Risks Related to Ownership of Our Common Stock

The trading price of shares of our common stock has been subject to volatility.

The trading price of our common stock has been, and is likely to continue to be, volatile, and may be influenced by various factors including the risks, uncertainties and factors described in this Annual Report and our other filings with the SEC, as well as factors beyond our control or of which we may be unaware. If these risks come to pass and our business and results of operation suffer as a result, the market price of our securities may decline, which could have a material adverse effect on an investment in our securities.

Bitcoin is subject to price volatility resulting from financial instability, poor business practices, fraudulent activities of players in the market, and other factors ~~referenced herein~~outside of our control. Such factors may cause a decline in ~~"Risk Factors."~~

the price of Bitcoin, which may affect the trading price of our shares of common stock.

We have issued new shares of our common stock, which has a dilutive effect.

We have, primarily, financed our strategic growth through our at-the-market (“ATM”) offerings and issuances of our common stock. Our ATM offerings allow us to raise capital as needed by tapping into the existing trading market for our shares by selling newly issued shares into the market depending on prevailing market prices. Our efforts to raise capital is for the purpose of executing on development plans and strategic growth opportunities as they arise; however, holders of our common stock may experience dilution as a result of our sales of newly issued shares of our common stock in such ATM offerings.

We have a classified board of directors; therefore, only approximately one-third of the Board is up for election at each annual stockholders’ meeting, which could limit stockholders’ ability to influence directors’ decision making.

Our Bylaws provide for a classified board of directors consisting of three classes of directors serving staggered three-year terms, and each year our stockholders elect one class of our directors. We believe that a classified board structure facilitates continuity and stability of leadership and policy by helping ensure that, at any given time, a majority of our directors have prior experience as directors of our Company and are familiar with our business and operations. In our view, this permits more effective long-term planning and helps create long-term value for our stockholders. The classified board structure, however, could prevent a party who acquires control of a majority of our outstanding voting stock from obtaining control of our board of directors until the second annual stockholders’ meeting following the date that party obtains control of a majority of our voting stock. The classified board structure may discourage a third party from initiating a proxy contest, making a tender offer or otherwise attempting to obtain control of us, as the structure makes it more difficult for a stockholder to replace a majority of our directors.

Article X of our Bylaws, as amended, designates the courts of the State of Nevada as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, and therefore may limit our stockholders’ ability to choose a forum for disputes with us or our directors, officers, employees, or agents.

Article X of our Bylaws, as amended, provides that, to the fullest extent permitted by law, and unless we consent to the selection of an alternative forum, the state and federal courts in and for the State of Nevada shall be the sole and exclusive forum for the resolution of certain actions and proceedings that may be initiated by our stockholders, and that, by purchasing our securities, our stockholders are deemed to have notice of and consented to this forum selection clause. Under Article X of our Bylaws, the following claims are subject to this forum selection clause: (a) any derivative action or proceeding brought on behalf of the Company; (b) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any director or officer of the Company to the Company or the Company’s stockholders; (c) any action or proceeding asserting a claim against the Company arising pursuant to any provision of the Nevada Revised Statutes or the Company’s Articles of Incorporation or Bylaws (as either might be amended from time to time); or (d) any action or proceeding asserting a claim against the Company governed by the internal affairs doctrine.

By its terms, the forum selection clause in our Bylaws applies to the foregoing claims to the fullest extent permitted by law, and, as such, should not be interpreted as precluding our stockholders from bringing claims under the Exchange Act in the appropriate federal court with jurisdiction over such claims, or any other claim for which the federal courts of the United States have exclusive jurisdiction.

We believe the choice-of-forum provision in our Bylaws will help provide for the orderly, efficient, and cost-effective resolution of legal issues affecting us by designating courts located in the State of Nevada as the exclusive forum for cases involving such issues. However, this provision may limit a stockholder’s ability to bring a claim in a judicial forum that it believes to be favorable for disputes with us or our directors, officers, employees, or agents, which may discourage such actions against us and our directors, officers, employees, and agents.

~~PART I~~

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The Nevada revised statutes permit us to make this selection in our Bylaws. However, if a court were to find the choice-of-forum provision in our Bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition, or results of operations.

Nevada law contains provisions that could discourage, delay or prevent a change in control of our Company, prevent attempts to replace or remove current management and reduce the market price of our stock.

Certain provisions of Nevada law described below may make us a less attractive candidate for acquisition, which may adversely impact the value of the shares of our capital stock held by our stockholders. We have not opted out of these provisions in our Bylaws, as permitted under the Nevada Revised Statutes.

Nevada Revised Statutes Sections 78.411 through 78.444 (the “Nevada Combinations Statute”) generally prohibit “combinations” including mergers, consolidations, sales and leases of assets, issuances of securities and similar transactions by a Nevada corporation having a requisite number of stockholders of record (of which we are one) with any person who beneficially owns (or any affiliate or associate of the corporation who within the previous two years owned), directly or indirectly, 10% or more of the voting power of the outstanding voting shares of the corporation (an “interested stockholder”), within two years after such person first became an interested stockholder unless (i) the board of directors of the corporation approved the combination or transaction by which the person first became an interested stockholder before the person first became an interested stockholder or (ii) the board of directors of the corporation has approved the combination in question and, at or after that time, such combination is approved at an annual or special meeting of the stockholders of the target corporation, and not by written consent, by the affirmative vote of holders of stock representing at least 60% of the outstanding voting power of the target corporation not beneficially owned by the interested stockholder or the affiliates or associates of the interested stockholder.

Two years after the date the person first became an interested stockholder, the Nevada Combinations Statute prohibits any combination with that interested stockholder unless (i) the board of directors of the corporation approved the combination or transaction by which the person first became an interested stockholder before the person first became an interested stockholder or (ii) such combination is approved by a majority of the outstanding voting power of the corporation not beneficially owned by the interested stockholder or any affiliate or associate of the interested stockholder. The Nevada Combinations Statute does not apply to combinations with an interested stockholder after the expiration of four years from when the person first became an interested stockholder.

Because we do not currently intend to pay any cash dividends on our common stock, our stockholders will not be able to receive a return on their shares unless they sell them.

We currently intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them. There is no assurance that stockholders will be able to sell shares when desired.

We previously identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, any of which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.

We are required to comply with certain provisions of Section 404 of the Sarbanes-Oxley Act. Section 404 requires that we document and test our internal control over financial reporting and issue management’s assessment of our internal control over financial reporting. Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Based on our assessment, as of December 31, 2023, we concluded that our internal control over financial reporting contained no material weaknesses. However, to remediate previously identified material weaknesses, our management previously implemented and continues to implement measures designed to ensure that control deficiencies contributing to the material weaknesses are remediated, such that these controls are designed, implemented, and operating effectively.

We believe that these actions remediated the material weaknesses. However, the remediation cannot be deemed successful until the applicable controls operate for a sufficient period of time and our management has concluded, through testing, that these controls

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are operating effectively. If we fail to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, the accuracy and timeliness of the filing of our annual and quarterly reports may be materially adversely affected and could cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock. In addition, a material weakness in the effectiveness of our internal control over financial reporting could result in an increased chance of fraud and the loss of customers, reduce our ability to obtain financing and require additional expenditures to comply with these requirements, each of which could have a material adverse effect on our business, results of operations and financial condition.

ITEM ~~1. BUSINESS.~~1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 1C. Cybersecurity

We recognize the importance of assessing, identifying, and managing material risks associated with cybersecurity threats, as such term is defined in Item 106(a) of Regulation S-K. These material risks are managed across Riot, our subsidiaries, and third-party contractors, and monitoring such risks and threats is integrated into our overall risk management program. Our risk management program is comprised of, among other things, policies that are designed to identify, assess, manage, and mitigate cybersecurity risk, and is based on applicable laws and regulations, informed by industry standards and best practices.

We conduct risk assessments to evaluate the effectiveness of our systems and processes in addressing threats and to identify opportunities for enhancements. Additionally, we conduct privacy and cybersecurity reviews, as well as annual employee training, and monitor emerging laws and regulations related to information security and data protection. We utilize third party tools and techniques to test and enhance our security controls, perform annual cybersecurity framework assessments, conduct ongoing penetration testing of our systems, and benchmark against industry practices. Our internal audit function provides independent assessment on the overall operations of our cybersecurity program and the supporting frameworks.

In support of our risk management program, we have adopted an Information Security Policy (the “Info-Sec Policy”) and an Incident Response Plan (the “Response Plan”) that establish administrative, physical, and technical controls and procedures to protect the integrity, confidentiality, and accessibility of sensitive data that may exist throughout the Company as well as processes to assess, identify, manage, and report cybersecurity risks and incidents. Our Info-Sec Policy applies to all persons working for the Company, as well as any third parties working with Riot in any capacity. Violation of our Info-Sec Policy may result in revocation of access privileges, and disciplinary action up to and including termination of employment or service relations for third parties.

Our cybersecurity team analyzes all third-party vendors for compliance with our internal Info-Sec Policy in order to help us assess potential risks associated with their security controls. We also generally require third parties to, among other things, maintain security controls to protect our confidential information or data, and to notify us promptly, but in any case, no later than twenty-four (24) hours after the occurrence of any data breach or cybersecurity incident that may impact our data. After coordinating a response to any third-party cybersecurity incident, the incident response team reviews service providers’ compliance with the privacy and data security requirements of our Info-Sec Policy, obtains written assurance of corrective actions, as appropriate, and considers whether additional measures need to be taken to protect the Company.

Our cybersecurity team engages and utilizes third-party services as it monitors and actively responds to cybersecurity threats. We utilize an Endpoint Detection and Response (EDR) platform, an anti-virus application, through which incoming electronic communications are filtered, and an email security platform which seeks out identifiers in communications that disguise, impersonate, or otherwise misrepresent the source of the communication. Any such communications are then subject to quarantine or removal depending on the severity of issue. Additionally, we use a Security Information and Event Management (SIEM) system, which allows us to store logs off the system of record to prevent log tampering and provides the cybersecurity team functionality to build alerts on specific use cases that are important and unique to our business. If our applications fail or our software does not successfully block a malicious electronic communication, employees are required to notify an immediate supervisor or the cybersecurity team promptly, but in no circumstances later than twenty-four (24) hours after such occurrence.

Our board of directors has ultimate oversight of our strategic and business risk management and, as such, has oversight responsibilities for risks and incidents relating to cybersecurity threats, including compliance with disclosure requirements, cooperation with law enforcement, and related effects on financial and other risks. Management is responsible for identifying, assessing, and managing material cybersecurity risks on an ongoing basis, establishing and updating processes to ensure such potential risks are monitored, putting in place appropriate mitigation measures, and providing regular reports on cybersecurity trends and risks, and should they arise, any material incidents with our board of directors.

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Our Chief Financial Officer is responsible for our cybersecurity program, and our Manager of Cybersecurity is our incident response team leader. In this position, our Manager of Cybersecurity oversees our cybersecurity team, and guides our incident response team, which is comprised of members from across our organization, including cybersecurity, IT support, mining operations, software engineering, compliance and legal, as well as contractors and other partners, as they support our cybersecurity functions. Our Manager of Cybersecurity has nearly two decades of experience in cybersecurity management and policy, achieved through job training, higher education, and military experience, and possesses a background in security and alignment of information technology solutions.

Our Response Plan, developed by management and our cybersecurity team, and IT support team, serves as a Company-wide guide to facilitate coordinated, prompt, and systematic responses to any cybersecurity incidents and utilizes four interconnecting phases: (1) Preparation; (2) Detection and Analysis; (3) Containment, Eradication, and Recovery; and (4) Post-Incident Activity.

Upon detection of a cybersecurity incident and initial intake and validation by our cybersecurity team, our incident response team triages and evaluates the cybersecurity incident, and, depending on the severity, escalates the incident to management and a cross-functional working group. Any incident assessed as potentially being or potentially becoming material is immediately escalated for further assessment and reported to executive management. Determination of what resources are needed to address the incident, prioritizing of response activities, forming of action plans, and notification of external parties as needed are then undertaken by executive management and the cross-functional working group, led by our Chief Financial Officer and Manager of Cybersecurity. We consult with outside counsel as appropriate, including on materiality analysis and disclosure matters, and our executive management makes the final materiality and disclosure determinations, among other compliance decisions.

In 2023, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations or financial condition. However, despite our efforts, we may not be successful in eliminating all risks from cybersecurity threats and can provide no assurances that undetected cybersecurity incidents have not occurred. See Part I, Item 1A. “Risk Factors” of this Annual Report for more information regarding the cybersecurity risks we face.

ITEM 2. PROPERTIES

Leased Property

As of December 31, 2023, we leased various corporate offices, manufacturing facilities in Denver, Colorado used for our Engineering segment, temporary office space at our Corsicana Facility, which is used for our Bitcoin Mining segment, and had a long-term ground lease for the land upon which the Rockdale Facility is constructed, which is used for our Bitcoin Mining and Data Center Hosting segments.

Property Owned

As of December 31, 2023, we owned the Rockdale Facility and the land upon which the Corsicana Facility is being constructed. We will own the Corsicana Facility once it is constructed.

In our opinion, our facilities, whether owned or leased, are suitable and adequate for their intended purposes, are well-maintained and generally in regular use and have capacities adequate for current and projected needs. Other than the ground lease for the Rockdale Facility noted above, there are no material encumbrances on any of our owned facilities.

ITEM 3. LEGAL PROCEEDINGS

For a discussion of our legal proceedings, see Note 17. Commitments and Contingencies to our Consolidated Financial Statements.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock trades on the Nasdaq Capital Market under the symbol “RIOT”.

Holders of our Common Stock

As of February 20, 2024, there were approximately 1,815 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.

Dividend Policy

We have historically not declared or paid cash dividends on our capital stock. Any future determination regarding the declaration and payment of dividends, if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects, and other factors our board of directors may deem relevant.

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Stock Performance Graph

This performance graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference into any filing of Riot Platforms, Inc. under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

The following graph shows a comparison over a five-year period from December 31, 2018 through December 31, 2023, of the cumulative total return on (a) our common stock (RIOT), (b) our self-constructed Peer Group Index, (c) the RUSSELL 3000 Index (“RUSSELL 3000”), (d) the NASDAQ Composite Index (“NASDAQ Composite”), and (e) the RUSSELL 2000 Index (“RUSSELL 2000”), assuming an aggregate initial investment in each of $100 on December 31, 2018 (and weighted based on the market cap of each peer in the Peer Group Index as of December 31, 2018), including reinvestments of any dividends. Such returns are based on historical results and are not intended to suggest future performance. Historically, we have not declared or paid cash dividends on our common stock.

For the year ended December 31, 2023, the Company elected to change the relative benchmark groups from NASDAQ Composite and RUSSELL 2000, to a self-constructed Peer Group Index, and RUSSELL 3000. Management believes that the self-constructed Peer Group Index includes companies that are more aligned with Riot than NASDAQ Composite, which was previously used due to the infancy of the industry and the lack of an established peer group. Additionally, the change from RUSSELL 2000 to RUSSELL 3000 reflects the Company’s decision to utilize RUSSELL 3000 to determine our stock’s relative performance under the Company’s 2019 Equity Incentive Plan, as amended (the “2019 Equity Incentive Plan”). During the year ended December 31, 2023, we established a peer group as disclosed in our definitive proxy statement for our 2023 annual meeting of stockholders (the “2023 Proxy Statement”).

Our self-constructed Peer Group Index consists of the members of our peer group with available publicly traded market data as of, and subsequent to, December 31, 2018, and consists of: Marathon Digital Holdings, Inc. (MARA), Hut 8 Corp. (HUT), CleanSpark, Inc. (CLSK), HIVE Digital Technologies, Ltd. (HIVE), Bit Digital, Inc. (BTBT), TeraWulf Inc. (WULF), and Mawson Infrastructure Group, Inc. (MIGI).

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Issuer Purchases of Securities

During the three months ended December 31, 2023, certain of our employees surrendered shares of common stock awarded to them to satisfy statutory minimum federal and state tax obligations associated with the vesting of restricted stock awards issued under our 2019 Equity Incentive Plan. The following table summarizes these repurchases:


				Total Number	Maximum
				of Shares	Number of
				Purchased as	Shares that
	Total			Part of	May Yet Be
	Number of	Average		Publicly	Purchased
	Shares	Price Paid		Announced Plans	Under the Plans
Period	Purchased	per Share (a)		or Programs	or Programs
October 1, 2023 through October 31, 2023	2,098	$	9.15	N/A	N/A
November 1, 2023 through November 30, 2023	7,034		10.68	N/A	N/A
December 1, 2023 through December 31, 2023	1,335		15.66	N/A	N/A
Total	10,467	$	11.01

(a)

The price paid per share is based on the closing price of our common stock as of the date of the determination of the statutory minimum for federal and state tax obligations.

Recent Sales of Unregistered Securities

On December 1, 2021, we issued 715,413 shares of our common stock, subject to a holdback of 70,165 shares to the sellers in connection with the ESS Metron Acquisition. The shares of common stock in connection with the ESS Metron Acquisition were issued in reliance upon an exemption from registration provided by Section 4(a)(2) of the Securities Act. Subsequently, we registered for resale the 645,248 shares issued to the sellers at the closing of the ESS Metron Acquisition and the 70,165 shares to the sellers upon expiration of the holdback period during 2023.

On May 26, 2021, at the closing of the Whinstone Acquisition, we issued 11.8 million shares of our common stock to Northern Data in exchange for all of the issued and outstanding equity interests of Whinstone US, Inc. (“Whinstone”). These shares were issued in reliance upon an exemption from registration provided by Section 4(a)(2) of the Securities Act. Subsequently, we registered the shares issued to Northern Data for resale pursuant to registration rights granted under the shareholders’ agreement we entered into with Northern Data in connection with closing of the Whinstone Acquisition.

ITEM 6. [RESERVED]

Not applicable.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) provides information that will assist the reader in understanding our results of operations and financial condition. This MD&A should be read in conjunction with our Consolidated Financial Statements and the related notes that are included in Part II, Item 8. “Financial Statements and Supplementary Data” of this Annual Report.

This MD&A generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 are not included, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016 (the "Annual Report") we refer to Bioptix, Inc., a Colorado corporation, as "Bioptix," the "Company," "we," "us"~~2022.

Forward Looking Statements

This MD&A includes forward-looking statements based upon current expectations that involve risks and ~~"our."~~

~~Overview~~

Through our wholly owned subsidiary, BiOptix Diagnostics, Inc. ("BDI"), which we acquired in September 2016, we have developed a proprietary Enhanced Surface Plasmon Resonance technology platform for the detection of molecular interactions. We acquired a Surface Plasma Resonance (SPR) platform which seeks to combine high sensitivity with microarray detection capability to allow researchers to understand whether their target molecules have functionality against the disease targeted. SPR is an advanced and highly sensitive optical technology that can measure refractive index changes on a sensor chip's gold surface due to a change in mass that occurs during a binding event. This change can be used to monitor biological interactionsuncertainties, such as ~~the concentration of target molecules, kinetic rates~~our plans, objectives, expectations, and ~~affinity constants.~~

BDI is a life science tools company that provides an affordable solution for drug discovery scientists who require label-free, real-time detection of bio-molecular interactions. BDI manufactures, sells and services instruments and consumables to pharmaceutical researchers allowing them to develop new drugs faster than by using older technologies such as enzyme-linked immunosorbent assay or "ELISA". BDI was originally established with technology developed in conjunction with Dr. John L. "Jan" Hall, Adjoint Professor, JILA (University of Colorado), who shared the Nobel Prize for Physics in 2005 for his work on laser-based precision spectroscopyintentions. Actual results and the ~~optical frequency comb technique. Surface Plasma Resonance (SPR) is the core~~timing of ~~the BDI products and intellectual property. Dr. Hall,~~events could differ materially from those anticipated in ~~conjunction with the scientists at BDI, created~~these forward-looking statements as a ~~common path interferometer that was commercialized to become the 404pi instrument.~~

~~Interferometry is one~~result of the most sensitive optical detection techniques in existence, but its power has historically not been available in a commercial instrument. Classic interferometry requires separate optical paths for analyzing samples and providing a reference. The two paths can be affected differently by vibration, heat, and other noise sources. Common path interferometry solves that problem by embedding two phase states into a single beam of light. When molecular binding occurs, one of the phase states changes while the other remains constant. The two states are subtracted and accurately provide information about affinity constants, kinetic rates, and concentration of relevant molecules.

BDI's technology is an ultra-sensitive detection platform that is part of the class of Surface Plasmon Resonance instruments and combines high sensitivity with microarray detection capability allowing researchers at pharmaceutical companies, universities and other research organizations to understand much earlier in the discovery process whether their target molecules have functionality against the disease targeted. BDI sells to biotechnology and pharmaceutical companies, contract research organizations and academic research institutions to help make these drug development process more effective and productive. BDI offers an affordable solution for drug discovery scientists that require label-free real-time detection of bio molecular interactions. The BDI unique enhanced SPR instrumentation offers measurement of kinetics, affinity constants and concentration, proprietary easy-to-use analytical software, and two operating modes for higher throughput and experimental flexibility.

When it was acquired by the Company in September 2016, BDI was in the initial stages of rolling out its first commercial product, the 404pi system. BDI's initial revenue was generated in 2014 with first sales to customers including sales to leading academic researchers and biotech companies. BDI did not experience any significant seasonality to its business and provided normal terms to its customers, generally 30-60 days, net. Currently there is no back-log of orders.

Following the September 2016 acquisition of BDI, the Company began hiring sales, marketing and operational employees, adding a total of eight employees to the twelve hired in connection with the acquisition.

The BDI products include a reader instrument (404pi) and the consumable test products consisting of test chips (cassettes) and packaging. The instrument is assembled in-house using primarily off the shelf parts and certain customized components. Consumable test product components are manufactured at the BDI facility using certain sub-assemblies processed by third-party contractors. Raw materials and certain sub-components are acquired from a number of ~~suppliers.~~factors. See “Cautionary Note Regarding Forward-Looking Statements.”

~~Recent Developments~~

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~~Effective January 14, 2017, we adopted~~

Business Overview and 2023 Highlights

We are a ~~plan~~vertically integrated Bitcoin mining company principally engaged in enhancing our capabilities to ~~exit this acquired business and commenced a significant reduction~~mine Bitcoin in ~~the workforce. The decision to adopt this plan was made following an evaluation by the Company's Board of Directors in January 2017,~~support of the estimated results of operations projected during the near to mid-term period for BDI, including consideration of product development required and updated sales forecasts, and estimated additional cash resources required. We are reviewing possible strategic alternatives relative to the business to maximize shareholder value. The Company's continuing evaluation following adoption of the plan, estimates that it will incur charges to operations in early 2017 of approximately, $2.7 million, consisting of 1) write-down of tangible and intangible assets estimated at approximately $2.2 million, and 2) wind-down, severance and transaction expenses estimated at approximately $500,000.

Following the recent decision to exit the BDI business, the Company has begun evaluating potential strategic alternatives. The Company expects, in the near term, to establish the primary criteria it will consider as it evaluates its next steps and strategic path forward with the goal of maximizing value for its shareholders. Additionally it will focus on attempting to locate an acquirer or partner for the BDI operations as well as continuing to attempt to locate an interested party for the appendicitis assets.

In March 2017, the Company completed private placements totaling $7,000,000. Included was a common stock unit financing for $2,250,000 with certain accredited investors, $1,000,000 of which has been released to the Company, with the balance in escrow pending completion of release conditions. The Company also closed on a convertible note financing with certain accredited investors with gross proceeds totaling $4,750,000. The convertible note financing proceeds are in escrow pending successful completion of release conditions. The common stock offering sold Units at a purchase price of $2.50 per Unit. Each Unit consists of one share of the Company's Common Stock and a three-year Warrant to purchase one share of the Company's common stock at an initial exercise price of $3.50. The separate securities purchase agreements for a convertible note financing totaled $4,750,000 which is being held in escrow pending completion of defined release conditions. Following release from escrow the notes shall be convertible into shares of Common Stock at an initial conversion price of $2.50 per share and Warrants to purchase 1,900,000 shares of the Company's common stock at an initial exercise price of $3.56, shall be exercisable on or after the six-month anniversary of closing. Pursuant to the terms of the convertible note purchase agreements, the Company has agreed to file a proxy to hold a special meeting of its shareholders to among other provisions, approve the terms of the offering and authorize preferred stock, all as specified in the agreements.

~~Historical Operations~~

Bitcoin blockchain. We also ~~hold an exclusive license agreement with Washington University ("WU")~~provide comprehensive and critical mining infrastructure for institutional-scale hosted clients to mine Bitcoin at our Rockdale Facility. The Rockdale Facility currently provides 700 MW in ~~St. Louis~~total developed capacity for our Bitcoin mining and data center hosting services for institutional-scale hosted clients. Our Rockdale Facility is believed to be the largest Bitcoin mining facility in North America, as measured by developed capacity. Additionally, we are developing the Corsicana Facility, a second large-scale Bitcoin mining data center facility, which, ~~granted us an exclusive license~~upon completion, is expected to have approximately one gigawatt of capacity available for our own Bitcoin mining and ~~right~~data center hosting services for institutional-scale hosted clients. During 2023, Riot continued to ~~sublicense its technology for veterinary products worldwide, subject to certain exceptions. In July 2012, we granted Ceva Sante Animale S.A. ("Ceva") an exclusive royalty-bearing license to~~expand on our ~~intellectual property~~growth-focused corporate strategy by capitalizing on our positioning within the market, and other assets, relating to recombinant single chain reproductive hormone technology for use in non-human mammals. This license includes a sublicense of the technology licensed to us by WU. Ceva continues to advance development of the bovine rFSH product and cumulative cash payments received to date by us from Ceva have been approximately $2 million.

Prior to 2016, Bioptix was an in vitro diagnostic company focused on obtaining clearance from the U.S. Food and Drug Administration ("FDA") for and commercializing its blood-based test to serve as an adjunctive test in the diagnosis and treatment of acute appendicitis in children, adolescent, and young adults. Our test, the ~~APPY~~1 Test, was a CE marked rapid blood test panel for aiding in identifying patients in the emergency department who are at low risk for acute appendicitis. We were not aware of any blood test that is cleared by the FDA to aid in ruling out appendicitis and are not aware of any competitors in this area. The ~~APPY1 Test was not cleared by the FDA despite our performance of clinical trials, including our pivotal clinical trial for the~~ ~~APPY~~1 Test, which was completed in early 2014. The data demonstrated high sensitivity and high negative predictive value ("NPV"), similar to other adjunctive tests for other conditions currently in use by physicians. In March 2014, we submitted a de novo request to the FDA for the ~~APPY~~1 System. In June 2014, the FDA sent us an Additional Information ("AI") request, which is typical of this type of submission. We were in communication with the FDA several times while gathering the responsive information.

~~In December 2014, we filed a response as a submission amendment. On January 27, 2015, the FDA notified us that it had determined that the~~ ~~APPY~~1 Test did not meet the criteria for market clearance as a class II device based upon data and information in our de novo submission and subsequent amendment. We engaged in a number of conversations with the FDA between January and October of 2015, and determined that it was not prudent to use our financialappropriately allocating resources to continue to ~~advance development~~expand and develop in a volatile market.

We operate in an environment which frequently evolves based on the proliferation of Bitcoin and cryptocurrencies in general. A significant component of our strategy is to effectively and efficiently allocate capital between opportunities that generate the highest return on our investment.

Bitcoin Mining

We own and operate one of the ~~APPY1 Test to attempt to secure FDA clearance. Therefore during early 2016, we suspended~~largest Bitcoin Mining operations ~~associated with the~~ ~~APPY1 Test, including termination of marketing the product~~ in the EU. We then advanced in our pursuit of strategic alternatives for the Company and began attempting to monetize our appendicitis-related assets or partner with another company to further develop such assets.

In October 2015 as part of its evaluation of strategic alternatives, Bioptix entered into a non-binding letter of intent with Strand Life Sciences Private Limited ("Strand"). Bioptix entered into a series of definitive agreements with Strand, its U.S. subsidiary, Strand Genomics, Inc. ("SGI") and the shareholders of Strand on January 26, 2016. Bioptix entered into a Master Agreement with Strand and SGI, and into a series of share sale and investment agreements with the holders of more than 90% of the Strand shares, and a subsidiary of Bioptix entered into an Asset Purchase Agreement with SGI. On March 11, 2016, Bioptix, Strand and SGI entered into a Mutual Termination Agreement to terminate these definitive agreements. Pursuant to the Mutual Termination Agreement, each of the parties was relieved of any obligations or responsibilities under the Master Agreement and other transaction agreements. Each of the parties remained responsible for its respective transaction-related costs.

On February 25, 2016, we completed the sale of our corporate headquarters, land and building, to a third party at a purchase price of $4,053,000. The sale generated approximately $1.8 million in net cash after expenses and mortgage payoffs. In addition to agreeing to the sale, we rented back space in the building under short-term lease agreements that provide storage space required for our current level of operations.

~~Animal Healthcare~~

Effective May 1, 2004, we entered into an exclusive license agreement ("WU License Agreement") with Washington University in St. Louis (WU), which granted us an exclusive license and right to sublicense WU's technology (as defined under the WU License Agreement) for veterinary products worldwide, except where such products are prohibited under U.S. laws for export. The term of the WU License Agreement continues until the expiration of the last of WU's patents (as defined in the WU License Agreement). We have agreed to pay minimum annual royalties of $20,000 during the term of the WU License Agreement and such amounts are creditable against future royalties and other payments. Royalties payable to WU under the WU License Agreement for covered product sales by us, directly or indirectly, carry a mid-single-digit royalty rate and for sublicense fees received by us carry a low double-digit royalty rate. The WU License Agreement contains customary terms for confidentiality, prosecution and infringement provisions for licensed patents, publication rights, indemnification and insurance coverage. The WU License Agreement is cancelable by us with ninety days advance notice at any time and by WU with sixty days advance notice if we materially breach the WU License Agreement and fail to cure such breach in a designated period.

In July 2012, we entered into an exclusive license agreement (License Agreement) with Ceva Santé Animale S.A. (Licensee), under which we granted the Licensee an exclusive royalty-bearing license to our intellectual property and other assets, including patent rights and know-how, relating to recombinant single chain reproductive hormone technology for use in non-human mammals (Animal Health Assets). The License Agreement includes a sublicense of the technology licensed to us by WU and a license to the assets acquired from Novartis under the Termination Agreement described below. Under the terms of the WU License Agreement, a portion of the license fees and royalties we receive from sublicensing agreements will be paid to WU. Under the License Agreement, the Licensee obtained a worldwide exclusive license to develop, seek regulatory approval for and offer to sell, market, distribute, import and export luteinizing hormone (LH) and/or follicle-stimulating hormone (FSH) products for bovine (cattle), equine and swine in the field of the assistance and facilitation of reproduction in bovine, equine and swine animals. We also granted the Licensee an option and right of first refusal to develop additional animal health products outside of the licensed field of use or any diagnostic pregnancy detection tests for non-human mammals.

~~Intellectual Property~~

~~APPY1 Intellectual Property~~

~~Beginning in 2004, we initiated the establishment of an intellectual property portfolio for the acute appendicitis testing technology and products that have been used in the development of the~~ ~~APPY~~1 Test. We filed for extensive patent coverage related to several aspects of the initial discovery and various test applications. In March 2009, the United States Patent and Trademark Office issued our patent directed to methods relating to our appendicitis diagnostic technology. This patent, No. 7,501,256 (expires February 7, 2026), is entitled "Methods and Devices for Diagnosis of Appendicitis." Additional U.S. patents, No. 7,659,087 and No. 7,670,769, were issued on February 9, 2010 and March 2, 2010, respectively (both expiring July 25, 2025). At this time, patents have been issued in the following foreign countries: Australia, Hong Kong, Israel, Japan, New Zealand, Singapore and South Africa. A patent was also granted by the European Patent Office and subsequently validated in the following European countries: Belgium, Switzerland, Germany, Spain, France, the United Kingdom, Ireland, Italy, the Netherlands and Sweden. In late 2014, we were notified that the Canadian patent applications have been allowed and on March 24, 2015, Canadian patent 2,574,991 was granted.

In late 2012, additional U.S. utility and patent cooperation treaty (PCT) patent applications were filed for the appendicitis testing technology and products. The patent filings focused on the newly developed multiple-marker technology, providing patent coverage for using the MRP 8/14 levels in a given sample in conjunction with CRP levels and WBC count among a number of other evaluated marker combinations in order to provide an increasingly robust test to aid in the management of low risk patients suspicious for appendicitis. Additionally, the patent filings claim a method for ruling out appendicitis based on multiple markers, a device or system for assessing a subject based on a plurality of markers, and a kit or device to determine the value of a biomarker in a given sample. Currently, further pursuit of these filings have been terminated.

As a result of the decision to not further pursue development of the appendicitis assets, the appendicitis patents were deemed 100% impaired as of December 31, 2016 and further pursuit of these patents has been suspended.

~~Animal Health~~

Our animal health patent portfolio originated under the exclusive license agreement with WU, under which we obtained intellectual property rights to WU's patent estate. This extensive portfolio consists of both patents and pending patent applications (approximately 25 patents and numerous patent applications) related to our animal health products under development. The term of the WU License Agreement ends upon the expiration of the last patent to expire. Patents in the estate have expiration dates ranging from 2010 to 2019. WU has filed, and continues to file, patent applications to expand and extend the patent coverage of the WU technology. We reimburse WU for the costs of such patent filings, namely prosecution and maintenance fees. Additional patents in the animal health portfolio have been filed by us outside of the WU License Agreement.

A patent filing for the recombinant luteinizing hormone technology was submitted in 2004, entitled "Methods and Kits for Maintaining Pregnancy, Treating Follicular Cysts, and Synchronizing Ovulation Using Luteinizing Hormone." This patent family claims methods of administering rLH, the timing of administration, and dosage given in order to increase formation of accessory corpora lutea and maintain pregnancies in treated animals. To date, five foreign patents have been granted for "Methods and Kits for Maintaining Pregnancy, Treating Follicular Cysts, and Synchronizing Ovulation Using Luteinizing Hormone," New Zealand patent 542549 was granted March 12, 2009 (expiring March 2024), Australia 2004218365 was granted May 27, 2010 (expiring March 2024), European patent 1610803 was granted December 15, 2010 (expiring March 2024), Canadian patent 2518268 was granted December 10, 2013 (expiring March 2024) and Brazil was granted May 31, 2016 (expiring March 4, 2026). The patent granted by the European Patent Office and has been validated in the following countries: Belgium, France, Germany, Ireland, Italy, the Netherlands, Spain, Switzerland and the United Kingdom. Currently, there are additional foreign patent applications that are in prosecution.

A patent filing for the recombinant bovine follicle stimulating hormone technology was submitted in 2008, entitled "Compositions and Methods Including Expression and Bioactivity of Bovine Follicle Stimulating Hormone." This patent family claims the rbFSH single-chains itself, as well as methods of administering rbFSH, the timing of administration, and dosage given in order to increase reproduction, induce superovulation or increase embryo production in ungulates. The patent family includes filings in the following countries: Argentina, Australia, Canada, New Zealand, Thailand and the United States.

The patent has also been filed with the European Patent Office. In October of 2011, the first patent in this family was granted by the European Patent Office (2134165), expiring October 12, 2028. The patent has also been granted in New Zealand (579740), expiring October 1, 2028. Following the grant of the patent in 2011 by the European Patent Office, the patent was validated in the following countries: France, Germany, Italy and the Netherlands. In August 2013, the patent was granted in the United States (8518881 B2) expiring February 8, 2028, followed in November 2013 by the grant in Australia (2008213567) expiring February 8, 2028.

A patent filing for the equine follicle stimulating hormone technology was filed in 2008, entitled "Activity of Recombinant Equine Follicle Stimulating Hormone." This patent family provides coverage for the single chain eFSH itself, methods of administering reFSH, the timing of administration, and dosage given in order to increase reproductive activity in treated animals. The first patent in the patent family was granted in China in April 2013 (200880123523.8) expiring November 28, 2028. The U.S. Patent for this family was granted in September 2014 (8,835,386) expiring November 28, 2028. The patent was granted for Canada (2,685,437) on June 2, 2015 and will expire February 8, 2028. Currently, there are additional foreign patent applications that are in prosecution.

~~General Operations~~

~~Revenues~~ —North America. During the year ended December 31, ~~2016~~2023, we continued to deploy miners at our ~~revenues were not significant~~Rockdale Facility and ~~resulted~~continued development activities at the Corsicana Facility, with the objective of increasing our operational efficiency and performance in the future.

As of December 31, 2023, our Bitcoin Mining business segment operated 112,944 miners, with a hash rate capacity of 12.4 EH/s.

During the year ended December 31, 2023, we mined 6,626 Bitcoin, which represented an increase of 19.3% over the 5,554 Bitcoin we mined in the year ended December 31, 2022. We anticipate achieving a total self-mining hash rate capacity of 28 EH/s by the end of 2024.

During the year ended December 31, 2023, we entered into the Master Agreement to acquire 99,840 miners from ~~consumable sales made~~MicroBT (consisting of 8,320 M56S+ model miners, 22,684 M56S++ model miners, 20,778 M66 model miners, and 48,058 M66S model miners), primarily for use at the Corsicana Facility, for a total purchase price of approximately $453.4 million. Delivery of the miners began in the fourth quarter of 2023, with all miners expected to ~~several BDI customers.~~ be received and deployed by mid-2025. Upon full deployment of the 99,840 miners, we anticipate a total self-mining hash rate capacity of 38 EH/s. The Master Agreement also provides us with an option to purchase up to an additional 265,000 additional miners, on the same terms as the initial order.

For the year ended December 31, ~~2015, three European-based customers~~2023, Bitcoin Mining revenue was approximately $189.0 million.

Data Center Hosting

Following our acquisition of Whinstone, we commenced an expansion of our Rockdale Facility to more than double its developed capacity at the time of acquisition and, as of December 31, 2023, this expansion had been completed.

The expansion of our Rockdale Facility has provided capacity to enable us to deploy our current fleet of miners in a self-hosted facility, while allowing us to continue offering our Data Center Hosting services. We believe deploying our miners at the expanded Rockdale Facility offers many advantages for our Bitcoin Mining operations, including allowing us to operate our miners without incurring third-party colocation services fees and to do so at the low fixed energy costs available to the Rockdale Facility under its long-term PPA.

Data Center Hosting revenue includes upfront payments, which we record as deferred revenue and generally recognize as services are provided. We provide energized space and operating and maintenance services to third-party mining companies who locate their mining hardware at our Rockdale Facility under long-term contracts. We account for these agreements as a single performance obligation for services being delivered in a series with delivery being measured by daily successful operation of the ~~APPY1 Test accounted for total net sales, each representing 52%, 26% and 22%, respectively. At December 31, 2016 and 2015, Bioptix accounts receivable were not significant.~~

~~Research and Development~~ ~~— We expended approximately $863,000 and $2,159,000 on total research and development in 2016 and 2015, respectively. Virtually all~~mining hardware. As such, we recognize revenue over the life of ~~this research and development activity was incurred related to development on appendicitis products.~~the contract as its series of performance obligations are met. The ~~Licensee conducts all research and development activities with respect to the animal health assets.~~

~~Regulatory Matters~~

~~FDA~~

~~The Company is generally not subject to regulation under the FDA or similar regulatory bodies in other markets. The FDA had regulatory marketing authority~~contracts are recognized in the ~~United States over our~~ ~~APPY1 System under 21 CFR Part 820 regulations (U.S.) and ISO13485 standards (EU)~~amount for ~~cGMP manufacturing of medical devices.~~

~~European Regulations~~

~~In January 2013, we obtained CE marking for the~~ ~~APPY~~1 System. In the European Union, in-vitro diagnostic (IVD) medical devices are regulated under EU-Directive 98/79/EC (IVD Directive), and related provisions. The IVD Directive requirements include provisions for the design, manufacture, distribution and post-market surveillance of IVDs to assure the safety and efficacy of the devices. These standards include ISO 14971, risk management and ISO 13485, the quality standard for medical device manufacturers. IVD medical devices must bear the CE marking of conformity when they are placed on the market. The CE mark is a declaration by the manufacturer that the product meets all the appropriate provisions and essential requirements outlined in the European IVD Directive. As a general rule, the manufacturer must follow the procedure of the EC Declaration of conformity to obtain this CE marking. Each European country must adopt its own laws, regulations and administrative provisions necessary to comply with the IVD Directive.

~~Environmental Protection~~

We are subject to various environmental laws pertaining to the disposal of hazardous medical waste. We contract for disposal of our hazardous waste with a licensed disposal facility. We do not expect to incur liabilities related to compliance with environmental laws; however, we cannot make a definitive prediction. The costs we incur in disposal of hazardous waste have not been significant.

~~Competition~~

~~BDI is a small participant in a large market with a number of competitors, many of~~ which are substantially larger than BDI. Although the market for SPR products, such as the BDI products is large, there are a number of large market competitors, including GE Healthcare (Biacore), Ametek (Reichert SPR System) and Danaher (ForteBio/Pall Corporation). It will be difficult for us to establish a market position in such competitive market. We believe that most of our competitors have significantly greater financial, manufacturing, marketing and product development resources than we do. In addition there are a number of other competitors in the SPR market including SensiQ Technologies, Wasatch Microfluidics and Sierra Sensors GmbH.

~~Properties~~

Our subsidiary, BDI leases its office and laboratory space under an agreement that expires March 31, 2018. The facility comprises approximately 14,000 net rentable square feet and requires monthly base rent of $15,711 and common area maintenance costs are currently $10,145 per month. The Company also rents certain office and storage space under short-term arrangements. The Company believes that its leased facilities are adequate for its near-term needs.

~~Other Laws~~

~~We are also subject to other federal, state and local laws, pertaining to matters such as safe working conditions and fire hazard control.~~

~~Corporate Information~~

Bioptix, Inc., was organized on July 24, 2000, as a Colorado corporation. Our corporate address is 834-F South Perry Street, Suite 443, Castle Rock, CO 80104. Our phone number is (303) 794-2000. We currently employ seven full-time and one part-time employees. We believe our relationships with our employees are good. We maintain a website at ~~www.Venaxis.com.~~

~~Available Information~~

You can access, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports as filed with the Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934, as amended. These documents may also be accessed on our website: ~~www.Venaxis.com~~. These documents are placed on our website as soon as is reasonably practicable after their filing with the SEC. The information contained in, or that can be accessed through, the website is not part of this Annual Report. These documents may also be found at the SEC's website at ~~www.sec.gov~~.

~~ITEM 1A. — RISK FACTORS~~

If any of the following risks actually occur, they could materially adversely affect our business, financial condition or operating results. In that case, the trading price of our common stock could decline.

~~Risks Related to Our Business~~

~~We may not be successful in the pursuit of a strategic alternative.~~

~~Following the January 2017 decision to exit the BDI business, the Company has turned its attention to an evaluation of other strategic alternatives available to us. As of February 28, 2017~~ we have ~~approximately $11,500,000 in cash, cash equivalents, and investments, and~~the right to invoice because we ~~hope~~elected the “right to maintain our NASDAQ Capital Market listing as described below under "Risks Related to our Securities." We may not be successful in identifying and successfully negotiating a transaction with another target company, as merger and acquisition transactions are highly uncertain of success, or obtaining shareholder approval of any such transaction. If we are not able to identify, negotiate and consummate a transaction with another company, we will be unable to continue our business and may need to dissolve.

~~We may not be successful in disposing of the BDI business under acceptable terms and on a basis that does not involve liability settlements or other contingencies.~~

Following the January 2017 decision to exit the BDI business we are evaluating possible options to sell or license the assets, operations or stock of BDI. If we are not able to reach an agreement under acceptable terms for the disposal, we may face additional costs for and creditor complaints that would need to be dealt with and could entail additional expenses and management time.

~~We have a history of operating losses, and we may not be able to achieve or sustain profitability.~~

We were a diagnostics company and are now a research tools company with a limited operating history. We are not profitable and have incurred losses since our inception. We believe that our existing cash and cash equivalents, together with cash received from sales of our products, will be sufficient to meet our anticipated cash needs through the first quarter of 2018, subject to any possible strategic transactions.

We expect to continue to incur losses for the foreseeable future, and these losses will likely increase as we continue to develop and commercialize our products and product candidates. If our products fail in development, or if our products do not achieve market acceptance, we may never become profitable. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. We anticipate that, if needed, we will seek capital from other sources, such as equity offerings, at some point in the future. However, we cannot assure you that we will be successful in obtaining such additional financing on terms acceptable to the Company or at all. In addition, any sale of a substantial number of additional shares may cause dilution to our existing shareholders and could also cause the market price of our common stock to decline.

~~Risks Related to our Securities~~

~~Our common stock is listed on the NASDAQ Capital Market and we need to maintain the requisite qualitative and quantitative requirements for continued listing.~~

In the past, the trading price of our common stock, did not meet the $1.00 minimum bid price required by the NASDAQ Capital Market pursuant to NASDAQ Marketplace Rule 5550(a)(2), and we needed to effect a reverse stock split to regain compliance with the minimum bid price requirement. If the trading price of our common stock falls below the $1.00 minimum bid requirement, or other changes cause us to lose our listing, that could result in negative consequences, such as a limited availability of market quotations for our common stock, a determination that the common stock is a "penny stock" which would require brokers trading in the common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for the common stock, a limited amount of analyst coverage and a decreased ability to issue additional securities or obtain additional financing in the future.

