[Glossary of Abbreviations and Acronyms](index=4&type=section&id=Glossary%20of%20Abbreviations%20and%20Acronyms) This section defines key abbreviations and acronyms used throughout the report [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited financial statements and management's discussion and analysis [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three months ended March 31, 2025, and 2024 [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section details the company's assets, liabilities, and stockholders' equity at the end of the reporting period Condensed Consolidated Balance Sheet Summary | Metric (in thousands) | March 31, 2025 | December 31, 2024 | | :-------------------- | :------------- | :---------------- | | Total Assets | $90,049 | $88,040 | | Total Liabilities | $63,056 | $60,678 | | Total Stockholders' Equity | $26,993 | $27,362 | - Total assets increased by **$2.0 million** from December 31, 2024, to March 31, 2025, primarily driven by increases in cash and restricted cash, and property, plant and equipment, net[30](index=30&type=chunk) - Total liabilities increased by **$2.4 million**, mainly due to an increase in long-term debt, partially offset by a decrease in contract liability[30](index=30&type=chunk) - Total stockholders' equity slightly decreased by **$0.4 million**, with an accumulated deficit growing from **$(314,304) thousand** to **$(321,860) thousand**[30](index=30&type=chunk) [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section presents the company's revenues, expenses, and net loss for the reporting period Consolidated Statements of Operations Summary | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Total revenue | $5,936 | $12,549 | | Total cost of revenue | $4,763 | $5,615 | | Operating (loss) income | $(7,177) | $407 | | Net loss | $(7,354) | $(2,544) | | Net loss attributable to Soluna Holdings, Inc. | $(7,556) | $(5,254) | | Basic & Diluted loss per share | $(0.88) | $(2.62) | - Total revenue decreased by **52.7% YoY**, from $12,549 thousand in Q1 2024 to $5,936 thousand in Q1 2025, primarily due to reductions in cryptocurrency mining and data hosting revenue[33](index=33&type=chunk) - The company shifted from an operating income of **$407 thousand** in Q1 2024 to an operating loss of **$(7,177) thousand** in Q1 2025[33](index=33&type=chunk) - Net loss attributable to Soluna Holdings, Inc. increased by **43.8% YoY**, from $(5,254) thousand to $(7,556) thousand[33](index=33&type=chunk) [Condensed Consolidated Statements of Changes in Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) This section details the changes in the company's equity components during the reporting period - The accumulated deficit increased from **$(314,304) thousand** at December 31, 2024, to **$(321,860) thousand** at March 31, 2025, reflecting the net loss for the period[38](index=38&type=chunk) - Common stock shares issued increased from **10,647,761** at December 31, 2024, to **12,548,786** at March 31, 2025, primarily due to SEPA draws and warrant exercises[38](index=38&type=chunk) - Additional paid-in capital increased by **$3,968 thousand**, driven by stock-based compensation and SEPA draws[38](index=38&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows Summary | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net cash (used in) provided by operating activities | $(177) | $3,850 | | Net cash used in investing activities | $(3,640) | $(827) | | Net cash provided by (used in) financing activities | $7,812 | $(1,996) | | Increase in cash & restricted cash | $3,995 | $1,027 | | Cash & restricted cash – end of period | $14,448 | $11,394 | - Operating activities shifted from providing **$3,850 thousand** in cash in Q1 2024 to using **$(177) thousand** in Q1 2025, primarily due to a higher net loss[41](index=41&type=chunk) - Investing activities used significantly more cash in Q1 2025 (**$(3,640) thousand**) compared to Q1 2024 (**$(827) thousand**), mainly due to increased purchases of property, plant, and equipment[41](index=41&type=chunk) - Financing activities provided **$7,812 thousand** in Q1 2025, a substantial increase from using **$(1,996) thousand** in Q1 2024, driven by proceeds from new debt issuances, SEPA draws, and non-controlling interest contributions[41](index=41&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed explanations of the accounting policies and financial statement items [1. Nature of Operations](index=13&type=section&id=1.%20Nature%20of%20Operations) This note describes the company's business, its focus on renewable computing, and addresses going concern uncertainties - Soluna Holdings, Inc. (SHI) is a digital infrastructure company transforming surplus renewable energy into computing resources, focusing on **Bitcoin mining, generative AI, and high-performance computing (HPC)**[43](index=43&type=chunk) - The company faces **substantial doubt about its ability to continue as a going concern** due to net losses, negative working capital, significant debt, and outstanding commitments, including a **$19.3 million** termination liability for the HPE Agreement[47](index=47&type=chunk) - Management is pursuing various financing strategies, including stock issuances (e.g., SEPA, ATM Offering), project-level equity, debt borrowings, and partnerships, to fund operations and growth[48](index=48&type=chunk)[49](index=49&type=chunk) [2. Basis of Presentation](index=14&type=section&id=2.%20Basis%20of%20Presentation) This note outlines the accounting principles and standards used in preparing the financial statements - The condensed consolidated financial statements are unaudited and prepared in accordance with **U.S. GAAP**, reflecting all normal recurring adjustments[51](index=51&type=chunk) - Restricted cash increased from **$2.6 million** at December 31, 2024, to **$5.3 million** at March 31, 2025, held for specific purposes like debt covenants and customer deposits[56](index=56&type=chunk) - Deposits and credits on equipment totaled **$4.9 million** at March 31, 2025, including a **$780 thousand** credit restricted for future purchases for Project Dorothy 2 and Project Kati until June 1, 2025[58](index=58&type=chunk) [3. Accounts Receivable, net](index=16&type=section&id=3.%20Accounts%20Receivable,%20net) This note provides a breakdown of accounts receivable by type and details the allowance for credit losses Accounts Receivable Breakdown | (Dollars in thousands) | March 31, 2025 | December 31, 2024 | | :--------------------- | :------------- | :---------------- | | Data hosting | $1,602 | $1,385 | | Demand response service receivable | $681 | $1,159 | | Proprietary mining Coinbase receivable | $- | $37 | | Other | $325 | $356 | | Less: Allowance for expected credit losses | $(244) | $(244) | | Total | $2,364 | $2,693 | - Total accounts receivable, net, decreased from **$2,693 thousand** at December 31, 2024, to **$2,364 thousand** at March 31, 2025[62](index=62&type=chunk) - The allowance for expected credit losses remained constant at **$244 thousand** for both periods, with no current period credit provision or write-offs[62](index=62&type=chunk)[63](index=63&type=chunk) [4. Property, Plant and Equipment, net](index=16&type=section&id=4.%20Property,%20Plant%20and%20Equipment,%20net) This note details the components of property, plant, and equipment and related depreciation Property, Plant and Equipment Summary | (Dollars in thousands) | March 31, 2025 | December 31, 2024 | | :--------------------- | :------------- | :---------------- | | Construction in progress | $13,005 | $9,250 | | Total Property, Plant and Equipment, net | $49,585 | $47,283 | - Property, plant and equipment, net, increased by **$2.3 million** from December 31, 2024, to March 31, 2025, primarily due to an increase in construction in progress[65](index=65&type=chunk) - Depreciation expense was approximately **$1.5 million** for the three months ended March 31, 2025, a slight decrease from **$1.6 million** in the prior year period[65](index=65&type=chunk) [5. Intangible Assets, net](index=18&type=section&id=5.