Soluna Holdings Reports Q1 Results

Ramps Project Dorothy and Kicks Off New Business Plan

Soluna Holdings, Inc. (“SHI” or the “Company”), (NASDAQ: SLNH), the parent company of Soluna Computing, Inc. (“SCI”), a developer of green data centers for Bitcoin mining and other intensive computing, reported financial results for the first quarter ended March 31, 2023.

John Belizaire, CEO of Soluna Holdings, said, “Soluna has been busy the last few months. In the first quarter, we began our transition to a new business model, focused on monetizing our sites through hosting and joint ventures. We continue to reduce G&A costs to put us on a trajectory to reach positive cash flows from operations. We expect the first two quarters of this year to be transition quarters as we ramp up Project Dorothy and Project Sophie’s new hosting customers. In the coming weeks I will provide a more fulsome Earnings Power Illustration for our shareholders.”

Operating Highlights:

Revenue:

  • Completed Project Dorothy interconnection work and received ERCOT approval to energize.
  • Project Dorothy 1A: 25 MW of hosting contracts executed with strategic customers. Thousands of machines are being delivered the week of May 15th as the facility ramps up.
  • Project Dorothy 1B: Secured Navitas Global as investment partner for $14 million proprietary mining partnership. Construction is currently being completed and we expect it to energize in June 2023.
  • Project Sophie: Secured 25 MW hosting agreement with Sustainability-focus Bitcoin Miner.

Expenses:

  • Continued G&A expense reductions.

Capital Structure:

  • Obtained a 14-month Extension from October Noteholders, to July 25, 2024.
  • Returned approximately $3 million of collateral to NYDIG.
  • Decommissioned Project Marie facility in Kentucky.

Financial Summary:

Key financial results for the first quarter include:

  • Total revenue in the first quarter of 2023 decreased by 67% to $3.1 million compared to $9.3 million in the first quarter of 2022. The decrease is primarily attributable to decommissioning of Project Marie impacting both proprietary mining and hosting. In addition, the average Bitcoin pricing decreased by 45% in the first quarter of 2023 versus the first quarter of 2022.
  • Net loss improved from $8.9 million in the first quarter of 2022 to $7.1 million in the first quarter of 2023 - due mainly to a reduction in depreciation expense, which resulted from an impairment charge at the end of 2022 and cost reductions implemented during the first quarter.
  • General and Administrative expenses declined by 10% to $4.4 million in the first quarter of 2023, as compared to $4.9 million in the first quarter of 2022, primarily due to cost reductions related to salaries and benefits, consulting and professional fees, offset in part by an increase in investor relations costs. Stock compensation in the first quarter 2023 was $847 thousand versus $927 thousand in the first quarter of 2022.
  • Non-GAAP Adjusted EBITDA for the quarter ended March 31, 2023, was negative ($2.9) million, as compared to positive $853 thousand in the first quarter of 2022.

The unaudited financial statements are available online.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Soluna Holdings, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about Soluna’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, further information regarding which is included in the Company's filings with the Securities and Exchange Commission. All information provided in this press release is as of the date of the press release, and Soluna Holdings, Inc. undertakes no duty to update such information, except as required under applicable law.

About Soluna Holdings, Inc (SLNH)

Soluna Holdings, Inc. is the leading developer of green data centers that convert excess renewable energy into global computing resources. Soluna builds modular, scalable data centers for computing intensive, batchable applications such as Bitcoin mining, AI, and machine learning. Soluna provides a cost-effective alternative to battery storage or transmission lines. Soluna uses technology and intentional design to solve complex, real-world challenges. Up to 30% of the power of renewable energy projects can go to waste. Soluna’s data centers enable clean electricity asset owners to ‘Sell. Every. Megawatt.’

Soluna Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

As of March 31, 2023 (Unaudited) and December 31, 2022

 

(Dollars in thousands, except per share)

 

 

 

 

 

 

 

 

 

March 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

Assets

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash

 

$

4,553

 

 

$

1,136

 

Restricted cash

 

 

493

 

 

 

685

 

Accounts receivable

 

 

452

 

 

 

320

 

Prepaid expenses and other current assets

 

 

1,346

 

 

 

1,326

 

Deposits on equipment

 

 

975

 

 

 

1,175

 

Total Current Assets

 

 

7,819

 

 

 

4,642

 

Other assets

 

 

2,950

 

 

 

1,150

 

Property, plant and equipment, net

 

 

38,808

 

 

 

42,504

 

Intangible assets, net

 

 

34,087

 

 

 

36,432

 

Operating lease right-of-use assets

 

 

577

 

 

 

233

 

Total Assets

 

$

84,241

 

 

$

84,961

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

3,822

 

 

$

3,548

 

Accrued liabilities

 

 

2,847

 

 

 

2,721

 

Line of credit

 

 

135

 

 

 

350

 

Convertible notes payable

 

 

10,270

 

 

 

11,737

 

Current portion of debt

 

 

7,758

 

 

 

10,546

 

Deferred revenue

 

 

 

 

 

453

 

Operating lease liability

 

 

205

 

 

 

161

 

Total Current Liabilities

 

