EX-99.3

EX-99.3 4 d291095dex993.htm EX-99.3 EX-99.3

Exhibit 99.3

UNAUDITED HISTORICAL COMPARATIVE AND PRO FORMA COMBINED PER

SHARE DATA OF XPDI AND CORE SCIENTIFIC HOLDING CO.

Presented below is the historical and pro forma per share data for New Core, XPDI, Core Scientific and Blockcap for the year ended December 31, 2021. The pro forma earnings per share data for the year ended December 31, 2021 is presented as if the merger had been completed on January 1, 2021. The information provided below is unaudited.

This information should be read together with XPDI’s, Core Scientific’s and Blockcap’s audited financial statements and related notes, the sections titled “Unaudited Pro Forma Condensed Combined Financial Information,” “XPDI’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Core Scientific’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in each case, included elsewhere in this 8-K/A.

The historical per share information of XPDI, Core Scientific and Blockcap was derived from the audited consolidated financial statements of XPDI and Core Scientific respectively, and the audited financial statements of Blockcap, for the year ended December 31, 2021.

The unaudited pro forma data of Core Scientific combines the historical results of Blockcap’s financial statements for the period prior to the acquisition into Core Scientific’s historical consolidated financial statements. The unaudited pro forma data then combines the derived pro forma results of Core Scientific with XPDI’s consolidated financial statements.

The New Core pro forma equivalent per share amount is calculated by dividing the pro forma net income by the New Core equivalent weighted average basic and diluted shares. The New Core equivalent shares are calculated by adding a) the Core Scientific pro forma combined shares multiplied by the exchange rate of 1.6001528688 and b) the XPDI pro forma combined shares after the redemption of 12,347,077 redeemable shares. See “Unaudited Pro Forma Condensed Combined Financial Information—Note 5”.

The pro forma data is presented for illustrative purposes only and is not necessarily indicative of the results of operations or the financial condition that would have occurred if the merger had been completed as of the dates described above.

Unaudited Pro Forma Per Share Data

For The Year Ended December 31, 2021


	Blockcap (Historical) for the period January 1, 2021 through July 30, 2021			Core Scientific Historical		Core Scientific Pro Forma Combined			XPDI Historical			Pro Forma Combined New Core			Pro Forma Equivalent New Core
Net (loss) income per share:
Basic	$	(0.16	)	$	0.37	$	(2.04	)	$	(0.83	)	$	(1.81	)	$	(1.21	)
Diluted ⁽¹⁾	$	(0.16	)	$	0.32	$	(2.04	)	$	(0.83	)	$	(1.81	)	$	(1.21	)

¹	Potentially dilutive securities are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial information is provided to aid you in your analysis of the financial aspects of the Transactions (as defined below). This information should be read together with XPDI’s and Core Scientific’s consolidated financial statements and the related notes included as an exhibit to the amendment to the current report on Form 8-K, which was originally filed with the Securities and Exchange Commission on January 24, 2022 (as originally filed, the “Super 8-K” and, as amended hereby, the “8-K/A”, the sections titled “XPDI’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Core Scientific’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the other financial information, in each case, contained elsewhere in this 8-K/A. Capitalized terms used but not defined herein have the respective meanings given to them in this 8-K/A.

The following unaudited pro forma condensed combined financial information presents the combination of the historical financial information of XPDI and Core Scientific, adjusted to give effect to the merger, other events contemplated by the merger agreement and certain recent transactions completed by Core Scientific (collectively, the “Transactions”).

The Transactions include:

•

The merger, which includes the merger of XPDI and the Merger Sub with Core Scientific;

•

Core Scientific’s acquisition of Blockcap (described below), including any elimination of the effect of transactions between Core Scientific and Blockcap, as required, is included in the Core Scientific historical financial statements as of and for the year ended December 31, 2021. The pro forma impact to the Statement of Operations had the acquisition taken place on January 1, 2021 is included as an adjustment for the year ended December 31, 2021.

•

The issuance by Core Scientific of secured convertible notes in April, 2021, net of the repayment of the existing Core Scientific loan (the “Silverpeak loan”) and the issuance during the period August through November, 2021 of unsecured convertible notes is included in the Core Scientific historical financial statements as of and for the year ended December 31, 2021. The pro forma impact to interest expense for the year ended December 31, 2021 is included as an adjustment.

The unaudited pro forma condensed combined balance sheet as of December 31, 2021 combines the historical condensed consolidated balance sheet of XPDI as of December 31, 2021 and the historical balance sheet of Core Scientific as of December 31, 2021 presented on a pro forma basis as if the Transactions had been consummated on December 31, 2021. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2021 combine the historical statements of operations of XPDI for the year ended December 31, 2021, the historical statements of operations of Core Scientific for the year ended December 31, 2021, and the historical statements of operations of Blockcap for the period from January 1, 2021 through July 30, 2021 (the date of acquisition), respectively, on a pro forma basis as if the Transactions had been consummated on January 1, 2021, the beginning of the earliest period presented.

The unaudited pro forma condensed combined financial information and accompanying notes have been derived from and should be read in conjunction with:

•

the historical audited condensed consolidated financial statements of XPDI as of and for the year ended December 31, 2021 and the related notes, which are included elsewhere in this 8-K/A;

•

the historical audited financial statements of Core Scientific as of and for the year ended December 31, 2021 and the related notes, which are included elsewhere in this 8-K/A;

•

the historical unaudited financial statements of Blockcap for the period from January 1, 2021 through the acquisition date of July 30, 2021;

•

other information relating to XPDI and Core Scientific contained in this 8-K/A, including the merger agreement and the description of certain terms thereof set forth in the section entitled “The Merger Agreement.”

Description of the Merger

On July 20, 2021, XPDI, the Merger Sub and Core Scientific entered into the merger agreement pursuant to which Merger Sub merged with and into Core Scientific, with Core Scientific surviving the First Merger as a wholly owned subsidiary of XPDI, and promptly following the First Merger, Core Scientific merged with and into XPDI, with XPDI surviving the Second Merger. Upon the consummation of the merger, the name of the surviving entity is “Core Scientific, Inc.”