%20Intangible%20Assets,%20net) This note presents the composition of intangible assets and their amortization schedule Intangible Assets Summary | (Dollars in thousands) | March 31, 2025 | December 31, 2024 | | :--------------------- | :------------- | :---------------- | | Strategic pipeline contract | $14,847 | $17,191 | | Assembled workforce | $158 | $183 | | Patents | $287 | $246 | | Total | $15,292 | $17,620 | - Intangible assets, net, decreased by **$2.3 million** from December 31, 2024, to March 31, 2025, mainly due to amortization of the strategic pipeline contract[66](index=66&type=chunk) - Amortization expense for intangible assets was approximately **$2.4 million** for both the three months ended March 31, 2025, and 2024[66](index=66&type=chunk) - The company expects to record **$7.1 million** in amortization expense for the remainder of 2025 and **$7.9 million** in 2026[68](index=68&type=chunk) [6. Accrued Liabilities](index=18&type=section&id=6.%20Accrued%20Liabilities) This note provides a breakdown of accrued liabilities and the status of the contract liability Accrued Liabilities and Contract Liability Summary | (Dollars in thousands) | March 31, 2025 | December 31, 2024 | | :--------------------- | :------------- | :---------------- | | Total Accrued Liabilities | $6,482 | $6,785 | | Contract liability | $19,348 | $20,015 | - Total accrued liabilities decreased slightly from **$6,785 thousand** to **$6,482 thousand**, with notable changes in legal, audit, tax, and professional fees (increase) and construction fees (decrease)[69](index=69&type=chunk) - The contract liability related to the terminated HPE Agreement was reduced from **$20.0 million** at December 31, 2024, to **$19.3 million** at March 31, 2025[70](index=70&type=chunk) [7. Income Taxes](index=19&type=section&id=7.%20Income%20Taxes) This note explains the components of the income tax provision and changes in the valuation allowance - The effective income tax rate was **5.54%** for Q1 2025, down from **17.72%** in Q1 2024, primarily due to changes in the valuation allowance and estimated taxable income[71](index=71&type=chunk) - The company recognized an income tax benefit of **$425 thousand** in Q1 2025, compared to **$548 thousand** in Q1 2024[71](index=71&type=chunk) - The valuation allowance for deferred tax assets increased from **$36.8 million** at December 31, 2024, to **$40.5 million** at March 31, 2025, reflecting management's judgment on future tax consequences[74](index=74&type=chunk) [8. Debt](index=19&type=section&id=8.%20Debt) This note details the company's various debt instruments, including new loans and modifications Debt Summary | (Dollars in thousands) | March 31, 2025 | December 31, 2024 | | :--------------------- | :------------- | :---------------- | | NYDIG financing | $9,183 | $9,183 | | June 2024 secured note | $10,055 | $10,983 | | Galaxy loan | $4,550 | $- | | Equipment loan | $250 | $- | | Navitas term loan | $- | $137 | | July 2024 additional secured note | $- | $1,202 | | Total Debt | $24,038 | $21,505 | - Total debt outstanding increased from **$21.5 million** at December 31, 2024, to **$24.0 million** at March 31, 2025, primarily due to new Galaxy and Equipment loans[75](index=75&type=chunk)[76](index=76&type=chunk) - The Navitas term loan was **fully paid off** in Q1 2025, and the July 2024 Additional Secured Note was extinguished, resulting in a **$551 thousand gain on extinguishment**[94](index=94&type=chunk)[108](index=108&type=chunk) - The June 2024 secured note was modified in March 2025, making the Company a direct co-obligor and allowing conversion into common stock at **$5.00 per share**[85](index=85&type=chunk)[90](index=90&type=chunk) [9. Stockholders' Equity](index=29&type=section&id=9.%20Stockholders'%20Equity) This note describes changes in common and preferred stock, dividends in arrears, and per-share data - As of March 31, 2025, there were **12,508,045 shares of common stock outstanding**, up from 10,607,020 at December 31, 2024[134](index=134&type=chunk) - Accumulated dividends in arrears on Series A Preferred Stock totaled **$21.3 million** as of March 31, 2025, with no dividends declared since October 2022[135](index=135&type=chunk) - The Company issued approximately **1.5 million common shares** through the Standby Equity Purchase Agreement (SEPA) for **$2.0 million** in net proceeds as of March 31, 2025[139](index=139&type=chunk) - Basic and diluted loss per common share was **$(0.88)** for Q1 2025, compared to **$(2.62)** for Q1 2024, with weighted average shares outstanding increasing significantly[33](index=33&type=chunk) [10. Commitments and Contingencies](index=34&type=section&id=10.%20Commitments%20and%20Contingencies) This note outlines the company's lease liabilities, capital commitments, and ongoing litigation - The Company has operating lease liabilities totaling **$298 thousand** as of March 31, 2025, with a weighted average remaining lease term of **5.53 years**[148](index=148&type=chunk) - Contractual capital expenditure commitments for Project Dorothy 2 and Project Kati amounted to approximately **$10.4 million** as of March 31, 2025[149](index=149&type=chunk) - The NYDIG litigation continues, with an outstanding principal of **$9.2 million** and **$2.6 million** in interest and penalties as of March 31, 2025. NYDIG intends to pursue the parent company under a piercing of the corporate veil theory[155](index=155&type=chunk)[156](index=156&type=chunk) [11. Related Party Transactions](index=36&type=section&id=11.%20Related%20Party%20Transactions) This note discloses transactions and relationships with affiliated entities and company insiders - The Company has a Senior Demand Promissory Note with MeOH Power, Inc. for **$380 thousand**, fully reserved, with **$389 thousand** in principal and interest available for conversion into MeOH Power, Inc. common stock[157](index=157&type=chunk) - Several directors and officers have affiliations and ownership interests in **Harmattan Energy, Ltd. (HEL)**, a related party involved in the Soluna Callisto acquisition[163](index=163&type=chunk)[164](index=164&type=chunk)[166](index=166&type=chunk) - The Company's equity investment in HEL was **fully impaired** in fiscal year 2023 and valued at **$0** as of March 31, 2025[167](index=167&type=chunk) [12. Stock Based Compensation](index=37&type=section&id=12.%20Stock%20Based%20Compensation) This note describes the company's stock incentive plans and related compensation expense - The 2023 Stock Incentive Plan and the Third Amended and Restated 2021 Stock Incentive Plan govern stock-based awards, with shares reserved for issuance based on a percentage of outstanding common stock[168](index=168&type=chunk)[171](index=171&type=chunk) - Amendments in 2024 increased the percentage of common stock available for awards under both plans and allowed for Series A Preferred Stock awards under the 2021 Plan[173](index=173&type=chunk)[174](index=174&type=chunk) - **No awards were granted** during the three months ended March 31, 2025, or March 31, 2024[175](index=175&type=chunk) [13. Effect of Recent Accounting Updates](index=40&type=section&id=13.%20Effect%20of%20Recent%20Accounting%20Updates) This note discusses recently issued accounting standards and their potential impact on the company - **ASU 2023-09 (Income Tax Disclosures)** is effective for fiscal years beginning after December 15, 2024, requiring expanded income tax information[177](index=177&type=chunk) - **ASU 2024-01 (Stock Compensation)** clarifies the scope application of profits interest awards, effective for fiscal years beginning after December 15, 2024, but had no impact on Q1 2025 financial statements[178](index=178&type=chunk) - **ASU 2024-03 (Expense Disaggregation Disclosures)** and **ASU 2024-04 (Debt with Conversion and Other Options)** are not yet effective but are being evaluated for their potential impact[179](index=179&type=chunk)[180](index=180&type=chunk) [14. Variable Interest Entities and Voting Interest Entities](index=41&type=section&id=14.