What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-06 compared with 2023-08-04 · 364 added, 231 removed, 693 unchanged (46% of the section changed)

4 unchanged sentences

(in thousands, except par value)

September 30,

2023 December 31,

7 unchanged sentences

Prepaid expenses and other current assets 33,039 31,881

Assets held for sale 36,069 —

Total Current Assets 134,719 85,102

11 unchanged sentences

Operating lease liabilities, current portion 205 769

Finance lease liabilities, current portion 19,833 —

Notes payable, current portion 128,321 36,242

1 unchanged sentence

Operating lease liabilities, net of current portion 1,047 720

Finance lease liabilities, net of current portion 35,909 —

Notes payable, net of current portion 679,559 —

7 unchanged sentences

$ 0.0001 par value;

10,000,000 shares authorized at both June 30, 2023 and December 31, 2022;

379,091 and 375,225 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

10,000,000 shares authorized at both September 30, 2023 and December 31, 2022;

385,868 and 375,225 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 1,805,782 1,764,368

7 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

16 unchanged sentences

97,485 189,648 276,312 463,419

36,959 12,717 68,740 82,720

Loss on legal settlement

Gross profit (loss)

15,419 ( 27,076 ) 84,159 55,644

3 unchanged sentences

Impairment of goodwill and other intangibles — ( 268,512 ) — ( 1,059,265 )

Impairment of property, plant and equipment — ( 59,259 ) — ( 59,259 )

Losses on exchange or disposal of property, plant and equipment ( 340 ) — ( 514 ) ( 13,057 )

8 unchanged sentences

26,805 49,577 78,112 210,360

Operating income (loss)

Operating (loss) income

( 12,044 ) ( 401,374 ) 5,027 ( 1,473,474 )

Non-operating expenses (income), net:

Non-operating expenses, net:

Gain on debt extinguishment

( 374 ) — ( 21,135 ) —

Interest (income) expense, net

Interest expense, net

2,196 25,942 2,317 74,734

2 unchanged sentences

Reorganization items, net 28,256 — 78,270 —

Other non-operating expenses (income), net

Other non-operating (income) expenses, net

( 1,090 ) 1,478 ( 3,978 ) 4,997

Total non-operating expenses (income), net

Total non-operating expenses, net

28,988 22,776 55,474 233,599

1 unchanged sentence

( 41,032 ) ( 424,150 ) ( 50,447 ) ( 1,707,073 )

Income tax expense (benefit)

Income tax expense

114 10,642 347 4,398

11 unchanged sentences

(in thousands)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

9 unchanged sentences

(Debtor-in-Possession)

Consolidated Statements of Changes in Stockholders’ Deficit

For the Three and Six Months Ended June 30, 2023

Consolidated Statements of Changes in Stockholders’ (Deficit) Equity

For the Three and Nine Months Ended September 30, 2023

(in thousands)

3 unchanged sentences

Stockholders’

(Deficit) Equity

Shares Amount

Balance at April 1, 2023 377,841 $ 36 $ 1,776,641 $ ( 2,174,138 ) $ ( 397,461 )

Balance at July 1, 2023 379,091 $ 36 $ 1,790,921 $ ( 2,183,398 ) $ ( 392,441 )

Net loss — — — ( 41,146 ) ( 41,146 )

1 unchanged sentence

Restricted stock awards issued, net of shares withheld for tax withholding obligations 7,154 — — — —

Balance at June 30, 2023 379,091 $ 36 $ 1,790,921 $ ( 2,183,398 ) $ ( 392,441 )

Restricted stock awards forfeited ( 377 ) — — — —

Balance at September 30, 2023 385,868 $ 36 $ 1,805,782 $ ( 2,224,544 ) $ ( 418,726 )

Balance at January 1, 2023 375,225 $ 36 $ 1,764,368 $ ( 2,173,750 ) $ ( 409,346 )

2 unchanged sentences

Restricted stock awards issued, net of shares withheld for tax withholding obligations 11,020 — — — —

Balance at June 30, 2023 379,091 $ 36 $ 1,790,921 $ ( 2,183,398 ) $ ( 392,441 )

Restricted stock awards forfeited ( 377 ) — — — —

Balance at September 30, 2023 385,868 $ 36 $ 1,805,782 $ ( 2,224,544 ) $ ( 418,726 )

See accompanying notes to unaudited consolidated financial statements.

1 unchanged sentence

(Debtor-in-Possession)

Consolidated Statements of Changes in Contingently Redeemable Convertible Preferred Stock and Stockholders’ Equity

For the Three and Six Months Ended June 30, 2022

Consolidated Statements of Changes in Contingently Redeemable Convertible Preferred Stock and Stockholders’ (Deficit) Equity

For the Three and Nine Months Ended September 30, 2022

(in thousands)

3 unchanged sentences

Paid-In Capital Accumulated

Deficit Accumulated Other Comprehensive Loss Total

Deficit Accumulated Other Comprehensive Income

Stockholders’

(Deficit) Equity

Shares Amount Shares Amount

Balance at April 1, 2022

Balance at July 1, 2022

— $ — 353,481 $ 35 $ 1,695,748 $ ( 1,304,111 ) $ 24,780 $ 416,452

3 unchanged sentences

Stock-based compensation — — — — 29,884 — — 29,884

Exercise of stock options — — 1,321 — 3,846 — — 3,846

Restricted stock awards issued, net of shares withheld for tax withholding obligations — — 4,897 — ( 2,349 ) — — ( 2,349 )

Exercise of convertible notes — — 197 1,574 — — 1,574

Balance at June 30, 2022

Restricted stock awards forfeited — — ( 2,268 ) — — — — —

Issuances of common stock - equity line of credit — — 7,315 1 13,039 — — 13,040

Issuances of common stock - financing transaction fees — — 1,285 — 2,960 — — 2,960

Balance at September 30, 2022

— $ — 364,710 $ 36 $ 1,739,282 $ ( 1,738,903 ) $ 72,612 $ 73,027

Contingently Redeemable

Convertible Preferred

Stock Common Stock Additional

Paid-In Capital Accumulated

Deficit Accumulated Other Comprehensive Income (Loss)

Stockholders’

Shares Amount Shares Amount

Balance at January 1, 2022

6 unchanged sentences

Restricted stock awards issued, net of shares withheld for tax withholding obligations — — 39,099 4 ( 31,630 ) — — ( 31,626 )

Restricted stock awards forfeited — — ( 2,268 ) — — — — —

Exercise of convertible notes — — 197 — 1,574 — — 1,574

Cashless exercise of warrants — — 3,001 — — — — —

Issuances of common stock - equity line of credit — — 7,315 1 13,039 — — 13,040

Conversion of contingently redeemable preferred stock to common stock ( 10,826 ) ( 44,476 ) 10,826 1 44,475 — — 44,476

Issuances of common stock - Merger with XPDI — — 30,778 3 163,456 — — 163,459

Issuances of common stock - financing transaction fees — — 1,285 — 2,960 — — 2,960

Issuances of common stock - vendor settlement — — 1,580 — 12,674 — — 12,674

Costs attributable to issuance of common stock and equity instruments - Merger with XPDI — — — — ( 16,642 ) — — ( 16,642 )

Balance at June 30, 2022

Balance at September 30, 2022

— $ — 364,710 $ 36 $ 1,739,282 $ ( 1,738,903 ) $ 72,612 $ 73,027

4 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from Operating Activities:

$ ( 50,794 ) $ ( 1,711,471 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 64,800 156,544

8 unchanged sentences

Fair value adjustment on other liabilities — 9,498

Equity line of credit expenses — 1,431

Amortization of debt discount and debt issuance costs — 6,172

2 unchanged sentences

Impairment of goodwill, other intangibles and property, plant and equipment — 1,118,524

Provision for doubtful accounts — 5,943

Gain on sale of digital assets ( 2,358 ) ( 25,007 )

3 unchanged sentences

Digital assets 277,823 350,794

Deposits for equipment for sales to customers — 36,953

Deposits for equipment

( 600 ) ( 66,932 )

Prepaid expenses and other current assets ( 10,650 ) 53,832

7 unchanged sentences

Purchases of property, plant and equipment ( 4,516 ) ( 243,755 )

Cash acquired in acquisition — —

Deposits for self-mining equipment — ( 217,677 )

4 unchanged sentences

Cash flows from Financing Activities:

Proceeds from issuance of common stock, net of transaction costs — —

Proceeds from issuance of common stock upon Merger with XPDI, net of transaction costs — 210,534

3 unchanged sentences

Principal payments on debt ( 22,941 ) ( 98,953 )

Payment for transaction costs — —

Net cash (used in) provided by financing activities ( 26,352 ) 268,066

4 unchanged sentences

Cash paid for interest 1,508 69,616

Income tax (refunds) payments ( 336 ) 6,538

Income tax refunds

( 336 ) ( 782 )

Cash paid for reorganization items, net

Supplemental disclosure of noncash investing and financing activities:

4 unchanged sentences

Cashless exercise of warrants — 3,001

Property, plant and equipment obtained in exchange transaction

Property, plant and equipment disposed of through settlements

Purchase of insurance policies financed by short-term note payable

Issuance of notes payable through settlements

Certain prior year amounts have been reclassified for consistency with the current year presentation.