~~We do not anticipate paying any dividends in the foreseeable future and, as a result, our investors' sole source of gain, if any, will depend on capital appreciation, if any.~~

The Company does not intend to declare any dividends on our shares of common stock in the foreseeable future and currently intends to retain any future earnings for funding growth. As a result, investors should not rely on an investment in our securities if they require the investment to produce dividend income. Capital appreciation, if any, of our shares may be investors' sole source of gain for the foreseeable future. Moreover, investors may not be able to resell their shares of our common stock at or above the price they paid for them.

~~Our stock price is volatile.~~

Our common stock is currently traded on the NASDAQ Capital Market. The trading price of our common stock from time to time has fluctuated widely and may be subject to similar volatility, in the future. invoice” practical expedient.

For ~~example in the calendar year 2016, our trading price has ranged from $1.62 to $4.54, and in~~ the year ended December 31, ~~2015,~~2023, Data Center Hosting revenue was approximately $27.3 million.

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Engineering

Our Engineering business segment designs and manufacturers power distribution equipment and custom engineered electrical products that provide us with the ability to vertically integrate many of the critical electrical components and engineering services necessary for our ~~common stock traded~~Corsicana Facility development and Rockdale Facility expansions and to reduce our execution and counter-party risk in ongoing and future expansion projects. Engineering and other specialized talent employed in our Engineering business segment also allows us to continue to explore new methods to optimize and develop a best-in-class Bitcoin Mining operation and has been instrumental in the development of our industrial-scale immersion-cooled Bitcoin mining hardware.

Our Engineering business segment also provides electricity distribution product design, manufacturing, and installation services primarily focused on large-scale commercial and governmental customers and serves a broad scope of clients across a wide range of markets including data center, power generation, utility, water, industrial, and alternative energy. Products are custom built to client and industry specifications.

Engineering revenue is derived from the sale of custom products built to customers’ specifications under fixed-price contracts with one identified performance obligation. Engineering revenue is recognized over time as ~~low~~performance creates or enhances an asset with no alternative use, and for which we have an enforceable right to receive compensation as ~~$2.12~~defined under the contract.

For the year ended December 31, 2023, Engineering revenue was approximately $64.3 million.

Industry Trends

During 2022 and ~~as high as $16.32. The trading~~2023, we observed several companies in the Bitcoin ecosystem experience significant challenges and initiate bankruptcy proceedings due to the significant volatility in the price of ~~our common stock~~Bitcoin, the increase in interest rates, the volatility in the ~~future may be affected~~spot price of power, and other national and global macroeconomic factors. We anticipate this trend will likely continue as companies attempt to shift their business models to operate on significantly compressed margins. Further affecting the margins of the companies within the Bitcoin ecosystem, the Bitcoin reward for solving a block is subject to periodic incremental halving, which is next anticipated to occur in April 2024. The network halving is a preprogrammed, fixed process of the Bitcoin network where the Bitcoin reward for solving a block received by miners is reduced by half approximately every four years. The network halving will continue to occur on this schedule until the amount of Bitcoin in existence reaches the cap of 21.0 million. The network halving is a ~~number~~process designed to implement a periodic decreasing schedule of ~~factors, including events described~~the issuance of new Bitcoin into the market which results in ~~these "Risk Factors." In recent years, broad stock market indices,~~a predictable and controlled inflationary rate.

The dramatic increase in ~~general, and smaller capitalization companies, in particular, have experienced substantial~~the price ~~fluctuations. In a volatile market, we may experience wide fluctuations~~of Bitcoin observed in the market during prior years caused many companies to over-leverage themselves, thus operating in potentially unsustainable ways given the recent variability in the price of Bitcoin. Riot chose to refrain from engaging in any significant debt-financing activities during this period and, as a result, has not been subject to the significant debt-service shortfalls some of our ~~common stock. These fluctuations~~competitors are experiencing. Despite such challenges in the ecosystem, Riot continues to focus on building long-term stockholder value by taking strategic action to vertically integrate our business, utilizing the Rockdale Facility and developing the Corsicana Facility. Management believes this focus will positively affect each of Riot’s three business segments by providing more capacity for our Bitcoin Mining and Data Center Hosting operations, and by capitalizing on supply chain efficiencies garnered through our Engineering segment. As we grow our business, we continue to focus on deploying our efficient Bitcoin mining fleet, at scale, while realizing the benefits of being an owner and operator of our Bitcoin Mining and Data Center Hosting facilities.

We anticipate companies in our industry will continue to experience challenges, and that 2024 will be a period of consolidation in the Bitcoin mining industry. Further, given our relative position, liquidity, and absence of any significant long-term debt, we believe we are well positioned to benefit from such consolidation. We are continuously evaluating strategic opportunities which we may decide to undertake as part of our strategic growth initiatives; however, we can offer no assurances that any strategic opportunities which we decide to undertake will be achieved on the schedule or within the budget we anticipate, if at all, in our competitive and evolving industry, and our business and financial results may change significantly as a result of such strategic growth.

The recent shutdowns of certain digital asset exchanges and trading platforms due to fraud or business failure has negatively impacted confidence in the digital asset industry as a whole and led to increased oversight and scrutiny of the industry. We did not have any exposure to any digital asset lenders or exchanges who have declared bankruptcy or have suspended operations. We only hold and sell Bitcoin that we have mined and do not sell, hold, or redeem any Bitcoin for any other parties. Our Bitcoin is held in cold storage wallets by a well-known U.S.-based third-party digital asset-focused custodian. We also sell our Bitcoin using our custodian’s U.S. brokerage services.

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In 2023, the banking industry and financial services sector experienced disruptions and instability. In March 2023, Silvergate Capital Corporation, the holding company for Silvergate Bank, which was primarily focused on the digital asset industry, announced its intent to wind down operations and voluntarily liquidate its holdings. Also in March 2023, Silicon Valley Bank and Signature Bank both closed and the FDIC was appointed receiver following their closures and transferred substantially all assets of the former banks to newly created, FDIC-operated bridge banks in an action to protect all depositors of the banks. In May 2023, First Republic Bank was closed, and the FDIC sold substantially all of First Republic Bank’s assets to JP Morgan Chase & Co.

Although we maintained certain operating accounts with Signature Bank prior to its closure, we have since transferred all our deposits previously held with the bank to other banking institutions. We did not lose access to our accounts or experience interruptions in banking services, and we suffered no losses with respect to our deposits at Signature Bank as a result of the bank’s closure. We did not have any banking relationships with Silicon Valley Bank, Silvergate Bank, or First Republic Bank, and currently hold our cash and cash equivalents at multiple banking institutions. Although we did not suffer any losses, we continue to monitor for updates to mitigate any future impacts we may be subject to as a result of instability of the banking industry and financial services sector.

See Part I, Item 1A. “Risk Factors” of this Annual Report for additional discussion regarding potential impacts our competitive and evolving industry may have ~~a negative effect~~on our business.

Global Logistics

Global supply logistics have caused delays across all channels of distribution. Similarly, we have also experienced delays in certain of our miner delivery schedules and in our infrastructure development schedules due to constraints on the ~~market price~~globalized supply chains for miners, electricity distribution equipment and construction materials. Through the date of this Annual Report, we have been able to effectively and efficiently mitigate delivery delays to avoid materially impacting our common stock. In the past, following periods of volatility in the market price of a company's securities, securities class action litigation has often been instituted. A securities class action suit against us could result in substantial costs, potential liabilities and the diversion of management's attention and resources, and could have a material adverse effect on our financial condition.

~~As a public company~~miner deployment schedule, however, we are subject to complex legal and accounting requirements that require us to incur substantial expenses, and our financial controls and procedures may not be sufficient to ensure timely and reliable reporting of financial information, which, as a public company, could materially harm our stock price and listing on the NASDAQ Capital Market.

As a public company, we are subject to numerous legal and accounting requirements that do not apply to private companies. The cost of compliance with many of these requirements is substantial, not only in absolute terms but, more importantly, in relation to the overall scope of the operations of a small company. Failure to comply with these requirements can have numerous adverse consequences including, but not limited to, our inability to file required periodic reports on a timely basis, loss of market confidence, delisting of our securities and/or governmental or private actions against us. We cannot ~~assure you~~guarantee that we will be able to ~~comply with all of these requirements or that~~continue to mitigate any such delivery delays in the ~~cost of such compliance will not prove to be a substantial competitive disadvantage vis-а-vis our privately held and larger public competitors.~~

The Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley") requires, among other things, that we maintain effective internal controls over financial reporting and disclosure controls and procedures. In particular, we must perform system and process evaluation and testingfuture.

Additionally, the development of our ~~internal control over financial reporting~~new Corsicana Facility requires large quantities of construction materials, specialized electricity distribution equipment and other component parts that can be difficult to ~~allow management~~source. We have procured and already hold many of the required materials to ~~report on the effectiveness of our internal control over financial reporting, as required by Section 404 of Sarbanes-Oxley. Our compliance with Section 404 of Sarbanes-Oxley requires~~help navigate challenges related to global supply logistics and mitigate any inflationary pricing concerns that ~~we incur substantial accounting expense and expend significant management efforts. The effectiveness of our controls and procedures~~ may come from global supply delays.

We continue to monitor developments in the ~~future be limited by a variety of factors, including:~~

	·		~~faulty human judgment and simple errors, omissions or mistakes;~~
	·		~~fraudulent action of an individual or collusion of two or more people;~~
	·		~~inappropriate management override of procedures; and~~
	·		~~the possibility that any enhancements to controls and procedures may still not be adequate to assure timely and accurate financial information.~~

If we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identifies deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, we may be subject to NASDAQ delisting, investigations by the SECglobal supply chain and ~~civil or criminal sanctions.~~

Our ability to successfully implement our business plan and comply with Section 404 requires us to be able to prepare timely and accurate financial statements. We expect that we will need to continue to improve existing, and implement new operational, financial and accounting systems, procedures and controls to manage our business effectively.

Any delay in the implementation of, or disruption in the transition to, new or enhanced systems, procedures or controls may cause our operations to suffer, and we may be unable to conclude that our internal control over financial reporting is effective as required under Section 404 of Sarbanes-Oxley. If we are unable to complete the required Section 404 assessment as to the adequacy of our internal control over financial reporting, if we fail to maintain or implement adequate controls, our ability to obtain additional financing could be impaired. In addition, investors could lose confidence in the reliability of our internal control over financial reporting and in the accuracy of our periodic reports filed under the Exchange Act. A lack of investor confidence in the reliability and accuracy of our public reporting could cause our stock price to decline.

We may be unable to monetize or support our other assets (appendicitis and animal health) on a timely basis or at all, which could distract management's attention from the core pursuit of exploring strategic alternatives, and could have a negativeassess their potential impact on our ~~financial condition.~~expansion plans.

~~We intend to attempt to monetize~~

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Summary of Bitcoin Mining Results

The following table presents additional information about our Bitcoin Mining activities, including Bitcoin production and sales of the ~~legacy Bioptix appendicitis portfolio~~Bitcoin mined:


	Quantity	Amounts
Balance as of January 1, 2021	1,078	$	10,186
Revenue recognized from Bitcoin mined	3,812		184,422
Exchange of Bitcoin for employee compensation	(6)		(295)
Realized gain on sale/exchange of Bitcoin	—		253
Impairment of Bitcoin	—		(43,973)
Balance as of December 31, 2021	4,884		150,593
Revenue recognized from Bitcoin mined	5,554		156,870
Proceeds from sale of Bitcoin	(3,425)		(79,529)
Exchange of Bitcoin for employee compensation	(39)		(1,495)
Realized gain on sale/exchange of Bitcoin	—		30,346
Impairment of Bitcoin	—		(147,365)
Balance as of December 31, 2022	6,974		109,420
Cumulative effect upon adoption of ASU 2023-08	—		5,994
Revenue recognized from Bitcoin mined	6,626		188,996
Bitcoin receivable	(21)		(878)
Proceeds from sale of Bitcoin	(6,185)		(176,219)
Exchange of Bitcoin for employee compensation	(32)		(869)
Change in fair value of Bitcoin	—		184,734
Balance as of December 31, 2023	7,362	$	311,178

Results of Operations Comparative Results for the Years Ended December 31, 2023 and ~~support our animal health assets to maximize liquidity. We may not be successful in such endeavors, could realize less than we anticipate in~~2022

Revenue

Total revenue for the ~~disposition or support of such assets, could incur unanticipated costs in such disposition activities~~years ended December 31, 2023 and ~~may need to shut down such legacy businesses without realizing any value from such legacy assets. In any such event, our financial condition could be negatively impacted.~~

~~The legacy Bioptix shareholders will likely experience significant dilution of their ownership in any strategic transaction.~~

~~We anticipate that any strategic transaction will involve the issuance~~2022, was $280.7 million and $259.2 million, respectively, and consisted of our ~~securities, which could have a signification dilutive effect on~~Bitcoin Mining revenue, Data Center Hosting revenue, Engineering revenue, and other revenue.

For the ~~percentage ownership~~years ended December 31, 2023 and 2022, Bitcoin Mining revenue was $189.0 million and $156.9 million, respectively. The increase of ~~our current shareholders.~~

~~Advancing on or failure to complete a strategic transaction could likely materially adversely affect Bioptix.~~

Bioptix will be subject to significant costs, including legal, accounting and advisory fees related to any strategic transaction, which must be paid even if a transaction is not ultimately consummated. Bioptix cannot make any assurance that a future strategic transaction will occur on commercially reasonable terms or at all.

~~We may not achieve the anticipated revenue from the out-licensing of our animal health assets.~~

In 2012, we entered into an exclusive license agreement with a third party to license all of our animal health assets in return for license fees, milestone and royalty payments. If product development efforts using our animal health assets are not successful in achieving commercial products, we may not receive all anticipated milestone and royalty payments.

~~Our results of operations could be affected by our royalty payments~~$32.1 million was primarily due to ~~third parties.~~

~~Any revenues from products under development will likely be subject to royalty payments under licensing or similar agreements. Major factors affecting these payments include, but are not limited to:~~

●	~~coverage decisions by governmental and other third party payors;~~
●	~~our ability to achieve meaningful sales of our products;~~
●	~~the achievement of milestones established~~a 19.3% increase in ~~our license agreements; and~~
●	~~our use of the intellectual property licensed in developing the products.~~

~~Risks Relating to Our Intellectual Property~~

~~Our competitive position is contingent upon the production of our intellectual property and we may not be able to withstand challenges to our intellectual property rights.~~

We rely on our intellectual property, including our issued and applied for patents and our licenses, to help support the value of our assets and business. If our intellectual property rights are challenged, no assurances can be given that our patents or licenses will survive claims alleging invalidity or infringement on other patents or licenses. Additionally, disputes may arise regarding inventorship of our intellectual property. There also could be existing patents of which we are unaware that our products may be infringing upon. As the number of ~~participants~~Bitcoin mined in the ~~market grows,~~2023 period as compared to the possibility of patent infringement claims against us increases. It is difficult, if not impossible, to determine how such disputes would be resolved. Furthermore, because of the substantial amount of discovery required in connection with patent litigation, there is a risk that some of our confidential information could be required to be publicly disclosed. In addition, during the course of patent litigation, there could be public announcements of the results of hearings, motions or other interim proceedings or developments in the litigation. Any litigation claims against us may cause us to incur substantial costs and could place a significant strain upon our financial resources, divert the attention of management or restrict our core business or result in the public disclosure of confidential information. The occurrence of any of the foregoing could materially impact our business.

~~We may incur substantial costs~~2022 period as a result of ~~litigation or other proceedings relating to patents and other intellectual property rights, and we may be unable to protect our rights to, or use of, our technology.~~

Some or all of our patent applications may not issue as patents, or the claims of any issued patents may not afford meaningful protection for our technologies or products. In addition, patents issued to us or our licensors, if any, may be challenged and subsequently narrowed, invalidated or circumvented. Patent litigation is widespreadan increase in miners deployed, partially offset by an increase in the ~~biotechnology industry~~Bitcoin network difficulty. Additionally, we continued employing our power strategy to significantly reduce overall power costs. As described below, during the years ended December 31, 2023 and ~~could harm~~2022, we earned $71.2 million and $27.3 million, respectively, in power credits, which were recognized as offsets to our ~~business. Litigation might be necessary~~operating expenses, but equated to ~~protect our patent position or to determine the scope~~approximately 2,497 Bitcoin and ~~validity of third party proprietary rights.~~

~~If we choose to commence legal proceedings to stop someone else from~~968 Bitcoin, respectively, as computed using the ~~inventions claimed~~average daily Bitcoin prices for the applicable period.

For the years ended December 31, 2023 and 2022, Data Center Hosting revenue was $27.3 million and $36.9 million, respectively. The decrease of $9.6 million was primarily due to hosting fewer customers during the 2023 period as we continue to address legacy contracts. For information regarding measures we have taken to address legacy contracts, see the discussion under “Legacy Hosting Customer Disputes” in Note 17. Commitments and Contingencies to our ~~patents, that individual or company would have~~Consolidated Financial Statements.

For the ~~right~~years ended December 31, 2023 and 2022, Engineering revenue was $64.3 million and $65.3 million, respectively. The decrease of $1.0 million was primarily attributable to ask the court to rule that such patents are invalid or should not be enforced against that third party. These lawsuits are expensive and we may not have the required resources to pursue such litigation or to protect our patent rights. In addition, there is a risk that the court will decide that these patents are not valid and that we do not have the right to stop the other party from using the inventions. There is also the risk that, even if the validity of these patents is upheld, the court will refuse to stop the other party on the ground that such other party's activities do not infringe our rights in these patents.

Furthermore, a third party may claim that we are using inventions covered by the third party's patent rights and initiate legal proceedings to stop us from engaging in our normal operations and activities, including making or selling our product candidates. These lawsuits are costly and could affect our results of operations and divert the attention of managerial and technical personnel. There is a risk that a court would decide that we are infringing the third party's patents and would order us to stop the activities covered by the patents. In addition, there is a risk that a court will order us to pay the other party treble damages for having violated the other party's patents. The biotechnology industry has produced a proliferation of patents, and it is not always clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform. If we are sued for patent infringement, we would need to demonstrate that our products or methods of use either do not infringe the claims of the relevant patent or that the patent claims are invalid, and we may not be able to do this. Proving invalidity in the United Sates, in particular, is difficult because it requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents.

Because some patent applications in the United States may be maintained in secrecy until the patents are issued, patent applications in the United States and many foreign jurisdictions are typically not published until eighteen months after filing, and publications in the scientific literature often lag behind actual discoveries, we cannot be certain that others have not filed patent applications for technology covered by our issued patents or our pending applications or that we were the first to invent the technology. Our competitors may have filed, and may in the future file, patent applications covering technology similar to ours. Any such patent application may have priority over our patent applications and could further require us to obtain rights to issued patents covering such technologies. If another party has filed a U.S. patent application on inventions similar to ours, we may have to participate in an interference or other proceeding in the U.S. Patent and Trademark Office, or the PTO, or a court to determine priority of invention in the United States. The costs of these proceedings could be substantial, and it is possible that such efforts would be unsuccessful,supply chain constraints resulting in ~~a loss~~decreased receipts of ~~our U.S. patent position with respect to~~materials, delaying the completion of certain custom products, and therefore, the recognition of revenue. Our custom electrical products such ~~inventions.~~

Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from the initiationas switchgear and ~~continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations.~~

Obtaining and maintaining our patent protection depends upon compliance with various procedural, document submissions, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

~~The PTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent prosecution process. There~~power distribution centers are ~~situations~~used as important components in which noncompliance can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to enter the market earlier than would otherwise have been the case.

~~Our failure to secure trademark registrations could adversely affect our ability to market our product candidates and our business.~~

Our trademark applications in the United States and any other jurisdiction where we may file, when filed, may not be allowed for registration, and our registered trademarks may not be maintained or enforced. During trademark registration proceedings, we may receive rejections. Although we are given an opportunity to respond to those rejections, we may be unable to overcome such rejections. In addition, in the PTOdata center development and in ~~comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose pending trademark applications~~power generation and ~~to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our applications or registrations,~~distribution facilities, and our applications or registrations may not survive such proceedings. Failure to secure such trademark registrations in the United States and in foreign jurisdictions could adversely affect our ability to market our product candidates and our business.

Confidentiality agreements with employees and others may not adequately prevent disclosure of our trade secrets and other proprietary information and may not adequately protect our intellectual property, which could impede our ability to compete.

Because we operate in the highly technical field of biotechnology we rely in part on trade secret protection in order to protect our proprietary trade secrets and unpatented know-how. However, trade secrets are difficult to protect, and we cannot be certain that others will not develop the same or similar technologies on their own. We have taken steps, including entering into confidentiality agreements with all of our employees, consultants and corporate partners, to protect our trade secrets and unpatented know-how. These agreements generally require that the other party keep confidential and not disclose to third parties all confidential information developed by the party or made knownthere has been increased demand for these products due to the ~~party~~continued increase in data center construction by us during the course of the party's relationship with us. We also typically obtain agreements from these parties which provide that inventions conceived by the party in the course of rendering services to us will be our exclusive property. However, these agreements may not be honored and may not effectively assign intellectual property rights to us. Enforcing a claim that a party illegally obtained and is using our trade secrets or know-how is difficult, expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets or know-how. The failure to obtain or maintain trade secret protection could adversely affect our competitive position.

~~We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.~~

As is common in the biotechnology and pharmaceutical industry, we employ individuals who were previously employed at other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although no claims against us are currently pending, we may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.

~~We may not be able to adequately protect our intellectual property outside of the United States.~~

The laws in some of those countries may not provide protection for our trade secrets and intellectual property. If our trade secrets or intellectual property are misappropriated in those countries, we may be without adequate remedies to address the issue. Additionally, we also rely on confidentiality and assignment of invention agreements to protect our intellectual property. These agreements provide for contractual remedies in the event of misappropriation. We do not know to what extent, if any, these agreements and any remedies for their breach, will be enforced by a foreign or domestic court. In the event our intellectual property is misappropriated or infringed upon and an adequate remedy is not available, our future prospects will greatly diminish.

Additionally, prosecuting and maintaining intellectual property (particularly patent) rights are very costly endeavors. We do not know whether legal and government fees will increase substantially and therefore are unable to predict whether cost may factor into our intellectual property strategy.

~~ITEM 1B. UNRESOLVED STAFF COMMENTS.~~

~~None.~~

~~ITEM 2. PROPERTIES.~~

Our subsidiary, BDI leases its office and laboratory space under an agreement that expires March 31, 2018. The facility comprises approximately 14,000 net rentable square feet and requires monthly base rent of $15,711 and common area maintenance costs are currently $10,145 per month. The Company believes that its leased facilities are adequate for its near-term needs.

During 2015, we maintained our administrative office, laboratory and production operations in a 40,000 square foot building in Castle Rock, Colorado, which was constructed for us in 2003. In February 2016 we completed the sale of our corporate headquarters, land and building, to a third party at a purchase price of $4,053,000. The sale generated approximately $1.8 million in net cash after expenses and mortgage payoffs. In addition to agreeing to the sale, we are renting a small space in the building under short term lease agreement that provides storage space required.

Prior to the February 2016 sale of our corporate headquarters, we owned the property subject to a mortgage with an outstanding balance of approximately $1,998,000 at December 31, 2015, payable in monthly installments of approximately $20,600 and bearing interest at an approximate average rate of 4.9%. The mortgage was repaid in full with proceeds from the sale.

~~ITEM 3. LEGAL PROCEEDINGS.~~

In December 2016, certain shareholders filed suit in District Court, Douglas County, Colorado under which the court had issued an order requiring the Company to (a) issue to its shareholders notice of the Special Meeting on or prior to January 10, 2017; (b) hold a Special Meeting of shareholders to consider the Proposals pursuant to Section 7-107-103(1)(b) of the Colorado Revised Statutes not less than 10 nor more than 60 days from the date of notice; (c) bear the expense of sending notice of the Special Meeting and (d) pay the reasonable costs and expenses incurred and to be incurred, including reasonable attorneys' fees.

On January 18, 2017, Bioptix entered into an agreement with these shareholders providing for termination of the action and on March 8, 2017 the court entered an order dismissing the action without prejudice.

We are not a party to any other legal proceedings, the adverse outcome of which would, in our management's opinion, have a material adverse effect on our business, financial condition and results of operations.

~~ITEM 4. MINE SAFETY DISCLOSURES.~~

~~Not applicable.~~

~~PART II~~

~~ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.~~

~~Market Information~~

Our common stock began trading on the Nasdaq Capital Market under the symbol "BIOP" (previously traded under the symbol "APPY" from August 28, 2007 to December 12, 2016). The following table sets forth, for the periods indicated, the high and low closing prices of our shares, on a post-split basis, as reported by ~~www.Nasdaq.com~~.

Quarter ended High Low

March 31, 2015 $ 16.32 $ 3.44
June 30, 2015 $ 5.60 $ 3.52
September 30, 2015 $ 3.67 $ 2.46
December 31, 2015 $ 2.82 $ 2.12
March 31, 2016 $ 2.70 $ 1.62
June 30, 2016 $ 4.43 $ 2.63
September 30, 2016 $ 4.54 $ 2.94
December 31, 2016 $ 4.40 $ 2.31

~~As of March 24, 2017 we had approximately 964 holders of record (excluding an indeterminable number of stockholders whose shares are held in street or "nominee" name) of our common stock.~~

~~The closing price of our common stock on March 24, 2017 was $3.37 per share.~~

During the last two fiscal years we have not paid any dividend on any class of equity securities. We anticipate that for the foreseeable future all earnings will be retained for use in our business and no cash dividends will be paid to stockholders. Any payment of cash dividends in the future on the Company's common stock will be dependent upon our financial condition, results of operations, current and anticipated cash requirements, plans for expansion,developers, as well as ~~other factors that~~ the ~~Board~~continually increasing worldwide demand for power.

Costs and expenses

Cost of ~~Directors deems relevant.~~

~~Securities Authorized under Equity Compensation Plans Information~~

The Company currently has one equity compensation plan. The Bioptix, Inc. Amended and Restated Equity Incentive Plan, as amended (the Plan) was approved by the Board of Directors and adopted by the stockholders in 2002 and is usedrevenue for plan-based awards for officers, other employees, consultants, advisors and non-employee directors. The Plan was amended and restated on June 1, 2007 and further amended on June 9, 2008, November 20, 2009, November 22, 2010, July 8, 2011, May 22, 2012, December 11, 2012, June 11, 2013, June 25, 2014, September 1, 2015, and again amended and restated effective November 30, 2016, with the most recent increase to 895,000 shares, as approved by the shareholders.

~~The following table provides information about the Company's common stock that may be issued upon the exercise of options and rights under the Plan as of December 31, 2016:~~

Plan Category Number of securities to be issued upon exercise of outstanding options Weighted average exercise price of outstanding options Number of securities remaining available for future issuance

Equity compensation plans approved
by security holders 566,747 $ 20.46 328,253

Equity compensation plans not
approved by security holders — — —

Total 566,747 $ 20.46 328,253

~~Recent Sales of Unregistered Securities~~

~~None.~~

~~ITEM 6. SELECTED FINANCIAL DATA.~~

~~Not required for Smaller Reporting Company.~~

~~ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.~~

The discussion and analysis below includes certain forward-looking statements that are subject to risks, uncertainties and other factors, as described in "Risk Factors" and elsewhere in this Annual Report on Form 10-K, that could cause our actual growth, results of operations, performance, financial position and business prospects and opportunities for this fiscal year and the periods that follow to differ materially from those expressed in, or implied by, those forward-looking statements.

~~RESULTS OF OPERATIONS~~

~~Management's plans and basis of presentation~~

The Company has experienced recurring losses and negative cash flows from operations. At December 31, 2016, the Company had approximate balances of cash and liquid investments of $13,037,000, working capital of $12,688,000, total stockholders' equity of $14,920,000 and an accumulated deficit of $109,855,000. To date, the Company has in large part relied on equity financing to fund its operations.

~~The Company expects to continue to incur losses from operations~~Bitcoin Mining for the near-term and these losses could be significant as professional and other associated expenses in connection with possible strategic considerations, evaluations and transactions, wind-down of the operations of the Company's subsidiary BDI occur, and public company and administrative related expenses are incurred. The Company believes that its current working capital position will be sufficient to meet its currently estimated cash needs through the first quarter of 2018, subject to any possible strategic transactions. The Company continues to explore obtaining additional financing. The Company is closely monitoring its cash balances, cash needs and expense levels.

~~Management's strategic plans include the following:~~

~~exploring other possible strategic options and financing opportunities available to the Company;~~

~~evaluating options to monetize, partner or license the Company's assets, including the operations of our subsidiary, BiOptix Diagnostics and the appendicitis product portfolio; and;~~

~~continuing to implement cost control initiatives to conserve cash.~~

As part of the Company's process to identify possible strategic partners, several targets were identified that the Company assessed as possibly having a business model that could be interested in discussions with Bioptix for possibly acquiring or licensing the appendicitis assets. Bioptix has made initial contact with several of these parties to gauge their interest level, which initially is more focused on the ~~APPY~~2 development assets. While management believes that the estimated potential market for an appendicitis test continues to be significant, to date Bioptix has been unable to locate a new strategic target, a partner or other third-party interested in advancing development and commercial activities of the Bioptix appendicitis portfolio. The capitalized costs on the Company's balance sheet, totaling approximately $508,000, as of December 31, 2015 for the acute appendicitis patents have been deemed 100% impaired as of December 31, 2016.

~~Sales and Cost of Sales~~

~~2016 compared to 2015~~

~~Sales of approximately $9,000 were recorded for the year~~years ended December 31, ~~2016 as compared to $101,000 in the 2015 period. Sales in 2016 related to consumable product sales from the Company's subsidiary~~2023 and ~~in 2015 related to sales~~2022 was $96.6 million and $74.3 million, respectively, representing an increase of ~~the~~ ~~APPY~~1 System products which were made to customers for initial stocking orders in the EU under commercial development agreements. Three European-based distributors accounted for 100% of the 2015 sales, and individually represented 52%, 26% and 22%, respectively, of such sales.

~~Cost of sales totaled $3,000 for the year ended December 31, 2016,~~ ~~related to consumable product sales from the Company's subsidiary~~ ~~compared to $31,000 in the 2015 period,~~ ~~related to sales of the~~ ~~APPY1 System products~~.approximately $22.3 million. As a percentage of ~~sales, gross profit was 68% in the 2016 period as compared to gross profit~~Bitcoin Mining revenue, cost of ~~70% in the 2015 period.~~

In July 2012, the Company entered into an Exclusive License Agreement with Ceva Santé Animale S.A. under which the Company granted the licensee an exclusive royalty-bearing license to the Company's intellectual propertyrevenue totaled 51.1% and ~~other assets, including patent rights and know-how, relating to recombinant single chain reproductive hormone technology~~47.4% for use in non-human mammals (Company's Animal Health Assets). The net total payments received under this agreement were recorded as deferred revenue and are being recognized as revenue over future periods. During each of the years ended December 31, ~~2016~~2023 and ~~2015, $97,000~~2022, respectively. Bitcoin Mining cost of ~~such license payments~~revenue

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consists primarily of direct production costs of mining operations, including electricity, labor, insurance and, for a portion of 2022, the variable Coinmint hosting fee, but excluding depreciation and amortization, which are separately stated. The increase was primarily due to the increase in mining capacity at the Rockdale Facility, which requires more headcount and direct costs necessary to maintain and support the mining operations. During the years ended December 31, 2023 and 2022, we earned $71.2 million and $27.3 million, respectively, in power credits, to be credited against our power invoices, as a result of temporarily pausing our operations. These credits are recognized in power curtailment credits in the statements of operations, outside of cost of revenue, but significantly reduce our overall cost to mine Bitcoin. When reducing the cost of revenue for Bitcoin Mining by the power curtailment credits allocated to Bitcoin Mining, the non-GAAP Bitcoin Mining revenue in excess of cost of revenue, net of power curtailment credits, as ~~revenue.~~

~~Selling, General~~a percentage of revenue was 73.6% and ~~Administrative Expenses~~

~~2016~~ 60.3% for the years ended December 31, 2023 and 2022, respectively, compared with Bitcoin Mining revenue in excess of cost of revenue, as a percentage of revenue of 48.9% and 52.6% (without reducing the cost of revenue for Bitcoin Mining by the power curtailment credits allocated to ~~2015~~

Bitcoin Mining) for the years ended December 31, 2023 and 2022, respectively. For a reconciliation of Bitcoin Mining revenue in excess of cost of revenue to Bitcoin Mining revenue in excess of cost of revenue, net of power curtailment credits, see the subheading below titled “Non-GAAP Measures”.

Cost of revenue for Data Center Hosting for the years ended December 31, 2023 and 2022 was $97.1 million and $61.9 million, respectively, an increase of approximately $35.2 million. The costs consisted primarily of direct power costs, with the balance primarily incurred for rent and compensation costs. The increase was primarily attributable to the significant increase in size of our Rockdale Facility over the period, which has more than doubled since 2021.

Cost of revenue for Engineering for the years ended December 31, 2023 and 2022 was $60.6 million and $57.5 million, respectively. The costs consisted primarily of direct materials and labor, as well as indirect manufacturing costs. The increase was primarily due to increased cost of labor and materials, partially offset by decreased receipts of materials resulting from increased competition for direct materials due to supply chain constraints.

Selling, general and administrative expenses induring the ~~year~~years ended December 31, ~~2016,~~2023 and 2022 totaled ~~$5,547,000,~~$100.3 million and $67.5 million, respectively. Selling, general and administrative expenses consist of stock-based compensation, legal and professional fees, and other personnel and related costs. The increase of $32.9 million was primarily attributable to an increase in compensation expense, which ~~was~~increased by $12.2 million as a ~~$1,210,000 or 18% decrease as compared~~result of hiring additional employees to support our ongoing growth, increased stock-based compensation of $7.6 million due to the ~~2015 period. The decrease resulted from~~adoption of the ~~early 2016 termination~~long-term incentive plan and additional headcount, increased legal and professional fees of ~~appendicitis related activities, combined with the facility sale in February 2016, which subsequently reduced expenses~~$8.1 million primarily related to ~~ownership~~ongoing litigation and ~~operation~~public company compliance, and an increase of $5.0 million in other general operating costs such as insurance and information technology projects to support our growth.

Depreciation and amortization expense during the facility, offset by increased expenses late in 2016 associated with the September 2016 acquisition of the Company's subsidiary, BDI. Compensation, benefits and stock based compensation was reduced by $1,067,000 in 2016, primarily associated with the termination of employees from the appendicitis activities. General operating expenses were reduced by approximately $353,000 for the period following the sale of the facility and strategic and legal expenses were reduced by $705,000 in 2016 as compared to 2015, due to less activity on those matters. Following the BDI acquisition in September 2016, expenses totaling $1,125,000 were incurred for that operation. The BDI expenses included $568,000 in compensation related expenses and $92,000 in facility expenses.

~~Research and Development~~

~~2016 compared to 2015~~

~~Research and development expenses in the year~~years ended December 31, ~~2016~~2023 and 2022 totaled ~~$863,000, which is a $1,296,000 or 60% decrease as compared to the 2015 period.~~$252.4 million and $108.0 million, respectively. The decrease was due primarily to the termination of appendicitis related activities in 2016 resulting in a $991,000 reduction in compensation, benefits and stock based related expenses and a $498,000 reduction in direct clinical and regulatory development related expenses, net of an increase of ~~$335,000~~$144.4 million was primarily due to higher depreciation expense recognized for the Rockdale Facility and the significant increase in ~~patent amortization~~the number of recently acquired and ~~impairment expenses.~~

~~Other Income and Expense~~

~~2016 compared to 2015~~

~~In 2016, the Company sold its corporate headquarters, land, building and certain fixtures and equipment to a third party at a purchase price~~deployed miners.

Change in fair value of ~~$4,053,000. The sale resulted in a gain of approximately $1,943,000 and generated approximately $1,809,000 in net cash after expenses and mortgage payoffs.~~

~~Interest expense~~Bitcoin for the year ended December 31, ~~2016, decreased to $30,000 compared to $99,000 in the 2015 period~~2023, was a gain of $184.7 million, and was recognized as a result of adopting Accounting Standards Update (“ASU”) No. 2023-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”), effective January 1, 2023, under which Bitcoin is recognized at fair value with changes in fair value recognized in net income. The gain recognized was attributable to increases in the ~~lower average debt levels following~~price of Bitcoin and the increased quantity of Bitcoin held as of December 31, 2023, as compared to December 31, 2022.

Changes in fair value of our derivative asset for the years ended December 31, 2023 and 2022 were gains of $6.7 million and $71.4 million, respectively, and were recorded to adjust the fair value of our PPA, which was classified as a derivative asset and measured at fair value. The changes in fair value were due to changes in future power prices over the applicable period.

Power curtailment credits during the years ended December 31, 2023 and 2022 were $71.2 million and $27.3 million, respectively, and represent sales of unused power under our PPA and participation in ancillary services under ERCOT Demand Response Services Programs. The amount of these credits varies from period to period depending on various factors impacting the supply of power to, and the demand for power on, the ERCOT power grid, such as weather and global fuel costs.

Realized gains on sale/exchange of Bitcoin for the years ended December 31, 2023 and 2022 were zero and $30.3 million, respectively, and impairment of Bitcoin was zero and $147.4 million, respectively. As a result of adopting ASU 2023-08 effective January 1, 2023, under which Bitcoin is recognized at fair value, gains on the sale/exchange of Bitcoin and impairment of Bitcoin are no longer recognized.

Casualty-related (charges) recoveries, net during the years ended December 31, 2023 and 2022 were $6.0 million and ($9.7) million, respectively. In December 2022, the Rockdale Facility was damaged during severe winter storms in Texas, resulting in casualty-

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related charges being recognized in 2023 and 2022. The income recognized during the year ended December 31, 2023, was the result of cash recoveries from insurance claims related to the December 2022 winter storms.

Gain (loss) on the sale/exchange of equipment during the years ended December 31, 2023 and 2022 was $(5.3) million and $16.3 million, respectively. The loss on sale during the year ended December 31, 2023 was attributable to the sale of 2,700 Antminer model S19 XP miners for gross proceeds of $6.4 million. The gain on sale during the ~~facility~~year ended December 31, 2022 was attributable to us exchanging approximately 5,700 Antminer model S19 Pro miners previously deployed at the Coinmint Facility for 5,000 factory-new Antminer model S19j Pro miners.

Other income (expense)

For the years ended December 31, 2023 and 2022, total other income (expense) was $8.5 million and ($8.6) million, respectively. The income recognized during the year ended December 31, 2023 was primarily attributable to interest income earned as a result of higher cash balances and increased interest rates. The loss incurred in 2022 primarily consisted of realized losses on marketable equity securities of $9.0 million upon the sale of all of our marketable equity securities.

Income Taxes

For the years ended December 31, 2023 and 2022, total income tax benefit (expense) was $5.1 million and $11.7 million, respectively. The decrease in income tax benefit of $6.6 million was primarily attributable to the change in the contingent consideration liability.

Non-GAAP Measures

In addition to financial measures presented under generally accepted accounting principles in the United States (“GAAP”), we consistently evaluate our use of and calculation of non-GAAP financial measures such as “Adjusted EBITDA.” EBITDA is computed as net income before interest, taxes, depreciation, and amortization. Adjusted EBITDA is a financial measure defined as EBITDA adjusted to eliminate the effects of certain non-cash and/or non-recurring items that do not reflect our ongoing strategic business operations, which management believes results in a performance measurement that represents a key indicator of our core business operations of Bitcoin mining. The adjustments include fair value adjustments such as derivative power contract adjustments, equity securities value changes, and non-cash stock-based compensation expense, in addition to financing and legacy business income and expense items.

We believe Adjusted EBITDA can be an important financial measure because it allows management, investors, and our board of directors to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period-to-period by making such adjustments. Additionally, Adjusted EBITDA is used as a performance metric for share-based compensation.

Adjusted EBITDA is provided in addition to, and should not be considered to be a substitute for, or superior to, net income, the most comparable measure under GAAP to Adjusted EBITDA. Further, Adjusted EBITDA should not be considered as an alternative to revenue growth, net income, diluted earnings per share or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. Adjusted EBITDA has limitations as an analytical tool, and you should not consider this financial measure either in isolation or as a substitute for analyzing our results as reported under GAAP.

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The following table reconciles Adjusted EBITDA to Net income (loss), the most comparable GAAP financial measure:


	Years Ended December 31,
	2023		2022		2021
Net income (loss)	$	(49,472)	$	(509,553)	$	(15,437)
Interest (income) expense		(8,222)		(454)		296
Income tax expense (benefit)		(5,093)		(11,749)		254
Depreciation and amortization		252,354		107,950		26,324
EBITDA		189,567		(413,806)		11,437

Adjustments:
Stock-based compensation expense		32,170		24,555		68,491
Acquisition-related costs		—		78		21,198
Change in fair value of derivative asset		(6,721)		(71,418)		(12,112)
Change in fair value of contingent consideration		—		(159)		975
Realized gain on sale/exchange of long-term investment		—		—		(26,260)
Realized loss on sale of marketable equity securities		—		8,996		—
Unrealized (gain) loss on marketable equity securities		—		—		13,655
Loss (gain) on sale/exchange of equipment		5,336		(16,281)		—
Casualty-related charges (recoveries), net		(5,974)		9,688		—
Impairment of goodwill		—		335,648		—
Impairment of miners		—		55,544		—
Other (income) expense		(260)		59		(2,378)
License fees		(97)		(97)		(97)
Adjusted EBITDA	$	214,021	$	(67,193)	$	74,909

In addition to Adjusted EBITDA, we believe “Bitcoin Mining revenue in excess of cost of revenue, net of power curtailment credits”, “Data Center Hosting revenue in excess of cost of revenue, net of power curtailment credits”, “Cost of revenue – Bitcoin Mining, net of power curtailment credits” and “Cost of revenue – Data Center Hosting, net of power curtailment credits” are additional non-GAAP performance metrics that represent a key indicator of our core business operations of both Bitcoin Mining and Data Center Hosting.

We believe our ability to offer power back to the grid at market-driven spot prices, thereby reducing our operating costs, is integral to our overall strategy, specifically our power management strategy and our commitment to supporting the ERCOT power grid. While participation in various grid demand response programs may impact our Bitcoin production, we view this as an important part of our partnership-driven approach with ERCOT and our commitment to being a good corporate citizen in our communities.

We also believe netting the power sales against our costs can be an important financial measure because it allows management, investors, and our board of directors to evaluate and compare our operating results, including our operating efficiencies, from period-to-period by making such adjustments. We have allocated the benefit of the power sales to our Bitcoin Mining and Data Center Hosting segments based on their proportional power consumption during the periods presented.

Bitcoin Mining revenue in excess of cost of revenue, net of power curtailment credits, Data Center Hosting revenue in excess of cost of revenue, net of power curtailment credits, Cost of revenue – Bitcoin Mining, net of power curtailment credits and Cost of revenue – Data Center Hosting, net of power curtailment credits are provided in addition to and should not be considered to be a substitute for, or superior to Revenue – Bitcoin Mining, Revenue – Data Center Hosting, Cost of revenue – Bitcoin Mining or Cost of revenue – Data Center Hosting as presented in our Consolidated Statements of Operations.

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The following table presents reconciliations of these non-GAAP performance metrics to the most comparable GAAP financial measures:


	Years Ended December 31,
	2023		2022		2021
Bitcoin Mining
Revenue (A)	$	188,996	$	156,870	$	184,422
Cost of revenue		96,597		74,335		45,513
Bitcoin Mining revenue in excess of cost of revenue (B)		92,399		82,535		138,909

Power curtailment credits allocated to Bitcoin Mining		46,646		11,991		—
Bitcoin Mining revenue in excess of cost of revenue, net of power curtailment credits (C)	$	139,045	$	94,526	$	138,909

Bitcoin Mining revenue in excess of cost of revenue, as a percentage of revenue (B/A)		48.9%		52.6%		75.3%
Bitcoin Mining revenue in excess of cost of revenue, net of power curtailment credits, as a percentage of revenue (C/A)		73.6%		60.3%		75.3%

Data Center Hosting
Revenue (A)	$	27,282	$	36,862	$	24,546
Cost of revenue		97,122		61,906		32,998
Data Center Hosting revenue in excess of cost of revenue (B)		(69,840)		(25,044)		(8,452)

Power curtailment credits allocated to Data Center Hosting		24,569		15,354		6,514
Data Center Hosting revenue in excess of cost of revenue, net of power curtailment credits (C)	$	(45,271)	$	(9,690)	$	(1,938)

Data Center Hosting revenue in excess of cost of revenue, as a percentage of revenue (B/A)		(256.0)%		(67.9)%		(34.4)%
Data Center Hosting revenue in excess of cost of revenue, net of power curtailment credits, as a percentage of revenue (C/A)		(165.9)%		(26.3)%		(7.9)%

Allocation of Power Curtailment Credits
Consolidated power curtailment credits		71,215		27,345		6,514
Percentage of consolidated power curtailment credits allocated to Bitcoin Mining		65.5%		43.9%		0.0%
Percentage of consolidated power curtailment credits allocated to Data Center Hosting		34.5%		56.1%		100.0%

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2023, we had net working capital of approximately $887.6 million, including cash and cash equivalents of $597.2 million. We reported a net loss of $49.5 million during the year ended December 31, 2023. The net loss included $91.7 million in non-cash income items, primarily consisting of $189.0 million of Bitcoin revenue and $184.7 million in Change in fair value of Bitcoin, partially offset by depreciation and amortization of $252.4 million.

