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SOLUNA HOLDINGS(SLNHP) - 2024 Q2 - Quarterly Report
SLNHPSOLUNA HOLDINGS(SLNHP)2024-08-14 19:41

Financial Performance - Cryptocurrency mining revenue for Q2 2024 reached 4.484million,asignificantincreasefrom4.484 million, a significant increase from 0.915 million in Q2 2023, representing a growth of 388%[33] - Total revenue for the first half of 2024 was 22.224million,comparedto22.224 million, compared to 5.150 million in the same period of 2023, marking a year-over-year increase of 331%[33] - Operating loss for Q2 2024 was 3.675million,animprovementfromalossof3.675 million, an improvement from a loss of 7.074 million in Q2 2023[33] - Net loss attributable to Soluna Holdings, Inc. for Q2 2024 was 10.873million,comparedtoalossof10.873 million, compared to a loss of 8.775 million in Q2 2023[33] - The company reported a basic and diluted loss per share of 2.97forQ22024,comparedto2.97 for Q2 2024, compared to 9.54 for Q2 2023[33] - The net loss for the six months ended June 30, 2024, was 11.689million,comparedtoanetlossof11.689 million, compared to a net loss of 16.689 million for the same period in 2023, indicating a 30% improvement in losses year-over-year[41] - The net loss for the three months ended September 30, 2023, was 6.702million,withstock−basedcompensationexpensesamountingto6.702 million, with stock-based compensation expenses amounting to 602,000[37] Assets and Liabilities - Total current assets increased to 27.480millionasofJune30,2024,upfrom27.480 million as of June 30, 2024, up from 14.284 million at the end of 2023, reflecting an increase of 92%[30] - Total assets as of June 30, 2024, were 98.675million,comparedto98.675 million, compared to 91.276 million at the end of 2023, indicating a growth of 8%[31] - The company’s total liabilities rose to 48.742millionasofJune30,2024,comparedto48.742 million as of June 30, 2024, compared to 37.917 million at the end of 2023, an increase of 28%[31] - The total accounts receivable increased to 3,434thousandasofJune30,2024,comparedto3,434 thousand as of June 30, 2024, compared to 2,948 thousand as of December 31, 2023, with a provision for credit loss of approximately 244thousandduetoaborrower′sfinancialdifficulties[73]CashFlowandReserves−Cashreservesincreasedto244 thousand due to a borrower's financial difficulties[73] Cash Flow and Reserves - Cash reserves increased to 9.558 million as of June 30, 2024, up from 6.368millionattheendof2023,representingagrowthof506.368 million at the end of 2023, representing a growth of 50%[30] - The company reported total cash and restricted cash of 12.509 million at the end of June 30, 2024, up from 10.244millionattheendofJune30,2023,reflectinga12.410.244 million at the end of June 30, 2023, reflecting a 12.4% increase[41] - Operating cash flow for the six months ended June 30, 2024, resulted in a net cash used of 3.473 million, slightly better than the 3.836millionusedinthesameperiodof2023[41]StockandEquity−AsofJune30,2023,thecompanyreportedatotalof1,230,650commonsharesoutstanding,withanaccumulateddeficitof3.836 million used in the same period of 2023[41] Stock and Equity - As of June 30, 2023, the company reported a total of 1,230,650 common shares outstanding, with an accumulated deficit of 237.606 million[37] - The company issued 113,502 shares in a securities purchase offering, raising 770,000duringthesecondquarterof2023[37]−Thecompanyreportedatotalof2,546,361commonsharesoutstandingasofDecember31,2023,followingareversestocksplitataratioof1−for−25effectiveOctober13,2023[37]−TheCompanyhadapproximately770,000 during the second quarter of 2023[37] - The company reported a total of 2,546,361 common shares outstanding as of December 31, 2023, following a reverse stock split at a ratio of 1-for-25 effective October 13, 2023[37] - The Company had approximately 2.7 million in note conversions and 4.0millioninrevaluationlossesrelatedtofairvalueassessmentsofconvertibledebtforthethreemonthsendedJune30,2024[100]StrategicInitiatives−Thecompanyformedtwonewwholly−ownedsubsidiaries,SolunaCloud,Inc.andSolunaEnergy,Inc.,in2024toexpanditscloudandrenewableenergyservices[45]−Thecompanycontinuestofocusontransformingsurplusrenewableenergyintocomputingresources,supportingapplicationslikeBitcoinminingandAI[46]−TheCompanyenteredintoanagreementwithHewlettPackardEnterprisefordatacenterandcloudservicesvaluedat4.0 million in revaluation losses related to fair value assessments of convertible debt for the three months ended June 30, 2024[100] Strategic Initiatives - The company formed two new wholly-owned subsidiaries, Soluna Cloud, Inc. and Soluna Energy, Inc., in 2024 to expand its cloud and renewable energy services[45] - The company continues to focus on transforming surplus renewable energy into computing resources, supporting applications like Bitcoin mining and AI[46] - The Company entered into an agreement with Hewlett Packard Enterprise for datacenter and cloud services valued at 34.0 million, with an initial pre-payment of 10.3million[48]−TheCompanyanticipatessignificantamortizationexpensesforintangibleassets,with10.3 million[48] - The Company anticipates significant amortization expenses for intangible assets, with 9,488 thousand expected in 2025, highlighting future financial impacts[90] Legal and Regulatory Matters - The Company is involved in legal proceedings related to an EPA Demand Letter, with potential costs estimated at approximately 358,000[159]−NYDIGfiledaMotionforSummaryJudgmentagainsttheCompanyforapproximately358,000[159] - NYDIG filed a Motion for Summary Judgment against the Company for approximately 10.3 million for principal, interest, and penalties related to the MEFA[201] - The Court dismissed three of the four counts in the complaint filed by Atlas against the Company, with one count remaining[164] Tax and Deferred Tax - The effective income tax rate for the three months ended June 30, 2024, was 7.1%, compared to 4.5% for the same period in 2023, reflecting changes in valuation allowance and estimated taxable income[91] - The company recorded a deferred tax liability of approximately 10.9millionrelatedtothestrategiccontractpipeline,whichwillbeamortizedovertheasset′slife[92]−Thecompanyhasafullvaluationallowancefordeferredtaxassetstotaling10.9 million related to the strategic contract pipeline, which will be amortized over the asset's life[92] - The company has a full valuation allowance for deferred tax assets totaling 37.2 million as of June 30, 2024, indicating ongoing evaluation of realizability[94] Impairments and Write-offs - The Company performed an impairment analysis and determined that approximately 2.4millionofequipmentandleaseholdimprovementsassociatedwithProjectMariewereimpairedasofDecember31,2022[202]−TheCompanyfullyimpaireditsequityinvestmentinHEL,writingitdownfrom2.4 million of equipment and leasehold improvements associated with Project Marie were impaired as of December 31, 2022[202] - The Company fully impaired its equity investment in HEL, writing it down from 750 thousand to 0asofDecember31,2022[178]FutureOutlook−TheCompanybelievestheclosureofProjectMariedoesnotrepresentastrategicshift,asitintendstocontinueoperationsthroughdatahostingandproprietaryminingarrangements[205]−TheCompanyanticipatesthatcapitalcontributionsfromSpringLaneCapital,upto0 as of December 31, 2022[178] Future Outlook - The Company believes the closure of Project Marie does not represent a strategic shift, as it intends to continue operations through data hosting and proprietary mining arrangements[205] - The Company anticipates that capital contributions from Spring Lane Capital, up to 35 million, will help develop green data centers co-located with renewable energy assets[208]