Greenidge Generation Holdings Inc. Unaudited Pro Forma Condensed Consolidated Financial Information
▇▇▇▇▇▇▇▇▇ Generation Holdings Inc.
Unaudited Pro Forma Condensed Consolidated Financial Information
On November 9, 2023, ▇▇▇▇▇▇▇▇▇ Generation Holdings Inc. (“▇▇▇▇▇▇▇▇▇”) entered into a Debt Settlement Agreement (the “Debt Settlement Agreement”), by and among, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ Generation LLC, other subsidiary borrowers of ▇▇▇▇▇▇▇▇▇ and NYDIG ABL LLC (“NYDIG”) in order to settle the Senior Secured Loan and the Secured Promissory Note, which NYDIG acquired from ▇. ▇▇▇▇▇ Commercial on July 20, 2023. In exchange for the debt settlement and additional cash considerations, ▇▇▇▇▇▇▇▇▇ transferred to NYDIG the South Carolina Datacenter Facility and 22 acres of land on which it is located. In conjunction with the sale, ▇▇▇▇▇▇▇▇▇ and NYDIG terminated the Hosting Agreement at the South Carolina site.
The sale of the South Carolina Facility is considered a significant disposition for the purposes of Item 2.01 of Form 8-K. As a result, the Company prepared the accompanying unaudited pro forma condensed consolidated financial statements in accordance with Article 11 of Regulation S-X. The Company determined that the sale of the South Carolina Facility did not qualify for discontinued operations accounting under financial statement presentation authoritative guidance. The accompanying unaudited pro forma condensed consolidated balance sheet as of September 30, 2023 assumes the sale of the South Carolina Facility occurred on September 30, 2023. The accompanying unaudited condensed consolidated statements of operations for the nine months ended September 30, 2023, and for the fiscal year ended December 21, 2022, assumes the sale had occurred on January 1, 2022. The pro forma adjustments are described in the accompanying notes and are based upon information and assumptions available at the time of the filing.
The unaudited pro forma condensed consolidated financial information is subject to the assumptions and adjustments described in the accompanying notes. The unaudited pro forma consolidated financial statements are presented based on certain estimates and assumptions are intended for informational purposes only, which are not necessarily indicative of what our financial position or results of operations actually would have been had the sale of the South Carolina Facility been completed as of the dates indicated, nor are they necessarily indicative of future results.
The unaudited pro forma consolidated financial statements and accompanying notes should be read together with our historical consolidated financial statements as of and for the fiscal year ended December 31, 2022 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2023.
▇▇▇▇▇▇▇▇▇ Generation Holdings Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2023
(Dollar amounts in thousands, except share data)
| September 30, 2023 | ||||||||||||||
| (Unaudited) | South Carolina Facility | Pro Forma | ||||||||||||
| ASSETS | ||||||||||||||
| CURRENT ASSETS: | ||||||||||||||
| Cash and cash equivalents | $ | 10,687 | $ | — | (a) | $ | 10,687 | |||||||
| Accounts receivable, net of allowance for doubtful accounts of $0 at June 30, 2023 and December 31, 2022 | 275 | — | 275 | |||||||||||
| Prepaid expenses and other assets | 8,017 | (3,500) | (a) | 4,517 | ||||||||||
| Emissions and carbon offset credits | 1,597 | — | 1,597 | |||||||||||
| Income tax receivable | 857 | — | 857 | |||||||||||
| Current assets held for sale | 507 | — | 507 | |||||||||||
