[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]

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 As filed with the Securities and Exchange Commission on February 3, 2025 Registration No. 333-282559 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 4 TO FORM S-1 SOLUNA HOLDINGS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Nevada 7374 14-1462255 (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Num ...

As filed with the Securities and Exchange Commission on January 15, 2025 Registration No. 333-282559 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 3 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 SOLUNA HOLDINGS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Nevada 7374 14-1462255 (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Num ...

As filed with the Securities and Exchange Commission on December 16, 2024 Registration No. 333-282559 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 2 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 SOLUNA HOLDINGS, INC. (I.R.S. Employer Identification Number) 325 Washington Avenue Extension Albany, New York 12205 (516) 216-9257 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) (Sta ...

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].