried at fair value, such as digital currencies, are excluded
from impairment analysis.
Recoverable amount is the higher of fair value
less costs of disposal and value in use. In assessing value in use, the estimated future cash flows to be derived from continuing use
of the asset or cash generating unit are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. Fair value less costs of disposal is the amount obtainable
from the sale of an asset or cash generating unit in an arm’s length transaction between knowledgeable, willing parties, less the
cost of disposal. When a binding sale agreement is not available, fair value less costs of disposal is estimated using a discounted cash
flow approach with inputs and assumptions consistent with those of a market participant. If the recoverable amount of an asset or cash
generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash generating unit is reduced
to its recoverable amount. An impairment loss is recognized immediately in net income. Where an impairment loss subsequently reverses,
the carrying amount of the asset or cash generating unit is increased to the revised estimate of its recoverable amount, such that the
increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the three and nine month periods ended September 30, 2021
October
20, 2021
(i) Leases
and right-of-use assets
All leases are accounted for by recognizing a
right-of-use asset and a lease liability except for:
|
|
●
|
Leases of low value assets; and
|
|
|
●
|
Leases with a duration of twelve months or less.
|
Lease liabilities are measured at the present
value of the contractual payments due to the lessor over the lease term, with the discount rate determined by the incremental borrowing
rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they
depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged
throughout the lease term. Other variable lease payments are expensed in the period to which they relate.
On initial recognition, the carrying value of
the lease liability also includes:
|
|
●
|
Amounts expected to be payable under any residual
value guarantee;
|
|
|
●
|
The exercise price of any purchase option granted
if it is reasonable certain to assess that option;
|
|
|
●
|
Any penalties payable for terminating the lease,
if the term of the lease has been estimated on the basis of termination option being exercised.
|
Right-of-use assets are initially measured at
cost, which includes the initial amount of the lease liability, reduced for any lease incentives received, and increased for:
|
|
●
|
Lease payments made at or before commencement
of the lease;
|
|
|
●
|
Initial direct costs incurred; and
|
|
|
●
|
The amount of any provision recognised where
the Company is contractually required to dismantle, remove, or restore the leased asset.
|
Lease liabilities, on initial measurement, increase
as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made.
Right-of-use assets are amortized on a straight-line
basis over the remaining term of the lease or over the remaining economic life of the asset if this is judged to be shorter than the lease
term.
When the Company revises its estimate of the term
of any lease, it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted
at the same discount rate that applied on lease commencement. The carrying value of lease liabilities is similarly revised when the variable
element of future lease payments dependent on a rate or index is revised. In both cases an equivalent adjustment is made to the carrying
value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term or recorded
in profit or loss if the right-of-use asset is reduced to zero.
(j) Goodwill
The Company measures goodwill as the fair value
of the cost of the acquisition less the fair value of the identifiable net assets acquired, all measured as of the acquisition date. Goodwill
is carried at cost less accumulated impairment losses.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the three and nine month periods ended September 30, 2021
October
20, 2021
(k) Share
capital and equity
Share capital represents the amount received on
the issue of shares, less issuance costs, net of any underlying income tax benefit from these issuance costs. When warrants are issued
in connection with shares, the Company uses the residual method for allocating fair value to the shares and then to warrants.
Contributed surplus include the value of outstanding
warrants and stock options. When warrants and stock options are exercised, the related compensation cost and value are transferred to
share capital.
Deficits include all current and prior year losses.
Digital currency revaluation reserve includes
gains and losses from the revaluation of digital currencies, net of tax.
Cumulative translation reserve includes foreign
currency translation differences arising from the translation of financial statements of foreign entities into United States dollars.
(l) Share-based
compensation
The granting of stock options to employees, officers,
directors, or consultants of the Company requires the recognition of share-based compensation expense with a corresponding increase in
contributed surplus in shareholders’ equity. The fair value of stock options that vest immediately are recorded as share-based compensation
expense at the date of the grant. The expense for stock options that vest over time is recorded over the vesting period using the graded
method, which incorporates management’s estimate of the stock options that are not expected to vest. For stock options where vesting
is subject to the completion of performance milestones, the estimate for completion of the milestone is reviewed at each reporting date
for any change in the estimated vesting date, and to the extent there is a material change in the vesting date estimate, the amortization
to be recognized is recalculated for the new timeline estimate and adjusted on a prospective basis in the current period. The effect of
a change in the number of stock options expected to vest is a change in an estimate and the cumulative effect of the change is recognized
in the period when the change occurs. On exercise of a stock option, the consideration received, and the estimated fair value previously
recorded in contributed surplus is recorded as an increase in share capital.
Stock options awarded to consultants are measured
based on the fair value of the goods and services received unless that fair value cannot be estimated reliably. If the fair value of the
goods and services cannot be reliably measured, then the fair value of the equity instruments granted is used to recognize the expense.
Critical accounting judgements, estimates and
assumption
The preparation of these financial statements
in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes
could differ from these estimates. These financial statements include estimates that, by their nature, are uncertain. The impacts of such
estimates are pervasive throughout the financial statements and may require accounting adjustments based on future occurrences. Revisions
to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both
current and future periods. These estimates are based on historical experience, current and future economic conditions, and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the three and nine month periods ended September 30, 2021
October
20, 2021
Significant assumptions about the future that
management has made that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual
results differ from assumptions made, relate to, but are not limited to, the following:
Significant judgements
(i) Income
from digital currency mining
The Company recognizes income from digital currency
mining from the provision of transaction verification services within digital currency networks, commonly termed “cryptocurrency
mining”. As consideration for these services, the Company receives digital currency from each specific network in which it participates
(“coins”). Income from digital currency mining is measured based on the fair value of the coins received. The fair value is
determined using the spot price of the coin on the date of receipt. The coins are recorded on the statement of financial position, as
digital currencies, at their fair value less costs to sell and re- measured at each reporting date. Revaluation gains or losses, as well
as gains or losses on the sale of coins for traditional (fiat) currencies are included in profit or loss in accordance with the Company’s
treatment of its digital currencies as a traded commodity.
There is currently no specific definitive guidance
in IFRS or alternative accounting frameworks for the accounting for the mining and strategic selling of digital currencies and management
has exercised significant judgement in determining appropriate accounting treatment for the recognition of income from digital currency
mining for mining of digital currencies. Management has examined various factors surrounding the substance of the Company’s operations,
including the stage of completion being the completion and addition of a block to a blockchain and the reliability of the measurement
of the digital currency received.
(ii) Business
combination
Management uses judgement to determines whether
assets acquired, and liabilities assumed constitute a business. A business consists of inputs and processes applied to those inputs that
have the ability to create outputs.
The Company completed the RTO Transaction in February
2020 (note 3) and concluded that the entity acquired did qualify as a business combination under IFRS 3, “Business Combinations”,
as significant processes were acquired. Accordingly, the RTO Transaction has been accounted for as a business combination.
(iii) Going
concern
The assessment of the Company's ability to continue
as a going concern involves judgment regarding future funding available for its operations and working capital requirements as discussed
in note 1.
(iv) Leases
– incremental borrowing rate
Judgment is applied when determining the incremental
borrowing rate used to measure the lease liability of each lease contract, including an estimate of the asset-specific security impact.
The incremental borrowing rate should reflect the interest rate the Company would pay to borrow at a similar term and with similar security.
