Benzinga | Apr 5, 2021 07:42AM EDT

500.com Limited Announces Acquisition Of A 7-nanometer Mining Machine Manufacturer and New Issuance of Preference Shares

500.com Limited (NYSE:WBAI) ("500.com" or the "Company"), a cryptocurrency mining enterprise, today announced that it has entered into a share exchange agreement ("Share Exchange Agreement") with shareholders (the "Selling Shareholders") of Bee Computing (HK) Limited ("Bee Computing"). Pursuant to the Share Exchange Agreement, the Company expects to issue an aggregate of 45,825,530 of its Class A ordinary shares valued at US$2.182 per share, corresponding to US$21.82 per American Depositary Share ("ADS") (based on the ratio of ten ordinary shares per ADS), representing a consideration of US$100 million in aggregate, to the Selling Shareholders and research and development team members, in exchange for the total issued share capital of Bee Computing. The 45,825,530 Class A ordinary shares represent approximately 8.18% of the Company's total outstanding share capital as of March 31, 2021. The price of US$21.82 per ADS is based on the volume weighted average price of the twenty trading days prior to the date of the Share Exchange Agreement. This transaction is subject to the completion of certain conditions precedent to the closing of the transaction, including Bee Computing's satisfactory completion of certain reorganization steps and other required closing conditions. There can be no assurance that the closing conditions will be satisfied, or that the proposed transaction will be consummated.

Pursuant the Share Exchange Agreement, the Company shall, subject to customary conditions, issue at the first closing an aggregate of 16,038,930, or US$35 million worth, of its Class A ordinary shares to the Selling Shareholders. The first closing is expected to occur in the second quarter of 2021. Subject to satisfaction of the following milestones, the Company shall issue at the subsequent closing an aggregate of 29,786,600, or US$65 million worth, of its Class A ordinary shares to Selling Shareholders and research and development team members:

2 Continuous mass-production of Bitcoin mining machines incorporated with 7-nanometer application specific integrated circuits ("ASICs");

4 Development and mass-production of new generation of Bitcoin mining machines incorporated with 7-nanometer ASICs;

6 Successful development of high-performance and mass-producible ETH ASIC mining machines;

8 Successful development of high-performance and mass-producible LTC ASIC mining machines.

The Company's Class A ordinary shares issued pursuant to the Share Exchange Agreement shall be subject to an agreed lock-up period.

Bee Computing was established in 2018 and specializes in the development and manufacture of cryptocurrency mining chips and mining machines for different cryptocurrencies, including BTC, ETH and LRC. Bee Computing has invested more than US$35 million in research and development since its inception. In 2019, Bee Computing launched a Bitcoin mining machine incorporating 7-nanometer ASICs co-developed with MediaTek Inc., the largest IC design company in Asia, manufactured by Taiwan Semiconductor Manufacturing Company, the world's leading third-party foundry, and tested and packaged by ASE Technology Holding Co., Ltd., the world's largest semiconductor testing company, who is also a major investor of Bee Computing.

The Company purchased Bee Computing's bitcoin mining machines incorporating 7-nanometer ASICs on February 2, 2021, and the mining machines are expected to be delivered by the end of April 2021. The company plans to invest no less than US$30 million in Bee Computing to develop cryptocurrency mining chips and mining machines after first closing.