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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230516005524/en/
David Michaels Soluna Holdings, Inc. Chief Financial Officer
Hello@soluna.io
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