(v) Income,
value added, withholding and other taxes
The Company is subject to income, value added,
withholding and other taxes. Significant judgment is required in determining the Company's provisions for taxes. There are many transactions
and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognizes
liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The determination of the Company's
income, value added, withholding and other tax liabilities requires interpretation of complex laws and regulations. The Company's interpretation
of taxation law as applied to transactions and activities may not coincide with the interpretation of the tax authorities. All tax related
filings are subject to government audit and potential reassessment subsequent to the financial statement reporting period. Where the final
tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the tax related
accruals and deferred income tax provisions in the period in which such determination is made.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the three and nine month periods ended September 30, 2021
October
20, 2021
Significant estimates
(i) Determination
of asset and liability fair values and allocation of purchase consideration
Significant business combinations require judgements
and estimates to be made at the date of acquisition in relation to determining the relative fair value of the allocation of the purchase
consideration over the fair value of the assets. The information necessary to measure the fair values as at the acquisition date of assets
acquired requires management to make certain judgements and estimates about future events, including but not limited to availability of
hardware and expertise, future production opportunities, future digital currency prices and future operating costs.
(ii) Useful
lives of property, plant, and equipment
Depreciation of data miners and equipment are
an estimate of its expected life. In order to determine the useful life of computing equipment, assumptions are required about a range
of computing industry market and economic factors, including required hashrates, technological changes, availability of hardware and other
inputs, and production costs.
(iii) Digital
currency valuation
Digital currencies consist of cryptocurrency denominated
assets (note 4) and are included in current assets. Digital currencies are carried at their fair value determined by the spot rate less
costs to sell. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative
of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s
earnings and financial position.
(iv) Impairment
of goodwill
Goodwill is tested for impairment if there is
an indicator of impairment and annually for all CGUs with goodwill. The Company considers both external and internal sources of information
for indications that goodwill is impaired. External sources of information we consider include changes in the market and economic and
legal environment in which the CGU operates that are not within its control and affect the recoverable amount of goodwill. Internal sources
of information considered include the strategic plans for the Company including estimates of revenue and other indications of economic
performance of the assets.
Disclosure of Internal Controls
Management has established processes to provide
it with sufficient knowledge to support representations that it has exercised reasonable diligence to ensure that (i) the consolidated
financial statements do not contain any untrue statement of material fact or omit to state a material fact required to be stated or that
is necessary to make a statement not misleading in light of the circumstances under which it is made, as of the date of and for the periods
presented by the financial statements, and (ii) the consolidated financial statements fairly present in all material respects the financial
condition, results of operations and cash flow of the Company, as of the date of and for the periods presented.
In contrast to the certificate required for non-venture
issuers under National Instrument 52-109 - Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”),
the Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls
and procedures (“DC&P”) and internal control over financial reporting (“ICFR”), as defined in NI 52-109. In
particular, the certifying officers filing such certificate are not making any representations relating to the establishment and maintenance
of:
|
|
(i)
|
controls and other procedures designed to provide reasonable assurance that information required to be
disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded,
processed, summarized, and reported within the time periods specified in securities legislation; and
|
|
|
(ii)
|
a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of consolidated financial statements for external purposes in accordance with the issuer’s GAAP (IFRS).
|
The Company’s certifying officers are responsible
for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in the
certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and
implement on a cost-effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability,
transparency and timeliness of interim and annual filings and other reports provided under securities legislation.
DIGIHOST TECHNOLOGY INC.
Management’s Discussion & Analysis
For the three and nine month periods ended September 30, 2021
October
20, 2021
Risks and Uncertainties
An investment in the securities of the Company is
highly speculative and involves numerous and significant risks. Such investment should be undertaken only by investors whose financial
resources are sufficient to enable them to assume these risks and who have no need for immediate liquidity in their investment. Prospective
investors should carefully consider the risk factors that have affected, and which in the future are reasonably expected to affect, the
Company and its financial position. Please refer to the section entitled "Risks and Uncertainties" in the Company’s Annual
MD&A for the fiscal year ended December 31, 2020, available on SEDAR at www.sedar.com.
Cautionary Note Regarding Forward-Looking Information
This MD&A contains certain forward-looking
information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as “forward-looking
statements”). These statements relate to future events or the Company’s future performance. All statements other than statements
of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words
such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”,
“continues”, “forecasts”, “projects”, “predicts”, “intends”, “anticipates”
or “believes”, or variations of, or the negatives of, such words and phrases, or statements that certain actions, events or
results “may”, “could”, “would”, “should”, “might” or “will” be
taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause
actual results to differ materially from those anticipated in such forward-looking statements. The forward-looking statements in this
MD&A speak only as of the date of this MD&A or as of the date specified in such statement. The following table outlines certain
significant forward-looking statements contained in this MD&A and provides the material assumptions used to develop such forward-looking
statements and material risk factors that could cause actual results to differ materially from the forward-looking statements. In particular,
this MD&A contains forward-looking statements pertaining to the following:
|
|
●
|
the impact of the ongoing novel coronavirus disease
outbreak (COVID-19) on the business, operations, financial results, and prospects of the Company;
|
|
|
●
|
the impact of the Bitcoin Halving in May 2020
on the price of BTC and the normalization after the Bitcoin Halving to pre-Bitcoin Halving profitability levels;
|
|
|
●
|
future debt levels, financial capacity, liquidity,
and capital resources;
|
|
|
●
|
anticipated future sources of funds to meet working
capital requirements;
|
|
|
●
|
future capital expenditures and contractual commitments;
|
|
|
●
|
expectations respecting future financial results;
|
|
|
●
|
expectations regarding benefits of certain transactions
and capital investments;
|
|
|
●
|
the Company’s objectives, strategies, and
competitive strengths and growth strategy;
|
|
|
●
|
expectations with respect to future opportunities;
|
|
|
●
|
expectations with respect to the Company’s
financial position;
|
|
|
●
|
the Company’s capital expenditure programs
and future capital requirements;
|
|
|
●
|
capital resources and the Company’s ability
to raise capital; and
|
|
|
●
|
industry conditions pertaining to the cryptocurrency
industry;
|
|
|
●
|
the other factors discussed under “Risk
Factors”.
|
This list of factors should not be construed as
exhaustive.
Additional Information
Additional information concerning the Company
is available on SEDAR at www.sedar.com.
P a g e |
15
Exhibit
99.163
FORM
52-109FV2
CERTIFICATION
OF INTERIM FILINGS
VENTURE
ISSUER BASIC CERTIFICATE
I,
Paul Ciullo, Chief Financial Officer of Digihost Technology Inc., certify the following:
|
1.
|
Review:
I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Digihost Technology
Inc. (the “issuer”) for the interim period ended September 30, 2021.
|
|
2.
|
No
misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in
light of the circumstances under which it was made, with respect to the period covered by the interim filings.
|
|
3.
|
Fair
presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other
financial information included in the interim filings fairly present in all material respects the financial condition, financial performance
and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
|
Date:
October 21, 2021
|
/s/ Paul Ciullo
|
|
|
Paul Ciullo
|
|
|
Chief Financial Officer
|
|
NOTE
TO READER
In
contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’
Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment
and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in
NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment
and maintenance of
|
i)
|
controls
and other procedures designed to provide reasonable assurance that information required to
be disclosed by the issuer in its annual filings, interim filings or other reports filed
or submitted under securities legislation is recorded, processed, summarized and reported
within the time periods specified in securities legislation; and
|
|
ii)
|
a
process to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with the
issuer’s GAAP.
|
The
issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge
to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability
of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109
may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports
provided under securities legislation.
