Project Dorothy Moves to Energization
Date
Soluna Holdings, Inc. (“SHI” or the “Company”), (NASDAQ: SLNH),
the parent company of Soluna Computing, Inc. (“SCI”), a developer
of green data centers for cryptocurrency mining and other intensive
computing, reported financial results for the third quarter ended
September 30, 2022.
Michael Toporek, CEO of Soluna Holdings, Inc., said, “In the
quarter, Soluna continued to execute on our business plan
delivering healthy hashrate and cash contribution margins despite
low BTC prices and energy market volatility. We continue to focus
our resources on energizing Project Dorothy, which we expect to
double our existing operating footprint. Our team is working with
ERCOT to finalize the details for an energization date. Dorothy is
anticipated to be one of the lowest cost facilities of its kind in
North America.”
Third Quarter 2022 Financial Results
Key Financial Highlights for the third quarter include
- Total revenue of $6.4 million for the three-month period
ended September 30, 2022, as compared to $3.1 million for the
same year-over-year period. The increase was driven primarily by an
additional site operating in 2022.
- BTC equivalent mined increased 12.4% from the second
quarter ended June 30, 2022. Peak hashrate remained above 1
EH/s during the quarter.
- Cryptocurrency mining revenue of $5.4 million for the
three-month period ended September 30, 2022, as compared to $2.0
million for the same year-over-year period. Megawatts deployed
increased from approximately 2 megawatts at the beginning of 2021
to 20 megawatts for the Calvert City facility and 25 megawatts for
the Murray facility in 2022.
- Data hosting revenue of $1.0 million for the three-month period
ended September 30, 2022, as compared to $1.1 million for the same
year-over-year period. Compared to one year ago, hosting revenues
now exclude any component related to power costs, which are treated
as a pass-through item.
- General and administrative (“G&A”) expenses, excluding
depreciation and amortization, totaled $5.7 million for the
three-month period ended September 30, 2022 compared to $2.3
million for the three-month period ended September 30, 2021. Of the
$3.4 million increase, $1.3 million was due to an increase in
personnel and $1.1 million due to certain complex transactions
including Dorothy and the convertible note amendments.
- Net Loss for the quarter of $(55.9) million, or $(3.94) per
share, for the three-month period ended September 30, 2022, as
compared to a net loss of $(0.6) million, or $(0.06) per
share during the same year-over-year period, and compared to a net
loss of $(6.6) million, or $(0.57) per share in the second quarter.
Net loss for the quarter was materially impacted by the impairment
of fixed assets ($28.1 million) and a loss on extinguishment of
debt ($12.3 million).
- Non-GAAP Adjusted EBITDA for the quarter ended September 30,
2022 was a loss of ($3.6) million during the three-month period
ended September 30, 2022.
Revenue & Contribution Margin Summary
*all numbers below exclude legacy
hosting
($ in 000s, Unaudited)
FY 21
Q1 2022
Q2 2022
Q3 2022
Revenue
$13,010
$9,316
$8,676
$6,372
Cash Contribution Margin
$8,888
$5,206
$4,760
$1,194
Annualized Revenue
$13,010
$37,264
$34,704
$25,490
Annualized Contribution Margin
$8,888
$20,824
$19,042
$4,774
Dorothy Facility Update and Potential Contribution
Once the Company energizes Dorothy, anticipated to be one of the
lowest cost facilities of its kind in North America, it will
continue to refine the economic model of the first 50MW of this
100MW site. The table below updates a recent illustration of the
earnings power of the site for current economic conditions,
including current Bitcoin pricing and network hashrate.
Illustrative Monthly
Earnings Power of Dorothy (Bitmain XP chips, $ in 000)
Illustrative Summary of Monthly Cash Contribution to
Soluna from Dorothy ($ in 000)
100% Hosting
50% / 50% 100% Prop Dorothy 1A
311
539
766
Dorothy 1B
458
792
1,127
Total
769
1,331
1,893
Note: Represents non-GAAP financial metrics
and forward looking statements.
