Performance Includes 176% Increase in Revenue
and Operating Profit Milestone
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 applications, reported financial results for the third
quarter ended September 30, 2023.
John Belizaire, CEO of Soluna Holdings, said, “We are delighted
to announce the successful completion of Project Dorothy 1B,
marking a significant milestone for Project Dorothy. The project is
now fully operational, and we are witnessing the tangible impact of
its earnings potential.”
Belizaire went further on to say, “Our dedicated team has
demonstrated exceptional execution across our four strategic focus
areas, as outlined in our shareholder letter: the energizing of
Project Dorothy, Cash Flow and Expense Management, Expanding our
Flagship, and Growing our Pipeline. The business transition
initiated in Q2 is yielding positive results, evident in our latest
financials. Despite the challenges posed by the summer heat in
Texas and Kentucky, our team's focused and meticulous efforts have
propelled us to our first quarter of gross profit and substantial
business growth from earlier lows.”
Belizaire concluded by saying, “With Project Dorothy 2 on the
immediate horizon, Project Kati setting up its robust earnings
power and the vast potential of AI at our doorstep, we have a solid
foundation for future growth.”
Finance and Operational Highlights:
Substantial cash balance - The
unrestricted cash balance as of September 30, 2023, was $5.6
million compared to $1.1 million as of December 31, 2022. This
is driven by new project-level investments, operational execution,
and expense management measures implemented in the first half of
the year.
EBITDA Milestone - The Company
achieved a positive Adjusted EBITDA for the first time since second
quarter 2022.
Revenue Ramp - Revenue in the third
quarter increased by 176% to $5.8 million compared to $2.1
million in the second quarter of 2023. The revenue increase is
driven by the continued ramp in the Project Dorothy sites,
including hosting and proprietary mining.
Project Dorothy 1A and 1B fully operational as of October 31
2023 - Installed hashrate of 1.76 EH/s in Project Dorothy 1A/1B
fully and it is fully operational. This brings the Company’s total
installed hashrate to 2.6 EH/s. Project Dorothy consumed over
4,000 MWh of curtailed energy through the end of October
solidifying the effectiveness of Soluna’s innovative solution to
monetizing curtailed energy.
Ancillary services revenue - The
Company completed its pre-registration for Ancillary Services with
ERCOT, bringing it closer to diversifying its revenue by having
Project Dorothy serve as a grid resource.
As of the end of the third quarter of 2023, Soluna deployed over
23,600 bitcoin miners (between hosting and prop mining) across all
sites. And, the Company operated at an average hashrate of 2.4 EH/s
across all sites as Project Dorothy became fully energized by late
summer.
AI initiative - The Company
launched a new initiative focused on a new data center
purpose-built for AI training workloads. The new design, code-named
“Helix”, will be part of Project Dorothy 2; due to start in the
first quarter of 2024. The Company also formed a new Advisory Board
to accelerate the Company’s AI initiatives and tapped Daniel
Golding, a former head of advanced engineering and data center
innovation at Google.
Financial Summary:
Key financial results for the third quarter include:
2023 Revenue By Quarter (in thousands) Revenue Q1 2023
Q2 2023 Q3 2023 YTD 2023 Data hosting revenue
$
286
$
1,153
$
4,011
$
5,451
Cryptocurrency mining revenue
2,796
915
1,786
5,497
Total revenue
$
3,082
$
2,068
$
5,797
$
10,948
*may not foot due to rounding
- Total revenue in the third quarter
of 2023 increased by 176% to $5.8 million compared to
$2.1 million in the second quarter of 2023. The increase is
primarily attributable to the ramping of Project Dorothy,
commissioning of proprietary mining and continued ramping of
hosting revenues.
2023 Gross Profit by Quarter (in thousands) Gross Profit Q1 2023 Q2
2023 Q3 2023 YTD Cryptocurrency mining revenue
$
2,796
$
915
$
1,786
$
5,497
Data Hosting Revenue
286
1,153
4,011
5,451
Total Revenue
3,082
2,068
5,797
10,948
Cost of cryptocurrency mining revenue, exclusive of depreciation
2,252
1,160
1,040
4,452
Cost of data hosting mining revenue, exclusive of depreciation
272
759
2,150
3,181
Cost of revenue - depreciation
625
539
1,200
2,364
Total cost of revenue
3,149
2,458
4,390
9,997
Gross Profit
$
(67
)
$
(390
)
$
1,407
$
950
*certain prior quarter amounts have been reclassified for
consistency in the current quarter presentation
- Gross profit improved to
$1.4 million in the third quarter of 2023, as
compared to $(390) thousand in the second quarter of 2023.