Immediately prior to the Effective Time, each share of Core Scientific preferred stock issued and outstanding automatically converted into a number of shares of Core Scientific common stock in accordance with the Certificates of Designation for Core Scientific’s Series A Preferred Stock and Series B Preferred Stock, in each case, upon receipt of the requisite vote of holders with respect to each respective class of preferred stock as set forth in each such Certificate of Designation.

At the Effective Time, each share of Core Scientific common stock (including, for the avoidance of doubt, common stock issued as a result of the conversion of Core Scientific preferred stock in connection with the merger and any shares of Core Scientific common stock that were issued as a result of any deemed exercise of an option to purchase Core Scientific common stock held by a former employee or service provider of Core Scientific, except as set forth in the merger agreement) that was issued and outstanding immediately prior to the Effective Time (other than shares held in treasury and dissenting shares) was cancelled and extinguished and collectively converted into the right to receive the applicable portion of the merger consideration, in accordance with the Allocation Schedule, consisting of a number of shares of Class A Common Stock equal to the Exchange Ratio. Each share of Core Scientific common stock held in treasury immediately prior to the Effective Time was cancelled and extinguished, and no consideration was paid or is payable with respect thereto. Each issued and outstanding share of common stock of Merger Sub was converted into and became one share of common stock of the surviving corporation of the First Merger. By virtue of the Second Merger, each share of common stock of the surviving corporation of the First Merger was converted into and became one common membership unit of the surviving entity of the Second Merger.

At the Effective Time, each warrant to purchase Core Scientific common stock held by a former employee or service provider that was issued, outstanding and unexercised immediately prior to the Effective Time was deemed to have been exercised, on a net exercise basis with respect to the applicable exercise price and any required withholding or employment taxes thereon, immediately prior to the Closing and was settled in the applicable number of shares of Core Scientific common stock, rounded down to the nearest whole share. At the Effective Time, each warrant to purchase Core Scientific common stock that was issued, outstanding and unexercised immediately prior to the Effective Time (except as described above) was assumed by XPDI and converted into a warrant to purchase shares of Class A Common Stock on the same terms and conditions as were applicable to the warrants to purchase Core Scientific common stock immediately prior to the Effective Time, equal to the product (rounded down to the nearest whole number) of (i) the number of shares of Core Scientific common stock subject to such warrant immediately prior to the Effective Time and (ii) the Exchange Ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to the quotient of (x) the exercise price per share applicable to such warrant immediately prior to the Effective Time divided by (y) the Exchange Ratio.

At the Effective Time, each of Core Scientific’s RSUs were assumed by XPDI and converted into a restricted stock unit to be settled in shares of Class A Common Stock on the same terms and conditions as were applicable to such RSU immediately prior to the Effective Time, including applicable vesting conditions, equal to the product (rounded down to the nearest whole number) of (i) the number of shares of Core Scientific common stock underlying such RSU immediately prior to the Effective Time and (ii) the Exchange Ratio.

At the Effective Time, each option to purchase Core Scientific common stock held by a former employee or service provider of Core Scientific that was vested and outstanding immediately prior to the Effective Time, except as set forth in the merger agreement, was deemed to have been exercised, on a net exercise basis with respect to the applicable exercise price and any required withholding or employment taxes thereon, immediately prior to the Closing and settled in the applicable number of shares of Class A Common Stock, rounded down to the nearest whole share. At the Effective Time, each option to purchase Core Scientific common stock held by a former employee or service provider of Core Scientific that was unvested and outstanding immediately prior to the Effective Time, except as set forth in the merger agreement, was automatically cancelled at the Closing without the payment of consideration. From and after the Closing, except as set forth in the merger agreement and except with respect to the holder’s right to receive Class A Common Stock, if any, each Core Scientific option held by a former employee or service provider of Core Scientific was cancelled and ceased to be outstanding and the holder ceased to have any rights with respect thereto. At the Effective Time, except as set forth in the merger agreement, each other option to purchase Core Scientific common stock issued and outstanding immediately prior to the Effective Time not held by a former employee or service provider of Core Scientific was assumed by XPDI and converted into an option to purchase shares of Class A Common Stock on the same terms and conditions as were applicable to such option immediately prior to the Effective Time, including applicable vesting conditions (an “Exchanged Option”), equal to the product (rounded down to the nearest whole number) of (i) the number of shares of Class A Common Stock subject to such option immediately prior to the Effective Time and (ii) the Exchange Ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to (x) the exercise price per share of such option immediately prior to the Effective Time divided by (y) the Exchange Ratio; provided, however, that the exercise price and the number of shares of Class A Common Stock purchasable pursuant to such option shall be determined in a manner consistent with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) (to the extent applicable to such option); provided further, that in the case of any such option to which Section 422 of the Code applies, the exercise price and the number of shares of Class A Common Stock purchasable pursuant to such option was determined in accordance with the foregoing, and the requirements of Section 424(a) of the Code. At the Effective Time, each option to purchase Core Scientific common stock issued and outstanding immediately prior to the Effective Time held by certain specified Core Scientific option holders that is vested and outstanding immediately prior to the Effective Time was deemed to have been exercised, on a net exercise basis with respect to the applicable exercise price and any required withholding or employment taxes thereon, immediately prior to the Closing and settled in cash.

At the Effective Time, each secured convertible promissory note issued by Core Scientific that was outstanding immediately prior to the Effective Time was assumed by XPDI and remains outstanding (and Core Scientific or its successor by merger remains an obligor with respect to such notes) and is convertible into Class A Common Stock (rather than equity securities of Core Scientific) in accordance with the terms of such convertible promissory note; provided, however, that with respect to any outstanding convertible promissory notes for which Core Scientific received a duly executed exercise of conversion in accordance with such convertible promissory note, exercising the right of such holder to convert such convertible promissory note subject to and conditioned upon the occurrence of the Effective Time, the outstanding principal amount and accrued interest as of the Effective Time with respect to such convertible promissory note was converted into shares of Class A Common Stock, equal to the product (rounded down to the nearest whole number) of (i) the number of shares of Core Scientific common stock issuable upon the conversion of such convertible promissory note in accordance with such convertible promissory note immediately prior to the Effective Time and (ii) the Exchange Ratio.

