Stronghold Digital Mining, Inc. (Nasdaq:
SDIG) (“Stronghold,” or the “Company”) today reported
financial results for its first quarter ended March 31, 2022 and
provided an operational update.
First Quarter 2022 and Recent
Operational and Financial Highlights
- Removed
approximately 279,000 tons of coal refuse and returned
approximately 179,000 tons of beneficial use ash to waste coal
sites during the first quarter of 2022, facilitating the
remediation of these sites.
- On May 15, 2022,
the Company issued approximately $33.8 million aggregate principal
notes (the “Notes”) bearing a coupon of 10.0% and a maturity date
of May 15, 2024, plus approximately 6.3 million warrants, with a
strike price of $2.50, to certain investors. The Notes convert to
preferred equity bearing an 8.0% coupon if the market
capitalization exceeds $400 million based on the 20-day VWAP price
and there are 60 million shares outstanding or greater as of
September 30, 2022. If those tests are not met as of September 30,
2022, the security remains a note bearing 10% coupon plus quarterly
note amortization of the greater of 8% of revenue or $5.4 million.
The Notes can be repaid by the Company at any time without
prepayment penalty.
- As of May 12,
2022, and pro forma for the issuance of the Notes and miner sales,
which were executed after May 12, 2022, Stronghold had
approximately $47 million of cash & equivalents plus
unrestricted BTC holdings and more than $60 million of liquidity.
These figures include $27 million of cash proceeds from the
issuance of the Notes and approximately $10 million of cash
proceeds from miner sales.
- Mined 438
Bitcoin during the first quarter of 2022, including 198 in March
2022; mined over 100 Bitcoin in first 13 days of May.
- Averaged hash
rate of 0.9 exahash per second (“EH/s”) in the first quarter of
2022.
- As of March 31,
2022, Stronghold had received a total of approximately 25,900
miners with total hash rate capacity of approximately 2.4 EH/s. As
of May 12, 2022, the Company had received approximately 32,800
miners with total hash rate capacity of approximately 3.0
EH/s.
- Reiterating
guidance to exit 2022 with 4.1 EH/s of installed hash rate
capacity, which excludes all potential future deliveries of MinerVa
miners. Note that this guidance is unaffected by recent miner sales
related to our miner fleet optimization initiative.
Management Commentary
“Since we reported FY 2021 earnings on March 29,
2022, we believe that we have made significant progress on
enhancing our operations, and we are executing on our goal of
exceeding 4 EH/s by the end of the year,” said Greg Beard,
co-chairman and chief executive officer of Stronghold. “Earlier in
the year, Stronghold chose to de-emphasize growth to focus on
capital discipline and financial flexibility, and recent
operational and financial initiatives, including our recent
issuance of the Notes, have helped de-risk our funding needs,
despite recent volatility in cryptocurrency markets.”
“Furthermore, we believe that our vertically
integrated business model provides us with differentiated downside
protection that is misunderstood by the market. We built Stronghold
with the expectation that volatility in the cryptocurrency markets
could, at times, stress full-cycle returns throughout the industry.
Owning our power assets, which sell power into the PJM grid, allows
us to pivot to sell power opportunistically during periods when
power prices are more favorable than Bitcoin mining economics. This
powerful option has never been more valuable, and we are in the
process of ensuring that our plants and datacenters have the
ability to optimize for profitability during periods of weak
Bitcoin prices and strong power prices.”
Cryptocurrency Mining
Update
During the first quarter of 2022, Stronghold
mined approximately 438 Bitcoin. As of March 31, 2022, we had
received approximately 25,900 miners with total hash rate capacity
of approximately 2.4 EH/s. For the first quarter of 2022,
Stronghold averaged a hash rate of approximately 0.9 EH/s, in line
with previously announced guidance.
On April 20, 2022, switchgear failed at the
datacenter at the Panther Creek power plant (the “Panther Creek
Plant”), resulting in 10 days of downtime in cryptocurrency mining,
during which time the Company instead sold power to the grid. Prior
to the switchgear failure, the datacenter at the Panther Creek
Plant was operating at approximately 1.2 EH/s. Normal mining
operations resumed on April 30, 2022, and Stronghold estimates the
lost mining associated with the outage to be approximately 55
Bitcoin, or approximately $2.2 million, which was partially
mitigated by energy revenue of $0.8 million, resulting in a net
impact of negative $1.4 million. Stronghold has assessed critical
and long-lead-time equipment and is actively procuring additional
parts, which will be held in inventory to mitigate the length and
impact of any future outages.