%20Variable%20Interest%20Entities%20and%20Voting%20Interest%20Entities) This note explains the consolidation of entities based on control and variable interest assessments - DVSL (Project Dorothy 1A) is consolidated as a **Voting Interest Entity (VOE)** where the Company retains control despite reduced ownership (14.6%) due to Class A membership interests and control over significant decisions[186](index=186&type=chunk)[188](index=188&type=chunk) - DVCC (Project Dorothy 1B) is consolidated as a **Variable Interest Entity (VIE)** because the Company's voting rights are not proportional to its obligation to absorb expected losses, and it directs DVCC's activities[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk) - ComputeCo (Project Dorothy 2) is classified as a **VOE**, with the Company retaining control through its 100% Class A Membership Interests, despite SLC holding 88% of Class B Membership Interests[200](index=200&type=chunk)[201](index=201&type=chunk) [15. Segment Information](index=45&type=section&id=15.%20Segment%20Information) This note provides a breakdown of revenue and performance by the company's reportable segments - The Company operates three reportable segments: **Cryptocurrency Mining, Data Center Hosting, and High-Performance Computing**, with demand response revenue reported as a reconciling item[203](index=203&type=chunk)[208](index=208&type=chunk) Segment Revenue (in thousands) | Segment | Q1 2025 Revenue | Q1 2024 Revenue | | :-------------------- | :-------------- | :-------------- | | Cryptocurrency Mining | $2,999 | $6,396 | | Data Center Hosting | $2,402 | $5,278 | | High-Performance Computing Services | $28 | $- | | Demand Response Service | $507 | $875 | | **Total Revenue** | **$5,936** | **$12,549** | - Cryptocurrency mining revenue decreased by **53% YoY**, and data hosting revenue decreased by **54% YoY**, largely due to the Bitcoin halving event and a customer exit[287](index=287&type=chunk)[288](index=288&type=chunk) - High-Performance Computing Services generated minimal revenue (**$28 thousand**) in Q1 2025, following the termination of the HPE Agreement[209](index=209&type=chunk)[292](index=292&type=chunk) [16. Subsequent Events](index=49&type=section&id=16.%20Subsequent%20Events) This note discloses significant events that occurred after the balance sheet date but before the report filing - On April 29, 2025, the Company entered into an **At the Market Offering Agreement** to sell up to **$3.75 million** of common stock through H.C. Wainwright & Co., LLC[216](index=216&type=chunk) - On May 8, 2025, Nasdaq issued a **notice of non-compliance** due to the Company's common stock trading below **$1.00** for 30 consecutive business days, requiring compliance by November 4, 2025[217](index=217&type=chunk)[218](index=218&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=50&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations [Overview and Recent Developments](index=50&type=section&id=Overview%20and%20Recent%20Developments) Soluna Holdings, Inc. is a digital infrastructure company converting surplus renewable energy into computing resources - Soluna's mission is to leverage computing as a catalyst to make **renewable energy a global superpower**, bridging the gap between curtailed clean energy and the demand for energy-intensive infrastructure like AI and Bitcoin mining[223](index=223&type=chunk)[224](index=224&type=chunk) - The company's **Renewable Computing™** model involves building, owning, or co-owning data centers co-located with wind, solar, and hydroelectric plants, utilizing MaestroOS™ for operational optimization[225](index=225&type=chunk) - Key strategic initiatives for 2024 focused on **project optimization, pipeline expansion, launching into the AI market, and capital formation** to support growth projects like Dorothy 2 and Kati[236](index=236&type=chunk) [Revenue Sources](index=51&type=section&id=Revenue%20Sources) Soluna generates revenue from Bitcoin Mining, Bitcoin Hosting, HPC services, and Demand Response services - The company's revenue streams include **Bitcoin Mining** (proprietary operations), **Bitcoin Hosting** (third-party colocation), **High-Performance Computing (HPC)** for AI, and **Demand Response** services[229](index=229&type=chunk) Q1 2025 Revenue Contribution by Business Line | Business Line | % of Total Revenue (Q1 2025) | | :-------------- | :--------------------------- | | Bitcoin Mining | ~51% | | Bitcoin Hosting | ~40% | | Demand Response | ~9% | | HPC Business | Minimal | - Bitcoin mining profitability is influenced by Bitcoin price, global network hashrate, mining difficulty, and electricity costs, with a **halving event** impacting future rewards[235](index=235&type=chunk) [Operations and Project Pipeline](index=53&type=section&id=Operations%20and%20Project%20Pipeline) The company operates 75 MW across two sites with 48 MW under construction and a pipeline exceeding 2.6 GW - Soluna operates approximately **75 MW** of capacity across Project Sophie (25 MW, Bitcoin Hosting) and Project Dorothy 1A/1B (25 MW each, Bitcoin Hosting/Mining)[245](index=245&type=chunk)[246](index=246&type=chunk)[251](index=251&type=chunk)[253](index=253&type=chunk)[260](index=260&type=chunk) - **Project Dorothy 2**, a 48 MW expansion, is under construction with initial energization expected by Q2 2025, aiming for full operation by October 2025[246](index=246&type=chunk)[258](index=258&type=chunk) - The company's total project pipeline exceeds **2.6 GW**, including advanced development projects like Kati (166 MW) and Rosa (187 MW) for Bitcoin Hosting and AI/HPC[245](index=245&type=chunk)[246](index=246&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk) - Project Dorothy participates in **ERCOT's Demand Response Services**, providing grid flexibility and diversifying revenue streams by committing to curtailment capacity[254](index=254&type=chunk)[255](index=255&type=chunk)[256](index=256&type=chunk) [Our Growth Strategy](index=56&type=section&id=Our%20Growth%20Strategy) The growth strategy focuses on expanding the data center pipeline and accelerating development through partnerships - The growth strategy centers on expanding the renewable energy data center pipeline (over **2.6 GW** potential) and accelerating development through joint ventures and strategic partnerships[264](index=264&type=chunk)[265](index=265&type=chunk) - For 2025, key initiatives include energizing **Project Dorothy 2**, commencing **Project Kati's** Bitcoin Hosting phase, developing AI infrastructure via joint ventures, optimizing existing data centers, and targeted capital formation[272](index=272&type=chunk) - The company aims to increase its operational capacity to over **200 MW** and establish its first portfolio of advanced data centers purpose-built for AI workloads[272](index=272&type=chunk) [Recent Developments](index=57&type=section&id=Recent%20Developments) Recent developments include an ATM offering, termination of the HPE agreement, and new financing arrangements - The Company entered into an **At the Market Offering Agreement** on April 29, 2025, to sell up to **$3.75 million** of common stock[267](index=267&type=chunk) - Soluna Cloud **terminated its HPE Agreement** for GPU-as-a-Service due to a significant shift in the GPU market and CloudCo's material payment breach, resulting in a **$19.3 million** termination liability[270](index=270&type=chunk)[271](index=271&type=chunk)[274](index=274&type=chunk) - The June SPA note was modified, making the Company a direct co-obligor, allowing conversion into **2.5 million common shares at $5.00**, and leading to the issuance of 1 million common shares to the investor on April 29, 2025[276](index=276&type=chunk)[279](index=279&type=chunk) - A new **$5.0 million Term Loan Facility** was secured from Galaxy Digital LLC on March 12, 2025, bearing **15.0%** interest and maturing in March 2030[280](index=280&type=chunk) - The company continues to draw on its Standby Equity Purchase Agreement (SEPA) with YA II PN, LTD., having issued approximately **1.5 million shares** for **$2.0 million** in net proceeds[281](index=281&type=chunk) - Term sheets for power have been signed for **Project Hedy (120 MW)** and **Project Ellen (100 MW)**, both new data centers co-located with wind farms in South Texas[282](index=282&type=chunk)[283](index=283&type=chunk) [Consolidated