Item 5.02 Departure of Directors or Certain Officers; Election of Directors;

Appointment of Certain Officers; Compensatory Arrangements of Certain

Officers.

On October 26, 2022, Core Scientific, Inc. ("Core Scientific," "we," "our," "us" or the "Company") announced the appointment of Neal P. Goldman to its board of directors (the "Board"). As a result of the appointment of Mr. Goldman the size of the Board increased from six members to seven members. As compensation for his services as a director, the Company has agreed to pay Mr. Goldman a monthly fee of $35,000. The Company expects to enter into an indemnification agreement with Mr. Goldman substantially in the form entered into by the Company's existing directors.

There are no arrangements or understandings between Mr. Goldman and any other persons pursuant to which Mr. Goldman was selected as director. There are no family relationships between Mr. Goldman and the Company's existing directors and officers. There has been no transaction, nor is there any currently proposed transaction, between Mr. Goldman and the Company that would require disclosure under Item 404(a) of Regulation S-K.

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Item 8.01 Other Events

The Company also announced today updates on its business and liquidity position.

As previously disclosed, the Company's operating performance and liquidity have been severely impacted by the prolonged decrease in the price of bitcoin, the increase in electricity costs, the increase in the global bitcoin network hash rate and the litigation with Celsius Networks LLC and its affiliates ("Celsius"). As a result, management has been actively taking steps to decrease monthly costs, delay construction expenses, reduce and delay capital expenditures and increase hosting revenues. In addition, the Board has decided that the Company will not make payments coming due in late October and early November 2022 with respect to several of its equipment and other financings, including its two bridge promissory notes. As a result, the creditors under these debt facilities may exercise remedies following any applicable grace periods, including electing to accelerate the principal amount of such debt, suing the Company for nonpayment or taking action with respect to collateral, where applicable. Any such creditor actions may result in events of default under the Company's other indebtedness agreements, including its two series of convertible notes due 2025, and the potential exercise of remedies by creditors under such agreements.

In light of the foregoing, the Company is in the process of exploring a number of potential strategic alternatives with respect to the Company's capital structure, including hiring strategic advisers, raising additional capital or restructuring its existing capital structure. Specifically, the Company has engaged Weil, Gotshal & Manges LLP, as legal advisers, and PJT Partners LP, as financial advisers, to assist the Company in analyzing and evaluating potential strategic alternatives and initiatives to improve liquidity. The Company and its advisers have begun to engage in discussions with certain of its creditors regarding these initiatives. The Company expects these activities will continue and intensify. Among possible alternatives, the Company may explore liability management transactions, including exchanging its existing debt for equity or additional debt, which transactions may be dilutive to holders of the Company's common stock. These discussions may not result in any agreement on commercially acceptable terms or at all. Furthermore, the Company may seek alternative sources of equity or debt financing, delay capital expenditures or evaluate potential asset sales, and potentially could seek relief under the applicable bankruptcy or insolvency laws. In the event of a bankruptcy proceeding or insolvency, or restructuring of our capital structure, holders of the Company's common stock could suffer a total loss of their investment.

As of October 26, 2022, the Company held 24 bitcoins and approximately $26.6 million in cash as compared to 1,051 bitcoins and approximately $29.5 million in cash as of September 30, 2022.

On July 20, 2022, the Company entered into an equity purchase agreement with B. Riley Principal Capital II ("B. Riley"), pursuant to which, the Company has the right to sell to B. Riley up to $100,000,000 of shares of the Company's common stock, subject to certain limitations and conditions set forth in the purchase agreement (the "B. Riley equity line of credit"). As of October 26, 2022, the Company has sold 13,354,892 shares of common stock under B. Riley equity line of credit for net proceeds of approximately $20.7 million. The Company intends to use additional proceeds from the equity line of credit, if any, for working capital purposes, including payment of adviser fees and expenses. The Company's existing shareholders will be diluted if, and to the extent, the Company elects to further utilize the B. Riley equity line of credit.

It is very difficult to estimate our future liquidity requirements. The Company anticipates that existing cash resources will be depleted by the end of 2022 or sooner. Depending on the Company's assumptions regarding the timing and ability to achieve more normalized levels of operating revenue, the estimates of amounts of required liquidity vary significantly. Similarly, it is very difficult to predict when or if bitcoin prices will recover or energy costs will abate.

Given the uncertainty regarding the Company's financial condition, substantial doubt exists about the Company's ability to continue as a going concern for a reasonable period of time.

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In connection with the transactions described above, the Company is filing the updated risk factors attached hereto as Exhibit 99.1 (together with the other risk factors referred to therein, the "Risk Factors"), which is incorporated herein by reference.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Form 8-K may constitute "forward-looking statements" for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our and our management team's expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intends," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "will," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Form 8-K may include, for example, statements about our ability to:



     •    meet future liquidity requirements and comply with covenants in our
          indebtedness;



     •    effectively respond to general economic and business conditions,
          including the price of bitcoin;



     •    maintain the listing on, or to prevent the delisting of our securities
          from, Nasdaq or another national securities exchange;



     •    obtain additional capital, whether equity or debt, or exist or remain as
          a going concern;



  •   enhance future operating and financial results;



  •   successfully execute expansion plans;



  •   attract and retain employees, officers or directors;



  •   anticipate rapid changes in laws, regulations and technology;



     •    execute its business strategy, including enhancement of the profitability
          of services provided;



     •    realize the benefits expected from the acquisition of Blockcap, including
          any related synergies;



     •    anticipate the uncertainties inherent in the development of new business
          strategies;



     •    anticipate the impact of the COVID-19 pandemic, including variant strains
          of COVID-19, and its effect on business and financial conditions;



     •    manage risks associated with operational changes in response to the
          COVID-19 pandemic, including the emergence of variant strains of
          COVID-19;



  •   increase brand awareness;



     •    upgrade and maintain effective business controls and information
          technology systems;



  •   acquire and protect intellectual property;



     •    comply with laws and regulations applicable to its business, including
          tax laws and laws and regulations related to data privacy and the
          protection of the environment;



     •    stay abreast of modified or new laws and regulations applicable to its
          business or withstand the impact of any new laws and regulations related
          to its industry;



  •   anticipate the impact of, and response to, new accounting standards;



  •   anticipate the significance and timing of contractual obligations;



  •   maintain key strategic relationships with partners and distributors;



     •    respond to uncertainties associated with product and service development
          and market acceptance;

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     •    anticipate the impact of changes in U.S. federal income tax laws,
          including the impact on deferred tax assets; and



     •    successfully defend litigation, including matters in the Celsius chapter
          11 proceedings.

These forward-looking statements are based on information available as of the date of this Form 8-K, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

You should read this Form 8-K with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Form 8-K and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and such statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.

Item 9.01 Financial Statement and Exhibits




(d) Exhibits

Exhibit
  No.       Description

99.1          Core Scientific, Inc. Additional Risk Factors.

104         Cover Page Interactive Data File (embedded within the Inline XBRL
            document).

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