Exhibit
99.164
FORM
52-109FV2
CERTIFICATION
OF INTERIM FILINGS
VENTURE
ISSUER BASIC CERTIFICATE
I,
Michel Amar, Chief Executive Officer of Digihost Technology Inc., certify the following:
|
1.
|
Review:
I have reviewed the interim financial report and interim MD&A (together, the “interim filings”)
of Digihost Technology Inc. (the “issuer”) for the interim period ended September
30, 2021.
|
|
2.
|
No
misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings
do not contain any untrue statement of a material fact or omit to state a material fact required to be
stated or that is necessary to make a statement not misleading in light of the circumstances under which
it was made, with respect to the period covered by the interim filings.
|
|
3.
|
Fair
presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial
report together with the other financial information included in the interim filings fairly present in
all material respects the financial condition, financial performance and cash flows of the issuer, as
of the date of and for the periods presented in the interim filings.
|
Date:
October 21, 2021
|
/s/
Michel Amar
|
|
|
Michel Amar
|
|
|
Chief Executive Officer
|
|
NOTE
TO READER
In
contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’
Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment
and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in
NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment
and maintenance of
|
i)
|
controls
and other procedures designed to provide reasonable assurance that information required to be disclosed
by the issuer in its annual filings, interim filings or other reports filed or submitted under securities
legislation is recorded, processed, summarized and reported within the time periods specified in securities
legislation; and
|
|
ii)
|
a
process to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with the issuer’s GAAP.
|
The
issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge
to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability
of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109
may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports
provided under securities legislation.
Exhibit 99.165
DIGIHOST GENERATES RECORD-LEVEL REVENUE FROM
BITCOIN MINING DURING Q3 2021
Toronto, ON – October 21, 2021 –
Digihost Technology Inc. (“Digihost” or the “Company”) (TSXV: DGHI; OTCQB: HSSHF) is pleased to
announce its financial results for the third quarter ended September 30, 2021 (all amounts in U.S. dollars, unless otherwise indicated).
Revenue from digital currency mining was $5.5
million in the third quarter of 2021, a 1,153% increase over the corresponding quarter in 2020, and an 8% increase over Q2 2021. The Company
also realized total comprehensive income of $2.9 million in Q3 of 2021 as compared to a comprehensive loss of $1.7 million in Q3 of 2020
and a loss of $6.9 million in Q2 of 2021.
Michel Amar, CEO of Digihost, stated: “It
is rewarding for the Company to announce strong Q3 financial results generating record top-line revenue growth for the second consecutive
quarter along with positive net income. The Company’s improved financial performance is directly related to Digihost’s dedicated
focus to managing costs and continued growth in our mining operations. With additional miners arriving in Q4 2021 and in early 2022, Digihost
expects to aggressively expand its mining capacity as previous investments in infrastructure are expected to drive continued growth for
the Company.”
Third Quarter 2021 Financial Highlights
The following information compares the financial
results of the Company for the three months ended September 30, 2021 (“2021”) and the three months ended September
30, 2020 (“2020”):
|
|
-
|
Record revenue from digital currency mining of $5.5 million reported in 2021, compared to $0.4 million
in 2020, an increase of 1,153%;
|
|
|
|
|
|
|
-
|
Gross profit margin from operations was 49% in 2021 compared to a gross loss margin from operations of
429% million in 2020;
|
|
|
|
|
|
|
-
|
Realized net income of $0.7 million in 2021, compared to a net loss of $1.8 million in 2020, an absolute increase of 140%;
|
|
|
|
|
|
|
-
|
Generated Adjusted EBITDA of $4.4 million in 2021, a significant increase from a negative Adjusted EBITDA
amount of $0.9 million in 2020.
|
|
|
|
|
|
|
-
|
Total comprehensive income of $2.9 million reported in 2021, as compared to a total comprehensive loss
of $1.7 million in 2020, an absolute increase of 273%.
|
The following information compares the financial
position of the Company as at September 30, 2021 (“2021”) and as at December 31, 2020 (“2020”):
|
|
-
|
Cash balance of $17.3 million in 2021 compared to $0.03 million in 2020, an increase of $17.2 million;
|
|
|
|
|
|
|
-
|
Digital currencies balance of $22.8 million in 2021, comprised of 452.24 Bitcoins and 1,000.89 Ethereum,
compared to $4.5 million in 2020, comprised of 195.52 Bitcoins, an increase of $18.3 million and 256.72 Bitcoins and 1,000.89 Ethereum.
Ending inventory valuation of Bitcoin was performed at a price of approximately $44k per Bitcoin;
|
|
|
|
|
|
|
-
|
Total assets of $74.5 million in 2021 compared to $16.5 million in 2020, an increase of $58.0 million;
|
|
|
|
|
|
|
-
|
Total liabilities of $5.5 million in 2021 compared to $6.1 million in 2020, a decrease of $0.6 million;
and
|
|
|
|
|
|
|
-
|
Total shareholders’ equity of $68.9 million in 2021 compared to $10.4 million in 2020, an increase
of $58.5 million.
|
Recent Highlights
|
|
-
|
On July 26, 2021, the Company announced it had entered into a second strategic
co-mining agreement with Bit Digital, Inc. (“Bit Digital”). Pursuant to the terms of the agreement, Digihost will provide
certain premises to Bit Digital for the operation of a 100 MW Bitcoin mining system to be delivered by Bit Digital for a term of two years.
This expanded collaboration between Digihost and Bit Digital is expected to facilitate an additional increase in hashrate of approximately
2 EH between the companies, and a total increase in hashrate between the two companies of approximately 2.4 EH including the initial collaboration
agreement that was previously announced on June 10, 2021;
|
|
|
|
|
|
|
-
|
On October 5, 2021, the Company announced that it intends to consolidate the outstanding subordinate voting
shares and proportionate voting shares of the Company on the basis of three (3) pre-consolidation shares for every one (1) post-consolidation
share in order to facilitate a proposed listing of its subordinate voting shares on the Nasdaq Capital Market and satisfy the minimum
share price requirement set by Nasdaq.
|
|
|
|
|
|
|
-
|
On October 13, 2021, the Company announced it had received 1,952 new technologically advanced, high-performance
M30 Bitcoin miners (the “Miners”). The Miners are currently being installed at the Company’s data center and
are expected to be fully operational within two weeks of the announcement.
|
|
|
|
|
|
|
-
|
The Company’s current cryptocurrency holdings are comprised of 472.58
Bitcoin and 1,000.89 Ethereum. Based on current Bitcoin and Ethereum prices, the present value of the Company’s digital currency
balances is approximately $31.2 million and $4.2 million, respectively.
|
Michel Amar commented: “It is encouraging
to see the core strengths of Digihost, primarily our committed team and operational quality, come together to produce quality results
and prove our dedication to developing as a diversified leader in the digital asset space. The Company’s measured approach to managing
and growing our mining operations paid off with positive results in Q3 and as we remain focused on executing our long-term strategy as
we move into 2022.”