As of May 12, 2022, the Company had received
approximately 32,800 miners with total hash rate capacity of
approximately 3.0 EH/s, of which approximately 24,000 miners, with
hash rate capacity of approximately 2.3 EH/s, were installed and
operational. As of May 12, 2022, Stronghold has entered into
purchase agreements for approximately 12,000 additional miners with
total hash rate capacity of approximately 1.2 EH/s, excluding
potential future deliveries of MinerVa miners. The Company
continues to have active and frequent conversations with MinerVa
regarding future deliveries or other methods of extracting the
value contractually owed to Stronghold. The Company does not have
sufficient information from MinerVa to provide an update or a
timeline on future deliveries, or if the Company can expect any
future deliveries. MinerVa miners represent approximately 11% of
Stronghold’s current hash rate capacity and are expected to
represent less than 6% of installed hash rate capacity by year end
2022.
Operations associated with the Company’s
profit-sharing arrangement at the Scrubgrass power plant (the
“Scrubgrass Plant”) are also progressing. On March 29, 2022, only
four of 24 datacenter containers had been commissioned under the
arrangement, but, as of May 12, 2022, 10 additional datacenter
containers had been commissioned, with an additional 10 datacenter
containers expected to be commissioned within the next two
months.
As of March 31, 2022 and May 12, 2022,
Stronghold held on its balance sheet approximately 369 Bitcoin and
approximately 285 Bitcoin, respectively.
Power Assets Update
Stronghold owns and operates approximately 165
MW of power generation capacity through its Scrubgrass Plant and
its Panther Creek Plant, both coal refuse reclamation-to-energy
facilities located in Pennsylvania. These plants generate power
from coal refuse, which is a waste byproduct of legacy coal mining
operations. The Commonwealth of Pennsylvania has designated coal
refuse as a Tier II Alternative Energy Source, making the
facilities eligible to earn renewable energy credits.
Stronghold’s vertically integrated business
model, which includes ownership of power assets, provides
differentiated opportunities to create value, including during
periods of higher power prices or lower Bitcoin prices. Since March
30, 2022, average forward power prices for June 2022 to May 2023,
in the markets into which the Company sells power, have increased
by nearly 70%, while Bitcoin prices have decreased more than 35%
over the same time frame. This divergence has created opportunities
for Stronghold to potentially generate more value selling power to
the grid rather than powering its Bitcoin operations during certain
timeframes. The Company is consistently evaluating the optimal
strategy, which may include selling power to the grid during hours
when on-peak power prices are in effect but remains committed to
its Bitcoin mining operations.
As discussed in the Company’s fourth quarter
earnings release, the Scrubgrass Plant encountered
greater-than-anticipated downtime and operated at a lower
utilization than expected during the fourth quarter of 2021 and the
first quarter of 2022. Stronghold has been implementing upgrades to
improve utilization, and average output increased by more than 20%
in April 2022 compared to the first quarter of 2022. The upgrades
remain on track to be completed by early in the second half of
2022, at which point uptime and utilization are expected to return
to normalized levels.
The Company continues to evaluate opportunities
to acquire additional power generation assets, including a coal
refuse reclamation facility with 112 MW of power generation
capacity that has been under a non-binding letter of intent to
purchase since 2021.
First Quarter 2022 Financial
Results
Revenues in the first quarter of 2022 increased
656% to $28.7 million compared to $3.8 million in the same quarter
a year ago. The increase is primarily attributable to higher energy
generation and cryptocurrency mining revenues.
Operating expenses in the first quarter of 2022
increased 1,074% to $58.3 million compared to $5.0 million in the
same quarter a year ago. The increase is attributable to a $12.2
million non-cash impairment on equipment deposits for MinerVa
miners, an $11.8 million increase in depreciation and amortization
from deploying additional miners and transformers, a $10.5 million
increase in general and administrative expenses as the Company
continues to scale operations, a $9.1 million increase in
operations and maintenance expense primarily driven by the
additional Panther Creek plant and one-time plant upgrades at
Scrubgrass, a $7.2 million increase in fuel expenses driven by
higher power generation and $2.5 million of non-cash impairment
costs attributable to the declines in the price of Bitcoin.