 

25,037

 

 

 

29,516

 

 

 

 

 

 

 

 

 

 

Other liabilities

 

 

307

 

 

 

203

 

Operating lease liability

 

 

379

 

 

 

84

 

Deferred tax liability, net

 

 

8,339

 

 

 

8,886

 

Total Liabilities

 

 

34,062

 

 

 

38,689

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (Note 10)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

 

9.0% Series A Cumulative Perpetual Preferred Stock, par value $0.001 per share, $25.00 liquidation preference; authorized 6,040,000; 3,061,245 shares issued and outstanding as of March 31, 2023 and December 31, 2022

 

 

3

 

 

 

3

 

Series B Preferred Stock, par value $0.0001 per share, authorized 187,500; 62,500 shares issued and outstanding as of March 31, 2023 and December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, par value $0.001 per share, authorized 75,000,000; 26,433,162 shares issued and 25,414,646 shared outstanding as of March 31, 2023 and 19,712,722 shares issued and 18,694,206 shares outstanding as of December 31, 2022

 

 

26

 

 

 

20

 

Additional paid-in capital

 

 

279,985

 

 

 

277,410

 

Accumulated deficit

 

 

(228,831

)

 

 

(221,769

)

Common stock in treasury, at cost, 1,018,516 shares at March 31, 2023 and December 31, 2022

 

 

(13,798

)

 

 

(13,798

)

Total Soluna Holdings, Inc. Stockholders’ Equity

 

 

37,385

 

 

 

41,866

 

Non-Controlling Interest

 

 

12,794

 

 

 

4,406

 

Total Stockholders’ Equity

 

 

50,179

 

 

 

46,272

 

Total Liabilities and Stockholders’ Equity

 

$

84,241

 

 

$

84,961

 

Soluna Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (Unaudited)

For the Three Months Ended March 31, 2023 and 2022

 

(Dollars in thousands, except per share)

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

 

March 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Cryptocurrency mining revenue

 

$

2,796

 

 

$

7,812

 

Data hosting revenue

 

 

286

 

 

 

1,504

 

Total revenue

 

 

3,082

 

 

 

9,316

 

Operating costs:

 

 

 

 

 

 

 

 

Cost of cryptocurrency mining revenue, exclusive of depreciation

 

 

2,299

 

 

 

3,397

 

Depreciation costs associated with cryptocurrency mining

 

 

625

 

 

 

4,324

 

Total cost of cryptocurrency mining revenue

 

 

2,924

 

 

 

7,721

 

Cost of data hosting revenue

 

 

214

 

 

 

1,138

 

Operating expenses:

 

 

 

 

 

 

 

 

General and administrative expenses, exclusive of depreciation and amortization

 

 

4,370

 

 

 

4,882

 

Depreciation and amortization associated with general and administrative expenses

 

 

2,377

 

 

 

2,373

 

Total general and administrative expenses

 

 

6,747

 

 

 

7,255

 

Impairment on fixed assets

 

 

209

 

 

 

-

 

Operating loss

 

 

(7,012

)

 

 

(6,798

)

Interest expense

 

 

(1,374

)

 

 

(2,881

)

Gain on debt revaluation, net

 

 

473

 

 

 

-

 

Loss on sale of fixed assets

 

 

(78

)

 

 

-

 

Other income, net

 

 

12

 

 

 

-

 

Loss before income taxes from continuing operations

 

 

(7,979

)

 

 

(9,679

)

Income tax benefit from continuing operations

 

 

547

 

 

 

547

 

Net loss from continuing operations

 

 

(7,432

)

 

 

(9,132

)

Income before income taxes from discontinued operations

 

 

-

 

 

 

226

 

Income tax benefit from discontinued operations

 

 

-

 

 

 

-

 

Net income from discontinued operations

 

 

-

 

 

 

226

 

Net loss

 

 

(7,432

)

 

 

(8,906

)

(Less) Net loss attributable to non-controlling interest

 

 

370

 

 

 

-

 

Net loss attributable to Soluna Holdings, Inc.

 

$

(7,062

)

 

$

(8,906

)

 

 

 

 

 

 

 

 

 

Basic and Diluted (loss) earnings per common share:

 

 

 

 

 

 

 

 

Net loss from continuing operations per share (Basic & Diluted)

 

$

(0.35

)

 

$

(0.71

)

Net income from discontinued operations per share (Basic & Diluted)

 

$

-

 

 

$

0.02

 

Basic & Diluted loss per share

 

$

(0.35

)

 

$

(0.69

)

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding (Basic and Diluted)

 

 

21,621,320

 

 

 

13,870,646

 

Soluna Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

For the Three Months Ended March 31, 2023 and 2022

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Operating Activities

 

 

 

 

 

 

 

 

Net loss

 

$

(7,432

)

 

$

(8,906

)

Net income from discontinued operations

 

 

-

 

 

 

(226

)

Net loss from continuing operations

 

 

(7,432

)

 

 

(9,132

)

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation expense

 

 

632

 

 

 

4,328

 

Amortization expense

 

 

2,369

 

 

 

2,369

 

Stock-based compensation

 

 

