Vogogo Announces Closing of Purchase of Cryptocurrency Mining Company

Vogogo (CSE:VGO) has announced that it has closed the previously announced acquisition of all the issued and outstanding shares of Crypto 205.

As quoted in the press release:

 Crypto 205 Inc. (“Crypto 205”) is now a wholly-owned subsidiary of Vogogo that is currently engaged in the business of mining for cryptocurrencies for its own account, as a service for third party customers and within mining pools, together with corresponding support services.

Pursuant to the Acquisition, Vogogo acquired all of the issued and outstanding shares of Crypto 205 from its former shareholders in exchange for an aggregate of 130,000,000 non-voting, convertible series 1 preferred shares in the capital of Vogogo (the “Preferred Shares”). In connection with the Acquisition, Vogogo was also assigned a shareholder loan in exchange for a cash payment of $5 million.

The terms of the Preferred Shares provide, among other things, that they: (i) are non-voting; (ii) are convertible into common shares of Vogogo (“Common Shares”) on a one for one basis, subject to customary adjustments; (iii) are eligible to participate in dividends if and when declared on the Common Shares; (iv) have priority rights on liquidation; and (v) are subject to a restriction that no holder of the Preferred Shares may convert into a number of Common Shares that would result in such holder beneficially owning greater than 9.9% of the Common Shares. The holders of the Preferred Shares have contractually agreed not to convert any Preferred Shares until 3 months after the closing date, at which point they may elect, subject to the terms of the Preferred Shares, to convert up to 25% of the Preferred Shares held on closing of the Acquisition and up to an additional 25% of the Preferred Shares held on closing of the Acquisition after each of October 3, 2018, January 3, 2019 and April 3, 2019.

Crypto 205 commenced operations late in 2017 and expanded quickly, having generated revenue of approximately CAD$2.8 million from its operations from January 1st to February 28th, 2018, based on the closing price of Bitcoin and the exchange rate of the Canadian dollar on February 28, 2018. Crypto 205 operates from state-of-the-art facilities in Pointe-Claire, Québec. At January 1st, Crypto 205 operated approximately 1875 cryptocurrency miners and it currently operates approximately 2,625 cryptocurrency miners, along with supporting equipment, with a further 1,500 cryptocurrency miners anticipated to be operational over the coming days. Electrical power represents the primary expense of cryptocurrency mining and Crypto 205 currently benefits from access to rates that are globally competitive and create favourable differentiation from other mining companies.

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