See accompanying notes to unaudited consolidated financial statements.

11 unchanged sentences

completed the acquisition of Blockcap, Inc.

(“Blockcap”), one of Old Core’s largest hosting customers.

Prior to its acquisition, Blockcap had retained Core Scientific Holding Co.

to host in the data centers operated by Core Scientific Holding Co Blockcap’s industrial scale digital asset mining operations.

(“Blockcap”).

Prior to its acquisition, Blockcap was one of Old Core’s largest hosting customers.

On January 19, 2022, following the approval at the special meeting of the stockholders of Power & Digital Infrastructure Acquisition Corp., a Delaware corporation (“XPDI”), Core Scientific Holding Co.

3 unchanged sentences

(“Core Scientific” or the “Company”).

Core Scientific is a best-in-class, large-scale operator of dedicated, purpose-built facilities for digital asset mining and a premier provider of blockchain infrastructure, software solutions and services.

Core Scientific is a best-in-class, large-scale operator of purpose-built facilities for digital asset mining.

We mine digital assets for our own account and provide colocation hosting services for other large-scale miners at our eight operational data centers in Georgia ( 2 ), Kentucky ( 1 ), North Carolina ( 2 ), North Dakota ( 1 ) and Texas ( 2 ).

We began digital asset mining in 2018 and in 2020 became one of the largest North American providers of colocation hosting services for third-party mining customers, at which time we derived almost all our revenue from third-party colocation hosting fees and the resale of digital asset mining machines.

Currently, we derive the majority of our revenue from self-mining bitcoin.

We began digital asset mining in 2018 and in 2020 became one of the largest North American providers of colocation hosting services for third-party mining customers.

We are one of the largest blockchain infrastructure, digital asset mining and colocation hosting provider companies in North America.

As of June 30, 2023, we had approximately 1,500 MW of contracted power capacity at our sites, including 500 MW of power allocated to the Muskogee data center, which remains substantially undeveloped.

As of September 30, 2023, we had approximately 1,500 MW of contracted power capacity at our sites, including 500 MW of power allocated to the Muskogee, Oklahoma data center, which remains substantially undeveloped.

Our hosting colocation business provides a full suite of services to digital asset mining customers.

We provide deployment, monitoring, troubleshooting, optimization and maintenance of our customers’ digital asset mining equipment and provide necessary electrical power and repair and other infrastructure services necessary to operate, maintain and efficiently mine digital assets.

We provide deployment, monitoring, troubleshooting, optimization and maintenance of our customers’ digital asset mining equipment and provide necessary electrical power, repair and other infrastructure services necessary to operate, maintain and efficiently mine digital assets.

We operate in two segments:

“Mining”, consisting of digital asset mining for our own account, and “Hosting”, consisting of our blockchain infrastructure and third-party hosting business.

During 2022, our “Hosting” segment also included sales of mining equipment to customers and was referred to as “Hosting and Equipment Sales”.

Our business strategy is to grow our revenue and profitability by increasing the capacity and efficiency of our self-mining fleet and by enhancing our third-party colocation business.

We intend to strategically develop the infrastructure necessary to support business growth and profitability and take advantage of adjacent opportunities that leverage our mining expertise and capabilities.

Our business strategy is to grow our revenue and profitability by increasing the capacity and efficiency of our self-mining fleet and entering into strategic, revenue-enhancing colocation opportunities with third parties.

We intend to develop the infrastructure necessary to support business growth and profitability and capture adjacent opportunities that leverage our mining infrastructure, expertise and capabilities.

Chapter 11 Filing

4 unchanged sentences

For detailed discussion about the Chapter 11 Cases, refer to Note 3 — Chapter 11 Filing and Other Related Matters.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Refer to the significant accounting policies described in Note 2 — Summary of Significant Accounting Policies to the consolidated financial statements and accompanying notes in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022.

On June 20, 2023 the Debtors filed with the Bankruptcy Court a proposed Joint Chapter 11 Plan of Reorganization of Core Scientific, Inc.

and its Debtor Affiliates and a related proposed form of Disclosure Statement;

(ii) on August 8, 2023, the Amended Joint Chapter 11 Plan of Reorganization of Core Scientific, Inc.

and its Debtor Affiliates and a related Disclosure Statement;

and (iii) on September 7, 2023, the Second Amended Joint Chapter 11 Plan of Reorganization of Core Scientific, Inc.

and its Debtor Affiliates (the “Plan”) and a related Disclosure Statement (the “Disclosure Statement”).

On September 19, 2023, the Debtors, the ad hoc group of the Debtors’ secured convertible notes holders (the “Ad Hoc Noteholder Group”) and the equity committee (the “Equity Committee”) reached an agreement in principle with respect to the

Core Scientific, Inc.

1 unchanged sentence

Notes to Unaudited Consolidated Financial Statements

economic terms of the Plan (the “Mediated Settlement”).

The Debtors, the Ad Hoc Noteholder Group and the Equity Committee will continue to work and negotiate in good faith to document the Mediated Settlement, resolve certain open issues and revise the Plan and Disclosure Statement to incorporate the terms of the Mediated Settlement.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

3 unchanged sentences

However, in our opinion, the disclosures made therein are adequate to make the information presented not misleading.

We believe the unaudited interim financial statements furnished reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.

We believe the unaudited interim financial statements furnished reflect all adjustments which are, in the opinion of management, necessary to present a fair statement of the results for the interim periods presented.

All of these adjustments are of a normal recurring nature.

4 unchanged sentences

Going Concern

The consolidated financial statements have been prepared on a going concern basis.

For the six months ended June 30, 2023, the Company generated a net loss of $ 9.6 million.

The Company had unrestricted cash and cash equivalents of $ 57.6 million as of June 30, 2023, compared to $ 15.9 million as of December 31, 2022.

The increase in cash and cash equivalents for the six months ended June 30, 2023, primarily reflected $ 38.0 million of cash provided by operating activities (including $ 195.5 million of cash provided by changes in operating assets and liabilities), partially offset by $ 2.5 million of cash used in investing activities (including $ 1.8 million of purchases of property, plant and equipment), and by $ 11.0 million of cash used in financing activities.

For the nine months ended September 30, 2023, the Company generated a net loss of $ 50.8 million.

The Company had unrestricted cash and cash equivalents of $ 42.1 million as of September 30, 2023, compared to $ 15.9 million as of December 31, 2022.

The Company has historically generated cash primarily from the issuance of common stock and debt, through sales of digital assets received as digital asset mining revenue and from operations through contracts with customers.

During the six months ended June 30, 2023, the average price of bitcoin was $ 25,470 compared to $ 36,876 for the six months ended June 30, 2022.

This contributed to a decrease in the Company’s mining segment revenue to $ 195.1 million for the six months ended June 30, 2023, as compared to $ 242.8 million for the six months ended June 30, 2022.

In addition, as discussed in Note 8 — Commitments and Contingencies, in July 2022, one of the Company’s largest customers filed for voluntary relief under chapter 11 of the Bankruptcy Code.

This, along with a reduction in the number of hosted miners, contributed to a decrease in the Company’s hosting segment revenue to $ 52.5 million for the six months ended June 30, 2023, as compared to $ 113.6 million for the six months ended June 30, 2022.

These revenue declines were partially offset by a reduction in costs of revenue to $ 178.8 million for the six months ended June 30, 2023, as compared to $ 273.8 million for the six months ended June 30, 2022.

These factors contributed to a decrease in the Company’s gross profit to $ 68.7 million for the six months ended June 30, 2023, as compared to $ 82.7 million for the six months ended June 30, 2022.

As of September 30, 2023, the Company had a total stockholders’ deficit of $ 418.7 million.

The consolidated financial statements have been prepared on a going concern basis.

Our ability to continue as a going concern is contingent upon, among other things, our ability to, subject to the Bankruptcy Court’s approval, implement a Chapter 11 plan of reorganization (the “Plan”), successfully emerge from the Chapter 11 Cases and generate sufficient liquidity from the restructuring to meet our obligations and operating needs.

3 unchanged sentences

In general, as debtors-in-possession under the Bankruptcy Code, we are authorized to continue to operate as an ongoing business but may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court.

Pursuant to certain motions and applications intended to limit the disruption of the bankruptcy proceedings on our operations (the First Day Motions (as defined below)) and other motions filed with the Bankruptcy Court, the Bankruptcy Court has authorized us to conduct our business activities in the ordinary course, including, among other things and subject to the terms and conditions of such orders, authorizing us to obtain DIP financing, pay employee wages and benefits, settle certain de minimis disputes and pay vendors

Pursuant to certain motions and applications intended to limit the disruption of the bankruptcy proceedings on our operations (the First Day Motions (as defined below)) and other motions filed with the Bankruptcy Court throughout the duration of the Chapter 11 Cases, the Bankruptcy Court has authorized us to conduct our business activities in the ordinary course, including, among other things and subject to the terms and conditions of such orders, authorizing us to obtain DIP financing, pay employee wages and benefits, enter into contracts with customers, vendors and suppliers, continue to earn revenue and pay vendors and suppliers in the ordinary course of business.