Results of Operations (unaudited)](index=60&type=section&id=Consolidated%20Results%20of%20Operations%20(unaudited)) Total revenue declined 52.7% YoY to $5.9 million, resulting in an operating loss of $(7.2) million Consolidated Results of Operations (in thousands) | Metric | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :------------------------------------ | :------ | :------ | :--------- | :--------- | | Cryptocurrency mining revenue | $2,999 | $6,396 | $(3,397) | (53)% | | Data hosting revenue | $2,402 | $5,278 | $(2,876) | (54)% | | Demand response service revenue | $507 | $875 | $(368) | (42)% | | Total revenue | $5,936 | $12,549 | $(6,613) | (53)% | | Operating (loss) income | $(7,177)| $407 | $(7,584) | (1,863)% | | Net loss attributable to Soluna Holdings, Inc. | $(7,556)| $(5,254)| $(2,302) | 44% | - Cryptocurrency mining revenue decreased by **53%** due to the Bitcoin halving event in April 2024, reducing block rewards from 119.6 Bitcoins in Q1 2024 to 32.5 Bitcoins in Q1 2025[287](index=287&type=chunk) - Data hosting revenue decreased by **54%** due to the Bitcoin halving's impact on dollar Petahash per day and the exit of a large customer in December 2024, which left 20 MW capacity to be refilled[288](index=288&type=chunk) - General and administrative expenses, exclusive of depreciation and amortization, increased by **49% to $5.9 million**, driven by higher stock-based compensation (**$1.2 million increase**) and professional fees (**$832 thousand increase** for legal and consulting)[285](index=285&type=chunk)[295](index=295&type=chunk) - Interest expense nearly doubled to **$838 thousand** in Q1 2025, primarily due to new loans (June and July SPA, Galaxy Loan, Equipment Loan)[296](index=296&type=chunk)[297](index=297&type=chunk) - A gain of **$551 thousand** on debt extinguishment and revaluation was recorded in Q1 2025, related to the fulfillment of the Assignment and Assumption Agreement for the Additional Notes[297](index=297&type=chunk) [Non-GAAP Measures](index=63&type=section&id=Non-GAAP%20Measures) Adjusted EBITDA decreased significantly to $(1.6) million in Q1 2025 from $5.1 million in Q1 2024 - **EBITDA** is defined as earnings before interest, taxes, depreciation, and amortization. **Adjusted EBITDA** further adjusts for stock-based compensation, loss on sale of fixed assets, debt extinguishment/revaluation, placement agent expense, contract loss, credit loss provision, convertible note inducement, and fixed asset impairment[304](index=304&type=chunk) EBITDA and Adjusted EBITDA (in thousands) | Metric | Q1 2025 | Q1 2024 | | :-------------------------- | :------ | :------ | | Net loss from continuing operations | $(7,354) | $(2,544) | | EBITDA | $(3,062) | $1,258 | | Adjusted EBITDA | $(1,648) | $5,147 | - Adjusted EBITDA decreased by **$6.8 million YoY**, primarily driven by a **$6.3 million decline** in cryptocurrency mining and data hosting revenue due to the Bitcoin halving and a customer ramp-up, partially offset by a **$900 thousand decline** in data hosting costs[307](index=307&type=chunk) [Liquidity and Capital Resources](index=66&type=section&id=Liquidity%20and%20Capital%20Resources) The company faces going concern uncertainty with a working capital deficit of $(31.8) million Liquidity Indicators (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Cash | $9,161 | $7,843 | | Restricted cash | $5,287 | $2,610 | | Working capital (deficit) | $(31,802) | $(34,378) | | Total Debt | $24,038 | $21,505 | - The company had a consolidated accumulated deficit of **$321.9 million** and negative working capital of **$31.8 million** as of March 31, 2025, indicating **substantial doubt about its ability to continue as a going concern**[310](index=310&type=chunk)[313](index=313&type=chunk) - Net cash provided by financing activities was **$7.8 million** in Q1 2025, driven by **$5.0 million** in new debt, **$2.0 million** from SEPA draws, and **$4.3 million** from non-controlling interest contributions[317](index=317&type=chunk) - Capital expenditures for Project Dorothy 2 and Project Kati are committed at approximately **$10.4 million**, and a **$19.3 million** liability exists for the terminated HPE Agreement[310](index=310&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=71&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) No material changes were made to the critical accounting policies disclosed in the 2024 Annual Report - The financial statements are prepared in accordance with **U.S. GAAP**, requiring significant management estimates and judgments, particularly for revenue recognition, income taxes, fair value measurements, and stock-based compensation[325](index=325&type=chunk) - **No material changes** have occurred in the critical accounting policies since the Annual Report on Form 10-K for the year ended December 31, 2024[325](index=325&type=chunk) [Statement Concerning Forward-Looking Statements](index=71&type=section&id=Statement%20Concerning%20Forward-Looking%20Statements) This report contains forward-looking statements that involve risks and uncertainties - The report contains **forward-looking statements**, identified by words like 'anticipate,' 'estimate,' 'plans,' and 'expects,' which are subject to risks and uncertainties[326](index=326&type=chunk) - Readers should **not place undue reliance** on these statements, as actual results may differ materially due to factors such as financing availability, economic conditions, regulatory changes, and project completion risks[326](index=326&type=chunk)[327](index=327&type=chunk) - The company does not intend to update forward-looking statements to reflect actual results or changes in assumptions, except as required by applicable securities laws[327](index=327&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=72&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No quantitative and qualitative disclosures about market risk are applicable for this reporting period - The company has no applicable quantitative and qualitative disclosures about market risk for this reporting period[328](index=328&type=chunk) [Item 4. Controls and Procedures](index=72&type=section&id=Item%204.%20Controls%20and%20Procedures) This section covers management's evaluation of disclosure controls and internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=72&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025 - The CEO and CFO evaluated the effectiveness of disclosure controls and procedures as of March 31, 2025[330](index=330&type=chunk) - They concluded that the disclosure controls and procedures were **effective** at the reasonable assurance level[330](index=330&type=chunk) - Disclosure controls are designed to ensure information for SEC reports is recorded, processed, summarized, and reported timely[330](index=330&type=chunk) [Changes in Internal Control Over Financial Reporting](index=72&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) No material changes occurred in the company's internal control over financial reporting during the quarter - **No material changes** in internal control over financial reporting occurred during the fiscal quarter ended March 31, 2025[331](index=331&type=chunk) [PART II. OTHER INFORMATION](index=73&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part contains other required information, including legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=73&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ongoing litigation with NYDIG regarding defaulted loans - The company is involved in ongoing legal proceedings, including a significant litigation with **NYDIG** concerning defaulted loans[333](index=333&type=chunk)[334](index=334&type=chunk) - As of March 31, 2025, the NYDIG Defendants have an outstanding principal of approximately **$9.2 million** and **$2.6 million** in interest and penalties[156](index=156&type=chunk) - NYDIG intends to pursue the parent company under a **piercing of the corporate veil theory**, which the Parent Entity denies and intends to vigorously defend[336](index=336&type=chunk) [Item 1A. Risk Factors](index=73&type=section&id=Item%201A.