Net loss for the first quarter of 2022 was
($32.3) million compared to a net loss of ($0.2) million for the
same quarter a year ago.
Adjusted EBITDA for the first quarter of 2022
was $3.8 million, compared to a loss of ($0.3) million for the same
quarter a year ago (see reconciliation of Non-GAAP financial
measures).
Net cash used by operating activities in the
first quarter of 2022 was ($2.5) million compared to $3.0 million
of net cash provided by operating activities in the same quarter a
year ago.
Stronghold ended the quarter with approximately
$25.5 million in cash, $5.1 million in unrestricted digital
currencies and approximately $110.8 million in debt.
Liquidity and Capital
Resources
Stronghold ended the first quarter of 2022 with
total liquidity of approximately $48.6 million, comprising
approximately $25.5 million in cash, approximately $5.1 million in
unrestricted digital currencies and approximately $18.0 million in
availability under its existing equipment financing agreements.
Subsequent to the end of the first quarter of
2022, the Company raised $27.0 million from certain investors
through the issuance of the Notes and sold Bitcoin miners with hash
rate capacity of approximately 332 PH/s for approximately $16.9
million. Approximately $9.9 million of cash and approximately
$7.0mm reduction of future 2022 capital expenditures.
As of May 12, 2022, and pro forma for the
issuance of the Notes and the sales of Bitcoin miners, total
liquidity was approximately $61 million, including cash,
unrestricted digital currencies and availability under existing
financing agreements.
Stronghold believes its liquidity position,
combined with expected operating cash flow, will be sufficient to
meet all existing commitments and fund operations. The Company also
believes that incremental liquidity can be created through proceeds
related to Bitcoin miner fleet management and optimization,
including potential miner sales and through additional equipment
financing agreements, if necessary.
Conference Call
Stronghold will host a conference call today,
May 16, 2022 at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time)
with an accompanying presentation to discuss these results. A
question-and-answer session will follow management's
presentation.
To participate, please dial the appropriate
number at least ten minutes prior to the start time and ask for the
Stronghold Digital Mining conference call.
U.S. dial-in number: 1-844-705-8583International
number: 1-270-215-9880Conference ID: 3498036
The conference call will broadcast live and be
available for replay here.
A replay of the call will be available after
8:00 p.m. Eastern time on the same day through May 30, 2022 at 8:00
p.m. Eastern time.
Toll-free replay number:
1-855-859-2056International replay number: 1-404-537-3406Conference
ID: 3498036
About Stronghold Digital Mining,
Inc.Stronghold is a vertically integrated Bitcoin mining
company with an emphasis on environmentally beneficial operations.
Stronghold houses its miners at its wholly owned and operated
Scrubgrass Plant and Panther Creek Plant, both of which are
low-cost, environmentally beneficial coal refuse power generation
facilities in Pennsylvania.
Cautionary Statement Concerning
Forward-Looking StatementsCertain statements contained in
this press release constitute “forward-looking statements.” within
the meaning of the Private Securities Litigation Reform Act of
1995. You can identify forward-looking statements because they
contain words such as “believes,” “expects,” “may,” “will,”
“should,” “seeks,” “approximately,” “intends,” “plans,” “estimates”
or “anticipates” or the negative of these words and phrases or
similar words or phrases which are predictions of or indicate
future events or trends and which do not relate solely to
historical matters. Forward-looking statements and the business
prospects of Stronghold are subject to a number of risks and
uncertainties that may cause Stronghold’s actual results in future
periods to differ materially from the forward-looking statements.