| Total current assets | 21,940 | (3,500) | 18,440 | |||||||||||
| LONG-TERM ASSETS: | ||||||||||||||
| Property and equipment, net | 47,777 | — | 47,777 | |||||||||||
| Other long-term assets | 800 | — | 800 | |||||||||||
| Long-term assets held for sale | 19,295 | (19,295) | (a) | — | ||||||||||
| Total assets | 89,812 | (22,795) | 67,017 | |||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||
| CURRENT LIABILITIES: | ||||||||||||||
| Accounts payable | 13,664 | (7,867) | (a) | 5,797 | ||||||||||
| Accrued emissions expense | 7,924 | — | 7,924 | |||||||||||
| Accrued expenses | 8,016 | (481) | (a) | 7,535 | ||||||||||
| Short-term environmental liability | 1,700 | — | 1,700 | |||||||||||
| Long-term debt, current portion | 2,365 | (2,365) | (b) | — | ||||||||||
| Current liabilities held for sale | 1,732 | (865) | (a) | 867 | ||||||||||
| Total current liabilities | 35,401 | (11,578) | 23,823 | |||||||||||
| LONG-TERM LIABILITIES: | ||||||||||||||
| Long-term debt, net of current portion and deferred financing fees | 87,085 | (17,139) | (b) | 69,946 | ||||||||||
| Environmental liabilities | 27,733 | — | 27,733 | |||||||||||
| Other long-term liabilities | 4,820 | (2,160) | (a) | 2,660 | ||||||||||
| Total liabilities | 155,039 | (30,877) | 124,162 | |||||||||||
| STOCKHOLDERS' EQUITY: | ||||||||||||||
| Preferred stock, par value $0.0001, 20,000,000 shares authorized, none outstanding | — | — | — | |||||||||||
| Common stock, par value | 1 | — | 1 | |||||||||||
| Additional paid-in capital | 308,031 | — | 308,031 | |||||||||||
| Cumulative translation adjustment | (342) | — | (342) | |||||||||||
| Accumulated deficit | (372,917) | 8,082 | (a) | (364,835) | ||||||||||
| Total stockholders' equity | (65,227) | 8,082 | (57,145) | |||||||||||
| Total liabilities and stockholders' equity | $ | 89,812 | $ | (22,795) | $ | 67,017 | ||||||||
▇▇▇▇▇▇▇▇▇ Generation Holdings Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Nine months ended September 30, 2023
(in thousands, except per share data)
| Nine Months Ended 9/30/2023 | South Carolina Facility | Pro Forma | ||||||||||||
| REVENUE: | ||||||||||||||
| Datacenter hosting revenue | $ | 28,740 | (10,019) | (c) | 18,721 | |||||||||
| Cryptocurrency mining revenue | 17,033 | (1,858) | (c) | 15,175 | ||||||||||
| Power and capacity | 4,973 | — | 4,973 | |||||||||||
| Total revenue | 50,746 | (11,877) | 38,869 | |||||||||||
| OPERATING COSTS AND EXPENSES: | ||||||||||||||
| Cost of revenue - datacenter hosting (exclusive of depreciation) | 20,830 | (8,893) | (c) | 11,937 | ||||||||||
| Cost of revenue - cryptocurrency mining (exclusive of depreciation) | 10,639 | (940) | (c) | 9,699 | ||||||||||
| Cost of revenue - power and capacity (exclusive of depreciation) | 4,762 | — | 4,762 | |||||||||||
| Selling, general and administrative | 22,724 | (563) | (c) | 22,161 | ||||||||||
| Depreciation | 10,368 | (569) | (c) | 9,799 | ||||||||||
| Impairment of long-lived assets | 4,000 | — | 4,000 | |||||||||||
| Gain on sale of assets | (1,752) | — | (1,752) | |||||||||||
| Remeasurement of environmental liability | 1,600 | — | 1,600 | |||||||||||
| Total operating costs and expenses | 73,171 | (10,965) | 62,206 | |||||||||||
| Operating loss | (22,425) | (912) | (23,337) | |||||||||||
| OTHER EXPENSE, NET: | ||||||||||||||
| Interest expense, net | (9,725) | 1,020 | (e) | (8,705) | ||||||||||
| Gain (Loss) on Sale of Digital Assets | 398 | — | 398 | |||||||||||
| Other income (expense), net | (4) | — | (4) | |||||||||||
| Total other expense, net | (9,331) | 1,020 | (8,311) | |||||||||||