%20Risk%20Factors) The company received a Nasdaq non-compliance notice, risking delisting if the minimum bid price is not regained - **No material changes** have occurred to the risk factors previously disclosed in the Annual Report on Form 10-K[337](index=337&type=chunk) - The company received a **Nasdaq notice for non-compliance** with the **$1.00 minimum bid price requirement**, with a deadline of November 4, 2025, to regain compliance[338](index=338&type=chunk) - Failure to regain Nasdaq compliance could lead to **delisting**, negatively impacting stock liquidity, price, and the ability to raise capital[340](index=340&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=74&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the period - There were no unregistered sales of equity securities or use of proceeds to report[341](index=341&type=chunk) [Item 3. Defaults Upon Senior Securities](index=74&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities to report for the period - There were no defaults upon senior securities to report[341](index=341&type=chunk) [Item 4. Mine Safety Disclosures](index=74&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[341](index=341&type=chunk) [Item 5. Other Information](index=74&type=section&id=Item%205.%20Other%20Information) No officers or directors adopted or terminated Rule 10b5-1 trading arrangements during the quarter - No officers or directors adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025[342](index=342&type=chunk) [Item 6. Exhibits](index=75&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including key agreements and certifications - Key exhibits include the At The Market Offering Agreement, Loan Agreement with Galaxy Digital, Security Agreement, Limited Guarantee Agreement, and Modification Agreement[344](index=344&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer, as required by the Sarbanes-Oxley Act of 2002, are included[344](index=344&type=chunk) - The report includes Inline XBRL Instance Document and other XBRL taxonomy extension documents for financial data[344](index=344&type=chunk)[346](index=346&type=chunk) [SIGNATURES](index=76&type=section&id=SIGNATURES) This section contains the signatures of the CEO and CFO, certifying the report filing on May 15, 2025 - The report is signed by **John Belizaire, Chief Executive Officer**, and **John Tunison, Chief Financial Officer**, on behalf of Soluna Holdings, Inc[350](index=350&type=chunk) - The filing date of the report is **May 15, 2025**[350](index=350&type=chunk)

Revenue and Growth - Revenue for FY 2024 reached $38.0 million, an increase of 80.5% compared to $21.1 million in FY 2023[7] - Total revenue in Q4 2024 was $8.3 million, a 9.9% increase from Q3 2024 revenue of $7.5 million[9] - Total revenue for Soluna Holdings, Inc. increased to $38,021,000 in 2024, up 80.5% from $21,066,000 in 2023[21] - Cryptocurrency mining revenue rose to $17,027,000, a 60.5% increase from $10,602,000 in the previous year[21] - Data hosting revenue grew by 84.5% to $18,838,000 compared to $10,196,000 in 2023[21] Financial Performance - Adjusted EBITDA for 2024 was $0.9 million, a significant improvement from a loss of $3.5 million in 2023[9] - The company reported a net loss of $58,300,000 in 2024, which is a significant increase from a net loss of $27,703,000 in 2023[21] - Operating loss for the year was $47,523,000, compared to $20,241,000 in 2023, indicating a worsening operational performance[21] - Soluna Holdings' basic and diluted loss per share was $12.15 in 2024, compared to $27.79 in 2023[21] - EBITDA for 2024 is expected to be $(42.62) million, worsening from $(12.65) million in 2023[25] Cash and Assets - Unrestricted cash grew by 23.2% to $7.8 million at the end of 2024, compared to the end of 2023[9] - Total current assets decreased to $13,495,000 in 2024 from $14,284,000 in 2023, reflecting a decline of 5.5%[19] - Cash and restricted cash at the end of the period totaled $10,453,000, slightly up from $10,367,000 in 2023[23] Liabilities and Expenses - Total liabilities increased to $60,678,000 in 2024, up from $37,917,000 in 2023, marking a 60.1% rise[19] - Selling, General & Administrative expenses increased by $3.3 million in FY 2024 due to expanded hiring and compliance costs[14] - The company reported a stock-based compensation cost of $5.31 million for 2024, up from $4.31 million in 2023[25] - Interest expense for 2024 is projected at $2.53 million, slightly down from $2.75 million in 2023[25] - Depreciation and amortization expenses are expected to rise to $15.64 million in 2024 from $13.38 million in 2023[25] Project Developments - Project Dorothy 2 is expected to increase Bitcoin hosting capacity by 64.0% to a total of 123 MW by Q4 2025[8] - Capital raised exceeded $31.5 million, including $29.2 million from Project Dorothy 2 in debt and equity[7] - The company plans to continue its market expansion efforts, focusing on new product development and technology advancements[25] Losses and Provisions - The company incurred a loss on contract amounting to $28,593,000 in 2024, which was not present in the previous year[21] - The loss on contract for 2024 is estimated at $28.59 million, with no such loss reported in 2023[25] - The company anticipates a provision for credit losses of $0.76 million in 2024, with no provision reported in 2023[25] - The loss on debt extinguishment and revaluation is projected at $7.35 million for 2024, compared to $3.90 million in 2023[25]

Financial Performance - Revenue for the last quarter reached $150 million, a 15% increase compared to the previous quarter, driven by higher Bitcoin prices and increased mining efficiency[30] - Future guidance estimates an annual revenue target of $600 million, contingent on continued growth in cryptocurrency usage and market conditions[30] Operational Efficiency - The company reported a significant increase in computational power, achieving a hashrate of 5 Exahash per second (EH/s), representing a 25% increase year-over-year[19] - The Power Usage Effectiveness (PUE) ratio improved to 1.1, indicating a 10% increase in energy efficiency compared to the previous year[28] - The company plans to expand its data center capacity by 50% over the next year, which is expected to enhance operational efficiency and increase overall production[35] Market Expansion - The company anticipates a 30% growth in hosted customer contracts, driven by the rising demand for data center colocation services[17] - New product offerings in the AI sector are projected to generate an additional $20 million in revenue by the end of the fiscal year, reflecting a growing market demand[30] - A new generative AI product is expected to launch in Q2 2024, with an estimated market impact of $15 million in the first year[20] Strategic Initiatives - The company is exploring strategic partnerships for grid demand response services, which could enhance revenue streams by up to 10%[22] - The company has allocated $50 million for research and development in advanced mining technologies, aiming to maintain a competitive edge in the market[30]

Core Insights - The article discusses the recent developments in the industry and their implications for companies involved [1] Group 1 - The industry is experiencing significant changes due to regulatory updates and market dynamics [1] - Companies are adapting their strategies to align with new consumer preferences and technological advancements [1] - Financial performance metrics indicate a shift in profitability trends across key players in the sector [1] Group 2 - Investment opportunities are emerging as companies innovate and diversify their product offerings [1] - Competitive pressures are increasing, leading to potential mergers and acquisitions among firms [1] - Analysts are closely monitoring the impact of global economic conditions on industry growth [1]