For detailed discussion about the Chapter 11 Cases, refer to Note 3 — Chapter 11 Filing and Other Related Matters.

Core Scientific, Inc.

1 unchanged sentence

Notes to Unaudited Consolidated Financial Statements

and suppliers in the ordinary course for all goods and services.

For detailed discussion about the Chapter 11 Cases, refer to Note 3 — Chapter 11 Filing and Other Related Matters.

Use of Estimates

The preparation of the Company’s unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period.

Some of the more significant estimates include assumptions used to estimate its ability to continue as a going concern, the valuation of goodwill, intangibles and property, plant and equipment, the fair value of convertible debt, and income taxes.

Some of the more significant estimates include assumptions used to estimate its ability to continue as a going concern, the valuation of the Company’s common shares and the determination of the grant date fair value of stock-based compensation awards for periods prior to the Merger, the valuation of digital assets, goodwill, other intangible assets and property, plant and equipment, the fair value of convertible debt, derivative warrants, and income taxes.

These estimates are based on information available as of the date of the financial statements;

2 unchanged sentences

Cash and cash equivalents include all cash balances and highly liquid investments with original maturities of three months or less from the date of acquisition.

As of June 30, 2023 and December 31, 2022, cash equivalents included $ 43.3 million and $ 10.2 million, respectively, of highly liquid money market funds which are classified as Level 1 within the fair value hierarchy.

As of September 30, 2023 and December 31, 2022, cash equivalents included $ 34.1 million and $ 10.2 million, respectively, of highly liquid money market funds which are classified as Level 1 within the fair value hierarchy.

Restricted cash consists of cash held in escrow under the Original DIP Credit Agreement (as defined below) and in escrow to pay for construction and development activities.

As of June 30, 2023 and December 31, 2022, restricted cash of $ 19.2 million and $ 36.4 million, respectively, consisted of cash held in escrow under the Original DIP Credit Agreement.

As of September 30, 2023 and December 31, 2022, the Company had restricted cash of $ 21.8 million and $ 36.4 million, respectively.

Accounts Receivable and Allowance for Doubtful Accounts

7 unchanged sentences

Recoveries of financial assets previously written off are recorded when received.

For the six months ended June 30, 2023 and 2022, the Company did not record any credit losses or recoveries.

Based on the Company’s current and historical collection experience, the Company recorded an allowance for doubtful accounts of $ 8.7 million as of June 30, 2023 and December 31, 2022.

Performance Obligations

For the nine months ended September 30, 2023 and 2022, the Company did not record any credit losses or recoveries.

Based on the Company’s current and historical collection experience, the Company recorded an allowance for doubtful accounts of $ 8.7 million as of September 30, 2023 and December 31, 2022.

Performance Obligations - Hosting Segment

The Company’s performance obligations relate to hosting services, which are described below.

The Company has performance obligations associated with commitments in customer hosting contracts for future services that have not yet been recognized in the financial statements.

For contracts with original terms that exceed one year (typically ranging from 18 to 48 months), those commitments not yet recognized as of June 30, 2023 and December 31, 2022, were $ 116.9 million and $ 159.6 million, respectively.

For contracts with original terms that exceed one year (typically ranging from 15 to 48 months), those commitments not yet recognized as of September 30, 2023 and December 31, 2022, were $ 100.8 million and $ 159.6 million, respectively.

Deferred Revenue

The Company records contract liabilities in Deferred revenue and Other non-current liabilities on the Company’s Consolidated Balance Sheets when cash payments are received in advance of performance and recognizes them as revenue when the performance obligations are satisfied.

The Company’s current and non-current deferred revenue balance as of June 30, 2023 and December 31, 2022, was $ 66.2 million and $ 80.4 million, respectively, all from advance payments received during the periods then ended.

In the three and six months ended June 30, 2023, the Company recognized $ 14.3 million and $ 25.9 million of revenue, respectively, that was included in the deferred revenue balance as of the beginning of the year.

The Company’s total deferred revenue balance as of September 30, 2023 and December 31, 2022, was $ 64.3 million and $ 80.4 million, respectively, all from advance payments received during the periods then ended.

In the three and nine months ended September 30, 2023, the Company recognized $ 2.7 million and $ 20.5 million of revenue, respectively, that was included in the deferred revenue balance as of the beginning of the year.

Core Scientific, Inc.

1 unchanged sentence

Notes to Unaudited Consolidated Financial Statements

In the three and six months ended June 30, 2022, the Company recognized $ 3.9 million and $ 40.7 million of revenue, respectively, that was included in the deferred revenue balance as of the beginning of the year.

In the three and nine months ended September 30, 2022, the Company recognized $ 30.9 million and $ 79.6 million of revenue, respectively, that was included in the deferred revenue balance as of the beginning of the year.

Advanced payments for hosting services are typically recognized in the following month and are generally recognized within one year.

11 unchanged sentences

The Debtors filed various “first day” motions with the Bankruptcy Court requesting customary relief, which were generally approved by the Bankruptcy Court on December 22, 2022, that have enabled the Company to operate in the ordinary course while under Chapter 11 protection.

On June 20, 2023 the Debtors filed with the Bankruptcy Court a proposed Joint Chapter 11 Plan of Reorganization of Core Scientific, Inc.

and its Debtor Affiliates and a related proposed form of Disclosure Statement;

(ii) on August 8, 2023, the Amended Joint Chapter 11 Plan of Reorganization of Core Scientific, Inc.

and its Debtor Affiliates and a related Disclosure Statement;

and (iii) on September 7, 2023, the Second Amended Joint Chapter 11 Plan of Reorganization of Core Scientific, Inc.

and its Debtor Affiliates and a related Disclosure Statement.

Original DIP Credit Agreement and Restructuring Support Agreement

2 unchanged sentences

(as successor of Core Scientific Holding Co.), the guarantors party thereto from time to time, U.S.

Bank National Association, as note agent and collateral agent, and the purchasers of the notes issued thereunder (the “Secured Convertible Notes”), and (ii) the Convertible Note Purchase Agreement, dated as of August 20, 2021, (as amended, restated, amended and restated, supplemented or otherwise modified from time to time), by and among Core Scientific, Inc.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

Scientific, Inc.

(as successor of Core Scientific Holding Co.), the guarantors party thereto from time to time, U.S.

2 unchanged sentences

The Company terminated the Restructuring Support Agreement pursuant to a “fiduciary out” which permitted the Company to pursue better alternatives.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

Replacement DIP Credit Agreement

16 unchanged sentences

On March 1, 2023, the Bankruptcy Court entered an order approving the Replacement DIP Facility on a final basis and the terms under which the Debtors are authorized to use the cash collateral of the holders of their convertible notes (the “Final DIP Order”).

On July 4, 2023, the Debtors, the Administrative Agents and the Replacement DIP Lender entered into the First Amendment to the Replacement DIP Credit Credit Agreement (the “First Amendment”).

For detailed discussion about the First Amendment, refer to Note 15 — Subsequent Events.

On July 4, 2023, the Debtors, the Administrative Agents and the Replacement DIP Lender entered into the First Amendment to the Replacement DIP Credit Agreement.

For detailed discussion about the First Amendment, refer to Note 5 — Notes Payable.

NYDIG Settlement

On February 26, 2023, the Bankruptcy Court entered an order (the “NYDIG Order”), whereby the Debtors and NYDIG agree that the Debtors would transfer the miners serving as collateral under the NYDIG Loan back to NYDIG over a period of several months in exchange for the full extinguishment of the NYDIG Loan.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

months in exchange for the full extinguishment of the NYDIG Loan.

The final shipment of miners serving as collateral under the NYDIG loan occurred during the quarter ended March 31, 2023, after which the NYDIG Loan was extinguished in full and the Company recorded a $ 20.8 million gain on extinguishment of debt in the Company’s Consolidated Statements of Operations.

3 unchanged sentences

The claim was deemed paid and fully satisfied by transfer of specific equipment from the Debtors to Priority Power on the date of the Priority Power Order, thereby releasing all Priority Power liens.

The satisfaction

The satisfaction of the obligation and transfer of the equipment is a noncash transaction which occurred during the quarter ended March 31, 2023, and resulted in a gain of $ 4.9 million recorded to Reorganization items, net in the Consolidated Statements of Operations for the nine months ended September 30, 2023.

City of Denton Lease Settlement

On August 16, 2023, the Bankruptcy Court entered an order (the “City of Denton Order”), approving the parties agreement to settle all claims of City of Denton and Denton Municipal Electric (“Denton”) against the Debtors and releasing any and all liens related to the Debtor’s lease of the Denton facility in exchange for Debtors execution lease cure costs totaling $ 1.5 million.

The satisfaction of the settlement resulted in a loss of $ 1.5 million recorded to Reorganization items, net in the Consolidated Statements of Operations for the three months ended September 30, 2023.