During the year ended December 31, 2023, we sold 6,185 Bitcoin for proceeds of approximately $176.2 million. We monitor our balance sheet on an ongoing basis and evaluate the level of Bitcoin retained from monthly production in consideration of our cash requirements for ongoing operations and expansion.

Contractual Commitments (Miners and Mining Equipment)

During the year ended December 31, 2023, the Company paid $191.1 million in deposits and payments to MicroBT for the purchase of miners described herein. The remaining commitment of approximately $270.4 million is due in installments through approximately April 2025 based on the estimated miner delivery schedule. Total payments of $220.0 million and $50.4 million are expected to be made in 2024 and 2025, respectively.

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During the year ended December 31, 2023, the Company paid $31.2 million in deposits and payments to Midas Green Technologies, LLC (d/b/a Midas Immersion Cooling) (“Midas”) for the purchase of immersion cooling systems described herein. The remaining commitment of approximately $21.1 million is due in installments in early ~~2016.~~ 2024, based on the estimated delivery schedule.

Development of the Corsicana Facility Data Center

During the year ended December 31, 2022, we announced the initiation of a large-scale development to expand our Bitcoin mining and data center hosting capabilities in Navarro County, Texas with the acquisition of a 265-acre site where the anticipated one-gigawatt Corsicana Facility is being constructed. We received approval from ERCOT for the entire one-gigawatt capacity. The initial phase of the development of the Corsicana Facility involves the construction on the 265-acre site of 400 MW of immersion-cooled Bitcoin mining and data center hosting infrastructure spread across multiple buildings, as well as a high-voltage power substation and transmission facilities to supply power to the facility. Construction of the substation and the data centers is expected to be carried out concurrently, with self-mining operations expected to commence by the end of the first quarter of 2024, following the commissioning of the substation.

This first phase of the development of the Corsicana Facility includes land acquisition, site preparation, substation development, and transmission construction, along with construction of ancillary buildings and four buildings utilizing our immersion-cooling infrastructure and technology. We estimate that the total cost of the first phase of the development will be approximately $333.0 million, which is scheduled to be invested through mid-2024. Through December 31, 2023, we had incurred costs of approximately $217.8 million related to the development of the Corsicana Facility, which consisted of $10.1 million for land, $203.0 million of initial developments costs and equipment and a $4.7 million deposit for future power usage. We expect to incur costs of approximately $115.2 million during the first half of 2024.

Revenue from Operations

Bitcoin Mining

Funding our operations on a go-forward basis will rely significantly on our ability to mine Bitcoin at a price above our Bitcoin Mining costs and revenue generated from our Engineering customers. We expect to generate ongoing revenue from Bitcoin rewards in connection with our Bitcoin Mining operations and our ability to liquidate Bitcoin rewards at future values will be regularly evaluated to generate cash for operations.

Generating Bitcoin rewards, for example, which exceed our production and overhead costs will determine our ability to report profit margins related to such mining operations, although accounting for our reported profitability is significantly complex. Furthermore, regardless of our ability to generate proceeds from the sale of our Bitcoin produced from our Bitcoin Mining business, we may need to raise additional capital in the form of equity or debt to fund our operations and pursue our business strategy.

The ability to raise funds through the sale of equity, debt financings, or the sale of Bitcoin to maintain our operations is subject to many risks and uncertainties and, even if we were successful, future equity issuances or convertible debt offerings could result in dilution to our existing stockholders and any future debt or debt securities may contain covenants that limit our operations or ability to enter into certain transactions. Our ability to realize revenue through Bitcoin production and successfully convert Bitcoin into cash or fund overhead with Bitcoin is subject to a number of risks, including regulatory, financial and business risks, many of which are beyond our control. Additionally, we have observed significant historical volatility in the market price of Bitcoin and, as such, future prices cannot be predicted. See the discussion of risks affecting our business under Part I, Item 1A. “Risk Factors” of this Annual Report.

Data Center Hosting

In general, we provide power for our data center customers on a variable (sub-metered) basis. A customer pays us variable monthly fees for the specific amount of power utilized at rates specified in each contract, subject to certain minimums. We recognize variable power revenue each month as the uncertainty related to the consideration is resolved, power is provided to our customers, and our customers utilize the power (the customer simultaneously receives and consumes the benefits of our performance).

We generate engineering and construction services revenue from the fabrication and deployment of immersion cooling technology for Bitcoin mining customers, for which we bill the customer at a fixed monthly fee or at an hourly rate. For the construction of customer-owned equipment, revenue is recognized upon completion of each phase of the construction project, as defined in each contract. For the construction of assets owned by us but paid for and used by the customer during the term of their data center hosting contract, revenue is recognized on a straight-line basis over the remaining life of the contract.

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Maintenance services include cleaning, cabling, and other services to maintain the customers’ equipment. We bill the customer at a fixed monthly fee or at an hourly rate. Revenue is recognized as these services are provided.

Engineering

Substantially all engineering revenue is derived from the sale of custom products built to customers’ specifications under fixed-price contracts. Revenue is recognized over time as performance creates or enhances an asset with no alternative use, and for which we have an enforceable right to receive compensation as defined under the contract. The length of time required to complete a custom product varies but is typically between four to 12 weeks.

Customers are typically required to make periodic progress payments based on contractually agreed-upon milestones.

If we are unable to generate sufficient revenue from our Bitcoin Mining, Data Center Hosting, or Engineering operations when needed or secure additional sources of funding, it may be necessary to significantly reduce our current rate of spending or explore other strategic alternatives.

ATM Equity Offerings

2023 ATM Offering

In August 2023, we entered into the 2023 ATM sales agreement under which we could offer and sell up to $750.0 million in shares of our common stock.

During the year ended December 31, 2023, we received net proceeds of approximately $571.6 million ($583.3 million of gross proceeds, net of $11.7 million in commissions and expenses) from the sale of 45,758,400 shares of our common stock at a weighted average fair value of $13.07 per share under the 2023 ATM Offering.

2022 ATM Offering

In March 2022, we entered into an ATM sales agreement under which we could offer and sell up to $500.0 million in shares of our common stock.

During the year ended December 31, 2022, we received gross proceeds of approximately $304.8 million ($298.2 million, net of $6.6 million in commissions and expenses), from the sale of 37,052,612 shares of common stock at an average fair value of $8.23 per share under the 2022 ATM Offering.

During the year ended December 31, 2023, we received net proceeds of approximately $191.2 million ($195.2 million of gross proceeds, net of $3.9 million in commissions and expenses) from the sale of 16,447,645 shares of our common stock at a weighted average fair value of $11.86 per share under the 2022 ATM Offering. With the sale and issuance of these shares, all $500.0 million in shares of our common stock available for sale under the 2022 ATM Offering had been issued.

Legal Proceedings

We have been named a defendant in several class action and other investor related lawsuits as more fully described in Note 17. Commitments and Contingencies to our Consolidated Financial Statements. While we maintain policies of insurance, such policies may not cover all of the costs or expenses associated with responding to such matters or any liability or settlement associated with any lawsuits and are subject to significant deductible or retention amounts.

Operating Activities

For the year ended December 31, ~~2016,~~2023, net cash provided by operating activities was $33.1 million, which primarily consisted of net cash inflows of $174.3 million due to changes in operating assets and liabilities, including proceeds of $176.2 million from the ~~Company recorded investment~~sale of Bitcoin, partially offset by net income from non-cash reconciling items of ~~approximately $122,000 compared~~$91.7 million and the consolidated net loss of $49.5 million. The net income from non-cash reconciling items primarily consisted of Bitcoin Mining revenue of $189.0 million and change in fair value of Bitcoin of $184.7 million, partially offset by depreciation and amortization of $252.4 million, which was primarily attributable to ~~$82,000 in~~ the ~~2015 period.~~depreciation of our miners.

~~Income Taxes~~

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~~No income tax benefit was recorded on the loss for~~

For the year ended December 31, ~~2016, as management~~2022, net cash provided by operating activities was $0.5 million, which primarily consisted of net cash inflows of $95.1 million due to changes in operating assets and liabilities, including proceeds of $79.5 million from the ~~Company was unable to determine that it was more likely than not that such benefit would be realized. At December 31, 2016, the Company had a net operating loss carry forwards for income tax purposes~~sale of ~~approximately $109 million, expiring through 2035. As of December 31, 2016, the Company's subsidiary has net operating loss carry forwards of approximately $22 million for federal~~Bitcoin, and state tax purposes, which are available to offset future taxable income, if any, expiring through 2035. As of December 31, 2016, the Company's subsidiary has a capital loss carry forward of approximately $1.1 million for federal and state tax purposes, which are available to offset future capital gains, if any, expiring through December 2020. Utilization of the subsidiaries' net operating losses are subject to certain limitations under Section 382 of the Internal Revenue Coe of 1986, as amended, and other limitations under state tax laws.

~~LIQUIDITY AND CAPITAL RESOURCES~~

~~At December 31, 2016, the Company had working capital of $12,688,000, which included cash, cash equivalents and short-term investments of $13,037,000. The Company reported~~ a net loss from non-cash reconciling items of ~~$4,273,000 during~~$415.0 million, partially offset by the consolidated net loss of $509.6 million. The net loss from non-cash reconciling items primarily consisted of Impairment of goodwill of $335.6 million, impairment of Bitcoin of $147.4 million, depreciation and amortization of $108.0 million, which was primarily attributable to the depreciation of our miners, and impairment of our miners of $55.5 million, partially offset by Bitcoin Mining revenue of $156.9 million and the change in fair value of our derivative assets of $71.4 million.

Investing Activities

For the year ended December 31, ~~2016,~~2023, net cash used in investing activities was $414.8 million, which ~~included $1,320,000 in non-cash expenses including, stock-based compensation totaling $546,000, depreciation~~primarily consisted of deposits paid on equipment of $230.4 million, which was primarily related to the purchase of new miners, and ~~amortization totaling $239,000~~purchases of property and ~~patent impairments~~equipment of ~~$535,000. These amounts were net~~$193.7 million, which was primarily related to the development of the ~~gain on sale~~Corsicana Facility and the now complete expansion of the ~~facility of $1,943,000 and amortization of deferred revenue totaling $97,000.~~

Effective January 14, 2017, we adopted a plan to exit this acquired business and commenced a significant reduction in the workforce. The decision to adopt this plan was made following an evaluation by the Company's Board of Directors in January 2017, of the estimated results of operations projected during the near to mid-term period for BDI, including consideration of product development required and updated sales forecasts, and estimated additional cash resources required. We are reviewing possible strategic alternatives relative to the business to maximize shareholder value. The Company's continuing evaluation following adoption of the plan, estimates that it will incur charges to operations in early 2017 of approximately, $2.7 million, consisting of 1) write-down of tangible and intangible assets estimated at approximately $2.2 million, and 2) wind-down, severance and transaction expenses estimated at approximately $500,000.

Currently, the Company is focused on pursuit of a strategic transaction with a new partner following adoption of the plan to exit the BDI business. Bioptix is also attempting to locate a partner or partners for the BDI business or assets, and locating a partner or other third-party interested in advancing development and or commercial activities of the Bioptix appendicitis portfolio. We also continue the relationship with Ceva Santé Animale S.A. as they advance on developing the Company's licensed animal health assets.

We expect to continue to incur losses from operations for the near-term and these losses could be significant as we incur professional and other associated expenses in connection with exiting the BDI business, strategic evaluation expenses, appendicitis portfolio related expenses, and public company and administrative related expenses. We believe that our current working capital position will be sufficient to meet our estimated cash needs through the first quarter of 2018, subject to any possible strategic transactions. We may pursue potential additional financing opportunities; however, there can be no assurance that we will be able to obtain sufficient additional financing on terms acceptable to us, if at all. We are closely monitoring our cash balances, cash needs and expense levels. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might result in our possible inability to continue as a going concern.

In July 2012, the Company entered into an exclusive license agreement with Ceva Santé Animale S.A., under which the Company granted the licensee an exclusive royalty-bearing license, until December 31, 2028, to the Company's intellectual property and other assets, including patent rights and know-how, relating to recombinant single chain reproductive hormone technology for use in non-human mammals (the "Company's Animal Health Assets"). The license agreement is subject to termination by the licensee (a) for convenience on 180 days prior written notice, (b) in the licensee's discretion in the event of a sale or other disposal of the Company's animal health assets, (c) in the licensee's discretion upon a change in control of the Company, (d) for a material breach of the license agreement by the Company, or (e) in the licensee's discretion, if the Company becomes insolvent. The license agreement is also terminable by the Company if there is a material breach of the license agreement by the licensee, or if the licensee challenges the Company's ownership of designated intellectual property. The license agreement includes a sublicense of the technology licensed to the Company by WU. Under the terms of the WU license agreement, a portion of license fees and royalties Bioptix receives from sublicensing agreements will be paid to WU. The obligation for such license fees due to WU is included in accrued expenses at December 31, 2016.

~~Under the License Agreement as of December 31, 2016, the following future milestone payments are provided, assuming future milestones are successfully achieved:~~

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~~Milestone payments, totaling up to a potential of $1.1 million in the aggregate, based on the satisfactory conclusion of milestones as defined in the License Agreement;~~

●

~~Potential for milestone payments of up to an additional $2 million for development and receipt of regulatory approval for additional licensed products; and~~

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~~Royalties, at low double digit rates, based on sales of licensed products.~~

The Company periodically enters into generally short-term consulting and development agreements. Such commitments at any point in time may be significant but the agreements typically contain cancellation provisions.

Prior to the February 2016 sale of our corporate headquarters, we had a permanent mortgage on our land and building that was refinanced in May 2013. The mortgage was held by a commercial bank and included a portion guaranteed by the U. S. Small Business Administration. The loan was collateralized by the real property and the SBA portion was also personally guaranteed by a former officer of the Company. The commercial bank loan terms included a payment schedule based on a fifteen year amortization, with a balloon maturity at five years. The commercial bank portion had an interest rate fixed at 3.95%, and the SBA portion bore interest at the rate of 5.86%. The commercial bank portion of the loan required total monthly payments of approximately $11,700, which included approximately $4,000 per month in interest. The SBA portion of the loan required total monthly payments of approximately $9,000 through July 2023, which included approximately $3,500 per month in interest and fees in 2015.

On February 25, 2016, we completed the sale of our corporate headquarters, land and building, to a third party at a purchase price of $4,053,000. The sale generated approximately $1.8 million in net cash after expenses and payoff of the mortgages described above. As part of the sale, we leased back space in the building under a month-to-month lease that provides storage space.

Due to market conditions potentially affecting all industries and the economy as a whole, management has placed increased emphasis on monitoring the risks associated with the current environment, particularly the investment parameters of the short term investments, the recoverability of current assets, the fair value of assets, and the Company's liquidity. At this point in time, there has not been a material impact on the Company's assets and liquidity. Management will continue to monitor the risks associated with the current environment and their impact on the Company's results.

~~Operating Activities~~

~~Net cash consumed by operating activities was $5,520,000 during~~Rockdale Facility.

For the year ended December 31, ~~2016. Cash~~2022, net cash used in investing activities was ~~consumed by~~$354.9 million, which primarily consisted of deposits paid on equipment of $194.9 million, which was primarily related to the ~~loss~~purchase of ~~$4,273,000, less non-cash expenses of $1,320,000 for stock-based compensation, depreciation~~new miners, and ~~amortization, and impairment of patent costs, offset by the gain on sale~~purchases of property and equipment of ~~$1,943,000 and amortization of license fees totaling $97,000. Decreases in prepaid and other current assets of $259,000 provided cash,~~$148.4 million, which was primarily related to ~~routine changes in operating activities. There was a $760,000 decrease in accounts payable and accrued expenses in~~the expansion of the Rockdale Facility.

Financing Activities

For the year ended December 31, ~~2016, primarily due to the payment of 2015 accrued incentives in early 2016, and a reduction in overall expenses due to the wind-down of the appendicitis activities.~~

~~Net~~2023, net cash ~~consumed~~provided by ~~operating~~financing activities was ~~$6,869,000 during~~$748.5 million, which primarily consisted of net proceeds from the issuance of our common stock in connection with our ATM offerings of $761.8 million, partially offset by the repurchase of shares of common stock withheld to satisfy employee withholding taxes of $14.0 million in connection with the settlement of vested equity awards granted under the 2019 Equity Incentive Plan.

For the year ended December 31, ~~2015. Cash~~2022, net cash provided by financing activities was ~~consumed by~~$272.3 million, which primarily consisted of net proceeds from the ~~loss~~issuance of ~~$8,758,000, less net non-cash expenses~~our common stock in connection with our ATM Offerings of ~~$1,143,000 for stock-based compensation and depreciation and amortization totaling $254,000, patent impairments of $188,000,~~$298.2 million, partially offset by ~~the amortization of license fee totaling $97,000 and~~ ~~gain from sale of equipment totaling $8,000. Increases in prepaid and other current assets of $388,000 used cash, primarily~~payments on our contingent consideration liability related to ~~routine changes~~the acquisition of Whinstone of $15.7 million and the repurchase of shares of common stock withheld to satisfy employee withholding taxes of $10.1 million in ~~operating activities. There was an $180,000 increase in accounts payable and accrued expenses in~~connection with the ~~year ended December 31, 2015, primarily due to strategic evaluations activities. Accrued compensation decreased by $160,000, primarily due to reduction in staff.~~

~~Investing Activities~~

~~Net cash inflows from investing activities provided $9,348,000 during the year ended December 31, 2016. Sales~~settlement of marketable securities investments totaled approximately $24,489,000 and marketable securities purchased totaled approximately $16,876,000. A $26,000 use of cash was attributable to additional costs incurred from patent filings and $35,000 was used in equipment purchases. The sale of the land, building and assets generated approximately $1,809,000 in cash. As part of the BDI acquisition $17,000 in cash was acquired. During late 2016, the remaining minority interest in BDI was acquired for $29,000.

Net cash inflows from investing activities provided $5,795,000 during the year ended December 31, 2015. Sales of marketable securities investments totaled approximately $33,057,000 and marketable securities purchased totaled approximately $27,178,000. ~~A $92,000 use of cash was attributable to additional costs incurred from patent filings. Proceeds from sale of equipment totaled $8,000.~~

~~Financing Activities~~

~~Net cash outflows from financing activities consumed $311,000 during the year ended December 31, 2016 for scheduled payments~~vested equity awards granted under ~~the Company's debt agreements.~~

~~Net cash outflows from financing activities consumed $454,000 during the year ended December 31, 2015 for scheduled payments under the Company's debt agreements.~~

our 2019 Equity Incentive Plan.

Critical Accounting ~~Policies~~

Estimates

The preparation of financial statements in conformity with ~~accounting principles generally accepted in the United States of America (GAAP)~~GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. The most significant accounting estimates inherent in the preparation of our financial statements include ~~estimates associated with~~ revenue recognition, valuing the derivative asset classified under Level 3 fair value hierarchy, determining the useful lives and recoverability of long-lived assets, impairment analysis of fixed assets and finite-lived intangibles, stock-based compensation, and ~~stock-based compensation.~~

~~The Company's~~the valuation allowance associated with our deferred tax assets.

Our financial position, results of operations and cash flows are impacted by the accounting policies ~~the Company has~~we have adopted. In order to get a full understanding of ~~the Company's~~our financial statements, one must have a clear understanding of the accounting policies employed. A summary of ~~the Company's~~our critical accounting policies follows:

~~Investments~~: ~~The Company invests excess cash from time to time in highly liquid debt and equity securities of highly rated entities which are classified as trading securities. Such amounts~~

Bitcoin

Bitcoin purchased are recorded at cost and Bitcoin awarded to us through our mining activities are accounted for in connection with our revenue recognition policy.

Bitcoin held are accounted for as intangible assets with indefinite useful lives. Bitcoin is measured on a first-in-first-out (“FIFO”). The Company adopted ASU 2023-08 effective January 1, 2023, which requires our Bitcoin to be valued at fair value each reporting period with changes in fair value recorded in net income.

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Prior to the adoption of ASU 2023-08, Bitcoin was measured for impairment whenever indicators of impairment are identified based on the intraday low quoted price of Bitcoin. To the extent an impairment loss was recognized, the loss established the new cost basis of the Bitcoin. Subsequent reversal of impairment losses was not permitted.

Bitcoin is classified on our balance sheet as a current asset due to our ability to sell it in a highly liquid marketplace and our intent to liquidate our Bitcoin to support operations when needed.

Purchases and sales of Bitcoin by us and Bitcoin awarded to us are included within Cash flows from operating activities on the Consolidated Statements of Cash Flows as substantially all of our Bitcoin production is sold within days of being produced, but never more than our production on a monthly basis per our internal policy. The change in fair value of Bitcoin is included in Operating income (expense) on the Consolidated Statements of Operations. During 2024, the Company made a strategic decision to temporarily cease the sales of all its Bitcoin production and instead, increase its Bitcoin holdings. The Company will continue to monitor its cash needs and expects to sell Bitcoin in the future to fund its cash expenditures.

Impairment of long-lived assets

Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

Revenue recognition

Bitcoin Mining

We have entered into digital asset mining pools by executing contracts with mining pool operators to provide computing power to the mining pool. Our enforceable right to compensation begins only when, and lasts as long as, we provide computing power to the mining pool operator and is created as power is provided over time. The only consideration due to us relates to the provision of computing power. The contracts are terminable at any time by and at no cost to us, and by the pool operator under certain conditions specified in the contract. Providing computing power in digital asset transaction verification services is an output of our ordinary activities. Providing such computing power is the only performance obligation in our contracts with mining pool operators.

The transaction consideration we receive, if any, is noncash consideration in the form of Bitcoin. Changes in the fair value of the noncash consideration due to form of the consideration (changes in the market price of Bitcoin) are not included in the transaction price and therefore, are not included in revenue. Certain mining pool operators charge fees to cover the costs of maintaining the pool and are ~~generally classified~~deducted from amounts we may otherwise earn and are treated as a reduction to the consideration received. Fees fluctuate and historically have been no more than approximately 2% per reward earned, on average. The terms of the agreements provide that neither party can dispute settlement terms after approximately thirty-five days following settlement. In exchange for providing computing power, we are entitled to either:

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a Full-Pay-Per-Share payout of Bitcoin based on a contractual formula, which primarily calculates the hash rate provided by us to the mining pool as a percentage of total network hash rate, and other inputs. We are entitled to consideration even if a block is not successfully placed by the mining pool operator. The contract is in effect until terminated by either party.

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The consideration is all variable. Because it is probable that a significant reversal of cumulative revenue will not occur and we are able to calculate the payout based on the contractual formula, noncash consideration is estimated and recognized based on the spot price of Bitcoin determined using our principal market for Bitcoin at the inception of each contract. Noncash consideration is measured at fair value at contract inception. Fair value of the crypto asset consideration is determined using the quoted price on our principal market for Bitcoin at the beginning of the contract period at the single bitcoin level (one bitcoin). This amount is recognized in revenue as hash rate is provided.

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We transitioned completely to this mining pool type in December 2022 and utilized it for the year ended December 31, 2023.

Or:

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a fractional share of the fixed Bitcoin award the mining pool operator receives (less digital asset transaction fees to the mining pool operator which are immaterial and are recorded as a deduction from revenue) for successfully adding a block to the blockchain based on a proportion of our “scoring hash rate” to the pool’s “scoring hash rate” where the scoring hash rate as defined by the pool is the exponential moving average of the hash power contributed by us or by all pool members combined. Our fractional share of the Bitcoin reward is based on the proportion of computing power we contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm.

●

Because the consideration to which we expect to be entitled for providing computing power is entirely variable, as well as being noncash consideration, we assess the estimated amount of the variable noncash consideration to which it expects to be entitled for providing computing power at contract inception and subsequently, to determine when and to what extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur once the uncertainty associated with the variable consideration is subsequently resolved (the “constraint”). Only when significant revenue reversal is concluded probable of not occurring can estimated variable consideration be included in revenue. Based on evaluation of likelihood and magnitude of a reversal in applying the constraint, the estimated variable noncash consideration is constrained from inclusion in revenue until the end of the contract term, when the underlying uncertainties have been resolved and number of Bitcoin to which we are entitled becomes known.

●

Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pool operator successfully places a block (by being the first to solve an algorithm) and we receive confirmation of the consideration it will receive, at which time revenue is recognized based on the spot rate of Bitcoin determined using our principal market for Bitcoin at the time of receipt.

There is no significant financing component in these transactions, due to the performance obligations and settlement of the transactions being on a daily basis.

Data Center Hosting

In general, we provide power for our data center customers on a variable (sub-metered) basis. A customer pays us variable monthly fees for the specific amount of power utilized at rates specified in each contract, subject to certain minimums. We recognize variable power revenue each month as the ~~Company does not intend~~uncertainty related to ~~hold~~ the ~~investments beyond twelve months. Such excess funds are invested under~~consideration is resolved, power is provided to our customers, and our customers utilize the ~~Company's investment policy but an unexpected decline or loss could~~power (the customer simultaneously receives and consumes the benefits of our performance).

We have ~~an adverse and material effect on the carrying value, recoverability or investment returns~~determined that our contracts contain a series of ~~such investments. Our Board has approved an investment policy covering the investment parameters~~performance obligations which qualify to be ~~followed with~~recognized under a practical expedient available known as the ~~primary goals being~~“right to invoice.” This determination allows variable consideration in such contracts to be allocated to and recognized in the ~~safety~~period to which the consideration relates, which is typically the period in which it is billed, rather than requiring estimation of ~~principal amounts and maintaining liquidity~~variable consideration at the inception of the ~~fund. The policy provides~~contract. We have also determined that the contracts contain a significant financing component because the timing of revenue recognition differs from the timing of invoicing by a period, exceeding one year.

We generate engineering and construction services revenue from the fabrication and deployment of immersion cooling technology for ~~minimum investment rating requirements~~Bitcoin mining customers, for which we bill the customer at a fixed monthly fee or at an hourly rate. For the construction of customer-owned equipment, revenue is recognized upon completion of each phase of the construction project, as ~~well as limitations~~defined in each contract. For the construction of assets owned by us but paid for and used by the customer during the term of their data center hosting contract, revenue is recognized on ~~investment duration and concentrations.~~

~~Intangible Assets~~: ~~Intangible assets primarily represent legal costs and filings associated with obtaining patents on the Company's new discoveries. The Company amortizes these costs~~a straight-line basis over the ~~shorter of the legal~~remaining life of the ~~patent~~contract. Due to the long-term nature of the hosting contracts, there is a significant financing component in transactions where the customer paid for the construction of assets we own.

Maintenance services include cleaning, cabling, and other services to maintain the customers’ equipment. We bill the customer at a fixed monthly fee or ~~its~~at an hourly rate. Revenue is recognized as these services are provided.

Deferred revenue is primarily from advance payments received and is recognized to revenue in a manner consistent with the service being provided, as described above.

Our primary data center hosting contracts contain Service Level Agreement clauses, which guarantee a certain percentage of time the power will be available to our customer. In the rare case that we may incur penalties under these clauses, we recognize the

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payment as variable consideration and a reduction of the transaction price and, therefore, of revenue, when not in exchange for a good or service from the customer.

Engineering

Substantially all revenue is derived from the sale of custom products built to customers’ specifications under fixed-price contracts with one identified performance obligation. Revenue is recognized over time as performance creates or enhances an asset with no alternative use, and for which we have an enforceable right to receive compensation as defined under the contract.

To determine the amount of revenue to recognize over time, we utilize the cost-to-cost method as management believes cost incurred best represents the amount of work completed and remaining on projects. As the cost-to-cost method is driven by incurred cost, we calculate the percentage of completion by dividing costs incurred to date by the total estimated ~~economic life~~cost. The percentage of completion is then multiplied by estimated revenue to determine inception-to-date revenue. Approved changes to design plans are generally recognized as a cumulative adjustment to the percentage of completion calculation. Revenue recognized for the period is the current inception-to-date recognized revenue less the prior period inception-to-date recognized revenue. If a contract is projected to result in a loss, the entire contract loss is recognized in the period when the loss was first determined, and any additional losses incurred subsequently are recognized in the subsequent reporting periods as they are identified. Additionally, contract costs incurred to date and expected total contract costs are continuously monitored during the term of the contract.

Changes in the job performance, job conditions and final contract settlements are factors that influence management’s assessment of total contract value and the total estimated costs to complete those contracts, and therefore, profit and revenue recognition. Any costs to obtain a contract are not material to our financial statements and would be expensed as incurred. Because of the inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change within the near term. The length of time for us to complete a custom product varies but is typically between four to 12 weeks.

Customers are typically required to make periodic progress payments to us based on contractually agreed-upon milestones. Invoices are due net, 30 days, and retainage, if any, is generally due 30 days after delivery. Taxes collected from customers and remitted to governmental authorities are excluded from revenue. Shipping and handling costs are treated as fulfillment costs and are included in cost of sales.

Fair value of financial instruments

We recognize financial instruments under the following fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 — assets and liabilities whose significant value drivers are unobservable.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on our market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the ~~straight-line method.~~lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. The ~~Company tests~~carrying amounts of our financial assets and liabilities, such as cash and cash equivalents, and accounts payable, approximate fair value due to the short-term nature of these instruments.

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Finite-lived intangible assets

Intangible assets with finite lives ~~upon significant~~are comprised of customer contracts, trademarks, UL Listings, and patents that are amortized on a straight-line basis over their expected useful lives, which is their contractual term or estimated useful life. Patents costs consisting of filing and legal fees incurred are initially recorded at cost. Certain patents are in the legal application process and therefore are not currently being amortized. We perform assessments to determine whether finite-lived classification is still appropriate at least annually. The carrying value of finite-lived assets and their remaining useful lives are also reviewed at least annually to determine if circumstances exist which may indicate a potential impairment or revision to the amortization period. A finite-lived intangible asset is considered to be impaired if its carrying value exceeds the estimated future undiscounted cash flows to be derived from it. We exercise judgment in selecting the assumptions used in the estimated future undiscounted cash flows analysis. Impairment is measured by the amount that the carrying value exceeds fair value.

The use of different estimates or assumptions could result in significantly different fair values for our reporting units and intangible assets.

Operating segments

Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. Our CODM is comprised of several members of our executive management team who use revenue and cost of revenue of our three reporting segments to assess the performance of the business of our reportable operating segments.

Stock-based compensation

We account for share-based payment awards exchanged for services at the estimated grant date fair value of the award, which is based on the fair market value of our common stock at the time of the grant. For performance-based share-based payment awards, we recognize compensation cost over the performance period when achievement of the milestones and targets is probable.

We have elected to account for forfeitures of awards as they occur.

Recently issued and adopted accounting pronouncements

We continually assess any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects our financial reporting, we undertake a review to determine the consequences of the change to our financial statements and believe that there are proper controls in place to ascertain that our financial statements properly reflect the change.

See Note 2. Significant Accounting Policies and Recent Accounting Pronouncements to our Consolidated Financial Statements for a description of applicable recent accounting pronouncements and any material impact on our financial statements.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following discussion about our market risk exposures involves forward-looking statements. Actual results could differ materially from those projected in our forward-looking statements. For more information regarding the forward-looking statements used in this section and elsewhere in this Annual Report, see the “Cautionary Note Regarding Forward-Looking Statements” at the forepart of this Annual Report.

Risk Regarding the Price of Bitcoin.

Our business and development strategy is focused on maintaining and expanding our Bitcoin Mining operations to maximize the amount of new Bitcoin rewards we earn. As of December 31, 2023, we held 7,362 Bitcoin that was recognized at its fair value of $311.2 million. All Bitcoin held were produced from our Bitcoin Mining operations.

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We cannot accurately predict the future market price of Bitcoin, the future value of which will affect revenue from our operations, and any future declines in the fair value of the Bitcoin we mine and hold for our account would be reported in our financial statements and results of operations as a charge against net income, which could have a material adverse effect on the market price for our securities.

A 10% increase or decrease in both the price of Bitcoin produced during the year ended December 31, 2023 and the fair value of Bitcoin as of December 31, 2023, would have increased or decreased net income by approximately $48.9 million.

A 10% increase or decrease in future power prices at December 31, 2023, would have increased or decreased net income by approximately $43.2 million.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


Reports of Independent Registered Public Accounting Firms*	F-1
Consolidated Balance Sheets as of December 31, 2023 and 2022	F-4
Consolidated Statements of Operations for the years ended December 31, 2023, 2022, and 2021	F-5
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023, 2022, and 2021	F-6
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023, 2022, and 2021	F-7
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022, and 2021	F-8
Notes to Consolidated Financial Statements	F-10

* Deloitte & Touche LLP, PCAOB Firm ID No. 34

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Riot Platforms, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Riot Platforms, Inc. and subsidiaries (the "Company") as of December 31, 2023, the related consolidated statement of operations, comprehensive income (loss), stockholders' equity, and cash flows, for the year ended December 31, 2023 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 22, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 2 to the financial statements, the Company has changed its method of accounting for Bitcoin to fair value, with changes in fair value recognized in net income, effective as of January 1, 2023 due to the adoption of Accounting Standards Update (“ASU”) No. 2023-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”).

Basis for Opinion

These financial statements are the responsibility of the Company's ~~business environment.~~ management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

The ~~testing resulted~~critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in ~~approximately $535,000~~any way our opinion on the financial statements, taken as a whole, and ~~$188,000~~we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Bitcoin Mining Revenue – Refer to Notes 2 and 4 to the financial statements

Critical Audit Matter Description

The Company participates in a digital asset mining pool ("the mining pool”) by providing computing power to the mining pool operator. The Company recognizes revenue as they fulfill their performance obligation over time by providing computing power in exchange for bitcoin. Once the computing power is transferred to the mining pool operator, the mining pool operator will compensate

F-1

Table of ~~net patent impairment charges during~~Contents

the Company for the computing power provided with a payout in bitcoin. For the years ended December 31, ~~2016~~2023, and ~~2015,~~2022, Bitcoin Mining Revenue was $189.0 million, and $156.9 million, respectively.

We identified the auditing of bitcoin mining revenue as a critical audit matter due to the extent of audit effort required to perform audit procedures over the Company’s computing power provided to the mining pool operator, the associated contractual payouts including the blockchain contractual inputs, the Company’s valuation of bitcoin received from the mining pool operator, and evaluating the results of those procedures.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s process for recording bitcoin mining revenue included the following, among others:

●

With the assistance of our Information Technology (IT) specialists, we identified the significant systems used to monitor computing power and tested the general IT controls over each of these systems.

●

We tested the effectiveness of controls over the Company’s mining revenue calculation.

●

We tested the amount of the mining revenue recorded by developing an expectation for the amount recorded based on the computing power provided to the mining pool operator per the calculation prescribed in the contract with the mining pool operator and comparing our expectation to the amount recorded by the Company.

●

We confirmed with the mining pool operator the significant contractual terms utilized in the determination of mining revenue, total mining rewards earned, and the digital asset wallet addressesin which the rewards are deposited.

●

We utilized our proprietary audit tool to independently obtain evidence from the Bitcoin blockchain to test the occurrence and accuracy of mining revenue.

●

With the assistance of our fair value specialists, we evaluated the reasonableness of the prices utilized by the Company to value bitcoin by obtaining independent bitcoin prices and comparing those to the prices selected by the Company.

/s/ DELOITTE & TOUCHE LLP

Houston, TX

February 22, 2024

We have served as the Company’s auditor since 2023.

F-2

~~Long-Lived Assets~~:

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of

Riot Platforms, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet ofRiot Platforms, Inc. and Subsidiaries (the “Company”) as of December 31, 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the two years in the period endedDecember 31, 2022, and the related notes(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Marcum llp

Marcum llp

We have served as the Company’s auditor from 2019 through May 18, 2023.

Los Angeles, CA
March 2, 2023

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Riot Platforms, Inc.

Consolidated Balance Sheets

(in thousands, except for share and per share amounts)


	December 31,		December 31,
	2023		2022
ASSETS
Current assets
Cash and cash equivalents	$	597,169	$	230,328
Accounts receivable, net		24,706		26,932
Contract assets, including retainage of $3,166 and $3,012, respectively		15,359		19,743
Prepaid expenses and other current assets		29,107		32,661
Bitcoin		311,178		109,420
Derivative asset, current portion		30,781		—
Future power credits, current portion		271		24,297
Total current assets		1,008,571		443,381

Property and equipment, net		704,194		692,555
Deposits		215,009		42,433
Finite-lived intangible assets, net		15,697		21,477
Derivative asset, less current portion		73,437		97,497
Operating lease right-of-use assets		20,413		21,673
Future power credits, less current portion		638		638
Other long-term assets		13,121		310
Total assets	$	2,051,080	$	1,319,964

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	23,157	$	18,445
Contract liabilities		4,073		8,446
Accrued expenses		62,628		65,464
Deferred gain on acquisition post-close dispute settlement		26,007		—
Deferred revenue, current portion		2,458		2,882
Contingent consideration liability - future power credits, current portion		271		24,297
Operating lease liability, current portion		2,421		2,009
Total current liabilities		121,015		121,543

Deferred revenue, less current portion		15,801		17,869
Operating lease liability, less current portion		18,924		20,242
Contingent consideration liability - future power credits, less current portion		638		638
Other long-term liabilities		6,680		8,230
Total liabilities		163,058		168,522

Commitments and contingencies - Note 17

Stockholders’ equity
Preferred stock, no par value, 15,000,000 shares authorized:
2% Series A Convertible Preferred stock, 2,000,000 shares authorized; no shares issued and outstanding as of December 31, 2023 and December 31, 2022		—		—
0% Series B Convertible Preferred stock, 1,750,001 shares authorized; no shares issued and outstanding as of December 31, 2023 and December 31, 2022		—		—
Common stock, no par value; 340,000,000 shares authorized; 230,836,624 and 167,751,112 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively		2,687,692		1,907,784
Accumulated deficit		(799,820)		(756,342)
Accumulated other comprehensive income (loss), net		150		—
Total stockholders’ equity		1,888,022		1,151,442
Total liabilities and stockholders’ equity	$	2,051,080	$	1,319,964

See accompanying Notes to Consolidated Financial Statements.

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Riot Platforms, Inc.

Consolidated Statements of Operations

(in thousands, except for share and per share amounts)



	Years Ended December 31,
	2023		2022		2021
Revenue:
Bitcoin Mining	$	188,996	$	156,870	$	184,422
Data Center Hosting		27,282		36,862		24,546
Engineering		64,303		65,342		4,178
Other revenue		97		97		97
Total revenue		280,678		259,171		213,243

Costs and expenses:
Cost of revenue:
Bitcoin Mining		96,597		74,335		45,513
Data Center Hosting		97,122		61,906		32,998
Engineering		60,614		57,455		3,582
Acquisition-related costs		—		78		21,198
Selling, general, and administrative		100,346		67,452		87,429
Depreciation and amortization		252,354		107,950		26,324
Change in fair value of Bitcoin		(184,734)		—		—
Change in fair value of derivative asset		(6,721)		(71,418)		(12,112)
Power curtailment credits		(71,215)		(27,345)		(6,514)
Change in fair value of contingent consideration		—		(159)		975
Realized gain on sale of Bitcoin		—		(30,346)		(253)
Loss (gain) on sale/exchange of equipment		5,336		(16,281)		—
Casualty-related charges (recoveries), net		(5,974)		9,688		—
Impairment of Bitcoin		—		147,365		43,973
Impairment of goodwill		—		335,648		—
Impairment of miners		—		55,544		—
Total costs and expenses		343,725		771,872		243,113
Operating income (loss)		(63,047)		(512,701)		(29,870)

Other income (expense):
Interest income (expense)		8,222		454		(296)
Realized loss on sale of marketable equity securities		—		(8,996)		—
Realized gain on sale/exchange of long-term investment		—		—		26,260
Unrealized gain (loss) on marketable equity securities		—		—		(13,655)
Other income (expense)		260		(59)		2,378
Total other income (expense)		8,482		(8,601)		14,687

Net income (loss) before taxes		(54,565)		(521,302)		(15,183)

Current income tax benefit (expense)		48		(789)		(254)
Deferred income tax benefit (expense)		5,045		12,538		—
Total income tax benefit (expense)		5,093		11,749		(254)

Net income (loss)	$	(49,472)	$	(509,553)		(15,437)

Basic and diluted net income (loss) per share	$	(0.28)	$	(3.65)	$	(0.17)
Basic and diluted weighted average number of shares outstanding		175,026,051		139,433,901		93,452,764

See accompanying Notes to Consolidated Financial Statements.

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Riot Platforms, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)


	Years Ended December 31,
	2023		2022		2021
Net income (loss)	$	(49,472)	$	(509,553)	$	(15,437)
Other comprehensive income (loss):
Unrealized holding gains (losses) on convertible note		150		—		—
Comprehensive income (loss)	$	(49,322)	$	(509,553)	$	(15,437)

See accompanying Notes to Consolidated Financial Statements.

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Riot Platforms, Inc.

Consolidated Statements of Stockholders’ Equity

(in thousands, except for share and per share amounts)


									Accumulated other		Total
	Preferred Stock			Common Stock			Accumulated		comprehensive		stockholders’
	Shares	Amount		Shares	Amount		deficit		income (loss)		equity
Balance as of January 1, 2021	4,199	$	22	78,523,517	$	506,961	$	(231,352)	$	—	$	275,631
Delivery of common stock underlying restricted stock units, net of shares settled for tax withholding	—		—	464,021		(5,082)		—		—		(5,082)
Issuance of common stock related to exercise of warrants	—		—	415,657		806		—		—		806
Issuance of common stock for settlement of 1,257,235 warrants on a cashless basis	—		—	543,686		—		—		—		—
Issuance of common stock in connection with the acquisition of Whinstone	—		—	11,800,000		326,152		—		—		326,152
Issuance of common stock in connection with the acquisition of ESS Metron, net of 70,156 shares withheld	—		—	645,248		26,735		—		—		26,735
Issuance of common stock/At-the-market offering, net of offering costs	—		—	24,344,057		669,916		—		—		669,916
Issuance of common stock warrant for settlement of advisory fees	—		—	—		1,157		—		—		1,157
Conversion of preferred stock to common stock	(2,000)		(11)	2,000		11		—		—		—
Stock option exercise	—		—	10,286		—		—		—		—
Stock-based compensation	—		—	—		68,491		—		—		68,491
Net income (loss)	—		—	—		—		(15,437)		—		(15,437)
Balance as of December 31, 2021	2,199		11	116,748,472		1,595,147		(246,789)		—		1,348,369
Issuance of restricted stock, net of forfeitures and delivery of common stock underlying stock awards, net of tax withholding	—		—	13,947,829		(10,138)		—		—		(10,138)
Issuance of common stock/At-the-market offering, net of offering costs	—		—	37,052,612		298,209		—		—		298,209
Conversion of preferred stock to common stock	(2,199)		(11)	2,199		11		—		—		—
Stock-based compensation	—		—	—		24,555		—		—		24,555
Net income (loss)	—		—	—		—		(509,553)		—		(509,553)
Balance as of December 31, 2022	—		—	167,751,112		1,907,784		(756,342)		—		1,151,442
Cumulative effect upon adoption of ASU 2023-08	—		—	—		—		5,994		—		5,994
Issuance of restricted stock, net of forfeitures and delivery of common stock underlying stock awards, net of tax withholding	—		—	809,302		(14,035)		—		—		(14,035)
Issuance of common stock/At-the-market offering, net of offering costs	—		—	62,206,045		761,773		—		—		761,773
Issuance of common stock in connection with acquisition of ESS Metron, LLC	—		—	70,165		—		—		—		—
Stock-based compensation	—		—	—		32,170		—		—		32,170
Net income (loss)	—		—	—		—		(49,472)		—		(49,472)
Other comprehensive income (loss)	—		—	—		—		—		150		150
Balance as of December 31, 2023	—	$	—	230,836,624	$	2,687,692	$	(799,820)	$	150	$	1,888,022

See accompanying Notes to Consolidated Financial Statements.

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Riot Platforms, Inc.