| Loss from continuing operations before income taxes | (31,756) | 108 | (31,648) | |||||||||||
| (Loss) income per basic share: | ||||||||||||||
| Loss per basic share from continuing operations | $ | (5.01) | $ | 0.02 | $ | (4.99) | ||||||||
| (Loss) income per diluted share: | ||||||||||||||
| Loss per diluted share from continuing operations | $ | (5.01) | $ | 0.02 | $ | (4.99) | ||||||||
| Average Shares Outstanding | ||||||||||||||
| Basic | 6,341 | 6,341 | 6,341 | |||||||||||
| Diluted | 6,341 | 6,341 | 6,341 | |||||||||||
▇▇▇▇▇▇▇▇▇ Generation Holdings Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
As of December 31, 2022
(in thousands, except per share data)
| Year Ended 12/31/2022 | South Carolina Facility | Pro Forma | ||||||||||||
| REVENUE: | ||||||||||||||
| Cryptocurrency datacenter | $ | 73,809 | $ | (15,968) | (d) | $ | 57,841 | |||||||
| Power and capacity | 16,170 | — | 16,170 | |||||||||||
| Total revenue | 89,979 | (15,968) | 74,011 | |||||||||||
| OPERATING COSTS AND EXPENSES: | ||||||||||||||
| Cost of revenue - cryptocurrency datacenter (exclusive of depreciation and amortization) | 45,933 | (7,471) | (d) | 38,462 | ||||||||||
| Cost of revenue - power and capacity (exclusive of depreciation and amortization) | 13,906 | — | 13,906 | |||||||||||
| Selling, general and administrative | 36,946 | (1,182) | (d) | 35,764 | ||||||||||
| Depreciation and amortization | 35,136 | (5,270) | (d) | 29,866 | ||||||||||
| Gain on sale of assets | (1,780) | — | (1,780) | |||||||||||
| Impairment of long-lived assets | 176,307 | — | 176,307 | |||||||||||
| Remeasurement of environmental liability | 16,694 | — | 16,694 | |||||||||||
| Total operating costs and expenses | 323,142 | (13,923) | 309,219 | |||||||||||
| Operating (loss) income from operations | (233,163) | (2,045) | (235,208) | |||||||||||
| OTHER INCOME (EXPENSE), NET: | ||||||||||||||
| Interest expense, net | (21,575) | 2,962 | (e) | (18,613) | ||||||||||
| (Loss) gain on sale of digital assets | (15) | — | (15) | |||||||||||
| Other income, net | 14 | — | 14 | |||||||||||
| Total other expense, net | (21,576) | 2,962 | (18,614) | |||||||||||
| (Loss) income from continuing operations before taxes | (254,739) | 917 | (253,822) | |||||||||||
| Provision for income taxes | 15,002 | — | 15,002 | |||||||||||
| Net (loss) income from continuing operations | (269,741) | 917 | (268,824) | |||||||||||
| (Loss) earnings per basic share: | ||||||||||||||
| (Loss) earnings per basic share from continuing operations | $ | (6.37) | $ | 0.02 | $ | (6.34) | ||||||||
| (Loss) earnings per diluted share: | ||||||||||||||
| (Loss) earnings per diluted share from continuing operations | $ | (6.37) | $ | 0.02 | $ | (6.34) | ||||||||
| Average Shares Outstanding | ||||||||||||||
| Basic | 42,373 | 42,373 | 42,373 | |||||||||||
| Diluted | 42,373 | 42,373 | 42,373 | |||||||||||
The unaudited pro forma condensed consolidated financial statements represent the following adjustments:
(a) Represents the Company’s divestiture of assets related to the South Carolina Facility as of September 30, 2023.
(b) Reflects the settlement of the Senior Secured Loan and the Secured Promissory note as of September 30, 2023.
(c) Reflects the elimination of results of operations attributable to the South Carolina Facility for the six months ended September 30, 2023.
(d) Reflects the elimination of results of operations attributable to the South Carolina Facility for the twelve months ended December 31, 2022.
(e) Reflects the settlement of the Senior Secured Loan and the Secured Promissory note as of January 1, 2022.