Form 8-K - Current report

0000827876falseCLEANSPARK, INC.00008278762024-08-092024-08-09

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 09, 2024

 

 

CleanSpark, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Nevada			001-39187	87-0449945
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
10624 S. Eastern Ave. Suite A - 638
Henderson, Nevada				89052
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: [phone]

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001 per share		CLSK		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

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. ☐

 

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Item 2.02 Results of Operations and Financial Condition.

On August 9, 2024, CleanSpark, Inc. announced financial results for its fiscal quarter ended June 30, 2024. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

The information in this Item 2.02 of this Current Report on Form 8-K (including Exhibit 99.1) shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.	Description
99.1	Press Release, dated August 9, 2024
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			CLEANSPARK, INC.
Date:	August 9, 2024	By:	/s/ Gary Vecchiarelli
			Gary Vecchiarelli, Chief Financial Officer

 

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CleanSpark Reports Third Quarter FY2024 Financial Results

 

FY2024 Third Quarter Revenue of $104.1 million, net loss of ($236.2) million and Adjusted EBITDA of ($12.7) million

Revenue grows 129% year over year

Current hashrate surpasses 22 EH/s

Partners with Coinbase on $50 million line of credit

 

LAS VEGAS, August 9, 2024 — CleanSpark, Inc. (Nasdaq: CLSK) (the "Company"), America's Bitcoin Miner®, today reported financial results for the three months ended June 30, 2024.

“We had a tremendous quarter with a 24% increase in hashrate during the quarter and an 21% increase in efficiency year to date. We are also executing on expansions into two new states, Tennessee and Wyoming,” said Zach Bradford, CEO. “We have made a strategic decision to best position the company to thrive now and into the future, recognizing the need to maximize efficiency of our miners and operations. Specifically, we determined to replace a substantial portion of our fleet before the miners reached the end of their originally expected life cycle. Although that decision has generated a non-cash expense that negatively affects our reported operating results for this quarter. We believe this is the most prudent step for the long-term success of the company. Our team has done an incredible job optimizing the efficiency of our deployed fleet to maximize profitability. We believe, based on information from independent third-party sources, that CleanSpark is currently the most efficient large-scale publicly traded Bitcoin miner.”

“CleanSpark weathered the challenges of the bitcoin halving with one of the most efficient mining portfolios as evidenced by our strong gross margins,” said Gary A. Vecchiarelli, CFO. “During the third quarter, we saw block rewards get cut by 50%, yet we managed to recognize only 7% less revenue by mining 1,583 bitcoin in the period. Additionally, we recognized a net loss primarily due to two non-cash factors: an unfavorable mark-to-market on the fair value of our large bitcoin holdings and an impairment on older, less-efficient miners. The non-cash impairment was directly attributable to a conscious strategic decision to upgrade and maintain one of the world’s largest and most efficient state-of-the-art mining fleets. We continue to have one of the strongest balance sheets in the industry and as a result I am happy to announce that we have also entered into a partnership with Coinbase where we have acquired a $50 million revolving line of credit collateralized by a portion of our bitcoin holdings. This line of credit will help us continue to take advantage of opportunities in the marketplace at a low cost of capital.”

Q3 Financial Highlights

Financial Results for the Three Months Ended June 30, 2024.

•

The Company increased its quarterly revenues to $104.1 million, an increase of $58.6 million, or 129% from $45.5 million for the same prior year period.

•

Net loss for the three months ended June 30, 2024 was ($236.2) million or ($1.03) basic income loss per share compared to a loss of ($14.1) million or ($0.12) loss per share for the same prior year period.

 

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•

Adjusted EBITDA decreased to ($12.7) million, a decrease of ($26.0) million from $13.3 million in the prior year.

 

Balance Sheet Highlights as of June 30, 2024

Assets

•

Cash: $129.2 million

•

Bitcoin: $413.0 million

•

Total Current assets: $598.8 million

•

Total Mining assets (including prepaid deposits & deployed miners): $625.8 million

•

Total Assets: $1.48 billion

Liabilities and Stockholders' Equity

•

Current Liabilities: $67.0 million

•

Total Liabilities: $73.4 million

•

Total Stockholders' Equity: $1.40 billion

The Company had working capital of $531.9 million and $11.0 million of debt as of June 30, 2024.

Investor Conference Call and Webcast

The Company will hold its third quarter FY2024 earnings presentation and business update for investors and analysts today, August 9, 2024, at 1:30 p.m. PT / 4:30 p.m. ET.