These risks and uncertainties include, among other things: the
hybrid nature of our business model, which is highly dependent on
the price of Bitcoin; our dependence on the level of demand and
financial performance of the crypto asset industry; our ability to
manage growth, business, financial results and results of
operations; uncertainty regarding our evolving business model; our
ability to retain management and key personnel and the integration
of new management; our ability to raise capital to fund business
growth; our ability to maintain sufficient liquidity to fund
operations, growth and acquisitions; our substantial indebtedness
and its effect on our results of operations and our financial
condition; uncertainty regarding the outcomes of any investigations
or proceedings; our ability to enter into purchase agreements,
acquisitions and financing transactions; public health crises,
epidemics, and pandemics such as the coronavirus pandemic; our
ability to procure crypto asset mining equipment from foreign-based
suppliers; our ability to maintain our relationships with our third
party brokers and our dependence on their performance; our ability
to procure crypto asset mining equipment; developments and changes
in laws and regulations, including increased regulation of the
crypto asset industry through legislative action and revised rules
and standards applied by The Financial Crimes Enforcement Network
under the authority of the U.S. Bank Secrecy Act and the Investment
Company Act; the future acceptance and/or widespread use of, and
demand for, Bitcoin and other crypto assets; our ability to respond
to price fluctuations and rapidly changing technology; our ability
to operate our coal refuse power generation facilities as planned;
our ability to avail ourselves of tax credits for the clean-up of
coal refuse piles; and legislative or regulatory changes, and
liability under, or any future inability to comply with, existing
or future energy regulations or requirements. More information on
these risks and other potential factors that could affect our
financial results is included in our filings with the Securities
and Exchange Commission, including in the “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” sections of our Annual Report on Form 10-K
filed on March 29, 2022. Any forward-looking statement speaks only
as of the date as of which such statement is made, and, except as
required by law, we undertake no obligation to update or revise
publicly any forward-looking statements, whether because of new
information, future events, or otherwise.
STRONGHOLD
DIGITAL MINING, INC. |
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
|
|
|
|
March 31, 2022 |
|
December 31, 2021 |
|
(unaudited) |
|
|
CURRENT ASSETS |
|
|
|
Cash |
$ |
25,480,693 |
|
|
$ |
31,790,115 |
|
Digital currencies |
|
5,104,861 |
|
|
|
7,718,221 |
|
Digital currencies restricted |
|
8,763,725 |
|
|
|
2,699,644 |
|
Accounts receivable |
|
1,701,331 |
|
|
|
2,111,855 |
|
Due from related party |
|
864,625 |
|
|
|
- |
|
Prepaid insurance |
|
4,449,106 |
|
|
|
6,301,701 |
|
Inventory |
|
3,552,028 |
|
|
|
3,372,254 |
|
Other current assets |
|
698,882 |
|
|
|
661,640 |
|
Total Current Assets |
|
50,615,251 |
|
|
|
54,655,430 |
|
EQUIPMENT DEPOSITS |
|
98,577,594 |
|
|
|
130,999,398 |
|
PROPERTY, PLANT AND EQUIPMENT, NET |
|
220,200,769 |
|
|
|
166,657,155 |
|
LAND |
|
1,748,439 |
|
|
|
1,748,440 |
|
ROAD
BOND |
|
211,958 |
|
|
|
211,958 |
|
SECURITY DEPOSITS |
|
348,888 |
|
|
|
348,888 |
|
TOTAL ASSETS |
$ |
371,702,899 |
|
|
$ |
354,621,269 |
|
CURRENT LIABILITIES |
|
|
|
Current portion of long-term debt-net of discounts/issuance
fees |
$ |
76,226,400 |
|
|
$ |
45,799,651 |
|
Financed insurance premiums |
|
2,467,573 |
|
|
|
4,299,721 |
|
Forward sale contract |
|
8,570,236 |
|
|
|
7,116,488 |
|
Accounts payable |
|
28,239,743 |
|
|
|
28,650,659 |
|
Due to related parties |
|
1,499,307 |
|
|
|
1,430,660 |
|
Accrued liabilities |
|
7,357,537 |
|
|
|
5,053,957 |
|
Total Current Liabilities |
|
124,360,796 |
|
|
|
92,351,136 |
|
LONG-TERM LIABILITIES |
|
|
|
Asset retirement obligation |
|
980,032 |
|
|
|
973,948 |
|
Contract liabilities |
|
132,093 |
|
|
|
187,835 |
|
Paycheck Protection Program Loan |
|
841,670 |
|
|
|
841,670 |
|
Long-term debt-net of discounts/issuance fees |
|
32,063,889 |
|
|
|
18,378,841 |
|
Total Long-Term Liabilities |
|
34,017,684 |
|
|
|
20,382,294 |
|
Total Liabilities |
|
158,378,480 |
|
|
|
112,733,430 |
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
REDEEMABLE COMMON STOCK |
|
|
|
Common Stock - Class V, $0.0001 par value; 34,560,000 shares
authorized, and 27,057,600 and 27,057,600 shares issued and
outstanding,respectively |
|
172,704,220 |
|
|
|
301,052,617 |
|
Total redeemable common stock |
|
172,704,220 |
|
|
|
301,052,617 |
|
STOCKHOLDERS' EQUITY / (DEFICIT) |
|
|
|
General partners |
|
- |
|
|
|
- |
|
Limited partners |
|
- |
|
|
|
- |
|
Non-controlling Series A redeemable and convertible preferred
stock, $0.0001 par value, aggregate liquidation value $5,000,000.