- General and Administrative,
exclusive of depreciation and amortization expenses, decreased by
52% to $2.7 million in the third quarter of
2023, as compared to $5.7 million in the third quarter of 2022,
primarily due to cost reductions related to salaries and benefits,
and reduced consulting and professional fees.
- Stock compensation expense during
the third quarter of 2023 was $595 thousand versus $890 thousand in
the third quarter of 2022.
- Net loss from continuing
operations improved to $6.0 million in the third quarter of
2023 from $56.2 million in the third quarter of 2022.
2023 Adjusted EBITDA by Quarter (in thousands) Q1 2023
Q2 2023 Q3 2023 YTD 2023 Net Loss
$
(7,432
)
$
(9,257
)
$
(6,016
)
$
(22,705
)
(+) Interest expense
1,374
486
495
2,355
(+) Income taxes
(547
)
(547
)
569
(524
)
(+) Depreciation and amortization
3,002
2,918
3,579
9,498
EBITDA Table
$
(3,603
)
$
(6,400
)
$
(1,373
)
$
(11,376
)
Adjustments non-cash
Stock based compensation
879
2,232
595
3,709
(Gain) loss on sale of fixed assets
78
(48
)
373
404
Impairment on fixed assets
209
169
41
418
Debt extinguishment and revaluation
(473
)
2,054
769
2,350
Adjusted EBITDA
$
(2,910
)
$
(1,993
)
$
405
(4,495
)
*may not foot due to rounding
- Adjusted EBITDA positive - The
measure improved to $405 thousand in the third quarter of 2023,
as compared to $(2.0) million in the second quarter of 2023 and
$(2.9) million in the first quarter of 2023, a quarter over quarter
improvement.
The unaudited financial statements are available online. A
presentation of this Third Quarter Update can also be
found 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.
In addition to figures prepared in accordance with GAAP, Soluna
from time to time presents alternative non-GAAP performance
measures, e.g., EBITDA, adjusted EBITDA, adjusted net profit/loss,
adjusted earnings per share, free cash flow. These measures should
be considered in addition to, but not as a substitute for, the
information prepared in accordance with GAAP. Alternative
performance measures are not subject to GAAP or any other generally
accepted accounting principle. Other companies may define these
terms in different ways.
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 September 30, 2023
(Unaudited) and December 31, 2022
(Dollars in thousands, except per
share)
September 30,
December 31,
2023
2022
Assets
Current Assets:
Cash
$
5,625
$
1,136
Restricted cash
3,428
685
Accounts receivable
2,024
320
Notes receivable
446
219
Prepaid expenses and other current
assets
1,593
1,107
Deposits and credits on equipment
975
1,175
Equipment held for sale
248
295
Total Current Assets
14,339
4,937
Restricted cash
1,000
-
Other assets
2,957
1,150
Property, plant and equipment,
net
45,938
42,209
Intangible assets, net
29,370
36,432
Operating lease right-of-use
assets
483
233
Total Assets
$
94,087
$
84,961
Liabilities and Stockholders’
Equity
Current Liabilities:
Accounts payable
$
3,005
$
3,548
Accrued liabilities
4,447
2,721
Line of credit
-
350
Convertible notes payable
10,796
11,737
Current portion of debt
9,053
10,546
Deferred revenue
-
453
Operating lease liability
215
161
Total Current Liabilities
27,516
29,516
Other liabilities
1,497
203
Long-term debt
1,050
-
Operating lease liability
273
84
Deferred tax liability, net
8,362
8,886
Total Liabilities
38,698
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 September 30, 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 September 30, 2023 and December 31, 2022
—
—
Common stock, par value $0.001 per share,
authorized 75,000,000; 1,492,729 shares issued and 1,451,988 shared
outstanding as of September 30, 2023 and 788,578 shares issued and
747,837 shares outstanding as of December 31, 2022(1)
1
1
Additional paid-in capital
286,799
277,429
Accumulated deficit
(244,268
)
(221,769
)
Common stock in treasury, at cost, 40,741
shares at September 30, 2023 and December 31, 2022(1)
(13,798
)
(13,798
)
Total Soluna Holdings, Inc.
