10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________________ to _____________________

Commission File Number: 001-40808

 

Greenidge Generation Holdings Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

 

86-1746728

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer
Identification No.)

 

 

 

135 Rennell Drive, 3rd Floor

Fairfield, CT

 

06890

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (203) 718-5960

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Class A Common Stock, $0.0001 par value

GREE

The Nasdaq Global Select Market

8.50% Senior Notes due 2026

GREEL

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

Securities registered pursuant to Section 12(g) of the Act: None

As of May 13, 2022, the registrant had 12,838,861 shares of Class A common stock, $0.0001 par value per share, outstanding and 28,526,372 shares of Class B common stock, $0.0001 par value per share, outstanding.

 

 

 


 

Table of Contents

 

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

 

Item 1.

Financial Statements

 

 

 

Condensed Consolidated Balance Sheets (Unaudited)

 

3

 

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited)

 

4

 

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

 

5

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

6

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

17

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

27

Item 4.

Controls and Procedures

 

27

PART II.

OTHER INFORMATION

 

 

Item 1.

Legal Proceedings

 

28

Item 1A.

Risk Factors

 

28

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

28

Item 3.

Defaults Upon Senior Securities

 

28

Item 4.

Mine Safety Disclosures

 

28

Item 5.

Other Information

 

28

Item 6.

Exhibits

 

29

Exhibit Index

 

29

Signatures

 

30

 

1


 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-Q includes certain statements that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact are forward-looking statements for purposes of federal and state securities laws. These forward-looking statements involve uncertainties that could significantly affect our financial or operating results. These forward-looking statements may be identified by terms such as “anticipate,” “believe,” “continue,” “foresee,” “expect,” “intend,” “plan,” “may,” “will,” “would” “could” and “should” and the negative of these terms or other similar expressions. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Forward-looking statements in this document include, among other things, statements regarding our business plan, business strategy and operations in the future. In addition, all statements that address operating performance and future performance, events or developments that are expected or anticipated to occur in the future, including statements relating to creating value for stockholders, are forward-looking statements.

Forward-looking statements are subject to a number of risks, uncertainties and assumptions. Matters and factors that could cause actual results to differ materially from those expressed or implied in such forward-looking statements include but are not limited to the matters and factors described in Part I, Item 1A. “Risk Factors” of Greenidge's Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission ("SEC") on March 31, 2022 and those described from time to time in our future reports filed with the SEC, which should be reviewed carefully. Please consider Greenidge's forward-looking statements in light of those risks.

2


Table of Contents

 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Greenidge Generation Holdings Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands, except share data)

 

 

 

March 31, 2022
(Unaudited)

 

 

December 31, 2021

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

$

96,453

 

 

$

82,599

 

Short term investments

 

 

-

 

 

 

496

 

Digital assets

 

 

393

 

 

 

476

 

Accounts receivable

 

 

5,569

 

 

 

5,524

 

Prepaid expenses

 

 

10,286

 

 

 

9,146

 

Emissions and carbon offset credits

 

 

1,025

 

 

 

2,361

 

Total current assets

 

 

113,726

 

 

 

100,602

 

LONG-TERM ASSETS:

 

 

 

 

 

 

Property and equipment, net

 

 

292,051

 

 

 

217,091

 

Right-of-use assets

 

 

1,375

 

 

 

1,472

 

Intangible assets, net

 

 

3,305

 

 

 

3,537

 

Goodwill

 

 

3,062

 

 

 

3,062

 

Deferred tax assets

 

 

16,846

 

 

 

15,058

 

Other long-term assets

 

 

989

 

 

 

445

 

Total assets

 

$

431,354

 

 

$

341,267

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Accounts payable

 

$

14,823

 

 

$

5,923

 

Accrued emissions expense

 

 

2,637

 

 

 

2,634

 

Accrued expenses

 

 

11,676

 

 

 

10,375

 

Income taxes payable

 

 

3,879

 

 

 

2,481

 

Long-term debt, current portion

 

 

66,729

 

 

 

19,577

 

Lease obligations, current portion

 

 

500

 

 