Huband-Mantor Construction Settlement

On August 18, 2023, the Bankruptcy Court entered an order (the “HMC Order”), approving the parties agreement to settle all claims of Huband-Mantor Construction (“HMC”) and its subcontractors against the Debtors and releasing any and all liens in favor of HMC and its subcontractors in exchange for Debtors payment of $ 2 million and the Debtors execution of a promissory note in favor of HMC in the principal amount of $ 15.5 million.

The promissory note is secured by a mortgage of the Debtors Cottonwood 1 facility in Texas.

The satisfaction of the settlement resulted in a loss of $ 8.3 million recorded to Reorganization items, net in the Consolidated Statements of Operations for the three months ended September 30, 2023.

See Note 5 — Notes Payable for further discussion of the promissory note.

Celsius Mining LLC Settlement

On September 14, 2023, the Debtors and Celsius entered into a purchase and sale agreement (the “PSA”) that provides in addition to a full mutual release of claims asserted against each party in the respective bankruptcy cases for a cash payment by Celsius to the Company of $ 14.0 million and a full and final release of all claims of Celsius against the Debtors related to the Celsius Contracts, in exchange for the Debtors, (i) sale to Celsius of the Debtor’s Ward County, Texas bitcoin mining data center site (the “Cedarvale Facility”) and certain related assets, (ii) grant to Celsius of a perpetual, non-transferable (except as described in Section 14 of the PSA), non-exclusive limited license to use identified Company intellectual property solely as and to the extent necessary to (x) finish construction and development of the Cedarvale Facility, (y) develop and construct other mining facilities on other properties owned or leased by Celsius similar in type and scope to the Cedarvale Facility, and (z) operate all of the foregoing, (iii) assumption and assignment to Celsius of certain executory contracts.

In connection with the PSA the parties released and (iv) unequivocally release claims against Celsius asserted by the Company in connection with the Celsius Chapter 11 Cases and the Company’s Chapter 11 Cases.

On November 2, 2023, the Company received the payment of $ 14.0 million from Celsius in connection with the PSA.

As of September 30, 2023, there were $ 36.1 million of assets held for sale on the Company’s Consolidated Balance Sheets related to the sale of the Cedarvale Facility.

Refer to Note 8 — Commitments and Contingencies for further discussion of the sale.

ACM ELF ST LLC Lease Settlement

In September 2023, the Company entered into a $ 7.2 million equipment finance agreement with ACM ELF ST LLC in settlement and satisfaction of a previous equipment finance agreement which resulted in a gain of $ 5.0 million recorded to Reorganization items, net in the Consolidated Statements of Operations for the three months ended September 30, 2023.

See Note 5 — Notes Payable for further discussion of the promissory note.

Core Scientific, Inc.

1 unchanged sentence

Notes to Unaudited Consolidated Financial Statements

of the obligation and transfer of the equipment is a noncash transaction which occurred during the quarter ended March 31, 2023, and did not result in any gain or loss as of June 30, 2023.

Didado Electric, LLC Settlement

On October 2, 2023, the Bankruptcy Court entered an order (the “J.W.

Didado Order”), approving the parties agreement to settle all claims of W.

Didado Electric, LLC (“Didado”) against the Debtors and releasing any and all liens related to the Debtor’s Muskogee datacenter in exchange for Debtors execution of an unsecured promissory note in favor of Didado in the principal amount of $ 13 million to be paid over 36 months upon emergence of bankruptcy.

Reorganization items, net and Liabilities Subject to Compromise

14 unchanged sentences

Any damages resulting from the rejection of executory contracts and unexpired leases are treated as general unsecured claims.

While the Chapter 11 Cases are pending, the Debtors do not anticipate making interest payments due under their pre-petition debt instruments pursuant to the protection under the Plan.

The contractual interest expense pursuant to our pre-petition debt instruments that was not recognized in our consolidated statements of operations was $ 19.2 million and $ 60.7 million for the three and nine months ended September 30, 2023, respectively.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

Reorganization items, net incurred as a result of the Chapter 11 Cases presented separately in the accompanying Consolidated Statements of Operations were as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

Professional fees and other bankruptcy related costs $ 25,113 $ 62,970

Settlements with creditors:

Priority Power

( 4,878 ) ( 4,878 )

ACM ELF ST LLC Lease

( 5,003 ) ( 5,003 )

Huband-Mantor Construction

Total settlements with creditors

( 61 ) ( 61 )

Debtor-in-possession financing costs 3,204 15,361

1 unchanged sentence

The Company has incurred and continues to incur significant costs associated with the reorganization, primarily debtor-in-possession financing costs and legal and professional fees, which were classified as Reorganization items, net subsequent to our petition.

The accompanying Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 include amounts classified as Liabilities subject to compromise, which represent liabilities the Company anticipates will be allowed as claims in the Chapter 11 Cases.

The accompanying Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022 include amounts classified as Liabilities subject to compromise, which represent liabilities the Company anticipates will be allowed as claims in the Chapter 11 Cases.

These amounts represent the Company's current estimate of known or potential obligations to be resolved in connection with the Chapter 11 Cases and may differ from actual future settlement amounts paid.

Differences between liabilities estimated and claims filed, or to be filed, will be investigated and resolved in connection with the claims resolution process.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

Liabilities subject to compromise consisted of the following (in thousands):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Accounts payable $ 33,278 $ 20,908

7 unchanged sentences

Liabilities subject to compromise $ 93,853 $ 1,027,313

Determination of the value at which liabilities will ultimately be settled cannot be made until the Plan becomes effective and the Company emerges from bankruptcy.

Pre-petition unsecured claims, and secured claims which ultimately may be determined to be impaired during the bankruptcy process and therefor subject to compromise, have been classified as Liabilities subject to compromise.

During the quarter ended September 30, 2023, improvements in the Company’s condition and other developments indicated that secured claims which were initially considered subject to compromise at the beginning of the bankruptcy process and at December 31, 2022, were no longer likely to be subject to compromise as of September 30, 2023.

This determination is the primary reason for the decrease in the Liabilities subject to compromise balance, with Court approved settlements contributing nominally to the reductions.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

Final determination of the value at which liabilities will ultimately be settled cannot be made until the Plan becomes effective and the Company emerges from bankruptcy.

The Company will continue to evaluate and adjust the amount and classification of its pre-petition liabilities.

2 unchanged sentences

DIGITAL ASSETS

Activity related to our digital asset balances for the six months ended June 30, 2023 and 2022 was as follows (in thousands):

June 30, 2023 June 30, 2022

Activity related to our digital asset balances for the nine months ended September 30, 2023 and 2022 was as follows (in thousands):

September 30, 2023 September 30, 2022

Digital assets, beginning of period $ 724 $ 234,298

7 unchanged sentences

Digital assets, end of period $ 559 $ 19,663

* As of June 30, 2023, there was $ 1.0 million of digital asset receivable included in prepaid expenses and other current assets on the consolidated balance sheets.

* As of September 30, 2023, there was $ 0.9 million of digital asset receivable included in prepaid expenses and other current assets on the consolidated balance sheets.

Digital assets are available to be sold as a source of funds, if needed, for current operations and are classified as current assets on the Company’s Consolidated Balance Sheets.

The Company had total digital assets of $ 0.3 million and $ 0.7 million, at June 30, 2023 and December 31, 2022, respectively.

The Company had total digital assets of $ 0.6 million and $ 0.7 million, at September 30, 2023 and December 31, 2022, respectively.

The Company does not have any off-balance sheet holdings of digital assets.

1 unchanged sentence

The commencement of the Chapter 11 Cases constituted an event of default under certain of the Company's debt agreements.

Accordingly, all debt not reclassified as liabilities subject to compromise with original long-term stated maturities was classified as current on the Company’s Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022.

However, any efforts to enforce payment obligations under the debt instruments are automatically stayed as a result of the Chapter 11 Cases and the creditors' rights in respect of the debt instruments are subject to the applicable provisions of the Bankruptcy Code.

Any efforts to enforce payment obligations under the debt instruments are automatically stayed as a result of the Chapter 11 Cases and the creditors' rights in respect of the debt instruments are subject to the applicable provisions of the Bankruptcy Code.

See Note 3 — Chapter 11 Filing and Other Related Matters for further information.

The stay applies to the ability of creditors to demand accelerated payments under default provisions, as a result, the Company continues to classify its notes and leases, not subject to compromise, according to the original payment schedules.

Core Scientific, Inc.