1,152,000 and 1,152,000 issued and outstanding, respectively |
|
36,898,361 |
|
|
|
37,670,161 |
|
Common Stock - Class A, $0.0001 par value; 685,440,000 shares
authorized, and 20,020,877 and 20,016,067 shares issued and
outstanding, respectively |
|
2,002 |
|
|
|
2,002 |
|
Accumulated deficits |
|
(241,895,906 |
) |
|
|
(338,709,688 |
) |
Additional paid-in capital |
|
245,615,742 |
|
|
|
241,872,747 |
|
Stockholders' equity / (deficit) |
|
40,620,199 |
|
|
|
-59,164,778 |
|
Total |
|
213,324,419 |
|
|
|
241,887,839 |
|
TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY /
(DEFICIT) |
$ |
371,702,899 |
|
|
$ |
354,621,269 |
|
|
|
|
|
STRONGHOLD
DIGITAL MINING, INC. |
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|
|
|
|
|
Three months
ended, |
|
Consolidated |
|
Combined |
|
March 31, 2022 |
|
March 31, 2021 |
|
(unaudited) |
|
(unaudited) |
OPERATING REVENUES |
|
|
|
Energy |
$ |
8,362,801 |
|
|
$ |
1,915,856 |
|
Capacity |
|
2,044,427 |
|
|
|
687,690 |
|
Cryptocurrency hosting |
|
67,876 |
|
|
|
555,747 |
|
Cryptocurrency mining |
|
18,204,193 |
|
|
|
516,259 |
|
Other |
|
20,762 |
|
|
|
122,782 |
|
Total operating revenues |
|
28,700,059 |
|
|
|
3,798,334 |
|
OPERATING EXPENSES |
|
|
|
Fuel |
|
9,338,394 |
|
|
|
2,172,109 |
|
Operations and maintenance |
|
10,520,305 |
|
|
|
1,370,688 |
|
General and administrative |
|
11,424,231 |
|
|
|
910,876 |
|
Impairments on digital currencies |
|
2,506,172 |
|
|
|
- |
|
Impairments on equipment deposits |
|
12,228,742 |
|
|
|
- |
|
Depreciation and amortization |
|
12,319,581 |
|
|
|
517,443 |
|
Total operating expenses |
|
58,337,425 |
|
|
|
4,971,116 |
|
NET
OPERATING LOSS |
|
(29,637,366 |
) |
|
|
(1,172,782 |
) |
OTHER INCOME (EXPENSE) |
|
|
|
Interest expense |
|
(2,911,452 |
) |
|
|
(78,640 |
) |
Gain on extinguishment of PPP loan |
|
- |
|
|
|
638,800 |
|
Realized gain (loss) on sale of digital currencies |
|
751,110 |
|
|
|
143,881 |
|
Changes in fair value of warrant liabilities |
|
- |
|
|
|
- |
|
Realized gain (loss) on disposal of fixed asset |
|
(44,958 |
) |
|
|
- |
|
Changes in fair value of forward sale derivative |
|
(483,749 |
) |
|
|
- |
|
Waste coal credits |
|
- |
|
|
|
211,890 |
|
Other |
|
20,000 |
|
|
|
17,895 |
|
Total other income / (expense) |
|
(2,669,049 |
) |
|
|
933,826 |
|
NET
LOSS |
$ |
(32,306,416 |
) |
|
$ |
(238,956 |
) |
NET
LOSS - attributable to non-controlling interest |
$ |
(18,897,638 |
) |
|
|
NET
LOSS - Stronghold Digital Mining, Inc |
$ |
(13,408,778 |
) |
|
|
NET
LOSS attributable to Class A Common Shares(1) |
|
|
|
Basic |
$ |
(0.66 |
) |
|
|
Diluted |
$ |
(0.66 |
) |
|
|
Class A Common Shares Outstanding(1) |
|
|
|
Basic |
|
20,206,103 |
|
|
|
Diluted |
|
20,206,103 |
|
|
|
|
|
|
|
STRONGHOLD
DIGITAL MINING, INC. |
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|
|
|
|
Three months
ended, |
|
March 31, 2022 |
|
March 31, 2021 |
|
(unaudited) |
|
(unaudited) |
CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
|
Net Loss |
$ |
(32,306,416 |
) |
|
$ |
(238,956 |
) |
Adjustments to reconcile net loss to net cash provided by operating
activities: |
|
|
|
Depreciation and Amortization - PP&E |
|
12,319,581 |
|
|
|
517,443 |
|
Forgiveness of PPP loan |
|
- |
|
|
|
(638,800 |
) |