Note: Assumes $17k BTC price, 270 EH / s network hash rate, 90%
capacity factor, 95% availability factor, and estimated $35 / kWh
average annual power costs (including assumed seasonal demand fees
and taxes). Hosting contract based on $60 / kWh fixed rate. Assumes
that purchased and hosted machines are 140 Th/s Bitmain XPs.
A presentation detailing the Q3 2022 earnings can be found on
the company website at www.solunacomputing.com/investors/
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 cryptocurrency
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.’
For more information about Soluna, please visit
www.solunacomputing.com or follow us on LinkedIn at
linkedin.com/solunaholdings and Twitter @SolunaHoldings.
Forward Looking Statements
The statements in this press release with respect to the
progress of Soluna’s development pipeline and the ability to scale
the Dorothy project to assist partner organizations constitute
forward-looking statements within the meaning of the federal
securities laws. Forward-looking statements reflect management’s
current expectations, as of the date of this press release, and are
subject to certain risks and uncertainties that could cause actual
results to differ materially from future results expressed or
implied by such forward-looking statements. Actual results could
differ materially from those expressed or implied by such
forward-looking statements as a result of various factors,
including, but not limited to: (1) those risk factors set forth in
the Company’s Annual Report on Form 10-K for the year ended
December 31, 2021 and other reports filed with the SEC. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date made. Except as
required by law, the Company assumes no obligation to update or
revise any forward-looking statements.
Adjusted EBITDA to Net
Income
(Dollars in thousands)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Net loss from continuing operations
$
(56,143
)
$
(933
)
$
(79,379
)
$
(2,952
)
Interest expense
1,671
—
7,856
—
Income tax (benefit) expense
(547
)
—
(1,344
)
3
Depreciation and amortization
8,388
157
22,999
381
EBITDA
(46,631
)
(776
)
(49,867
)
(2,568
)
Adjustments: Non-cash items
Stock-based compensation costs
890
334
2,868
1,422
Loss on sale of fixed assets
988
—
2,606
—
Loss on debt extinguishment and
revaluation
12,317
—
12,317
—
Impairment of equity investment
750
—
750
—
Impairment on fixed assets
28,086
—
28,836
—
Adjustments: Non-recurring
items
Exchange registration expenses
—
—
293
Adjusted EBITDA
$
(3,600
)
$
(442
)
$
(2,490
)
$
(853
)
Reconciliation of Non-GAAP
Results
Reconciliation from Operating
(Loss) Income to Adjusted EBITDA Contribution (Non-GAAP)
Q3 2022
Soluna Computing
Edith
Marie
Sophie
Dorothy
Corporate
Total
Corporate
Consolidated
Net Income (Loss) (GAAP)
(17)
(13,229)
(20,067)
(917)
(4,617)
(38,847)
(17,296)
(56,143)
-
-
Interest
424
424
1,247
1,671
Income tax (benefit) expense
(547)
(547)
(547)
Depreciation & amortization
96
2,308
3,605
2,374
8,383
5
8,388
EBITDA
79
(10,497)
(16,462)
(917)
(2,790)
(30,587)
(16,044)
(46,631)
Adjustments: Non-cash items
Stock-based compensation costs
9
7
3
321
340
550
890
Loss on sale of fixed assets
(24)
1,012
988
988
Loss on debt extinguishment and
revaluation
-
12,317
12,317
Impairment of equity investment
-
750
750
Impairment on fixed assets
10,510
17,474
27,984
102
28,086
-
-
Adjusted EBITDA Contribution
(Non-GAAP)
55
22
1,019
(914)
(1,457)
(1,275)
(2,325)
(3,600)
Soluna Holdings, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
As of September 30, 2022
(Unaudited) and December 31, 2021
(Dollars in thousands, except per
share)
September 30,
December 31,
2022
2021
Assets
Current Assets:
Cash
$
1,083
$
10,258
Accounts receivable
2,029
531
Prepaid expenses and other current
assets
1,621
977
Deposits on equipment
1,175
10,188
Current assets associated with
discontinued operations
—
3,028
