Member Info for Hexam

Lotto - I don't think it can be brushed off that easily. At the very least that part of the IPO prospectus has been invalidated and so will presumably need re-writing - and with what? As I said I think this is a blow to Argo as the package they thought they needed to attract the best talent for the expansion in the US has been voted down and they are now at a disadvantage. Presumably they'll come up with a new plan but will they want/need to do that before the IPO or not?

AB - I just hope it hasn't thrown a spanner in the works for the IPO (it's timing and/or attractiveness). I have a horrible feeling it does from how it was presented in the prospectus but am unsure of the process from here and just hope I'm wrong. Either way we'll soon find out.

I must admit I'm a bit confused by some of the posts on this. My understanding from the IPO prospectus is that the Equity Incentive Plan is for "Officers, directors, employees, consultants and independent contractors who provide services to us or to any of our subsidiaries" so I'm not sure why there has been a focus on NEDs who I am not sure are even covered at all (Equity awards for non-execs was passed in Resolution 3).

So my understanding is that far from rewarding just the top dogs this was to cover all staff to ensure the best talent could be attracted and retained in what is a limited pool and a very competitive market - especially key for Argo as they look to expand aggressively. Indeed they stated in their prospectus that "In connection with this offering, our board of directors and our current shareholders are expected to approve our 2021 Equity Incentive Plan (the “2021 Plan”), to be effective prior to the completion of this offering." Clearly this is now not the case and It may even impact the IPO itself - either by delaying it until they can sort a new scheme out, or if they can still go ahead then will it be as attractive to US investors with ARB effectively shackled on remuneration compared to its competitors?

I can understand why some investors have baulked at the potential 76m shares involved (though there is an overriding maximum of 10% of shares so currently can't be this much). However I think Argo have been somewhat hamstrung as they are not able to compete on a level playing field with competitors and for, what will still be a small workforce, places them at greater risk of losing key staff.

I think PW is partly to blame for not providing more details (including how much will be performance related) and communicating the need better but personally I think investors have scored an own goal today.

Hi Wolf - I haven't read too much on the accounting treatment, just enough to understand what ARB are doing and hence how profits may emerge. I was surprised they could (and do) immediately recognise any change in the value of the BTC they are holding (as this can lead to volatile profits) but pleased they are able to as there is no temptation then to sell purely to enable profit to be banked - which would be a poor reason to sell. Mind you, as I said earlier, maybe they still have to sell a little bit now and again to keep the broker/trader tag that allows them this treatment. Just me speculating though.

I may do a bit more digging but confess that reading accounting discussion papers is for me going above and beyond in the name of research ;-)

@600 - thanks - enjoy the cake. Very jealous!!

Actually it also gives another possibility as to why they sold some as I’m guessing they would struggle to be seen to act as a “commodity broker/trader” and take advantage of IAS2 if they don’t buy and sell BTC at least occasionally?

@600 - it’s not creative accounting, IAS 2 just allows them to recognise any gains (or losses) in the value of crypto assets as they arise which is good as it means they don’t have to sell BTC in or order for gains to show in the profits. There was a £6m loss on this item in the half year accounts but at the moment this item is heading for a thumping positive in H2!

lotto - not sure the 400,000 shares have anything to do with Argo - surely there would have been an RNS and would also have appeared in the half year accounts as an asset like pluto, WonderFi, Luxor etc.?

@600 - Great post and agree will be interesting where the diversification leads (btw - it is a clear part of their strategy as highlighted in the NASDAQ IPO prospectus so these things aren't just 'back-ups').

One point to clarify is that the HIVE share swap didn't actually happen (in 3rd Sept 2019 RNS it was formally abandoned).

Also in answer to your question the DOT used for the first investment in Pluto represented their entire holding at the time and I'm not aware of them acquiring anymore since. They did hold 254 ETH as at the 30th June though as well as small amounts of other coins.

Flowerpot - this is from the prospectus:

"The short term loan is a Bitcoin collateralised loan against 795 Bitcoin initially with a further 86 Bitcoin transferred after the period end".

No - as it is a public holiday in the US

@Obi - Are we in week 3? ARB submitted a "draft Registration Statement on Form F-1" before July 21st (when that RNS was released). I'm pretty sure the August 19th Filing would be already after some review has taken place so some way down your timeline already.

My own guess based on this, timeline for Abcam (that went down a similar route) plus the upcoming GM milestone, is that we will hear something next week or early the week after. Tbh though I'm not too concerned as it will happen when it happens though I admit I will be a little worried if we don't hear anything this month i.e. it goes beyond the Q3 'target' that PW set and seemed to confirm in his recent Q&A when he said September will be busy but October less so.

HGN - I get what you are saying and I too am curious as to why they have now decided now to sell some BTC and having decided this why such a small amount. But that’s all I am, curious, not concerned or worried. I don’t think there is a suggestion in what they’ve said that they’ve earmarked it for anything particular but even if they have I’m not concerned over what this £2m is for just as I’m not over any other £2m (to put into perspective their monthly costs are higher than this, upcoming IPO is about £50m and Texas costs will be a multiple of this). Also when the accounts are published I’ll see all the itemised spend anyway. In the meantime I’m only interested in big ticket items.

So not concerned - in fact personally I am pleased they have sent a signal they are not wedded absolutely to holding BTC indefinitely but will consider selling if the time is right and/or the need is there and it is deemed preferable to other funding options. And perhaps that was actually the purpose?

HGN - You've said you "agree at selling some BTC at good prices" - so isn't that enough for you as maybe that is all they are doing? Just like a prudent shareholder maybe they are simply top-slicing to take advantage of high prices rather than spending the proceeds immediately? I'd much rather they did that than hold all the BTC forever - that would be like a gambler in a casino never cashing in any chips when he's winning.

Even if they are using it for something specific then since you are happy they are selling some BTC at high prices your real question seems to be what are they spending £2m on? Do you really want to know where they spend every £1m when they spend it? That is some serious micro analysis.

It may upset the purists but personally I think it's great they've sold some BTC. It shows they are not dogmatic but flexible in their strategy and will consider all options for future funding - much more of which will be needed (in addition to the upcoming IPO) to fund their ambitious expansion plans.

Not sure why anybody is surprised ARB mined less than last month. There has been no news on any new machines, the existing ones are all a month older and difficulty levels are up compared to July. So should be no surprise as would have required something really strange, bordering on miraculous, for mining numbers to have gone up. In the circumstances 206 is pleasingly high (and may even suggest that there a few new machines in play)?

80%? If its 201 BTC in August the margin will be at least 84% so even stonkier :-)

@600 - I think your prediction that August revenue will be higher than July is pretty much guaranteed. The average value of BTC over the month is up around a third but the average difficulty is up only a fraction of this. Could mean revenue up by as much as £1m but we'll soon see - besides, as you say, much more important news is probably very imminent so the monthly numbers are likely to be quickly overshadowed.

Like others I'm not too concerned by one month's mining numbers as any news about the dual listing or new machines is far more important at the moment.

Having said that, although coins mined will be lower than last month (maybe just shy of 200 unless new machines have already been installed), thanks to BTC's recent uplift the revenue and margins should be very close to the record levels of April - or as @K3VMC aptly put it - "Another stonking profit"!

Rory - not sure it does matter (from posts earlier) but if it does then fiscal year for ARB is their reporting year i.e. Jan-Dec. The Apr-Apr year in the UK is just the tax reporting year though some companies choose this as their reporting year too - most don’t.

In the US I believe the tax reporting year is Jan-Dec.