8-K
Cleanspark, Inc. (CLSK)
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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, 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<br>of Incorporation) | (Commission File Number) | (IRS Employer<br>Identification No.) |
| 10624 S. Eastern Ave.<br><br>Suite A - 638 | ||
| Henderson, Nevada | 89052 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
| Registrant’s Telephone Number, Including Area Code: (702) 989-7692 | ||
| --- |
(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<br>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. ☐
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) |
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 |
EX-99.1
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.
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
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
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.
CLEANSPARK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share amounts)
| September 30,<br>2023 | |||||
|---|---|---|---|---|---|
| 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 |
All values are in US Dollars.
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,<br>2024 | June 30,<br>2023 | June 30,<br>2024 | June 30,<br>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 | ) |
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,<br>2024 | June 30,<br>2023 | June 30,<br>2024 | June 30,<br>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 |
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<br><br>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 ir@cleanspark.com
Media Contact Eleni Stylianou
702-989-7694 pr@cleanspark.com