1 unchanged sentence

Notes to Unaudited Consolidated Financial Statements

Notes payable as of June 30, 2023 and December 31, 2022, consist of the following (in thousands):

Interest Rates Maturities June 30, 2023 December 31, 2022

Notes payable as of September 30, 2023 and December 31, 2022, consist of the following (in thousands):

Stated Interest Rate

Effective Interest Rates

Maturities September 30, 2023 December 31, 2022

Kentucky note 5.0 % 5.0 % 2023 $ 529 $ 529

NYDIG loan 11.0 % - 15.0 %

11.0 % - 17.0 %

Various — 38,573

4 unchanged sentences

10.1 % - 13.1 %

2023 53,913 53,913

Anchor Labs loan 12.5 % 12.5 % 2024 25,159 25,159

Mass Mutual Barings loans 9.8 % - 13.0 %

9.8 % - 13.0 %

2025 63,844 63,844

Riley Bridge Notes 7.0 % 7.0 % 2023 41,777 41,777

8 unchanged sentences

10.0 % 10.0 % 2023 17,848 —

HMC loan — 15.0 % 2026

ACM financing — 15.0 % 2025

First Insurance loan — 7.6 % 2024

Other 2,618 2,960

2 unchanged sentences

41,775 844,695

Unamortized discount and debt issuance costs 6

Fair value adjustment on convertible notes 7

— ( 808,148 )

Unamortized discount and debt issuance costs - post-petition

Total notes payable, net 807,880 36,242

current maturities

128,321 36,242

Notes payable, net of current portion

$ 679,559 $ —

1 Secured Convertible Notes includes principal balance at issuance and PIK interest.

2 unchanged sentences

4 Replacement DIP Credit Agreement, see Note 3 - Chapter 11 Filing and Other Related Matters for further information.

5 In connection with the Company's Chapter 11 Cases, $ 805.9 million and $ 844.7 million of outstanding notes payable have been reclassified to Liabilities subject to compromise in the Company's Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022, respectively, at their expected allowed amount.

5 In connection with the Company's Chapter 11 Cases, $ 41.8 million and $ 844.7 million of outstanding notes payable have been reclassified to Liabilities subject to compromise in the Company's Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022, respectively, at their expected allowed amount.

Up to the Petition Date, the Company continued to accrue interest expense in relation to these reclassified debt instruments.

As of June 30, 2023 and December 31, 2022, $ 12.5 million and $ 12.6 million, respectively, of accrued interest was classified as Liabilities subject to compromise.

As of September 30, 2023 and December 31, 2022, $ 0.7 million and $ 12.6 million, respectively, of accrued interest was classified as Liabilities subject to compromise.

HMC Loan - In August 2023, in addition to a cash payment of $ 2 million, the Company entered into a $ 15.5 million secured promissory note agreement with Huband-Mantor Construction, Inc (the “HMC loan”) in connection with its settlement and release from all claims.

The note bears interest at a contractual rate per annum of 0 % and has a term of 36 months from issuance, The Company is required to make monthly payments of principal and interest.

Interest expense on the note has been recognized based on an effective interest rate of 15.0 %.

The loan is secured by a security interest in the underlying property leased.

ACM Financing - In September 2023, the Company entered into a $ 7.2 million equipment finance agreement with ACM ELF ST LLC (the “ACM Loan”) in settlement and satisfaction of a previous equipment finance agreement.

The finance agreement has a term of 26 months from issuance.

Interest expense on the finance agreement has been recognized based on an effective rate of 15.0 %.

The finance agreement is secured by a security interest in the underlying equipment.

First Insurance Loan - In August 2023, the Company entered into an unsecured $ 5.0 million Insurance Premium Financing Agreement with First Insurance Funding, a Division of Lake Forest Bank & Trust Company (the “First Insurance loan”) to finance the

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

renewal premium of property insurance policies.

Under the agreement, a down payment was paid in the amount of $ 2.1 million, and the Company will pay the balance in eight monthly installments commencing on September 24, 2023.

The contractual annual percentage interest rate is 0 %.

Interest expense on the note has been recognized based on an effective interest rate of 7.6 %

On July 4, 2023, the Debtors, the Administrative Agent and the Replacement DIP Lenders entered into a First Amendment to the Replacement DIP Credit Agreement (the “First Amendment”).

The First Amendment, among other things, provides (i) that the Debtors may make certain transfers or payments in connection with settlements of certain third-party claims as described in the First Amendment and (ii) for a reduction in the excess cash threshold amount to the sum of $ 40.0 million and an amount (which shall not be less than zero ) equal to $ 5.0 million less the amount of any payments on account of prepetition claims, liens or cure costs made by any Obligor after June 30, 2023.

This excess cash threshold amount reduction resulted in the Debtors making an additional $ 6.2 million mandatory prepayment under the Replacement DIP Credit Agreement on July 7, 2023.

As discussed in Note 3 — Chapter 11 Filing and Other Related Matters, under the NYDIG Order, the final shipment of miners that served as collateral under the NYDIG loan occurred during the quarter ended March 31, 2023, after which the NYDIG Loan was extinguished in full and the Company recorded a $ 20.8 million Gain on extinguishment of debt in the Company’s Consolidated Statements of Operations.

The principal amount of the Convertible Notes as of June 30, 2023, reflects the proceeds received plus any PIK interest added to the principal balance of the notes.

The principal amount of the Convertible Notes as of September 30, 2023, reflects the proceeds received plus any PIK interest added to the principal balance of the notes.

Upon the closing of the merger agreement with XPDI in January 2022, the conversion price for the Convertible Notes became fixed at 80 % of the financing price ($ 8.00 per share of common stock) and the holders now have the right to convert at any time until maturity.

2 unchanged sentences

In addition, at any time (both before and after the merger with XPDI), the Company has the right to prepay the Convertible Notes at the minimum payoff of two times the outstanding principal amount plus accrued interest.

All of the Convertible Notes, totaling $ 560.0 million as of June 30, 2023, are scheduled to mature on April 19, 2025, which includes $ 237.6 million for the principal amount of the Secured Convertible Notes which have payoff at maturity of two times the principal amount of the note plus accrued interest.

The total amount that would be owed on the Secured Convertible Notes outstanding as of June 30, 2023, if held to maturity was $ 475.2 million.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

All of the Convertible Notes, totaling $ 560.0 million as of September 30, 2023, are scheduled to mature on April 19, 2025, which includes $ 237.6 million for the principal amount of the Secured Convertible Notes which have payoff at maturity of two times the principal amount of the note plus accrued interest.

The total amount that would be owed on the Secured Convertible Notes outstanding as of September 30, 2023, if held to maturity was $ 475.2 million.

FAIR VALUE MEASUREMENTS

The Company measures certain assets and liabilities at fair value on a recurring or non-recurring basis in certain circumstances.

Fair value is defined as the price 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.

To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants.

These valuations require significant judgment.

The Company uses observable market data when determining fair value whenever possible and relies on unobservable inputs only when observable market data is not available.

Level 3 Recurring Fair Value Measurements

1 unchanged sentence

All transfers into and out of Level 3 are assumed to occur at the beginning of the quarterly reporting period in which they occur.

As of June 30, 2023 and December 31, 2022, there were no Level 3 financial instruments.

As of September 30, 2023 and December 31, 2022, there were no Level 3 financial instruments.

Nonrecurring fair value measurements

2 unchanged sentences

Refer to Note 2 — Summary of Significant Accounting Policies, for more information regarding fair value considerations when measuring impairment.

No non-financial assets were classified as Level 3 as of June 30, 2023, or December 31, 2022.

No non-financial assets were classified as Level 3 as of September 30, 2023, or December 31, 2022.

Fair value of financial instruments

The Company’s financial instruments include cash and cash equivalents, restricted cash, accounts receivable, net, accounts payable, notes payable and certain accrued expenses and other current liabilities.

The Company’s financial instruments include cash and cash equivalents, restricted cash, accounts receivable, net, accounts payable, notes payable and certain accrued expenses and other liabilities.

The carrying amount of these financial instruments, other than notes payable discussed below, approximates fair value due to the short-term nature of these instruments.

The fair value of the Company’s notes payable (excluding the Convertible Notes carried at fair value described above and the expected allowed amount transferred to Liabilities subject to compromise), which are carried at amortized cost, was determined based on a discounted cash flow approach using market interest rates of instruments with similar terms and maturities and an estimate for our standalone credit risk.

The Company has entered into non-cancellable operating and finance leases for office, data facilities, computer and networking equipment, electrical infrastructure and office equipment, with original lease periods expiring through 2033.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

In addition, certain leases contain bargain renewal options extending through 2051.

