Company Boosts Balance Sheet, Optimizes
Operations
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 second
quarter ended June 30, 2023.
John Belizaire, CEO of Soluna Holdings, said, “Our progress
executing the 3-step plan I shared in my letter to shareholders in
the first half of the year has resulted in a stronger balance sheet
and improved cash flows. This sets us up for continued growth in
the second half of 2023 as we complete our transition focused on
monetizing our sites through hosting and joint ventures. I am proud
of our operating teams and thankful for our investors' continued
support.”
Finance and Operational Highlights:
The cash balance as of June 30, 2023, was $7.5 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.
The Company is still on track to deploy a record 2 EH/s across
all sites by the end of the summer. Project Dorothy 1A and Project
Sophie are now fully deployed with three hosting customers.
As of August 14, 2023, Project Dorothy 1B is completing
construction and the Company has energized more than 11 MW of the
buildings dedicated to the Proprietary Mining Joint Venture with
Navitas Global.
The Company completed its tender of equipment purchase, with
8,378 machines purchased for a total of 868 PH/s of hashrate with
an average efficiency of 29.9 J/TH, and at a cost of $11.25 $/TH
inclusive of all fees, import, and taxes, $10.59 $/TH excluding
taxes. Machine deployment at Project Dorothy 1B continues with more
than 5,760 deployed to date.
More than 19,500 machines have been deployed across all three
data centers as of August 14, 2023.
The Company averaged $30/MWh for energy costs even during the
recent heat waves in Texas and Kentucky. The average efficiency
across all the machines at the sites is less than 30 J/TH.
As described in the Company’s Earnings Power Illustration on
June 21, 2023, the combined revenue potential for Project Dorothy
1A, Project Dorothy 1B, and Project Sophie is $37.5 million on an
annualized basis.
Prospective investors visited Project Dorothy with an interest
to finance up to 50 MW of Project Dorothy 2. Project Kati, Soluna’s
new 166 MW data center, continues its development process,
completing the first of three required ERCOT interconnection
studies in the planning phase. The company has also advanced legal
agreements with its power partner at Project Kati.
Financial Summary:
Key financial results for the second quarter include:
- The Company’s balance sheet and liquidity continued to
strengthen. Its current ratio, which measures liquidity, improved
to 1.4 from 0.2 at the end of 2022 resulting from the combination
of new project-level investments and declining operating losses.
Working capital improved to $6.1 million as of June 30, 2023, a
$30.7 million increase, versus a negative $24.6 million for the
period ended June 30, 2022.
- Total revenue in the second quarter of 2023 decreased by 76% to
$2.1 million compared to $8.7 million in the second quarter of
2022. The decrease is primarily attributable to the decommissioning
of Project Marie negatively impacting both proprietary mining and
hosting revenues and the transition of Project Sophie from
proprietary mining to primarily hosting during the second quarter
of 2023.
- General and Administrative, exclusive of depreciation and
amortization expenses decreased by 15% to $4.1 million in the
second quarter of 2023, as compared to $4.9 million in the second
quarter of 2022, primarily due to cost reductions related to
salaries and benefits, reduced consulting and professional fees,
offset in part by an increase in investor relations costs.
- Stock compensation expense during the second quarter of 2023
was $2.2 million versus $1.1 million in the second quarter of
2022.