Prior to the Effective Time, XPDI appointed a commercial bank or trust company (the “Exchange Agent”) for the purpose of distributing the merger consideration payable to each holder of Core Scientific common stock. At the Effective Time, XPDI deposited evidence of shares of Class A Common Stock in book-entry form (or certificates representing shares of Class A Common Stock, at XPDI’s election) representing the aggregate merger consideration payable pursuant to the merger agreement (such equity deposited with the Exchange Agent referred to herein as the “Exchange Fund”). At the Effective Time, XPDI delivered irrevocable instructions to the Exchange Agent to deliver the merger consideration out of the Exchange Fund in accordance with the merger agreement. See “The Merger—Merger Consideration; Conversion of Shares; Exchange Procedures” in this 8-K/A.

Accounting for the Merger

The merger between XPDI and Core Scientific will be accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, XPDI will be treated as the “acquired” company for financial reporting purposes and the merger will be treated as the equivalent of Core Scientific issuing stock for the net assets of XPDI, accompanied by a recapitalization. The net assets of XPDI will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Transactions will be those of Core Scientific. See “Accounting Treatment.”

Description of Blockcap Acquisition

On July 30, 2021, Core Scientific acquired Blockcap, one of its largest hosting customers. Consideration consisted of the issuance of approximately 71.2 million shares of Core Scientific common stock, approximately 4 million shares of Core Scientific restricted stock and approximately 5 million options to purchase shares of Core Scientific common stock. The acquisition is expected to be accounted for as a business combination using the acquisition method of accounting, whereby the net assets acquired and the liabilities assumed were recorded at fair value. Core Scientific is still in the process of completing its initial accounting for the business combination, including determining the fair value of consideration transferred, assets acquired and liabilities assumed and the allocation of the purchase price to goodwill. Core Scientific and Blockcap had preexisting relationships which were settled on the acquisition date. Using the estimated purchase price for the transaction, Core Scientific has allocated the purchase price to identifiable assets and liabilities based upon preliminary fair value estimates. The difference between the aggregate consideration relative to the fair value of net assets is recorded as goodwill. Refer to Note 3 for further discussion.

On July 1, 2021, prior to Core Scientific’s acquisition of Blockcap, Blockcap purchased Radar Relay, Inc. (“RADAR”), an early stage company focused on technology enhancement and development in the digital asset industry. The acquisition was accounted for as a business combination using the acquisition method of accounting, whereby the net assets acquired, and the liabilities assumed were recorded at fair value. Using the estimated purchase price for the transaction, Blockcap has allocated the purchase price to identifiable assets and liabilities based upon preliminary fair value estimates. The difference between the aggregate consideration relative to the fair value of net assets is recorded as goodwill. Refer to Note 3 for further discussion.

Description of the Issuance of Convertible Notes

In April 2021, Core Scientific entered into a Secured Convertible Note Purchase Agreement and issued $215 million of senior secured convertible notes to new and existing lenders. The convertible notes have a maturity date of April 2025 and bear interest of 10% per annum, of which 4% is payable in cash and 6% is payable in kind. The convertible notes are convertible into common or preferred shares at the option of the holder upon the occurrence of a) an initial public offering or SPAC merger, b) a private placement of equity securities with gross proceeds to the Company of at least $50 million or c) a change in control. The conversion price is equal to a) 65-80% of the price paid for equity securities in an initial public offering, depending on the timing of the initial public offering or b) 65-80% of the fair value per share paid in a change in control or SPAC merger, depending on the timing of the change in control or SPAC merger. At maturity, the Secured Convertible Notes not converted will be owed two times the face value of the note plus accrued interest. The proceeds from the convertible notes were used, in part, to repay the 15% per annum Silverpeak loan of which $21 million was issued in May 2020 and an additional $9 million was issued in February 2021.

In August through November of 2021, an additional $300 million of senior unsecured convertible notes were issued under substantially the same terms and conditions as the original $215 million of secured convertible notes issued in April 2021, except that such notes are unsecured until the occurrence of a) an initial public offering or SPAC merger, b) a private placement of equity securities with gross proceeds to the Company of at least $50 million or c) a change in control, at which time they become secured on a pari passu basis with the Secured Convertible Notes.

Core Scientific has reflected the issuance of the April convertible note, the repayment of the Silverpeak loan and the issuance of the senior unsecured convertible notes in its historical financial statements as of and for the year ended December 31, 2021. The impact is only partially reflected for the entire pro forma period in the historical statements. An adjustment has been made to the pro forma statement of operations for the twelve month period ending December 31, 2021 to reflect the impact for the full pro forma period.

Refer to Note 2 and Note 8 for further discussion.

Basis of Pro Forma Presentation

The unaudited pro forma condensed combined financial information has been presented for illustrative purposes only and is not necessarily indicative of the operating results and financial position that would have been achieved had the Transactions occurred on the dates indicated, and does not reflect adjustments for any anticipated synergies, operating efficiencies, tax savings or cost savings. Any cash proceeds remaining after the consummation of the Transactions and the other related events contemplated by the merger agreement are expected to be used for general corporate purposes. The unaudited pro forma condensed combined financial information does not purport to project the future operating results or financial position of XPDI following the completion of the Transactions.

The unaudited pro forma adjustments are based on information currently available, and assumptions and estimates underlying the unaudited pro forma adjustments are described in the accompanying notes. Actual results may differ materially from the assumptions used to present the accompanying unaudited pro forma condensed combined financial information.

The following summarizes the unaudited pro forma New Core common stock issued and outstanding immediately after the Transactions (in thousands, except percentages):


	Share Ownership in New Core
	Shares		% of Total
Core Scientific shareholders¹		301,292		90.7	%
XPDI:
XPDI Class A shares⁴		22,153		6.7	%
XPDI Class B shares converted to Class A²		8,625		2.6	%

XPDI shareholders		30,778		9.3	%

Closing Shares³		332,070		100.0	%

¹	Includes equivalent Core Scientific common shares exchanged for New Core shares using the exchange rate of 1.6001528688 consisting of:

Core Scientific common shares of 158,212

Core Scientific common shares from convertible Series A and B preferred stock of 10,826

Core Scientific vested warrants and options of 10,556

Blockcap equivalent Core Scientific common shares of 115,508

Blockcap equivalent Core Scientific common shares from vested RSUs of 1,956

Blockcap equivalent Core Scientific vested options of 4,234

Includes 1,725 Class B common shares that will be converted to Class A unvested shares and will vest upon the date on which the volume-weighted average price of the Class A Common Stock is greater than $12.50 per share for any 20 trading days within any 30 consecutive trading day period within five years of the Closing date. The unvested shares will be excluded from pro forma earnings per share calculations because the stock price threshold contingency has not yet been met.