4 unchanged sentences

For certain leases, the Company receives lease incentives, such as tenant improvement allowances, and records those as adjustments to operating lease right-of-use assets and operating lease liabilities on the Company’s Consolidated Balance Sheets and amortizes the lease incentives on a straight-line basis over the lease term as an adjustment to rent expense.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

The components of operating and finance leases are presented on the Company’s Consolidated Balance Sheets as follows (in thousands):

Financial statement line item June 30, 2023 December 31, 2022

Financial statement line item September 30, 2023 December 31, 2022

Operating lease right-of-use assets Operating lease right-of-use assets $ 6,583 $ 20,430

7 unchanged sentences

of current portion $ 1,047 $ 720

Finance lease liabilities, current portion Finance lease liabilities, current portion $ 19,833 $ —

Finance lease liabilities, net of

current portion Finance lease liabilities, net of current portion $ 35,909 $ —

Operating and finance lease liabilities subject to compromise Liabilities subject to compromise $ — $ 84,664

1 unchanged sentence

The components of lease expense were as follows (in thousands):

Three Months Ended June 30,

Three Months Ended September 30,

Financial statement line item 2023 2022

6 unchanged sentences

Total lease expense $ 3,584 $ 12,102

Six Months Ended June 30,

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

Nine Months Ended September 30,

Financial statement line item 2023 2022

9 unchanged sentences

Determining our incremental borrowing rate, especially if there are insufficient observable borrowings near the time of lease commencement, may require significant judgment.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

Information relating to the lease term and discount rate is as follows:

June 30, 2023 June 30, 2022

September 30, 2023 September 30, 2022

Weighted Average Remaining Lease Term (Years)

4 unchanged sentences

Finance leases 12.9 % 12.7 %

The following tables summarizes the Company’s supplemental cash flow information (in thousands):

Three Months Ended June 30,

Lease Payments

Operating lease payments $ 261 $ 101

Finance lease payments $ 1,168 $ 15,169

Supplemental Noncash Information

Finance lease right-of-use assets obtained in exchange for lease obligations $ — $ —

Six Months Ended June 30,

The following tables summarize the Company’s supplemental cash flow information (in thousands):

Nine Months Ended September 30,

Lease Payments

2 unchanged sentences

Supplemental Noncash Information

Finance lease right-of-use assets obtained in exchange for lease obligations $ — $ 10,557

The Company’s minimum payments under noncancelable operating and finance leases having initial terms and bargain renewal periods in excess of one year are as follows at June 30, 2023, and thereafter (in thousands):

Operating lease right-of-use assets obtained in exchange for lease obligations 1

(Decrease) increase in finance lease right-of-use assets as a result of lease modification

$ ( 11,644 ) $ 693

Decrease in ROU related due to termination $ 13,144 $ —

Decrease in lease liability due to termination $ ( 13,517 ) $ —

1 Includes operating lease right-of-use assets of $ 6.7 million that were recorded upon adoption of Topic 842 on January 1, 2022.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

The Company’s minimum payments under noncancelable operating and finance leases having initial terms and bargain renewal periods in excess of one year are as follows at September 30, 2023, and thereafter (in thousands):

Operating leases Finance leases

5 unchanged sentences

imputed interest 952 3,247

Liabilities subject to compromise 13,475 68,536

Total $ 1,252 $ 55,742

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

Balance Sheet Classification

2 unchanged sentences

Remedies available under these debt facilities are stayed while the Company is under Chapter 11 protections.

The Company has classified all of its finance lease liabilities as Liabilities subject to compromise as of June 30, 2023 and December 31, 2022.

COMMITMENTS AND CONTINGENCIES

7 unchanged sentences

Notwithstanding the general application of the automatic stay described above, governmental authorities may determine to continue actions brought under their police and regulatory powers.

In July 2022, one of the Company’s largest customers, Celsius Mining LLC (“Celsius”), along with its parent company and certain affiliates, filed for voluntary relief under Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court for the Southern District of New York.

On September 28, 2022, Celsius filed a motion in the Chapter 11 case alleging that the Company is violating the automatic stay with respect to the Master Services Agreement between Celsius and the Company (the “Celsius Agreement”).

Celsius is also using its Chapter 11 proceeding to withhold payment of certain charges billed to Celsius pursuant to the Celsius Agreement.

The Company strongly disagrees with the allegations made in the Celsius motion and the interpretation of the Celsius Agreement espoused therein and is vigorously defending its interests, including seeking resolution from the bankruptcy court and payment of any outstanding amounts owed under the Celsius Agreement (subject to applicable bankruptcy law in the Celsius Chapter 11 case).

The parties agreed to stay the proceedings indefinitely and on December 8, 2022, the Company terminated the Celsius Agreement.

The Bankruptcy Court approved the Company’s motion to reject the Celsius Agreement on January 4, 2023.

Celsius has filed a proof of claim for damages for breach of the Celsius Agreement.

An adverse ruling by the bankruptcy court with respect to Celsius’ allegations would have a material effect on the Company’s business, financial condition, results of operations and cash flows.

As of June 30, 2023, the Company had accrued $ 8.7 million as an allowance against amounts due from Celsius.

Celsius filed the Celsius Chapter 11 Cases in the United States Bankruptcy Court for the Southern District of New York under the Bankruptcy Code.

Celsius was one of the Company’s largest host-mining customers in July 2022.

Prior to the Celsius Chapter 11 Cases, Celsius paid the Company certain PPT Charges invoiced to Celsius pursuant to the Master Services Agreements between Celsius and the Company (the “Celsius Contracts”).

After commencing the Celsius Chapter 11 Cases, Celsius refused to pay all PPT Charges the Company invoiced to Celsius;

Celsius and the Company filed competing motions, pleadings, and proofs of claims and engaged in protracted litigation, discovery, and mediation.

On September 14, 2023, the Debtors and Celsius entered into a PSA that provides in addition to a full mutual release of claims asserted against each party in the respective bankruptcy cases for a cash payment by Celsius to the Company of $ 14.0 million and a full and final release of all claims of Celsius against the Debtors related to the Celsius Contracts, in exchange for the Debtors, (i) sale to Celsius of the Debtor’s Cedarvale Facility and certain related assets, (ii) grant to Celsius of a perpetual, non-transferable (except as described in Section 14 of the PSA), non-exclusive limited license to use identified Company intellectual property solely as and to the extent necessary to (x) finish construction and development of the Cedarvale Facility, (y) develop and construct other mining facilities

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

on other properties owned or leased by Celsius similar in type and scope to the Cedarvale Facility, and (z) operate all of the foregoing, (iii) assumption and assignment to Celsius of certain executory contracts,.

On November 2, 2023, the Company received the payment of $ 14.0 million from Celsius in connection with the PSA.

In November 2022, Sphere 3D Corp.

1 unchanged sentence

The arbitration demand alleges that the Company has failed to provide contracted for services and to return prepayments allegedly made by Sphere 3D for such services.

The Company denies the allegations contained in Sphere 3D’s arbitration demand and intends to vigorously defend its interests.

The arbitration demand was stayed by the filing of the Company Parties’ Chapter 11 Cases.

Refer to the discussion contained within this footnote under the subtitle “Effect of Automatic Stay.”

In April 2023, Sphere 3D Corp.

filed a proof of claim against the Debtors in the Chapter 11 Cases alleging a claim for approximately $ 39.5 million allegedly pursuant to a contract for services as to which the Debtors were allegedly a party and failed to perform and other claims related thereto.

The Debtors have objected to Sphere 3D Corp.’s proof of claim and intends to contest the entirety of the claim in the Chapter 11 Cases.

A hearing on the matter is expected during the first quarter of 2024.

In November 2022, McCarthy Building Companies, Inc.

1 unchanged sentence

The case has been stayed as a result of the Company’s filing of a petition for relief under chapter 11 of the United States Bankruptcy Code.

In November 2022, plaintiff Mei Peng filed a putative class action in the United States District Court, Western District of Texas, Austin Division, asserting that the Company violated the Securities Exchange Act of 1934, as amended, by failing to disclose to investors, among other things, that the Company was vulnerable to litigation, that certain clients had breached their agreements, and

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

that this impacted the Company's profitability and ability to continue as a going concern.

In November 2022, plaintiff Mei Peng filed a putative class action (the “Putative Class Action”) in the United States District Court, Western District of Texas, Austin Division, asserting that the Company violated the Securities Exchange Act of 1934, as amended, by failing to disclose to investors, among other things, that the Company was vulnerable to litigation, that certain clients had breached their agreements, and that this impacted the Company's profitability and ability to continue as a going concern.

On May 5, 2023, plaintiff filed an amended complaint removing the Company as a defendant and asserting that certain officers, directors and former officers and directors of the Company violated the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended, as a result of allegedly false and misleading statements regarding the business of the Company.

As of June 30, 2023 and December 31, 2022, there were no other material loss contingency accruals for legal matters.

In April 2023, the lead plaintiff in the matter filed a proof of claim related to the Putative Class Action filed against the Debtors in the Chapter 11 Cases and in August 2023 filed an amended proof of claim to reflect an amendment to the Putative Class Action reserving the right to add Core Scientific as a defendant following the conclusion of the Chapter 11 Cases.

In September the lead plaintiff filed a motion with the Bankruptcy Court requesting the grant of (i) class treatment, (ii) certification of the class for purposes of its class proof of claim, and (iii) other relief.

The Debtors timely filed its objection and support objecting to the relief requested and the stated basis for the relief requested.

In September 2023 Harlin Dean filed a proof of claim against the Debtors in the Chapter 11 Cases seeking to recover approximately $ 8 million in severance pay and hypothetical proceeds from the sale of Company stock allegedly due following his resignation from the Company in 2022.

The Debtors timely filed an objection to Mr.

Dean’s proof of claim denying any obligation to Mr.

Dean resulting from his resignation of employment and requesting disallowance of the proof of claim.

In October 2023, Mr.

Dean filed a Motion for Summary Judgment with respect to his claims.

The Debtors intend to respond timely to the motion and vigorously contest the claims.

As of September 30, 2023 and December 31, 2022, there were no other material loss contingency accruals for legal matters.