Consolidated Statements of Cash Flows

(in thousands)



	Years Ended December 31,
	2023		2022		2021
Operating activities
Net income (loss)	$	(49,472)	$	(509,553)	$	(15,437)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Stock-based compensation		32,170		24,555		68,491
Depreciation and amortization		252,354		107,950		26,324
Amortization of license fee revenue		(97)		(97)		(97)
Noncash lease expense		2,509		12,181		275
Deferred income tax expense (benefit)		(5,045)		(11,749)		254
Issuance of common stock warrant for settlement of advisory fees		—		—		1,157
Impairment of Bitcoin		—		147,365		43,973
Impairment of goodwill		—		335,648		—
Impairment of miners		—		55,544		—
Change in fair value of Bitcoin		(184,734)		—		—
Change in fair value of derivative asset		(6,721)		(71,418)		(12,112)
Change in fair value of contingent consideration		—		(159)		975
Realized loss on sale of marketable equity securities		—		8,996		—
Realized gain on sale/exchange of long-term investment		—		—		(26,260)
Realized gain on sale of Bitcoin		—		(30,346)		(253)
Unrealized loss on marketable equity securities		—		—		13,655
Loss (gain) on sale/exchange of equipment		5,336		(16,281)		—
Casualty-related charges		1,526		9,688		—
Bitcoin Mining revenue		(188,996)		(156,870)		(184,422)
Proceeds from sale of Bitcoin		176,219		79,529		295
Changes in assets and liabilities:
(Increase)/decrease in operating assets		6,352		12,058		(7,148)
Increase/(decrease) in operating liabilities		(8,316)		3,489		4,248
Net cash provided by (used in) operating activities		33,085		530		(86,082)

Investing activities
Proceeds from the sale of marketable equity securities		—		1,808		—
Acquisition of Whinstone, net of cash acquired		—		—		(40,879)
Acquisition of ESS Metron, net of cash acquired		—		—		(29,567)
Proceeds from the sale of long-term investments		—		—		1,800
Deposits on equipment		(230,397)		(194,923)		(274,833)
Security deposits		—		(3,809)		—
Investment in convertible debt		(4,500)		—		—
Purchases of property and equipment, including construction in progress		(193,704)		(148,412)		(147,116)
Casualty-related recoveries		7,500		—		—
Proceeds from the sale of equipment		6,369		—		—
Patent costs incurred		(34)		(9,527)		(30)
Net cash provided by (used in) investing activities		(414,766)		(354,863)		(490,625)

Financing activities
Proceeds from the issuance of common stock / At-the-market offering		778,430		304,849		684,817
Offering costs for the issuance of common stock / At-the-market offering		(16,657)		(6,640)		(14,901)
Proceeds from exercise of common stock warrants		—		—		806
Payments on contingent consideration liability - future power credits		—		(15,725)		—
Proceeds from Credit and Security Facility		6,920		—		—
Repayments of Credit and Security Facility		(6,059)		—		—
Debt issuance costs		(77)		—		—
Repurchase of common shares to pay employee withholding taxes		(14,035)		(10,138)		(5,082)
Net cash provided by (used in) financing activities		748,522		272,346		665,640

Net increase (decrease) in cash and cash equivalents		366,841		(81,987)		88,933
Cash and cash equivalents at beginning of period		230,328		312,315		223,382
Cash and cash equivalents at end of period	$	597,169	$	230,328	$	312,315

See accompanying Notes to Consolidated Financial Statements.

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Table of Contents

Riot Platforms, Inc.

Consolidated Statements of Cash Flows - continued

(in thousands)


	Years Ended December 31,
	2023		2022		2021
Supplemental information:
Cash paid for interest	$	84	$	—	$	—
Cash paid for taxes	$	680	$	—	$	—
Non-cash transactions
Issuance of common stock for business combination	$	—	$	—	$	352,887
Reclassification of deposits to property and equipment	$	78,376	$	422,865	$	46,711
Construction in progress included in accrued expenses	$	23,451	$	16,621	$	2,423
Bitcoin exchanged for employee compensation	$	869	$	1,495	$	295
Conversion of preferred stock to common stock	$	—	$	11	$	11
Cumulative effect upon adoption of ASU 2023-08	$	5,994	$	—	$	—
Right of use assets exchanged for new operating lease liabilities	$	1,249	$	10,333	$	13,622
Property and equipment obtained in exchange transaction	$	—	$	10,409	$	—

See accompanying Notes to Consolidated Financial Statements.

F-9

Table of Contents

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Note 1. Organization and Basis of Presentation

Organization

Riot Platforms, Inc. is a vertically integrated Bitcoin mining company principally engaged in enhancing our capabilities to mine Bitcoin in support of the Bitcoin blockchain. The Company also provides comprehensive and critical mining infrastructure for institutional-scale hosted clients to mine Bitcoin at its Rockdale Facility. The Rockdale Facility currently provides 700 MW in total developed capacity for Bitcoin mining and data center hosting services for institutional-scale hosted clients. The Company is also developing the Corsicana Facility, a second large-scale Bitcoin mining data center facility, which, upon completion, is expected to have approximately one gigawatt of capacity available for Bitcoin mining and data center hosting services for institutional-scale hosted clients.

As described in Note 20. Segment Information, we operate in three business segments: Bitcoin Mining, Data Center Hosting, and Engineering.

Basis of presentation and principles of consolidation

The accompanying Consolidated Financial Statements of the Company include the accounts of the Company and its wholly or majority owned and controlled subsidiaries. Consolidated subsidiaries’ results are included from the date the subsidiary was formed or acquired. Intercompany investments, balances and transactions have been eliminated in consolidation.

The accompanying audited Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Amounts disclosed are in thousands of U.S. Dollars except for share, per share, and miner amounts, and Bitcoin quantities, prices and hash rate, or as otherwise noted.

Note 2. Significant Accounting Policies and Recent Accounting Pronouncements

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ significantly from those estimates. The most significant accounting estimates inherent in the preparation of the Company’s financial statements include revenue recognition, valuing the derivative asset classified under Level 3 fair value hierarchy, determining the useful lives and recoverability of long-lived assets, impairment analysis of fixed assets and finite-lived intangibles, stock-based compensation, and the valuation allowance associated with the Company’s deferred tax assets.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation. The reclassifications did not have a material impact on the Company’s Consolidated Financial Statements and related disclosures. The impact on any prior period disclosures was immaterial.

Cash and cash equivalents

Cash and cash equivalents consists of cash on hand and highly liquid investments. We consider any highly liquid investments with an original maturity of three months or less at acquisition to be cash equivalents. From time to time, the Company’s cash account balances exceed the balances as covered by the FDIC. The Company has never suffered a loss due to such excess balances.

Accounts receivable

The Company’s accounts receivable balance consists of amounts due from its mining pool operator and data center hosting and engineering customers. The Company records ~~property~~accounts receivable at the invoiced amount less an allowance for any potentially uncollectable accounts under the current expected credit loss (“CECL”) impairment model and presents the net amount of the financial instrument expected to be collected. The CECL impairment model requires an estimate of expected credit losses, measured

F-10

Table of Contents

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

over the contractual life of an instrument, that considers forecasts of future economic conditions in addition to information about past events and current conditions. Based on this model, the Company considers many factors, including the age of the balance, collection history, and current economic trends. Bad debts are written off after all collection efforts have ceased.

Allowances for credit losses are recorded as a direct reduction from an asset’s amortized cost basis. Credit losses and recoveries are recorded in Selling, general and administrative expenses in the Consolidated Statements of Operations. Recoveries of financial assets previously written off are recorded when received. For the years ended December 31, 2023, 2022, and 2021, the Company did not record any credit losses or recoveries.

Based on the Company’s current and historical collection experience, management recorded allowances for doubtful accounts of $1.5 million and $1.9 million as of December 31, 2023 and December 31, 2022, respectively.

Bitcoin

As a result of the adoption of ASU 2023-08, Bitcoin is recorded at fair value, and changes in fair value are recognized in Change in fair value of Bitcoin, in Operating income (loss) on the Consolidated Statements of Operations, as of, and for the year ended December 31, 2023.

Prior to the adoption of ASU 2023-08, Bitcoin was accounted for as intangible assets with an indefinite useful life. Bitcoin was sold on a FIFO basis and measured for impairment whenever indicators of impairment are identified based on the intraday low quoted price of Bitcoin. To the extent an impairment loss was recognized, the loss established the new cost basis of the Bitcoin. Subsequent reversal of impairment losses was not permitted.

Bitcoin awarded to the Company through its mining activities are accounted for in connection with the Company’s revenue recognition policy.

Bitcoin is classified on the Company’s Consolidated Balance Sheet as a current asset due to the Company’s ability to sell it in a highly liquid marketplace and its intent to liquidate its Bitcoin to support operations when needed.

Purchases and sales of Bitcoin by the Company and Bitcoin awarded to the Company are included within Operating activities on the Consolidated Statements of Cash Flows as substantially all of the Company’s Bitcoin production is sold within days of being produced, but never more than the production on a monthly basis per the Company’s internal policy. During 2024, the Company made a strategic decision to temporarily cease the sales of all its Bitcoin production and instead, increase its Bitcoin holdings. The Company will continue to monitor its cash needs and expects to sell Bitcoin in the future to fund its cash expenditures.

Long-term investments

For equity investments, the Company initially records equity investments at cost then adjusts the carrying value of such equity investments through earnings when there is an observable transaction involving the same or a similar investment with the same issuer or upon an impairment.

Revenue recognition

Bitcoin Mining

The Company has entered into digital asset mining pools by executing contracts with mining pool operators to provide computing power to the mining pool. The Company’s enforceable right to compensation begins only when, and lasts as long as, the Company provides computing power to the mining pool operator and is created as power is provided over time. The only consideration due to the Company relates to the provision of computing power. The contracts are terminable at any time by the Company, at no cost to the Company, or by the pool operator, under certain conditions specified in the contract. Providing computing power in digital asset transaction verification services is an output of the Company’s ordinary activities. Providing such computing power is the only performance obligation in the Company’s contracts with mining pool operators.

The transaction consideration the Company receives, if any, is noncash consideration in the form of Bitcoin. Changes in the fair value of the noncash consideration due to form of the consideration (changes in the market price of Bitcoin) are not included in the transaction price and therefore, are not included in revenue. Certain mining pool operators charge fees to cover the costs of maintaining the pool, which are deducted from amounts we may otherwise earn and are treated as a reduction to the consideration

F-11

Table of Contents

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

received. Fees fluctuate and historically have been no more than approximately 2% per reward earned, on average. The terms of the agreements provide that neither party can dispute settlement terms after approximately thirty-five days following settlement.

In exchange for providing computing power, the Company is entitled to either:

●

a Full-Pay-Per-Share payout of Bitcoin based on a contractual formula, which primarily calculates the hash rate provided by the Company to the mining pool as a percentage of total network hash rate, and other inputs. The Company is entitled to consideration even if a block is not successfully placed by the mining pool operator. The contract is in effect until terminated by either party.

●

The consideration is all variable. Because it is probable that a significant reversal of cumulative revenue will not occur and the Company is able to calculate the payout based on the contractual formula, noncash consideration is estimated and recognized based on the spot price of Bitcoin determined using the Company’s principal market for Bitcoin at the inception of each contract. Noncash consideration is measured at fair value at contract inception. Fair value of the crypto asset consideration is determined using the quoted price on the Company’s principal market for Bitcoin at the beginning of the contract period at the single bitcoin level (one bitcoin). This amount is recognized in revenue as hash rate is provided.

●

The Company transitioned completely to this mining pool type in December 2022 and utilized it for the year ended December 31, 2023.

Or:

●

a fractional share of the fixed Bitcoin award the mining pool operator receives (less digital asset transaction fees to the mining pool operator which are immaterial and are recorded as a deduction from revenue) for successfully adding a block to the blockchain based on a proportion of the Company’s “scoring hash rate” to the pool’s “scoring hash rate” where the scoring hash rate as defined by the pool is the exponential moving average of the hash power contributed by the Company or by all pool members combined. The Company’s fractional share of the Bitcoin reward is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm.

●

Because the consideration to which the Company expects to be entitled for providing computing power is entirely variable, as well as being noncash consideration, the Company assesses the estimated amount of the variable noncash consideration to which it expects to be entitled for providing computing power at contract inception and subsequently, to determine when and to what extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur once the uncertainty associated with the variable consideration is subsequently resolved (the “constraint”). Only when significant revenue reversal is concluded probable of not occurring can estimated variable consideration be included in revenue. Based on evaluation of likelihood and magnitude of a reversal in applying the constraint, the estimated variable noncash consideration is constrained from inclusion in revenue until the end of the contract term, when the underlying uncertainties have been resolved and number of Bitcoin to which the Company is entitled becomes known.

●

Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pool operator successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized based on the spot rate of Bitcoin determined using the Company’s principal market for Bitcoin at the time of receipt.

●

The Company utilized this mining pool type during the year ended December 31, 2021 and throughout 2022, until mid-December 2022.

There is no significant financing component in these transactions due to the performance obligations and settlement of the transactions being on a daily basis.

F-12

Table of Contents

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Data Center Hosting

We have determined that our contracts contain a series of performance obligations which qualify to be recognized under a practical expedient available known as the “right to invoice.” This determination allows variable consideration in such contracts to be allocated to and recognized in the period to which the consideration relates, which is typically the period in which it is billed, rather than requiring estimation of variable consideration at the inception of the contract. We have also determined that the contracts contain a significant financing component because the timing of revenue recognition differs from the timing of invoicing by a period, exceeding one year.

The Company also installs certain hosted customers’ mining equipment and bills the customer at a fixed fee per piece of equipment or at an hourly rate. Revenue is recognized upon completion of the installation.

Maintenance services include cleaning, cabling, and other services to maintain customer equipment. We bill the customer at a fixed monthly fee or at an hourly rate. Revenue is recognized as these services are provided.

Deferred revenue is primarily from advance payments received and is recognized on a straight-line basis over the remaining life of the contract or upon completion of the installation of the customers’ equipment.

Our primary data center hosting contracts contain Service Level Agreement clauses, which guarantee a certain percentage of time that power will be available to our customers. In the rare case that we may incur penalties under these clauses, we recognize the payment as variable consideration and a reduction of the transaction price and, therefore, of revenue, when not in exchange for a good or service from the customer.

Engineering

Substantially all revenue is derived from the sale of custom products built to customers’ specifications under fixed-price contracts with one identified performance obligation. Revenue is recognized over time as performance creates or enhances an asset with no alternative use, and for which the Company has an enforceable right to receive compensation as defined under the contract.

To determine the amount of revenue to recognize over time, the Company utilizes the cost-to-cost method as management believes cost incurred best represents the amount of work completed and remaining on projects. As the cost-to-cost method is driven by incurred cost, the Company calculates the percentage of completion by dividing costs incurred to date by the total estimated cost. The percentage of completion is then multiplied by estimated revenue to determine inception-to-date revenue. Approved changes to design plans are generally recognized as a cumulative adjustment to the percentage of completion calculation. Revenue recognized for the period is the current inception-to-date recognized revenue less the prior period inception-to-date recognized revenue. If a contract is projected to result in a loss, the entire contract loss is recognized in the period when the loss was first determined, and any additional losses incurred subsequently are recognized in the subsequent reporting periods as they are identified. Additionally, contract costs incurred to date and expected total contract costs are continuously monitored during the term of the contract.

Changes in the job performance, job conditions and final contract settlements are factors that influence management’s assessment of total contract value and the total estimated costs to complete those contracts, and therefore, profit and revenue recognition. Any costs to obtain a contract are not material to the Company’s financial statements and would be expensed as incurred. Because of the inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change within the near term. The length of time for the Company to complete a custom product varies but is typically between four to 12 weeks.

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Table of Contents

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Customers are typically required to make periodic progress payments to the Company based on contractually agreed-upon milestones. Invoices are due net, 30 days, and retainage, if any, is generally due 30 days after delivery. Taxes collected from customers and remitted to governmental authorities are excluded from revenue. Shipping and handling costs are treated as fulfillment costs and are included in cost of sales.

Fair value measurement

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability.

Fair value measurements are classified and disclosed in one of the following three categories:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Observable inputs other than Level 1 prices, for similar assets or liabilities that are directly or indirectly observable in the marketplace.

Level 3: Unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The Company will update its assumptions each reporting period based on new developments and record such amounts at fair value based on the revised assumptions until the agreements expire or contingency is resolved, as applicable.

Property and equipment

Property and equipment is stated at ~~cost. Depreciation of the assets is recorded on~~cost and depreciated using the straight-line ~~basis~~method over the estimated useful lives of the assets. ~~Dispositions~~Estimated useful lives for leasehold improvements are typically the lesser of the estimated useful life of the asset or the life of the term of the lease. The estimated useful lives for all the Company’s property and equipment are ~~recorded in the period~~as follows:


		Life (Years)
Buildings and building improvements		10-25
Miners and mining equipment		2
Machinery and facility equipment		5-10
Office and computer equipment		3

Impairment of ~~disposition and any resulting gains or losses are charged to income or expense when the disposal occurs. The Company~~long-lived assets

Management reviews long-lived assets for impairment whenever ~~there~~events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an ~~indication~~asset to undiscounted future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of ~~impairment. The analysis resulted~~the assets exceeds the fair value of the assets.

Goodwill

Goodwill represents the cost of a business acquisition in noexcess of the fair value of the net assets acquired. Goodwill is not amortized and is reviewed for impairment ~~charges being recorded to date.~~

~~Business Combinations:~~ annually as of December 31, or more frequently if facts and circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. We use both qualitative and quantitative analyses in making this determination. The Company ~~applies the provisions~~determined that it has three reporting units for goodwill impairment testing purposes, Bitcoin Mining, Data Center Hosting, and Engineering, which is consistent with internal management reporting and management’s oversight of ~~ASC 805~~operations. Our analyses require significant assumptions and judgments, including

F-14

Table of Contents

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

assumptions about future economic conditions, revenue growth, and operating margins, among other factors. Example events or changes in circumstances considered in the qualitative analysis, many of which are subjective in nature, include: a significant negative trend in our industry or overall economic trends, a significant change in how we use the acquired assets, a significant change in our business strategy, a significant decrease in the market value of the asset, a significant change in regulations or in the industry that could affect the value of the asset, and a change in segments. If it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company performs the quantitative test to identify and measure the amount of goodwill impairment loss. The Company compares the fair value of the reporting unit with its carrying amount. If the carrying amount exceeds the fair value, goodwill of the reporting unit is considered impaired and that excess is recognized as a goodwill impairment loss.

Finite-lived intangible assets

Intangible assets with finite lives are comprised of customer contracts, trademarks, UL Listings, and patents that are amortized on a straight-line basis over their expected useful lives, which is their contractual term or estimated useful life. Patents costs consisting of filing and legal fees incurred are initially recorded at cost. Certain patents are in the legal application process and therefore are not currently being amortized. The Company performs assessments to determine whether finite-lived classification is still appropriate at least annually. The carrying value of finite-lived assets and their remaining useful lives are also reviewed at least annually to determine if circumstances exist which may indicate a potential impairment or revision to the amortization period. A finite-lived intangible asset is considered to be impaired if its carrying value exceeds the estimated future undiscounted cash flows to be derived from it. We exercise judgment in selecting the assumptions used in the estimated future undiscounted cash flows analysis. Impairment is measured by the amount that the carrying value exceeds fair value.

The use of different estimates or assumptions could result in significantly different fair values for our reporting units and intangible assets.

Business combinations

The Company uses the acquisition method of accounting ~~for acquisitions. ASC 805 requires us to recognize separately from goodwill~~by recognizing the identifiable tangible and intangible assets acquired and ~~the~~ liabilities assumed, and any non-controlling interest in the acquired business, measured at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the ~~net of~~aforementioned amounts. Contingent consideration is included within the purchase price and is recognized at its fair value on the acquisition date. A liability resulting from contingent consideration is remeasured to fair value as of each reporting date until the contingency is resolved, and subsequent changes in fair ~~values of the assets acquired~~value are recognized in earnings. Contingent consideration is recorded in current and ~~the~~long-term liabilities ~~assumed.~~ on our Consolidated Balance Sheets.

While we use our best estimates and assumptions to accurately apply preliminary ~~value~~values to assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, these estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of the assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in ~~our~~the Consolidated Statements of Operations.

Accounting for business combinations requires management to make significant estimates and assumptions, especially at the acquisition date, including estimates for intangible assets, contractual obligations assumed, ~~restructuring liabilities,~~ pre-acquisition contingencies, and contingent consideration, where applicable. Although we believe the assumptions and estimates we have made have been reasonable and appropriate, they are based in part on historical experience and information obtained from management of the acquired companies and are inherently uncertain. Critical estimates in valuing certain of the intangible assets we have acquired ~~include:~~include; future expected cash flows from ~~product sales;~~ customer contracts, ~~and acquired technologies; expected costs to develop in-process research and development into commercially viable products~~discount rates, and estimated ~~cash flows from~~market changes in the ~~projects when completed; and discount rates.~~value of the PPA, which is accounted for as a nonhedged derivative contract. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates, or actual results.

~~Revenue Recognition~~: ~~The Company's revenues~~

Acquisition-related expenses are recognized ~~when products~~separately from the business combination and are shipped or delivered to unaffiliated customers. The Securities and Exchange Commission's Staff Accounting Bulletin (SAB) No. 104, provides guidance on the application of generally accepted accounting principles to select revenue recognition issues. expensed as incurred.

Investment in marketable equity securities

The Company ~~has concluded that~~measures its ~~revenue recognition policy is appropriate and~~investments in accordance with SAB No. 104. Revenue is recognized under sales, license and distribution agreements only after the following criteria are met: (i) there exists adequate evidence of the transactions; (ii) delivery of goods has occurred or services have been rendered; and (iii) the price is not contingent on future activity and (iv) collectability is reasonably assured.

~~Stock-based Compensation~~: ~~ASC 718,~~ ~~Share-Based Payment, defines the fair-value-based method of accounting for stock-based employee compensation plans and transactions used by the Company to account for its issuances of~~marketable equity ~~instruments to record compensation cost for stock-based employee compensation plans~~securities at fair value at each balance sheet date, with unrealized holding gains and losses recorded in other income (expense), as ~~well as to acquire goods or services from non-employees. Transactions in which~~ the ~~Company issues stock-based compensation to employees, directors and consultants and for goods or services received from non-employees are accounted for based on the~~shares have a readily determinable fair value of the equity instruments issued. The Company utilizes pricing models in determining the fair values of options and warrants issued as stock-based compensation. These pricing models utilize the market price of the Company's common stock and the exercise price of the option or warrant, as well as time value and volatility factors underlying the positions.

~~Recently issued and adopted accounting pronouncements~~: The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company's financial reporting, the Company undertakes a study to determine the consequences of the change to its financial statements and assures that theresince they are ~~proper controls in place to ascertain that the Company's financial statements properly reflect the change.~~

~~We have considered recently issued accounting pronouncements and do not believe the adoption of such pronouncements will have a material impact on our consolidated financial statements.~~

~~Off-Balance Sheet Arrangements~~

~~We do not have any off-balance sheet arrangements.~~

~~ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.~~

~~Not required for Smaller Reporting Company.~~

~~ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.~~

~~Report of Independent Registered Public Accounting Firm~~	23
~~Report of Independent Registered Public Accounting Firm~~	24
~~Consolidated Balance Sheets at December 31, 2016 and 2015~~	25
~~Consolidated Statements of Operations for the years ended December 31, 2016 and 2015~~	26
~~Consolidated Statements of Stockholders' Equity for the years ended December 31, 2016 and 2015~~	27
~~Consolidated Statements of Cash Flows for the years ended December 31, 2016 and 2015~~	28
~~Notes to Consolidated Financial Statements~~	29

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~

~~The Board of Directors and Shareholders of~~

~~Bioptix, Inc.~~

We have audited the accompanying consolidated balance sheet of Bioptix, Inc. (formerly: Venaxis, Inc.) and Subsidiary (the "Company") as of December 31, 2016, and the related consolidated statements of operations, stockholders' equity, and cash flows for the year then ended. The financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Bioptix, Inc. and Subsidiary as of December 31, 2016, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

~~We also have audited the adjustments to the 2015 financial statements to retrospectively reflect the reverse stock split, as described in Note 1. In our opinion, such adjustments are appropriate~~publicly traded and have ~~been properly applied. We were not engaged to audit, review, or apply any procedures to the 2015 financial statements~~significant average daily volume traded.

F-15

Table of ~~the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2015 financial statements taken as a whole.~~

~~/s/ EisnerAmper LLP~~

~~Iselin, New Jersey~~

~~March 31, 2017~~

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~

~~Board of Directors and Shareholders~~

~~Bioptix,~~Contents

Riot Platforms, Inc.

We have audited, before the effects of the adjustments to retroactively apply the impact of the reverse stock split described in Notes 1 and 6, the accompanying balance sheet of Bioptix, Inc. (formerly Venaxis, Inc.) ("the Company") as of December 31, 2015, and the related statements of operations, stockholders' equity, and cash flows for the year then ended (the 2015 financial statements before the effects of the adjustments discussed in Notes 1 and 6 are not presented herein). These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above, before the effects of the adjustments to retroactively apply the impact of the reverse stock split described in Notes 1 and 6, present fairly, in all material respects, the financial position of Bioptix, Inc. as of December 31, 2015, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to audit, review or apply any procedures to the adjustments to retroactively apply the change in accounting described in Notes 1 and 6 and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by EisnerAmper LLP.

~~/s/ GHP HORWATH, P.C.~~

~~Denver, Colorado~~

~~March 23, 2016~~

~~Bioptix, Inc. and Subsidiary~~

~~Consolidated Balance Sheets~~

~~December 31,~~

2016 2015
ASSETS
Current assets:
     Cash and cash equivalents $ 5,529,848 $ 2,012,283
     Short-term investments (Note 1) 7,506,761 14,147,991
     Accounts receivable 4,539 —
     Inventories (Note 2) 415,847 —
     Prepaid expenses and other current assets 286,495 251,778

         Total current assets 13,743,490 16,412,052

Property and equipment, net (Note 3) 41,133 1,954,496

Intangible rights acquired (Note 2) 1,851,736 —

Long-term investments (Note 1) — 972,000

Other long term assets, net (Note 4) 1,404,456 1,523,649

Total assets $ 17,040,815 $ 20,862,197

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable $ 428,204 $ 701,064
     Accrued compensation 55,866 449,873
     Accrued expenses 334,761 241,882
     Notes and other obligations, current portion (Note 5) 139,611 301,250
     Deferred revenue, current portion (Note 8) 96,698 96,698

         Total current liabilities 1,055,140 1,790,767

Notes and other obligations, less current portion (Note 5) — 1,838,779
Deferred revenue, less current portion (Note 8) 1,065,316 1,162,015

         Total liabilities 2,120,456 4,791,561

Commitments and contingencies (Notes 8 and 10)

Stockholders' equity (Notes 6, 7 and 11):
    Common stock, no par value, 60,000,000 shares authorized;
           4,503,971 (2016) and 3,876,961 (2015) shares issued and outstanding 124,775,635 121,653,075
     Accumulated deficit (109,855,276 ) (105,582,439 )

         Total equity 14,920,359 16,070,636

Total liabilities and stockholders' equity $ 17,040,815 $ 20,862,197

~~See Accompanying~~

Notes to Consolidated Financial Statements

~~Bioptix, Inc.~~

Leases

The Company determines whether an arrangement contains a lease at the inception of the arrangement. If a lease is determined to exist, the term of such lease is assessed based on the date on which the underlying asset is made available for the Company’s use by the lessor. The Company’s assessment of the lease term reflects the non-cancelable term of the lease, inclusive of any rent-free periods and/or periods covered by early-termination options which the Company is reasonably certain of not exercising, as well as periods covered by renewal options which the Company is reasonably certain of exercising. The Company also determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and ~~Subsidiary~~

the presentation reflected on the Consolidated Statements of Operations

~~Years ended December 31,~~

2016 2015
Sales (Note 1) $ 9,416 $ 101,388
Cost of sales 3,058 30,586

Gross profit 6,358 70,802

Other revenue - fee (Note 8) 96,699 96,698

Operating expenses:
   Selling, general and administrative 5,547,406 6,757,074
   Research and development 862,784 2,159,137

Total operating expenses 6,410,190 8,916,211

Operating loss (6,307,133 ) (8,748,711 )

Other income (expense):
    Gain on sale of property and equipment (Note 3) 1,942,980 —
    Interest expense (30,408 ) (98,964 )
    Investment income 121,724 82,000
    Other income — 8,110

          Total other (expense) income 2,034,296 (8,854 )

     Net loss $ (4,272,837 ) $ (8,757,565 )

Basic and diluted net loss per share (Note 1) $ (1.05 ) $ (2.26 )

Basic and diluted weighted average number
   of common shares outstanding (Note 1) 4,065,406 3,876,961

~~See Accompanying Notes to Consolidated Financial Statements~~

~~Bioptix, Inc. and Subsidiary~~

~~Consolidated Statements~~ over the lease term. For all periods presented, the Company only had operating leases.

For leases with a term exceeding 12 months, an operating lease liability is recorded on the Company’s consolidated balance sheet at lease commencement reflecting the present value of ~~Stockholders' Equity~~

~~Years ended December 31, 2016 and 2015~~

Common Stock Accumulated
Shares Amount Deficit Total

Balance, January 1, 2015 3,876,961 $ 120,509,997 $ (96,824,874 ) $ 23,685,123

       Stock-based compensation issued for services — 1,143,078 — 1,143,078

      Net loss for the year — — (8,757,565 ) (8,757,565 )

Balance, December 31, 2015 3,876,961 121,653,075 (105,582,439 ) 16,070,636

      Stock-based compensation issued for services — 545,549 — 545,549

      Common stock issued for acquisition (Note 2) 627,010 2,577,011 — 2,577,011

      Net loss for the year — — (4,272,837 ) (4,272,837 )

Balance, December 31, 2016 4,503,971 $ 124,775,635 $ (109,855,276 ) $ 14,920,359

~~See Accompanying Notes to Consolidated Financial Statements~~

~~Bioptix, Inc. and Subsidiary~~

~~Consolidated Statements of Cash Flows~~

~~Years ended December 31,~~

2016 2015
Cash flows from operating activities:
     Net loss $ (4,272,837 ) $ (8,757,565 )
     Adjustments to reconcile net loss to
         net cash used in operating activities:
              Stock-based compensation for services 545,549 1,143,078
              Depreciation and amortization 239,330 253,818
              Patent impairment charges 535,256 188,141
              Amortization of deferred revenue (96,699 ) (96,698 )
              Gain on sale of property and equipment (1,942,980 ) (8,110 )
        Change in (net of BDI business acquisition):
              Accounts receivable 16,366 (202 )
              Inventories (37,041 ) —
              Prepaid expenses and other current assets 258,608 388,331
              Accounts payable (390,363 ) 263,545
  ��           Accrued expenses 98,818 (83,518 )
              Accrued compensation (473,751 ) (159,544 )

     Net cash used in operating activities (5,519,744 ) (6,868,724 )

Cash flows from investing activities:
     Purchases of short-term investments (16,875,550 ) (27,178,337 )
     Sales of short-term investments 24,488,780 33,057,135
     Purchases of property and equipment (35,402 ) —
     Purchases of patent and other assets (26,067 ) (92,033 )
     Proceeds from sale of property and equipment 1,808,787 8,110
     Cash acquired in purchase of BDI 16,673 —
     Acquisition of BDI remaining interest (28,800 ) —

     Net cash provided by (used in) investing activities 9,348,421 5,794,875

Cash flows from financing activities:
     Repayment of notes payable and other obligations (311,112 ) (453,779 )
     Net proceeds from issuance of common stock — —

     Net cash used in financing activities (311,112 ) (453,779 )

Net increase (decrease) in cash and cash equivalents 3,517,565 (1,527,628 )

Cash and cash equivalents, at beginning of year 2,012,283 3,539,911

Cash and cash equivalents, at end of year $ 5,529,848 $ 2,012,283

Supplemental disclosure of cash flow information:
     Cash paid during the year for:
         Interest $ 35,516 $ 99,382

      Schedule of non-cash investing and financing transactions:
          Liability payoffs upon property sale $ 2,064,758 $ —
          Value of Common Shares issued for BDI purchase $ 2,577,011 $ —
          Acquisitions of assets for installment obligations $ 276,640 $ 282,825

~~See Accompanying Notes to Consolidated Financial Statements~~

~~Bioptix, Inc. and Subsidiary~~

~~Notes to Consolidated Financial Statements~~

~~Note 1. Organization and summary of significant accounting policies:~~

~~Nature of operations:~~

~~Bioptix, Inc. (the "Company", "we" or "Bioptix") was organized on July 24, 2000, as a Colorado corporation. Effective November 30, 2016,~~its fixed minimum payment obligations over the ~~Company's name was changed to Bioptix, Inc., from Venaxis, Inc.~~

Historically, we have been an in vitro diagnostic company. The Company's business had been in the development and commercialization of innovative products that address unmet diagnostic and therapeutic needs. Until 2016, when determined that it was not prudent to use our financial resources to continue to advance development of the ~~APPY1 Test to attempt to secure FDA clearance and we suspended operations associated with the~~ ~~APPY1 Test, the Company's former lead product candidate, the~~ ~~APPY~~1 Test, was being developed to be a novel blood-based diagnostic test intended to aid, through the test's negative predictive value, in the evaluation of low risk patients initially suspected of having acute appendicitis.

We hold an exclusive license agreement with Washington University ("WU") in St. Louis which granted us an exclusive license and right to sublicense its technology for veterinary products worldwide, subject to certain exceptions. In July 2012, we granted Ceva Sante Animale S.A. ("Ceva") an exclusive royalty-bearing license to our intellectual property and other assets, relating to recombinant single chain reproductive hormone technology for use in non-human mammals. This license includes a sublicense of the technology licensed to us by WU. Ceva continues to advance development of the bovine rFSH product and cumulative cash payments received to date by us from Ceva are approximately $2 million.

Through our wholly owned subsidiary, BiOptix Diagnostics, Inc., ("BDI") which we acquired in September 2016, we have developed a proprietary Enhanced Surface Plasmon Resonance technology platform for the detection of molecular interactions. We acquired a Surface Plasma Resonance ("SPR") platform which seeks to combine high sensitivity with microarray detection capability to allow researchers to understand whether their target molecules have functionality against the disease targeted. SPR is an advanced and highly sensitive optical technology that can measure refractive index changes on a sensor chip's gold surface due to a change in mass that occurs during a binding event. This change can be used to monitor biological interactions such as the concentration of target molecules, kinetic rates and affinity constants.

Effective January 14, 2017, we adopted a plan to exit this acquired business and commenced a significant reduction in the workforce. The decision to adopt this plan was made following an evaluation by the Company's Board of Directors in January 2017, of the estimated results of operations projected during the near to mid-term period for BDI, including consideration of product development required and updated sales forecasts, and estimated additional cash resources required. We are reviewing possible strategic alternatives relativelease term. A corresponding operating lease right-of-use asset equal to the ~~business to maximize shareholder value. See Note 11.~~

~~Management's plans and basis of presentation:~~

~~The Company expects to continue to incur losses from operations~~initial lease liability is also recorded, adjusted for ~~the near-term and these losses could be significant as professional and other associated expenses~~any prepaid rent and/or initial direct costs incurred in connection with ~~possible strategic considerations, evaluations and transactions, wind-down~~execution of the ~~operations~~lease and reduced by any lease incentives received. For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in its leasing arrangements are typically not readily determinable. The Company’s incremental borrowing rate reflects the rate it would pay to borrow on a secured basis and incorporates the term and economic environment of the ~~Company's subsidiary BDI occur, and public company and administrative related expenses~~associated lease.

For the Company’s operating leases, fixed lease payments are ~~incurred. The Company believes that its current working capital position will be sufficient to meet its currently estimated cash needs through~~recognized as lease expense on a straight-line basis over the ~~first quarter~~lease term. For leases with a term of 2018, subject to any possible strategic transactions. The Company continues to explore obtaining additional financing. The Company is closely monitoring its cash balances, cash needs and expense levels.

~~Management's strategic plans include the following:~~

~~exploring other possible strategic options and financing opportunities available to the Company;~~

~~evaluating options to monetize, partner or license the Company's assets, including the operations of our subsidiary, BDI and the appendicitis product portfolio; and;~~

~~continuing to implement cost control initiatives to conserve cash.~~

~~Principles of consolidation~~

The accompanying consolidated financial statements of the Company include the accounts of Bioptix and its wholly-owned and controlled subsidiary, BDI (collectively the "Company") from the date it was acquired (September 12 ~~2016). Intercompany investments, accounts and transactions have been eliminated in consolidation.~~

~~Cash, cash equivalents and short-term investments:~~

~~The Company considers all highly liquid investments with an original maturity of three~~ months or less, atany fixed lease payments are recognized on a straight-line basis over the ~~date~~lease term and are not recognized on the Consolidated Balance Sheets as an accounting policy election. Leases qualifying for the short-term lease exception were insignificant. Variable lease costs are recognized as incurred and primarily consist of ~~acquisition to be cash equivalents. From time to time,~~common area maintenance and utility charges not included in the ~~Company's cash account balances exceed the balances~~measurement of right of use assets and operating lease liabilities.

Operating segments

Operating segments are defined as ~~covered~~components of an entity for which discrete financial information is available that is regularly reviewed by the ~~Federal Deposit Insurance System.~~CODM in deciding how to allocate resources to an individual segment and in assessing performance. The ~~Company has never suffered a loss due~~Company’s CODM is comprised of several members of its executive management team who use revenue and cost of revenue of its three reporting segments to ~~such excess balances.~~

~~The Company invests excess cash from time to time in highly-liquid debt and equity investments of highly-rated entities, which are classified as trading securities. Historically,~~assess the ~~purpose~~performance of the investments has been to fund research and development, product development, FDA clearance-related activities and general corporate purposes. Such amounts are recorded at market values using Level 1 inputs in determining fair value and are generally classified as current, as the Company does not intend to hold the investments beyond twelve months. Investment securities classified as trading are those securities that are bought and held principally for the purposebusiness of selling them in the near term, with the objective of preserving principal and generating profits. These securities are reported at fair value with unrealized gains and losses reported as an element of other (expense) income in current period earnings. The Company's Board of Directors has approved an investment policy covering the investment parameters to be followed with the primary goals being the safety of principal amounts and maintaining liquidity. The policy provides for minimum investment rating requirements as well as limitations on investment duration and concentrations. Based upon market conditions, the investment guidelines have been tightened to increase the minimum acceptable investment ratings required for investments and shorten the maximum investment term. As of December 31, 2016 and 2015, approximately 41% and 9%, respectively, of the investment portfolio was in cash and cash equivalents, which is presented as such on the accompanying balance sheet, and the remaining funds were invested in marketable securities with none individually representing a material amount of the portfolio. Investments with a scheduled maturity beyond one year are classified as long-term investments on the balance sheet. For the years ended December 31, 2016 and 2015, there were approximately $22,000 and $30,000, respectively, in management fee expenses.

The Company's short-term investments comprise certificates of deposit, commercial paper and corporate bonds, all of which are classified as trading securities and carried at their fair value based upon quoted market prices of the securities at December 31, 2016 and 2015. Net realized and unrealized gains and losses on trading securities are included in net loss. For purposes of determining realized gains and losses, the cost of securities sold is based on specific identification.

~~The composition of trading securities is as follows at December 31, 2016 and 2015:~~

2016 2015
Cost Fair Value Cost Fair Value

Certificates of deposit / commercial paper $ 2,378,222 $ 2,373,891 $ 1,249,988 $ 1,248,845

Corporate bonds 5,138,182 5,132,870 12,924,514 12,899,146

Subtotal current assets 7,516,404 7,506,761 14,174,502 14,147,991

Certificates of deposit, long term — — 350,000 349,013

Corporate bonds, long term — — 626,622 622,987

Total trading securities $ 7,516,404 $ 7,506,761 $ 15,151,124 $ 15,119,991

~~Investment income for the years ended December 31, 2016 and 2015 consists of the following:~~

2016 2015
Interest income $ 126,296 $ 153,586

Realized gains (losses) (3,316 ) (34,791 )

Unrealized gains (losses) 20,641 (7,246 )

Management fee expenses (21,897 ) (29,549 )

Net investment income $ 121,724 $ 82,000

~~Fair value of financial instruments:~~

~~The Company accounts for financial instruments under Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic (ASC) 820,~~ ~~Fair Value Measurements~~. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

	~~Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities;~~

	Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

	~~Level 3 — assets and liabilities whose significant value drivers are unobservable.~~

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company's market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. There were no financial assets or liabilities measured at fair value, with the exception of cash, cash equivalents (level 1) and short-term investments (level 1) as of December 31, 2016 and 2015.

The carrying amounts of the Company's financial instruments (other than cash, cash equivalents and short-term investments as discussed above) approximate fair value because of their variable interest rates and / or short maturities combined with the recent historical interest rate levels.

~~Revenue recognition and accounts receivable:~~

~~We recognize sales of goods under the provisions of Financial Accounting Standards Board ("FASB") ASC 605 and the U.S. Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) 104,~~ ~~Revenue Recognition. Historical revenue has been generated primarily from the sale of products. Product revenue primarily consists of sales of instrumentation and consumables.~~

Revenue is recognized when the following four basic criteria have been met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred and risk of loss has passed; (iii) the seller's price to the buyer is fixed or determinable; and (iv) collectability is reasonably assured.

Revenues are recorded less a reserve for estimated warranty costs, product returns and allowances which to date have not been significant. Determination of the reserve for estimated product warranty costs, returns and allowances is based on management's analyses and judgments regarding certain conditions. Should future changes in conditions prove management's conclusions and judgments on previous analyses to be incorrect, revenue recognized for any reporting period could be adversely affected.

The Company extends credit to customers generally without requiring collateral. At December 31, 2016 and 2015, the Company's accounts receivable were insignificant. During the year ended December 31, 2016, our ~~sales were not significant and resulted from consumable sales made to several BDI customers. During the year ended December 31, 2015, three European-based customers of the~~ ~~APPY1 product, accounted for total net sales, each representing 52%, 26% and 22%, respectively.~~

The Company monitors its exposure for credit losses and maintains allowances for anticipated losses. The Company records an allowance for doubtful accounts when it is probable that the accounts receivable balance will not be collected. When estimating the allowance, the Company takes into consideration such factors as its day-to-day knowledge of the financial position of specific clients, the industry and size of its clients. A financial decline of any one of the Company's large clients could have an adverse and material effect on the collectability of receivables and thus the adequacy of the allowance for doubtful accounts receivable. Increases in the allowance are recorded as charges to bad debt expense and are reflected inreportable operating ~~expenses in the Company's statements of operations. Write-offs of uncollectible accounts are charged against the allowance.~~

~~Inventories:~~

The Company values its inventories at the lower of the actual cost to purchase (first-in, first-out method) and/or manufacture the inventories or the current estimated market value of the inventories. The Company regularly reviews inventory on hand and records a provision to write down obsolete inventories to its estimated net realizable value if less than cost.

~~Property and equipment:~~

Property and equipment is stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets, generally twenty-five years for the building, ten years for land improvements, five years for equipment, and three years for computer related assets. See Note 3 for the 2016 sale of the land and building.

~~Patents and other intangible assets:~~

The Company accounts for intangible assets under ASC 350-30. Patents consisting of legal fees incurred are initially recorded at cost. Patents are amortized over the useful lives of the assets, using the straight-line method. Certain patents are in the legal application process and therefore are not currently being amortized. We review the carrying value of patents at the end of each reporting period.

~~Goodwill:~~

The Company performs a goodwill impairment analysis in the fourth quarter of each year, or whenever there is an indication of impairment. When conducting its annual goodwill impairment assessment, the Company initially performs a qualitative evaluation to determine if it is more likely than not that the fair value of its reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a two-step goodwill impairment test. The Company has determined, based on its qualitative evaluation, that it was not necessary to perform the two-step goodwill impairment test and that no impairment had occurred as of December 31, 2016. (See Notes 2 and 4 for goodwill information).

~~Impairment of long-lived assets:~~

Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Based on its review, management determined that certain costs previously incurred for patents had been impaired during the years ended December 31, 2016 and 2015. Approximately $535,000 and $188,000 of such net patent costs were determined to be impaired during the years ended December 31, 2016 and 2015, respectively, resulting from management's decisions not to pursue patents based upon a cost benefit analysis of patent expenses and coverage protection in several smaller world markets that were determined to not have the economic or fiscal potential to make the patent pursuit viable. Impairment charges are included in research and development expenses in the accompanying statements of operations.

~~Research and development:~~

~~Research and development costs are charged to expense as incurred.~~

~~Use of estimates:~~

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ significantly from those estimates.

segments.

Income ~~taxes:~~

taxes

The Company accounts for income taxes under the asset and liability method, in which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is required to the extent any deferred tax assets may not be realizable.

Contract balances

Contract assets consist of costs and estimated earnings in excess of billings on uncompleted engineering contracts.

Deferred revenue relates to upfront payments and consideration received from customers for data center hosting and the upfront license fee generated from our legacy animal health business. Contract liabilities consist of billings in excess of costs and estimated earnings on uncompleted engineering contracts,

Remaining performance obligations

Remaining performance obligations represent the transaction price of contracts for work that has not yet been performed. The Company ~~does~~elected the practical expedient to not ~~have an accrual~~adjust the transaction price for ~~uncertain tax positions as~~the existence of ~~December 31, 2016~~a significant financing component if the timing difference between a customer’s payment and ~~2015.~~

~~The Company's policy~~our performance is ~~to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. At December 31, 2016, the Company did not have any accrued interest~~one year or ~~penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the years ended December 31, 2016 or 2015.~~

less.

F-16

Table of Contents

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Stock-based ~~compensation:~~

compensation

The Company ~~recognizes~~accounts for share-based payment awards exchanged for services at the ~~cost of employee services received in exchange for an award of equity instruments in the financial statements which is measured based on the~~estimated grant date fair value of the ~~award. Stock-based~~award, which is based on the fair market value of the Company’s common stock at the time of the grant. For performance-based share-based payment awards, the Company recognizes compensation ~~expense is recognized~~cost over the performance period ~~during which an employee~~when achievement of the milestones and targets is ~~required to provide service in exchange for the award (generally the vesting period).~~ probable.

The Company ~~estimates the fair value~~has elected to account for forfeitures of ~~each stock option at the grant date by using the Black-Scholes option pricing model.~~

~~Income (loss) per share:~~

~~ASC 260,~~ ~~Earnings Per Share~~, requires dual presentation of basic and diluted earnings per share (EPS) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

Basic earnings (loss) per share includes no dilution and is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the Company's earnings (loss). The effect of the inclusion of the dilutive shares would have resulted in a decrease in loss per share during the years ended December 31, 2016 and 2015. Accordingly, the weighted average shares outstanding have not been adjusted for dilutive shares. Outstanding stock options and warrants are not considered in the calculation,awards as the impact of the potential common shares (totaling approximately 1,093,750 and 764,563 shares for each of the years ended December 31, 2016 and 2015, respectively) would be to decrease the net loss per share.