Excludes Core Scientific and Blockcap equivalent Core Scientific common shares from unvested RSUs of 97,409 and 4,855, respectively, and 21,103 and 3,111 from unvested options, respectively, using the exchange rate of 1.6001528688 and all other potentially dilutive securities including Core Scientific options, warrants, restricted stock units and convertible notes as well as XPDI warrants. See Note 5—Earnings per Share.

⁴	Includes the impact of the redemption by XPDI shareholders of 12,347 shares of Class A common stock subject to redemption.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF DECEMBER 31, 2021


	December 31, 2021										December 31, 2021
	Core Scientific Pro Forma (Note 2)			XPDI (Historical)			Merger Adjustments				Pro Forma Combined
Assets
Current Assets:
Cash and cash equivalents	$	117,871		$	971		$	(39,000	)	A	$	301,406
								221,564		B
Restricted cash		13,807			—			—				13,807
Accounts receivable, net of allowance of $— and $620, respectively		1,382			—			—				1,382
Accounts receivable from related parties		300			—			—				300
Deposits for equipment		358,791			—			—				358,791
Digital currency assets		234,298			—			—				234,298
Prepaid expenses and other current assets		30,111			363			—				30,474

Total Current Assets		756,560			1,334			182,564				940,458

Property, plant and equipment, net		597,304			—			—				597,304
Goodwill		1,055,760			—			—				1,055,760
Intangible assets, net		8,195			—			—				8,195
Investments held in Trust Account		—			345,035			(345,035	)	B		—
Other noncurrent assets		21,045			—			—				21,045

Total Assets	$	2,438,864		$	346,369		$	(162,471	)		$	2,622,762

Liabilities, Redeemable Preferred Stock and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	11,617		$	263		$	—			$	11,880
Accrued expenses and other		67,862			3,749			—				71,611
Deferred revenue		63,417			—			—				63,417
Deferred revenue from related parties		72,945			—			—				72,945
Capital lease obligations, current portion		28,452			—			—				28,452
Notes payable, current portion		75,996			—			—				75,996
Other current liabilities		—			200			—				200

Total Current Liabilities		320,289			4,212			—				324,501

Capital lease obligations, net of current portion		62,145			—			—				62,145
Notes payable, net of current portion (includes $557,007 and $— at fair value)		1,018,857			—			—				1,018,857
Derivative warrant liabilities		—			49,291			—				49,291
Deferred underwriting commissions		—			12,075			(12,075	)			—
Other noncurrent liabilities		18,531			—			—				18,531

Total Liabilities		1,419,822			65,578			(12,075	)			1,473,325

Contingently redeemable preferred stock		44,476			—			(44,476	)	D		—
Commitments and contingencies
Class A common stock subject to redemption		—			345,000			(345,000	)	E		—
Stockholders’ Equity:
Common stock; $0.00001 par value		2			—			1		F		3
Class B common stock, $0.0001 par value		—			1			(1	)	F		—
Additional paid-in capital		1,379,606			—			(64,210	)	F		1,558,228
								(23,173	)	A
								44,476		D
								345,000		E
								(123,471	)	C
Accumulated deficit		(394,076	)		(64,210	)		64,210		F		(397,828	)
								(3,752	)	A
Accumulated other comprehensive loss		(10,966	)		—			—				(10,966	)
Total Stockholders’ Equity		974,566			(64,209	)		239,080				1,149,437

Total Liabilities, Redeemable Preferred Stock and Stockholders’ Equity	$	2,438,864		$	346,369		$	(162,471	)		$	2,622,762

See accompanying notes to the unaudited pro forma combined financial statements

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2021


	December 31, 2021									December 31, 2021
	Core Scientific Pro Forma (Note 2)			XPDI (Historical)			Merger Adjustments			Pro Forma Combined
Revenue:
Hosting revenue from customers	$	67,495		$	—		$	—		$	67,495
Equipment sales to customers		230,541			—			—			230,541
Digital asset mining income		288,955			—			—			288,955

Total revenue		586,991			—			—			586,991
Cost of revenue		296,430			—			—			296,430

Gross profit		290,561			—			—			290,561
(Loss) gain on legal settlements		(2,636	)		—			—			(2,636	)
Gain from sales of digital currency assets	$	4,959		$	—		$	—			4,959
Impairment of digital currency assets		(54,678	)		—			—			(54,678	)
Operating expenses:
Research and development		7,674			—			—			7,674
Sales and marketing		4,062			—			—			4,062
General and administrative		89,361			4,794			3,752	c		97,907
General and administrative - related party		—			220			—			220
Franchise tax expenses		—			200			—			200

Total operating expenses	$	101,097		$	5,214		$	—		$	106,311

Operating income (loss)		137,109			(5,214	)		—			131,895
Non-operating expenses, net:
Loss on debt from extinguishment		8,016			—			—			8,016
Interest expense, net		71,144			—			—			71,144
Other non-operating expenses, net		384,165			—			—			384,165
Change in fair value of derivative warrant liabilities		—			26,264			—			26,264
Offering costs associated with derivative warrant liabilities		—			1,056			—			1,056
Income from investments held in trust		—			(35	)		35	d		—

Total non-operating expense, net		463,325			27,285			35			490,645

Income (loss) before income taxes		(326,216	)		(32,499	)		(35	)		(358,750	)
Income tax expense		22,237			—			—			22,237

Net income (loss)		(348,453	)		(32,499	)		(35	)		(380,987	)

Deemed dividend from common to preferred exchange		—			—			—			—

Net income (loss) attributable to common stockholders		(348,453	)		(32,499	)		(35	)		(380,987	)

Net income (loss) per share:
Basic	$	(2.04	)	$	(0.83	)	$	—		$	(1.21	)
Diluted	$	(2.04	)	$	(0.83	)	$	—		$	(1.21	)
Weighted average shares outstanding:
Basic		171,059			39,026			—			313,599
Diluted		171,059			39,026			—			313,599

See accompanying notes to the unaudited pro forma combined financial statements

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

1.	Basis of Presentation

The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X, as amended. The adjustments in the unaudited pro forma condensed combined financial information have been identified and presented to provide relevant information necessary for an illustrative understanding of New Core upon consummation of the Transactions. Assumptions and estimates underlying the unaudited pro forma adjustments set forth in the unaudited pro forma condensed combined financial information are described in the accompanying notes.

