CleanSpark Inc (CLSK)

[BillyBahama]

$10,750,000 Senior Secured Redeemable Convertible Promissory Note

2,150 Shares of Series B Preferred Stock

Common Stock Purchase Warrant to Purchase up to 2,300,000 Shares of Common Stock

Shares of Common Stock Issuable Upon Conversion of the Senior Secured Redeemable Convertible Promissory Note

Shares of Common Stock Issuable Upon Conversion of the Series B Preferred Stock

Shares of Common Stock Issuable Upon Exercise of the Warrant

1,250,000 Shares of Common Stock


We are offering a $10,750,000 face value Senior Secured Redeemable Convertible Promissory Note (the “Debenture”) with a 7.5% original issue discount, 2,150 shares of our Series B Preferred Stock with a 7.5% original issue discount, a Common Stock Purchase Warrant (the “Warrant”) on a cash-only basis to acquire up to 2,300,000 shares (the “Warrant Shares”) of our common stock (our “Common Stock”), the shares of our Common Stock underlying the Debenture, the shares of Common Stock underlying the Series B Preferred Stock, the Warrant Shares and 1,250,000 shares of Common Stock. The aggregate purchase price for the Debenture, the Series B Preferred Stock the Warrant and the Common Stock is $20,000,000.


The Debenture has a maturity date two years from the issuance date and we have agreed to pay compounded interest on the unpaid principal balance of the Debenture at the rate equal to 7.5% per annum. Interest is payable on the date the applicable principal is converted or on maturity. The interest must be paid in cash and, in certain circumstances, may be paid in shares of our Common Stock. The Series B Preferred Stock may convert into Common Stock and has other features as discussed elsewhere in this Prospectus. The Warrant is exercisable for a term of three years on a cash-only basis at an exercise price of $3.50 per share with respect to 2,000,000 Warrant Shares, $4.00 with respect to 100,000 Warrant Shares, $5.00 with respect to 100,000 Warrant Shares, $7.50 with respect to 50,000 Warrant Shares and $10.00 with respect to 50,000 Warrant Shares.


Prior to the maturity date, provided that no trigger event has occurred, we will have the right at any time upon 30 trading days’ prior written notice, in our sole and absolute discretion, to redeem all or any portion of the Debenture then outstanding by paying the holder an amount equal to 145% of the face value of the Debenture.


The holder may convert the Debenture into shares of our Common Stock at a conversion price equal to 90% of the mathematical average of the 5 lowest individual daily volume weighted average prices of our Common Stock, less $0.075 per share, during the period beginning on the issuance date and ending on the maturity date. No conversion is permitted at a price below $1.00 per share until approval of certain corporate actions by the shareholders is obtained and then at $0.35 per share. In the event certain equity conditions exist, we may require that the holder convert the Debenture. In no event shall the holder of the Debenture be allowed to effect a conversion if such conversion, along with all other shares of our Common Stock beneficially owned by the holder and its affiliates would exceed 4.99% of the outstanding shares of our Common Stock.


We do not intend to apply to list the Debenture, the Series Preferred Stock or Warrant on any national securities exchange or any automated dealer quotation system. Our Common Stock is listed on the OTCQB marketplace under the symbol “CLSK.” On April 16, 2019, the last reported sale price of our Common Stock was $3.34 per share.


We intend to use the net proceeds received from the sale of the above securities for general corporate purposes and the repayment of certain outstanding debt. We will not receive any additional proceeds if and when the Debenture or Series B Preferred Stock is converted, in whole or in part, into shares of our Common Stock. We will, however, receive any additional proceeds if and when the Warrant is exercised into shares of our Common Stock.


Our business and an investment in our Common Stock involve significant risks. These risks are described under the caption “Risk Factors” beginning on page S-3 of this prospectus supplement and in the documents incorporated by reference into this prospectus supplement.


Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The date on this prospectus supplement is April 17, 2019

https://ih.advfn.com/stock-market/USOTC/cleanspark-inc-CLSK/stock-news/79718906/prospectus-filed-pursuant-to-rule-424b5-424b5