847

 

 

 

927

 

Consultant stock compensation

 

 

32

 

 

 

28

 

Deferred income taxes

 

 

(547

)

 

 

(547

)

Impairment on fixed assets

 

 

209

 

 

 

-

 

Amortization of operating lease asset

 

 

56

 

 

 

50

 

Gain on debt revaluation, net

 

 

(473

)

 

 

-

 

Amortization on deferred financing costs and discount on notes

 

 

501

 

 

 

2,447

 

Loss on sale of fixed assets

 

 

78

 

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

41

 

 

 

206

 

Prepaid expenses and other current assets

 

 

(26

)

 

 

(594

)

Other long-term assets

 

 

(300

)

 

 

59

 

Accounts payable

 

 

1,368

 

 

 

1,405

 

Deferred revenue

 

 

(453

)

 

 

(9

)

Operating lease liabilities

 

 

(54

)

 

 

(49

)

Other liabilities

 

 

104

 

 

 

-

 

Accrued liabilities

 

 

(5

)

 

 

(687

)

Net cash (used in) provided by operating activities

 

 

(3,053

)

 

 

801

 

Net cash provided by operating activities- discontinued operations

 

 

-

 

 

 

510

 

Investing Activities

 

 

 

 

 

 

 

 

Purchases of property, plant, and equipment

 

 

(860

)

 

 

(25,438

)

Purchases of intangible assets

 

 

(24

)

 

 

(40

)

Proceeds from disposal on property, plant, and equipment

 

 

249

 

 

 

-

 

Deposits of equipment, net

 

 

200

 

 

 

(2,590

)

Net cash used in investing activities

 

 

(435

)

 

 

(28,068

)

Net cash provided by (used in) investing activities- discontinued operations

 

 

-

 

 

 

-

 

Financing Activities

 

 

 

 

 

 

 

 

Proceeds from preferred offerings

 

 

-

 

 

 

1,170

 

Proceeds from common stock securities purchase agreement offering

 

 

41

 

 

 

-

 

Proceeds from notes and debt issuance

 

 

900

 

 

 

19,767

 

Costs of preferred offering

 

 

-

 

 

 

(155

)

Costs of common stock securities purchase agreement offering

 

 

(4

)

 

 

-

 

Costs of notes and short-term debt issuance

 

 

-

 

 

 

(465

)

Cash dividend distribution on preferred stock

 

 

-

 

 

 

(749

)

Payments on NYDIG loans and line of credit

 

 

(215

)

 

 

(980

)

Contributions from non-controlling interest

 

 

5,991

 

 

 

-

 

Proceeds from common stock warrant exercises

 

 

-

 

 

 

738

 

Net cash provided by financing activities

 

 

6,713

 

 

 

19,326

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in cash & restricted cash-continuing operations

 

 

3,225

 

 

 

(7,941

)

Increase in cash & restricted cash- discontinued operations

 

 

-

 

 

 

510

 

Cash & restricted cash – beginning of period

 

 

1,821

 

 

 

10,258

 

Cash & restricted cash – end of period

 

$

5,046

 

 

$

2,827

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information

 

 

 

 

 

 

 

 

Noncash equipment financing

 

 

-

 

 

 

4,620

 

Interest paid on NYDIG loans and line of credit

 

 

6

 

 

 

345

 

Noncash disposal of NYDIG collateralized equipment

 

 

3,388

 

 

 

-

 

Notes converted to common stock

 

 

1,394

 

 

 

1,342

 

Warrant consideration in relation to promissory notes and convertible notes

 

 

-

 

 

 

2,257

 

Promissory note and interest conversion to common shares

 

 

401

 

 

 

-

 

Registration fees in prepaids and accounts payable

 

 

-

 

 

 

(58

)

Noncash non-controlling interest contributions

 

 

2,767

 

 

 

-

 

Series B preferred dividend in accrued expense

 

 

(131

)

 

 

-

 

Noncash activity right-of-use assets obtained in exchange for lease obligations

 

 

397

 

 

 

-

 

Reconciliations of Adjusted EBITDA to net income from continuing operations, the most comparable GAAP financial metric, for historical periods are presented in the table below:

(Dollars in thousands)

 

March 31, 2023

 

 

March 31, 2022

 

 

 

 

 

 

 

 

Net loss from continuing operations

 

$

(7,432

)

 

$

(9,132

)

Interest expense, net

 

 

1,374

 

 

 

2,880

 

Income tax benefit

 

 

(547

)

 

 

(547

)

Depreciation and amortization

 

 

3,002

 

 

 

6,697

 

EBITDA

 

 

(3,603

)

 

 

(102

)

Adjustments- Non-cash items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation costs

 

 

879

 

 

 

955

 

Impairment on fixed assets

 

 

209

 

 

 

-

 

Loss on sale of fixed assets

 

 

78

 

 

 

-

 

Gain on debt revaluation, net

 

 

(473

)

 

 

-

 

Adjusted EBITDA

 

$

(2,910

)

 

$

853

 

 

Contacts

David Michaels

Soluna Holdings, Inc.

Chief Financial Officer

Hello@soluna.io

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