|
|
|
Three Months Ended September 30
|
|
|
(U.S.$ except per share data)
|
|
2021
|
|
|
2020
|
|
|
For the periods ended as indicated
|
|
|
|
|
|
|
|
Revenue from digital currency mining
|
|
|
5,485,754
|
|
|
|
437,813
|
|
|
Operating and maintenance costs
|
|
|
(1,882,023
|
)
|
|
|
(1,224,911
|
)
|
|
Depreciation
|
|
|
(891,386
|
)
|
|
|
(1,089,869
|
)
|
|
Gross profit (loss)
|
|
|
2,712,345
|
|
|
|
(1,876,967
|
)
|
|
General and administrative and other expenses
|
|
|
(1,926,250
|
)
|
|
|
73,026
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
786,095
|
|
|
|
(1,803,941
|
)
|
|
Net financial expenses
|
|
|
(59,164
|
)
|
|
|
(19,633
|
)
|
|
Net income (loss) for the period
|
|
|
726,931
|
|
|
|
(1,823,574
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
(1,452,384
|
)
|
|
|
-
|
|
|
Revaluation of digital currency (1)
|
|
|
3,591,629
|
|
|
|
164,315
|
|
|
Total comprehensive income (loss)
|
|
|
2,866,176
|
|
|
|
(1,659,259
|
)
|
|
Basic and diluted income (loss) per share – diluted
|
|
|
0.01
|
|
|
|
(0.05
|
)
|
|
Weighted average number of subordinate voting shares outstanding – basic and diluted
|
|
|
74,934,331
|
|
|
|
40,073,661
|
|
|
EBITDA (2)
|
|
|
1,618,317
|
|
|
|
(733,704
|
)
|
|
Adjusted EBITDA (2)
|
|
|
4,385,272
|
|
|
|
(947,911
|
)
|
|
1.
|
Non-IFRS measure. A reconciliation to its nearest IFRS measures is provided under "Adoption of new
accounting policies – Digital Currencies" in the Company’s MD&A.
|
|
2.
|
Non-IFRS measure. A reconciliation to its nearest IFRS measures is provided under "Adjusted EBITDA
– Non-GAAP Measure" in the Company’s MD&A.
|
Financial Statements and MD&A
The Company’s Condensed Unaudited Interim
Consolidated Financial Statements and Management’s Discussion and Analysis (“MD&A”) thereon for the three
and nine months ended September 30, 2021, will be accessible on SEDAR at www.sedar.com under Digihost’s profile.
For further information, please contact:
Digihost Technology Inc.
www.digihost.ca
Michel Amar, Chief Executive Officer
T: 1-818-280-9758
Email: michel@digihost.ca
Cautionary Statement
Trading in the securities of the Company should
be considered highly speculative. No stock exchange, securities commission or other regulatory authority has approved or disapproved the
information contained in this news release. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined
in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Forward-Looking Statements
Except for the statements of historical fact,
this news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking
information”) that is based on expectations, estimates and projections as at the date of this news release. Forward-looking information
in this news release includes information about hashrate expansion, diversification of operations, potential further improvements to profitability
and efficiency across mining operations, potential for the Company’s long-term growth, and the business goals and objectives of
the Company. Factors that could cause actual results, performance or achievements to differ materially from those described in such forward-looking
information include, but are not limited to: continued effects of the COVID19 pandemic may have a material adverse effect on the Company’s
performance as supply chains are disrupted and prevent the Company from operating its assets; the ability to establish new facilities
for the purpose of research & development; a decrease in cryptocurrency pricing, volume of transaction activity or generally, the
profitability of cryptocurrency mining; delivery of mining rigs for hosting may not be realized in the number anticipated, or at all,
and resulting hashing power may materially differ from that anticipated; further improvements to profitability and efficiency may not
be realized; the digital currency market; the Company’s ability to successfully mine digital currency on the cloud; the Company
may not be able to profitably liquidate its current digital currency inventory, or at all; a decline in digital currency prices may have
a significant negative impact on the Company’s operations; the volatility of digital currency prices; and other related risks as
more fully set out in the Annual Information Form of the Company and other documents disclosed under the Company’s filings at www.sedar.com.
The forward-looking information in this news release reflects the current expectations, assumptions and/or beliefs of the Company based
on information currently available to the Company. In connection with the forward-looking information contained in this news release,
the Company has made assumptions about: the current profitability in mining cryptocurrency (including pricing and volume of current transaction
activity); profitable use of the Company’s assets going forward; the Company’s ability to profitably liquidate its digital
currency inventory as required; historical prices of digital currencies and the ability of the Company to mine digital currencies on the
cloud will be consistent with historical prices; and there will be no regulation or law that will prevent the Company from operating its
business. The Company has also assumed that no significant events occur outside of the Company's normal course of business. Although the
Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a
guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.
Exhibit
99.166
FORM
51-102F3
MATERIAL
CHANGE REPORT
|
Item 1
|
Name and Address of Company
|
Digihost
Technology Inc.
18 King Street East
Suite
902
Toronto,
ON M5C 1C4
|
Item 2
|
Date
of Material Change
|
October
21, 2021
The
News Release attached as Schedule A was released on October 21, 2021 via GlobeNewswire.
|
Item 4
|
Summary
of Material Change
|
The
material change is described in the attached News Release.
|
Item 5
|
Full
Description of Material Change
|
The
material change is described in the attached News Release.
|
Item 6
|
Reliance
of subsection 7.1(2) of National Instrument 51-102
|
Not
applicable.
|
Item 7
|
Omitted
Information
|
Not
applicable.
Inquires
in respect of the material change referred to herein may be made to:
Michel Amar, Chief Executive Officer
T:
1-818-280-9758
E:
michel@digihost.ca
October
21, 2021
Schedule
A
DIGIHOST
GENERATES RECORD-LEVEL REVENUE FROM BITCOIN MINING DURING Q3 2021
Toronto,
ON – October 21, 2021 – Digihost Technology Inc. (“Digihost” or the “Company”)
(TSXV: DGHI; OTCQB: HSSHF) is pleased to announce its financial results for the third quarter ended September 30, 2021 (all amounts in
U.S. dollars, unless otherwise indicated).
Revenue
from digital currency mining was $5.5 million in the third quarter of 2021, a 1,153% increase over the corresponding quarter in 2020,
and an 8% increase over Q2 2021. The Company also realized total comprehensive income of $2.9 million in Q3 of 2021 as compared to a
comprehensive loss of $1.7 million in Q3 of 2020 and a loss of $6.9 million in Q2 of 2021.
Michel
Amar, CEO of Digihost, stated: “It is rewarding for the Company to announce strong Q3 financial results generating record top-line
revenue growth for the second consecutive quarter along with positive net income. The Company’s improved financial performance
is directly related to Digihost’s dedicated focus to managing costs and continued growth in our mining operations. With additional
miners arriving in Q4 2021 and in early 2022, Digihost expects to aggressively expand its mining capacity as previous investments in
infrastructure are expected to drive continued growth for the Company.”
