Canaan Inc. Secures $50 Million in Final Tranche of Preferred Shares Financing

Canaan Inc. (NASDAQ: CAN), a leading provider of high-performance computing solutions, has successfully closed the third and final tranche of its preferred shares financing, raising an additional $50 million. This latest development marks the completion of a significant funding initiative aimed at bolstering the company's self-mining expansion and Bitcoin mining machine business in North America.

Details of the Financing

According to PRNewswire, the third tranche involved the issuance of 50,000 Preferred Shares at a price of $1,000 per share. The funds raised will be utilized by Canaan and its subsidiaries for manufacturing or investing in digital mining sites and equipment in North America. This includes potential acquisition or disposition of assets between subsidiaries.

Strategic Expansion Plans

Nangeng Zhang, chairman and CEO of Canaan, expressed optimism about the partnership with the institutional investor involved in this financing. Zhang highlighted the benefits of expanding North American self-mining activities, emphasizing a more diversified revenue stream, reduced volatility, and a stable regulatory environment. He noted that this strategic initiative positions Canaan to capitalize on the anticipated Bitcoin bull market, enhancing the company's ability to generate robust returns.

Past Financing Tranches

The financing journey began on November 27, 2023, when Canaan entered into a Securities Purchase Agreement with an institutional investor to issue up to 125,000 Series A Convertible Preferred Shares at $1,000 each. The first tranche closed on December 11, 2023, raising $25 million, followed by a second tranche on January 22, 2024, which raised $50 million.

The third and final tranche closed on September 27, 2024, under amended terms that included the issuance of restricted securities. These shares are convertible into Class A Ordinary Shares after six months and are subject to a 10% weekly trading volume limit for aggregate sales by the buyer.

Amendments and Conversion Terms

Significant amendments to the Securities Purchase Agreement and the Certificate of Designations were made, including an increase in the Fixed Conversion Price to $4.00. Additionally, a 90-day average Secured Overnight Financing Rate (SOFR) has been added to the calculation of the conversion amount, reflecting an added cost for using the proceeds until the conversion date.

The Securities Purchase Agreement, as amended, contains customary representations, warranties, and indemnification obligations. The terms are not intended to provide factual information about the current state of the company but rather to outline the legal framework of the financing.

About Canaan Inc.

Established in 2013, Canaan Inc. is known for its ASIC high-performance computing chip design and production. The company made history in 2013 by shipping the world's first batch of ASIC-based Bitcoin mining machines. In 2019, Canaan completed its initial public offering on the Nasdaq Global Market.

For more information on Canaan Inc., visit their official website at https://www.canaan.io/.