 

736

 

Total current liabilities

 

 

100,244

 

 

 

41,726

 

LONG-TERM LIABILITIES:

 

 

 

 

 

 

Long-term debt, net of current portion and deferred financing fees

 

 

103,191

 

 

 

75,251

 

Lease obligations, net of current portion

 

 

195

 

 

 

193

 

Asset retirement obligations

 

 

2,691

 

 

 

2,691

 

Environmental liability

 

 

8,615

 

 

 

8,615

 

Other long-term liabilities

 

 

366

 

 

 

368

 

Total liabilities

 

 

215,302

 

 

 

128,844

 

COMMITMENTS AND CONTINGENCIES (NOTE 13)

 

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

 

 

    Preferred stock, par value $0.0001, 20,000,000 shares authorized, none outstanding

 

 

-

 

 

 

-

 

    Common stock, par value $0.0001, 3,000,000,000 shares authorized,
    
41,363,271 and 40,865,336 shares issued and outstanding as of March 31, 2022
    and December 31, 2021, respectively

 

 

4

 

 

 

4

 

Additional paid-in capital

 

 

285,905

 

 

 

281,815

 

Cumulative translation adjustment

 

 

(32

)

 

 

-

 

       Accumulated deficit

 

 

(69,825

)

 

 

(69,396

)

Total stockholders' equity

 

 

216,052

 

 

 

212,423

 

Total liabilities and stockholders' equity

 

$

431,354

 

 

$

341,267

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


Table of Contents

 

Greenidge Generation Holdings Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

(in thousands, except per share data)

 

Three Months Ended March 31,

 

 

2022

 

 

2021

 

REVENUE:

 

 

 

 

 

  Cryptocurrency datacenter

$

23,232

 

 

$

8,997

 

  Power and capacity

 

5,923

 

 

 

2,066

 

  Services and other

 

8,500

 

 

 

-

 

Total revenue

 

37,655

 

 

 

11,063

 

OPERATING COSTS AND EXPENSES:

 

 

 

 

 

  Cost of revenue - cryptocurrency datacenter (exclusive of
     depreciation and amortization)

 

8,456

 

 

 

2,574

 

  Cost of revenue - power and capacity (exclusive of
     depreciation and amortization)

 

4,023

 

 

 

2,009

 

  Cost of revenue - services and other (exclusive of
     depreciation and amortization)

 

4,071

 

 

 

-

 

  Selling, general and administrative

 

14,392

 

 

 

3,229

 

  Merger and other costs

 

213

 

 

 

105

 

  Depreciation and amortization

 

3,978

 

 

 

1,261

 

    Total operating costs and expenses

 

35,133

 

 

 

9,178

 

Income from operations

 

2,522

 

 

 

1,885

 

OTHER INCOME (EXPENSE), NET:

 

 

 

 

 

Interest expense, net

 

(3,353

)

 

 

(166

)

Interest expense - related party

 

-

 

 

 

(22

)

(Loss) gain on sale of digital assets

 

(5

)

 

 

295

 

Other income, net

 

39

 

 

 

19

 

Total other (expense) income, net

 

(3,319

)

 

 

126

 

(LOSS) INCOME BEFORE INCOME TAXES

 

(797

)

 

 

2,011

 

(Benefit) provision for income taxes

 

(368

)

 

 

732

 

NET (LOSS) INCOME

 

(429

)

 

 

1,279

 

Foreign currency translation adjustment

 

(32

)

 

 

-

 

COMPREHENSIVE (LOSS) INCOME

$

(461

)

 

$

1,279

 

(Loss) earnings per share:

 

 

 

 

 

Basic

$

(0.01

)

 

$

0.02

 

Diluted

$

(0.01

)

 

$

0.02

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


Table of Contents

 

Greenidge Generation Holdings Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(in thousands, except share and member unit data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Common Units

 

 

Preferred Units

 

 

Senior Priority Units

 

 

Total

 

 

Cumulative

 

 

 

 

 

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Paid - In

 

 

Number

 

 

Members'

 

 

Number

 

 

Members'

 

 

Number

 