The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the Transactions and has been prepared for informational purposes only.

The merger between XPDI and Core Scientific will be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, XPDI will be treated as the “acquired” company for financial reporting purposes. Accordingly, the merger will be treated as the equivalent of Core Scientific issuing stock for the net assets of XPDI, accompanied by a recapitalization. The net assets of XPDI will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Transactions will be those of Core Scientific. See “Accounting Treatment.” The pro forma adjustments related to the merger are described in Note 3.

The acquisition of Blockcap by Core Scientific, as further summarized in Note 2, was accounted for as a business combination using the acquisition method of accounting in accordance with ASC 805, Business Combinations, with Core Scientific determined to be the accounting acquirer. Accordingly, the acquired assets and assumed liabilities of Blockcap have been adjusted to fair value, where appropriate. The difference between the aggregate consideration relative to the fair value of the identifiable net assets is recorded as goodwill. In addition, pro forma adjustments related to Core Scientific’s issuance of convertible notes and the repayment of the Silverpeak loan are reflected in Note 2.

Management has made significant estimates and assumptions in its determination of the pro forma adjustments. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.

The unaudited pro forma condensed combined financial information does not give effect to:

•

any anticipated synergies, operating efficiencies, tax savings, cost savings or increased costs of a public company that may be associated with the Transactions, or

•

the potential purchases of mining and hosting equipment.

The pro forma adjustments reflecting the consummation of the Transactions are based on certain currently available information and certain assumptions and methodologies that XPDI believes are reasonable under the circumstances. The unaudited condensed combined pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments and it is possible the difference may be material. XPDI believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Transactions based on information available to management at this time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Transactions taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of New Core. The unaudited pro forma condensed combined financial information should be read in conjunction with the historical financial statements and notes thereto of XPDI, Core Scientific and Blockcap.

2.	Historical Core Scientific, Blockcap Acquisition and Convertible Note Issuance

The following unaudited pro forma adjustments reflect the impact of Transactions completed by Core Scientific prior to the anticipated merger, including (all share amounts are in thousands):

•

The pro forma interest expense impact of the Core Scientific issuance of $515 million of convertible notes ($215 million in April 2021 and $300 million in August through November 2021) and the subsequent repayment of the $30 million Silverpeak loan net of prepayment penalties. The holders of the convertible notes have not exercised their conversion rights as a result of the merger; and

•

The acquisition of Blockcap by Core Scientific on July 30, 2021, including any elimination of the effect of transactions between Core Scientific and Blockcap, as required, is included in the Core Scientific historical financial statements as of and for the year ended December 31, 2021. The pro forma impact to the Statement of Operations had the acquisition taken place on January 1, 2021 is included as an adjustment for the period from January 1, 2021 through July 30, 2021. Consideration paid consisted of 72,186 Core Scientific common shares, 657 common shares from vested options settlement, 4,256 Core Scientific Restricted Stock Units and 2,393 Core Scientific Options. The portion of the fair value of the replaced Blockcap share based payments attributable to pre-combination service as well as the impact of the effective settlement of preexisting hosting and equipment contracts between Core Scientific and Blockcap has been included in the aggregate purchase price of $1.14 billion.

The purchase price allocation is as follows:

PPA Allocation


Consideration (in thousands):
71.2 million common shares valued at $16.18 per share^1,2	$	1,151,985
Fair value of replaced Blockcap share-based payments attributable to pre-combination service³		21,768
Settlement of Blockcap debt⁴		25,607
Settlement of preexisting contracts⁵		(60,522)

Total Consideration	$	1,138,838
Fair value of assets acquired, and liabilities assumed:
Cash and cash equivalents	$	704
Digital assets-Bitcoin		73,304
Digital assets-Ethereum		365
Digital assets-Bitcoin cash		8
Digital assets-Siacoin		554
Digital assets-Other		3,329
Other current assets		633
Intangible assets, net		2,925
Property, plant and equipment, net		97,964
Other noncurrent assets		1,293

Total assets acquired		181,079
Accounts payable		492
Accrued expenses and other		22,647
Deferred revenue		414
Other current liabilities		7,204
Deferred tax liability		9,003

Total liabilities assumed	$	39,760
Total identifiable net assets	$	141,319
Goodwill on acquisition	$	997,519

¹	71.2 million common shares represent the equivalent Core Scientific common shares issued to Blockcap shareholders as consideration for the purchase.

The price per share of our common shares was estimated to be $16.18. As the Core Scientific common shares were not listed on a public marketplace, the calculation of the fair value of the common shares was subject to a greater degree of estimation. Given the absence of a public market, an estimate of the fair value of the common shares was required at the time of the Blockcap Acquisition. Objective and subjective factors were considered in determining the estimated fair value and because there is no active trading of the Core Scientific equity shares on an established securities market, an independent valuation specialist was engaged. The valuation was determined by weighting the outcomes of scenarios estimating share value based on both public company valuations and private company valuations. Both a market approach and common stock equivalency model were used to determine a range of outcomes, which were weighted based on probability to determine the result.

³	Reflects the estimated fair value of replaced Blockcap share-based payments allocated to purchase price based on the proportion of service related to the pre-combination period. The fair value of the stock-based awards was determined utilizing the Black-Scholes pricing model.

⁴	Reflects the fair value of loans issued by the Company in July 2021 that were effectively used to settle debt that had previously been held by Blockcap.

⁵	Blockcap had preexisting hosting and equipment with Core Scientific that were effectively settled by Core Scientific’s acquisition of Blockcap. As a result, the consideration transferred to Blockcap has been adjusted by the deferred revenue balances that were settled at the time of acquisition.