Third
Quarter 2021 Financial Highlights
The
following information compares the financial results of the Company for the three months ended September 30, 2021 (“2021”)
and the three months ended September 30, 2020 (“2020”):
|
|
-
|
Record
revenue from digital currency mining of $5.5 million reported in 2021, compared to $0.4 million
in 2020, an increase of 1,153%;
|
|
|
-
|
Gross
profit margin from operations was 49% in 2021 compared to a gross loss margin from operations
of 429% million in 2020;
|
|
|
-
|
Realized
net income of $0.7 million in 2021, compared to a net loss of $1.8 million in 2020, an absolute
increase of 140%;
|
|
|
-
|
Generated
Adjusted EBITDA of $4.4 million in 2021, a significant increase from a negative Adjusted
EBITDA amount of $0.9 million in 2020.
|
|
|
-
|
Total
comprehensive income of $2.9 million reported in 2021, as compared to a total comprehensive
loss of $1.7 million in 2020, an absolute increase of 273%.
|
The
following information compares the financial position of the Company as at September 30, 2021 (“2021”) and as at December
31, 2020 (“2020”):
|
|
-
|
Cash
balance of $17.3 million in 2021 compared to $0.03 million in 2020, an increase of $17.2
million;
|
|
|
-
|
Digital
currencies balance of $22.8 million in 2021, comprised of 452.24 Bitcoins and 1,000.89 Ethereum,
compared to $4.5 million in 2020, comprised of 195.52 Bitcoins, an increase of $18.3 million
and 256.72 Bitcoins and 1,000.89 Ethereum. Ending inventory valuation of Bitcoin was performed
at a price of approximately $44k per Bitcoin;
|
|
|
-
|
Total
assets of $74.5 million in 2021 compared to $16.5 million in 2020, an increase of $58.0
million;
|
|
|
-
|
Total
liabilities of $5.5 million in 2021 compared to $6.1 million in 2020, a decrease of $0.6
million; and
|
|
|
-
|
Total
shareholders’ equity of $68.9 million in 2021 compared to $10.4 million in 2020, an
increase of $58.5 million.
|
Recent
Highlights
|
|
-
|
On
July 26, 2021, the Company announced it had entered into a second strategic co-mining agreement
with Bit Digital, Inc. (“Bit Digital”). Pursuant to the terms of the agreement,
Digihost will provide certain premises to Bit Digital for the operation of a 100 MW Bitcoin
mining system to be delivered by Bit Digital for a term of two years. This expanded collaboration
between Digihost and Bit Digital is expected to facilitate an additional increase in hashrate
of approximately 2 EH between the companies, and a total increase in hashrate between the
two companies of approximately 2.4 EH including the initial collaboration agreement that
was previously announced on June 10, 2021;
|
|
|
-
|
On
October 5, 2021, the Company announced that it intends to consolidate the outstanding subordinate
voting shares and proportionate voting shares of the Company on the basis of three (3) pre-consolidation
shares for every one (1) post-consolidation share in order to facilitate a proposed listing
of its subordinate voting shares on the Nasdaq Capital Market and satisfy the minimum share
price requirement set by Nasdaq.
|
|
|
-
|
On
October 13, 2021, the Company announced it had received 1,952 new technologically advanced,
high-performance M30 Bitcoin miners (the “Miners”). The Miners are currently
being installed at the Company’s data center and are expected to be fully operational
within two weeks of the announcement.
|
|
|
-
|
The
Company’s current cryptocurrency holdings are comprised of 472.58 Bitcoin and 1,000.89
Ethereum. Based on current Bitcoin and Ethereum prices, the present value of the Company’s
digital currency balances is approximately $31.2 million and $4.2 million, respectively.
|
Michel
Amar commented: “It is encouraging to see the core strengths of Digihost, primarily our committed team and operational quality,
come together to produce quality results and prove our dedication to developing as a diversified leader in the digital asset space. The
Company’s measured approach to managing and growing our mining operations paid off with positive results in Q3 and as we remain
focused on executing our long-term strategy as we move into 2022.”
|
|
|
Three Months Ended
September 30
|
|
|
(U.S.$ except per share data)
|
|
2021
|
|
|
2020
|
|
|
For the periods ended as indicated
|
|
|
|
|
|
|
|
Revenue from digital currency mining
|
|
|
5,485,754
|
|
|
|
437,813
|
|
|
Operating and maintenance costs
|
|
|
(1,882,023
|
)
|
|
|
(1,224,911
|
)
|
|
Depreciation
|
|
|
(891,386
|
)
|
|
|
(1,089,869
|
)
|
|
Gross profit (loss)
|
|
|
2,712,345
|
|
|
|
(1,876,967
|
)
|
|
General and administrative and other expenses
|
|
|
(1,926,250
|
)
|
|
|
73,026
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
786,095
|
|
|
|
(1,803,941
|
)
|
|
Net financial expenses
|
|
|
(59,164
|
)
|
|
|
(19,633
|
)
|
|
Net income (loss) for the period
|
|
|
726,931
|
|
|
|
(1,823,574
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
(1,452,384
|
)
|
|
|
-
|
|
|
Revaluation of digital currency (1)
|
|
|
3,591,629
|
|
|
|
164,315
|
|
|
Total comprehensive income (loss)
|
|
|
2,866,176
|
|
|
|
(1,659,259
|
)
|
|
Basic and diluted income (loss) per share – diluted
|
|
|
0.01
|
|
|
|
(0.05
|
)
|
|
Weighted average number of subordinate voting shares outstanding – basic and diluted
|
|
|
74,934,331
|
|
|
|
40,073,661
|
|
|
EBITDA (2)
|
|
|
1,618,317
|
|
|
|
(733,704
|
)
|
|
Adjusted EBITDA (2)
|
|
|
4,385,272
|
|
|
|
(947,911
|
)
|
|
1.
|
Non-IFRS
measure. A reconciliation to its nearest IFRS measures is provided under “Adoption of
new accounting policies – Digital Currencies” in the Company’s MD&A.
|
|
2.
|
Non-IFRS
measure. A reconciliation to its nearest IFRS measures is provided under “Adjusted EBITDA
– Non-GAAP Measure” in the Company’s MD&A.
|
Financial
Statements and MD&A
The
Company’s Condensed Unaudited Interim Consolidated Financial Statements and Management’s Discussion and Analysis (“MD&A”)
thereon for the three and nine months ended September 30, 2021, will be accessible on SEDAR at www.sedar.com under Digihost’s
profile.
For
further information, please contact:
Digihost
Technology Inc.
www.digihost.ca
Michel
Amar, Chief Executive Officer
T:
1-818-280-9758
Email:
michel@digihost.ca
Cautionary
Statement
Trading
in the securities of the Company should be considered highly speculative. No stock exchange, securities commission or other regulatory
authority has approved or disapproved the information contained in this news release. Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy
of this news release.
Forward-Looking
Statements
Except
for the statements of historical fact, this news release contains “forward-looking information” and “forward-looking
statements” (collectively, “forward-looking information”) that is based on expectations, estimates and projections
as at the date of this news release. Forward-looking information in this news release includes information about hashrate expansion,
diversification of operations, potential further improvements to profitability and efficiency across mining operations, potential for
the Company’s long-term growth, and the business goals and objectives of the Company. Factors that could cause actual results,
performance or achievements to differ materially from those described in such forward-looking information include, but are not limited
to: continued effects of the COVID19 pandemic may have a material adverse effect on the Company’s performance as supply chains
are disrupted and prevent the Company from operating its assets; the ability to establish new facilities for the purpose of research
& development; a decrease in cryptocurrency pricing, volume of transaction activity or generally, the profitability of cryptocurrency
mining; delivery of mining rigs for hosting may not be realized in the number anticipated, or at all, and resulting hashing power may
materially differ from that anticipated; further improvements to profitability and efficiency may not be realized; the digital currency
market; the Company’s ability to successfully mine digital currency on the cloud; the Company may not be able to profitably liquidate
its current digital currency inventory, or at all; a decline in digital currency prices may have a significant negative impact on the
Company’s operations; the volatility of digital currency prices; and other related risks as more fully set out in the Annual Information
Form of the Company and other documents disclosed under the Company’s filings at www.sedar.com. The forward-looking information
in this news release reflects the current expectations, assumptions and/or beliefs of the Company based on information currently available
to the Company. In connection with the forward-looking information contained in this news release, the Company has made assumptions about:
the current profitability in mining cryptocurrency (including pricing and volume of current transaction activity); profitable use of
the Company’s assets going forward; the Company’s ability to profitably liquidate its digital currency inventory as required;
historical prices of digital currencies and the ability of the Company to mine digital currencies on the cloud will be consistent with
historical prices; and there will be no regulation or law that will prevent the Company from operating its business. The Company has
also assumed that no significant events occur outside of the Company’s normal course of business. Although the Company believes that
the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a guarantee of future
performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.