Webcast URL: https://investors.cleanspark.com

The webcast will be accessible for at least 30 days on the Company's website and a transcript of the call will be available on the Company's website following the call.

About CleanSpark

CleanSpark (Nasdaq: CLSK) is America's Bitcoin Miner®. We own and operate multiple data centers that primarily run on low-carbon power. Our infrastructure responsibly supports Bitcoin, the world's most important digital commodity and an essential tool for financial independence and inclusion. We cultivate trust and transparency among our employees and the communities we operate in. Visit our website at www.cleanspark.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In this press release, forward-looking statements

 

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include, but may not be limited to, statements regarding the Company’s expectations, beliefs, plans, intentions, and strategies. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "targets," "projects," "contemplates," "believes," "estimates," "forecasts," "predicts," "potential" or "continue" or the negative of these terms or other similar expressions. The forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to: achieving our future growth plans; using the line of credit and realizing a lower cost of capital; closing on announced expansions; the risk that the electrical power available to our facilities does not increase as expected; the success of its digital currency mining activities; the volatile and unpredictable cycles in the emerging and evolving industries in which we operate; increasing difficulty rates for bitcoin mining; bitcoin halving; new or additional governmental regulation; the anticipated delivery dates of new miners; the ability to successfully deploy new miners; the dependency on utility rate structures and government incentive programs; dependency on third-party power providers for expansion efforts; the expectations of future revenue growth may not be realized; and other risks described in the Company's prior press releases and in its filings with the Securities and Exchange Commission (SEC), including under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023, and any subsequent filings with the SEC. Forward-looking statements contained herein are made only as to the date of this press release, and we assume no obligation to update or revise any forward-looking statements as a result of any new information, changed circumstances or future events or otherwise, except as required by applicable law.

Non-GAAP Measure

The Company presents adjusted EBITDA, which is not a measurement of financial performance under generally accepted accounting principles in the United States("GAAP"). The Company's non-GAAP "Adjusted EBITDA" excludes (i) impacts of interest, taxes, and depreciation; (ii) the Company's share-based compensation expense, unrealized gains/losses on securities, and, changes in the fair value of contingent consideration with respect to previously completed acquisitions, all of which are non-cash items that the Company believes are not reflective of the Company's general business performance, and for which the accounting requires management judgment, and the resulting expenses could vary significantly in comparison to other companies; (iii) non-cash impairment losses related to long-lived assets (including goodwill); (iv) realized gains and losses on sales of equity securities, the amounts of which are directly related to the unrealized gains and losses that are also excluded; (v) legal fees related to litigation and various transactions, which fees management does not believe are reflective of the Company's ongoing operating activities; (vi) gains and losses on disposal of assets, the majority of which are related to obsolete or unrepairable machines that are no longer deployed; (vii) gains and losses related to discontinued operations that would not be applicable to the Company's future business activities; and (viii) severance expenses. The Company previously excluded non-cash impairment losses related to digital assets and realized gains and losses on sales of bitcoin from our calculation of adjusted

 

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EBITDA, but has determined such items are part of the Company's normal ongoing operations and will no longer be excluding them from our calculation of adjusted EBITDA.

Management believes that providing this non-GAAP financial measure that excludes these items allows for meaningful comparisons between the Company's core business operating results and those of other companies, and provides the Company with an important tool for financial and operational decision making and for evaluating its own core business operating results over different periods of time. In addition to management's internal use of non-GAAP adjusted EBITDA, management believes that adjusted EBITDA is also useful to investors and analysts in comparing the Company's performance across reporting periods on a consistent basis. Management believes the foregoing to be the case even though some of the excluded items involve cash outlays and some of them recur on a regular basis (although management does not believe any of such items are normal operating expenses necessary to generate our bitcoin related revenues). For example, the Company expects that share-based compensation expense, which is excluded from adjusted EBITDA, will continue to be a significant recurring expense over the coming years and is an important part of the compensation provided to certain employees, officers, and directors. Additionally, management does not consider any of the excluded items to be expenses necessary to generate the Company's bitcoin related revenue.

The Company's adjusted EBITDA measure may not be directly comparable to similar measures provided by other companies in our industry, as other companies in the Company's industry may calculate non-GAAP financial results differently. The Company's adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to operating (loss) income or any other measure of performance derived in accordance with GAAP. Although management utilizes internally and presents adjusted EBITDA, the Company only utilizes that measure supplementally and does not consider it to be a substitute for, or superior to, the information provided by GAAP financial results.