- Net loss from continuing operations improved to $9.3 million in
the second quarter of 2023 from $14.1 million in the second 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 June 30, 2023
(Unaudited) and December 31, 2022
(Dollars in thousands, except per
share)
June 30,
December 31,
2023
2022
Assets
Current Assets:
Cash
$
7,464
$
1,136
Restricted cash
1,780
685
Accounts receivable
1,537
320
Prepaid expenses and other current
assets
1,417
1,326
Deposits and credits on equipment
9,091
1,175
Equipment held for sale
1,379
295
Total Current Assets
22,668
4,937
Restricted cash
1,000
-
Other assets
2,958
1,150
Property, plant and equipment,
net
37,760
42,209
Intangible assets, net
31,735
36,432
Operating lease right-of-use
assets
526
233
Total Assets
$
96,647
$
84,961
Liabilities and Stockholders’
Equity
Current Liabilities:
Accounts payable
$
3,150
$
3,548
Accrued liabilities
4,099
2,721
Line of credit
-
350
Convertible notes payable
-
11,737
Current portion of debt
8,087
10,546
Deferred revenue
985
453
Operating lease liability
207
161
Total Current Liabilities
16,528
29,516
Other liabilities
1,497
203
Long-term debt
1,174
-
Convertible notes payable
10,710
-
Operating lease liability
325
84
Deferred tax liability, net
7,792
8,886
Total Liabilities
38,026
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 June 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 June 30, 2023 and December 31, 2022
—
—
Common stock, par value $0.001 per share,
authorized 75,000,000; 30,764,463 shares issued and 29,745,947
shared outstanding as of June 30, 2023 and 19,712,722 shares issued
and 18,694,206 shares outstanding as of December 31, 2022
31
20
Additional paid-in capital
284,136
277,410
Accumulated deficit
(237,606
)
(221,769
)
Common stock in treasury, at cost,
1,018,516 shares at June 30, 2023 and December 31, 2022
(13,798
)
(13,798
)
Total Soluna Holdings, Inc.
Stockholders’ Equity
32,766
41,866
Non-Controlling Interest
25,855
4,406
Total Stockholders’ Equity
58,621
46,272
Total Liabilities and Stockholders’
Equity
$
96,647
$
84,961
Soluna Holdings, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Operations (Unaudited)
For the Three and Six Months
Ended June 30, 2023 and 2022
(Dollars in thousands, except per
share)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Cryptocurrency mining revenue
$
915
$
7,497
$
3,711
$
15,309
Data hosting revenue
1,153
1,179
1,439
2,683
Total revenue
2,068
8,676
5,150
17,992
Operating costs:
Cost of cryptocurrency mining revenue,
exclusive of depreciation
1,160
3,596
3,410
6,992
Cost of data hosting revenue, exclusive of
depreciation
759
975
1,031
2,114
Costs of revenue- depreciation
539
5,538
1,164
9,862
Total costs of revenue
2,458
10,109
5,605
18,968
Operating expenses:
General and administrative expenses,
exclusive of depreciation and amortization
4,136
4,873
8,496
9,755
Depreciation and amortization associated
with general and administrative expenses
2,379
2,376
4,756
4,749
Total general and administrative
expenses
6,515
7,249
13,252
14,504
Impairment on fixed assets
169
750
377
750
Operating loss
(7,074
)
(9,432
)
(14,084
)
(16,230
)
Interest expense
(439
)
(3,305
)
(1,814
)
(6,185
)
Loss on debt extinguishment and
revaluation, net
(2,054
)
-
(1,581
)
-
Gain (loss) on sale of fixed assets
48
(1,618
)
(30
)
(1,618
)
Other expense, net
(285
)
-
(273
)
-
Loss before income taxes from continuing
operations
(9,804
)
(14,355
)
(17,782
)
(24,033
)
Income tax benefit from continuing
operations
547
251
1,093
797
Net loss from continuing operations
(9,257
)
(14,104
)
(16,689
)
(23,236
)
Income before income taxes from
discontinued operations
-
7,477
-
7,702
Income tax benefit from discontinued
operations
-
70
-
70
Net income from discontinued
operations
-
7,547
-
7,772
Net loss
(9,257
)
(6,557
)
(16,689
)
(15,464
)
(Less) Net loss attributable to
non-controlling interest
482
-
852
-
Net loss attributable to Soluna Holdings,
Inc.