 

Members'

 

 

Members'

 

 

Translation

 

 

Accumulated

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

of Units

 

 

Capital

 

 

of Units

 

 

Capital

 

 

of Units

 

 

Capital

 

 

Capital

 

 

Adjustment

 

 

Deficit

 

 

Total

 

Balance at January 1, 2022

 

-

 

 

$

-

 

 

 

40,865,336

 

 

$

4

 

 

$

281,815

 

 

 

-

 

 

$

-

 

 

 

-

 

 

$

-

 

 

 

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

(69,396

)

 

$

212,423

 

Stock-based compensation expense

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

362

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

362

 

Issuance of shares, net of issuance costs of $147

 

-

 

 

 

-

 

 

 

415,000

 

 

 

-

 

 

 

3,791

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,791

 

Restricted shares award issuance, net of withholdings

 

-

 

 

 

-

 

 

 

82,601

 

 

 

-

 

 

 

(65

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(65

)

Proceeds from stock options exercised

 

-

 

 

 

-

 

 

 

334

 

 

 

-

 

 

 

2

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2

 

Foreign currency translation adjustment

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(32

)

 

 

-

 

 

 

(32

)

Net loss

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

(429

)

 

 

(429

)

Balance at March 31,
   2022

 

-

 

 

$

-

 

 

 

41,363,271

 

 

$

4

 

 

$

285,905

 

 

 

-

 

 

$

-

 

 

 

-

 

 

$

-

 

 

 

-

 

 

$

-

 

 

$

-

 

 

$

(32

)

 

$

(69,825

)

 

$

216,052

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2021

 

-

 

 

$

-

 

 

 

-

 

 

$

-

 

 

$

-

 

 

 

750

 

 

$

-

 

 

 

39,228

 

 

$

39,074

 

 

 

10,000

 

 

$

30,202

 

 

$

69,276

 

 

$

-

 

 

$

(24,916

)

 

$

44,360

 

Contribution of GGH Preferred Units, GGH Senior Priority Units, and notes payable to related party for GGHI Common Stock

 

-

 

 

 

-

 

 

 

26,800,300

 

 

 

3

 

 

 

72,888

 

 

 

-

 

 

 

-

 

 

 

(39,228

)

 

 

(39,074

)

 

 

(10,000

)

 

 

(30,202

)

 

 

(69,276

)

 

 

-

 

 

 

-

 

 

 

3,615

 

Contribution of GGH Common Units for GGHI Common Stock

 

-

 

 

 

-

 

 

 

1,199,700

 

 

 

-

 

 

 

-

 

 

 

(750

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Proceeds from sale of preferred stock, net of stock issuance costs of $3,387

 

1,620,000

 

 

 

1

 

 

 

-

 

 

 

-

 

 

 

37,112

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

37,112

 

Stock-based compensation expense

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

656

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

656

 

Proceeds from stock options exercised

 

-

 

 

 

-

 

 

 

160,000

 

 

 

-

 

 

 

1,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,000

 

Stock issued to purchase miners

 

-

 

 

 

-

 

 

 

160,000

 

 

 

-

 

 

 

991

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

991

 

Net income

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,279

 

 

 

1,279

 

Balance at March 31,
   2021

 

1,620,000

 

 

$

1

 

 

 

28,320,000

 

 

$

3

 

 

$

112,647

 

 

 

-

 

 

$

-

 

 

 

-

 

 

$

-

 

 

 

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

(23,637

)

 

$

89,014

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


Table of Contents

 

Greenidge Generation Holdings Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

CASH FLOW FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net (loss) income

 

$

(429

)

 

$

1,279

 

Adjustments to reconcile net (loss) income to net cash
   flow from operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

3,978

 

 

 

1,261

 

Deferred income taxes

 

 

(1,788

)

 

 

482

 

Amortization of debt issuance costs

 

 

424

 

 

 

-

 

Accretion of asset retirement obligations

 

 

-

 

 

 

33

 

Stock-based compensation expense

 

 

362

 

 

 

656

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(45

)

 

 

283

 

Emissions and carbon offset credits