Stockholders’ Equity
28,737
41,866
Non-Controlling Interest
26,652
4,406
Total Stockholders’ Equity
55,389
46,272
Total Liabilities and Stockholders’
Equity
$
94,087
$
84,961
(1) Prior period results have been adjusted to reflect the Reverse
Stock Split of the Common Stock at a ratio of 1-for-25 that became
effective October 13, 2023.
Soluna Holdings, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Operations (Unaudited)
For the Three and Nine Months
Ended September 30, 2023 and 2022
(Dollars in thousands, except per
share)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Cryptocurrency mining revenue
$
1,786
$
5,387
$
5,497
$
20,696
Data hosting revenue
4,011
985
5,451
3,668
Total revenue
5,797
6,372
10,948
24,364
Operating costs:
Cost of cryptocurrency mining revenue,
exclusive of depreciation
1,040
4,100
4,451
11,092
Cost of data hosting revenue, exclusive of
depreciation
2,150
1,078
3,181
3,192
Costs of revenue- depreciation
1,200
6,010
2,364
15,872
Total costs of revenue
4,390
11,188
9,996
30,156
Operating expenses:
General and administrative expenses,
exclusive of depreciation and amortization
2,723
5,686
11,219
15,441
Depreciation and amortization associated
with general and administrative expenses
2,379
2,378
7,134
7,127
Total general and administrative
expenses
5,102
8,064
18,353
22,568
Impairment on equity investment
-
750
-
750
Impairment on fixed assets
41
28,086
418
28,836
Operating loss
(3,736
)
(41,716
)
(17,819
)
(57,946
)
Interest expense
(495
)
(1,671
)
(2,355
)
(7,856
)
Loss on debt extinguishment and
revaluation, net
(769
)
(12,317
)
(2,350
)
(12,317
)
Loss on sale of fixed assets
(373
)
(988
)
(404
)
(2,606
)
Other (expense) income, net
(74
)
2
(301
)
2
Loss before income taxes from continuing
operations
(5,447
)
(56,690
)
(23,229
)
(80,723
)
Income tax (expense) benefit from
continuing operations
(569
)
547
524
1,344
Net loss from continuing operations
(6,016
)
(56,143
)
(22,705
)
(79,379
)
Income before income taxes from
discontinued operations
-
(21
)
-
7,681
Income tax benefit from discontinued
operations
-
-
-
70
Net income from discontinued
operations
-
(21
)
-
7,751
Net loss
(6,016
)
(56,164
)
(22,705
)
(71,628
)
(Less) Net (income) loss attributable to
non- controlling interest
(646
)
272
206
272
Net loss attributable to Soluna Holdings,
Inc.
$
(6,662
)
$
(55,892
)
$
(22,499
)
$
(71,356
)
Basic and Diluted (loss) earnings per
common share:
Net loss from continuing operations per
share (Basic & Diluted) (1)
$
(4.40
)
$
(95.49
)
$
(20.11
)
$
(146.46
)
Net income from discontinued operations
per share (Basic & Diluted) (1)
$
-
$
(0.04
)
$
-
$
13.64
Basic & Diluted loss per share (1)
$
(4.40
)
$
(95.53
)
$
(20.11
)
$
(132.82
)
Weighted average shares outstanding (Basic
and Diluted) (1)
1,374,364
587,921
1,149,745
568,307
(1) Prior period results have been
adjusted to reflect the Reverse Stock Split of the Common Stock at
a ratio of 1-for-25 that became effective October 13, 2023.