Exhibit
99.167
DIGIHOST
ANNOUNCES EFFECTIVE DATE OF SHARE CONSOLIDATION
TO
FACILITATE NASDAQ LISTING
Toronto,
ON – October 26, 2021 – Digihost Technology Inc. (“Digihost” or the “Company”)
(TSXV: DGHI; OTCQB: HSSHF), an innovative North American-based Bitcoin self-mining company, announces that the Company will effect the
consolidation of its outstanding subordinate voting shares and proportionate voting shares (collectively, the “Shares”),
as previously announced on October 5, 2021, on the basis of three (3) pre-consolidation Shares for every one (1) post-consolidation Share
(the “Consolidation”. Any fraction of a Share will be rounded down to the nearest whole number. The Shares will begin
trading on the TSX Venture Exchange (“TSXV”) on a consolidated basis and with a new CUSIP number on October 28, 2021.
As
a result of the Consolidation, the outstanding Shares of the Company will be reduced to approximately 25,029,610 Shares.
The
Company has effected the Consolidation to facilitate a proposed listing of its subordinate voting shares on the Nasdaq Capital Market
(“Nasdaq”) and satisfy the minimum share price requirement set by Nasdaq. The Company is pursuing a Nasdaq listing
to enhance its investor profile and increase liquidity for its shareholders. The listing of the Company on Nasdaq remains subject to
the approval of Nasdaq and the satisfaction of all applicable listing and regulatory requirements. As a result, there can be no assurances
that Digihost’s shares will be listed on Nasdaq. Digihost expects to retain its listing on the TSX Venture Exchange under the symbol
“DGHI” and, until Digihost shares are listed on Nasdaq, on the OTCQB under the ticker symbol “HSSHF”.
The
Company will not be changing its name or trading symbol in connection with the Consolidation.
Trading
on a Consolidated Basis: October 28, 2021
New
CUSIP: 25381D206
New
ISIN: CA25381D2068
About
Digihost Technology Inc.
Digihost
Technology Inc. is a growth-oriented blockchain technology company primarily focused on Bitcoin mining. The Company is currently hashing
at a rate of 285PH with plans to expand to a hashrate of 3.6 EH by the end of 2022.
For
further information, please contact:
Digihost
Technology Inc.
www.digihost.ca
Michel
Amar, Chief Executive Officer
T:
1-818-280-9758
Email:
michel@digihostblockchain.com
Cautionary
Statement
Trading
in the securities of the Company should be considered highly speculative. No stock exchange, securities commission or other regulatory
authority has approved or disapproved the information contained herein. Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Forward-Looking
Statements
Except
for the statements of historical fact, this news release contains “forward-looking information” and “forward-looking
statements” (collectively, “forward-looking information”) that are based on expectations, estimates and projections
as at the date of this news release. Forward-looking information in this news release includes information about the proposed consolidation,
expectations in respect to listing and trading on Nasdaq and future plans and objectives of the Company. Other forward-looking information
includes, but is not limited to, information concerning: hashrate expansion, diversification of operations, potential further improvements
to profitability and efficiency across mining operations, potential for the Company’s long-term growth, and the business goals
of the Company Factors that could cause actual results, performance or achievements to differ materially from those described in such
forward-looking information include, but are not limited to: completion of the proposed consolidation; continued effects of the COVID19
pandemic may have a material adverse effect on the Company’s performance as supply chains are disrupted and prevent the Company
from operating its assets; a decrease in cryptocurrency pricing, volume of transaction activity or generally, the profitability of cryptocurrency
mining; further improvements to profitability and efficiency may not be realized; the digital currency market; the Company’s ability
to successfully mine digital currency on the cloud; the Company may not be able to profitably liquidate its current digital currency
inventory, or at all; a decline in digital currency prices may have a significant negative impact on the Company’s operations;
the volatility of digital currency prices; and other related risks as more fully set out in the Annual Information Form of the Company
and other documents disclosed under the Company’s filings at www.sedar.com. The forward-looking information in this news release
reflects the current expectations, assumptions and/or beliefs of the Company based on information currently available to the Company.
In connection with the forward-looking information contained in this news release, the Company has made assumptions about: the current
profitability in mining cryptocurrency (including pricing and volume of current transaction activity); profitable use of the Company’s
assets going forward; the Company’s ability to profitably liquidate its digital currency inventory as required; historical prices
of digital currencies and the ability of the Company to mine digital currencies on the cloud will be consistent with historical prices;
and there will be no regulation or law that will prevent the Company from operating its business. The Company has also assumed that no
significant events occur outside of the Company's normal course of business. Although the Company believes that the assumptions inherent
in the forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and accordingly
undue reliance should not be put on such information due to the inherent uncertainty therein.
3
Exhibit
99.168
FORM
51-102F3
MATERIAL
CHANGE REPORT
|
|
Item
1
|
Name
and Address of Company
|
Digihost
Technology Inc. (formerly HashChain Technology Inc.)
18
King Street East, Suite 902
Toronto,
ON M5C 1C4
|
|
Item 2
|
Date
of Material Change
|
October
26, 2021
The
press release attached as Schedule “A” was released on October 26, 2021.
|
|
Item 4
|
Summary
of Material Change
|
The
material change is described in the press release attached as Schedule “A”.
|
|
Item 5
|
Full
Description of Material Change
|
The
material change is described in the press release attached as Schedule “A”.
|
|
Item
6
|
Reliance
of subsection 7.1(2) of National Instrument 51-102
|
Not
applicable.
|
|
Item
7
|
Omitted
Information
|
Not
applicable.
Inquires
in respect of the material change referred to herein may be made to:
Michel
Amar, Chief Executive Officer
T:
1-818-280-9758
E:
michel@digihostblockchain.com
October
26, 2021
SCHEDULE
“A”
DIGIHOST
ANNOUNCES EFFECTIVE DATE OF SHARE CONSOLIDATION
TO
FACILITATE NASDAQ LISTING
Toronto,
ON – October 26, 2021 – Digihost Technology Inc. (“Digihost” or the “Company”)
(TSXV: DGHI; OTCQB: HSSHF), an innovative North American-based Bitcoin self-mining company, announces that the Company will effect the
consolidation of its outstanding subordinate voting shares and proportionate voting shares (collectively, the “Shares”),
as previously announced on October 5, 2021, on the basis of three (3) pre-consolidation Shares for every one (1) post-consolidation Share
(the “Consolidation”. Any fraction of a Share will be rounded down to the nearest whole number. The Shares will begin
trading on the TSX Venture Exchange (“TSXV”) on a consolidated basis and with a new CUSIP number on October 28, 2021.
As
a result of the Consolidation, the outstanding Shares of the Company will be reduced to approximately 25,029,610 Shares.