~~Reverse stock split:~~

In 2015, the Company received a notification letter from NASDAQ notifying it that it was not in compliance with its $1.00 minimum bid price requirement because the bid price for the Company's common stock closed below $1.00 over the prior 30 consecutive business days. To regain compliance with this requirement, the Company completed a reverse stock split, which was effected on March 31, 2016 at a ratio of one-for-eight with no change in par value. All historical references to shares and share amounts in this report have been retroactively revised to reflect the Reverse Stock Split.

they occur.

Recently issued ~~and adopted~~ accounting ~~pronouncements:~~

pronouncements

The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the ~~Company's~~Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its ~~consolidated financial statements~~Consolidated Financial Statements and assures that there are proper controls in place to ascertain that the ~~Company's consolidated financial statements~~Company’s Consolidated Financial Statements properly reflect the change.

In ~~August 2014, the FASB issued ASU No. 2014‑15,~~ ~~Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern~~. ASU 2014‑15 requires management to evaluate, at each annual or interim reporting period, whether there are conditions or events that exist that raise substantial doubt about an entity's ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014‑15 is effective for annual periods ending after December 15, 2016 and earlier application is permitted. The Company adopted this standard during the three months ended December 31, 2016. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.

~~In May 2014,~~2023, the Financial Accounting Standards Board ~~("FASB"~~(“FASB”) issued ~~Accounting Standard Update~~ASU No. ~~2014-09,~~ ~~Revenue from Contracts with Customers~~2023-09, Income Taxes (Topic ~~606) ("~~740): Improvements to Income Tax Disclosures (“ASU ~~2041-09"~~2023-09”)~~, which supersedes nearly all~~. ASU 2023-09 expands existing ~~revenue recognition guidance. The standard's core principle~~income tax disclosures for rate reconciliations by requiring disclosure of certain specific categories and additional reconciling items that meet quantitative thresholds and expands disclosures for income taxes paid by requiring disaggregation by certain jurisdictions. ASU 2023-09 is ~~that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange~~effective for those goods or services. The standard creates a five-step model to achieve its core principle: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction's price to the separate performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. In addition, entities must disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Qualitative and quantitative disclosures are required about: (i) the entity's contracts with customers; (ii) the significant judgments, and changes in judgments, made in applying the guidance to those contracts; and (iii) any assets recognized from the costs to obtain or fulfill a contract with a customer.

~~In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 616) - Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 to interim and~~ annual periods beginning after December 15, 2017. The standard allows entities to apply the standard retrospectively to each prior period presented ("full retrospective adoption") or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application ("modified retrospective adoption").2024; early adoption is permitted. The Company ~~plans~~does note expect the updated guidance to adopt this guidance on January 1, 2018, and continues to evaluate the impact of adopting under the modified retrospective adoption versus the full retrospective method. The Company is currently in the process of determining the impact of the new revenue recognition guidance on its revenue transactions, including any impacts on associated processes, systems, and internal controls. The Company's preliminary assessment indicates implementation of this standard will not have a material impact on financial results. The Company's evaluation has included determining whether the unit of account (i.e., performance obligations) will change as compared to current GAAP, as well as determining the standalone selling price of each performance obligation. The Company continues to evaluate the impact of this guidance and its ~~subsequent amendments on the consolidated financial position, results of operations, and cash flows, and any preliminary assessments are subject to change.~~

disclosures.

In ~~July 2015,~~December 2023, the FASB issued ASU ~~2015-11,~~ ~~Inventory~~ ~~(Topic 330). This standard requires an entity~~2023-08, Intangibles - Goodwill and Other - Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, which establishes accounting guidance for crypto assets meeting certain criteria. Bitcoin meets this criteria. The amendments require crypto assets meeting the criteria to ~~measure inventory~~be recognized at fair value with changes recognized in net income each reporting period. Upon adoption, a cumulative-effect adjustment is made to the ~~lower~~opening balance of ~~cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin.~~retained earnings as of the beginning of the annual reporting period of adoption. ASU ~~2015-11~~2023-08 is effective for fiscal years beginning after December 15, ~~2016,~~2024, including interim periods within those fiscal years. ~~The Company plans to adopt ASU 2015-11 on January 1, 2017. The Company is currently in the process of evaluating the impact that will result from adopting ASU 2015-11.~~

~~In January 2016, the FASB issued ASU No. 2016-01,~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities~~. ASU No. 2016-01 supersedes and amends the guidance to classify equity securities with readily determinable fair values into different categories (that is, trading or available-for-sale) and require equity securities to be measured at fair value with changes in the fair value recognized through net income. The amendments allow equity investments that do not have readily determinable fair values to be re-measured at fair value either upon the occurrence of an observable price change or upon identification of an impairment. The amendments also require enhanced disclosures about those investments. ASU No. 2016-01 is effective for annual reporting beginning after December 15, 2017, including interim periods within the year of adoption, and calls for prospective application. The Company is currently in the process of evaluating the impact that will result from adopting ASU 2016-01.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~ (Topic 842). This standard requires a lessee to recognize the lease assets and lease liabilities arising from operating leases in the balance sheet. Qualitative along with specific quantitative disclosures are required by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 including interim periods within those fiscal years. The Company is currently evaluating the impact that will result from adopting ASU 2016-02.

~~In March 2016, the FASB issued ASU 2016-09,~~ ~~Improvements to Employee Share Based Payment Accounting~~ ("ASU 2016-09"), which amends guidance issued in Accounting Standards Codification ("ASC") Topic 718, Compensation - Stock Compensation. ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years and earlyEarly adoption is permitted. The Company ~~has evaluated~~elected to early adopt ASU 2023-08 for the ~~impact of adoption~~year ended December 31, 2023. As a result of the adoption, the Company recorded a cumulative effect adjustment to its Accumulated deficit balance of approximately $6.0 million as of January 1, 2023, as a result of recognizing its Bitcoin held as of January 1, 2023, at fair value. See Note 21. Impacts of Adoption of ASU ~~on its Consolidated Financial Statements. The principal impact will be that the to the extent~~2023-08 for a ~~tax benefit or expense from stock compensation arises it will be presented in the income tax line~~summary of the ~~Statement~~impacts on the Company’s interim Condensed Consolidated Statements of Operations ~~rather than~~provided during the current presentation as a component of equity on the Balance Sheet. Also the tax benefit or expense will be presented as activity in Cash Flow from Operating Activity rather than the current presentation as Cash Flow from Financing Activity in the Statement of Cash Flows. The Company will also continue to estimate forfeitures of stock grants as allowed by ASU 2016-09.

year ended December 31, 2023.

In ~~August 2016,~~November 2023, the FASB issued ASU ~~2016-15,~~ ~~Statement~~2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 is intended to enhance reportable segment disclosures by requiring disclosures of ~~Cash Flows~~ ~~(Topic 230): Classification~~significant segment expenses regularly provided to the CODM, requiring disclosure of ~~Certain Cash Receipts~~the title and ~~Cash Payments. This standard provides guidance for eight cash flow classification issues~~position of the CODM and explanation of how the reported measures of segment profit and loss are used by the CODM in ~~current GAAP.~~assessing segment performance and allocation of resources. ASU ~~2016-15~~2023-07 is effective for ~~fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The~~the Company ~~is currently evaluating the impact that will result from adopting ASU 2016-15.~~

~~In January 2017, the FASB issued an ASU 2017-01,~~ ~~Business Combinations (Topic 805) Clarifying the Definition of a Business~~. The amendments in this Update is to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for annual periods beginning after December ~~15, 2017, including interim periods within those periods. The Company plans to adopt this guidance effective January 1, 2017.~~

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350)~~: Simplifying the Accounting for Goodwill Impairment. ASU 2017-04 removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This standard will be effective for the Company beginning in the first quarter of fiscal year 2020 and is required to be applied prospectively. Early31, 2023; early adoption is ~~permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.~~permitted. The ~~Company~~updated guidance is ~~currently evaluating the impact this standard will have on its consolidated financial statements.~~

~~We have considered recently issued accounting pronouncements and do~~ not ~~believe the adoption of such pronouncements will~~expected to have a material impact on ~~our consolidated financial statements.~~

~~Note 2. Acquisition:~~

~~On September 12,~~the Company’s disclosures.

In June 2016, the Company completed the strategic acquisition of BDI, a privately-held entity. The decision to acquire BDI was made based on the evaluation that the Company's resources would primarily be used for market development and commercial launch of the product and the market opportunity was estimated to be sizable. Pursuant to the Purchase Agreement, through a wholly-owned subsidiary ("Venaxis Sub"), the Company acquired all of the outstanding shares of Series 1 Preferred Stock of BDI from the selling shareholders, representing more than 98% of the outstanding voting stock of BDI, and BDI thereupon become a majority owned subsidiary of the Company.

Under the terms of the Purchase Agreement, the consideration consisted of an aggregate of 627,010 shares of the Company's common stock (the "Shares") which Shares were distributed in accordance with the liquidation preferences set forth in BDI's Fifth Amended and Restated Certificate of Incorporation, as amended. The Shares were valued at approximately $2,577,000 (based upon the closing value of our common stock on the acquisition date) and the issuance represented approximately 14% of the outstanding Bioptix common stock at the closing. The Purchase Agreement contains customary representations and warranties of the parties, including BDI, and the Sellers have customary indemnification obligations to the Company relating to BDI, which are subject to certain limitations described further in the Purchase Agreement. The issuance of the Shares was effected as a private placement of securities. The Company also entered into a Registration Rights Agreement with the Sellers.

Effective November 30, 2016, Venaxis Sub, a wholly-owned subsidiary of the Company, merged with and into BDI, pursuant to an Agreement and Plan of Merger. In the merger, each share of BDI common stock, par value $0.001 per share, except for shares owned by Venaxis Sub, converted into the right to receive cash consideration, upon the terms and subject to the conditions set forth in the merger agreement. The aggregate cash consideration paid in the merger was approximately $28,800 for acquisition of the then remaining 1.1% of the outstanding voting securities of BDI. Following the merger transaction, BDI, the surviving corporation in the Merger, became a wholly-owned subsidiary of the Company.

~~The total consideration transferred consisted of the 627,010 shares of the Company's common stock with a value of $2,577,000.~~

Under the acquisition method of accounting, the total estimated purchase consideration is allocated to the acquired tangible and intangible assets and assumed liabilities based on their estimated fair values as of the acquisition date. We have completed a preliminary allocation of the purchase consideration. The following allocation of the purchase consideration is subject to revision as additional information becomes known in the future:

Cash and cash equivalents $ 17,000
Accounts receivable 21,000
Inventory 379,000
Prepaid and other assets 51,000
Equipment 1,000
Identifiable intangible assets:
  Trademarks (5 year estimated useful life) 99,000
  Customer base (6 year estimated useful life) 37,000
  Developed technology (4 year estimated useful life) 1,864,000
Total identifiable intangible assets 2,000,000
Goodwill 430,000
Accounts payable (118,000 )
Accrued and other liabilities (175,000 )
Non-controlling interest (29,000 )
Purchase price $ 2,577,000

~~The identifiable intangible assets acquired estimated average lives are noted above, which will result in annual estimated future amortization of approximately $492,000 per year.~~

~~Intangible rights acquired consisted of the following as of December 31, 2016:~~

Trademarks $ 99,000
Customer base 37,000
Developed technology 1,864,000
Total 2,000,000
Less accumulated amortization (148,264 )
Net acquired intangibles $ 1,851,736

~~As of November 30, 2016, the Company paid approximately $29,000 to acquire the non-controlling interest in BDI, which was accounted for as an equity transaction.~~

From the September 12, 2016 acquisition date through December 31, 2016, BDI revenues and net loss were approximately $9,000 and $967,000, respectively. Amortization expense amounted to approximately $148,000 for the period ended December 31, 2016.

~~The following table presents unaudited supplemental pro forma information for the years ended December 31, 2016 and 2015, as if the BDI acquisition had occurred as of January 1, 2015:~~

2016 2015
Total revenue $ 127,000 $ 690,000
Net loss 6,895,000 10,921,000

Loss per share (Basic and Diluted) $ 1.53 $ 2.42

These pro forma condensed consolidated financial results have been prepared for comparative purposes only and include certain adjustments to reflect the pro forma results of operations as if the acquisition had occurred as of the beginning of the periods presented, such as increased amortization for the fair value of acquired intangible assets. The pro forma information does not reflect the effect of costs or synergies that would have been expected to result from the integration of the acquisition. The pro forma information does not purport to be indicative of the results of operations that actually would have resulted had the combination occurred at the beginning of each period presented, or of future results of the consolidated entities.

As of December 31, 2016, Bioptix had incurred a total of approximately $130,000 in advisory and legal fees related to the acquisition of BDI, reported in selling, general and administrative expenses in the accompanying consolidated statement of operations for the year ended December 31, 2016.

~~As of December 31, 2016 inventories totaled $415,847, consisting of $187,921 in raw materials and $227,926 in finished goods, all associated with the BDI operations.~~

~~In September 2015,~~ the FASB issued ASU ~~2015-16,~~ ~~Business Combinations~~2016-13, Financial Instruments-Credit Losses (Topic ~~805)~~326): ~~Simplifying~~Measurement of Credit Losses on Financial Instruments, which was codified with its subsequent amendments as Accounting Standards Codification (“ASC”) Topic 326, Financial Instruments – Credit Losses (“ASC 326”). ASC 326 seeks to provide financial statement users with more decision-useful information about the ~~Accounting for Measurement-Period Adjustments. ASU 2015-16 eliminates~~expected credit losses on financial instruments, including trade receivables, and other commitments to extend credit held by a reporting entity at each reporting date. The amendments require an entity to replace the ~~requirement to restate prior period financial statements for measurement period adjustments. The new guidance~~incurred loss impairment methodology in other GAAP with a methodology that reflects current expected credit losses and requires ~~that the cumulative impact~~consideration of a ~~measurement period adjustment (including~~broader range of reasonable and supportable information to inform credit loss estimates. The updated guidance is effective for the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. In addition, separate presentation on the face of the income statement or disclosure in the notes is required regarding the portion of the adjustment recorded in the current period earnings, by line item, which would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 is to be applied prospectively for measurement period adjustments that occur after the effective date. ASU 2015-16 is effectiveCompany for annual reporting periods beginning after December 15, ~~2015. The~~2022, and early adoption is permitted. In connection with the Company’s acquisitions during the year ended December 31, 2021, the Company adopted this ~~guidance~~standard on January 1, ~~2016~~2021, and the adoption ~~thereof~~ did not have a material impact on the ~~Company's consolidated~~ financial ~~statements.~~statements and related disclosures.

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Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Note 3. Acquisitions

Acquisition of Corsicana Facility land site

During the year ended December 31, 2022, the Company initiated a large-scale development to expand its Bitcoin mining and data center hosting capabilities with the acquisition of a 265-acre site in Navarro County, Texas, strategically located next to the Navarro switch, for $10.1 million, where its anticipated one-gigawatt Bitcoin mining and data center facility complex, the Corsicana Facility, is under development. See Note 7. Property and ~~equipment:~~Equipment, for more information about the Corsicana Facility.

Acquisition of ESS Metron

On December 1, 2021, the Company acquired 100% of the equity interests of ESS Metron. ESS Metron is a power distribution and management systems manufacturing, design and engineering firm based in Denver, Colorado, operating from facilities totaling approximately 121,000 square feet of manufacturing, office, and warehouse space in the metropolitan Denver area. These facilities are subject to long-term lease agreements. The acquisition of ESS Metron established the Company’s Engineering business and enhanced the Company’s ability to scale its Bitcoin Mining and Data Center Hosting operations.

Total consideration transferred of $56.9 million was comprised of a cash payment of approximately $30.1 million, net of $3.7 million of seller transaction costs, and 715,413 shares of the Company’s common stock with an acquisition date fair value of approximately $26.7 million. Of the 715,413 shares of common stock, 645,248 were issued upon closing and the remaining 70,165 were withheld as security for the sellers’ indemnification obligations for 18 months following the transaction closing date. During the year ended December 31, 2023, the indemnification period ended and all 70,165 of the withheld shares were issued to the ESS Metron sellers.

Other than an insignificant post-closing settlement of preliminary net working capital, there were no adjustments to the provisional purchase price and fair value estimates. The Company finalized the valuation of the acquired assets and liabilities, and consideration transferred, in December 2022.

The following table presents the allocation of the purchase consideration:


Cash and cash equivalents	$	549
Accounts receivable		9,879
Prepaid and other current assets		636
Inventory and work-in-progress		1,175
Costs and estimated earnings in excess of billings		13,205
Property and equipment		4,501
Intangible assets		14,000
Right of use asset		6,714
Accounts payable		(9,235)
Accrued expenses		(1,239)
Billings in excess of costs and estimated earnings		(5,883)
Operating lease liabilities		(6,714)
Warranty liability		(116)
Total identifiable assets and liabilities acquired		27,472
Goodwill		29,379
Total purchase consideration	$	56,851

Goodwill was attributable to the assembled workforce of experienced personnel at ESS Metron and synergies expected to be achieved from the combined operations of Riot and ESS Metron. The goodwill recognized is expected to be deductible for tax purposes. We assigned the goodwill to our Engineering segment.

The Company determined that the 70,165 shares withheld met the conditions necessary to be classified as equity because the consideration was indexed to the Company’s own equity, there were no exercise contingencies based on an observable market not based on its stock or operations, settlement was consistent with a fixed-for-fixed equity instrument, the agreement contained an explicit number of shares and there were no cash payment provisions. Additionally, based on these assessments, the Company recorded the shares at fair value on the acquisition date, similar to escrowed shares or securities and accounted for them in total consideration transferred. This consideration related to representations and warranties of circumstances that existed as of the

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Riot Platforms, Inc.

Notes to Consolidated Financial Statements

acquisition date and which the Company believed to be accurate, with future issuance of the share consideration deemed likely to occur.

The fair values of cash and cash equivalents, accounts receivable, prepaid and other current assets, inventory and work-in-progress, accounts payable, accrued expenses, and warranty liability were determined to be the carrying values due to the short-term nature of the assets and liabilities. The fair value of the acquired trade receivables was determined to be the net realizable amount of the closing date book value of $9.9 million.

Contract assets consisted of costs and estimated earnings in excess of billings on uncompleted contracts and unearned revenue consists of billings in excess of costs and estimated earnings on uncompleted contracts. The fair values of these assets and liabilities were determined to be the carrying values due to the short-term nature of the underlying project contracts incurring costs and the associated customer billings.

The fair value of property and equipment was estimated by applying the cost approach. The cost approach uses the replacement or reproduction cost as an indicator of fair value. The assumptions of the cost approach include replacement cost new, projected capital expenditures, and physical deterioration factors including economic useful life, remaining useful life, age, and effective age.

Intangible assets reflect the identifiable intangible assets acquired, consisting of customer relationships, a trademark and UL Listings. Customer relationships are assigned an estimated useful life of approximately 10 years based on the low attrition of the customer base, in part due to the customized nature of the Company’s products. Fair value of the customer relationships was estimated by applying an income approach – multi period excess earnings method. The fair value was determined by calculating the present value of estimated future operating cash flows generated from the existing customers less costs to realize the revenue. The Company applied a discount rate of 21%, which reflected the nature of the assets as they relate to the risk and uncertainty of the estimated future operating cash flows. Other significant assumptions used to estimate the fair value of the customer contracts included an assumed income tax rate of 25%.

Although ESS Metron had been in business for over 60 years, the trademark was assigned a 10-year life due to the Company obtaining more data center customers where the longevity of the projects may be shorter than have been historically. Fair value of the trademark was estimated by applying the relief from royalty rate method. The fair value was determined by applying an estimated royalty rate to revenue, measuring the value the Company would pay in royalties to a market participant if it did not own the trademark and had to license it from a third party.

UL Listings were assigned a 12-year life. A UL Listing means that independent safety organization UL, LLC has tested representative samples of a product and determined that the product meets specific, defined requirements. These requirements are often based on UL’s published and nationally recognized Standards for Safety. Although the UL Listing certifications do not expire, due to technological improvements in similar products, particularly in the data center industry, a 12-year life was assumed. Fair value of the UL Listings was estimated by applying an estimated developer’s profit margin of approximately 4.5% to estimated costs to be incurred over an estimated six months to re-acquire the UL Listings. The Company applied a discount rate of 15%, which reflected the short time necessary to re-acquire the asset.

The right of use asset and operating lease liabilities consisted of two operating leases of the manufacturing facility in Denver, Colorado. These leases had combined annual payments of approximately $0.9 million and remaining lease terms of approximately 3.5 and 10 years as of acquisition.

The operating results of ESS Metron have been included in the Company’s Consolidated Statements of Operations since the acquisition date. The Company recognized $2.1 million of acquisition-related costs related to this acquisition that were expensed as incurred. From the acquisition date through December 31, 2021, ESS Metron’s total revenue and net income was approximately $4.2 million and $0.2 million, respectively.

Acquisition of Whinstone

On May 26, 2021, the Company acquired 100% of the equity interests of Whinstone US, Inc., the owner and operator of the Rockdale Facility. The assets and operations of Whinstone increased the scale and scope of Riot’s operations, which is a foundational element in the Company’s strategy to become an industry-leading Bitcoin mining platform on a global scale.

Total consideration transferred of $460.4 million was comprised of a $53.0 million cash payment (including $38.1 million of debt payoff and certain seller transaction costs), 11.8 million shares of the Company’s common stock with an acquisition date fair value

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Riot Platforms, Inc.

Notes to Consolidated Financial Statements

of approximately $326.2 million, an $83.0 million contingent purchase price payable to the Seller (see Note 17. Commitments and Contingencies), and other net items of $(1.7 million).

There were no adjustments to the provisional purchase price and fair value estimates. The Company finalized the valuation of these assets and liabilities, and consideration transferred, in May 2022.

The following table presents the allocation of the purchase consideration:


Cash and cash equivalents	$	10,400
Accounts receivable		1,072
Prepaid expenses and other current assets		2,176
Property and equipment		91,707
Derivative asset		13,967
Right of use asset		6,547
Security deposits		1,775
Future power credits		82,953
Accounts payable		(12,853)
Accrued expenses		(504)
Deferred revenue and customer deposits		(34,856)
Operating lease liabilities		(8,184)
Total identifiable assets and liabilities acquired		154,200
Goodwill		306,184
Total purchase consideration	$	460,384

Goodwill represented the excess of total purchase consideration over the fair value of the underlying assets acquired and liabilities assumed. Goodwill was attributable to the assembled workforce of experienced personnel at Whinstone and synergies expected to be achieved from the combined operations of Riot and Whinstone. None of the goodwill recognized is expected to be deductible for tax purposes. We assigned the goodwill to our Data Center Hosting segment.

As part of the share purchase agreement Riot entered into with the seller in connection with the Whinstone Acquisition, Riot was obligated to the seller to pay up to a maximum amount of $86.0 million, net of income taxes, as defined under the stock purchase agreement (undiscounted) of additional consideration if certain power credits were received or realized by Whinstone. Those power credits arose from the February 2021 weather event. The purchase price included the estimated fair value of the contingent consideration at the Whinstone Acquisition Date of approximately $83.0 million. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. These assumptions for the power credits whose utilization by Whinstone is contingent on ERCOT’s future power billings, included the timing of receipt or realization of the power credits, estimates of future power consumption, the discount rate and credit risk of the Company and the owing party (ERCOT).

The fair value of the acquired trade receivables was determined to be the net realizable amount of the closing date book value of $1.1 million.

The fair value of the acquired long-term other asset of approximately $83.0 million related to the estimated amount of power credits due Whinstone from the February 2021 weather event. We estimated the fair value of the power credits to be the same as that of the contingent consideration arrangement because the Company is required to remit to the seller in cash as additional consideration the amount of such power credits received or realized by Whinstone. See discussion above on contingent consideration.

The derivative asset acquired pertained to the PPA. The fair value of the contract of approximately $14.0 million was estimated by applying a discounted debt-free cash flow approach. This fair value measurement was based on significant inputs not observable in the market and thus represented a Level 3 measurement as defined in ASC 820. The significant assumptions used to estimate fair value of the derivative contract included a discount rate of 21%, which reflected the nature of the contract as it relates to the risk and uncertainty of the estimated future mark-to-market adjustments, forward price curves of the power supply, broker/dealer quotes, and other similar data obtained from quoted market prices or independent pricing vendors.

The fair value of property and equipment was estimated by applying the cost approach. The cost approach uses the replacement or reproduction cost as an indicator of fair value. The assumptions of the cost approach included replacement costs, projected capital expenditures, and physical deterioration factors including economic useful life, remaining useful life, age, and effective age.

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Table of Contents

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

The operating results of Whinstone have been included in the Company’s Consolidated Statements of Operations since the acquisition date. The Company recognized $19.1 million of acquisition-related costs that were expensed as incurred.

The financial results of the acquisition have been included in the Company’s Consolidated Financial Statements from the closing of the acquisition. From the acquisition date through December 31, 2021, Whinstone’s total revenue and net income was approximately $24.5 million and $1.2 million, respectively.

Note 4. Revenue from Contracts with Customers

Disaggregated revenue

Revenue disaggregated by reportable segment is presented in See Note 20. Segments Information.

Contract balances

Contract assets relate to uncompleted Engineering contracts. As of December 31, 2023 and 2022, contract assets were $15.4 million and $19.7 million, respectively.

Contract liabilities primarily relate to upfront payments and consideration received for Data Center Hosting services and Deferred revenue relates to uncompleted Engineering contracts. The following table presents changes in contract liabilities and deferred revenue:


	Years Ended December 31,
	2023		2022
Beginning balance	$	29,197	$	27,903
Revenue recognized		(11,226)		(6,805)
Other changes in contract liabilities		4,361		8,099
Ending balance	$	22,332	$	29,197

Remaining performance obligation

The following table presents the estimated future recognition of the Company’s remaining performance obligations, which represent the transaction price of current contracts for work to be performed.


	2024		2025		2026		2027		2028		Thereafter		Total
Data Center Hosting	$	2,362	$	2,362	$	2,362	$	2,362	$	2,362	$	5,964	$	17,774
Engineering		4,073		—		—		—		—		—		4,073
Other		97		97		97		97		97		—		485
Total contract liabilities	$	6,532	$	2,459	$	2,459	$	2,459	$	2,459	$	5,964	$	22,332

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Table of Contents

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Note 5. Bitcoin

The following table presents information about the Company’s Bitcoin balance held:


	Quantity	Amounts
Balance as of January 1, 2022	4,884	$	150,593
Revenue recognized from Bitcoin mined	5,554		156,870
Proceeds from sale of Bitcoin	(3,425)		(79,529)
Exchange of Bitcoin for employee compensation	(39)		(1,495)
Realized gain on sale/exchange of Bitcoin	—		30,346
Impairment of Bitcoin	—		(147,365)
Balance as of December 31, 2022	6,974		109,420
Cumulative effect upon adoption of ASU 2023-08	—		5,994
Revenue recognized from Bitcoin mined	6,626		188,996
Bitcoin receivable	(21)		(878)
Proceeds from sale of Bitcoin	(6,185)		(176,219)
Exchange of Bitcoin for employee compensation	(32)		(869)
Change in fair value of Bitcoin	—		184,734
Balance as of December 31, 2023	7,362	$	311,178

Carrying value of Bitcoin as of December 31, 2023^(a)		$	199,928
Realized gains on the sale of Bitcoin for the year ended December 31, 2023^(b)		$	80,174

(a)

The carrying value of Bitcoin is equal to the post-impairment value of all Bitcoin held as of the adoption of ASU 2023-08 on January 1, 2023, and, for Bitcoin produced subsequent to the adoption ASU 2023-08, the initial value of the Bitcoin as determined for revenue recognition purposes.

(b)

Bitcoin is sold on a FIFO basis. During the year ended December 31, 2023, gains were recognized on all sales of Bitcoin and are included in Change in fair value of Bitcoin on the Consolidated Statements of Operations.

All additions of Bitcoin were the result of Bitcoin generated by the Company’s Bitcoin Mining operations (see Note 4. Revenue from Contracts with Customers). All dispositions of Bitcoin were the result of sales on the open market to fund Company operations and for compensation for certain employees.

Note 6. Investments

Convertible note

During the year ended December 31, 2023, the Company invested in a $4.5 million convertible note at face value. The convertible note has a three-year term and earns interest at a rate of 12% per annum, which may be paid in cash or in-kind, and converts into equity of the issuer of the convertible note at the end of the three-year term.

The convertible note is accounted for as an available-for-sale debt instrument and is recognized at fair value in Other long-term assets on the Consolidated Balance Sheets. Unrealized changes in the fair value of the convertible note are recognized in Other comprehensive income (loss) on the Consolidated Statements of Comprehensive Income (Loss). Interest income is recognized within Interest income (expense) on the Consolidated Statements of Operations.

The fair value measurement of the convertible note is based on significant inputs not observable in the market and thus represents a Level 3 measurement. The significant assumptions used to estimate fair value of the convertible note included a discount rate of 12.3%, which reflected the issuance date spread premium over the selected yield for the remaining time to maturity. The issuance date discount rate of 14.0% reflected an estimated required return for mezzanine financing after taking into consideration the principal of the convertible note and the investee’s early stage of development.

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Notes to Consolidated Financial Statements

The following table presents information about the convertible note:


Investment	$	4,500
Accrued interest		59
Amortized costs basis		4,559
Unrealized holding gains (losses) in accumulated other comprehensive income		150
Fair value as of December 31, 2023	$	4,709

The Company determined that the issuer of the convertible preferred note was a variable interest entity (“VIE”) and that the Company held a variable interest in the issuer of the convertible preferred note. The Company has considered the amount it is contributing to the issuer, its lack of decision-making rights and control, among other factors, and has concluded that it does not hold a controlling financial interest and does not have majority decision-making control. Therefore, the Company is not the primary beneficiary of the VIE, and as a result, the Company is not required to consolidate the VIE. The entire $4.5 million investment is at risk of loss.

Coinsquare and Mogo

In September 2017, and February 2018, the Company acquired a minority interest for $9.4 million in Coinsquare Ltd., a Canadian cryptocurrency exchange (“Coinsquare”), which operates a digital cryptocurrency exchange platform in Canada. The investment resulted in an ownership in Coinsquare by the Company of approximately 11.7% ownership in Coinsquare on a fully diluted basis. The Company elected to account for the investment using the measurement alternative as the equity securities are without a readily determinable fair value and do not give the Company significant influence over Coinsquare. Per the measurement alternative, the investment is recorded at cost, less any impairment, plus or minus changes resulting from observable price changes.

During June 2020, the Company became aware of allegations brought by the Ontario Securities Commission (the “OSC”) that Coinsquare and certain of its executives and directors engaged in systematic “wash trading” of cryptocurrencies on its Coinsquare market to manipulate the market’s trading volume during 2018 and 2019.

On July 21, 2020, a hearing panel of the OSC entered an order (the “Order”) approving the settlement agreement between OSC, Coinsquare, and certain of its executives and directors (the “Settlement Agreement”), in which they admitted to breaches of Ontario securities laws and/or conduct contrary to the public interest including, market manipulation through reporting inflated trading volumes on its Coinsquare Market, misleading its clients and investors about these trading volumes, and taking reprisal against an internal whistleblower who brought this conduct to the attention of the named executives and directors. The Order requires certain oversight and governance procedures and to prohibit the named executives and directors from engaging in certain activities with respect to Coinsquare; additionally, the named executives and directors were required to resign from Coinsquare and Coinsquare and the named executives and directors were required to pay penalties and costs totaling approximately CAD $2.2 million.

The Company thereupon determined there were indicators that would cause a 100% impairment of the Coinsquare investment and observed price changes and recorded an impairment expense of $9.4 million for its investment in Coinsquare during the year ended December 31, 2020.

During the year ended December 31, 2021, under agreements between Coinsquare, Coinsquare’s shareholders (including Riot) and Mogo Inc. (NASDAQ: MOGO), a digital payments and financial technology company (“Mogo”), Riot sold all 3.4 million common shares of Coinsquare in exchange for approximately 3.2 million common shares of Mogo and approximately $1.8 million in cash.

During the year ended December 31, 2021, the Company recorded a gain on sale/exchange of long-term investments of $26.3 million for the sale of its shares of Coinsquare. Concurrently, the Company recorded the fair value of the Mogo shares received in the exchange of $24.8 million in investments in marketable equity securities within current assets on the Consolidated Balance Sheets. The fair value was calculated as 3.2 million shares of Mogo common stock multiplied by the fair value of the Mogo shares received. During the year ended December 31, 2021, we recorded an unrealized loss on the shares of approximately $13.7 million based on the closing price per share of Mogo common stock on the Nasdaq Stock Market on December 31, 2021 of $3.42.

During the year ended December 31, 2022, the Company sold all 3.2 million shares of its shares of Mogo for proceeds of $1.8 million, resulting in realized losses of approximately $9.0 million.

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Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Note 7. Property and Equipment

Property and equipment ~~consisted~~consists of the ~~following as of December 31:~~

2016 2015

Land and improvements $ — $ 1,107,508
Building — 2,589,231
Building improvements — 253,526
Laboratory equipment 35,946 848,014
Office and computer equipment 116,510 318,254

152,456 5,116,533
Less accumulated depreciation 111,323 3,162,037

$ 41,133 $ 1,954,496

following:


	December 31,		December 31,
	2023		2022
Buildings and building improvements	$	348,865	$	229,685
Land rights and land improvements		10,320		10,164
Miners and mining equipment		496,230		441,324
Machinery and facility equipment		39,144		35,125
Office and computer equipment		2,108		1,206
Construction in progress		166,970		97,231
Total cost of property and equipment		1,063,637		814,735
Less accumulated depreciation		(359,443)		(122,180)
Property and equipment, net	$	704,194	$	692,555

Depreciation and amortization expense related to property and equipment totaled approximately ~~$4,000~~$246.5 million, $105.9 million, and ~~$149,000,~~$26.1 million, for the years ended December 31, ~~2016~~2023, 2022, and ~~2015,~~2021, respectively.

On February 25, 2016, the Company completed the sale of its corporate headquarters, land, building and certain fixtures and equipment to a third party for a purchase price of approximately $4,000,000. The sale resulted in a gain of approximately $1,943,000 and generated approximately $1,809,000 in net cash after expenses and mortgage payoffs.

The Company ~~is leasing back space in~~recognized an impairment charge for its miners and mining equipment during the ~~building under a short-term lease agreement for storage space.~~

~~Note 4. Other long-term assets:~~

~~Other long-term assets consisted of the following as of~~year ended December 31, ~~2016~~2022, as described below, but did not incur any other impairment charges for its property and ~~2015:~~

Beginning Balance Additions Impairments Ending Balance
Year ended December 31, 2016:
Cost:
  Patents $ 1,684,737 $ 26,067 $ (677,822 ) $ 1,032,982
  Goodwill 447,951 429,418 — 877,369
  Deposits — 37,000 — 37,000
Total 2,132,688 492,485 (677,822 ) 1,947,351

Accumulated Amortization:
  Patents (548,327 ) (76,422 ) 142,566 (482,183 )
  Goodwill (60,712 ) — — (60,712 )
Total (609,039 ) (76,422 ) 142,566 (542,895 )

Net Other Long Term Assets $ 1,523,649 $ 416,063 $ (535,256 ) $ 1,404,456

Year ended December 31, 2015:
Cost:
  Patents $ 1,844,595 $ 92,033 $ (251,891 ) $ 1,684,737
  Goodwill 447,951 — — 447,951
  Deposits — — — —
Total 2,292,546 92,033 (251,891 ) 2,132,688

Accumulated Amortization:
  Patents (507,644 ) (104,433 ) 63,750 (548,327 )
  Goodwill (60,712 ) — — (60,712 )
Total (568,356 ) (104,433 ) 63,750 (609,039 )

Net Other Long Term Assets $ 1,724,190 $ (12,400 ) $ (188,141 ) $ 1,523,649

The Company capitalizes legal costs and filing fees associated with obtaining patents on its new discoveries. Once the patents have been issued, the Company amortizes these costs over the shorter of the legal life of the patent or its estimated economic life using the straight-line method. Amortization expense totaled $76,000 and $104,000equipment for the years ended December 31, ~~2016~~2023 and ~~2015, respectively. Based upon~~2021.

Miners and mining equipment

As of December 31, 2023, the ~~current status~~Company had deployed a total of 112,944 miners in its mining operation, all at the Rockdale Facility.

During the year ended December 31, 2023, the Company entered into the Master Agreement to acquire 99,840 miners from MicroBT (consisting of 8,320 M56S+ model miners, 22,684 M56S++ model miners, 20,778 M66 model miners, and 48,058 M66S model miners), primarily for use at the Corsicana Facility, for a total purchase price of approximately $453.4 million, subject to adjustment. Delivery of the ~~above~~miners began in the fourth quarter of 2023, with all miners expected to be received and deployed by mid-2025. The Master Agreement also provides us an option to purchase up to an additional 265,000 additional miners, on the same terms as the initial order.

During the year ended December 31, 2023, the Company sold 2,700 Antminer model S19 XP miners for gross proceeds of $6.4 million, which resulted in a loss on sale of equipment of $5.3 million.

As of December 31, 2022, the Company had outstanding executed purchase agreements for the purchase of miners from Bitmain for a total of 5,130 S19 series miners, all of which were received in January 2023. As of December 31, 2023, the Company did not have any outstanding purchase agreements for the purchase of miners from Bitmain.

During the year ended December 31, 2022, the Company elected not to renew its co-location mining services agreement with Coinmint, which was therefore terminated automatically per its terms. In connection with the termination, the Company arranged for the transfer of the miners it was operating at Coinmint’s Massena, New York facility (the “Coinmint Facility”). The Company then entered into an equipment exchange agreement with a third-party Bitcoin mining company (the “Counterparty”), whereby the Company transferred approximately 5,700 of the Antminer model S19 Pro miners it had previously deployed at the Coinmint Facility to the Counterparty in exchange for 5,000 factory-new Antminer model S19j Pro miners delivered to the Rockdale Facility. After completing the transfer of the miners to the Counterparty, the Company relocated the balance of the miners it had deployed at the Coinmint Facility to the Rockdale Facility. As a result of the exchange with the Counterparty, the Company recognized a gain on the exchange of equipment of approximately $16.3 million during the year ended December 31, 2022.

Impairment of miners

During the year ended December 31, 2022, adverse changes in business climate, including decreases in the price of Bitcoin and resulting decrease in the market price of miners, indicated that an impairment triggering event had occurred. Testing performed indicated the estimated fair value of the Company’s miners to be less than their net carrying value as of December 31, 2022, and an impairment charge of $55.5 million was recognized, decreasing the net carrying value of the Company’s miners to their estimated

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Riot Platforms, Inc.

Notes to Consolidated Financial Statements

fair value. The estimated fair value of the Company’s miners was classified in Level 2 of the fair value hierarchy due to the quoted market prices for similar assets.

Casualty-related charges (recoveries), net

In December 2022, the Rockdale Facility was damaged during severe winter storms in Texas. As of December 31, 2023, the Company estimated that total damages of $10.3 million had been incurred. During the year ended December 31, 2023, the Company received net insurance recoveries of $7.5 million. Recoveries are recognized when they are probable of being received.

Construction in progress

As of December 31, 2023, the Company’s expansion of the Rockdale Facility had been completed.

In 2022, the Company initiated development of the Corsicana Facility to expand its Bitcoin Mining and Data Center Hosting capabilities, on a 265-acre site in Navarro County, Texas, located next to the Navarro Switch. Once complete, the Company expects the Corsicana Facility to have one gigawatt of developed capacity for its Bitcoin Mining and Data Center Hosting operations.

The initial phase of the development of the Corsicana Facility involves the construction of 400 MW of immersion-cooled Bitcoin Mining and Data Center Hosting infrastructure, as well as a high-voltage power substation and transmission facilities to supply power and water to the facility. Construction of the substation and the data centers is ongoing and operations are expected to commence by the end of the first quarter of 2024, following commissioning of the substation.

Through December 31, 2023, the Company had incurred costs of approximately $217.8 million related to the development of the Corsicana Facility, including $10.1 million paid to acquire the land on which the facility is being developed, $203.0 million of initial developments costs and equipment, and a $4.7 million deposit for future power usage.

During the year ended December 31, 2023, the Company entered into a purchase agreement with Midas for the purchase of 200 MW of immersion cooling systems for its Corsicana Facility. Delivery of the immersion cooling systems began in the fourth quarter of 2023 and is expected to be completed in the first quarter of 2024. The purchase agreement also provides the Company an option to purchase up to an additional 400 MW of immersion cooling systems from Midas, on the same terms as the initial order, through December 31, 2025.

Related party land transaction

During the year ended December 31, 2022, the Company began an initiative to provide certain on-site temporary housing for stakeholders, including partners, analysts, stockholders, employees, vendors, and other visitors to the Rockdale Facility, which is located in a relatively remote area of central Texas with limited accommodations for visitors. During the year ended December 31, 2023, Riot completed its acquisition of property and land for the development of temporary housing from Lyle Theriot (indirectly, through a limited liability company controlled by Mr. Theriot) for approximately $1.1 million, consisting of $0.2 million for land and $0.9 million for buildings and improvements. At the time of the transaction, Mr. Theriot was part of the management team at Riot and was considered a related party of Riot. The transaction was accounted for as an asset acquisition.

Commitments

During the year ended December 31, 2023, the Company paid $191.1 million in deposits and payments to MicroBT for the purchase of miners pursuant to the Master Agreement described herein. The remaining commitment of approximately $270.4 million is due in installments through approximately April 2025 based on the estimated miner delivery schedule. Total payments of $220.0 million and $50.4 million are expected to be made in 2024 and 2025, respectively.

During the year ended December 31, 2023, the Company paid $31.2 million in deposits and payments to Midas for the purchase of immersion cooling systems described herein. The remaining commitment of approximately $21.1 million is due in installments in early 2024, based on the estimated delivery schedule.

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Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Note 8. Goodwill and Intangible Assets

Goodwill

During the second quarter of 2022, adverse changes in business climate, including decreases in the price of Bitcoin and increased volatility of equity markets, as evidenced by declines in the market price of the Company’s securities, those of its peers, and major market indices, reduced market multiples and increased weighted-average costs of capital, primarily driven by an increase in interest rates. Market concerns related to inflation, supply chain disruption issues and other macroeconomic factors were some of the primary causes for these declines. Additionally, the price of Bitcoin had declined significantly, notably during the second quarter of 2022.

Due to these factors, the Company determined that a triggering event had occurred, and therefore, performed a goodwill impairment assessment as of June 30, 2022. The valuation of the Company’s reporting units was determined with the assistance of an independent valuation specialist firm using a market approach. The market approach was based on the Guideline Public Company Method, which is derived from metrics of publicly traded companies or historically completed transactions of comparable businesses. The selection of comparable businesses was based on the markets in which the reporting units operated, giving consideration to risk profiles, size, geography, and diversity of products and services. Under the market approach, the Company evaluated the fair value based on trailing and forward-looking earnings and revenue multiples derived from comparable publicly traded companies with similar market position and size as the Company’s reporting units. The unobservable inputs used to measure the fair value included projected revenue growth rates, the price of Bitcoin, the global Bitcoin network hash rate, the timing of miner shipments under currently executed contracts and their subsequent deployment, and the determination of appropriate market comparison companies. The trailing-twelve-month and next-twelve-month enterprise value-to-revenue multiples assumed in the analysis ranged from approximately 0.7x to approximately 3.9x. The resulting estimated fair values of the combined reporting units were reconciled to the Company’s market capitalization, including an estimated implied control premium of approximately 30%.

The results of the quantitative test indicated the fair value of the reporting units did not exceed their carrying amounts, including goodwill, in excess of the carrying value of the goodwill. As a result, the entire carrying amount of the goodwill was recognized as a non-cash impairment charge during the year ended December 31, 2022.

Finite-lived intangible assets

The following table presents the ~~aggregate~~Company’s finite-lived intangible assets as of December 31, 2023:


							Weighted-
	Gross		Accumulated		Net book		average life
	book value		amortization		value		(years)
Customer contracts	$	6,300	$	(1,292)	$	5,008	10
Trademark		5,000		(1,042)		3,958	10
UL Listings		2,700		(469)		2,231	12
Patents		10,060		(5,560)		4,500	Various
Finite-lived intangible assets	$	24,060	$	(8,363)	$	15,697

The customer contracts, trademark, and UL listings were recognized as the result of acquisitions during the year ended December 31, 2021 (see Note 3. Acquisitions).

During the year ended December 31, 2022, the Company paid $9.5 million to license a patent for technology being used in the development of the Corsicana Facility. The amount paid is being amortized over the term of the license, which expires on December 31, 2024.

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Riot Platforms, Inc.

Notes to Consolidated Financial Statements

The following table presents the Company’s finite-lived intangible assets as of December 31, 2022:


							Weighted-
	Gross		Accumulated		Net book		average life
	book value		amortization		value		(years)
Customer contracts	$	6,300	$	(671)	$	5,629	10
Trademark		5,000		(542)		4,458	10
UL Listings		2,700		(244)		2,456	12
Patents		10,060		(1,126)		8,934	Various
Finite-lived intangible assets	$	24,060	$	(2,583)	$	21,477

During the years ended December 31, 2023, 2022, and 2021, amortization expense isrelated to finite-lived intangible assets was $5.8 million, $2.1 million, and $0.2 million, respectively.