Realized (gain) loss on sale of derivatives |
|
- |
|
|
|
- |
|
Realized (gain) loss on sale of digital currency |
|
(751,110 |
) |
|
|
(143,881 |
) |
Realized (gain) loss on disposal of fixed assets |
|
44,958 |
|
|
|
- |
|
Amortization of debt issuance costs |
|
881,463 |
|
|
|
- |
|
Stock Compensation |
|
2,592,995 |
|
|
|
- |
|
Impairments on digital currencies |
|
2,506,172 |
|
|
|
- |
|
Impairments on equipment deposits |
|
12,228,742 |
|
|
|
- |
|
Changes in fair value of forward sale derivative |
|
483,749 |
|
|
|
- |
|
(Increase) decrease in assets: |
|
|
|
Digital currencies |
|
(3,450,721 |
) |
|
|
(516,259 |
) |
Accounts receivable |
|
410,525 |
|
|
|
(298,765 |
) |
Prepaid Insurance |
|
1,852,595 |
|
|
|
- |
|
Due from related party |
|
(864,624 |
) |
|
|
302,973 |
|
Inventory |
|
(179,774 |
) |
|
|
114,750 |
|
Other current assets |
|
(37,242 |
) |
|
|
(35,782 |
) |
Increase (decrease) in liabilities: |
|
|
|
Accounts payable |
|
(410,916 |
) |
|
|
3,348,824 |
|
Due to related parties |
|
68,647 |
|
|
|
319,071 |
|
Accrued liabilities |
|
2,164,896 |
|
|
|
227,167 |
|
Contract liabilities |
|
(55,742 |
) |
|
|
- |
|
NET
CASH PROVIDED BY (USED) OPERATING ACTIVITIES |
|
(2,502,222 |
) |
|
|
2,957,785 |
|
CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
|
Proceeds from sale of digital currencies |
|
12,998,410 |
|
|
|
484,387 |
|
Proceeds from sale of derivatives |
|
- |
|
|
|
- |
|
Forward sale contract prepayment |
|
970,000 |
|
|
|
- |
|
Purchase of property, plant and equipment |
|
(37,236,332 |
) |
|
|
(2,854,904 |
) |
Equipment purchase deposits- net of future commitments |
|
(6,482,000 |
) |
|
|
- |
|
NET
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES |
|
(29,749,922 |
) |
|
|
(2,370,517 |
) |
CASH
FLOWS FROM (USED IN) FINANCING ACTIVITIES |
|
|
|
Payments on long-term debt |
|
(9,282,227 |
) |
|
|
(109,364 |
) |
Payments on financed insurance premiums |
|
(1,832,149 |
) |
|
|
- |
|
Proceeds from promissory note |
|
24,144,586 |
|
|
|
- |
|
Proceeds from equipment financing agreement |
|
12,912,512 |
|
|
|
- |
|
Proceeds from PPP loan |
|
- |
|
|
|
841,670 |
|
NET
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES |
|
25,942,722 |
|
|
|
732,306 |
|
NET
INCREASE (DECREASE) IN CASH |
|
(6,309,422 |
) |
|
|
1,319,574 |
|
CASH
- BEGINNING OF PERIOD |
|
31,790,115 |
|
|
|
303,187 |
|
CASH
- END OF PERIOD |
$ |
25,480,693 |
|
|
$ |
1,622,761 |
|
|
|
|
|
Use and Reconciliation of Non-GAAP
Financial MeasuresThis press release and our related
earnings call contain certain non-GAAP financial measures,
including Adjusted EBITDA, as a measure of our operating
performance. Adjusted EBITDA is a non-GAAP financial measure. We
define Adjusted EBITDA as net income (loss) before interest, taxes,
depreciation and amortization, further adjusted by the removal of
one-time transaction costs, impairment of digital currencies,
realized gains and losses on the sale of long-term assets, expenses
related to stock-based compensation, gains or losses on derivative
contracts, gain on extinguishment of debt, realized gain or loss on
sale of digital currencies, waste coal credits, commission on sale
of ash, or changes in fair value of warrant liabilities in the
period presented. See reconciliation below.