Accordingly, adjusted EBITDA is not meant to be considered in isolation of, and should be read in conjunction with, the information contained in the Company's Consolidated Financial Statements, which have been prepared in accordance with GAAP.

 

 

 

 

 

 

 

 

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CLEANSPARK, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value and share amounts)

 

		June 30, 2024				September 30, 2023
		(Unaudited)
ASSETS
Current assets
Cash and cash equivalents		$	126,141			$	29,215
Restricted cash			3,023				—
Receivable from equity offerings			31,158				9,590
Prepaid expense and other current assets			7,656				3,258
Bitcoin (see Note 2 and Note 5)			413,033				56,241
Note receivable from GRIID (see Note 6)			15,000				—
Derivative investment asset			1,692				2,697
Investment in debt security, at fair value			812				726
Current assets held for sale			320				445
Total current assets		$	598,835			$	102,172
Property and equipment, net		$	568,393			$	564,395
Operating lease right of use asset			2,872				688
Intangible assets, net			3,580				4,603
Deposits on miners and mining equipment			284,541				75,959
Other long-term assets			9,311				5,718
Goodwill			8,043				8,043
Total assets		$	1,475,575			$	761,578
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities		$	56,488			$	65,577
Current portion of operating lease liability			198				181
Current portion of finance lease liability			23				130
Current portion of long-term loans payable			9,665				6,992
Current liabilities held for sale			611				1,175
Total current liabilities		$	66,985			$	74,055
Long-term liabilities
Operating lease liability, net of current portion			721				519
Finance lease liability, net of current portion			—				9
Loans payable, net of current portion			1,314				8,911
Deferred income taxes, net			4,356				857
Total liabilities		$	73,376			$	84,351
Stockholders' equity
Preferred stock; $0.001 par value; 10,000,000 shares authorized; Series A shares; 2,000,000 authorized; 1,750,000 and 1,750,000 issued and outstanding, respectively			2				2
Common stock; $0.001 par value; 300,000,000 shares authorized; 235,525,077 and 160,184,921 shares issued and outstanding, respectively			236				160
Additional paid-in capital			1,817,128				1,009,482
Accumulated other comprehensive income			312				226
Accumulated deficit			(415,479	)			(332,643	)
Total stockholders' equity			1,402,199				677,227
Total liabilities and stockholders' equity		$	1,475,575			$	761,578

 

 

 

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CLEANSPARK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited, in thousands, except per share and share amounts)

 

		For the three months ended									For the nine months ended
		June 30, 2024				June 30, 2023					June 30, 2024				June 30, 2023
Revenues, net
Bitcoin mining revenue, net		$	104,108			$	45,427				$	289,693			$	115,661
Other services revenue			—				96					—				227
Total revenues, net		$	104,108			$	45,523				$	289,693			$	115,888
Costs and expenses
Cost of revenues (exclusive of depreciation and amortization shown below)			45,180				20,681					108,374				63,179
Professional fees			4,368				2,225					8,149				8,806
Payroll expenses			17,150				10,405					49,291				29,957
General and administrative expenses			8,235				5,064					20,058				13,117
(Gain) loss on disposal of assets			(47	)			—					2,281				3
Loss (gain) on fair value of bitcoin, net (see Note 2 and Note 5)			48,338				—					(107,406	)			—
Impairment expense - bitcoin			—				740					—				1,017
Impairment expense - fixed assets			189,235				—					189,235				—
Impairment expense - other			—				—					396				—
Realized loss (gain) on sale of bitcoin			—				143					—				(762	)
Depreciation and amortization			40,727				21,850					102,761				62,525
Total costs and expenses		$	353,186			$	61,108				$	373,139			$	177,842
Loss from operations			(249,078	)			(15,585		)			(83,446	)			(61,954	)
Other income (expense)
Other income			—				—					—				11
Change in fair value of contingent consideration			—				2,000					—				2,485
Unrealized gain (loss) on derivative security			1,188				105					(1,005	)			(1,110	)
Interest income			2,638				52					5,909				174
Interest expense			(485	)			(689		)			(1,557	)			(2,377	)
Total other income (expense)		$	3,341			$	1,468				$	3,347			$	(817	)
Loss before income tax expense			(245,737	)			(14,117		)			(80,099	)			(62,771	)
Income tax (benefit) expense			(9,495	)			—					3,499				—
Loss from continuing operations		$	(236,242	)		$	(14,117		)		$	(83,598	)		$	(62,771	)
Discontinued operations
(Loss) income from discontinued operations		$	—			$	(102		)		$	—			$	1,061
Income tax expense			—				—					—				—
(Loss) income on discontinued operations		$	—			$	(102		)		$	—			$	1,061
Net loss		$	(236,242	)		$	(14,219		)		$	(83,598	)		$	(61,710	)
Preferred stock dividends			—				—					3,421				—
Net loss attributable to common shareholders		$	(236,242	)		$	(14,219		)		$	(87,019	)		$	(61,710	)
Other comprehensive income			28				28					86				86
Total comprehensive (loss) income attributable to common shareholders		$	(236,214	)		$	(14,191		)		$	(86,933	)		$	(61,624	)