The
Company has effected the Consolidation to facilitate a proposed listing of its subordinate voting shares on the Nasdaq Capital Market
(“Nasdaq”) and satisfy the minimum share price requirement set by Nasdaq. The Company is pursuing a Nasdaq listing
to enhance its investor profile and increase liquidity for its shareholders. The listing of the Company on Nasdaq remains subject to
the approval of Nasdaq and the satisfaction of all applicable listing and regulatory requirements. As a result, there can be no assurances
that Digihost’s shares will be listed on Nasdaq. Digihost expects to retain its listing on the TSX Venture Exchange under the symbol
“DGHI” and, until Digihost shares are listed on Nasdaq, on the OTCQB under the ticker symbol “HSSHF”.
The
Company will not be changing its name or trading symbol in connection with the Consolidation.
Trading
on a Consolidated Basis: October 28, 2021
New
CUSIP: 25381D206
New
ISIN: CA25381D2068
About
Digihost Technology Inc.
Digihost
Technology Inc. is a growth-oriented blockchain technology company primarily focused on Bitcoin mining. The Company is currently hashing
at a rate of 285PH with plans to expand to a hashrate of 3.6 EH by the end of 2022.
For
further information, please contact:
Digihost
Technology Inc.
www.digihost.ca
Michel
Amar, Chief Executive Officer
T:
1-818-280-9758
Email:
michel@digihostblockchain.com
Cautionary
Statement
Trading
in the securities of the Company should be considered highly speculative. No stock exchange, securities commission or other regulatory
authority has approved or disapproved the information contained herein. Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Forward-Looking
Statements
Except
for the statements of historical fact, this news release contains “forward-looking information” and “forward-looking
statements” (collectively, “forward-looking information”) that are based on expectations, estimates and projections
as at the date of this news release. Forward-looking information in this news release includes information about the proposed consolidation,
expectations in respect to listing and trading on Nasdaq and future plans and objectives of the Company. Other forward-looking information
includes, but is not limited to, information concerning: hashrate expansion, diversification of operations, potential further improvements
to profitability and efficiency across mining operations, potential for the Company’s long-term growth, and the business goals
of the Company Factors that could cause actual results, performance or achievements to differ materially from those described in such
forward-looking information include, but are not limited to: completion of the proposed consolidation; continued effects of the COVID19
pandemic may have a material adverse effect on the Company’s performance as supply chains are disrupted and prevent the Company
from operating its assets; a decrease in cryptocurrency pricing, volume of transaction activity or generally, the profitability of cryptocurrency
mining; further improvements to profitability and efficiency may not be realized; the digital currency market; the Company’s ability
to successfully mine digital currency on the cloud; the Company may not be able to profitably liquidate its current digital currency
inventory, or at all; a decline in digital currency prices may have a significant negative impact on the Company’s operations;
the volatility of digital currency prices; and other related risks as more fully set out in the Annual Information Form of the Company
and other documents disclosed under the Company’s filings at www.sedar.com. The forward-looking information in this news release
reflects the current expectations, assumptions and/or beliefs of the Company based on information currently available to the Company.
In connection with the forward-looking information contained in this news release, the Company has made assumptions about: the current
profitability in mining cryptocurrency (including pricing and volume of current transaction activity); profitable use of the Company’s
assets going forward; the Company’s ability to profitably liquidate its digital currency inventory as required; historical prices
of digital currencies and the ability of the Company to mine digital currencies on the cloud will be consistent with historical prices;
and there will be no regulation or law that will prevent the Company from operating its business. The Company has also assumed that no
significant events occur outside of the Company's normal course of business. Although the Company believes that the assumptions inherent
in the forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and accordingly
undue reliance should not be put on such information due to the inherent uncertainty therein.
3
Exhibit 99.169
DIGIHOST ANNOUNCES OVER 6,000 M30 BITCOIN MINERS
RECEIVED OR IN TRANSIT SINCE MID-OCTOBER
Toronto, ON – October 28, 2021 –
Digihost Technology Inc. (“Digihost” or the “Company”) (TSXV: DGHI; OTCQB: HSSHF), an innovative
North American-based Bitcoin self-mining company, is pleased to announce that the Company has received 1,040 new, technologically advanced,
high-performance M30 Bitcoin (“BTC”) miners (the “Miners”) anticipated to be online and fully
operational by the end of next week. These new Miners are in addition to the 1,952 M30 miners received in mid-October (please refer to
the Company’s October 13, 2021 press release).
Additionally, Digihost is pleased to announce
that 3,040 M30 miners are currently in transit to the Company’s data center. Once received and fully operational, Digihost will
have added approximately 6,000 new M30 miners since mid-October. The Company’s current hashrate of approximately 300PH, which includes
the 1,952 M30 miners and the removal of old, less efficient miners, is expected to increase to approximately 500PH by the middle of November,
representing an approximate increase of 150% since September of 2021.
Michel Amar, the Company’s CEO, stated:
“With 2,992 new generation miners having arrived at our facility in the last two weeks and with 3,040 more M30s currently en route,
the Company is significantly scaling up its operational capabilities and placing a greater hashrate online. As further deliveries of high
efficiency miners arrive at our data center, the Company will build upon the momentum of last quarter’s mining results and continue
to execute on our multiyear growth strategy as we head into 2022.”
About Digihost Technology Inc.
Digihost is a growth-oriented blockchain technology
company primarily focused on Bitcoin mining. The Company is currently hashing at a rate of 300PH with plans to expand to a hashrate of
3.6 EH by the end of 2022.
For further information, please contact:
Digihost Technology Inc.
www.digihost.ca
Michel Amar, Chief Executive Officer
T: 1-818-280-9758
Email: michel@digihostblockchain.com
Cautionary Statement
Trading in the securities of the Company should
be considered highly speculative. No stock exchange, securities commission or other regulatory authority has approved or disapproved the
information contained herein. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies
of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
Except for the statements of historical fact,
this news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking
information”) that are based on expectations, estimates and projections as at the date of this news release. Forward-looking information
in this news release includes information about the proposed consolidation, expectations in respect to listing and trading on Nasdaq and
future plans and objectives of the Company. Other forward-looking information includes, but is not limited to, information concerning:
hashrate expansion, diversification of operations, potential further improvements to profitability and efficiency across mining operations,
potential for the Company’s long-term growth, and the business goals of the Company Factors that could cause actual results, performance
or achievements to differ materially from those described in such forward-looking information include, but are not limited to: completion
of the proposed consolidation; continued effects of the COVID19 pandemic may have a material adverse effect on the Company’s performance
as supply chains are disrupted and prevent the Company from operating its assets; a decrease in cryptocurrency pricing, volume of transaction
activity or generally, the profitability of cryptocurrency mining; further improvements to profitability and efficiency may not be realized;
the digital currency market; the Company’s ability to successfully mine digital currency on the cloud; the Company may not be able
to profitably liquidate its current digital currency inventory, or at all; a decline in digital currency prices may have a significant
negative impact on the Company’s operations; the volatility of digital currency prices; and other related risks as more fully set
out in the Annual Information Form of the Company and other documents disclosed under the Company’s filings at www.sedar.com. The
forward-looking information in this news release reflects the current expectations, assumptions and/or beliefs of the Company based on
information currently available to the Company. In connection with the forward-looking information contained in this news release, the
Company has made assumptions about: the current profitability in mining cryptocurrency (including pricing and volume of current transaction
activity); profitable use of the Company’s assets going forward; the Company’s ability to profitably liquidate its digital
currency inventory as required; historical prices of digital currencies and the ability of the Company to mine digital currencies on the
cloud will be consistent with historical prices; and there will be no regulation or law that will prevent the Company from operating its
business. The Company has also assumed that no significant events occur outside of the Company’s normal course of business. Although the
Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a
guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.