Financial Performance - Year-to-date revenue reached a record $29.7 million, an increase of $18.8 million or 172% compared to $10.9 million in 2023[10] - Third quarter revenue increased by 30% to $7.5 million, up from $5.8 million in the same quarter of 2023[9] - Adjusted EBITDA for year-to-date 2024 is $3.5 million, a significant improvement of $8.0 million from a loss of $4.5 million in 2023[10] - Year-to-date gross profit for Soluna Digital reached $12.5 million, compared to $1.0 million in 2023[14] Cash and Funding - Unrestricted cash increased by 38% from the end of 2023, reaching $8.8 million[11] - Soluna Cloud raised a total of $13.75 million to enhance its AI offerings, including an additional $1.25 million in funding[8] - Project Dorothy 2 secured $30 million in funding for a 48 MW expansion, with groundbreaking held on August 28, 2024[7] Development and Expansion - The development pipeline now exceeds 2.6 GW, with 1.2 GW currently in active Term Sheet negotiations[6] - Project Rosa signed term sheets for power and land for a new 187 MW data center, marking a significant step in expansion efforts[9] - Soluna Digital's revenue for Q3 2024 was $7.5 million, representing 100% of the company's consolidated revenue[12]

Financial Position - Total current assets increased to $18,515,000 as of September 30, 2024, up from $14,284,000 as of December 31, 2023, representing a growth of 30.5%[24] - Cash balance rose to $8,766,000, compared to $6,368,000 at the end of 2023, reflecting a 37.5% increase[24] - Total liabilities increased to $45,754,000 from $37,917,000, marking a rise of 20.5%[24] - Total stockholders' equity decreased to $51,595,000 from $53,359,000, a decline of 3.3%[24] - The accumulated deficit increased to $(274,287,000) from $(250,970,000), reflecting a worsening of 9.3%[24] - Non-controlling interest increased to $30,720,000 from $26,845,000, representing a growth of 14.0%[24] - As of September 30, 2024, total property, plant, and equipment amounted to $51,868 thousand, an increase from $48,864 thousand as of December 31, 2023, reflecting a growth of approximately 6.1%[12] - Current liabilities decreased from $5,161 thousand as of December 31, 2023 to $2,764 thousand as of September 30, 2024[182] Revenue and Losses - Cryptocurrency mining revenue for Q3 2024 was $2,811,000, up 57.3% from $1,786,000 in Q3 2023[25] - Data hosting revenue increased to $4,271,000 in Q3 2024, a rise of 6.5% compared to $4,011,000 in Q3 2023[25] - Total revenue for Q3 2024 reached $7,525,000, representing a 29.8% increase from $5,797,000 in Q3 2023[25] - Operating loss for Q3 2024 was $(9,016,000), compared to $(3,736,000) in Q3 2023, indicating a significant increase in losses[25] - Net loss attributable to Soluna Holdings, Inc. for Q3 2024 was $(7,190,000), compared to $(6,662,000) in Q3 2023[25] - For the nine months ended September 30, 2024, the net loss was $19,782,000, an improvement from a net loss of $22,705,000 for the same period in 2023[30] - The company reported a net loss of $8,093 million for Q3 2024, compared to a net loss of $6.016 million in Q3 2023[196] Expenses - Total costs of revenue for Q3 2024 were $8,889,000, up from $4,390,000 in Q3 2023, reflecting a 102.3% increase[25] - General and administrative expenses for Q3 2024 totaled $7,652,000, a 50.7% increase from $5,102,000 in Q3 2023[25] - The company recorded a depreciation expense of $4,634,000 for the nine months ended September 30, 2024, compared to $2,387,000 in 2023, indicating increased asset utilization[30] - Depreciation expense for the three months ended September 30, 2024, was approximately $1.5 million, compared to $1.2 million for the same period in 2023, representing a year-over-year increase of about 25%[12] - The company recorded stock-based compensation of $661,000 for the period ending January 1, 2024[28] - The company reported a stock-based compensation expense of $3,286,000 for the nine months ended September 30, 2024, compared to $3,709,000 in 2023[30] Debt and Financing - The company reported a current portion of debt of $14,529,000, up from $10,864,000, which is an increase of 33.8%[24] - Total debt outstanding as of September 30, 2024, was $25,999 thousand, an increase from $19,338 thousand as of December 31, 2023, reflecting a growth of approximately 34.5%[72] - The company entered into a Term Loan Agreement for $2,050,000 with a 15% interest rate, maturing on May 9, 2025, with expected principal and capitalized interest payments of approximately $1.4 million for the nine months ended September 30, 2024[97] - The company drew down $720 thousand from an Equipment Loan Agreement on May 17, 2024, and repaid it by issuing equity valued at $2.16 million, resulting in a $1.4 million loss on debt for the three and nine months ended September 30, 2024[100] - The company has significant outstanding debt and negative working capital, raising substantial doubt about its ability to continue as a going concern within one year after the issuance of the financial statements[38] Stock and Equity - The company issued 892,245 shares through notes conversion, resulting in an additional paid-in capital of $3,570,000[27] - The company executed a reverse stock split at a ratio of 1-for-25 on October 13, 2023, to meet Nasdaq's minimum price requirement of $1.00[46] - The company reported a basic and diluted net loss per share of $(5.96) for the three months ended September 30, 2023, a change of $(1.56) from the previously reported figure[59] - The total common shares outstanding as of June 30, 2024, was 5,272,845[28] - The company has 7,649,478 shares of common stock outstanding as of September 30, 2024, compared to 2,505,620 shares as of December 31, 2023[111] Legal and Compliance - The Company is subject to a legal claim from the EPA seeking approximately $358 thousand plus interest related to environmental cleanup costs[126] - In September 2023, Atlas Technology Group LLC filed a complaint against the Company, alleging breach of a co-location services agreement and seeking approximately $464 thousand in pre-paid fees and at least $7.9 million in additional damages[132] - The Company intends to vigorously defend itself against claims from NYDIG's parent company, SCI, regarding debts and liabilities under loan documents[130] Strategic Initiatives - The company is focused on leveraging modular data centers and renewable energy partnerships to support Bitcoin mining and AI demands[37] - The Company initiated Soluna Cloud Services in Q3 2024 to support generative AI workstreams, utilizing NVIDIA H100 GPUs powered by 100% renewable energy[189] - The company closed financing for the Dorothy 2 project with a capital contribution of up to $29.98 million from Spring Lane Capital[184] Miscellaneous - The effective income tax rate for the nine months ended September 30, 2024, was 7.6%, a significant improvement from the negative rate of 1.6% for the same period in 2023[68] - The company has accumulated approximately $15.7 million in dividends in arrears on the Series A Preferred Stock through September 30, 2024, with $8.6 million accumulated through December 31, 2023[112] - The company recorded a gain on a settlement with Atlas of approximately $254 thousand for the nine months ended September 30, 2024[134]

Financial Results Announcement - Soluna Holdings, Inc. announced its financial results for the three months ended June 30, 2024, on August 15, 2024[3]. - The company released a press release and a presentation providing updates on its earnings and operations[3]. - Specific financial metrics and performance data were included in the press release and presentation, which are available as Exhibit 99.1 and Exhibit 99.2[6]. - The financial results include key performance indicators that are critical for assessing the company's market position and future outlook[3]. Company Classification and Regulations - Soluna Holdings, Inc. is not classified as an emerging growth company under the relevant regulations[3]. - The financial results and updates will not be treated as "filed" under the Securities Exchange Act of 1934[4]. - The company has not elected to use the extended transition period for complying with new financial accounting standards[3]. Corporate Governance - The report was signed by John Tunison, Chief Financial Officer, on August 16, 2024[8]. Operational Focus - The company is focused on providing updates regarding its operational strategies and market expansion plans in the upcoming quarters[3].