 

 

 

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CLEANSPARK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Continued)

(Unaudited, in thousands, except per share and share amounts)

 

 

		For the three months ended								For the nine months ended
		June 30, 2024				June 30, 2023				June 30, 2024				June 30, 2023
(Loss) income from continuing operations per common share - basic		$	(1.03	)		$	(0.12	)		$	(0.42	)		$	(0.72	)
Weighted average common shares outstanding - basic			228,642,939				114,844,402				205,482,062				87,248,719
(Loss) income from continuing operations per common share - diluted		$	(1.03	)		$	(0.12	)		$	(0.42	)		$	(0.72	)
Weighted average common shares outstanding - diluted			228,642,939				114,844,402				205,482,062				87,638,134
Income on discontinued operations per common share - basic		$	—			$	—			$	—			$	0.01
Weighted average common shares outstanding - basic			228,642,939				114,844,402				205,482,062				87,248,719
Income on discontinued operations per common share - diluted		$	—			$	—			$	—			$	0.01
Weighted average common shares outstanding - diluted			228,642,939				114,844,402				205,482,062				87,638,134

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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CLEANSPARK, INC.

RECONCILIATION OF ADJUSTED EBITDA

(Unaudited, in thousands)

 

		Three Months Ended June 30,
		2024							2023
Net income (loss)		$	(236,242)						$	(14,219)
Adjustments:
Loss (income) on discontinued operations			—							102
Impairment expense - other			—							—
Impairment expense - fixed assets			189,235							—
Depreciation and amortization			40,727							21,850
Share-based compensation expense			2,946							5,947
Change in fair value of contingent consideration			—							(2,000)
Unrealized loss (gain) of derivative security			(1,188)							(105)
Interest income			(2,638)							(52)
Interest expense			485							689
Loss on disposal of assets			(47)							—
Income tax expense			(9,495)							—
Fees related to financing & business development transactions			2,862							85
Litigation & settlement related expenses			686							1,036
Total Adjusted EBITDA		$	(12,669)						$	13,333
					Three months ended March 31, 2024
Revenues, net
Digital currency mining revenue, net					$	111,799
Other services revenue						—
Total revenues, net					$	111,799
Net income					$	126,735
Adjustments:
Depreciation and amortization						32,187
Share-based compensation expense						9,797
Impairment expense - other							396
Unrealized loss on derivative security						949
Interest income					(2,684						)
Interest expense					526
Loss on disposal of assets					1,652
Income tax expense					11,595
Other2					676
Total Adjusted EBITDA					$	181,829

We have not excluded the changes fair value of our bitcoin (loss of $48,338 and gain of $119,702 in the quarters ended June 30, 2024 and March 31, 2024, respectively), which we now record in our statement of operations, as provided for in ASC 350-60 and as discussed elsewhere in our Form 10-Q.

2 Includes fees and expenses related to litigation, settlements, financing & business development transactions.

Investor Relations Contact
Brittany Moore
702-989-7693
[e-mail]

Media Contact
Eleni Stylianou
 

 

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702-989-7694
[e-mail]

 

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Document And Entity Information	Aug. 09, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 09, 2024
Entity Registrant Name	CLEANSPARK, INC.
Entity Central Index Key	0000827876
Entity Emerging Growth Company	false
Entity File Number	001-39187
Entity Incorporation, State or Country Code	NV
Entity Tax Identification Number	87-0449945
Entity Address, Address Line One	10624 S. Eastern Ave.
Entity Address, Address Line Two	Suite A - 638
Entity Address, City or Town	Henderson
Entity Address, State or Province	NV
Entity Address, Postal Zip Code	89052
City Area Code	(702)
Local Phone Number	989-7692
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	CLSK
Security Exchange Name	NASDAQ

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