In a business combination, the initial allocation of the purchase price is considered preliminary and therefore subject to change until the end of the measurement period (not to exceed one year from the acquisition date). Because the measurement period is still open, certain fair value estimates may change once all information necessary to make a final fair value assessment has been received. Specifically, the measurement period is still open for consideration transferred, property, plant and equipment, net and deferred tax liabilities as the Company is still in the process of obtaining information about certain shares allocated to Blockcap shareholders and certain transactions between Blockcap and Core that were outstanding as of July 30, 2021.

Goodwill with an assigned value of $1.00 billion represents the excess of the consideration transferred over the estimated fair values of assets acquired and liabilities assumed. The goodwill recognized includes the assembled workforce of Blockcap and intangible assets that do not qualify for separate recognition. None of the goodwill resulting from the acquisition is deductible for tax purposes. All of the goodwill acquired is allocated to the Mining segment. Management believes the acquisition of Blockcap strengthens its presence in the data mining market due to the scale of its operations. These factors are the basis for the excess purchase price paid over the value of the assets acquired and liabilities assumed, resulting in goodwill.

UNAUDITED PRO FORMA CORE SCIENTIFIC CONDENSED COMBINED BALANCE SHEET


	December 31, 2021
	Core Scientific Pro Forma (Historical) (A)			Convertible Note Adjustments				Pro Forma Combined
Assets
Current Assets:
Cash and cash equivalents	$	117,871		$	—			$	117,871
Restricted cash		13,807			—				13,807
Accounts receivable, net of allowance of $— and $620, respectively		1,382			—				1,382
Accounts receivable from related parties		300			—				300
Deposits for equipment		358,791			—				358,791
Digital currency assets		234,298			—				234,298
Prepaid expenses and other current assets		30,111			—				30,111

Total Current Assets		756,560			—				756,560

Property, plant and equipment, net		597,304			—				597,304
Goodwill		1,055,760			—				1,055,760
Intangible assets, net		8,195			—				8,195
Other noncurrent assets		21,045			—				21,045

Total Assets	$	2,438,864		$	—			$	2,438,864

Liabilities, Redeemable Preferred Stock and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	11,617		$	—			$	11,617
Accrued expenses and other		67,862			—				67,862
Deferred revenue		63,417			—				63,417
Deferred revenue from related parties		72,945			—				72,945
Capital lease obligations, current portion		28,452			—				28,452
Notes payable, current portion		75,996			—				75,996

Total Current Liabilities		320,289			—				320,289

Capital lease obligations, net of current portion		62,145			—				62,145
Notes payable, net of current portion (includes $557,007 and $—at fair value)		652,213			366,644		B		1,018,857
Other noncurrent liabilities		18,531			—				18,531

Total Liabilities		1,053,178			366,644				1,419,822

Contingently redeemable preferred stock; $0.00001 par value; 50,000 shares authorized; 6,766 shares issued and outstanding at December 31, 2021 and 2020, respectively		44,476			—				44,476
Commitments and contingencies
Stockholders’ Equity:
Common stock; $0.00001 par value; 300,000 and 200,000 shares authorized at December 31, 2021 and 2020, respectively; 170,976 and 98,607 shares issued and outstanding at December 31, 2021 and 2020, respectively		2			—				2
Additional paid-in capital		1,379,606			—				1,379,606
Accumulated deficit		(27,432	)		(366,644	)			(394,076	)
Accumulated other comprehensive loss		(10,966	)		—				(10,966	)

Total Stockholders’ Equity		1,341,210			(366,644	)			974,566

Total Liabilities, Redeemable Preferred Stock and Stockholders’ Equity	$	2,438,864		$	—			$	2,438,864

UNAUDITED PRO FORMA CONDENSED COMBINED CORE SCIENTIFIC

STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2021


											Transaction Accounting Adjustments
	Core Scientific Historical December 31, 2021			Blockcap (Historical) for the period January 1, 2021 through July 30, 2021			Elimination Adjustments				Blockcap Acquisition				Convertible Note				Core Scientific Pro Forma Combined
Revenue:
Hosting revenue from customers	$	79,323		$	—		$	(11,828	)		$	—			$	—			$	67,495
Equipment sales to customers		248,235			—			(17,694	)	e1		—				—				230,541
Digital asset mining income		216,925			72,030			—		e1		—				—				288,955

Total revenue		544,483			72,030			(29,522	)			—				—				586,991
Cost of revenue		305,621			17,903			(26,226	)			(868	)			—				296,430

Gross profit		238,862			54,127			(3,296	)	e1		868		a		—				290,561
(Loss) gain on legal settlements		(2,636	)		—			—				—				—				(2,636	)
Gain from sales of digital currency assets		4,814			145			—				—				—				4,959
Impairment of digital currency assets		(37,206	)		(17,472	)		—				—				—				(54,678	)
Operating expenses:
Research and development		7,674			—			—				—				—				7,674
Sales and marketing		4,062			—			—				—				—				4,062
General and administrative		60,604			47,997			—				(19,240	)			—				89,361

Total operating expenses		72,340			47,997			—				(19,240	)	b		—				101,097

Operating income (loss)		131,494			(11,197	)		(3,296	)			20,108				—				137,109
Non-operating expenses, net:
Loss on debt from extinguishment		8,016			—			—				—				—				8,016
Interest expense, net		44,354			1,717			—				—				25,073		c		71,144
Other non-operating expenses, net		16,049			1,472			—				—				366,644		d		384,165

Total non-operating expense, net		68,419			3,189			—				—				391,717				463,325

Income (loss) before income taxes		63,075			(14,386	)		(3,296	)			20,108				(391,717	)			(326,216	)
Income tax expense		15,763			6,474			—				—				—				22,237

Net income (loss)		$47,312			$(20,860)			$(3,296)				$20,108				$(391,717)				$(348,453)

Adjustments to Unaudited Pro Forma Condensed Combined Core Scientific and Blockcap Balance Sheet

The adjustments included in the unaudited pro forma condensed combined balance sheet as of December 31, 2021 are as follows (in thousands, except price):

Other adjustments:

(A)

The following purchase price adjustments related to the acquisition of Blockcap by Core Scientific have been included in the Core Scientific historical balance sheet as of December 31, 2021:

Changes to the Blockcap historical financials to represent the fair value changes associated with the acquisition. The resulting goodwill adjustment represents the excess of the purchase price over the aggregate fair value of the net identifiable assets acquired and liabilities assumed, including identifiable intangible assets. The goodwill is not deductible for U.S. federal income tax purposes.