The following table presents the estimated ~~to be approximately $68,000 for each~~future amortization of the ~~next five fiscal years.~~ Company’s finite-lived intangible assets as of December 31, 2023:


2024	$	5,823
2025		1,355
2026		1,355
2027		1,355
2028		1,355
Thereafter		4,455
Total	$	15,697

The Company ~~tests~~did not identify any impairment of its finite-lived intangible assets ~~with finite lives upon significant changes in the Company's business environment. The testing resulted in approximately $535,000 and $188,000 of net patent impairment charges~~ during the years ended December 31, ~~2016~~2023, 2022, and ~~2015, respectively. The impairment charges are related~~2021.

Note 9. Power Purchase Agreement

In May 2020, the Company, through its subsidiary, Whinstone, entered into the PPA to provide for the delivery of power to its Rockdale Facility, via the nearby Sandow Switch. Pursuant to the ~~Company's ongoing analysis on which specific patents in specific countries~~PPA, the Company ~~intends~~has agreed to ~~continue~~acquire a total of 345 MW of long-term, fixed-price power, in multiple blocks, as follows: 130 MW contracted in May 2020, at fixed prices through April 30, 2030; 65 MW contracted in March 2022, at fixed prices through April 30, 2030; and 150 MW contracted in November 2022, at fixed prices through October 31, 2027. Additionally, under the PPA, the Company has the option to ~~pursue.~~

~~Note 5. Notes and other obligations:~~

~~Notes payable and installment obligations consisted~~purchase additional power at market prices, as needed.

If electricity used exceeds the amount contracted, the cost of the ~~following as~~excess electricity is incurred at the then-current spot rate. Concurrently with the PPA, the Company entered into an interconnection agreement for the extension of ~~December 31:~~

2016 2015

Mortgage notes $ — $ 1,997,701
Other short-term installment obligations 139,611 142,328
139,611 2,140,029
Less current portion 139,611 301,250

$ — $ 1,838,779

~~Mortgage notes:~~

~~Prior~~delivery system transmission/substation facilities to facilitate delivery of the electricity to the ~~February 2016 sale~~Rockdale Facility (the “Facilities Agreement”). Power costs incurred under the Facilities Agreement are determined every 15 minutes using settlement information provided by the ERCOT and are recorded in Cost of revenue on the Consolidated Statements of Operations.

In collaboration with market participants such as the Company, ERCOT has implemented Demand Response Services Programs for customers that have the ability to reduce or modify electricity use in response to ERCOT instructions or signals. These Demand Response Services Programs provide the ERCOT market with valuable reliability and economic services by helping to preserve system reliability, enhancing competition, mitigating price spikes, and stabilizing the grid by encouraging the demand side of the ~~corporate headquarters,~~market to give more visibility and control of their power consumption to grid operators. Market participants with electrical loads like the Company ~~had~~may participate in these Demand Response Service Programs directly by offering their electrical loads into the ERCOT markets, or indirectly by voluntarily reducing their energy usage in response to increasing power demand in the ERCOT marketplace.

Under these Demand Response Services Programs, the Company can participate in a ~~permanent mortgage on its land and building that was refinanced in May 2013. The mortgage was held~~variety of programs known as “ancillary services” by ~~a commercial bank and included~~electing to designate a portion ~~guaranteed by~~of its available electrical load for participation in such programs on an hourly basis. For each respective Demand Response Services Program, the ~~U. S. Small Business Administration ("SBA"). The loan was collateralized by the real property~~Company receives a cash payment based on hourly rates for power, and the ~~SBA portion was~~amount of electrical load into which it bids. Through ancillary services, the Company competitively bids amongst other market participants to sell ERCOT the ability to control Riot’s electrical load on demand, and to power down when directed to by ERCOT,

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Riot Platforms, Inc.

Notes to Consolidated Financial Statements

as part of ERCOT’s efforts to stabilize the grid. The Company receives compensation for its participation in ancillary services whether or not the Company is actually called to power down.

Riot also ~~personally guaranteed by a former officer~~participates in ERCOT’s Four Coincident Peak (“4CP”) program, which refers to the highest-load settlement intervals in each of the ~~Company.~~four summer months (June, July, August, and September), during which time, demand for power is at its highest. 4CP participants may voluntarily power down operations during these times and in doing so, reduce the electrical load demand on the ERCOT grid. Participants that reduce their load in these peak periods receive credits to transmission costs on future power bills during the subsequent year, reducing overall power costs. As a result of Riot’s participation in 4CP in 2022, the Company’s transmission charges in its 2023 monthly power bills were substantially reduced.

Under the PPA, the Company may also elect not to utilize its long-term, fixed-price power for its operations, and instead elect to sell that power in exchange for credits against future power costs when there is a benefit to the Company, depending on the spot market price of electricity. The ~~commercial bank loan terms included~~Company’s power strategy combines participation in Demand Response Services Programs and sales of power during times of peak demand, to attempt to manage operating costs most efficiently.

During the years ended December 31, 2023, 2022, and 2021, the Company earned credits against future power costs in exchange for power resold of approximately $71.2 million, $27.3 million, and $6.5 million, respectively. These amounts are recorded in Power curtailment credits on the Consolidated Statements of Operations.

The Company determined the PPA meets the definition of a ~~payment schedule based on a fifteen year amortization, with a balloon maturity at five years. The commercial bank portion had an interest rate fixed at 3.95%, and~~derivative because it allows for net settlement. However, because the ~~SBA portion bore interest at~~Company has the ~~rate of 5.86%. The commercial bank portion~~ability to offer the power back for sale, rather than taking physical delivery, the Company determined that physical delivery is not probable through the entirety of the loan required total monthly payments of approximately $11,700, which included approximately $4,500 per month in interest. The SBA portion of the loan required total monthly payments of approximately $9,000 through July 2023, which included approximately $3,500 per month in interestcontract and ~~fees in 2016.~~

~~On February 25, 2016,~~therefore, the Company ~~completed~~does not believe the ~~sale of its corporate headquarters, land~~normal purchases and ~~building, and also paid off its mortgage obligations. See Note 3.~~

~~Other short-term installment obligations and future maturities:~~

~~The Company has executed financing agreements~~normal sales scope exception applies to the PPA. Accordingly, the PPA (a non-hedging derivative contract) is accounted for ~~certain of the Company's insurance premiums. At December 31, 2016, these obligations totaled $139,611, all of which are due in 2017.~~

~~The Company's exclusive license agreement with The Washington University also requires minimum annual royalty payments of $20,000 per year during its term. See Note 8.~~

~~Note 6. Stockholders' equity:~~

~~2016 Transactions:~~

On September 12, 2016, the Company issued an aggregate of 627,010 shares of common stock of the Company as consideration for the acquisition of the Preferred Stock of BDI, thereby making BDI a majority-owned subsidiary of the Company. The issuance of the shares was effected as a ~~private placement transaction. See Note 2.~~

~~Upon~~derivative and recorded at its estimated fair value each reporting period in Derivative asset on the ~~completion~~Consolidated Balance Sheets with the change in the fair value recorded in Change in fair value of derivative asset on the Consolidated Statements of Operations. The PPA is not designated as a special shareholders meeting on March 24, 2016, where such action was approved by shareholders, the Board of Directors authorized the Reverse Stock Split at a ratio of one-for-eight, whereby each eight shares of common stock were combined into one share of common stock. hedging instrument.

The Reverse Stock Split was implemented and effective on March 31, 2016. All historical references to shares and share amounts in this report have been retroactively revised to reflect the Reverse Stock Split.

~~2015 Transactions:~~

~~The Company had no equity offerings in 2015, as it focused on strategic alternatives.~~

~~Note 7. Stock options and warrants:~~

The Company currently provides stock-based compensation to employees, directors and consultants, both under the Company's 2002 Stock Incentive Plan, as amended (the "Plan") and non-qualified options and warrants issued outside of the Plan. ~~During November, 2016, the Company's shareholders approved amendments to the Plan to increase the number of shares reserved under the Plan from 709,141 to 895,000. The Company estimates the~~estimated fair value of the ~~share-based awards on~~Company’s Derivate asset is classified under Level 3 of the ~~date~~fair value hierarchy due to the significant unobservable inputs utilized in the valuation. Specifically, the Company’s discounted cash flow estimation models contain quoted commodity exchange spot and forward prices and are adjusted for basis spreads for load zone-to-hub differentials through the term of ~~grant using~~ the ~~Black-Scholes option-pricing model (the "Black-Scholes model"). Using the Black-Scholes model, the~~PPA, which is scheduled to end as of April 30, 2030. The significant assumptions used to estimate fair value of the ~~award that is ultimately expected~~derivative contract include a discount rate of 23.1%, which reflected the nature of the contract as it relates to ~~vest is recognized over~~ the ~~requisite service period~~risk and uncertainty of the estimated future mark-to-market adjustments, forward price curves of the power supply, broker/dealer quotes and other similar data obtained from quoted market prices or independent pricing vendors. The discount rate includes observable market inputs, but also includes unobservable inputs based on qualitative judgment related to company-specific risk factors.

The terms of the PPA require margin-based collateral, calculated as exposure resulting from fluctuations in the ~~statement~~market cost rate of ~~operations. Option forfeitures are estimated~~electricity compared to the fixed price stated in the contract. As of December 31, 2023, the margin-based collateral requirement of the Company was zero.

While the Company manages operating costs at the ~~time of grant and revised, if necessary,~~Rockdale Facility in ~~subsequent periods if actual forfeitures differ from those estimates.~~ part by periodically selling back unused or uneconomical power, the Company does not consider such actions to be trading activities.

The ~~Company attributes compensation to expense using the straight-line single option method for all options granted.~~

~~The Company's determination of~~following table presents changes in the estimated fair value of ~~share-based payment awards~~the Derivative asset:


Balance as of December 31, 2022	$	97,497
Change in fair value of derivative asset		6,721
Balance as of December 31, 2023	$	104,218

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Notes to Consolidated Financial Statements

Note 10. Deposits

The following table presents the activity of the Company’s deposits paid:


Deposits on equipment:
Balance as of December 31, 2022	$	33,273
Additions		230,397
Reclassifications to property and equipment		(78,376)
Balance as of December 31, 2023		185,294
Security deposits		29,715
Total long-term deposits	$	215,009

Deposits on ~~the date~~equipment

As of ~~grant is affected by the following variables and assumptions:~~

·	~~The grant date exercise price – the closing market price of the Company's common stock on the date of the grant;~~
·	~~Expected option term – based on historical experience with existing option holders estimated at 3-5 years;~~
·	~~Estimated dividend rates – based on historical and anticipated dividends over the life of the option;~~
·	~~Term of the option – grants have lives of 10 years;~~
·	~~Risk-free interest rates – with maturities that approximate the expected life of the options granted;~~
·	Calculated stock price volatility – calculated over the expected life of the options granted, which is calculated based on the daily closing price of the Company's common stock over a period equal to the expected term of the option; and
·	~~Option exercise behaviors – based on actual and projected employee stock option exercises and forfeitures.~~

~~The Company recognized stock-based compensation totaling $545,549 and $1,143,078 during the years ended~~ December 31, ~~2016 and 2015, respectively. These expenses are included in~~2022, the ~~accompanying Statements of Operations~~Company had outstanding executed purchase agreements for the ~~years ended December 31,~~purchase of miners from Bitmain for a total of 5,130 S19 series miners, which were received in ~~the following categories:~~

2016 2015

Selling, general and administrative expenses $ 542,989 $ 1,016,011
Research and development expenses 2,560 127,067
Total stock-based compensation $ 545,549 $ 1,143,078

~~Stock incentive plan options:~~

The Company currently provides stock-based compensation to employees, directors and consultants under the Plan. The Company utilized assumptions in the estimation of fair value of stock-based compensation for the years ended December 31, as follows:

2016 2015

Dividend yield 0 % 0 %
Expected price volatility 99 to 100% 93 %
Risk free interest rate 1.20 to 1.83% 1.39 %
Expected term 5 years 5 years

~~A summary of stock option activity under the Plan for options to employees, officers, directors and consultants, for the year ended December 31, 2016, is presented below:~~

Shares
Underlying
Options

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Term (Years)

Aggregate
Intrinsic
Value

Outstanding at January 1, 2016 332,560 $ 35.36
     Granted 259,666 2.90
     Exercised - -
     Forfeited (25,479 ) 36.88

Outstanding at December 31, 2016 566,747 $ 20.46 7.4 $ 243,000

Exercisable at December 31, 2016 469,009 $ 23.99 7.0 $ 158,000

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company's closing stock price on December 31, 2016 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders, had all option holders been able to, and in fact had, exercised their options on December 31, 2016.

January 2023. During the year ended December 31, ~~2016, 259,666 options were granted under~~2023, the ~~Plan~~Company reclassified the outstanding deposit of $33.3 million to ~~employees, officers, directors~~property and ~~consultants~~equipment in connection with ~~a weighted average exercise price~~the receipt of the miners at ~~grant date of $2.90 per option.~~ ~~Included in~~ the 259,666 options issued, the non-employee directors were granted a total of 109,666 options at an average exercise price of $2.92 per share of which the majority vest quarterly over a one-year period, officers were granted 128,000 options at an exercise price of $2.89 per share vesting over a one year periodRockdale Facility. See Note 7. Property and employees were granted 2,000 options at an exercise price of $2.89 per share, vesting over a one year period, a consultant was granted 20,000 options at an exercise price of $2.89 per share, vesting over a one year period. All options were granted under the Company's 2002 Stock Incentive Plan and expire ten years from the grant date.

Equipment.

During the year ended December 31, ~~2016,~~2023, the Company paid deposits and advance payments of $191.1 million to MicroBT for the purchase of miners, paid a ~~total~~deposit of ~~25,479 options that were granted under~~$20.8 million to Midas for the ~~Plan were forfeited,~~purchase of ~~which 21,859 were vested~~immersion cooling systems, and ~~3,620 were unvested. The vested options were exercisable at an average~~paid deposits of ~~$40.49 per share~~$18.5 million for other purchases of miners from various suppliers. See Note 7. Property and ~~the unvested options were exercisable at an average of $15.13 per share.~~

Equipment.

During the year ended December 31, ~~2015, 136,813 options~~2023, $12.6 million of the deposits made to MicroBT, all of the $20.8 million deposit made to Midas, and $11.7 million of the deposits for other purchases of miners were ~~granted under~~reclassified to property and equipment in connection with the ~~Plan to employees, officers, and directors with an exercise price~~receipt of ~~$15.12. Included were, 43,000 options were issued to non-employee directors under~~ the Plan, with an exercise price of $15.12 per share. The options expire ten years from the date of grant and vest over one year, based upon 25% on the date of grant, and 25% on each of April 1, 2015, July 1, 2015, and October 1, 2015. equipment.

Security deposits

During the year ended December 31, ~~2015, 93,813 options were issued~~2023, the Company paid $23.0 million as a security deposit in connection with its 215 MW increase to ~~officers and employees~~the long-term, fixed-price power secured under the ~~Plan, exercisable~~PPA, resulting in a total of 345 MW under contract at an average of $15.12 per share. The options expire ten years from the date of grant and vest over two years with 50% vesting upon six month anniversary of grant date and the remaining balance vesting over the following six quarters in arrears. fixed prices. See Note 8. Power Purchase Agreement.

During the year ended December 31, ~~2015,~~2022, the Company paid approximately $4.7 million as a ~~total~~security deposit for the development of ~~36,099 options that were granted under~~ the ~~Plan were forfeited,~~Corsicana Facility, all of which ~~7,894 were vested and 28,205 were unvested. The vested options were exercisable at an average~~remains held as a deposit as of ~~$72.32 per share and~~December 31, 2023.

During the ~~unvested options were exercisable at an average of $16.48 per share.~~

~~The total fair value of stock options granted to employees, directors and consultants that vested and became exercisable during the years~~year ended December 31, ~~2016~~2021, the Company paid approximately $3.1 million in connection with an amended and ~~2015, was $646,000 and $1,344,000, respectively. Based upon~~restated Transmission/Substation Facility Extension Agreement for the ~~Company's experience, approximately 80%~~construction of the ~~outstanding nonvested stock options, or approximately 78,000 options, are expected~~Oncor-owned Delivery System facilities to ~~vest in~~serve the ~~future, under their terms. A summary~~expansion of the ~~activity~~Rockdale Facility, all of ~~nonvested options~~which has been returned to the Company as of December 31, 2023.

The Company has other security deposits totaling approximately $2.0 million for its offices and facilities, including $1.8 million associated with its ground lease.

Note 11. Accrued Expenses

The Company’s accrued expenses consist of the following:


	December 31,		December 31,
	2023		2022
Construction in progress	$	23,451	$	16,621
Power related costs and remittances		11,114		32,632
Compensation		14,888		8,582
Insurance		7,490		3,660
Other		5,685		3,969
Total accrued expenses	$	62,628	$	65,464

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Notes to Consolidated Financial Statements

Note 12. Debt

Credit and security facility

The Company’s subsidiary, ESS Metron, has a Credit and Security Facility Agreement, as amended, which provides for a $10.0 million credit and security facility consisting of a $6.0 million revolving line of credit (the “Revolving Line of Credit”) and a $4.0 million equipment guidance line (the “Equipment Guidance Line”).

The Revolving Line of Credit has a term of two years with interest due monthly and principal due at maturity. All amounts borrowed under the ~~Company's Plan to acquire common shares granted to employees, officers, directors~~Revolving Line of Credit carry a variable interest of not less than 4.0% and ~~consultants~~are secured by the assets of ESS Metron. As of December 31, 2023, the interest rate was 8.5%. Total borrowings under the Revolving Line of Credit during the year ended December 31, ~~2016 is presented below:~~

Nonvested Shares
Nonvested
Shares
Underlying
Options

Weighted
Average
Exercise
Price

Weighted
Average
Grant Date
Fair Value

Nonvested at January 1, 2016 33,336 $ 15.54 $ 11.41
     Granted 259,666 2.90 2.15
     Vested (191,644 ) 4.56 3.37
     Forfeited (3,620 ) 15.13 10.75

Nonvested at December 31, 2016 97,738 $ 3.51 $ 2.58

~~At December 31, 2016, based upon employee, officer, director~~2023, were $6.0 million and consultant options granted, there was approximately $133,000 additional unrecognized compensation cost related to stock options that will be recorded over a weighted average future period of approximately three-quarters of one year.

~~Other common stock purchase options and warrants:~~

payments were $6.0 million. As of December 31, ~~2016, in addition~~2023, the outstanding balance on the Revolving Line of Credit was $0.

The Equipment Guidance Line has a term of two years and permits the Company to ~~the stock options issued~~finance up to 80.0% of certain equipment purchases. All amounts borrowed under the ~~Plan as discussed above,~~Equipment Guidance Line carry a variable interest of not less than 4.0% and are secured by the ~~Company had outstanding non-qualified options and warrants to acquire 527,003 shares~~assets of ~~common stock. These options and warrants include those issued in connection with stock offerings, officers' employment inducement awards and investor relations consulting.~~

~~Following is a summary~~ESS Metron. As of ~~outstanding options and warrants that were issued outside of~~December 31, 2023, the ~~Plan for~~interest rate was 8.5%. Total borrowings under the Equipment Guidance Line during the year ended December 31, ~~2016:~~

Shares
Underlying
Options / Warrants

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Term (Years)

Aggregate
Intrinsic
Value

Outstanding at January 1, 2016 432,003 $ 15.47
     Granted 95,000 3.78
     Exercised — —
     Forfeited — —

Outstanding at December 31, 2016 527,003 $ 13.36 2.8 $ 6,000

Exercisable at December 31, 2016 432,003 $ 15.47 1.2 $ —

Included at December 31, 2016 in the 527,003 total outstanding options and warrants are 429,503 non-compensatory warrants, exercisable at an average of $15.40 per common share, expiring through May 2018, granted in connection with public offerings and 97,500 options, exercisable at $4.38 per common share, expiring through September 2026, issued under compensatory arrangements.

2023, were approximately $0.9 million. During the year ended December 31, ~~2016, 95,000 options were granted outside~~2023, approximately $0.4 million outstanding under the Equipment Guidance Line converted to a fixed rate term loan (see below). As of December 31, 2023, the ~~Plan~~outstanding balance on the Equipment Guidance Line was approximately $0.5 million.

All borrowings and accrued interest under the equipment guidance line convert to ~~certain employees who worked at BDI.~~fixed rate term loans every six months, which have either five-year terms for borrowings used to acquire vehicles and manufacturing equipment (“Manufacturing Term Loans”) or three-year terms for borrowings of equipment other than vehicles and manufacturing equipment (“Equipment Term Loans”). The ~~options are exercisable~~Manufacturing Term Loans made upon the first conversion of guidance line loans carry interest at a ~~$3.78 per share, they~~ ~~expire ten years from~~fixed rate equal to the ~~date~~five-year treasury rate plus 2.5% as of ~~grant and vest over two years with 50% vesting upon six month anniversary of grant date~~conversion and the ~~remaining balance vesting over~~Equipment Term Loans made upon the ~~following six quarters in arrears. F~~orfirst conversion of guidance line loans carry interest at a fixed rate equal to the ~~year ended December 31, 2016, there was approximately $56,000 in stock-based compensation included in operating expenses related~~three-year treasury rate plus 2.5% as of conversion. All subsequent conversions to ~~other common stock purchase options~~Manufacturing Term Loans and ~~warrants. At December 31, 2016, based upon compensatory options granted outside of~~Equipment Term Loans carry interest at a fluctuating rate equal to the ~~Plan, there was approximately $157,000 additional unrecognized compensation cost related to stock options that will be recorded over a weighted average future period of approximately one year.~~

lender’s prime rate.

During the year ended December 31, ~~2015 no stock options were granted outside~~2023, approximately $0.4 million outstanding under the Equipment Guidance Line was converted into a three-year Equipment Term Loan with a fixed interest rate of 6.6%. As of December 31, 2023, the outstanding balance on the Equipment Term Loan was approximately $0.3 million.

As of December 31, 2023, the outstanding balance on the Equipment Guidance Line and Equipment Term Loans was recognized net of deferred financing costs of approximately $0.1 million. The net current outstanding debt balance of $0.3 million was recognized within Accrued Expenses and the net long-term outstanding debt balance of $0.5 million was recognized within Other long-term liabilities on the Consolidated Balance Sheets.

As of December 31, 2023, the Company was in compliance with all covenants of the ~~Plan.~~

Credit and Security Facility Agreement.

Note ~~8. Animal Health License Agreements:~~

~~Effective May 1, 2004 Washington University~~13. Leases

As of December 31, 2023, the Company had operating leases primarily for its offices and the manufacturing facilities of ESS Metron, and a ground lease for the Rockdale Facility, all of which expire on various dates through January 2032.

During the year ended December 31, 2022, the Company executed an amendment to the ground lease for the Rockdale Facility to add a second 100-acre tract of land, adjacent to the land subject to the original ground lease, for an additional $0.9 million in St. Louis ("WU") and Bioptix entered into an exclusive license agreement (WU License Agreement) which grants Bioptix exclusive license and right to sublicense WU's technology (as defined under the WU License Agreement) for veterinary products worldwide, except where such products are prohibited under U.S. laws for export.annual payments. The term of the ~~WU License Agreement continues until~~amended lease is scheduled to expire on January 31, 2032, followed by three ten-year renewal periods at the ~~expiration of~~Company’s option, unless terminated earlier. Concurrent with the ~~last of WU's patents (as defined in~~amendment to the ~~WU License Agreement) expire. Bioptix has agreed to pay minimum annual royalties of $20,000 annually during~~ground lease, the Company extended the term of ~~the WU License Agreement and such amounts are creditable against future royalties. Royalties payable to WU under the WU License~~its Water Reservation Agreement for ~~covered product sales~~the Rockdale Facility (see Note 17. Commitments and Contingencies).

As of December 31, 2023 and 2022, operating lease right of use assets were $20.4 million and $21.7 million, respectively, and operating lease liabilities were $21.3 million and $22.3 million, respectively.

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Notes to Consolidated Financial Statements

The following table presents the components of the Company’s lease expense, which the ground and facilities’ leases are included in Cost of revenue and the office leases are included in Selling, general, and administrative on the Consolidated Statements of Operations:


	Years Ended December 31,
	2023		2022		2021
Operating lease cost	$	3,747	$	3,193	$	678
Variable lease cost		240		182		51
Operating lease expense		3,987		3,375		729
Short-term lease rent expense		—		—		19
Total lease expense	$	3,987	$	3,375	$	748

The following table presents supplemental lease information:



	2023			2022			2021
Operating cash outflows for operating leases	$	3,522		$	2,789		$	435
Right of use assets exchanged for new operating lease liabilities	$	1,249		$	10,333		$	13,622
Weighted-average remaining lease term – operating leases		7.5			8.5			8.6
Weighted-average discount rate – operating leases		6.7	%		6.6	%		5.8	%

The following table represents our future minimum operating lease payments as of December 31, 2023:


	Ground lease		Office and other leases		Total
2024	$	1,998	$	1,798	$	3,796
2025		2,058		1,495		3,553
2026		2,119		1,425		3,544
2027		2,183		1,305		3,488
2028		2,249		1,017		3,266
Thereafter		7,369		2,426		9,795
Total undiscounted lease payments		17,976		9,466		27,442
Less present value discount		(4,685)		(1,412)		(6,097)
Present value of lease liabilities	$	13,291	$	8,054	$	21,345

Note 14. Stockholders’ Equity

Preferred Stock

0% Series B Convertible Preferred Stock

On November 3, 2017, the Company designated 1,750,001 shares of preferred stock as “0% Series B Convertible Preferred Stock.”

The shares of 0% Series B Convertible Preferred Stock are non-voting and convertible into shares of common stock based on a conversion calculation equal to the stated value of the 0% Series B Convertible Preferred Stock, plus all accrued and unpaid dividends, if any, as of such date of determination, divided by ~~Bioptix carry~~the conversion price. The stated value of each share of 0% Series B Convertible Preferred Stock is $6.80 and the initial conversion price is $6.80 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events. The holders of 0% Series B Convertible Preferred Stock are entitled to receive dividends if and when declared by the Company’s board of directors. The 0% Series B Convertible Preferred Stock is also subject to beneficial ownership limitations and conversion limitations.

During the year ended December 31, 2022, the remaining 2,199 shares outstanding of the Company’s 0% Series B Convertible Preferred Stock were converted to 2,199 shares of its common stock. As of December 31, 2023, no shares of the Company’s 0% Series B Convertible Preferred Stock were outstanding.

Common Stock

The Company is authorized to issue up to 340,000,000 shares of Common Stock, without any par value per share.

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Notes to Consolidated Financial Statements

Each holder of Common Stock is entitled to one vote for each share held of record on all matters to be voted on by such holders. Holders of Common Stock are entitled to receive dividends, if declared. Upon liquidation, dissolution or winding-up, holders of Common Stock are entitled to share ratably in the net assets legally available for distribution after payment of all debts and other liabilities, subject to any preferential rights of the holders of Preferred Stock, if any.

ATM Equity Offerings

2023 ATM Offering

In August 2023, the Company entered into the 2023 ATM Offering, under which it could offer and sell up to $750.0 million in shares of the Company’s common stock.

During the year ended December 31, 2023, the Company received net proceeds of approximately $571.6 million ($583.3 million of gross proceeds, net of $11.7 million in commissions and expenses) from the sale of 45,758,400 shares of its common stock at a ~~mid-single digit royalty rate~~weighted average fair value of $13.07 per share under its 2023 ATM Offering.

Subsequent to December 31, 2023, and ~~for sublicense fees~~through February 20, 2024, the Company received ~~by Bioptix carry~~net proceeds of approximately $114.9 million from the sale of 8,644,100 shares of its common stock at a low double-digit royalty rate. The WU License Agreement contains customary terms for confidentiality, prosecution and infringement provisions for licensed patents, publication rights, indemnification and insurance coverage. The WU License Agreement is cancelable by Bioptix with ninety days advance notice at any time and by WU with sixty days advance notice if Bioptix materially breaches the WU License Agreement and fails to cure such breach.

weighted average fair value of $13.57 per share under its 2023 ATM Offering.

2022 ATM Offering

In ~~July 2012,~~March 2022, the Company entered into an ~~exclusive license~~ATM sales agreement ~~(the "License Agreement") with~~ ~~Ceva Santé Animale S.A.~~ ~~("Licensee"),~~ under which it could offer and sell up to $500.0 million in shares of the Company’s common stock.

During the year ended December 31, 2022, the Company ~~granted~~received gross proceeds of approximately $304.8 million ($298.2 million, net of $6.6 million in commissions and expenses), from the ~~Licensee~~sale of 37,052,612 shares of common stock at an ~~exclusive royalty-bearing license, until~~average fair value of $8.23 per share under the 2022 ATM Offering.

During the year ended December 31, ~~2028, to~~2023, the ~~Company's intellectual property~~Company received net proceeds of approximately $191.2 million ($195.2 million of gross proceeds, net of $3.9 million in commissions and ~~other assets, including patent rights~~expenses) from the sale of 16,447,645 shares of its common stock at a weighted average fair value of $11.86 per share under its 2022 ATM Offering. With the sale and ~~know-how, relating to recombinant single chain reproductive hormone technology for use~~issuance of these shares, all $500.0 million in non-human mammals (the "Company's Animal Health Assets"). The License Agreement is subject to termination by the Licensee (a) for convenience on 180 days prior written notice, (b) in the Licensee's discretion in the event of a sale or other disposalshares of the ~~Company's animal health assets, (c)~~Company’s common stock available for sale under its 2022 ATM Offering had been issued.

2021 ATM Offering

In August 2021, the Company entered into an ATM sales agreement under which it could offer and sell up to $600.0 million in ~~the Licensee's discretion upon a change in control~~shares of the Company’s common stock.

During the year ended December 31, 2021, the Company ~~(d) for~~received gross proceeds of approximately $600.0 million ($587.2 million, net of $12.8 million in commissions and expenses), from the sale of 19,910,589 shares of common stock at a ~~material breach~~weighted average fair value of $29.53 per share. With the sale and issuance of these shares, all $600.0 million in shares of the ~~License Agreement by the Company; or (e) in the Licensee's discretion, if~~Company’s common stock available for sale under 2021 ATM Offering had been issued.

2020 ATM Offering

In October 2020, the Company ~~becomes insolvent.~~entered into an ATM sales agreement under which it received proceeds of approximately $100.0 million from the sale of common shares. The ~~License Agreement is also terminable by~~Company incurred fees of up to 3.0% of the gross proceeds received.

In January 2021, the Company ~~if there is a material breach~~received gross proceeds of approximately $84.8 million ($82.7 million net, after $2.1 million in expenses) from the ~~License Agreement by~~sale of 4,433,468 shares of common stock at an average fair value of $19.13 per share under an ATM agreement entered into in December 2020. With the ~~Licensee, or if~~sale and issuance of these shares, all $200 million in shares of Company common stock available for sale under the ~~Licensee challenges the Company's ownership of designated intellectual property. The License Agreement includes a sublicense of the technology licensed to the Company by WU.~~ December 2020 ATM Offering had been issued.

Under the terms of the ~~WU License Agreement, a portion~~2023, 2022, 2021, and 2020 ATM Offerings, the Company only issued shares of ~~license fees and royalties Bioptix receives from sublicensing agreements will be paid~~its common stock.

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Notes to ~~WU. The obligation~~Consolidated Financial Statements

ESS Metron Holdback Shares

On December 1, 2021, the Company acquired 100% of the equity interests in ESS Metron for ~~such license fees due to WU, totaling $10,000, is~~consideration that included ~~in accrued expenses at~~715,413 shares of the Company’s common stock, 70,165 shares of which were withheld as security for the sellers’ indemnification obligations for 18 months. During the year ended December 31, ~~2016.~~

~~Under~~2023, the ~~License Agreement, the Licensee obtained a worldwide exclusive license to develop, seek regulatory approval for~~indemnification period ended and ~~offer to sell, market, distribute, import and export luteinizing hormone ('LH') and/or follicle-stimulating hormone ("FSH") products for bovine (cattle), equine and swine in the field~~all 70,165 of the ~~assistance and facilitation of reproduction~~withheld shares were issued to the ESS Metron sellers.

Warrants

During the year ended December 31, 2021, the Company issued warrants to XMS Capital Partners, LLC as partial payment for its advisory services in ~~bovine, equine and swine animals.~~connection with the Whinstone Acquisition. The ~~Company also granted the Licensee an option and right of first refusal~~warrants entitle XMS to ~~develop additional animal health products outside~~purchase up to 63,000 shares of the ~~licensed field~~Company’s common stock at a purchase price of ~~use or~~$48.37 per share. The warrants may be exercised at any ~~diagnostic pregnancy detection tests for non-human mammals.~~

~~Under the License Agreement~~time through August 12, 2026.

The warrants are recognized as a liability with a fair value of zero upon issuance and a redemption value of zero as of December 31, ~~2016,~~2023.

2023 Transactions

During the ~~following future milestone payments are provided, assuming future milestones are successfully achieved:~~

●

~~Milestone payments, totaling up to a potential of $1.1 million in the aggregate, based on the satisfactory conclusion of milestones as defined in the License Agreement;~~

●

~~Potential for milestone payments of up to an additional $2 million for development and receipt of regulatory approval for additional licensed products; and~~

●

~~Royalties, at low double digit rates, based on sales of licensed products.~~

~~Revenue recognition~~year ended December 31, 2023, approximately 5.0 million shares of common stock were issued to the Company’s board of directors, officers, employees, and advisors in settlement of an equal number of fully vested restricted stock awards awarded to such individuals by the Company under the 2019 Equity Incentive Plan. The Company withheld approximately 1.3 million of these shares, with a fair value of approximately $14.0 million, to cover the withholding taxes related to the ~~License Agreement~~settlement of these vested restricted stock awards, as permitted by the 2019 Equity Incentive Plan.

In June 2023, the Company’s stockholders approved the Fourth Amendment to the 2019 Equity Incentive Plan, which increased the shares of common stock reserved for issuance under the 2019 Equity Incentive Plan by 4.0 million shares.

In December 2023, the Company’s stockholders approved the Fifth Amendment to the 2019 Equity Incentive Plan, which increased the shares of common stock reserved for issuance under the 2019 Equity Inventive Plan by 13.0 million shares.

2022 Transactions

During the year ended December 31, 2022, the Company increased its authorized shares of common stock from 170.0 million shares to 340.0 million shares.

During the year ended December 31, 2022, 1,819,332 shares of common stock were issued to the Company’s board of directors, officers, employees, and ~~WU License Agreement is~~advisors of the Company in settlement of an equal number of fully vested restricted stock units awarded to such individuals by the Company under the 2019 Equity Incentive Plan. The Company withheld 685,781 of these shares, at a fair value of approximately $10.1 million, to cover the withholding taxes related to the settlement of these vested restricted stock units, as permitted by the 2019 Equity Incentive Plan.

During the year ended December 31, 2022, — shares of the Company’s 0% Series B Convertible Preferred Stock were converted into 70,165 shares of its common stock, leaving no shares outstanding.

In July 2022, the Company’s stockholders approved the Third Amendment to its 2019 Equity Incentive Plan, which increased the number of shares of the Company’s common stock reserved for issuance by 10.0 million shares.

2021 Transactions

During the year ended December 31, 2021, the Company issued 11,800,000 shares of its common stock in connection with its acquisition of Whinstone. See Note 3. Acquisitions.

During the year ended December 31, 2021, the Company issued 645,248 shares of its common stock in connection with its acquisition of ESS Metron. See Note 3. Acquisitions.

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Notes to Consolidated Financial Statements

During the year ended December 31, 2021, 464,021 shares of common stock were issued to the Company’s board of directors, officers, employees and advisors of the Company in settlement of an equal number of fully vested restricted stock units awarded to such individuals by the Company pursuant to grants made under the Company’s 2019 Equity Incentive Plan, as amended. The Company withheld 174,685 of these shares, at a fair value of approximately $5.1 million, to cover the withholding taxes related to the settlement of these vested restricted stock units, as permitted by the 2019 Equity Incentive Plan.

During the year ended December 31, 2021, the Company issued 415,657 shares of its common stock in connection with the exercise of 415,657 common stock warrants issued to investors in connection with the Company’s January 2019 private placement transaction, for net proceeds of approximately $0.8 million.

During the year ended December 31, 2021, the Company issued 543,686 shares of its common stock in connection with the cashless exercise of warrants to purchase 1,257,235 shares of common stock, which were issued to investors in connection with private placement transactions in December 2017.

During the year ended December 31, 2021, the Company issued 10,286 shares of its common stock upon the cashless exercise of 12,000 stock options.

During the year ended December 31, 2021, 2,000 shares of the Company’s 0% Series B Convertible Preferred Stock were converted into 2,000 shares of its common stock, leaving 2,199 shares outstanding. The Company currently has one equity compensation plan, the 2019 Equity Incentive Plan. On October 19, 2021, the Company’s stockholders approved the Second Amendment to its 2019 Equity Incentive Plan, which increased the number of shares of the Company’s common stock reserved for issuance by 4.4 million shares.

Note 15. Stock-Based Compensation

The 2019 Equity Incentive Plan authorizes the granting of stock-based compensation awards to directors, officers, employees, and advisors of the Company in the form of restricted stock awards (“RSAs”), restricted stock units (“RSUs”), or stock options, all of which settle in shares of the Company’s common stock upon vesting. 3.6 million shares of common stock were initially reserved for issuance.

In July 2023, the Company adopted a new long-term incentive program under its 2019 Equity Incentive Plan, under which employees are eligible to receive performance-based RSAs or RSUs and service-based RSAs or RSUs. The performance-based awards are eligible to vest based ~~primarily~~ on the ~~Company's consideration of ASC 808-10-45, "Accounting for Collaborative Arrangements". For financial reporting purposes, the license fees and milestone payments received from the License Agreement, net~~relative performance of the ~~amounts due~~Company’s common stock (“Total Stockholder Return” or “TSR”), compared to ~~third parties, including WU,~~the performance of the Russell 3000 Index (the “Index TSR”), during the three-year performance period commencing as of the grant date of the TSR award (collectively, the “TSR Awards”). The TSR Awards have ~~been recorded as deferred revenue~~a vesting range of 0% to 200% of the recipient’s target award, which is calculated based on the difference between the Company’s TSR and ~~are amortized~~the Index TSR over the ~~term~~three-year performance period, subject to the recipient’s continuous employment with the Company through the third anniversary of the ~~License Agreement. License fees and milestone revenue totaling~~award’s grant date. The service-based awards are eligible to vest in one-third annual installments over a ~~net~~three-year service period commencing on the award’s grant date, subject to the recipient’s continuous employment with the Company through the applicable vesting dates.

In November 2020, the Company’s stockholders approved the First Amendment to the 2019 Equity Incentive Plan, which increased the shares of ~~approximately $1,556,000 commenced being amortized into income upon~~common stock reserved for issuance by 3.5 million shares.

In October 2021, the Company’s stockholders approved the Second Amendment to the 2019 Equity Inventive Plan, which increased the shares of common stock reserved for issuance by 4.4 million shares.

In July ~~2012 date~~2022, the Company’s stockholders approved the Third Amendment to the 2019 Equity Incentive Plan, which increased the shares of ~~milestone achievement.~~ common stock reserved for issuance by 10.0 million shares.

In June 2023, the Company’s stockholders approved the Fourth Amendment to the 2019 Equity Incentive Plan, which increased the shares of common stock reserved for issuance by 4.0 million shares.

In December 2023, the Company’s stockholders approved the Fifth Amendment to the 2019 Equity Incentive Plan, which increased the shares of common stock reserved for issuance by 13.0 million shares.

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Riot Platforms, Inc.

Notes to Consolidated Financial Statements

As of December 31, ~~2016, deferred revenue~~2023, the Company had 18,517,831 shares of ~~$96,698 has been classified~~common stock reserved for issuance under the 2019 Equity Incentive Plan.

The following table presents stock-based compensation expense by category:


	Years Ended December 31,
	2023		2022		2021
Performance-based stock awards and units	$	(4,703)	$	16,444	$	63,556
Service-based stock awards and units		36,873		8,111		4,935
Total stock-based compensation	$	32,170	$	24,555	$	68,491

Stock-based compensation expense is recognized within Selling, general and administrative on the Consolidated Statements of Operations.

Performance-Based Awards and Units

Performance-based awards and units are eligible to vest either: (i) over a three-year performance period ending December 31, 2023, based upon financial performance targets met during the performance period, and the completion of specified performance milestones related to development and monetization of added infrastructure capacity; or (ii) based on the Company’s TSR as compared to the Index TSR through December 31, 2025.

The following table presents a ~~current liability and $1,065,316 has been classified as a long-term liability. The current liability represents the next twelve months' portion~~summary of the ~~amortizable milestone revenue. For each~~activity of the ~~years~~performance-based RSAs:


		Weighted Average
		Grant-Date
		Per Share
	Number of Shares	Fair Value
Balance as of January 1, 2023	3,918,935	$	25.92
Granted	2,076,340	$	17.48
Vested	(567,281)	$	24.96
Forfeited	(499,468)	$	33.54
Balance as of December 31, 2023	4,928,526	$	21.71

During the year ended December 31, ~~2016 and 2015, approximately $97,000, was recorded as~~2022, the ~~amortized license fee revenue.~~

~~A tabular summary~~Company granted 245,266 performance-based RSAs with a grant date fair value of $1.7 million. During the ~~revenue categories and cumulative amounts of revenue recognition associated with the License Agreement follows:~~

Category Totals
License fees and milestone amounts paid / achieved $ 1,920,000
Third party obligations recorded, including WU (363,700 )
Deferred revenue balance 1,556,300
Revenue amortization to December 31, 2016 (394,286 )

Net deferred revenue balance at December 31, 2016 $ 1,162,014

~~Commencement of license fees revenue recognition~~	~~Upon signing or receipt~~
~~Commencement of milestone revenue recognition~~	~~Upon milestone achievement over the then remaining life~~
~~Original amortization period~~	~~197 months~~

~~Note 9. Income taxes:~~

~~Income taxes at the federal statutory rate are reconciled to the Company's actual income taxes as follows:~~

2016 2015

Federal income tax benefit at 34% $ (1,453,000 ) $ (2,978,000 )
State income tax net of federal tax effect (128,000 ) (263,000 )
Permanent items 259,000 424,000
Other (20,000 ) (15,000 )
Valuation allowance 1,342,000 2,832,000
$ — $ —

year ended December 31, 2021, no performance-based RSAs were awarded.

As of December 31, ~~2016,~~2023, there was approximately $27.8 million of unrecognized compensation cost related to the performance-based RSAs, which is expected to be recognized over a remaining weighted-average vesting period of approximately 2.6 years.

The following table presents a summary of the activity of the performance-based RSUs:


		Weighted Average
		Grant-Date
		Per Share
	Number of Shares	Fair Value
Balance as of January 1, 2023	—	$	—
Granted	246,426	$	19.59
Vested	—	$	—
Forfeited	—	$	—
Balance as of December 31, 2023	246,426	$	19.59

During the year ended December 31, 2022, the Company ~~has net operating loss carry forwards~~granted 1,412,299 performance-based RSUs with a grant date fair value of ~~approximately $99 million for federal and state tax purposes, which are available to offset future taxable income, if any, expiring through~~$15.1 million. During the year ended December ~~2035.~~ 31, 2021, the Company granted 4,033,159 performance-based RSUs with a grant date fair value of $148.0 million. During the year ended December 31, 2022, all outstanding performance-based RSUs were converted into performance-based RSAs.

As of December 31, ~~2016,~~2023, there was approximately $4.1 million of unrecognized compensation cost related to the ~~Company's subsidiary has net operating loss carry forwards~~performance-based RSUs, which is expected to be recognized over a remaining weighted-average vesting period of approximately ~~$980,000 for federal~~2.6 years.

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Notes to Consolidated Financial Statements

Service-Based Awards and ~~state tax purposes,~~Units

Service-based awards vest over a one, two, and three-year service periods.

The following table presents a summary of the activity of the service-based RSAs:


		Weighted Average
		Grant-Date
		Per Share
	Number of Shares	Fair Value
Balance as of January 1, 2023	8,855,744	$	6.84
Granted	1,313,925	$	15.44
Vested	(4,464,307)	$	6.89
Forfeited	(807,468)	$	6.86
Balance as of December 31, 2023	4,897,894	$	9.14

During the year ended December 31, 2022, the Company awarded 10,310,115 service-based RSAs with a grant date fair value of $69.4 million. During the year ended December 31, 2021, no service-based RSAs were awarded.

As of December 31, 2023, there was approximately $29.0 million of unrecognized compensation cost related to the service-based RSAs, which is expected to be recognized over a remaining weighted-average vesting period of approximately 10 months.

The following table presents a summary of the activity of the service-based RSUs:


		Weighted Average
		Grant-Date
		Per Share
	Number of Shares	Fair Value
Balance as of January 1, 2023	—	$	—
Granted	155,213	$	19.30
Vested	—	$	—
Forfeited	—	$	—
Balance as of December 31, 2023	155,213	$	19.30

During the year ended December 31, 2022, the Company awarded 922,552 service-based RSUs with a grant date fair value of $6.4 million. During the year ended December 31, 2021, the Company granted 212,189 service-based RSUs with a grant date fair value of $7.1 million. During the year ended December 31, 2022, all outstanding service-based RSUs were converted into service-based RSAs.

As of December 31, 2023, there was approximately $2.6 million of unrecognized compensation cost related to the service-based RSUs, which is expected to be recognized over a remaining weighted-average vesting period of approximately 2.2 years.