Soluna Holdings, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows (Unaudited)
For the Nine Months Ended
September 30, 2023 and 2022
(Dollars in thousands)
Nine Months Ended September
30,
2023
2022
Operating Activities
Net loss
$
(22,705
)
$
(71,628
)
Net income from discontinued
operations
-
(7,751
)
Net loss from continuing operations
(22,705
)
(79,379
)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation expense
2,387
15,888
Amortization expense
7,111
7,111
Stock-based compensation
3,640
2,747
Consultant stock compensation
69
121
Deferred income taxes
(524
)
(1,344
)
Impairment on fixed assets
418
28,836
Amortization of operating lease asset
177
151
Impairment on equity investment
-
750
Loss on debt extinguishment and
revaluation, net
2,350
12,317
Amortization on deferred financing costs
and discount on notes
748
6,630
Loss on sale of fixed assets
404
2,606
Changes in operating assets and
liabilities:
Accounts receivable
(1,552
)
(1,498
)
Prepaid expenses and other current
assets
(484
)
(154
)
Other long-term assets
(307
)
(69
)
Accounts payable
551
884
Deferred revenue
(453
)
118
Operating lease liabilities
(172
)
(148
)
Other liabilities
1,294
(306
)
Accrued liabilities
2,644
(382
)
Net cash (used in) provided by operating
activities
(4,404
)
(5,121
)
Net cash provided by operating activities-
discontinued operations
-
369
Investing Activities
Purchases of property, plant, and
equipment
(12,534
)
(61,867
)
Purchases of intangible assets
(49
)
(114
)
Proceeds from disposal on property, plant,
and equipment
2,266
2,525
Deposits and credits on equipment, net
200
6,441
Net cash used in investing activities
(10,117
)
(53,015
)
Net cash provided by investing activities-
discontinued operations
-
9,004
Financing Activities
Proceeds from preferred offerings
-
16,658
Proceeds from common stock securities
purchase agreement offering
817
-
Proceeds from notes and debt issuance
3,100
29,736
Costs of preferred offering
-
(1,910
)
Costs of common stock securities purchase
agreement offering
(10
)
-
Costs and payments of notes and short-term
debt issuance
(510
)
(2,428
)
Cash dividend distribution on preferred
stock
-
(3,852
)
Payments on NYDIG loans and line of
credit
(350
)
(3,841
)
Contributions from non-controlling
interest
19,706
4,293
Proceeds from stock option exercises
-
153
Proceeds from common stock warrant
exercises
-
779
Net cash provided by financing
activities
22,753
39,588
Increase (decrease) in cash &
restricted cash-continuing operations
8,232
(18,548
)
Increase in cash & restricted cash-
discontinued operations
-
9,373
Cash & restricted cash – beginning of
period
1,821
10,258
Cash & restricted cash – end of
period
$
10,053
$
1,083
Supplemental Disclosure of Cash Flow
Information
Noncash equipment financing
-
4,620
Interest paid on NYDIG loans and cash
interest paid on line of credit
567
1,179
Noncash disposal of NYDIG collateralized
equipment
2,576
-
Proceed receivable from sale of MTI
Instruments
-
205
Notes converted to common stock
2,444
2,441
Warrant consideration in relation to
promissory notes and convertible notes
1,330
14,602
Promissory note and interest conversion to
common shares
845
15,236
Noncash note receivable from sale of
equipment
240
-
Noncash non-controlling interest
contributions
2,746
290
Series B preferred dividend prefunded
warrant and common stock issuance
657
-
Noncash activity right-of-use assets
obtained in exchange for lease obligations
403
20
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)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net loss from continuing operations
$
(6,016
)
$
(56,143
)
$
(22,705
)
$
(79,379
)
Interest expense, net
495
1,671
2,355
7,856
Income tax expense (benefit) from
continuing operations
569
(547
)
(524
)
(1,344
)
Depreciation and amortization
3,579
8,388
9,498
22,999
EBITDA
(1,373
)
(46,631
)
(11,376
)
(49,868
)
Adjustments: Non-cash items
Stock-based compensation costs
595
890
3,709
2,869
Loss on sale of fixed assets
373
988
404
2,606
Impairment on equity investment
-
750
-
750
Impairment on fixed assets
41
28,086
418
28,836
Loss on debt extinguishment and
revaluation, net
769
12,317
2,350
12,317
Adjusted EBITDA
$
405
$
(3,600
)
$
(4,495
)
$
(2,490
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231115093396/en/
David Michaels Soluna Holdings, Inc. Chief Financial Officer
Hello@soluna.io
For Media Inquiries: Sam Sova Founder and CEO SOVA
Sam@teamsova.biz
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