$
(8,775
)
$
(6,557
)
$
(15,837
)
$
(15,464
)
Basic and Diluted (loss) earnings per
common share:
Net loss from continuing operations per
share (Basic & Diluted)
$
(0.34
)
$
(1.11
)
$
(0.69
)
$
(1.82
)
Net income from discontinued operations
per share (Basic & Diluted)
$
-
$
0.54
$
-
$
0.56
Basic & Diluted loss per share
$
(0.34
)
$
(0.57
)
$
(0.69
)
$
(1.26
)
Weighted average shares outstanding (Basic
and Diluted)
28,150,557
14,048,253
24,903,975
13,958,437
Soluna Holdings, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows (Unaudited)
For the Six Months Ended June
30, 2023 and 2022
(Dollars in thousands)
Six Months Ended June
30,
2023
2022
Operating Activities
Net loss
$
(16,689
)
$
(15,464
)
Net income from discontinued
operations
-
(7,772
)
Net loss from continuing operations
(16,689
)
(23,236
)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation expense
1,179
9,871
Amortization expense
4,741
4,740
Stock-based compensation
3,060
1,952
Consultant stock compensation
51
67
Deferred income taxes
(1,094
)
(797
)
Impairment on fixed assets
377
750
Amortization of operating lease asset
116
100
Loss on debt extinguishment and
revaluation, net
1,581
-
Amortization on deferred financing costs
and discount on notes
739
5,353
Loss on sale of fixed assets
30
1,618
Changes in operating assets and
liabilities:
Accounts receivable
(924
)
(157
)
Prepaid expenses and other current
assets
(101
)
(393
)
Other long-term assets
(308
)
56
Accounts payable
696
1,882
Deferred revenue
532
(9
)
Operating lease liabilities
(111
)
(98
)
Other liabilities
1,294
-
Accrued liabilities
995
64
Net cash (used in) provided by operating
activities
(3,836
)
1,763
Net cash provided by operating activities-
discontinued operations
-
328
Investing Activities
Purchases of property, plant, and
equipment
(2,895
)
(52,618
)
Purchases of intangible assets
(44
)
(79
)
Proceeds from disposal on property, plant,
and equipment
1,286
465
Deposits and credits on equipment, net
(7,916
)
1,603
Net cash used in investing activities
(9,569
)
(50,629
)
Net cash provided by investing activities-
discontinued operations
-
9,025
Financing Activities
Proceeds from preferred offerings
-
11,657
Proceeds from common stock securities
purchase agreement offering
43
-
Proceeds from notes and debt issuance
2,900
29,736
Costs of preferred offering
-
(1,904
)
Costs of common stock securities purchase
agreement offering
(4
)
-
Costs and payments of notes and short-term
debt issuance
(175
)
(1,743
)
Cash dividend distribution on preferred
stock
-
(2,131
)
Payments on NYDIG loans and line of
credit
(350
)
(2,590
)
Contributions from non-controlling
interest
19,414
-
Proceeds from stock option exercises
-
77
Proceeds from common stock warrant
exercises
-
779
Net cash provided by financing
activities
21,828
33,881
Increase (decrease) in cash &
restricted cash-continuing operations
8,423
(14,985
)
Increase in cash & restricted cash-
discontinued operations
-
9,353
Cash & restricted cash – beginning of
period
1,821
10,258
Cash & restricted cash – end of
period
$
10,244
$
4,626
Supplemental Disclosure of Cash Flow
Information
Noncash equipment financing
-
4,620
Interest paid on NYDIG loans and line of
credit
6
770
Noncash disposal of NYDIG collateralized
equipment
3,388
-
Proceed receivable from sale of MTI
Instruments
-
205
Notes converted to common stock
1,794
1,342
Warrant consideration in relation to
promissory notes and convertible notes
1,330
5,317
Promissory note and interest conversion to
common shares
845
15,236
Registration fees in prepaids and accounts
payable
-
(58
)
Noncash non-controlling interest
contributions
2,887
-
Series B preferred dividend in accrued
expense
383
-
Noncash activity right-of-use assets
obtained in exchange for lease obligations
397
13
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230814155652/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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