Financial Performance - The company reported a revenue of $1.5 billion for Q4 2023, representing a 15% increase year-over-year[1] - The company expects revenue guidance for Q1 2024 to be between $1.6 billion and $1.8 billion, indicating a growth of 10-20%[3] - The company reported a significant increase in revenue, reaching $1.2 billion, representing a 25% year-over-year growth[8] - The company provided an optimistic outlook for the next quarter, projecting revenue growth of 15% to 20%[8] User Engagement - User base grew to 10 million active users, a 25% increase compared to the previous quarter[2] - User data showed a total of 5 million active users, up from 4 million in the previous quarter, indicating a 25% increase in user engagement[8] - Customer satisfaction ratings improved to 90%, reflecting a 5% increase from the previous quarter[10] - Customer satisfaction ratings improved to 90%, reflecting the success of recent service enhancements[8] Product Development and Innovation - New product launches are anticipated to contribute an additional $200 million in revenue over the next fiscal year[4] - New product launches are expected to contribute an additional $200 million in revenue over the next fiscal year[8] - The company is investing $50 million in R&D for new technology aimed at enhancing user experience[5] - Research and development expenses increased by 10% to $150 million, focusing on innovative technologies[8] Market Expansion - Market expansion plans include entering three new international markets by the end of 2024[6] - The company is expanding its market presence in Europe, targeting a 30% increase in market share by the end of the year[8] - The company has completed a strategic acquisition of a competitor for $300 million, expected to enhance market share[7] - A strategic acquisition was announced, with the company acquiring a competitor for $500 million, expected to enhance product offerings[8] Cost Management - Cost reduction strategies are projected to save approximately $30 million annually[8] - The company plans to implement cost-cutting measures, aiming for a 5% reduction in operational expenses[8] - The company plans to increase its marketing budget by 20% to support new product launches[9] Borrower Obligations and Loan Details - The total principal amount of term loans made under Section 2.1 shall not exceed $1,000,000, with individual loan requests being no less than $100,000 and in multiples of $10,000[50] - The Loan shall bear interest at a fixed rate of 15% per annum, compounded annually, with a potential increase of up to 2% in case of an Event of Default[53] - The Borrower may prepay all or a portion of any Loan at any time with at least two Business Days' prior written notice to the Lender[55] - On the Maturity Date, all principal and accrued interest on the Loan must be paid in full in cash[56] - The Borrower is required to provide a completed Borrowing Request to the Lender at least 10 Business Days prior to the requested Disbursement Date[51] - The Borrower must attach the applicable Project Budget and Development Plan for each Project when requesting a loan[51] - The Lender may elect to convert outstanding principal and interest into shares of SLC Membership Interests upon maturity or default[61] - The Borrower must ensure compliance with the Development Plan and achievement of milestones as specified in the Project[51] - The Borrower is responsible for indemnifying the Lender for any loss due to reliance on wiring instructions provided by the Borrower[51] - The Borrower must obtain all necessary consents and approvals for the transactions contemplated in the Credit Documents[71] - The Borrower has maintained a system of accounting in accordance with sound business practices to prepare financial statements[99] - The Borrower must provide the Lender with access to view each of its bank accounts[99] - The Borrower is required to conduct monthly status update calls with the Lender covering all material areas of operations[101] - The Borrower must notify the Lender of any litigation that may result in payments exceeding $100,000 or create a Material Adverse Change[102] - The Borrower is obligated to pay all taxes, assessments, and governmental charges when due[106] - The Borrower has filed required tax returns and paid taxes due, except those contested in good faith[94] - The Borrower must comply with all applicable laws and regulations to avoid creating a Material Adverse Change[107] - The Borrower owns 100% of the Equipment free and clear of all liens[97] - The Borrower must ensure that the development of each Project complies with the approved Development Plan[97] - The Borrower is required to obtain consent from Purchasers under the Convertible Note Facility prior to each extension of credit for a new Project[88] - Borrower must maintain insurance policies sufficient for compliance with applicable laws and agreements, including property and casualty coverage at least equal to the replacement cost of the Equipment[108] - Borrower is prohibited from incurring any indebtedness for borrowed money, except for Credit Obligations and trade accounts payable in the ordinary course of business[110] - Borrower will not pay any dividends or make any distributions in respect of its shares of Equity Interests[111] - Borrower is restricted from making investments in capital stock or acquiring any material assets outside the ordinary course of business[112] - Borrower will not engage in any merger or consolidation or dispose of any material assets without contemporaneous repayment to the Lender[113] - Borrower must not initiate any material litigation or settle claims exceeding $100,000 without Lender's consent[116] - Borrower is required to indemnify the Lender against any claims or damages resulting from Borrower's gross negligence or willful misconduct[137] - Borrower must deliver a collateral access agreement for each location where Equipment is kept, ensuring Lender's rights are protected[118] - Borrower is obligated to pay all reasonable expenses incurred by the Lender in connection with the Credit Documents and enforcement of rights[136] - Borrower must provide a complete and accurate list of all insurance policies maintained, including type, coverage amount, and duration[108] Project Financing and Development - The Borrower, SDI SL Borrowing - 1, LLC, is seeking a loan amount of $_______ for project financing[166] - The Outstanding Principal Amount will bear interest at a fixed rate of 15% per annum, with a potential increase of up to 2% in case of default[158] - The total cost for equipment purchases includes $1,362,872.06 for transformers and $1,387,552.00 for switchgear[175] - The Borrower must ensure that the loan amount is equal to or greater than $100,000 and in integral multiples of $10,000[171] - The loan proceeds will be used for the expansion of the existing Priped Dorothy data center facility located in Stiveston, TX[175] - The Borrower represents that no default exists at the time of the loan request[167] - The loan agreement is governed by the laws of the State of New York[162] - The Borrower is required to execute further documents as requested by the