3
Exhibit 99.170
FORM 51-102F3
MATERIAL CHANGE REPORT
|
|
Item 1
|
Name and Address of Company
|
Digihost Technology Inc. (formerly
HashChain Technology Inc.)
18 King Street East, Suite 902
Toronto, ON M5C 1C4
|
|
Item 2
|
Date of Material Change
|
October 28, 2021
The press release attached as Schedule “A”
was released on October 28, 2021.
|
|
Item 4
|
Summary of Material Change
|
The material change is described in the press release attached as Schedule
“A”.
|
|
Item 5
|
Full Description of Material Change
|
The material change is described in the press release attached as Schedule
“A”.
|
|
Item 6
|
Reliance of subsection 7.1(2) of National Instrument 51-102
|
Not applicable.
|
|
Item 7
|
Omitted Information
|
Not applicable.
Inquires in respect of the material change referred to herein may be
made to:
Michel Amar, Chief Executive Officer
T: 1-818-280-9758
E: michel@digihostblockchain.com
October 28, 2021
SCHEDULE
“A”
DIGIHOST ANNOUNCES OVER 6,000 M30 BITCOIN MINERS
RECEIVED OR IN TRANSIT SINCE MID-OCTOBER
Toronto, ON – October 28, 2021 –
Digihost Technology Inc. (“Digihost” or the “Company”) (TSXV: DGHI; OTCQB: HSSHF), an innovative
North American-based Bitcoin self-mining company, is pleased to announce that the Company has received 1,040 new, technologically advanced,
high-performance M30 Bitcoin (“BTC”) miners (the “Miners”) anticipated to be online and fully
operational by the end of next week. These new Miners are in addition to the 1,952 M30 miners received in mid-October (please refer to
the Company’s October 13, 2021 press release).
Additionally, Digihost is pleased to announce
that 3,040 M30 miners are currently in transit to the Company’s data center. Once received and fully operational, Digihost will
have added approximately 6,000 new M30 miners since mid-October. The Company’s current hashrate of approximately 300PH, which includes
the 1,952 M30 miners and the removal of old, less efficient miners, is expected to increase to approximately 500PH by the middle of November,
representing an approximate increase of 150% since September of 2021.
Michel Amar, the Company’s CEO, stated:
“With 2,992 new generation miners having arrived at our facility in the last two weeks and with 3,040 more M30s currently en route,
the Company is significantly scaling up its operational capabilities and placing a greater hashrate online. As further deliveries of high
efficiency miners arrive at our data center, the Company will build upon the momentum of last quarter’s mining results and continue
to execute on our multiyear growth strategy as we head into 2022.”
About Digihost Technology Inc.
Digihost is a growth-oriented blockchain technology
company primarily focused on Bitcoin mining. The Company is currently hashing at a rate of 300PH with plans to expand to a hashrate of
3.6 EH by the end of 2022.
For further information, please contact:
Digihost Technology Inc.
www.digihost.ca
Michel Amar, Chief Executive Officer
T: 1-818-280-9758
Email: michel@digihostblockchain.com
Cautionary Statement
Trading in the securities of the Company should
be considered highly speculative. No stock exchange, securities commission or other regulatory authority has approved or disapproved the
information contained herein. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies
of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
Except for the statements of historical fact,
this news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking
information”) that are based on expectations, estimates and projections as at the date of this news release. Forward-looking information
in this news release includes information about the proposed consolidation, expectations in respect to listing and trading on Nasdaq and
future plans and objectives of the Company. Other forward-looking information includes, but is not limited to, information concerning:
hashrate expansion, diversification of operations, potential further improvements to profitability and efficiency across mining operations,
potential for the Company’s long-term growth, and the business goals of the Company Factors that could cause actual results, performance
or achievements to differ materially from those described in such forward-looking information include, but are not limited to: completion
of the proposed consolidation; continued effects of the COVID19 pandemic may have a material adverse effect on the Company’s performance
as supply chains are disrupted and prevent the Company from operating its assets; a decrease in cryptocurrency pricing, volume of transaction
activity or generally, the profitability of cryptocurrency mining; further improvements to profitability and efficiency may not be realized;
the digital currency market; the Company’s ability to successfully mine digital currency on the cloud; the Company may not be able
to profitably liquidate its current digital currency inventory, or at all; a decline in digital currency prices may have a significant
negative impact on the Company’s operations; the volatility of digital currency prices; and other related risks as more fully set
out in the Annual Information Form of the Company and other documents disclosed under the Company’s filings at www.sedar.com. The
forward-looking information in this news release reflects the current expectations, assumptions and/or beliefs of the Company based on
information currently available to the Company. In connection with the forward-looking information contained in this news release, the
Company has made assumptions about: the current profitability in mining cryptocurrency (including pricing and volume of current transaction
activity); profitable use of the Company’s assets going forward; the Company’s ability to profitably liquidate its digital
currency inventory as required; historical prices of digital currencies and the ability of the Company to mine digital currencies on the
cloud will be consistent with historical prices; and there will be no regulation or law that will prevent the Company from operating its
business. The Company has also assumed that no significant events occur outside of the Company's normal course of business. Although the
Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a
guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.
3
Exhibit
99.171
|
Consent
of Independent Auditor
|
Raymond Chabot
|
|
Grant Thornton LLP
|
|
Suite 2000
|
|
National Bank Tower
|
|
600 De La Gauchetière
Street West
|
|
Montréal, Quebec
|
|
H3B 4L8
|
|
|
|
T 514-878-2691
|
We
hereby consent to the incorporation by reference in the Registration Statement on Form 40-F of Digihost Technology Inc. of our report
dated April 30, 2021, relating to the consolidated financial statements, which is filed as Exhibit 99.105 to the Registration Statement
on Form 40-F.
Yours
very truly,
Montréal,
Canada
October
29, 2021
|
|
|
|
|
|
|
|
|
Member of Grant
Thornton International Ltd
|
|
rcgt.com
|
Exhibit
99.172
October
29, 2021
United
States Securities and Exchange Commission
Dear
Sirs/Mesdames:
|
Re:
|
Digihost
Technology Inc. (the “Company” or “Digihost”)
|
|
|
We
hereby consent to the incorporation by reference in the Registration Statement on Form 40-F of Digihost Technology Inc. of our report
dated June 11, 2020, relating to the audited financial statements for the year ended December 31, 2019 and for the period from incorporation
(October 9, 2018) to December 31, 2018, which is filed as Exhibit 99.21 to the Registration Statement on Form 40-F.
We
also consent to reference to us under the heading, “Experts” in the Annual Information Form for the year ended December 31,
2019, which is filed as Exhibit 99.49 to the Registration Statement on Form 40-F.
We
make no representation as to the sufficiency and accuracy of the documents being filed with the United States Securities and Exchange
Commission as Exhibits to Form 40-F, with the exception of the aforementioned financial statements.
Yours
very truly,
Chartered
Professional Accountants
Licensed
Public Accountants
2560 MATHESON BLVD E.,
SUITE 527, MISSISSAUGA, ON L4W 4Y9 | (647) 969-7382 | INFO@CLEARHOUSE.CA
| CLEARHOUSE.CA