Total Current Assets
5,908
24,982
Other assets
1,190
1,121
Equity investment
—
750
Property, plant and equipment, net
63,511
44,597
Intangible assets, net
38,842
45,839
Operating lease right-of-use assets
282
405
Total Assets
$
109,733
$
117,694
Liabilities and Stockholders’
Equity
Current Liabilities:
Accounts payable
$
3,843
$
2,958
Accrued liabilities
2,477
2,859
Line of credit
650
1,000
Notes payable
13,281
7,121
Current portion of debt
6,462
—
Deferred revenue
434
316
Operating lease liability
186
184
Income taxes payable
2
2
Current liabilities associated with
discontinued operations
—
1,243
Total Current Liabilities
27,335
15,683
Other liabilities
201
509
Long term debt
3,841
—
Operating lease liability
109
237
Deferred tax liability, net
8,929
10,277
Total Liabilities
40,415
26,706
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, 2022 and 1,252,299 shares issued
and outstanding as of December 31, 2021
3
1
Series B Preferred Stock, par value
$0.0001 per share, authorized 187,500; 62,500 shares issued and
outstanding as of September 30, 2022 and 0 shares issued and
outstanding as of December 31, 2021
—
—
Common stock, par value $0.001 per share,
authorized 75,000,000; 16,413,584 shares issued and 15,395,068
shares issued and outstanding as of September 30, 2022 and
14,769,699 shares issued and 13,754,206 shares issued and
outstanding as of December 31, 2021
16
15
Additional paid-in capital
273,484
227,790
Accumulated deficit
(194,409
)
(123,054
)
Common stock in treasury, at cost,
1,018,516 shares at September 30, 2022 and 1,015,493 shares at
December 31, 2021
(13,798
)
(13,764
)
Total Soluna Holdings, Inc. Stockholders’
Equity
65,296
90,988
Non-Controlling Interest
4,022
—
Total Stockholders’ Equity
69,318
90,988
Total Liabilities and Stockholders’
Equity
$
109,733
$
117,694
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
Soluna Holdings, Inc. and
Subsidiaries
Condensed Consolidated Statements
of Operations (Unaudited)
For the Three and Nine Months
Ended September 30, 2022 and 2021
(Dollars in thousands, except per
share)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Cryptocurrency mining revenue
$
5,387
$
2,018
$
20,696
$
4,670
Data hosting revenue
985
1,106
3,668
1,106
Total revenue
6,372
3,124
24,364
5,776
Operating costs:
Cost of cryptocurrency mining revenue,
exclusive of depreciation
4,100
623
11,092
1,272
Depreciation costs associated with
cryptocurrency mining
6,010
156
15,872
380
Total cost of cryptocurrency mining
revenue
10,110
779
26,964
1,652
Cost of data hosting revenue
1,078
964
3,192
964
Operating expenses:
General and administrative expenses,
exclusive of depreciation and amortization
5,686
2,316
15,441
6,118
Depreciation and amortization associated
with general and administrative expenses
2,378
1
7,127
1
Total general and administrative
expenses
8,064
2,317
22,568
6,119
Impairment on equity investment
750
750
Impairment on fixed assets
28,086
-
28,836
-
Operating loss
(41,716
)
(936
)
(57,946
)
(2,959
)
Interest expense
(1,671
)
-
(7,856
)
-
Loss on debt extinguishment and
revaluation
(12,317
)
-
(12,317
)
-
Loss on sale of fixed assets
(988
)
-
(2,606
)
-
Other income, net
2
3
2
10
Loss before income taxes from continuing
operations
(56,690
)
(933
)
(80,723
)
(2,949
)
Income tax benefit (expense) from
continuing operations
547
-
1,344
(3
)
Net loss from continuing operations
(56,143
)
(933
)
(79,379
)
(2,952
)
(Loss) Income before income taxes from
discontinued operations (including (loss) gain on sale of MTI
Instruments of $(21) and $7,581 for three and nine months ended
September 30, 2022)
(21
)
323
7,681
500
Income tax benefit from discontinued
operations
-
-
70
-
Net (loss) income from discontinued
operations
(21
)
323
7,751
500
Consolidated net loss
(56,164
)
(610
)
(71,628
)
(2,452
)
(Less) Net loss attributable to
non-controlling interest
272
-
272
-
Net loss attributable to Soluna Holdings,
Inc.
