Soluna (SLNH) - 2024 Q1 - Quarterly Report

Revenue Growth - Cryptocurrency mining revenue increased to $6,396,000 for Q1 2024, up 129$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$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]