The fair value of the digital assets acquired was determined using the average U.S. dollar spot rate of the related digital currency at the time of acquisition.

The following table presents the details of Blockcap’s digital asset holdings:


	As of July 30, 2021
	Quantity		Price		Fair value		Carrying value
Bitcoin (BTC)	$	1,736	$	42,235.55		73,304		55,568
Ethereum (ETH)		148		2,466.96		365		1,263
Bitcoin Cash (BCH)		16		491.00		8		7
Siacoin (SC)		39,487,794		0.01		554		384
Other		Various		Various		3,329		1,777

Total digital currencies					$	77,560	$	58,999

The fair value of the mining equipment was determined by applying the Cost Approach, which is based on estimating the Replacement Cost New (“RCN”) and deducting for depreciation which considers physical deterioration, functional obsolescence and economic/external obsolescence. The primary depreciation applied to the mining equipment was physical depreciation as it was determined that functional and economic obsolescence was not present with the miners. The RCN of the miners was based on current pricing for such equipment, which fluctuates with the increase or decrease of digital asset prices.

The elimination of Blockcap additional paid in capital and accumulated earnings.

The total consideration added to APIC as a result of the acquisition.

The transaction costs associated with the Blockcap acquisition that were expensed as an adjustment to cash and retained earnings.

The one-time expense Core Scientific has recorded as compensation expense in its financial statements for the period ending December 31, 2021 for the acceleration of certain equity awards of Blockcap’s CEO and others.

(B)

The fair value of the Core Scientific’s convertible notes as of December 31, 2021 included the effect of a negotiation discount, which is a calibration adjustment that reflects the illiquidity of the instruments and the Company’s negotiating position. Since the transaction was an orderly transaction, the Company deemed that the fair value equaled the transaction price at initial recognition. However, the closing of the merger of XPDI (which represents the occurrence of a qualified financing event) would have resulted in the elimination of the negotiation discount along with other changes in fair value which is estimated to significantly increase in the fair value of the convertible notes, with a corresponding increase to Other Non-operating Expenses, net, The final valuation adjustment to the convertible note as a result of the closing of the merger could differ materially from this preliminary estimate based changes in the share price and other factors.

Adjustments to Unaudited Pro Forma Condensed Combined Core Scientific and Blockcap Statements of Operations

The pro forma adjustments included in the unaudited pro forma condensed combined statements of operations for the period January 1, 2021 through July 30, 2021 for Blockcap adjustments and for the year ended December 31, 2021 for the convertible debt adjustments are as follows (in thousands):

Eliminations of intercompany transactions:

(e1)

Reflects the elimination of Core Scientific Hosting and Equipment sales revenue and Cost of revenue from Blockcap and the corresponding Blockcap revenue and cost of revenue.

Other adjustments:

(a)

Reflects the change in the cost of revenue attributable to incremental depreciation as a result of the fair value decrease to the basis of the Blockcap mining equipment assets as a result of the acquisition. The fair value adjustment decreases the historical cost of these assets by $4.5 million on assets with an assumed useful life of three years resulting in a decrease in depreciation expense of $0.9 million for the period January 1, 2021 through July 30, 2021.

(b)

Reflects the elimination of $19,240 of expense recognized by Blockcap in July 2021 for the acceleration of certain equity awards of its CEO and others. Because this acceleration was deemed to be in contemplation of the Merger, Core Scientific has recorded $23,294 of compensation expense for the acceleration in its financial statements for the period ending December 31, 2021, which was determined based on the fair value of the awards at the time of the Merger. This adjustment is necessary to avoid duplication of the expense attributable to the combined company related to the acceleration of the same awards.

(c)

Reflects the impact to interest expense derived from removing 15% per annum interest on the $30,000 Silverpeak loan, originated in May 2020, and replacing it with 10% per annum interest on the $515,000 million convertible notes ($215,000 issued in April 2021 and the remaining $300,000 issued in August through November 2021). This adjustment resulted in a reduction of $1,125 in interest expense due to the elimination of the Silverpeak loan, an increase in interest expense of $26,198 due to the issuance of the convertible notes for a net increase in interest expense of $25,073 for the year ended December 31, 2021.

(d)

Reflects the adjustment to expense related to the elimination of the negotiation discount included in the December 31, 2021 fair value adjustment of the outstanding convertible notes. Due to the increase in liquidity associated with the Transactions, the negotiation discount has been removed.

3.	Transaction Accounting Adjustments-Merger

Merger Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet (in thousands)

The adjustments included in the unaudited pro forma condensed combined balance sheet as of December 31, 2021 are as follows (in thousands):

(A)

Reflects the estimated $39,000 reduction in cash for estimated transaction related expenses. This includes $12,075 that was previously recorded as deferred underwriting commissions and was therefore reversed. An additional $3,752 of the $39,000 is reflected as an adjustment to the accumulated deficit to properly reflect the direct and incremental costs allocated to the XPDI liability-classified instruments that are measured at fair value through earnings. The remaining $23,173 is adjusted against additional paid in capital as direct and incremental costs of the offering.

(B)

Reflects the increase in cash from the release of the balance of funds equal to $221,564 from the Trust Account after payment of $123,471 for the redemption of 12,347 shares.

(C)

Reflects the impact to equity related to $123,471 of Trust Account funds paid to holders that redeemed 12,347 Class A redeemable shares at $10 per share for a total of $123,471.

(D)

Reflects the conversion of 6,452 shares of Series A Preferred Stock and 314 shares of Series B Preferred Stock redeemable preferred stock to 6,766 shares of Core Scientific common stock just prior to the merger, eliminating the preferred stock balance. Subsequent to this conversion, these shares will be exchanged for New Core common shares using the exchange rate calculated per the merger agreement.

(E)

Reflects the elimination of 34,500 shares of Class A Common Stock subject to redemption. The $345,000 subject to redemption is eliminated and added to additional paid in capital.