Leases —See Note 7 — Leases for further information.

STOCKHOLDERS' DEFICIT

Stock-Based Compensation

Stock-based compensation expense relates primarily to expense for restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and stock options.

As of June 30, 2023, we had unvested or unexercised stock-based awards outstanding representing approximately 62.0 million shares of our common stock, consisting of approximately 39.9 million RSAs and RSUs with a weighted average per share fair value of $ 2.84 , and options to purchase approximately 22.0 million shares of our common stock with a weighted average exercise price of $ 8.81 .

During the three and six months ended June 30, 2023, the Company did not grant any stock options, RSUs or RSAs.

During the three and six months ended June 30, 2023, 0.7 million and 1.9 million stock options were cancelled, respectively, and 0.5 million and 5.3 million RSAs and RSUs were forfeited, respectively.

Stock-based compensation expense for the three and six months ended June 30, 2023 and 2022, is included in the Company’s Consolidated Statements of Operations as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

As of September 30, 2023, we had unvested or unexercised stock-based awards outstanding representing approximately 60.7 million shares of our common stock, consisting of approximately 38.6 million RSAs and RSUs with a weighted

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

average per share fair value of $ 2.74 , and options to purchase approximately 22.0 million shares of our common stock with a weighted average exercise price of $ 8.81 .

During the three and nine months ended September 30, 2023, the Company did not grant any stock options, RSUs or RSAs.

During the three and nine months ended September 30, 2023, nil and 1.9 million stock options were cancelled, respectively, and 1.3 million and 6.6 million RSAs and RSUs were forfeited, respectively.

Stock-based compensation expense for the three and nine months ended September 30, 2023 and 2022, is included in the Company’s Consolidated Statements of Operations as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

3 unchanged sentences

General and administrative 1,2

12,507 20,897 35,102 114,122

Total stock-based compensation expense 1,2

As of June 30, 2023, total unrecognized stock-based compensation expense related to unvested stock options was approximately $ 69.4 million, which is expected to be recognized over a weighted average time period of 2.6 years.

As of June 30, 2023, the Company had approximately $ 56.8 million of unrecognized stock-based compensation expense related to RSAs and RSUs, which is expected to be recognized over a weighted average time period of 2.5 years, and an additional $ 15.8 million of unrecognized stock-based compensation expense related to RSUs for which some or all of the requisite service had been provided under the service conditions but had performance conditions that had not yet been achieved.

$ 14,861 $ 29,753 $ 41,414 $ 166,548

1 Includes $( 0.1 ) million and $ 0.6 million that was recorded as an adjustment to accrued expenses and other within total current liabilities during the three and nine months ended September 30, 2022, respectively.

2 Includes $ 1.0 million of stock-based compensation that were provided in severance as part of restructuring charges incurred during the three and nine months ended September 30, 2022.

As of September 30, 2023, total unrecognized stock-based compensation expense related to unvested stock options was approximately $ 62.6 million, which is expected to be recognized over a weighted average time period of 2.3 years.

As of September 30, 2023, the Company had approximately $ 50.8 million of unrecognized stock-based compensation expense related to RSAs and RSUs, which is expected to be recognized over a weighted average time period of 2.3 years, and an additional $ 13.1 million of unrecognized stock-based compensation expense related to RSUs for which some or all of the requisite service had been provided under the service conditions but had performance conditions that had not yet been achieved .

Current income tax expense represents the amount expected to be reported on the Company’s income tax returns, and deferred tax expense or benefit represents the change in net deferred tax assets and liabilities.

1 unchanged sentence

Valuation allowances are recorded as appropriate to reduce deferred tax assets to the amount considered likely to be realized.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

The income tax expense and effective income tax rate for the three and six months ended June 30, 2023 and 2022 were as follows:

Three Months Ended June 30, Six Months Ended June 30,

The income tax expense and effective income tax rate for the three and nine months ended September 30, 2023 and 2022 were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

3 unchanged sentences

( 0.3 ) % ( 2.5 ) % ( 0.7 ) % ( 0.3 ) %

For the three and six months ended June 30, 2023, the Company recorded $ 0.1 million and $ 0.2 million, respectively of income tax expense.

The Company's estimated annual effective income tax rate is ( 2.5 )%, compared to the U.S.

federal statutory rate of 21.0% due to a change in the valuation allowance 9.3 %, state taxes ( 1.4 )%, non-deductible transaction costs ( 29.2 )% and other items ( 2.2 )%.

For the nine months ended September 30, 2023, the Company recorded $ 0.3 million of income tax expense which consisted of discrete state taxes.

The Company's estimated annual effective income tax rate without consideration of discrete items is 0.0 %, compared to the U.S.

federal statutory rate of 21.0% due to projected changes in the valuation allowance 2.3 %, state taxes ( 0.4 )%, non-deductible transaction costs ( 22.8 )% and other items ( 0.1 )%.

The Company has a full valuation allowance on its net deferred tax asset as the evidence indicates that it is not more likely than not expected to realize such asset.

For the three months ended June 30, 2022, discrete tax expense of $ 0.4 million was included in the $ 48.7 million of income tax benefit.

The Company’s estimated annual effective income tax rate without discrete items was 1.1 %, compared to the U.S.

federal statutory rate of 21.0% due to the fair value adjustment on debt instruments ( 2.6 )%, change in valuation allowance ( 5.5 )%, goodwill impairment ( 11.6 )%, non-deductible interest ( 0.8 )%, and other items 0.8 %.

For the six months ended June 30, 2022, discrete tax expense of $ 7.7 million was included in the $ 6.2 million of income tax benefit.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

For the nine months ended September 30, 2022, the Company recorded $ 4.4 million of income tax expense, which included a discrete tax expense of $ 9.1 million related to stock-based compensation and an increase in the valuation allowance on a capital loss.

The Company’s estimated annual effective income tax rate was ( 0.3 )%, compared to the U.S.

federal statutory rate of 21.0% due to a goodwill impairment ( 12.2 )%, change in valuation allowance ( 6.7 )%, state taxes 0.8 %, non-deductible interest ( 0.6 )%, and other items ( 2.5 )%.

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share (in thousands, except per share amounts):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

3 unchanged sentences

Weighted average shares outstanding - diluted 382,483 354,195 378,107 318,169

Net income (loss) per share - basic ( 0.02 ) $ ( 2.49 ) $ ( 0.03 ) $ ( 4.04 )

Net income (loss) per share - diluted ( 0.02 ) $ ( 2.49 ) $ ( 0.03 ) $ ( 4.04 )

Net loss per share - basic

$ ( 0.11 ) $ ( 1.23 ) $ ( 0.13 ) $ ( 5.38 )

Net loss per share - diluted

$ ( 0.11 ) $ ( 1.23 ) $ ( 0.13 ) $ ( 5.38 )

Pote ntially dilutive securities include securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive and contingently issuable shares and warrants for which all necessary conditions for issuance had not been satisfied by the end of the period.

Potentially dilutive securities are as follows (in common stock equivalent shares, in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

8 unchanged sentences

147,286 169,182 147,286 169,182

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

SEGMENT REPORTING

11 unchanged sentences

The segments’ accounting policies are the same as those described in the summary of significant accounting policies.

The Company excludes certain operating expenses and other expense from the allocations to operating segments.

The Company excludes certain operating expenses and other expenses from the allocations to operating segments.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

The following table presents revenue and gross profit by reportable segment for the periods presented (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

7 unchanged sentences

Total cost of revenue 24,882 72,892 64,187 183,843

Gross profit (loss)

$ 4,966 $ 9,185 $ 18,120 $ 11,883

6 unchanged sentences

Total cost of revenue 72,603 116,756 212,125 279,576

Gross profit (loss)

$ 10,453 $ ( 36,261 ) $ 66,039 $ 43,761

3 unchanged sentences

$ 97,485 $ 189,648 $ 276,312 $ 463,419

Consolidated gross profit

Consolidated gross profit (loss)

$ 15,419 $ ( 27,076 ) $ 84,159 $ 55,644

For the three months ended June 30, 2023 and 2022, cost of revenue included d epreciation expense of $ 1.5 million and $ 2.6 million, respectively for the Hosting segment.

For the three months ended June 30, 2023 and 2022, cost of revenue included depreciation expense of $ 18.8 million and $ 46.5 million, respectively for the Mining segment.

For the six months ended June 30, 2023 and 2022, cost of revenue included depreciation expense of $ 1.8 million and $ 4.8 million, respectively for the Hosting segment.

For the six months ended June 30, 2023 and 2022, cost of revenue included depreciation expense of $ 38.8 million and $ 85.9 million, respectively for the Mining segment.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

For the three months ended September 30, 2023 and 2022, cost of revenue included d epreciation expense of $ 1.9 million and $ 3.3 million, respectively for the Hosting segment.

For the three months ended September 30, 2023 and 2022, cost of revenue included depreciation expense of $ 22.0 million and $ 61.1 million, respectively for the Mining segment.

For the nine months ended September 30, 2023 and 2022, cost of revenue included depreciation expense of $ 3.7 million and $ 8.2 million, respectively for the Hosting segment.