Subsequent Awards

In January 2024, the Company awarded 1,000,000 performance-based RSUs with a grant date fair value of approximately $14.1 million, 14,071,926 performance-based RSAs with a grant date fair value of approximately $199.5 million, and 38,707 service-based RSAs with a grant date fair value of approximately $0.6 million and a three-year service period. The performance-based awards are ~~available~~eligible to ~~offset future taxable income, if any, expiring~~vest based on the Company’s TSR as compared to the Index TSR through December ~~2035. A valuation allowance was~~31, 2025.

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Notes to Consolidated Financial Statements

Note 16. Fair Value Measurements

Assets and liabilities measured at fair value on a recurring basis

The following tables present the Company’s assets and liabilities measured at fair value on a recurring basis:


	Fair value measured as of December 31, 2023
							Significant
			Quoted prices in		Significant other		unobservable
	Total carrying		active markets		observable inputs		inputs
	Value		(Level 1)		(Level 2)		(Level 3)
Bitcoin (a)	$	311,178	$	311,178	$	—	$	—
Convertible note (b)	$	4,709	$	—	$	—	$	4,709
Derivative asset (c)	$	104,218	$	—	$	—	$	104,218
Contingent consideration liability (d)	$	909	$	—	$	—	$	909


	Fair value measured as of December 31, 2022
							Significant
			Quoted prices in		Significant other		unobservable
	Total carrying		active markets		observable inputs		inputs
	Value		(Level 1)		(Level 2)		(Level 3)
Derivative asset (b)	$	97,497	$	—	$	—	$	97,497
Contingent consideration liability (c)	$	24,935	$	—	$	—	$	24,935

(a)

See Note 5. Bitcoin

(b)

See Note 6. Investments

(c)

See Note 9. Power Purchase Agreement

(d)

See Note 17. Commitments and Contingencies

There were no transfers of financial instruments between Level 1, Level 2, and Level 3 during the periods presented.

Assets and liabilities not measured at fair value on a recurring basis

In addition to assets and liabilities that are measured at fair value on a recurring basis, we also measure certain assets and liabilities at fair value on a nonrecurring basis. Our non-financial assets, including goodwill, intangible assets, operating lease right of use assets, and property, plant and equipment, are measured at fair value when there is an indication of impairment and the carrying amount exceeds the asset’s projected undiscounted cash flows. These assets are recorded at fair value only when an impairment charge is recognized.

As of December 31, ~~2016~~2023 and 2022, the fair values of cash and cash equivalents, accounts receivable, contract assets, prepaid expenses and other current assets, accounts payable, contract liabilities, and accrued expenses approximated their carrying values because of their short-term nature.

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Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Note 17. Commitments and Contingencies

Commitments

Miners and mining equipment

Operating leases

The Company leases its primary office locations and has a ground lease for its Rockdale Facility under noncancelable lease agreements that expire on varying dates through 2032. For additional information see Note 13. Leases.

Water reservation agreement

The Company has a water reservation agreement, as amended, with the lessor of its ground lease to secure a certain quantity of non-potable water from a nearby lake to be used by the Company at its Rockdale Facility. The water reservation agreement runs through January 2032 and requires annual payments of approximately $2.2 million.

The Company concluded that the water reservation agreement was not a lease or a derivative instrument. Because the Company obtained an additional right of use for the reserved water amount, and the charges were increased by a standalone price commensurate with the additional water use rights and at market rates, the water reservation agreement was determined to be a lease modification accounted for as a separate contract. As such, the fees of the water reservation agreement were excluded from the lease payments of the ground lease and the water reservation agreement was accounted for as a separate executory contract.

Contingent consideration liability

In February 2021, the State of Texas experienced an extreme and unprecedented winter weather event that resulted in prolonged freezing temperatures and caused an electricity generation shortage that was severely disruptive to the whole state. While demand for electricity reached extraordinary levels due to the ~~uncertainty~~extreme cold, the supply of ~~realization~~electricity significantly decreased in part because of ~~deferred tax assets~~the inability of certain power generation facilities to supply electric power to the grid. Due to the extreme market price of electricity during this time, at the request of ERCOT, the Company stopped supplying power to its customers and instead sold power back to the grid.

In April 2021, under the provisions of the PPA, and as a result of the weather event, the Company entered into a Qualified Scheduling Entity (“QSE”) Letter Agreement, which resulted in the ~~future.~~Company being entitled to receive approximately $125.1 million for its power sales during the February winter storm, all under the terms and conditions of the QSE Letter Agreement. The Company received cash of $29.0 million in April 2021 (after deducting $10.0 million in power management fees owed by Whinstone), approximately $59.7 million was credited against power bills of the Company during 2022, with the remaining $26.3 million being contingent upon ERCOT’s future remittance. These amounts are recognized gross before fair value adjustments and expenses incurred by the Company for power management fees noted above and customer settlements. The fair value of the settlement agreement was estimated and recognized as an asset as part of acquisition accounting.

As part of the Whinstone Acquisition (see Note 3. Acquisitions), the Company is obligated to pay the seller up to $86.0 million, net of income taxes, (undiscounted) of additional consideration if certain power credits are received or realized by the Company arising from the February 2021 weather event. Upon the acquisition of Whinstone, the estimated fair value of the contingent consideration was approximately $83.0 million.

The estimated fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement.

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Notes to Consolidated Financial Statements

Upon the acquisition of Whinstone, the Company estimated the fair value of the contingent consideration using a discounted cash flow analysis, which included estimates of both the timing and amounts of potential future power credits. These estimates were determined using the Company’s historical consumption quantities and patterns combined with management’s expectations of its future consumption requirements, which required significant judgment and depend on various factors outside the Company’s control, such as construction delays. The discount rate of approximately 2.5% included observable market inputs, but also included unobservable inputs such as interest rate spreads, which were estimated based on qualitative judgment related to company-specific risk factors. Specifically, the Company used S&P Global’s B credit rating in the yield curve to estimate a reasonable interest rate spread to determine the cost of debt input because the power credits are subordinated obligations of the Company’s counterparty. Although these estimates are based on management’s best knowledge of current events, the estimates could change significantly from period to period.

The following table presents the changes in the estimated fair value of our contingent consideration liability:


Balance as of December 31, 2022	$	24,935
Change in contingent consideration		(24,026)
Change in fair value of contingent consideration		—
Balance as of December 31, 2023	$	909

Approximately $1.2 million of remaining future power credits to be received are estimated to be received over a period of 12 years. The Company determined the value of the contingent consideration as of December 31, 2023, using a discount rate of approximately 8.0%, which was based on the factors above, including the recent increase in interest rates.

Contingencies

Legal proceedings

The Company, and our subsidiaries, are subject at times to various claims, lawsuits and governmental proceedings relating to our business and transactions arising in the ordinary course of business. We cannot predict the final outcome of such proceedings. Where appropriate, we vigorously defend such claims, lawsuits and proceedings. Some of these claims, lawsuits and proceedings seek damages, including, direct, consequential, exemplary, and/or punitive damages, in amounts that could, if awarded, be significant. Certain of the claims, lawsuits and proceedings arising in ordinary course of business are covered by our insurance program. We maintain property, and various types of liability insurance in an effort to protect ourselves from such claims. In terms of any matters where there is no insurance coverage available to us, or where coverage is available and we maintain a retention or deductible associated with such insurance, we may establish an accrual for such loss, retention or deductible based on current available information. In accordance with accounting guidance, if it is probable that an asset has been impaired or a liability has been incurred as of the date of the financial statements, and the amount of loss is reasonably estimable, then an accrual for the cost to resolve or settle these claims is recorded by us on the Consolidated Balance Sheets. If it is reasonably possible that an asset may be impaired as of the date of the financial statement, then we disclose the range of possible loss. Paid expenses related to the defense of such claims are recorded by us as incurred and paid. Management, with the assistance of outside counsel, may from time to time adjust such accruals according to new developments in the matter, court rulings, or changes in the strategy affecting our defense of such matters. On the basis of current information, we do not believe there is a reasonable possibility that any material loss, if any, will result from any claims, lawsuits and proceedings to which we are subject to either individually, or in the aggregate.

Northern Data Working Capital Disputes

On September 7, 2022, the Company filed a complaint against Northern Data AG (“Northern Data”) in the Delaware Court of Chancery (Case No. C.A. No. 2022-0792-LWW) disputing the purchase price of Whinstone and seeking declaratory relief and specific performance of the stock purchase agreement. On March 31, 2023, the parties filed a stipulation agreeing to dismiss all claims without prejudice and to submit the dispute for final determination to an independent accountant. The Company placed approximately $29.5 million in escrow pending the final determination of the independent accountant, and, on June 9, 2023, the independent accountant rendered a written final determination finding in favor of the Company on disputed issues totaling approximately $27.1 million. Accordingly, approximately $27.1 million of the escrowed amount was released from escrow and distributed to the Company on June 13, 2023, with the remaining approximately $2.4 million held in escrow allocated to Northern Data. As a result, the Company recognized a Deferred gain on acquisition post-close dispute settlement of $26.0 million on the Consolidated Balance Sheets.

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Notes to Consolidated Financial Statements

Following the final determination, Northern Data filed a complaint against the Company in the Delaware Court of Chancery (the “Chancery Court”) on June 23, 2023 (Case No. C.A. No. 2023-0650-LWW) challenging the independent accountant’s written final determination and seeking to re-litigate the purchase price adjustment process. The Company contests the legal and factual basis of Northern Data’s claims and filed a motion to dismiss the complaint on July 17, 2023, which the Chancery Court heard on February 13, 2024. The Chancery Court took the matter under advisement and it is now pending a ruling. While the Company intends to vigorously oppose such complaint, the Company cannot accurately predict the outcome of such ongoing litigation, or estimate the magnitude of such outcome, due to its early stage.

Legacy Hosting Customer Disputes

Rhodium

On May 2, 2023, Whinstone filed a petition in the District Court for the 20th Judicial District of Milam County, Texas (Case No. CV41873), which it later amended, against Rhodium 30MW, LLC, Rhodium JV, LLC, Air HPC LLC, and Jordan HPC, LLC (collectively, “Rhodium”) asserting breach of contract claims for Rhodium’s failure to pay amounts due under Rhodium’s colocation agreements with Whinstone. Whinstone seeks recovery of more than $26.0 million, plus reasonable attorneys’ fees and costs, expenses, and pre- and post-judgment interest. On June 12, 2023, Rhodium answered and, along with non-parties Rhodium Encore LLC, Rhodium 2.0 LLC, and Rhodium 10mw LLC (collectively, the “Non-Parties”), moved to compel arbitration and filed counterclaims for breach of contract seeking recovery of at least $7.0-$10.0 million in power credits allegedly owed to Rhodium under the superseded agreements, as well as lost profits. On August 2, 2023, Rhodium disclosed the amount of damages it seeks to recover for these claims, which includes at least $42.0 million in alleged energy credits, at least $1.0 million in alleged lost profits for power diversion, and at least $0.7 million in alleged direct damages for breach of contract, plus lost profits and reasonable and necessary attorneys’ fees. On August 28, 2023, the district court granted Rhodium’s motion to compel arbitration and stay litigation. On November 27, 2023, Whinstone terminated the Rhodium JV, LLC and Air HPC LLC hosting agreements at the Rockdale Facility with immediate effect. On December 11, 2023, Rhodium and the Non-Parties submitted an arbitration demand to the American Arbitration Association seeking approximately $55.0 million in damages and specific performance of unspecified contracts. Whinstone believes Rhodium’s claims are without merit and intends to vigorously contest them, as appropriate. Because this litigation is still at this early stage, the Company cannot reasonably estimate the likelihood of an unfavorable outcome or the magnitude of such an outcome, if any.

SBI Crypto Co.

On April 5, 2023, SBI Crypto Co., Ltd. (“SBI”) filed a complaint in the United States District Court for the Western District of Texas (Case No. 6:23-cv-252), which it later amended, against Whinstone alleging breach of contract, fraud, and negligent bailment claims. On July 21, 2023, Whinstone filed a motion to dismiss the amended complaint, which was denied on October 25, 2023. SBI seeks recovery of at least $15.0 million in lost profits, at least $16.0 million for equipment damage, reasonable attorneys’ fees and costs, expenses, costs, and pre- and post-judgment interest. Whinstone believes many of the claims are barred or waived and substantively lack merit, and Whinstone plans to vigorously contest the same, as appropriate. While a preliminary investigation of the merits of SBI’s claims has commenced, because this litigation is still at this early stage, the Company cannot reasonably estimate the likelihood of an unfavorable outcome or the magnitude of such an outcome, if any.

GMO

On June 13, 2022, GMO Gamecenter USA, Inc. and its parent, GMO Internet, Inc., (collectively “GMO”) filed a complaint against Whinstone alleging breach of contract under the colocation services agreement between GMO and Whinstone, seeking damages in excess of $150.0 million. The case is pending in the United States District Court for the Southern District of New York (Case No. 1:22-cv-05974-JPC). Whinstone has responded to GMO’s claims and raised counterclaims of its own, alleging GMO itself breached the colocation services agreement, seeking a declaratory judgment and damages in excess of $25.0 million. On October 19, 2023, GMO filed its fourth amended complaint claiming an additional $496.0 million in damages, for loss of profit and profit sharing, based on Whinstone’s alleged wrongful termination of the colocation services agreement as of June 29, 2023. At this preliminary stage, the Company believes that GMO’s claims lack merit; however, because this litigation is still at this early stage, the Company cannot reasonably estimate the likelihood of an unfavorable outcome or the magnitude of such an outcome, if any.

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Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Class Actions and Related Shareholder Derivative Actions

On August 25, 2023, the United States District Court for the District of New Jersey dismissed the Takata v. Riot Blockchain action (Case No. 3: 18-cv-02293, the “Takata Action”), with prejudice, dismissing all claims.

Following the dismissal of the Takata Action, all shareholder derivative complaints filed against the Company were subsequently dismissed without prejudice. On October 23, 2023, the parties in Jackson v. Riot Blockchain, Inc., et al. (Case No. 604520/18) filed a joint stipulation of discontinuance dismissing all claims without prejudice. On January 18, 2023, the Eighth Judicial District Court of the State of Nevada entered an order voluntarily dismissing In re Riot Blockchain, Inc. Shareholder Derivative Litigation (Case No. A-18-774890-B) without prejudice. On October 6, 2023, plaintiff filed a notice in Finitz v. O’Rourke, et al. (Case No. 1:18-cv-09640) voluntarily dismissing all claims without prejudice. On September 26, 2023, plaintiff filed a notice in Monts v. O’Rourke, et al. (Case No. 1:18-cv-01443) voluntarily dismissing all claims without prejudice.

Note 18. Income taxes

The following table presents the components of the loss before provision for income taxes:


	For the years ended December 31,
	2023		2022		2021
Domestic	$	(54,565)	$	(521,302)	$	(15,183)
Foreign		—		—		—
Loss before provision for income taxes	$	(54,565)	$	(521,302)	$	(15,183)

The following table presents the components of income tax benefit (expense):


	As of December 31,
	2023		2022		2021
Current:
US Federal	$	—	$	—	$	—
US State		48		(789)		(254)
Foreign		—		—		—
Total current benefit (expense)	$	48	$	(789)	$	(254)
Deferred:
US Federal	$	5,045	$	12,538	$	—
US State		—		—		—
Foreign		—		—		—
Total deferred benefit		5,045		12,538		—
Total benefit (expense) for income taxes	$	5,093	$	11,749	$	(254)

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Notes to Consolidated Financial Statements

The following table presents the tax effects of temporary differences and tax loss and credit carry forwards that give rise to significant portions of deferred tax assets and ~~liabilities at~~liabilities:


	As of December 31,
	2023		2022
Deferred income tax assets:
Operating lease liability	$	4,485	$	5,178
Deferred revenue		3,735		4,595
Stock compensation		2,348		17,422
Bitcoin		—		29,111
Intangible assets		6,523		6,501
Net operating losses		116,872		150,167
Other deferred tax assets		2,058		2,393
Total deferred tax assets		136,021		215,367
Valuation allowance		(65,600)		(108,060)
Net deferred tax assets		70,421		107,307
Deferred income tax liabilities:
Derivative asset		(21,898)		(22,678)
Right of use asset		(4,289)		(5,043)
Fixed assets		(19,189)		(79,586)
Bitcoin		(23,300)		—
Other deferred tax liabilities		(1,745)		—
Total deferred tax liabilities		(70,421)		(107,307)
Net deferred tax assets (liabilities)	$	—	$	—

The Company has approximately $528.0 million and $171.0 million of federal and state tax Net Operating Losses (“NOLs”), respectively, that may be available to offset future taxable income. Federal and state net operating loss carryforwards of $130.0 million and $101.0 million, respectively, if not utilized, expire between 2026 and 2037. Under the Tax Cuts and Jobs Act, $398.0 million federal and $70.0 million state NOLs incurred after December 31, ~~2016~~2017 are carried forward indefinitely, but may be limited in utilization to 80% of taxable income.

Furthermore, as a result of changes in the ownership of our common stock and ~~2015~~changes in our business operations, our ability to use our federal and state NOLs may be subject to annual limitations limited under Internal Revenue Code Section 382 and 383. The annual limitations may result in the expiration of net operating losses and credits before they are able to be utilized. The Company does not expect any previous ownership changes, as ~~follows:~~

2016 2015

Deferred tax assets (liabilities):
Net operating loss carry forwards $ 36,817,000 $ 35,649,000

Property and equipment 50,000 43,000
Other (22,000 ) 6,000
Capital loss carryforward 444,000 —
Research and development credit 1,103,000 1,103,000

Deferred tax asset 38,392,000 36,801,000
Valuation allowance (38,392,000 ) (36,801,000 )

$ — $ —

~~Note 10. Commitments~~defined under Section 382 and ~~contingencies:~~

~~Commitments:~~

383 of the Internal Revenue Code, to result in an ultimate limitation that will materially reduce the total amount of net operating loss carryforwards and credits that can be utilized.

The ~~Company's subsidiary, BDI, has a lease commitment on its office~~statute of limitations for assessment by the IRS and ~~laboratory space that expires March~~state tax authorities is open for tax years ending December 31, 2018 through 2023, although carryforward attributes that were generated prior to tax year 2018 may still be adjusted upon examination by the IRS or state tax authorities if they either have been or will be used in a future period. Currently, no federal or state income tax returns are under examination by the respective taxing authorities.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and ~~requires~~taxing strategies in making this assessment. In case the deferred tax assets will not be realized in future ~~non-cancellable lease payments~~periods, the Company has provided a valuation allowance for the full amount of the deferred tax assets as of December 31, 2023 and 2022. The valuation allowance decreased by approximately $42.5 million during the year ended December 31, 2023.

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Notes to Consolidated Financial Statements

The following table reconciles the income tax benefit (expense) based on the U.S. federal statutory rate with actual income tax benefit (expense):


	For the years ended December 31,
	2023			2022
Federal statutory rate	$	11,459	21.0%	$	109,376	21.0%
State and local taxes, net of federal taxes		42	(0.1)%		3,403	0.7%
Goodwill impairment		—	0.0%		(64,295)	(12.3)%
Contingent payment		5,045	9.3%		12,538	2.4%
Section 162m compensation		(21,315)	(39.1)%		(11,433)	(2.2)%
Stock compensation		2,648	4.9%		2,904	0.6%
Return to provision		(2,760)	(5.1)%		9,026	1.7%
Rate change on deferreds		3,919	7.2%		(3,321)	(0.6)%
Deferred adjustment		(36,159)	(66.3)%		—	0.0%
Other		(244)	0.5%		—	0.0%
Change in valuation allowance		42,458	77.8%		(46,449)	(8.9)%
Income tax benefit (expense)	$	5,093	9.3%	$	11,749	2.3%

The Company has not identified any uncertain tax positions requiring a reserve as of December 31, 2023 and 2022. The Company’s policy is to recognize interest and penalties that would be assessed in relation to the settlement value of unrecognized tax benefits as a component of income tax expense. The Company did not accrue either interest or penalties for the years ended December 31, 2023 and 2022.

The Company is subject to U.S. federal income tax and primarily Florida, Colorado, and Texas state income tax. The Company has not been under tax examination in any jurisdiction for the years ended December 31, 2023 and 2022.

Note 19. Earnings Per Share

The following table presents potentially dilutive securities that are not included in the computation of diluted net income (loss) per share as their inclusion would be anti-dilutive:


	December 31,
	2023	2022	2021
Warrants to purchase common stock	63,000	63,000	63,000
Unvested restricted stock awards ^(a)	9,824,546	—	—
Unvested restricted stock units	401,639	—	4,015,146
Convertible Series B preferred shares	—	—	2,199
Total	10,289,185	63,000	4,080,345

(a)

Unvested restricted stock awards are included in total common shares outstanding but are excluded from the calculation of basic earnings per share.

Note 20. Segment Information

The Company has three reportable segments: Bitcoin Mining, Data Center Hosting, and Engineering. The reportable segments are identified based on the types of service performed.

The Bitcoin Mining segment generates revenue from the Bitcoin the Company earns through its mining activities. Bitcoin Mining cost of revenue consists primarily of direct production costs of mining operations, including electricity, labor, insurance, variable data center hosting fees, but excluding depreciation and amortization.

The Data Center Hosting segment generates revenue from long-term customer contracts for the provision/consumption of electricity, construction of infrastructure, operation of data centers, and maintenance/management of computing capacity from the Company’s high performance data center facility in Rockdale, Texas. Data Center Hosting cost of revenue consists primarily of direct power costs, rent and compensation costs.

F-43

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Riot Platforms, Inc.

Notes to Consolidated Financial Statements

The Engineering segment generates revenue through customer contracts for custom engineered electrical products. Engineering cost of revenue consists primarily of direct materials and labor, as well as indirect manufacturing costs.

The CODM analyzes the performance of the segments based on reportable segment revenue and reportable segment cost of revenue. No operating segments have been aggregated to form the reportable segments.

The Company does not allocate all assets to the reporting segments as these are managed on an entity-wide basis. Therefore, the Company does not separately disclose the total assets of its reportable operating segments.

The Data Center Hosting segment purchases custom engineered electrical products from the Engineering segment in the ordinary course of business. All revenue and cost of revenue from intersegment transactions have been eliminated in the Consolidated Statements of Operations. All Other revenue is from external customers.

Concentrations

During the years ended December 31, 2023 and 2021, aside from the Bitcoin Mining revenue generated as a result of the Company’s participation in a mining pool, no single customer or related group of customers contributed 10% or more of the Company’s total consolidated revenue.

During the year ended December 31, 2022, aside from the Bitcoin Mining revenue generated as a result of the Company’s participation in a mining pool, the Company earned revenue of approximately ~~$311,000~~$29.7 million from one customer, representing 11.4% of the Company’s total consolidated revenue, in ~~2017 and $78,000 in 2018. The agreement requires monthly base rent~~its Engineering segment. No other individual customer accounted for more than 10% of ~~approximately $15,700 and common area maintenance costs are currently approximately $10,200 per month. Rent expense~~total revenue for the year ended December 31, 2016 totaled approximately $120,000 which included short term facility rental expenses plus $92,000 in expense for the subsidiary's office and laboratory space for the period from the September 12, 2016 acquisition to December 31, 2016. The Company had no rent expense for 2015.

2022.

As of December 31, ~~2016,~~2023 and 2022, five customers accounted for more than 70% and 80%, respectively, of consolidated accounts receivable, net.

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Riot Platforms, Inc.

Notes to Consolidated Financial Statements

The following table presents revenue and cost of revenue for the ~~Company has employment agreements with three officers providing aggregate annual minimum commitments totaling approximately $900,000. The agreements automatically renew at~~Company’s reportable segments, reconciled to the ~~end~~Consolidated Statements of ~~each contract year unless terminated by either party and contain customary confidentiality and benefit provisions.~~

Operations:


	Years Ended December 31,
	2023		2022		2021
Reportable segment revenue:
Bitcoin Mining	$	188,996	$	156,870	$	184,422
Data Center Hosting		154,334		101,718		24,546
Engineering		72,826		85,358		5,265
Other revenue		97		97		97
Eliminations		(135,574)		(84,872)		(1,087)
Total segment and consolidated revenue	$	280,679	$	259,171	$	213,243

Reportable segment cost of revenue:
Bitcoin Mining		134,515		84,897		45,513
Data Center Hosting		186,256		116,200		32,998
Engineering		66,277		70,283		4,351
Eliminations		(132,714)		(77,684)		(769)
Total segment and consolidated cost of revenue	$	254,334	$	193,696	$	82,093

Reconciling Items:
Acquisition-related costs		—		(78)		(21,198)
Selling, general, and administrative		(100,346)		(67,452)		(87,429)
Depreciation and amortization		(252,354)		(107,950)		(26,324)
Change in fair value of Bitcoin		184,734		—		—
Change in fair value of derivative asset		6,721		71,418		12,112
Power curtailment credits		71,215		27,345		6,514
Change in fair value of contingent consideration		—		159		(975)
Realized gain on sale of Bitcoin		—		30,346		253
(Loss) gain on sale/exchange of equipment		(5,336)		16,281		—
Casualty-related (charges) recoveries, net		5,974		(9,688)		—
Impairment of Bitcoin		—		(147,365)		(43,973)
Impairment of goodwill		—		(335,648)		—
Impairment of miners		—		(55,544)		—
Interest income (expense)		8,222		454		(296)
Realized loss on sale of marketable equity securities		—		(8,996)		—
Realized gain on sale/exchange of long-term investment		—		—		26,260
Unrealized loss on marketable equity securities		—		—		(13,655)
Other income (expense)		260		(59)		2,378
Current income tax benefit (expense)		48		(789)		(254)
Deferred income tax benefit (expense)		5,045		12,538		—
Net income (loss)	$	(49,472)	$	(509,553)	$	(15,437)

F-45

~~Contingencies:~~

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Riot Platforms, Inc.

Notes to Consolidated Financial Statements

In December 2016, certain shareholders filed suit in District Court, Douglas County, Colorado in an action under which the court had issued an order requiring the Company to (a) issue to its shareholders notice

Note 21. Impacts of Adoption of ASU 2023-08

The following tables present a summary of the ~~Special Meeting on or prior to January 10, 2017; (b) hold a Special Meeting of shareholders to consider the proposals pursuant to Section 7-107-103(1)(b)~~impacts of the ~~Colorado Revised Statutes not less than 10 nor more than 60 days from the date~~adoption of ~~notice; (c) bear the expense of sending notice of the Special Meeting and (d) pay the reasonable costs and expenses incurred and to be incurred, including reasonable attorneys' fees.~~

On January 18, 2017, the Company entered into an agreement with the shareholders providing for termination of the action related to the shareholders' demands. In connection with the agreement, the shareholders agreed to withdraw the action under which the court issued an order requiring the Company to (a) issue to its shareholders notice of the Special Meeting on or prior to January 10, 2017; (b) hold a Special Meeting of shareholders to consider the proposals pursuant to Section 7-107-103(1)(b) of the Colorado Revised Statutes not less than 10 nor more than 60 days from the date of notice; (c) bear the expense of sending notice of the Special Meeting and (d) pay the reasonable costs and expenses incurred and to be incurred, including reasonable attorneys' fees. The Agreement followed the resignation of (3) three members of the Board of Directors of the CompanyASU 2023-08, effective January ~~6, 2017 and appointment~~1, 2023, on the Company’s interim Condensed Consolidated Statements of ~~two (2) of the director candidates proposed by these shareholders. On March 8, 2017 the court entered an order dismissing the action without prejudice.~~

In the ordinary course of business and in the general industry in which the Company is engaged, it is not atypical to periodically receive a third party communication which may be in the form of a notice, threat, or "cease and desist" letter concerning certain activities. For example, this can occur in the context of the Company's pursuit of intellectual property rights. This can also occur in the context of operations such as the using, making, having made, selling, and offering to sell products and services, and in other contexts. The Company makes rational assessments of each situation on a case-by-case basis as such may arise. The Company periodically evaluates its options for trademark positions and considers a full spectrum of alternatives for trademark protection and product branding.

We are currently not a party to any legal proceedings, the adverse outcome of which would, in our management's opinion, have a material adverse effect on our business, financial condition and results of operations.

~~Note 11. Subsequent Events:~~


	For the three months ended March 31, 2023
Consolidated Statements of Operations	As previously reported		Effects of adoption		As adjusted
Total revenue	$	73,236	$	—	$	73,236
Realized gain on sale of Bitcoin		(13,775)		13,775		—
Impairment of Bitcoin		4,472		(4,472)		—
Change in fair value of Bitcoin		—		(83,504)		(83,504)
Operating income (loss)		(56,827)		74,201		17,374
Net income (loss)	$	(55,688)	$	74,201	$	18,513
Basic net income (loss) per share	$	(0.33)	$	0.44	$	0.11
Diluted net income (loss) per share	$	(0.33)	$	0.44	$	0.11
Basic weighted average number of shares outstanding		167,342,500		—		167,342,500
Diluted weighted average number of shares outstanding		167,342,500		4,771,833		172,114,333


	For the three months ended June 30, 2023						For the six months ended June 30, 2023
Consolidated Statements of Operations	As previously reported		Effects of adoption		As adjusted		As previously reported		Effects of adoption		As adjusted
Total revenue	$	76,739	$	—	$	76,739	$	149,975	$	—	$	149,975
Realized gain on sale of Bitcoin		(19,828)		19,828		—		(33,603)		33,603		—
Impairment of Bitcoin		5,638		(5,638)		—		10,110		(10,110)		—
Change in fair value of Bitcoin		—		(14,490)		(14,490)		—		(97,994)		(97,994)
Operating income (loss)		(32,483)		300		(32,183)		(89,310)		74,501		(14,809)
Net income (loss)	$	(27,687)	$	300	$	(27,387)	$	(83,375)	$	74,501	$	(8,874)
Basic and diluted net income (loss) per share	$	(0.17)	$	0.01	$	(0.16)	$	(0.51)	$	0.46	$	(0.05)
Basic and diluted weighted average number of shares outstanding		167,342,813		—		167,342,813		162,559,956		—		162,559,956


	For the three months ended September 30, 2023						For the nine months ended September 30, 2023
Consolidated Statements of Operations	As previously reported		Effects of adoption		As adjusted		As previously reported		Effects of adoption		As adjusted
Total revenue	$	51,891	$	—	$	51,891	$	201,866	$	—	$	201,866
Realized gain on sale of Bitcoin		(13,495)		13,495		—		(47,098)		47,098		—
Impairment of Bitcoin		4,041		(4,041)		—		14,151		(14,151)		—
Change in fair value of Bitcoin		—		25,261		25,261		—		(72,733)		(72,733)
Operating income (loss)		(47,831)		(34,715)		(82,546)		(137,141)		39,786		(97,355)
Net income (loss)	$	(45,325)	$	(34,715)	$	(80,040)	$	(128,700)	$	39,786	$	(88,914)
Basic and diluted net income (loss) per share	$	(0.25)	$	(0.19)	$	(0.44)	$	(0.76)	$	0.23	$	(0.53)
Basic and diluted weighted average number of shares outstanding		180,952,689		—		180,952,689		168,758,240		—		168,758,240

F-46

Table of product development required and updated sales forecasts, and estimated additional cash resources required. We are reviewing possible strategic alternatives relative to the business to maximize shareholder value. The Company's continuing evaluation following adoption of the plan, estimates that it will incur charges to operations in early 2017 of approximately $2.7 million, consisting of 1) write-down of tangible and intangible assets estimated at approximately $2.2 million, and 2) wind-down, severance and transaction expenses estimated at approximately $500,000.Contents

On February 3, 2017 members of the Company's Board of Directors were awarded a total of 165,000 shares of restricted common stock subject to vesting and acceleration provisions. Upon the resignation of a Director, 20,000 shares were subsequently forfeited.

In March 2017, the Company completed private placements totaling $7,000,000. Included was a common stock unit financing for $2,250,000 with certain accredited investors, $1,000,000 of which has been released to the Company, with the balance in escrow pending completion of release conditions. The Company also closed on a convertible note financing with certain accredited investors with gross proceeds totaling $4,750,000. The convertible note financing proceeds are in escrow pending successful completion of release conditions. The common stock offering sold Units at a purchase price of $2.50 per Unit. Each Unit consists of one share of the Company's Common Stock and a three-year Warrant to purchase one share of the Company's common stock at an exercise price of $3.50 per share. The separate securities purchase agreements for a convertible note financing totaled $4,750,000 which is being held in escrow pending completion of defined release conditions. Following release from escrow the notes shall be convertible into shares of Common Stock at an initial conversion price of $2.50 per share and Warrants to purchase 1,900,000 shares of the Company's common stock at an initial exercise price of $3.56 per share. Pursuant to the terms of the convertible note purchase agreements, the Company has agreed to file a proxy to hold a special meeting of its shareholders to among other provisions, approve the terms of the offering and authorize preferred stock, all as specified in the agreements.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

~~There have been no disagreements between~~

As of May 18, 2023, the Company ~~and its~~dismissed Marcum LLP (“Marcum”) as it’s independent ~~accountants~~registered public accounting firm, not as a result of any disagreement on any matter of accounting principles or practices, or financial statement ~~disclosure.~~

~~On January 13, 2017, we received notice from our independent registered public accounting firm, GHP Horwath, P.C. ("GHP"), that GHP has chosen not to stand for re-appointment as~~disclosure, or audit scope or procedure.

During the Company's auditor, and effective as of January 13, 2017, the client-auditor relationship between the Company and GHP Horwath, P.C. ceased. The resignation of GHP was not recommended by the Company's audit committee nor was the audit committee's approval required. GHP has informed us that its employees joined another independent registered public accounting firm effective January 1, 2017.

~~The audit report of GHP on the Company's financial statements for the~~Company’s fiscal ~~years~~year ended December 31, ~~2015 and 2014 contained no adverse opinion or disclaimer of opinion and was not qualified or modified~~2022, as ~~to uncertainty, audit scope or accounting principles.~~

~~For~~well as the ~~fiscal years ended December 31, 2015 and 2014 and~~subsequent interim periods through ~~January 13, 2017,~~Marcum’s dismissal, there were no ~~"disagreements" (as described in~~disagreements within the meaning of Item 304(a)(1)(iv) of Regulation ~~S-K)~~S-K with ~~GHP~~Marcum on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, ~~disagreements,~~ if not resolved to ~~the~~Marcum’s satisfaction, ~~of GHP,~~ would have caused itMarcum to make reference ~~in connection with its opinion~~ to the subject matter of the ~~disagreement. For~~disagreements in connection with its reports on the Company’s financial statements for such fiscal ~~years ended December 31, 2015 and 2014 and through January 13, 2017, there were no "reportable events"~~years. There was a reportable event within the meaning of Item 304(a)(1)(v) of Regulation ~~S-K.~~

On February 3, 2017, the Company's Board of Directors appointed EisnerAmper LLP ("Eisner") as the Company's independent registered public accounting firm effective February 3, 2017. The decision to appoint Eisner was recommended and approved by our Audit Committee following the Committee's further process to determine our independent registered accounting firm. DuringS-K during the fiscal ~~years~~year ended December 31, ~~2015 and 2014 and~~2022, taking the ~~subsequent interim period through February 3, 2017, neither we, nor anyone on our behalf, consulted with Eisner regarding: (i) the application~~form of ~~accounting principles to a specified transaction, either completed or proposed; (ii) the type of audit~~an adverse opinion ~~that might be rendered~~ on the ~~Company's financial statements, and Eisner did not provide any written report or oral advice that Eisner concluded was an important factor considered by~~effectiveness of the ~~Company in reaching a decision as to any such accounting, auditing or~~Company’s internal control over financial reporting ~~issue; (iii) any matter that was~~related to the ~~subject~~existence of a ~~"disagreement" within~~material weakness for the ~~meaning~~fiscal year ended December 31, 2022. Specifically, Marcum’s report contained an adverse opinion regarding the Company’s control pertaining to the review of ~~Item 304(a)(1)(iv) of Regulation S-K or (iv) any "reportable event" within the meaning of Item 304(a)(1)(v) of Regulation S-K.~~

its Bitcoin for potential impairment.

ITEM 9A. CONTROLS AND ~~PROCEDURES.~~

PROCEDURES

Evaluation of ~~Disclosure Controls~~disclosure controls and ~~Procedures~~

~~We maintain~~procedures

Our management, with the participation of our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal financial officer), has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in ~~Rule~~Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~the Securities Exchange Act of 1934, as amended (the "Exchange Act")) that are designed~~December 31, 2023 to ensure that the information required to be disclosed by the Company in ~~our~~the reports ~~filed~~that it files or ~~submitted to the SEC~~submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified ~~by the SEC's~~in SEC rules and forms, and that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including ~~the principal executive~~our Chief Executive Officer and ~~financial officer as appropriate,~~Chief Financial Officer, to allow timely decisions regarding required disclosures. ~~The~~It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Based on this evaluation, our management, with the participation of our Chief Executive Officer (principal executive officer) and our Chief Financial Officer evaluated the effectiveness of disclosure controls and procedures as of December 31, 2016, pursuant to Rule 13a-15(b) under the Exchange Act. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer(principal financial officer), concluded that ~~as of the end of the period covered by this report, the Company's~~our disclosure controls and procedures were ~~effective. A system~~effective at the reasonable assurance level as of controls, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the system of controls are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

December 31, 2023.

Changes in ~~Internal Control over Financial Reporting~~

~~No changes were made to~~internal control

We periodically review our internal control over financial reporting as part of our efforts to ensure compliance with the requirements of Section 404 of the Sarbanes-Oxley Act. In addition, we routinely review our system of internal control over financial reporting to identify potential changes to our processes and systems that may improve controls and increase efficiency, with the goal of establishing and maintaining an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating the activities of business units, migrating certain processes to our shared services organizations, formalizing policies and procedures, improving segregation of duties and increasing monitoring controls.

There have been no changes in our internal control over financial reporting that occurred during ~~our most recently completed fiscal quarter~~the three months ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Management's Report~~

Management’s report on ~~Internal Control~~internal control over ~~Financial Reporting~~

financial reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. ~~The Exchange Act defines~~Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2023.

Our internal control over financial reporting is a process designed ~~by, or under the supervision of, our executive and principal financial officers and effected by our board of directors, management and other personnel,~~ to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with ~~GAAP and includes those policies and procedures that:~~

	•		~~Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;~~
	•		Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our directors; and
	•		~~Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.~~

~~All~~generally accepted accounting principles. Because of its inherent limitations, internal control ~~systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to~~over financial ~~statement preparation and presentation.~~ reporting may not prevent or detect misstatements.

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management ~~assessed~~utilized the criteria established in the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) to assess the effectiveness of our internal control over financial reporting as of December 31, ~~2016. In making this~~2023. Based on our management’s assessment ~~we used~~and those criteria, our management concluded that our internal control over financial reporting was effective as of December 31, 2023.

Our independent registered public accounting firm, Deloitte & Touche LLP, has issued an audit report on management’s assessment of internal control over financial reporting as of December 31, 2023. The report of Deloitte & Touche LLP is included below under the heading “Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting”.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Riot Platforms, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Riot Platforms, Inc. and subsidiaries (the “Company”) as of December 31, 2023, based on criteria ~~set forth~~established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated ~~Framework. Based~~Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated February 22, 2024 expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company’s early adoption of Accounting Standards Update (“ASU”) No. 2023-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”).

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our ~~assessment,~~audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we ~~determined that, as of December 31, 2016, our~~plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was ~~effective~~maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those ~~criteria.~~policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance

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regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ DELOITTE & TOUCHE LLP

Houston, Texas

February 22, 2024

ITEM 9B. OTHER ~~INFORMATION.~~

~~None.~~

INFORMATION

During the three months ended December 31, 2023, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted, modified, or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any “non-Rule 10b5-1 arrangement” as defined in Item 408(c) of Regulation S-K.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

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PART III

ITEM 10.DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE ~~GOVERNANCE.~~

GOVERNANCE

The information required by this Part III, Item 10 is ~~incorporated by reference to~~included in our definitive proxy statement for our 2024 annual meeting of stockholders (our “2024 Proxy Statement”), which will be filed no later than 120 days after the end of our fiscal year ended December 31, 2023.

a)	Identification of Directors: The information required by this Part III, Item 10 with respect to our directors is incorporated herein by reference to the discussion under the heading “Proposal No. 1: Election of Directors—Information Regarding Directors” in our 2024 Proxy Statement.

b)	Identification of Executive Officers: The information required by this Item with respect to our executive officers is included in Part I of this Annual Report under the heading “Information About Our Executive Officers” in accordance with General Instruction G(3) of Form 10-K.

Audit Committee Information; Financial Expert: The information required by this Part III, Item 10 with respect to the Audit Committee of our board of directors and “audit committee financial experts” is incorporated herein by reference to the discussion under the heading “Committees of the Board of Directors—Audit Committee” in our 2024 Proxy Statement.

d)	Delinquent Section 16(a) Reports: The information required by this Item with respect to compliance with Section 16(a) of the Exchange Act is incorporated herein by reference to the discussion under the heading “Delinquent Section 16(a) Reports” in our 2024 Proxy Statement.

Code of Ethics: All of our directors and employees, including our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, and other senior accounting and financial officers, are required to abide by our Code of Ethics and Business Conduct. Our Code of Ethics and Business Conduct is filed as an exhibit to this Annual Report and is posted on our website at https://www.riotplatforms.com/investors/corporate-governance/governance-documents. We intend to disclose on our website at https://www.riotplatforms.com/investors/corporate-governance/governance-documents any amendment to, or waiver from, our Code of Ethics and Business Conduct that is required to be disclosed to stockholders, within four business days following such amendment or waiver. The information required by this Part III, Item 10 with respect to codes of ethics is incorporated herein by reference to the discussion under the heading “Corporate Governance—Corporate Governance Guidelines, Code of Ethics and Business Conduct, and Committee Charters” in our 2024 Proxy Statement.

Policy for Nominees: The information required under Item 407(c)(3) of Regulation S-K is incorporated herein by reference to the discussion under the heading “General Information—When are stockholder proposals due for next year’s annual general meeting?” in our 2024 Proxy Statement concerning procedures by which stockholders may recommend nominees to our board of directors. No material changes to those procedures have occurred since the disclosure regarding those procedures in Part II, Item 5 of our Quarterly Report on Form 10-Q for thequarter ended June 30, 2023.

ITEM 11.EXECUTIVE ~~COMPENSATION.~~

COMPENSATION

The information required by this Part III, Item 11 will be provided in the section entitled “Executive Compensation” in our 2024 Proxy Statement and is incorporated herein by reference ~~to the Proxy Statement.~~

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED ~~STOCK HOLDER MATTERS.~~

~~The~~STOCKHOLDER MATTERS

Except as set forth below regarding securities authorized under our equity compensation plans, the information required to be disclosed by this Part III, Item 12 is incorporated herein by reference from the section entitled “Security Ownership of Certain Beneficial Owners and Management” in our 2024 Proxy Statement.

Securities authorized for issuance under equity compensation plans

In October 2019, the Company’s stockholders approved the 2019 Equity Incentive Plan. The 2019 Equity Incentive Plan authorized the granting of stock-based compensation awards to directors, employees, and consultants in the form of time-based and performance

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based restricted stock awards, restricted stock unit awards, or stock options that settled in shares of the Company’s common stock upon vesting. There were 3.6 million shares of common stock initially reserved for issuance under the 2019 Equity Incentive Plan.

In November 2020, the Company’s stockholders approved the First Amendment to the ~~Proxy Statement.~~

2019 Equity Incentive Plan, which increased the shares of common stock reserved for issuance by 3.5 million shares.

In October 2021, the Company’s stockholders approved the Second Amendment to the 2019 Equity Incentive Plan, which increased the shares of common stock reserved for issuance by 4.4 million shares.

In July 2022, the Company’s stockholders approved the Third Amendment to the 2019 Equity Incentive Plan, which increased the shares of common stock reserved for issuance by 10.0 million shares.

In June 2023, the Company’s stockholders approved the Fourth Amendment to the 2019 Equity Incentive Plan, which increased the shares of common stock reserved for issuance by 4.0 million shares.

In December 2023, the Company’s stockholders approved the Fifth Amendment to the 2019 Equity Incentive Plan, which increased the shares of common stock reserved for issuance by 13.0 million shares.

As of December 31, 2023, the Company had 18,517,831 shares of common stock reserved for issuance under the 2019 Equity Incentive Plan.

The following table provides information as of December 31, 2023, about the shares of common stock that may be issued upon the vesting of performance and non-performance based restricted common stock under the 2019 Equity Incentive Plan:


	Number of
	securities to be
	issued
	upon exercise of
	outstanding	Weighted		Number of
	options and	average exercise		securities
	restricted	price of		remaining
	common	outstanding		available for
Plan Category	stock	options		future issuance
Equity compensation plans approved by security holders	401,639	$	-	18,517,831
Equity compensation plans not approved by security holders	-		-	-
Total	401,639	$	-	18,517,831

ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR ~~INDEPENDENCE.~~

INDEPENDENCE

The information required by this Part III, Item 13 will be provided in the sections entitled “Certain Relationships and Related-Party Transactions” and “Director Independence” in our 2024 Proxy Statement and is incorporated herein by ~~reference to the Proxy Statement.~~

reference.

ITEM 14.PRINCIPAL ACCOUNTANT FEES AND ~~SERVICES.~~

SERVICES

The information required by this Part III, Item 14 will be provided in the section entitled “Fees to Independent Auditors” in our 2024 Proxy Statement and is incorporated herein by reference.