(F)

Represents the elimination of XPDI equity and accumulated earnings and the exchange of existing Core Scientific and XPDI outstanding equity instruments for New Core common stock as follows:

171,059 existing Class A Core Scientific shares and 6,766 shares of Core Scientific Series A and Series B convertible preferred stock, were exchanged for New Core shares using an exchange rate of 1.6001528688 per the merger agreement resulting in a total of 284,546 New Core common shares outstanding with a par value of $0.0001.

22,153 existing Class A XPDI shares not redeemed and 8,625 existing XPDI Class B shares into 30,778 common shares of New Core. Immediately prior to the Closing, 1,725 Class B common shares will be unvested and will vest upon the date on which the volume-weighted average price of the Class A Common Stock is greater than $12.50 per share for any 20 trading days within any 30 consecutive trading day period within five years of the Closing date. These unvested shares are excluded from earnings per share calculations until such time as conditions are met for vesting.

Removes XPDI accumulated earnings with the offsetting adjustment to paid in capital.

Merger Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations (in thousands)

The pro forma adjustments included in the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2021 are as follows:

(a)	Reflects the calculation of earnings per share, basic and diluted, of the combined companies after the conversion of equity shares into New Core shares using the adjusted net income of the combined companies. See Note 5—Earnings per Share.

(b)	Reflects the total New Core common shares outstanding at the completion of the transaction. See Note 5—Earnings per Share.

(c)	Reflects the $3,752 related to the direct and incremental costs allocated to the XPDI liability-classified instruments that are measured at fair value through earnings.

(d)	Reflects the elimination of income earned on investments in trust due to the release of trust funds to cash or the reduction in trust funds due to the redemption of redeemable stock.

4. Accounting Policies

Upon consummation of the Transactions, XPDI will perform a comprehensive review of all entities’ accounting policies. As a result of the review, management may identify additional differences between the accounting policies of the entities which, when conformed, could have a material impact on the financial statements of New Core.

5. Earnings per Share

The Company computes earnings per share (“EPS”) following Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 260, Earnings per share. Basic EPS is measured as the income or loss available to common stockholders divided by the weighted average common shares outstanding for the period. Diluted EPS presents the dilutive effect on a per-share basis from the potential conversion of convertible securities or the exercise of options and or warrants; the dilutive impacts of potentially convertible securities are calculated using the as-if method; the potentially dilutive effect of options or warranties are computed using the treasury stock method. Securities that are potentially an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from diluted EPS calculation.

The following adjustments have been made to calculate the pro forma EPS and weighted average shares both basic and diluted.

•

171,059 existing Class A Core Scientific shares and 6,766 Core Scientific Series A and Series B convertible preferred stock were exchanged for New Core shares using an exchange rate of 1.6001528688 per the merger agreement resulting in a total of 284,546 New Core common shares outstanding with a par value of $0.0001.

•

22,153 existing Class A XPDI shares that were not redeemed and 8,625 existing XPDI Class B shares into 30,778 common shares of New Core. Immediately prior to the Closing, 1,725 Class B common shares will be unvested and will vest upon the date on which the volume-weighted average price of the Class A Common Stock is greater than $12.50 per share for any 20 trading days within any 30 consecutive trading day period within five years of the Closing date. These unvested shares are excluded from earnings per share calculations until such time as conditions are met for vesting.


	Existing Shares		Shares just prior to exchange		After exchange and redemption of 12,347 shares
Core Scientific common stock		171,059		177,825		284,546
XPDI Class A redeemable shares		22,153		22,153		22,153
XPDI Class B sponsor shares net of unvested shares		8,625		6,900		6,900

Total weighted average common shares - Basic and Diluted (1) and (2)		201,837		206,878		313,599

Year ended December 31, 2021
Pro forma net income (loss)					$	(380,987)
Pro forma EPS – Basic and diluted⁽¹⁾					$	(1.21)

Potentially dilutive securities are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive. Shares potentially dilutive with the conversion of the convertible debt were not included due to the add back of interest avoided upon conversion causing the conversion to be anti-dilutive.

As of December 31, 2021, the outstanding principal amount of the notes (including all accrued payment-in-kind (“PIK”) interest not already added to the principal amount of the notes) was $522.1 million. Should some or all holders of these notes elect to convert such notes would result in potential dilutive issuance of up to 65,263 shares of New Core common stock based on an applicable conversion price of $8.00 per share that was not included in the calculation of diluted net loss per share above.

²	Total Core Scientific outstanding options and warrants after exchanged is 32,195 and 6,808, respectively and are anti-dilutive so not included in the calculation of diluted EPS. 14,892 XPDI warrants are anti-dilutive so not included the calculation of diluted EPS.

Core Scientific outstanding RSUs are not included as these are contingently issuable shares for which the transaction condition has not yet been met. These RSUs are subject to a time-based vesting condition and a transaction vesting condition. The transaction vesting condition is satisfied upon the earlier of a change in control or an initial public offering. The transaction vesting condition can be met in future years only with respect to a change in control or waiver of the condition by the Company’s board of directors and is not expected to occur, if at all, prior to expiration of the applicable lock-up period. In the event the transaction-based condition were to be met, including by future action of the board of directors, the unrecognized compensation expense for which the requisite service had been provided that would have been recognized was $631.0 million as of December 31, 2021. Included in the total of Core Scientific’s unvested RSUs are 9,038 RSUs held by a former employee. These units have met the time-based vesting condition but similarly have not met the transaction-based vesting condition. The transaction-based vesting condition must be satisfied within three years of the former employee’s separation date or they will be forfeited. Had the transaction based vesting condition been met, unrecognized compensation expense would have been $82,674 as of December 31, 2021. This does not account for 6,912 Blockcap RSUs granted to legacy Blockcap shareholders and subject only to time-vesting conditions because the inclusion of such RSUs would be anti-dilutive.


Unvested Core Scientific RSUs as of December 30, 2021			55,370
RSUs to be reserved for future issuances			5,504

Unvested RSUs of Core Scientific (excluding Blockcap)			60,874
Exchange Rate			1.6001528688

Unvested pro forma RSUs of Core Scientific (excluding Blockcap) after applying exchange rate			97,409