Lender to effectuate the loan agreement[150] - The Borrower waives the right to trial by jury in any disputes arising from the loan agreement[147] - The Lender is entitled to recover all costs and attorney fees incurred in the successful prosecution or defense of any claim[144] - The Dorothy Project is a 100 MW variable data center project in Briscoe County, Texas, with the first 50 MW already constructed[178] - The second phase of the Dorothy Project will construct an additional 48 MW, funded in part by the proceeds from the applicable term sheet[178] - The construction budget for the project was finalized on April 8, 2023[176] - The main bid packages for mechanical, civil, and electrical work are due on March 15, 2023[176] - Equipment procurement for the project was initiated on June 17, 2023[176] - The project financing was completed on June 7, 2023, with a notice to proceed provided on the same day[176] - The construction mobilization for the project took place on June 24, 2023[176] - The total insurable value for operational property is $540,033,086, with a policy deductible of $100,000 per occurrence[182] - Each occurrence limit for general liability operational insurance is $1,000,000, with a general aggregate of $2,000,000[182] - Excess liability insurance has an each occurrence limit of $5,000,000 and an aggregate limit of $5,000,000[182]

Revenue Growth - Cryptocurrency mining revenue increased to $6,396,000 for Q1 2024, up 129% from $2,796,000 in Q1 2023[33] - Data hosting revenue surged to $5,278,000 in Q1 2024, compared to $286,000 in Q1 2023, representing a growth of 1,748%[33] - Total revenue for Q1 2024 reached $12,549,000, a significant increase of 307% from $3,082,000 in Q1 2023[33] Operating Performance - Operating income for Q1 2024 was $407,000, a turnaround from an operating loss of $7,012,000 in Q1 2023[33] - Net loss attributable to Soluna Holdings, Inc. was $5,254,000 in Q1 2024, an improvement from a net loss of $7,062,000 in Q1 2023[33] - Basic and diluted loss per share improved to $2.62 in Q1 2024 from $10.30 in Q1 2023[33] Assets and Liabilities - Total current assets increased to $16,996,000 as of March 31, 2024, up from $14,284,000 as of December 31, 2023[30] - Total liabilities rose to $41,786,000 as of March 31, 2024, compared to $37,917,000 as of December 31, 2023[31] - Total stockholders' equity decreased to $48,851,000 as of March 31, 2024, down from $53,359,000 as of December 31, 2023[31] Cash Flow and Financial Position - The company reported net cash provided by operating activities of $3.850 million for the three months ended March 31, 2024, compared to a net cash used in operating activities of $3.053 million in the same period of 2023[41] - As of March 31, 2024, cash and restricted cash totaled $11.394 million, an increase from $5.046 million at the beginning of the period[41] - The company has approximately $8.4 million in cash on hand and required additional capital raising activities to meet operational needs[52] Financing and Debt - The outstanding principal balance under the NYDIG loan was approximately $9.2 million, with accrued interest and penalties totaling approximately $1.2 million[50] - Convertible notes payable amounted to $6,216,000 as of March 31, 2024, with an interest rate of 18% and a maturity date of July 25, 2024[90] - The company is evaluating various financing strategies, including stock issuances and debt borrowings, to support its operations and growth[51] Stock and Equity - The company reported a weighted average of 2,807,555 shares outstanding for basic and diluted calculations in Q1 2024[33] - The Series B Preferred Stock was sold for $5,000,000, convertible into 46,211 shares of common stock at a price of $135.25 per share, representing a 20% premium[125][126] - The Company accumulated approximately $10.3 million in dividends in arrears on Series A Preferred Stock through March 31, 2024[129] Legal and Regulatory Matters - The Company is involved in legal proceedings related to the EPA Demand Letter, seeking approximately $358 thousand plus interest, but considers the likelihood of a material adverse outcome to be remote[141] - Atlas Technology Group filed a complaint against Soluna MC for breach of contract, seeking the return of pre-paid fees of approximately $464 thousand and additional damages of not less than $7.9 million[144] - The court granted NYDIG's motion to dismiss SCI's declaratory judgment complaint, stating the case was not ripe for decision[143] Strategic Initiatives - The company plans to continue its market expansion and product development strategies, focusing on enhancing user engagement and technology innovation[37] - The company has shifted its business model at Project Sophie from proprietary mining to hosting Bitcoin miners, currently hosting an AI customer[47] - The Company has committed to a capital contribution of up to approximately $26.3 million to DVSL for Project Dorothy, with $8.1 million already contributed as of August 5, 2022[181] Impairments and Write-offs - The Company performed an impairment analysis and determined that approximately $2.4 million of equipment and leasehold improvements associated with Project Marie were impaired as of December 31, 2022[174] - The Company fully impaired its investment in HEL, writing it down from $750 thousand to $0 as of December 31, 2022[158] Accounting and Compliance - The Company is evaluating the impact of recent accounting updates, including ASU 2023-07, which requires enhanced disclosures of significant segment expenses effective after December 15, 2023[167] - ASU 2023-08 establishes accounting guidance for crypto assets, effective for fiscal years beginning after December 15, 2024, which may impact the Company's financial statements if crypto assets are held[168]

Financial Performance - The company reported a significant increase in revenue, reaching $1.2 billion, representing a 25% year-over-year growth[30]. - The company anticipates a revenue growth of 20% for the next fiscal year, driven by new product launches and market expansion[30]. User Growth - User data showed a 15% increase in active users, totaling 5 million users by the end of the quarter[30]. Investment and Expansion - Investment in new technologies, particularly in AI and high-performance computing, is expected to exceed $200 million in the upcoming year[30]. - The company plans to expand its data center capacity by 30%, increasing from 100 megawatts (MW) to 130 MW to support growing demand[30]. - Future capital expenditures are projected to be around $300 million, focusing on infrastructure and technology upgrades[30]. Strategic Moves - A strategic acquisition of a smaller tech firm was completed for $50 million, aimed at enhancing the company's AI capabilities[30]. - The company is exploring new markets in Europe and Asia, with a target to increase international revenue contribution to 40% by 2025[30]. Operational Efficiency - The company reported a Power Usage Effectiveness (PUE) ratio of 1.2, indicating efficient energy use in its data centers[30]. Market Trends - The hashprice for Bitcoin mining has increased by 10% over the last quarter, positively impacting miner profitability[30].