For the nine months ended September 30, 2023 and 2022, cost of revenue included depreciation expense of $ 60.8 million and $ 146.8 million, respectively for the Mining segment.

Concentrations of Revenue and Credit Risk

2 unchanged sentences

The Company places its cash and cash equivalents with major financial institutions, which management assesses to be of high credit quality, in order to limit the exposure to credit risk.

As of June 30, 2023 and December 31, 2022, all of the Company’s fixed assets were located in the United States.

For the three and six months ended June 30, 2023 and 2022, all of the Company’s revenue was generated in the United States.

For the three and six months ended June 30, 2023, 76 % and 79 %, respectively, of the Company’s total revenue was generated from digital asset mining of bitcoin, which is subject to extreme price volatility.

As of June 30, 2023, substantially all of our digital assets were held by one third-party digital asset service.

As of September 30, 2023 and December 31, 2022, all of the Company’s fixed assets were located in the United States.

For the three and nine months ended September 30, 2023 and 2022, all of the Company’s revenue was generated in the United States.

For the three and nine months ended September 30, 2023, 74 % and 77 %, respectively, of the Company’s total revenue was generated from digital asset mining of bitcoin, which is subject to extreme price volatility.

As of September 30, 2023, substantially all of our digital assets were held by one third-party digital asset service.

As of December 31, 2022, substantially all of our digital assets were held by two third-party digital asset services.

For the three and six months ended June 30, 2023 and June 30, 2022, the concentration of customers comprising 10% or more of the Company’s total revenue are as follows:

Three Months Ended June 30, Three Months Ended June 30,

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

For the three and nine months ended September 30, 2023 and September 30, 2022, the concentration of customers comprising 10% or more of the Company’s total revenue are as follows:

Three Months Ended September 30, Three Months Ended September 30,

2023 2022 2023 2022

1 unchanged sentence

Percent of Hosting segment revenue:

D 11 % N/A 49 % N/A

Six Months Ended June 30, Six Months Ended June 30,

E (related party) 1

N/A 23 % N/A 46 %

12 % N/A 45 % N/A

Nine Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

1 unchanged sentence

Percent of Hosting segment revenue:

D 10 % N/A 49 % N/A

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

A reconciliation of the reportable segment gross profit to loss before income taxes included in the Company’s Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022, is as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Reportable segment gross profit

E (related party) 1

N/A 16 % N/A 42 %

11 % N/A 48 % N/A

1 This customer was labeled as Customer A in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

The label was updated to conform to the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

2 This customer was labeled as Customer D in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.

A reconciliation of the reportable segment gross profit to loss before income taxes included in the Company’s Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022, is as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Loss on legal settlement

Reportable segment gross profit (loss)

$ 15,419 $ ( 27,076 ) $ 84,159 $ 55,644

3 unchanged sentences

Impairment of goodwill and other intangibles — ( 268,512 ) — ( 1,059,265 )

Impairment of property, plant and equipment — ( 59,259 ) — ( 59,259 )

Losses on exchange or disposal of property, plant and equipment ( 340 ) — ( 514 ) ( 13,057 )

8 unchanged sentences

26,805 49,577 78,112 210,360

Operating income (loss)

Operating (loss) income

( 12,044 ) ( 401,374 ) 5,027 ( 1,473,474 )

Non-operating expenses (income), net:

Non-operating expenses, net:

Gain on debt extinguishment

( 374 ) — ( 21,135 ) —

Interest (income) expense, net

Interest expense, net

2,196 25,942 2,317 74,734

2 unchanged sentences

Reorganization items, net 28,256 — 78,270 —

Other non-operating expenses (income), net 181 3,876 ( 2,888 ) 3,519

Total non-operating expenses (income), net

Other non-operating (income) expenses, net ( 1,090 ) 1,478 ( 3,978 ) 4,997

Total non-operating expenses, net

28,988 22,776 55,474 233,599

1 unchanged sentence

$ ( 41,032 ) $ ( 424,150 ) $ ( 50,447 ) $ ( 1,707,073 )

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

RELATED-PARTY TRANSACTIONS

In the ordinary course of business, the Company enters into various transactions with related parties.

In the ordinary course of business, the Company from time to time has entered into various transactions with related parties.

The Company has agreements to provide hosting services to various entities that are managed and invested in by individuals that are directors and executives of the Company.

For the three and six months ended June 30, 2023, the Company recognized hosting revenue from the contracts with these entities of $ 3.5 million and $ 7.2 million, r espectively.

For the three and six months ended June 30, 2022, the Company recognized hosting revenue from the contracts with these entities of $ 7.6 million and $ 13.5 million , respectively.

In addition, for the three and six months ended June 30, 2023, there was no equipment sales revenue recognized to these same various entities.

For the three and six months ended June 30, 2022, there was equipment sales revenue recognized of $ 11.7 million and $ 37.6 million to these same various entities.

A nominal amount w as receivable from these entities as of June 30, 2023 and December 31, 2022.

For the three and nine months ended September 30, 2023, the Company recognized hosting revenue from the contracts with these entities of $ 2.8 million and $ 10.1 million, r espectively.

For the three and nine months ended September 30, 2022, the Company recognized hosting revenue from the contracts with these entities of $ 9.2 million and $ 22.7 million , respectively.

In addition, for the three and nine months ended September 30, 2023, there was no equipment sales revenue recognized to these same various entities.

For the three and nine months ended September 30, 2022, there was equipment sales revenue recognized of $ 29.7 million and $ 67.3 million to these same various entities.

A nominal amount w as receivable from these entities as of September 30, 2023 and December 31, 2022.

The Company reimburses certain officers and directors of the Company for use of a personal aircraft for flights taken on Company business.

F or the three and six months ended June 30, 2023, the Company did not incur personal aircraft reimbursements.

For the three and six months ended June 30, 2022, the Company incurred reimbursements of $ 0.8 million and $ 1.2 million, respectively.

As of June 30, 2023 and December 31, 2022, there was no reimbursements payable.

F or the three and nine months ended September 30, 2023, the Company did not incur personal aircraft reimbursements.

For the three and nine months ended September 30, 2022, the Company incurred reimbursements of $ 0.7 million and $ 1.8 million, respectively.

As of September 30, 2023 and December 31, 2022, there were no reimbursements payable.

REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

1 unchanged sentence

The error resulted in an overstatement in cost of revenue for the three months ended March 31, 2023.

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

This error also resulted in an overstatement of accrued expenses and other current liabilities as of March 31, 2023.

13 unchanged sentences

Total Stockholders’ Deficit $ ( 397,461 ) $ ( 408,758 ) $ 11,297

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

The following table presents the effect of the revision on the Company’s Consolidated Statement of Operations for the three months ended March 31, 2023 (in thousands):

16 unchanged sentences

375,419 375,419 —

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

The following table presents the effect of the revision on the Company’s Consolidated Statements of Changes in Stockholders’ Deficit (in thousands):

7 unchanged sentences

Change - Balance at March 31, 2023 $ 11,297 $ 11,297

Core Scientific, Inc.

(Debtor-in-Possession)

Notes to Unaudited Consolidated Financial Statements

The following table presents the effect of the revision on the Company’s Consolidated Statements of Cash Flow (in thousands):

11 unchanged sentences

SUBSEQUENT EVENTS

On July 4, 2023, the Debtors, the Administrative Agent and the Replacement DIP Lenders entered into a First Amendment to the Replacement DIP Credit Agreement (the “First Amendment”).

This excess cash threshold amount reduction resulted in the Debtors making an additional $ 6.2 million mandatory prepayment under the Replacement DIP Credit Agreement on July 7, 2023.

Bitmain Purchase Agreement

Subsequent to September 2023, the Company executed a purchase agreement with Bitmain for the acquisition of 12,600 Antminer S21 model miners for use in the Company's operations, for a total purchase price of approximately $ 50.4 million, of which $ 0.6 million was paid as a deposit as of September 30, 2023.

All miners are expected to be received and deployed by the third quarter of 2024.

On October 2, 2023, the Bankruptcy Court entered the J.W.

Didado Order approving the parties agreement to settle all claims of Didado against the Debtors.

For further discussion of this settlement, refer to Note 3 — Chapter 11 Filing and Other Related Matters.

On October 30, 2023, the Debtors reached an agreement in principle (the “Restructuring Term Sheet”) with the Ad Hoc Noteholder Group and the Equity Committee regarding the terms of a chapter 11 plan of reorganization, subject to the finalization of the Debtors’ Third Amended Joint Chapter 11 Plan of Reorganization of Core Scientific, Inc.

and its Debtor Affiliates and a related Disclosure Statement, and the execution of a restructuring support agreement (the “Restructuring Support Agreement”) and other definitive documentation, which the Debtors expect to enter into with the Ad Hoc Noteholder Group and the Equity Committee in the coming days.

The Restructuring Support Agreement, if and when executed by the Debtors, the Ad Hoc Noteholder Group and the Equity Committee, is expected to include terms consistent with those terms set forth in the Restructuring Term Sheet.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements