Greenidge Generation(GREE) - 2021 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial information for the period, highlighting significant growth and strategic shifts Financial Statements The financial statements for the period ended September 30, 2021, reflect significant growth and transformation, driven by acquisitions and cryptocurrency mining Condensed Consolidated Balance Sheets (Unaudited) As of September 30, 2021, total assets surged to $258.3 million, primarily due to miner purchases and the Support.com merger Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Total Current Assets | $64,425 | $7,774 | | Cash and cash equivalents | $51,149 | $5,052 | | Property and equipment, net | $121,532 | $56,645 | | Goodwill | $46,349 | $0 | | Total Assets | $258,311 | $64,567 | | Total Current Liabilities | $33,454 | $11,639 | | Notes payable, current portion | $17,994 | $3,273 | | Total Liabilities | $52,509 | $20,207 | | Total Stockholders' Equity | $205,802 | $44,360 | Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) Revenues grew dramatically due to cryptocurrency mining, but the company posted a net loss primarily from merger-related costs Statement of Operations Highlights (in thousands) | Metric | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $35,754 | $6,123 | $62,993 | $13,937 | | Cryptocurrency mining | $31,156 | $3,043 | $54,217 | $8,673 | | Power and capacity | $3,077 | $3,080 | $7,255 | $5,264 | | Services and other | $1,521 | $0 | $1,521 | $0 | | Loss from Operations | ($11,865) | ($506) | ($4,696) | ($2,102) | | Merger and other costs | $29,847 | $0 | $31,095 | $0 | | Net Loss | ($7,896) | ($289) | ($3,099) | ($2,466) | | Loss per Share (Basic) | ($0.28) | N/A | ($0.13) | N/A | Condensed Consolidated Statements of Cash Flows (Unaudited) Net cash from operations improved significantly, while substantial capital was used for investing and raised through financing activities Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Category | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $26,666 | $788 | | Net cash used in investing activities | ($38,644) | ($9,302) | | Purchases of and deposits for property and equipment | ($65,757) | ($9,738) | | Cash received in Merger | $27,113 | $0 | | Net cash provided by financing activities | $58,075 | $0 | | Proceeds from issuance of preferred stock, net | $37,113 | $0 | | Proceeds from notes payable, net | $25,112 | $0 | | Change in Cash and Cash Equivalents | $46,097 | ($8,514) | Notes to Condensed Consolidated Financial Statements (Unaudited) The notes detail the Support.com merger, accounting policies for digital assets, significant equipment commitments, and subsequent financing and expansion events - On September 14, 2021, Greenidge merged with Support.com in an all-stock transaction, valued at $93.9 million[23][24][85] - Digital assets (primarily bitcoin) are accounted for as indefinite-lived intangible assets and assessed for impairment; gains or losses on sales use the LIFO method[37][40] - As of September 30, 2021, the company had agreements to purchase miner equipment totaling $142.2 million, with deposits of $38.5 million already paid[147] - Subsequent to quarter end, Greenidge completed a $55.2 million public offering of 8.50% Senior Notes due 2026 and agreed to purchase a 175-acre property in South Carolina for $15.0 million for a new bitcoin mining operation[155][156][157] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes significant revenue growth to cryptocurrency mining expansion and favorable bitcoin prices, while pursuing further capacity and strategic capital raises - As of September 30, 2021, Greenidge had approximately 15,300 miners with an estimated aggregate hash rate capacity of 1.2 EH/s, with orders to reach approximately 49,000 miners and 4.7 EH/s total committed capacity[184] - The company is expanding operations with a new bitcoin mining facility in Spartanburg, South Carolina, and exploring multiple sites in Texas with over 2,000MW of potential electrical capacity[171][172][174] Key Financial Metrics (Q3 2021 vs Q3 2020, in thousands) | Metric | Q3 2021 | Q3 2020 | Variance | | :--- | :--- | :--- | :--- | | Total Revenue | $35,754 | $6,123 | 483.9% | | Net Loss | ($7,896) | ($289) | N/A | | Adjusted EBITDA | $21,177 | $775 | 2632.5% | - The company significantly improved liquidity, ending Q3 with $51.1 million in cash, and subsequently raised $53.3 million net from senior notes and $47.9 million from share sales[220][222][223] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Greenidge is not required to provide this disclosure - Disclosure is not required for smaller reporting companies[263] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal controls during Q3 2021 - The CEO and CFO concluded that as of September 30, 2021, the company's disclosure controls and procedures are effective[264] - No changes in internal control over financial reporting occurred during Q3 2021 that materially affected, or are reasonably likely to materially affect, the company's internal control[265] PART II. OTHER INFORMATION Other information includes legal proceedings, risk factors, equity sales, and management changes Legal Proceedings The company is involved in an Article 78 petition challenging its data center expansion, while previous merger-related lawsuits have been dismissed - An Article 78 petition was filed challenging the site plan review for the planned expansion of the bitcoin mining data center in the Town of Torrey; the company believes the claims have no merit[268] - All six merger-related lawsuits filed by alleged Support.com stockholders have been voluntarily dismissed by the plaintiffs[144][145][282] Risk Factors The company identifies numerous risks, including dependence on a single power facility, bitcoin price volatility, regulatory uncertainties, and control by Atlas - The business currently depends on a single natural gas power generation facility in Torrey, New York, making it vulnerable to operational disruptions[288] - The company's financial success is highly dependent on the volatile price of bitcoin; a decline could significantly harm revenue and profitability[309] - The company is a "controlled company" under Nasdaq rules due to Atlas and its affiliates controlling 88.8% of the voting power, limiting Class A stockholder influence[394] - The Support Services segment has high customer concentration, with a major customer, Comcast, terminating its contract in Q1 2022[369] Unregistered Sales of Equity Securities and Use of Proceeds During and after the quarter, the company issued unregistered securities, including Class A shares for consulting fees, preferred stock conversion, and sales to B. Riley Principal Capital - Issued 562,174 shares of Class A common stock as a consulting fee in connection with the Merger[426] - From October 6, 2021, to November 12, 2021, the company sold 1,977,500 shares of Class A common stock to B. Riley Principal Capital, LLC under a purchase agreement[428] Defaults Upon Senior Securities None - None[432] Mine Safety Disclosures Not applicable - Not applicable[433] Other Information The company announced a management transition effective January 1, 2022, appointing Robert Loughran as the new CFO - Effective January 1, 2022, Timothy Rainey will transition from Company CFO to Treasurer and CFO of the subsidiary Greenidge Generation Holdings LLC[434] - Robert Loughran has been appointed as the Company's new Chief Financial Officer, effective January 1, 2022[435][436] Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance documents and material contracts