$
(55,892
)
$
(610
)
$
(71,356
)
$
(2,452
)
Basic and Diluted (loss) earnings per
common share:
Net loss from continuing operations per
share (Basic & Diluted)
$
(3.94
)
$
(0.09
)
$
(5.74
)
$
(0.27
)
Net income from discontinued operations
per share (Basic & Diluted)
$
-
$
0.03
$
0.53
$
0.04
Basic & Diluted loss per share
$
(3.94
)
$
(0.06
)
$
(5.21
)
$
(0.23
)
Weighted average shares outstanding (Basic
and Diluted)
14,698,013
12,702,393
14,494,356
11,413,678
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
Soluna Holdings, Inc. and
Subsidiaries
Condensed Consolidated Statements
of Cash Flows (Unaudited)
For the Nine Months Ended
September 30, 2022 and 2021
(Dollars in thousands)
Nine Months Ended September
30,
2022
2021
Operating Activities
Net loss
$
(71,628
)
$
(2,452
)
Net income from discontinued operations
(including gain on sale of MTI Instruments of $7,581 for the nine
months ended September 30, 2022)
(7,751
)
(500
)
Net loss from continuing operations
(79,379
)
(2,952
)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation and amortization
22,999
381
Stock-based compensation
2,747
1,373
Consultant stock compensation
121
49
Deferred income taxes
(1,344
)
-
Impairment on fixed assets
28,836
-
Amortization of operating lease asset
151
121
Impairment on equity investment
750
-
Loss on debt extinguishment and
revaluation
12,317
-
Amortization on deferred financing costs
and discount on notes
6,630
-
Loss (gain) on sale of fixed assets
2,606
(6
)
Changes in operating assets and
liabilities:
Accounts receivable
(1,498
)
(108
)
Prepaid expenses and other current
assets
(154
)
(628
)
Other long-term assets
(69
)
(754
)
Accounts payable
884
3,590
Deferred revenue
118
183
Operating lease liabilities
(148
)
(111
)
Other liabilities
(306
)
306
Accrued liabilities
(382
)
937
Net cash (used in) provided by operating
activities
(5,121
)
2,381
Net cash provided by operating activities-
discontinued operations
369
496
Investing Activities
Purchases of equipment
(61,867
)
(17,632
)
Purchases of intangible assets
(114
)
-
Proceeds from disposal on equipment
2,525
-
Deposits of equipment, net
6,441
(5,656
)
Net cash used in investing activities
(53,015
)
(23,288
)
Net cash provided by (used in) investing
activities- discontinued operations
9,004
(37
)
Financing Activities
Proceeds from preferred offering
16,658
20,165
Proceeds from common stock offering
-
17,250
Proceeds from notes and debt issuance
29,736
-
Costs of preferred offering
(1,910
)
(1,867
)
Costs of common stock offering
-
(1,847
)
Costs of notes and short term debt
issuance
(6,269
)
-
Cash dividend distribution on preferred
stock
(3,852
)
(176
)
Contributions from non-controlling
interest
4,293
-
Proceeds from stock option exercises
153
101
Proceeds from common stock warrant
exercises
779
9
Net cash provided by financing
activities
39,588
33,635
(Decrease) increase in cash-continuing
operations
(18,548
)
12,728
Increase in cash- discontinued
operations
9,373
459
Cash – beginning of period
10,258
2,630
Cash – end of period
$
1,083
$
15,817
Supplemental Disclosure of Cash Flow
Information
Noncash equipment financing
4,620
-
Interest paid on NYDIG loans
1,148
-
Proceed receivable from sale of MTI
Instruments
205
-
Notes converted to common stock
2,441
-
Warrant consideration in relation to
promissory notes and convertible notes
14,602
-
Promissory note conversion to preferred
shares
15,236
-
Noncash proceed on sale of equipment
290
-
Purchase of miner equipment using
restricted stock
-
(207
)
Registration fees in prepaids and accounts
payable
-
(8
)
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221115006053/en/
Philip F. Patman, Jr. Chief Financial Officer Soluna Holdings,
Inc. ppatman@soluna.io
MZ Contact Brian M. Prenoveau, CFA MZ Group – MZ North
America SLNH@mzgroup.us 561 489 5315
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