Long Blockchain to sell 1.6 million new shares to raise $7.7M
CEO Philip Thomas of Long Blockchain, formerly Long Island Iced Tea Corp. Credit: Long Island Iced Tea
Long Blockchain Corp., whose stock began trading under a new ticker symbol Friday, announced a stock offering at a price of $5.25 per share that it expects to raise $7.7 million.
After the announcement, shares of the Farmingdale company formerly known as Long Island Iced Tea Corp. fell 21.1 percent Friday to close at $5.04. That was still more than twice the closing price of $2.44 on Dec. 20, the day before the company announced it was changing its business model to focus on blockchain, the technology behind bitcoin.
Long Blockchain also said that on Thursday it had agreed to pay $4.2 million to purchase computer equipment used to “mine” cryptocurrencies including bitcoin. The unnamed vendors of the equipment will receive $2.9 million in cash and 260,000 shares of Long Blockchain stock, Long Blockchain said in a government filing.
“The commencement of our mining operations places us on a path to generating blockchain-related revenue through the accumulation of bitcoin,” chief executive Philip Thomas said in a statement.
The company, which last month announced a pivot from ready-to-drink iced tea to the technology that keeps track of cryptocurrencies, Friday started trading on the Nasdaq Capital Market under the symbol “LBCC.” Previously its stock ticker had been “LTEA,” but the company sought a new symbol to reflect the change in its business model.
The 1.6 million-share stock offering, using Manhattan-based investment bank Alexander Capital as a placement agent, is expected to close on Tuesday.
The stock offering was made under a shelf registration statement filed in 2016 and declared effective by the Securities and Exchange Commission. Under a shelf registration, a stock issuer is allowed to sell securities to the public for a period of up to two years.
Blockchain is a decentralized digital ledger that records transactions for bitcoin and other digital currencies, also called cryptocurrencies, across many computers. Cryptocurrencies are not tied to a bank or government and allow users to spend money anonymously.
“Miners” use high-powered computers to authenticate and encrypt transactions involving cryptocurrencies.
Once the transaction is authenticated and added to the blockchain — or digital ledger — the miners typically are paid in a cryptocurrency.
Long Blockchain’s electronic mining equipment will be installed in a data center in an unnamed “Nordic” country, the company said.
Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.
