Soluna Holdings, Inc. Announces Q3 2022 Earnings

Project Dorothy Moves to Energization Date

ALBANY, N.Y.–(BUSINESS WIRE)–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.

Contacts

Philip F. Patman, Jr.

Chief Financial Officer

Soluna Holdings, Inc.

[email protected]

MZ Contact
Brian M. Prenoveau, CFA

MZ Group – MZ North America

[email protected]
561 489 5315