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

We have filed the following documents as part of this Annual Report:

1.	Consolidated financial statements


Reports of Independent Registered Public Accounting Firms	F-1
Consolidated Balance Sheets as of December 31, 2023 and 2022	F-4
Consolidated Statements of Operations for the years ended December 31, 2023, 2022, and 2021	F-5
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023, 2022, and 2021	F-6
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023, 2022, and 2021	F-7
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022, and 2021	F-8
Notes to Consolidated Financial Statements	F-10

2.	Financial statement schedules

All schedules are omitted because they are not applicable, not required, or the information has been otherwise included in the Consolidated Financial Statements or Notes to ~~the Proxy Statement.~~Consolidated Financial Statements.

~~PART IV~~

~~ITEM 15.~~

~~EXHIBITS, FINANCIAL STATEMENT SCHEDULES.~~

~~(a) Exhibits~~

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~~No.~~

~~Exhibit~~

~~2.1~~	~~Stock Purchase Agreement,~~
3. Index of exhibits
Exhibit	Description	Location*
3.	Certificate of Incorporation and Bylaws.

3.1	Articles of Incorporation, dated asSeptember 19, 2017.	Exhibit 3.1 of ~~September 12, 2016, by and among Registrant, Venaxis Sub, Inc., as purchaser, BiOptix Diagnostics, Inc.,~~ the ~~Sellers who are parties thereto, and the Seller Representative~~ ~~(incorporated by reference to the Registrant's~~ Current Report on Form 8-K ~~dated September 12, 2016, and~~ filed September ~~13, 2016).~~25, 2017.

~~3.1~~
3.2	Articles of ~~Incorporation filed July 24, 2000 (Incorporated by reference from~~Merger between Bioptix, Inc., and Riot Blockchain, Inc.		Exhibit 3.1 of the ~~Registrant's Registration Statement~~Current Report on Form ~~S‑1 (File No. 333-86190),~~8-K filed ~~April 12, 2002).~~October 4, 2017.

~~3.1.1~~	~~Articles of~~
3.3	Amendment to the Articles of Incorporation of Riot Blockchain, Inc., dated November 21, 2022.		Exhibit 3.1 of the Current Report on Form 8-K filed November 23, 2022.

3.4	Articles of Merger between Riot Blockchain, Inc. and Riot Platforms, Inc., effective December 30, 2022.		Exhibit 3.1 of the Current Report on Form 8-K filed January 3, 2023.

3.5	Amended and Restated Bylaws of Riot Platforms, Inc. effective June 27, 2023.	,	Exhibit 3.1 of the Current Report on Form 8-K filed June 30, 2023.

4.	Instruments Defining the Rights of Security Holders, Including Indentures.

4.1	Certificate of Designations, Preferences and Rights of the 0% Series B Convertible Preferred Stock of the Company.		Exhibit 3.1 of the Current Report on Form 8-K filed November 3, 2017.

4.2	Amendment to Certificate of Designation of 0% Series B Convertible Preferred Stock of the Company.		Exhibit 3.1 of the Current Report on Form 8-K filed December ~~26, 2001 (Incorporated by reference from~~21, 2017.

4.3 +	2019 Equity Incentive Plan.		Appendix A to the ~~Registrant's~~Definitive Proxy Statement on Schedule DEF 14A filed September 20, 2019.

4.4 +	First Amendment to the 2019 Equity Incentive Plan.		Appendix A to the Definitive Proxy Statement on Schedule DEF 14A filed October 14, 2020.

4.5 +	Second Amendment to the 2019 Equity Incentive Plan.		Exhibit 10.1 of the Current Report on Form 8-K filed October 22, 2021.

4.6 +	Third Amendment to the 2019 Equity Incentive Plan.		Exhibit 10.1 of the Current Report on Form 8-K filed August 2, 2022.

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Exhibit	Description	Location*

4.7 +	Fourth Amendment to the 2019 Equity Incentive Plan.	Exhibit 4.1 of the Current Report on Form 8-K filed June 30, 2023.

4.8 +	Fifth Amendment to the 2019 Equity Incentive Plan.	Exhibit 4.1 of the Current Report on Form 8-K filed December 20, 2023.

4.9 +	2019 Equity Incentive Plan of Riot Platforms, Inc., as amended.	Exhibit 4.2 of the Current Report on Form 8-K filed December 20, 2023.

4.10 +	Form of Time-Based Restricted Stock Unit Award Agreement under the 2019 Equity Incentive Plan.	Exhibit 4.7 of the Registration Statement on Form ~~S-1 (File No. 333-86190), filed April 12, 2002).~~

~~3.1.2~~	~~Articles of Amendment to the Articles of Incorporation~~S-8 filed November ~~9, 2005 (Incorporated by reference from~~15, 2021.

4.11 +	Form of Performance-Based Restricted Stock Unit Award Agreement under the ~~Registrant's Report on Form 10-QSB for~~2019 Equity Incentive Plan.	Exhibit 10.1 of the ~~quarter ended October 31, 2005, filed November 10, 2005).~~

~~3.1.3~~

~~Articles of Amendment to the Articles of Incorporation filed July 29, 2011 (Incorporated by reference from the Registrant's~~Current Report on Form 8-K ~~dated and~~ filed ~~July 29, 2011).~~August 16, 2021.

~~3.1.4~~	~~Addendum to Articles~~
4.12 +	Form of ~~Amendment to~~Service-Based Restricted Stock Award Agreement.		Exhibit 10.1 of the ~~Articles of Incorporation filed June 19, 2012 (Incorporated by reference from the Registrant's~~Current Report on Form 8-K ~~dated June 19, 2012 and~~ filed ~~June 20, 2012).~~October 3, 2022.

~~3.1.5~~	~~Articles~~
4.13 +	Form of ~~Amendment to~~Performance-Based Restricted Stock Award Agreement.		Exhibit 10.2 of the ~~Articles of Incorporation, as amended, of Registrant, dated and filed December 12, 2012 (Incorporated by reference from the Registrant's~~Current Report on Form 8-K ~~dated December 11, 2012 and~~ filed ~~December 13, 2012).~~October 3, 2022.

~~3.1.6~~	~~Articles~~
4.14 +	Form of ~~Amendment to~~Riot Platforms, Inc. Long-Term Incentive Program Award Agreement.		Exhibit 10.1 of the ~~Articles of Incorporation, as amended, of Registrant, dated and filed June 13, 2013 (Incorporated by reference from the Registrant's~~Current Report on Form 8-K ~~dated June 11, 2013,~~ filed ~~on June 13, 2013).~~July 19, 2023.

~~3.1.7~~	~~Articles~~
4.15	Form of ~~Amendment to amend and restate the Articles of Incorporation, as amended, of~~ ~~Registrant~~,Senior Secured Convertible Promissory Note dated as of ~~March 29, 2017~~ ~~(Incorporated by reference from~~January 28, 2019.		Exhibit 4.1 of the ~~Registrant's~~Current Report on Form 8-K ~~effective March 24, 2017 and~~ filed ~~March 29, 2017).~~February 1, 2019.

~~3.1.8~~	~~Articles~~
4.16	Form of ~~Amendment to amend and restate the Articles of Incorporation of~~ ~~Registrant, effective~~Common Stock Purchase Warrant Agreement, dated as of ~~December 1, 2016~~ ~~(Incorporated by reference from~~January 28, 2019.		Exhibit 4.2 of the ~~Registrant's~~Current Report on Form 8-K ~~effective November 30, 2016 and~~ filed ~~December 2, 2016).~~February 1, 2019.

~~3.2~~
4.17	Form of Registration Rights Agreement, dated as of January 28, 2019.	Exhibit 10.03 of the Current Report on Form 8-K filed February 1, 2019.

4.18	Form of Escrow Deposit Agreement.	Exhibit 10.2 of the Current Report on Form 8-K filed February 16, 2018.

4.19	Riot-Northern Data Shareholder Agreement dated as of May 26, 2021.	Exhibit 10.1 of the Current Report on Form 8-K filed May 26, 2021.

4.20	Description of Securities.	Filed herewith.

10.	Material Contracts.

10.1 +	Jeffrey G. McGonegal Executive Employment Agreement, dated as of February 6, 2019.	Exhibit 10.1 of the Current Report on Form 8-K filed February 11, 2019.

10.2 +	Amended and Restated ~~Bylaws, effective March 27, 2008 (Incorporated~~McGonegal Executive Employment Agreement, dated as of February 7, 2020.	Exhibit 10.1 of the Current Report on Form 8-K filed February 11, 2020.

10.3 +	First Amendment to the Amended and Restated McGonegal Employment Agreement, dated as of February 8, 2021.	Exhibit 10.2 of the Current Report on Form 8-K filed February 10, 2021.

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Exhibit	Description	Location*
10.4 +	Second Amendment to the Amended and Restated McGonegal Employment Agreement, dated as of February 7, 2022.	Exhibit 10.1 of the Current Report on Form 8-K filed February 8, 2022.


10.5 +	Jason Les Executive Employment Agreement, dated as of February 8, 2021.	Exhibit 10.1 of the Current Report on Form 8-K filed February 10, 2021.


10.6 +	Benjamin Yi Executive Employment Agreement, dated as of May 24, 2021.	Exhibit 10.1 of the Current Report on Form 8-K filed May 24, 2021.

10.7 +	Form of Executive Employment Agreement.	Exhibit 10.3 of the Current Report on Form 8-K filed October 3, 2022.

10.8	Subscription Agreement by ~~reference from~~and between the ~~Registrant's~~Company and goNumerical, Ltd. (Coinsquare) dated as of September 29, 2017.	Exhibit 10.1 of the Quarterly Report on Form 10-Q for the quarter ended ~~March~~September 30, 2017 filed November 13, 2017.

10.9	Sales Agreement, dated as of August 31, ~~2008~~2021, by and among Riot Blockchain, Inc., Cantor Fitzgerald & Co., B. Riley FBR, Inc., BTIG, LLC, Compass Point Research & Trading, LLC, and Roth Capital Partners, LLC.	Exhibit 1.2 of the Form S-3ASR filed ~~on May 15, 2008).~~August 31, 2021.

~~3.3~~	~~Form of Certificate of Designations,~~
10.10	Sales Agreement, dated as of March ~~15, 2017~~ ~~(Incorporated by reference from the Registrant's Report on Form 8-K, effective March 15, 2017 and filed March 17, 2017).~~

~~4.1~~

~~Specimen Certificate of Common Stock (Incorporated by reference from the Registrant's Report on Form 8‑K, dated and filed June 25, 2012).~~

~~4.2~~

Form of Warrant between the Company and each of the investors signatories to the Securities Purchase Agreement dated December 23, 2011 (Incorporated by reference from the Registrant's Report on Form 8-K, dated December 23, 2011 and filed December 28, 2011).

~~4.3~~

Form of Warrant between the Registrant and the underwriter under each of an Underwriting Agreement dated June 19, 2012, November 14, 2012 and November 15, 2012, respectively (Incorporated by reference to Exhibit A-13 of the Underwriting Agreement from the Registrant's Report on Form 8‑K, dated June 19, 2012 and filed June 20, 2012).

~~4.4~~

Common Stock Purchase Warrant Agreement by and between Registrant and Corporate Stock Transfer, Inc. dated May 30, 2013 (Incorporated by reference from the Registrant's Report on Form 8-K dated May 30, 2013, filed on May 30, 2013).

~~4.5~~

~~Form of Warrant, as of March 10, 2017~~ ~~(Incorporated by reference from the Registrant's Report on Form 8-K, effective March 10, 2017 and filed March 16, 2017).~~

~~4.6~~

~~Form of Note, as of March 15, 2017~~ ~~(Incorporated by reference from the Registrant's Report on Form 8-K, effective March 15, 2017 and filed March 17, 2017).~~

~~4.7~~

~~Form of Warrant, as of March 15, 2017~~ ~~(Incorporated by reference from the Registrant's Report on Form 8-K, effective March 15, 2017 and filed March 17, 2017).~~

~~10.1~~

~~2002 Stock Incentive Plan, as amended and restated effective July 1, 2007 (Incorporated by reference from the Registrant's Registration Statement on Form S-8, filed June 22, 2007).~~

~~10.1.1~~

~~Amendment to 2002 Stock Incentive Plan, effective June 9, 2008 (Incorporated by reference from the Registrant's Report on Form 10-K for the year ended December~~ 31, ~~2009, filed March 9, 2010).~~

~~10.1.2~~

Amendment to Amended and Restated 2002 Stock Incentive Plan, effective November 20, 2009 (Incorporated by reference from the Registrant's Report on Form 10-K for the year ended December 31, 2009, filed March 9, 2010).

~~10.1.3~~

Amendment to Amended and Restated 2002 Stock Incentive Plan, effective November 22, 2010 (Incorporated by reference from the Registrant's Report on Form 8-K, effective November 22, 2010 and filed November 29, 2010).

~~10.1.4~~

Amendment to Amended and Restated 2002 Stock Incentive Plan, effective July 8, 2011 (Incorporated by reference from the Registrant's Report on Form 8-K, effective July 8, 2011 and filed July 13, 2011).

~~10.1.5~~

~~Amendment to Amended and Restated 2002 Stock Incentive Plan, effective May 22, 2012 (Incorporated by reference from the Registrant's Report on Form 8-K, dated May 22, 2012 and filed May 24, 2012).~~

~~10.1.6~~

Amendment to Amended and Restated 2002 Stock Incentive Plan, effective December 11, 2012 (Incorporated by reference from the Registrant's Report on Form 8-K, dated December 11, 2012 and filed December 13, 2012).

~~10.1.7~~

~~Amendment to Amended and Restated 2002 Stock Incentive Plan, effective June 11, 2013 (Incorporated by reference from the Registrant's Report on Form 8-K dated June 11, 2013, filed on June 13, 2013).~~

~~10.1.8~~

~~Amendment to Amended and Restated 2002 Stock Incentive Plan, effective June 25, 2014 (Incorporated by reference from the Registrant's Report on Form 8-K dated June 25, 2014, filed on June 26, 2014).~~

~~10.1.9~~

Amendment to the Bioptix, Inc. Amended and Restated 2002 Stock Incentive Plan, as amended, effective September 1, 2015 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated September 1, 2015 and filed with the SEC on September 3, 2015).

~~10.1.10~~

~~Amended and Restated Equity Incentive Plan, effective November 30, 2016. 2017~~ ~~(Incorporated by reference from the Registrant's Report on Form 8-K, effective November 30, 2016 and filed December 2, 2016).~~

~~10.2~~

Exclusive License Agreement between Registrant and The Washington University, dated May 1, 2004 as amended (Incorporated by reference from the Registrant's Report on Form 10-Q for the quarter ended June 30, 2010, filed August 5, 2010).

~~10.3~~

Debt Modification Agreement with FirstBank of Tech Center, dated June 13, 2003 (Incorporated by reference from the Registrant's Report on Form 10-KSB/A for the year ended December 31, 2004, filed March 29, 2004).

~~10.3.1~~

Loan Agreement between Registrant and Front Range Regional Economic Development Corporation, dated June 13, 2003 for $1,300,000 regarding loan for physical plant or capital equipment acquisitions (Incorporated by reference from the Registrant's Report on Form 10-KSB/A for the year ended December 31, 2004, filed March 29, 2004).

~~10.3.2~~

Promissory Note by Registrant to Front Range Regional Economic Development Corporation in principal amount of $1,300,000, dated June 13, 2003 (Incorporated by reference from the Registrant's Report on Form 10-KSB/A for the year ended December 31, 2004, filed March 29, 2004).

~~10.3.3~~

Unconditional Guarantee by Registrant to Front Range Regional Economic Development Corporation in principal amount of $1,300,000, dated June 13, 2003 (Incorporated by reference from the Registrant's Report on Form 10-KSB/A for the year ended December 31, 2004, filed March 29, 2004).

~~10.3.4~~

Debt Modification Agreement between Registrant and FirstBank executed May 9, 2013, and effective as of April 8, 2013 (Incorporated by reference from the Registrant's Report on Form 8-K dated May 9, 2013, filed on May 9, 2013).

~~10.4~~

Executive Employment Agreement between Registrant and Jeffrey McGonegal, effective as of February 10, 2009 (Incorporated by reference from the Registrant's Report on Form 8-K dated February 10, 2009, filed on February 17, 2009).

~~10.5~~

Assignment and Consultation Agreement between Registrant and John Bealer, M.D., dated May 29, 2003 (Incorporated by reference from the Registrant's Report on Form 10-K for the year ended December 31, 2008, filed March 16, 2009).

~~10.6~~

Executive Employment Agreement between Registrant and Stephen T. Lundy, effective as of March 24, 2010 (Incorporated by reference from the Registrant's Report on Form 8-K dated March 24, 2010, filed March 26, 2010).

~~10.7~~

Form of Stock Option Agreement under the 2002 Stock Incentive Plan, as amended and restated and amended (Incorporated by reference from the Registrant's Report on Form 10-K for the year ended December 31, 2009, filed March 9, 2010).

~~10.8~~

~~Non-Employee Director Compensation (Incorporated by reference from the Registrant's Report on Form 10‑K for the year ended December 31, 2014, filed March 30, 2015).~~

~~10.9~~

~~Executive Employment Agreement between Registrant and Donald Hurd, dated May 23, 2012 (Incorporated by reference from the Registrant's Report on Form 8-K, dated May 23, 2012 and filed May 24, 2012).~~

~~10.9.1~~

Separation and Release Agreement between the Registrant and Donald Hurd, dated February 23, 2015 (Incorporated by reference from the Registrant's Report on Form 8-K, dated February 11, 2015 and filed February 18, 2015).

~~10.10~~

Exclusive License Agreement between Ceva Santé Animale S.A. and Registrant, dated July 25, 2012 (Incorporated by reference from the Registrant's Report on Form 8-K, dated July 25, 2012 and filed July 30, 2012).

~~10.11~~

~~Form of Exclusive Distributor Agreement (Incorporated by reference to Exhibit 10.15 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2013 and filed March 28, 2014).~~

~~10.12~~

Underwriting Agreement, dated April 3, 2014 between the Registrant and Canaccord Genuity Inc. (Incorporated by reference to the Registrant's Report on Form 8-K, dated April 3, 2014 and filed on April 3, 2014).

~~10.13~~

Contract to Buy and Sell Real Estate, dated October 16, 2015, by and between Bioptix, Inc. as Seller and Tenant, and Niebur Golf Development LLC, as Buyer and Landlord (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, dated October 16, 2015 and filed with the SEC on October 21, 2015).

~~10.14~~

~~Master Agreement, dated January 26, 2016,~~2022, by and among ~~Strand Life Sciences Private Limited, Strand Genomics,~~Riot Blockchain, Inc. and ~~Bioptix, Inc. (Incorporated by reference to the Registrant's Report on Form 8-K, dated January 26, 2016 and filed on January 27, 2016).~~

~~10.15~~

~~Asset Purchase Agreement, dated January 26, 2016, by and between Strand Genomics,~~its sales agents, Cantor Fitzgerald & Co., B. Riley FBR, Inc., ~~as seller,~~BTIG, LLC, Roth Capital Partners, LLC D.A. Davidson & Co., Macquarie Capital (USA) Inc., and ~~Bioptix Sub,~~Northland Securities, Inc.~~, as buyer. (Incorporated by reference to~~

Exhibit 1.1 of the ~~Registrant's Report on Form 8-K, dated January 26, 2016 and filed on January 27, 2016).~~

~~10.16~~

Form of Share Sale Agreement between Bioptix, Inc. and a Strand Life Sciences Private Limited Shareholder. (Incorporated by reference to the Registrant's Report on Form 8-K, dated January 26, 2016 and filed on January 27, 2016).

~~10.17~~

Form of Investment Agreement between Bioptix, Inc. and a Strand Life Sciences Private Limited Shareholder. (Incorporated by reference to the Registrant's Report on Form 8-K, dated January 26, 2016 and filed on January 27, 2016).

~~10.18~~

Form of Investment Agreement between Bioptix, Inc. and Biomark Capital Fund IV, L.P. (Incorporated by reference to the Registrant's Report on Form 8-K, dated January 26, 2016 and filed on January 27, 2016).

~~10.19~~

Mutual Termination Agreement, dated March 11, 2016, by and among Bioptix, Inc., Strand Life Sciences Private Limited and Strand Genomics, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed March ~~14, 2016).~~31, 2022.

~~10.20~~	~~Registration Rights~~
10.11	Controlled Equity Offering^SM Sales Agreement, dated as of ~~September 12, 2016,~~August 9, 2023, by and among ~~Venaxis,~~Riot Platforms, Inc. and the ~~Sellers party thereto~~ ~~(incorporated by reference to~~Sales Agents.	Exhibit 1.1 of the ~~Registrant's~~ Current Report on Form 8-K filed August 9, 2023.

10.12	Stock Purchase Agreement dated ~~September 12, 2016,~~as of April 8, 2021, by and ~~filed September 13, 2016)~~.

~~10.21~~among Riot Blockchain, Inc., Whinstone US, Inc., and Northern Data AG.	~~Form of Lock-Up Agreement between Registrant and each~~	Exhibit 2.1 of the ~~Sellers~~ ~~(incorporated by reference to the Registrant's~~ Current Report on Form 8-K filed April 9, 2021.

10.13	Share Purchase Agreement, dated ~~September 12, 2016,~~as of June 4, 2021, by and ~~filed September 13, 2016)~~.

~~10.22~~between Riot Blockchain, Inc. and Mogo, Inc.	~~Offer Letter, dated September 15, 2016, to Richard J. Whitcomb~~ ~~(incorporated by reference to~~	Exhibit 10.1 of the ~~Registrant's~~ Current Report on Form 8-K filed June 8, 2021.

10.14	Membership Interest Purchase Agreement dated ~~September 21, 2016,~~as of December 1, 2021 by and ~~filed September 27, 2016)~~.

~~10.23~~among Riot Blockchain, Inc., Electrode Acquisition Corp., and Steven R. Ferrie and David P. Franzmann.	~~Agreement between Registrant and certain Shareholders, dated January 18, 2017.~~ ~~(Incorporated by reference from~~	Exhibit 2.1 of the ~~Registrant's~~Current Report on Form 8-K ~~effective January 14, 2017~~filed December 1, 2021.

10.15 †	Master Purchase and ~~filed January 20, 2017).~~

~~10.24~~

~~Form of Purchase~~Sale Agreement between Riot Platforms, Inc. and MicroBT, dated as of ~~March 10, 2017~~ ~~(Incorporated by reference from~~June 23, 2023.

Exhibit 10.1 of the ~~Registrant's~~Current Report on Form 8-K ~~effective March 10, 2017 and~~ filed ~~March 16, 2017).~~June 30, 2023.

~~10.25~~	~~Form of Registration Rights Agreement,~~
10.16 †	Purchase Order No. 01, dated as of ~~March 10, 2017~~ ~~(Incorporated~~June 23, 2023, executed under that certain Master Purchase and Sales Agreement, dated as of June 23, 2023, by ~~reference from~~and between Riot Platforms, Inc. and MicroBT.	Exhibit 10.1, Appendix 3.1.2, of the ~~Registrant's~~Current Report on Form 8-K ~~effective March 10, 2017 and~~ filed ~~March 16, 2017).~~June 30, 2023.

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Exhibit	Description	Location*
~~10.26~~ 10.17 †	~~Form of Escrow Agreement,~~ Purchase Order No. 02, dated as of ~~March 10, 2017~~ ~~(Incorporated~~December 1, 2023, executed under that certain Master Purchase and Sales Agreement, dated as of June 23, 2023, by ~~reference from~~and between Riot Platforms, Inc. and MicroBT.	Exhibit 10.1 of the ~~Registrant's~~Current Report on Form 8-K ~~effective March 10, 2017~~filed December 6, 2023.

14.	Code of Ethics.

14.1	Riot Platforms, Inc. Code of Ethics and ~~filed March 16, 2017).~~

~~10.27~~Business Conduct Adopted June 27, 2023.	~~Form~~	Exhibit 14.1 of ~~Securities Escrow Agreement, as of March 10, 2017~~ ~~(Incorporated by reference from~~ the ~~Registrant's~~Current Report on Form 8-K ~~effective March 10, 2017~~filed June 30, 2023.

16.	Letter re Change in Certifying Accountant.

16	Letter of Marcum LLP to the Securities and ~~filed March 16, 2017).~~

~~10.28~~Exchange Commission, dated May 22, 2023.

~~Form~~

Exhibit 16.1 of ~~Purchase Agreement, as of March 15, 2017~~ ~~(Incorporated by reference from~~ the ~~Registrant's~~Current Report on Form 8-K ~~effective March 15, 2017 and~~ filed ~~March 17, 2017).~~May 22, 2023.

~~10.29~~	~~Form~~
21.	Subsidiaries.

21	List of ~~Registration Rights Agreement, as~~Subsidiaries of ~~March 15, 2017~~ (Riot Platforms, Inc.	Filed herewith.

23.	Consent of Independent Registered Public Accounting Firm.

23.1	Consent of Marcum LLP.	Filed herewith.

23.2	Consent of Deloitte & Touche LLP.	Filed herewith.

24.	Power of Attorney.

24	Power of Attorney.	Incorporated by reference ~~from~~to the ~~Registrant's Report on Form 8-K, effective March 15, 2017 and filed March 17, 2017).~~signature page of this Annual Report.

~~10.30~~

~~Form of Cash Escrow Agreement, as of March 15, 2017~~ ~~(Incorporated by reference from the Registrant's Report on Form 8-K, effective March 15, 2017 and filed March 17, 2017).~~

~~10.31~~

31.

~~Form of Securities Escrow Agreement, as of March 15, 2017~~ ~~(Incorporated by reference from the Registrant's Report on Form 8-K, effective March 15, 2017 and filed March 17, 2017).~~

Certifications.

~~Registrant's Code of Ethics (Incorporated by reference from the Registrant's Report on Form 10-K for the year ended December 31, 2012, filed March 26, 2013).~~

~~23.1~~

31.1

Consent of GHP Horwath, P.C. *

~~23.2~~

Consent of EisnerAmper LLP *

~~31.1~~

Rule 13a-14(a)/15d-14(a) - Certification of Chief Executive Officer *(principal executive officer).

Filed herewith.

~~31.2~~
31.2	Rule 13a-14(a)/15d-14(a) - Certification of Chief Financial Officer. *Officer (principal financial officer).		Filed herewith.

32
32.1	Section 1350 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *2002 (Principal Executive Officer).	Furnished herewith.

32.2	Section 1350 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Principal Financial Officer).	Furnished herewith.

97	Riot Platforms Inc. Policy for the Recovery of Erroneously Awarded Compensation.	Filed herewith.

Table of Contents



Exhibit	Description	Location*
101	~~Interactive data files pursuant to Rule 405 of Regulation S-T:~~ Inline XBRL (Extensible Business Reporting Language). The following from this Annual Report, formatted in iXBRL (inline XBRL): (i) ~~the~~Consolidated Balance Sheets as of December 31, 2023 and December 31, 2022; (ii) ~~the~~Consolidated Statements of Operations for the Years Ended December 31, 2023, 2022, and 2021; (iii) Consolidated Statements of ~~Stockholders~~Comprehensive Income (Loss) for the Years Ended December 31, 2023, 2022, and 2021; (iv) Consolidated Statements of Stockholders’ Equity ~~(iv)~~for the ~~Statement~~Years Ended December 31, 2023, 2022, and 2021; (v) Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022, and ~~(v) the~~2021; and (vi) Notes to Consolidated Financial Statements.	Filed herewith.

104	Cover Page Interactive Data File - the ~~Financial Statements~~ cover page XBRL tags are embedded within the iXBRL document.	Filed herewith.

*	Where an exhibit is indicated, that document has been previously filed with the SEC and the applicable exhibit is incorporated herein by reference.
†	Portions of this exhibit have been omitted as confidential information.
+	Indicates a management contract or compensatory plan or arrangement.

~~____________________~~

*	~~Filed herewith.~~

ITEM 16. FORM 10-K SUMMARY

None.

~~SIGNATURES~~

Table of Contents

SIGNATURES

Pursuant to the requirements ~~of Section 13 or 15(d)~~ of the Securities Exchange Act of 1934, the ~~Registrant~~registrant has duly caused this ~~report~~Annual Report on Form 10-K to be signed on its behalf ~~on March 31, 2017~~ by the undersigned thereunto duly authorized.

	~~BIOPTIX, INC.~~
Date: February 22, 2024	RIOT PLATFORMS, INC.
	~~/s/ Stephen T. Lundy~~
	~~Stephen T. Lundy,~~ /s/ Jason Les
	Jason Les, Chief Executive Officer (principal executive officer and duly authorized officer)

	/s/ Colin Yee
	~~/s/ Jeffrey G McGonegal~~
	~~Jeffrey G. McGonegal,~~ Colin Yee, Chief Financial Officer (principal financial officer and duly authorized officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jason Les and Colin Yee, each ~~of Stephen T. Lundy~~ and ~~Jeffrey G. McGonegal~~individually, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for them and in their name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report, ~~on Form 10-K,~~ and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, ~~(the "SEC"),~~ and generally to do all such things in their names and behalf in their capacities as officers and directors to enable the Company to comply with the provisions of the Securities Exchange Act of 1934 and all requirements of the ~~SEC,~~Securities and Exchange Commission, granting unto each said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, ratifying and confirming all that said attorney-in-fact and agent, or their or his or her substitutes or substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this ~~Report~~report has been signed below by the following persons on behalf of the ~~Registrant~~registrant on ~~March 31, 2017~~February 22, 2024, in the capacities indicated.


	/s/ ~~Stephen T. Lundy~~Jason Les
	~~Stephen T. Lundy,~~ Jason Les Chief Executive Officer and Director (principal executive officer)

	/s/ ~~Jeffrey G. McGonegal~~Colin Yee
	~~Jeffrey G. McGonegal,~~ Colin Yee Chief Financial Officer (principal financial ~~officer and principal~~officer)

	/s/ Ryan Werner
	Ryan Werner Chief Accounting Officer (principal accounting officer)

	/s/ ~~Michael M. Beeghley~~Benjamin Yi
	~~Michael M. Beeghley,~~ Benjamin Yi, Director & Executive Chairman ~~and Director~~

	/s/ ~~John R. O'Rourke~~Hannah Cho
	~~John R. O'Rourke,~~ Hannah Cho, Director

	/s/ ~~Mike Dai~~Lance D’Ambrosio
	~~Mike Dai,~~ Lance D’Ambrosio, Director

	/s/ Hubert Marleau
	Hubert Marleau, Director

~~Colorado~~ Nevada		84-1553387
(State or other jurisdiction of ~~incorporation~~Incorporation or organization)		(~~IRS~~I.R.S. Employer Identification No.)

~~834-F South Perry Street, Suite 443~~ ~~Castle Rock, CO~~	~~80104~~
3855 Ambrosia Street, Suite 301, Castle Rock, CO		80109
(Address of principal executive offices)		(Zip Code)

Securities registered under Section 12(b) of the Securities Exchange Act:
Common Stock, no par value per share		RIOT	The Nasdaq Capital Market
(Title of ~~Each Class~~class)		(Trading Symbol)	(Name of each exchange on which ~~registered~~
~~Common Stock, No Par Value~~	~~NASDAQ Capital Market~~registered)


Large accelerated filer ☒		Accelerated filer ☐
Non-accelerated filer ☐ ~~(Do not check if smaller reporting company)~~	~~Accelerated filer~~ ☐	Smaller reporting company ☒☐
Emerging growth company ☐

	~~Page~~
~~PART I~~		Page
	PART I
Item 1.	~~Business.~~ Business	2 4
Item 1A.	Risk ~~Factors.~~Factors	8 15
Item 1B.	Unresolved Staff ~~Comments.~~Comments	13 28
Item 2.1C.	~~Properties.~~ Cybersecurity	13 28
Item 3.2.	~~Legal Proceedings.~~ Properties	13 29
Item 3.	Legal Proceedings	29
Item 4.	Mine Safety Disclosures	13 29

	PART II

Item 5.	Market for ~~Registrant's~~Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity ~~Securities.~~Securities	14 30
Item 6.	~~Selected Financial Data.~~ [Reserved]	15 32
Item 7.	~~Management's~~ Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations.~~Operations	15 32
Item 7A.	Quantitative and Qualitative Disclosures About Market ~~Risk.~~Risk	21 47
Item 8.	Financial Statements and Supplementary ~~Data.~~Data	22 49
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial ~~Disclosure.~~Disclosure	47 67
Item 9A.	Controls and ~~Procedures.~~Procedures	47 67
Item 9B.	Other ~~Information.~~Information	48 69
Item 9C.	Disclosure Regarding Foreign Jurisdictions That Prevent Inspections	69
~~PART III~~
	PART III
Item 10.	Directors, Executive Officers, and Corporate ~~Governance.~~Governance	49 70
Item 11.	Executive ~~Compensation.~~Compensation	49 70
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder ~~Matters.~~Matters	49 70
Item 13.	Certain Relationships and Related Transactions, and Director ~~Independence.~~Independence	49 71
Item 14.	Principal Accountant Fees and ~~Services.~~Services	49 71

	PART IV
Item 15.	Exhibits and Financial Statement Schedules	72
Item ~~15.~~16.	~~Exhibits, Financial Statement Schedules.~~ Form 10-K Summary	50 77


☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~Bioptix, Inc.~~
~~(Exact name of registrant as specified in charter)~~


Name	Age	Position
Jason Les	38	Director and Chief Executive Officer (principal executive officer)
Benjamin Yi	41	Director and Executive Chairman
Colin Yee	48	Executive Vice President, Chief Financial Officer (principal financial officer)
William Jackman	40	Executive Vice President, General Counsel and Secretary
Jason Chung	42	Executive Vice President, Head of Corporate Development & Strategy
Ryan Werner	44	Senior Vice President, Chief Accounting Officer (principal accounting officer)

Quarter ended	High		Low

March 31, 2015	$	16.32	$	3.44
June 30, 2015	$	5.60	$	3.52
September 30, 2015	$	3.67	$	2.46
December 31, 2015	$	2.82	$	2.12
March 31, 2016	$	2.70	$	1.62
June 30, 2016	$	4.43	$	2.63
September 30, 2016	$	4.54	$	2.94
December 31, 2016	$	4.40	$	2.31

Plan Category	Number of securities to be issued upon exercise of outstanding options		Weighted average exercise price of outstanding options		Number of securities remaining available for future issuance

Equity compensation plans approved
by security holders		566,747	$	20.46		328,253

Equity compensation plans not
approved by security holders		—		—		—

Total		566,747	$	20.46		328,253


	2016			2015
ASSETS
Current assets:
Cash and cash equivalents	$	5,529,848		$	2,012,283
Short-term investments (Note 1)		7,506,761			14,147,991
Accounts receivable		4,539			—
Inventories (Note 2)		415,847			—
Prepaid expenses and other current assets		286,495			251,778

Total current assets		13,743,490			16,412,052

Property and equipment, net (Note 3)		41,133			1,954,496

Intangible rights acquired (Note 2)		1,851,736			—

Long-term investments (Note 1)		—			972,000

Other long term assets, net (Note 4)		1,404,456			1,523,649

Total assets	$	17,040,815		$	20,862,197

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	428,204		$	701,064
Accrued compensation		55,866			449,873
Accrued expenses		334,761			241,882
Notes and other obligations, current portion (Note 5)		139,611			301,250
Deferred revenue, current portion (Note 8)		96,698			96,698

Total current liabilities		1,055,140			1,790,767

Notes and other obligations, less current portion (Note 5)		—			1,838,779
Deferred revenue, less current portion (Note 8)		1,065,316			1,162,015

Total liabilities		2,120,456			4,791,561

Commitments and contingencies (Notes 8 and 10)

Stockholders' equity (Notes 6, 7 and 11):
Common stock, no par value, 60,000,000 shares authorized;
4,503,971 (2016) and 3,876,961 (2015) shares issued and outstanding		124,775,635			121,653,075
Accumulated deficit		(109,855,276	)		(105,582,439	)

Total equity		14,920,359			16,070,636

Total liabilities and stockholders' equity	$	17,040,815		$	20,862,197

	2016			2015
Sales (Note 1)	$	9,416		$	101,388
Cost of sales		3,058			30,586

Gross profit		6,358			70,802

Other revenue - fee (Note 8)		96,699			96,698

Operating expenses:
Selling, general and administrative		5,547,406			6,757,074
Research and development		862,784			2,159,137

Total operating expenses		6,410,190			8,916,211

Operating loss		(6,307,133	)		(8,748,711	)

Other income (expense):
Gain on sale of property and equipment (Note 3)		1,942,980			—
Interest expense		(30,408	)		(98,964	)
Investment income		121,724			82,000
Other income		—			8,110

Total other (expense) income		2,034,296			(8,854	)

Net loss	$	(4,272,837	)	$	(8,757,565	)

Basic and diluted net loss per share (Note 1)	$	(1.05	)	$	(2.26	)

Basic and diluted weighted average number
of common shares outstanding (Note 1)		4,065,406			3,876,961

	Common Stock				Accumulated
	Shares		Amount		Deficit			Total

Balance, January 1, 2015		3,876,961	$	120,509,997	$	(96,824,874	)	$	23,685,123

Stock-based compensation issued for services		—		1,143,078		—			1,143,078

Net loss for the year		—		—		(8,757,565	)		(8,757,565	)

Balance, December 31, 2015		3,876,961		121,653,075		(105,582,439	)		16,070,636

Stock-based compensation issued for services		—		545,549		—			545,549

Common stock issued for acquisition (Note 2)		627,010		2,577,011		—			2,577,011

Net loss for the year		—		—		(4,272,837	)		(4,272,837	)

Balance, December 31, 2016		4,503,971	$	124,775,635	$	(109,855,276	)	$	14,920,359

	2016			2015
Cash flows from operating activities:
Net loss	$	(4,272,837	)	$	(8,757,565	)
Adjustments to reconcile net loss to
net cash used in operating activities:
Stock-based compensation for services		545,549			1,143,078
Depreciation and amortization		239,330			253,818
Patent impairment charges		535,256			188,141
Amortization of deferred revenue		(96,699	)		(96,698	)
Gain on sale of property and equipment		(1,942,980	)		(8,110	)
Change in (net of BDI business acquisition):
Accounts receivable		16,366			(202	)
Inventories		(37,041	)		—
Prepaid expenses and other current assets		258,608			388,331
Accounts payable		(390,363	)		263,545
�� Accrued expenses		98,818			(83,518	)
Accrued compensation		(473,751	)		(159,544	)

Net cash used in operating activities		(5,519,744	)		(6,868,724	)

Cash flows from investing activities:
Purchases of short-term investments		(16,875,550	)		(27,178,337	)
Sales of short-term investments		24,488,780			33,057,135
Purchases of property and equipment		(35,402	)		—
Purchases of patent and other assets		(26,067	)		(92,033	)
Proceeds from sale of property and equipment		1,808,787			8,110
Cash acquired in purchase of BDI		16,673			—
Acquisition of BDI remaining interest		(28,800	)		—

Net cash provided by (used in) investing activities		9,348,421			5,794,875

Cash flows from financing activities:
Repayment of notes payable and other obligations		(311,112	)		(453,779	)
Net proceeds from issuance of common stock		—			—

Net cash used in financing activities		(311,112	)		(453,779	)

Net increase (decrease) in cash and cash equivalents		3,517,565			(1,527,628	)

Cash and cash equivalents, at beginning of year		2,012,283			3,539,911


Cash and cash equivalents, at end of year	$	5,529,848		$	2,012,283

Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest	$	35,516		$	99,382

Schedule of non-cash investing and financing transactions:
Liability payoffs upon property sale	$	2,064,758		$	—
Value of Common Shares issued for BDI purchase	$	2,577,011		$	—
Acquisitions of assets for installment obligations	$	276,640		$	282,825

	2016				2015
	Cost		Fair Value		Cost		Fair Value

Certificates of deposit / commercial paper	$	2,378,222	$	2,373,891	$	1,249,988	$	1,248,845

Corporate bonds		5,138,182		5,132,870		12,924,514		12,899,146

Subtotal current assets		7,516,404		7,506,761		14,174,502		14,147,991

Certificates of deposit, long term		—		—		350,000		349,013

Corporate bonds, long term		—		—		626,622		622,987

Total trading securities	$	7,516,404	$	7,506,761	$	15,151,124	$	15,119,991

	2016			2015
Interest income	$	126,296		$	153,586

Realized gains (losses)		(3,316	)		(34,791	)

Unrealized gains (losses)		20,641			(7,246	)

Management fee expenses		(21,897	)		(29,549	)

Net investment income	$	121,724		$	82,000

Cash and cash equivalents	$	17,000
Accounts receivable		21,000
Inventory		379,000
Prepaid and other assets		51,000
Equipment		1,000
Identifiable intangible assets:
Trademarks (5 year estimated useful life)		99,000
Customer base (6 year estimated useful life)		37,000
Developed technology (4 year estimated useful life)		1,864,000
Total identifiable intangible assets		2,000,000
Goodwill		430,000
Accounts payable		(118,000	)
Accrued and other liabilities		(175,000	)
Non-controlling interest		(29,000	)
Purchase price	$	2,577,000

Trademarks	$	99,000
Customer base		37,000
Developed technology		1,864,000
Total		2,000,000
Less accumulated amortization		(148,264	)
Net acquired intangibles	$	1,851,736

	2016		2015

Land and improvements	$	—	$	1,107,508
Building		—		2,589,231
Building improvements		—		253,526
Laboratory equipment		35,946		848,014
Office and computer equipment		116,510		318,254

		152,456		5,116,533
Less accumulated depreciation		111,323		3,162,037

	$	41,133	$	1,954,496

	Beginning Balance			Additions			Impairments			Ending Balance
Year ended December 31, 2016:
Cost:
Patents	$	1,684,737		$	26,067		$	(677,822	)	$	1,032,982
Goodwill		447,951			429,418			—			877,369
Deposits		—			37,000			—			37,000
Total		2,132,688			492,485			(677,822	)		1,947,351

Accumulated Amortization:
Patents		(548,327	)		(76,422	)		142,566			(482,183	)
Goodwill		(60,712	)		—			—			(60,712	)
Total		(609,039	)		(76,422	)		142,566			(542,895	)

Net Other Long Term Assets	$	1,523,649		$	416,063		$	(535,256	)	$	1,404,456

Year ended December 31, 2015:
Cost:
Patents	$	1,844,595		$	92,033		$	(251,891	)	$	1,684,737
Goodwill		447,951			—			—			447,951
Deposits		—			—			—			—
Total		2,292,546			92,033			(251,891	)		2,132,688

Accumulated Amortization:
Patents		(507,644	)		(104,433	)		63,750			(548,327	)
Goodwill		(60,712	)		—			—			(60,712	)
Total		(568,356	)		(104,433	)		63,750			(609,039	)

Net Other Long Term Assets	$	1,724,190		$	(12,400	)	$	(188,141	)	$	1,523,649

	2016		2015

Mortgage notes	$	—	$	1,997,701
Other short-term installment obligations		139,611		142,328
		139,611		2,140,029
Less current portion		139,611		301,250

	$	—	$	1,838,779

	2016			2015

Dividend yield		0	%		0	%
Expected price volatility	99 to 100%				93	%
Risk free interest rate	1.20 to 1.83%				1.39	%
Expected term	5 years			5 years

	Shares Underlying Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value

Outstanding at January 1, 2016		332,560		$	35.36
Granted		259,666			2.90
Exercised		-			-
Forfeited		(25,479	)		36.88

Outstanding at December 31, 2016		566,747		$	20.46		7.4		$	243,000

Exercisable at December 31, 2016		469,009		$	23.99		7.0		$	158,000

Nonvested Shares	Nonvested Shares Underlying Options			Weighted Average Exercise Price		Weighted Average Grant Date Fair Value

Nonvested at January 1, 2016		33,336		$	15.54	$	11.41
Granted		259,666			2.90		2.15
Vested		(191,644	)		4.56		3.37
Forfeited		(3,620	)		15.13		10.75

Nonvested at December 31, 2016		97,738		$	3.51	$	2.58

	Shares Underlying Options / Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value

Outstanding at January 1, 2016		432,003	$	15.47
Granted		95,000		3.78
Exercised		—		—
Forfeited		—		—

Outstanding at December 31, 2016		527,003	$	13.36	2.8	$	6,000

Exercisable at December 31, 2016		432,003	$	15.47	1.2	$	—

Category	Totals
License fees and milestone amounts paid / achieved	$	1,920,000
Third party obligations recorded, including WU		(363,700	)
Deferred revenue balance		1,556,300
Revenue amortization to December 31, 2016		(394,286	)

Net deferred revenue balance at December 31, 2016	$	1,162,014

	2016			2015

Federal income tax benefit at 34%	$	(1,453,000	)	$	(2,978,000	)
State income tax net of federal tax effect		(128,000	)		(263,000	)
Permanent items		259,000			424,000
Other		(20,000	)		(15,000	)
Valuation allowance		1,342,000			2,832,000
	$	—		$	—

	2016			2015

Deferred tax assets (liabilities):
Net operating loss carry forwards	$	36,817,000		$	35,649,000

Property and equipment		50,000			43,000
Other		(22,000	)		6,000
Capital loss carryforward		444,000			—
Research and development credit		1,103,000			1,103,000

Deferred tax asset		38,392,000			36,801,000
Valuation allowance		(38,392,000	)		(36,801,000	)

	$	—		$	—