Our board of directors and management team use
Adjusted EBITDA to assess our financial performance because they
believe it allows them to compare our operating performance on a
consistent basis across periods by removing the effects of our
capital structure (such as varying levels of interest expense and
income), asset base (such as depreciation, amortization,
impairment, and realized gains and losses on sale of long-term
assets) and other items (such as one-time transaction costs,
expenses related to stock-based compensation, and unrealized gains
and losses on derivative contracts) that impact the comparability
of financial results from period to period. We present Adjusted
EBITDA because we believe it provides useful information regarding
the factors and trends affecting our business in addition to
measures calculated under GAAP. Adjusted EBITDA is not a financial
measure presented in accordance with GAAP. We believe that the
presentation of this non-GAAP financial measure will provide useful
information to investors and analysts in assessing our financial
performance and results of operations across reporting periods by
excluding items we do not believe are indicative of our core
operating performance. Net income (loss) is the GAAP measure most
directly comparable to Adjusted EBITDA. Our non-GAAP financial
measure should not be considered as an alternative to the most
directly comparable GAAP financial measure. You are encouraged to
evaluate each of these adjustments and the reasons we consider them
appropriate for supplemental analysis. In evaluating Adjusted
EBITDA, you should be aware that in the future we may incur
expenses that are the same as or similar to some of the adjustments
in such presentation. Our presentation of Adjusted EBITDA should
not be construed as an inference that our future results will be
unaffected by unusual or non-recurring items. There can be no
assurance that we will not modify the presentation of Adjusted
EBITDA in the future, and any such modification may be material.
Adjusted EBITDA has important limitations as an analytical tool and
you should not consider Adjusted EBITDA in isolation or as a
substitute for analysis of our results as reported under GAAP and
should be read in conjunction with the financial statements
furnished in our Form 10-Q for the quarter ended March 31, 2022.
Because Adjusted EBITDA may be defined differently by other
companies in our industry, our definition of this non-GAAP
financial measure may not be comparable to similarly titled
measures of other companies, thereby diminishing its utility.
STRONGHOLD
DIGITAL MINING, INC. |
RECONCILATION OF ADJUSTED EBITDA |
|
|
|
|
|
Three months
ended, |
|
March 31, 2022 |
|
March 31, 2021 |
|
(unaudited) |
|
(unaudited) |
Net Income (loss) |
$ |
(32,306 |
) |
|
$ |
(239 |
) |
Interest |
|
2,912 |
|
|
|
73 |
|
Depreciation and amortization |
|
12,320 |
|
|
|
517 |
|
Impairment costs of digital currencies |
|
2,506 |
|
|
|
- |
|
Impairment costs of equipment deposits |
|
12,229 |
|
|
|
- |
|
Realized gains and losses on the sale of long-term assets |
|
- |
|
|
|
- |
|
One time non-recurring expenses 1 |
|
3,765 |
|
|
|
- |
|
Expenses related to stock-based compensation |
|
2,593 |
|
|
|
- |
|
(Gains)/Losses on disposal of fixed assets |
|
45 |
|
|
|
(Gains)/Losses on derivative contracts |
|
484 |
|
|
|
- |
|
Gain on extinguishment of PPP loan |
|
- |
|
|
|
(639 |
) |
Realized (gain)/loss on sale of digital currencies |
|
(751 |
) |
|
|
- |
|
Adjusted EBITDA |
$ |
3,795 |
|
|
$ |
(287 |
) |
|
|
|
|
Investor Contact:
Matt Glover or Jeff Grampp, CFAGateway Group,
Inc. SDIG@GatewayIR.com1-949-574-3860
Media Contact:
contact@strongholddigitalmining.com
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