5.  EQUIPMENT DEPOSITS

Payments to equipment suppliers prior to shipment of the equipment are recorded as equipment deposits.

Bitmain Agreement

On April 12, 2021, we entered into a Non-fixed Price Sales and Purchase Agreement with Bitmain Technologies Limited (“Bitmain”) (the “Bitmain Agreement”) to purchase from Bitmain cryptocurrency mining hardware and other equipment in accordance with the terms and conditions of the Bitmain Agreement. Bitmain is scheduled to manufacture and ship miners on monthly basis, in 12 equal batches of 400 units, starting in August 2021 and through July 2022. The Purchase Agreement remains in effect until the delivery of the last batch of products. The total purchase price was approximately $34,047,600, subject to price adjustments and related offsets. The total purchase price is payable as follows: (i) 25% of the total purchase price is due upon the execution of the Agreement or no later than April 19, 2021; (ii) 35% of the total purchase price, is due by May 30, 2021; and (iii) the remaining 40% of the total purchase price, is payable monthly starting in June 2021.

The Company entered into a separate agreement with Wattum Management, Inc. {“Wattum”), a non-related party, whereby Wattum agreed to share 50% of the purchase obligation under the Bitmain Agreement, including reimbursing the Company for 50% of the equipment deposits paid by the Company to Bitmain.

As of June 30, 2022, and June 30, 2021, equipment deposits on the condensed balance sheets totaled $2,355,167 and $7,663,265, respectively, and were comprised of payments to Bitmain and other equipment vendors, net of Wattum reimbursements and the deliveries of equipment. During the year ended June 30, 2022, equipment deposits paid to Bitmain, net of Wattum reimbursements, totaled $6,261,491. As of June 30, 2022, 10 of the 12 shipments totaling 3,957 miners had been delivered by Bitmain to the Company, Wattum and two customers of the Company.

Canaan Convey Purchase

As of June 30, 2021, the Company prepaid $990,000 to Canaan Convey Co. LTD (“Canaan Convey”) for the purchase of 250 cryptocurrency miners and freight and custom charges. As of June 30, 2022, the 250 miners had been delivered to the Company by Canaan Convey.

Sale of Miners

During the year ended June 30, 2022, the Company sold 187 miners to two non-related party for $1,678,660.